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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10/A
PRE-EFFECTIVE
AMENDMENT NO. 2 TO
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF
THE SECURITIES EXCHANGE ACT OF 1934
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JCC HOLDING COMPANY
(Exact name of registrant as specified in charter)
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DELAWARE 62-1650470
(State or other jurisdiction (I.R.S. Employer
of Identification
incorporation or organization) No.)
512 SOUTH PETERS STREET 70130
NEW ORLEANS, LOUISIANA (Zip code)
(Address of principal
executive offices)
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(504) 533-6000
(Registrant's telephone number, including area code)
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COPIES OF NOTICES AND OTHER COMMUNICATIONS SHOULD BE SENT TO:
FREDERICK W. BURFORD
PRESIDENT
JCC HOLDING COMPANY
512 SOUTH PETERS STREET
NEW ORLEANS, LOUISIANA 70130
(504) 533-6000
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrants' Agent for Service)
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MICHAEL R. MCALEVEY, ESQ.
ALSTON & BIRD LLP
ONE ATLANTA CENTER
1201 WEST PEACHTREE STREET
ATLANTA, GEORGIA 30309-3424
(404) 881-7000
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Securities to be registered pursuant to Section 12(b) of the Act:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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Class A Common Stock, par value $0.01 per
share....................................... The American Stock Exchange
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act: None
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TABLE OF CONTENTS
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ITEMS 1 AND 3. BUSINESS AND
PROPERTIES...................... 1
THE COMPANY..................... 1
Development Plans............. 1
Recent Reorganization......... 3
The Casino.................... 7
Marketing Strategy............ 8
Description of The Manager.... 9
Competition................... 9
Lease of Rivergate Site....... 11
Environmental Matters......... 11
Employees..................... 12
Title Insurance............... 12
RISK FACTORS.................... 14
Uncertainty Regarding Gaming
Regulation and Future Changes
to the Law................... 14
Political Environment......... 19
Non-Renewal of Minimum Payment
Guaranty..................... 20
Lack of Profitability......... 21
Substantial Leverage and
Potential Inability to Meet
Fixed Charges and Other
Payment Obligations.......... 21
Availability of Working
Capital...................... 22
Completion Guarantees......... 22
Ability to Commence Operations
as Scheduled................. 24
Ability to Develop the
Development Properties....... 25
Conditions to Disbursement
under Bank Loans............. 26
Certain Limitations on
Corporate Control............ 26
Anti-Takeover
Considerations............... 27
Dependence of Values on
Estimates of Future
Performance.................. 27
Lack of Historical Financial
Information for the
Company...................... 28
Limits on Restaurants,
Lodging, Retail Operations
and Entertainment............ 28
Competition................... 28
Limited Remedies for
Additional Land-Based
Casinos...................... 30
Minimal Operating History..... 31
Cross Defaults................ 32
No Prior Market for the Class
A Common Stock............... 32
Common Stock Eligible for
Future Sale.................. 32
Reliance on Single Market..... 33
Uncertainity Regarding Tax
Treatment of the Notes and
the Convertible Junior
Subordinated Debentures...... 33
Taxation...................... 33
Applicability of Public Works
Act.......................... 34
Environmental Matters......... 34
Restrictive Covenants......... 34
Conflicts of Interest......... 35
Repurchase of Class A Common
Stock Relating to Gaming
Matters...................... 35
Certain Bankruptcy
Considerations............... 36
Potential Successor
Liability.................... 36
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Lack of Experienced
Personnel.................... 36
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Amended Open Access Program
and Plans.................... 37
Year 2000 Risks............... 37
Dividend Policy............... 38
MATERIAL AGREEMENTS............. 39
Bank Loans.................... 39
Junior Subordinated Credit
Facility..................... 42
Convertible Junior
Subordinated Debentures...... 42
New Notes and New Contingent
Notes........................ 43
HET Warrant................... 46
Amended GDA................... 46
Amended Ground Lease.......... 48
Amended and Renegotiated
Casino Operating Contract.... 56
Amended Management
Agreement.................... 63
Completion Guarantees......... 68
Amended Completion Loan
Agreement.................... 71
Second Floor Sublease......... 73
Basin Street Casino Lease
Termination Agreement........ 74
Amended and Restated
Construction Lien Indemnity
Agreement.................... 74
HET/JCC Agreement............. 75
Manager Subordination
Agreements................... 78
REGULATION...................... 80
Louisiana Gaming Act.......... 80
State Legislation............. 85
Federal Regulation............ 87
Bank Secrecy Act.............. 87
Zoning and Land Use........... 87
ITEM 2. FINANCIAL INFORMATION..... 88
SELECTED HISTORICAL AND PRO
FORMA CONSOLIDATED FINANCIAL
DATA.......................... 88
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS.................... 89
Fresh-Start Reporting......... 90
Development Activities........ 90
Liquidity and Capital
Resources.................... 91
Results of Operations......... 92
Year 2000 Compliance.......... 93
ITEM 4. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT...................... 94
ITEM 5. DIRECTORS AND EXECUTIVE
OFFICERS........................ 95
ITEM 6. EXECUTIVE COMPENSATION.... 96
1998 Long-Term Incentive
Plan......................... 96
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ITEM 7. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS............ 100
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ITEM 8. LEGAL PROCEEDINGS......... 101
ITEM 9. MARKET PRICE OF AND
DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS........... 108
ITEM 10. RECENT SALES OF
UNREGISTERED SECURITIES......... 109
ITEM 11. DESCRIPTION OF
REGISTRANT'S SECURITIES TO BE
REGISTERED...................... 109
Common Stock.................. 109
Redemption Provisions......... 110
Board of Directors............ 111
Committees of the Board....... 114
Dividends..................... 115
Amendments to Certificate and
Bylaws....................... 115
Stockholder Meetings.......... 116
Agreements with Certain
Stockholders................. 116
Potential Effect of Certain
Provisions upon an Attempt to
Acquire Control of JCC
Holding...................... 118
Transfer Agent................ 118
Certain Definitions........... 118
ITEM 12. INDEMNIFICATION OF
DIRECTORS AND OFFICERS.......... 122
ITEM 13. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.............. 122
ITEM 14. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL
DISCLOSURE...................... 182
ITEM 15. FINANCIAL STATEMENTS AND
EXHIBITS........................ 182
INDEX............................. 189
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ITEMS 1 AND 3. BUSINESS AND PROPERTIES.
THE COMPANY
JCC Holding Company ("JCC Holding" or the "Registrant") conducts its
business through its wholly-owned subsidiaries, Jazz Casino Company, L.L.C., a
Louisiana limited liability company ("JCC" and, together with JCC Holding, the
"JCC Entities"), JCC Development Company, L.L.C., a Louisiana limited liability
company ("JCC Development"), CP Development, L.L.C., a Louisiana limited
liability company ("CP Development"), and FP Development, L.L.C., a Louisiana
limited liability company ("FP Development" and, together with JCC Development
and CP Development, the "Development Entities" and, together with the JCC
Entities, the "Company"). JCC Holding was incorporated on August 20, 1996 under
Delaware law. Currently, JCC Holding's principal executive offices are located
at 512 South Peters Street, New Orleans, Louisiana 70130, and its telephone
number is (504) 533-6000.
As discussed below under "Recent Reorganization," a Third Amended Joint Plan
of Reorganization Under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") As Modified Through October 13, 1998 (the "Plan of
Reorganization"), of Harrah's Jazz Company ("HJC"), Harrah's Jazz Finance Corp.
("Finance Corp.") and Harrah's New Orleans Investment Company ("HNOIC") filed
with the United States Bankruptcy Court for the Eastern District of Louisiana
(the "Bankruptcy Court") was confirmed by the Bankruptcy Court on October 13,
1998 and the transactions contemplated thereby were consummated on October 30,
1998 (the "Effective Date"). Under the Plan of Reorganization, the Company is
the successor to the operations of HJC, a general partnership that, prior to the
Effective Date, was comprised of (i) HNOIC, an indirect wholly-owned subsidiary
of Harrah's Entertainment, Inc. ("HET"), (ii) New Orleans/Louisiana Development
Corporation ("NOLDC"), and (iii) Grand Palais Casino, Inc. ("Grand Palais" and,
collectively with HNOIC and NOLDC, the "Partners"). On the Effective Date, all
of the partnership interests of HJC were transferred to JCC pursuant to the Plan
of Reorganization and, as contemplated by the Plan of Reorganization, HJC is in
the process of being dissolved in accordance with applicable state law. On the
Effective Date, HET, through an indirect wholly-owned subsidiary, acquired
beneficial ownership of the Class B Common Stock (as defined herein) of JCC
Holding and currently is the beneficial owner of 4,302,623 shares of Class B
Common Stock, or 96.6% of all of the issued and outstanding Class B Common
Stock. See "Item 4. Security Ownership of Certain Beneficial Owners and
Management." In addition, pursuant to the Plan of Reorganization, HET, or an
affiliate of HET, has entered into various agreements with the Company,
including (i) a credit agreement pursuant to which HET and a subsidiary of HET
have agreed to provide the Company up to $22.5 million, (ii) agreements pursuant
to which HET and a subsidiary of HET have agreed to guaranty certain of the
Company's obligations under various agreements entered into in connection with
the Plan of Reorganization, and (iii) a management agreement pursuant to which a
subsidiary of HET has agreed to manage and operate the Casino (as defined
herein). See "--Development Plans," "--Recent Reorganization," "--Material
Agreements--Junior Subordinated Credit Facility," "--Amended Management
Agreement," "--HET/JCC Agreement," "--Completion Loan Agreement," "Item 4.
Security Ownership of Certain Beneficial Owners and Management" and "Item 7.
Certain Relationships and Related Transactions."
DEVELOPMENT PLANS
Under the Plan of Reorganization, except for certain real property which
vested in CP Development and FP Development, all of the assets of HJC vested in
JCC on the Effective Date. In connection with the Plan of Reorganization, on the
Effective Date, HJC assigned to JCC in accordance with Louisiana law and the
agreement of the parties thereto an amended and renegotiated casino operating
contract, which gives JCC the right to operate a land-based casino in Orleans
Parish, Louisiana (the "Casino"). In addition, pursuant to the terms of the Plan
of Reorganization, as of the Effective Date, JCC succeeded to HJC's interest in
an approximately 30-year long-term lease, subject to renewals (the "Ground
Lease"), for the site in New Orleans, Louisiana (the "City"), designated by law
for the Casino's development and in a general development agreement relating to
the construction and development of the Casino (the "General Development
Agreement"). On October 29, 1998, the Ground Lease was amended by the Amended
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Ground Lease (as defined herein). The Amended Ground Lease has an initial term
of 30 years, plus the amount of time between April 27, 1993 and the Effective
Date, with three consecutive ten-year renewal options. See "--Material
Agreements--Amended Ground Lease." JCC owns and will operate the Casino after
construction is complete. The Casino will be located in downtown New Orleans at
the foot of Canal and Poydras Streets on the site of the City's former
convention center (the "Rivergate").
The Casino is scheduled to open and commence operations by October 30, 1999
(the "Opening Date") and is expected to include 100,000 square feet of net
gaming space, a 250-seat buffet, two parking garages, an underground tunnel
between the Casino and the parking garages (the "Poydras Tunnel Area") and
approximately 15,000 square feet of multi-function, special event and
meeting-room space on the first floor of the premises (collectively, the
"Initial Casino Facilities").
Concurrent with construction of the Initial Casino Facilities, approximately
130,000 square feet of multipurpose non-gaming entertainment space on the second
floor of the premises is expected to be constructed to the point at which the
shell of the structure is complete and the space is suitable for tenant
build-out ("Second Floor Shell Construction," and together with the Initial
Casino Facilities, the "Casino Construction"). A group consisting of
representatives of Rivergate Development Corporation (the "RDC"), JCC
Development and JCC will develop a master plan for the initial build-out and
leasing of the second floor for non-gaming uses (the "Master Plan"). The RDC, a
public benefit corporation formed for the purpose of subleasing the site on
which the Casino will be located, is JCC's landlord for the Rivergate site
pursuant to the terms of the Amended Ground Lease (as defined herein). See
"--Material Agreements--Second Floor Sublease--Master Plan." The Master Plan is
intended to establish, among other things, (i) leasing guidelines regarding
rent, termination rights and termination fees, tenant improvements and
concessions, permissible uses and brokerage fees, (ii) an initial capital
improvement budget, and (iii) an initial operating budget for the first year of
second-floor operation. JCC has subleased the second floor to JCC Development
pursuant to the Second Floor Sublease (as defined herein) and JCC Development
intends to manage and lease the second floor development in a manner consistent
with the Master Plan. The term of the Second Floor Sublease will commence upon
the occurrence of substantial completion of the Second Floor Shell Construction.
JCC will be entitled to convert any portion of the second floor in the future to
gaming use, subject to the approval of the Louisiana Gaming Control Board (the
"LGCB") and certain rights of the RDC. See "--Regulation." The LGCB will have
approval rights over the Master Plan based upon the terms of the Louisiana
Economic Development and Gaming Corporation Act and the Louisiana Gaming Control
Act (collectively, the "Gaming Act"). The LGCB will also have the authority to
approve all subleases and uses on the second floor to ensure that such use is
consistent with the Gaming Act and the rules and regulations promulgated
thereunder (the "Rules and Regulations"). Subject to the approval of the Master
Plan by the LGCB, entering into tenant leases and obtaining the necessary
funding, the build-out of non-gaming tenant improvements on the second floor of
the Casino beyond the Second Floor Shell Construction is targeted to be
completed following completion of the Second Floor Shell Construction. The
Second Floor Shell Construction is scheduled to be completed substantially
concurrently with the completion of the Initial Casino Facilities. The Company
has not obtained the funding necessary to complete the build out of non-gaming
tenant improvements on the second floor of the Casino beyond the Second Floor
Shell Construction. See "--Risk Factors--Ability to Develop the Development
Properties."
The completion and opening of the Casino is subject to, among other things,
receipt of the appropriate regulatory approvals, compliance with gaming laws,
rules and regulations, and the completion of certain suitability determinations
by the State with respect to various individuals and entities, including
employees and vendors. The Company has received all of the material State and
City regulatory approvals required to resume construction of the Casino and on
October 30, 1998, instructions to proceed with resuming construction of the
Casino were given to the Casino construction contractors. As such contractors
are required to be prepared to resume construction within 30 days of the
Company's notice, it is anticipated that construction of the Casino will resume
by November 29, 1998. In addition, under the Amended GDA (as defined herein),
the Site Reactivation Date (as defined herein) will occur no later than November
29, 1998. See "--Material Agreements--Amended GDA." Prior to opening the Casino,
however, the LGCB must still issue certain regulatory approvals relating to,
among other things, all gaming
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equipment and devices used at the Casino, surveillance equipment, accounting
controls and other operational issues to ensure compliance with the Gaming Act
and the Rules and Regulations. In addition, employees of JCC and the Manager (as
defined herein) are required to obtain licenses and permits from the LGCB and
the State Police before commencing operations at the Casino. Also, prior to
opening, under the Gaming Act and the Rules and Regulations, certain
manufacturers, distributors and suppliers of gaming devices, junkets, goods or
services to the Casino, as well as any person furnishing services or property to
JCC in exchange for payments based on earnings, profits or receipts from gaming
operations, and other persons deemed necessary by the LGCB, may be required to
obtain a license or permit from the LGCB or the State Police in order to conduct
business with JCC. Prior to opening, the Company may also be required to obtain
certain modifications to the City's conditional use approvals and certain
additional building permits may be required to accommodate the final design of
the Casino. See "--Regulation-- Louisiana Gaming Act."
Under the Plan of Reorganization, on the Effective Date, title to the real
property owned by HJC at 3 Canal Place in New Orleans, adjacent to the Canal
Place shopping center (the "3CP Property"), vested in CP Development, and title
to the real property owned by HJC on Fulton and Poydras Streets in New Orleans,
adjacent to the Casino parking facilities (the "Fulton Property"), vested in FP
Development. CP Development and FP Development are wholly-owned by JCC Holding.
The Company currently intends that CP Development and FP Development will
develop the properties, possibly with the assistance of a third party developer,
for entertainment uses supportive of the Casino. The Company has not obtained
financing to fund the development of either the 3CP Property or Fulton Property.
The 3CP Property and the Fulton Property are currently undeveloped properties
that do not generate any material revenues for the Company. See "--Risk
Factors--Ability to Develop the Development Properties."
RECENT REORGANIZATION
HJC was formed on November 29, 1993 for the purposes of developing, owning
and operating a casino at the Rivergate site. HJC entered into a contract (the
"Casino Operating Contract") with the Louisiana Economic Development and Gaming
Corporation ("LEDGC") to develop and operate the casino at the Rivergate site
and entered into the Ground Lease with the City and the RDC for the Rivergate
site. HJC, the RDC and the City also entered into the General Development
Agreement which governed the design, development and construction of the casino
and certain related facilities and an open access program and open access plans
adopted thereunder regarding hiring goals and programs (collectively, the "Open
Access Program and Plans"). HJC engaged Harrah's New Orleans Management Company
(the "Manager"), an indirect wholly-owned subsidiary of HET, to manage the
operations of the casino.
On November 16, 1994, HJC closed a series of transactions to finance
development of a casino at the Rivergate site (the "Initial Financing"),
including (i) a $170 million equity contribution by the Partners which consisted
of cash, fixed assets and project development expenses incurred by the Partners,
(ii) the sale of $435 million of 14 1/4% First Mortgage Notes due 2001 with
Contingent Interest (the "Old Bonds"), and (iii) bank credit facilities
providing for loans of up to $175 million aggregate principal amount (the "Old
Bank Credit Facilities"). In addition, at the time of the Initial Financing, HJC
anticipated that approximately $72 million of cash would be available from cash
flow generated by the operations of a casino (the "Basin Street Casino") to be
operated by HJC for approximately one year in the City's Municipal Auditorium on
a temporary basis until a casino at the Rivergate site was completed.
In January 1995, HJC began construction of a casino at the Rivergate site
and on May 1, 1995, the Basin Street Casino opened with approximately 76,000
square feet of net gaming space, 3,046 slot machines and approximately 85 table
games. The Basin Street Casino was managed by the Manager and was open 24 hours
a day, seven days a week, except for approximately 65 hours from May 9 to May
11, 1995, when HJC was forced to close the Basin Street Casino because of
flooding in the New Orleans area.
HJC had originally projected that the Basin Street Casino would have gross
gaming revenues of approximately $395 million per year, or an average of
approximately $33 million per month. Instead, gross
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gaming revenues from the Basin Street Casino for the months of May, June and
July 1995 were $11.2 million, $13.2 million and $14.8 million, respectively, and
HJC suffered net losses of $15.2 million, $14.0 million and $14.2 million,
respectively, in those three months. In an attempt to reduce such losses, in
August 1995, HJC reduced the work force in the Basin Street Casino by
approximately 15%. HJC also reduced the number of its slot machines in the Basin
Street Casino from 3,046 to 2,150. Gross gaming revenues were not adversely
affected by these changes. Gross revenues for August, September and October 1995
were $13.3 million, $12.0 million and $14.4 million, respectively. Operating
results did not improve, however. HJC posted net losses in August, September and
October 1995 of $13.5 million, $12.3 million and $12.0 million, respectively.
By November 1995, all of the Partners' equity contribution and substantially
all of the proceeds from the offering of the Old Bonds had been depleted.
Construction of the casino at the Rivergate site was approximately 60% complete
and, as a result of design modifications and project cost overruns, including
the addition of hard cost contingencies, the approved project budget for the
casino at the Rivergate site and the Basin Street Casino had increased from the
original amount of $815.0 million to $823.5 million; however, the actual cost of
constructing the casino at the Rivergate site as originally designed would
likely have exceeded this amount. In addition, as discussed above, the Basin
Street Casino had suffered significant operating losses in every month of
operation.
During a meeting on November 19, 1995, Bankers Trust Company ("BTCo"),
acting as agent for the lending banks under the Old Bank Credit Facilities,
informed HNOIC, the partner of HJC responsible for financing matters under HJC's
partnership agreement, that the lending banks would not disburse funds to HJC
under the terms of the Old Bank Credit Facilities. BTCo advised HNOIC that after
reviewing certain financial information of HJC, including HJC's forecasts of
reduced gross gaming revenues for the casino at the Rivergate site, it believed
that there was a material adverse change in the financial prospects of HJC under
the Old Bank Credit Facilities. Subsequently, HNOIC advised Grand Palais and
NOLDC of such developments. Faced with an absence of funding because of BTCo's
action, on November 21, 1995, HJC decided to close the Basin Street Casino and
suspend construction of the casino at the Rivergate site. HJC also decided to
file for bankruptcy protection. On November 21, 1995, BTCo declared the Old Bank
Credit Facilities in default, accelerated the maturity of and terminated the
bank loans, and withdrew $157 million of the cash on deposit in the banks' cash
collateral account at the collateral agent under the Old Bank Credit Facilities.
On November 22, 1995 (the "Petition Date"), HJC and Finance Corp., its
wholly-owned subsidiary, filed voluntary petitions for relief under the
Bankruptcy Code, ceased operations of the Basin Street Casino and, on or about
the same date, suspended construction of the casino at the Rivergate site. HJC,
Finance Corp., HNOIC and HET (collectively, the "Proponents") filed a plan of
reorganization and related disclosure statement with the Bankruptcy Court on
April 3, 1996. As a result of, among other things, ongoing negotiations with the
City, the State of Louisiana and other parties, the Proponents amended the plan
of reorganization several times during the reorganization process. The Plan of
Reorganization is filed as an exhibit hereto.
The effectiveness of the Plan of Reorganization was conditioned upon, among
other things, the execution and delivery of a modified casino operating contract
and all necessary approvals, if any, from the State of Louisiana (the "State").
Although the LGCB approved a modified casino operating contract on April 29,
1997, the State took the position that the State legislature must also give its
approval, which the State legislature has failed to do. On March 16, 1998 the
State Attorney General issued an opinion that the LGCB has independent authority
(without the necessity of any legislative approval) to renegotiate and execute a
renegotiated casino operating contract. On March 20, 1998, the LGCB approved an
amended and renegotiated Casino Operating Contract among HJC, JCC and the State,
by and through the LGCB (the "Amended and Renegotiated Casino Operating
Contract"), subject to, among other conditions, the condition that the Louisiana
Supreme Court render a final, non-appealable judgment that the LGCB, acting on
its own, is the proper party and has the legal authority to enter into the
Amended and Renegotiated Casino Operating Contract with HJC or JCC on behalf of
the State and the LGCB, without the specific approval of the Governor or the
State legislature. On May 15, 1998, the Louisiana Supreme
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Court issued a decision confirming that the LGCB has the independent authority
to renegotiate and execute the Amended and Renegotiated Casino Operating
Contract without seeking gubernatorial or legislative approval. See "--Risk
Factors--Uncertainty Regarding Gaming Regulation and Future Changes to the Law."
Following a hearing on the adequacy of the disclosure statement held on
September 3, 1998, the disclosure statement was approved, and the Plan of
Reorganization was confirmed by Bankruptcy Court on October 13, 1998. The Plan
of Reorganization and the transactions contemplated thereby, including the
execution of the Amended and Renegotiated Casino Operating Contract, were
consummated on October 30, 1998 and instructions to proceed with resuming
construction of the Casino
were given to the Casino construction contractors. As such contractors are
required to be prepared to resume construction within 30 days of the Company's
notice, it is anticipated that construction of the Casino will resume by
November 29, 1998. In addition, under the Amended GDA, the Site Reactivation
Date will occur no later than November 29, 1998.
Under the Plan of Reorganization all the assets of HJC, except for the 3CP
Property and Fulton Property, vested in JCC on the Effective Date. Title to the
3CP Property and Fulton Property vested in CP Development and FP Development,
respectively. The Plan of Reorganization provided that, for federal income tax
purposes, the vesting of assets in JCC, CP Development and FP Development was
deemed to have occurred as a deemed exchange of the Old Bonds by the holders of
Old Bonds ("Bondholders") for such assets, and a deemed exchange by the
Bondholders of such assets for the Class A Common Stock (as defined herein), the
New Notes (as defined herein) and the New Contingent Notes (as defined herein).
Pursuant to the Plan of Reorganization, the outstanding capital stock of JCC
Holding as of the Effective Date and as of the date of this Registration
Statement consists of shares of Class A Common Stock, par value $0.01 per share
(the "Class A Common Stock"), and shares of Class B Common Stock, par value
$0.01 per share (the "Class B Common Stock" and, together with the Class A
Common Stock and the Unclassified Common Stock (as defined herein), the "Common
Stock"). With certain exceptions, including the election of directors and the
right to separate class voting with respect to certain amendments to JCC
Holding's Restated Certificate of Incorporation and Second Amended and Restated
Bylaws (the "Bylaws"), each share of Common Stock (including, prior to the
Transition Date (as defined herein), each share of Class A Common Stock and
Class B Common Stock) has identical rights and privileges, and ranks equally,
shares ratably and is identical in every respect and as to all matters,
including rights in liquidation, and is entitled to vote upon all matters
submitted to a vote of the common stockholders, is entitled to one vote for each
share of Common Stock held, and, except as otherwise required by law, the
holders of shares of Common Stock generally vote together as one class on all
matters submitted to a vote of stockholders. See "Item 11. Description of
Registrant's Securities to be Registered." Upon and after the Transition Date,
however, the board of directors will no longer be classified into two classes of
directors with the holders of the Class A Common Stock entitled to elect Class A
Directors (as defined herein) and the holders of the Class B Common Stock
entitled to elect the Class B Directors (as defined herein) but rather will be
elected by the affirmative vote of the holders of a plurality of the shares of
Unclassified Common Stock. See "Item 11. Description of Registrant's Securities
to be Registered--Board of Directors." In addition, upon and after the
Transition Date, the requirement that any amendment to the Restated Certificate
of Incorporation or the Bylaws which affects the rights of holders of the Class
A Common Stock or Class A Directors or which affects the rights of holders of
the Class B Common Stock or Class B Directors be approved by the affirmative
vote of the holders of a majority of the affected class of Common Stock will
terminate. See "Item 11. Description of Registrant's Securities to be
Registered--Amendment to Certificate and Bylaws." Also upon and after the
Transition Date, the conversion feature of the Class B Common Stock will not
apply to the Unclassified Common Stock. See "Item 11. Description of
Registrant's Securities to be Registered--Common Stock."
Prior to the Effective Date, the Company had not issued any shares of Common
Stock. Pursuant to the Plan of Reorganization, on the Effective Date JCC Holding
issued an aggregate of 10 million shares of Common Stock. Harrah's Crescent City
Investment Company, a Nevada corporation, and an indirect wholly-owned
subsidiary of HET ("HCCIC"), acquired shares of Class B Common Stock in
consideration of, among other things, an equity investment (the "New Equity
Investment") of $15 million and the conversion to equity and contribution to JCC
Holding on the Effective Date of $60 million in debtor-in-
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possession financing that had been provided to HJC by HET or its affiliates over
the course of the reorganization. Additionally, on the Effective Date, any claim
of HET or its affiliates to any interest which had accrued on the
debtor-in-possession financing provided to HJC prior to the Effective Date was
cancelled. Also in connection with the Plan of Reorganization, HCCIC received
warrants (the "HET Warrant") entitling it to purchase additional shares of
Unclassified Common Stock such that HCCIC would be entitled to own up to 50.0%
of the then outstanding shares of Common Stock, subject to certain adjustments.
See "--Material Agreements--HET Warrant."
Under certain settlement agreements executed in connection with the Plan of
Reorganization, on the Effective Date, HCCIC transferred from its acquired
shares of Class B Common Stock (i) options to purchase 300,000 shares of Class B
Common Stock to the shareholders of NOLDC, (ii) options to purchase 150,000
shares of Class B Common Stock to First National Bank of Commerce (together with
its successors and assigns, "FNBC"), and (iii) its right to receive 350,000
shares on the Effective Date to the senior secured bondholders of Grand Palais.
Because the senior secured bondholders of Grand Palais are not permitted to own
shares of Class B Common Stock under the Restated Certificate of Incorporation,
the 350,000 shares received by the senior secured bondholders of Grand Palais
were shares of Class A Common Stock. Subsequent to the Effective Date, FNBC
exercised its option and on November 13, 1998, HCCIC transferred 150,000 shares
of its Class B Common Stock to FNBC. Accordingly, HET, through its wholly-owned
subsidiary HCCIC, currently beneficially owns an aggregate of 4,302,623 shares
of Class B Common Stock, or approximately 96.6% and approximately 43.0% of the
issued and outstanding shares of Class B Common Stock and Common Stock,
respectively. Therefore, through HCCIC, HET has the power to elect 100% of the
Class B Directors (as defined herein), constituting half of the full board of
directors. In the event that the options granted by HCCIC to the shareholders of
NOLDC are exercised in full, the Company believes that control of the Company
will not change because, as is required by the Restated Certificate of
Incorporation, prior to the Transition Date, the Harrah's Entities (as defined
herein) are required to own not less than 51% of the outstanding Class B Common
Stock (unless a lesser percentage is approved by the Class A and Class B
Directors), and will therefore continue to have the power to elect the Class B
Directors. See "Item 11. Description of Registrant's Securities to be
Registered--Common Stock."
Also pursuant to the Plan of Reorganization, on the Effective Date (i)
3,710,115 shares of Class A Common Stock which constituted approximately 37.1%
of the Common Stock issued on the Effective Date were distributed on a pro rata
basis to the Bondholders, and (ii) 1,487,262 shares of the Class A Common Stock
constituting approximately 14.9% of the Common Stock issued on the Effective
Date were issued to a disbursing agent for the benefit of Bondholders who
consented to releases as provided in the Plan of Reorganization, which amount
includes HCCIC's transfer to such disbursing agent of its right to receive on
the Effective Date 200,000 shares of Common Stock under the Plan of
Reorganization. Accordingly, upon the Effective Date, the Bondholders received
an aggregate of 5,197,377 shares of Class A Common Stock which constitutes
approximately 52.0% of the issued and outstanding Common Stock and 93.7% of the
issued and outstanding Class A Common Stock. Except as otherwise disclosed in
"Item 4. Security Ownership of Certain Beneficial Owners and Management," the
Company is not aware of any Bondholder who beneficially owns 5% or more of the
Class A Common Stock.
In addition, on the Effective Date the Bondholders received their pro rata
share of (i) $187.5 million in aggregate principal amount of Senior Subordinated
Notes with Contingent Payments due 2009 of JCC (the "New Notes"), and (ii)
Senior Subordinated Contingent Notes due 2009 of JCC (the "New Contingent Notes"
and, together with the New Notes, the "Notes"). See "--Material Agreements--New
Notes and New Contingent Notes."
Also in connection with the Plan of Reorganization, JCC entered into (i) a
$60 million term loan (the "A Term Loan") from a syndicate of lenders led by
BTCo (the "Bank Lenders"), (ii) a $151.5 million term loan from the Bank Lenders
(the "B Term Loan" and, together with the A Term Loan, the "Term Loans"), and
(iii) a credit facility pursuant to which HET has agreed to make available up to
$22.5 million of subordinated indebtedness (the "Junior Subordinated Credit
Facility"). In connection with the Plan of Reorganization, JCC issued to BTCo
and FNBC (the "Participating Banks") and to Salomon Smith Barney Inc.
("Salomon"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and BT
Alex. Brown Incorporated approximately $27.3 million aggregate principal amount
of 8% Convertible Junior
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Subordinated Debentures due 2010 of JCC (the "Convertible Junior Subordinated
Debentures"). JCC also has up to $25 million available for working capital
purposes under a working capital line of credit (the "Working Capital Facility"
and, together with the Term Loans, the "Bank Loans"). See "--Material
Agreements--Bank Loans" and "--Convertible Junior Subordinated Debentures." In
addition, the Plan of Reorganization effected amendments to the Ground Lease,
the General Development Agreement and other contracts and plans, including the
Open Access Program and Plans. See "--Material Agreements." The lease among HJC,
the City and the RDC for the Basin Street Casino (the "Basin Street Casino
Lease") was terminated prior to the Effective Date. See "--Material
Agreements--Basin Street Casino Lease Termination Agreement."
Under the terms of JCC Holding's Restated Certificate of Incorporation, on
the Transition Date a number of events will occur, some of which may impact
control of the Company. Prior to the Transition Date, except upon the occurrence
of certain events, and after the requisite gaming regulatory agencies have made
their determinations necessary to allow such directors to serve on the board of
directors, the board of directors of JCC Holding will consist of six directors,
with three directors elected by the holders of Class A Common Stock ("Class A
Directors") and three directors elected by the holders of shares of Class B
Common Stock ("Class B Directors"). See "Item 11. Description of Registrant's
Securities to be Registered--Board of Directors." With the exception of certain
significant transactions, the Class B Directors, as members of the Gaming
Committee of the board of directors, generally supervise the day-to-day
activities of the Company. See "Item 11. Description of Registrant's Securities
to be Registered-- Committees of the Board." In addition, HET currently owns
approximately 96.6% of the issued and outstanding Class B Common Stock, or
approximately 43.0% of the issued and outstanding Common Stock, and, prior to
the Transition Date, HET has agreed to own not less than 51% of the outstanding
shares of Class B Common Stock (but HET may own such lesser percentage as may be
approved by the Class A Directors and the Class B Directors). See "Item 11.
Description of Registrant's Securities to be Registered--Common Stock."
Consequently, prior to the Transition Date, HET is able to elect all of the
directors who will exercise day-to-day control over the Company. In addition,
JCC has engaged the Manager, an indirect wholly-owned subsidiary of HET, to
manage the operations of the Casino. See "-- Description of The Manager" and
"--Material Agreements--Amended Management Agreement." As a result of HET's
ability to elect the Class B Directors and the engagement of the Manager to
operate the Casino, prior to the Transition Date the ability of holders of Class
A Common Stock to influence the day-to-day operations of the Company may be
limited. On the Transition Date, however, HET may no longer be able to exercise
such control over the Company due to the fact that each share of Class A Common
Stock and each share of Class B Common Stock will automatically convert into
shares of Unclassified Common Stock, the classification of the board of
directors will be eliminated and the Gaming Committee will terminate. See "Item
11. Description of Registrant's Securities to be Registered--Common Stock" "--
Board of Directors" and "--Committees of the Board." Nevertheless, upon and
after the Transition Date, the HET Warrant becomes exerciseable and, if
exercised in its entirety, HET and its subsidiaries would own up to 50.0% of the
then outstanding shares of Common Stock, subject to certain adjustments. In
addition, following the Transition Date, the Manager will continue to manage the
operations of the Casino. See "--Material Agreements--HET Warrant" and
"--Amended Management Agreement."
THE CASINO
When HJC filed for bankruptcy in November 1995, construction at the
Rivergate site stopped. At the time construction stopped, the Casino was
approximately 60% complete. The building shell, including the structural steel,
exterior walls and roof was approximately 76% complete, and the building
interior, including the mechanical and electrical systems and interior finishes,
was approximately 35% complete. Construction resumed on March 11, 1996 for the
limited purpose of enclosing the structure, which was completed on or about
September 6, 1996. While construction was suspended, the structure at the
Rivergate site incurred approximately $5.0 million of damage from exposure to
moisture and humidity.
As redesigned pursuant to the Plan of Reorganization, the Casino will
contain five themed areas named The Jazz Court, The Mardi Gras Court, The
Smuggler's Court, The Court of the Mansion and The Court of Good Fortune. The
remaining space will be used for additional gaming activities, a food service
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area, casino support facilities, and multi-function, special event and
meeting-room space. To maintain operational efficiency and a dynamic atmosphere,
the Casino will be designed so that individual gaming areas can be opened or
closed to patrons depending on volume. The second floor of the Casino will be
initially developed for non-gaming uses. Parking for between 400 and 500 cars
and approximately 145,000 square feet of back-of-house and support areas will be
provided underneath the main gaming floor. Across Poydras Street and connected
to the Casino by the Poydras Tunnel Area will be a newly constructed parking
facility which will contain approximately 1,550 parking spaces. Under the Plan
of Reorganization and the Amended and Renegotiated Casino Operating Contract,
the Basin Street Casino will not re-open.
JCC Development intends to sublease and manage the second floor development
in a manner consistent with the Master Plan. JCC may convert any portion of the
second floor in the future to gaming use, subject to approval of the LGCB and
the Amended and Renegotiated Casino Operating Contract. If, however, such
conversion were to reduce the sublease revenue payable to the RDC pursuant to
the Second Floor Sublease, JCC would be required to compensate the RDC for such
reduction. See "--Material Agreements--Second Floor Sublease--Rent."
Prior to the Effective Date, the Proponents reached an agreement with Centex
Landis Construction Co., Inc. ("Centex"), the primary contractor for the Casino,
with respect to full-scale construction of the Casino in accordance with the
modified design for the Casino and the revised opening schedule (the "Centex
Settlement Agreement"). The Centex Settlement Agreement accommodates the
construction schedule currently contemplated by the Plan of Reorganization, the
Amended and Renegotiated Casino Operating Contract and the Amended Ground Lease
(as defined herein).
The Proponents also reached an agreement with Broadmoor, a Louisiana general
partnership and the primary contractor for the Casino's parking facilities, with
respect to construction of the Casino's parking facilities (the "Broadmoor
Settlement Agreement"). The Broadmoor Settlement Agreement provided that if the
Effective Date did not occur by July 31, 1997 (which it did not), Broadmoor
would have the right to have its contract deemed rejected and to pursue its
proof of claim, a right Broadmoor did not exercise. On September 22, 1998, the
Bankruptcy Court approved the terms of an amended settlement agreement with
Broadmoor, and authorized HJC to execute that agreement and authorized HJC to
recommence construction of the Casino's parking facilities. In connection with
the consummation of the Plan of Reorganization, HJC and Broadmoor executed the
amended settlement agreement October 21, 1998.
JCC has approximately 3,000 slot machines in inventory. Up to 1,000 of these
owned machines may not meet customer expectations and could require replacement.
JCC intends to evaluate the extent to which the owned machines will meet
customer expectations upon opening of the Casino, whether such machines will
need to be replaced, and the options available to replace such machines.
The Initial Casino Facilities are scheduled to open and commence operations
by October 30, 1999. The Second Floor Shell Construction is scheduled to be
completed substantially concurrently with the opening of the Initial Casino
Facilities.
Subject to the approval of the LGCB, all games typically available in Las
Vegas casinos except sports betting will be permitted at the Casino. Under
existing law, the Casino will be open 24 hours per day, every day of the year
and will extend credit, with no loss or wagering limits. See "--Risk
Factors--Uncertainty Regarding Gaming Regulation and Future Changes to the
Law--Uncertainty of Recent Regulation and Interpretation of Gaming Act" and
"--Regulation."
MARKETING STRATEGY
JCC's marketing strategy will be designed to attract primarily a broad
"middle market" of casino patrons. JCC does not intend to seek those casino
patrons who are most interested in discounts, but does expect to have a program
designed to attract both domestic and international premium gaming customers.
JCC expects to use marketing material emphasizing the Casino as a total
entertainment experience as well as New Orleans' unique music, food, history,
architecture and spirit. Additionally, under the terms of the Amended Ground
Lease (as defined herein), JCC agreed to pay the City $1 million per year for
the
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purpose of marketing and promoting the Casino as a part of the City's
destination marketing program pursuant to the guidelines therein, the first
installment of which was contributed on the Effective Date. See "--Material
Agreements--Amended Ground Lease--Term, Fees and Impositions."
DESCRIPTION OF THE MANAGER
JCC has engaged the Manager to manage and develop operations of the Casino.
The Manager is an indirect wholly-owned subsidiary of HET and was formed in May
1993 for the purpose of acting as the manager of the casino at the Rivergate
site. The Manager is responsible for and has authority over, among other things:
hiring, supervising and establishing labor policies with respect to employees
working in the Casino; gaming and entertainment policies and operations
including security and internal control procedures; advertising and public
relations and promotion; Casino-level accounting, budgeting, financial and
treasury functions; maintaining, renovating and improving the Casino; performing
certain system services generally performed at casinos owned or managed by HET
or its affiliates; and performing certain other functions identified by JCC and
agreed to by the Manager.
HET's casino business commenced operations more than 60 years ago and,
through its operating subsidiaries and other affiliates, HET currently operates
casino entertainment facilities in 11 states and Sydney, Australia. Such
facilities include: casino hotels in the five traditional U.S. gaming markets of
Reno, Lake Tahoe, Las Vegas and Laughlin, Nevada and Atlantic City, New Jersey;
riverboat or dockside casinos in Joliet, Illinois, Vicksburg and Tunica,
Mississippi, Shreveport, Louisiana, North Kansas City and St. Louis, Missouri,
and East Chicago, Indiana; casinos on Indian lands near Phoenix, Arizona,
Seattle, Washington, Cherokee, North Carolina and Topeka, Kansas; and a
land-based casino in Sydney, Australia. On July 23, 1998, HET announced that it
would withdraw from management of the Indian casino near Seattle, Washington
before the end of 1998. As of July 1, 1998, HET, through its operating
subsidiaries and other affiliates, operated a total of approximately 1,102,000
square feet of casino space, 27,100 slot machines, 1,187 table games, 9,017
hotel rooms or suites, approximately 165,200 square feet of convention space, 76
restaurants, nine showrooms and four cabarets.
COMPETITION
Since the time the land-based Casino project was originally proposed in the
early 1990s, considerable competition has developed which may have an adverse
impact on the Casino's profitability. The Company believes that the Casino will
face significant competition on a national, regional and local scale from gaming
operations in Mississippi and, on a regional and local scale, from gaming
operations in the State. The Company believes that the Casino will also compete
for patrons on a national and international scale with large casino hotel
facilities in Las Vegas, Nevada and Atlantic City, New Jersey. Because of the
large number of casinos competing on both the local and national levels and the
continued development of other gaming markets, the attraction of a land-based
casino in New Orleans has decreased. In addition, negative publicity associated
with the Company's bankruptcy may have an adverse impact on the Casino's ability
to compete.
The Gaming Act prohibits JCC from offering seated restaurant facilities with
table food service for patrons of the Casino. Although the Gaming Act permits
the Casino to offer limited cafeteria style food services for employees and
patrons, no food may be given away or subsidized within the Casino by JCC or any
licensee, and seating may not exceed 250 persons. The LGCB may, by Rule or
Regulation, allow JCC to enter into contracts with local restaurants and vendors
to provide food services at the Casino. JCC is also prohibited from offering
lodging in the Casino, or engaging in any practice or entering into any business
relationship to give any hotel, whether or not affiliated with JCC, any
advantage or preference not available to any similarly situated hotels. Unlike
the Casino, the vast majority of the Casino's competitors operate without
restrictions on lodging, food services, and entertainment due primarily to the
fact that the legislation authorizing casino gaming operations conducted by the
Company's competitors was, unlike the Gaming Act, adopted without such
restrictions. The Company believes that the ability to provide such amenities is
a considerable competitive advantage for the Casino's competitors. See "--Risk
Factors-- Limits on Restaurants, Lodging, Retail Operations and Entertainment"
and "--Competition."
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MISSISSIPPI. JCC will compete on a national, regional and local scale for
visitors with existing gaming facilities in Mississippi. The Mississippi Gulf
Coast has emerged as a major gaming destination. There are currently 11 dockside
casinos operating in the Mississippi Gulf Coast which are within 100 miles of
New Orleans, and significant enlargements to many of these facilities are
underway or have been announced. Such enlargements include significant
expansions of hotel space, and additions of retail, convention space and golf
courses. Plans to build additional new dockside casinos in the Mississippi Gulf
Coast have been announced and a substantial number of applications to operate
casinos in Mississippi have been filed with the Mississippi Gaming Commission.
In addition, in early 1999 Mirage Resorts Inc. is scheduled to open Beau Rivage,
an 1,800 room hotel, resort and dockside casino in Biloxi that will be larger
than any hotel in New Orleans. Approximately $600 million is expected to be
spent to develop Beau Rivage and due to its projected size, amenities and
ownership, it is anticipated to provide significant competition to the Casino.
The Mississippi enabling legislation allows dockside gaming and does not limit
the number of casinos or the square feet of gaming space in these facilities. In
addition, unlike the Casino, gaming facilities in Mississippi operate without
restrictions on lodging, food and beverage services, and entertainment, and
several of such facilities have recently expanded to enhance such services. See
"--Risk Factors-- Competition" and "--Limits on Restaurants, Lodging, Retail
Operations and Entertainment."
LOUISIANA. Under Section 240 of the Gaming Act, JCC has the exclusive right
to operate a land-based casino in the City. In authorizing the operation of a
single, official land-based gaming establishment, the Louisiana legislature's
intent was to promote economic development and maintain public confidence in the
integrity of casino gaming operations in a manner that ensures that the owner or
operator of the casino has no incentive to (i) divert or skim revenues, (ii)
engage in illegal activities or to reduce competition from other gaming
entities, or (iii) conduct land-based gaming operations so as to prevent guests
from patronizing local businesses other than the official gaming establishment.
The legislature further determined that by authorizing only a single, official
land-based casino, all persons involved with the proposed casino gaming
operation, including manufacturers, suppliers, and distributors of certain
gaming devices and equipment, could be licensed, regulated, and controlled in
such a manner as to, among other things, protect the public health, safety,
morals, good order, and general welfare of the citizens of the State.
Notwithstanding its exclusive right to operate a land-based Casino in the City,
on a regional and local scale, JCC will still compete with gaming operations in
Louisiana. In Louisiana, 13 riverboats are operating, including one riverboat in
Orleans Parish, two other riverboats in the New Orleans metropolitan area, two
riverboats in Baton Rouge, four riverboats in Lake Charles in western Louisiana
and four dockside casinos in Shreveport/Bossier City in northern Louisiana. One
license to conduct riverboat gaming in the State has not yet been awarded,
however, the award of such license has been deferred pending the results of an
LGCB study on the effects of gaming in Louisiana. The Louisiana Riverboat
Economic Development and Gaming Control Act (the "Riverboat Act") presently does
not impose wagering or loss limits and permits all forms of gaming with the
exception of sports betting. Although the Riverboat Act permits only dockside
gaming at the facilities in the Shreveport area, the Riverboat Act has been
administered so as to allow riverboats to refrain from cruising under certain
circumstances. Riverboats that remain moored under such circumstances are
permitted to allow unlimited ingress and egress of customers. There can be no
assurance that the Riverboat Act will not be amended to permit unlimited
dockside gaming or to increase the number of permitted riverboats. JCC will also
compete with land-based gaming facilities in central Louisiana on Native
American land. The Tunica-Biloxi, Chitimacha and Coushatta Indian tribes have
each opened a casino near the towns of Marksville, Charenton and Kinder,
respectively. Each casino is located more than 105 miles from New Orleans.
NATIONAL AND INTERNATIONAL COMPETITION. JCC will compete for patrons on a
national and international scale with large casino hotel facilities located in
Las Vegas, Nevada and Atlantic City, New Jersey. Several new facilities have
recently opened in Las Vegas and certain existing facilities in Las Vegas and
Atlantic City have undergone major expansions. This construction and expansion
increased the number of hotel rooms and gaming positions in the Las Vegas and
Atlantic City markets and created several attractions which have enhanced the
appeal of those cities as tourist destinations. To a lesser degree, JCC will
also compete for international patrons with casinos in other parts of the world.
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OTHER VENUES. Additional regional competition may be generated from
land-based or dockside casino facilities to be located in states which do not
currently allow casino gaming activities including Alabama and Texas. Bills
seeking to legalize gaming were introduced in both of these states in the past.
Although these bills were not enacted, similar bills may be introduced in future
legislative sessions.
OTHER FORMS OF LEGAL WAGERING. JCC will compete for local customers with
other forms of legal wagering, including racetracks and off-track betting
("OTB") parlors. In addition, under Louisiana law, certain parishes (including
Orleans Parish) presently permit restaurants, taverns, hotels and licensed clubs
to operate up to three video draw poker devices ("VDPs") per location,
qualifying truck stops may operate up to 50 VDPs per location, and racetracks
and OTB parlors may operate an unlimited number of VDPs per location. Louisiana
law, however, limits VDP wagering and jackpots. Other forms of wagering,
including charitable gaming and a state lottery, will provide additional local
competition. Further, in 1997, the State legislature authorized the use of slot
machines at race tracks located in three parishes in the State (but not Orleans
Parish), subject to a 15,000 square foot limitation. The authorization for this
bill was subject to a referendum in each of the parishes where the race tracks
are located to approve such use of slot machines. The voters in two of the three
parishes approved the use of slot machines at the race tracks located in those
parishes. The authorization for this bill remains subject to further legislative
action on the fees and taxes to be imposed on such slot machines. Legislation to
impose such fees and taxes was introduced in the 1998 fiscal session of the
State legislature, but failed to receive legislative approval. Future
consideration of this issue is likely by the State legislature. If slot machines
are ultimately permitted at race tracks in the two parishes that approved such
use of slot machines, the Casino would compete for patrons with slot machines at
such race tracks.
LEASE OF RIVERGATE SITE
JCC entered into an Amended and Restated Lease Agreement, dated October 29,
1998 and effective as of the Effective Date, with the RDC and the City, as
intervenor, regarding the sublease of the Rivergate site and certain related
property (the "Amended Ground Lease"). See "--Material Agreements-- Amended
Ground Lease."
ENVIRONMENTAL MATTERS
Subject to all of its rights and defenses at law and equity, JCC may be
subject to various federal, state and local laws, ordinances and regulations
that impose liability for the costs of cleaning up, and certain damages
resulting from, sites of past spills, disposals or other releases of hazardous
or toxic substances or wastes (the "Cleanup Laws"), and may be subject to other
laws, ordinances and regulations that govern activities or operations that may
have adverse environmental effects, such as discharges to air and water, as well
as handling and disposal practices for solid and hazardous or toxic wastes.
Pursuant to certain of such Cleanup Laws, current and past owners and
"operators" of real estate (including lessees) may be liable for the costs of
removal or remediation of certain hazardous substances on, in or about such
properties. Removal of such hazardous substances, in turn, may expose JCC to
potential responsibility for contamination at off-site locations. The liability
imposed by such laws is often joint and several, and without regard to whether
the owner/operator knew of, or was responsible for, the presence of such
hazardous substances. In addition, the presence of such substances, or the
failure to properly remediate such substances, may adversely affect the
owner/operator's ability to borrow using such real estate as collateral.
JCC owns and leases a number of properties, some of which were formerly
owned or leased by companies with operations that involved or may have involved
the use of hazardous substances. Some of the buildings on property owned or
leased by JCC contain asbestos. Asbestos abatement costs incurred by HJC in
connection with the construction of the Casino were approximately $3.7 million.
Asbestos abatement costs incurred by HJC in connection with the renovation of
the City's Municipal Auditorium were approximately $590,000. Asbestos and
lead-based paint abatement costs in connection with the Municipal Auditorium
restoration project were approximately $30,000. The Amended Ground Lease
requires JCC to indemnify the RDC and the City for environmental liabilities
with respect to causes of action arising after November 30, 1994, other than
those caused by third parties, and to assume
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responsibility for any environmental cleanup on or under the Casino, regardless
of when the environmental contamination occurred, unless known by various City
departments.
The removal and disposal of polychlorinated biphenyl ("PCB") at the
Rivergate site has been completed. In connection with that removal, HJC incurred
costs of $973,000. By separate indemnity agreements, the City agreed to
indemnify HJC from and against any liability if, as a result of removing PCBs at
the Rivergate site, HJC should be declared to be an owner or guarantor of the
PCBs which were removed. The costs and expenses of the removal were credited to
rents previously due under the Basin Street Casino Lease.
The Company does not anticipate that future expenditures for compliance with
environmental laws and regulations will have a material adverse effect on the
Company. No assurances can be given, however, that such matters, or that
compliance with environmental laws and regulations that may be enacted in the
future, will not have a material adverse effect on the Company. See "--Risk
Factors--Environmental Matters."
EMPLOYEES
As of November 13, 1998, JCC Holding employed 30 people on a full-time basis
and one person on a part-time basis. JCC, through the Manager, will recruit and
train employees to operate the Casino. To the extent permitted by law and
contract, JCC and JCC Development, in their hiring directed toward the opening
of the Casino and as practicable thereafter, will give priority to consideration
of the former employees of the Basin Street Casino in an evaluation of the
candidate qualifications. See "--Risk Factors--Lack of Experienced Personnel,"
"--Amended Open Access Program and Plans," "--Material Agreements--Amended GDA"
and "--Amended Management Agreement." The Casino's executive staff will be
comprised of employees of the Manager and JCC.
TITLE INSURANCE
JCC has obtained a title insurance policy from First American Title
Insurance Company ("First American") for the premises underlying the Casino
leased by JCC pursuant to the Amended Ground Lease and certain related leased
property (the "Casino Premises"). In addition, CP Development has obtained a
title insurance policy covering the 3CP Property and FP Development has obtained
a title insurance policy covering the Fulton Property. With respect to each of
the foregoing, such policies consist of lenders' title insurance policies for
the benefit of HET and Harrah's Operating Company, Inc. ("HOCI") as Minimum
Payment Guarantors (as defined herein), the Bank Lenders and the holders of the
Notes and owners' title insurance policies for the benefit of JCC, CP
Development and FP Development, respectively.
The owners' title insurance policy with respect to the Casino Premises
provides coverage in the amount of $524 million. The lenders' title insurance
policy with respect to the Casino Premises provides coverage equal to (i) $100
million in favor of HET and HOCI the Minimum Payment Guarantors, (ii) the total
amount of indebtedness under the Bank Loans in favor of the Administrative Agent
(as defined herein), and (iii) the aggregate principal amount of the Notes in
favor of the Trustee (as defined herein).
By endorsement, the title policy with respect to the Casino Premises
provides that the computation of loss or damage under such policy will be
measured by the use or uses to which the land and improvements are put at the
time of loss, or, if not then in use, as intended to be used pursuant to the
Amended Ground Lease. Actual loss has been generally construed to mean the
diminution in value of an insured mortgage resulting from an insured title
defect, not to exceed the value of the mortgagor's estate or interest in the
land and improvements. There has been no judicial construction of the
endorsement providing that such loss will be measured by the intended or actual
use of the mortgaged property. Actual loss will be determined either by
voluntary agreement with the title insurer or judicially. Due to uncertainty
regarding the method for valuing any loss and depending upon the nature and
extent of an insured title defect and its effect upon the use of the land and
improvements, and because a significant portion of the funds will not be used
for improvements and changes in the value of the land and improvements, the
amount of any
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recovery for such other title losses under the lenders' title policies with
respect to the Casino Premises cannot be predicted and there can be no assurance
that any recovery as a result of such title loss will not be in an amount
substantially less than (i) $100 million in the case of HET and HOCI as Minimum
Payment guarantors, (ii) the total amount of indebtedness under the Bank Loans
in the case of the Administrative Agent, or (iii) the aggregate principal amount
of the Notes in the case of the Trustee.
The owners' and lenders' title insurance policies with respect to each of
the 3CP Property and the Fulton Property provide coverage equal to $4 million
for the 3CP Property and $14 million for the Fulton Property.
The title insurance policies with respect to each of the Casino Premises,
the 3CP Property and the Fulton Property are reinsured through various title
insurance companies throughout the United States. The ability to successfully
recover under the policies is dependent on the creditworthiness of First
American and its reinsurers at the time of the claim and the existence and
validity of any defenses that First American and its reinsurers may have. There
can be no assurance that the title insurers will be able to fulfill their
financial obligations under the title insurance policies.
In December 1996, HJC and First American reached agreement on the terms of a
settlement agreement providing for the issuance of new blanket owner's and
lender's title insurance policies for the Casino Premises, the 3CP Property and
the Fulton Property (the "First American Settlement Agreement"), the form of
which the Bankruptcy Court subsequently approved on January 21, 1997. Bankruptcy
Court approval of the First American Settlement Agreement was appealed by
Messrs. Harry McCall, Henry McCall and Thomas Tucker to the Civil District Court
for the Parish of Orleans. As of the Effective Date this matter was settled and
the appeal has been dismissed with prejudice. See "Item 8. Legal
Proceedings--McCall Litigation." The effectiveness of the First American
Settlement Agreement resolved certain of the parties' claims against each other,
caused the cancellation of the existing owner's title insurance policy and
provided for the issuance of new title insurance to JCC and its lenders at
reduced "re-issue" rates.
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RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS REGISTRATION STATEMENT
BEFORE MAKING AN INVESTMENT IN THE CLASS A COMMON STOCK. THIS REGISTRATION
STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS. DISCUSSIONS CONTAINING SUCH
FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE MATERIAL SET FORTH UNDER "ITEMS 1
AND 3. BUSINESS AND PROPERTIES," "ITEM 2. FINANCIAL INFORMATION," AND "ITEM 13.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA," AS WELL AS WITHIN THE REGISTRATION
STATEMENT GENERALLY. IN ADDITION, WHEN USED IN THIS REGISTRATION STATEMENT, THE
WORDS "BELIEVES," "ANTICIPATES," "INTENDS," "EXPECTS," "ESTIMATES," "SCHEDULED,"
"CONTEMPLATED," "LIKELY," "TARGETS," "FORECASTED" AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES
THAT THE EXPECTATIONS IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN
GIVE NO ASSURANCE THAT ANY FORWARD-LOOKING STATEMENTS WILL PROVE TO BE CORRECT.
SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND OTHER FACTORS. ACTUAL RESULTS IN THE FUTURE COULD DIFFER MATERIALLY FROM
THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE "RISK
FACTORS" SET FORTH BELOW AND THE MATTERS SET FORTH IN THE REGISTRATION STATEMENT
GENERALLY. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE THE RESULT
OF ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO REFLECT
ANY FUTURE EVENTS OR CIRCUMSTANCES. THE COMPANY CAUTIONS THE READER, HOWEVER,
THAT THIS LIST OF RISK FACTORS MAY NOT BE EXHAUSTIVE.
UNCERTAINTY REGARDING GAMING REGULATION AND FUTURE CHANGES TO THE LAW
UNCERTAINTY OF AND IMPACT OF FUTURE LEGISLATION. Because legalized gaming
is a relatively new industry in the State of Louisiana, there has been
significant attention by the State legislature over the past few years to gaming
related bills dealing with a wide range of subjects that could impact the Casino
project. At various times, bills have been introduced to, among other things,
constitutionally and/or legislatively repeal all forms of gaming (including the
land-based casino), increase taxes on casinos, limit credit that may be extended
by casinos and limit days and hours of operations. There is no assurance that
future legislation will not be enacted by the State legislature that would
impose obligations, restrictions or costs that could interfere with JCC's casino
operations, cause JCC to violate agreements to which it is a party or otherwise
have a material adverse effect on the Company.
In the spring of 1996, a special session of the State legislature was
convened to consider, among other things, certain legislation proposed by the
Governor that impacted the gaming industry and, in certain instances, had
material adverse impacts on HJC. One such law called for a parish-by-parish
referenda during the November 5, 1996 election (the "Local Option Election") to
decide, on an item-by-item basis, whether riverboat gaming, video poker gaming
and in Orleans Parish, the land-based casino, should be permitted to operate in
the parish. The local option bill purported to provide that in the event voters
in Orleans Parish voted not to allow the operation of land-based casino gaming
in that parish, the "operation of land based casino gaming existing in the
parish shall be discontinued." On November 5, 1996, voters in Orleans Parish
elected by approximately a two-to-one margin to permit land-based casino gaming
in that parish. At the same time, voters in Orleans Parish elected to authorize
both riverboat gaming and video poker gaming in Orleans Parish. There can be no
assurance, however, that similar legislation will not be enacted in the future
that could lead to the suspension or cessation of gaming operations at the
Casino. Although voters in Orleans Parish voted to permit land-based casino
gaming in that parish, the law providing for the Local Option Election had a
material adverse effect on HJC even prior to voter action by impairing HJC's
ability to obtain financing for the Plan of Reorganization and by increasing
costs related to the Plan of Reorganization.
The Amended and Renegotiated Casino Operating Contract has been negotiated
based on the current terms of the Gaming Act. There can be no assurance that the
State will not amend or repeal the Gaming Act. Bills and resolutions to repeal
the authorization for a land-based casino or to instruct or urge the LGCB not to
execute the Amended and Restated Casino Operating Contract were introduced in
the State House of Representatives and the State Senate during 1998. Although
none of the bills or resolutions relating to the Casino has been enacted, there
can be no assurance that the State will not subsequently
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enact new legislation that modifies or revokes JCC's right to conduct gaming
activities or otherwise materially adversely affects the Company's business and
operations, including legislation increasing competition by authorizing
additional riverboats or other forms of gaming or authorizing dockside gaming or
other land-based casinos in Orleans Parish or elsewhere in the State. In 1997,
the State legislature authorized the use of slot machines at race tracks in
three parishes in the State (but not Orleans Parish) subject to a referendum in
each such parish to approve such use of slot machines. Two parishes approved the
use of slot machines at race tracks, but the State legislature's authorization
is subject to further legislative action on fees and taxes. Legislation to
impose such fees and taxes was introduced in the 1998 fiscal session of the
State legislature, but failed to receive legislative approval. Future
consideration of this issue is likely by the State legislature. There can be no
assurance that these authorizations if enacted will not negatively impact JCC
should slot machines ultimately be permitted at these race tracks. See
"--Competition--Other Forms of Legal Wagering."
Additionally, two bills were pre-filed in the State House of Representatives
for consideration during the State legislature's 1999 regular session which
begins March 1999. If passed, the first bill would repeal the Gaming Act in its
entirety and the second would amend the Gaming Act to broaden the food service
restrictions applicable to the Casino and all parts of any connecting structure
or building. See "--Limits on Restaurants, Lodging, Retail Operations and
Entertainment." There can be no assurance that the Company will be successful in
preventing such legislative changes or that the Company will be able to recover
damages as a result thereof. The repeal of the Gaming Act would have a material
adverse effect on the Company, and other legislative changes that affect the
Company's business and operations could have a material adverse effect on the
Company.
UNCERTAINTY REGARDING REGULATION AND INTERPRETATION OF THE GAMING ACT. In
May 1996, a bill was enacted by the State legislature that, among other things,
transferred regulatory authority over the Casino from the LEDGC to the LGCB and
provided that the LGCB would have the assistance of the State Police. See
"--Regulation--Louisiana Gaming Act--LGCB." Although the existing Rules and
Regulations promulgated by LEDGC remain in force and effect at this time, the
LGCB is empowered to repeal such Rules and Regulations and to promulgate its own
Rules and Regulations. This law also authorizes the State Police to, among other
things, conduct investigations and audits of gaming license applicants and to
assist the LGCB in determining compliance with gaming laws and regulations. The
Company and the Manager have little operational or other experience with the
LGCB or the State Police and the regulatory framework established by the State
legislature in 1996. JCC has been advised that the LGCB intends to promulgate a
number of its own Rules and Regulations after the Effective Date. There is no
assurance that the adoption of new Rules and Regulations or the repeal of
existing Rules and Regulations will not impose obligations, restrictions or
costs that could interfere with JCC's casino operations, cause JCC to violate
agreements to which it is a party or that otherwise have a material adverse
effect on the Company. There is also no assurance that the interpretation and
implementation of the Gaming Act and the Rules and Regulations by the LGCB and
the State Police will not impose obligations, restrictions or costs that could
interfere with JCC's casino operations, that could cause JCC to violate
agreements to which it is a party or that could otherwise have a material
adverse effect on the Company.
In addition, state laws generally requiring riverboats to sail in accordance
with their schedules and safety conditions are frequently unenforced. Another
law enacted as a result of the special session of the State legislature in the
spring of 1996, among other things, purports to retroactively amend the Gaming
Act: (i) to state that the conduct of gaming operations upon riverboats in
accordance with the provisions of the Riverboat Act or otherwise while upon a
designated waterway while temporarily at dockside does not constitute the
authorization of additional land-based casino gaming operations which relieves
the operator of the Casino of the obligation to pay compensation to the LGCB;
and (ii) to provide that governmental inaction which results in the operation of
another land-based casino in Orleans Parish will not relieve the operator of the
Casino of the obligation to pay compensation to the LGCB. This law also purports
to provide that in the event of litigation between the operator of the Casino
and the State or any of its
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political subdivisions (including the LGCB), the operator of the Casino must
continue to make all payments to the State and any of its political subdivisions
(including the LGCB) as required by law during the pendency of such litigation,
and that any failure to make the required payments will render the operator of
the Casino unsuitable. See "--Regulation--Louisiana Gaming Act." The failure of
the riverboats to sail in accordance with their schedules and/or governmental
inaction which results in the operation of another land-based casino in Orleans
Parish could have a material adverse effect on the Company. The Company's
remedies and the limitations thereon if a riverboat conducts dockside gaming in
material violation of the Riverboat Act or the Gaming Act are also addressed in
the Amended and Renegotiated Casino Operating Contract. See "--Limited Remedies
For Additional Land-Based Casinos" and "--Material Agreements--Amended and
Renegotiated Casino Operating Contract."
The interpretation of certain provisions of the Gaming Act, and the
authority of the LGCB thereunder, has also been the subject of multiple
lawsuits. The Gaming Act provides that the LGCB has the right, but is not
required, to set aside or renegotiate the provisions of a casino operating
contract if the casino operator is voluntarily or involuntarily placed in
bankruptcy, receivership, convservatorship or similar status. A law enacted
during the State legislature's special session in spring in 1996 purports to
authorize the Governor by executive order, subject to legislative approval, or
the State Legislature by act or resolution, to set aside or order renegotiation
or revocation of a casino operating contract when the casino operator is either
voluntarily or involuntarily placed in bankruptcy, receivership,
conservatorship, or some similar status.
On March 16, 1998, the State Attorney General issued an opinion that the
LGCB has independent authority (without the necessity of any legislative
approval) to renegotiate and execute a renegotiated casino operating contract.
On March 20, 1998, the LGCB approved the Amended and Renegotiated Casino
Operating Contract, subject to the rendition of a final, non-appealable judgment
of the State Supreme Court that the LGCB, acting on its own, is the proper party
and has the legal authority to enter into the Amended and Renegotiated Casino
Operating Contract with HJC and JCC on behalf of the State and the LGCB, without
the specific approval of the Governor or the State legislature.
On March 18, 1998, two separate petitions were filed seeking a declaratory
judgment and injunctive relief to preclude the LGCB from executing a casino
operating contract without the approval of the State legislature. In a lawsuit
captioned Jordan vs. Louisiana Gaming Control Board and Murphy J. Foster (19th
Judicial District Court, State of Louisiana, Parish of East Baton Rouge)
("Jordan"), the plaintiff, a Louisiana State Senator, sought a declaratory
judgment and injunctive relief seeking, among other things, to preclude the LGCB
from executing a casino operating contract without the approval of the State
legislature. In a lawsuit captioned Bean vs. Louisiana Gaming Control Board and
Rivergate Development Corporation (19th Judicial District Court, State of
Louisiana, Parish of East Baton Rouge) ("Bean"), the plaintiff, also a member of
the State Senate, sought declaratory and injunctive relief seeking, among other
things, to preclude the LGCB from entering into a casino operating contract with
JCC without the approval of the State legislature. HJC and the Bondholders
Committee filed separate petitions of intervention in that litigation.
The two cases were consolidated and HJC intervened in the Bean litigation
and the Bondholders Committee intervened in both the Bean and Jordan
litigations. After a trial, the district court on April 9, 1998, entered
judgment rejecting the plaintiffs' claims and declaring, among other things,
that the LGCB has the independent authority to renegotiate and execute a casino
operating contract without seeking gubernatorial or legislative approval. In
reaching its decision, the district court made a number of written findings of
fact and conclusions of law, including the conclusion that insofar as the
provisions of La. R.S. 27:224(D) and La. R.S. 27:224(E) subject the acts of the
LGCB or the governor to legislative approval or authorize the State legislature
to take executive action, those provisions are unconstitutional as violative of
Article II, Section 2 of the Louisiana Constitution, which establishes the
principle of separation of powers between the branches of government in
Louisiana.
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The consolidated cases were heard by the First Circuit Court of Appeal which
issued a decision on April 22, 1998, affirming in part and reversing in part the
judgment of the district court. The court of appeal affirmed the district
court's determination that the LGCB had the authority independently to
renegotiate the casino operating contract, but reversed what it perceived to be
the district court's conclusion that the State legislature had no right to
participate in the process of renegotiating the casino operating contract of a
casino operator in bankruptcy and concluded the State legislature may set aside
or order the LGCB to renegotiate the provisions of the casino operating contract
of a casino operator in bankruptcy.
The parties filed applications for various writs for review in the Louisiana
Supreme Court, which were subsequently granted and on May 15, 1998 the Louisiana
Supreme Court issued a decision affirming in part and reversing in part the
judgment of the court of appeal. The opinion of the Louisiana Supreme Court
affirmed the court of appeal's determination that the LGCB has the independent
authority to renegotiate and execute the casino operating contract without
seeking gubernatorial or legislative approval, and reversed that portion of the
court of appeal's decision that purported to interpret La. R.S. 27:224(D) to
grant the State legislature the power to set aside or order the LGCB to
renegotiate the provisions of the casino operating contract of a casino operator
in bankruptcy on the basis that such holdings by the court of appeal and the
district court were impermissible advisory opinions. The decision of the
Louisiana Supreme Court has since become final and non-appealable.
Although the consolidated suits were decided favorably for HJC, the suits
adversely affected HJC by delaying HJC's ability to consummate the Plan of
Reorganization and by increasing costs related to the Plan of Reorganization.
There can be no assurance that additional litigation will not be filed
challenging the authority of the LGCB and its actions. Any such litigation could
have a material adverse effect on the Company. Additionally, since the Louisiana
Supreme Court reversed the portion of the Court of Appeal's decision that
purported to interpret La. R.S. 27:224(D) on the basis that such holdings by the
Court of Appeal and the District Court were impermissible advisory opinions, the
State legislature's power to set aside or order the LGCB to renegotiate the
provisions of a casino operating contact of a casino operator in bankruptcy has
not been judicially determined. If the State legislature is determined to have
and/or attempts to exercise such power, it could have a material adverse effect
on the Company.
REGULATORY ENFORCEMENT ACTIONS. The ownership and operation of the Casino
is subject to pervasive regulation by the LGCB and the State Police under the
Gaming Act and the Rules and Regulations. The LGCB is empowered to sanction JCC
and all persons that hold permits, licenses or are required to be found
suitable, for violations of the Gaming Act and the Rules and Regulations.
Failure of JCC and its employees, JCC Holding or the Manager to comply with the
Gaming Act, the Rules and Regulations or regulatory requirements in the Amended
and Renegotiated Casino Operating Contract could have a material adverse effect
on the Company, including the imposition of fines, the suspension of rights
granted by the Amended and Renegotiated Casino Operating Contract and, under
certain circumstances, the revocation or termination of the Amended and
Renegotiated Casino Operating Contract. See "-- Regulation--Louisiana Gaming
Act" and "--Material Agreements--Amended and Renegotiated Casino Operating
Contract."
SUITABILITY OF JCC AND AFFILIATED PERSONS. JCC is not permitted to operate
the Casino unless and until certain persons required to be found suitable are
found suitable by the LGCB. Such persons include, without limitation, JCC, JCC
Holding, the Manager and certain members, officers and directors of such
companies. See "--Regulation--Louisiana Gaming Act." Although JCC, JCC Holding,
the Manager and the certain officers and directors of JCC Holding, JCC and the
Manager were found suitable after extensive background investigations by the
LGCB (and its investigatory arm, the State Police), prior to appointing
additional officers and directors of JCC, JCC Holding or the Manager, such
persons will be required to be found suitable by the LGCB. There can be no
assurance that future candidates proposed to serve as officers and directors of
JCC, JCC Holding or the Manager will be found suitable on a timely
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basis. Failure to timely receive all required suitability findings could have a
material adverse effect on the Company.
JCC, JCC Holding and the Manager and all other persons and entities required
to be found suitable, once found suitable, have an ongoing obligation to
maintain their suitability throughout the term of the Amended and Renegotiated
Casino Operating Contract. The failure of such entities and persons to maintain
their suitability could result in a finding of unsuitability of JCC or the
Manager and in the revocation of the Amended and Renegotiated Casino Operating
Contract. The suitability of JCC and the Manager may be adversely affected by
persons associated with them and their respective affiliates, over whom JCC and
the Manager have no control. See "--Material Agreements--Amended and
Renegotiated Casino Operating Contract," and "--Regulation--Louisiana Gaming
Act." A finding that JCC or the Manager is unsuitable, and the revocation of the
Amended and Renegotiated Casino Operating Contract would have a material adverse
effect on the Company.
Furthermore, the Gaming Act, the Rules and Regulations, and the Amended and
Renegotiated Casino Operating Contract impose certain suitability requirements
with respect to the holders of Notes and holders of equity in JCC and its
affiliates, including JCC Holding. To the extent that any holder of Notes or
Common Stock is required to be suitable and fails to be so found, such holder
may be required to divest such Notes or Common Stock at substantially
below-the-market prices for such securities. To the extent such holder fails to
divest, JCC Holding will have the right to redeem the Common Stock and JCC will
have the right to redeem the Notes, and prior to such redemption, such holder
will forfeit all benefits of ownership. See "--Repurchase of Class A Common
Stock Relating to Gaming Matters" and "Item 11. Description of Registrant's
Securities to be Registered--Redemption Provisions." Any failure to obtain
required qualifications or approvals may, by virtue of requirements imposed on
JCC or JCC Holding, subject such holders to certain requirements, limitations or
prohibitions, including a requirement that such holders liquidate their Notes or
Common Stock at a time or at a cost that is otherwise unfavorable for such
holders. There can be no assurance that the Gaming Act will not be interpreted,
that additional Rules and Regulations will not be implemented or that new
legislation will not be enacted to impose additional restrictions on, or
otherwise prohibit, certain persons from holding securities of JCC or JCC
Holding, including the Common Stock and the Notes, or cause such holders to
liquidate such securities at a time or at a cost that is otherwise unfavorable
for such holders. See "--Regulation--Louisiana Gaming Act."
LICENSING AND PERMITTING OF EMPLOYEES AND VENDORS. Under the Gaming Act and
the Rules and Regulations, employees of JCC are required to obtain certain
licenses and permits from the LGCB and the State Police before they may commence
employment at the Casino. Such licensing and permitting requires the submission
of an application, the payment of related fees and appropriate investigation by
the regulatory authorities. See "--Regulation--Louisiana Gaming Act." There can
be no assurances that such licenses or permits will be obtained. Failure to
obtain the licenses and/or permits for employees of JCC necessary to operate the
Casino on a timely basis could have a material adverse effect on the Company.
Under the Gaming Act and the Rules and Regulations, certain manufacturers,
distributors and suppliers of gaming devices, junkets, goods or services to the
Casino, as well as any person furnishing services or property to JCC in exchange
for payments based on earnings, profits or receipts from gaming operations, and
other persons deemed necessary by the LGCB, may be required to obtain a license
or permit from the LGCB or the State Police in order to conduct business with
JCC. See "--Regulation-- Louisiana Gaming Act." There can be no assurance that
such licenses or permits will be obtained by such vendors. The failure of any
such vendors to obtain any required licenses or permits on a timely basis could
have a material adverse effect on the Company.
STATE IMMUNITY FOR BREACH OF CONTRACT. The Amended and Renegotiated Casino
Operating Contract creates certain material rights in JCC with respect to the
Casino. See "--Material Agreements--Amended and Renegotiated Casino Operating
Contract." Under the Amended and Renegotiated Casino Operating Contract, JCC is
entitled to bring an action to compel specific performance or any other remedy
permitted
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or provided by law in the event the LGCB breaches the contract and fails to cure
such breach. See "--Material Agreements--Amended and Renegotiated Casino
Operating Contract--Exclusive Contract." In the spring of 1996, however, a
special session of the State legislature enacted a bill that purports to amend
the Gaming Act to provide the State and all of its subdivisions (including the
LGCB) with immunity from suit and liability for any action or failure to act on
the part of the State or any of its political subdivisions (including the LGCB).
See "--Regulation--Louisiana Gaming Act." There can be no assurance that in the
event JCC seeks to enforce its rights under the Amended and Renegotiated Casino
Operating Contact, that a court would allow the suit to proceed. Failure of the
LGCB to comply with the Amended and Renegotiated Casino Operating Contract could
have a material adverse effect on the Company, which effect would be exacerbated
if a court applied the immunity statute and precluded JCC from seeking recourse
in a judicial forum.
POSSIBLE FEDERAL LEGISLATION. In August 1996, the President signed into law
a bill that creates a federal commission to examine the rapid growth of the
gambling industry and its impact on American society. The law creates a
nine-member National Gambling Impact and Policy Commission (the "National
Commission") to study the economic and social impact of gaming and report its
findings to Congress and the President. The National Commission is required by
the enabling legislation to issue a report containing its findings and
conclusions, together with recommendations of the National Commission for
legislation and administrative actions, within two years after the date on which
it held its first meeting, which occurred on June 20, 1997. Any recommendations
which may be made by the National Commission could result in the enactment of
new laws or the adoption of new regulations which could adversely impact the
gaming industry in general and the Company in particular. The Company is unable
at this time to determine what recommendations, if any, the National Commission
will make, or the ultimate disposition of any recommendations the National
Commission may make.
POLITICAL ENVIRONMENT
The development and construction of the Casino has been and will continue to
be, and the operation of the Casino may be, affected by the State and local
political environments, both of which are uncertain. There is considerable
opposition to gaming among a segment of the population in Louisiana. The
enactment and implementation of gaming legislation in Louisiana and the
development of the Casino have been the subject of lawsuits, claims and delays
brought about by various anti-gaming and preservationist groups and competitors
of the Casino. Although these lawsuits and claims have all been settled or
dismissed, these lawsuits and claims, as well as contract negotiations with
State and City governmental entities, have significantly delayed development of
the Casino. See "Item 8. Legal Proceedings." Additional lawsuits and the
uncertain political environment may result in further delays, all of which could
have a material adverse effect on the Company.
The State and City have used, and may in the future use, the additional
governmental approvals required to be obtained by JCC to develop, construct and
open the Casino as an opportunity to request additional funds and other
obligations from JCC and thereby create funding shortfalls and/or delay the
development and opening of the Casino. No assurance can be given that the State
and the City governments will not seek to raise additional funds from or impose
additional obligations on JCC or the Casino or that these factors will not have
a material adverse effect on the Company. See "--Taxation."
The Company is subject to being adversely affected by all of the foregoing
problems or investigations which directly affect its operations and it is also
subject to being adversely affected by investigations or disputes which may only
tangentially relate to the construction or operation of the Casino but which
cause those who are opposed to the Casino in particular or gaming in general to
increase their opposition. For example, on August 8, 1997, HJC was served with a
subpoena by the Committee on Rules and Administration of the United States
Senate which was investigating the contest of the election of Mary Landrieu to
the United States Senate and the role, if any, that gaming interests may have
played in her election. HJC
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complied with the subpoena and HJC representatives testified before the
Committee during September 1997. Although the Committee has completed its
investigation into the contested election, it has not yet issued a report, and
the Company cannot presently assess the degree to which this investigation had
or may have an impact on the Company.
NON-RENEWAL OF MINIMUM PAYMENT GUARANTY
Under the terms of the Amended and Renegotiated Casino Operating Contract,
JCC is required to obtain a guaranty in favor of the State by and through the
LGCB of the $100 million annual payment due to the State under the Amended and
Renegotiated Casino Operating Contract (the "Minimum Payment Guaranty") to
assure payment of such minimum payment. On the Effective Date, JCC entered into
an agreement (the "HET/JCC Agreement") with HET and its wholly-owned subsidiary,
HOCI, pursuant to which HET and HOCI have provided an initial Minimum Payment
Guaranty, subject to renewal, early termination or expiration in accordance with
the terms of the HET/JCC Agreement (HET and HOCI or any successor or substitute
party providing a Minimum Payment Guaranty are referred to herein as the
"Minimum Payment Guarantors"). See "--Material Agreements--Amended and
Renegotiated Casino Operating Contract" and "--HET/JCC Agreement."
By entering into the HET/JCC Agreement and providing an initial Minimum
Payment Guaranty, HET and HOCI are not obligated to provide a Minimum Payment
Guaranty for each fiscal year of the entire term of the Amended and Renegotiated
Casino Operating Contract, but rather have agreed only to provide it for the
period and on terms and conditions specified in the HET/JCC Agreement. See
"--Material Agreements--HET/JCC Agreement." HET and HOCI have expressly informed
JCC, the State, the LGCB and the City, among others, that they have not agreed
to renew a Minimum Payment Guaranty beyond March 31, 2004, or in any prior year
in which HET's and HOCI's obligation to furnish a Minimum Payment Guaranty does
not renew by the express terms of the HET/JCC Agreement. HET and HOCI have
informed HJC, Finance Corp., HNOIC (collectively, the "Debtors"), JCC, the
State, the LGCB and the City, among others, that any decision HET and HOCI make
concerning whether to renew any Minimum Payment Guaranty or the HET/JCC
Agreement will be made in their sole discretion, and have informed JCC and the
Debtors that such decision will be made acting only in HET's and HOCI's best
interests. Various agreements executed on the Effective Date require JCC
Holding, JCC, the State, LGCB and the City, among others, to acknowledge that
(i) HET and HOCI are not obligated to and have not given any assurances to the
Debtors, JCC, the State, the LGCB or the City, among others, that they will
renew the HET/JCC Agreement beyond March 31, 2004, or renew any Minimum Payment
Guaranty for any earlier COC Fiscal Year (as defined herein) in which HET's and
HOCI's obligation to furnish a Minimum Payment Guaranty does not renew under the
express terms of the HET/JCC Agreement, (ii) HET and HOCI have the right to make
any such renewal decision in their sole discretion, and (iii) HET and HOCI need
not consider the interests of any other parties in making any such renewal
decision, notwithstanding that HET and HOCI are involved in a number of
capacities in respect of JCC and JCC Holding. Upon termination of the HET/JCC
Agreement on March 31, 2004 or at any earlier time pursuant to the terms of the
HET/JCC Agreement, JCC will be required to obtain a substitute guarantor to
provide a Minimum Payment Guaranty or the Casino will be unable to remain open
under the terms of the Amended and Renegotiated Casino Operating Contract. Such
substitute guarantor may or may not be HET and/or HOCI and there can be no
assurance that JCC will be able to locate a substitute guarantor on satisfactory
terms. See "Material Agreements--HET/JCC Agreement." A failure by JCC to cause
to be provided a Minimum Payment Guaranty before the first day of a new COC
Fiscal Year would result in a termination (with no cure period) of the Amended
and Renegotiated Casino Operating Contract. Consequently, JCC's failure to
locate a substitute guarantor on satisfactory terms in accordance with the
Amended and Renegotiated Casino Operating Contract would have a material adverse
effect on the Company.
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LACK OF PROFITABILITY
In connection with the Initial Financing, HJC projected that revenues for
the 12 months that the Basin Street Casino was scheduled to operate would be
approximately $395 million, or an average of approximately $33 million per
month, and that revenues for the first 12 months of operations of HJC's casino
at the Rivergate site would be approximately $618 million. The actual results of
the Basin Street Casino proved to be significantly less than HJC's projections
for the Basin Street Casino. Gross revenues for the Basin Street Casino's six
full months of operations averaged approximately $13.2 million per month and,
for those six months, the Basin Street Casino posted significant negative
operating cash flows, and net losses in every month, averaging approximately
$13.5 million per month. See "Item 2. Financial Information--Management's
Discussion and Analysis of Financial Conditions and Results of
Operations--Results of Operations." As evidenced by the results of the Basin
Street Casino, the success of land based gaming in a market which has never
supported significant land based gaming operations, such as New Orleans, cannot
be accurately predicted. The number of visitors to a casino in a new gaming
jurisdiction and their propensity to wager cannot be predicted with any degree
of certainty.
Further, even if the Casino's construction is completed in accordance with
the Company's construction schedule and budget, the Company expects that it will
sustain substantial net losses in the first two years of operation of the
Casino. On a pro forma basis assuming that the Plan of Reorganization was
consummated on January 1, 1997, JCC Holding experienced losses of $36.8 million
and $30.4 million for each of the year ended December 31, 1997 and the nine
month period ended September 30, 1998, respectively. There can be no assurance
that JCC will ever be able to operate the Casino in a profitable manner or
generate positive net earnings. See "--Minimal Operating History,"
"--Limitations on Working Capital," "--Limits on Restaurants, Lodging, Retail
Operations and Entertainment," "--Competition" and "--Substantial Leverage and
Potential Inability to Meet Fixed Charge and Other Payment Obligations."
SUBSTANTIAL LEVERAGE AND POTENTIAL INABILITY TO MEET FIXED CHARGES AND OTHER
PAYMENT OBLIGATIONS
Upon the Effective Date of the Plan of Reorganization, JCC's total long-term
indebtedness was approximately $284.8 million and its debt to equity ratio was
2.4 to 1. Through the opening of the Casino, JCC is expected to borrow $22.5
million under the Junior Subordinated Credit Facility and an additional $141.5
million under the Term Loans. In addition, JCC has $25 million of availability
under the Working Capital Facility. Upon the opening of the Casino, JCC's total
long-term indebtedness is expected to be approximately $448.8 million. JCC also
has payment obligations to the RDC, a public benefit corporation formed for the
purpose of subleasing the site on which the Casino will be located, and the
LGCB. Upon the opening of the Casino, JCC will have an annual payment obligation
to the LGCB of the greater of $100 million and a percentage of gross gaming
revenues. See "--Material Agreements--Amended and Renegotiated Casino Operating
Contract." In addition, upon the opening of the Initial Casino Facilities, JCC
will have under the Amended Ground Lease an annual minimum payment obligation of
$12.5 million, up to $3.25 million of other general annual payments and certain
one-time payments during the first two years after the Opening Date and also
will be required to make significant payments into a marketing fund and a
capital replacement fund for refurbishments to the Casino. See "--Material
Agreements--Amended Ground Lease."
In addition, the Company's total long-term indebtedness may increase if
fixed interest on the New Notes is paid in kind, if interest on the Convertible
Junior Subordinated Debentures is paid in kind, if payments are made by the
Completion Guarantors (as defined herein) under the Completion Guarantees (as
defined herein), or if the Company obtains financing to fund the build-out of
the non-gaming tenant improvements on the second floor of the Casino beyond the
Second Floor Shell Construction or the development of the 3CP Property or Fulton
Property. See "--Ability to Commence Operations as Scheduled," "--Availability
of Financing For the Development Properties," "--Material Agreements-- New Notes
and New Contingent Notes," "--Convertible Junior Subordinated Debentures" and
"-- Amended Completion Loan Agreement."
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There is no assurance that the Casino will achieve the level of gaming
activity and operating cash flow necessary to satisfy JCC's obligations under
the Notes, the Convertible Junior Subordinated Debentures, the Term Loans, the
Junior Subordinated Credit Facility, any additional indebtedness the Company may
incur, and JCC's obligations to the RDC, the LGCB and the City and its related
subdivisions. Future operating results are subject to significant business,
economic, regulatory, political and competitive uncertainties and contingencies,
many of which are outside JCC's control. While JCC expects that operating cash
flow will be sufficient to cover expenses, including interest costs, JCC may be
required to reduce or delay planned capital expenditures, sell assets,
restructure debt or raise additional equity to meet principal repayment and
other obligations in later years. There is no assurance that any of these
alternatives could be effected on satisfactory terms, if at all, because of,
among other things, the special purpose nature of the Casino. Alternative
financings could impair the Casino's competitive position and reduce its cash
flow. See "Item 2. Financial Information--Management's Discussion and Analysis
of Financial Condition and Results of Operations."
AVAILABILITY OF WORKING CAPITAL
HET and HOCI (collectively, the "Completion Guarantors") have agreed to fund
JCC's working capital shortfalls until the Termination of Construction Date (as
defined herein) and have agreed to guarantee that, at such time, JCC will have
available for working capital $5 million of cash and the Working Capital
Facility Maximum Amount (as defined herein) of availability for immediate
drawdown(s) under the Working Capital Facility. See "--Material
Agreements--Completion Guarantees" and "--Amended Completion Loan Agreement."
Upon the Termination of Construction Date, the Completion Guarantors' obligation
to fund JCC's working capital shortfalls will cease and JCC's sources of working
capital will be limited to the $5 million of cash, availability under the
Working Capital Facility and any cash flow from operations in excess of its
fixed charges and other payment obligations. See "--Substantial Leverage and
Potential Inability to Meet Fixed Charges and Other Payment Obligations." The
Company estimates that on a pro forma basis assuming that the Plan of
Reorganization was consummated on January 1, 1997, $5.9 million of the Company's
pro forma cash flow from operations for the nine month period ended September
30, 1998 would be dedicated to the cash payment of interest on indebtedness. The
Bank Loans require a portion, or in some instances all, of the cash flow of the
Company from operations in excess of fixed charges and other payment obligations
to be allocated to repayment of the Bank Loans. See "--Material Agreements--Bank
Loans." There can be no assurance that the above sources of working capital will
be sufficient for JCC to operate the Casino and, if such sources are not
sufficient, there can be no assurance that JCC will be able to obtain new
sources of working capital on satisfactory terms, if at all. The inability to
obtain sufficient working capital would have a material adverse effect on the
Company.
COMPLETION GUARANTEES
Pursuant to separate completion guarantees (the "Completion Guarantees") in
favor of each of (i) the RDC and the City, (ii) the LGCB, (iii) the holders of
the Notes, and (iv) the Bank Lenders (collectively, the "Beneficiaries"), the
Completion Guarantors have agreed to guarantee the Completion Obligations (as
defined herein), the Carry Obligations (as defined herein) and the Preservation
Obligations (as defined herein). See "--Material Agreements--Completion
Guarantees." The Completion Guarantees are subject to a number of important
exceptions and qualifications. The Completion Guarantors' obligation to complete
the Casino does not take effect until and unless JCC fails or neglects to
complete the Casino or any phase of construction of the Casino, fails in any
other manner to prosecute with diligence and continuity the Completion
Obligations, fails timely to pay any of the Carry Obligations, files or has
filed against it a petition for bankruptcy or similar relief, or is adjudged
bankrupt or insolvent or makes a general assignment for the benefit of
creditors. In addition, the Completion Guarantors' obligations under the
Completion Guarantees are suspended during the pendency of any Force Majeure
events. In general, "Force Majeure" events are defined as: (a) strikes,
lockouts, labor disputes, inability to procure materials (for which there is no
suitable substitute or alternative that can be timely obtained on
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reasonable commercial terms), failure of power; (b) material and adverse changes
in governmental requirements applicable to the construction of the Casino first
effective after the Effective Date and after the submission and approval of the
design of the Casino, and any material and adverse changes after the Effective
Date in the orders of any governmental authority having jurisdiction over a
party, the project area, the Casino Premises or the development (not including
stop work orders due to a building, safety or other code violation); (c)
material and adverse changes in governmental requirements first effective after
the Effective Date; (d) breach by the LGCB of the Amended and Renegotiated
Casino Operating Contract (not caused or created by the Company, the Completion
Guarantors or any affiliate of a Completion Guarantor); (e) acts of God,
tornadoes, hurricanes, floods, sinkholes, fires and other casualties,
landslides, earthquakes, epidemics, quarantine, pestilence, abnormal inclement
weather; (f) acts of a public enemy, acts of war, terrorism, effects of nuclear
radiation, blockades, insurrections, riots, civil disturbances, governmental
preemption in connection with a national emergency, or national or international
calamities; and (g) any judgment, directive, ruling or order that substantially
restrains or substantially interferes with completion of Casino Construction. A
suspension for a Force Majeure event may not extend beyond 18 months from the
date JCC knew or should have known of such Force Majeure event, except that if
the items in (b) through (g) above or a national or general strike render
performance impossible during such 18 months, the suspension will continue until
such time as performance is no longer impossible.
The Completion Guarantees terminate upon the occurrence of any of the
following: (i) the termination of the Amended Ground Lease or the Amended GDA
(as defined herein) other than as a result of a breach by JCC or any Completion
Guarantor or the voluntary termination thereof by JCC, (ii) casino gaming
operations are no longer permitted to be conducted at the Casino or are
modified, restricted or limited in a manner that materially diminishes the
benefits afforded to JCC or the gaming activities permitted to be conducted at
the Casino pursuant to the Gaming Act by reason of a change of law or the
enactment of a new law after the Effective Date or by reason of JCC's rights
under the Amended and Renegotiated Casino Operating Contract having been
terminated in any material respect, other than as a result of a breach by JCC or
any Completion Guarantor; provided that, upon the occurrence of any of the
events described in this clause (ii) prior to the Termination of Construction
Date, the Completion Guarantors are nevertheless obligated to complete the
parking area and bus staging area for the Casino plus commercial space at the
street level (collectively, the "Poydras Street Support Facility"), the Poydras
Tunnel Area, exterior site and street work, and certain improvements which may
be required under the Amended Ground Lease; (iii) only as to the Carry
Obligations but not as to the Completion Obligations, a Force Majeure shall have
continued for more than one year from the receipt of a notice from any of the
Beneficiaries to the Completion Guarantors that the Completion Guarantors'
obligation to complete the Casino has taken effect, notwithstanding the
Completion Guarantors' actual and continuous best efforts to remove such Force
Majeure; provided, however, that the Completion Guarantors will remain liable
for all Carry Obligations that actually come due through the expiration of such
one year period to the extent not satisfied by JCC; and, provided further, that
the Completion Guarantors will have used their best efforts to remove such Force
Majeure within such one year period; or (iv) as to the Carry Obligations, as of
and upon the Termination of Construction Date and as to the Completion
Obligations upon the date on which all such payments or satisfactory provisions
for all such payments have been made, all lien periods with respect to the
Casino Construction have expired and no liens or privileges arising from the
furnishing of labor, materials, supplies or equipment for the Casino
Construction affecting or purporting to affect the Casino remain of record in
Orleans Parish. See "--Material Agreements--Completion Guarantees."
The Completion Guarantees are not for the benefit of, and may not be
enforced by, holders of equity of JCC Holding, including holders of Class A
Common Stock. Nevertheless, if the Completion Guarantors are required to perform
under the Completion Guarantees and such performance is suspended as the result
of a Force Majeure event, such suspension could significantly delay the
completion and opening of the Casino. The failure to complete and open the
Casino on schedule would have a material adverse effect on the Company.
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JCC has also obtained a surety bond (the "Surety Bond") in the amount of
$119 million, representing the remaining hard construction costs of the Casino
Construction as of October 29, 1998, from a surety for the benefit of the
Beneficiaries.
ABILITY TO COMMENCE OPERATIONS AS SCHEDULED
DEVELOPMENT AND CONSTRUCTION. Construction projects, such as the Casino,
can entail significant development and construction risks including, but not
limited to, labor disputes, shortages of material and skilled labor, weather
interference, unforeseen engineering problems, environmental problems (including
asbestos, PCB, lead and waste removal), geological problems (including those
resulting from construction activities below sea level), construction,
demolition, excavation, zoning or equipment problems and unanticipated cost
increases, any of which could give rise to delays or cost overruns. Adverse
developments in any of these areas could delay the project or increase its cost,
or both. Since HJC's bankruptcy filing, the Company has materially increased its
estimate of the cost to complete construction of the Casino Construction,
primarily as a result of (i) increases in general construction costs in the
region, (ii) physical deterioration of the partially-completed Casino structure
and parking lot structures, (iii) the need to redesign the Casino's interior due
to the dedication of the second floor of the Casino building to non-gaming uses
and by other changes in the configuration of the Casino contemplated by the
Amended and Renegotiated Casino Operating Contract, and (iv) the need to upgrade
the interior of the Casino in order to compete effectively with casinos in the
Mississippi Gulf Coast.
JCC intends to complete construction of the Casino Construction utilizing an
accelerated construction schedule which includes the use of multiple shifts,
early ordering of materials, fast tracking, and a seven-day work week (when
required). An accelerated construction schedule may cause actual construction
costs to exceed budgeted amounts. If the costs of developing, constructing,
equipping and opening the Casino exceed the proceeds from the Term Loans, the
Junior Subordinated Credit Facility, the Convertible Junior Subordinated
Debentures and the New Equity Contribution, JCC could be forced to draw upon the
Completion Guarantees, which are subject to important qualifications and
exceptions in the event certain Force Majeure or termination events occur. See
"Material Agreements--Completion Guarantees." In addition, drawings on the
Completion Guarantees would have the effect of increasing the Company's
outstanding indebtedness. See "--Material Agreements--Completion Guarantees" and
"--Amended Completion Loan Agreement."
The anticipated costs and opening date for the Casino are based on budgets,
conceptual design documents and schedule estimates prepared by JCC with the
assistance of contractors. The final amounts would be subject to modification
based upon the occurrence of certain events, such as certain design change
orders and costs associated with certain types of construction delays,
including, in certain cases, Force Majeure events. There is no assurance that
the Casino will commence operations on schedule or that construction costs for
the Casino will not exceed budgeted amounts. Failure to complete the Casino on
budget or on schedule would have a material adverse effect on the Company.
Pursuant to the terms of the Amended and Renegotiated Casino Operating Contract,
beginning on the Casino Opening Date and continuing until the expiration date of
such contract, JCC is required to make payments which will for each 12 month
period beginning April 1 for purposes of the Amended and Renegotiated Casino
Operating Contract (a "COC Fiscal Year") constitute the greater of $100 million
or the sum of certain percentages of revenue from gaming operations of the
Casino (less the amounts paid out as winnings to patrons and credit instruments
or checks which are uncollected) for that COC Fiscal Year. Accordingly, the
amount of the minimum daily payment in a COC Fiscal Year is equal to $100
million divided by 365 days, or approximately $274,000, with an end of year
settlement, if any, of Gross Gaming Revenue Share Payments (as defined herein)
in excess of $100 million. Subject to certain extensions for Force Majeure
events, the Casino is required to be open for business to the general public by
October 30, 1999. If the Opening Date does not occur by October 30, 1999, then
JCC is still required to pay the minimum daily payment to the LGCB as required
under the Amended and Renegotiated Casino Operating Contract, under the same
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terms and conditions as if the Casino were actually open for business to the
general public, unless the failure to open the Casino for business to the
general public by October 30, 1999 is due to a Force Majeure event. The
requirement to pay the minimum daily payment pursuant to the terms of the
Amended and Renegotiated Casino Operating Contract prior to the date that the
Casino actually opens for operation would have a material adverse effect on the
Company. See "--Material Agreements--Amended and Renegotiated Casino Operating
Contract."
CONSTRUCTION OBLIGATIONS, PERMITS AND APPROVALS. An amended General
Development Agreement (the "Amended GDA") entered into among JCC, the RDC and
the City, as intervenor, dated October 29, 1998 and effective upon the Effective
Date, targets 12 months after the Effective Date, subject to extension for Force
Majeure, as the date JCC will complete the Casino Construction and open the
Initial Casino Facilities. Failure to complete the Casino Construction by June
30, 2000 and/or failure to diligently proceed with construction of the Casino
(subject to a 30 day cure period) would each constitute an event of default
under the Amended Ground Lease. See "--Cross Defaults," "--Political
Environment," "--Uncertainty Regarding Gaming Regulations and Future Changes to
the Law," "--Litigation," "--Applicability of Public Works Act," "--Material
Agreements--Amended GDA," "--Amended Ground Lease," and "--Amended and
Renegotiated Casino Operating Contract." Difficulties in obtaining any of the
requisite licenses, permits (including building permits), allocations and
authorizations from regulatory authorities could increase the cost of, or delay
the construction or opening of the Casino or otherwise affect its design and
could oblige JCC to make the payments referred to above under the Amended GDA.
Furthermore, there is no assurance that the necessary approvals or permits will
be obtained to permit the construction or occupancy of the Casino. See
"--Political Environment."
ZONING AND LAND USE. The Proponents have obtained certain conditional use
approvals from the City for the Casino and the parking facilities for the
Casino. Certain of such approvals, however, are subject to further review and
additional approvals may be required. Although JCC expects to obtain all
required conditional use approvals for the Casino and its operations, no
assurances can be given that JCC will receive the required approvals. The
failure to obtain required approvals could have a material adverse effect on the
Company. See "--Uncertain Political Environment."
Because, absent certain waivers, the Casino does not fit within all
requirements of the City's zoning ordinance (the "Zoning Ordinance"), the
Proponents have requested and received a number of waivers from the City
Council. For instance, in the fall of 1996, after discussions with the City, the
Proponents received waivers from the City Council relating to such matters as
permissible size of retail space, the scope of cafeteria food services,
limitations on live entertainment, permissible signage and required public
artwork. Some uncertainty exists, however, as to the City Council's authority to
grant such waivers in that a third party may successfully challenge the City
Council's authority to grant waivers to a particular City zoning ordinance and
invalidate waivers previously granted by the City. Although the Company is not
currently aware of any such challenges, revocation of such waivers could cause
the Casino to cease operations or limit the ability to operate once opened and
therefore could have a material adverse effect on the Company. In addition, the
Zoning Ordinance may be subject to differing interpretations and, depending upon
the interpretation, certain required waivers may not be requested or granted.
Accordingly, no assurances can be given that the Casino will comply with the
Zoning Ordinance in all material respects. Failure to comply with the Zoning
Ordinance could delay or prevent the construction or opening of the Casino or
cause the Casino to cease operations once opened and therefore would have a
material adverse effect on the Company.
ABILITY TO DEVELOP THE DEVELOPMENT PROPERTIES
Subject to, among other things, the approval of the Master Plan, entering
into tenant leases and obtaining the necessary financing, the build-out of the
non-gaming tenant improvements on the second floor of the Casino beyond the
Second Floor Shell Construction (together with the 3CP Property and the Fulton
Property, the "Development Properties") is targeted to be completed following
completion of the
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Second Floor Shell Construction. Subject to, among other things, obtaining the
necessary financing, the 3CP Property and Fulton Property are potentially
available for development for entertainment uses supportive of the Casino. The
Company, however, has not made any plans for disposition or development of such
properties. There can be no assurance that the Company will be able to obtain
the necessary financing and satisfy the other conditions to development of the
Development Properties. The failure to develop the Development Properties could
have a material adverse effect on the Company.
CONDITIONS TO DISBURSEMENT UNDER BANK LOANS
JCC has entered into the Bank Loans to finance development of the Casino and
to provide working capital. The $10 million Tranche A-1 (as defined herein) and
$30 million Tranche A-3 (as defined herein) of the A Term Loan and the $30
million Tranche B-1 (as defined herein) of the B Term Loan were funded on the
Effective Date. The $20 million Tranche A-2 (as defined herein) of the A Term
Loan and the $121.5 million Tranche B-2 (as defined herein) of the B Term Loan
will be funded as required for construction of the Casino. The failure of the
Bank Lenders under Tranche A-2 or Tranche B-2 to disburse funds will not
terminate the Completion Guarantors' obligations under the Completion Guarantees
nor will such failure constitute a Force Majeure thereunder. The Bank Loans
provide that after the Effective Date, prior to each disbursement of funds, the
following conditions, among others, must be met: (i) there exists no default
under the Completion Guarantees or the HET Loan Guaranty (as defined herein) or
under the Bank Loans with respect to payments thereunder or due to the
occurrence of bankruptcy or insolvency events, and (ii) all representations
under the HET Loan Guaranty remain true and correct in all material respects. If
such conditions are unable to be met, JCC would be deprived of its primary
source of construction and working capital financing. There can be no assurance
that such conditions will be able to be met for the duration of the Bank Loans,
and the inability of JCC to obtain funds under the Bank Loans would have a
material adverse effect on the Company. See "--Material Agreements--Bank Loans."
CERTAIN LIMITATIONS ON CORPORATE CONTROL
Prior to the Transition Date, except upon the occurrence of certain events,
and after the requisite gaming regulatory agencies have made the necessary
suitability determinations, the board of directors of JCC Holding will consist
of six directors, with three directors elected by the holders of Class A Common
Stock and three directors elected by the holders of shares of Class B Common
Stock. See "Item 11. Description of Registrant's Securities to be
Registered--Board of Directors." With the exception of certain significant
transactions, the Class B Directors, as members of the Gaming Committee of the
board of directors, generally supervise the day-to-day activities of the
Company. See "Item 11. Description of Registrant's Securities to be
Registered--Committees of the Board." HET currently beneficially owns 96.6% of
the issued and outstanding Class B Common Stock and, prior to the Transition
Date, HET has agreed to own not less than 51% of the outstanding shares of Class
B Common Stock (but HET may own such lesser percentage as may be approved by the
Class A Directors and the Class B Directors). See "Item 11. Description of
Registrant's Securities to be Registered--Common Stock." Consequently, HET is
able to elect all of the directors who will exercise day-to-day control over the
Company. Also, upon and after the Transition Date, if the HET Warrant is
exercised in its entirety, HET and its subsidiaries could own up to 50.0% of the
then outstanding shares of Unclassified Common Stock, subject to certain
adjustments. See "--Material Agreements--HET Warrant." In addition, JCC has
engaged the Manager, an indirect wholly-owned subsidiary of HET, to manage the
operations of the Casino. See "--Material Agreements-- Amended Management
Agreement." As a result of HET's ability to elect the Class B Directors and the
engagement of the Manager to operate the Casino, the ability of holders of Class
A Common Stock to influence the day-to-day operations of the Company may be
limited.
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ANTI-TAKEOVER CONSIDERATIONS
JCC Holding's Restated Certificate of Incorporation and Bylaws include a
number of provisions that may have the effect of encouraging persons considering
unsolicited tender offers or other unilateral takeover proposals to negotiate
with the board of directors of JCC Holding rather than pursue non-negotiated
takeover attempts. Prior to the Transition Date, these provisions include (i)
classification of the Common Stock into Class A Common Stock and Class B Common
Stock, (ii) limitations on the entities that are permitted to hold shares of
Class B Common Stock, (iii) the requirement that the Harrah's Entities own not
less that 51% of the Class B Common Stock, (iv) classification of the board of
directors where Class A Directors may be elected only by holders of the Class A
Common Stock and the Class B Directors may be elected only by holders of Class B
Common Stock, (v) a staggered board of directors, (vi) majority approval by the
Class A Directors and the Class B Directors of Significant Transactions (as
defined herein), (vii) the increase of the number of Class B Directors upon a
Change of Control (as defined herein), (viii) the requirement that any amendment
to the Restated Certificate of Incorporation or Bylaws which affects the rights
of holders of the Class A Common Stock or Class A Directors or which affects the
rights of holders of the Class B Common Stock or Class B Directors be approved
by the affirmative vote of the holders of a majority of the affected class of
Common Stock, and (ix) the right of the Harrah's Entities to acquire and hold
shares of Class A Common Stock upon a Change of Control. See "Item 11.
Description of Registrant's Securities to be Registered." After the Transition
Date, these provisions include (a) a staggered board of directors and (b)
supermajority stockholder voting requirements to approve an amendment to the
Restated Certificate of Incorporation or an amendment to the Bylaws. See "Item
11. Description of Registrant's Securities to be Registered." In addition,
certain provisions under the Gaming Act and the Rules and Regulations could have
the effect of making it more difficult for a third party to acquire control of
the Company, including the requirement that officers, directors and certain
persons holding an equity interest in JCC Holding be found suitable under the
Gaming Act and Rules and Regulations. The Gaming Act also prohibits the sale,
transfer, assignment, pledge, alienation, disposition, public offering, or
acquisition of securities that results in one person's owning five percent or
more of the total outstanding equity securities issued by JCC without prior
approval of the LGCB. See "--Regulation." HCCIC's right upon and after the
Transition Date to purchase up to 50.0% of the then outstanding shares of Common
Stock under the HET Warrant could also have the effect of making it more
difficult for a third party to acquire control of the Company. See "--Material
Agreements--HET Warrant." In addition, certain of the agreements entered into in
connection with the Plan of Reorganization contain provisions restricting the
ability of the Company to enter into certain change of control transactions. See
"--Material Agreements--New Notes and New Contingent Notes," "--Convertible
Junior Subordinated Debentures" and "--Amended Management Agreement." These
anti-takeover provisions may discourage or make more difficult the acquisition
of control of JCC Holding by means of a tender offer, open-market purchase,
proxy fight or otherwise, even if such events would be favorable to the
interests of the stockholders of JCC Holding.
DEPENDENCE OF VALUES ON ESTIMATES OF FUTURE PERFORMANCE
The Company's pro forma unaudited condensed consolidated financial
statements have been prepared in accordance with the requirements of AICPA
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" ("SOP 90-7"). SOP 90-7 requires a determination of
the Company's reorganization value, which is the estimated fair value of the
reorganized entity as a going concern at the time it emerges from bankruptcy.
The Company's estimate of its reorganization value was based on a number of
assumptions, including the assumptions upon which the Company's estimates of
future operating results are based. The valuation necessarily assumes that the
Company will achieve the estimates of future operating results in all material
respects. If these results are not achieved, the resulting values could be
materially different. See "Item 13. Financial Statements and Supplementary
Data-- Unaudited Pro Forma Condensed Consolidated Financial Information."
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LACK OF HISTORICAL FINANCIAL INFORMATION FOR THE COMPANY
Prior to the Effective Date, the Company had not (i) conducted any
operations, (ii) generated any revenues or (iii) issued any capital stock.
Accordingly, separate financial statements and other disclosures with respect to
the Company are omitted as such separate financial statements and other
disclosure are not deemed material. On the Effective Date of the Plan of
Reorganization, JCC succeeded to all of the assets of HJC except the 3CP
Property and Fulton Property which vested in CP Development and FP Development,
respectively. Therefore the historical financial statements included herein are
the historical financial statements of HJC. The historical financial statements
of HJC, however, do not purport to represent what the financial position or
results of operations of the Company would have been if the Plan of
Reorganization had in fact been consummated on the dates indicated or at the
beginning of the period indicated or to project the financial position or
results of operations for any future date or period. Due to, among other things,
the application of "Fresh Start" reporting on the Effective Date, the future
financial position and results of operations of the Company is expected to be
materially different from the financial position and results of operations of
HJC. There can be no assurance, however, that the future financial position and
results of operations of the Company will be materially different from the
financial position and results of operations of HJC. See "Item 2. Financial
Information--Management's Discussion and Analysis of Financial Condition and
Results of Operations--Fresh Start Reporting."
LIMITS ON RESTAURANTS, LODGING, RETAIL OPERATIONS AND ENTERTAINMENT
The Gaming Act and the Rules and Regulations prohibit JCC from directly
offering seated restaurant facilities with table food service for patrons of the
Casino. The Gaming Act and the Rules and Regulations do permit JCC to offer
limited cafeteria style food services for employees and patrons, although no
food may be given away or subsidized within the Casino by JCC or any licensee,
and seating may not exceed 250 persons. The Gaming Act and the Rules and
Regulations also permit JCC, under certain circumstances, to contract with local
restaurant owners to provide food at designated areas within the Casino. The
Gaming Act and the Rules and Regulations do not prohibit JCC from serving liquor
and other alcoholic beverages to patrons. JCC is also prohibited from offering
lodging in the Casino, or engaging in any practice or entering into any business
relationships to give any hotel, whether or not affiliated with JCC, any
advantage or preference not available to any similarly situated hotels. In
addition, under the Gaming Act, the Company is generally prohibited from
engaging in the sale of products in the Casino that are not directly related to
gaming. The provisions described above relating to food, lodging and retail
activities also apply to the Company's operations on the second floor of the
Casino. See "--Regulation--Louisiana Gaming Act." See "--Regulation." In
addition to the Gaming Act and the Rules and Regulations described above which
only permit the Company to offer limited cafeteria style food services, the
Company is currently prohibited from offering, under the terms of the Second
Floor Sublease, facilities, the principal business purpose of which is a
restaurant, on the second floor of the Casino. See "--Material
Agreements--Second Floor Sublease." Further, a bill was pre-filed in the State
House of Representatives for consideration during the State legislature's 1999
regular session which would amend the Gaming Act to broaden the food service
restrictions applicable to the Casino to all parts of any connecting structure
or building. Neither JCC, the Manager nor HET has operated a land-based casino
of the size of the Casino without associated hotel and full-service food
operations. Unlike the Casino, the vast majority of the Casino's competitors
operate without restrictions on lodging, food services, and entertainment, and
the Company believes that the ability to provide such amenities is a
considerable competitive advantage for the Casino's competitors. See "--The
Company--Competition." There is no assurance that JCC and the Manager will be
able to operate and manage the Casino on a profitable basis without such
amenities.
COMPETITION
The gaming industry is characterized by intense competition among companies
which, in many instances, have greater resources than JCC. Additionally, since
the time the land-based Casino project was
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originally proposed in the early 1990s, considerable competition has developed
which may have an adverse impact upon the Casino's profitability. The Company
believes that the Casino will face significant competition on a national,
regional and local scale from gaming operations in Mississippi and, on a
regional and local scale, from gaming operations in Louisiana. The Company
believes that the Casino will also compete for patrons on a national and
international scale with large casino hotel facilities in Las Vegas, Nevada and
Atlantic City, New Jersey. Because of the large number of casinos competing on
both the local and national levels and the continued development of other gaming
markets, the attraction of a land-based casino in New Orleans has decreased. In
addition, negative publicity associated with the Company's bankruptcy may have
an adverse impact on the Casino's ability to compete. Further, unlike the
Casino, the vast majority of the Casino's competitors operate without
restrictions on lodging, food services, and entertainment. The Company believes
that the ability to provide such amenities is a considerable competitive
advantage for the Casino's competitors. See "Limits on Restaurants, Lodging,
Retail Operations and Entertainment" and "--The Company--Competition."
MISSISSIPPI. JCC will compete for visitors on a national, regional and
local scale with existing gaming facilities in Mississippi. The Mississippi Gulf
Coast has recently emerged as a major gaming destination. There are currently 11
dockside casinos operating in the Mississippi Gulf Coast which are within 100
miles of New Orleans, and significant enlargements to many of these facilities
are underway or have been announced. Such enlargements include significant
expansions of hotel space, and additions of retail convention space and golf
courses. Plans to build additional new dockside casinos in the Mississippi Gulf
Coast have been announced, a substantial number of applications to operate
casinos in Mississippi have been filed with the Mississippi Gaming Commission.
In addition, in early 1999 Mirage Resorts Inc. is scheduled to open Beau Rivage,
an 1,800 room hotel, resort and dockside casino in Biloxi that will be larger
than any hotel in New Orleans. Approximately $600 million is expected to be
spent to develop Beau Rivage and due to its projected size, amenities and
ownership, is anticipated to provide significant competition to the Casino. The
Mississippi enabling legislation allows dockside gaming and does not limit the
number of casinos or the square feet of gaming space in these facilities. In
addition, unlike the Casino, gaming facilities in Mississippi operate without
restrictions on lodging, food and beverage services, and entertainment, and
several of such facilities have recently expanded to enhance such services. See
"--The Company--Competition."
LOUISIANA. On a regional and local scale, JCC will compete with gaming
operations in Louisiana. In Louisiana, thirteen riverboats are operating,
including one riverboat in Orleans Parish, two other riverboats in the New
Orleans metropolitan area, two riverboats in Baton Rouge, four riverboats in
Lake Charles in western Louisiana and four dockside casinos in
Shreveport/Bossier City in northern Louisiana. One license to conduct riverboat
gaming in the State has not yet been awarded, however, the award of such license
has been deferred pending the results of an LGCB study on the effects of gaming
in Louisiana. The Riverboat Act does not impose wagering or loss limits and
permits all forms of gaming with the exception of sports betting. Although the
Riverboat Act permits only dockside gaming at the facilities in the Shreveport
area, the Riverboat Act has been administered so as to allow riverboats to
refrain from cruising under certain circumstances. Riverboats that remain moored
under such circumstances are permitted to allow unlimited ingress and egress of
customers. There can be no assurance that the Riverboat Act will not be amended
to permit unlimited dockside gaming or to increase the number of permitted
riverboats. JCC will also compete with land-based gaming facilities in central
Louisiana on Native American land. The Tunica-Biloxi, Chitimacha and Coushatta
Indian tribes have each opened a casino near the towns of Marksville, Charenton
and Kinder, respectively. Each casino is located more than 105 miles from New
Orleans.
NATIONAL AND INTERNATIONAL COMPETITION. JCC will also compete nationally
with established and proposed casino hotel operations in Las Vegas, Nevada and
Atlantic City, New Jersey. Several new facilities have opened in Las Vegas and
certain existing facilities in Las Vegas and Atlantic City have undergone major
expansions. This construction and expansion increased the number of hotel rooms
and
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gaming positions in the Las Vegas and Atlantic City markets and created several
attractions which have enhanced the appeal of those cities as tourist
destinations. To a lesser degree, JCC will also compete for international
patrons with casinos in other parts of the world.
OTHER VENUES. Additional regional competition may be generated from
land-based or dockside casino facilities to be located in states which do not
currently allow casino gaming activities including Alabama and Texas. Bills
seeking to legalize gaming were introduced in both of these states in the past.
Although these bills were not enacted, similar bills may be introduced in future
legislative sessions.
OTHER FORMS OF LEGAL WAGERING. JCC will compete for local customers with
other forms of legal wagering, including OTB parlors. In addition, under
Louisiana law, certain parishes (including Orleans Parish) presently permit
restaurants, taverns, hotels and licensed clubs to operate up to three VDPs per
location, qualifying truck stops may operate up to 50 VDPs per location, and
racetracks and OTB parlors may operate an unlimited number of VDPs per location.
Louisiana law, however, limits VDP wagering and jackpots. Other forms of
wagering, including charitable gaming and a state lottery, will provide
additional local competition. Further, in 1997, the State legislature authorized
the use of slot machines at race tracks located in three parishes in the State
(but not Orleans Parish), subject to a 15,000 square foot limitation. The
authorization for this bill was subject to a referendum in each of the parishes
where the race tracks are located to approve such use of slot machines. The
voters in two of the three parishes approved the use of slot machines at the
race tracks located in those parishes. The authorization for this bill remains
subject to further legislative action on the fees and taxes to be imposed on
such slot machines. Legislation to impose such fees and taxes was introduced in
the 1998 fiscal session of the State legislature, but failed to receive
legislative approval. Future consideration of this issue is likely by the State
legislature. If slot machines are ultimately permitted at race tracks in the two
parishes that approved such use of slot machines, the Casino would compete for
patrons with slot machines at such race tracks.
In the Company's opinion, its principal competitors will be the gaming
facilities located on the Mississippi Gulf Coast as well as the riverboats
located in Orleans Parish and in the New Orleans metropolitan area, with the
riverboats in other areas of the State and the casinos operated by Indian tribes
affording less significant competition.
LIMITED REMEDIES FOR ADDITIONAL LAND-BASED CASINOS
The Gaming Act presently restricts land-based casino gaming to the Rivergate
site. However, there can be no assurance that the State will not enact
legislation to permit competing land-based casinos at other sites or in parishes
other than Orleans Parish, including other parishes in the New Orleans
metropolitan area, the operation of which could have a material adverse effect
on JCC's operations. As to Orleans Parish, the Gaming Act provides that, if at
any time while the Amended and Restated Casino Operating Contract is in effect,
a "land-based casino gaming establishment" in addition to the Casino is
authorized to operate in Orleans Parish, JCC would be relieved of the obligation
to remit to the LGCB the compensation required under the provisions of the
Amended and Renegotiated Casino Operating Contract (but such obligation may
resume pursuant to the terms of the Amended and Renegotiated Casino Operating
Contract). The Gaming Act further provides that, among other things, gaming
operations upon riverboats in accordance with the Riverboat Act shall not
constitute the authorization of additional land-based casino gaming operations
which relieves the casino gaming operator of payment of compensation to the
LGCB. However, state laws generally requiring riverboats to sail in accordance
with their schedules and safety conditions are frequently unenforced.
Under the Amended and Renegotiated Casino Operating Contract, if the State
or the LGCB permits any riverboat to conduct dockside gaming in material
violation of the Riverboat Act or the Gaming Act after notice from JCC and an
opportunity to cure, JCC will be entitled to seek specific performance by the
LGCB and/or the State under the exclusivity provisions of the Amended and
Renegotiated Casino Operating Contract and/or mandamus against the LGCB or any
other appropriate governmental authority
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not to permit such violations. JCC's obligation to pay the Gross Gaming Revenue
Share Payments (as defined herein) will continue during the pendency of any
judicial action through final non-appealable judgment and at all times
thereafter will not relieve JCC of the obligation to pay the Gross Gaming
Revenue Share Payments even if the court finds that the LGCB permitted a
riverboat to conduct dockside gaming. This circumstance could have a material
adverse effect on JCC's operations. The Amended and Renegotiated Casino
Operating Contract further limits the remedies available to JCC in the event
that a Permitted Riverboat (as defined herein) in Orleans Parish violates a
Permitted Amendment (as defined herein) to the Gaming Act. See "--Material
Agreements--Amended and Renegotiated Casino Operating Contract--Exclusive
Contract." The Amended and Renegotiated Casino Operating Contract contemplates a
possible change in the Gaming Act to allow only one Permitted Riverboat on Lake
Pontchartain in Orleans Parish to conduct dockside gaming subject to, among
other things, certain restaurant and hotel limitations on such Permitted
Riverboat. If LGCB allows a violation of the Permitted Amendment to occur by a
Permitted Riverboat, JCC may seek relief in the court by way of specific
performance and/or mandamus but is not relieved of its obligation to pay the
Gross Gaming Revenue Share Payments. See "--Material Agreements--Amended and
Renegotiated Casino Operating Contract."
In addition, a state law enacted in 1996 purports to, among other things,
retroactively amend the Gaming Act: (i) to provide that the conduct of gaming
operations upon riverboats in accordance with the provisions of the Riverboat
Act or otherwise while upon a designated waterway while temporarily at dockside
does not constitute the authorization of additional land-based casino gaming
operations which relieves the operator of the Casino of the obligation to pay
compensation to the LGCB in accordance with the Amended and Restated Casino
Operating Contract; and (ii) to provide that governmental inaction which results
in the operation of another land-based casino in Orleans Parish will not relieve
the operator of the Casino of the obligation to pay compensation to the LGCB in
accordance with the Amended and Restated Casino Operating Contract. This law
also purports to provide that in the event of litigation between the operator of
the Casino and the LGCB or the State or any of its political subdivisions, the
operator of the Casino must continue to make all payments to the LGCB and to the
State and any of its political subdivisions as required by law and the Amended
and Restated Casino Operating Contract during the pendency of such litigation,
and that any failure to make the required payments will render the operator of
the Casino unsuitable. See "--Regulation--Louisiana Gaming Act." There is no
assurance that JCC will not face the prospect of competing against dockside
riverboat gaming operations in Orleans Parish without being relieved of its
obligation to remit to the LGCB the compensation required under the Amended and
Renegotiated Casino Operating Contract, a circumstance that could have a
material adverse effect on JCC's operations. See "--Uncertainty Regarding Gaming
Regulation and Future Changes to the Law--Uncertainty Regarding Regulation and
Interpretation of the Gaming Act" and "--The Company-- Competition."
MINIMAL OPERATING HISTORY
Although HJC and the Manager were involved in construction of the Casino and
operated the Basin Street Casino for approximately six months, JCC has no
operating history and has never been involved in constructing or operating a
casino. Although certain of JCC Holding's expected board members and certain
officers of the Manager have experience operating casinos, none of these
individuals have operated a land-based casino of the size of the Casino without
associated hotel and full-service food operations. JCC will rely on the Manager
to manage the Casino and will grant it a significant degree of independence in
operating matters, including day-to-day financial control. See "Material
Agreements--Amended Management Agreement." There can be no assurance that JCC
and the Manager can operate the Casino on a profitable basis.
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CROSS DEFAULTS
Certain events of default under the Amended and Renegotiated Casino
Operating Contract, the Amended Ground Lease, the Amended Management Agreement
(as defined herein), the indentures for the New Notes and New Contingent Notes
(the "Indentures") or the Bank Loans constitute an event of default under
certain of the other of such agreements (subject, in certain circumstances, to
the cure periods set forth in such agreements). For example, a default under the
Amended Management Agreement results in cross defaults under the Amended and
Renegotiated Casino Operating Contract and the Amended Ground Lease, and a
default under the Amended GDA or the revocation or termination of the Amended
and Renegotiated Casino Operating Contract results in a cross default under the
Amended Ground Lease. The occurrence of an event of default under any of such
agreements and the effect of any resulting cross-defaults would have a material
adverse effect on the Company.
NO PRIOR MARKET FOR THE CLASS A COMMON STOCK
JCC Holding will use its best efforts to cause the Class A Common Stock to
be listed on the American Stock Exchange, or to be listed on such other national
securities exchange or quoted on the National Association of Securities Dealers,
Inc. Automated Quotations System as it deems appropriate. There can be no
assurance that JCC Holding will be successful in causing the Class A Common
Stock to be so listed or quoted.
The shares of Class A Common Stock are an issue of new securities, have no
established trading market and may not be widely distributed. There can be no
assurance that a trading market for the Class A Common Stock will develop. If a
trading market does develop, the prices of the Class A Common Stock may be
volatile and liquidity may be limited. If a market for the Class A Common Stock
does not develop, holders of Class A Common Stock may be unable to resell the
Class A Common Stock for an extended period of time, if at all. Future trading
prices of the Class A Common Stock will depend upon many factors, including,
among other things, JCC's operating results, competitive factors, prevailing
interest rates and the markets for similar securities which are subject to
various pressures.
COMMON STOCK ELIGIBLE FOR FUTURE SALE
Pursuant to the Plan of Reorganization, JCC Holding has agreed that, (i)
upon the request of any holder of shares of Class A Common Stock who is
reasonably required by law to register public resales of such shares, JCC
Holding will file with the SEC and cause to become effective as soon as
practicable after the Effective Date a registration statement relating to such
public resales, and (ii) upon the request of HCCIC (which request may not be
made until the second anniversary of the opening of the Casino), JCC Holding
will file with the SEC and cause to become effective as soon as reasonably
practicable thereafter a registration statement relating to all shares of Class
B Common Stock held by HCCIC, HET and HET's subsidiaries (provided, however,
that prior to the Transition Date, Harrah's Entities are required to own at
least 51% of the outstanding shares of Class B Common Stock, unless a lesser
percentage is approved by the Class A Directors and the Class B Directors). See
"Item 11. Description of Registrant's Securities to be Registered--Common Stock"
and "--Agreements with Certain Stockholders." Such shares of Class B Common
Stock convert to shares of Class A Common Stock if they are transferred to
entities other than former Partners of HJC, their affiliates and FNBC. See "Item
11. Description Registrant's Securities to be Registered--Common Stock." In
addition, the Convertible Junior Subordinated Debentures will be convertible at
the option of the holders, in whole or in part, at any time after October 1,
2002, into Class A Common Stock at a conversion price of $25.00. See "--Material
Agreements--Convertible Junior Subordinated Indentures." Sales of or offers to
sell a substantial number of shares of Class A Common Stock, or the perception
by investors, investment professionals and securities analysis of the
possibility of such sales, could adversely affect the market for and prevailing
prices with respect to the Class A Common Stock.
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RELIANCE ON SINGLE MARKET
Because JCC has no present intention to have operations other than the
Casino and will be dependent upon visitors to New Orleans and New Orleans area
residents, a downturn in the local or regional economy, a decline in tourism in
New Orleans, a decline in the New Orleans gaming market or an increase in
competition could have a material adverse effect on the Company. In addition, a
reduction or cessation of activities at the Casino due to flooding, severe
weather, natural disaster or otherwise could have a material adverse effect on
the Company.
UNCERTAINTY REGARDING TAX TREATMENT OF THE NOTES AND THE CONVERTIBLE JUNIOR
SUBORDINATED DEBENTURES
The Notes and the Convertible Junior Subordinated Debentures have legal and
other economic terms typically associated with indebtedness and are intended to
create a debtor-creditor relationship between JCC and the holders thereof.
Consequently, JCC treats the Notes and the Convertible Junior Subordinated
Debentures as debt for federal income tax purposes, and the discussion herein
assumes such treatment. Nevertheless, the Internal Revenue Service ("IRS") may
assert that, because all payments on the New Contingent Notes (and certain
payments on the New Notes) are contingent upon future positive cash flows being
generated by JCC, the New Contingent Notes (or, possibly, both series of Notes)
should be classified as equity, rather than debt, for federal income tax
purposes. In addition, it is possible that the IRS may assert that the
Convertible Junior Subordinated Debentures should be classified as equity
because of the debentures' conversion, redemption and other features. Moreover,
even if the Convertible Junior Subordinated Debentures are treated as debt for
federal income tax purposes, amendments made to the Internal Revenue Code of
1986, as amended (the "Code"), in 1997 may prohibit JCC Holding from deducting
interest payments made thereon due to the debentures' conversion and redemption
features. It is unclear whether the debentures will qualify for a transition
rule or "grandfather" exception to these amendments. There can be no assurance
that the IRS will not challenge the characterization of the Notes or the
Convertible Junior Subordinated Debentures as debt or that a court would not
sustain such a challenge. If it were determined that any such instrument
constitutes equity for federal income tax purposes, or if JCC Holding is
prohibited from deducting interest paid on the Convertible Junior Subordinated
Debentures due to the amendments to the Code, such a recharacterization or
treatment, as the case may be, would result in the loss of substantial interest
deductions and other tax benefits for JCC. The loss of such deductions and other
tax benefits could have a material adverse effect on the Company.
TAXATION
Gaming companies are typically subject to significant taxes and fees, both
of which are subject to increases at any time. Federal and state legislatures
have from time to time considered imposing federal and additional state taxes on
all gaming establishments. Any material increase in taxes, or the imposition of
any additional taxes or fees on JCC, could have a material adverse effect on the
Company.
The City currently imposes a 5% "amusement" tax on the gross receipts
representing admission charges to, among other things, "any game of skill and
chance as well as all mechanical devices operated for pleasure or skill where a
fee is charged for admission or entrance or for the purpose of playing them or
whether there is any charge whatever for them or in connection with them either
directly or indirectly." "Admission" is broadly defined to include "all amounts
paid for admission, season tickets, refreshments, service and merchandise" and
"any charge or fee for the purpose of self-participation in any amusement
activity." The City Attorney opined that, as applied to riverboat gaming,
riverboat cruises are "excursions" subject to the amusement tax and that
admission charges include all activities within the riverboat, including money
spent on wagers. To the Company's knowledge, the City has not levied or
collected the amusement tax on money spent on wagers on riverboats. In addition,
the City Attorney subsequently issued an opinion that the amusement tax may not
legally be levied on gaming revenues derived from the Casino because these
revenues do not constitute taxable "admission." Opinions of the City Attorney
are
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not binding on the City or any other person. There can be no assurance that the
City will not attempt to levy the tax on the operations of the Casino, and the
Company cannot predict, if this tax were to be so levied, whether it would be
levied on wagers, gaming revenues or some other measure. The Amended Ground
Lease provides that, in the event a court of competent jurisdiction in a final
non-appealable judgment determines that the amusement tax is applicable to JCC's
receipts (other than from special events), JCC is entitled to set off the amount
of the amusement tax collected and remitted (other than with respect to special
events) against certain payments required to be made under the Amended Ground
Lease. However, there can be no assurance that the amount of the tax, if
successfully levied, would not exceed the amount of such offset. If the
amusement tax were to be successfully imposed on wagers at the Casino, JCC could
be unable to make payments on its indebtedness, which could have a material
adverse effect on the Company.
APPLICABILITY OF PUBLIC WORKS ACT
Certain groups of business owners, including contractors, have claimed that
the State's Public Works Act, which requires competitive bidding on public works
contracts, should apply to contracts in connection with the construction of the
Casino (the "Casino Contracts"). Although such groups have previously threatened
to litigate their claims, the Company has no knowledge that any such litigation
is pending. The Company believes that the Casino Contracts are not governed by
the Public Works Act and are not subject to its bidding requirements. If the
Public Works Act were to apply to the Casino Contracts, the Public Works Act
would nullify any Casino Contracts which are not made in compliance with the
bidding requirements thereof. Such nullification would result in construction
delay and potential damage claims from contractors and may have a material
adverse effect on the Company. Although the State Attorney General has opined
that the Public Works Act does not apply to the Casino Contracts, opinions of
the State Attorney General are not binding on the State or any other person and
no assurances can be given that such contracts are not subject to the Public
Works Act or that litigation concerning the applicability of that act to the
Casino Contracts will not cause material delays in the construction of the
Casino or otherwise adversely affect the Company.
ENVIRONMENTAL MATTERS
JCC owns and leases certain properties, some of which were formerly owned or
leased by companies with operations that involved or may have involved the use
of hazardous substances or wastes and which could subject JCC to liability for
the cleanup of such hazardous substances or wastes or may adversely affect the
owner/operator's ability to borrow in the future using the real estate as
collateral. In addition to all of its rights under the Bankruptcy Code as
successor to HJC under the Plan of Reorganization, JCC has obtained certain
indemnifications for past activities, operations or occurrences at such
properties that it believes will be sufficient to cover the costs of any
potential liability related thereto. At the present time, the Company does not
anticipate that such liability or conditions will have a material adverse effect
on the Company. However, no assurances can be given that such matters will not
have a material adverse effect on the Company. See "--The Company--Environmental
Matters."
RESTRICTIVE COVENANTS
The Amended Ground Lease and the Amended and Renegotiated Casino Operating
Contract limit the amount of secured indebtedness JCC may incur and from whom
such indebtedness may be obtained without consent. These restrictions could
limit JCC's ability to effect future financings or otherwise restrict JCC's
activities. The Company's operating and financing options are subject to
covenants contained in the Indentures, the Bank Loans, related collateral
documents, and agreements with the LGCB and the RDC, which covenants include,
among others, restrictions on restricted payments, the granting of liens, the
incurrence of additional indebtedness, the payment of management fees,
subsidiary dividend restrictions,
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asset sales, transactions with affiliates, mergers and consolidations. See
"--Material Agreements--New Notes and New Contingent Notes," "--Bank Loans,"
"--Amended Ground Lease," and "--Amended and Renegotiated Casino Operating
Contract."
CONFLICTS OF INTEREST
Under the Amended Management Agreement, the Manager, a wholly-owned
subsidiary of HET, is exclusively responsible for supervising and managing the
Casino. However, HET has also, through its operating subsidiaries and other
affiliates, developed and currently operates dockside casinos in Vicksburg and
Tunica, Mississippi and Shreveport, Louisiana and HET may develop other casinos
that may compete with the Casino (collectively, the "Competing Casinos"). Due to
the Competing Casinos' proximity to the Casino, they will compete directly with
the Casino for patrons. HET, through its operating subsidiaries, also operates
casinos in the five major Nevada and New Jersey gaming markets and such casinos
will also compete with the Casino on a national basis.
In addition, Colin V. Reed, Executive Vice President and Chief Executive
Officer of HET, is presently a director as well as Chairman of the Board of JCC
Holding. Currently, Frederick W. Burford, formerly a paid consultant to HET, is
the President of JCC Holding, JCC, JCC Development, CP Development and FP
Development. As of the Effective Date of the Plan of Reorganization, Frederick
W. Burford ceased to be a paid consultant to HET. Additionally, L. Camille
Fowler, the Vice President-Finance, Treasurer and Secretary of JCC Holding, JCC,
JCC Development, CP Development and FP Development was also the Director of
Finance, Vice President, Secretary and Treasurer of the Manager. Immediately
after the Effective Date, L. Camille Fowler ceased to serve as the Director of
Finance, Vice President, Secretary and Treasurer of the Manager. See "Item 5.
Directors and Executive Officers." Sometime after the Effective Date, if the
requisite gaming regulatory agencies have made the necessary determinations, one
or two other officers of HET are expected to be Class B Directors of JCC
Holding. As a result of HET's ownership of the Competing Casinos, and the fact
that these HET officers hold or are expected to hold such positions with JCC
Holding, a conflict of interest may be deemed to exist by reason of such
persons' access to information and business opportunities possibly useful to any
or all of the Competing Casinos. No specific procedures have been devised for
resolving conflicts of interest confronting, or which may confront the Company.
REPURCHASE OF CLASS A COMMON STOCK RELATING TO GAMING MATTERS
The Gaming Act, the Rules and Regulations thereunder, and the Amended and
Renegotiated Casino Operating Contract impose certain suitability requirements
with respect to the holding of any securities of JCC Holding and JCC. To the
extent any holder of such securities fails to satisfy such requirements, such
holder may be required to obtain certain qualifications or approvals from the
LGCB to continue to hold such securities. Any failure to obtain such
qualifications or approvals may, by virtue of requirements imposed on JCC,
subject such securityholders to certain requirements, limitations or
prohibitions, including a requirement that such securityholders liquidate their
securities at a time or at a cost that is otherwise unfavorable for such
securityholders. There can be no assurance that the Gaming Act will not be
interpreted, that additional rules and regulations will not be implemented, or
that new legislation will not be enacted to impose additional restrictions on,
or otherwise prohibit, certain persons from holding the Class A Common Stock, or
cause such securityholders to liquidate their Class A Common Stock at a time or
at a cost that is otherwise unfavorable for such securityholders. See
"--Uncertainty Regarding Gaming Regulation and Future Changes to the Law,"
"--Regulation--Louisiana Gaming Act" and "--Material Agreements--Amended and
Renegotiated Casino Operating Contract." The Restated Certificate of
Incorporation of JCC Holding provides that the shares of Class A Common Stock
may, under certain circumstances, be redeemed by JCC Holding if JCC Holding, or
certain affiliates thereof, believes such action is required to prevent the loss
or impairment of a material gaming license of JCC or such affiliate. See "Item
11. Description of Registrant's Securities to be Registered--Redemption
Provisions."
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CERTAIN BANKRUPTCY CONSIDERATIONS
The RDC leases the Rivergate site from the City pursuant to a lease
agreement with the City (the "City Lease") and JCC subleases the site from the
RDC pursuant to the Amended Ground Lease. The commencement of a bankruptcy case
by or against the City or the RDC could adversely affect JCC's rights under the
Amended Ground Lease, if the City and/or the RDC should elect to "reject" the
City Lease and/ or the Amended Ground Lease under Section 365(a) of the
Bankruptcy Code. Under Section 365(h) of the Bankruptcy Code, a lessee may elect
either to treat the rejected lease as terminated or to remain in possession. In
the event of the City's bankruptcy, the RDC is obligated under the Amended
Ground Lease to assert a right under Section 365(h) to remain in possession to
protect the Company's rights and the securityholders' interest in the premises.
If the RDC does assert such right, JCC's right to remain in possession should be
unaffected by the City's bankruptcy. Some courts have held that Section 365(h)
does not provide continuing possessory rights to a sublessee when the
lessee-sublessor rejects its master lease with its lessor. Thus, if the City
Lease were terminated as between the City and RDC as a result of such rejection
by the RDC, JCC might lose its rights under the Amended Ground Lease. JCC's loss
of its rights under the Amended Ground Lease would have a material adverse
effect on the Company.
POTENTIAL SUCCESSOR LIABILITY
As the successor to HJC, the Company may be subject to certain liabilities
of HJC not provided for in the Plan of Reorganization. Such liabilities may
arise in a number of circumstances, including those where (i) a creditor of HJC
did not receive proper notice of the pendency of the bankruptcy case relating
the Plan of Reorganization or the deadline for filing claims therein, (ii) the
injury giving rise to, or source of, a creditor's claim did not manifest itself
in time for the creditor to file the creditor's claim, (iii) a creditor did not
timely file the creditor's claim in such bankruptcy case due to excusable
neglect or (iv) the order of confirmation for the Plan of Reorganization was
procured by fraud. Although the Company has no reason to believe that it will
become subject to liabilities of HJC that are not provided for in the Plan of
Reorganization, if the Company should become subject to such liabilities, it
could have a material adverse effect on the Company.
LACK OF EXPERIENCED PERSONNEL
A shortage of skilled and licensed labor exists in the gaming industry,
which may make it more difficult and expensive to attract and retain qualified
employees. While JCC believes that it will be able to attract and train
qualified individuals to staff the Casino, there is no assurance that it will be
able to do so. In addition, the Gaming Act requires that at least 50% of the
individuals employed at the Casino be Louisiana residents for at least one year
prior to employment. The Amended Ground Lease requires that not less than 55% of
the employees of JCC and JCC Development live and reside in Orleans Parish
(subject to reduction to comply with applicable law). The minimum percentage of
JCC and JCC Development employees that are required under the Amended Ground
Lease to be Orleans Parish residents will increase by 2% on the anniversary of
the Opening Date until the residency requirement reaches 65% (subject to
reduction to comply with applicable law). JCC has agreed to use its best efforts
to maximize hiring in Orleans Parish with the goal being that 80% of employees
of JCC and JCC Development, in the aggregate, live and reside in Orleans Parish.
There is no assurance that JCC will be able to hire qualified individuals
satisfying these criteria. If JCC is able to hire qualified individuals
satisfying these criteria, the cost of hiring such individuals could be
significantly higher than if JCC was not required to hire individuals satisfying
such criteria. If JCC does not satisfy these criteria and does not pursue
curative actions, it is possible that the default could result in revocation of
the Amended Ground Lease. See "--Material Agreements--Amended Ground
Lease--Residency Requirements" and "--Risk Factors-- Cross Defaults."
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AMENDED OPEN ACCESS PROGRAM AND PLANS
The Amended GDA and the Amended Ground Lease obligate JCC to comply with a
revised and updated open access program and amended and restated open access
plans adopted pursuant thereto (collectively, the "Amended Open Access Program
and Plans"). The Amended Open Access Program and Plans were approved and adopted
by the New Orleans City Council on October 15, 1998. The Amended Open Access
Program and Plans are designed to facilitate participation by minorities, women,
and disadvantaged persons and business enterprises in developing, constructing
and operating the Casino and contain various provisions which permit the City's
Mayor and the City Council to impose penalties on JCC if it fails to comply with
the provisions of the Amended Open Access Program and Plans. These penalties
include fines, a default under the Amended Ground Lease under certain
circumstances and the right of the City's Mayor to request a review of hiring
and contracting practices. Imposition of the fines could have a material adverse
effect on the Company. In addition, JCC is required to indemnify the City and
the RDC against certain damage awards arising out of lawsuits related to the
Amended Open Access Program and Plans. See "Material Agreements--Amended GDA."
Under the Gaming Act, JCC is required, as nearly as practicable, to employ
minorities in proportions consistent with the population of the State. The
Amended Open Access Program and Plans may establish or require goals for the
employment of minorities at the Casino in a proportion greater than the
proportion of minorities in the State's population. JCC interprets the
provisions of the Gaming Act in a manner that would not prohibit JCC from
employing a workforce with a percentage of minorities in excess of the
percentage of minorities of the population of the State. There can be no
assurance that the Gaming Act or the Amended and Renegotiated Casino Operating
Contract will be applied in a manner which permits compliance with the Amended
Open Access Program and Plans. If such provisions were not applied in such a
manner, there may be a conflict between the Gaming Act, the Amended and
Renegotiated Casino Operating Contract and the Amended Open Access Program and
Plans since the percentage minority population of the State may be less than the
percentage minority hiring goals under the Amended Open Access Program and
Plans. JCC intends to comply with the Amended Open Access Program and Plans
unless they are found to be preempted by the Gaming Act. If the conflict
discussed above exists and JCC nevertheless complies with the minority hiring
goal under the Amended Open Access Program and Plans, JCC may be in violation of
the Gaming Act and the provisions of the Amended and Renegotiated Casino
Operating Contract. Such a violation could result in a material adverse effect
on the Company.
YEAR 2000 RISKS
The Year 2000 issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates that have been
stored as two digits rather than four (e.g., "98" for 1998). On January 1, 2000,
any clock or date recording mechanism, including date sensitive software, which
uses only two digits to represent the year may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failures or
miscalculations causing disruption of operations, including, among other things,
a temporary inability to process transactions, send invoices or perform similar
tasks.
The Company has not yet fully evaluated its state of readiness with respect
to Year 2000 problems, the costs that may be incurred to address any Year 2000
issues which may arise or the effect on the Company of any Year 2000 issue which
may arise. The Company will not be able to fully evaluate its readiness until
after the completion of a material portion of the construction of the Casino
(specifically, the installation of computer hardware and software in the Casino)
and the negotiation and execution of contracts with significant suppliers.
On the Effective Date, JCC and the Manager entered into a side letter
agreement pursuant to which the Manager agreed to prepare and deliver to the
board of directors of JCC Holding quarterly reports regarding certain Year 2000
issues relating to JCC. It is expected that the slot management system for the
Casino will be licensed from a third party. The Company has no information on
the status of the
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compliance of the slot management or any other system licensed from a third
party or in equipment owned by JCC or otherwise on which the operation of the
Casino may depend, and will not be able to obtain such information until the
relevant contracts are negotiated and executed.
Because the business activities of JCC Holding, JCC Development, CP
Development and FP Development are limited, and because many of the business
activities of JCC Development, CP Development and FP Development likely will not
commence until after January 1, 2000, the Company is not presently aware of the
existence of any material Year 2000 compliance risks with respect to those
entities.
Should the Company and/or its significant suppliers fail to timely identify,
address and correct material Year 2000 issues, such failure could have a
material adverse impact on the Company's ability to operate. In addition, if
corrections made by such suppliers to address Year 2000 issues are incompatible
with the Company's systems, the Year 2000 issue could have a material adverse
impact on the Company's ability to operate. The Company does not currently have
contingency plans designed to minimize the impact of a Year 2000 problem, but
expects to develop plans as it completes construction of a material portion of
the Casino (specifically, the installation of computer hardware and software in
the Casino) and negotiates contracts with significant suppliers. There can be no
assurance, however, that such plans will be successful. The impact on the
Company's operating results of the Company's and/or its significant suppliers'
failure to timely address and correct material Year 2000 issues and of any
contingency plans to be designed to address such issues cannot be determined at
this time.
DIVIDEND POLICY
JCC Holding does not intend to pay cash dividends on the Common Stock,
including the Class A Common Stock, in the foreseeable future. Further, pursuant
to the terms of the Bank Loans, for as long as there are amounts outstanding
under the Bank Loans no dividends will be paid. See "--Material Agreements--Bank
Loans." In addition, the terms of the Indentures prohibit payment of cash
dividends unless certain conditions are met, including the condition that no
dividend shall be paid unless JCC has paid the maximum contingent payments with
respect to the New Notes and the New Contingent Notes for certain periods of
time. See "--Material Agreements--Indentures." The payment of cash dividends, if
any, will be made only from assets legally available for that purpose, and will
depend on JCC Holding's financial condition, results of operations, current and
anticipated capital requirements, restrictions under then existing debt
instruments and other factors deemed relevant by the board of directors of JCC
Holding.
Certain institutional investors may only invest in dividend-paying equity
securities or may operate under other restrictions which prohibit or limit their
ability to invest in the Class A Common Stock.
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MATERIAL AGREEMENTS
The following discussion summarizes the material terms of certain material
agreements to which the Company is a party, but this summary does not purport to
be complete and is qualified in its entirety by reference to the relevant
agreements, which are filed as exhibits to this Registration Statement. Readers
are urged to obtain and review such agreements.
BANK LOANS
Pursuant to the Credit Agreement dated as of October 29, 1998 (the "Credit
Agreement") among JCC, as borrower, JCC Holding, as guarantor, and the Bank
Lenders, JCC has obtained a construction financing commitment from the Bank
Lenders to provide JCC with $211.5 million under the Term Loans and up to $25
million under the Working Capital Facility. The Term Loans and the Working
Capital Facility are a single combined credit facility.
The A Term Loan is comprised of three tranches, two of which mature in April
2006 and one of which matures in January 2006, and the B Term Loan is comprised
of two tranches, both of which mature in January 2006. The Working Capital
Facility is a $25 million revolving line of credit which terminates in January
2006.
The A Term Loan consists of a $60 million term loan which generally ranks
senior to all existing and future indebtedness of JCC except certain obligations
of JCC under the HET/JCC Agreement. The A Term Loan consists of three tranches:
(i) a $10 million tranche ("Tranche A-1"); (ii) a $20 million tranche ("Tranche
A-2"); and (iii) a $30 million tranche ("Tranche A-3"). The B Term Loan consists
of two tranches: (i) a $30 million tranche ("Tranche B-1"); and (ii) a $121.5
million tranche ("Tranche B-2"). The Working Capital Facility provides JCC with
up to $25 million of availability to meet short-term working capital
requirements, including up to $10 million of availability for letters of credit.
The interest rate on Tranche A-1 and Tranche A-3 is LIBOR plus 1.0%. The
interest rate on Tranche A-2 loans maintained as Eurodollar loans is equal to
the sum of (i) LIBOR plus 2.5%, and, (ii) if applicable, any increase, not to
exceed 1.0%, by which the applicable margin charged under HET's existing senior
bank credit facility (the "HET applicable margin") is above 0.5%. The interest
rate on Tranche B-1 is LIBOR plus 2.5%. The interest rate on Tranche B-2 loans
maintained as Eurodollar loans equals (i) to the extent the aggregate principal
amount of such loans so outstanding at any time exceeds $10 million, the sum of
(a) LIBOR plus 2.5% plus, if applicable, (b) any increase, not to exceed 1.0%,
by which the HET applicable margin is above 0.5% and (ii) in the case of the
first $10 million of Tranche B-2 loans maintained as Eurodollar loans at any
time outstanding, the rate will be LIBOR plus the HET applicable margin then in
effect, and for such loans maintained as base rate loans, the base rate is an
amount which is 1.0% less than the margin applicable to Tranche B-2 Eurodollar
loans (not less than 0.0%). The interest rate on any loans maintained as base
rate loans is the sum of (i) the applicable base interest rate and (ii) that
percentage (not below 1.0%) which is 1.0% less than the margin for loans of such
tranche maintained as Eurodollar loans. The interest rate on the Working Capital
Facility is (i) so long as the Carry Obligations under the Completion Guarantees
remain guaranteed pursuant to the terms of such Completion Guarantees and in
accordance with the terms thereof (with the first date upon which such Carry
Obligations are no longer so guaranteed being herein called the "Carry
Obligation Termination Date"), the HET applicable margin and (ii) at all times
from and after the Carry Obligation Termination Date, a rate equal to the sum of
(a) LIBOR plus 2.50%, plus, if applicable, (b) any increase, not to exceed 1.0%,
in the HET applicable margin above the HET applicable margin in effect on the
Effective Date. All of the immediately preceding interest rates are per annum.
Notwithstanding the above, default interest rates will apply to past due amounts
under the Bank Loans.
The combined amortization required under Tranche A-1 and Tranche A-2 is
quarterly installments of principal, commencing July 31, 2000, in the amount of
$400,000 per year, with a $27.8 million lump sum payment due at maturity. The
amortization required under Tranche A-3 is quarterly installments of
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principal, commencing July 31, 2000, in the amount of $4 million the first year,
$6 million the second and third years and $7.0 million the fourth and fifth
years, with no lump sum payment due at maturity. The amortization required under
the B Term Loan is quarterly installments of principal, commencing July 31,
2000, in the amount of $6.0 million the first year, $10.0 million the second,
third, fourth and fifth years, and $8.5 million the sixth year, with a $97.0
million lump sum payment due at maturity. The Bank Loans require all excess cash
flow of JCC to first be allocated to repayment of Tranche A-1 and Tranche A-2 on
a pro rata basis. After Tranche A-1 and Tranche A-2 are repaid, mandatory
prepayments resulting from application of excess cash flow and other proceeds
(excluding scheduled amortization and payments pursuant to any voluntary
prepayment, payment guarantees or put agreements) include (i) if any principal
amortization has been deferred (as set forth in the subsequent paragraph), 75%
of excess cash flow and certain additional proceeds will be applied first to
Tranche B-1 and second to Tranche A-3 to the extent of the total of all such
deferred principal amortization, and (ii) thereafter, 50% of excess cash flow
and certain additional proceeds will be applied pro rata to Tranche A-3, Tranche
B-1 and Tranche B-2 until an agreed threshold amount (determined based on
projected cash flow) for the respective fiscal year has been so applied. At such
time as an aggregate amount equal to the agreed threshold amount has been so
applied in any fiscal year, excess cash flow and other mandatory prepayments
will be applied first to Tranche B-1, second to Tranche A-3 and third to Tranche
B-2.
The scheduled quarterly amortization payments under the Term Loans will be
deferred for any of the first six semi-annual interest payment periods if (i)
Fixed Interest (as defined herein) on the New Notes is paid in kind for the
period ending prior to such quarterly amortization date, (ii) the Manager has
deferred Base Fees (as defined herein) for the corresponding interest payment
period, (iii) the Manager has deferred Incentive Fees (as defined herein) for
the corresponding interest payment periods, and (iv) HET and HOCI have deferred
their fees under the HET/JCC Agreement. Starting with the fourth year after the
Effective Date, if Consolidated EBITDA (as defined herein) for JCC does not
exceed $28.5 million for the 12 months ending on the last day of the semi-annual
period ended immediately prior to the most recent semi-annual interest payment
date with respect to the Notes, amortization under the Term Loans will be
deferred.
HET and HOCI have provided a payment guarantee or a "put" agreement with
respect to Tranche A-2, Tranche B-2 and the Working Capital Facility
(collectively, the "HET Loan Guaranty"); provided, however, that any payments by
HET or HOCI under the Completion Guarantees will be made pursuant to the
Completion Guarantees. In exchange for providing the HET Loan Guaranty, BTCo
will pay to HET an annual credit support fee (the "BTCo Credit Support Fee")
equal to 2%, and JCC will pay to HET an annual credit support fee (the "JCC
Credit Support Fee") equal to 0.75%, of the average aggregate principal amount
of loans and/or stated amount of letters of credit outstanding from time to time
under Tranche A-2, Tranche B-2 and the Working Capital Facility (in the case of
Tranche B-2, only to the extent of the aggregate outstanding principal amount
thereof from time to time is in excess of $10 million); provided, however, that
(i) HET will not receive credit support fees based on amounts outstanding, or
stated amounts of letters of credit relating to project costs of the Casino,
under the Working Capital Facility until the Carry Obligations of HET and HOCI
under the Completion Guarantees have terminated, (ii) the BTCo Credit Support
Fee will be payable only to the extent such fee is actually received by BTCo
from JCC as interest under Tranche A-2, Tranche B-2 and the Working Capital
Facility, and so long as HET and HOCI are not in default under the HET Loan
Guaranty, and (iii) the Credit Support Fee amounts are subject to certain
adjustments in the HET applicable margin. To the extent the HET applicable
margin increases up to .75%, the .75% JCC credit support fee is reduced down to
zero. The net effect of JCC's payment of credit support fees combined with the
applicable interest rate for Tranche A-2, Tranche B-2 and the Working Capital
Facility is that JCC will pay in credit support fees and interest (i) in the
case of Eurodollar loans, a sum equal to LIBOR plus 3.50% which can reduce to
3.25% if the HET applicable margin decreases and (ii) in the case of base rate
loans, a sum equal to that applicable to Eurodollar loans, less 2.50% which can
reduce to 2.25% if the HET applicable margin decreases. Also in consideration of
the HET Loan Guaranty, HCCIC received the HET Warrant. See "--HET Warrant."
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The $10 million Tranche A-1, the $30 million Tranche A-3 and the $30 million
Tranche B-1 were fully funded on the Effective Date. The $121.5 million Tranche
B-2 and the $20 million Tranche A-2 will be funded as required for the
construction of the Casino with Tranche B-2 to be drawn prior to Tranche A-2.
The $22.5 million Junior Subordinated Credit Facility will be funded after
Tranche A-2, however any portion of the Junior Subordinated Credit Facility
which is not used for construction related costs will be applied to repay
amounts outstanding under Tranche A-2. If any amount of Tranche B-2 remains
undrawn upon completion of the construction of the Casino, it will be drawn to
pay down Tranche A-1. The failure of the lenders under Tranche A-2 or Tranche
B-2 to disburse funds will not terminate the Completion Guarantors' obligations
under the Completion Guarantees.
The Bank Loans are secured by liens on substantially all of the assets of
each of JCC (excluding the Amended and Renegotiated Casino Operating Contract,
the House Bank (as defined herein) and the Gross Gaming Revenue Share Payments
(as defined herein)), JCC Holding, JCC Development, CP Development and FP
Development in favor of The Bank of New York, as collateral agent (the
"Collateral Agent") for the benefit of the Bank Lenders as well as the holders
of the Notes under the Indentures and HET and HOCI as Minimum Payment
Guarantors, subject to the terms of the Intercreditor Agreement (as defined
herein). Certain of the collateral is subject to release in accordance with the
applicable security documents and the Intercreditor Agreement. Within the Bank
Loans, the A Term Loan and related Senior Permitted Refinancings (as defined
herein) are senior to the Working Capital Facility and the B Term Loan. The B
Term Loan and the Senior Subordinated Permitted Refinancings (as defined herein)
are PARI PASSU with the New Notes and the New Contingent Notes. The "Senior
Permitted Refinancings" include any refinancings of the A Term Loan which do not
increase the principal amount of indebtedness outstanding and available
thereunder (except to the extent (x) accrued and unpaid interest and/or other
amounts owing with respect to the refinanced indebtedness are refinanced and/or
(y) of the fees and expenses incurred in connection with the refinanced
indebtedness) or decrease the weighted-average maturity thereof. The "Senior
Subordinated Permitted Refinancings" include any refinancings of the B Term Loan
and the Working Capital Facility which do not increase the principal amount of
indebtedness outstanding and available thereunder (except to the extent (x)
accrued and unpaid interest and/or other amounts owing with respect to the
refinanced indebtedness are financed and/or (y) of the fees and expenses
incurred in connection with the refinanced indebtedness) or decrease the
weighted-average maturity thereof.
Future drawings under the Bank Loans are subject to the following
conditions, among others, (i) that there exists no default under the Bank Loans
with respect to payments thereunder or certain bankruptcy or insolvency events
or under the Completion Guarantees or the HET Loan Guaranty at the time of each
draw, and (ii) that all representations under the HET Loan Guaranty remain true
and correct in all material respects at the time of each draw.
The Bank Loans contain affirmative covenants with respect to, among other
things, the maintenance of certain leverage ratios, coverage ratios and levels
of tangible net worth, limitations on indebtedness, changes in JCC's business,
the sale of all or substantially all of JCC's assets, mergers, acquisitions,
reorganizations and recapitalizations, liens, guarantees, the payment of
management fees, dividends and other distribution, investments, debt
prepayments, sale-leasebacks, capital expenditures, lease expenditures and
transactions with affiliates, and financial reporting.
The obligations of JCC under the Credit Agreement (including obligations
under interest rate protection agreements entered into in connection therewith)
are guaranteed on a senior basis by JCC Holding, JCC Development, CP Development
and FP Development, and will be similarly guaranteed by each future subsidiary
of JCC Holding.
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JUNIOR SUBORDINATED CREDIT FACILITY
On the Effective Date, JCC entered into the Junior Subordinated Credit
Facility pursuant to which HET agreed to make available up to $22.5 million of
subordinated indebtedness to fund project costs to the extent that such costs
exceed amounts available under the Term Loans (excluding Tranche A-1 and Tranche
A-3), the proceeds from the sale of the Convertible Junior Subordinated
Debentures and the Harrah's New Equity Investment. The Junior Subordinated
Credit Facility will be applied to project costs prior to amounts under Tranche
A-1 and Tranche A-3. The Junior Subordinated Credit Facility is unsecured, and
amounts outstanding thereunder will be subordinated in right of payment to
certain obligations of JCC under the HET/JCC Agreement, the Term Loans, the New
Notes, the New Contingent Notes, the Working Capital Facility, Senior Permitted
Refinancings and Senior Subordinated Permitted Refinancings. If on the
termination of construction of the Casino JCC has not borrowed the full $22.5
million under the Junior Subordinated Credit Facility, JCC must borrow the
remaining amount and use the proceeds (i) first to pay any outstanding principal
and interest under Tranche A-1 and (ii) second to pay any outstanding principal
and interest under Tranche A-2.
Amounts owing under the Junior Subordinated Credit Facility will be due and
payable six months following the maturity of the New Notes. Early repayment is
permitted, subject to meeting certain restricted payment tests contained in the
Indentures for the Notes and pursuant to the documents relating to the Bank
Loans. Outstanding principal under the Junior Subordinated Credit Facility bears
annual interest at the rate of 8%. Subject to meeting certain restricted payment
tests contained in the Indentures for the Notes and pursuant to the documents
relating to the Bank Loans, the Junior Subordinated Credit Facility will be
repaid from the cash flow or proceeds of major capital events of JCC available
for distribution by JCC to its member; provided, however, that interest on the
Junior Subordinated Credit Facility will not be paid in cash and will be added
to the outstanding principal amount if certain earnings before interest, taxes,
depreciation and amortization ("EBITDA") tests are not met prior to September
30, 2001, or if JCC pays interest in kind on the New Notes after September 30,
2001. Any portion of the Junior Subordinated Credit Facility not paid at
maturity will bear annual interest at the forgoing rate plus 2%.
CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES
On the Effective Date, the Company issued to the Participating Banks and to
Salomon, DLJ and BT Alex. Brown Incorporated (collectively, the "Underwriters")
$27,287,500 aggregate principal amount of the Convertible Junior Subordinated
Debentures.
The Convertible Junior Subordinated Debentures mature in May 2010, six
months following the scheduled maturity of the New Notes. The Convertible Junior
Subordinated Debentures bear interest at a rate of 8% per annum payable
semi-annually in cash; provided, however, that JCC has the option of paying the
interest on the Convertible Junior Subordinated Debentures, in whole or in part,
in kind rather than in cash (i) at any time on or prior to October 30, 2003, and
(ii) at any time thereafter if the Company did not make contingent payments with
respect to the New Contingent Notes on the immediately preceding interest
payment date for the New Contingent Notes. See "--New Notes and New Contingent
Notes."
The Convertible Junior Subordinated Debentures are unsecured obligations of
JCC, subordinated in right of payment to (i) certain obligations of JCC under
the HET/JCC Agreement and all indebtedness of JCC under or in respect of the
Credit Agreement, the New Notes, the New Contingent Notes and any permitted
refinancing thereof and (ii) all obligations of the Company that are expressly
senior in right of payment to, or PARI PASSU in right of payment with, the
obligations and indebtedness described in clause (i). The Convertible Junior
Subordinated Debentures are convertible at the option of the holders, in whole
or in part, at any time after October 1, 2002, into Common Stock of JCC Holding
at a conversion price of $25.00 per share, subject to dilution and other
appropriate adjustments (the "Conversion Price"). In addition, if the
Convertible Junior Subordinated Debentures are at any time called for
redemption, each holder of Convertible Junior Subordinated Debentures may,
subject to certain limitations, convert such
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holder's Convertible Junior Subordinated Debentures at such time. The
Convertible Junior Subordinated Debentures are redeemable at the option of the
Company (i) at any time at par plus accrued but unpaid interest in cash, or (ii)
at any time during the 12 months prior to October 30, 2010 if the Conversion
Price is greater than the Current Market Price per share on the redemption date,
at par plus accrued but unpaid interest, payable in shares of Common Stock or a
combination of cash and shares of Common Stock. The "Current Market Price" is
defined to generally mean the volume weighted average for the preceding 10
trading days of the last reported sale price (or, if no last reported sales
price is available for any such trading day, the last reported closing bid price
on such trading day) of the Common Stock.
The indenture under which the Convertible Junior Subordinated Debentures are
issued restricts mergers and consolidations involving, and the sale, transfer,
lease or conveyance of all or substantially all of the assets of, JCC and JCC
Holding. The obligations of JCC to the holders of the Convertible Junior
Subordinated Debentures are guaranteed on a subordinated basis by JCC Holding.
Pursuant to the Registration Rights Agreement, dated as of the Effective
Date, by and among JCC, JCC Holding, the Underwriters, BTCo and FNBC, upon the
request of (i) any initial holder of the Convertible Junior Subordinated
Debentures that purchased $5.0 million or greater of such securities or (ii) any
permitted transferee of the Convertible Junior Subordinated Debentures, shares
of Common Stock issued upon the conversion or redemption thereof, or, subject to
certain limitations, any other securities issued or issuable with respect
thereto (collectively "Debenture Registrable Securities"), that, at the time of
request, owns $5.0 million or greater of the Debenture Registrable Securities
(the holders described in clauses (i) and (ii) are referred to as the
"Initiating Holders"), JCC or JCC Holding, as the case may be, will provide
notice of such request to certain other holders of Debenture Registrable
Securities (the "Other Holders") and will use its commercially reasonable
efforts to effect, as soon as reasonably practicable, the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of (x) any Debenture
Registrable Securities held by the Initiating Holder and (y) any Debenture
Registrable Securities requested to be included in such registration by the
Other Holders. However, (a) neither JCC nor JCC Holding is obligated to effect
more than one such registration for any Initiating Holder or more than two such
registrations in the aggregate, (b) no holder may request such a registration
prior to the earlier of 18 months after the Casino opens for business and the
filing by JCC Holding of its third Annual Report on Form 10-K under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (c)
neither JCC nor JCC Holding is obligated to effect such a registration unless
the aggregate Debenture Registrable Securities requested to be included in such
registration would have a gross sales price of at least $5.0 million.
NEW NOTES AND NEW CONTINGENT NOTES
In connection with the Plan of Reorganization, on the Effective Date, JCC
issued (i) $187.5 million aggregate principal amount of New Notes maturing in
2009 pursuant to an indenture, dated as of the Effective Date, by and among JCC,
as obligor, JCC Holding, JCC Development, CP Development and FP Development, as
guarantors, and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"), and (ii) New Contingent Notes pursuant to an indenture, dated as of
the Effective Date, by and among JCC, as obligor, JCC Holding, JCC Development,
CP Development and FP Development, as guarantors, and the Trustee. See "--The
Company--Recent Reorganization."
Fixed interest on the New Notes accrues at a rate of 5.867% per annum,
increasing over the first three years to a rate of 6.214% per annum in the
fourth and fifth years and increasing to 8% per annum after the first five years
("Fixed Interest") and is payable semiannually in arrears on each May 15 and
November 15, beginning May 15, 1999. Interest on the New Notes accrues from the
Effective Date. JCC has the option to pay the first six semi-annual payments of
Fixed Interest on the New Notes in kind rather than in cash; provided, however,
that JCC must pay the first four semi-annual payments of Fixed-Interest in kind
if Tranche A-1 and/or Tranche A-2 is outstanding when such payments are due. JCC
has the option to pay the fifth and sixth semi-annual payments of Fixed Interest
in kind and may be required to do so by the Credit
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Agreement under certain circumstances; provided, however, that JCC may not pay
the fifth and sixth semi-annual payments of Fixed Interest in kind if (i)
Tranches A-1 and A-2 have been fully repaid, (ii) there are no outstanding
drawings under the Working Capital Facility, other than letters of credit as
permitted pursuant to the Credit Agreement, and (iii) JCC has accumulated cash
availability of at least $20 million.
If Consolidated EBITDA for JCC is less than $28.5 million for the 12 month
period ending on the March 31 or September 30, as applicable, immediately
preceding any interest payment date occurring on or after May 15, 2002, Fixed
Interest on the New Notes must be paid in kind. Payments of Fixed Interest not
made in kind are payable in cash.
Contingent payments with respect to the New Notes, to the extent they are
due and owing, are payable on each interest payment date. On interest payment
dates occurring on May 15, JCC is required to pay to the holders of New Notes,
on a PRO RATA basis, contingent payments in an aggregate amount equal to 37.5%
of the Contingent Payment Measurement Amount (as defined below) for the 12 month
period ending on the immediately preceding March 31 in excess of $65 million and
less than $85 million. On interest payment dates occurring on November 15, JCC
is required to pay to the holders of New Notes, on a PRO RATA basis, contingent
payments in an aggregate amount equal to (i) 75% of the Contingent Payment
Measurement Amount for the 12 month period ending on the immediately preceding
September 30 in excess of $65 million and less than $85 million, less (ii) the
aggregate amount, if any, of contingent payments paid on the immediately
preceding May 15. If, on any interest payment date, no contingent payments are
due and payable to holders of New Notes in accordance with the foregoing, no
contingent payments will be accrued or paid on such interest payment date.
No fixed interest is payable in respect of the New Contingent Notes. All
payments in respect of the New Contingent Notes are contingent. Contingent
payments in respect of the New Contingent Notes, to the extent any are due and
owing, are due on each May 15 and November 15. On payment dates occurring on May
15, JCC is required to pay to the holders of New Contingent Notes, on a PRO RATA
basis, contingent payments in an aggregate amount equal to 37.5% of the
Contingent Payment Measurement Amount for the 12 month period ending on the
immediately preceding March 31 in excess of $85 million and less than $109.425
million. On payment dates occurring on November 15, JCC is required to pay to
the holders of New Contingent Notes, on a PRO RATA basis, contingent payments in
an aggregate amount equal to (i) 75% of the Contingent Payment Measurement
Amount for the 12 month period ending on the immediately preceding September 30
in excess of $85 million and less than $109.425 million, less (ii) the aggregate
amount, if any, of contingent payments paid on the immediately preceding May 15.
If, on any payment date, no contingent payments are due and payable to holders
of New Contingent Notes in accordance with the foregoing, no contingent payments
will be accrued or paid on such payment date.
"Contingent Payment Measurement Amount" means, for any period, an amount
equal to (i) the Consolidated EBITDA of JCC for such period, (ii) plus an amount
equal to the cash distributions, if any, from CP Development and FP Development
to JCC Holding during such period, (iii) after the date on which the second
floor of the Casino is open to customers (a) if the JCC Development Adjustment
Amount (as defined below) is a positive number for such period, plus an amount
equal to the JCC Development Adjustment Amount for such period or (b) if the JCC
Development Adjustment Amount is a negative number for such period, less an
amount equal to the absolute value of the JCC Development Adjustment Amount for
such period. If the net working capital of either of CP Development or FP
Development is in excess of $1 million on any March 31 or September 30, as
applicable, then the amount of net working capital in excess of $1 million shall
be deemed to have been distributed by CP Development and/or FP Development, as
applicable, to JCC Holding for the purposes of calculating the Contingent
Payment Measurement Amount. Notwithstanding the foregoing, in no event shall the
proceeds from the sale of assets be included in the calculation of "Contingent
Payment Measurement Amount." "JCC Development Adjustment Amount" shall mean, for
any period, an amount equal to (A) the amount, if any, of the lease payments
received by JCC from JCC Development pursuant to the Second Floor Sublease
during such period, less (B) the amount, if any, of cash transferred (whether in
the form of one or more
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loans or equity contributions or otherwise (except payments for goods and
services)) (collectively, "JCC Advances") by JCC to JCC Development during such
period, plus (C) the amount, if any, of cash transferred by JCC Development to
JCC in respect of JCC Advances during such period. "Consolidated EBITDA" means,
with respect to any person, for any period, the consolidated net income of such
person for such period adjusted (A) to add thereto (to the extent deducted from
net revenues in determining consolidated net income), without duplication, the
sum of (i) permitted tax distributions to JCC Holding, and if such person is not
treated as a pass through entity for federal income tax purposes, income tax
expense (whether or not payable during such period) of such person and its
consolidated subsidiaries, (ii) consolidated depreciation and amortization
expense, (iii) consolidated fixed charges, (iv) aggregate contingent payments,
whether paid or accrued, (v) Incentive Fees (as defined below), whether paid or
accrued, (vi) amortization expense with respect to deferred refinancing fees,
(vii) preopening expenses, (viii) any extraordinary loss reflected in the
calculation of consolidated net income, (ix) other non-cash charges, and (x)
solely for the purposes of calculating contingent payments under the New Notes
and the New Contingent Notes, if any, and the Incentive Fees, if any, the
proceeds, if any, from the exercise of the HET Warrant, and (B) to subtract
therefrom (1) any extraordinary gain reflected in the calculation of
consolidated net income, (2) any restricted payments made by JCC to JCC Holding
for the purpose of complying with reporting obligations, paying professionals
and other administrative expenses, and (3) solely for the purpose of calculating
contingent payments, if any, and Incentive Fees, if any, all revenue received by
the Company pursuant to the Second Floor Sublease.
The New Notes and the New Contingent Notes are secured on an equal and
ratable basis by liens on substantially all of the assets of each of JCC
(excluding the Amended and Renegotiated Casino Operating Contract, the Casino's
bankroll and the Gross Gaming Revenue Share Payments), JCC Holding, JCC
Development, CP Development and FP Development in favor of the Collateral Agent
for the benefit of the holders of the Notes under the Indentures as well as the
Bank Lenders and HET and HOCI as Minimum Payment Guarantors, subject to the
terms of the Intercreditor Agreement. Certain of the collateral is subject to
release in accordance with the applicable security documents, the Intercreditor
Agreement and the Indentures. With the exception of the Term Loans, the Working
Capital Facility, Senior Permitted Refinancings, Senior Subordinated Permitted
Refinancings, and certain special purpose indebtedness, any other indebtedness
for borrowed money of JCC must be subordinated to the Notes. The New Notes
contain provisions such that, in the event of a payment default or bankruptcy,
the holders will be made whole for any accelerated maturity, accrued and unpaid
interest, all Fixed Interest in respect of future periods, and the maximum
contingent payments in respect of future periods, and related costs and
expenses. The New Contingent Notes contain provisions such that, in the event of
payment default or bankruptcy, the holders will be made whole for an amount
equal to the maximum contingent payments for all future periods, and related
costs and expenses. Nevertheless, the amount of future contingent payments under
the Notes is subordinated in right of payment to certain obligations of JCC
under the HET/JCC Agreement, the Bank Loans, the Senior Permitted Refinancings
and the Senior Subordinated Permitted Refinancings.
JCC Holding, JCC Development, CP Development and FP Development have
irrevocably and unconditionally guaranteed to each holder of New Notes the
payment of principal, premium, if any, and interest (including contingent
payments) on the New Notes. JCC Holding, JCC Development, CP Development and FP
Development irrevocably and unconditionally guarantee to each holder of New
Contingent Notes the payment of contingent payments in respect of the New
Contingent Notes.
Upon a change in the manager of the Casino or other similar events, each
holder of the New Notes will have the right, at such holder's option, to require
JCC to purchase such holder's New Notes at 101% of the principal amount thereof
plus accrued and unpaid interest. Due to the highly leveraged nature of JCC, JCC
may not have sufficient financing to purchase the New Notes and satisfy other
obligations which may become due upon such an event. New Notes and the New
Contingent Notes are not redeemable or subject to mandatory prepayment prior to
maturity, except that New Notes and New Contingent Notes are subject
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to redemption based on gaming regulatory considerations. Each of the Indentures
contains certain restrictions on, among other things, restricted payments,
liens, incurrence of additional indebtedness, payment of management fees,
subsidiary dividend restrictions, asset sales, transactions with affiliates,
mergers and consolidations.
HET WARRANT
In consideration of, among other things, the HET Loan Guaranty, and pursuant
to the Warrant Agreement between JCC Holding and HCCIC dated October 30, 1998,
HCCIC received the HET Warrant entitling it to purchase additional shares of JCC
Holding Common Stock such that, upon exercise of the HET Warrant in its
entirety, HET and its subsidiaries, including HCCIC, will own in the aggregate
50.0% of the then outstanding shares of Common Stock, subject to certain
adjustments. The number of shares issuable upon exercise of the HET Warrant is
four (4) million, however, the number of shares issuable under the HET Warrant
will be adjusted as necessary by the board of directors in order to preserve the
right of HET and its subsidiaries to own in the aggregate 50.0% of the Common
Stock upon full exercise of the HET Warrant. The HET Warrant is exercisable at
any time after the Transition Date until the sixth anniversary of the Opening
Date, in whole or in part at a price of $15.00 per share of Common Stock. HET
and its subsidiaries are not permitted to exercise the HET Warrant with respect
to that number of shares which would cause HET and its subsidiaries to own more
than 50.0% of the Common Stock until such time as such exercise will not cause
HET and its subsidiaries to own more than 50.0% of the then outstanding shares
of Common Stock. If at any time after the Transition Date the closing bid price
of the Common Stock has exceeded $20.00 per share for 60 consecutive trading
days, JCC Holding's board of directors may elect to give written notice to HCCIC
of an election to redeem 75% of the warrants at $0.05 per warrant unless HCCIC
exercises the warrants within forty-five days after the date of such notice. If
(i) an election to redeem warrants is made by JCC Holding, and (ii) HCCIC
exercises warrants with respect to that number of shares which at the time of
exercise would cause HET and its subsidiaries to own in the aggregate 50.0% of
the then outstanding shares of Common Stock, then none of the then existing
warrants which were called for redemption shall be redeemed.
AMENDED GDA
On October 29, 1998 and effective as of the Effective Date, JCC entered into
the Amended GDA with the RDC and the City, as intervenor. The Amended GDA sets
forth the obligations of the parties and the procedures to be followed relating
to the design, development and construction of the Casino and certain related
facilities (the "Casino Development"). The Amended GDA imposes responsibility on
JCC for the location, identification and condition of all utilities serving the
Casino Development and obligates JCC to provide certain traffic signalization
and intersection improvements as a part of the cost of the project. No other
transportation or roadway improvements will be required of JCC and the RDC. The
Amended GDA also obligates JCC to reimburse the RDC for reasonable fees and
expenses of the RDC, incurred on or after the Effective Date, for the services
of the project manager and his or her staff. Project manager and staff
reimbursement amounts vary depending on the status of construction and certain
other timing conditions.
The Amended GDA establishes scheduling parameters for the construction and
completion of the Casino Development and contains the RDC's approval and
acceptance of the commencement and completion schedule set forth therein for the
recommencement and completion of construction. The Amended GDA also provides for
additional schedules, including a working development schedule, a development
schedule and a construction schedule, as the design documents for each component
and phase of the Casino Construction are prepared and approved and as
construction planning evolves, and updated versions thereof as necessary.
JCC is obligated under the Amended GDA to complete the Casino Construction
and open the Casino for business on or before 12 months after the Effective
Date, subject to extension for Force Majeure.
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Failure to complete the Casino Construction by June 30, 2000, subject to
extension for Force Majeure, will be an event of default under the Amended
Ground Lease.
The Amended GDA also grants certain approval rights to the RDC with respect
to the selection of architects, contractors and other consultants. Under the
Amended GDA, JCC is responsible for applying for and obtaining all necessary
permits, licenses, approvals, consents and other government authorizations
(collectively "Permits"). Provided the RDC has approved the construction
documents for a component or phase of the Casino Development, and provided there
is no outstanding event of default under the Amended Ground Lease, the RDC is
obligated to issue and deliver to JCC a notice to proceed for each component or
phase of the Casino Development within ten days following its approval of the
construction documents for such component or phase of the Casino Development.
Work by JCC on that component or phase of the Casino Development must then
commence within 14 days after JCC's receipt of both the notice to proceed and
the required Permits, but in no event will commencement of work on the Casino
Construction be required sooner than the Site Reactivation Date. For purposes of
the Amended GDA, the "Site Reactivation Date" means the first day after the
execution of the Amended GDA and the occurrence of the Effective Date when
personnel and/or equipment first enter the development for the purpose of
preparing the property for construction of the improvements required by the
Amended GDA; provided, however, preliminary or preparatory work will not be
considered site reactivation activities. The Site Reactivation Date will be no
later than November 29, 1998.
Under the Amended GDA, JCC is obligated to take reasonable precautions to
protect from damage and preserve all adjacent public and private properties from
damage caused by the construction, as well as restore and repair any properties
damaged by the work. If JCC fails to perform the repair or restoration, the RDC
may do so and recover the cost and expense incurred from JCC.
Except as otherwise permitted by the Amended GDA, JCC must obtain or cause
its general contractors to obtain performance and payment bonds with qualified
corporate sureties for the full value of the contract for the construction of
each component or phase of the Casino Development before commencing construction
of such component or phase of the Casino Development. The initial construction
bonds were executed by HJC and certain qualified corporate sureties in late 1994
(as modified, the "Initial Bonds") and remain in effect, as supplemented by
riders thereto executed by the sureties on October 29, 1998, providing for,
among other things, (i) the acknowledgment and consent of the sureties to
changes in the scope of work bonded thereunder, including, without limitation, a
change in the amount of the bonded obligations, and the succession of JCC to the
rights and obligations of HJC under the Initial Bonds, (ii) the affirmation by
the parties that the Initial Bonds (as so supplemented) remain in full force and
effect and (iii) the addition of JCC as an additional obligee under the Initial
Bonds (as so supplemented).
Subject to certain limitations, JCC is permitted to make minor changes in
the work up to a specified amount without RDC approval. All other changes
require the RDC's prior approval.
The Amended GDA requires JCC to obtain financing as described in the Plan of
Reorganization. The Amended GDA obligates the Completion Guarantors to provide
the completion guarantee in favor of the RDC and the City and, in connection
therewith, JCC has caused the Surety Bond to be issued. The amount of the Surety
Bond is $119 million, which amount equals the remaining hard construction costs
of the Casino Construction. Such costs generally comprise the costs and expenses
of developing, designing and constructing the Casino (excluding financing costs,
legal fees and pre-opening and related marketing or advertising expenses) as of
October 29, 1998. Pursuant to the completion guarantee, if JCC fails to complete
the Casino Construction, the Completion Guarantors, subject to a number of
important exceptions and qualifications, are obligated to complete the Casino
Construction. See "--Completion Guarantees."
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The Amended GDA will terminate upon the earlier of (i) the last of the final
completion dates of all components and phases of the Casino or (ii) the
termination of the Amended Ground Lease, whether by default or otherwise. If the
Amended GDA is terminated upon termination of the Amended Ground Lease as a
result of the occurrence of an event of default by JCC thereunder, the RDC may,
under certain circumstances, have any remaining Casino Construction work
completed, repaired or replaced at the expense of JCC.
The Amended GDA and the Amended Ground Lease obligate JCC to comply with the
Amended Open Access Program and Plans. See "--Risk Factors--Amended Open Access
Program and Plans."
AMENDED GROUND LEASE
TERM; RENT AND ADDITIONAL CHARGES. On October 29, 1998 and effective as of
the Effective Date, JCC entered into the Amended Ground Lease for the Rivergate
site with the RDC and the City, as intervenor. The Amended Ground Lease has an
initial term of 30 years plus the amount of time between April 27, 1993 and the
Effective Date, with three consecutive ten-year renewal options. The Amended
Ground Lease entitles JCC to possess the Rivergate site and obligates JCC to
construct, build and operate the Casino, the support facilities, and the other
improvements in accordance with the terms of the Amended Ground Lease and the
Amended GDA.
The RDC and the City have been paid $736,000 per month since January 1, 1997
as pre-opening day rent (the "Pre-Opening Date Rent"). HJC initially deposited
$2,208,000 in escrow to secure this rental obligation through May 31, 1997, all
of which has been paid to the RDC and the City. The Pre-Opening Date Rent has
been paid to the RDC and the City each month thereafter through and including
November 1998. Under the Amended Ground Lease, the Pre-Opening Date Rent
continues to be paid until the Opening Date; provided that if the Opening Date
has not occurred on or prior to November 1, 1999 (unless and to the extent
extended by Force Majeure), the Pre-Opening Date Rent will increase to an amount
equal to the monthly Amended Ground Lease Minimum Payments (as defined herein).
The Amended Ground Lease provides that the minimum of all: (i) Rent (as
defined herein) payments; (ii) Gross Gaming Payments (as defined herein), (iii)
Audubon Payments (as defined herein), (iv) Gross Non-Gaming Payments (as defined
herein) (collectively, the "Amended Ground Lease Minimum Payments"), must equal
$12.5 million per year to be payable in monthly installments.
JCC is obligated to pay to the RDC rent ("Rent") of $5 million per year for
each of the first five years after the Opening Date. On the fifth anniversary of
the Opening Date and on each fifth anniversary thereafter during the term of the
Amended Ground Lease, the Rent will be increased by $2.5 million; provided,
however, that if the increase would cause the yearly Rent to exceed 3% of gross
gaming revenue for the fiscal year immediately preceding the rental adjustment
date, the yearly Rent for the five year period commencing with such rental
adjustment date will be the greater of: (a) the yearly Rent for the preceding
fiscal year or (b) 3% of gross gaming revenue for the preceding fiscal year. The
Rent is payable monthly in advance as part of the Amended Ground Lease Minimum
Payments.
Commencing on the Opening Date, JCC is obligated to make gross gaming
payments ("Gross Gaming Payments") to the RDC equal to the amount by which the
Gross Gaming Percentage Amount exceeds the Rent for that fiscal year. The "Gross
Gaming Percentage Amount" in any fiscal year is determined as follows: $100,000
plus (a) 3.0% of gross gaming revenues for increments of gross gaming revenues
from $0 to $350 million, (b) 3.5% of gross gaming revenue for increments of
gross gaming revenue from $350 million to $375 million and (c) a percentage of
gross gaming revenue starting at 4.0% for increments of gross gaming revenue
above $375 million and increasing by five-tenths of 1% for each additional $25
million of gross gaming revenue up a maximum of 8%. A portion of the Gross
Gaming Payments is payable monthly in advance as part of the Amended Ground
Lease Minimum Payment. In addition, commencing with the month in which gross
gaming revenue for a given fiscal year exceeds $350 million, JCC is obligated to
pay additional Gross Gaming Payments then due for such month and for each month
thereafter.
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JCC will also be obligated to pay additional sums pursuant to the Amended
Ground Lease, including but not limited to: (i) a one-time payment equal to
$875,000 on or before December 31, 1999; (ii) a one-time payment of $875,000 due
during the second year of Casino operations; (iii) an aggregate of $500,000
during the second year after the Opening Date, payable in quarterly
installments; (iv) an annual contribution of $2 million throughout the lease
term, including any extensions, to be allocated by the City Council to the
Orleans Parish School Board (the "School Board Payment"), with the first payment
to be made within six months of opening the Casino and subsequent payments to
occur on each anniversary thereof; (v) an annual contribution of $200,000,
payable monthly as part of the Amended Ground Lease Minimum Payments, to be
allocated to the Audubon Park Commission, for and on behalf of the City (the
"Audubon Payment"); and (vi) an annual payment to the RDC of $1.7 million,
payable in monthly installments as part of the Amended Ground Lease Minimum
Payments, plus 6% of all gross non-gaming revenues in excess of approximately
$28.33 million payable commencing with the month (and for each month thereafter)
in which gross non-gaming revenue exceeds $28.33 million ("Gross Non-Gaming
Payments"). Gross non-gaming revenue includes, among other things, revenue
derived from parking, the sale of food, beverages, services and merchandise,
income from non-gaming-related tenants, operation of any business or enterprise
owned by JCC or its affiliates and operated on the Casino Development, and
income received by JCC from the use of any trade name of JCC or HET in
connection with the Casino in the greater New Orleans area. Gross non-gaming
revenue does not include any revenue derived from sales (other than sales by JCC
or its affiliates) within the premises covered by the Second Floor Sublease (as
defined herein). Under the Amended Ground Lease, JCC also has waived any right
to credits or offsets against Rent arising prior to October 30, 1998, including
any credit for renovation work at the Basin Street Casino conducted by HJC.
Commencing on the Opening Date, JCC will be required to pay to the City a
payment (the "City Payments") in the amount of $1.25 million for each fiscal
year during the term of the Amended Ground Lease in which JCC receives gross
gaming revenue in the amount of $350 million or more. The City Payments are
payable in monthly installments in the amount of $104,167 each. The City has
released and terminated the undrawn letter of credit in the amount of $1.5
million issued by BTCo in favor of the City securing the payment of City
Payments. Such security is no longer required with respect to the City Payments.
The RDC has, at any time during the term of the Amended Ground Lease, a
one-time right, with the prior written consent of the City Council and upon 30
days prior written notice to JCC specifying the RDC's exercise of its right (the
"MAR Exercise Notice") to receive a payment of additional rent (the "MAR
Payment") equal to 4.99% of the amount, if any (the "Net Market Appreciation"),
by which the weighted average closing trading price of the Common Stock issued
by JCC Holding in connection with the Plan of Reorganization over the 20 days of
trading immediately prior to delivery of the MAR Exercise Notice times the
number of outstanding shares of such Common Stock, is greater than $320 million.
Upon JCC's payment of the MAR Payment to the RDC, the RDC will have no further
right to receive the 4.99% contingent payments described above or any additional
market appreciation payments.
JCC is also required to make: (i) contingent payments to the RDC equal to
4.99% of certain sums dividended or distributed by JCC to the stockholders of
JCC Holding, (ii) in the event that JCC pays a Termination Fee (as defined
herein) to the Manager, JCC must pay to the RDC an amount equal to 2.5% of such
fee; and (iii) if the City adopts parking programs for certain neighborhoods
adjacent to the Casino, $60,000 for the first year of Casino operations to
administer such programs, payable within 30 days after Opening Date. If JCC
fails to pay, when due, any of the payments under the Amended Ground Lease, JCC
could be forced to pay the outstanding balance plus interest thereon from the
due date of the payment to the delivery date of the payment at a default rate
equal to the greater of: (a) the prime rate quoted by Citibank, N.A., plus 4%
per annum; or (b) 14% per annum. Furthermore, JCC may be required to pay certain
additional default penalties if any default by JCC results in the termination of
the Amended Ground Lease.
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Pursuant to the Amended Ground Lease, as of the Effective Date JCC
contributed, and on each anniversary thereof JCC will contribute, $1 million to
the destination marketing program of the City for the joint benefit of the City
and JCC in order to promote New Orleans and the Casino as destinations. The
City, upon receipt of such annual contributions, has agreed to promptly transfer
said funds directly to the entity or agency that the City is utilizing during
that year for the majority of the tourism marketing conducted by or on behalf of
the City. JCC will exercise control, with certain exceptions, over the spending
of such $1 million annual contribution. If at the end of the first year after
the execution date of the Amended Ground Lease or the end of any year thereafter
ending on an anniversary of the execution date, JCC fails to designate the
content for any portion of its destination marketing, such portion of the
destination marketing for such year will thereafter not be subject to JCC's
control. The City will cause the entity undertaking the destination marketing
for the City to designate $1 million of such entity's budget on an annual basis,
which budget is presently funded through designated tax revenues, for use in a
destination marketing plan which will include promotion of the Casino. With
respect to such $1 million of marketing expenditure, the City will exercise
control over the content of said destination marketing. No person will be
considered a third party beneficiary of the agreement by JCC to contribute $1
million annually to the destination marketing program of the City. Failure of
JCC to contribute annually as provided above within 15 days after receipt of
notice of such failure is an event of default under the Amended Ground Lease.
The City has agreed, under the Amended Ground Lease, to take all necessary
actions to move the Joan of Arc statue to a location other than the Rivergate
site promptly after the Effective Date. JCC will make a payment to the City to
assist in the relocation as provided in the City's conditional use ordinance for
the Casino.
GRANT OF SERVITUDE RIGHTS. Under the Amended Ground Lease a portion of the
parking facility premises previously leased by HJC from the RDC under the Ground
Lease has been surrendered to the City and the RDC, but certain access rights
over such portion of the parking facilities surrendered to the City have been
retained. In addition to such access rights, the City and the RDC have granted
JCC certain servitude rights in portions of the employee and bus parking
facility premises pursuant to the Amended Ground Lease. JCC is required to
maintain the servitude areas granted pursuant to the Amended Ground Lease.
DEFAULT; TERMINATION. The occurrence of an event of default by JCC under
the Amended Ground Lease could result in injunctive relief, fines, acceleration
of rent, or termination of the Amended Ground Lease, subject to the rights of
leasehold mortgagees. An event of default under the Amended Ground Lease by JCC
includes (subject, in certain circumstances, to cure), among other things: (i)
the failure to make the payments described above; (ii) the making of an
assignment for the benefit of creditors or the filing of a bankruptcy petition;
(iii) the unauthorized sale, assignment, pledge, mortgage or transfer of the
Amended Ground Lease or interest in JCC; (iv) the failure to comply with certain
material terms of the Amended Ground Lease, the Second Floor Sublease or the
Amended GDA; (v) the amendment of the Amended Management Agreement in a manner
that materially and adversely affects any interests of the RDC or, under certain
circumstances, the termination thereof; (vi) the hiring of a casino
manager/operator without the approval and prior written consent of the RDC;
(vii) the revocation or termination of the Amended and Renegotiated Casino
Operating Contract; (viii) the failure to comply with a final non-appealable
judgment establishing a violation of the Amended Open Access Program; (ix) the
failure continually to operate the Casino in accordance with the terms of the
Amended Ground Lease; (x) the failure to commence the Casino Construction within
the time periods set forth in the Amended GDA (subject to Force Majeure and
certain cure rights under the completion guarantee for the benefit of the RDC
and the City); and (xi) the failure of the Casino Construction to have been
completed by June 30, 2000 (subject to Force Majeure). Additionally, if the
initial term of the Amended and Renegotiated Casino Operating Contract expires
prior to the expiration of the initial term of the Amended Ground Lease or the
Amended and Renegotiated Casino Operating Contract is not renewed or extended
following due application, then JCC and the RDC each have the right to terminate
the Amended Ground Lease and
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upon such termination the parties thereto will have no further rights or
obligations thereunder. If the RDC or JCC elects not to terminate the Amended
Ground Lease in such circumstance, JCC is obligated to pay only the Rent,
Impositions, School Board Payments, and contingent payments (or the MAR Payment,
if applicable) and JCC shall be excused from complying with all obligations of
the Amended Ground Lease which directly or indirectly require operation of the
development for casino gaming operations until such time as a casino operating
contract is re-acquired by JCC.
CHANGE OF USE. The Amended Ground Lease provides that if: (i) a change of
law or the enactment of a new law causes the prohibition, modification,
restriction, or limitation of gaming operations at the Rivergate site in a
manner which materially diminishes the benefits afforded JCC or the gaming
activities permitted to be conducted at the Casino in the manner contemplated by
current law; or (ii) the term of the Amended and Renegotiated Casino Operating
Contract is limited, or cannot be extended following its expiration because of
statutory restrictions in the Gaming Act, then JCC and the RDC will renegotiate
the terms of the Amended Ground Lease in order to establish the highest and best
use permitted by then-current law or, alternatively, in the case of (ii), JCC
will have the right to terminate the Amended Ground Lease. In such event, JCC
and the RDC will negotiate to establish a new rent and other additional charges
payable under a revised ground lease. If the parties are unable to agree on the
new rent and additional charges, the Amended Ground Lease imposes an appraisal
procedure to resolve the dispute.
LIMITATION OF WARRANTIES BY THE RDC AND THE CITY. In the Amended Ground
Lease, the City and the RDC represent and warrant that the City is the owner of
the Rivergate site subject to certain exceptions and that the City and the RDC
bind themselves to maintain JCC in actual possession of the Rivergate site. The
City and the RDC will have no liability, however, if either (i) the laws
permitting the operation of the Casino are repealed or modified or (ii) a court
of competent jurisdiction determines that the law permitting the operation of
the Casino is unconstitutional, illegal, or unenforceable. Additionally, if one
or more of the following should occur: (a) a determination that the Amended
Ground Lease is invalid, illegal, void, or unenforceable by a court of competent
jurisdiction; (b) the RDC is unable to grant and convey the leasehold rights
provided for under the Amended Ground Lease; (c) a determination or declaration
that the RDC does not have the right, power, and authority to enter into the
Amended Ground Lease; (d) the RDC does not have clear title to the Rivergate
site which would materially interfere with or prevent the construction and
operation of the Casino; or (e) the RDC is unable to maintain JCC in actual
possession of the Rivergate site, and, in any of such events, a final,
non-appealable judgment is rendered on the issue of possession, then the Amended
Ground Lease will terminate and the liability of the City and the RDC to JCC
will be (i) limited to JCC's actual damages (specifically excluding
consequential damages, such as loss of future profits), (ii) reduced by
collateral source payments, and (iii) limited to future proceeds received by the
City or the RDC from the sale, lease, or other disposition of the Rivergate site
for 10 years from the date of such occurrence, or such lesser time as remains
under the Amended Ground Lease. The Amended Ground Lease obligates the RDC to
use reasonable best efforts to maintain the validity of the Amended Ground
Lease, to maintain JCC's actual possession, and to perfect the City's good and
merchantable title. The Amended Ground Lease further provides that if the
Amended Ground Lease is terminated due to the failure of the RDC and the City to
maintain JCC in possession of the leased premises and JCC elects to seek damages
against the RDC or the City, JCC may relinquish the right it would otherwise
have under the Amended Ground Lease to re-lease the Rivergate site if the City
and the RDC regain the ability to lease such site.
INDEMNIFICATION. JCC is required to indemnify the RDC and the City against
all liabilities arising out of or relating to, among other things: (i) the
ownership, possession and use of the leased premises or any improvements
thereon; (ii) the operation or management of the Casino Development; (iii)
noncompliance by JCC with any terms of the Amended Ground Lease, the Amended GDA
or the Second Floor Sublease; or (iv) noncompliance by JCC Development with any
terms of the Second Floor Sublease. JCC's obligation to indemnify will not
apply: (a) to liabilities caused by the intentional acts or omissions or the
sole negligence of the RDC or the City, or their respective employees, agents,
or contractors; or (b) where the
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RDC or the City or their respective employees, agents or contractors are liable
with third parties other than JCC, its employees, agents or contractors. In
addition, JCC has also agreed to indemnify the RDC or the City for environmental
liabilities with respect to causes of action arising after November 30, 1994,
other than those caused by third parties, and to assume responsibility for the
cleanup (to the extent not completed) of certain environmental contamination
arising prior to November 30, 1994.
LIMITATIONS ON SECURED INDEBTEDNESS. After substantial completion of all
components and all phases of the development as required by the Amended GDA, JCC
may encumber its leasehold interest only after first obtaining the RDC's
consent. The RDC's consent is not required if the lender is a "suitable lender"
and the financing secured by such encumbrance satisfies certain objective
criteria described in the Amended Ground Lease. For purposes of any subsequent
financings, HET and entities controlled by, under common control with, or
controlling HET will be suitable lenders. Under the Amended Ground Lease, the
meaning of "suitable lender" is substantially similar to the definition of
"suitable lender" in the Amended and Renegotiated Casino Operating Contract. See
"--Amended and Renegotiated Casino Operating Contract--Financing." Any leasehold
mortgages to be delivered in connection with the financing contemplated by the
Plan of Reorganization are required to be consistent with the leasehold mortgage
provisions of the Amended Ground Lease. HET and HOCI will also be treated as
suitable lenders as to any loan made by either entity pursuant to the HET/JCC
Agreement, the Amended and Restated Completion Loan documents (as defined
herein), the Amended and Restated Construction Lien Indemnity Obligation
Agreement (as defined herein), the HET Loan Guaranty, the indemnity by HET or
HOCI to the provider of the Surety Bond, and the Junior Subordinated Credit
Facility; provided that such treatment will not allow HET or HOCI to have any
additional or longer cure period than is provided to leasehold mortgagees
pursuant to the Amended Ground Lease. See "--Amended and Renegotiated Casino
Operating Contract--Financing" and "Terms, Fees and Impositions."
LOAN DEFAULT RENT. If as a result of a default by JCC on an obligation owed
to a leasehold mortgagee, the Amended Ground Lease is transferred to a new
tenant, then: (i) the aggregate amount of Rent, Gross Gaming Payments, Gross
Non-Gaming Payments and the Second Floor Sublease rent for each full or partial
fiscal year after such transfer must be at least 80% of the amounts paid with
respect to the same period for the immediately preceding full or corresponding
year (but no less than the Amended Ground Lease Minimum Payments), and (ii) all
Rent increases must be suspended. These adjustments will no longer apply as soon
as the aggregate amount of the payments for a full or partial fiscal year exceed
80% of the aggregate amount of the payments made with respect to the immediately
preceding full or corresponding partial fiscal year.
RESTRICTIONS ON ASSIGNMENT AND SUBLEASING. The Amended Ground Lease may not
be assigned, sold or transferred, nor may JCC enter into a sublease or any space
lease of any portion of the leased premises, without the prior written consent
of the RDC and the City, which may be conditioned on, among other things, the
proposed assignee's satisfaction of certain qualifications regarding net worth,
gaming experience, and other matters and, in the case of a sublessee,
qualifications regarding the type of business contemplated and the size of space
and term of sublease, provided, however, that the RDC has consented to and
approved the terms of the Second Floor Sublease, and space leases in accordance
with such Second Floor Sublease and the Master Plan will not require the prior
written approval or consent of the RDC. See "--Second Floor Sublease--Master
Plan." These restrictions do not apply to leasehold mortgagees under certain
specified circumstances. The Amended Ground Lease provides that either the RDC
or the City Council may, for any reason, refuse to consent or financially
condition any assignment, sale or transfer of JCC's interest in the Amended
Ground Lease, the Second Floor Sublease or the Amended Management Agreement to
any entity (including a subsidiary or affiliate thereof) that has previously
operated a licensed gaming establishment (including a riverboat) within Orleans
Parish.
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RESTRICTIONS ON MANAGEMENT AND OPERATING CONTRACTS. The Amended Ground
Lease prohibits JCC from entering into any management or operating contract with
any person without the prior written consent of the RDC and the City.
Notwithstanding the foregoing, the RDC and the City Council have approved the
Amended Management Agreement and Harrah's New Orleans Management Company as the
Manager.
RESTRICTIONS ON EQUITY TRANSFERS. The Amended Ground Lease prohibits
certain types of transfers of equity interests in JCC and certain affiliated
entities without the prior written consent of the RDC; provided, however, that
the RDC is limited to seeking an injunction against transferees' participation
in management. Certain transfers of membership interests in JCC result in the
obligation of such entity effectuating such transfer to pay RDC 2.5% of the
profit realized by such entity from such transfer; provided that no such
transfer payment will be due in the case of any transfer of Class A Common Stock
or other publicly traded common stock of JCC Holding issued pursuant to the Plan
of Reorganization.
NON-COMPETE PROVISIONS. The Amended Ground Lease prohibits JCC, JCC
Holding, and certain affiliated entities from operating another land-based
casino in the State or within 200 miles of the Casino Development during the
term of the Amended Ground Lease without the prior written consent of the RDC.
LIMITATION ON USES OF DEVELOPMENT REVENUES. JCC and JCC Development are
prohibited from using revenues generated at the Casino Development to subsidize
persons or entities that will compete unfairly with the businesses located in
Orleans Parish, such as restaurants, hotels or other commercial enterprises and
is also prohibited from operating any form of ground transportation, except
shuttle buses for both customers and employees, to the metropolitan New Orleans
area. Notwithstanding the foregoing, JCC is permitted to (i) offer shuttle bus
service to and from the Casino for employees and shuttle bus service to and from
the Casino and hotels for its customers except in areas where the operation of
buses is prohibited by City traffic ordinances of general application in effect
as of the execution date of a certain agreement with the City; (ii) offer food
service at the Casino to the extent permitted under State law in effect as of
the execution of the Amended Ground Lease; (iii) permit live entertainment on
the first floor of the Casino; (iv) permit exterior signs on the leased premises
in appropriate locations, sizes, numbers and appearance identifying performers;
(v) permit charges for boxing or other specialty events not normally conducted
by businesses in the immediate vicinity of the Casino, as more particularly
agreed to in the conditional use application, subject to the application of any
special event charges in accordance with the Amended Ground Lease; (vi) permit
retail space on the first floor of the Casino in an area not to exceed 5,000
square feet; and (vii) permit tenants of the premises subject to the Second
Floor Sublease to occupy and use such premises for the purposes permitted by the
Second Floor Sublease.
RESIDENCY REQUIREMENTS. The Amended Ground Lease requires that not less
than 55% of the employees of JCC and JCC Development live and reside in Orleans
Parish (subject to reduction to comply with applicable law). The minimum
percentage of JCC and JCC Development employees that are Orleans Parish
residents will increase by 2% on the anniversary of the Opening Date until the
residency requirement reaches 65% (subject to reduction to comply with
applicable law). JCC agrees to use its best efforts to maximize hiring in
Orleans Parish with the goal being that 80% of employees of JCC and JCC
Development, in the aggregate, live and reside in Orleans Parish.
AMENDED MANAGEMENT AGREEMENT. The Amended Ground Lease requires JCC to
implement and abide by the terms of the Amended Management Agreement. Further,
JCC may not amend the Amended Management Agreement in a manner that materially
and adversely affects the interest of the RDC without the prior written consent
of the RDC and the New Orleans City Council. JCC must give the RDC at least six
months advance notice of any termination of the Amended Management Agreement.
Amendment of the Amended Management Agreement in a manner that materially and
adversely affects any interest of the RDC, or the hiring or retaining of a
casino manager/operator without the prior written consent of the RDC constitutes
an event of default under the Amended Ground Lease, subject to applicable cure
periods.
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TRANSITION AND MANAGER SUBORDINATION AGREEMENT. In the event the Amended
Management Agreement is terminated, JCC is required to submit a written plan
providing for the continuous operation of the Casino without material
interruption, including but not limited to provisions for the transition of
control of the development and of the funds in the house bank maintained at the
Casino (the "House Bank") and the capital replacement fund described below. In
connection with any termination of the Amended Ground Lease due to JCC's
default, JCC is required to pay the RDC the sum of $5 million (subject to annual
increases in the Consumer Price Index) to be used to facilitate the transition
of the Casino to a new trade name, service mark, or other identification, unless
the RDC has received Rent and other payments totaling at least $25 million
(subject to annual increases in the Consumer Price Index) during the previous 12
month period. In the event of early termination of the Amended Ground Lease, the
RDC also has the option to lease from JCC owned or leased gaming equipment at
fair market rent and on customary terms.
The Manager, the RDC and the City have entered into a subordination
agreement (the "Manager Subordination Agreement (RDC/City)") providing for the
subordination of fees owing by JCC to the Manager pursuant to the Amended
Management Agreement to the prior payment in full of all Rent and other payments
due the City and the RDC under the Amended Ground Lease. In addition, the
Manager Subordination Agreement (RDC/City) provides that, during the Transition
Period (as defined herein), the Manager will, among other things, undertake to
remove (and, under certain circumstances, replace) certain property and marks
owned by the Manager or its affiliates from the Casino, the improvements or
other property, as the case may be. For purposes of the Manager Subordination
Agreement (RDC/City), the "Transition Period" generally refers to a forty-five
day period beginning on the date on which (i) the RDC or its receiver is placed
in ownership or possession of the Casino or (ii) an event of default has
occurred and not been cured under the Amended Ground Lease as a result of the
termination of the Amended Management Agreement and, with respect to either of
the foregoing, (A) the Manager terminates the Amended Management Agreement or
fails to give proper notice of such termination, (B) the RDC is unable, for any
reason, to use certain marks at the Casino, or (C) the Manager terminates the
use at the Casino of certain proprietary computer systems without replacing such
systems.
LIMITATIONS ON ALTERATIONS TO CASINO DEVELOPMENT. The Amended Ground Lease
prohibits JCC from making any alteration to the Casino Development other than
non-structural alterations without the prior written approval of the RDC and the
City. Approval of the City is not necessary for non-structural alterations
except to the extent required by applicable laws and regulations. Further, the
consent of the RDC is required if the total costs of the non-structural
alterations exceeds $250,000, provided that the RDC may not unreasonably
withhold its consent. JCC is not required to seek the consent of the City or the
RDC to a non-structural alteration costing less than $250,000, but JCC is
required to give the RDC copies of the as built plans and specifications on
completion of the nonstructural alterations if any such plans or specifications
have been prepared for JCC.
PROVISIONS REGARDING CASUALTY LOSS. The Amended Ground Lease requires all
insurance proceeds in excess of $500,000 payable following a casualty loss at
the Casino to be paid to an insurance trustee, who will disburse the funds to
pay for the cost of restoring the Casino, subject to specific procedures and
approvals set forth in the Amended Ground Lease. If the insurance proceeds are
insufficient to pay for the restoration of the Casino, JCC is obligated to
complete the work at its own expense. No destruction of, or damage to, the
Casino or any portion thereof will permit JCC to terminate the Amended Ground
Lease, nor will such circumstances give rise to a rent abatement, except under
certain circumstances during the last five years of the term of the Amended
Ground Lease.
PROVISIONS REGARDING CONDEMNATION. If there is a taking by eminent domain
or condemnation of the entirety of the Casino Development, or of so much thereof
that it would be imprudent or unreasonable to continue Casino operations even
after making all reasonable repairs and restorations (a "Major Condemnation"),
the Amended Ground Lease will terminate. Thereupon, no party to the Amended
Ground Lease will have any further claims against the other parties thereto, and
each party to the Amended Ground Lease may seek to recover (unless the City or
its agencies are the condemnor) compensation from the condemning authority,
subject to the right of the leasehold mortgagees to be paid in full if such
Major
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Condemnation occurs during the first ten years of the Amended Ground Lease and
thereafter to be paid in accordance with a declining scale. If a Major
Condemnation occurs by the City or its agencies, JCC has the right to receive
compensation from the condemning authority subject to the right of leasehold
mortgagees to be paid in full. If any taking or condemnation other than a Major
Condemnation occurs, the Amended Ground Lease will remain in full force and
effect, the Rent and additional charges payable thereunder may be adjusted, and
JCC will be obligated to restore the Casino as early as possible to its prior
condition. The proceeds of any condemnation award will be held by an escrow
agent selected by JCC and the RDC, to be disbursed in the manner set forth in
the Amended Ground Lease. If the amount of the condemnation award or awards is
insufficient to pay for restoring the Casino, JCC is obligated to complete the
restoration work at its own expense.
CAPITAL REPLACEMENT FUND. Beginning on the first full calendar month after
the Opening Date of the Casino, JCC is required to fund monthly payments into a
capital replacement fund in an aggregate amount equal to $3 million for the
first 12 months following the Opening Date, $4 million for the second 12 months
following the Opening Date, and $5 million for the third 12 months following the
Opening Date. For each successive 12 month period thereafter, JCC is required to
contribute to the capital replacement fund 2.0% of Gross Gaming Revenue and
Gross Non-Gaming Revenue. The Amended Ground Lease specifies the purposes for
which sums in the capital replacement fund may be used and sets forth rules for
carrying forward, retaining, withdrawing from and replenishing the capital
replacement fund, as well as the use of such funds upon the termination of the
Amended Ground Lease. The capital replacement fund referred to above is the same
as that required pursuant to the Amended Management Agreement and the Amended
and Restated Casino Operating Contract and is not meant to duplicate the capital
replacement obligations of JCC under the Amended Management Agreement and the
Amended and Restated Casino Operating Contract. See "--Amended and Renegotiated
Casino Operating Contract--Capital Replacement Fund" and "Amended Management
Agreement--Capital Replacement Fund."
SAVINGS AND RETIREMENT PLAN. Subject to restrictions under applicable law
and any changes therein that may from time to time be elected by JCC, JCC
Development or the Manager, employees of the Casino premises will be given the
opportunity to participate in a JCC savings and retirement plan (the "JCC S&RP")
no less favorable than the savings and retirement plan of HET and its affiliates
in effect on the Effective Date (the "Harrah's S&RP"), as thereafter substituted
or amended, or if the Manager or an HET affiliate is no longer the Casino
manager, on terms no less favorable than the savings and retirement plan of the
successor entity, as may be approved by the City and the RDC. Changes or
modifications to the JCC S&RP will not be a default under the Amended Ground
Lease or in any way actionable by the City or RDC as long as such modified JCC
S&RP is no less favorable than the Harrah's S&RP or the savings and retirement
plan of any such approved successor entity, as may be applicable, and is not
discriminatory against JCC's employees.
DISPOSITION OF EXCESS PROCEEDS FOLLOWING FORECLOSURE. The Amended Ground
Lease provides that a mortgagee who forecloses upon the Casino Development and
subsequently receives proceeds from the sale of the Casino property in excess of
the unpaid indebtedness plus costs shall pay 50% of such excess proceeds to the
RDC, subject to any rights of JCC to such excess proceeds. The RDC and the City
acknowledge and agree in the Amended Ground Lease that the Bank Lenders, the
holders of the New Notes, the New Contingent Notes, the Junior Subordinated
Credit Facility and the Convertible Junior Subordinated Debentures have not
received excess proceeds in connection with the transactions contemplated by the
Plan of Reorganization and the RDC is entitled to no additional compensation
under the Amended Ground Lease in connection therewith.
AMENDED OPEN ACCESS PROGRAM. As additional consideration for the Amended
Ground Lease, JCC is obligated to comply with the terms of the Amended Open
Access Program and Plans and agrees to use the efforts specified therein and all
due diligence to achieve the goals and objectives and to satisfy the commitments
stated in the Amended Open Access Program and Plans under the penalties stated
therein. JCC has covenanted to require the Manager to comply with the Amended
Open Access Program in all
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hiring, employment and contracting decisions. See "--Amended GDA" and "--Risk
Factors--Open Access Program and Plans."
IMPOSITIONS; AMUSEMENT TAX. JCC is required, commencing on the Opening Date
and throughout the term of the Amended Ground Lease, to pay or cause to be paid,
on a timely basis, any non-discriminatory tax, duty, charge, fee or payment
imposed by any governmental, quasi-governmental or public authority, utility or
entity which arises in connection with the ownership, use, occupancy or
possession of the Casino Development (collectively, "Impositions"). The Amended
Ground Lease further requires JCC voluntarily to pay ad valorem taxes to the
City in the event that any local and special state legislation is subsequently
enacted which relieves JCC of its obligation to pay the tax.
The City imposes an amusement tax on certain receipts. The Amended Ground
Lease also provides that JCC will be obligated to collect and remit, and cause
JCC Development to collect and remit, to the City an amusement tax only with
respect to certain special events and that the amusement tax need not be
collected or remitted with respect to wagers or gross gaming revenues. If,
however, a court determines in a final non-appealable judgment that the
amusement tax is applicable to JCC's receipts other than receipts from special
events, JCC may set off the amount of the amusement tax collected against future
Rents, future Gross Gaming Payments and future Gross Non-Gaming Payments. See
"--Risk Factors--Taxation."
AMENDED AND RENEGOTIATED CASINO OPERATING CONTRACT
Pursuant to the Casino Operating Contract, which commenced on July 15, 1994,
the LEDGC granted HJC the right to conduct gaming operations at the Casino.
Under the Plan of Reorganization, on the Effective Date, all of HJC's right,
title and interest in and to the Casino Operating Contract revested in HJC, and
the Casino Operating Contract was modified by the Amended and Renegotiated
Casino Operating Contract and assigned to JCC in accordance with applicable
State law and the agreement of the parties thereto.
TERM, FEES AND IMPOSITIONS. Pursuant to the Amended and Renegotiated Casino
Operating Contract, JCC has the right to conduct gaming operations at the
Casino, and the Casino is required to be located at the site of the former
Rivergate Convention Center. The Amended and Renegotiated Casino Operating
Contract is revocable in accordance with the terms thereof. The term of the
Amended and Renegotiated Casino Operating Contract is 20 years from July 1994
with one automatic ten year renewal option.
Under the Casino Operating Contract, HJC paid the LEDGC an initial payment
of $125 million (the "Initial Payment") in installments as well as 25% of the
gross gaming revenues from the Basin Street Casino during the period that it
operated. During the operation of the Basin Street Casino, HJC overpaid the
LEDGC approximately $4.8 million and is, therefore, entitled to a credit of this
amount from the LGCB, as successor to the LEDGC. Under the Amended and
Renegotiated Casino Operating Contract, JCC is entitled to an offset of
$4,812,477 against daily payments owed to the LGCB during the second full COC
Fiscal Year to take into account such overpayments by HJC to LEDGC.
Under the Amended and Renegotiated Casino Operating Contract, each fiscal
year of the Casino's operation, JCC is required to pay to the State, by and
through the LGCB, an amount equal to the greater of (i) $100 million or (ii) the
sum of the following percentages of gross gaming revenue from the Casino in a
fiscal year: (A) 18.5% of gross gaming revenue up to and including $600 million;
plus (B) 20% of gross gaming revenue in excess of $600 million up to and
including $700 million; plus (C) 22% of the gross gaming revenue in excess of
$700 million up to and including $800 million; plus (D) 24% of gross gaming
revenue in excess of $800 million up to and including $900; plus 25% of gross
gaming revenue in excess of $900 million (the "Gross Gaming Revenue Share
Payments"). JCC is required to make a daily payment to the LGCB equal to $100
million divided by 365 days, or approximately $274,000, with an end of year
settlement, if any, of Gross Gaming Revenue Share Payments in excess of $100
million. If the Opening Date does not occur by October 30, 1999, then JCC is
still required to pay the minimum daily payment to the LGCB as required under
the Amended and Renegotiated Casino Operating Contract, under the same terms and
conditions as if the Casino were actually open for business to the general
public, unless the failure to open the Casino for business to the general public
by October 30, 1999 is due to a Force Majeure
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event. The requirement to pay the minimum daily payment pursuant to the terms of
the Amended and Renegotiated Casino Operating Contract prior to the date that
the Casino actually opens for operation would have a material adverse effect on
the Company.
Any unpaid portion due to the State in any one COC Fiscal Year (including
any short COC Fiscal Year for the period immediately following opening of the
Casino) in which (x) JCC ceases operations other than for an Excusable Temporary
Cessation of Operations (as defined herein), (y) an event of default occurs
causing termination of the Amended Ground Lease, or (z) an event of default
occurs under the Amended and Renegotiated Casino Operating Contract as a result
of failure to pay Gross Gaming Revenue Share Payments (the "Minimum Payments")
will be guaranteed by a Minimum Payment Guaranty. A failure by JCC to cause to
be provided a Minimum Payment Guaranty before the first day of a new COC Fiscal
Year will result in a termination of the Amended and Renegotiated Casino
Operating Contract with no cure period.
For the partial COC Fiscal Year of operation ending March 31, 2000 HET and
HOCI have provided, and subject to the terms and conditions set forth in the
HET/JCC Agreement, for the four subsequent full COC Fiscal Years, HET and HOCI
have agreed to continue to provide, a Minimum Payment Guaranty. See "--HET/JCC
Agreement." The obligations of JCC, HET and HOCI under the HET/JCC Agreement are
secured by a first priority lien on substantially all the assets of JCC Holding,
JCC, CP Development and FP Development (excluding the Amended and Renegotiated
Casino Operating Contract and the Gross Revenue Share Payments). Pursuant to the
terms of the HET/JCC Agreement, commencing with the COC Fiscal Year beginning
April 1, 2001, JCC may terminate the HET/JCC Agreement by providing notice of
its intent to terminate to HET and HOCI. If JCC elects to terminate the HET/JCC
Agreement for the COC Fiscal Year beginning April 1, 2001, JCC will be required
to pay a termination fee of $1.0 million to HET. For a termination in the COC
Fiscal Years beginning April 1, 2002 and April 1, 2003, no such fee will be
payable. A Minimum Payment Guaranty will guarantee JCC's obligations to pay the
Minimum Payments only for the duration of the COC Fiscal Year during which JCC
(i) abandons operations of the Casino, (ii) fails to make daily payments to the
LGCB, or (iii) files for bankruptcy and ceases casino operations (each a
"Minimum Payment Default"). A Minimum Payment Guaranty will not secure any
obligations during, or otherwise apply to, any subsequent COC Fiscal Year. In
the event a non-renewal condition under the HET/JCC Agreement has occurred or
upon termination of the HET/JCC Agreement on March 31, 2004, JCC is required to
secure a substitute guarantor acceptable to the LGCB to provide a Minimum
Payment Guaranty. Such guarantor may or may not be HET, HOCI or any affiliate
thereof. In the Amended and Renegotiated Casino Operating Contract, the State
and the LGCB have acknowledged that HET and HOCI have no legal obligation or
duty, express or implied, to provide a Minimum Payment Guaranty (i) for any COC
Fiscal Year following a fiscal year in which a Minimum Payment Default occurs or
any other non-renewal condition under the HET/JCC Agreement occurs, (ii) for any
COC Fiscal Year after March 31, 2004, or (iii) if the HET/JCC Agreement has
otherwise terminated pursuant to its terms.
Under the Amended and Renegotiated Casino Operating Contract, the State owns
that portion of the daily collections from gaming operations equal to the amount
of the daily payment. JCC is prohibited from entering into any contract or other
agreement that permits or purports to permit JCC or any other person to claim a
right or interest in or to the Gross Gaming Revenue Share Payments, which
include the daily payments. The daily payments are required to be deposited
directly into a State account by the next business day after collection.
Under the Amended and Renegotiated Casino Operating Contract, subject to
certain regulatory approvals, JCC is permitted to grant to one or more leasehold
mortgagees a security interest in the funds owned by JCC if the instrument
granting the security interest provides that the security instrument does not
extend to the State's ownership interest in the Gross Gaming Revenue Share
Payments, including the daily payments. The leasehold mortgagee is required to
acknowledge that its mortgage does not extend to the State's ownership interests
in the Gross Gaming Revenue Share Payments.
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If JCC fails to pay as and when due any amount due the State under the
Amended and Renegotiated Casino Operating Contract, in addition to other
consequences of default, the amount past due bears interest at a default
interest rate equal to the greater of (i) the prime rate of Citibank N.A. or its
successor plus 5% or (ii) 15% per annum.
EXCLUSIVE CONTRACT. The Amended and Renegotiated Casino Operating Contract
is exclusive in Orleans Parish. The Amended and Renegotiated Casino Operating
Contract provides that if another land-based casino is authorized to operate in
Orleans Parish during the term of the Amended and Renegotiated Casino Operating
Contract, JCC is afforded certain specified relief described below, however, JCC
is not relieved of the obligation to pay additional charges or to perform its
non-monetary obligations under the Amended and Renegotiated Casino Operating
Contract, including construction and operation of the Casino.
The Amended and Renegotiated Casino Operating Contract provides that if (i)
there are material violations of particular statutory exclusivity provisions by
(a) a change in State law (adopted by statute, regulation or rule) from that in
effect January 1, 1997 permitting any game or gaming device at another
land-based facility in the Parish of New Orleans (not otherwise legal and
offered for play under existing law at such facility) or permitting riverboats
(other than a Permitted Riverboat) to conduct gaming beyond the scope permitted
by statute in effect January 1, 1997, (b) a failure by the State or an agency or
instrumentality thereof to enforce the State law regarding land-based gaming
(other than riverboat dockside issues), (c) the State or LGCB permitting
riverboats to conduct gaming if the riverboats do not meet the requirements of
La.R.S. 27:44(4) and 27:44(23) (c) and (d), as those statutes are in effect
January 1, 1997, or (d) Indian gaming, and (ii) which material violations
continue after notice from JCC and 60 days opportunity to cure by the LGCB or
the State, and (iii) a court of competent jurisdiction renders a final
non-appealable judgment holding that such material violations did occur and were
not timely cured within 60 days after receipt by the LGCB of notice from JCC,
JCC will be relieved of the obligation to make the Gross Gaming Revenue Share
Payments from the date of such final non-appealable judgment, subject to the
additional cure provisions described below, and JCC will be entitled to an
offset against future obligations to the LGCB and/or the State with respect to
any amounts paid to the LGCB and/or the State during the judicially determined
period of any such violation. During the judicial action referred to above, JCC
is required to continue to pay the Gross Gaming Revenue Share Payments while the
action is pursued to a final non-appealable judgment, with a reservation of all
JCC's legal rights.
With respect to clause (a) of the immediately preceding paragraph, a change
in State law which would cause a violation of the exclusivity provisions of the
Amended and Restated Casino Operating Contract does not include a "Permitted
Amendment." A "Permitted Amendment" is a change in State law authorizing one or
more licensed riverboats to remain dockside and conduct dockside gaming beyond
the scope of permitted by statute as in effect January 1, 1997; provided that,
with respect to Orleans Parish, such authorization must be limited to one
licensed riverboat at any time (a "Permitted Riverboat") which must be located
on Lake Pontchartrain in Orleans Parish, and provided, further, that the (A) the
Permitted Riverboat's gaming area must not exceed 30,000 square feet in the
aggregate; (B) the owner or operator of the Permitted Riverboat may not
participate directly or indirectly in the ownership, construction, operation or
subsidization of any hotel of a size exceeding 399 guest rooms within a distance
of one mile from the berthing area of a Permitted Riverboat; and (C) the
Permitted Riverboat may not maintain or offer for patron or public use on the
vessel and at its terminal, berthing area and any hotel referred to above, more
than 8,000 square feet of restaurant facilities in the aggregate (exclusive of
food preparation and handling areas).
Notwithstanding the terms of any final non-appealable judgment rendered by
the court in any action brought pursuant to the procedures described in the
immediately preceding paragraph, the LGCB and the State will have 24 months from
the date that any such final non-appealable judgment is rendered to cure the
material violation and to file a declaratory judgment action seeking a
declaration from a court of competent jurisdiction confirming that the cure has,
in fact, been made and the date and duration of any one or more periods of cure.
If the LGCB and the State obtain such declaration, the Gross Gaming
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Revenue Share Payments will be paid to the State for all periods during the
course of the litigation that the court determines by final judgment were
periods of "cure."
The Amended and Renegotiated Casino Operating Contract also provides: that
the State covenants that it will not permit riverboats (any vessel meeting the
requirements of La.R.S. 27:44(4) and 27:44(23)(a-e), as those statutes are in
effect on the date of the Amended and Renegotiated Casino Operating Contract) to
conduct illegal dockside gaming (provided that it does not include such gaming
if the riverboat conducts sailing or cruising materially in accordance with the
requirements of La.R.S. 27:65(B)(1) in effect as of January 1, 1997), and (a)
that if there are any material violations of the covenant which continue after
notice from JCC and 60 days opportunity to cure by the LGCB or the State, and
(b) that if a court of competent jurisdiction renders a judgment (subject to
applicable appellate rights) holding that material violations did occur and were
not timely cured within 60 days after receipt by the LGCB of notice from JCC,
JCC will be entitled to seek only (i) specific performance by the LGCB and/or
the State of the obligations contained in the covenant and/or (ii) mandamus
against the LGCB or the appropriate governmental authority. Notwithstanding the
relief from the Gross Gaming Revenue Share Payments set forth in the Gaming Act,
no monetary remedy is authorized under the Amended and Renegotiated Casino
Operating Contract. During the pendency of any such judicial action seeking
specific performance and/or mandamus, through final non-appealable judgment, JCC
will not be relieved of its obligation to pay the Gross Gaming Revenue Share
Payments. The finding of the violation complained of in such action will not at
that time or at any time thereafter relieve JCC of its obligation to pay the
Gross Gaming Revenue Share Payments.
The Amended and Renegotiated Casino Operating Contract provides that JCC
will not initiate any action for judicial relief concerning any exclusivity
violations until the expiration of 18 months after the Opening Date, although
the notice and cure provisions regarding both parties will be in force during
such eighteen month period and subsequent years. In no event will JCC be
restricted during such 18 month period from asserting any exclusivity violations
as a defense or in any other procedural manner required under the circumstances
properly to seek relief as described above in response to any action initiated
by LGCB: (a) to terminate the Amended and Renegotiated Casino Operating
Contract; or (b) to challenge the financial suitability of JCC caused
substantially by the exclusivity violation asserted as a defense thereto. The
Amended and Renegotiated Casino Operating Contract further states that the
provisions described in the preceding sentence are not intended to apply to
routine operational regulatory interactions between the parties.
RULES AND REGULATIONS. Under the Amended and Renegotiated Casino Operating
Contract, JCC acknowledges and consents to the LGCB's rule and regulation making
authority.
CASINO MANAGER. Under the Amended and Renegotiated Casino Operating
Contract, JCC cannot amend the casino management contract between JCC and the
Manager or enter into a new casino management contract without the LGCB's
approval. The acts and omissions of the Manager are deemed to be the acts and
omissions of JCC for purposes of the Amended and Renegotiated Casino Operating
Contract.
FINANCIAL STABILITY. Under the Amended and Renegotiated Casino Operating
Contract, JCC must remain financially stable. JCC is deemed to be financially
stable if JCC: (i) maintains an adequate casino bankroll; (ii) has the ability
to satisfy its operating expenses; (iii) has the ability to pay its debts that
will mature or otherwise become due and payable during the next 12 month period;
and (iv) has made all required payments to the capital replacement fund. If, at
any time, JCC is unable to demonstrate that it is financially stable, JCC will
have a specified time period after notice of a financial stability default from
the LGCB to cure such default. During the existence of a financial stability
default, the LGCB may impose orders or regulatory conditions, necessary to
protect the public interest, including the appointment of a fiscal agent.
SUITABILITY. Under the Amended and Renegotiated Casino Operating Contract,
JCC and the Manager are required to remain "suitable" (as that term is defined
in the Gaming Act), which requires findings
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with respect to certain equity and debt holders as well as certain officers and
directors of JCC, the Manager and their affiliates. See "--Regulation--Louisiana
Gaming Act." The LGCB may terminate the Amended and Renegotiated Casino
Operating Contract if the LGCB determines that JCC or the Manager is not
suitable. If the LGCB determines that JCC or a holder of a debt or equity
interest in JCC or any of their respective affiliates is not suitable, the LGCB
must provide notice of this determination to JCC. If JCC pursues certain
remedial actions designed to insulate itself from the unsuitable person, it may
protect itself against regulatory action if certain requirements are met. The
safe harbor requirements obligate JCC or its affiliates to take immediate good
faith action to cause the unsuitable person to dispose of the person's interest
in JCC or its affiliates and, pending the disposition, JCC or its affiliates, as
the case may be, must ensure that the unsuitable person: (i) does not receive
dividends or interest on the securities of JCC or its affiliates; (ii) does not
exercise, directly or indirectly, including through a trustee or nominee, any
right conferred by the securities of JCC or its affiliates; (iii) does not
receive any remuneration from JCC or its affiliates; (iv) does not receive any
economic benefit from JCC or its affiliates; and (v) subject to the disposition
requirements, does not continue in an ownership or economic interest in JCC or
its affiliates or remain as a manager, officer, director, partner, employee,
consultant or agent of JCC or its affiliates. This safe harbor does not apply if
JCC or its affiliates, as the case may be (a) had actual or constructive
knowledge or should have had knowledge of the facts that are the basis of the
regulatory action and failed to take appropriate action; (b) is so tainted by
the unsuitable person to affect the suitability of JCC or its affiliates; or (c)
cannot meet the suitability standards contained in the Gaming Act and the Rules
and Regulations.
Under the Amended and Renegotiated Casino Operating Contract, JCC was
required to advance the LGCB up to $3.5 million to reimburse the LGCB for its
actual personnel costs (to include LGCB, State Police and Attorney General
personnel and contract staff appropriate to the suitability process) that were
incurred in connection with the suitability findings necessary for the execution
of the Amended and Renegotiated Casino Operating Contract and the opening of the
Casino (the "Initial Costs"). HJC paid $500,000 of this amount prior to the
Effective Date and JCC advanced $3 million of this amount on the Effective Date.
Six months after the Effective Date, the LGCB will provide JCC with a full
accounting of amounts spent to date and projections of anticipated additional
Initial Costs. The LGCB also may notify JCC that the Initial Costs have exceeded
the $3.5 million advanced to the LGCB, in which case JCC may be required by the
LGCB and/or State to pay such additional amounts within 15 days of demand. There
can be no assurance that the Initial Costs will not exceed $3.5 million, and in
the event that the Initial Costs do exceed $3.5 million, it is likely that the
LGCB and/or State will require JCC to pay such additional amounts to them.
DAYS AND HOURS OF OPERATION. With certain limited exceptions, the Amended
and Renegotiated Casino Operating Contract requires JCC to operate the Casino 24
hours a day, seven days a week.
TIMETABLES AND OUTSIDE DATES. Under the Amended and Renegotiated Casino
Operating Contract, JCC has a duty to complete the Casino Construction within 12
months of the Effective Date, adjusted for Force Majeure events, but only for
the number of days due to such Force Majeure events and only to the extent that
such Force Majeure events actually delay the completion of the Casino
Construction.
RESTAURANT, LODGING AND RETAIL RESTRICTIONS. The Amended and Renegotiated
Casino Operating Contract incorporates the restrictions in the Gaming Act
prohibiting certain restaurant, lodging and retail operations, subject to the
LGCB's rule making powers with respect to leasing space to third-party
restaurateurs and venders. See "--Risk Factors--Limits on Restaurants, Lodging,
Retail Operations and Entertainment."
CAPITAL REPLACEMENT FUND. The Amended and Renegotiated Casino Operating
Contract obligates JCC to maintain a capital replacement fund. The capital
replacement fund is the same as that required pursuant to the Amended Ground
Lease and Amended Management Agreement and is not meant to duplicate the capital
replacement fund obligations under the Amended Ground Lease and Amended
Management Agreement. See "--Amended Ground Lease--Capital Replacement Fund" and
"Management Agreement--Capital Replacement Fund."
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OTHER COVENANTS AND CONDITIONS. The Amended and Renegotiated Casino
Operating Contract contains a number of other covenants on the part of JCC,
including adherence to nondiscrimination policies and practices; giving
preference to Louisiana residents in obtaining goods and services; employment of
minorities at least consistent with the minority population of the State;
production of documentation on the holders of notes or indentures or other
evidences of indebtedness; performance of obligations under the Amended Ground
Lease, the Amended GDA and the Amended Management Agreement; limiting
accessibility to the areas of the Casino where gaming occurs by persons under
the age of 21; and maintaining the Casino in a clean, safe and first-class
condition. JCC also cannot amend the Amended Management Agreement without the
LGCB's approval.
DESIGN AND CONSTRUCTION. JCC is required to obtain prior approval from the
LGCB of any material change to the design development documents or the
construction documents with respect to the Casino and for any subsequent
alterations that would constitute a material change.
INDEMNIFICATION. Under the Amended and Renegotiated Casino Operating
Contract, JCC is required to indemnify the LGCB against all liabilities arising
out of or relating to, among other things: (i) the failure of JCC, the Manager
or a lessee to comply with the terms of the Amended and Renegotiated Casino
Operating Contract; (ii) the construction or remodeling of the Casino or the
performance of any work thereon; (iii) the failure of JCC, the Manager or a
lessee to comply with the terms of the Amended Ground Lease, the Amended GDA,
the Amended Management Agreement or any other agreement affecting the Casino to
which JCC, the Manager or a lessee is a party; (iv) any personal injury, death
or property damage suffered or alleged to have been suffered in, on or about the
Casino; (v) any act, omission or other negligence of JCC, the Manager, any
lessee or their respective employees, agents or servants; or (vi) any failure of
JCC, the Manager or a lessee to comply with applicable law. JCC's obligation to
indemnify the LGCB does not apply with respect to claims that are based upon:
(a) the sole negligence or intentional fault of the LGCB; (b) a finding of
unsuitability that has been adjudicated by a proper court to have been arbitrary
and capricious; (c) the joint or solitary fault of the LGCB, the State or any
person for whom either is vicariously liable with a third party or parties other
than JCC, the Manager or their respective affiliates, or (d) a breach of the
Amended and Renegotiated Casino Operating Contract by the LGCB. JCC is required
to indemnify the State in the event a judgment is rendered against the State as
a result of the actions of JCC or its agents.
DEFAULT; TERMINATION. The occurrence of a default of a material obligation
by JCC could result in the termination of the Amended and Renegotiated Casino
Operating Contract, subject, under certain circumstances, to the rights of
leasehold mortgagees. Such default includes, among other things: (i) the failure
to pay the installments of the Gross Gaming Revenue Share Payments or any other
payment; (ii) financial instability of JCC; (iii) unsuitability of JCC or the
Manager; (iv) unsuitability of certain other persons required to be found
suitable if JCC does not satisfy the safe harbor requirements; (v) conviction of
JCC of conduct that, in the applicable jurisdiction, is punishable as a felony
or equates to a felony in the State; (vi) adjudication of JCC as being in
default under the Amended Ground Lease, the Amended GDA or the Amended
Management Agreement and, in the LGCB's opinion, the default materially affects
JCC's ability to perform its obligations under the Amended and Renegotiated
Casino Operating Contract; (vii) the Amended and Renegotiated Casino Operating
Contract, or any right created thereby, is taken, seized or attached and the
execution, seizure or attachment is not released within five days; (viii) JCC
makes a general assignment for the benefit of creditors; admits in writing its
insolvency or inability to pay its debts; is adjudged to be insolvent; files a
petition or other request for relief seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief; files an
answer or other pleading admitting or not contesting the material allegations
of, or stipulating to the relief sought in, a petition filed against it in any
such proceeding; seeks or consents or acquiesces in the appointment of a
trustee, administrator or liquidator for JCC or a material part of its assets;
or if JCC voluntarily liquidates or dissolves; (ix) JCC fails to perform or
comply with any other material obligation in the Amended and Renegotiated Casino
Operating Contract; or (x) other than as a result of certain excusable causes,
JCC
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closes or abandons Casino operations; or (xi) JCC does not cause to be provided
and continuously maintain a Minimum Payment Guaranty. The LGCB is required to
provide notice and an opportunity to cure a default. Subject to the rights of
the leasehold mortgagees, if JCC does not cure a default within the time period
provided in the Amended and Renegotiated Casino Operating Contract, the LGCB may
terminate the Amended and Renegotiated Casino Operating Contract, enforce the
obligation in default and exercise any other right or remedy available to the
LGCB, including the imposition of fines.
The Amended and Renegotiated Casino Operating Contract will be immediately
terminated, with no right to cure, if either (i) JCC, other than as a result of
an Excusable Temporary Cessation of Operations, closes the Casino or ceases
gaming operations and fails to reopen the Casino and resume gaming operations
within seven days, or (ii) JCC fails to post the Minimum Payment Guaranty at
least one day prior to the first day of each COC Fiscal Year (either of (i) or
(ii) above, a "Termination Event").
FINANCING. All financing must be approved by the LGCB and is required to be
obtained from suitable lenders. The following lenders are presumed to be
suitable: (i) an insurance company regulated by any state of the United States;
(ii) an investment company registered under the Investment Company Act of 1940;
(iii) a plan established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political subdivisions, for
the benefit of its employees; (iv) a trust fund the trustee of which is a bank
or trust company and the participants of which are exclusively plans of the type
identified in clause (iii) above; (v) an investment adviser registered under the
Investment Adviser's Act of 1940; (vi) a real estate investment trust registered
under the Investment Adviser's Act of 1940; (vi) a real estate investment trust
registered with the SEC; (vii) a dealer registered pursuant to Section 15 of the
Exchange Act; (viii) a qualified institutional buyer as defined in Rule 144A
under the Securities Act and any entity, all of the equity owners of which are
qualified institutional buyers, acting for their own accounts or the accounts of
other qualified institutional buyers; (ix) a bank as defined in Section 3(a)(2)
of the Securities Act, a savings and loan association or other institution as
referenced in Section 3(a)(5)(A) of the Securities Act, or any foreign bank or
savings and loan association or equivalent institution or an investment fund
that participates in a bank syndication (and any purchaser that takes an
assignment interest in the bank syndication); (x) any business development
company as defined in Section 2(a)(48) of the Investment Company Act of 1940;
(xi) any business development company as defined in Section 202(a)(22) of the
Investment Adviser's Act of 1940; (xii) investors purchasing debt securities of
JCC (or a subsidiary of JCC) in a public offering registered pursuant to the
Securities Act or through a private placement, and any investor purchasing such
debt securities in a subsequent sale, provided, however, that such debt
securities are widely held and freely traded (and the investor holds no more
than 20% of JCC's total debt or 50% of a material debt issue) so as not to give
an investor the ability to control JCC or the Manager; and (xiii) HET or HOCI
and their wholly owned subsidiaries with respect to certain loans contemplated
by the Plan of Reorganization. The LGCB may at any time determine that the
presumption of suitability no longer exists for a lender if either (a) the
lender exercises control or intends to exercise control over JCC or the Manager,
or (b) the LGCB receives information indicating that the lender may not meet the
suitability requirements. If the presumption of suitability no longer exists,
the lender is required to demonstrate its suitability in accordance with the
terms of the Gaming Act.
JCC is not required to obtain the LGCB's approval for financings if the
lenders are suitable and: (i) the principal amount of the new debt does not
exceed the sum of the debt refinanced, capital improvements funded from proceeds
of the additional financing and transaction costs related to the financing; (ii)
the pre-tax cash flow of JCC is not less than 1.25 times the amount of annual
interest payable with respect to the debt incurred in the financing; or (iii)
the financing is permitted by the LGCB's Rules and Regulations.
The Amended and Renegotiated Casino Operating Contract provides protections
to the leasehold mortgagees, including notice of a default and, unless a
Termination Event occurs, 45 business days within which to cure the default
after the expiration of the casino operator's cure period. The leasehold
mortgagees also have the right to seek the appointment of a receiver unless a
Termination Event occurs.
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Upon the appointment of a receiver and the posting of a bond by the receiver,
the receiver is issued a one time, nonrenewable provisional contract by the LGCB
to continue operation of the Casino until the receivership is terminated. The
leasehold mortgagee provoking the appointment of a receiver is required to pay
the cost of the receiver's bond and the cost of operating the Casino during the
term of the receivership to the extent that costs exceed available revenues. If
the leasehold mortgagee that provoked the receivership provides notice of its
intent to withdraw financial support of the receivership, upon 90 days notice,
the leasehold mortgagee will not be responsible for any costs or expenses of the
receivership after the date specified in its notice. The Amended and
Renegotiated Casino Operating Contract provides for the effects of termination
of the receivership, which may result in the Amended and Renegotiated Casino
Operating Contract being terminated and the right to operate the Casino being
rebid.
TRANSFER RESTRICTIONS. Under the Amended and Renegotiated Casino Operating
Contract, JCC cannot transfer or encumber the Amended and Renegotiated Casino
Operating Contract, the Amended Management Agreement, the Amended Ground Lease
or the Amended GDA, or any interest therein, without the approval of the LGCB.
The LGCB may in all cases impose conditions to its approval. The LGCB is
required to give notice and an opportunity to cure a violation of the transfer
restrictions. With respect to a transfer or encumbrance by someone other than
JCC in violation of the transfer restrictions, the transfer or encumbrance will
not be a default by JCC if JCC complies with the safe harbor requirements and
insulates itself in the manner required by the Amended and Renegotiated Casino
Operating Contract. Notwithstanding the foregoing, the Amended and Renegotiated
Casino Operating Contract provides that the transfer restrictions are not
intended to restrict the transfer of publicly traded securities that are traded
on a national exchange, provided that the LGCB maintains the power to require
the holder of any such securities subsequently to be found suitable. See
"--Regulation--Louisiana Gaming Act."
COMPLETION GUARANTEE. Pursuant to the Amended and Renegotiated Casino
Operating Contract, the Completion Guarantors have provided to the LGCB a
guarantee of the completion of construction of the Casino. See "--Completion
Guarantees."
AMENDED MANAGEMENT AGREEMENT
GENERAL. On October 29, 1998, JCC and the Manager entered into a second
amended and restated management agreement (the "Amended Management Agreement")
granting the Manager the sole and exclusive right to manage and operate the
Casino. The Manager is responsible for and has authority over, among other
things: (a) hiring, supervising, and establishing labor policies with respect to
employees working in the Casino; (b) gaming and entertainment policies and
operations, including security and internal control procedures; (c) advertising,
marketing and promotions; (d) Casino-level accounting, budgeting, financial and
treasury functions; (e) maintaining, renovating and improving the Casino; (f)
determining the use of certain proprietary and third party licensed computer
services and certain brand services generally offered at casinos owned or
managed by HET and its affiliates; and (g) performing certain other obligations
of JCC requested by JCC in writing and agreed to by the Manager. During the term
of the Amended Management Agreement, JCC is required to fund the cost of
operating the Casino and is responsible for, among other things, (a) approving
budgets presented by the Manager; (b) maintaining JCC's leasehold interest in
the Casino Premises, free from encumbrances other than those set forth as
exceptions in the title policy covering the Casino Premises; (c) developing,
constructing, furnishing and equipping the Casino, including the hiring of a
program manager or any construction consultants, contractors, subcontractors or
architects; (d) obtaining and maintaining all licenses and permits required for
ownership of the Casino and continued operation of all facilities and handling
governmental affairs; (e) matters relating to the development, leasing and
financing of the second floor of the Casino; (f) matters relating to the Amended
Open Access Program and Plans; (g) payment of all indebtedness encumbering the
Casino and matters related to the reorganization; (h) community and public
relations other than advertising, marketing and promotions; (i) establishing and
administering employee
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benefit plans and other employee benefit matters; (j) determining, based on the
Manager's recommendations, what entity shall provide certain administrative
services; (k) assisting the Manager with respect to any matters delegated to the
Manager if requested in writing by the Manager and agreed by JCC; and (l) all
corporate, administrative and other business activities of JCC and any other
matters not expressly delegated to the Manager under the Amended Management
Agreement.
The Manager is required to operate the Casino (at JCC's expense) in
accordance with the operational standards applied at the casino operated by an
affiliate of HET in Atlantic City, New Jersey, as well as in accordance with
applicable law and the applicable provisions of the Amended and Renegotiated
Casino Operating Contract and the Amended Ground Lease. If HET or its affiliates
cease to operate its Atlantic City casino, then the Manager must operate the
Casino in the same manner in which HET operates a casino designated by the
Manager with similar operations and market characteristics. The Casino's
physical plant will be gauged based on its condition following completion as
described by the plans and specifications, together with any capital
improvements required by the Manager for all casinos of similar market
characteristics, or, in the absence of such similar casinos, then HET's Atlantic
City casino, if managed by HET or any affiliate of HET and if not, then by
reference to another casino, designated by the Manager, operated by HET or its
affiliates similar in physical character.
TERM. The Amended Management Agreement has an initial term expiring October
29, 2018, and may be extended for four consecutive terms of ten years each,
provided the Manager is not in default under the Amended Management Agreement at
the time any such extension term is to commence. The Amended Management
Agreement will terminate without any further action of JCC or the Manager
immediately upon the occurrence of the termination of the Amended Ground Lease
by the RDC as a result of JCC's failure timely to complete construction of the
Casino.
CAPITAL REPLACEMENT FUND. Under the Amended Management Agreement, the
Manager on behalf of JCC will make monthly deposits into a fund for capital
replacements and improvements totaling $3 million for the first 12 month period
following the Opening Date, $4 million for the second 12 month period following
the Opening Date, $5 million for the third 12 month period following the Opening
Date, and 2% of gross revenues of the Casino for each fiscal month thereafter.
Any expenditures for capital replacements or improvements which have been
budgeted in an annual plan may be paid from the reserve fund. Upon expiration or
termination of the Amended Management Agreement, all amounts then held in the
reserve fund will be distributed to JCC after compliance with JCC's obligations
under the Amended Ground Lease which must be satisfied from the reserve fund and
after payment of any amounts owed to the Manager under the Amended Management
Agreement. The capital replacement fund referred to above is the same as that
required pursuant to the Amended Ground Lease and Amended and Restated Casino
Operating Contract, and is not meant to duplicate the capital replacement fund
obligations of JCC under the Amended Ground Lease and Amended and Restated
Casino Operating Contract. See "Amended Ground Lease--Capital Replacement Fund"
and "--Amended and Renegotiated Casino Operating Contract-- Capital Replacement
Fund."
BOOKS AND RECORDS; BUDGET. The Manager is responsible for maintaining the
books and records of the Casino. A certified audit will be performed within 90
days after the end of each fiscal year and upon termination or expiration of the
Amended Management Agreement. The audit of the Casino's gross gaming revenues
will be performed by Deloitte & Touche LLP or such other accounting firm as may
be selected by JCC and approved by the Manager. The Manager is also responsible
for preparing an annual plan for JCC's review and approval. The annual plan will
consist of a statement of the estimated income and expenses for the coming
fiscal year, including estimates as to gross revenues, operating costs and
capital replacements; a business and marketing plan for the upcoming fiscal
year; and a projection of the minimum balance which must remain in the bank
account in the "house bank" as of the end of each month to assure sufficient
monies for working capital purposes, the "house bank" and other expenditures
authorized under the annual plan. Within 20 days from the date the proposed
annual plan is delivered to
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JCC, the Manager and JCC will conduct an in-depth review of the plan including
comparisons with the prior year's performance. The Amended Management Agreement
requires the Manager and JCC to resolve all disputes regarding the proposed
budget through arbitration. The Amended Management Agreement also grants the
Manager the discretion to reallocate part or all of the amount budgeted with
respect to any line item to another line item in the same department and to make
expenditures not authorized under the applicable annual plan under certain
circumstances. The Manager may, from time to time during the fiscal year, submit
a revised annual plan to JCC for approval. If the revised annual plan is not
approved, any disagreement between JCC and the Manager with respect to the
revised annual plan shall be resolved by arbitration. JCC must establish a bank
account with a minimum balance of $10 million at the time of the Casino's
opening and a "house bank" in the amount of $5 million. Subject to the
requirements of the Gaming Act and the Rules and Regulations, the minimum
balance and the "house bank" may be adjusted jointly by JCC or the Manager at
any time following the opening of the Casino. The Manager has absolute control
of the bank accounts and the "house bank" and all gross revenues of the Casino
will pass through the bank accounts and Casino funds will not be commingled with
any funds of the Manager or any of the Manager's affiliates. The Manager will
provide JCC with copies of bank statements with respect to the Casino's bank
accounts upon receipt and will also provide a reconciliation of such statements
to the books and records relating to Casino operations within 20 days of the
Manager's receipt of such bank statements.
FEES. The Manager is entitled to receive a management fee having two
components. The first component (the "Base Fee") is equal to 3% of gross
revenues of the Casino. The second component (the "Incentive Fee" and, together
with the Base Fee, the "Management Fees") is equal to 7% of Consolidated EBITDA
of JCC above (i) $40 million for the six month period ending on each March 31
after the Opening Date, and (ii) $75 million for the 12 month period ending on
each September 30 after the Opening Date, less the Incentive Fee paid to the
Manager for the six months included in the applicable 12 month period; provided,
however, that the Manager will refund to JCC all fees paid by JCC under clause
(i) hereof if Consolidated EBITDA does not exceed $75 million for the applicable
12 month period, with appropriate proration of such threshold for any partial
year following the Opening Date and preceding the termination of the Amended
Management Agreement, as the case may be. The Base Fee will be payable to the
Manager monthly. The Incentive Fee, if any, will be payable to the Manager at
six month intervals on the next business day following actual cash payment of
all accrued Fixed Interest and contingent payments, if any, on the Notes. No
Base Fee will be paid, and no Incentive Fee will be accrued or paid, during or
with respect to any period in which JCC is in default with respect to interest
or principal payments under the Notes or the Bank Loans. Any unpaid Base Fees
will be deferred and payable to the Manager at such time as any such default is
cured. In addition, the Manager is entitled to receive a travel fee equal to
$100,000 per year, subject to adjustment by the Consumer Price Index, and a
"marketing contribution" equal to 0.4% of the Casino's net revenues which may be
used for advertising services, special promotions, public relations and other
marketing services. HET's affiliates may pool this marketing contribution with
contributions made by other participating casinos owned or managed by HET's
affiliates.
The New Notes provide for six elections by JCC to pay semi-annual Fixed
Interest in kind rather than in cash for the first three years of the New Notes
and requires JCC to pay semi-annual Fixed Interest in kind thereafter if JCC's
Consolidated EBITDA for the prior 12 months has not exceeded $28.5 million.
Under the Amended Management Agreement, if JCC is required to cause Base Fees to
be deferred and/or disgorged as a result of any such election to pay semi-annual
Fixed Interest in kind or is required by the Credit Agreement to defer Base Fees
as a result of a deferral of principal amortization, the Manager agrees to defer
and/or disgorge such Base Fees. The New Notes provide that, on any of the first
six semi-annual interest payment dates, Base Fees payable to the Manager will be
deferred to the extent that the cash saving from paying Fixed Interest in kind
is needed for cash flow deficiencies other than for repayment of Tranche A-1 and
Tranche A-2. With respect to Incentive Fees, the New Notes also provide that if
JCC is required to pay Fixed Interest in kind with respect to the third, fourth,
fifth or sixth semi-annual interest payment periods, because of the terms of the
Term Loans or if JCC elects to pay Fixed
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Interest in kind during such semi-annual interest period, the Incentive Fees
payable to the Manager will be deferred during such corresponding semi-annual
interest period. If Consolidated EBITDA for JCC is less than $28.5 million for
the 12 months ending on the last day of the semi-annual interest period starting
with the fourth year after the Effective Date, the Base Fees and Incentive Fees
will be deferred as set forth above. Any such election or elections by JCC to
pay semi-annual fixed interest in kind must be by written notice from JCC to the
Manager specifying the amount, if any, required to be deferred under the
Indenture and/or Credit Agreement (the "Deferral Amount"). Such Deferral Amount
will first be applied to offset any Base Fees then unpaid and thereafter
accruing during the applicable six month period. To the extent any such Deferral
Amount exceeds the amount of any unpaid and accrued Base Fees for the applicable
six month period, the Manager will repay to JCC the remaining amount of such
Deferral Amount not to exceed the amount of any Base Fees previously paid to the
Manager with respect to any portion of the applicable six month period paid or
accruing prior to JCC's election to pay Fixed Interest in kind. To the extent
the Manager is required to refund to JCC any deferred Management Fees as
described above, HET and HOCI will guarantee the Manager's obligation to make
such refund.
Any deferred Management Fees will bear interest at 8.0%, which will accrue
until such deferred Management Fees are repaid. At such time and to the extent
that JCC's Consolidated EBITDA exceeds $65 million for the preceding 12 month
period, any deferred or refunded Base Fees together with interest thereon will
be payable to the Manager pro rata with any deferred guaranty fees payable to
HET or HOCI pursuant to the HET/JCC Agreement, out of excess cash flow
(remaining after application of the excess cash flow sweep required by the
Credit Agreement) to the extent JCC's Consolidated EBITDA exceeds $65 million.
See "--HET/JCC Agreement" and "--Bank Loans." At such time and to the extent
that JCC's Consolidated EBITDA exceeds $75 million for the preceding 12 month
period, any deferred Incentive Fees together with interest thereon will be
payable to the Manager, after repayment of any deferred Base Fees and such
deferred guaranty fees, out of excess cash flow (remaining after application of
the excess cash flow sweep required by the Credit Agreement) to the extent JCC's
Consolidated EBITDA exceeds $75 million. During the continuance of any uncured
payment default under the New Notes indenture or any default which results in an
acceleration under the New Notes indenture, or during the continuance of any
uncured default under certain provisions of the Amended Management Agreement,
any accrued but unpaid Base Fees or Incentive Fees will be subordinated to
payments pursuant to the New Notes indenture in the following order: (a) Fixed
Interest; (b) principal amounts under the New Notes; (c) Base Fees; (d)
contingent payments with respect to the New Notes; (e) amounts advanced under
the Completion Guarantees; and (f) Incentive Fees. See "--HET/JCC Agreement" and
"--Bank Loans."
INDEMNITY. JCC is required to indemnify and hold the Manager harmless from
any Claims (as defined herein) and must reimburse the Manager for any money
damages to property which the Manager is required or authorized to pay for any
reason. JCC's indemnity excludes any liability not covered by insurance which
results solely from the proven gross negligence or willful misconduct of any of
the "Key Casino Personnel" or certain of HET's corporate officers if and to the
extent that their proven gross negligence or willful misconduct involves
directing the activity in the operation of the Casino or in the Manager's
performance of its obligations under the Amended Management Agreement that
results in a liability and the liability is proximately caused by such
direction. For purposes of the Amended Management Agreement, "Claims" include
any action or actions, cause or causes of action, in law or in equity, suits,
debts, liens, liabilities, claims, demands, damages, punitive damages, losses,
costs or expenses, and reasonable attorneys' fees of any nature whatsoever
(including, without limitation, claims based upon legal fault, negligence,
offense, quasi-offense, contract, quasi-contract, or any other theory) whether
fixed or contingent, and "Key Casino Personnel" include, among others, the
Casino's general manager, vice president of operations, and vice president of
marketing and certain other direct reports to the general manager. The Manager
is required to indemnify and hold JCC harmless from any liability not covered by
insurance which results solely from the gross negligence or willful misconduct
of any of the Key Casino Personnel if and to the extent that their proven gross
negligence or willful misconduct involves directing
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activity in the operation of the Casino or in the Manager's performance of its
obligations under the Amended Management Agreement that results in a liability
proximately caused by the direction.
TERMINATION OF AMENDED MANAGEMENT AGREEMENT. Upon the happening of certain
events, the Manager may declare an event of default by JCC, entitling it to
terminate the Amended Management Agreement and receive the Termination Fee (as
defined herein). These events include: (i) a breach of the Amended Management
Agreement by JCC which is not cured within the agreed cure period; (ii) failure
by JCC timely to reconstruct the Casino following casualty or partial
condemnation at any time the board of directors of JCC Holding does not consist
of Continuing Directors; (iii) dissolution or bankruptcy of JCC or the Manager
or any person directly or indirectly controlling them or a general assignment
for the benefit of its creditors; (iv) passing of title by JCC to the Casino or
any part thereof in lieu of foreclosure or institution of an action to foreclose
any mortgage in the Casino against JCC and which is not dismissed within 30 days
thereafter; or (v) acquisition by any person or entity that would, if associated
with JCC, any of JCC's affiliates or the Manager, impair or cause the denial,
suspension or revocation of any gaming or alcoholic beverage registration,
permit, license, right or entitlement held by or applied for by JCC, the Manager
or their respective affiliates (a "Non-Qualified Person") of any legal or
beneficial interest in JCC or its affiliates, or any indebtedness of JCC or its
affiliates, that has not been cured within 45 days following notice to JCC by
the Manager of such acquisition. The "Termination Fee" payable to the Manager is
equal to three times the average amount of annual Management Fees earned in the
24 fiscal months preceding termination, but, until the end of the third full
fiscal year following the opening of the Casino, not less than $44 million
adjusted by increases in the Consumer Price Index. Notwithstanding the
foregoing, if any default or event giving rise to a termination by the Manager
results solely from an action or omission of HET, or its affiliates, in its
capacity as a member of JCC, the Manager will not in any such event receive a
Termination Fee in connection with such event of default or resulting
termination.
In addition to the Manager's right to terminate the Amended Management
Agreement as described above, if (i) the Amended Ground Lease or the Amended and
Renegotiated Casino Operating Contract are subject to the imminent risk of
termination, or (ii) any mortgage created pursuant to the Credit Agreement or
any other mortgage securing repayment of indebtedness, the proceeds of which are
used solely to construct, improve, restore or repair the Casino, or to refinance
any indebtedness incurred in connection with such mortgage, is subject to the
imminent risk of foreclosure, JCC shall be entitled to terminate the Amended
Management Agreement by giving 60 days' advanced written notice to the Manager,
without payment of the Termination Fee.
In the event the Rivergate site is destroyed or substantially destroyed by
casualty, or title to the Rivergate site becomes impaired, and the cost of
restoring or curing the title impairment exceeds the insurance proceeds, JCC and
the Manager may terminate the Amended Management Agreement. Upon such
termination, the Manager will be entitled to receive from JCC any amounts due or
owing with respect to events occurring prior to or in connection with such
termination, but the Manager will not be entitled to receive a Termination Fee.
In the event the Rivergate site is condemned or the Amended and Renegotiated
Casino Operating Contract is revoked through no fault of JCC, then the Amended
Management Agreement will be terminated and the Manager will receive from JCC
any amounts due or owing, but the Manager will not be entitled to receive a
Termination Fee; provided, however, the Manager will be entitled to seek a
recovery from the condemning or revoking authority for the Manager's economic
loss in respect of the Amended Management Agreement.
If the Manager or any of its affiliates is determined by the LGCB to be
unsuitable to conduct gaming, JCC shall be entitled to terminate the Amended
Management Agreement upon 30 days' prior notice to the Manager. Following the
Transition Date, if a Change of Control (as defined herein) occurs and the board
of directors of JCC Holding does not consist of Continuing Directors (as defined
herein), the Manager will be entitled to terminate the Amended Management
Agreement upon 90 days' written notice to JCC, but will not be entitled to
receive a Termination Fee. "Continuing Directors" means the directors of JCC
Holding on the Effective Date and each other director, if such director's
nomination for election to the
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board of directors of JCC Holding is recommended by a majority of the then
Continuing Directors. In addition, following the Transition Date, if JCC sells,
assigns or transfers any of its direct or indirect legal or beneficial interest
in the Casino, to any person other than a Qualified Purchaser (as defined
herein) approved by the Manager and which assumes and agrees to perform the
obligations of JCC under the Amended Management Agreement, the Manager will be
entitled to terminate the Amended Management Agreement upon the closing of such
sale, assignment or transfer, but will not be entitled to receive a Termination
Fee. "Qualified Purchaser" means any person or entity that is duly licensed or
otherwise authorized to own and operate the Casino and that: (i) is not a
Conflicted Entity (as defined herein), and (ii) would not, if affiliated with
the Manager, in the reasonable judgment of the Manager or any licensing
authority, impair or cause the denial, suspension or revocation of any gaming
registration, permit, license, right or entitlement or alcoholic beverage
registration, permit, license, right or entitlement held or applied for by the
Manager or an affiliate of the Manager. Other than as described herein, JCC has
no right to terminate the Amended Management Agreement in the absence of a
default by the Manager.
NON-COMPETE. Neither the Manager nor JCC nor any affiliate of the Manager
or JCC that is controlled by the Manager's ultimate parent or JCC's ultimate
parent, as the case may be, may develop, own, finance or manage casino or other
gaming operations in Orleans, Plaquemines, St. Charles, St. Tammany, Jefferson
or St. Bernard Parishes, Louisiana, except for the Casino.
SUCCESSORS AND ASSIGNS. The Manager is not required to seek JCC's consent
to the following, none of which would constitute an event of default under the
Amended Management Agreement: (i) any assignment by the Manager of its
obligations, rights or interests under the Amended Management Agreement to an
affiliate of the Manager that is controlled by the Manager's ultimate parent;
(ii) any transfer of all or substantially all of the Manager's and its
affiliates' gaming business; (iii) any corporate reorganization of the Manager
and its affiliates; or (iv) any transfer of publicly-held stock in the Manager
or any of its affiliates. In the event of such an assignment, the Manager may be
released from its obligations under the Amended Management Agreement, and the
Amended Management Agreement contains no provisions that prohibit assignment to
a financially unstable entity. The Manager may not in any manner, voluntary or
involuntarily, directly or indirectly, partition (or seek the partition of),
sell, assign or transfer any of its legal or beneficial interest in the Casino
or the Amended Management Agreement without prior written consent of JCC (which
consent may be withheld for any reason). Notwithstanding the foregoing, the
immediately preceding sentence does not restrict, limit or effect in any manner
the sale, assignment or transfer of any legal or beneficial interest in JCC's
ultimate parent.
CONFLICTS WITH AMENDED GROUND LEASE. If there is a conflict between the
terms of the Amended Management Agreement and the terms of the Amended Ground
Lease, the terms of the Amended Ground Lease will control.
COMPLETION GUARANTEES
Pursuant to the Completion Guarantees in favor of the Beneficiaries, the
Completion Guarantors have agreed to guarantee the Completion Obligations, the
Carry Obligations and the Preservation Obligations. The "Completion Obligations"
mean the obligations of JCC to commence and complete the construction of and
timely and fully pay for all costs and expenses of completion when due for the
Casino Construction, to equip the Casino with the required furniture, fixtures
and equipment so that the Casino is ready to open to the public (subject to any
necessary regulatory approvals from the LGCB or any other State regulatory
authorities) as a casino gaming operation in accordance with the terms of the
Amended Ground Lease, the Amended GDA, the Indentures and any applicable
requirement of the LGCB. These obligations include, but are not limited to, (i)
the payment of any and all costs of completing the Casino Construction,
including without limitation all labor, materials, supplies and equipment
related thereto, to be paid and satisfied when due including, without
limitation, all cost overruns not paid by JCC; (ii) the payment, satisfaction or
discharge of liens arising from injuries or damages to persons or property in
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connection with the Casino Construction and all liens, charges and claims, other
than permitted liens, arising from the furnishing of labor, material, supplies
or equipment for the Casino Construction, that are or may be imposed upon or
asserted against the Casino or any portion thereof; and (iii) the defense and
indemnification of the Beneficiaries against all such liens arising from
injuries or damages to persons or property in connection with the Casino
Construction, and all such liens, charges and claims, other than permitted
liens, arising from the furnishing of labor, materials, supplies or equipment
for the Casino Construction.
The "Carry Obligations" mean the full and complete payment and performance
of all obligations of JCC to pay on a timely basis all amounts due from or
incurred by or otherwise payable by JCC to any person, including without
limitation, any rent, liquidated damages or other amounts payable to the City
and the RDC under the Amended Ground Lease or the Amended GDA (including but not
limited to JCC Development's obligation, if any, to pay rent directly to the
City and the RDC under the Second Floor Sublease prior to completion of the
Casino Construction), and all project costs (other than any costs which are
included as a part of the Completion Obligations), including without limitation,
the payment of interest and scheduled principal payments (excluding the
principal of the Notes), taxes (prior to delinquency), amounts owing to the LGCB
under the Amended and Renegotiated Casino Operating Contract, amounts owing to
the City and the RDC under the Amended Ground Lease, assessments, utilities,
insurance, maintenance expenses and amounts arising from injuries or damages to
person or property or amounts due pursuant to contracts or agreements to be
funded, paid and satisfied on or prior to the Termination of Construction Date
(as defined herein); provided that the Completion Guarantors in no event
guarantee payment pursuant to the Completion Guarantees of any Minimum Payment
under the Amended and Renegotiated Casino Operating Contract. The Carry
Obligations include, without limitation, (i) the obligation of JCC upon the
Termination of Construction Date to have available for working capital at least
$5.0 million of cash and the Working Capital Facility Maximum Amount of
availability for immediate drawdown(s) under the Working Capital Facility,
subject to the terms thereof (which may require the Completion Guarantors to
contribute working capital directly to JCC or to pay down the Working Capital
Facility), and (ii) the obligation of JCC to repay the Working Capital Facility
upon an event of default under the Working Capital Facility prior to the
completion of the Casino Construction. The "Working Capital Facility Maximum
Amount" equals $25 million reduced by the amount of funds, if any, not to exceed
$2.0 million, available under any letter of credit sub-facility under the
Working Capital Facility for purposes other than those relating to project costs
of the Casino and a drawing of up to $10.0 million to fund a certain Casino bank
account on or before the Termination of Construction Date.
The "Preservation Obligations" include the Completion Guarantors'
obligations, after notices of failure of JCC to fulfill the Completion
Obligations in a timely manner, to pay any of the Carry Obligations or to be the
subject of a voluntary or involuntary bankruptcy proceeding, to take all
necessary steps to maintain insurance coverage and to secure the Casino to
prevent deterioration and unauthorized access. The "Termination of Construction
Date" means the date by which all of the following have occurred: (i) a
temporary certificate of occupancy has been issued for the Initial Casino
Facilities by the building department and other relevant agencies; (ii) all
required permits with respect to the Casino Construction have been received by
JCC; (iii) a notice of completion has been recorded with respect to the Casino
Construction; (iv) an officer's certificate of the Completion Guarantors has
been delivered to the Beneficiaries certifying that the Termination of
Construction Date has occurred; (v) the Casino is equipped with the required
furniture, fixtures and equipment and ready to open for business as a casino
gaming operation; (iv) a certificate has been delivered by the general
contractor and the project architect to the Beneficiaries for the Casino
Construction certifying that the Casino Construction has been substantially
completed in accordance with the plans and specifications therefor and all
applicable building laws, ordinances and regulations; and (vii) the Initial
Casino Facilities have opened for business as a casino gaming operation so long
as any necessary regulatory approvals from the LGCB or any other State
regulatory authorities have been received, or, if such approvals have not been
received, even though timely receipt of any such approvals has been diligently
pursued by or on behalf of JCC in accordance with the
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Rules and Regulations for such approvals, the Initial Casino Facilities are in a
condition to receive customers in the ordinary course of business.
The Completion Guarantees are subject to a number of important exceptions
and qualifications. The Completion Guarantors' obligation to complete the Casino
does not take effect until and unless JCC fails or neglects timely to commence
or complete the Casino Construction, fails in any other manner to prosecute with
diligence and continuity the Completion Obligations, fails timely to pay any of
the Carry Obligations, or files or has filed against it a petition for
bankruptcy or similar relief. See "--Material Agreements--Amended Completion
Loan Agreement." In addition, the Completion Obligations (but not the Carry
Obligations) under the Completion Guarantees are suspended during the pendency
of any Force Majeure. See "--Risk Factors--Completion Guarantees." The
Completion Guarantees are not for the benefit of, and are not enforceable by,
the holders of equity interests in JCC Holding, including holders of Class A
Common Stock.
The Completion Guarantees terminate upon the occurrence of any of the
following: (i) the termination of the Amended Ground Lease or the Amended GDA
other than as a result of a breach by JCC; (ii) casino gaming operations are no
longer permitted to be conducted at the Casino or are modified, restricted or
limited in a manner that materially diminishes the benefits afforded to JCC or
the gaming activities permitted to be conducted at the Casino pursuant to the
Gaming Act by reason of a change of law or the enactment of a new law after the
Effective Date or by reason of JCC's rights under the Amended and Renegotiated
Casino Operating Contract having been terminated in any material respect, other
than as a result of a breach by JCC or the Completion Guarantors; provided that,
upon the occurrence of any of the events described in this clause (ii) prior to
the Termination of Construction Date, the Completion Guarantors are nevertheless
obligated to complete the Poydras Street Support Facility, the Poydras Tunnel
Area, exterior site and street work, and certain improvements which may be
required under the Amended Ground Lease; (iii) only as to the Carry Obligations
but not as to the Completion Obligations, a Force Majeure continues for more
than one year from the receipt of a notice from any of the Beneficiaries to the
Completion Guarantors that the Completion Guarantors' obligation to complete the
Casino has taken effect, notwithstanding the Completion Guarantors' actual and
continuous best efforts to remove such Force Majeure; provided, however, that
the Completion Guarantors will remain liable for all Carry Obligations that
actually come due through the expiration of such one year period to the extent
not satisfied by JCC; and, provided further, that the Completion Guarantors used
their best efforts to remove such Force Majeure within such one year period; or
(iv) as to the Carry Obligations, as of and upon the Termination of Construction
Date and as to the Completion Obligations upon the date on which all such
payments or satisfactory provisions for all such payments have been made, all
lien periods with respect to the Casino Construction have expired and no liens
or privileges arising from the furnishing of labor, materials, supplies or
equipment for the Casino Construction affecting or purporting to affect the
Casino remain of record in Orleans Parish. JCC has obtained the Surety Bond for
the benefit of the Beneficiaries for completion of the Casino Construction.
The remedy of specific performance and the remedies described below are not
intended to be exclusive of remedies that Beneficiaries may have against JCC
under any other documents or agreements. If, after notice and opportunity to
cure, the Completion Guarantors fail timely to pay the Carry Obligations (a
"Carry Obligation Default") or if, after notice and an opportunity to cure, the
Completion Guarantors fail to commence and diligently thereafter continue to
perform the Completion Obligations through the date of completion (a "Completion
Obligation Default"), or if, after notice and an opportunity to cure, the
Completion Guarantors fail to perform the Preservation Obligations (a
"Preservation Obligation Default"), then the Beneficiaries, subject to certain
provisions, may elect to require specific performance by the Completion
Guarantors of any or all of the Carry Obligations after a Carry Obligation
Default, the Completion Obligations after a Completion Obligation Default and
the Preservation Obligations after a Preservation Obligation Default. After a
Completion Obligation Default or a Preservation Obligation Default, the
Beneficiaries, at their option, have the right, but have no obligation, to
require the
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surety to perform the Completion Obligations or the Preservation Obligations
pursuant to the Surety Bond. The Beneficiaries' election to require the surety
to perform the Completion Obligations will not release, diminish or extinguish
the liability of JCC or the Completion Guarantors to the extent the surety fails
to perform the Completion Obligations or the Preservation Obligations. The
Completion Guarantors will remain obligated to perform the Carry Obligations
notwithstanding any such election and notwithstanding the surety's performance
of the Completion Obligations or the Preservation Obligations. In addition to
the Beneficiaries' right to require specific performance by the Completion
Guarantors of any and/or all of the Completion Obligations after a Completion
Obligation Default, the Carry Obligations after a Carry Obligation Default or
the Preservation Obligations after a Preservation Obligation Default, and
whether or not the Beneficiaries have called on the surety pursuant to the
surety bond, (i) the Beneficiaries have the right to recover from the Completion
Guarantors all unreimbursed costs and expenses, including but not limited to
attorneys' fees, incurred by the Beneficiaries in protecting, preserving,
enforcing or defending their interests both as against JCC and as against the
Completion Guarantors under the Completion Guarantees, (ii) after a Carry
Obligation Default, the Completion Guarantors will be liable for the joint
benefit of the Beneficiaries as their interests may appear for any interest or
delinquency costs arising from such Carry Obligation Default; provided that the
Completion Guarantors will not be liable for more than one payment of any such
interest or delinquency costs of JCC regardless of whether multiple demands are
made by any or all of the Beneficiaries; (iii) after a Completion Obligation
Default, the Completion Guarantors will be liable for the joint benefit of the
Beneficiaries as their interests may appear for damages to pay for the costs of
performance of the Completion Obligations arising from such Completion
Obligation Default or otherwise available at law or in equity; and (iv) after a
Preservation Obligation Default, the Completion Guarantors will be liable for
the joint benefit of the Beneficiaries as their interests may appear for damages
to pay for the costs of performance of the Preservation Obligations arising from
such Preservation Obligation Default; provided that in no event will the
Completion Guarantors be liable for duplicate payments in respect of damages nor
for more than one performance of the Preservation Obligations.
On the Effective Date, the Completion Guarantors entered into a completion
guarantee agreement in favor of the RDC and the City (the "RDC Completion
Guarantee"), a completion guarantee agreement in favor of the LGCB and the State
(the "LGCB Completion Guarantee"), a completion guarantee agreement in favor of
the holders of the Notes (the "Notes Completion Guarantee"), and a completion
guarantee agreement in favor of the Bank Lenders (the "Bank Completion
Guarantee"). In the event that any amendment or supplemental agreement with
respect to any of the foregoing completion guarantees provides rights or
remedies to any Beneficiary (the "Favored Beneficiary") under its completion
guarantee agreement that are more favorable in any respect than the rights and
remedies granted to the other Beneficiaries (the "Other Beneficiaries") under
their respective completion guarantee agreements, then the Other Beneficiaries
will be deemed to have available to them, at their option, the benefit of the
more favorable rights and remedies implemented by such amendment or supplemental
agreement and will not under any circumstances be deemed to have agreed to or
become subject to any alterations in the completion guarantee agreement of the
Favored Beneficiary, or any provisions of a supplemental agreement among the
Completion Guarantors and the Favored Beneficiary, that are less favorable than
the rights and remedies granted to the Other Beneficiaries under their
respective completion guarantee agreements.
AMENDED COMPLETION LOAN AGREEMENT
On the Effective Date, JCC and the Completion Guarantors entered into an
amended and restated subordinated completion loan agreement (the "Amended
Completion Loan Agreement"), under which any expenditures made by the Completion
Guarantors under the Completion Guarantees which are not also expenditures under
the Amended and Restated Construction Lien Indemnity Agreement (as defined
herein) are deemed unsecured limited recourse indebtedness (the "Completion
Loans") of JCC due and
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payable six months following the maturity of the New Notes and New Contingent
Notes. The Completion Loans bear annual interest at the rate of 8%. Subject to
meeting certain restricted payment tests contained in the Indentures for the
Notes and pursuant to the Bank Loan documents, the Completion Loans will be
repaid from the cash flow or proceeds of major capital events of JCC available
for distribution by JCC to its member. During any period in which (i) payment of
the Completion Loans is prohibited under the terms of the Bank Loan Documents or
(ii) JCC has paid interest in kind rather than in cash on the New Notes, JCC
will not be permitted to make any payment in respect of the Completion Loans;
provided, however, that interest will continue to accrue on the Completion Loans
at the annual rate of 8.0% during any period in which the Company is not
permitted to make payments and such interest will be added to the principal
amount of the Completion Loans. Any Completion Loan not paid at maturity will
bear annual interest at the foregoing rate plus 2.0%. The Completion Loans are
junior in right of payment to the Bank Loans, the Notes (including principal,
interest and contingent payments due and payable), Senior Permitted
Refinancings, Senior Subordinated Permitted Refinancings and will rank PARI
PASSU with the Junior Subordinated Credit Facility. Repayments are generally
treated as restricted payments under the Indentures and Bank Loan documents.
Payments in excess of those permitted to be paid under the Indentures or Bank
Loan documents will be subordinate to the repayment of the Notes and the Bank
Loans.
At such time that there is a demand, call, notice or requirement for
performance of any Completion Guarantee, the Completion Guarantors will be
entitled to control the disbursement and use of, and apply toward the cost to
complete the Casino, all available funds of JCC without any further action or
consent by JCC, including, without limitation, drawing and using any such
portion of the Term Loans the Junior Subordinated Credit Facility, or the
proceeds from the Convertible Junior Subordinated Debentures up to the total
amount available thereunder, until all obligations of the Completion Guarantors
in respect of the Completion Guarantees have been fully satisfied (subject to
the obligation to provide certain minimum cash and working capital availability
as described in the Completion Guarantees). The Amended Completion Loan
Agreement also provides that JCC will use all of its available funds, including
all equity contributions made to JCC and amounts received from Term Loans, the
Junior Subordinated Credit Facility and the Convertible Junior Subordinated
Debentures for the construction and development of the Casino.
Under the Amended Completion Loan Agreement, JCC and the Completion
Guarantors agree that (i) separate books and records will be kept for funds
related to operations of the Casino and funds related to construction of the
Casino, and such funds will not be commingled, and (ii) within 45 days following
the completion of construction of the Casino Construction, JCC will have its
accountants audit such books and records and all amounts expended to construct
the Casino. To the extent such audit determines that the amounts in the
aggregate expended for construction were in excess of the costs budgeted for
such construction, the Completion Guarantors will reimburse to JCC any such
excess and such amounts reimbursed will be a Completion Loan.
Pursuant to the Amended Completion Loan Agreement, HET, HOCI, JCC, the RDC
and the City entered into an entry agreement under which the Completion
Guarantors are granted the right to enter and take control of construction of
the Casino, provided that the Completion Guarantors will be liable for actual
damages resulting from their willful misconduct or gross negligence in the
exercise of its entry rights. If the Completion Guarantors exercise their rights
as a result of: (i) any demand, call, notice or requirement for performance
under any Completion Guarantee; or (ii) the Completion Guarantors having
determined in good faith that the cost of completing the Casino will materially
exceed the project budget for the Casino or delay the timely completion of the
Casino, the Completion Guarantors' liability will be limited to actual damages
suffered by JCC not to exceed $2.0 million unless such damages arise from the
Completion Guarantors' willful misconduct or gross negligence. A good faith
determination may be based on, among other things: (a) the occurrence of certain
delays in the construction schedule; (b) certain project cost overruns; (c)
defaults on any Completion Loan; or (d) default under the Amended and
Renegotiated Casino Operating Contract, Amended GDA or the Amended Ground Lease.
Following the occurrence of any such circumstance, the Completion Guarantors
have the right to act in the place of JCC
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in respect of the construction contracts, architects, agreements, payment and
performance bonds and the plans and specifications relating to the Casino.
The Completion Loan Agreement imposes certain covenants, representations,
warranties and events of default on JCC.
SECOND FLOOR SUBLEASE
GENERAL. On October 29, 1998 and effective as of the Effective Date, JCC
entered into a sublease (the "Second Floor Sublease") with JCC Development,
pursuant to which JCC subleases to JCC Development for the term described below
the second floor of the Casino which is available for non-gaming uses.
TERM. The term of the Second Floor Sublease commences upon the occurrence
of substantial completion of the Second Floor Shell Construction and terminates
on the earlier of the date of expiration or the date of termination of the
Amended Ground Lease, unless sooner terminated by its terms.
SUBLEASE AND CONVERSION TO GAMING SPACE. The entire second floor of the
Casino initially is available for non-gaming uses upon the completion of the
Second Floor Shell Construction. JCC may convert any portion of the second floor
space in the future to a gaming use subject to approval of the LGCB; provided
that if such conversion would result in less sublease revenue to the RDC, the
RDC will be compensated for such reduction in sublease revenue in accordance
with the terms of the Second Floor Sublease. In the event that such a conversion
of second floor space to gaming use occurs, such space will be removed from the
Second Floor Sublease and thereafter be subject to the terms of the Amended
Ground Lease as applied to the first floor.
MASTER PLAN. A group composed of representatives of JCC, JCC Development
and the RDC is expected to develop the Master Plan for the initial build-out and
leasing of the second floor for non-gaming uses. The Master Plan must be
approved by the RDC, JCC and JCC Development and will, among other things,
establish leasing guidelines regarding rent, termination rights and termination
fees, tenant improvements and concessions, permissible uses, brokerage fees, an
initial capital improvement budget and an initial operating budget for the first
year of operations. JCC and the RDC will sponsor and support at the required
times the necessary steps to gain regulatory and municipal approvals and
conditional use ordinance modifications consistent with the Master Plan. The
Amended Ground Lease prohibits any waiver of or modification to the Second Floor
Sublease or the Master Plan which would have a material adverse effect on the
RDC, the City or the City Council without the prior written consent of the RDC,
the City and the City Council, such consent not to be financially conditioned,
unreasonably withheld or delayed.
SECOND FLOOR BUILD-OUT. The second floor of the Casino is anticipated to be
available for leasing following the opening of the Casino and approval of the
Master Plan. The tenant improvement build-out and development of the non-gaming
uses on the second floor of the Casino is scheduled to begin, subject to
entering into tenant leases, following the approval of the Master Plan. Such
initial non-gaming tenant improvement build-out and development must be
consistent with the Master Plan. The Second Floor Sublease prohibits facilities,
the principal business purpose of which is a restaurant, on the second floor of
the Casino.
MANAGEMENT AND LEASING. JCC Development will manage and lease the second
floor development consistent with the Second Floor Sublease and the Master Plan.
JCC Development may hire a leasing agent and project manager for the second
floor non-gaming leasing and operations. The leasing of the second floor will be
consistent with the leasing parameters set forth in the Master Plan. JCC
Development will submit to the RDC on or before July 15 of each year a proposed
cash flow and operating budget for the second floor non-gaming development for
the following year.
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RENT. JCC Development will pay directly to the RDC, as assignee of JCC,
rent in respect of the second floor equal to 50% of the net operating income
from the second floor development, which shall be net of all costs of
development, construction, leasing, operating and managing the second floor
non-gaming project to the extent such costs are not inconsistent with the Master
Plan. The remaining 50% of the net operating income will be paid by JCC
Development to JCC as rent under the Second Floor Sublease. Such construction
costs in connection with the development and build-out of the second floor must
be consistent with the Master Plan and will be the incremental costs necessary
to make the second floor suitable for non-gaming tenants and to attract such
tenants, and such costs will be amortized over a cost recovery period of ten
years. If any conversion of any portion of the second floor to gaming use would
result in less sublease revenue to the RDC, JCC will compensate the RDC for such
reduction in the sublease revenue. In the event that such a conversion to gaming
use takes place, such space will be removed from the Second Floor Sublease and
will thereafter be subject to the terms of the Amended Ground Lease that apply
to the first floor of the Casino.
ASSIGNMENT AND MORTGAGE. JCC Development may not assign its obligations
under the Second Floor Sublease without the prior written consent of JCC and the
RDC. In addition, JCC Development is prohibited by the terms of the Second Floor
Sublease from pledging, mortgaging or otherwise encumbering the second floor or
the Second Floor Sublease or its interest therein, other than in connection with
the Bank Loans, the New Notes or the HET/JCC Agreement or in connection with any
financing of the second floor development consented to by the RDC pursuant to
the Second Floor Sublease.
BASIN STREET CASINO LEASE TERMINATION AGREEMENT
On January 15, 1997, HJC entered into a Basin Street Casino Lease
Termination Agreement with the RDC and the City, as intervenor (the "Termination
Agreement"). The LGCB approved the termination of the Basin Street Casino Lease.
Pursuant to the Termination Agreement, the Basin Street Casino Lease
automatically terminated on the date the LGCB approved such termination.
Possession of the Basin Street Casino premises has been transferred to the City.
The RDC and the City, on the one hand, and HJC, on the other hand, have mutually
released all rights and obligations under the Basin Street Casino Lease;
provided that such release does not affect any rights or obligations of the
parties under the Termination Agreement in respect of the Municipal Auditorium
or the restoration work described below, as specifically set forth in the
Termination Agreement. The RDC and the City have no claim for damages as a
result of the termination of the Basin Street Casino Lease.
The Termination Agreement required HJC to restore the Municipal Auditorium
to its previous use. In accordance with the terms of the Termination Agreement,
HJC deposited $3,475,399 into escrow on October 3, 1996 to fund the restoration
work and commenced and substantially performed the restoration work. Pursuant to
an assignment and assumption agreement dated as of September 9, 1997, HJC
assigned, and the City and the RDC assumed, all of HJC's rights regarding
performance of all remaining restoration work under the Termination Agreement,
thus releasing HJC from any obligation under the Termination Agreement to
complete and fund the remaining restoration work at the Municipal Auditorium. In
addition, in connection with such assignment and assumption, certain funds on
deposit in the escrow account were returned to HJC and all remaining rights and
obligations of HJC with respect to the escrow account were assigned and
transferred to the City and the RDC.
AMENDED AND RESTATED CONSTRUCTION LIEN INDEMNITY AGREEMENT
JCC and HOCI entered into an Amended and Restated Construction Lien
Indemnity Obligation Agreement (the "Amended and Restated Construction Lien
Indemnity Agreement") pursuant to which any expenditures made by HOCI under the
construction lien indemnity agreement delivered by HET and HOCI to First
American regarding mechanic's liens claiming priority to the Bank Loans, the New
Notes or
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the New Contingent Notes, will be deemed unsecured limited recourse indebtedness
("Indemnity Obligations") of JCC due and payable on demand. The Indemnity
Obligations will bear interest at the rate of 8%. The repayment of the Indemnity
Obligations will generally be treated as a restricted payment under the
Indentures and payments in excess of those permitted to be paid under the
Indentures or the Bank Loans will be subordinate to the repayment of the Notes
and the Bank Loans. During any period in which (i) payment of the Indemnity
Obligations is prohibited under the terms of the Bank Loan documents or (ii) JCC
has paid interest in kind rather than in cash on the New Notes, JCC will not be
permitted to make payments in respect of the Indemnity Obligations; provided,
however, that interest will continue to accrue at the annual rate of 8.0% during
any period in which JCC is not permitted to make payments and such interest will
be added to the principal amount of the Indemnity Obligations. HOCI did not and
will not receive a fee for entering into the Amended and Restated Construction
Lien Indemnity Obligation Agreement.
HET/JCC AGREEMENT
On the Effective Date, JCC entered into the HET/JCC Agreement with HET and
HOCI, under which HET and HOCI provided an initial Minimum Payment Guaranty for
the benefit of the LGCB to assure payment of the Minimum Payment, subject to
renewal or early termination in accordance with the terms of the HET/JCC
Agreement. Any drawing on a Minimum Payment Guaranty provided by HET or HOCI
will bear interest at the Tranche A-3 interest rate. See "--Bank Loans."
HET and HOCI have committed to provide a Minimum Payment Guaranty through
the COC Fiscal Year ending March 31, 2004; provided that a Minimum Payment
Guaranty will not renew for any of the COC Fiscal Years beginning April 1, 2000,
2001, 2002 or 2003 if: (i) there has been a JCC bankruptcy or a cessation of
Casino operations; (ii) there are any unpaid guarantee fees (other than fees
deferred as agreed in the HET/JCC Agreement); (iii) there has been a failure to
pay the Minimum Payment; (iv) in the case of the renewal of the Minimum Payment
Guaranty for the COC Fiscal Year beginning April 1, 2000, the project has failed
to generate positive Consolidated EBITDA for the period of operations ending
January 31, 2000, provided, however there will be no Consolidated EBITDA test
for the period of operations ending January 31, 2000 if such period of
operations commenced after August 1, 1999; (v) in the case of the renewal of the
Minimum Payment Guaranty for the COC Fiscal Years beginning April 1, 2001, 2002
and 2003, the project has failed to generate positive Consolidated EBITDA as of
the 12 month period ending November 30 of the prior calendar year in an amount
equal to $15 million as of the 12 month period ending November 30, 2000, $20
million as of the 12 month period ending November 30, 2001, and $25 million as
of the 12 month period ending November 30, 2002; (vi) HET, HOCI or the Manager
or any of HET's affiliates has been determined to be unsuitable; (vii) the
Manager has been removed as manager of the Casino; (viii) the Amended and
Renegotiated Casino Operating Contract has been terminated (ix) JCC has breached
certain covenants in the HET/JCC Agreement; or (x) an Excusable Temporary
Cessation of Operations has occurred and is continuing. For purposes of clauses
(iv) and (v) above Consolidated EBITDA will mean operating income determined
according to generally accepted accounting principles, but will not include any
extraordinary non-cash items such as the write down of assets or pre-opening
expenses.
With respect to clause (iv) of the preceding paragraph regarding the renewal
of the Minimum Payment Guaranty for the COC Fiscal Year beginning April 1, 2000,
if an Excusable Temporary Cessation of Operations occurs, the Minimum Payment
Guaranty will automatically renew if the Casino's failure to generate positive
EBITDA for the period of operations ending January 31, 2000 is solely the result
of an Excusable Temporary Cessation of Operations and but for the Excusable
Temporary Cessation of Operations the applicable EBITDA test would have been
met. To determine whether the Casino would have generated positive EBITDA in the
absence of an Excusable Temporary Cessation of Operations for the period of
operations ending January 31, 2000, it will be assumed that the Casino would
have generated EBITDA for each day of any period of time the Casino was closed
due to an Excusable Temporary Cessation of Operations in an amount equal to the
average daily EBITDA generated during the 30 days
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prior to such period of time the Casino was closed due to an Excusable Temporary
Cessation of Operations.
With respect to clause (v) of the second preceding paragraph regarding the
renewal of the Minimum Payment Guaranty for the COC Fiscal Years beginning April
1, 2001, 2002, and 2003 if an Excusable Temporary Cessation of Operations
occurs, the Minimum Payment Guaranty will automatically renew if the Casino's
failure to generate EBITDA for the 12 month period ending November 30 of the
prior calendar year in an amount equal to $15 million as of the 12 month period
ending November 30, 2000, $20 million as of the 12 month period ending November
30, 2001, and $25 million as of the 12 month period ending November 30, 2002 is
solely the result of an Excusable Temporary Cessation of Operations; provided
that (i) such $15 million, $20 million and $25 million, EBITDA tests,
respectively, will be reduced pro rata for any period of time the Casino was
closed due to an Excusable Temporary Cessation of Operations during the
applicable 12 month period and (ii) the Minimum Payment Guaranty will
automatically expire and not renew if any such reduced EBITDA tests are not met.
An "Excusable Temporary Cessation of Operations" occurs if any of the
following circumstances occurs, to the extent and only for such time that it
causes temporary closure or temporary cessation of operations of the Casino
beyond the reasonable control of JCC, and further provided that the Casino
Operator diligently and in good faith seeks to reopen the Casino and to
recommence Casino operations: (a) strikes, lockouts, inability to procure
materials or failure of power; (b) arbitrary or capricious State, local or
municipal governmental action (but in no event will an Excusable Temporary
Cessation of Operations pursuant to this clause (b) exceed a period of six
months); (c) acts of God, hurricanes, floods, sinkholes, fires and other
casualties, earthquakes, epidemics, or quarantine; (d) acts of a public enemy,
acts of war, terrorism, blockades, insurrections, riots, civil disturbances,
governmental preemption in connection with a national emergency, or national or
international calamities; (e) the entry of a judgment, order or ruling in
litigation not filed by JCC or any affiliates of JCC and which judgment, order
or ruling was not entered substantially as the result of the fault of JCC or any
affiliates of JCC and which judgment, order or ruling restrains or substantially
interferes with operations of the Casino; (f) any action by the legislature or
any governmental agency the result of which is that gaming as currently proposed
to be conducted at the Casino is materially diminished; (g) any other causes
related to or arising out of the causes stated in subsections (a) through (g)
above beyond the reasonable control of JCC (excluding any bankruptcy of JCC or
failure of JCC to obtain financing or to pay its financial obligations as they
come due) and not substantially the result of the fault of JCC; and (h) any
other cause which the LGCB in its sole discretion formally determines to be an
Excusable Temporary Cessation of Operations.
Commencing with the COC Fiscal Year beginning April 1, 2001, upon written
notice 90 days prior to the first day of the respective COC Fiscal Year, JCC may
terminate the HET/JCC Agreement, thereby cancelling the commitment of HET and
HOCI to renew the Minimum Payment Guaranty for the COC Fiscal Year beginning
April 1, 2001 upon payment of a termination fee of $1 million in cash and may
cancel the commitment of HET and HOCI to renew the Minimum Payment Guaranty for
the COC Fiscal Years beginning April 1, 2002 and 2003 without any fee.
Notwithstanding any other provision hereof, JCC is restricted from terminating
the HET/JCC Agreement unless JCC has obtained a replacement guaranty or letter
of credit which meets the requirements of the Amended and Renegotiated Casino
Operating Contract and which does not result in increased cost to JCC (after
giving effect to payment to HET and HOCI of the termination fee, if applicable),
the Amended and Renegotiated Casino Operating Contract no longer requires JCC to
provide a guaranty or letter of credit, or the LGCB waives the requirement that
JCC provide a guaranty or letter of credit.
HET and HOCI, collectively, will receive a $6 million per annum guaranty fee
for the COC Fiscal Years ending March 31, 2000 and 2001 and a $5 million per
annum guaranty fee for the COC Fiscal Years ending March 31, 2002, 2003 and
2004, all payable quarterly. HET and HOCI, collectively, will receive a pro rata
fee based on an annual fee of $6 million for any partial COC Fiscal Year ending
March 31, 1999 or for the COC Fiscal Year ending March 31, 2000 if it is a
partial COC Fiscal Year. HET and HOCI will not
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receive a guaranty fee for any COC Fiscal Year in which a Minimum Payment
Guaranty is not provided and will repay to JCC any guaranty fee previously
advanced to it in respect of such COC Fiscal Year. If Consolidated EBITDA is
less than $28.5 million for the 12 month reporting period ending 45 days prior
to each semi-annual New Note interest payment date beginning with the fourth
year after the Effective Date, the guaranty fee to HET and HOCI will be
deferred, Fixed Interest on the New Notes will be paid in kind, Management Fees
will be deferred and bank principal amortization may be deferred. JCC's
obligation to pay the per annum guaranty fee and any termination fee to HET and
HOCI and to reimburse HET and HOCI for any drawings (including interest thereon)
by the State under any Minimum Payment Guaranty provided by HET and HOCI is
secured by liens on substantially all of the assets of each of JCC (except the
Amended and Renegotiated Casino Operating Contract and the Gross Gaming Revenue
Share Payments), JCC Development, CP Development and FP Development in favor of
the Collateral Agent for the benefit of HET and HOCI as Minimum Payment
Guarantors as well as the Bank Lenders and the holders of the Notes under the
Indentures, subject to the terms of the Intercreditor Agreement. Certain of the
collateral is subject to release in accordance with the applicable security
documents and the Intercreditor Agreement. In addition, JCC executed a security
agreement granting a lien on the House Bank solely with respect to and in favor
of HET and HOCI as Minimum Payment Guarantors to secure such obligations,
subject to certain rights of the RDC in the House Bank under the Amended Ground
Lease. The HET/JCC Agreement contains covenants in favor of the Minimum Payment
Guarantors (i) requiring JCC to maintain insurance, pay taxes and impositions,
repair and maintain the Casino, and keep the lease in effect, and (ii)
restricting indebtedness and liens by JCC and restricting dividends, merger and
asset disposition. Any successor guarantor in respect of the Minimum Payment
Guaranty may be secured by such lien, subject to payment of any unpaid fees or
obligations to HET and HOCI in respect of the HET/ JCC Agreement.
As explained above, by entering into the HET/JCC Agreement and providing a
Minimum Payment Guaranty, HET and HOCI are not obligated to provide a Minimum
Payment Guaranty for the entire term of the Amended and Renegotiated Casino
Operating Contract, but rather are only obligated to provide it for the period
and on terms and conditions specified in the HET/JCC Agreement. HET and HOCI
have expressly informed JCC, the State and the LGCB that they have not agreed to
renew a Minimum Payment Guaranty beyond March 31, 2004, or in any prior year in
which HET's and HOCI's obligation to furnish a Minimum Payment Guaranty does not
renew by the express terms of the HET/JCC Agreement. HET and HOCI have informed
the Debtors, JCC, the State and the LGCB that any decision HET and HOCI make
concerning whether to renew any Minimum Payment Guaranty or the HET/JCC
Agreement will be made in their sole discretion, and have informed JCC and the
Debtors that such decision will be made acting only in HET on HOCI's best
interests. The State and the LGCB, JCC and JCC Holding have acknowledged that
(i) HET and HOCI are not obligated to and have not given any assurances to the
Debtors, JCC, the State or the LGCB that they will renew the HET/JCC Agreement
beyond March 31, 2004, or renew any Minimum Payment Guaranty for any earlier
fiscal year in which HET's and HOCI's obligation to furnish a Minimum Payment
Guaranty does not renew under the express terms of the HET/JCC Agreement, (ii)
HET and HOCI have the right to make any such renewal decision in their sole
discretion, and (iii) HET and HOCI need not consider the interests of any other
parties in making any such renewal decision, notwithstanding that HET and HOCI
are involved in a number of capacities in respect of JCC and JCC Holding. Upon
termination of the HET/JCC Agreement, JCC will be required to secure a
substitute guarantor to provide a Minimum Payment Guaranty or the Casino will be
unable to open under the terms of the Amended and Renegotiated Casino Operating
Contract. Such substitute guarantor may or may not be HET and/or HOCI or an
affiliate thereof and there can be no assurance that JCC will be able to locate
a substitute guarantor on satisfactory terms. A failure by JCC to cause to be
provided a Minimum Payment Guaranty before the first day of a new fiscal year
will result in a termination with no cure period of the Amended and Renegotiated
Casino Operating Contract. See "--Risk Factors--Non-Renewal of Minimum Payment
Guaranty."
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MANAGER SUBORDINATION AGREEMENTS
In addition to the Manager Subordination Agreement (RDC/City), the Manager
has entered into separate subordination agreements (the "Manager Subordination
Agreements") in favor of each of: (i) BTCo, as administrative agent for the Bank
Lenders (the "Administrative Agent"), and (ii) the Trustee under the Indentures
(collectively, the "Subordination Beneficiaries"). See "--Amended Ground
Lease--Amended Management Agreement" for a description of the Manager
Subordination Agreement (RDC/City).
SUBORDINATION. Pursuant to the subordination agreement between the Manager
and the Administrative Agent (the "Bank Lenders Subordination Agreement"),
payment by JCC of the Subordinated Obligations (as defined herein) is
subordinated to the prior payment in full in cash of all Senior Indebtedness (as
defined herein). "Subordinated Obligations" means, without limitation, the
payment of any Management Fees or Termination Fees owing by JCC to the Manager
pursuant to the Amended Management Agreement and the right to receive or collect
any or all: (a) proceeds of condemnation awards, (b) compensation for revocation
of the Amended and Renegotiated Casino Operating Contract, (c) proceeds of JCC's
title insurance, property or hazard insurance, or other insurance proceeds, (d)
fair market value or other proceeds of JCC's assets, (e) damages or compensation
paid by the State, the LGCB, or any other government entity in connection with
prohibition of use for gaming purposes of the Casino, and (f) any and all other
payments and proceeds under the Amended Management Agreement; provided, however,
that the Lenders Subordinated Obligations do not include system fees, travel
fees and accounting fees, certain tax and insurance fees and other similar fees
and reimbursable expenses of the Manager, in each case to the extent that the
foregoing fees and expenses do not constitute compensation to the Manager for
managing the Casino. "Senior Indebtedness" means all obligations of JCC (1)
under the Credit Agreement and certain other credit documents, and (2) in
respect of any interest rate protection agreements with the Bank Lenders.
Pursuant to the subordination agreement between the Manager and the Trustee
under the Indenture for the Notes (the "Notes Subordination Agreement"), payment
by JCC of the Subordinated Obligations is subordinated to the prior payment in
full in cash of all Notes Obligations (as defined herein). "Notes Obligations"
means (a) the principal of, and premium, if any, and interest on the Notes, and
(b) all other obligations and indebtedness of JCC to the holders of the Notes
and/or to the Trustee or the collateral agent under that certain Intercreditor
Agreement entered into pursuant to the Plan of Reorganization between the
Company, JCC, the Bank Lenders and the Administrative Agent (the "Intercreditor
Agreement").
FORECLOSURE. Under the Bank Lenders and Notes Subordination Agreements, as
of the date (the "Succession Date") that (i) a Subordination Beneficiary takes
possession of or acquires a leasehold interest in the Casino, or succeeds to the
interests of JCC under the Amended Management Agreement or (ii) a receiver,
keeper or conservator (collectively, a "Receiver") of the Casino is appointed,
and at any time during a period ending on the date that is 180 days after the
Succession Date (the "Termination Date"), the Subordination Beneficiary will
have the right to terminate the Amended Management Agreement upon at least 120
days' prior written notice (the "Termination Notice") to the Manager and whether
or not any default then exists on the part of the Manager under the Amended
Management Agreement.
In addition to the termination right set forth in the immediately preceding
paragraph, on any date following (i) the Succession Date or (ii) the filing of
any foreclosure proceeding by a Subordination Beneficiary with respect to the
Casino, and at any time thereafter during the pendency of such foreclosure
(whether or not a Termination Date has occurred), such Subordination Beneficiary
will have the right to terminate the Amended Management Agreement by written
notice to the Manager to be effective as of the date of such notice and without
any other action on the part of such Subordination Beneficiary if an event of
default under the Amended Management Agreement has occurred, the applicable cure
periods have expired, and JCC has the right to terminate the Amended Management
Agreement; provided that such
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termination will not be effective for 45 days unless certain conditions are met.
A Subordination Beneficiary will also have the right to terminate the Amended
Management Agreement by written notice to the Manager to be effective as of the
date of such notice (i) if at any time the Manager ceases to be authorized to
manage the Casino under the law and regulations of Louisiana applicable to
land-based gaming, (ii) if a casino management company other than the Manager is
appointed as Receiver, or (iii) if a casino management company other than the
Manager is appointed to manage the Casino as a result of any order, decree,
judgment or ruling of any court of competent jurisdiction; provided that such
termination will not be effective for 45 days unless certain conditions are met.
If at the time of the giving of any Termination Notice or any termination
without notice pursuant to the immediately preceding paragraph, no default
exists on the part of the Manager under the Amended Management Agreement, the
Manager will be entitled to payment from JCC of the Termination Fee; provided
that (i) such payment will be subordinated to the prior payment in full of all
Senior Indebtedness and Notes Obligations, and (ii) non-payment of such
Termination Fee will have no effect on the effectiveness of any termination of
the Amended Management Agreement under the Bank Lenders or Notes Subordination
Agreements.
CURE PERIOD. Under the Bank Lenders and Notes Subordination Agreements, if
the Manager becomes aware of the existence of any event, act or omission by JCC
under the Amended Management Agreement which would give the Manager the right to
terminate the Amended Management Agreement, the Manager is required to give
written notice of such event, act or omission to the Subordination Beneficiaries
within five days after the Manager becomes aware of the existence of such event,
act or omission. Furthermore, the Manager is required to give the Subordination
Beneficiaries at least 45 business days (the "Cure Period") prior written notice
of any proposed termination by the Manager of the Amended Management Agreement,
which notice must specify the basis for the termination and any defaults then
existing pursuant to the Amended Management Agreement. During the Cure Period,
JCC and/or the Subordination Beneficiaries may remedy the defaults specified in
the notice delivered pursuant to the preceding sentence and, if all such
defaults are cured during the Cure Period, the termination will not take effect.
Furthermore, (in the case of any non-monetary defaults) if any such default is
capable of being cured and a Subordination Beneficiary notifies the Manager that
such Subordination Beneficiary is proceeding to remedy the defaults, but that
the remedy will take longer than the Cure Period, the termination will be
delayed for so long as such Subordination Beneficiary is proceeding to cure the
default and such termination will not occur if the defaults are cured. In the
event that a default under the Amended Management Agreement cannot be cured
without obtaining the legal right to possession of the Casino, the Subordination
Beneficiaries will cooperate with JCC and the Manager to the extent reasonably
feasible to enable JCC and the Manager to cure such default and, upon request of
a Subordination Beneficiary, the Manager will cooperate with such Subordination
Beneficiary to the extent reasonably feasible to enable the Subordination
Beneficiaries to cure such default.
TERMINATION. The Bank Lenders Subordination Agreement will terminate on the
first to occur of (i) the termination of the Credit Agreement and satisfaction
of all obligations to the Administrative Agent and the lenders thereunder or
(ii) the termination of the Amended Management Agreement and satisfaction of all
obligations to JCC and the Manager under the Amended Management Agreement and
the obligations of the Manager under the Bank Lenders Subordination Agreement.
The Notes Subordination Agreement will terminate on the first to occur of
(i) the termination of the Indenture and satisfaction of all obligations to the
Note holders thereunder or (ii) the termination of the Amended Management
Agreement and satisfaction of all obligations to JCC and the Manager under the
Amended Management Agreement and all obligations of the Manager under the Notes
Subordination Agreement.
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REGULATION
LOUISIANA GAMING ACT
PERVASIVE GOVERNMENTAL REGULATION. The ownership and operation of the
Casino are subject to pervasive governmental regulation, including regulation by
the LGCB in accordance with the terms of the Gaming Act, the Rules and
Regulations and the Amended and Renegotiated Casino Operating Contract. The LGCB
is empowered to regulate a wide spectrum of gaming and non-gaming related
activities.
The Gaming Act and the Rules and Regulations, all of which are subject to
amendment or revision from time to time, establish significant regulatory
requirements with respect to gaming activities and the casino operator,
including, without limitation, requirements with respect to minimum accounting
and financial practices, standards for gaming devices and surveillance,
licensure requirements for vendors and employees, standards for credit extension
and collection, and permissible food services. Failure to comply with the Gaming
Act and the Rules and Regulations could result in disciplinary action, including
fines and suspension or revocation of a license or suitability. Certain
regulatory violations could also constitute an event of default under the
Amended and Renegotiated Casino Operating Contract.
LGCB. The Gaming Act initially established the LEDGC as a special public
purpose corporation to regulate land-based gaming in Louisiana. In May 1996, a
law transferred responsibility for regulation of riverboat gaming and land-based
casino gaming from separate boards, one of which was the LEDGC, and substituted
in their place the LGCB. This single board, consisting of nine voting members
and two EX OFFICIO members, is empowered to regulate most forms of gambling in
the State, including the Casino. This law also authorizes the State Police to,
among other things, conduct investigations and audits of gaming license
applicants and to assist the LGCB in determining compliance with gaming laws and
regulations.
AUTHORITY TO ENTER INTO CASINO OPERATING CONTRACTS. The Gaming Act
authorized the LEDGC (and now the LGCB), among other things, to enter into a
casino operating contract with a casino operator for the conduct of casino
gaming operations at a single land-based gaming establishment, having at least
100,000 square feet of usable space, to be located at a facility at the
Rivergate site. The term of the contract under the Gaming Act is not to exceed a
total of 20 years with one ten-year renewal option. The Gaming Act requires the
Gross Gaming Revenue Share Payments as minimum compensation payable to the LGCB
by the casino operator from gaming operations at the land-based casino. For a
discussion of the compensation arrangements in the Amended and Renegotiated
Casino Operating Contract, see "-- Material Agreements--Amended and Renegotiated
Casino Operating Contract--Terms, Fees and Impositions."
Under the Gaming Act, the gaming activities that may be conducted at the
official gaming establishment, subject to the rule-making authority of the LGCB,
include any banking or percentage game that is played with cards, dice or any
electronic, electrical or mechanical device or machine for money, property or
any thing of value, but exclude lottery, bingo, charitable games, raffles,
electronic video bingo, pull tabs, cable television bingo, wagering on dog or
horse races, sports betting or wagering on any type of sports contest or event.
Under the Plan of Reorganization and with certain approvals from the LGCB,
HJC and JCC entered into the Amended and Renegotiated Casino Operating Contract
which provides for alterations of the size and scope of the Casino and a revised
opening schedule for the Casino. See "--Material Agreements-- Amended and
Renegotiated Casino Operating Contract." The Gaming Act provides that the LGCB
has the right but is not required to set aside or renegotiate the provisions of
a casino operating contract if the casino operation is voluntarily or
involuntarily placed in bankruptcy, receivership, conservatorship or similar
status. A law enacted during the State legislature's special session in spring
of 1996, purports to authorize the Governor by executive order, subject to
legislative approval, or the State legislature by act or resolution, to set
aside or order renegotiation or revocation of a casino operating contract when
the casino operator is either voluntarily or involuntarily placed in bankruptcy,
receivership, conservatorship, or some similar status. On March 16, 1998 the
State Attorney General issued an opinion that the LGCB has
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independent authority (without the necessity of any legislative approval) to
renegotiate and execute a renegotiated casino operating contract. On March 20,
1998, the LGCB approved the Amended and Renegotiated Casino Operating Contract,
subject to, among other conditions, the condition that the Louisiana Supreme
Court render a final, non-appealable judgment that the LGCB, acting on its own,
is the proper party and has the legal authority to enter into the Amended and
Renegotiated Casino Operating Contract with HJC or JCC on behalf of the State
and the LGCB, without the specific approval of the Governor or the State
legislature. On May 15, 1998, the Louisiana Supreme Court issued a decision
confirming that the LGCB has the independent authority to renegotiate and
execute the Amended and Renegotiated Casino Operating Contract without seeking
gubernatorial or legislative approval. On October 20, 1998, the LGCB approved
the Amended and Renegotiated Casino Operating Contract, and such contract was
executed on October 30, 1998. See "Risk Factors--Uncertainty Regarding Gaming
Regulation and Future Changes to the Law--Uncertainty Regarding Regulation and
Interpretation of the Gaming Act."
RULES AND REGULATIONS. Under the Gaming Act, the LGCB has broad
discretionary authority to regulate all aspects of the casino operator's
operations, including the power to adopt administrative rules and regulations
(previously defined herein as Rules and Regulations) as may be necessary to
carry out and implement its powers and duties, the conduct of gaming operations,
and any other matters necessary or desirable for the efficient and effective
operation of casino gaming or public convenience. The Gaming Act gives the LGCB
the power, among other things, to (i) investigate the qualifications of any
proposed gaming operator and each applicant for a license or permit, (ii)
investigate violations of the Gaming Act and any rules and regulations
promulgated thereunder, and any other incidents or transactions which it deems
appropriate, (iii) conduct hearings and proceedings concerning, and reviews and
inspections of, gaming operations and related activities, (iv) inspect and
examine all premises, and all equipment or supplies thereon, where gaming
activities are conducted or gaming devices or equipment are manufactured, sold,
distributed, and summarily seize and remove from such premises and impound any
equipment or supplies for the purpose of examination and inspection, (v) audit
the records of applicants and gaming operators respecting all revenues produced
by any gaming operations, (vi) issue interrogatories and subpoenas, and (vii)
monitor the conduct of all casino operators, licensees, permittees and other
persons having a material involvement directly or indirectly with a casino
operator.
ISSUANCE OF LICENSES AND PERMITS. Under the Gaming Act, the LGCB is
required to issue licenses or permits to certain persons associated with gaming
operations, including: (i) certain employees of the casino operator; (ii)
certain manufacturers, distributors and suppliers of gaming devices; (iii)
certain suppliers of goods or services; (iv) any person who furnishes services
or property to the casino operator under an arrangement pursuant to which the
person receives payments based on earnings, profits or receipts from gaming
operations; and (v) any other persons deemed necessary by the LGCB.
The securing of the requisite licenses and permits under the Gaming Act is a
prerequisite for conducting, operating or performing any activity regulated by
the LGCB or the Gaming Act. The Gaming Act provides that the LGCB has full and
absolute power to deny an application, or to limit, condition, restrict, revoke
or suspend any license, permit or approval, or to fine any person licensed,
permitted or approved for any cause specified in the Gaming Act or rules
promulgated by the LGCB. The Rules and Regulations provide that the LGCB may
take any of the foregoing actions with respect to any person licensed,
permitted, or approved, or any person registered, found suitable, or holding a
contract, for any cause deemed reasonable.
The Gaming Act provides that it is the express intent, desire and policy of
the legislature that no holder of the casino operating contract, applicant for a
license, permit, contract or other thing existing, issued or let as a result of
the Gaming Act shall have any right or action to obtain any license, permit,
contract or the granting of the approval sought except as provided for and
authorized by the Gaming Act. Any license, permit, contract, approval or thing
obtained or issued pursuant to the provisions of the Gaming Act has been
expressly declared by the legislature to be a pure and absolute revocable
privilege
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and not a right, property or otherwise, under the constitutions of the United
States or of the State. The Gaming Act also provides that no holder acquires any
vested right therein or thereunder.
SUITABILITY. Under the Gaming Act, no person is eligible to receive a
license or enter into a contract to conduct casino gaming operations unless,
among other things, the LGCB is satisfied the applicant is suitable. The Gaming
Act and the Rules and Regulations also require suitability findings for, among
others, the casino manager, anyone with a direct ownership interest or the
ability to control the casino operator or casino manager (as well as their
intermediary and holding companies), certain officers and directors of such
companies, and certain employees of the casino operator. Suitability requires a
demonstration by each applicant, by clear and convincing evidence, that, among
other things, (i) the applicant is a person of good character, honesty and
integrity; (ii) the applicant's prior activities, criminal record, if any,
reputation, habits and associations do not pose a threat to the public interest
of the State or the regulation and control of casino gaming or create or enhance
the dangers of unsuitable, unfair or illegal practices, methods and activities
in the conduct of gaming or the carrying on of the business and financial
arrangements incidental thereto; and (iii) the applicant is capable of and is
likely to conduct the activities for which a license or contract is sought. In
addition, to be found suitable for purposes of the Amended and Renegotiated
Casino Operating Contract the casino operator must demonstrate by clear and
convincing evidence that: (i) it has or guarantees acquisition of adequate
business competence and experience in the operation of casino gaming operations;
(ii) the proposed financing is adequate for the proposed operation and is from
suitable sources; and (iii) it has or is capable of and guarantees the obtaining
of a bond or satisfactory financial guarantee of sufficient amount, as
determined by the LGCB, to guarantee successful completion of and compliance
with the Amended and Renegotiated Casino Operating Contract or such other
projects that are regulated by the LGCB.
Under the Gaming Act and Rules and Regulations, the LGCB can also require
that the holder of debt securities issued by the casino operator or its
affiliated companies and the holders of equity interests in holding companies of
the casino operator be found suitable. Any person holding or controlling a five
percent or more equity interest in a non-publicly traded, direct or indirect
holding company of the casino operator or casino manager or ten percent or more
equity interest in a publicly traded, direct or indirect holding company of the
casino operator or casino manager, is presumed to have the ability to control
the casino operator or casino manager, as the case may be, requiring a finding
of suitability, unless, among other things: (i) the presumption is rebutted by
clear and convincing evidence; or (ii) the holder is one of several specified
passive institutional investors holding a stated minimum amount of assets and,
upon request, such institution files a certification stating that it does not
have an intention to influence the affairs of the casino operator or casino
manager. To the extent any holder of the securities of the Company fails to
satisfy such requirement, such holder may be required to obtain certain
qualifications or approvals from the LGCB to continue to hold such securities.
Any failure to obtain such qualifications or approvals may, by virtue of the
requirements imposed on the Company, subject such security holders to certain
requirements, limitations or prohibitions, including a requirement that such
security holders liquidate their securities at a time or at a cost that is
otherwise unfavorable to such security holders.
Under the Gaming Act and Rules and Regulations, the LGCB has the authority
to deny, revoke, suspend, limit, condition, or restrict any finding of
suitability. Under the Rules and Regulations, the LGCB also has the authority to
take further action on the grounds that the person found suitable is associated
with, or controls, or is controlled by, or is under common control with, an
unsuitable or disqualified person. Under the Rules and Regulations and the
Amended and Renegotiated Casino Operating Contract, if at any time the LGCB
finds that any person required to be and remain suitable has failed to
demonstrate suitability, the LGCB may, consistent with the Gaming Act and the
Amended and Renegotiated Casino Operating Contract, take any action that the
LGCB deems necessary to protect the public interest. Under the Rules and
Regulations, however, if a person associated with the casino operator or an
affiliate, intermediary, or holding company thereof has failed to be found or
remain suitable, the LGCB shall not declare the casino operator or its
affiliate, intermediary, or holding company, as the case may be, unsuitable as a
result if such companies comply with the conditional licensing provisions, take
immediate
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good faith action and comply with any order of the LGCB to cause such person to
dispose of its interest, and, before such disposition, ensure that the
disqualified person does not receive any ownership benefits. The above safe
harbor protections do not apply if: (i) the casino manager has failed to remain
suitable, (ii) the casino operator is engaged in a relationship with the
unsuitable person and had actual or constructive knowledge of the wrongdoing
causing the LGCB's action, (iii) the casino operator is so tainted by such
person that it affects the suitability of the casino operator under the
standards of the Gaming Act, or (iv) the casino operator cannot meet the
suitability standard contained in the Gaming Act and the Rules and Regulations.
JCC is not permitted to operate the Casino unless and until certain persons
and entities required to be found suitable are found suitable by the LGCB. Such
persons and entities include, without limitation, JCC Holding, JCC, the Manager
and certain members, officers and directors of such companies and any other
persons having the ability to significantly affect the affairs of thereof. On
October 13, 1998, JCC Holding, JCC, the Manager and certain the officers and
directors of JCC Holding, JCC and the Manager were found suitable after
extensive background investigations by the LGCB (and its investigatory arm, the
State Police). Prior to appointing additional officers and directors of JCC
Holding, JCC or the Manager, such persons will also be required to be found
suitable by the LGCB. JCC Holding, JCC, the Manager and all other persons and
entities required to be found suitable, including those already found suitable,
have an ongoing obligation to maintain their suitability throughout the term of
the Amended and Renegotiated Casino Operating Contract. See "Risk
Factors--Uncertainty Regarding Gaming Regulation and Future Changes to the
Law--Suitability of JCC and Affiliated Persons."
TRANSFERS. The sale, transfer, assignment, or alienation of a casino
operating contract, or an interest therein, in violation of the Gaming Act is
prohibited. The LGCB may approve the sale, transfer, assignment, or any grant
the approval subject to conditions imposed by the LGCB.
Under the Gaming Act, the sale, transfer, assignment, pledge, alienation,
disposition, public offering, or acquisition of securities that results in one
person's owning 5% or more of the total outstanding shares issued by the casino
operator is void as to such person without prior approval of the LGCB. Failure
to obtain prior approval by the LGCB of a person acquiring 5% or more of the
total outstanding shares of a licensee or 5% or more economic interest in the
casino operator is grounds for cancellation of the casino operating contract or
license suspension or revocation. For a discussion of certain transfer
restrictions with respect to certain interests in the casino operator, the
Casino Manager, or certain affiliates, see "Material Agreements--Amended and
Renegotiated Casino Operating Contract--Transfer Restrictions" and
"--Financing."
PRIORITY TO LOUISIANA RESIDENTS AND BUSINESSES; MINORITY EMPLOYMENT The
Gaming Act obligates the casino operator to give preference and priority to
Louisiana residents, laborers, vendors and suppliers, except when not reasonably
possible to do so without added expense, substantial inconvenience or sacrifice
in operational efficiency. The Gaming Act further obligates the casino operator
to give preference and priority to Louisiana residents in considering applicants
for employment and requires that no less than 80% of the persons employed by the
casino operator be Louisiana residents for at least one year immediately prior
to employment. The Gaming Act provides that if any contract or other agreement
to which the casino operator is a party contains a provision or clause
establishing a different percentage or requiring more than 50% of the persons
employed to be residents of any one parish, any such provision or clause shall
be null and void and unenforceable as against public policy.
The Gaming Act requires that the casino operator and/or LGCB adopt written
policies, procedures, and regulations to allow the participation of businesses
owned by minorities in all design, engineering, and construction contracts
and/or projects to the maximum extent practicable. The Rules and Regulations
provide that the casino operator and the casino manager must take the foregoing
actions with respect to all design, engineering, construction, banking and
maintenance contracts and any other projects initiated by the casino operator or
casino manager. The Gaming Act further requires the casino operator, as nearly
as practicable, to employ minorities consistent with the population of the
State. The Rules and Regulations
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extend this obligation to the casino manager as well. The Rules and Regulations
provide that if at any time the LGCB shall conclude that the casino operator or
the casino manager is conducting itself in a manner inconsistent with the
requirements of State law or the Rules and Regulations, the LGCB may take
enforcement action, including fines and the imposition of a plan that the LGCB
determines meets the objectives of the Gaming Act and the Rules and Regulations.
LIMITS ON RESTAURANT, LODGING, RETAIL OPERATIONS. The Gaming Act provides
that the casino operator shall not: (i) offer seated restaurant facilities with
table food service for patrons, but may offer limited cafeteria style food
services for employees and patrons as provided by rule of the LGCB, provided,
however, that no food may be given away or subsidized within the official gaming
establishment by the casino operator or any licensee, and no facility for food
service shall exceed seating for 250 persons (by rule and regulation, LGCB is
empowered to allow the Casino operator to contract with local food preparers to
provide food at the restaurants at the Casino); (ii) offer lodging in the
official gaming establishment, nor engage in any practice or enter into any
business relationships to give any hotel, whether or not affiliated with the
casino operator, any advantage or preference not available to all similarly
situated hotels; (iii) engage in such activities as are prohibited by the casino
operating contract; (iv) engage in the sale of products that are not directly
related to gaming; or (v) cash or accept in exchange for the purchase of tokens,
chips or electronic cards an identifiable employee payroll check. Any contract
between the casino operator and any hotel or lodging facilities must be
submitted to the LGCB for approval prior to entering into the contract.
PUBLIC RECORDS. The Gaming Act provides that all records of the LGCB are
public records and available for public inspection, subject to certain
exceptions, and may, in any event, be made available to other governmental
entities or regulators, under certain circumstances.
CASINO SUPPORT SERVICES CONTRACT. The Gaming Act provides that the LGCB
shall annually enter into a casino support services contract with the City of
New Orleans in order to compensate it for the cost to it for providing support
services resulting from the operation of the official gaming establishment and
the activities therein. The amount of the contract is to be determined by
negotiation and agreement between the LGCB and the City of New Orleans, subject
to approval by the State legislature.
RIGHTS OF HOLDERS OF SECURITY INTERESTS. The Gaming Act authorizes the LGCB
to provide for the protection of the rights of holders of security interests in
both immovable property and movable property used in or related to casino gaming
operations ("Gaming Collateral") and to provide for the continued operation of
the official gaming establishment during the period of time that a lender, as a
holder of a security interest, seeks to enforce its security interest in such
property. In connection therewith, the Gaming Act provides that the holder of a
security interest in Gaming Collateral may receive payments from the owner or
lessee of such property out of the proceeds of casino gaming operations received
by the owner or lessee, and, the holder of the security interest may be exempt
from the licensing requirements of the Gaming Act with respect to such payments
if the transaction(s) giving rise to such payments have been approved in advance
by the LGCB and complies with all rules and regulations of the LGCB and the LGCB
determines the holder to be suitable.
Under the Gaming Act, a holder of a security interest in a gaming device who
asserts the right to ownership or possession of the encumbered property may be
granted a one-time, nonrenewable, provisional contract for a maximum of 90 days
for the sole purpose of acquiring ownership or possession for resale to a
licensed or approved person, all in accordance with rules and regulations to be
promulgated by the LGCB. The Rules and Regulations do not yet include a rule and
regulation on this provision. The license or contract shall not authorize the
holder to operate the gaming device or to utilize the property in gaming
activities.
If the holder of a security interest in immovable property comprising the
official gaming establishment wishes to continue the operation of the official
gaming establishment during and after the filing of a suit to enforce the
security interest, the Gaming Act provides that the holder of the security
interest must name
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the LGCB as a nominal defendant in such suit and request the appointment of a
receiver from among the persons on a list maintained by the LGCB. Upon proof of
the debtor's default under the security instrument and the holder's right to
enforce the security interest, the court shall appoint a person from the LGCB's
list as a receiver of the official gaming establishment. Upon appointment of the
receiver, the Gaming Act requires the receiver to furnish a fidelity bond in
favor of the security interest holder, the owner or lessee of the official
gaming establishment and the LGCB in an amount to be set by the court after
consultation with the LGCB and all parties. The Gaming Act requires the LGCB to
issue to the receiver a one-time, nonrenewable, provisional contract to continue
gaming operations until the receivership is terminated. The receiver is
considered to have all the rights and obligations of the casino operator under
the casino operating contract. The holder of the security interest provoking the
appointment of a receiver under the Gaming Act is required to pay the cost of
the receiver's bond and the cost of operating the official gaming establishment
or gaming operator during the term of receivership to the extent that such costs
exceed available revenues, in accordance with the rules and regulations of the
LGCB. The Gaming Act further provides that the fees of the receiver and the
authority for expenditures of the receiver are to be established by rules and
regulations of the LGCB.
The Gaming Act provides that a receivership must terminate upon: (i) the
sale of the property subject to receivership to a duly approved or authorized
person; (ii) the payment in full of all obligations due to the holder of the
security interest in the property subject to the receivership; (iii) an
agreement for termination of the receivership signed by the holder of the
security interest and the debtor, and approved by the LGCB and the court; or,
(iv) the lapse of five years from the date of the initial appointment of the
receiver. Under the Gaming Act, a receivership may also be terminated by notice
from the holder of the security interest who provoked the receivership addressed
to the court and the LGCB of its intention to withdraw its financial support of
the receivership at a specified time not less than 90 days from the date of the
notice. In the event of such notice, the Gaming Act provides that the holder of
the security interest giving the notice will not be responsible for any costs or
expenses of the receivership after the date specified in the notice; except for
reasonable costs and fees of the receiver in concluding the receivership, and
the costs of a final accounting.
The Gaming Act provides that no rule or regulation and no provision in a
contract executed by the LGCB pursuant to its authority to protect the holders
of security interests in Gaming Collateral shall be the basis for any cause of
action in contract or in tort against the State or the LGCB, its board of
directors or its agents, attorneys or employees.
STATE LEGISLATION
Because legalized gaming is a relatively new industry in the State, there
has been significant attention by the State legislature over the past few years
to gaming related bills dealing with a wide range of subjects that could impact
the Casino project. At various times, bills have been introduced to, among other
things, constitutionally and/or legislatively repeal all forms of gaming
(including the land-based casino), increase taxes on casinos, limit credit that
may be extended by casinos and limit days and hours of operations. See "--Risk
Factors--Uncertainty Regarding Gaming Regulation and Future Changes to the Law."
In March 1996, the Governor of the State called a special session of the
State legislature to consider a number of topics, including topics relating to
the Casino. Several laws were enacted as a result of the special session which
have affected the formulation of the Plan of Reorganization and the rights to
operate the Casino under the Gaming Act and the Amended and Renegotiated Casino
Operating Contract.
One such law called for the Local Option Election to decide, on an
item-by-item basis, whether riverboat gaming, video poker gaming and in Orleans
Parish, the land-based casino, should be permitted to operate in the parish. On
November 5, 1996, voters in Orleans Parish elected by approximately a two-to-one
margin to permit land-based casino gaming in that parish. At the same time,
voters in Orleans Parish elected to authorize both riverboat gaming and video
poker gaming in Orleans Parish. See "Risk Factors--
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Uncertainty Regarding Gaming Regulation and Future Changes to the
Law--Uncertainty and Impact of Future Legislation."
Another such law purports to amend the Gaming Act to provide the State and
all of its subdivisions (including the LGCB) with immunity from suit and
liability for any action or failure to act on the part of the State or any of
its political subdivisions (including the LGCB). See "--Risk Factors--State
Immunity for Breach of Contract." It also purports to authorize the Governor by
executive order, subject to legislative approval, or the State legislature by
act or resolution, to set aside or order renegotiation or revocation of a casino
operating contract when the casino operator is either voluntarily or
involuntarily placed in bankruptcy, receivership, conservatorship, or some
similar status. See "Risk Factors--Uncertainty Regarding Gaming Regulation and
Future Changes to the Law--Uncertainty Regarding Regulation and Interpretation
of the Gaming Act."
Another law, among other things, purports to retroactively amend the Gaming
Act (i) to state that the conduct of gaming operations upon riverboats in
accordance with the provisions of the Riverboat Act or otherwise while upon a
designated waterway while temporarily at dockside does not constitute the
authorization of additional land-based casino gaming operations which relieves
the operator of the Casino of the obligation to pay compensation to the LGCB;
and (ii) to provide that governmental inaction which results in the operation of
another land-based casino in Orleans Parish will not relieve the operator of the
Casino of the obligation to pay compensation to the LGCB. This law also purports
to provide that in the event of litigation between the operator of the Casino
and the State or any of its political subdivisions (including the LGCB), the
operator of the Casino must continue to make all payments to the State and any
of its political subdivisions (including the LGCB) as required by law during the
pendency of such litigation, and that any failure to make the required payments
will render the operator of the Casino unsuitable. See "Risk
Factors--Uncertainty Regarding Gaming Regulation and Future Changes to the
Law--Uncertainty Regarding Regulation and Interpretation of the Gaming Act."
Because the Amended and Renegotiated Casino Operating Contract creates
material rights in JCC with respect to the Casino, it is important that JCC be
clearly entitled to bring an action to compel specific performance or any other
remedy permitted or provided by law in the event the LGCB breaches the contract
and fails to cure such breach. However, because of the legislation described
above, there can be no assurance that in the event JCC seeks to enforce its
rights under the Amended and Renegotiated Casino Operating Contract, a court
would allow the suit to proceed.
In May 1996, a law transferred responsibility for regulation of riverboat
gaming and land-based casino gaming from separate boards, one of which was the
LEDGC, and substituted in their place the LGCB. This single board, consisting of
nine voting members and two EX OFFICIO members, is empowered to regulate most
forms of gambling in the State, including the land-based casino. Although the
existing Rules and Regulations promulgated by LEDGC remain in force and effect
at this time, the LGCB is empowered to repeal such Rules and Regulations and to
promulgate its own Rules and Regulations. This law also authorizes the State
Police to, among other things, conduct investigations and audits of gaming
license applicants and to assist the LGCB in determining compliance with gaming
laws and regulations. JCC has been advised that the LGCB intends to promulgate a
number of its own Rules and Regulations after the Effective Date. See "Risk
Factors--Uncertainty Regarding Gaming Regulation and Future Changes to the
Law--Uncertainty Regarding Regulation and Interpretation of the Gaming Act."
In 1997, the State legislature authorized the use of slot machines at race
tracks in three parishes in the State (but not Orleans Parish) subject to a
referendum in each such parish to approve such use of slot machines. Two
parishes approved the use of slot machines at race tracks, but the State
legislature's authorization is subject to further legislative action on fees and
taxes. Legislation to impose such fees and taxes was introduced in the 1998
fiscal session of the State legislature, but failed to receive legislative
approval. Future consideration of this issue is likely by the State legislature.
Bills and resolutions to repeal the authorization for a land-based casino or
to instruct or urge the LGCB not to execute the Amended and Restated Casino
Operating Contract were introduced in the State
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House of Representatives and the State Senate during 1998 but were not enacted.
Additionally, two bills were pre-filed in the State House of Representatives for
consideration during the State legislature's 1999 regular session which begins
March 1999. If passed, the first bill would repeal the Gaming Act in its
entirety and the second would amend the Gaming Act to broaden the food service
restrictions applicable to the Casino and all parts of any connecting structure
or building. See "--Risk Factors--Uncertainty Regarding Gaming Regulation and
Future Changes to the Law--Uncertainty of and Impact of Future Legislation" and
- --Limits on Restaurants, Lodging, Retail Operations and Entertainment."
FEDERAL REGULATION
In August 1996, the President signed into law a bill that creates a federal
commission to examine the rapid growth of the gambling industry and its impact
on American society. The law creates a nine-member National Commission to study
the economic and social impact of gaming and report its findings to Congress and
the President. The National Commission is required by the enabling legislation
to issue a report containing its findings and conclusions, together with
recommendations of the National Commission for legislation and administrative
actions, within two years after the date on which it held its first meeting,
which occurred on June 20, 1997. Any recommendations which may be made by the
National Commission could result in the enactment of new laws or the adoption of
new regulations which could adversely impact the gaming industry in general and
the Company in particular. The Company is unable at this time to determine what
recommendations, if any, the National Commission will make, or the ultimate
disposition of any recommendations the National Commission may make.
BANK SECRECY ACT
Similar to banks and other financial institutions, casinos are required to
monitor and report currency receipts and disbursements in excess of a certain
limit to the United States Department of the Treasury. Under amendments recently
adopted by the Treasury, casinos must obtain and document customer
identification data for all currency transactions above $10,000. These
requirements impose record keeping requirements on the Company which may
increase its overall cost of operations.
ZONING AND LAND USE
The Proponents have obtained certain conditional use approvals from the City
for the Casino and the parking facilities for the Casino. Certain of such
approvals, however, are subject to further review and additional approvals may
be required. Although JCC expects to obtain all required conditional use
approvals for the Casino and its operations, no assurances can be given that JCC
will receive the required approvals.
Because, absent certain waivers, the Casino does not fit within all
requirements of the City's Zoning Ordinance, the Proponents have requested and
received a number of waivers from the City Council. For instance, in the fall of
1996, after discussions with the City, the Proponents received waivers from the
City Council relating to such matters as permissable size of retail space, the
scope of cafeteria services, limitations on live entertainment, permissible
signage and required public artwork. Some uncertainty exists, however, as to the
City Council's authority to grant such waivers in that a third party may
challenge the City Council's authority to grant waivers to a particular City
zoning ordinance and invalidate waivers previously granted by the City. Although
the Company is not currently aware of any such challenges, revocation of such
waivers could cause the Company to cease operations or limit its ability to
operate once opened and therefore could have a material adverse effect on the
Company. In addition, the Zoning Ordinance may be subject to differing
interpretations and, depending upon the interpretation, certain required waivers
may not be requested or granted. Accordingly, no assurances can be given that
the Casino will comply with the Zoning Ordinance in all material respects.
Failure to comply with the Zoning Ordinance could delay or prevent the
construction or opening of the Casino or cause the Casino to cease operations
once opened and therefore would have a material adverse effect on the Company.
See "--Risk Factors--Ability to Commence Operations as Scheduled--Zoning and
Land Use."
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ITEM 2. FINANCIAL INFORMATION
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following selected historical consolidated financial data for HJC has
been derived from the historical financial information of HJC. The selected
unaudited pro forma consolidated financial data for JCC Holding illustrate the
estimated effects of the proposed Plan of Reorganization. The pro forma
consolidated results of operations are based on the HJC historical statement of
operations for the applicable period and assume the Plan of Reorganization was
consummated on January 1, 1997. The pro forma consolidated balance sheet data is
based on the September 30, 1998 balance sheet of HJC and assumes the Plan of
Reorganization was consummated on that date. The unaudited pro forma
consolidated financial data do not purport to represent the Company's results of
operations or financial position had the Company's reorganization been effective
for any periods indicated and do not purport to project the Company's results of
operations and financial position for any future periods. The selected
historical and pro forma consolidated financial data should be read in
conjunction with the related notes, HJC's historical consolidated financial
statements and related notes, the Unaudited Pro Forma Condensed Consolidated
Financial Information and related notes, and other information contained
elsewhere in the Registration Statement, including information set forth herein
under "--Management's Discussion and Analysis of Financial Condition and Results
of Operations."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL HISTORICAL
------------------------------------------------------- PRO FORMA --------------------
1993(A) 1994 1995 1996 1997 1997 1997 1998
----------- --------- --------- --------- --------- ----------- --------- ---------
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Revenues.................... $ 50 $ 91 $ 95,257 $ 1,661 $ 1,679 $ 1,679 $ 60 $ 81
Net loss.................... (6,302) (29,201) (301,560) (20,900) (21,244) (36,817) (14,419) (17,585)
Loss per share.............. N/A N/A N/A N/A N/A $ (3.68) N/A N/A
BALANCE SHEET
Total assets................ 87 665,391 364,480 359,469 354,417 354,414 359,418
Long-term debt.............. -- 510,000 -- -- -- -- --
Liabilities subject to
compromise................ -- -- 519,360 523,483 523,468 523,476 523,468
<CAPTION>
<S> <C>
PRO FORMA
1998
-----------
<S> <C>
RESULTS OF OPERATIONS
Revenues.................... $ 81
Net loss.................... (30,373)
Loss per share.............. $ (3.04)
BALANCE SHEET
Total assets................ 331,000
Long-term debt.............. 189,239
Liabilities subject to
compromise................ --
</TABLE>
- ------------------------
(a) Includes operations for the period of November 29, 1993 (date of inception
of HJC) through December 31, 1993. HJC's financial statements for this
period include significant amounts for transactions incurred by its partners
prior to November 29, 1993.
88
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In connection with the Plan of Reorganization, on the Effective Date, except
for the 3CP Property and the Fulton Property (which properties are not needed
for development and operation of the Casino), all the assets of HJC vested in
JCC. Title to the 3CP Property and the Fulton Property vested in CP Development
and FP Development, respectively. JCC, JCC Development, CP Development and FP
Development are wholly-owned by JCC Holding. In addition, all of HJC's rights in
the Casino Operating Contract to operate a land-based casino in Orleans Parish,
Louisiana revested in HJC on the Effective Date, which Casino Operating Contract
was then modified by the Amended and Renegotiated Casino Operating Contract and
assigned to JCC in accordance with applicable State law and the agreement of the
parties thereto. On the Effective Date, the Company also succeeded to HJC's
interest in the Ground Lease for the site in the City designated by law for the
Casino's development.
Pursuant to the Plan of Reorganization, on account of the New Equity
Investment and the conversion to equity and contribution to JCC Holding on the
Effective Date of $60 million in debtor-in-possession financing that had been
provided to HJC by HET or its affiliates over the course of the reorganization,
HCCIC acquired 100% of the Class B Common Stock issued on the Effective Date. In
connection with the Plan of Reorganization, HCCIC also received the HET Warrant
entitling it to purchase additional shares of Common Stock such that, upon
exercise of the HET Warrant in its entirety, HET and its subsidiaries, including
HCCIC would own 50.0% of the then outstanding shares of Common Stock, subject to
certain adjustments. See "Items 1 and 3. Business and Properties--Material
Agreements--HET Warrant." Under certain settlement agreements executed in
connection with the Plan of Reorganization, HCCIC transfered from its
distribution (i) options to purchase 300,000 shares of Class B Common Stock to
the shareholders of NOLDC, (ii) options to purchase 150,000 shares of Class B
Common Stock to FNBC and (iii) its right to receive 350,000 shares on the
Effective Date to senior secured bondholders of Grand Palais. Because the senior
secured bondholders of Grand Palais are not permitted to own shares of Class B
Common Stock under the Restated Certificate of Incorporation, the 350,000 shares
received by the senior secured bondholders of Grand Palais were shares of Class
A Common Stock. Subsequent to the Effective Date, FNBC exercised its option and
on November 13, 1998, HCCIC transferred 150,000 shares of its Class B Common
Stock to FNBC. Accordingly, HET, through its wholly-owned subsidiary HCCIC,
currently beneficially owns an aggregate of 4,302,623 shares of Class B Common
Stock, or approximately 96.6% and approximately 43.0% of all the issued and
outstanding shares of Class B Common Stock and Common Stock, respectively.
Also pursuant to the Plan of Reorganization, on the Effective Date, (i)
3,710,115 shares of Class A Common Stock which constituted approximately 37.1%
of the Common Stock issued on the Effective Date were distributed on a pro rata
basis to the Bondholders, and (ii) 1,487,262 shares of the Class A Common Stock
which constituted approximately 14.9% of the Common Stock issued on the
Effective Date were issued to a disbursing agent for the benefit of Bondholders
who consented to releases as provided in the Plan of Reorganization, which
amount includes HCCIC's transfer to such disbursing agent of its right to
receive on the Effective Date 200,000 shares of Common Stock under the Plan of
Reorganization. In addition, on the Effective Date, the Bondholders received
their pro rata share of (i) $187.5 million in aggregate principal amount of the
New Notes, and (ii) the New Contingent Notes. See "Items 1 and 3. Business and
Properties--Material Agreements--New Notes and New Contingent Notes."
Also in connection with the Plan of Reorganization, JCC entered into the $60
million A Term Loan, the $151.5 million B Term Loan, the $25 million Working
Capital Facility and the $22.5 million Junior Subordinated Credit Facility. See
"Items 1 and 3. Business and Properties--Material Agreements--Bank Loans" and
"--Junior Subordinated Credit Facility." JCC also issued to the Participating
Banks and the Underwriters approximately $27.3 million aggregate principal
amount of the Convertible Junior Subordinated Debentures. See "Items 1 and 3.
Business and Properties--Material Agreements--Convertible Junior Subordinated
Debentures." In addition, under the terms of the Plan of Reorganization certain
89
<PAGE>
amendments to the Ground Lease, the General Development Agreement, and other
contracts and plans, including the Open Access Program, were made.
Also in connection with the Plan of Reorganization, JCC entered into the
HET/JCC Agreement with HET and HOCI, pursuant to which HET and HOCI have agreed
to provide a guaranty of the $100 million annual payment due to the State under
the Amended and Renegotiated Casino Operating Contract for the benefit of the
LGCB to assure payment of such minimum payment until March 31, 2004, subject to
renewal or early termination in accordance with the terms of the HET/JCC
Agreement. See "Items 1 and 3. Business and Properties--Material
Agreements--HET/JCC Agreement."
FRESH-START REPORTING
On the Effective Date, the Company, among other things, restructured its
capitalization in accordance with the Plan of Reorganization and the
transactions contemplated thereby. Additionally, the application of "fresh
start" reporting as of the Effective Date included adjustments, which aggregated
approximately $100 million, to certain noncurrent assets that will result in
substantially lower depreciation and amortization expense in the future related
to such assets. See "Item 13. Financial Statements and Supplementary
Data--Unaudited Pro Forma Condensed Consolidated Financial Information." As a
result, the financial condition and results of operations of the Company after
giving effect to the Plan of Reorganization and the transactions contemplated
thereby will not be comparable to the financial condition and results of
operations of the Company as of any dates and for any periods prior to the
Effective Date.
As a result of the complexity of the transactions that occurred in
connection with the implementation of the Plan of Reorganization, the recording
of all transactions related to the Company's emergence from Chapter 11 have not
been completed as of the date of this Registration Statement. The Unaudited Pro
Forma Condensed Consolidated Financial Information is based on the assumptions
and preliminary estimates described in the notes thereto. The actual
consolidated financial information as of the Effective Date may vary. See "Item
13. Financial Statements and Supplementary Data--Unaudited Pro Forma Condensed
Consolidated Financial Information."
DEVELOPMENT ACTIVITIES
As redesigned pursuant to the Plan of Reorganization, the Casino will
contain five themed areas named The Jazz Court, The Mardi Gras Court, The
Smuggler's Court, The Court of the Mansion and The Court of Good Fortune. The
remaining space will be used for additional gaming activities, a food service
area, casino support facilities, and multi-function, special event and
meeting-room space. The Jazz Court will have a raised domed ceiling and occupy
the center of the Casino. The Casino will be designed so that individual gaming
areas can be opened or closed to patrons depending on volume. Parking for
between 400 and 500 cars and approximately 145,000 square feet of back-of-house
and support areas will be provided underneath the main gaming floor. Across
Poydras Street and connected to the Casino by the Poydras Tunnel Area will be a
newly constructed parking facility which will contain approximately 1,550
parking spaces.
The Initial Casino Facilities are scheduled to open and commence operations
by October 30, 1999 and will include 100,000 square feet of net gaming space, a
250-seat buffet, two parking garages, the Poydras Tunnel Area and approximately
15,000 square feet of multi-function, special event, food service and
meeting-room space on the first floor of the premises. The Second Floor Shell
Construction, scheduled to be completed substantially concurrently with the
opening of the Initial Casino Facilities, will consist of approximately 130,000
square feet of multipurpose non-gaming entertainment space on the second floor
of the premises constructed to the point at which the shell of the structure is
complete and the space is suitable for tenant build-out. See "Items 1 and 3.
Business and Properties--The Company--Development Plans," and "--The Casino." On
October 30, 1998, instructions to proceed with resuming construction of the
Casino were given to the Casino construction contractors. As such contractors
are required to be prepared to resume construction within 30 days of the
Company's notice, it is anticipated that construction of the Casino will resume
by November 29, 1998. In addition, under the Amended GDA, the Site
90
<PAGE>
Reactivation Date will occur no later than November 29, 1998. See "Items 1 and
3. Business and Properties--Material Agreements--Amended GDA."
LIQUIDITY AND CAPITAL RESOURCES
The Company estimates that from the date HJC filed for bankruptcy, the hard
costs of completing construction of the Casino will be approximately $140.7
million. This amount includes approximately $18.4 million for construction work
at the Casino, and $4.2 million for restoration of the Municipal Auditorium,
which already have been expended and paid. The total construction and other
costs required to complete and open the Initial Casino Facilities and the Second
Floor Shell Construction are estimated to be approximately $335.0 million. This
amount includes, among other things, hard costs of completing construction of
the Casino, gaming equipment and supplies, initial working capital,
reorganization costs, payments to unsecured creditors and cure payments in
connection with the assumption of certain contracts. The above estimate of total
construction and other costs does not include costs associated with the
build-out of non-gaming tenant improvements on the second floor of the Casino
and the development of the 3CP Property and Fulton Property. See "Items 1 and 3.
Business and Properties--Risk Factors-- Ability to Develop the Development
Properties."
The funds necessary to complete the development and construction of the
Casino (including the installation of certain gaming equipment and other
furniture, fixtures and equipment, but excluding the build-out of the non-gaming
improvements on the second floor of the Casino beyond the Second Floor Shell
Construction and the development of the 3CP Property and Fulton Property) are
expected to be funded from a combination of the $75 million New Equity
Investment from HCCIC, the $211.5 million Term Loans, the $22.5 million Junior
Subordinated Credit Facility and the issuance of approximately $27.3 million
aggregate principal amount of Convertible Junior Subordinated Debentures. In
addition, the Company has $25 million of availability under the Working Capital
Facility to meet short-term working capital requirements. Funds provided by a
combination of these sources are expected to be sufficient to satisfy the
Company's financial obligations during the next 12 months, including developing
and commencing operations at the Casino up through the opening of the Initial
Casino Facilities and completing the Second Floor Shell Construction, assuming
no delays or construction cost overruns. In addition, the Completion Guarantors
have entered into the Completion Guarantees with respect to the completion of
the Casino and the payment of project costs owing prior to such completion. See
"Items 1 and 3. Business and Properties--Material Agreements--Completion
Guarantees." The Company has not obtained financing to fund the build-out of the
non-gaming improvements on the second floor of the Casino beyond the Second
Floor Shell Construction and the development of the 3CP Property and Fulton
Property and there can be no assurance the Company will obtain such financing.
See "Items 1 and 3. Risk Factors--Ability to Develop the Development
Properties." The Company expects that the capital expenditures necessary to
operate the Casino after the Opening Date will be funded by the capital
replacement fund JCC is required to establish pursuant to the Amended Ground
Lease, the Amended Management Agreement and the Amended and Renegotiated Casino
Operating Contract. See "Items 1 and 3. Business and Properties-- Amended Ground
Lease--Capital Replacement Fund," "--Amended Management Agreement--Capital
Replacement Fund" and "--Amended and Renegotiated Casino Operating
Contract--Capital Replacement Fund." JCC will be required to fund monthly
payments into the capital replacement fund in an aggregate amount equal to $3
million for the first 12 months following the Opening Date, $4 million for the
second 12 months following the Opening Date, $5 million for the third 12 months
following the Opening Date, and 2% of the gross revenues of the Casino for each
fiscal month thereafter. The Company expects, but there can be no assurance
that, the capital replacement fund will be adequate to meet capital expenditures
after the Opening Date.
Until the opening of the Initial Casino Facilities, the Company expects to
fund its working capital needs, as presently contemplated, from the New Equity
Investment, the $211.5 million Term Loans, the $22.5 million Junior Subordinated
Credit Facility and the issuance of approximately $27.3 million aggregate
principal amount of Convertible Junior Subordinated Debentures. After the
opening of the Initial
91
<PAGE>
Casino Facilities, JCC expects that its working capital needs will be funded by
a combination of the Working Capital Facility and any operating cash flows
remaining after application of the excess cash flow sweep required by the Credit
Agreement for the Bank Loans. See "Items 1 and 3. Business and
Properties--Material Agreements--Bank Loans." In addition, the Completion
Guarantors have agreed to ensure that, upon the completion of the Casino
Construction, JCC will have $5.0 million in cash and the Working Capital
Facility Maximum Amount of availability for immediate drawdown(s) under the
Working Capital Facility. See "Items 1 and 3. Business and Properties--Material
Agreements--Completion Guarantees." In addition, JCC intends to establish
initial working capital reserves to provide for reasonably anticipated
short-term liquidity needs. There can be no assurance that additional financing,
if needed, will be available to JCC, or that, if available, the financing will
be on terms favorable to the Company. There is no assurance that JCC's estimate
of its reasonably anticipated liquidity needs is accurate or that new business
developments or other unforeseen events will not occur resulting in the need to
raise additional funds.
RESULTS OF OPERATIONS
On May 1, 1995, HJC opened the Basin Street Casino in the New Orleans
Municipal Auditorium. The Basin Street Casino, when first opened, had
approximately 76,000 square feet of gaming space with 3,046 slot machines and
approximately 85 table games. The Basin Street Casino was open 24-hours a day,
seven days a week, except for approximately 65 hours from May 9 to May 11, 1995,
when HJC was forced to close the Basin Street Casino due to a flood in the New
Orleans area.
HJC had originally projected that the Basin Street Casino would have gross
gaming revenues of approximately $395 million per year, which would result in an
average of approximately $33 million a month. Instead, gross gaming revenues
from the Basin Street Casino for the months of May, June and July, 1995 were
$11.2 million, $13.2 million and $14.8 million, respectively, and HJC suffered
net losses of $15.2 million, $14.0 million and $14.2 million in those three
months. In an attempt to reduce such losses, in August 1995 HJC reduced the
workforce in the Basin Street Casino by approximately 15% and reduced the Basin
Street Casino's gaming space from 76,000 to 62,000 square feet. HJC also reduced
the number of its slot machines in the Basin Street Casino from 3,046 to 2,150.
Gross gaming revenues were not adversely affected by these changes. Gross
revenues for August, September and October 1995 were $13.3 million, $12.0
million and $14.4 million, respectively. Operating results did not improve,
however. HJC posted net losses in August, September and October 1995 of $13.5
million, $12.3 million and $12.0 million, respectively.
The Company believes that the Basin Street Casino's results were principally
impacted by the location of the Basin Street Casino (which, unlike the Rivergate
site, is outside the traditional area of entertainment activity and tourist
visitation in New Orleans), the competition from the established Mississippi
Gulf Coast gaming marketplace and a slower than usual summer tourist season in
New Orleans. The Company also believes that the Basin Street Casino's gaming
revenues were adversely affected by the availability of dockside riverboat
gaming in Louisiana. The Company believes that such riverboats, when permitted
to remain moored to their docks and allow continuous ingress and egress of
customers, provide enhanced and direct competition with the Basin Street Casino
as land-based casinos. Competition from the established Mississippi Gulf Coast
gaming marketplace and the availability of dockside riverboat gaming in
Louisiana are material known trends or uncertainties which could have an impact
upon the performance of the Casino. See "Items 1 and 3. Business and
Properties--Risk Factors--Competition" and "--Limited Remedies for Additional
Land-Based Casinos."
On November 22, 1995, HJC and Finance Corp., its wholly-owned subsidiary,
filed for reorganization under Chapter 11 of the Bankruptcy Code, ceased
operation of the Basin Street Casino and suspended construction of the casino at
the Rivergate site. Since the Petition Date, HJC's activities have consisted of
administering the bankruptcy case, preparing the Plan of Reorganization and
related Disclosure Statement, negotiating with interested parties with respect
to the Plan of Reorganization, and related issues.
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HJC's primary source of operating funds has been debtor-in-possession financing
provided by HET and its affiliates and its largest expenses have been general
and administrative expenses and reorganization costs.
On October 30, 1998, the Plan of Reorganization and the transactions
contemplated thereby were consummated. Simultaneously with the consummation of
the Plan of Reorganization, all of the assets of HJC, except for the 3CP
Property and the Fulton Property, vested in JCC. Also on the Effective Date,
title to the 3CP Property and the Fulton Property vested in CP Development and
FP Development, respectively.
YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates that have been
stored as two digits rather than four (e.g., "98" for 1998). On January 1, 2000,
any clock or date recording mechanism, including date sensitive software, which
uses only two digits to represent the year may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failures or
miscalculations causing disruption of operations, including, among other things,
a temporary inability to process transactions, send invoices or perform similar
tasks.
The Company has not yet fully evaluated its state of readiness with respect
to Year 2000 problems, the costs that may be incurred to address any Year 2000
issues which may arise or the effect on the Company of any Year 2000 issues
which may arise. The Company will not be able to fully evaluate its readiness
until after the completion of a material portion of the construction of the
Casino (specifically, the installation of computer hardware and software in the
Casino) and the negotiation and execution of contracts with significant
suppliers.
On the Effective Date, JCC and the Manager entered into a side letter
agreement pursuant to which the Manager agreed to prepare and deliver to the
board of directors of JCC Holding quarterly reports regarding certain Year 2000
issues relating to JCC. It is expected that the slot management system for the
Casino will be licensed from a third party. The Company has no information on
the status of the compliance of the slot management system or any other system
licensed from a third party or in equipment owned by JCC or otherwise on which
the operation of the Casino may depend, and will not be able to obtain such
information until the relevant contracts are negotiated and executed.
Because the business activities of JCC Holding, and three of its
subsidiaries, JCC Development, CP Development and FP Development, are limited,
and because many of the business activities of JCC Development, CP Development
and FP Development likely will not commence until after January 1, 2000, the
Company is not presently aware of the existence of any material Year 2000
compliance risks with respect to those entities.
Should the Company and/or its significant suppliers fail to timely address
and correct material Year 2000 issues, such failure could have a material
adverse impact on the Company's ability to operate. In addition, if corrections
made by such suppliers to address Year 2000 issues are incompatible with the
Company's systems, the Year 2000 issue could have a material adverse impact on
the Company's ability to operate. The Company does not currently have
contingency plans designed to minimize the impact of a Year 2000 problem, but
expects to develop plans as it completes construction of the Casino
(specifically, the installation of computer hardware and software in the Casino)
and negotiates contracts with significant suppliers. The impact on the Company's
operating results of the Company's and/or its significant suppliers' failure to
timely address and correct material Year 2000 issues and of any contingency
plans to be designed to address such issues cannot be determined at this time.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the beneficial
ownership of JCC Holding's Class A Common Stock and Class B Common Stock as of
November 13, 1998 by each person believed by JCC Holding to own beneficially
more than 5% of the outstanding shares of either Class A Common Stock or Class B
Common Stock, the only classes of voting securities which are currently issued
and outstanding. Unless noted otherwise, the holders listed below have sole
voting power and dispositive power over the shares beneficially held by them. As
of November 13, 1998, there were a total of 5,547,377 shares of Class A Common
Stock and 4,452,623 shares of Class B Common Stock outstanding.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
----------------------------------- --------------------------------------
AMOUNT AND AMOUNT AND
NATURE OF PERCENTAGE NATURE OF PERCENTAGE
NAME AND ADDRESS BENEFICIAL OF CLASS A BENEFICIAL OF CLASS B
OF BENEFICIAL OWNER OWNERSHIP COMMON STOCK OWNERSHIP COMMON STOCK
- --------------------------------------- ------------------- -------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117.................... -- -- 4,302,623(1) 96.6%(1)
Merrill Lynch Asset
Management, L.P.
Fund Asset Management, L.P.
800 Scudders Mill Road
Plainsboro, NJ 08536................. 1,040,736(2) 18.8%(2) -- --
Contrarian Capital
Management, LLC
Contrarian Capital
Advisors, LLC
411 West Putnam Avenue,
Suite 225
Greenwich, CT 06830.................. 664,118(3) 12.0%(3) -- --
</TABLE>
- ------------------------
(1) Shares are held of record by HET's wholly-owned subsidiary, HCCIC. The above
number and percentage does not include shares issuable upon exercise of the
HET Warrant. See "Item 1 and 3, Material Accounts--HET Warrant."
(2) Merrill Lynch Asset Management, L.P. ("MLAM") and its affiliate, Fund Asset
Management, L.P. ("FAM"), are investment advisers registered under Section
203 of the Investment Advisors Act of 1940. The general partner of each of
MLAM and FAM is Princeton Services, Inc. MLAM and FAM act as investment
advisors for certain investment companies registered under the Investment
Company Act of 1940. The MLAM and FAM advised investment companies hold in
the aggregate 1,040,736 shares of Class A Common Stock. One such investment
company, Merrill Lynch Corporate Bond Fund, Inc.--High Income Portfolio
holds 730,758 shares of Class A Common Stock, or 13.2% of the issued and
outstanding shares of Class A Common Stock. The information presented is
based solely on information provided to JCC Holding by MLAM and FAM.
(3) Contrarian Capital Management, L.L.C. ("CCM") and Contrarian Capital
Advisors, L.L.C. ("CCA"), registered investment advisors that are under
common control, are deemed to be the beneficial owners within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, of 664,118
shares of Class A Common Stock. Of such shares, 492,852 shares, or 8.9% of
the issued and outstanding shares of Class A Common Stock, are held by
various investment entities managed by CCM and investment management clients
of CCM and 171,266 of such shares, or 3.1% of the issued and outstanding
shares of Class A Common Stock, are held by investment management clients of
CCA. Shares include an estimated number of shares of Class A Common Stock to
which CCM and CCA are entitled as Bondholders or transferees of Bondholders
who consented to certain releases as provided in the Plan of Reorganization.
The information presented is based solely on information provided to JCC
Holding by CCM and CCA.
The directors and executive officers of JCC Holding do not beneficially own
any shares of Common Stock of JCC Holding.
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth certain information with respect to the
current executive officers and directors of JCC Holding.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES HELD AND PRINCIPAL
NAME AND AGE OCCUPATIONS OR EMPLOYMENT DURING PAST FIVE YEARS
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Colin V. Reed (51)..................... Class B Director of JCC Holding. Chairman of the Board of JCC Holding
since April 1998. He is also Executive Vice President and Chief
Financial Officer of HET. He is also a director of Sodak Gaming, Inc. He
is a member of the Executive Committee of HJC and a director and Senior
Vice President of Finance Corp., both of which filed petitions under
Chapter 11 of the Bankruptcy Code in November 1995. He is a director and
Senior Vice President of HNOIC which filed a petition under Chapter 11
of the Bankruptcy Code in December 1995. He is also Senior Vice
President of the Manager. He served as Chief Executive Officer and
President of JCC Holding from August 1996 to April 1998. He served as
President of JCC and JCC Development Corporation from May 1997 to March
1998.
Seth E. Lemler (40).................... Class A Director of JCC Holding. Mr. Lemler has served as a Managing
Director in the Investment Banking Department of Ladenburg Thalmann &
Co. Inc. since May 1996. Prior to joining Ladenburg Thalmann & Co. Inc.,
Mr. Lemler served as a consultant at New Valley Corporation from January
1996 until May 1996 and from 1987 to 1996 Mr. Lemler was a senior
manager in the Reorganization Advisory Services Consulting Group of
Deloitte Touche LLP.
Frederick W. Burford (48).............. President of JCC Holding and JCC since April 1998 and President of JCC
Development, CP Development and FP Development since September 1998.
Secretary and Treasurer of JCC Holding from December 1997 until
September 1998. Mr. Burford was a consultant to HET from 1997 until
October 1998 and served as Vice President of JCC Holding from December
1997 to April 1998. From 1991 until 1997 Mr. Burford served as a
director and the Executive Vice President and Chief Financial Officer of
TPI Enterprises, Inc., a restaurant holding company, from 1990 to 1991
Mr. Burford served as the Vice President, Controller and Treasurer of
The Promus Companies, Inc., a gaming and hotel holding company, and from
1977 until 1990 Mr. Burford held various positions with the Holiday
Corporation, a gaming and hotel holding company, including most
recently, Vice President and Treasurer.
L. Camille Fowler (43)................. Vice President-Finance, Treasurer and Secretary of JCC Holding, JCC, JCC
Development, CP Development and FP Development since September 1998. Ms.
Fowler has also served as Director of Finance of the Manager from April
1996 to November 1998, Vice President and Secretary of the Manager from
January 1998 to November 1998, and Treasurer of the Manager from
February 1998 to November 1998. From October 1993 until April 1996, Ms.
Fowler served as the Director of Financial Reporting of the Manager.
</TABLE>
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ITEM 6. EXECUTIVE COMPENSATION.
During the last three fiscal years, the current named executive officers and
directors of JCC Holding earned no compensation from JCC Holding and were
granted no stock options, stock appreciation rights or any other form of
remuneration. Frederick W. Burford, the President of the Company, was paid
$229,047 by HOCI for his services as a consultant to HET from March 1998 through
September 1998. On the Effective Date, JCC reimbursed HOCI for the amounts paid
to Mr. Burford for such services as the services were rendered in connection
with consummating the transactions contemplated by the Plan of Reorganization.
Colin V. Reed, a member of the Executive Committee of HJC, has not received any
compensation from HJC during the last three fiscal years. Compensation
arrangements for certain executive officers and directors are expected to be
negotiated and such arrangements, when finalized, will be described either in an
amendment to this Registration Statement or, in the event such arrangements are
not finalized prior to the effectiveness of this Registration Statement, JCC
Holdings' next filing with the Securities and Exchange Commission under the
Exchange Act when such a description is appropriate or required.
1998 LONG-TERM INCENTIVE PLAN
On October 29, 1998, the board of directors adopted the JCC Holding 1998
Long-Term Incentive Plan (the "LTIP"), subject to approval of the LTIP by the
stockholders at the first annual meeting thereof. JCC Holding has reserved for
issuance upon the grant or exercise of awards pursuant to the LTIP 750,000
shares of the authorized but unissued shares of Class A Common Stock, and after
the Transition Date, the Unclassified Common Stock. The LTIP was effective as of
October 29, 1998, the date of its adoption by the Board.
A summary of the LTIP is set forth below. The summary is qualified in its
entirety by reference to the full text of the LTIP, which is filed as an exhibit
to this Registration Statement.
GENERAL
The purpose of the LTIP is to promote the success, and enhance the value, of
JCC Holding by linking the personal interests of employees, officers,
consultants and directors to those of the stockholders, and by providing such
employees, officer, consultants and directors with an incentive for outstanding
performance. As of November 13, 1998, there were approximately 31 persons
eligible to participate in the LTIP.
The LTIP authorizes the granting of awards ("Awards") to employees,
officers, consultants and directors of JCC Holding or its subsidiaries in the
following forms: (i) options to purchase shares of Class A Common Stock or,
after the Transition Date, the Unclassified Common Stock, as the case may be
("Options"), which may be incentive stock options or non-qualified, (ii) stock
appreciation rights ("SARs"); (iii) performance units ("Performance Units");
(iv) restricted stock ("Restricted Stock"); (v) dividend equivalents ("Dividend
Equivalents"); (vi) other stock-based awards; or (vii) any other right or
interest relating to Class A Common Stock or, after the Transition Date,
Unclassified Common Stock, as the case may be, or cash. To the extent necessary
to preserve the employee benefits plan exemption under applicable state blue sky
laws, no non-employee director or consultant of the Company will be eligible to
receive Awards under the LTIP until such time, if any, as the Class A Common
Stock or, after the Transition Date, Unclassified Common Stock, as the case may
be, shall be traded on a national securities exchange or on the Nasdaq National
Market.
Pursuant to Section 162(m) of the Code, the Company may not deduct
compensation in excess of $1 million paid to the President and the four next
most highly compensated executive officers of JCC Holding. The deduction limits
of Code Section 162(m) and the regulations thereunder do not apply to JCC
Holding until such time, if any, as any class of the JCC Holding's common equity
securities is registered under Section 12 of the Securities Act of 1934. Upon
becoming a publicly held corporation, the deduction
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limits of Code Section 162(m) and the regulations thereunder will not apply to
compensation payable under the LTIP until the expiration of the reliance period
described in Treasury Regulation 1.162-27(f) or any successor regulation. The
LTIP is designed to comply with Code Section 162(m) so that the grant of Options
and SARs under the LTIP, and other Awards, such as Performance Units, that are
conditioned on the performance goals described in Section 13.13 of the LTIP,
will be excluded from the calculation of annual compensation for purposes of
Code Section 162(m) and will be fully deductible by JCC Holding. The board of
directors has approved the LTIP for submission to the stockholders at the first
annual meeting in order to permit the grant of Awards thereunder to constitute
deductible performance-based compensation for purposes of Code Section 162(m).
ADMINISTRATION
The LTIP will be administered by the Compensation Committee of the board of
directors of JCC Holding (the "Committee"), or at the discretion of the board of
directors from time to time, by the board of directors. The Committee has the
power, authority and discretion to designate participants; determine the type or
types of Awards to be granted to each participant and the number, terms and
conditions thereof, establish, adopt or revise any rules and regulations as it
may deem necessary or advisable to administer the LTIP; and make all other
decisions and determinations that may be required under, or as the Committee
deems necessary or advisable to administer, the LTIP. During any time that the
board is acting as administrator of the LTIP, it shall have all the powers of
the Committee thereunder.
AWARDS
Stock Options. The Committee is authorized to grant Options, which may be
incentive stock options ("ISOs") or nonqualified stock options ("NSOs"), to
participants. All Options will be evidenced by a written Award Agreement between
JCC Holding and the participant, which will include such provisions as may be
specified by the Committee. The terms of any ISO must meet the requirements of
Section 422 of the Code, including stockholder approval requirements.
Stock Appreciation Rights. The Committee may grant SARs to participants.
Upon the exercise of a SAR, the participant has the right to receive the excess,
if any, of: the fair market value of one share of Class A Common Stock or, after
the Transition Date, Unclassified Common Stock, as the case may be, on the date
of exercise, over the grant price of the SAR as determined by the Committee,
which will not be less than the fair market value of one share of Class A Common
Stock or, after the transition Date, Unclassified Common Stock, as the case may
be, on the date of grant. All awards of SARs will be evidenced by an Award
Agreement, reflecting the terms, methods of exercise, methods of settlement,
form of consideration payable in settlement, and any other terms and conditions
of the SAR, as determined by the Committee at the time of grant.
Performance Units. The Committee may grant Performance Units to
participants on such terms and conditions as may be selected by the Committee.
The Committee will have the complete discretion to determine the number of
Performance Units granted to each participant and to set performance goals and
other terms or conditions to payment of the Performance Units in its discretion
which, depending on the extent to which they are met, will determine the number
and value of Performance Units that will be paid to the participant.
Restricted Stock Awards. The Committee may make awards of Restricted Stock
to participants, which will be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to
receive dividends, if any, on the Restricted Stock.)
Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to participants subject to such terms and conditions as may be
selected by the Committee. Dividend Equivalents entitle the participant to
receive payments equal to dividends with respect to all or a portion of the
number of
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shares of Class A Common Stock or, after the Transition Date, Unclassified
Common Stock, as the case may be, subject to an Option Award or SAR Award, as
determined by the Committee. The Committee may provide that Dividend Equivalents
be paid or distributed when accrued or be deemed to have been reinvested in
additional shares of Class A Common Stock or, after the Transition Date,
Unclassified Common Stock as the case may be, or otherwise reinvested.
Other Stock-Based Awards. The Committee may, subject to limitations under
applicable law, grant to participants such other Awards that are payable in,
valued in whole or in part by reference to, or otherwise based on or related to
shares of Class A Common Stock or, after the Transition Date, Unclassified
Common Stock, as the case may be, as deemed by the Committee to be consistent
with the purposes of the LTIP, including without limitation shares of Class A
Common Stock or, after the Transition Date, Unclassified Common Stock, as the
case may be, awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Class A Common Stock, or, after the
Transition Date, Unclassified Common Stock, as the case may be, and Awards
valued by reference to book value of shares of Class A Common Stock, or after
the Transition Date, Unclassified Common Stock, as the case may be, or the value
of securities of or the performance of specified patents or subsidiaries of JCC
Holding. The Committee will determine the terms and conditions of any such
Awards.
Performance Goals. The Committee may determine that any Award will be
determined solely on the basis of (a) the achievement by JCC Holding or a parent
or subsidiary of a specified target return, or target growth in return, on
equity or assets, (b) JCC Holding's, parent's or subsidiary's stock price, (c)
the achievement by an individual or a business unit of JCC Holding, parent or
subsidiary of a specified target, or target growth in, revenues, net income or
earnings per share, (d) the achievement of objectively determinable goals with
respect to service or product delivery, service or product quality, customer
satisfaction, meeting budgets and/or retention of employees or (e) any
combination of the goals set forth in (a) through (d) above. Furthermore, the
Committee reserves the right for any reason to reduce (but not increase) any
such Award, notwithstanding the achievement of a specified goal. If an Award is
made on such basis, the Committee must establish goals prior to the beginning of
the period for which such performance goal relates (or such later date as may be
permitted under Code Section 162(m)). Any payment of an Award granted with
performance goals will be conditioned on the written certification of the
Committee in each case that the performance goals and any other material
conditions were satisfied.
Limitations on Transfer; Beneficiaries. No Award will be assignable or
transferable by a participant other than by will or the laws of descent and
distribution or, except in the case of an ISO, pursuant to a qualified domestic
relations order; provided, however, that the Committee may (but need not) permit
other transfers where the Committee concludes that such transferability (i) does
not cause any Option intended to be an incentive stock option to fail to be
described in Code Section 422(b), and (ii) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
limitation, any state or federal tax or securities laws or regulations
applicable to transferable Awards. A participant may, in the manner determined
by the Committee, designate a beneficiary to exercise the rights of the
participant and to receive any distribution with respect to any Award upon the
participant's death.
Acceleration Upon Certain Events. Upon the participant's death or
disability, all outstanding Options, SARs, and other Awards in the nature of
rights that may be exercised will become fully exercisable and all restrictions
on outstanding Awards will lapse. Any Options or SARs will thereafter continue
or lapse in accordance with the other provisions of the LTIP and the Award
Agreement. In the event of a Change in Control of JCC Holding (as defined in the
LTIP), all outstanding Options, SARs, and other Awards in the nature of rights
that may be exercised will become fully vested and all restrictions on all
outstanding Awards will lapse; provided, however that such acceleration will not
occur if, in the opinion of JCC Holding's accountants, such acceleration would
preclude the use of "pooling of interest" accounting treatment for a Change in
Control transaction that would otherwise qualify for such accounting treatment
and is contingent upon qualifying for such accounting treatment. Regardless of
whether an event
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described above shall have occurred, the Committee may in its sole discretion
declare all outstanding Options, SARs, and other Awards in the nature of rights
that may be exercised to become fully vested, and/ or all restrictions on all
outstanding Awards to lapse, in each case as of such date as the Committee may,
in its sole discretion, declare. The Committee may discriminate among
participants or among Awards in exercising such discretion.
TERMINATION AND AMENDMENT
The board of directors or the Committee may, at any time and from time to
time, terminate, amend or modify the LTIP without stockholder approval;
provided, however, that the Committee may condition any amendment on the
approval of stockholders of JCC Holding if such approval is necessary or deemed
advisable with respect to tax, securities or other applicable laws, policies or
regulations. No termination, amendment, or modification of the LTIP may
adversely affect any Award previously granted under the LTIP, without the
written consent of the participant.
CERTAIN FEDERAL INCOME TAX EFFECTS
Nonqualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either JCC Holding or the
participant upon the grant of a non-discounted NSO. However, the participant
will realize ordinary income on the exercise of the NSO in an amount equal to
the excess of the fair market value of the Class A Common Stock, or, after the
Transition Date, Unclassified Common Stock, as the case may be, acquired upon
the exercise of such option over the exercise price, and JCC Holding will
receive a corresponding deduction (subject to Code Section 162(m) limitations).
The gain if any, realized upon the subsequent disposition by the participant of
the Class A Common Stock or, after the Transition Date, Unclassified Common
Stock, as the case may be, will constitute short-term or long-term capital gain,
depending on the participant's holding period.
Incentive Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either JCC Holding or the
participant upon the grant of an ISO or the exercise thereof by the participant.
If the participant holds the shares of Class A Common Stock or, after the
Transition Date, Unclassified Common Stock, as the case may be, for the greater
of two years after the date the Option was granted or one year after the
aquisition of such shares of Class A Common Stock or, after the Transition Date,
Unclassified Common Stock, as the case may be (the "required holding period"),
the difference between the aggregate option price and the amount realized upon
disposition of the shares of Class A Common Stock or, after the Transition Date,
Unclassified Common Stock, as the case may be, will constitute mid- or long-term
capital gain or loss, and JCC Holding will not be entitled to a federal income
tax deduction. If the shares of Class A Common Stock or, after the Transition
Date, Unclassified Common Stock, as the case may be, are disposed of in a sale,
exchange or other "disqualifying disposition" during the required holding
period, the participant will realize taxable ordinary income in an amount equal
to the excess of the fair market value of the Class A Common Stock or, after the
Transition Date, Unclassified Common Stock, as the case may be, purchased at the
time of exercise over the aggregate option price, and JCC Holding will be
entitled to a federal income tax deduction equal to such amount (subject to Code
Section 162(m) limitations).
SARs. Under present federal income tax regulations, a participant receiving
a SAR will not recognize income, and JCC Holding will not be allowed a tax
deduction, at the time the Award is granted. When a participant exercises the
SAR, the amount of cash and the fair market value of any shares of Class A
Common Stock or, after the Transition date, Unclassified Common Stock, as the
case may be, received will be ordinary income to the participant and will be
allowed as a deduction for federal income tax purposes to JCC Holding (subject
to Code Section 162(m) limitations).
Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a Restricted
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Stock Award will not recognize income, and JCC Holding will not be allowed a tax
deduction, at the time the Award is granted. When the restrictions lapse, the
participant will recognize ordinary income equal to the fair market value of the
Class A Common Stock or, after the Transition Date, Unclassified Common Stock,
as the case may be, and JCC Holding will be entitled to a corresponding tax
deduction at that time (subject to Code Section 162(m) limitations).
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
As of November 13, 1998, no awards had been granted or approved for grant
under the LTIP. Any Awards under the LTIP will be made at the discretion of the
Committee or the Board, as the case may be. Consequently, it is not presently
possible to determine, with respect to (i) the executive officers of JCC
Holding, (ii) all current executive officers as a group, (iii) all non-executive
directors, as a group, or (iv) all eligible participants, including all current
officers who are not executive officers, as a group, either the benefits or
amounts that will be received by such persons or groups pursuant to the LTIP or
the benefits or amounts that would have been received by such persons or groups
under the LTIP if it had been in effect during the last fiscal year.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
As of November 13, 1998 HET, through HCCIC, an indirect wholly-owned
subsidiary of HET, owned 4,302,623 shares of Class B Common Stock, or
approximately 96.6% of all of the issued and outstanding shares of Class B
Common Stock and approximately 43.0% of all of the issued and outstanding shares
of Common Stock. See "Item 4. Security Ownership of Certain Beneficial Owners
and Management." Accordingly, HET, through HCCIC, is able to elect all of the
Class B Directors, which, prior to the Transition Date, generally supervises the
day-to-day activities of the Company. See "Item 11. Description of Registrant's
Securities to be Registered--Board of Directors." Further, HCCIC was granted the
HET Warrant entitling it, upon and after the Transition Date, to purchase
additional shares of JCC Holding Common Stock such that, upon exercise of the
HET Warrant in its entirety, HET and its subsidaries will own in the aggregate
50.0% of the then outstanding shares of Common Stock. See "Items 1 and 3.
Business and Properties--Material Agreements--HET Warrant." JCC and the Manager,
an indirect wholly-owned subsidiary of HET, have entered into the Amended
Management Agreement. See "Items 1 and 3. Business and Properties--Material
Agreements--Amended Management Agreement." In addition, JCC entered into the
HET/JCC Agreement with HET and HOCI under which HET and HOCI have agreed to
provide a Minimum Payment Guaranty for the benefit of the LGCB to assure payment
of the Minimum Payment, subject to renewal or early termination in accordance
with the terms of the HET/JCC Agreement. See "Items 1 and 3. Business and
Properties--Material Agreements--HET/JCC Agreement." HET and HOCI have also
provided the HET Loan Guaranty with respect to Tranche A-2, Tranche B-2 and the
Working Capital Facility pursuant to which JCC has agreed to pay the JCC Credit
Support Fee. See "Items 1 and 3. Business and Properties--Material
Agreements--Bank Loans." In addition, pursuant to the Completion Guaranty, HET
and HOCI have agreed to, among other things, (i) fund JCC's working capital
shortfalls until the Termination of Construction Date and (ii) to guarantee
that, at such time, JCC will have available for working capital $5 million of
cash and the Working Capital Facility Maximum Amount of availability for
immediate drawdown(s) under the Working Capital Facility. HET and HOCI have also
agreed to guarantee the Completion Obligations and the Preservation Obligations
and any expenditures thereunder must be repaid by JCC pursuant to the Amended
Completion Loan Agreement. See "Items 1 and 3. Business and Properties--Material
Agreements--Completion Guarantees" and "-- Completion Loan Agreement." JCC and
HOCI also entered into the Amended and Restated Construction Lien Indemnity
Agreement pursuant to which any expenditures made by HOCI under the construction
lien indemnity agreement delivered by HET and HOCI to First American regarding
mechanic's liens claiming priority to the Bank Loans, the New Notes or the New
Contingent Notes, will be deemed Indemnity Obligations of JCC due and payable on
demand. See "Items 1 and 3. Business and Properties--Material
Agreements--Amended and Restated Construction Lien Indemnity Agreement." In
addition, HET and
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HOCI have agreed to provide up to $22.5 million under the Junior Subordinated
Credit Facility. See "Items 1 and 3. Business and Properties--Material
Agreements--Junior Subordinated Credit Facility."
On the Effective Date, JCC reimbursed HET and HOCI a total of $3,696,474 for
pre-Effective Date expenses incurred by HET, the Manager and HOCI on behalf of
JCC. Such expenses included over $3 million in legal fees and insurance premiums
relating to JCC, approximately $311,000 in consulting and relocation expenses
incurred by senior management of the Manager and approximately $289,000 in wages
paid to certain individuals involved in the reorganization process, such as the
current President of the Company. See "Item 6. Executive Compensation." Prior to
the opening of the Casino, the Manager or an affiliate of the Manager may agree
to provide certain services to the Company including, among other things,
payroll and bookkeeping services.
Currently, the Chairman of the Board, Colin V. Reed, is also Executive Vice
President and Chief Financial Officer of HET and Senior Vice President of the
Manager. Colin V. Reed is expected to continue to serve as JCC Holding's Class B
Director while also serving as Executive Vice President and Chief Financial
Officer of HET and Senior Vice President of the Manager. Frederick W. Burford,
the President of JCC Holding, JCC, JCC Development, CP Development and FP
Development was a paid consultant to HET. Effective upon consummation of the
Plan of Reorganization, Frederick W. Burford ceased serving as a paid consultant
to HET. In addition, L. Camille Fowler, the Vice President-Finance, Treasurer
and Secretary of JCC Holding, JCC, JCC Development, CP Development and FP
Development was, until and through the Effective Date, the Director of Finance,
Vice President, Secretary and Treasurer of the Manager. Immediately after the
Effective Date, L. Camille Fowler ceased serving as the Director of Finance,
Vice President, Secretary and Treasurer of the Manager. See "Item 5. Directors
and Executive Officers." The Company anticipates that if the requisite gaming
regulatory agencies have made the necessary suitability determinations, one or
two other officers of HET will be Class B Directors of JCC Holding. As a result
of HET's ownership of the Competing Casinos, and the fact that these HET
officers hold or are expected to hold such positions with JCC Holding, a
conflict of interest may be deemed to exist by reason of such persons' access to
information and business opportunities possibly useful to any or all of the
Competing Casinos. No specific procedures have been devised for resolving
conflicts of interest confronting, or which may confront the Company. See "Items
1 and 3. Business and Properties--Risk Factors--Conflicts of Interest."
ITEM 8. LEGAL PROCEEDINGS.
MCCALL LITIGATION. On April 26, 1993, a lawsuit was filed in the Civil
District Court for the Parish of Orleans captioned McCall v. McCall, et al. (the
"McCall Litigation"). Plaintiffs asserted an ownership interest in certain land
underlying the Rivergate site and also sought permanent injunctive relief
prohibiting the use of such land for the Casino. The lawsuit also challenged the
manner in which the RDC was formed and its authority to enter into the Ground
Lease and the Basin Street Casino Lease. HJC intervened in the lawsuit and
aligned itself with the City and the RDC. On February 22, 1994, the Civil
District Court granted the motion for summary judgment filed by the City, the
RDC and HJC, thereby dismissing all claims. On February 23, 1995, the state
appellate court unanimously affirmed the Civil District Court's ruling that the
plaintiffs did not have an ownership interest in any land underlying the
Rivergate site and remanded the case to the Civil District Court to determine
whether the plaintiffs have standing to assert the other claims concerning the
authority of the RDC to enter into the Ground Lease and the Basin Street Casino
Lease. On April 28, 1995, all parties to the litigation applied to the Louisiana
Supreme Court for writs of certiorari. On June 30, 1995, the Louisiana Supreme
Court unanimously denied all writ applications. The property claims in this
litigation have been finally resolved in favor of HJC, the City and the RDC. In
December 1995, the Civil District Court granted the exception of no right of
action submitted by the City and RDC and held that the plaintiffs lack standing
to challenge the constitutionality of the RDC. Harry McCall, one of the
claimants in the McCall Litigation, then filed a notice of appeal. On October
10, 1996, the Fourth Circuit Court of Appeals for the State of Louisiana voted
2-1 to reverse the trial court's dismissal for lack of standing. Under the
Louisiana Constitution, this
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non-unanimous decision required that the appeal be heard before a five-judge
panel of the same court. That panel also reversed the Civil District Court's
dismissal for lack of standing with respect to the cause of action challenging
the constitutionality of the RDC. The City, the RDC and HJC applied for a writ
of certiorari with the Louisiana Supreme Court, which was denied without
comment.
In addition, on April 6, 1994, Harry McCall, one of the claimants in the
McCall Litigation, filed a motion in Civil District Court for the Parish of
Orleans to enforce an agreement Mr. McCall claims to have entered into with HJC
to settle the McCall Litigation, asserting that he was entitled to receive
settlement proceeds based upon that agreement. HJC does not believe that a
binding settlement agreement was reached with that claimant. On July 8, 1994,
the Civil District Court ruled that Mr. McCall's motion was procedurally
defective. The plaintiff failed to cure the deficiency, and on September 12,
1994, the district court in New Orleans dismissed Mr. McCall's motion to enforce
the alleged agreement. A notice of appeal was filed by Mr. McCall and on October
12, 1995, the Fourth Circuit Court of Appeals for the State of Louisiana
reversed the district court's ruling, allowing Mr. McCall to pursue his claim.
On March 12, 1996, Harry and Henry McCall filed a proof of claim against HJC
in the amount of $2.0 million which appeared to be based upon the purported
settlement that was the subject of the April 1994 motion in Civil District
Court. They also filed an adversary proceeding in the Bankruptcy Court in late
May of 1996 seeking to enforce the purported settlement agreement. HJC filed an
objection to the McCalls' claim on May 2, 1996. The Bankruptcy Court ordered
that HJC's objection to the proof of claim and the adversary proceeding be
consolidated for purposes of trial and discovery. At a hearing on September 16,
1996, the Bankruptcy Court ruled that Thomas Tucker, attorney for the McCalls,
could not be both a witness and attorney in the matter. The trial was adjourned
to give Mr. Tucker time to decide which role he would take. On September 26,
1996, the McCalls filed a motion seeking an interlocutory appeal on this
decision of the Bankruptcy Court. At that time, the Bankruptcy Court stayed the
underlying action pending a decision on the appeal. On October 16, 1996, the
District Court denied the motion for an interlocutory appeal. The McCalls'
motion for reconsidering of the decision was also denied. Subsequently, Mr.
Tucker elected to be a witness.
On April 18, 1997, HJC, Finance Corp. and Thomas Tucker, Harry McCall, Henry
McCall and Susan LaFaye (an attorney who claims an interest in proceeds of the
McCall Litigation) (the "McCall Claimants") reached an agreement to settle
various litigation and other legal claims, demands and causes of action (the
"McCall Settlement Agreement"). The McCall Settlement Agreement was executed on
October 28, 1998. Under the McCall Settlement Agreement, the McCall Litigation
was dismissed with prejudice.
TUCKER LITIGATION. A lawsuit captioned Tucker v. City of New Orleans was
filed on October 5, 1994, against the City (the "Tucker Litigation") in the
Civil District Court for the Parish of Orleans by a resident of the Parish
challenging the validity of three casino-related ordinances adopted by the City
Council on September 23, 1994, which authorized, among other things, amendments
to the Ground Lease. The lawsuit also challenges the constitutionality of a
clarifying amendment to the Gaming Act. The clarifying amendment addresses a
provision of the Ground Lease which requires at least 80% of the persons
employed by the Casino to be residents of Orleans Parish ("Residency
Requirement"). The effects of the ordinances and the amendment to the Gaming Act
were, among other things, (i) to clarify the intent of the Gaming Act that a
provision of a contract (to which the gaming operator is a party) that requires
more than 50% of the persons employed to be residents of any one parish is void,
but that the contract as an entirety is not be void under the Gaming Act, and
(ii) to reduce the Residency Requirement in the Ground Lease if necessary to
comply with applicable law. In the event that the plaintiff ultimately prevails,
it is possible that the Ground Lease could be declared void. On November 18,
1994, the City filed preliminary exceptions contending that the plaintiff had
failed to name indispensable and necessary parties as defendants. On March 13,
1995 and August 17, 1995, the plaintiff filed supplemental amended petitions. On
September 22, 1995, the City requested that the plaintiff consider its prior
filed exceptions as applicable. There has been no activity in this case since
that time.
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Mr. Tucker and the law firm of Tucker & West filed proofs of claims against
the estates of HJC and HNOIC for amounts which they allege were owed to them
with respect to the Tucker Litigation and other litigation, including the McCall
Litigation. HJC and HNOIC filed objections to these proofs of claims.
Subsequently, on August 13, 1996, these claimants consented to disallowance of
these claims.
Under the McCall Settlement Agreement, the Tucker Litigation was dismissed
with prejudice.
LANDMARKS LITIGATION (JOAN OF ARC). On December 6, 1994, a lawsuit
captioned Louisiana Landmarks Society, Inc. v. City of New Orleans, Rivergate
Development Corporation, and Harrah's Jazz Company (the "Landmarks Litigation")
was filed against the City, the RDC and HJC in the United States District Court
for the Eastern District of Louisiana seeking to prevent, among other things,
HJC from moving the Joan of Arc statue or using any part of the Place de France
without the approval of the Secretary of the United States Department of the
Interior. The Place de France is located adjacent to the Casino. The original
design plans for the Casino contemplated locating the main access areas for the
Casino in the area currently in use as the Place de France. The plaintiff
alleged that the Place de France was developed with federal funds for historic
purposes and that therefore the statue cannot be relocated and the Place de
France cannot be converted to another use without the approval of the United
States Secretary of the Interior. The plaintiff also alleged a pendent state law
claim that the Place de France had been dedicated as a park by the City and that
the conversion of the Place de France to another use requires the approval of
the State Legislature. On January 27, 1995, the United States District Court for
the Eastern District of Louisiana issued an order permanently restraining the
City, the RDC and HJC from removing the Joan of Arc statue or using any part of
the Place de France without the approval of the Secretary of the Interior. The
City, the RDC and HJC filed notices of appeal. On June 7, 1996, the United
States Court of Appeals for the Fifth Circuit reversed the decision of the
district court, vacated the permanent injunction entered by the district court,
rendered a judgment of dismissal against the plaintiff for failure to state a
cause of action on the grounds that there is no implied right of action under
the applicable federal statute, and dismissed the plaintiff's cross-appeal
regarding the scope of the injunction as moot. On July 12, 1996, the Fifth
Circuit denied the plaintiffs' petition for rehearing.
The original design plans for the Casino contemplated locating the main
access areas for the Casino in the area currently in use as the Place de France.
Because of this litigation, HJC had to redesign the southern part of the Casino
at substantial cost so as to allow the Place de France to remain adjacent to the
Casino subject to certain alterations. As a result of the modification, the
expected size of the Casino was decreased by approximately 2,400 square feet.
The City has requested the written approval of the United States Secretary
of the Interior to remove the Joan of Arc statue from the Place de France. The
Secretary's approval has not yet been received and may not be forthcoming. If
the Secretary's approval is received and the Joan of Arc statue is removed, the
Company may decide to make further modifications to the entrance to the Casino.
Louisiana Landmarks Society, Inc., James Logan and the law firm of Tucker
and West filed proofs of claims against the estates of HJC and HNOIC for amounts
they alleged were owed to them as a result of the Landmarks Litigation. HJC and
HNOIC filed objections to these claims. On August 13, 1996 Louisiana Landmarks
Society, Inc. and the others consented to disallowance of their claims. As
stated above, on June 7, 1996 the Landmarks Litigation was dismissed with
prejudice.
TUCKER V. CITY OF NEW ORLEANS AND RIVERGATE DEVELOPMENT CORPORATION. On
July 24, 1996, Mr. Tucker filed a lawsuit captioned Tucker v. City of New
Orleans and Rivergate Development Corporation against the City and RDC in the
United States District Court for the Eastern District of Louisiana seeking to
enjoin alteration of the Place de France absent the express written approval of
the Secretary of Interior. The City and RDC have been made defendants; HJC is
not named, although the lawsuit could affect the development of the Casino. Mr.
Tucker characterized his claim as one for purported violation of his rights of
due process and equal protection pursuant to 42 U.S.C. Section 1983. The factual
allegations of the complaint are virtually identical to those previously
asserted in the Landmarks Litigation and rejected in the recent
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Fifth Circuit decision described above. Mr. Tucker served as counsel of record
for Louisiana Landmarks, and he is both a member and trustee of the non-profit
corporation. On October 14, 1996, Tucker filed an amended complaint naming First
American Title Insurance Company as an additional defendant. Upon information
and belief, all the defendants were thereafter served with the complaint. HJC
sought and received permission to intervene in the action on January 21, 1997.
Under the McCall Settlement Agreement, this suit was dismissed with
prejudice.
WARN ACT LITIGATION. On December 13, 1995 a lawsuit captioned Russell M.
Swody, et al. v. Harrah's New Orleans Management Company and Harrah's
Entertainment, Inc. ("Swody"), was filed against the Manager and HET in the
Civil District Court for the Parish of Orleans and subsequently amended. Swody
is a class action under the WARN Act and seeks damages for the alleged failure
to give timely notice to workers laid off at the time of HJC's bankruptcy.
Plaintiffs seek unspecified damages, as well as costs of legal proceedings, for
themselves and all members of the class. An answer was filed denying all of
plaintiff's allegations. HET and the Manager answered numerous document requests
and interrogatories. After a hearing, the Civil District Court certified the
class on April 22, 1996.
Early in 1996, Swody was consolidated with Susan N. Poirier, Darlene A.
Moss, et al. v. Harrah's Entertainment, Inc., Harrah's New Orleans Management
Company, and Harrah's Operating Company ("Poirier") which was filed in the Civil
District Court for the Parish of Orleans on January 17, 1996, and subsequently
amended. The Poirier class was certified with Swody on April 22, 1996, and the
consolidated Poirier and Swody cases were set for trial on May 5, 1997.
Similar complaints were filed by Ms. Poirier in the Bankruptcy Court in the
bankruptcy cases of HJC, HNOIC and Finance Corp. The Poirier adversary
proceedings purport to be class actions asserting claims under the WARN Act and
ERISA. On or about February 23, 1996, HJC and HNOIC each filed a motion in its
respective adversary proceeding to dismiss the Poirier litigation. A hearing on
such motions to dismiss was held on March 19, 1996. Later, Finance Corp. also
filed a similar motion. The Bankruptcy Court granted the motions to dismiss with
respect to each of HJC, HNOIC and Finance Corp. on or about June 28, 1996.
Proofs of claims on behalf of individual, alleged, terminated employees and
purportedly on behalf of all alleged former employees, were filed in the Chapter
11 cases. The plaintiffs in the litigation (the "WARN Act Claimants") moved to
certify three classes on whose behalf the plaintiffs sought to act as a class
representatives for purposes of the proofs of claims. The Bankruptcy Court
denied the motions by Memorandum Opinion and Order dated October 10, 1996.
However, in order to facilitate a proposed settlement reached with the WARN Act
Claimants (discussed below), the WARN Act Claimants filed motions to reconsider
that ruling. On December 10, 1996, the Bankruptcy Court certified classes for
settlement purposes only.
The WARN Act Claimants contend that HJC, Finance Corp. and HNOIC and the
defendants in the Swody and Poirier cases operated as a single business
enterprise with respect to operations in New Orleans and contend that, under
this alleged arrangement, HJC may be liable to the claimants under the WARN Act
along with the defendants in Swody and Poirier. The Company believes that such
claims have no merit. However, in order to avoid the expense, delay and risks
associated with additional litigation, HJC, Finance Corp., HNOIC and the WARN
Act Claimants agreed to compromise and settle all of the WARN Act Claimants'
claims on the terms summarized below.
Under the settlement, JCC agreed pay to those individuals laid off on or
about November 22, 1995 the sum of $2,265,000, which amount includes the fees
and cost of the Warn Act Claimants' attorneys and certain taxes attributable to
the WARN Act settlement. The amounts paid to these individual WARN Act Claimants
is based upon instructions from the WARN Act Claimants' attorneys. The
individual awards are based upon information obtained through the payroll
records for the time period of October 1 thorough November 22, 1995. In addition
to this monetary settlement, the individuals laid off on or about
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November 22, 1995 will be offered preferential re-employment to their former
positions or, if their former positions no longer exist or are not presently
available, to substantial equivalent portions to the extent that such jobs are
or become available. "Preferential re-employment" means that they will be
offered employment before employment is offered to any person who was not laid
off on or about November 22, 1995. WARN Act Claimants who were laid off in
August of 1995 will not receive a monetary award, but have been placed on a
secondary preferential re-hire list. The claimants will be offered re-employment
after those employees laid off on or about November 22, 1995 and employees laid
off by the Flamingo Casino. They will remain on the secondary preferential
re-hire list for one year following the date of the opening of the Casino. A
final hearing on the settlement took place on February 3, 1997, at which time
the Bankruptcy Court approved the settlement and dismissed the litigation,
subject to the occurrence of the Effective Date. This settlement was consummated
on the Effective Date.
SAPIR LITIGATION. On June 6, 1997, Eddie L. Sapir, a member of the city
counsel of New Orleans, and the Eddie L. Sapir Inter Vivos Trust filed a civil
action captioned Eddie L. Sapir and The Eddie L. Sapir Inter Vivos Trust versus
Grand Palais Enterprises, Inc., in the Civil District Court for the Parish of
Orleans. In that action, plaintiffs allege, among other things, that one of
HJC's three general partners, Grand Palais, through its principal Christopher B.
Hemmeter ("Hemmeter") and its former counsel Cezar M. Froelich ("Froelich"), has
negotiated or is negotiating a compromise with HET and others which improperly
benefits Hemmeter and Froelich to the detriment of the creditors and
shareholders of Grand Palais. Plaintiff sought and obtained an ex parte
temporary restraining order prohibiting the disposition of any property of Grand
Palais, including prohibition of Grand Palais' execution of the releases and
other agreements among Grand Palais, HET and others described in the Plan of
Reorganization. Plaintiffs also moved for the ex parte appointment of a
temporary receiver for Grand Palais, among others, which was granted by the
District Court.
On June 18, 1997, Grand Palais filed a notice of removal of the litigation
to the Bankruptcy Court. On July 1, 1997, plaintiffs filed a motion in the
Bankruptcy Court to remand the litigation to District Court. On July 2, 1997,
the Bankruptcy Court granted HJC leave to intervene in the litigation and
continued plaintiff's motion to remand the litigation to District Court. The
Bankruptcy Court's order also included provisions by which one of the plaintiffs
and/or the receiver could participate in HJC's weekly "steering committee"
conferences and present objections to the Bankruptcy Court with respect to any
significant decision requiring the approval of HJC's general partners.
Thereafter, plaintiffs filed a motion to reconsider the Bankruptcy Court's order
permitting HJC to intervene in the litigation. On October 6, 1997, the
Bankruptcy Court remanded the litigation to District Court. On that date, the
Bankruptcy Court also reconsidered its order permitting HJC to intervene in the
litigation and rescinded without prejudice its order permitting HJC to
intervene. The parties reached a definitive settlement agreement on the
Effective Date and the litigation has been dismissed without prejudice.
On November 21, 1997, Eddie L. Sapir and the Eddie L. Sapir Inter Vivos
Trust filed a civil action captioned Eddie L. Sapir and the Eddie L. Sapir Inter
Vivos Trust v. Banker's Trust Company, Cezar M. Froelich, ABC Insurance Company,
First National Bank of Commerce, Harrah's Entertainment Incorporated, Shefsky &
Froelich, Ltd., DEF Insurance Company, GHI Insurance Company, JKL Insurance
Company, The Boatmen's National Bank of St. Louis, Merrill Lynch Senior High
Income Fund, Merrill Lynch Senior High Income II Fund, Merrill Lynch Senior
Strategic Fund, Prime Income Trust, and Van Kampen Meritt Prime Rate Income
Trust, No. 97-3913, in the Civil District Court for the Parish of Orleans. In
that action, plaintiffs alleged, among other things, that defendants committed
breaches of contract and fiduciary duty with respect to actions taken in
connection with the Chapter 11 cases. Plaintiffs have never served the suit on
any defendant, no answers were filed by any defendant and no discovery was
taken. HET removed the case to the United States District Court for the Eastern
District of Louisiana. The Sapir Litigation has been dismissed without
prejudice.
HNOIC/NOLDC LITIGATION. On September 26, 1995, HNOIC brought a lawsuit
against NOLDC in the United States District Court for the Eastern District of
Louisiana seeking a declaratory judgment that
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(i) HNOIC was a 52.93% owner of HJC, (ii) the 1994 option agreement with NOLDC
had expired, and (iii) NOLDC was not a "material partner" of HJC.
On September 28, 1995, NOLDC brought a lawsuit against, among other parties,
HNOIC and HJC in the Civil District Court for the Parish of Orleans seeking (i)
a temporary restraining order enjoining the expiration of the 1994 option
agreement and removal of NOLDC from its status as a material partner of HJC,
(ii) a rescission of the fourth amendment to HJC's partnership agreement
(governing, among other matters the dilution of the NOLDC interest in HJC and
NOLDC's status as a material partner of HJC), (iii) restoration of NOLDC to a
full 33.3% ownership in HJC, and (iv) unspecified damages against all defendants
except HJC.
On September 29, 1995, NOLDC obtained a temporary restraining order from the
Civil District Court for the Parish of Orleans, directing HNOIC and HJC to treat
NOLDC as a material partner until a hearing on an injunction could be held on
October 9, 1995. On October 5, 1995, the defendants removed NOLDC's state court
complaint to the United States District Court for the Eastern District of
Louisiana, where it is now pending. On October 6, 1995, NOLDC sought to obtain
an extension of its temporary restraining order from the District Court. NOLDC's
request was denied, and no date for any further hearing was set. Following the
filing of bankruptcy by NOLDC, the litigation was placed on inactive status by
the court. At the time of the filing of NOLDC's bankruptcy, no discovery on the
merits had been taken.
Pursuant to the terms of a settlement agreement between the NOLDC
Shareholders, HET, HOCI and the Manager, all of the litigation described above
among NOLDC, HNOIC and HJC has been dismissed with prejudice.
BONDHOLDERS CLASS ACTION. Beginning on November 28, 1995, eight separate
class action suits were filed against HET and various of its corporate
affiliates, officers and directors in the United States District Court for the
Eastern District of Louisiana. They were Ben F. D'Angelo, Trustee for Ben F.
D'Angelo Revocable Trust v. Harrah's Entertainment Corp., Michael D. Rose,
Philip G. Satre and Ron Lenczycki; Max Fenster v. Harrah's Entertainment, Inc.,
Harrah's New Orleans Investment Company, Grand Palais Casino, Inc., Philip G.
Satre, Colin V. Reed, Michael N. Regan, Christopher B. Hemmeter, Donaldson,
Lufkin & Jenrette Securities Corporation, Salomon Brothers, Inc, and BT
Securities Corp.; Goldie Rosenbloom v. Harrah's Entertainment Corp., Michael D.
Rose, Philip G. Satre and Ron Lenczycki; Barry Ross v. Harrah's New Orleans
Investment Company, Philip G. Satre, Colin V. Reed, Lawrence L. Fowler, Michael
N. Regan, Cezar M. Froelich, Ulric Haynes, Jr., Wendell Gauthier, T. George
Solomon, Jr., Duplain W. Rhodes, III, Harrah's Entertainment, Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, Salomon Brothers Inc, and BT
Securities Corp.; Louis Silverman v. Harrah's Entertainment, Inc., Harrah's New
Orleans Investment Company, Grand Palais Casino, Inc., Philip G. Satre, Colin V.
Reed, Michael N. Regan, Christopher B. Hemmeter, and Donaldson, Lufkin &
Jenrette Securities Corporation; Florence Kessler v. Philip G. Satre, Colin V.
Reed, Charles A. Ledsinger, Jr., Michael N. Regan, Lawrence L. Fowler,
Christopher B. Hemmeter, Cezar M. Froelich, Ulric Haynes, Jr., Wendell H.
Gauthier, T. George Solomon, Jr., Duplain W. Rhodes, III, Donaldson, Lufkin &
Jenrette Securities Corporation, Salomon Brothers Inc, and BT Securities
Corporation; Warren Zeiller and Judith M. R. Zeiller v. Harrah's Entertainment
Corp., Michael D. Rose, Philip G. Satre, and Ron Lenczycki; and Charles Zwerving
and Helene Zwerving v. Harrah's Entertainment Corp., Philip G. Satre, Colin V.
Reed, Christopher B. Hemmeter, and Donaldson, Lufkin & Jenrette Securities
Corporation. Pursuant to a District Court order of January 26, 1996, plaintiffs,
on May 24, 1996, filed a consolidated complaint entitled In re Harrah's
Entertainment, Inc. Securities Litigation (the "Bondholders Class Action").
The plaintiffs in the Bondholders Class Action (who purport to represent all
persons, other than defendants and their affiliates, who purchased Old Bonds
between November 9, 1994 and November 21, 1995) characterized their complaint as
alleging violations of Sections 11 and 12(2) of the Securities Act, 15 U.S.C.
SectionSection 77k and 77l(2); Section 10(b) of the Exchange Act, 15 U.S.C.
Section 78j(b); and Rule 10b-5 promulgated thereunder by the Securities and
Exchange Commission, 17 C.F.R. Section 240.10b-5. The complaint asserted that
the registration statement and prospectus filed in connection with the offering
of the
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Old Bonds contained untrue statements of material fact and omitted to state
material facts necessary in order to make the statements made therein not
misleading. The complaint also alleged that the defendants engaged in a scheme
to defraud plaintiffs and the alleged class by knowingly or recklessly releasing
false and misleading information that was designed to and did (i) deceive the
investing public, including plaintiffs and other members of the alleged class,
regarding HJC's financial condition and future business prospects, (ii)
artificially inflate the market price of the Old Bonds during the relevant
period, and (iii) cause plaintiffs and other alleged class members to purchase
or otherwise acquire the Old Bonds at inflated prices.
Certain of the individuals named as defendants in the Bondholders Class
Action are officers and directors of the Debtors or of other entities and have
claimed or may claim defense, indemnification and/ or contribution rights
against the Debtors.
Proofs of claim, purportedly on behalf of the plaintiffs in the Bondholders
Class Action, were filed in the Chapter 11 cases. Such proofs of claim assert
claims based upon damages caused by alleged violations of federal securities
laws in connection with the purchase and sale of the Old Bonds. The Debtors have
objected to such proofs of claim. Under the Plan of Reorganization, any of such
claims which were allowed, to the extent that they were allowed, fell within the
classes of penalty claims under the Plan of Reorganization and received no
distributions on account of such claims.
Plaintiffs in the Bondholders Class Action filed motions in the Chapter 11
cases seeking the appointment of an examiner. A hearing on the motions was held
on November 6, 1996. On November 20, 1996, the Bankruptcy Court denied the
motion to appoint an examiner. In denying the motion, the Bankruptcy Court found
that the request for an examiner was both untimely and for an improper purpose.
HJC supported the settlement of the Bondholders Class Action negotiated
between counsel for the class and the defendants named in the litigation, whose
basic terms are as follows:
(1) in accordance with the Plan of Reorganization, HCCIC, HET and/or any
affiliates of HET as holders of Common Stock issued under the Plan of
Reorganization contributed 200,000 shares of Class A Common Stock to a pool
(the "Release Pool"), which was distributed as set forth in the Plan of
Reorganization to those members of the settlement class who were current
Bondholders;
(2) the sum of $3.8 million in cash was contributed by the defendants
and/or their insurance carriers toward the settlement, which funds will be
distributed as determined by plaintiffs' counsel and approved by the
District Court to members of the settlement class who do not provide
releases to HJC in exchange for a distribution from the Release Pool, as
well as for the payment of costs and fees;
(3) plaintiffs provided releases to the defendants, agreed to dismiss
the Bondholders Class Action with prejudice, and supported the Plan of
Reorganization.
The parties to the Bondholders Class Action entered into a stipulation
effectuating the basic terms of the settlement on April 16, 1997. On June 26,
1997, the District Court conducted a fairness hearing to determine whether to
approve the proposed settlement. No member of the settlement class opted out of
the settlement. On July 31, 1997, the District Court approved the settlement,
which was consummated with respect to HJC on the Effective Date.
FILING OF CERTAIN LAWSUITS BY DEBTORS AND NOLDC. In view of the fact that
certain two-year statutes of limitations under Sections 108 and 546 of the
Bankruptcy Code and applicable state law were to expire on November 22, 1997,
HJC filed certain complaints against multiple defendants on or before such date
to preserve the Debtors' claims. All of such claims were settled and released
pursuant to the Plan of Reorganization.
HJC and Finance Corp. sought and obtained an order directing them to abandon
and not pursue recovery of charitable donations and small preferences. As a
result of said order, HJC was not required to pursue the recovery or avoidance
of charitable donations and small preferences (under $5,000). However, HJC
preserved for the estate in the event the Plan of Reorganization was not
consummated avoidance
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actions of $5,000 and more. In connection with the Plan of Reorganization, all
of such claims were settled or released and dismissed.
NOLDC, which is the subject of its own Chapter 11 case, in order to preserve
its right to do so before the lapsing of statutes of limitations, filed a
lawsuit, captioned New Orleans Louisiana Development Corporation v. Bankers
Trust Company, First National Bank of Commerce, Inc., Harrah's Entertainment,
Harrah's New Orleans Investment Company, Harrah's New Orleans Management Company
and Harrah's Operating Company, Inc., No. 97-1176, in the Bankruptcy Court,
alleging breach of fiduciary duty and other causes of action. NOLDC, however,
states in its complaint that it is "actively pursuing confirmation and
consummation of a plan of reorganization" and upon occurrence of these events
"expects to waive, release or otherwise resolve" these claims. In connection
with the Plan of Reorganization, a motion to dismiss with prejudice this lawsuit
brought by NOLDC was filed on November 17, 1998 and the Company is currently
waiting to receive a final order dismissing such litigation.
There is no other material litigation or arbitration pending which affects
the Company which has not been resolved by the Plan of Reorganization.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER
MATTERS.
The shares of Class A Common Stock are an issue of new securities, have no
established trading market and may not be widely distributed. As of the date
hereof, there are approximately 800 record holders of the Company's Common
Stock. On or around the Effective Date of the Plan of Reorganization, JCC
Holding issued (i) 10 million shares of Common Stock, (ii) the HET Warrant
entitling HCCIC to purchase additional shares of Common Stock such that HCCIC
would be entitled to own up to 50.0% of the then outstanding shares of Common
Stock, subject to certain adjustments, and (iii) the Convertible Junior
Subordinated Debentures, which will be convertible at the option of the holders,
in whole or in part, at any time after October 1, 2002, into shares of Common
Stock at a conversion price of $25.00.
Pursuant to the Plan of Reorganization, JCC Holding has agreed that, (i)
upon the request of any holder of shares of Class A Common Stock who is
reasonably required by law to register public resales of such shares, JCC
Holding will file with the SEC and cause to become effective as soon as
practicable after the Effective Date a registration statement relating to such
public resales, and (ii) upon the request of HCCIC (which request may not be
made until the second anniversary of the opening of the Casino), JCC Holding
will file with the SEC and cause to become effective as soon as reasonably
practicable thereafter a registration statement relating to all shares of Class
B Common Stock held by HCCIC, HET and HET's subsidiaries (provided, however,
that prior to the Transition Date, HET and/or its subsidiaries are required to
own at least 51% of the outstanding shares of Class B Common Stock, unless a
lesser percentage is approved by the Class A Directors and the Class B
Directors). See "Item 11. Description of Registrant's Securities to be
Registered--Common Stock" and "--Agreements with Certain Stockholders." In
addition, upon the request of any Initiating Holder of the Debenture Registrable
Securities, JCC or JCC Holding, as the case may be, will provide notice of such
request to the Other Holders and will use its commercially reasonable efforts to
effect, as soon as reasonably practicable, the registration under the Securities
Act of (x) any Debenture Registrable Securities held by the Initiating Holders
and (y) any Debenture Registrable Securities requested to be included in such
registration by the Other Holders. However, (a) neither JCC nor JCC Holding is
obligated to effect more than one such registration for any Initiating Holder or
more than two such registrations in the aggregate, (b) no holder may request
such a registration prior to the earlier of 18 months after the Casino opens for
business and the filing by JCC Holding of its third Annual Report on Form 10-K,
under the Exchange Act and (c) neither JCC nor JCC Holding is obligated to
effect such a registration unless the aggregate Debenture Registrable Securities
requested to be included in such registration would have a gross sales price of
at least $5.0 million. See "Items 1 and 3. Business and Properties--Material
Agreements--Convertible Junior Subordinated Debentures" and "Item 11.
Description of Registrant's Securities to be Registered--Agreements with Certain
Stockholders."
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JCC Holding does not intend to pay cash dividends on the Common Stock,
including the Class A Common Stock, in the foreseeable future. Further, pursuant
to the terms of the Bank Loan agreements, for as long as there are amounts
outstanding under the Bank Loans, no dividends will be paid. See "Items 1 and 3.
Business and Properties--Material Agreements--Bank Loans." In addition, the
terms of the Indentures prohibit payment of cash dividends unless certain
conditions are met, including the condition that no dividend will be paid unless
JCC has paid the maximum contingent payments with respect to the New Notes and
the New Contingent Notes for four consecutive Semiannual Periods. See "Items 1
and 3. Business and Properties--Material Agreements--Indentures." The payment of
cash dividends, if any, will be made only from assets legally available for that
purpose, and will depend on JCC Holding's financial condition, results of
operations, current and anticipated capital requirements, restrictions under
then existing debt instruments and other factors deemed relevant by the board of
directors. See "Items 1 and 3. Business and Properties--Risk Factors--Dividend
Policy."
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
Prior to the Effective Date, JCC Holding had not issued any securities
within the past three years. Pursuant to the Plan of Reorganization, on the
Effective Date, (i) JCC Holding issued an aggregate of 10,000,000 shares of
Common Stock, the HET Warrant, guarantees with respect to the New Notes, the New
Contingent Notes and the Convertible Junior Subordinated Debentures, and
guarantees of JCC Development's, CP Development's and FP Development's
guarantees with respect to the New Notes and the New Contingent Notes, (ii) JCC
issued the New Notes, the New Contingent Notes and the Convertible Junior
Subordinated Debentures, and (iii) each of JCC Development, CP Development and
FP Development issued guarantees with respect to the New Notes and the New
Contingent Notes to the persons, in each case, in the amounts and on the terms
summarized under "Item 11. --Description of Registrant's Securities to be
Registered," and "Items 1. and 3. Business and Properties--Material Agreements--
Indentures," "--Convertible Junior Subordinated Debentures," "--HET Warrant" and
"--Recent Reorganization," without registration under the Securities Act, or
state or local law, in reliance on the exemptions provided for in Section 1145
of Title 11 of the Bankruptcy Code and Section 4(2) of the Securities Act.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The following brief description of JCC Holding's capital stock and related
corporate governance matters does not purport to be complete and is subject in
all respects to applicable Delaware law and to the provisions of JCC Holding's
Restated Certificate of Incorporation, Bylaws, and agreements with certain
stockholders referred to below, copies of which have been filed as exhibits to
this Registration Statement.
The authorized capital stock of JCC Holding consists of 20,000,000 shares of
Class A Common Stock, par value $0.01 per share, 20,000,000 shares of Class B
Common Stock, par value $0.01 per share, and 40,000,000 shares of unclassified
Common Stock, par value $0.01 per share (the "Unclassified Common Stock"). Prior
to the Transition Date, JCC Holding does not have the power to issue any shares
of Unclassified Common Stock. Upon and after the Transition Date, the
Corporation does not have the power to issue any shares of Class A Common Stock
or Class B Common Stock.
COMMON STOCK
On the Effective Date, JCC Holding issued 10,000,000 shares of Common Stock.
The Common Stock consists of shares of Class A Common Stock and shares of Class
B Common Stock. With certain exceptions, including the election of directors,
each share of Common Stock (including, prior to the Transition Date, each share
of Class A Common Stock and Class B Common Stock) has identical rights and
privileges, and ranks equally, shares ratably and is identical in every respect
and as to all matters, including rights in liquidation, and is entitled to vote
upon all matters submitted to a vote of the common stockholders, is entitled to
one vote for each share of Common Stock held, and, except as otherwise
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required by law, the holders of shares of Common Stock vote together as one
class on all matters submitted to a vote of stockholders. Shares of Class B
Common Stock may be held only by (i) HET and any direct or indirect wholly-owned
subsidiaries of HET (collectively, "Harrah's Entities"), (ii) Grand Palais and
any Controlled Affiliate of Grand Palais, (iii) shareholders of Grand Palais who
receive shares of Class B Common Stock in connection with the Plan of
Reorganization ("Grand Palais Shareholders"), (iv) any spouse, immediate family
member, or other relative who has the same principal residence of any Grand
Palais Shareholder (collectively, "Grand Palais Family Members"), (v) any trust
in which any Grand Palais Shareholder or any Grand Palais Family Member has a
beneficial interest, (vi) any Controlled Affiliate of Grand Palais Shareholders
or Grand Palais Family Members, (vii) shareholders of NOLDC ("NOLDC
Shareholders"), including, without limitation, all NOLDC Shareholders as of the
Effective Date, (viii) any spouse, immediate family member, or other relative
who has the same principal residence of any NOLDC Shareholder (collectively,
"NOLDC Family Members"), (ix) any trust in which any NOLDC Shareholder or any
NOLDC Family Member has a beneficial interest, (x) any Controlled Affiliate of
NOLDC Shareholders or NOLDC Family Members, and (xi) FNBC (the entities and
persons referred to in clauses (i) through (xi) referred to herein as "Class B
Entities"). Shares of Class A Common Stock are held by entities other than Class
B Entities. Shares of Class B Common Stock convert to shares of Class A Common
Stock if a Class B Entity transfers such shares to another entity other than
another Class B Entity, and, subject to certain exceptions upon a Change of
Control, shares of Class A Common Stock convert to shares of Class B Common
Stock if an entity that is not a Class B Entity transfers such shares to a Class
B Entity. Any shares of Class A Common Stock transferred from any entity to a
Class B Entity (subject to certain exceptions upon a Change of Control) and any
shares of Class B Common Stock transferred from a Class B Entity to an entity
other than another Class B Entity, will not be entitled to vote upon any matters
submitted to a vote of the holders of Common Stock of JCC Holding until at such
time as the Class B Entity involved with such transfer has complied with certain
notice requirements required by the Restated Certificate of Incorporation.
Shares of Class A Common Stock and Class B Common Stock are freely transferable.
Notwithstanding the preceding sentence, prior to the Transition Date, the
Harrah's Entities will at all times own at least 51% of the issued and
outstanding shares of Class B Common Stock; provided, however, that the Harrah's
Entities may own such lesser percentage of the issued and outstanding shares of
Class B Common Stock as shall be approved by a majority of Class A Directors
then in office and a majority of Class B Directors then in office. On the
Transition Date, each share of Class A Common Stock and each share of Class B
Common Stock will automatically convert into and become one share of
Unclassified Common Stock. With certain important exceptions summarized below,
holders of the Common Stock are entitled to one vote per share on all matters to
be voted upon by the stockholders of JCC Holding.
REDEMPTION PROVISIONS
Outstanding shares of Common Stock are subject to redemption by JCC Holding,
by action of the board of directors, if, in the judgment of the board of
directors any holder of Common Stock is determined by any gaming regulatory
agency to be unsuitable, has an application for a license or permit rejected, or
has a previously issued license or permit rescinded, suspended, revoked or not
renewed, as the case may be, whether or not any of the foregoing is final and
nonappealable, or if such action otherwise should be taken, pursuant to Section
151(b) of the Delaware General Corporation Law or any other applicable provision
of law, to the extent necessary to avoid any regulatory sanctions against, or to
prevent the loss of or secure the reinstatement of any license, franchise or
entitlement from any governmental agency held by, JCC Holding, any Affiliate of
JCC Holding (including, but not limited to, HET and its Affiliates) or any
entity in which JCC Holding or such Affiliate is an owner, which license,
franchise or entitlement is (i) conditioned upon some or all of the holders of
JCC Holding's stock of any class or series possessing prescribed qualifications,
or (ii) needed to allow the conduct of any portion of the business of JCC
Holding or any such Affiliate or other entity. Outstanding shares of Common
Stock held by a person or entity are also subject to redemption by JCC Holding,
by action of the board of directors, if such holder of Common Stock is
designated a Non-Qualified Person in a written notice from the Manager to JCC
pursuant to the
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Amended Management Agreement. The terms and conditions of such redemption shall
be as follows: (1) the redemption price of the shares to be redeemed will be
equal to the Fair Market Value of such shares (excluding any dividends thereon
not entitled to be received) or such other redemption price as required by any
applicable law, regulation, rule or resolution or order of a gaming regulatory
agency; (2) the redemption price of such shares may be paid in cash, Redemption
Securities or any combination thereof; (3) if less than all the shares held by
Disqualified Holders or Non-Qualified Persons are to be redeemed, the shares to
be redeemed will be selected in such manner as will be determined by the board
of directors, which may include selection first of the most recently purchased
shares thereof, selection by lot or selection in any other manner determined by
the board of directors; (4) at least 20 days' written notice of the Redemption
Date will be given to the record holders of the shares selected to be redeemed
(unless waived in writing by any such holder), provided that the Redemption Date
may be the date on which written notice will be given to record holders if the
cash or Redemption Securities necessary to effect the redemption has been
deposited in trust for the benefit of such record holders and subject to
immediate withdrawal by them upon surrender of the stock certificates for their
shares to be redeemed; (5) from and after the Redemption Date or such earlier
date as mandated by any applicable law, regulation, rule or resolution or order
of a gaming regulatory agency, any and all rights of whatever nature, which may
be held by the owners of shares selected for redemption (including without
limitation any rights to vote or participate in dividends declared on stock of
the same class or series as such shares), will cease and terminate and they will
thenceforth be entitled only to receive the cash or Redemption Securities
payable upon redemption; and (6) such additional terms and conditions as the
board of directors shall determine.
BOARD OF DIRECTORS
PRIOR TO THE TRANSITION DATE. Until the Transition Date, the following
provisions are in effect: except as set forth below, the total number of
authorized directors is six, and, as described below, the directors will consist
of three Class A Directors elected by the affirmative vote of a plurality of the
issued and outstanding shares of Class A Common Stock, and three Class B
Directors elected by the affirmative vote of a plurality of the issued and
outstanding shares of Class B Common Stock. The board of directors is divided
into three groups, designated Group I, Group II and Group III. Except as
described below, each group shall consist of one Class A Director and one Class
B Director. The initial directors in Group I have been selected for a term
expiring on the date of the annual meeting of stockholders occurring in 1999.
Subject to the provisions of the immediately following paragraph, directors in
Group II will be elected for a term expiring on the date of the annual meeting
of stockholders occurring in 2000 and directors in Group III will be elected for
a term expiring on the date of the annual meeting of stockholders occurring in
2001. At each succeeding annual meeting of stockholders, successors to the group
of directors whose term expires at that annual meeting will be elected for a
three-year term. If the number of directors increases due to the occurrence of
an Extraordinary Flip Event or a Change of Control, such additional director(s)
will be members of the group whose term is next to expire. A director generally
holds office until such director's term expires or until his successor is
elected and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
There are currently two directors consisting of one Class A Director and one
Class B Director who collectively comprise Group I. See "Item 5. Directors and
Executive Officers." The total number of authorized directors will increase by
two, for a total of four, with such directors comprising Group II, only at such
time as (i) a second Class A Director has been elected by a majority of the
Class A Directors then in office (or, if only one Class A Director is then in
office, by such Class A Director), (ii) a second Class B Director has been
elected by a majority of the Class B Directors then in office (or, if only one
Class B Director is then in office, by such Class B Director), and (iii) the
requisite gaming regulatory agencies have made the determinations necessary to
allow both of such directors to serve on the board of directors. The total
number of authorized directors will again increase by two, for a total of six,
with such directors comprising Group III, only at such time as (i) a third Class
A Director has been elected by a majority of the Class A Directors then in
office (or, if only one Class A Director is then in office, by such Class A
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Director), (ii) a third Class B Director has been elected by a majority of the
Class B Directors then in office (or, if only one Class B Director is then in
office, by such Class B Director), and (iii) the requisite gaming regulatory
agencies have made the determinations necessary to allow both of such directors
to serve on the board of directors.
Notwithstanding the foregoing, upon the occurrence of an Extraordinary Flip
Event, the authorized number of Class A Directors will increase by one (the
"Additional Class A Director") and the authorized number of Class B Directors
shall remain the same. The Additional Class A Director will be elected by a
majority of Class A Directors in office when the Extraordinary Flip Event giving
rise to such Additional Class A Director occurs. If a Cure Event occurs, the
term of the Additional Class A Director will immediately expire, and the
authorized number of Class A Directors will be reduced by one. Notwithstanding
the foregoing, upon the occurrence of a Change of Control, the authorized number
of Class B Directors will increase by one (the "Additional Class B Director")
and the authorized number of Class A Directors will remain the same; provided,
however, that the number of Class B Directors will not be increased to include
the Additional Class B Director if, prior to or upon the occurrence of a Change
of Control, an Extraordinary Flip Event has occurred and no corresponding Cure
Event has occurred; and provided, further, however, that the term of office of
the Additional Class B Director will immediately expire and the number of Class
B Directors will be reduced by one if an Extraordinary Flip Event occurs after
the Change of Control, or the percentage of the outstanding shares of Class A
Common Stock owned by the Conflicted Entity whose acquisition of shares of Class
A Common Stock effected the Change of Control is reduced such that such
Conflicted Entity owns less than 20% of the outstanding shares of Class A Common
Stock. The Additional Class B Director will be elected by a majority of Class B
Directors then in office when the change of control giving rise to such
Additional Class B Director occurs.
Any vacancy or newly created directorship on the board of directors of a
Class A Director position may only be filled by a majority of Class A Directors
then in office (or, if only one Class A Director is then in office, by such
Class A Director). Any vacancy or newly created directorship on the board of
directors of a Class B Director position may only be filled by a majority of
Class B Directors then in office (or, if only one Class B Director is then in
office, by such Class B Director). If there are no directors of one class then
in office, the holders of a majority of the shares of the class of Common Stock
that elected such class of directors will have the right to elect directors to
fill such vacancies or newly created directorships in a special meeting of
stockholders called for such purpose.
At all meetings of the board of directors, a majority of the entire board of
directors will be required to constitute a quorum for the transaction of
business. Except as provided in the following sentence or as otherwise provided
by law, no action shall be taken by the board of directors on behalf of JCC
Holding unless (i) such action is authorized by the affirmative vote of a
majority of the directors then in office, (ii) such action is authorized by at
least one Class B Director, and (iii) such action is authorized by at least one
Class A Director; provided, however, that if an Extraordinary Flip Event has
occurred and no related Cure Event has occurred, clause (ii) will not be
applicable. Notwithstanding the previous sentence, no Significant Transaction
shall be authorized unless such Significant Transaction (x) is authorized by the
affirmative vote of a majority of the directors then in office, (y) is
authorized by the affirmative vote of a majority of the Class A Directors then
in office and (z) is authorized by the affirmative vote of a majority of the
Class B Directors; provided, however, that if an Extraordinary Flip Event has
occurred and no related Cure Event has occurred, (A) except with respect to any
amendment to the Certificate of Incorporation or Bylaws of JCC Holding, clause
(z) shall not be applicable, and (B) no action of the board of directors shall
affect the holders of the Class A Common Stock and the holders of the Class B
Common Stock disproportionately without the separate approval of such action by
a majority of the Class A Directors then in office and a majority of the Class B
Directors then in office.
Any Class A Director may be removed from the board of directors, without
cause, by the affirmative vote of the holders of a majority of the outstanding
shares of Class A Common Stock. Any Class B Director may be removed from the
board of directors, without cause, by the affirmative vote of the holders of a
majority of the outstanding shares of Class B Common Stock. In the event that
any director of JCC
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Holding is found unsuitable by the LGCB or any other gaming regulatory agency
with proper jurisdiction over such director, such director will no longer be
deemed to be a Qualified Person, and such director shall immediately be no
longer eligible to serve on the board of directors, the term of such director
shall automatically terminate and no further remuneration of any kind will be
paid to such director.
AFTER THE TRANSITION DATE. Upon the Transition Date and thereafter, the
above provisions regarding the board of directors will terminate and will no
longer be applicable, and the following provisions shall be in effect: as soon
as practicable after the Transition Date, the board of directors will call a
special meeting of stockholders to elect new directors. All directors in office
on the Transition Date, except an Additional Class A Director or Additional
Class B Director then in office, if any, will continue to hold office until such
special meeting is held and their successors are duly elected. The board of
directors will consist of not less than three or more than 17 directors, the
exact number of directors to be determined from time to time by resolution
adopted by the affirmative vote of a majority of the board of directors. The
board of directors will be divided into three classes, designated Class I, Class
II and Class III. Each class will consist, as nearly as may be possible, of
one-third of the total number of directors constituting the entire board of
directors. At the first annual meeting of stockholders following the Transition
Date the terms of all Class A Directors and Class B Directors will expire, and
new directors will be elected as follows: Class I directors will be elected for
a one-year term, Class II directors for a two-year term and Class III directors
for a three-year term. At each succeeding annual meeting of stockholders,
successors to the class of directors whose term expires at that annual meeting
will be elected for a three-year term. If the number of directors is changed,
any increase or decrease will be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class will hold office for a term that will coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. A director will hold
office until the annual meeting for the year in which his term expires and until
his successor will be elected and will qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office.
Any vacancy on the board of directors that results from an increase in the
number of directors will be filled only by a majority of the board of directors
then in office, provided that a quorum is present, and any other vacancy
occurring in the board of directors will only be filled by a majority of the
directors then in office, even if less than a quorum, or by a sole remaining
director. Any director elected to fill a vacancy not resulting from an increase
in the number of directors will have the same remaining term as that of his
predecessor.
Directors will be elected at annual meetings of stockholders by the
affirmative vote of the holders of a plurality of the shares of Common Stock
present in person or represented by proxy at such meeting and entitled to vote
on the election of directors. Directors may be removed from the board of
directors, with or without cause, at any regular meeting or at any special
meeting of stockholders by the affirmative vote of holders of a majority of the
shares of Common Stock entitled to vote at an election of directors. In the
event that any director of JCC Holding is found unsuitable by the LGCB or any
other gaming regulatory agency with proper jurisdiction over such director, such
director will no longer be deemed to be a Qualified Person, and such director
shall immediately be no longer eligible to serve on the board of directors, the
term of such director shall automatically terminate and no further remuneration
of any kind will be paid to such director.
NOMINATION OF DIRECTORS. Nominations of persons for election to the board
of directors at the annual meeting may be made in the notice for such meeting by
the board of directors or at such meeting by or at the direction of the board of
directors, by any committee or persons appointed by the board of directors or by
any stockholder entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth below; provided, however, that
prior to the Transition Date, holders of shares of Class A Common Stock may only
nominate persons for election as Class A Directors, and holders of shares of
Class B Common Stock may only nominate persons for election of Class B
Directors. Such
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nominations by any stockholder must be made pursuant to timely notice in writing
to the Secretary of JCC Holding. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of JCC
Holding not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that less than 70 days notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder, to
be timely, must be received no later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs. Such stockholder's
notice to the Secretary must set forth (i) as to each person whom the
stockholder proposes to nominate for election or reelection as a director, (a)
the name, age, business address and residence address of the person, (b) the
principal occupation or employment of the person, (c) the class and number of
shares of capital stock of JCC Holding which are beneficially owned by the
person, and (d) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
the Rules and Regulations of the SEC under Section 14 of the Securities Exchange
Act of 1934, as amended; and (ii) as to the stockholder giving the notice (a)
the name and record address of the stockholder, (b) the class and number of
shares of capital stock of JCC Holding which are beneficially owned by the
stockholder and (c) whether the stockholder intends or is part of a group which
intends to solicit proxies from other stockholders in support of any person whom
the stockholder proposes to nominate for election or reelection as a director.
JCC Holding may require any proposed nominee to furnish such other information
as may reasonably be required by JCC Holding to determine the eligibility of
such proposed nominee to serve as a director. No person will be eligible for
election as a director of JCC Holding unless nominated in accordance with the
procedures set forth above.
COMMITTEES OF THE BOARD
Prior to the Transition Date, the Restated Certificate of Incorporation
provides that the following committees of the board shall exist: Audit
Committee, the Gaming Committee, the Compensation Committee, the Class A
Director Nomination Committee, the Class B Director Nomination Committee and the
Capital Committee. The Audit Committee consists of the Class A Directors and is
empowered to undertake and complete an audit or investigation, at any time, into
the business affairs of JCC Holding or a subsidiary, including JCC. The Gaming
Committee will supervise the day-to-day activities of JCC Holding and, except
with respect to Significant Transactions, has and may exercise, in such manner
as it shall deem to be in the best interests of JCC Holding, all of the powers
of the board of directors in the management or direction of the business and
affairs of JCC Holding, not inconsistent, however, with such specific direction
as to the conduct of the business and affairs as shall have been given by the
board of directors. The Gaming Committee consists of the Class B Directors;
provided, however, that upon the occurrence of a Flip Event, the Class B
Directors will be removed from the Gaming Committee and replaced on the Gaming
Committee by the Class A Directors. The Compensation Committee will consist of
the Class A Directors and will be empowered to act on behalf of JCC Holding with
respect to all matters regarding the compensation of officers and directors of
JCC Holding and its subsidiaries. The nominating committees consist of the
directors of each class and their purpose is to select the person(s) to stand
for election as director nominee(s) at any meeting of stockholders. The Capital
Committee consists of one Class A Director and one Class B Director. After the
date on which the Completion Guarantees have been terminated, the Capital
Committee will be empowered to act on behalf of JCC Holding with respect to all
changes to the capital budgets of JCC Holding and JCC between $250,000 and $2
million. Prior to the Transition Date, upon the affirmative vote of the majority
of the Class A Directors then in office and the affirmative vote of a majority
of the Class B Directors then in office JCC Holding has the power to form or
maintain committees of the board of directors other than those described above.
Pursuant to such authority, the board of directors has adopted a Counsel
Retention Committee to approve the selection of legal counsel by JCC Holding or
its subsidiaries in connection with any matter, matters, transaction or
transactions with Affiliates of JCC Holding which have not previously been
approved by the Company prior to or concurrently with the Effective Date and
otherwise to consider issues relating to the retention
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of legal counsel as the Counsel Retention Committee deems appropriate. The
Counsel Retention Committee consists of one Class A Director and one Class B
Director.
DIVIDENDS
Prior to the Transition Date, holders of Common Stock will be entitled to
receive such dividends and other distributions in cash, property or shares of
capital stock as may be declared thereon by the board of directors from time to
time; provided, however, that no dividend or distribution, including without
limitation, dividends or distributions of cash, shares of capital stock of JCC
Holding, other securities, or any other property, may be declared or paid on the
outstanding shares of either the Class A Common Stock or the Class B Common
Stock unless an identical per share dividend or distribution is simultaneously
declared and paid on all of the outstanding shares of Common Stock; provided,
further, however, that a dividend of shares of Common Stock may be declared and
paid in Class A Common Stock to holders of Class A Common Stock and in Class B
Common Stock to holders of Class B Common Stock if the number of shares paid per
share to holders of Class A Common Stock and to holders of Class B Common Stock
is the same. Under no circumstance will a dividend of shares be declared and
paid in Class A Common Stock to anyone other than holders of Class A Common
Stock, and under no circumstance will a dividend of shares be declared and paid
in Class B Common Stock to anyone other than holders of Class B Common Stock. If
JCC Holding in any manner subdivides, combines or reclassifies the outstanding
shares of Class A Common Stock or Class B Common Stock, the outstanding shares
of the other such class of common stock must be subdivided, combined or
reclassified proportionally in the same manner and on the same basis as the
outstanding shares of Class A Common Stock or Class B Common Stock, as the case
may be, have been subdivided, combined or reclassified. Upon and after the
Transition Date, subject to any other provisions of the Restated Certificate of
Incorporation, holders of Common Stock will be entitled to receive such
dividends and other distributions in cash, property or shares of capital stock
of JCC Holding as may be declared thereon by the board of directors from time to
time.
AMENDMENTS TO CERTIFICATE AND BYLAWS
Prior to the Transition Date, stockholders may not make, adopt, alter,
amend, change or repeal the Bylaws except upon the affirmative vote of a
majority of the votes entitled to be cast by the holders of outstanding shares
of Common Stock, voting together as a single class; provided, however, that in
addition to such vote, any amendment to the Bylaws which in any way adversely
affects the rights of holders of Class A Common Stock or Class A Directors will
also require the affirmative vote of the holders of a majority of the
outstanding shares of Class A Common Stock, and any amendment to the Bylaws
which in any way adversely affects the rights of holders of Class B Common Stock
or Class B Directors will also require the affirmative vote of the holders of a
majority of the outstanding shares of Class B Common Stock. Upon and after the
Transition Date, stockholders may not make, adopt, alter, amend, change or
repeal the Bylaws except upon the affirmative vote of not less than 75% of the
votes entitled to be cast by the holders of outstanding shares of Common Stock,
voting together as a single class. Prior to the Transition Date, the board of
directors is authorized to make, adopt, alter, amend, change or repeal the
Bylaws only if such action is approved as a Significant Transaction pursuant to
the Restated Certificate of Incorporation. Upon and after the Transition Date,
upon the affirmative vote of a majority of the board of directors then in
office, the board of directors is expressly authorized to make, adopt, alter,
amend, change or repeal the Bylaws.
The Restated Certificate of Incorporation may not be altered, amended,
changed or repealed in any respect, and no provision inconsistent with any
provision of the Restated Certificate of Incorporation or imposing cumulative
voting in the election of directors may be added to the Restated Certificate of
Incorporation, unless such action is approved (a) prior to the Transition Date,
by the affirmative vote of the holders of a majority of the outstanding shares
of Common Stock or (b) on and after the Transition Date, by the affirmative vote
of the holders of not less than 75% of the outstanding shares of Common Stock.
Prior to the Transition Date, in addition to the requirements of subsection (a)
of the immediately
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preceding sentence, any amendment to the Restated Certificate of Incorporation
which in any way affects the rights of holders of Class A Common Stock or Class
A Directors will also require the affirmative vote of the holders of a majority
of the outstanding shares of Class A Common Stock, and any amendment to the
Certificate of Incorporation which in any way affects the rights of holders of
Class B Common Stock or Class B Directors will also require the affirmative vote
of the holders of a majority of the outstanding shares of Class B Common Stock.
STOCKHOLDER MEETINGS
The annual meeting of stockholders will be held each year, on such date and
at such time as may be fixed by the board of directors and stated in the notice
of the meeting, for the purpose of electing directors and for the transaction of
only such other business as is properly brought before such meeting in
accordance with the Bylaws. Special meetings of the stockholders, for any
purpose or purposes, may be called by either the Chairman or the President and
(i) prior to the Transition Date, by the affirmative vote of a majority of the
Class A Directors then in office or the affirmative vote of a majority of the
Class B Directors then in office, and (ii) upon and after the Transition Date,
by a majority of the entire board of directors. At any meeting of the
stockholders at which the holders of Common Stock are entitled to vote, no
action may be taken unless a quorum of the holders of a majority of shares of
Common Stock is present, except a vote to adjourn such meeting; provided,
however, that prior to the Transition Date, a quorum will consist of a majority
of the holders of shares of Class A Common Stock and a majority of the holders
of shares of Class B Common Stock. Except as provided by law, the presence, in
person or by proxy, of the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at such meeting will constitute a quorum
of the holders of shares of Common Stock, and the presence, in person or by
proxy, of the holders of a majority of the issued and outstanding shares of each
class of Common Stock entitled to vote at such meeting will constitute a quorum
of such class.
To be properly brought before the annual meeting, business must be either
(i) specified in the notice of annual meeting (or any supplement or amendment
thereto) given by or at the direction of the board of directors, (ii) otherwise
brought before the annual meeting by or at the direction of the board of
directors, or (iii) otherwise properly brought before the annual meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary. To be timely,
a stockholder's notice must be delivered to or mailed and received at the
principal executive offices of JCC Holding not less than 60 days nor more than
120 days prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that less than 70 days notice or prior
public disclosure of the date of the annual meeting is given or made to
stockholders, notice by a stockholder, to be timely, must be received no later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made, whichever first occurs. A stockholder's notice to the Secretary of JCC
Holding shall set forth (a) as to each matter the stockholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, and (ii) any material interest of the stockholder in such
business, and (b) as to the stockholder giving the notice (i) the name and
record address of the stockholder, (ii) the class, series and number of shares
of capital stock of JCC Holding which are beneficially owned by the stockholder,
and (iii) whether the stockholder intends or is part of a group which intends to
solicit proxies from other stockholders in support of any matter the stockholder
proposes to bring before the annual meeting. Notwithstanding anything in the
Bylaws of JCC Holding to the contrary, no business shall be conducted at the
annual meeting except in accordance with these procedures.
AGREEMENTS WITH CERTAIN STOCKHOLDERS
REGISTRATION AND LISTING OF CLASS A COMMON STOCK. Pursuant to the Plan of
Reorganization, JCC Holding was required to use its best efforts to cause the
Class A Common Stock to be listed on a national
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securities exchange or quoted on the National Association of Securities Dealers,
Inc. Automated Quotations System upon the Effective Date. In addition, if this
Registration Statement is not declared effective by the SEC by a date which is
30 days after the receipt of any comments on this Registration Statement from
the SEC, the Company is required to pay to the Bondholders an amount equal to
$.05 per week for each $1,000 of Class A Common Stock (based on the greater of
(x) the market value of such Class A Common Stock at such time and (y) $15.00
per share) to be registered, which amount shall increase by $.05 every 45 days
to a maximum of $.30 per week. To the extent that it is reasonably determined
that the registration of public resales by any holder of Old Bonds of any
securities received by such holder under the Plan of Reorganization is required
by law, the Company is required to file a registration statement (the "33 Act
Registration Statement") with respect to such resales promptly after the
Effective Date. If such 33 Act Registration Statement is not effective within
120 days after it is filed, then the Company will pay to the holders of such
securities an amount equal to $.05 per week for each $1,000 of securities to be
registered, which amount will increase by $.05 every 45 days to a maximum of
$.30 per week. For purposes of calculating the amount, if any, owed to holders
of shares of Class A Common Stock, the value of a share of Class A Common Stock
will be deemed to be the greater of (i) the market price of a share of Class A
Common Stock and (ii) $15 per share.
In addition, pursuant to the Registration Rights Agreement, dated as of the
Effective Date, by and among JCC, JCC Holding, the Underwriters, BTCo and FNBC,
upon the request of any Initiating Holder, JCC or JCC Holding, as the case may
be, will provide notice of such request to the Other Holders and will use its
commercially reasonable efforts to effect, as soon as reasonably practicable,
the registration under the Securities Act of (x) any Debenture Registrable
Securities held by the Initiating Holder and (y) any Debenture Registrable
Securities requested to be included in such registration by the Other Holders.
However, (a) neither JCC nor JCC Holding is obligated to effect more than one
such registration for any Initiating Holder or more than two such registrations
in the aggregate, (b) no holder may request such a registration prior to the
earlier of 18 months after the Casino opens for business and the filing by JCC
Holding of its third Annual Report on Form 10-K under the Exchange Act and (c)
neither JCC nor JCC Holding is obligated to effect such a registration unless
the aggregate Debenture Registrable Securities requested to be included in such
registration would have a gross sales price of at least $5.0 million. See "Items
1 and 3. Business and Properties--Material Agreements--Convertible Junior
Subordinated Debentures."
REGISTRATION OF CLASS B COMMON STOCK. On the Effective Date, JCC Holding
and HCCIC entered into a Registration Rights Agreement (the "Class B
Registration Rights Agreement") containing such terms and conditions as are
customary under the circumstances, including the following: (i) upon the request
of HCCIC, which request may not be made prior to the second anniversary of the
opening of the Casino, the Company will promptly file with the SEC and cause to
become effective as soon as reasonably practicable thereafter a registration
statement on the appropriate form (the "Class B Registration Statement")
relating to all shares of Class B Common Stock held by HCCIC including any
shares of Class B Common Stock obtained by HCCIC pursuant to exercise of the HET
Warrant; and (ii) the Company shall cause such Class B Registration Statement to
be continually effective, subject to customary exceptions, through the third
anniversary of the date on which the Class B Registration Statement first
becomes effective.
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POTENTIAL EFFECT OF CERTAIN PROVISIONS UPON AN ATTEMPT TO ACQUIRE CONTROL OF JCC
HOLDING
Certain of the foregoing provisions of the Restated Certificate of
Incorporation and Bylaws may discourage or make more difficult the acquisition
of control of JCC Holding by means of a tender offer, open market purchase,
proxy fight or otherwise, including certain types of coercive takeover practices
and inadequate takeover bids. These provisions are intended to encourage persons
seeking to acquire control of JCC Holding first to negotiate with JCC Holding.
JCC Holding believes the foregoing measures provide benefits by enhancing JCC
Holding's potential ability to negotiate with the proponent of any unfriendly or
unsolicited proposal to take over or restructure JCC Holding and outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms.
TRANSFER AGENT
The transfer agent for the Common Stock is Norwest Bank Minnesota, National
Association.
CERTAIN DEFINITIONS
"AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act, as amended (the term "registrant" in said Rule 12b-2 meaning,
in this case, JCC Holding).
"CHANGE OF CONTROL" shall mean the acquisition of at least 20% of the
outstanding shares of Class A Common Stock by a Conflicted Entity.
"CLOSING PRICE" on any day means the reported closing sales price or, in
case no such sale takes place, the closing bid price on the principal United
States securities exchange registered under the Exchange Act on which such
security is listed, or, if such security is not listed on any such exchange, the
highest closing sales price or bid quotation for such security on the National
Association of Securities Dealers, Inc. Automated Quotations System or any other
system then in use, or if no such prices or quotations are available for such
day, then the highest closing sales price or bid quotation for the most recent
day within the 10 prior business days for which such a price or quotation is
available, or if no such prices or quotations are available within 10 business
days prior to such day, the fair market value on the day in question as
determined, prior to the Transition Date, upon the affirmative vote of a
majority of the Class A Directors then in office and the affirmative vote of a
majority of the Class B Directors then in office and, on and after the
Transition Date, by the board of directors in good faith.
"CONFLICTED ENTITY" shall mean an entity (including any Controlled
Affiliates of such entity and any entity of which such entity is a Controlled
Affiliate) which (i) controls or operates, or, as of the Effective Date, is
licensed or qualified to control or operate in any of the states of Illinois,
Indiana, Louisiana, Mississippi, Missouri, Nevada or New Jersey, a casino or
casino hotel facility, or (ii) has been, within the five years prior to the
Effective Date, involved in litigation with HET which HET has disclosed in an
Annual Report on Form 10-K on or prior to the Effective Date, or which HET would
be required to disclose in its next Annual Report on Form 10-K following the
Effective Date.
"CONTROLLED AFFILIATE" with respect to any Person shall mean (i) a
corporation (a) a majority of whose capital stock with voting power, under
ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by such Person, by such Person and one or more of such
Person's Controlled Affiliates or by one or more of such Person's Controlled
Affiliates, or (b) in which such Person, one or more of such Person's Controlled
Affiliates, or such Person and one or more of such Person's Controlled
Affiliates possesses the power to direct the management and policies of such
corporation, (ii) a partnership in which such Person is a general partner and in
which such Person possesses the power to direct the management and policies of
such partnership, or (iii) any other entity (other than a corporation or
partnership) in which such Person, one or more of such Person's Controlled
Affiliates, or such Person and one or more of such Person's Controlled
Affiliates, (a) directly or indirectly, at the date of determination thereof,
owns at least
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a majority ownership interest in such entity, and (b) possesses the power to
direct the management and policies of such entity.
"CURE EVENT" shall mean, with respect to a corresponding Flip Event (except
for Flip Events occurring pursuant to clause (h) under the definition of Flip
Event), that (A) all of the parties to the contract(s) under which a default or
event of default has occurred, and which default or event of default has given
rise to a Flip Event, have consented in writing that the default or event of
default giving rise to such Flip Event has been waived or cured, (B) the
President of JCC Holding has provided to the board of directors written notice
that the written consent(s) referred to in clause (A) have been received, and
(C) the board of directors has in good faith accepted such notice.
"DISQUALIFIED HOLDER" shall mean any holder of shares of stock of JCC
Holding of any class (or classes) or series who, either individually or when
taken together with any other holders of shares of stock of JCC Holding of any
class (or classes) or series, in the judgment of the board of directors, is
determined by any gaming regulatory agency to be unsuitable, or has an
application for a license or permit rejected, or has a previously issued license
or permit rescinded, suspended, revoked or not renewed, as the case may be,
whether or not any of the foregoing is final and nonappealable, or whose holding
of such stock, either individually or when taken together with the holding of
shares of stock of JCC Holding of any class (or classes) or series by any other
holders, may result, in the judgment of the board of directors, in any
regulatory sanctions against, or the loss of or the failure to secure the
reinstatement of any license, franchise or entitlement from any governmental
agency held by, JCC Holding, any Affiliate of JCC Holding or any entity in which
JCC Holding or such Affiliate is an owner.
"EXCLUDED TRANSACTIONS" shall mean any transaction or transactions (i)
authorized by the affirmative vote of a majority of the Class A Directors then
in office and the affirmative vote of a majority of the Class B Directors then
in office, or (ii) pursuant to or in connection with agreements or plans
(including, without limitation, any business plans, operating plans, financing
plans or marketing plans) (a) approved by the Bankruptcy Court in connection
with the Plan of Reorganization, (b) entered into by JCC Holding prior to, on,
or substantially concurrently with, the Effective Date, or (c) authorized by the
affirmative vote of a majority of the Class A Directors then in office and the
affirmative vote of a majority of the Class B Directors then in office.
"EXTRAORDINARY FLIP EVENT" shall mean a Flip Event (including a Flip Event
resulting from Manager bankruptcy events, but excluding a Flip Event resulting
from HET bankruptcy events) which occurs as a result of a willful action or
failure to act by the Class B Directors, HET, the Manager or a Controlled
Affiliate of HET as determined in a Speedy Arbitration.
"FAIR MARKET VALUE" of a share of JCC Holding's stock of any class or series
shall mean the average Closing Price for such share for each of the 45 most
recent days of which shares of stock of such class or series shall have been
traded preceding the day on which notice of redemption shall be given; provided,
however, that if shares of stock of such class or series are not traded on any
securities exchange or in the over-the-counter market, Fair Market Value shall
be determined by the board of directors in good faith; and provided further,
however, that Fair Market Value as to any stockholder who purchased any stock of
the class (or classes) or series subject to redemption within 120 days of a
Redemption Date need not (unless otherwise determined by the board of directors)
exceed the purchase price paid by him for any stock of such class (or classes)
or series of JCC Holding.
"FLIP EVENT" shall mean any of the following: (a) (i) an event of default
has occurred under the Bank Loans that is uncured or unwaived, or (ii) an event
of default has occurred that is uncured or unwaived under any other financing
agreement pursuant to which JCC Holding, the Development Entities or JCC is a
borrower and under which the aggregate amount outstanding exceeds $2.5 million,
and in each case such default by JCC Holding or JCC is caused by HET, HOCI or
Manager related events; (b) an event of default has occurred under the New Notes
or the New Contingent Notes and such default by JCC Holding or JCC is caused by
HET, HOCI or Manager related events; (c) an event of default in respect of
payments
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due and owing by JCC under the Amended Ground Lease, or any other material event
of default under the Amended Ground Lease in response to which any other party
to the Amended Ground Lease would be entitled to terminate, rescind, or
otherwise deprive JCC of the benefits of, the Amended Ground Lease and such
default by JCC Holding or JCC is caused by HET, HOCI or Manager related events;
(d) an event of default in respect of payments due and owing by JCC under the
Casino Operating Contract, or any other material event of default under the
Casino Operating Contract in response to which any other party to the Casino
Operating Contract would be entitled to terminate, rescind, or otherwise deprive
JCC of the benefits of, the Casino Operating Contract and such default by JCC
Holding or JCC is caused by HET, HOCI or Manager related events; (e) a material
event of default has occurred under the Amended Management Agreement and HET or
the Manager is the defaulting party and in response to which event of default
any party to the Amended Management Agreement would be entitled to terminate or
rescind the Amended Management Agreement; (f) HET or an Affiliate of HET has not
fulfilled its obligations, or is in default, under any of the Completion
Guarantees or under any material agreement relating to the Casino between HET or
any such affiliate and the City or State or any agency or instrumentality of the
foregoing; (g) JCC Holding is in violation of its certificate of incorporation
or bylaws in any material respect and such default by JCC Holding or JCC is
caused by HET, HOCI or Manager related events; or (h) HET, HOCI, the Manager,
any Controlled Affiliate of either, or any entity of which HET or the Manager is
a Controlled Affiliate makes a general assignment for the benefit of creditors;
admits in writing its inability to pay its debts as they become due; files a
voluntary petition in bankruptcy; is adjudged bankrupt or insolvent; files a
voluntary petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future statute, law or regulation; files an answer admitting or not contesting
the material allegations of a petition filed against it in any such proceeding;
seeks or consents to or acquiesces in the appointment of a trustee or liquidator
of such entity or a material part of its properties; or voluntarily liquidates
or dissolves; provided, however, that the actions described in clause (h) of
this definition with respect to a Controlled Affiliate of HET shall only
constitute a "Flip Event" if such action has or is reasonably likely to have an
adverse effect on JCC Holding, JCC, the Casino, or the suitability of any
director or officer of JCC Holding or JCC or any other employee thereof required
to be found suitable under any Louisiana gaming law, regulation, rule, or order
of a gaming regulatory agency; or (i) the LGCB, or any successor thereto, makes
a determination in accordance with the laws of the State and the Rules and
Regulations that HET is unsuitable to own an equity interest in JCC Holding.
"MINIMUM MARKET VALUE" shall mean, for each trading day, the sum of (i) the
Closing Price of a share of Class A Common Stock multiplied by the aggregate
number of such shares issued to holders of Old Bonds on the Effective Date in
connection with the Plan of Reorganization, plus (ii) the Closing Price per
$1,000 of New Notes and New Contingent Notes, divided by $1,000, and multiplied
by the aggregate principal amount of such notes outstanding.
"PERSON" shall mean both natural persons and legal entities, unless
otherwise specified.
"QUALIFIED PERSON" shall mean any natural person found suitable by the LGCB
(or any other gaming regulatory agency with proper jurisdiction) to serve as a
director of JCC Holding, or, if such a finding is not required, any natural
person that otherwise meets all the requirements of the LGCB (or any other
gaming regulatory agency with proper jurisdiction).
"REDEMPTION DATE" shall mean the date fixed by the board of directors for
the redemption of any shares of stock of JCC Holding.
"REDEMPTION SECURITIES" shall mean any debt or equity securities of JCC
Holding, any Subsidiary or any other corporation, or any combination thereof,
having such terms and conditions as shall be approved by the board of directors
and which, together with any cash to be paid as part of the redemption price, in
the opinion of any nationally recognized investment banking firm selected by the
board of directors (which may be a firm which provides other investment banking,
brokerage or other services to JCC Holding), has a value, at the time notice of
redemption is given, at least equal to the Fair Market Value of the shares to
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be redeemed (assuming, in the case of Redemption Securities to be publicly
traded, such Redemption Securities were fully distributed and subject only to
normal trading activity), or such other redemption price as required by any
applicable law, regulation, rule or resolution or order of a gaming regulatory
agency.
"SIGNIFICANT TRANSACTIONS" shall mean: (i) any amendment of the Restated
Certificate of Incorporation or the Bylaws of JCC Holding or the corporate
governance or organizational documents of any subsidiary of JCC Holding or the
organization of any new Subsidiary; (ii) any merger, consolidation, lease or
sale of a material portion of the Company's or any Subsidiaries' business or
assets; (iii) any transaction or transactions, except Excluded Transactions,
during a single fiscal year with HET or its Affiliates which in the aggregate
involve consideration to either party in excess of a threshold to be determined
by the board of directors (including, without limitation, any decisions
regarding the exercise, waiver or modification of rights or obligations, or the
determination of fees with respect to project development services, under the
Amended Management Agreement); (iv) any declaration of dividends; (v) any
amendment of the Amended and Restated Casino Operating Contract, the Amended
Ground Lease, the Amended GDA or any other material contract between JCC Holding
and the State or City or any agency or instrumentality of the foregoing; (vi)
any voluntary filing for protection under Title 11 of the United States Code or
any other present or future federal or state law, statute or regulation for the
relief of debtors, any general assignment for the benefit of creditors, any
admission in writing of JCC Holding's inability to pay its debts as they become
due, any filing of an answer admitting or not contesting the material
allegations of a petition filed against it in any bankruptcy or any similar
proceedings, any seeking, consenting to or acquiescence in the appointment of a
trustee or liquidator for JCC Holding or a material portion of its properties,
or any voluntary liquidation or dissolution; (vii) any incurrence of, or
assumption of liability for, indebtedness for borrowed money, other than
indebtedness incurred pursuant to the Plan of Reorganization, the amendment of
the terms of any indebtedness for borrowed money or any modification,
determination, consent or waiver thereunder; (viii) any issuance of securities
of the Company other than issuances pursuant to the Plan of Reorganization; (ix)
any repurchase of securities of the Company; (x) any change in the independent
auditors; (xi) the approval of JCC's annual operating plan and annual capital
budget; and (xii) any change to the Minimum Balance (as defined in the Amended
Management Agreement) pursuant to Section 8.03(a) of the Amended Management
Agreement; (xii) any lease of real property rights of the Company or any of its
Subsidiaries which involves consideration to the Company or any of its
Subsidiaries in excess of a threshold to be determined by the board of
directors; (xiv) the termination of that certain lease between the Alabama Great
Southern Railroad Company, as lessor, and JCC as lessee, or the release by the
Company or any of its Subsidiaries of a material portion of the property
thereunder; (xv) the termination of that certain Franchise Agreement between the
City and JCC by the Company, or any of its Subsidiaries, and (xvi) any interest
rate protection agreements (including, without limitation, interest rate hedges,
swaps, caps, floors or collars) to be entered into by the Company or any
Subsidiary.
"SPEEDY ARBITRATION" shall mean an arbitration conducted pursuant to
"Expedited Procedures" that shall take place in New York, New York and be
administered by the New York City office of the American Arbitration Association
or any successor thereto (the "AAA") in accordance with its Commercial
Arbitration Rules in effect at the time the arbitration is initiated
(collectively, the "Rules"). In accordance with the Rules, "Expedited
Procedures" shall be utilized with respect to all matters for determination in
the arbitration. As soon as a demand for arbitration is made, the AAA will
appoint a single arbitrator from the National Panel of Commercial Arbitrators
without submission of lists of proposed arbitrators and the arbitrator will
render a full, complete, conclusive and binding resolution of the dispute (which
will be immediate, final, non-appealable, and not subject to reconsideration)
and give written notice of the decision to the board of directors of JCC
Holding.
"SUBSIDIARY" shall mean (i) any corporation more than 50% of whose
outstanding stock entitled to vote generally in the election of directors is
owned by JCC Holding, by one or more Subsidiaries or by JCC Holding and one or
more Subsidiaries or (ii) any limited liability company (including the
Development Entities), partnership, joint venture or other entity or
organization of which JCC Holding or any of its
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subsidiaries is the sole member or of which JCC Holding and its subsidiaries
collectively hold more than 50% of the membership interests.
"TRANSFER" shall mean any type of transfer of shares of Class A Common Stock
or Class B Common Stock prior to the Transition Date, including, without
limitation, transfers by sale, exchange, gift, merger, operation of law, pledge,
devise, testamentary disposition or interspousal disposition pursuant to a
domestic relations proceeding or any transfer of the power to vote such shares
by proxy or by transferring any proxy.
"TRANSITION DATE" shall mean the date upon which the earliest of the
following events occur: (i) the third anniversary of the date the Casino is open
to customers, (ii) the end of two consecutive 12-month periods in each of which
the contingent payments under the New Notes and the New Contingent Notes equals
or exceeds $15 million, (iii) the end of a period consisting of 30 consecutive
trading days during which the average daily closing Minimum Market Value equals
or exceeds $435 million (as adjusted by the board of directors in good faith to
account for purchases of Common Stock by JCC Holding or issuance of additional
Common Stock by JCC Holding).
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware empowers JCC Holding
to indemnify, subject to the standards set forth therein, any person who is a
party in any action in connection with any action, suit or proceeding brought or
threatened by reason of the fact that the person was a director, officer,
employee or agent of such company, or is or was serving as such with respect to
another entity at the request of such company. The General Corporation Law of
Delaware also provides that JCC Holding may purchase insurance on behalf of any
such director, officer, employee or agent.
Article VI of the Restated Certificate of Incorporation of JCC Holding
provides for indemnification of the directors, officers, employees or agents of
JCC Holding to the full extent permitted by the Delaware General Corporation
Law.
Section 102(b)(7) of the Delaware General Corporation Law enables a Delaware
corporation to provide in its certificate of incorporation for the elimination
or limitation of the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Any such provision cannot eliminate or limit director's liability (1) for any
breach of the director's duty of loyalty to the corporation or its stockholders;
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (3) under Section 174 of the Delaware
General Corporation Law (which imposes liability on directors for unlawful
payment of dividends or unlawful stock purchase or redemption); or (4) for any
transaction from which the director derived an improper personal benefit.
Article VI of the Restated Certificate of Incorporation of JCC Holding
eliminates the liability of a director of JCC Holding to JCC Holding or its
stockholders for monetary damages for breach of fiduciary duty as a director to
the full extent permitted by the Delaware General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Prior to the Effective Date, the Company has not (i) conducted any
operations, (ii) generated any revenues or (iii) issued any capital stock.
Accordingly, separate financial statements and other disclosures with respect to
the Company are omitted as such separate financial statements and other
disclosure are not deemed material. On the Effective Date, JCC succeeded to all
the assets of HJC except the 3CP Property and Fulton Property which vested in CP
Development and FP Development, respectively. Therefore, the following
historical financial statements include Audited Financial Information and
Unaudited Interim Condensed Consolidated Financial Information for HJC. For
financial statements relating to JCC Holding, see "--Unaudited Pro Forma
Condensed Consolidated Financial Information."
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AUDITED FINANCIAL INFORMATION
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARRAH'S JAZZ COMPANY:
We have audited the accompanying consolidated balance sheets of Harrah's
Jazz Company (a Louisiana general partnership) and subsidiary as of December 31,
1997 and 1996, and the related consolidated statements of operations, partners'
capital and cash flows for each of the three years ended in the period December
31, 1997. These financial statements are the responsibility of HJC's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harrah's Jazz Company and
subsidiary as of December 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that HJC
will continue as a going concern. HJC has experienced significant losses and has
a net capital deficiency of $212,207,000 at December 31, 1997. In addition, as
described in Note 1 to the financial statements, HJC filed a voluntary petition
for relief under Chapter 11 of the U.S. Bankruptcy Code on November 22, 1995,
and suspended its principal business operations on that date. As discussed in
Note 2, on January 29, 1998, the Bankruptcy Court confirmed HJC's Third Amended
Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, as
Modified through January 29, 1998 (the "Modified Plan"). The outcome of the
bankruptcy proceedings is uncertain. The Modified Plan (either in its current
form or as modified by subsequent amendments proposed by HJC) will not become
effective unless the validity of the action of the Louisiana Gaming Control
Board ("LGCB") in approving the Amended and Renegotiated Operating Contract is
upheld by the Louisiana courts in time to permit the Modified Plan to be
successfully consummated. In addition, the City Council of the City of New
Orleans must execute and deliver the amended Canal Street Casino Lease and
certain other agreements. Further, there are other conditions precedent to the
occurrence of the Effective Date of the Modified Plan, which are beyond the
control of HJC. These matters, among others, raise substantial doubt about HJC's
ability to continue as a going concern. In the event the approval of the Amended
and Renegotiated Operating Contract by the LGCB is upheld by the Louisiana
courts, the City Council approves the amended Street Casino Lease and certain
other agreements, and all other conditions precedent to the occurrence of the
Effective Date of the Modified Plan are satisfied, continuation of the business
thereafter is dependent on the Casino's ability to achieve successful future
operations. The financial statements do not include any additional adjustments
relating to the adoption of fresh-start accounting (see Note 3) or the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should HJC be unable to
continue as a going concern.
Arthur Andersen LLP
New Orleans, Louisiana
March 27, 1998
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1996
(IN THOUSANDS)
(NOTES 1 AND 2)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents (includes restricted cash of $3,335 and $9,195 Note 4)...... $ 3,755 $ 10,114
Other................................................................................. 561 769
----------- -----------
Total current assets.............................................................. 4,316 10,883
----------- -----------
Land, buildings and equipment
Property held for development......................................................... 13,200 13,200
Construction in progress.............................................................. 157,475 155,350
Furniture, fixtures and equipment, net of accumulated depreciation of $6,598 and
$6,033.............................................................................. 24,857 25,467
----------- -----------
195,532 194,017
Deferred assets, net of amortization
Deferred operating contract costs (Notes 3 and 9)..................................... 122,222 122,222
Lease prepayments (Notes 3 and 8)..................................................... 30,263 30,263
Other................................................................................. 2,084 2,084
----------- -----------
$ 354,417 $ 359,469
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' DEFICIT
Liabilities not subject to compromise
Accounts payable...................................................................... $ 1,170 $ 1,266
Accrued expenses...................................................................... 9,756 8,501
Debtor-in-possession loans (Note 7)................................................... 32,230 17,182
----------- -----------
Total liabilities not subject to compromise....................................... 43,156 26,949
Liabilities subject to compromise (Note 6).............................................. 523,468 523,483
Commitments and contingencies (Notes 5, 8 and 9)
Partners' deficit (Notes 1 and 5)
Partners' capital contributions....................................................... 167,000 167,000
Accumulated deficit................................................................... (379,207) (357,963)
----------- -----------
Total partners' deficit........................................................... (212,207) (190,963)
----------- -----------
$ 354,417 $ 359,469
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
(NOTES 1 AND 2)
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
REVENUES:
Casino..................................................................... $ -- $ -- $ 92,028
Food and beverage.......................................................... -- -- 4,860
Other...................................................................... 1,679 1,661 2,241
Less: Promotional allowances................................................. -- -- (3,872)
---------- ---------- -----------
Net revenues........................................................... 1,679 1,661 95,257
OPERATING EXPENSES:
Direct
Casino................................................................... -- -- 72,847
Food and beverage........................................................ -- -- 2,270
General and administrative................................................. 14,703 17,459 35,206
Management and consulting.................................................. -- -- 7,647
Depreciation............................................................... 610 612 44,978
Asset valuation provision (Note 3)......................................... -- -- 69,579
Preopening expenses (Note 3)............................................... -- -- 15,017
Other...................................................................... -- -- 124
---------- ---------- -----------
Total operating expenses............................................... 15,313 18,071 247,668
---------- ---------- -----------
Loss from operations................................................... (13,634) (16,410) (152,411)
---------- ---------- -----------
REORGANIZATION ITEMS:
Costs and expenses (Note 3)................................................ (6,569) (8,117) (102,554)
Recovery of accounts receivable............................................ 683 3,832 --
Interest income............................................................ 251 416 --
---------- ---------- -----------
Total reorganization items............................................. (5,635) (3,869) (102,554)
---------- ---------- -----------
OTHER INCOME (EXPENSE):
Interest expense, net of capitalized interest (Notes 3 and 7).............. (1,975) (621) (61,601)
Interest income............................................................ -- -- 15,006
---------- ---------- -----------
Total other income (expense)........................................... (1,975) (621) (46,595)
---------- ---------- -----------
NET LOSS..................................................................... $ (21,244) $ (20,900) $ (301,560)
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
(NOTES 1 AND 2)
<TABLE>
<CAPTION>
PARTNERS' CONTRIBUTIONS TOTAL PARTNERS'
CAPITAL DUE FROM ACCUMULATED CAPITAL
CONTRIBUTIONS PARTNERS DEFICIT (DEFICIT)
------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Balance--December 31, 1994........................... 167,000 -- $ (35,503) $ 131,497
Net loss............................................. -- -- (301,560) (301,560)
------------- ------------- ------------ ---------------
Balance--December 31, 1995........................... 167,000 -- (337,063) (170,063)
Net loss............................................. -- -- (20,900) (20,900)
------------- ------------- ------------ ---------------
Balance--December 31, 1996........................... 167,000 -- (357,963) (190,963)
Net loss............................................. -- -- (21,244) (21,244)
------------- ------------- ------------ ---------------
Balance--December 31, 1997........................... $ 167,000 -- $ (379,207) $ (212,207)
------------- ------------- ------------ ---------------
------------- ------------- ------------ ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
126
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS)
(NOTES 1 AND 2)
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss................................................................... $ (21,244) $ (20,900) $ (301,560)
Adjustments to reconcile net loss to net cash used in operations
Asset valuation provision................................................ -- -- 69,579
Reorganization costs/reserves............................................ -- -- 102,554
Provision for uncollectible accounts..................................... -- -- 1,041
Depreciation............................................................. 610 612 44,978
Amortization of deferred financing costs................................. -- -- 6,083
Decrease (Increase) in other current assets.............................. 208 1,423 (19,186)
Increase (Decrease) in accounts payable and accrued expenses............. 1,159 (5,146) 2,649
(Decrease) Increase in accounts payable and accrued expenses prior to
Petition Date.......................................................... (15) 4,123 60,467
Other.................................................................... (10) (253) --
---------- ---------- -----------
Cash flows used in operating activities................................ (19,292) (20,393) (33,395)
---------- ---------- -----------
Cash flows from investing activities
Net maturities of marketable securities.................................... -- -- 305,514
Purchase of land, buildings and equipment.................................. (2,125) (9,631) (192,320)
Proceeds from sale of property............................................. 10 -- --
Payments for leasehold costs and other assets.............................. -- -- (125,999)
---------- ---------- -----------
Cash flows used in investing activities................................ (2,115) (9,631) (12,778)
---------- ---------- -----------
Cash flows from financing activities
Proceeds received from Debtor-in-Possession borrowings..................... 15,048 17,182 --
Proceeds received from borrowings, net of underwriting fees................ -- -- 70,000
Debt retirements........................................................... -- -- (145,000)
---------- ---------- -----------
Cash flows provided by (used in) financing activities.................. 15,048 17,182 (75,000)
---------- ---------- -----------
Net decrease in cash and cash equivalents.................................... (6,359) (12,842) (121,173)
Cash and cash equivalents, beginning of period............................... 10,114 22,956 144,129
---------- ---------- -----------
Cash and cash equivalents, end of period..................................... $ 3,755 $ 10,114 $ 22,956
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
127
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION, BANKRUPTCY AND BASIS OF PRESENTATION
ORGANIZATION
Harrah's Jazz Company (together with its subsidiary, "HJC") is a Louisiana
general partnership that was formed on November 29, 1993 for the purposes of
developing, owning and operating the exclusive land-based casino entertainment
facility (the "Casino") in New Orleans, Louisiana, on the site of the former
Rivergate Convention Center. HJC operated a temporary casino in the Municipal
Auditorium (the "Basin Street Casino" and, together with the Casino, the "Gaming
Facilities") from May 1, 1995 to November 22, 1995.
HJC was in the development stage until May 1, 1995, when it commenced
operation of the Basin Street Casino. Development stage activities consisted of
construction, organizational activities related to arranging construction and
financing contracts, and negotiating various other agreements to develop the
Gaming Facilities. These agreements included (i) the lease between HJC and the
Rivergate Development Corporation (the "RDC") and the City of New Orleans (the
"City"), as Intervenor, with respect to the site of the Casino (the "Canal
Street Casino Lease"); (ii) the lease between HJC and the RDC and the City, as
Intervenor, with respect to the Basin Street Casino (the "Basin Street Casino
Lease"); (iii) the Casino Operating Contract between HJC and the Louisiana
Economic Development and Gaming Corporation ("LEDGC"), a special public purpose
corporation established to regulate land-based gaming in Louisiana (the "Casino
Operating Contract"); and (iv) the General Development Agreement between HJC,
the RDC, and the City, as Intervenor (the "GDA").
PETITION FOR RELIEF UNDER CHAPTER 11
On November 22, 1995 (the "Petition Date"), HJC (which is sometimes referred
to herein as the "Debtor") and its subsidiary Harrah's Jazz Finance Corp.
("Finance Corp.") (sometimes referred to collectively herein as the "Debtors")
filed petitions for relief under Chapter 11 of Title 11 of the United States
Code ("Chapter 11"). The case is currently pending in the United States
Bankruptcy Court for the Eastern District of Louisiana (the "Bankruptcy Court"
or the "Court").
Under Chapter 11, the prosecution of certain claims against the Debtor in
existence prior to the Petition Date is stayed under federal bankruptcy law
while the Debtor attempts to reorganize. These claims are reflected in the
December 31, 1997 and December 31, 1996 consolidated balance sheets as
"liabilities subject to compromise." Additional claims (also included in the
account "liabilities subject to compromise") may arise subsequent to the filing
date from rejection of executory contracts, including leases, and from the
determination by the Court (or agreement by the parties in interest) with
respect to allowed claims for contingencies and other disputed amounts. The
prosecution of claims secured by the Debtors' assets also is stayed, although
the holders of such claims have the right to move the Court for relief from the
stay. Secured claims are collateralized primarily by substantially all of the
Debtors' assets.
On February 28, 1997, the Debtors filed their Third Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code (the "Original Plan") and
their Third Amended Joint Disclosure Statement Pursuant to Section 1125 of the
Bankruptcy Code (the "Original Disclosure Statement"), both dated as of February
26, 1997. The Original Plan was voted upon by all affected parties entitled to
vote and, as modified in connection with the hearing on confirmation of the
Original Plan, was confirmed by the Bankruptcy Court on April 28, 1997. The
Original Plan as so modified and confirmed is referred to herein as the
"Original Confirmed Plan." The commencement of implementation (or
"consummation") of the
128
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ORGANIZATION, BANKRUPTCY AND BASIS OF PRESENTATION (CONTINUED)
Original Confirmed Plan, however, was conditioned upon (among other things) the
execution and delivery of a casino operating contract (the "April 29, 1997
Casino Operating Contract") between Jazz Casino Corporation, a newly formed
company which was to succeed to HJC's rights to develop the Casino ("JCC Co."),
and the Louisiana Gaming Control Board ("LGCB") and all necessary approvals, if
any, from the LGCB. The LGCB approved the April 29, 1997 Casino Operating
Contract on April 29, 1997, but conditioned its approval upon the further
approval of the legislature of the State of Louisiana ("State"). The State
legislature failed to give its approval of the April 29, 1997 Casino Operating
Contract during its regular session, which adjourned on June 23, 1997.
Following negotiations with various parties in interest in the
reorganization, the Debtors prepared a new set of modifications to the Original
Confirmed Plan (the Original Confirmed Plan, as so modified and confirmed by the
Bankruptcy Court on January 29, 1998, is referred to herein as the "Modified
Plan"). The Modified Plan contemplates consummation of a plan of reorganization
with the consent and agreement of the State and the LGCB. Significant
differences between the Original Confirmed Plan and the Modified Plan include
(i) provisions that Harrah's Entertainment, Inc. ("HET") and Harrah's Operating
Company, Inc. ("HOCI") will supply the Minimum Payment Guaranty required by the
Amended and Renegotiated Casino Operating Contract (as defined below) for the
fiscal years ending March 31, 1999 and March 31, 2000, which guaranty will be
renewable (subject to certain non-renewal conditions) through the fiscal year
ending March 31, 2004 pursuant to a guaranty agreement (the "HET/JCC
Agreement"), in consideration for which HET and HOCI will receive annual
payments from Jazz Casino Company, L.L.C., a newly-formed Louisiana limited
liability company which is to succeed to HJC's interests pursuant to the
Modified Plan ("JCC"), as well as a first priority lien on substantially all
property of JCC, (ii) modifications to the terms of the Senior Subordinated
Notes with Contingent Interest to be issued by JCC under the Modified Plan (the
"New Bonds") to the holders of HJC's 14 1/4% First Mortgage Notes with
Contingent Payments due 2001 (the "Old Bonds"), and (iii) modifications to the
credit facilities to be provided to JCC. The Bankruptcy Court confirmed the
Modified Plan on January 29, 1998.
The Debtors also have negotiated further amendments to the Casino Operating
Contract (as so modified, the "December 9, 1997 Casino Operating Contract"). The
LGCB conditionally approved the December 9, 1997 Casino Operating Contract on
December 9, 1997, but conditioned its approval of the December 9, 1997 Casino
Operating Contract upon the further approval of the State legislature. The
Governor indicated that he would call a special session of the state legislature
commencing in the latter part of March 1998 which would consider, among other
things, approval of the December 9, 1997 Casino Operating Contract. However,
after receiving an opinion from the State Attorney General that the LGCB has
independent authority (without the necessity of any legislative approval) to
renegotiate and execute a renegotiated casino operating contract, the Governor
did not include approval of the December 9, 1997 Casino Operating Contract on
the call for the special session. Instead, on March 20, 1998, the LGCB approved
the Amended and Renegotiated Casino Operating Contract, subject to a suspensive
condition of the rendition of a final, non-appealable judgment of the State
Supreme Court that the LGCB, acting on its own, is the proper party and has the
legal authority to enter into the Amended and Renegotiated Casino Operating
Contract with HJC and JCC on behalf of the State and the LGCB, without the
specific approval of the State Governor or the State legislature. As described
in Note 9 below, two State senators have filed lawsuits challenging the LGCB's
authority to enter into the Amended and Renegotiated Casino Operating Contract,
and those lawsuits are now pending.
129
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ORGANIZATION, BANKRUPTCY AND BASIS OF PRESENTATION (CONTINUED)
There are significant differences between the April 29, 1997 Casino
Operating Contract conditionally approved by the LGCB on April 29, 1997 but not
approved by the State legislature, and the Amended and Renegotiated Casino
Operating Contract conditionally approved by the LGCB on March 20, 1998. These
include: (i) a requirement that for each fiscal year JCC will provide a guaranty
by a third party of JCC's annual minimum payment obligation of $100 million to
the LGCB (the "Minimum Payment Guaranty") pursuant to the Amended and
Renegotiated Casino Operating Contract, and a failure to do so will result, at
the option of the LGCB, in termination of the Amended and Renegotiated Casino
Operating Contract and closure of the Casino; (ii) a provision expressly stating
that the LGCB is authorized to license or permit any business which seeks to
make use of the non-gaming space to be made available on the second floor of the
Casino to ensure, among other things, that any desired use of the non-gaming
space is allowed by the State's gaming law and the regulations adopted pursuant
to it, as well as to make clear that the operator of the Casino may not lease
space to any business that would target persons under the age of 21 to come to
the non-gaming space; (iii) a provision precluding the operator of the Casino
from directly offering its own restaurant facilities in the non-gaming space on
the second floor; (iv) a provision that makes all documents submitted to the
LGCB subject to the public records laws of the State, subject only to the
statutory and other exemptions established under the law; and (v) a requirement
that all unsecured creditors be paid their allowed claims in accordance with the
Modified Plan.
Throughout most of the period in which HJC has been in reorganization, it
has been able to continue in existence because of loans (the "DIP Financing")
from Harrah's Entertainment or one of its affiliates (the "DIP Lender"). On
November 4, 1997, HET announced that the DIP Lender would continue to provide
debtor in possession financing to HJC, subject to the occurrence of certain
specified "milestones" related to the progress of HJC's Chapter 11 case.
Under the terms of the latest order approving DIP Financing entered on
February 27, 1998 (the "Seventh DIP Loan Order"), HJC is authorized to borrow
from the DIP Lender (in addition to the $35.5 million for which the Debtor was
authorized and qualified to borrow under the terms of the previous orders
approving DIP Financing: (1) up to an additional $1.5 million (for a cumulative
total of up to $37.0 million) on or after February 1, 1998, provided, that on or
prior to such date: (a) the Governor had publicly committed to the legislature's
consideration of the Amended and Renegotiated Casino Operating Contract during a
Note 1. Organization, Bankruptcy and Basis of Presentation special legislative
session to commence in March, 1998 and (b) the Modified Plan had been confirmed;
(2) up to an additional $1.5 million (for a cumulative total of up to $38.5
million) on or after March 1, 1998, provided, that on or prior to such date: (a)
the State had commenced and was actively pursuing the process required under the
Amended and Renegotiated Casino Operating Contract and State law of determining
the suitability of various persons proposed to be associated with the Casino to
serve in their respective capacities (the "Suitability Process"), and (b) a vote
by the City Council on the amended Canal Street Casino Lease, the amended GDA,
and related documents to be entered into pursuant to the Modified Plan had been
scheduled; and (3) up to an additional $1.5 million (for a cumulative total of
up to $40 million) on or after April 1, 1998, provided, that on or prior to such
date: (a) the State is continuing active pursuit of the Suitability Process; (b)
the State legislature has begun its session for purposes of considering the
Amended and Renegotiated Casino Operating Contract; and (c) the City Council has
approved and adopted the amended Canal Street Casino Lease, the amended GDA, and
related documents to be entered into pursuant to the Modified Plan.
130
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ORGANIZATION, BANKRUPTCY AND BASIS OF PRESENTATION (CONTINUED)
Under the Seventh DIP Loan Order, if any financing milestone set forth
therein is not timely achieved but the DIP Lender in its sole discretion
determines that such financing milestone may be achieved in the following 30
days, the DIP Lender in any month (and again in any subsequent months) may elect
to continue to provide funding under the terms of the Seventh DIP Loan Order, up
to the increased cumulative totals authorized as of February 1, March 1 or April
1, 1998, and any unachieved financing milestone shall thereupon become a
financing milestone required to be achieved as a condition to further funding.
HJC expects that on March 30, 1998, the DIP Lender will elect to waive the
financing milestones requiring legislative consideration of the December 9, 1997
Casino Operating Contract and City Council approval of the amended Casino Canal
Street Casino Lease and the amended GDA on or prior to April 1, 1998. There is
no assurance that the April 30, 1998 maturity date or any later maturity date
under the DIP Loans will be waived or that additional DIP Financing will be
available. In the event that the State Legislature disapproves the December 9,
1997 Casino Operating Contract, all debtor-in-possession financing shall
immediately terminate, and no unfunded portion (if any) of the existing DIP Loan
shall thereafter be requested or borrowed by HJC for any purpose. For additional
information regarding these matters, see Items 1 and 2. "Business and
Properties--Chapter 11 Proceedings--Debtor-in-Possession Financing" in HJC's
Annual Report on Form 10-K for the year ended December 31, 1997.
As of March 27, 1998, HJC had borrowed $36.3 million from the DIP Lender.
NOTE 2. STATUS OF REORGANIZATION PLANS AND RELATED RISKS
The Bankruptcy Code gives the debtor-in-possession the exclusive right to
file a reorganization plan within 120 days after the bankruptcy filing (the
"Exclusive Filing Period") and, if a plan is filed during the Exclusive Filing
Period, the first 180 days of the case within which to obtain acceptance of a
plan (the "Exclusive Solicitation Period"). Thus, the Exclusive Filing Period
for HJC and Finance Corp. was originally scheduled to expire on March 21, 1996.
However, prior to that date, HJC and Finance Corp. sought extensions of (i) the
Exclusive Filing Period through April 3, 1996, the date by which HJC had agreed
with the City and the RDC under the March 6 Agreement to file a plan of
reorganization, and (ii) the Exclusive Solicitation Period through June 30,
1996. At a hearing held on March 19, 1996, the Bankruptcy Court extended the
Exclusive Filing Period and the Exclusive Solicitation Period for HJC and
Finance Corp. through April 4, 1996 and June 30, 1996, respectively. By
subsequent orders of the Bankruptcy Court, HJC's and Finance Corp.'s Exclusive
Solicitation Period was extended through April 30, 1997. Prior to that date, the
Bankruptcy Court confirmed the Original Confirmed Plan.
On October 6, 1997, the United States Trustee filed a motion to convert the
debtors' Chapter 11 cases to cases under Chapter 7 of the bankruptcy Code, or
alternatively to dismiss the Chapter 11 cases. That motion was presented to the
Bankruptcy Court on November 5, 1997. On that date, after HJC informed the
Bankruptcy Court that an agreement in principle had been reached involving a
number of interested parties and that HJC would be filing the Modified Plan and
Modified Disclosure Statement shortly, and with the agreement and consent of the
United States Trustee, the Bankruptcy Court continued the hearing on the United
States Trustee's motion until December 10, 1997, and by subsequent order has
further continued the hearing on the United States Trustee's motion until May 5,
1998.
On January 29, 1998, the Bankruptcy Court confirmed the Modified Plan. Under
the Modified Plan, on the effective date of the Modified Plan (the "Effective
Date") HJC shall assume the Casino Operating Contract and enter into the Amended
and Renegotiated Casino Operating Contract, which will thereafter
131
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. STATUS OF REORGANIZATION PLANS AND RELATED RISKS (CONTINUED)
be assigned to JCC. Further, on the Effective Date, the assets and business of
HJC will vest in JCC, which will succeed to HJC's right to operate a land-based
casino in Orleans Parish, Louisiana and to HJC's interest in a long-term lease
for the site in the City designated by law for the Casino's development. JCC is
a wholly-owned subsidiary of JCC Holding Company, a newly formed Delaware
corporation ("JCC Holding"). JCC will complete construction of the Casino. Under
the Plan, the Old Bonds (See Note 7) would be canceled. An indirect, wholly
owned subsidiary of HET (the "Harrah's Investor") would receive 49.9% of the
equity in JCC Holding in exchange for an additional equity investment by the
Harrah's Investor, the holders of the Old Bonds (the "Bondholders") would
receive, on a PRO RATA basis, 37.1% of the equity in JCC Holding, and the
Bondholders who have executed certain releases under the Plan would receive the
remaining 13.0% of the equity in JCC Holding. Under the Modified Plan, the
Harrah's Investor would also contribute 2.0% of the equity in JCC Holding to
Bondholders who have executed certain releases under the Plan. In addition,
Bondholders would receive (i) the New Bonds, which will pay fixed interest
semi-annually at a rate of 5.867% per annum increasing over the first three
years to a rate of 6.214% per annum in the third through fifth years, and
increasing to 8% per annum after the first five years, and contingent payments
based on EBITDA of JCC, and (ii) a PRO RATA share of Senior Subordinated
Contingent Notes due 2007 of JCC. Up to six semi-annual fixed interest payments
on the New Bonds may be made in additional New Bonds in a principal amount equal
to the interest payment rather than in cash and, if JCC's earnings do not exceed
certain minimum levels, additional semi-annual fixed interest payments on the
New Bonds may be made in kind rather than in cash. The Modified Plan provides
also that HET and HOCI will supply the Minimum Payment Guaranty required by the
Amended and Renegotiated Casino Operating Contract for JCC's fiscal years ending
March 31, 1999 and March 31, 2000, and that the Harrah's Investor will receive
warrants entitling it to purchase enough additional shares of common stock of
JCC Holding so that, upon exercise of all of the warrants, Harrah's Investor
would own 50.0% of the common stock of JCC Holding, subject to certain
adjustments.
On March 26, 1998, HJC filed a Motion to Modify Debtors' Confirmed Plan and
to Authorize HJC's Execution of the Amended and Renegotiated Casino Operating
Contract, in which HJC seeks court approval of further modifications to the
Modified Plan to take into account the LGCB's conditional approval of the
Amended and Renegotiated Casino Operating Contract, the execution of the Amended
and Renegotiated Casino Operating Contract by HJC (as opposed to execution of
the December 9, 1997 Casino Operating Contract by JCC), and HJC's assignment of
the Amended and Renegotiated Casino Operating Contract to JCC on the Effective
Date in accordance with state law and with the agreement of the parties. The
motion is set to be heard by the Bankruptcy Court on April 6, 1998.
HJC has identified certain factors that may impact the ability of HJC to
consummate the Modified Plan, the development of the Casino or HJC's (or its
successor's) ability to achieve successful future operations:
a. On December 9, 1997, the LGCB, among other things, unanimously
approved the December 9, 1997 Casino Operating Contract for submission to
the Governor of the State with the request that he submit the December 9,
1997 Casino Operating Contract to the State legislature for its approval.
The Governor indicated that he would call a special session of the state
legislature commencing in the latter part of March 1998 which would
consider, among other things, approval of the December 9, 1997 Casino
Operating Contract. However, after receiving an opinion from the State
Attorney General that the LGCB has independent authority (without the
necessity of any legislative
132
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. STATUS OF REORGANIZATION PLANS AND RELATED RISKS (CONTINUED)
approval) to renegotiate and execute a renegotiated casino operating
contract, the Governor did not include approval of the December 9, 1997
Casino Operating Contract on the call for the special session. Instead, on
March 20, 1998, the LGCB approved the Amended and Renegotiated Casino
Operating Contract, subject to a suspensive condition of the rendition of a
final, non-appealable judgment of the State Supreme Court that the LGCB,
acting on its own, is the proper party and has the legal authority to enter
into the Amended and Renegotiated Casino Operating Contract with HJC and JCC
on behalf of the State and the LGCB, without the specific approval of the
State Governor or the State legislature. As described in Note 9 below, two
State Senators have filed lawsuits challenging the LGCB's authority to enter
into the Amended and Renegotiated Casino Operating Contract, and those
lawsuits are now pending.
b. HJC anticipates, prior to the Effective Date, that it will submit to
the City Council further revisions of the amended Canal Street Casino Lease
and the amended GDA and certain of the exhibits thereto with respect to the
revised construction schedule. There can be no assurance that the City
Council will approve these amended agreements.
c. The size of the gaming market in New Orleans is uncertain. The
success of a land-based casino in this market, including the number of
visitors to the casino and their propensity to wager, cannot be accurately
predicted. No accurate prediction can be made as well concerning the impact
of HJC's bankruptcy on the Casino's business. For these and other reasons,
there is no assurance that even a reorganized Casino will be able to be
operated in a successful manner.
d. There is a risk that the actual costs to complete construction of
the Casino will exceed cost estimates and that the construction will not be
completed on schedule.
e. Although the Casino is the only land-based casino currently
permitted by law in Orleans Parish, Louisiana, no assurance can be given
that the City of New Orleans or the State of Louisiana will not amend or
enact legislation permitting other land-based casinos in the New Orleans
metropolitan area. Such legislative changes could have a material adverse
effect on HJC's (or its successor's) future operations.
f. The Casino cannot be operated unless and until certain persons
required to be found suitable are found suitable by LGCB, including, without
limitation, the Casino operator and certain affiliates, the Manager (as
defined herein) and certain officers and directors of such companies. While
HJC, the Manager and certain of their respective partners, shareholders,
officers and directors were previously found suitable after extensive
background investigations by LEDGC, the LGCB (and its investigatory arm, the
State Police) has not issued any suitability findings in connection with the
above stated entities and persons (as contemplated by the Modified Plan).
There can be no assurance that the State Police will complete its
investigations and that LGCB will find all such entities and persons
suitable in a timely fashion or that such findings will be issued. Failure
to timely receive all required suitability findings could have material
adverse consequences.
g. The Casino will have substantial leverage and be committed to make
substantial payments to the City of New Orleans and the LGCB. There is no
assurance that the Casino will achieve the level of gaming activity and
operating cash flow necessary to meet these obligations. Future operating
results are subject to significant business, economic, regulatory,
political, and competitive uncertainties and contingencies, many of which
are outside of the Casino's control.
133
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. STATUS OF REORGANIZATION PLANS AND RELATED RISKS (CONTINUED)
h. The development and construction of the Casino has been and will
continue to be, and the operation of the Casino may be, affected by the
state and local political environments, both of which are uncertain. The
State and City governments may have differing political objectives and
constituencies, and each of them has sought to control the process of
governing the development of the Casino. In so doing, the State and City
governments have, in some instances, imposed obligations on the operation of
the Casino or its operator which may be mutually inconsistent. Although JCC
will seek to comply with all applicable requirements that are imposed, its
inability to comply with inconsistent requirements may have a material
adverse effect on the Casino.
The accompanying financial statements have been prepared assuming that HJC
will continue as a going concern. HJC has experienced significant losses and has
a net capital deficiency of $212,207,000 at December 31, 1997. The outcome of
the bankruptcy proceedings is uncertain. The Modified Plan will not become
effective unless the validity of the action of the LGCB in approving the Amended
and Renegotiated Operating Contract is upheld by the Louisiana Courts in time to
permit the Modified Plan to be successfully consummated. In addition, the City
Council of the City of New Orleans must execute and deliver the amended Canal
Street Casino Lease and certain other agreements. Further, there are other
conditions precedent to the occurrence of the effective date of the Modified
Plan, which are beyond the control of HJC. These matters, among others, raise
substantial doubt about HJC's ability to continue as a going concern.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PERVASIVENESS OF ESTIMATES--CERTAIN SIGNIFICANT ESTIMATES
Financial statements prepared in accordance with generally accepted
accounting principles require the use of management estimates. The most
significant estimates with regard to these financial statements are related to
the future recoverability, assuming a going concern, of buildings and equipment,
property held for development, deferred operating contract costs, and lease
prepayments, as discussed below. Realization of buildings and equipment,
deferred operating contract costs and lease prepayments is dependent upon
consummation of the Modified Plan and HJC's ability to achieve successful future
operations, as discussed in Note 2 above. The amount of buildings and equipment,
deferred operating contract costs and lease prepayments considered realizable
could be significantly reduced, if in HJC's judgment or a change in
circumstances, the likelihood of confirming a plan of reorganization and
achieving successful future operations becomes remote.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows and consolidated
balance sheets, cash and cash equivalents include highly liquid investments with
original maturities of three months or less. All cash is collateral for the Old
Bonds pursuant to the Indenture (see Notes 4 and 7); however, the Court has
authorized HJC to use such funds to pay approved post Petition Date costs.
134
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROVISION FOR UNCOLLECTIBLE ACCOUNTS
HJC records bad debt expense when the collection of casino or other
receivables becomes doubtful. During 1995, HJC recorded bad debt expense and an
allowance for doubtful accounts of $1 million, which was reduced by write-offs
of $300,000.
LAND, BUILDINGS AND EQUIPMENT
Land, buildings and equipment are stated at cost. Improvements and
extraordinary repairs that extend the life of the asset are capitalized.
Maintenance and repairs are expensed as incurred.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets or related lease terms, whichever is shorter, as
follows:
<TABLE>
<S> <C>
Buildings and improvements............................................ 30 years
Furniture, fixtures and equipment..................................... 3-15 years
</TABLE>
See discussion below under Reorganization Costs and Impairment of Asset
Carrying Values.
HJC has property held for future development which has been valued at the
lower of cost or estimated fair value, net of a valuation allowance of $5.1
million provided in 1995. The amount HJC will ultimately realize from the
property could differ materially from the estimated fair value.
CAPITALIZED INTEREST
Interest is capitalized on internally constructed assets at HJC's overall
weighted average rate of interest. Interest was also capitalized on deferred
operating contract costs, through the opening of the Basin Street Casino, as
these costs represent an integral part of the Casino. No interest was
capitalized during 1996 and 1997. Interest of $8.6 million was capitalized in
1995, based upon HJC's overall average rate of interest of 14.25%.
OTHER ASSETS
DEFERRED OPERATING CONTRACT COST
Deferred operating contract cost consists of payments to the LEDGC (see Note
9) required by the Casino Operating Contract, and will be amortized over the
30-year life of the contract. The 30-year life is comprised of the 20-year
initial term plus the 10-year extension provided for in the contract.
LEASE PREPAYMENTS
Lease prepayments include non-refundable initial payments required under
HJC's leases (see Note 8) and will be amortized on a straight-line basis over
the life of the related lease. See discussion below under Reorganization Costs
and Impairment of Asset Carrying Values.
REORGANIZATION COSTS AND IMPAIRMENT OF ASSET CARRYING VALUES
Reorganization costs are segregated from normal operations in the
accompanying consolidated statements of operations and reflect the costs
incurred associated with the reorganization of HJC.
135
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reorganization costs and expenses consisted primarily of professional fees
for the years ended December 31, 1997 and 1996.
HJC periodically evaluates whether events and circumstances have occurred
that indicate that certain assets may not be recoverable. When factors indicate
that long-lived assets should be evaluated for impairment, HJC uses an estimate
of undiscounted net cash flow over the remaining life of the related lease or
contract, as applicable, in determining whether the assets are recoverable. Due
to the filing of the bankruptcy petition, during 1995 HJC evaluated all
long-lived assets in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for Long-Lived Assets and
Long-Lived Assets to be Disposed Of." Also in 1995, the recoverability of all
current assets was assessed in light of the filing of the bankruptcy petition.
Based on management's evaluations, the following asset writedowns/reserves and
reorganization costs/reserves, respectively, were recorded in the accompanying
Consolidated Statement of Operations for the year ended December 31, 1995 (in
thousands):
<TABLE>
<CAPTION>
ASSET
WRITEDOWNS/ REORGANIZATION
RESERVES COSTS/RESERVES
----------- --------------
<S> <C> <C>
Leasehold costs.................................................. $ 64,471 $ --
Deferred financing costs......................................... -- 27,062
Leasehold improvements........................................... -- 19,388
Capitalized interest............................................. -- 17,404
Lease exit costs--Basin Street Casino (Note 8)................... -- 12,321
Organizational costs............................................. -- 8,999
Receivables and prepayments...................................... -- 14,813
Property held for development.................................... 5,108 --
----------- --------------
Other current assets............................................. -- 2,354
69,579 102,341
Other reorganization costs--professional fees.................... -- 213
$ 69,579 $ 102,554
----------- --------------
----------- --------------
</TABLE>
The $17.2 million related to receivables and prepayments and other current
assets, which, as adjusted for subsequent recoveries (see below), are included
in other current assets in the accompanying balance sheet, and the $5.1 million
related to property held for development, are valuation allowances to reduce
these accounts to an estimated net realizable value. During 1997 and 1996,
$683,000 and $3.8 million, respectively, of these accounts were recovered.
During 1997 and 1996, management's evaluation of events and circumstances
led to the conclusion that no further writedowns or reserves were necessary
under SFAS No. 121.
Realization of buildings and equipment, deferred operating contract costs
and lease prepayments is dependent upon consummation of the Modified Plan and
HJC's ability to achieve successful future operations, as discussed in Note 2
above. The amount of buildings and equipment, deferred operating contract costs
and lease prepayments considered realizable could be significantly reduced, if
in HJC's judgment or a change in circumstances, the likelihood of confirming a
plan of reorganization and achieving successful future operations becomes
remote. In addition, the application of fresh-start accounting by HJC
136
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
or its successor as of the Effective Date will include downward adjustments,
which may aggregate approximately $100 million, to certain non-current assets.
INCOME TAXES
No provision is made in the accounts of HJC for federal and state income
taxes, as such taxes are the responsibility of the individual partners. HJC's
tax returns and amounts of its allocable revenues and expenses are subject to
examination by federal and state taxing authorities. If such examinations occur
and result in changes, the portion of HJC's income or loss reported by the
individual partners would also change.
NOTE 4. RESTRICTED CASH
ESCROWED AMOUNTS
In connection with some of the agreements entered into in the course of
HJC's bankruptcy proceeding, HJC has been required to establish escrow accounts,
pursuant to escrow agreements, at Hibernia National Bank, escrow agent. A
description of each escrow account is set forth below.
HARRAH'S JAZZ COMPANY/CITY OF NEW ORLEANS/HIBERNIA NATIONAL BANK RESTORATION
ESCROW
Funds in the approximate amount of $3.5 million were set aside in this
escrow account to complete the restoration of the Municipal Auditorium as
required in the Basin Street Casino Lease Termination Agreement ("Basin Street
Termination Agreement") among the City, the RDC and HJC, dated January 15, 1997.
On September 9, 1997, HJC, City and RDC entered into an agreement whereby
responsibility for the restoration work was assigned to the City and the RDC,
and the escrow agreement was terminated. Note 4. Restricted Cash Interest earned
on the escrow account in the amount of $118,000 was transferred to HJC. The
principal balance then remaining in the account, $174,000, was transferred to
the City.
HARRAH'S JAZZ COMPANY/CENTEX LANDIS CONSTRUCTION COMPANY, INC./HIBERNIA NATIONAL
BANK ESCROW
This escrow account was established pursuant to the Close In Agreement
between HJC and Centex Landis Construction Company, Inc. ("Centex"), dated March
5, 1996, to contain retainage payments for Centex, the contractor for the
close-in work. Funds representing retainage earned were deposited weekly during
the close in. Escrowed funds have been distributed to Centex when a written
request for disbursement has been accepted by HJC. As of December 31, 1997, HJC
continued to hold in retainage approximately $117,000 relating to a dispute
regarding the close in work on the Casino.
RIVERGATE DEVELOPMENT CORPORATION/HARRAH'S JAZZ COMPANY/CITY OF NEW
ORLEANS/HARRAH'S OPERATING COMPANY/HIBERNIA NATIONAL BANK ESCROW
Pursuant to an agreement entitled "An Agreement Regarding Modifications and
Related Agreements in Respect of Amended and Restated Canal Street Casino Lease,
Termination of Basin Street Casino Lease, Amended and Restated General
Development Agreement, the Conditional Use Ordinances and other Regulatory
Matters" (the "City Agreement"), this escrow account was established to satisfy
HJC's rent payment obligations to the City. Funds deposited in this escrow
account are to be used exclusively for payment of HJC's rent obligations under
the City Agreement. Under the City Agreement, HJC was
137
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. RESTRICTED CASH (CONTINUED)
obligated to pay the RDC rent of $736,000 per month commencing on January 1,
1997 through June 30, 1997. HJC deposited $2,208,000 in escrow to secure this
rental obligation and paid rent each month from the escrow account. As of
December 31, 1997, $149,000 remained in the escrow account representing interest
earned on these funds.
OTHER AMOUNTS HELD AS SECURITY
In addition to the amounts held in the escrow accounts described above, $3.1
million in cash is being held as security for expenses and possible claims of
the trustee and former trustee under the Indenture dated as of November 15, 1994
(the "Indenture"), between the Debtors and First National Bank of Commerce, as
trustee ("FNBC"). Approximately $3.0 million is being held by Norwest Bank
Minnesota, N.A. ("Norwest") as successor trustee to FNBC, and $104,000 is being
held by FNBC.
Pursuant to a settlement agreement between FNBC and HJC (the "FNBC
Settlement Agreement"), which is reflected in the Modified Plan and would take
effect on the Effective Date, all of FNBC's claims or other rights to indemnity
and/or reimbursement (and all liens securing the same) under the Indenture, the
agreements pursuant to which HJC's Old Bonds were issued (the "Old Bond
Documents") and the agreements pursuant to which HJC's bank financing was
secured (the "Old Bank Credit Documents") would be canceled and extinguished,
subject to certain exceptions. JCC, which is to succeed to HJC's rights and
obligations relating to the Casino under the Modified Plan, would assume, on an
unsecured basis, HJC's obligation under the Old Bond Documents and/or the Old
Bank Credit Documents to indemnify FNBC for attorneys' fees or other costs
incurred in connection with certain claims against FNBC.
JCC would also assume any other indemnity obligation of HJC under the Old
Bond Documents and the Old Bank Credit Documents as an in rem obligation limited
in recourse to, and secured solely by, $100,000 plus interest (the "FNBC Cash
Collateral") accruing from the Effective Date. As security for such
indemnification obligations, FNBC is authorized to retain the FNBC Cash
Collateral until the later of the first anniversary of the Effective Date or the
resolution of any litigation filed against FNBC within one year after the
Effective Date. Thereafter, the remaining balance of the FNBC Cash Collateral
would be released to JCC.
The amount held by Norwest, less amounts dedicated to payment of
professional fees, would be returned to JCC on the Effective Date.
138
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. TRANSACTIONS WITH PARTNERS
PARTNERS' CAPITAL
The Partners contributed total capital of $170 million prior to the closing
of the debt financing discussed in Note 7. The capital contributions consisted
of (in millions):
<TABLE>
<S> <C>
Cash................................................................ $ 107.5
Partnership debt satisfied by Grand Palais on November 16, 1994..... 33.3
Net assets and expenses paid by the Partners on behalf of the
Company........................................................... 29.2
---------
$ 170.0
---------
---------
</TABLE>
Cash contributions to capital included $5.3 million the Partners paid
directly to third parties for amounts incurred by HJC.
The Partnership Agreement provides that certain assets acquired, net of
related debt, and expenses incurred by the Partners on behalf of HJC would be
contributed capital. The principle followed in determining the net value of such
assets and expenses was on the Partners' original cost, except for the ground
lease for the Casino site which was acquired at a price negotiated among the
Partners. The Partners believe that such price represented the fair market value
of the ground lease.
Included in the amounts incurred are $4.2 million of legal fees to the law
firm of a member of HJC's Executive Committee, who is also a director of an
affiliate of Grand Palais Casino, Inc. ("Grand Palais"), and $500,000 of legal
fees to the law firm of a member of HJC's Executive Committee, who is also a
shareholder of NOLDC.
The agreements discussed in the remainder of this Note are executory
contracts (see discussion in Note 2). The Modified Plan contemplates that
certain of these agreements will be amended and assumed, or rejected.
MANAGEMENT AGREEMENT
The operations of the Casino were to be managed by Harrah's New Orleans
Management Company ("Harrah's Management" or "Manager"), an affiliate of
Harrah's New Orleans Investment Company ("HNOIC"), pursuant to a management
agreement executed on March 15, 1994. The management agreement expires 20 years
after the opening of the Basin Street Casino, but may be renewed four times in
ten-year increments at the option of Harrah's Management. Harrah's Management
was to receive a base management fee equal to 4% of Basin Street Casino gross
revenues. For managing the Casino, Harrah's Management was to receive a base
management fee equal to 3% of annual gross revenues up to $750 million; 4% of
annual gross revenues in excess of $750 million up to $1 billion; and 5% of
annual gross revenues in excess of $1 billion. In addition, Harrah's Management
was entitled to receive an incentive fee equal to 7% of the Casino's Net
Operating Revenue, as defined, in excess of $75 million, as well as other system
fees and contributions, including a marketing fund contribution of 0.4% of the
Basin Street Casino and Casino revenues. As of the Petition Date, HJC had paid
Harrah's Management $1.7 million and an additional $2.1 million was owed
Harrah's Management pursuant to a management agreement executed on March 15,
1994 for management fees related to 1995 operations.
139
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. TRANSACTIONS WITH PARTNERS (CONTINUED)
At December 31, 1997 and 1996, Due to Manager consisted of non-interest
bearing current payables for payroll and other similar costs and management
fees. At December 31, 1997 and 1996, the Due to Manager balance for these pre
Petition Date costs was $29.5 million and is classified as a liability subject
to compromise (Note 6).
CONSULTING AGREEMENTS
Pursuant to consulting agreements dated March 15, 1994, NOLDC and Grand
Palais Management Company, L.L.C., an affiliate of Grand Palais, each received
an annual consulting fee from HJC equal to 2% of gross revenues of the Basin
Street Casino and 1% of gross revenues of the Casino. As of the Petition Date,
HJC had paid $848,000 to each entity and an additional $1,064,000 was owed to
each entity for consulting fees related to 1995 operations.
OTHER AGREEMENTS
On November 16, 1994, HJC paid Embassy Suites, Inc. (which was subsequently
renamed Harrah's Operating Company, Inc.) $3 million for services related to the
arrangement of financing for the development and construction of the Gaming
Facilities and $500,000 for indemnifying the title insurers for certain
construction liens which might have arisen prior to recording of the mortgages
granted the lenders in connection with the financing completed on November 16,
1994. HJC was also obligated to pay HOCI $12.2 million upon the opening of the
Casino pursuant to a completion guarantee agreement whereby HOCI was to provide
loans to HJC if additional funds were necessary to complete the development of
the Gaming Facilities, subject to certain important exceptions and limitations.
Since the filing of HJC's Chapter 11 proceeding, HET has stated that the failure
of HJC to obtain all funds under the bank credit agreement and the acceleration
of the maturity of the bank loans terminated HET's obligations under the
completion guarantees. On December 29, 1995, the City filed a lawsuit against
HET and HOCI, among others, which alleged that HET and HOCI have failed to
perform their obligations under the completion guarantees. Pursuant to the
settlement agreement between the City and HJC (Note 8), all discovery and
pending litigation between the City and HJC or any of its partners, including
this lawsuit against HET, has been stayed. On January 23, 1996, the LEDGC also
filed a lawsuit to compel HET and HOCI either to complete construction of the
Casino or pay damages. No discovery has been taken. An answer and a cross-claim
have been filed in this litigation.
DEBTOR-IN-POSSESSION FINANCING
See Note 7.
OTHER TRANSACTIONS
During 1995, HJC sold computer equipment to HET for $495,000, which
approximated the equipment's carrying value on the date of sale. At December 31,
1997 and 1996, a receivable from HET in the amount of $495,000 is included in
other current assets on the accompanying balance sheet.
140
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. LIABILITIES SUBJECT TO COMPROMISE
Payment or other disposition of the secured and unsecured liabilities of HJC
existing as of the date of the bankruptcy proceedings is deferred until a plan
of reorganization has been consummated (see Note 2). As of December 31, 1997 and
1996, HJC's books and records reflected unsecured and undersecured liabilities
subject to settlement under Chapter 11 proceedings as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
First Mortgage Notes.................................................. $ 435,000 $ 435,000
Construction Accounts Payable......................................... 37,039 37,039
Due to Manager........................................................ 29,513 29,513
Consulting fees payable to related parties............................ 2,128 2,128
Harrah's Entertainment, Inc., and affiliates.......................... 2,281 2,281
WARN Act Settlement................................................... 2,265 2,265
Others, individually less than $1,000,000............................. 15,242 15,257
---------- ----------
$ 523,468 $ 523,483
---------- ----------
---------- ----------
</TABLE>
The full amount of the Old Bonds (First Mortgage Notes) has been included in
Liabilities Subject to Compromise since they are an undersecured liability and
the ultimate value of the security is dependent upon future events, the outcomes
of which are uncertain at this time.
As part of the bankruptcy process, creditors are allowed to file proofs of
claim with the Court specifying their position on amounts owed to them.
Creditors often include estimates of penalties, interest and damages in proofs
of claim. These amounts are subject to upward or downward adjustments and
approval by the debtors and the Court.
NOTE 7. DEBT
On November 16, 1994, HJC issued $435 million of Old Bonds bearing interest
at a rate of 14.25% per annum, plus contingent interest equal to 7.25% of HJC's
consolidated earnings before interest, taxes, depreciation and amortization, due
2001, which are secured by substantially all assets of HJC.
The Old Bonds are redeemable, in whole or in part, any time on or after
November 15, 1999, initially at 114.00% of the principal amount thereof for one
year and then declining to 107.25% until maturity on November 15, 2001. In
addition, upon the occurrence of a change in control, as defined, holders of the
Old Bonds may elect to require HJC and Finance Corp. to repurchase all or any
part of such holder's Old Bonds at a purchase price equal to 101% of the
principal amount thereof, together with accrued interest to the purchase date.
There are no sinking fund requirements under the Indenture; however, as
discussed in Note 8, HJC's lease agreement for the Casino site calls for sinking
fund payments or debt retirements commencing two years following the issuance of
secured debt.
The Old Bonds were issued pursuant to the Indenture which provides that an
event of default occurs when HJC or Finance Corp. files a voluntary bankruptcy
petition under Chapter 11, and that if such an event of default occurs, all of
the principal of, premium applicable to, and accrued interest on, the Old Bonds
will be immediately due and payable on all outstanding Old Bonds without any
declaration or other act on the part of the Indenture Trustee or the holders of
the Old Bonds. In accordance with the provisions
141
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7. DEBT (CONTINUED)
of the Bankruptcy Code, payment on HJC's pre-petition debt has been suspended
and reclassified as "Liabilities Subject to Compromise." HJC believes that all
of its secured creditors are undersecured; therefore, HJC stopped accruing
interest on unsecured and undersecured debt as of November 22, 1995. For 1997,
1996 and 1995, contractual interest on those obligations amounted to $62.0
million, $62.0 million and $68.2 million, respectively, which is $62.0 million,
$62.0 million and $6.6 million, respectively, in excess of reported interest
expense in those years.
Based on market quotes of its publicly traded first mortgage notes, the fair
value of HJC's long-term debt was approximately $134.9 million at December 31,
1997.
Additionally, HJC entered into a credit agreement with a group of banks
which provided Bank Credit Facilities aggregating $175 million (the "Bank Credit
Facilities"). At December 31, 1994, $75 million was outstanding under one of the
term loan commitments with interest at 9.625% through March 21, 1995. On
November 19, 1995, representatives of HJC's bank syndicate informed HJC that the
bank syndicate would not disburse funds to HJC under the terms of the bank
credit facility. As of November 20, 1995, $145 million was outstanding, although
not available to HJC, under the Bank Credit Facilities. The bank credit facility
was accelerated and terminated by the bank lenders on November 21, 1995 and all
amounts outstanding at that date were recovered by the group of banks.
Accordingly, no amounts were outstanding under the Bank Credit Facilities at
December 31, 1997 or 1996.
As discussed in Note 1, HJC has obtained DIP Financing. Under the terms of
the Seventh DIP Loan Order, the DIP Lender agreed to extend the maturity of all
DIP Loans to the earlier of: (i) April 30, 1998, or such later date to which the
DIP Lender consents; (ii) the Effective Date of the Modified Plan; (iii) the
date on which the Modified Plan is revoked or is otherwise no longer in full
force and effect; (iv) the dismissal of HJC's Chapter 11 case; (v) the
conversion of HJC's Chapter 11 case to a case under Chapter 7 of the Bankruptcy
Code; (vi) the appointment of a trustee for HJC; (vii) any stay, reversal,
modification or other amendment in any respect (except to the extent acceptable
to the DIP Lender) or termination or expiration of the Seventh DIP Loan Order or
the Confirmation Order (as defined herein); (viii) any of the Milestone Dates if
one or more of the Financing Milestones (each as defined in the final order
approving the Seventh DIP Loan) required to be achieved on or before such date,
after giving effect to any extension, has not been achieved to the satisfaction
of the DIP Lender in its sole discretion; or (ix) the State legislature's
disapproval of the December 9, 1997 Casino Operating Contract. HJC expects that
on March 30, 1998, the DIP Lender will elect to waive the financing milestones
requiring legislative consideration of the December 9, 1997 Casino Operating
Contract and City Council approval of the amended Canal Street Casino Lease and
the amended GDA on or prior to April 1, 1998. There is no assurance that the
April 30, 1998 maturity date under the DIP Loans will be waived or that
additional DIP Financing will be available.
Interest on all existing DIP Loans is accruing at the rate of 8% per annum,
payable upon maturity. As "adequate protection" for the existing DIP Loans, the
DIP Lender has been granted (i) administrative priority status for all of the
existing DIP Loans, with priority equivalent in priority to a claim under
Section 364(c)(1) of the Bankruptcy Code, and in a priority over all other costs
and expenses of administration of the kinds specified in Sections 105, 326,
503(b), 507(a) or 507(b) of the Bankruptcy Code; and (ii) a first priority,
non-avoidable, valid, enforceable and automatically perfected lien and security
interest on and in all of HJC's assets, subject only to (a) all non-avoidable,
valid, enforceable and perfected liens and security interests in HJC's property
(other than personal property, certain parcels of real estate and cash and cash
142
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7. DEBT (CONTINUED)
equivalents) that existed on the Petition Date other than the prepetition and
postpetition liens and security interest in favor of the Bondholders, the
Indenture Trustee, the predecessor Indenture Trustee, the prepetition bank
lenders or their collateral agent, predecessor collateral agent or
administrative agent on any of HJC's property, (b) any and all non-avoidable,
valid, enforceable and perfected liens, security interests and/or rights of
setoff in favor of the Indenture Trustee and the predecessor Indenture Trustee
on $1.5 million previously deposited with them (subject to reduction for fees
and expenses of the predecessor indenture trustee), (c) any and all postpetition
liens and security interests in favor of any or all of the Bondholders and the
Indenture Trustee on any causes of action of HJC against any "insiders" (as
defined in Section 101(31) of the Bankruptcy Code) arising under Sections
544(b), 547, 548, 550 or 553 of the Bankruptcy Code, (d) certain, specified
allowed administrative expense claims for the fees, expenses and costs of
professionals retained by HJC and the Committees, and (e) any existing or future
rights of setoff, compensation and/or recoupment in favor of the City, the RDC,
the State and/or the LEDGC. The Seventh DIP Loan Order further provides that no
claims or liens of the DIP Lender shall have priority over any amounts paid
prior to the maturity of the existing DIP Loans to third parties pursuant to any
budget approved by the DIP Lender.
HJC will require additional funds prior to the Effective Date, and HJC
presently has no source of funding other than the DIP Lender. There can be no
assurance that the DIP Lender (or any other lender) will be willing to lend
additional amounts to HJC. At December 31, 1997 and 1996, HJC had no long-term
post Petition Date debt.
NOTE 8. LEASES
HJC leases both real estate and equipment for use in its business through
operating leases. In addition to minimum rentals, certain leases provide for
contingent rents based on percentages of revenue and certain payments to
Partners out of cash flow, as defined. Rent payments with escalation provisions
are amortized so as to achieve level rent expense, except for the impact of
contingent rentals, over the life of the lease. Real estate operating leases
range from 21 months to 30 years with options for extensions up to an additional
30 years. The average remaining term for non-real estate leases extends
approximately one year.
HJC's operating leases, including HJC's property leases, are executory
contracts. Under the Bankruptcy Code, a company in reorganization can choose to
accept or reject executory contracts.
The aggregate contractual future minimum rental commitments, excluding
contingent rentals as of December 31, 1997, were as follows (in thousands):
<TABLE>
<S> <C>
1998.............................................................. $ 9,567
1999.............................................................. 16,092
2000.............................................................. 15,191
2001.............................................................. 15,154
2002.............................................................. 15,116
Thereafter........................................................ 364,932
---------
$ 436,052
---------
---------
</TABLE>
143
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. LEASES (CONTINUED)
THE CASINO SITE
On March 15, 1994, HJC entered into a lease with the RDC and the City for
the Rivergate site on which the Casino was being constructed, all pursuant to an
assignment, dated as of March 15, 1994, from Grand Palais. The initial term,
from March 15, 1994, is 30 years, with three ten-year renewal options.
As of December 31, 1995, the required lease prepayment of $30 million and
mobilization payment of $8.75 million had been paid. Annual payments after
opening are subject to a minimum annual aggregate amount of approximately $15.4
million subject to escalation beginning in 2001, and 4.99% of certain payments
to Partners out of cash flows and proceeds of major capital events, as defined.
The lease also requires sinking fund payments or debt retirements of the
lesser of 2% of the original principal amount of HJC's secured debt or 25% of
net income, escalating to 20% of such original principal amount in each of the
two years ending one year prior to maturity, commencing two years following the
issuance of secured debt. In addition, maintenance of a capital replacement fund
to be funded by a percentage of gross gaming and non-gaming revenues of 1.5% the
first year, 1.75% the second year and 2.0% each succeeding year is required.
Costs of capital replacements may be paid from this fund. Amounts in excess of
$25 million, adjusted upwards by the Consumer Price Index ("CPI"), may be
withdrawn by HJC. Upon termination of the lease, the balance of the funds will
be available to restore the facilities.
THE BASIN STREET CASINO SITE
On March 15, 1994, HJC entered into a lease with the RDC and the City of New
Orleans for use of the Municipal Auditorium as the Basin Street Casino site
during the development of the Casino. The initial term, commencing March 15,
1994, was two years with nine two-year extension options, except that the lease
was to terminate on the date the Casino opened to the general public.
Annual rent and other payments due under the lease after opening were
subject to a minimum annual aggregate amount of approximately $3.4 million and
4.99% of certain payments to Partners out of cash flow and proceeds of major
capital events, as defined. Rent payments were due equal to 6% of gross non-
gaming revenues, and the amount by which 5% of gross gaming revenues for each
fiscal year exceeds the base rent of $200,000 per month.
Upon the opening of the Casino, the Basin Street Casino was to be closed and
the premises restored to its previous use as a civic auditorium. Further,
additional improvements or replacements were to be made at a cost not to exceed
$1.2 million plus annual CPI increases.
HJC has entered into the Basin Street Termination Agreement. Under the Basin
Street Termination Agreement, the RDC and the City, on the one hand, and HJC, on
the other, mutually released all rights and obligations under the Basin Street
Casino Lease, except that the release does not affect any rights or obligations
of the parties under the City Agreement in respect of the Municipal Auditorium
or the restoration work as set forth therein. The RDC and the City will have no
claim for damages as a result of such termination. Pursuant to the Basin Street
Termination Agreement, the Basin Street Casino Lease automatically terminated on
February 20, 1997, the date on which the LGCB approved the termination of the
Basin Street Casino Lease, with no further action required by the RDC, JCC or
the City.
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HJC is involved in various inquiries and administrative proceedings arising
in the normal course of business. While any proceeding has an element of
uncertainty, HJC believes that the final outcome of these matters will not have
a material adverse effect upon HJC's consolidated financial position or its
results of operations.
See Items 1 and 2 "Business and Properties" in HJC's Annual Report on Form
10-K for the year ended December 31, 1997 for a discussion of anticipated
modifications to the agreements discussed in the balance of this note as a
result of the Modified Plan.
OPERATING CONTRACT
HJC has entered into the Casino Operating Contract with the LEDGC to operate
the Gaming Facilities for 20 years, with a 10-year extension option. The Casino
Operating Contract requires HJC to pay a total of $125 million in installments
to the LEDGC, with payments due at various times prior to the opening of the
Basin Street Casino, with the final payment due within ten days after
commencement of Basin Street Casino operations (which was paid during 1995),
plus annual compensation, as follows:
Basin Street Casino--During the period of the Basin Street Casino's
operation, HJC paid the LEDGC payments equal to 25% of the Gross Gaming Revenue,
as defined.
The Casino--After the Casino opens, HJC is required to pay the LEDGC
payments in daily installments, calculated on an annualized basis, equal to the
greater of $100 million and a percentage of Gross Gaming Revenues, as defined,
as set forth below:
- 19% of the first $600 million; plus
- 20% of the next $100 million; plus
- 22% of the next $100 million; plus
- 24% of the next $100 million; plus
- 25% of the amount over $900 million.
The Casino Operating Contract also requires HJC to pay the LEDGC $11,364 per
month during the construction of the Gaming Facilities and to comply with
various covenants and conditions, including completing construction by specified
dates.
The Casino Operating Contract specifies the circumstances under which LEDGC
may revoke the contract. The Casino Operating Contract provides that, subject to
the rights of leasehold mortgagees, the occurrence of a default of a material
obligation by HJC could result in the termination of the contract. Such defaults
under the Casino Operating Contract include, among other things: (i) HJC's
failure to pay the LEDGC payments or any other payment, (ii) financial
instability of HJC, (iii) unsuitability of HJC, (iv) adjudication of HJC as
being in default under certain leases and agreements if, in LEDGC's opinion, the
default materially affects HJC's ability to perform its obligations under the
Casino Operating Contract, (v) HJC's filing of a petition or other request for
relief seeking any reorganization, liquidation, dissolution or similar relief,
or (vi) HJC's failure to perform continued or comply with any other material
obligation in the Casino Operating Contract. In the event of a default, LEDGC is
required to provide notice to HJC of the default and to provide HJC with an
opportunity to cure the default. If HJC does not cure the default
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within the time period provided in the Casino Operating Contract, LEDGC is
permitted to terminate the Casino Operating Contract, enforce the obligation in
default and exercise any other right or remedy available to LEDGC, including the
imposition of fines. Neither LEDGC nor LGCB have provided notice to HJC of any
defaults under the Casino Operating Contract. HJC believes that some of the
default provisions in the Casino Operating Contract may be unenforceable
pursuant to the Bankruptcy Code, so long as HJC cures all other defaults. There
is, however, no assurance that HJC can prevent a revocation of the Casino
Operating Contract by the LGCB or the Louisiana State legislature or recover
damages as a result of the revocation. Revocation of the Casino Operating
Contract would have a material adverse effect on HJC.
GENERAL DEVELOPMENT AGREEMENT
The GDA entered into with the RDC requires HJC to pay up to $2 million for
transportation and roadway improvements to mitigate the impact of the Casino
development on the city's traffic and transportation network. HJC is also
obligated to reimburse the RDC for certain costs incurred during the
construction of the Gaming Facilities, not to exceed an aggregate amount of $1.6
million. As of the Petition Date, HJC had paid $3.4 million related to these
obligations.
OPEN ACCESS PROGRAM AND PLANS
The Open Access Program requires HJC to form a special purpose corporation
to interface with new and existing businesses owned and controlled by
minorities, women and disadvantaged persons. HJC is required to capitalize this
corporation with $500,000 and underwrite its operations at a minimum of $250,000
per year for five years. HJC must also contribute an additional $500,000 per
year for five years to similar public efforts, in accordance with standards to
be established by HJC. As of the Petition Date, HJC had paid $883,000 towards
this obligation.
OTHER CITY AGREEMENTS
On October 5, 1994, HJC and the City entered into an agreement obligating
HJC to pay the City $4 million shortly after closing the debt financing
discussed in Note 7, which was paid on November 28, 1994, and make an annual
payment of $1.25 million for each year during the term of the Casino lease in
which HJC receives gross gaming revenues in an amount of $400 million or more.
HJC has delivered to the City a $1.5 million irrevocable letter of credit to
secure these payments.
CONSTRUCTION CONTRACTS
The Court has extended HJC's time to assume or reject executory contracts,
including construction contracts, until the time provided for in the Modified
Plan. HJC has entered into agreements with certain of its major contractors,
including Centex, pursuant to which such contractors have agreed to modify the
terms of their executory contracts with HJC.
LITIGATION
DECLARATORY JUDGMENT ACTIONS. On March 18, 1998, two separate petitions
were filed seeking a declaratory judgment and injunctive relief in the wake of
the Attorney General's opinion to the effect that
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the LGCB could execute the Amended and Renegotiated Casino Operating Contract
without further action by the State legislature. In JORDAN VS. LOUISIANA GAMING
CONTROL BOARD AND MURPHY J. FOSTER, Case No. 448192 (19th Judicial District
Court, State of Louisiana, Parish of East Baton Rouge), the plaintiff, a
Louisiana State Senator, sought a declaratory judgment and injunctive relief to
preclude the LGCB from executing a casino operating contract without the
approval of the State legislature. Joseph B. Boucree, Sr., former president of
the LEDGC, has filed a petition of intervention in the JORDAN litigation,
alleging that the LEDGC (rather than LGCB) retains the power to renegotiate
HJC's Casino Operating Contract, and that the LGCB's actions in approving the
Amended and Renegotiated Casino Operating Contract are invalid.
In BEAN VS. LOUISIANA GAMING CONTROL BOARD AND RIVERGATE DEVELOPMENT
CORPORATION, No. 448218 (19th Judicial District Court, State of Louisiana,
Parish of East Baton Rouge), the plaintiff, also a member of the Louisiana State
Senate, sought declaratory and injunctive relief precluding the LGCB from
entering into a casino operating contract with JCC without the approval of the
Louisiana legislature. HJC and the Bondholders Committee filed separate
petitions of intervention in that litigation. On March 25, 1998, the plaintiff
in JORDAN filed a petition of intervention and motion for consolidation of BEAN
with JORDAN. On March 25, 1998, the Court hearing the BEAN litigation entered
orders (1) directing that applications to the Louisiana Supreme Court for
supervisory writs be filed in the Louisiana Supreme Court on or before March 26,
1998, and (2) staying all proceedings in BEAN pending action by the Louisiana
Supreme Court on such writ applications. On March 25, 1998, HJC filed an
application for supervisory writs in the Louisiana Supreme Court, which has been
assigned Case No. 98CD0787. On that same date, Senator Bean, the LGCB and the
RDC filed a joint application for supervisory writs in the Louisiana Supreme
Court, which has been assigned Case No. 98CD0786. On March 27, 1998, Supreme
Court entered an order denying all writ petitions to the extent they sought an
immediate hearing before the Louisiana Supreme Court prior to a decision on the
merits by the 19th Judicial District Court, and directed that the BEAN
litigation be consolidated with the JORDAN litigation. The Supreme Court also
directed that the judge hearing the JORDAN litigation render judgment on the
merits no later than Friday, April 3, 1998, and reserved for further
consideration the applicants' requests that the intermediate court of appeals be
bypassed until after judgment is rendered by the 19th Judicial District Court.
On March 27, 1998, the judge hearing the Jordan litigation directed that all
parties in the consolidated litigation file pre-trial briefs no later than noon
on Sunday, March 29, 1998, and scheduled a trial to commence on Monday, March
30, 1998.
There can be no assurance that the validity of the action of the LGCB in
approving the Amended and Renegotiated Casino Operating Contract will be upheld
by the Louisiana courts or that the Louisiana courts will rule upon these
challenges in time to permit the Proposed Modified Plan to be successfully
consummated. In the event that the courts fail to uphold the validity of the
execution of the Amended and Renegotiated Casino Operating Contract by the State
in a timely fashion, the Proposed Modified Plan cannot be consummated, and HJC's
Chapter 11 case likely would be converted to a liquidation case under Chapter 7
of the Bankruptcy Code.
WARN ACT LITIGATION. RUSSELL M. SWODY, ET AL. V. HARRAH'S NEW ORLEANS
MANAGEMENT COMPANY AND HARRAH'S ENTERTAINMENT, INC., Civil No. 95-4118, was
filed against HET on December 13, 1995 in the District Court and subsequently
amended. Swody is a class action under the WARN Act and ERISA and seeks damages,
INTER ALIA, for the alleged failure to timely notify workers laid off by HJC.
Plaintiffs seek
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unspecified damages, as well as costs of legal proceedings, for themselves and
all members of the class. After a hearing, the District Court certified the
class on April 22, 1996.
Early in 1996, SWODY was consolidated with SUSAN N. POIRIER, DARLENE A.
MOSS, ET AL. V. HARRAH'S ENTERTAINMENT, INC., HARRAH'S NEW ORLEANS MANAGEMENT
COMPANY, and Harrah's Operating Company, Civil No. 96-0215, which was filed in
the United States District Court for the Eastern District of Louisiana on
January 17, 1996, and subsequently amended. The POIRIER class was certified with
Swody on April 22, 1996, and the consolidated POIRIER and SWODY cases were set
for trial on May 5, 1997.
Similar complaints were filed by Ms. Poirier in the Bankruptcy Court in HJC,
HNOIC and Finance Corp. bankruptcy cases (Adversary Nos. 96-1015, 96-1014, and
96-1013). The POIRIER adversary proceedings purported to be class actions,
asserting claims under the WARN Act, as well as ERISA. On or about February 23,
1996, HJC and HNOIC each filed a motion in its respective adversary proceeding
to dismiss the POIRIER adversary proceeding on procedural grounds. A hearing on
such motions to dismiss was held on March 19, 1996. Later, Finance Corp. also
filed a similar motion. The Bankruptcy Court granted the motions to dismiss with
respect to each of the Debtors on or about June 28, 1996.
Proofs of claims, on behalf of individual, alleged, terminated employees and
purportedly on behalf of all alleged former employees, were filed in HJC's
Chapter 11 case. The plaintiffs in the litigation (the "WARN Act Claimants")
moved to certify three classes on whose behalf the plaintiffs seek to act as
class representatives for purposes of the proofs of claims. The Bankruptcy Court
heard arguments on such motions on July 11, 1996, and denied the motions by
Memorandum Opinion and Order dated October 10, 1996. However, in order to
facilitate a proposed settlement reached by the Debtors and the WARN Act
Claimants (discussed below), the WARN Act Claimants filed motions to reconsider
that ruling. On December 10, 1996, the Bankruptcy Court certified classes for
settlement purposes only.
The WARN Act Claimants contend that the Debtors and the defendants in the
District Court cases operated as a single business enterprise with respect to
operations in New Orleans and contend that, under this alleged arrangement, HJC
may be liable to the claimants under the WARN Act along with the defendants in
the District Court cases.
In order to avoid the expense, delay and risks associated with additional
litigation, the Debtors and the WARN Act Claimants agreed to compromise and
settle all of the WARN Act Claimants' claims on the terms summarized below,
which settlement is reflected in the Modified Plan. Under the settlement, JCC
will pay to those individuals laid off on or about November 22, 1995 the sum of
$2,265,000, which amount includes the fees and costs of the WARN Act Claimants'
attorneys and certain taxes attributable to the WARN Act settlement. The amounts
paid to these individual WARN Act Claimants will be based upon instructions from
the WARN Act Claimants' attorneys. The individual awards will be based upon
information obtained through the payroll records for the time period of October
1 through November 22, 1995. In addition to this monetary settlement, the
individuals laid off on or about November 22, 1995 will be offered preferential
re-employment to their former positions or, if their former positions no longer
exist or are not presently available, to substantially equivalent positions to
the extent that such jobs are or become available. "Preferential re-employment"
means that they will be offered employment before employment is offered to any
person who was not laid off on or about November 22, 1995. WARN Act Claimants
who were laid off in August of 1995 will not receive a monetary award, but will
be placed on a secondary preferential re-hire list. These claimants will be
offered re-employment after those employees
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laid off on or about November 22, 1995 and employees laid off by the Flamingo
Casino. They will remain on the preferential re-hire list for one year following
the date of the opening of the Casino. A motion seeking approval of this
compromise and settlement was filed and the Bankruptcy Court preliminarily
approved the settlement on December 10, 1996. A final hearing on the settlement
took place on February 3, 1997, at which time the Bankruptcy Court approved the
settlement subject to the occurrence of the Effective Date. This settlement is
contingent upon consummation of the Modified Plan.
The WARN Act Claimants also filed a motion requesting that the Bankruptcy
Court order HJC to amend its schedules of creditors to include all alleged,
former employees and to extend the deadline for such alleged, former employees
to file proofs of claims. As part of the settlement described above, the WARN
Act Claimants have withdrawn such motion.
MCCALL LITIGATION. On April 26, 1993, a lawsuit was filed in the Civil
District Court for the Parish of Orleans (the "Civil District Court") captioned
MCCALL V. MCCALL, ET AL. (the "McCall Litigation"). Plaintiffs asserted an
ownership interest in certain land underlying the Rivergate site and also sought
permanent injunctive relief prohibiting the use of such land for the Casino. The
lawsuit also challenged the manner in which the RDC was formed and its authority
to enter into the Canal Street Casino Lease and the Basin Street Casino Lease.
HJC intervened in the lawsuit and aligned itself with the City and the RDC. On
February 22, 1994, the Civil District Court granted the motion for summary
judgment filed by the City, the RDC and HJC, thereby dismissing all claims. On
February 23, 1995, the state appellate court unanimously affirmed the Civil
District Court's ruling that plaintiffs did not have an ownership interest in
any land underlying the Rivergate site and remanded the case to the Civil
District Court to determine whether plaintiffs had standing to assert the other
claims concerning the authority of the RDC to enter into the Canal Street Casino
Lease and the Basin Street Casino Lease. On April 28, 1995, all parties to the
litigation applied to the Louisiana Supreme Court for writs of certiorari. On
June 30, 1995, the Louisiana Supreme Court unanimously denied all writ
applications. The property claims in this litigation have been resolved in favor
of, the City and the RDC. On December 5, 1995, the Civil District Court
dismissed the cause of action challenging the constitutionality of the RDC for
lack of standing. Harry McCall then filed a notice of appeal.
On March 12, 1996, Harry McCall, one of the claimants in the McCall
Litigation, filed a motion in the Bankruptcy Court seeking relief from the
automatic stay in bankruptcy to pursue this appeal. A hearing on Mr. McCall's
motion for relief from the stay was held on April 2, 1996, following which the
Bankruptcy Court modified the automatic stay to permit the McCall Litigation to
proceed. On April 18, 1996, HJC, the City and the RDC filed a joint motion
asking the Bankruptcy Court to amend and restate its order granting Mr. McCall's
motion for relief from the automatic stay. A hearing on the joint motion was
held on May 13, 1996, and the Bankruptcy Court granted the joint motion.
Specifically, the Bankruptcy Court amended the order granting relief from the
stay to clarify that the automatic stay did not apply, and had never applied, to
the McCall Litigation or any appeal taken therefrom. On October 10, 1996, the
Fourth Circuit Court of Appeals for the State of Louisiana voted 2-1 to reverse
the trial court's dismissal for lack of standing. Under the Louisiana
Constitution, this non-unanimous decision required that the appeal be heard
before a five-judge panel of the same court. Oral argument before the five-judge
panel took place on October 29, 1996 and that panel also reversed the trial
court's dismissal for lack of standing with respect to the cause of action
challenging the constitutionality of the RDC. The City, the RDC and HJC each
applied for a writ of certiorari with the Louisiana Supreme Court, which was
denied without comment.
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In addition, on April 6, 1994, Harry McCall filed a motion in Civil District
Court to enforce a purported settlement agreement of the McCall Litigation
entered into with HJC, asserting that he was entitled to receive settlement
proceeds based upon a settlement agreement. HJC does not believe that a binding
settlement agreement was reached with Mr. McCall. On July 8, 1994, the Civil
District Court ruled that Mr. McCall's motion was procedurally defective. He
subsequently failed to cure the deficiency and, on September 12, 1994, the court
dismissed Mr. McCall's motion to enforce the settlement. Mr. McCall filed a
notice of appeal and, on October 12, 1995, the Fourth Circuit Court of Appeals
for the State of Louisiana reversed the district court's ruling, allowing Mr.
McCall to pursue his claim.
On March 12, 1996, Harry and Henry McCall filed a proof of claim against HJC
in the amount of $2,000,000 which appeared to be based upon the purported
settlement that was the subject of the April 1994 motion in Civil District
Court. They also filed an adversary proceeding in the Bankruptcy Court in May,
1996 seeking to enforce the purported settlement agreement. HJC filed an
objection to the McCalls' proof of claim on May 2, 1996. The Bankruptcy Court
ordered that HJC's objection to the proof of claim and the adversary proceeding
be consolidated for purposes of trial and discovery. At a hearing on September
16, 1996, the Bankruptcy Court ruled that Thomas Tucker, attorney for the
McCalls, could not be both a witness and attorney in the matter. The trial was
adjourned to give Mr. Tucker time to decide which role he would take. On
September 26, 1996, the McCalls filed a motion seeking an interlocutory appeal
on this decision of the Bankruptcy Court. At that time, the Bankruptcy Court
stayed the underlying action pending a decision on the appeal. On October 16,
1996, the District Court denied the motion for an interlocutory appeal. The
McCalls' motion for reconsideration of the decision was also denied.
Subsequently, Mr. Tucker elected to be a witness.
On April 18, 1997, the Debtors and Thomas Tucker, Harry McCall, Henry McCall
and Susan LaFaye (an attorney who claims an interest in proceeds of the McCall
Litigation) (the "McCall Claimants") reached a tentative agreement to settle
various litigation and other legal claims, demands and causes of action (the
"McCall Settlement Agreement"). The McCall Settlement Agreement contemplates,
among other things, that:
(i) The McCall Claimants and the law firm of Tucker & West will withdraw
and dismiss with prejudice any and all proofs of claim and other demands for
payment filed by any one or more of them in the Chapter 11 Cases, including
any adversary proceedings, and also will release any and all claims,
demands, suits and causes of action of any type they have against HJC and
other persons identified in the McCall Settlement Agreement.
(ii) The McCall Claimants will file in HJC's case an amended proof of
claim in which they will jointly assert against HJC an unsecured claim in
the amount of $145,500, which HJC will recognize as a valid and enforceable
general, unsecured claim against HJC.
(iii) On the later of (a) the Effective Date or (b) the date on which a
court of competent jurisdiction enters judgments dismissing all of the
litigation described in (iv) below with prejudice, HJC will deliver payment
of the amended claim to an escrow agent designated in the McCall Settlement
Agreement. Thereafter, the escrow agent will distribute to Ms. LaFaye the
sum of $9,500, and will distribute to the other McCall Claimants, as their
interests may appear, the sum of $87,985. The balance, or $48,015, will be
held in escrow, and will be disbursed together with any accrued
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interest on the earlier of (a) the first anniversary of the Effective Date
or (b) the date of commencement of gaming at the Casino. If, however, prior
to the date of commencement of gaming at the Casino, HJC advises the escrow
agent that there has been a default under the McCall Settlement Agreement,
there will be no distribution from escrow until the escrow agent receives an
appropriate order or judgment from the Bankruptcy Court authorizing
distribution and identifying the recipients.
(iv) The McCall Claimants will dismiss with prejudice their adversary
proceeding in HJC's bankruptcy proceeding and all the actions they have
filed relating to HJC and the Casino.
(v) The McCall Claimants and Tucker & West will not, individually or
collectively, take any action, whether directly or acting through any other
person or entity, to oppose the conducting of casino gaming operations
including, but not limited to (a) filing of any suits, actions or other
proceedings against HJC and its successors, (b) seeking to retard, delay or
deny the issuance to HJC and its successors of any licenses, orders, grants
or other awards by any governmental entity or (c) assisting any other person
with respect to the foregoing.
The parties to the McCall Settlement Agreement are currently engaged in the
preparation of a definitive agreement to resolve their disputes, which will then
be executed and submitted to the Bankruptcy Court for its approval. The McCall
Settlement Agreement contemplates that Harry McCall will dismiss the McCall
Litigation with prejudice on the Effective Date.
TUCKER LITIGATION (CITY). A lawsuit captioned TUCKER V. CITY OF NEW ORLEANS
was filed on October 5, 1994 against the City (the "Tucker Litigation") in the
Civil District Court for the Parish of Orleans by a resident of the Parish
challenging the validity of three casino-related ordinances adopted by the City
Council on September 23, 1994 which authorized, among other things, amendments
to the Canal Street Casino Lease. The lawsuit also challenges the
constitutionality of a clarifying amendment to the Louisiana Gaming Act. The
clarifying amendment addresses a provision of the Canal Street Casino Lease
which requires at least 80% of the persons employed by the Casino to be
residents of Orleans Parish. The effects of the ordinances and the amendment to
the Louisiana Gaming Act were, among other things, (i) to clarify the intent of
the Louisiana Gaming Act that a provision of a contract (to which the gaming
operator is a party) that requires more than 50% of the persons employed to be
residents of any one parish is void, but that the contract as an entirety would
not be void under the Louisiana Gaming Act, and (ii) to reduce the residency
requirement in the Canal Street Casino Lease if necessary to comply with
applicable law. On November 18, 1994, the City filed preliminary exceptions
contending that the plaintiff had failed to name indispensable and necessary
parties as defendants. On March 13, 1995 and August 17, 1995, the plaintiff
filed supplemental amended petitions. On September 22, 1995, the City requested
the plaintiff consider its prior filed exceptions as applicable. There has been
no activity in the case since that time.
Mr. Tucker and the law firm of Tucker & West filed proofs of claims against
the estates of HJC and HNOIC for amounts which they allege were owed to them
with respect to the Tucker Litigation and other litigations, including the
McCall Litigation. HJC and HNOIC filed objections to these proofs of claims.
Subsequently, on August 13, 1996, the claimants consented to disallowance of
these claims.
The McCall Settlement Agreement contemplates that the Tucker Litigation will
be dismissed with prejudice as of the Effective Date.
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LANDMARKS LITIGATION (JOAN OF ARC). On December 6, 1994, a lawsuit
captioned LOUISIANA LANDMARKS SOCIETY, INC. V. CITY OF NEW ORLEANS, RIVERGATE
DEVELOPMENT CORPORATION, AND HARRAH'S JAZZ COMPANY (the "Landmarks Litigation")
was filed seeking to prevent, among other things, HJC from moving the Joan of
Arc statue or using any part of the Place de France without the approval of the
Secretary of the United States Department of the Interior. The Place de France
is located adjacent to the Casino. The original design plans for the Casino
contemplated locating the main access areas for the Casino in the area currently
in use as the Place de France. The plaintiff alleged that the Place de France
was developed with federal funds for historic purposes and that, therefore, the
statue could not be relocated and that the Place de France could not be
converted to another use without the approval of the Secretary of the Interior.
The plaintiff also alleged a pendent state law claim that the Place de France
had been dedicated as a park by the City and that the conversion of the Place de
France to another use would require the approval of the Louisiana State
Legislature. On January 27, 1995, the United States District Court for the
Eastern District of Louisiana issued an order permanently restraining the City,
the RDC and HJC from removing the Joan of Arc statue or using any part of the
Place de France without the approval of the United States Secretary of the
Interior. The City, the RDC and HJC filed notices of appeal. The plaintiff filed
a cross-appeal regarding the scope of the injunction. Oral argument on the
appeal took place on February 7, 1996 after HJC sought, and received, relief
from the automatic stay to proceed with the appeal. On June 7, 1996, the United
States Court of Appeals for the Fifth Circuit reversed the decision of the
District Court, vacated the permanent injunction entered by the District Court,
rendered a judgment of dismissal against the plaintiff for failure to state a
cause of action on the grounds that there is no implied private right of action
under the applicable federal statute, and dismissed the plaintiff's cross-appeal
regarding the scope of the injunction as moot. On July 12, 1996, the Fifth
Circuit denied plaintiff's petition for rehearing.
Because of this litigation, HJC had to redesign the southern part of the
Casino, at substantial cost. As a result of the modification, the size of the
Casino was decreased by approximately 2,400 square feet.
The City has requested the written approval of the United States Secretary
of the Interior to remove the Joan of Arc statue from the Place de France. Such
approval has not yet been received and may not be forthcoming. If such approval
is received and the Joan of Arc statue is removed, HJC may decide to make
further modifications to the entrance to the Casino.
Louisiana Landmarks Society, Inc., James Logan and the law firm of Tucker &
West filed proofs of claims against the estates of HJC and HNOIC for amounts
they alleged were owed to them as a result of the Landmarks Litigation. HJC and
HNOIC filed objections to these proofs of claims. On August 13, 1996, Louisiana
Landmarks Society, Inc. and the other claimants consented to disallowance of
their claims.
TUCKER LITIGATION (JOAN OF ARC). On July 24, 1996, Thomas Tucker filed
another lawsuit entitled, TUCKER V. CITY OF NEW ORLEANS AND RIVERGATE
DEVELOPMENT CORPORATION, seeking to enjoin alteration of the Place de France
absent the express written approval of the United States Secretary of the
Interior. HJC has not been named as a defendant. The lawsuit, however, could
affect the development of the Casino. Mr. Tucker has characterized his claim as
one based upon section 1983 of title 42 of the United States Code for purported
violations of his rights of due process and equal protection. The factual
allegations of the complaint are virtually identical to those asserted in the
Landmarks Litigation. Mr. Tucker served as counsel of record for the plaintiff
in the Landmarks Litigation, and he is both a member and trustee of that
plaintiff. On October 14, 1996, Tucker filed an amended complaint naming First
American Title Insurance Company as an additional defendant. Upon information
and belief, all the defendants were thereafter
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(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
served with the complaint. HJC sought and received permission to intervene in
the action on January 21, 1997.
The McCall Settlement Agreement contemplates that this suit will be
dismissed with prejudice on the Effective Date.
HNOIC/NOLDC LITIGATION. On September 26, 1995, HNOIC brought a lawsuit
against New Orleans/Louisiana Development Corp. ("NOLDC") in the District Court
seeking a declaratory judgment that (i) HNOIC was a 52.93% owner of HJC, (ii)
the 1994 option agreement with NOLDC had expired, and (iii) NOLDC was not a
"material partner" of HJC. This lawsuit is pending as Civil Action No. 95-3165.
On September 28, 1995, NOLDC brought a lawsuit against, among other parties,
HNOIC and HJC in the Civil District Court for the Parish of Orleans seeking (i)
a temporary restraining order enjoining the expiration of the 1994 option
agreement and removal of NOLDC from its status as a material partner of HJC,
(ii) a rescission of the fourth amendment to HJC's partnership agreement
(governing, among other matters the dilution of the NOLDC interest in HJC and
NOLDC's status as a material partner of HJC), (iii) restoration of NOLDC to a
full 33.3% ownership in HJC, and (iv) unspecified damages against all defendants
except HJC. This lawsuit was filed as Civil Action No. 95-14653.
On September 29, 1995, NOLDC obtained a temporary restraining order from the
Louisiana Civil District Court, directing HNOIC and HJC to treat NOLDC as a
material partner until a hearing on an injunction could be held on October 9,
1995. On October 5, 1995, the defendants removed NOLDC's state court complaint
to the District Court, where it is now pending as Civil Action No. 95-3272. On
October 6, 1995, NOLDC sought to obtain an extension of its temporary
restraining order from the District Court. NOLDC's request was denied, and no
date for any further hearing was set. Following the filing of bankruptcy by
NOLDC, the litigation was placed on inactive status by the court. At the time of
the filing of NOLDC's bankruptcy, no discovery on the merits had been taken.
It is contemplated that, pursuant to the NOLDC Shareholders/HET Settlement
Agreement (as defined in the Modified Plan), all of the litigation among NOLDC,
HNOIC and HJC will be dismissed on the Effective Date.
SAPIR LITIGATION. On June 6, 1997, Eddie L. Sapir and the Eddie L. Sapir
Inter Vivos Trust filed a civil action captioned EDDIE L. SAPIR AND THE EDDIE L.
SAPIR INTER VIVOS TRUST VERSUS GRAND PALAIS ENTERPRISES, INC., in the Civil
District Court. In that action, plaintiffs allege, among other things, that one
of HJC's three general partners, Grand Palais, through its principal Christopher
B. Hemmeter ("Hemmeter") and its former counsel Cezar M. Froelich ("Froelich"),
has negotiated or is negotiating a compromise with HET and others which
improperly benefits Hemmeter and Froelich to the detriment of the creditors and
shareholders of Grand Palais. Plaintiffs sought and obtained an EX PARTE
temporary restraining order prohibiting the disposition of any property of Grand
Palais, including prohibition of Grand Palais's execution of the releases and
other agreements among Grand Palais, HET and others contemplated under the
Modified Plan. Plaintiffs also moved for the EX PARTE appointment of a temporary
receiver for Grand Palais, among others, which was granted by the Civil District
Court.
On June 18, 1997, Grand Palais filed a notice of removal of the litigation
to the Bankruptcy Court. On July 1, 1997, plaintiffs filed a motion in the
Bankruptcy Court to remand the litigation to Civil District Court. On July 2,
1997, the Bankruptcy Court granted HJC leave to intervene in the litigation and
153
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(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
continued plaintiff's motion to remand the litigation to Civil District Court.
The Bankruptcy Court's order also included provisions by which one of the
plaintiffs and/or the receiver could participate in HJC's weekly "steering
committee" conferences and present objections to the Bankruptcy Court with
respect to any significant decision requiring the approval of HJC's general
partners. Thereafter, plaintiffs filed a motion to reconsider the Court's order
permitting HJC to intervene in the litigation. On October 6, 1997, the
Bankruptcy Court remanded the litigation to Civil District Court. On that date,
the Bankruptcy Court also reconsidered its order permitting HJC to intervene in
the litigation and rescinded without prejudice its order permitting HJC to
intervene.
On November 21, 1997, Eddie L. Sapir and the Eddie L. Sapir Inter Vivos
Trust filed a civil action captioned EDDIE L. SAPIR AND THE EDDIE L. SAPIR INTER
VIVOS TRUST V. BANKER'S TRUST COMPANY, CEZAR M. FROELICH, ABC INSURANCE COMPANY,
FIRST NATIONAL BANK OF COMMERCE, HARRAH'S ENTERTAINMENT INCORPORATED, SHEFSKY &
FROELICH, LTD., DEF INSURANCE COMPANY, GHI INSURANCE COMPANY, JKL INSURANCE
COMPANY, THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, MERRILL LYNCH SENIOR HIGH
INCOME FUND, MERRILL LYNCH SENIOR HIGH INCOME II FUND, MERRILL LYNCH SENIOR
STRATEGIC FUND, PRIME INCOME TRUST, AND VAN KAMPEN MERITT PRIME RATE INCOME
TRUST, No. 97-20643, in the Civil District Court. In that action, the plaintiffs
allege, among other things, that defendants committed breaches of contract and
fiduciary duty with respect to actions taken in connection with the Chapter 11
Cases.
As a result of the litigation described above, it is unclear who has the
authority to take certain actions on behalf of Grand Palais and the impact the
litigation might have on HJC's reorganization efforts. In addition, subsequent
to commencement of this litigation, Hemmeter filed a voluntary petition for
relief under Chapter 7 of the Bankruptcy Code, and a Chapter 7 trustee has been
appointed in that bankruptcy case. There can be no assurance that the litigation
between plaintiffs and Grand Palais or Hemmeter's Chapter 7 filing will not
materially impair the Debtor's ability to consummate the Modified Plan, or that
the litigation will be resolved on terms that will permit consummation of the
Modified Plan.
BONDHOLDERS CLASS ACTION. Beginning on November 28, 1995, eight separate
class action suits were filed against HET and various of its corporate
affiliates, officers and directors in the United States District Court for the
Eastern District of Louisiana. They were BEN F. D'ANGELO, TRUSTEE FOR BEN F.
D'ANGELO REVOCABLE TRUST V. HARRAH'S ENTERTAINMENT CORP., MICHAEL D. ROSE,
PHILIP G. SATRE AND RON LENCZYCKI; MAX FENSTER V. HARRAH'S ENTERTAINMENT, INC.,
HARRAH'S NEW ORLEANS INVESTMENT COMPANY, GRAND PALAIS CASINO, INC., PHILIP G.
SATRE, COLIN V. REED, MICHAEL N. REGAN, CHRISTOPHER B. HEMMETER, DONALDSON,
LUFKIN & JENRETTE SECURITIES CORPORATION, SALOMON BROTHERS, INC, AND BT
SECURITIES CORP.; GOLDIE ROSENBLOOM V. HARRAH'S ENTERTAINMENT CORP., MICHAEL D.
ROSE, PHILIP G. SATRE AND RON LENCZYCKI; BARRY ROSS V. HARRAH'S NEW ORLEANS
INVESTMENT COMPANY, PHILIP G. SATRE, COLIN V. REED, LAWRENCE L. FOWLER, MICHAEL
N. REGAN, CEZAR M. FROELICH, ULRIC HAYNES, JR., WENDELL GAUTHIER, T. GEORGE
SOLOMON, JR., DUPLAIN W. RHODES, III, HARRAH'S ENTERTAINMENT, INC., DONALDSON,
LUFKIN & JENRETTE SECURITIES CORPORATION, SALOMON BROTHERS INC, AND BT
SECURITIES CORP.; LOUIS SILVERMAN V. HARRAH'S ENTERTAINMENT, INC., HARRAH'S NEW
ORLEANS INVESTMENT COMPANY, GRAND PALAIS CASINO, INC., PHILIP G. SATRE, COLIN V.
REED, MICHAEL N. REGAN, CHRISTOPHER B. HEMMETER, AND DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION; FLORENCE KESSLER V. PHILIP G. SATRE, COLIN V.
REED, CHARLES A. LEDSINGER, JR., MICHAEL N. REGAN, LAWRENCE L. FOWLER,
CHRISTOPHER B. HEMMETER, CEZAR M. FROELICH, ULRIC HAYNES, JR., WENDELL H.
GAUTHIER, T. GEORGE SOLOMON, JR., DUPLAIN W. RHODES, III, DONALDSON, LUFKIN &
JENRETTE SECURITIES CORPORATION, SALOMON BROTHERS INC, AND BT SECURITIES
CORPORATION; WARREN ZEILLER AND JUDITH M. R. ZEILLER V. HARRAH'S ENTERTAINMENT
CORP., MICHAEL D. ROSE, PHILIP G. SATRE, AND RON
154
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
LENCZYCKI; AND CHARLES ZWERVING AND HELENE ZWERVING V. HARRAH'S ENTERTAINMENT
CORP., PHILIP G. SATRE, COLIN V. REED, CHRISTOPHER B. HEMMETER, AND DONALDSON,
LUFKIN & JENRETTE SECURITIES CORPORATION. Pursuant to a District Court order of
January 26, 1996, plaintiffs, on May 24, 1996, filed a consolidated complaint in
the action numbered 95-3925, entitled IN RE HARRAH'S ENTERTAINMENT, INC.
SECURITIES LITIGATION (the "Bondholders Class Action").
The plaintiffs in the Bondholders Class Action (who purport to represent all
persons, other than defendants and their affiliates, who purchased Old Bonds
between November 9, 1994 and November 21, 1995) have characterized their
complaint as alleging violations of Sections 11 and 12(2) of the Securities Act
of 1933, 15 U.S.C. SectionSection 77k and 77l(2); Section 10(b) of the
Securities Exchange Act of 1934, 15 U.S.C. Section 78j(b); and Rule 10b-5
promulgated thereunder by the Securities and Exchange Commission, 17 C.F.R.
Section 240.10b-5. The complaint asserts that the registration statement and
prospectus filed in connection with the offering of the Old Bonds contained
untrue statements of material fact and omitted to state material facts necessary
in order to make the statements made therein not misleading. The complaint also
alleges that the defendants engaged in a scheme to defraud plaintiffs and the
alleged class by knowingly or recklessly releasing false and misleading
information that was designed to and did (i) deceive the investing public,
including plaintiffs and other members of the alleged class, regarding HJC's
financial condition and future business prospects, (ii) artificially inflate the
market price of the Old Bonds during the relevant period, and (iii) cause
plaintiffs and other alleged class members to purchase or otherwise acquire the
Old Bonds at inflated prices.
Certain of the individuals named as defendants in the Bondholders Class
Action are officers and directors of the Debtors or of other entities and have
claimed or may claim defense, indemnification and/ or contribution rights
against the Debtors.
Proofs of claim, purportedly on behalf of the plaintiffs in the Bondholders
Class Action, have been filed in the Chapter 11 cases. Such proofs of claim
assert claims based upon damages caused by alleged violations of federal
securities laws in connection with the purchase and sale of the Old Bonds. The
Debtors have objected to such proofs of claim. Under the Modified Plan, if any
of such claims are allowed, then to the extent that they are allowed, they will
fall within the classes of Penalty Claims under the Modified Plan and will
receive no distributions on account of such claims.
Plaintiffs in the Bondholders Class Action filed motions in the Chapter 11
cases seeking the appointment of an examiner. A hearing on the motions was held
on November 6, 1996. On November 20, 1996, the Bankruptcy Court denied the
motion to appoint an examiner. In denying the motion, the Bankruptcy Court found
that the request for an examiner was both untimely and for an improper purpose.
HJC has supported the settlement of the Bondholders Class Action negotiated
between counsel for the class and the defendants named in the litigation, whose
basic terms are as follows:
(1) in accordance with the Modified Plan, Harrah's Investor will
contribute 200,000 shares of Class A New Common Stock to the Release Pool
(as defined in the Modified Plan) to be distributed as set forth in the
Modified Plan to those members of the settlement class who are current
Bondholders;
(2) the sum of $3.8 million in cash will be contributed by the
defendants and/or their insurance carriers toward the settlement, which
funds will be distributed as determined by plaintiffs' counsel and
155
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
approved by the District Court to members of the settlement class who do not
provide releases to HJC in exchange for a distribution from the Release
Pool, as well as for the payment of costs and fees;
(3) plaintiffs will provide releases to the defendants, dismiss the
Bondholders Class Action with prejudice, and support the Modified Plan.
The parties to the Bondholders Class Action entered into a stipulation
effectuating the basic terms of the settlement on April 16, 1997. On June 26,
1997, the District Court conducted a fairness hearing to determine whether to
approve the proposed settlement. No member of the settlement class opted out of
the settlement. On July 31, 1997, the District Court approved the settlement,
which is contingent on the occurrence of the Effective Date of the Original
Confirmed Plan or the effective date of a plan of reorganization supported by
HET in the Chapter 11 Cases (which would include the Modified Plan).
STATUS OF LITIGATION IF NO REORGANIZATION
The settlement agreements described above are contingent on the occurrence
of the Effective Date of the Modified Plan. If the required contingency is not
satisfied, the claimants may proceed with their claims against HJC and/or its
affiliates.
OTHER CONTINGENCIES
The enactment and implementation of gaming legislation in Louisiana and the
development of the Gaming Facilities have been the subject of lawsuits, claims
and delays brought about by various parties. Additional lawsuits and the
uncertain political environment may result in further delays, all of which could
have a material adverse effect on HJC or JCC as its successor and operator of
the Casino. For additional information regarding these matters, see Items 1 and
2. "Business and Properties--Risk Factors" in HJC's Annual Report on Form 10-K
for the year ended December 31, 1997.
156
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The accompanying unaudited condensed consolidated financial statements of
HJC and subsidiary, have been prepared in accordance with the instructions to
Form 10, and therefore do not include all information and notes necessary for
complete financial statements prepared in conformity with 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. These consolidated financial statements and related
notes should be read in conjunction with the financial statements and related
notes included in "--Audited Financial Information."
Separate financial statements and other disclosures with respect to HJC's
subsidiary, Harrah's Jazz Finance Corp., are omitted as such separate financial
statements and other disclosures are not deemed material.
157
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents (includes restricted cash of $3,793 and $3,335,
respectively)................................................................... $ 5,121 $ 3,755
Other............................................................................. 560 561
------------- ------------
Total current assets.......................................................... 5,681 4,316
------------- ------------
Land, buildings and equipment
Property held for development..................................................... 13,200 13,200
Construction in progress.......................................................... 161,496 157,475
Furniture, fixtures and equipment, net of accumulated depreciation of $7,029 and
$6,598, respectively............................................................ 24,472 24,857
------------- ------------
Total land, buildings and equipment........................................... 199,168 195,532
------------- ------------
Deferred assets, net of amortization
Deferred operating contract costs................................................. 122,222 122,222
Lease prepayments................................................................. 30,263 30,263
Other............................................................................. 2,084 2,084
------------- ------------
$ 359,418 $ 354,417
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' DEFICIT
Liabilities not subject to compromise
Accounts payable.................................................................. $ 1,855 $ 1,170
Accrued expenses.................................................................. 15,553 9,756
Debtor-in-possession loans........................................................ 48,334 32,230
------------- ------------
Total liabilities not subject to compromise................................... 65,742 43,156
------------- ------------
Liabilities subject to compromise................................................... 523,468 523,468
------------- ------------
Commitments and contingencies
Partners' deficit
Partners' capital contributions................................................... 167,000 167,000
Accumulated deficit............................................................... (396,792) (379,207)
------------- ------------
Total partners' deficit....................................................... (229,792) (212,207)
------------- ------------
$ 359,418 $ 354,417
------------- ------------
------------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
158
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
MISCELLANEOUS REVENUES............................. $ 31 $ 28 $ 81 $ 60
------------- ------------- ------------- -------------
OPERATING EXPENSES:
Depreciation and amortization.................... 138 153 431 459
General and administrative....................... 3,092 3,896 11,010 10,628
------------- ------------- ------------- -------------
Total operating expenses....................... 3,230 4,049 11,441 11,087
------------- ------------- ------------- -------------
Loss from operations........................... (3,200) (4,021) (11,360) (11,027)
------------- ------------- ------------- -------------
REORGANIZATION ITEMS:
Costs and expenses............................... (1,479) (1,705) (4,016) (2,718)
Recovery of accounts receivable.................. -- 2 2 482
Interest income.................................. 36 139 112 206
------------- ------------- ------------- -------------
Total reorganization items..................... (1,443) (1,564) (3,902) (2,030)
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE):
Interest expense................................. (886) (544) (2,323) (1,362)
------------- ------------- ------------- -------------
NET LOSS........................................... $ (5,528) $ (6,129) $ (17,585) $ (14,419)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
159
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net loss.......................................................................... $ (17,585) $ (14,419)
Adjustments to reconcile net loss to net cash used in operations
Depreciation and amortization................................................... 431 459
Decrease in other current assets................................................ 1 208
Increase (decrease) in accounts payable and accrued expenses.................... 6,482 (3,271)
Decrease in accounts payable and accrued expenses prior to Petition Date........ -- (15)
------------- -------------
Cash flows used in operating activities......................................... (10,672) (17,038)
------------- -------------
Cash flows from investing activities
Purchase of land, buildings and equipment......................................... (4,066) (1,960)
------------- -------------
Cash flows from financing activities
Proceeds received from Debtor-in-Possession borrowings............................ 16,104 12,650
------------- -------------
Increase (decrease) in cash and cash equivalents.................................... 1,366 (6,348)
Cash and cash equivalents, beginning of period...................................... 3,755 10,114
------------- -------------
Cash and cash equivalents, end of period............................................ $ 5,121 $ 3,766
------------- -------------
------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
160
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION, BANKRUPTCY AND BASIS OF PRESENTATION
Harrah's Jazz Company (together with its subsidiary, "HJC"), a Louisiana
general partnership consisting of Harrah's New Orleans Investment Company
("HNOIC"), a subsidiary of Harrah's Entertainment, Inc. ("HET"), New
Orleans/Louisiana Development Corporation ("NOLDC"), and Grand Palais Casino,
Inc. ("Grand Palais"), was formed on November 29, 1993 for the purposes of
developing, owning and operating the exclusive land-based casino entertainment
facility (the "Casino") in New Orleans, Louisiana, on the site of the former
Rivergate Convention Center. HJC operated a temporary casino in the Municipal
Auditorium (the "Basin Street Casino" and, together with the Casino, the "Gaming
Facilities") from May 1, 1995 to November 22, 1995.
HJC was in the development stage until May 1, 1995, when it commenced
operation of the Basin Street Casino. Development stage activities consisted of
construction, organizational activities related to arranging construction and
financing contracts, and negotiating various other agreements to develop and
operate the Gaming Facilities. These agreements included (i) the lease between
HJC and the Rivergate Development Corporation (the "RDC") and the City of New
Orleans (the "City"), as Intervenor, with respect to the site of the Casino (the
"Canal Street Casino Lease"); (ii) the lease between HJC, the RDC and the City,
as Intervenor, with respect to the Basin Street Casino (the "Basin Street Casino
Lease"); (iii) the casino operating contract between HJC and the Louisiana
Economic Development and Gaming Corporation ("LEDGC"), a special public purpose
corporation established to regulate land-based gaming in Louisiana (the "Casino
Operating Contract"); (iv) a general development agreement between HJC, the RDC,
and the City, as Intervenor (the "General Development Agreement") and (v) a
management agreement between HJC and Harrah's New Orleans Management Company
(the "Manager").
On November 22, 1995 (the "Petition Date"), HJC (which is sometimes referred
to herein as the "Debtor") and its subsidiary Finance Corp. (sometimes referred
to collectively herein as the "Debtors") filed petitions for relief under
Chapter 11 of Title 11 of the United States Code ("Chapter 11"). As of September
30, 1998, the case was pending in the United States Bankruptcy Court for the
Eastern District of Louisiana (the "Bankruptcy Court").
On February 28, 1997, the Debtors and HNOIC, together with HET (the
"Proponents"), filed their Third Amended Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code dated as of February 26, 1997. That plan, as
voted upon by all affected parties entitled to vote and as modified in
connection with the hearing on confirmation, was confirmed by the Bankruptcy
Court on April 28, 1997, and as so modified and confirmed is referred to herein
as the "Original Plan."
Implementation of the Original Plan was conditioned upon (among other
things) the execution and delivery of a casino operating contract (the "April
29, 1997 Casino Operating Contract") by Jazz Casino Company, L.L.C. ("JCC"), a
newly formed company which was to succeed to HJC's rights to develop the Casino,
and the Louisiana Gaming Control Board (the "LGCB") and all necessary approvals,
if any, from the LGCB and the State of Louisiana (the "State"). The LGCB
approved the April 29, 1997 Casino Operating Contract, but conditioned its
execution of the April 29, 1997 Casino Operating Contract upon the further
approval of the State legislature. The State legislature failed to give its
approval of the April 29, 1997 Casino Operating Contract during its 1997 regular
session, which adjourned on June 23, 1997.
In light of the State legislature's adjournment without action on the April
29, 1997 Casino Operating Contract, on June 26, 1997, the Proponents sought
Bankruptcy Court approval to modify the Original Plan to provide, among other
things, for the assumption of HJC's existing Casino Operating Contract without
161
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ORGANIZATION, BANKRUPTCY AND BASIS OF PRESENTATION (CONTINUED)
any amendments requiring the approval of the LGCB or the State. The State and
the LGCB vigorously opposed these proposed modifications.
Following negotiations with various parties in interest in the
reorganization, including the official committee of bondholders appointed in
HJC's Chapter 11 case (the "Bondholders Committee") and Bankers Trust Company ("
Bankers Trust"), HJC's primary lender, the Proponents prepared a new set of
modifications to the Original Plan (The Original Plan, as so modified and
confirmed by the Bankruptcy Court on January 29, 1998, is referred to herein as
the "Modified Plan.") For a discussion of the significant differences between
the Original Plan and the Modified Plan, see Items 1 and 2. "Business and
Properties--Plan of Reorganization--Modified Plan of Reorganization--Summary of
the Modified Plan" in HJC's Annual Report on Form 10-K for the year ended
December 31, 1997. The Modified Plan was filed as an exhibit to HJC's Annual
Report on Form 10-K for the year ended December 31, 1997.
The Modified Plan abandoned the changes to the Original Plan initially
proposed by the Proponents following the State legislature's adjournment in June
1997, and instead provided, among other things, for further amendments to the
Casino Operating Contract (as so modified, the "December 9, 1997 Casino
Operating Contract") and a guarantee of certain of the amounts due thereunder.
The LGCB conditionally approved the December 9, 1997 Casino Operating Contract,
but conditioned its execution of the December 9, 1997 Casino Operating Contract
upon the further approval of the State legislature. For a discussion of the
significant differences between the April 29, 1997 Casino Operating Contract and
the December 9, 1997 Casino Operating Contract, see Items 1 and 2. "Business and
Properties--Overview of Business-- Contract Rights--Amended and Renegotiated
Casino Operating Contract" in HJC's Annual Report on Form 10-K for the year
ended December 31, 1997.
The governor indicated that he would call a special session of the State
legislature commencing in March 1998 to consider, among other things, approval
of the December 9, 1997 Casino Operating Contract. However, after receiving an
opinion from the State attorney general that the LGCB has independent authority
(without the necessity of any legislative approval) to renegotiate and execute a
renegotiated casino operating contract, the governor did not include
consideration of the December 9, 1997 Casino Operating Contract in the call for
the 1998 special session. Instead, on March 20, 1998, the LGCB approved an
amended Casino Operating Contract between HJC and the LGCB (the "Amended and
Renegotiated Casino Operating Contract"), subject to a number of conditions,
including that the Louisiana Supreme Court render a final, non-appealable
judgment that the LGCB, acting on its own, is the proper party and has the legal
authority to enter into the Amended and Renegotiated Casino Operating Contract,
without the specific approval of the governor or the State legislature.
The right of the LGCB to execute the Amended and Renegotiated Casino
Operating Contract without the approval of the governor or the legislature of
the State was then challenged in court. On May 15, 1998, the Louisiana Supreme
Court rendered a final decision holding that the LGCB is in fact the proper
party and has the legal authority to enter into the Amended and Renegotiated
Casino Operating Contract, without the approval of the governor or the State
legislature. The decision of the Louisiana Supreme Court has since become final
and non-appealable. For more information on this litigation, see Note 6.
"Commitments and Contingencies--Litigation--Declaratory Judgment Actions."
As a result of, among other things, the LGCB's conditional approval of the
Amended and Renegotiated Casino Operating Contract, on March 26, 1998, the
Proponents filed with the Bankruptcy Court a
162
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ORGANIZATION, BANKRUPTCY AND BASIS OF PRESENTATION (CONTINUED)
motion to approve further modifications to the Modified Plan, which
modifications were approved by the Bankruptcy Court on April 6, 1998 is (the
Modified Plan, as so modified and confirmed by the Bankruptcy Court on April 6,
1998 is referred to herein as the "April 1998 Plan"). The April 1998 Plan was
filed as an exhibit to HJC's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
In connection with preparations for consummation of the April 1998 Plan, a
review of the partially-constructed Casino and adjoining parking lot structure
was conducted to determine (i) what redesign of the Casino interior will be
necessitated by the dedication of the second floor of the Casino building to
non-gaming uses and by the other changes in the configuration of the Casino
contemplated by the Amended and Renegotiated Casino Operating Contract, (ii)
whether to upgrade the Casino design and gaming equipment to meet more intense
competition from other gaming facilities such as those located on the
Mississippi Gulf Coast, (iii) the extent to which the Casino structure and
adjoining parking facilities have deteriorated during the three year
reorganization process, and (iv) the extent to which increased costs resulting
from proposed modifications and additions might be offset by changes to the
Casino design. In addition, HJC obtained estimates for the costs of the various
modifications to the Casino project under consideration, and also determined
what costs were occasioned by the delay in the reorganization process resulting
from the developments described above.
Upon determining what modifications and additions to the Casino project were
reasonably necessary to its success, what other changes to the Casino design
should be made to partially offset the increased costs occasioned by such
modifications and the delay in the reorganization process, and after
negotiations with the Bondholders Committee and Bankers Trust, HJC revised its
budget for completion and operation of the Casino. HJC's revised budget for
completion of the Casino project included, among its elements, $25 million in
additional new financing and the cancellation of all accrued interest on the
debtor-in-possession loan. For these and other reasons, HJC proposed to modify
the April 1998 Plan, which modifications were incorporated in HJC's proposed
Third Amended Joint Plan of Reorganization, As Modified Through August 12, 1998.
A copy of this proposed plan was filed as an exhibit to HJC's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998, and also was filed with the
Bankruptcy Court on August 13, 1998. At the same time, forms of a summary
disclosure statement and a full disclosure statement were filed with the
Bankruptcy Court pursuant to Sections 1125 and 1127 of the Bankruptcy Code. On
September 3, 1998, the Bankruptcy Court approved a summary disclosure statement
and a full disclosure statement dated as of September 3, 1998, and authorized
and directed the Debtor to distribute a proposed Third Amended Joint Plan of
Reorganization, As Modified Through September 3, 1998 (which contained certain
modifications to the plan dated as of August 12, 1998) and the summary
disclosure statement and to all creditors entitled to vote on that plan.
On October 13, 1998, the Bankruptcy Court confirmed the Third Amended Joint
Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as Modified
Through October 13, 1998 ("Plan") proposed by the Debtors, HNOIC and HET. On
October 30, 1998 (the "Effective Date"), the Plan was consummated. Under the
Plan, all of the Debtor's assets have been transferred to JCC, the Debtor's
successor under the Plan, except for certain interests in real property not
necessary to develop the Casino, which were transferred under the Plan to JCC's
affiliates CP Development, L.L.C. and FP Development, L.L.C. Claims of creditors
are treated in accordance with Plan, and all claims not otherwise treated under
the Plan have been discharged as to the Debtor.
163
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ORGANIZATION, BANKRUPTCY AND BASIS OF PRESENTATION (CONTINUED)
Although the Debtor's case is currently still pending before the Bankruptcy
Court, on the Effective Date of the Plan the Debtor ceased its business
operations, the Debtor's three general partners transferred their interests in
the Debtor to JCC, and JCC commenced the process of terminating the Debtor's
existence in accordance with applicable state law. In addition, upon the
Effective Date, HJC's reporting obligations under the Securities Exchange Act of
1934, as amended, terminated and HJC filed with the Securities and Exchange
Commission a Form 15, Certification and Notice of Termination of Registration
under Section 12(g) of the Securities Exchange Act of 1934 or Suspension of Duty
to File Reports Under Sections 13 and 15(d) of the Securities Exchange Act of
1934. The Basin Street Casino Lease was terminated prior to the Effective Date,
and the Casino Operating Contract, as amended, revested in the Debtor on the
Effective Date and was assigned to JCC in accordance with applicable state law
and the agreement of the parties. Each of the Debtor's other agreements
identified in the second paragraph of this Note 1 has been modified with the
consent of the parties thereto and assigned to JCC in accordance with the
provisions of the Plan.
NOTE 2. RESTRICTED CASH
ESCROWED AMOUNTS
In connection with some of the agreements entered into in the course of
HJC's bankruptcy proceeding, HJC has been required to establish escrow accounts,
pursuant to escrow agreements, at Hibernia National Bank, as escrow agent. A
description of each currently funded escrow account is set forth below.
HARRAH'S JAZZ COMPANY/CENTEX LANDIS CONSTRUCTION CO., INC./HIBERNIA NATIONAL
BANK ESCROW
This escrow account was established pursuant to the Close-In Agreement
between HJC and Centex Landis Construction Co. Inc. ("Centex"), dated March 5,
1996, to contain retainage payments for Centex, the contractor for the close-in
work. Funds representing retainage earned were deposited weekly during the
close-in. Escrowed funds have been distributed to Centex when a written request
for disbursement has been accepted by HJC. As of September 30, 1998, HJC held in
retainage approximately $472,000 in the escrow account.
RIVERGATE DEVELOPMENT CORPORATION/HARRAH'S JAZZ COMPANY/CITY OF NEW
ORLEANS/HARRAH'S OPERATING COMPANY/HIBERNIA NATIONAL BANK ESCROW
As contemplated under an agreement entitled "An Agreement Regarding
Modifications and Related Agreements in Respect of Amended and Restated Canal
Street Casino Lease, Termination of Basin Street Casino Lease, Amended and
Restated General Development Agreement, the Conditional Use Ordinances and other
Regulatory Matters" (the "City Agreement"), this escrow account was established
to satisfy HJC's rent payment obligations to the City. Funds deposited in this
escrow account are to be used exclusively for payment of HJC's rent obligations
under the City Agreement. Under the City Agreement, HJC was obligated to pay the
RDC rent of $736,000 per month commencing on January 1, 1997 through June 30,
1997. HJC deposited $2,208,000 in escrow to secure this rental obligation, and
paid rent each month from the escrow account until the principal amount
deposited into escrow ($2,208,000) was depleted. As of September 30, 1998,
approximately $151,000 was held in this escrow account. On the Effective Date,
the City executed a letter of direction directing payment of the balance
remaining in this
164
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. RESTRICTED CASH (CONTINUED)
escrow account (representing accrued interest) to HET, as was provided for in
the documents establishing and funding the escrow account, and this escrow
account was closed.
OTHER AMOUNTS HELD AS SECURITY
In addition to the amounts held in the escrow accounts described above,
approximately $3.1 million in cash had been held as security for expenses and
possible claims of the trustee and former trustee under the Indenture dated as
of November 15, 1994 (the "Indenture"), between the Debtors and First National
Bank of Commerce, as trustee ("FNBC"). As of September 30, 1998, approximately
$3 million was being held by Norwest Bank Minnesota, N.A. ("Norwest") as
successor trustee to FNBC, and approximately $111,000 was being held by FNBC.
Pursuant to a settlement agreement between FNBC and HJC (the "FNBC
Settlement Agreement"), which was incorporated into the Plan and became
effective on the Effective Date, all of FNBC's claims or other rights to
indemnity and/or reimbursement (and all liens securing the same) under the
Indenture, the agreements pursuant to which HJC's Old Bonds were issued (the
"Old Bond Documents") and the agreements pursuant to which HJC's bank financing
was secured (the "Old Bank Credit Documents") were canceled and extinguished,
subject to certain exceptions. JCC assumed, on an unsecured basis, HJC's
obligation under the Old Bond Documents and/or the Old Bank Credit Documents to
indemnify FNBC for attorneys' fees or other costs incurred in connection with
certain claims against FNBC. JCC also assumed any other indemnity obligation of
HJC's under the Old Bond Documents and the Old Bank Credit Documents as an IN
REM obligation limited in recourse to, and secured solely by, $100,000 plus
interest accruing from the Effective Date (the "FNBC Cash Collateral"). As
security for such indemnification obligations, FNBC is authorized to retain the
FNBC Cash Collateral until the later of the first anniversary of the Effective
Date or the resolution of any litigation filed against FNBC within one year
after the Effective Date. Thereafter, the remaining balance of the FNBC Cash
Collateral will be released to JCC.
On the Effective Date, and in accordance with the Plan, all amounts held by
Norwest (less amounts dedicated to payment of professional fees), and all but
$100,000 of the amount being held by FNBC, were turned over to JCC.
NOTE 3. LIABILITIES SUBJECT TO COMPROMISE
As of September 30, 1998, HJC's books and records continued to reflect
unsecured and undersecured liabilities subject to compromise in the Chapter 11
proceedings as follows (in thousands):
<TABLE>
<S> <C>
First Mortgage Notes.............................................. $ 435,000
Construction Accounts Payable..................................... 37,039
Due to Manager.................................................... 29,513
Consulting fees payable to related parties........................ 2,128
WARN Act Settlement............................................... 2,265
Harrah's Entertainment, Inc., and affiliates (other than
Manager)........................................................ 2,281
Others, individually less than $1,000,000......................... 15,242
---------
$ 523,468
---------
---------
</TABLE>
165
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. LIABILITIES SUBJECT TO COMPROMISE (CONTINUED)
All of these liabilities have been treated under the Plan, and all claims
related to these liabilities have been discharged and are now barred as to HJC.
JCC is responsible under the Plan for payment of claims in accordance with the
provisions of the Plan, and certain of claims have been compromised, reduced or
canceled in accordance with the provisions of the Plan. In addition, certain
claims asserted by creditors have not yet been liquidated by the Bankruptcy
Court.
NOTE 4. DEBT
As of September 30, 1998, HJC had borrowed an aggregate of $48.3 million in
debtor-in-possession loans ("DIP Financing") from HET or one of its affiliates
(the "DIP Lender"). Pursuant to the most recent order approving HJC's DIP
Financing entered by the Bankruptcy Court on August 25, 1998, HJC was authorized
to borrow up to $60 million to fund its reorganization efforts. All of these
borrowings were granted secured and administrative priority status. The DIP
Lender agreed to extend the maturity date of the DIP Financing until October 31,
1998. As of the Effective Date, HJC had borrowed an aggregate of $60 million,
which was the maximum amount HJC had been authorized to borrow by the Bankruptcy
Court. On the Effective Date, in accordance with the Plan, the then-outstanding
principal amount of DIP Financing ($60 million) was converted to equity and
contributed to JCC, and all outstanding accrued interest on the DIP Financing
was cancelled.
NOTE 5. LEASES
HJC entered into the City Agreement with the RDC, which agreement was
declared effective by the Bankruptcy Court on September 12, 1996. The City
Agreement provided for the amendment of the Canal Street Casino Lease and the
General Development Agreement, and for the termination of the Basin Street
Casino Lease, and also amended or provided for several additional agreements,
all as of the Effective Date. These amendments and additional agreements
included (i) modification of the rent and other amounts payable under the Canal
Street Casino Lease, (ii) permission for an affiliate of JCC to develop the
second floor of the Casino for non-gaming purposes, and (iii) adoption by the
City of certain conditional use ordinances to permit the Casino, within defined
limits, to offer food, entertainment, shuttle bus service, and certain other
amenities previously not permitted. The amendments to the Canal Street Casino
Lease (as amended, the "Amended Canal Street Casino Lease") have been approved
by the City Council, and the Mayor has executed the Amended Canal Street Casino
Lease. Pursuant to the Plan, the Amended Canal Street Casino Lease has been
assigned to JCC in accordance with the Plan.
NOTE 6. COMMITMENTS AND CONTINGENCIES
LITIGATION
DECLARATORY JUDGMENT ACTIONS. On March 18, 1998, two separate petitions were
filed seeking declaratory judgments and injunctive relief in the wake of the
State attorney general's opinion to the effect that the LGCB could execute the
Amended and Renegotiated Casino Operating Contract without further action by the
State legislature. In JORDAN V. LOUISIANA GAMING CONTROL BOARD AND MURPHY J.
FOSTER, Case No. 448192 (19th Judicial District Court, State of Louisiana,
Parish of East Baton Rouge), the plaintiff, a State senator, sought a
declaratory judgment and injunctive relief to preclude the LGCB from executing a
casino operating contract without the approval of the State legislature. Joseph
B. Boucree, Sr., former president of the LEDGC, filed a petition of intervention
in the JORDAN litigation, alleging that the LEDGC (rather
166
<PAGE>
HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
than the LGCB) retains the power to renegotiate HJC's Casino Operating Contract,
and that the LGCB's actions in approving the Amended and Renegotiated Casino
Operating Contract are invalid. That petition for intervention was denied on
March 30, 1998, and Mr. Boucree was not permitted to intervene in the JORDAN
litigation.
In BEAN V. LOUISIANA GAMING CONTROL BOARD AND RIVERGATE DEVELOPMENT
CORPORATION, case No. 448218 (19th Judicial District Court, State of Louisiana,
Parish of East Baton Rouge), the plaintiff, also a member of the State senate,
sought declaratory and injunctive relief precluding the LGCB from entering into
a casino operating contract with JCC without the approval of the State
legislature. HJC and the Bondholders Committee filed separate petitions for
intervention in that litigation. On March 25, 1998, plaintiff in JORDAN filed a
petition for intervention and motion for consolidation of BEAN with JORDAN. On
March 25, 1998, the district court hearing the BEAN litigation entered orders
(1) directing that applications for supervisory writs be filed in the Louisiana
Supreme Court on or before March 26, 1998, and (2) staying all proceedings in
BEAN pending action by the Louisiana Supreme Court on such writ applications. On
March 25, 1998, HJC, Senator Bean, the LGCB and the RDC filed applications for
supervisory writs in the Louisiana Supreme Court. On March 27, 1998, the Supreme
Court entered an order denying all writ petitions to the extent they sought an
immediate hearing before the Louisiana Supreme Court prior to a decision on the
merits by the district court, and directed that the BEAN litigation be
consolidated with the JORDAN litigation. The Louisiana Supreme Court also
directed that the judge hearing the JORDAN litigation render judgment on the
merits no later than Friday, April 3, 1998, and reserved for further
consideration the applicants' requests that the intermediate court of appeal be
bypassed until after judgment was rendered by the district court.
On March 30, 1998, a trial was held in the consolidated BEAN and JORDAN
cases, and on April 9, 1998, the district court entered judgment rejecting the
plaintiffs' claims and declaring the rights of the parties as follows: (1)
pursuant to La. R.S. 27:210B and 27:245A, the LGCB has independent authority to
negotiate and execute the Amended and Renegotiated Casino Operating Contract,
without the approval of the State legislature or the governor; (2) pursuant to
La. R.S. 27:31 and effective May 1, 1996, the LGCB assumed all powers, duties,
functions, responsibilities and obligations of the LEDGC; (3) the provisions of
La. R.S. 27:245A have not been impliedly repealed by the enactment of La. R.S.
27:224D and E; (4) the State legislature is neither required nor authorized to
approve the Amended and Renegotiated Casino Operating Contract, either prior or
subsequent to its execution and implementation; (5) authority to execute a
casino operating contract has specifically been delegated to the LGCB) and the
governor has no authority to execute a casino operating contract independently;
and (6) the Amended and Renegotiated Casino Operating Contract approved by the
LGCB on March 20, 1998 is not a new contract within the meaning of La. R.S.
27:224E. In reaching its decision, the district court also made a number of
written findings of fact and conclusions of law, including the conclusion that
insofar as the provisions of La. R.S. 27:224D and E subject the acts of the LGCB
or the governor to legislative approval or authorize the State legislature to
take executive action, those provisions violate Article II, Section 2 of the
Louisiana Constitution, which establishes the principle of separation of powers
between the branches of government.
Thereafter, Senator Bean, HJC and the Bondholders Committee filed
supplemental writ applications in the Louisiana Supreme Court requesting that it
directly hear their appeals. On April 9, 1998, the Louisiana Supreme Court
denied the applicants' request to bypass the intermediate court of appeal, but
ordered that the court of appeal hear the matter EN BANC within five days of the
filing of the petition for appeal and that it decide the appeal within ten days
thereafter. On April 22, 1998, the First Circuit Court
167
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(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
of Appeal, sitting EN BANC, issued a decision affirming in part and reversing in
part the judgment of the district court. The opinion of the court of appeal
affirmed the district court's determination (1) that La. R.S. 27:31 transferred
the power and authority of LEDGC to the LGCB; (2) that La. R.S. 27:245A was not
impliedly repealed by La. R.S. 27:224D and E; (3) that La. R.S. 27:224D and La.
R.S. 27:245A can be read together harmoniously; (4) that the Amended and
Renegotiated Casino Operating Contract approved by the LGCB on March 20, 1998 is
a renegotiated contract; and (5) that the LGCB had the authority independently
to renegotiate the Casino Operating Contract. The opinion reversed what it
perceived to be the district court's conclusion that the legislature had no
"right to participate in the process" of renegotiating the casino operating
contract of a casino operator in bankruptcy, and concluded that the legislature
may set aside or order that the LGCB renegotiate the provisions of the casino
operating contract of a casino operator in bankruptcy. The court of appeal
reserved to the Louisiana Supreme Court any ruling on the constitutionality of
La. R.S. 27:224D and La. R.S.27:224E. There were a number of opinions, both
concurring and dissenting, in addition to the opinion of the majority of the
members of the court of appeal.
The parties filed applications for various writs of review in the Louisiana
Supreme Court, which were subsequently granted, and on May 15, 1998 the
Louisiana Supreme Court issued a decision affirming in part and reversing in
part the judgment of the court of appeal, a copy of which is attached to HJC's
Current Report on Form 8-K filed on May 19, 1998. The opinion of the Louisiana
Supreme Court affirmed the court of appeal's determination that the LGCB has the
independent authority to renegotiate and execute the Casino Operating Contract
without seeking gubernatorial or legislative approval, and reversed the portion
of the court of appeal's decision that purported to interpret the State
legislature's power under L.a. R.S. 27:224D to set aside or order the LGCB to
renegotiate the provisions of the casino operating contract of a casino operator
in bankruptcy on the basis that such holdings by the court of appeal and the
district court were impermissible advisory opinions because the State
legislature had not purported to take any such actions. The decision of the
Louisiana Supreme Court has since become final and non-appealable.
It is always possible that there may be other challenges to the completion
and operation of the Casino which could delay or prevent the completion and
operation of the Casino.
WARN ACT LITIGATION. RUSSELL M. SWODY, ET AL. V. HARRAH'S NEW ORLEANS
MANAGEMENT COMPANY AND HARRAH'S ENTERTAINMENT, INC., Civil Action No. 95-4118,
was filed against HET on December 13, 1995, in the United States District Court
for the Eastern District of Louisiana (the "Federal District Court") and
subsequently amended. Swody was a class action under the Worker Adjustment and
Retraining Notification Act. Early in 1996, SWODY is consolidated with SUSAN N.
POIRIER, DARLENE A. MOSS, ET AL. V. HARRAH'S ENTERTAINMENT, INC., HARRAH'S NEW
ORLEANS MANAGEMENT COMPANY, AND HARRAH'S OPERATING COMPANY, Civil Action No.
96-0215, which was filed in the Federal District Court on January 17, 1996, and
subsequently amended. Similar complaints were filed by Ms. Poirier in the
Bankruptcy Court in HJC, HNOIC and Finance Corp. bankruptcy cases (Adversary
Nos. 96-1015, 96-1014 and 96-1013). In addition, proofs of claims, on behalf of
individual, alleged, terminated employees and purportedly on behalf of all
alleged former employees, were filed in the Bankruptcy Court in HJC's Chapter 11
case.
This litigation and a compromise resolving this litigation are more fully
described in HJC's 1997 Annual Report on Form 10-K, Item 3 "Legal Proceedings."
On the Effective Date, the compromise
168
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HARRAH'S JAZZ COMPANY AND SUBSIDIARY
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
resolving this litigation became effective, and all claims against HJC related
to this litigation have been treated under the Plan and are now discharged as to
HJC.
MCCALL LITIGATION. On April 26, 1993, a lawsuit was filed in the Civil
District Court for the Parish of Orleans (the "Civil District Court") captioned
MCCALL V. MCCALL, ET AL. That litigation and a compromise resolving it are more
fully described in HJC's 1997 Annual Report on Form 10-K, Item 3. "Legal
Proceedings." On the Effective Date, the compromise resolving this litigation
became effective, and all claims against HJC related to this litigation have
been treated under the Plan and are now discharged as to HJC. In addition, this
litigation has been dismissed with prejudice.
TUCKER LITIGATION (CITY). On October 5, 1994, a lawsuit captioned TUCKER V.
CITY OF NEW ORLEANS was filed by Thomas Tucker against the City in the Civil
District Court. In addition, Mr. Tucker and the law firm of Tucker & West filed
proofs of claims in HJC's Chapter 11 case for amounts which they allege were
owed to them with respect to this and other litigation. This litigation and a
compromise resolving it are more fully described in HJC's 1997 Annual Report on
Form 10-K, Item 3. "Legal Proceedings." On the Effective Date, the compromise
resolving this litigation became effective, and all claims against HJC related
to this litigation have been treated under the Plan and are now discharged as to
HJC. In addition, this litigation has been dismissed with prejudice.
LANDMARKS LITIGATION (JOAN OF ARC). On December 6, 1994, a lawsuit
captioned LOUISIANA LANDMARKS SOCIETY, INC. V. CITY OF NEW ORLEANS, RIVERGATE
DEVELOPMENT CORPORATION, AND HARRAH'S JAZZ COMPANY was filed in Federal District
Court. This litigation and a compromise resolving it are more fully described in
HJC's 1997 Annual Report on Form 10-K, Item 3. "Legal Proceedings." On the
Effective Date, the compromise resolving this litigation became effective, and
all claims against HJC related to this litigation have been treated under the
Plan and are now discharged as to HJC. In addition, this litigation has been
dismissed with prejudice.
TUCKER LITIGATION (JOAN OF ARC). On July 24, 1996, Thomas Tucker filed
another lawsuit entitled TUCKER V. CITY OF NEW ORLEANS AND RIVERGATE DEVELOPMENT
CORPORATION in Federal District Court, seeking to enjoin alteration of the Place
de France and the relocation of the statue of St. Joan of Arc absent the express
written approval of the United States Secretary of the Interior. This litigation
and a compromise resolving it are more fully described in HJC's 1997 Annual
Report on Form 10-K, Item 3. "Legal Proceedings." On the Effective Date, the
compromise resolving this litigation became effective, and all claims against
HJC related to this litigation have been treated under the Plan and are now
discharged as to HJC. In addition, this litigation has been dismissed with
prejudice.
HNOIC/NOLDC LITIGATION. On September 26, 1995, HNOIC brought a lawsuit
against NOLDC in the Federal District Court seeking a declaratory judgment that
(i) HNOIC was a 52.93% owner of HJC, (ii) the 1994 option agreement with NOLDC
had expired, and (iii) NOLDC was not a "material partner" of HJC. This lawsuit
was pending as Civil Action No. 95-3165. On September 28, 1995, NOLDC brought a
lawsuit against, among other parties, HNOIC and HJC in the Civil District Court
seeking (i) a temporary restraining order enjoining the expiration of the 1994
option agreement and removal of NOLDC from its status as a material partner of
HJC, (ii) a rescission of the fourth amendment to HJC's partnership agreement
(governing, among other matters, the dilution of the NOLDC interest in HJC and
NOLDC's status as a material partner of HJC), (iii) restoration of NOLDC to a
full 33.3% ownership in HJC, and (iv) unspecified damages against all defendants
except HJC. On October 5, 1995, the defendants removed
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(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
NOLDC's Civil District Court action to the Federal District Court, where it was
pending as Civil Action No. 95-3272.
This litigation is more fully described in HJC's 1997 Annual Report on Form
10-K, Item 3. "Legal Proceedings." On the Effective Date, a compromise resolving
this litigation became effective, and all claims against HJC related to this
litigation have been treated under the Plan and are now discharged as to HJC. In
addition, this litigation has been dismissed.
SAPIR LITIGATION. On June 6, 1997, Eddie L. Sapir and the Eddie L. Sapir
Inter Vivos Trust filed a civil action captioned EDDIE L. SAPIR AND THE EDDIE L.
SAPIR INTER VIVOS TRUST V. GRAND PALAIS ENTERPRISES, INC., in the Civil District
Court. On November 21, 1997, Eddie L. Sapir and the Eddie L. Sapir Inter Vivos
Trust filed a civil action captioned EDDIE L. SAPIR AND THE EDDIE L. SAPIR INTER
VIVOS TRUST V. BANKER'S TRUST COMPANY, CEZAR M. FROELICH, ABC INSURANCE COMPANY,
FIRST NATIONAL BANK OF COMMERCE, HARRAH'S ENTERTAINMENT INCORPORATED, SHEFSKY &
FROELICH, LTD., DEF INSURANCE COMPANY, GHI INSURANCE COMPANY, JKL INSURANCE
COMPANY, THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, MERRILL LYNCH SENIOR HIGH
INCOME FUND, MERRILL LYNCH SENIOR HIGH INCOME II FUND, MERRILL LYNCH SENIOR
STRATEGIC FUND, PRIME INCOME TRUST, AND VAN KAMPEN MERIT PRIME RATE INCOME
TRUST, No. 97-20643, in the Civil District Court. In addition, Christopher
Hemmeter, the Chairman of Grand Palais, filed a voluntary petition for relief
under Chapter 7 of the Bankruptcy Code, and a Chapter 7 trustee has been
appointed in that bankruptcy case.
This litigation and its relevance to HJC is more fully described in HJC 1997
Annual Report on Form 10-K, Item 3. "Legal Proceedings." On the Effective Date,
a compromise resolving this litigation became effective and the litigation has
been dismissed without prejudice.
BONDHOLDERS CLASS ACTION. Beginning on November 28, 1995, eight separate
class action suits were filed against HET and various of its corporate
affiliates, officers and directors. Pursuant to a Federal District Court order
of January 26, 1996, plaintiffs filed a consolidated complaint in the Federal
District Court entitled IN RE HARRAH'S ENTERTAINMENT, INC. SECURITIES LITIGATION
(the "Bondholders Class Action"). Proofs of claim, purportedly on behalf of the
plaintiffs in the Bondholders Class Action, were filed in Bankruptcy Court in
HJC's Chapter 11 case.
This litigation and a compromise resolving this litigation are more fully
described in HJC's 1997 Annual Report on Form 10-K, Item 3, "Legal Proceedings."
All claims against HJC related to this litigation were treated under the Plan
and, as of the Effective Date, are now discharged as to HJC.
OTHER CONTINGENCIES
The enactment and implementation of gaming legislation in Louisiana and the
development of the Gaming Facilities have been the subject of lawsuits, claims
and delays brought about by various parties. Additional lawsuits and the
uncertain political environment may result in further delays, all of which could
have a material adverse effect on JCC as HJC's successor and operator of the
Casino. For additional information regarding the uncertain political
environment, see Part II, Items 1 and 2, "Business and Properties--Risk Factors"
in HJC's 1997 Annual Report on Form 10-K.
170
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JCC HOLDING COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The Unaudited Pro Forma Condensed Consolidated Financial Information of the
Company has been prepared giving effect to the consummation of the Plan of
Reorganization, including the costs thereto (collectively, the "Pro Forma
Adjustments"), to AICPA Statement of Position 90-7, Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code ("SOP 90-7"). Pursuant to
SOP 90-7, the total reorganization value of the reorganized Company's assets was
determined using several factors and by reliance on various valuation methods,
including discounting cash flow, as well as by analyzing market cash flow
multiples applied to the Company's pro forma cash flows. The factors considered
by the Company included: (i) forecasted cash flow results which gave effect to
the estimated impact of the restructuring; (ii) the discounted residual value at
the end of the forecast period; (iii) competition and general economic
considerations; and (iv) future potential profitability. Based on this analysis,
the Company, after consultation with an independent firm specializing in
reorganizations, established the Company's reorganization value as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Reorganization value as of opening based upon independent appraisal........... $ 495,000
Debt to be borrowed post bankruptcy but prior to opening...................... (164,000)
--------------
Reorganization value.......................................................... $ 331,000
--------------
--------------
</TABLE>
Such value is subject to potential further changes. The Company is not presently
aware of any matters which would cause the final reorganization value to differ
significantly from the amounts presented; however these numbers are estimates
and have not yet been subjected to audit. Under the principles of "fresh start"
accounting, the Company's total net assets were recorded at this assumed
reorganization value, which was then allocated to identifiable tangible assets
on the basis of their estimated fair value. In accordance with "fresh start"
accounting, the difference between the assumed reorganization value and the
aggregate fair value of the identifiable tangible assets resulted in a reduction
in the value assigned to intangible deferred operating contract costs and
prepaid lease costs. The Company adopted fresh-start reporting because holders
of existing voting shares immediately before filing and confirmation of the Plan
of Reorganization received less than 50% of the voting shares of the emerging
entity and its reorganization value is less than the postpetition liabilities
and allowed claims, as shown below:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Postpetition current liabilities.............................................. $ 65,742
Liabilities deferred pursuant to Chapter 11 proceeding........................ 523,468
--------------
Total postpetition liabilities and allowed claims............................. 589,210
Reorganization value.......................................................... 331,000
--------------
Excess of liabilities over reorganization value............................... $ 258,210
--------------
--------------
</TABLE>
The unaudited Pro Forma Condensed Consolidated Balance Sheet as of September
30, 1998 was prepared as if the Pro Forma Adjustments had occurred on September
30, 1998. The unaudited Pro Forma Condensed Consolidated Statement of Operations
for the nine months ended September 30, 1998, and the unaudited Pro Forma
Condensed Consolidated Statement of Operations for the year ended December 31,
1997, were prepared as if the Pro Forma Adjustments had occurred January 1,
1997. The Pro Forma Adjustments are based upon available information and upon
certain assumptions that the Company's management believes are reasonable in the
circumstances.
No changes in revenues or expenses have been made to reflect the results of
any modifications to operations that might have been made had the Plan of
Reorganization been confirmed on the assumed effective dates of the confirmation
of the Plan of Reorganization for presenting pro forma results. The Pro Forma
Condensed Consolidated Financial Data of the Company does not purport to
represent what the financial position or results of operations of the Company
would have been if the Plan of Reorganization had in fact been consummated on
such date or at the beginning of the period indicated or to project the
financial position or results of operations for any future date or period.
171
<PAGE>
JCC HOLDING COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA JCC
HJC ADJUSTMENTS HOLDING
HISTORICAL (NOTE 2) PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................................... $ 5,121 $ 26,666(c) $ 57,133
(71,954)(e)
97,300(f)
Other................................................................... 560 -- 560
----------- ----------- -----------
Total current assets................................................ 5,681 52,012 57,693
Land, buildings and equipment............................................. 199,168 (8,964)(g) 190,204
Deferred operating contract costs......................................... 122,222 (57,282)(g) 64,940
Lease prepayments......................................................... 30,263 (14,184)(g) 16,079
Other..................................................................... 2,084 -- 2,084
----------- ----------- -----------
$ 359,418 $ (28,418) $ 331,000
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND EQUITY
Liabilities not subject to compromise
Accounts payable........................................................ $ 1,855 $ 54,546(b) $ --
(56,401)(e) --
Debtor-in-possession loans.............................................. 48,334 (48,334)(c) --
Accrued expenses........................................................ 15,553 (15,553)(e) --
----------- ----------- -----------
65,742 (65,742) --
----------- ----------- -----------
Liabilities subject to compromise......................................... 523,468 (523,468)(b) --
----------- ----------- -----------
Deferred tax liability.................................................... -- 36,300(h) 36,300
Long-term debt
Senior Subordinated Notes with Contingent Payments due 2009............. -- 187,500(b) 187,500
Discount on Notes..................................................... -- (95,561)(b) (95,561)
Senior Subordinated Contingent Notes due 2009........................... -- --
A Term Loan............................................................. -- 40,000(f) 40,000
B Term Loan............................................................. -- 30,000(f) 30,000
Convertible Junior Subordinated Debentures.............................. -- 27,300(f) 27,300
----------- ----------- -----------
Total long-term debt................................................ -- 189,239 189,239
----------- ----------- -----------
Partners' capital/stockholders' equity
Partners' capital contributions......................................... 167,000 (167,000)(a) --
Accumulated deficit..................................................... (396,792) 167,000(a) --
301,682(b) --
-- (71,890)(d) --
----------- ----------- -----------
Total partners' capital............................................. (229,792) 229,792 --
----------- ----------- -----------
Common stock
Class A............................................................... -- 75,301(b) 75,301
Class B............................................................... -- 75,000(c) 75,000
Paid-in capital......................................................... -- 71,890(d) (44,840)
-- (80,430)(g) --
(36,300)(h)
----------- ----------- -----------
Total stockholders' equity.......................................... -- 105,461 105,461
----------- ----------- -----------
$ 359,418 $ (28,418) $ 331,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
172
<PAGE>
JCC HOLDING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA JCC
HJC ADJUSTMENTS HOLDING
HISTORICAL (NOTE 3) PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Total revenues............................................................................... $ 81 $ -- $ 81
---------- ----------- ---------
Operating expenses
Depreciation and amortization.............................................................. 431 -- 431
General and administrative................................................................. 11,010 -- 11,010
Reorganization costs....................................................................... 4,016 (4,016)(a) --
---------- ----------- ---------
Total operating expenses............................................................... 15,457 (4,016) 11,441
---------- ----------- ---------
Operating loss............................................................................... (15,376) 4,016 (11,360)
---------- ----------- ---------
Other income (expenses)
Interest expense........................................................................... (2,323) 2,323(b) (19,125)
(13,212)(c)
(5,913)(d)
Interest and other income.................................................................. 112 -- 112
---------- ----------- ---------
Total other income (expenses).......................................................... (2,211) (16,802) (19,013)
---------- ----------- ---------
Loss before income taxes..................................................................... (17,587) (12,786)(e) (30,373)
Income tax benefit........................................................................... -- -- (e) --
---------- ----------- ---------
Net loss..................................................................................... $ (17,587) $(12,786) $(30,373)
---------- ----------- ---------
---------- ----------- ---------
Loss per common share........................................................................ N/A $ (3.04)
---------- ---------
---------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
173
<PAGE>
JCC HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1998
NOTE 1. PRESENTATION
The following notes set forth the explanations and assumptions used in
preparing the unaudited Pro Forma Condensed Consolidated Financial Statements.
JCC Holding is the successor to HJC, the prior owner of the Casino and the
owner and operator of the Basin Street Temporary Casino. Upon the Effective Date
of the Plan of Reorganization, except for certain property which will vest in CP
Development and FP Development, all of the assets of HJC will vest in JCC.
For purposes of the accompanying pro forma financial information, pursuant
to SOP 90-7, the total reorganization value of the reorganized Company's assets
was determined using several factors and by reliance on various valuation
methods, including discounting cash flow, as well as by analyzing market cash
flow multiples applied to the Company's pro forma cash flows. The factors
considered by the Company included: (i) forecasted cash flow results which gave
effect to the estimated impact of the restructuring; (ii) the discounted
residual value at the end of the forecast period; (iii) competition and general
economic considerations; and (iv) future potential profitability. Based on this
analysis, the Company, after consultation with an independent firm specializing
in reorganizations, established the Company's reorganization value. Under the
principles of "fresh start" accounting, the Company's total net assets were
recorded at this assumed reorganization value, which was then allocated to
identifiable tangible assets on the basis of their estimated fair value. In
accordance with "fresh start" accounting, the difference between the assumed
reorganization value and the aggregate fair value of the identifiable tangible
assets resulted in a reduction in the value assigned to intangible deferred
operating contract costs and prepaid lease costs.
Loss per common share was calculated using 10,000,000 shares of Common
Stock, which represents the number of shares expected to be issued in connection
with the Plan of Reorganization.
NOTE 2. BALANCE SHEET PRO FORMA ADJUSTMENTS
(a) Records the offset of the partners' capital contributions balance
against the accumulated deficit on the books of HJC.
(b) Records the discharge of HJC's liabilities and debt upon the Effective
Date of the Plan of Reorganization, including the exchange of HJC's $435 million
of 14 1/4% First Mortgage Notes due 2001 for the following equity and debt
securities to be issued by JCC Holding and its subsidiaries:
1) Class A Common Stock of JCC Holding, representing a 50.1% ownership
interest in JCC Holding at an estimated fair value of $75.3 million,
2) $187.5 million of New Notes issued by JCC, discounted to net present
value at a 16% discount rate, and
3) New Contingent Notes.
This transaction also records as accounts payable those liabilities subject
to compromise which will be settled in cash on the Effective Date.
The gain arising from the discharge of this debt of $301.7 million is
recorded as a reduction of HJC's accumulated deficit.
The stated interest rate on the New Notes is considered by the Company to be
lower than prevailing interest rates for debt with similar terms and credit
ratings. The New Notes were valued based on discounting concepts to approximate
their fair value. The Company also assumed for purposes of calculating fair
value that the first five interest payments required under the New Notes would
be paid in
174
<PAGE>
JCC HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
AS OF SEPTEMBER 30, 1998
NOTE 2. BALANCE SHEET PRO FORMA ADJUSTMENTS (CONTINUED)
kind rather than in cash. No value was assigned the New Contingent Notes as
their fair value is estimated to be nominal.
The following table reflects the effect on the pro forma balance sheet and
results of operations of a 1% fluctuation in the 16% discount rate used in
calculating the net present value of the New Notes: (in thousands)
<TABLE>
<CAPTION>
DISCOUNT RATE DISCOUNT ON 8% NOTES PAID IN CAPITAL INTEREST EXPENSE
- ------------- -------------------- --------------- ----------------
<S> <C> <C> <C>
15% $ 88,400 $(52,001) $15,423
16% $ 95,561 $(44,840) $15,299
17% $102,100 $(38,301) $15,135
</TABLE>
The Notes and the Convertible Junior Subordinated Debentures will have legal
and other economic terms typically associated with indebtedness and have been
intended to create a debtor-creditor relationship between JCC and the holders
thereof. Consequently, JCC intends to treat the Notes and the Convertible Junior
Subordinated Debentures as debt for federal income tax purposes, and the
discussion herein assumes such treatment. The IRS may assert that the New Notes,
the New Contingent Notes and the Convertible Junior Subordinated Debentures
should be classified as equity rather than debt for federal income tax purposes.
If it were determined that either the Notes or the Convertible Junior
Subordinated Debentures constitutes equity for federal income tax purposes, or
if JCC Holding is prohibited from deducting interest paid on the Convertible
Junior Subordinated Debentures due to certain recent amendments to the Internal
Revenue Code of 1986, as amended, such a recharacterization or treatment, as the
case may be, would result in the loss of substantial interest deductions and
other tax benefits for JCC. The Company believes that the New Notes are properly
classified as debt for federal income tax purposes and that the
recharacterization of the New Contingent Notes and/or the Convertible Junior
Subordinated Debentures as equity for federal income tax purposes would not
impact the pro forma balance sheet or the pro forma statement of operations.
(c) Records the purchase for $75 million of a 49.9% equity interest in JCC
Holding by the HJC Entities. A portion of the $75 million contribution is funded
through the conversion to equity of debtor-in-possession loans previously
extended to HJC by the HJC Entities.
(d) Records the reduction of net partners' capital balance to zero in
recognition of the vesting of the assets and business of HJC in JCC under the
Plan of Reorganization. The Plan of Reorganization provides that, for federal
income tax purposes, such vesting shall be deemed to have occurred as a deemed
exchange by the Bondholders of the Old Bonds for such assets and business and
deemed exchanges by the Bondholders of such assets and business for the Class A
Common Stock, the New Notes and the New Contingent Notes. Also records the
creation of paid-in capital on the books of the Company arising from JCC's
assumption of the assets of HJC.
(e) Records the payment of certain HJC liabilities pursuant to the terms of
the Plan of Reorganization.
(f) Records the funding of loans anticipated to be incurred on the Effective
Date as follows: $40 million of the A Term Loan; $30 million of the B Term Loan;
and $27.3 million of Convertible Junior Subordinated Debentures.
(g) To record the adjustments to state assets and liabilities at fair value
and adjust for the difference between the assumed reorganization value and fair
value of the identifiable tangible assets by reducing the value assigned to
intangible deferred operating contract costs and lease prepayments.
175
<PAGE>
JCC HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
AS OF SEPTEMBER 30, 1998
NOTE 2. BALANCE SHEET PRO FORMA ADJUSTMENTS (CONTINUED)
(h) To record the temporary tax difference created under Financial
Accounting Standard No. 109, due to the basis difference in the discount on the
New Notes for book and tax purposes.
NOTE 3. STATEMENT OF OPERATIONS PRO FORMA ADJUSTMENTS
(a) To reverse expenses recorded during the period related to the bankruptcy
filing and reorganization of HJC.
(b) To reverse the interest expense incurred during the period in connection
with debtor-in-possession financing obtained by HJC.
(c) To record interest expense and related amortization on the New Notes as
follows:
<TABLE>
<CAPTION>
BEGINNING EFFECTIVE CASH TOTAL END OF
OF PERIOD INTEREST AMORTIZATION INTEREST INTEREST PERIOD
FISCAL YEAR CARRYING VALUE 16% OF DISCOUNT PAID EXPENSE CARRYING VALUE
----------- -------------- --------- ------------ -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
1997
Semi-Annual 1.................................. $ 91,939 $7,355 $ 7,355 $ -- $ 7,355 $ 99,294
Semi-Annual 2.................................. 99,294 7,944 7,944 -- 7,944 107,238
---------
1997 Sub Total............................... 15,299
---------
---------
1998
Semi-Annual 3.................................. 107,238 8,579 8,579 -- 8,579 115,817
Semi-Annual 4.................................. 115,817 9,265 9,265 -- 9,265 125,082
---------
1998 Sub Total............................... 17,844
---------
Nine Month Sub Total......................... 13,212
---------
---------
1999
Semi-Annual 5.................................. 125,082 10,007 10,007 -- 10,007 135,089
Semi-Annual 6.................................. 135,089 10,807 4,116 6,691 10,807 139,205
2000
Semi-Annual 7.................................. 139,205 11,136 4,385 6,751 11,136 143,590
Semi-Annual 8.................................. 143,590 11,487 4,736 6,751 11,487 148,326
2001
Semi-Annual 9.................................. 148,326 11,866 5,115 6,751 11,866 153,441
Semi-Annual 10................................. 153,441 12,275 5,524 6,751 12,275 158,965
</TABLE>
This calculation does not include any contingent interest expense, nor do
the financials include the pro forma effect on interest expense, net loss and
related per share amounts.
The Notes and the Convertible Junior Subordinated Debentures will have legal
and other economic terms typically associated with indebtedness and have been
intended to create a debtor-creditor relationship between JCC and the holders
thereof. Consequently, JCC intends to treat the Notes and the Convertible Junior
Subordinated Debentures as debt for federal income tax purposes, and the
discussion herein assumes such treatment. The IRS may assert that the New Notes,
the New Contingent Notes and the Convertible Junior Subordinated Debentures
should be classified as equity rather than debt for federal income tax purposes.
If it were determined that either the Notes or the Convertible Junior
Subordinated
176
<PAGE>
JCC HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
AS OF SEPTEMBER 30, 1998
NOTE 3. STATEMENT OF OPERATIONS PRO FORMA ADJUSTMENTS (CONTINUED)
Debentures constitutes equity for federal income tax purposes, or if JCC Holding
is prohibited from deducting interest paid on the Convertible Junior
Subordinated Debentures due to certain recent amendments to the Internal Revenue
Code of 1986, as amended, such a recharacterization or treatment, as the case
may be, would result in the loss of substantial interest deductions and other
tax benefits for JCC. The Company believes that the New Notes are properly
classified as debt for federal income tax purposes
and that the recharacterization of the New Contingent Notes and/or the
Convertible Junior Subordinated Debentures as equity for federal income tax
purposes would not impact the pro forma balance sheet or the pro forma statement
of operations.
(d) To record interest expense on the loans anticipated to be funded on the
Effective Date. This interest is calculated based on approximately $70 million
in term loans at rates ranging between 7.5% and 9.0%, and approximately $27.3
million in Convertible Junior Subordinated Debentures at an 8% rate.
(e) As a result of its structure as a partnership, no provisions for federal
or state income taxes were made on the books of HJC, as such taxes were the
responsibility of the individual partners. JCC Holding will be a corporation
subject to the income taxes. However, no provision or benefit is provided for
such taxes due to the incurrence of a pro forma net loss for the period and the
uncertainty of the ability to utilize the net operating loss carry forward in
future periods.
177
<PAGE>
JCC HOLDING COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA JCC
HJC ADJUSTMENTS HOLDING
HISTORICAL (NOTE 2) PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
Total revenues............................................................ $ 1,679 $ -- $ 1,679
---------- ----------- -----------
Operating expenses
Depreciation and amortization........................................... 610 -- 610
General and administrative.............................................. 14,703 -- 14,703
Reorganization costs.................................................... 5,886 (5,886)(a) --
---------- ----------- -----------
Total operating expenses............................................ 21,199 (5,886) 15,313
---------- ----------- -----------
Operating loss............................................................ (19,520) 5,886 (13,634)
---------- ----------- -----------
Other income (expenses)
Interest expense........................................................ (1,975) 1,975(b) (23,183)
(15,299)(c)
(7,884)(d)
Interest and other income............................................... 251 (251)(b) --
---------- ----------- -----------
Total other income (expenses)....................................... (1,724) (21,459) (23,183)
---------- ----------- -----------
Loss before income taxes.................................................. (21,244) (15,573) (36,817)
Income tax benefit........................................................ -- -- (e) --
---------- ----------- -----------
Net loss.................................................................. $ (21,244) $ (15,573) $ (36,817)
---------- ----------- -----------
---------- ----------- -----------
Loss per common share..................................................... N/A $ (3.68)
---------- -----------
---------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997.
178
<PAGE>
JCC HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
NOTE 1. PRESENTATION
The following notes set forth the explanations and assumptions used in
preparing the unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1997.
JCC Holding is the successor to HJC, the prior owner of the Casino and the
owner and operator of the Basino Street Temporary Casino. Upon the Effective
Date of the Plan of Reorganization, except for certain property which will vest
in CP Development and FP Development, all of the assets of HJC will vest in JCC.
For purposes of the accompanying pro forma financial information, pursuant
to SOP 90-7, the total reorganization value of the reorganized Company's assets
was determined using several factors and by reliance on various valuation
methods, including discounting cash flow, as well as by analyzing market cash
flow multiples applied to the Company's pro forma cash flows. The factors
considered by the Company included: (i) forecasted cash flow results which gave
effect to the estimated impact of the restructuring; (ii) the discounted
residual value at the end of the forecast period; (iii) competition and general
economic considerations; and (iv) future potential profitability. Based on this
analysis, the Company, after consultation with an independent firm specializing
in reorganizations, established the Company's reorganization value. Under the
principles of "fresh start" accounting, the Company's total net assets were
recorded at this assumed reorganization value, which was then allocated to
identifiable tangible assets on the basis of their estimated fair value. In
accordance with "fresh start" accounting, the difference between the assumed
reorganization value and the aggregate fair value of the identifiable tangible
assets resulted in a reduction in the value assigned to intangible deferred
Operating Contract Costs and prepaid lease costs.
Loss per common share was calculated using 10,000,000 shares of Common
Stock, the number of shares expected to be issued in connection with the Plan of
Reorganization.
179
<PAGE>
JCC HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
NOTE 2. PRO FORMA ADJUSTMENTS
(a) To reverse expenses recorded during the period related to the bankruptcy
filing and reorganization of HJC.
(b) To reverse the interest expense incurred during the period in connection
with debtor-in-possession financing obtained by HJC, and the recorded interest
income earned on some required escrow accounts.
(c) To record interest expense and related amortization on the New Notes as
follows:
<TABLE>
<CAPTION>
BEGINNING EFFECTIVE CASH TOTAL END OF
OF PERIOD INTEREST AMORTIZATION INTEREST INTEREST PERIOD
FISCAL YEAR CARRYING VALUE 16% OF DISCOUNT PAID EXPENSE CARRYING VALUE
----------- -------------- --------- ------------ -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
1997
Semi-Annual 1.................................. $ 91,939 $7,355 $ 7,355 $ -- $ 7,355 $ 99,294
Semi-Annual 2.................................. 99,294 7,944 7,944 -- 7,944 107,238
---------
1997 Sub Total............................... 15,299
---------
---------
1998
Semi-Annual 3.................................. 107,238 8,579 8,579 -- 8,579 115,817
Semi-Annual 4.................................. 115,817 9,265 9,265 -- 9,265 125,082
---------
1998 Sub Total............................... 17,844
---------
Nine Month Sub Total......................... 13,212
---------
---------
1999
Semi-Annual 5.................................. 125,082 10,007 10,007 -- 10,007 135,089
Semi-Annual 6.................................. 135,089 10,807 4,116 6,691 10,807 139,205
2000
Semi-Annual 7.................................. 139,205 11,136 4,385 6,751 11,136 143,590
Semi-Annual 8.................................. 143,590 11,487 4,736 6,751 11,487 148,326
2001
Semi-Annual 9.................................. 148,326 11,866 5,115 6,751 11,866 153,441
Semi-Annual 10................................. 153,441 12,275 5,524 6,751 12,275 158,965
</TABLE>
This calculation does not include any contingent interest expense, nor do
the financials include the pro forma effect on interest expense, net loss and
related per share amounts.
The Notes and the Convertible Junior Subordinated Debentures will have legal
and other economic terms typically associated with indebtedness and have been
intended to create a debtor-creditor relationship between JCC and the holders
thereof. Consequently, JCC intends to treat the Notes and the Convertible Junior
Subordinated Debentures as debt for federal income tax purposes, and the
discussion herein assumes such treatment. The IRS may assert that the New Notes,
the New Contingent Notes, and the Convertible Junior Subordinated Debentures
should be classified as equity rather than debt for federal income tax purposes.
If it were determined that either the Notes or the Convertible Junior
Subordinated Debentures constitutes equity for federal income tax purposes, or
if JCC Holding is prohibited from deducting interest paid on the Convertible
Junior Subordinated Debentures due to certain recent amendments to the Internal
Revenue Code of 1986, as amended, such a recharacterization or treatement,
180
<PAGE>
JCC HOLDING COMPANY
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
NOTE 2. PRO FORMA ADJUSTMENTS (CONTINUED)
as the case may be, would result in the loss of substantial interest deductions
and other tax benefits for JCC. The Company believes that the New Notes are
properly classified as debt for federal income tax purposes and that the
recharacterization of the New Contingent Notes and/or the Convertible Junior
Subordinated Debentures as equity for federal income tax purposes would not
impact the pro forma balance sheet or the pro forma statement of operations.
(d) To record interest expense on the loans anticipated to be funded on the
Effective Date. This interest is calculated based on approximately $70 million
in term loans at rates ranging between 7.5% and 9.0%, and approximately $27.3
million in Convertible Junior Subordinated Debentures at an 8% rate.
(e) As a result of its structure as a partnership, no provisions for federal
or state income taxes were made on the books of HJC, as such taxes were the
responsibility of the individual partners. JCC Holding will be a corporation
subject to the income taxes. However, no provision or benefit is provided for
such taxes due to the incurrence of a pro forma net loss for the period and the
uncertainty of the ability to utilize the net operating loss carry forward in
future periods.
181
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF HJC
Report of Independent Public Accountants
Consolidated Balance Sheets, As of December 31, 1997 and 1996
Consolidated Statements of Operations For the Years Ended December 31,
1995, 1996 and 1997
Consolidated Statements of Partners' Capital (Deficit) For the Years
Ended December 31, 1995,
1996 and 1997
Consolidated Statements of Cash Flows For the Years Ended December 31,
1995, 1996 and 1997
Notes to Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 1998 and December
31, 1997
Condensed Consolidated Statements of Operations for the Third Quarter Ended
September 30,
1998 and September 30, 1997 and the Nine Months Ended September 30, 1998
and September 30,
1997
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1998
and September 30, 1997
Notes to Condensed Consolidated Financial Statements
FINANCIAL STATEMENTS OF JCC HOLDING
Pro Forma Condensed Consolidated Balance Sheet As of September 30, 1998
Pro Forma Condensed Consolidated Statement of Operations For the Nine Months
Ended Septem-
ber 30, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements As
of September 30,
1998
Pro Forma Condensed Consolidated Statement of Operations For the Year Ended
December 31, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year
Ended December 31, 1997
182
<PAGE>
(b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <C> <S>
2.01 -- Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code of Harrah's Jazz Company,
Harrah's Jazz Finance Corp. and Harrah's New Orleans Investment Company (collectively "Debtors"),
dated April 3, 1996(1)
2.02 -- First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code dated June 17,
1996(2)
2.03 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code dated February 26,
1997(3)
2.04 -- Third Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as Modified and
Confirmed, dated as of February 26, 1997(4)
2.05 -- Third Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as Modified Pre-
and Post-Confirmation, dated as of July 24, 1997(5)
2.06 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as Modified
Through November 14, 1997, dated November 14, 1997(6)
2.07 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as Modified
Through January 29, 1998, dated January 29, 1998(3)
2.08 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as Modified
Through April 6, 1998(7)
2.09 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as Modified
Through August 12, 1998(8)
+2.10 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as Modified
Through September 3, 1998
2.11 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as Modified
Through October 13, 1998(9)
+3.01 -- Certificate of Incorporation of JCC Holding Company
3.02 -- Restated Certificate of Incorporation of JCC Holding Company
+3.03 -- Bylaws of JCC Holding Company
+3.04 -- Amended and Restated Bylaws of JCC Holding Company
3.05 -- Second Amended and Restated Bylaws of JCC Holding Company
4.01 -- Indenture, dated as of October 30, 1998, among Jazz Casino Company, L.L.C., as Issuer, JCC Holding
Company, JCC Development Company, L.L.C., CP Development, L.L.C. and FP Development L.L.C., as
Guarantors and Norwest Bank Minnesota, National Association, as Trustee, with respect to the Senior
Subordinated Notes due 2009 with Contingent Payments(9)
4.02 -- Indenture, dated as of October 30, 1998, among Jazz Casino Company, L.L.C., as Issuer, JCC Holding
Company, JCC Development Company, L.L.C., CP Development, L.L.C. and FP Development L.L.C., as
Guarantors, and Norwest Bank Minnesota, National Association, as Trustee, with respect to the Senior
Subordinated Contingent Notes due 2009(10)
</TABLE>
183
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <C> <S>
4.03 -- Notes Completion Guarantee among Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and
Norwest Bank Minnesota, National Association, as Trustee, dated October 30, 1998
4.04 -- Indenture, dated as of October 30, 1998, among Jazz Casino Company, L.L.C., as Issuer, JCC Holding
Company, as Guarantor, and Norwest Bank Minnesota, National Association, as Trustee, with respect to
the 8% Convertible Junior Subordinated Debentures due 2010
4.05 -- Registration Rights Agreement among Jazz Casino Company, L.L.C., JCC Holding Company, Salomon Smith
Barney, Inc., Donaldson, Lufkin & Jenrette Inc., BT Alex. Brown Incorporated, Bankers Trust Company
and First National Bank of Commerce, dated as of October 30, 1998
4.06 -- Registration Rights Agreement between JCC Holding Company and Harrah's Crescent City Investment
Company, dated as of October 30, 1998
4.07 -- Warrant Agreement between JCC Holding Company and Harrah's Crescent City Investment Company, dated as
of October 30, 1998
4.08 -- Subordinated Loan Agreement among Jazz Casino Company, L.L.C., Harrah's Operating Company, Inc. and
Harrah's Entertainment, Inc., dated as of October 30, 1998
4.09 -- Intercreditor Agreement among Harrah's Entertainment, Inc., Harrah's Operating Company, Inc., Bankers
Trust Company, as Administrative Agent, and Norwest Bank Minnesota, National Association, as Trustee,
and The Bank of New York, as Collateral Agent, acknowledged and agreed to by JCC Holding Company,
Jazz Casino Company, L.L.C., CP Development, L.L.C., FP Development, L.L.C. and JCC Development
Company, L.L.C., dated as of October 29, 1998
4.10 -- Credit Agreement among JCC Holding Company, Jazz Casino Company, L.L.C., the Banks party hereto from
time to time, and Bankers Trust Company, as Administrative Agent, dated as of October 29, 1998
10.01 -- Amended and Restated Lease Agreement among Rivergate Development Corporation, as Landlord, and Jazz
Casino Company, L.L.C., as Tenant, and the City of New Orleans, as Intervenor, dated October 29, 1998
10.02 -- Amended and Restated General Development Agreement among Rivergate Development Corporation, Jazz
Casino Company, L.L.C. and the City of New Orleans, as Intervenor, dated October 29, 1998
10.03 -- Basin Street Casino Lease Termination Agreement among the City of New Orleans, the Rivergate
Development Corporation and Harrah's Jazz Company, dated January 15, 1997(3)
10.04 -- Casino Operating Contract between the Louisiana Economic Development and Gaming Corporation and
Harrah's Jazz Company, dated March 14, 1994(11)
10.05 -- Amended and Renegotiated Casino Operating Contract among the State of Louisiana by and through the
Louisiana Gaming Control Board, Harrah's Jazz Company, Jazz Casino Company, L.L.C., and Harrah's New
Orleans Management Company and JCC Holding Company, as Intervenors effective as of October 30, 1998
10.06 -- Second Amended and Restated Management Agreement between Harrah's New Orleans Management Company and
Jazz Casino Company, L.L.C., acknowledged and consented to by Rivergate Development Corporation, as
Landlord, dated as of October 29, 1998
</TABLE>
184
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <C> <S>
10.07 -- Second Floor Non-Gaming Sublease between Jazz Casino Company, L.L.C., as Sublessor, and JCC
Development Company, L.L.C., as Sublessee, dated October 29, 1998
10.08 -- City/RDC Completion Guarantee among Harrah's Entertainment, Inc., Harrah's Operating Company, Inc.,
the Rivergate Development Corporation and the City of New Orleans, dated as of October 29, 1998
10.09 -- LGCB Completion Guarantee among Harrah's Entertainment, Inc., Harrah's Operating Company, Inc.,
accepted and agreed to by the Louisiana Gaming Control Board, dated as of October 30, 1998
10.10 -- Amended and Restated Subordinated Completion Loan Agreement among Jazz Casino Company, L.L.C.,
Harrah's Entertainment, Inc., Harrah's Operating Company, Inc., and as to the provisions of Sections
2(C)iii and (iv) only, agreed and accepted by Bankers Trust Company as Administrative Agent for
Lenders, dated October 30, 1998
10.11 -- Amended and Restated Construction Lien Indemnity Obligation Agreement between Jazz Casino Company,
L.L.C. and Harrah's Operating Company, Inc., dated October 30, 1998
10.12 -- Bank Completion Guarantee among Harrah's Entertainment, Inc. and Harrah's Operating Company, Inc.,
accepted and agreed to by Bankers Trust Company, as Administrative Agent, dated October 29, 1998
10.13 -- Completion Guarantor Subordination Agreement (Senior Subordinated Notes) among Harrah's
Entertainment, Inc., Harrah's Operating Company, Inc. and Norwest Bank Minnesota, N.A., as Trustee,
acknowledged and agreed to by Jazz Casino Company, L.L.C., dated as of October 30, 1998
10.14 -- Manager Subordination Agreement (Landlord) among Harrah's New Orleans Management Company, the City of
New Orleans and Rivergate Development Corporation, dated as of October 29, 1998
10.15 -- Manager Subordination Agreement (Lenders) between Harrah's New Orleans Management Company and Bankers
Trust Company, as Administrative Agent, acknowledged and agreed to by Jazz Casino Company, L.L.C. and
The Bank of New York, dated as of October 29, 1998
10.16 -- Manager Subordination Agreement (Senior Subordinated Notes) between Harrah's New Orleans Management
Company and Norwest Bank Minnesota, National Association, as Trustee, acknowledged and agreed to by
Jazz Casino Company, L.L.C., and The Bank of New York, dated as of October 29, 1998
10.17 -- HET Subordinated Lender Subordination Agreement (Lenders) among Harrah's Entertainment, Inc.,
Harrah's Operating Company, Inc. and Bankers Trust Company, as Administrative Agent, acknowledged and
agreed to by Jazz Casino Company, L.L.C., dated as of October 29, 1998
10.18 -- Management Fee Reimbursement Agreement Guarantee among Harrah's Entertainment, Inc., Harrah's
Operating Company, Inc., Jazz Casino Company, L.L.C., and Harrah's New Orleans Management Company,
dated October 29, 1998
</TABLE>
185
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <C> <S>
10.19 -- Performance Bond among Jazz Casino Company, L.L.C. as Principal, and Reliance Insurance Company and
United States Fidelity and Guaranty Company, as Sureties, for the benefit of each of the City of New
Orleans, Rivergate Development Corporation, the Louisiana Gaming Control Board, Norwest Bank,
Minnesota, N.A., and Bankers Trust Company (collectively, the "Obligees"), dated October 29, 1998
10.20 -- Form of JCC Holding Company 1998 Long-Term Incentive Plan
10.21 -- Completion Guarantor Subordination Agreement (Lenders) among Harrah's Entertainment, Inc., Harrah's
Operating Company, Inc. and Bankers Trust Company, as Administrative Agent, acknowledged and agreed
to by Jazz Casino Company, L.L.C., dated as of October 29, 1998
10.22 -- Completion Guarantor Subordination Agreement (Convertible Junior Subordinated Debentures) among
Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and Norwest Bank Minnesota, N.A., as
Trustee, acknowledged and agreed to by Jazz Casino Company, L.L.C., dated as of October 30, 1998
10.23 -- HET Subordinated Lender Subordination Agreement (Senior Subordinated Notes) among Harrah's
Entertainment, Inc., Harrah's Operating Company, Inc. and Norwest Bank Minnesota, N.A., as Trustee,
acknowledged and agreed to by Jazz Casino Company, L.L.C., dated as of October 30, 1998
10.24 -- HET Subordinated Lender Subordination Agreement (Convertible Junior Subordinated Debentures) among
Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and Norwest Bank Minnesota, N.A., as
Trustee, acknowledged and agreed to by Jazz Casino Company, L.L.C., dated as of October 29, 1998
10.25 -- Credit Enhancement Fee Agreement between Jazz Casino Company, L.L.C. and Harrah's Operating Company,
Inc., dated October 29, 1998
10.26 -- HET/JCC Agreement between Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and Jazz
Casino Company, L.L.C., dated October 30, 1998
10.27 -- Guaranty and Loan Purchase Agreement by Harrah's Entertainment, Inc. and Harrah's Operating Company,
Inc., acknowledged and agreed to by Bankers Trust Company as Administrative Agent, dated as of
October 29, 1998
10.28 -- Act of Mortgage and Collateral Assignment by Jazz Casino Company L.L.C., in favor of The Bank of New
York, as Collateral Agent, for the present and future holders of the Secured Indebtedness, dated
October 29, 1998, effective as of October 30, 1998
10.29 -- Act of Mortgage and Collateral Assignment by CP Development, L.L.C., in favor of The Bank of New
York, as Collateral Agent, for the present and future holders of the Secured Obligations, dated
October 29, 1998, effective as of October 30, 1998
10.30 -- Act of Mortgage and Collateral Assignment by FP Development, L.L.C., in favor of The Bank of New
York, as Collateral Agent, for the present and future holders of the Secured Obligations, dated
October 29, 1998, effective as of October 30, 1998
10.31 -- Act of Mortgage and Collateral Assignment by JCC Development Company, L.L.C., in favor of The Bank of
New York, as Collateral Agent, for the present and future holders of the Secured Obligations, dated
October 29, 1998, effective as of October 30, 1998
</TABLE>
186
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <C> <S>
10.32 -- Credit Enhancement Fee Agreement (Bank Credit Agreement) by and among Bankers Trust Company, as
Administrative Agent for Morgan Stanley Prime Income Trust and Van Kampen American Capital Prime Rate
Income Trust, Harrah's Operating Company, Inc. and Harrah's Entertainment, Inc., dated October 29,
1998
10.33 -- Security Agreement, dated as of October 29, 1998, among JCC Holding Company, Jazz Casino Company,
L.L.C., CP Development, L.L.C., FP Development, L.L.C., and JCC Development Company., L.L.C (each, an
'Assignor" and, together with any other entity that becomes a party, the 'Assignors"), The Bank of
New York, as Collateral Agent for the benefit of Harrah's Entertainment, Inc., Harrah's Operating
Company, Inc. and the Secured Creditors.
10.34 -- Pledge Agreement, dated as of October 29, 1998, among JCC Holding Company, Jazz Casino Company,
L.L.C., CP Development, L.L.C., FP Development, L.L.C., and JCC Development Company., L.L.C. (each a
'Pledgor" and collectively, the 'Pledgors"), The Bank of New York Harrah's Entertainment, Inc.,
Harrah's Operating Company, Inc. and the Secured Creditors.
10.35 -- Subsidiaries Guaranty, dated as of October 29, 1998, among CP Development, L.L.C., FP Development,
L.L.C. and JCC Development Company, L.L.C. (each a 'Guarantor" and, together with any other entity
that becomes a party, the 'Guarantors"), and Bankers Trust Company, as Administrative Agent, for the
benefit of the Creditors.
10.36 -- Assignment of Contracts and Ancillary Rights, dated as of October 30, 1998, among Jazz Casino
Company, L.L.C., Harrah's Operating Company, Inc. and Harrah's Entertainment, Inc.
10.37 -- Amended and Restated Open Access Plans of Jazz Casino Company, L.L.C., Submitted to the Council of
the City of New Orleans on October 15, 1998.
10.38 -- Open Access Program
+21.01 -- List of Subsidiaries of JCC Holding Company
27.01 -- Financial Data Schedule
99.01 -- Opinion of New Orleans City Attorney regarding Home Rule Charter(12)
99.02 -- Opinion of New Orleans City Attorney regarding Amusement Tax(12)
99.03 -- Opinion of Richard P. Ieyoub, Louisiana State Attorney General, regarding the Powers of the Louisiana
Gaming Control Board(3)
99.04 -- JORDAN VS. LOUISIANA GAMING CONTROL BOARD and MURPHY J. FOSTER AND BEAN VS. LOUISIANA GAMING CONTROL
BOARD AND RIVERGATE DEVELOPMENT CORPORATION, Nos. 98-C-1122, 98-C-1133 and 98-C-1134, (La. S. Ct.,
May 15, 1998)(13)
</TABLE>
- ------------------------
+ Previously filed.
* To be filed by amendment.
(1) Incorporated by reference to Harrah's Jazz Company Annual Report on Form
10-K for the year ended December 31, 1995, File No. 33-73370.
(2) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended June 30, 1996, filed August 14, 1996, File No.
33-73370.
187
<PAGE>
(3) Incorporated by reference to Harrah's Jazz Company Annual Report on Form
10-K for the year ended December 31, 1997, File No. 33-73370.
(4) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended March 30, 1997, filed May 15, 1997, File No.
33-73370.
(5) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended June 30, 1997, filed August 14, 1997, File No.
33-73370.
(6) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, filed November 14, 1997, File
No. 33-73370.
(7) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended March 31, 1998, filed May 15, 1998, File No.
33-73370.
(8) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended June 30, 1998, filed August 14, 1998, File No.
33-73370.
(9) Incorporated by reference to the Post Effective Amendment No. 1 to the Form
T-3 of the Jazz Casino Company, L.L.C., filed November 10, 1998, File No.
022-22289.
(10) Incorporated by reference to the Post Effective Amendment No. 1 to the Form
T-3 of the Jazz Casino Company, L.L.C., filed November 10, 1998, File No.
022-22291.
(11) Incorporated by reference to Amendment No. 3 to the Registration Statement
on Form S-1 of Harrah's Jazz Company and Harrah's Jazz Finance Corp., filed
August 4, 1994, File No. 33-73370.
(12) Incorporated by reference to Amendment No. 4 to the Registration Statement
on Form S-1 of Harrah's Jazz Company and Harrah's Jazz Finance Corp., filed
October 12, 1994, File No. 33-73370.
(13) Incorporated by reference to Harrah's Jazz Company Current Report on Form
8-K, filed May 19, 1998, File No. 33-73370.
188
<PAGE>
INDEX
The following is an index of certain defined terms which are used in this
Registration Statement on Form 10. The following index does not include those
defined terms which are set forth in the financial statements included in this
Registration Statement:
<TABLE>
<S> <C>
33 Act Registration Statement.......... 117
3CP Property........................... 3
AAA.................................... 121
A Term Loan............................ 6
Additional Class A Director............ 112
Additional Class B Director............ 112
Administrative Agent................... 78
Admission.............................. 33
Affiliate.............................. 118
Amended and Renegotiated Casino
Operating Contract................... 4
Amended and Restated Construction Lien
Indemnity Agreement.................. 74
Amended Completion Loan Agreement...... 71
Amended GDA............................ 25
Amended Ground Lease................... 11
Amended Ground Lease Minimum
Payments............................. 48
Amended Management Agreement........... 63
Amended Open Access Program and Plans.. 37
Audubon Payment........................ 49
Awards................................. 96
B Term Loan............................ 6
Bank Completion Guarantee.............. 71
Bank Lenders........................... 6
Bank Lenders Subordination Agreement... 78
Bank Loans............................. 7
Bankruptcy Code........................ 1
Bankruptcy Court....................... 1
Base Fee............................... 65
Basin Street Casino.................... 3
Basin Street Casino Lease.............. 7
Bean................................... 16
Beneficiaries.......................... 22
Bondholders............................ 5
Bondholders Class Action............... 106
Broadmoor Settlement Agreement......... 8
BTCo................................... 4
BTCo Credit Support Fee................ 40
Bylaws................................. 5
Carry Obligation Default............... 70
Carry Obligation Termination Date...... 39
Carry Obligations...................... 69
Casino................................. 1
Casino Construction.................... 2
Casino Contracts....................... 34
Casino Development..................... 46
Casino Operating Contract.............. 3
Casino Premises........................ 12
CCA.................................... 94
CCM.................................... 94
Centex................................. 8
Centex Settlement Agreement............ 8
Change of Control...................... 118
City................................... 1
City Lease............................. 36
City Payments.......................... 49
Claims................................. 66
Class A Common Stock................... 5
Class A Directors...................... 7
Class B Common Stock................... 5
Class B Directors...................... 7
Class B Entities....................... 110
Class B Registration Rights
Agreement............................ 117
Class B Registration Statement......... 117
Cleanup Laws........................... 11
Closing Price.......................... 118
COC Fiscal Year........................ 24
Code................................... 33
Collateral Agent....................... 41
Committee.............................. 97
Common Stock........................... 5
Company................................ 1
Competing Casinos...................... 35
Completion Guarantees.................. 22
Completion Guarantors.................. 22
Completion Loans....................... 71
Completion Obligation Default.......... 70
Completion Obligations................. 68
Conflicted Entity...................... 118
Consolidated EBITDA.................... 45
Contingent Payment Measurement Amount.. 44
Continuing Directors................... 67
Controlled Affiliate................... 118
Conversion Price....................... 42
Convertible Junior Subordinated
Debentures........................... 7
CP Development......................... 1
Credit Agreement....................... 39
Cure Event............................. 119
Cure Period............................ 79
Current Market Price................... 43
</TABLE>
189
<PAGE>
<TABLE>
<S> <C>
Debenture Registrable Securities....... 45
Debtors................................ 20
Deferral Amount........................ 66
Development Entities................... 1
Development Properties................. 25
Disqualified Holder.................... 119
Dividend Equivalent.................... 96
DLJ.................................... 6
EBITDA................................. 42
Effective Date......................... 1
Exchange Act........................... 43
Excluded Transactions.................. 119
Excusable Temporary Cessation of
Operations........................... 76
Expedited Procedures................... 121
Extraordinary Flip Event............... 119
Fair Market Value...................... 119
FAM.................................... 94
Favored Beneficiary.................... 71
Finance Corp........................... 1
First American......................... 12
First American Settlement Agreement.... 12
Fixed Interest......................... 43
Flip Event............................. 119
FNBC................................... 6
Force Majeure.......................... 22
FP Development......................... 1
Froelich............................... 105
Fulton Property........................ 3
Gaming Act............................. 2
Gaming Collateral...................... 84
General Development Agreement.......... 1
Grand Palais........................... 1
Grand Palais Family Members............ 110
Grand Palais Shareholders.............. 110
Gross Gaming Payments.................. 48
Gross Gaming Percentage Amount......... 48
Gross Gaming Revenue Share Payments.... 56
Gross Non-Gaming Payments.............. 49
Ground Lease........................... 1
Harrah's Entities...................... 110
Harrah's S&RP.......................... 55
HCCIC.................................. 5
Hemmeter............................... 105
HET.................................... 1
HET applicable rate.................... 39
HET Loan Guaranty...................... 40
HET Warrant............................ 6
HET/JCC Agreement...................... 20
HJC.................................... 1
HNOIC.................................. 1
HOCI................................... 12
House Bank............................. 54
Impositions............................ 56
Incentive Fee.......................... 65
Indemnity Obligations.................. 75
Indentures............................. 32
Initial Bonds.......................... 47
Initial Casino Facilities.............. 2
Initial Costs.......................... 60
Initial Financing...................... 3
Initial Payment........................ 56
Initiating Holders..................... 43
Intercreditor Agreement................ 78
IRS.................................... 33
ISOs................................... 97
JCC.................................... 1
JCC Advances........................... 45
JCC Credit Support Fee................. 40
JCC Development........................ 1
JCC Development Adjustment Amount...... 44
JCC Entities........................... 1
JCC Holding............................ 1
JCC S&RP............................... 55
Jordan................................. 16
Junior Subordinated Credit Facility.... 6
Key Casino Personnel................... 66
Landmarks Litigation................... 103
LEDGC.................................. 3
LGCB................................... 2
LGCB Completion Guarantee.............. 71
Local Option Election.................. 14
LTIP................................... 96
Major Condemnation..................... 54
Management Fees........................ 65
Manager................................ 3
Manager Subordination Agreement (RDC/
City)................................ 54
Manager Subordination Agreements....... 78
MAR Exercise Notice.................... 49
MAR Payment............................ 49
Master Plan............................ 2
McCall Claimants....................... 102
McCall Litigation...................... 101
McCall Settlement Agreement............ 102
Minimum Market Value................... 120
Minimum Payment Default................ 57
Minimum Payment Guarantors............. 20
Minimum Payment Guaranty............... 20
Minimum Payments....................... 57
MLAM................................... 94
National Commission.................... 19
</TABLE>
190
<PAGE>
<TABLE>
<S> <C>
Net Market Appreciation................ 49
New Contingent Notes................... 6
New Equity Investment.................. 5
New Notes.............................. 6
NOLDC.................................. 1
NOLDC Family Members................... 110
NOLDC Shareholders..................... 110
Non-Qualified Person................... 67
Notes.................................. 6
Notes Completion Guarantee............. 71
Notes Obligations...................... 78
Notes Subordination Agreement.......... 78
NSOs................................... 97
Old Bank Credit Facilities............. 3
Old Bonds.............................. 3
Open Access Program and Plans.......... 3
Opening Date........................... 2
Options................................ 96
OTB.................................... 11
Other Beneficiaries.................... 71
Other Holders.......................... 43
Participating Banks.................... 6
Partners............................... 1
PCB.................................... 12
Required holding period................ 99
Permits................................ 47
Permitted Amendment.................... 58
Permitted Riverboat.................... 58
Person................................. 119
Petition Date.......................... 4
Plan of Reorganization................. 1
Poirier................................ 104
Poydras Street Support Facility........ 23
Poydras Tunnel Area.................... 2
Pre-Opening Date Rent.................. 48
Preferential re-employment............. 104
Preservation Obligation Default........ 70
Preservation Obligations............... 69
Proponents............................. 4
Qualified Person....................... 120
Qualified Purchaser.................... 68
RDC.................................... 2
RDC Completion Guarantee............... 71
Receiver............................... 78
Redemption Date........................ 120
Redemption Securities.................. 120
Registrant............................. 1
Release Pool........................... 107
Rent................................... 48
Performance Units...................... 96
Residency Requirement.................. 102
Restricted Stock....................... 96
Riverboat Act.......................... 10
Rivergate.............................. 1
Rules.................................. 121
Rules and Regulations.................. 2
Salomon................................ 6
SARs................................... 96
School Board Payment................... 49
Second Floor Shell Construction........ 2
Second Floor Sublease.................. 73
Securities Act......................... 43
Senior Indebtedness.................... 78
Senior Permitted Refinancings.......... 41
Senior Subordinated Permitted
Refinancings......................... 41
Significant Transactions............... 120
Site Reactivation Date................. 47
SOP 90-7............................... 27
Speedy Arbitration..................... 121
State.................................. 4
Subordinated Obligations............... 78
Subordination Beneficiaries............ 78
Subsidiary............................. 122
Succession Date........................ 78
Surety Bond............................ 24
Swody.................................. 104
Term Loans............................. 6
Termination Agreement.................. 74
Termination Date....................... 78
Termination Event...................... 62
Termination Fee........................ 67
Termination Notice..................... 78
Termination of Construction Date....... 69
Tranche A-1............................ 39
Tranche A-2............................ 39
Tranche A-3............................ 39
Tranche B-1............................ 39
Tranche B-2............................ 39
Transfer............................... 122
Transition Date........................ 122
Transition Period...................... 54
Trustee................................ 43
Tucker Litigation...................... 102
Unclassified Common Stock.............. 109
Underwriters........................... 42
VDPs................................... 11
WARN Act Claimants..................... 104
Working Capital Facility............... 7
Working Capital Facility Maximum
Amount............................... 69
Zoning Ordinance....................... 25
</TABLE>
191
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
JCC HOLDING COMPANY
By: /s/ FREDERICK W. BURFORD
----------------------------------------
Title: President
-------------------------------------
</TABLE>
Date November 20, 1998
192
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- --------- ---------------------------------------------------------------------------------------- -------------
<C> <C> <S> <C>
2.01 -- Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code of Harrah's Jazz
Company, Harrah's Jazz Finance Corp. and Harrah's New Orleans Investment Company
(collectively "Debtors"), dated April 3, 1996(1)
2.02 -- First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code dated
June 17, 1996(2)
2.03 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code dated
February 26, 1997(3)
2.04 -- Third Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as
Modified and Confirmed, dated as of February 26, 1997(4)
2.05 -- Third Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as
Modified Pre- and Post-Confirmation, dated as of July 24, 1997(5)
2.06 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as
Modified Through November 14, 1997, dated November 14, 1997(6)
2.07 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as
Modified Through January 29, 1998, dated January 29, 1998(3)
2.08 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as
Modified Through April 6, 1998(7)
2.09 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as
Modified Through August 12, 1998(8)
+2.10 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as
Modified Through September 3, 1998
2.11 -- Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code as
Modified Through October 13, 1998(9)
+3.01 -- Certificate of Incorporation of JCC Holding Company
3.02 -- Restated Certificate of Incorporation of JCC Holding Company
+3.03 -- Bylaws of JCC Holding Company
+3.04 -- Amended and Restated Bylaws of JCC Holding Company
3.05 -- Second Amended and Restated Bylaws of JCC Holding Company
4.01 -- Indenture, dated as of October 30, 1998, among Jazz Casino Company, L.L.C., as Issuer,
JCC Holding Company, JCC Development Company, L.L.C., CP Development, L.L.C. and FP
Development L.L.C., as Guarantors and Norwest Bank Minnesota, National Association, as
Trustee, with respect to the Senior Subordinated Notes due 2009 with Contingent
Payments(9)
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4.02 -- Indenture, dated as of October 30, 1998, among Jazz Casino Company, L.L.C., as Issuer,
JCC Holding Company, JCC Development Company, L.L.C., CP Development, L.L.C. and FP
Development L.L.C., as Guarantors, and Norwest Bank Minnesota, National Association, as
Trustee, with respect to the Senior Subordinated Contingent Notes due 2009(10)
4.03 -- Notes Completion Guarantee among Harrah's Entertainment, Inc., Harrah's Operating
Company, Inc. and Norwest Bank Minnesota, National Association, as Trustee, dated
October 30, 1998
4.04 -- Indenture, dated as of October 30, 1998, among Jazz Casino Company, L.L.C., as Issuer,
JCC Holding Company, as Guarantor, and Norwest Bank Minnesota, National Association, as
Trustee, with respect to the 8% Convertible Junior Subordinated Debentures due 2010
4.05 -- Registration Rights Agreement among Jazz Casino Company, L.L.C., JCC Holding Company,
Salomon Smith Barney, Inc., Donaldson, Lufkin & Jenrette Inc., BT Alex. Brown
Incorporated, Bankers Trust Company and First National Bank of Commerce, dated as of
October 30, 1998
4.06 -- Registration Rights Agreement between JCC Holding Company and Harrah's Crescent City
Investment Company, dated as of October 30, 1998
4.07 -- Warrant Agreement between JCC Holding Company and Harrah's Crescent City Investment
Company, dated as of October 30, 1998
4.08 -- Subordinated Loan Agreement among Jazz Casino Company, L.L.C., Harrah's Operating
Company, Inc. and Harrah's Entertainment, Inc., dated as of October 30, 1998
4.09 -- Intercreditor Agreement among Harrah's Entertainment, Inc., Harrah's Operating Company,
Inc., Bankers Trust Company, as Administrative Agent, and Norwest Bank Minnesota,
National Association, as Trustee, and The Bank of New York, as Collateral Agent,
acknowledged and agreed to by JCC Holding Company, Jazz Casino Company, L.L.C., CP
Development, L.L.C., FP Development, L.L.C. and JCC Development Company, L.L.C., dated
as of October 29, 1998
4.10 -- Credit Agreement among JCC Holding Company, Jazz Casino Company, L.L.C., the Banks party
hereto from time to time, and Bankers Trust Company, as Administrative Agent, dated as
of October 29, 1998
10.01 -- Amended and Restated Lease Agreement among Rivergate Development Corporation, as
Landlord, Jazz Casino Company, L.L.C., as Tenant, and the City of New Orleans, as
Intervenor, dated October 29, 1998
10.02 -- Amended and Restated General Development Agreement among Rivergate Development
Corporation, Jazz Casino Company, L.L.C. and the City of New Orleans, as Intervenor,
dated October 29, 1998
10.03 -- Basin Street Casino Lease Termination Agreement among the City of New Orleans, the
Rivergate Development Corporation and Harrah's Jazz Company, dated January 15, 1997(3)
10.04 -- Casino Operating Contract between the Louisiana Economic Development and Gaming
Corporation and Harrah's Jazz Company, dated March 14, 1994(11)
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10.05 -- Amended and Renegotiated Casino Operating Contract among the State of Louisiana by and
through the Louisiana Gaming Control Board, Harrah's Jazz Company, Jazz Casino Company,
L.L.C., and Harrah's New Orleans Management Company and JCC Holding Company, as
Intervenors, effective as of October 30, 1998
10.06 -- Second Amended and Restated Management Agreement between Harrah's New Orleans Management
Company and Jazz Casino Company, L.L.C., acknowledged and consented to by Rivergate
Development Corporation, as Landlord, dated as of October 29, 1998
10.07 -- Second Floor Non-Gaming Sublease between Jazz Casino Company, L.L.C., as Sublessor, and
JCC Development Company, L.L.C., as Sublessee, dated October 29, 1998
10.08 -- City/RDC Completion Guarantee among Harrah's Entertainment, Inc., Harrah's Operating
Company, Inc., the Rivergate Development Corporation and the City of New Orleans, dated
as of October 29, 1998
10.09 -- LGCB Completion Guarantee among Harrah's Entertainment, Inc., Harrah's Operating
Company, Inc., accepted and agreed to by the Louisiana Gaming Control Board, dated as of
October 30, 1998
10.10 -- Amended and Restated Subordinated Completion Loan Agreement among Jazz Casino Company,
L.L.C., Harrah's Entertainment, Inc., Harrah's Operating Company, Inc., and as to the
provisions of Sections 2(C)iii and (iv) only, agreed and accepted by Bankers Trust
Company as Administrative Agent for Lenders, dated October 30, 1998
10.11 -- Amended and Restated Construction Lien Indemnity Obligation Agreement between Jazz
Casino Company, L.L.C. and Harrah's Operating Company, Inc., dated October 30, 1998
10.12 -- Bank Completion Guarantee among Harrah's Entertainment, Inc. and Harrah's Operating
Company, Inc. accepted and agreed to by Bankers Trust Company, as Administrative Agent,
dated October 29, 1998
10.13 -- Completion Guarantor Subordination Agreement (Senior Subordinated Notes) among Harrah's
Entertainment, Inc., Harrah's Operating Company, Inc. and Norwest Bank Minnesota, N.A.,
as Trustee, acknowledged and agreed to by Jazz Casino Company, L.L.C., dated as of
October 30, 1998
10.14 -- Manager Subordination Agreement (Landlord) among Harrah's New Orleans Management
Company, the City of New Orleans and Rivergate Development Corporation, dated as of
October 29, 1998
10.15 -- Manager Subordination Agreement (Lenders) between Harrah's New Orleans Management
Company and Bankers Trust Company, as Administrative Agent, acknowledged and agreed to
by Jazz Casino Company, L.L.C. and The Bank of New York, dated as of October 29, 1998
10.16 -- Manager Subordination Agreement (Senior Subordinated Notes) between Harrah's New Orleans
Management Company and Norwest Bank Minnesota, National Association, as Trustee,
acknowledged and agreed to by Jazz Casino Company, L.L.C., and The Bank of New York,
dated as of October 29, 1998
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10.17 -- HET Subordinated Lender Subordination Agreement (Lenders) among Harrah's Entertainment,
Inc., Harrah's Operating Company, Inc. and Bankers Trust Company, as Administrative
Agent, acknowledged and agreed to by Jazz Casino Company, L.L.C., dated as of October
29, 1998
10.18 -- Management Fee Reimbursement Agreement Guarantee among Harrah's Entertainment, Inc.,
Harrah's Operating Company, Inc., Jazz Casino Company, L.L.C., and Harrah's New Orleans
Management Company, dated October 29, 1998
10.19 -- Performance Bond among Jazz Casino Company, L.L.C. as Principal, and Reliance Insurance
Company and United States Fidelity and Guaranty Company, as Sureties, for the benefit of
each of the City of New Orleans, Rivergate Development Corporation, the Louisiana Gaming
Control Board, Norwest Bank, Minnesota, N.A., and Bankers Trust Company (collectively,
the "Obligees"), dated October 29, 1998
10.20 -- Form of JCC Holding Company 1998 Long-Term Incentive Plan
10.21 -- Completion Guarantor Subordination Agreement (Lenders) among Harrah's Entertainment,
Inc., Harrah's Operating Company, Inc. and Bankers Trust Company, as Administrative
Agent, acknowledged and agreed to by Jazz Casino Company, L.L.C., dated as of October
29, 1998
10.22 -- Completion Guarantor Subordination Agreement (Convertible Junior Subordinated
Debentures) among Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and
Norwest Bank Minnesota, N.A., as Trustee, acknowledged and agreed to by Jazz Casino
Company, L.L.C., dated as of October 30, 1998
10.23 -- HET Subordinated Lender Subordination Agreement (Senior Subordinated Notes) among
Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and Norwest Bank
Minnesota, N.A., as Trustee, acknowledged and agreed to by Jazz Casino Company, L.L.C.,
dated as of October 30, 1998
10.24 -- HET Subordinated Lender Subordination Agreement (Convertible Junior Subordinated
Debentures) among Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and
Norwest Bank Minnesota, N.A., as Trustee, acknowledged and agreed to by Jazz Casino
Company, L.L.C., dated as of October 29, 1998
10.25 -- Credit Enhancement Fee Agreement between Jazz Casino Company, L.L.C. and Harrah's
Operating Company, Inc., dated October 29, 1998
10.26 -- HET/JCC Agreement between Harrah's Entertainment, Inc., Harrah's Operating Company, Inc.
and Jazz Casino Company, L.L.C., dated October 30, 1998
10.27 -- Guaranty and Loan Purchase Agreement by Harrah's Entertainment, Inc. and Harrah's
Operating Company, Inc., acknowledged and agreed to by Bankers Trust Company as
Administrative Agent, dated as of October 29, 1998
10.28 -- Act of Mortgage and Collateral Assignment by Jazz Casino Company L.L.C., in favor of The
Bank of New York, as Collateral Agent, for the present and future holders of the Secured
Indebtedness, dated October 29, 1998, effective as of October 30, 1998
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10.29 -- Act of Mortgage and Collateral Assignment by CP Development, L.L.C., in favor of The
Bank of New York, as Collateral Agent, for the present and future holders of the Secured
Obligations, dated October 29, 1998, effective as of October 30, 1998
10.30 -- Act of Mortgage and Collateral Assignment by FP Development, L.L.C., in favor of The
Bank of New York, as Collateral Agent, for the present and future holders of the Secured
Obligations, dated October 29, 1998, effective as of October 30, 1998
10.31 -- Act of Mortgage and Collateral Assignment by JCC Development Company, L.L.C., in favor
of The Bank of New York, as Collateral Agent, for the present and future holders of the
Secured Obligations, dated October 29, 1998, effective as of October 30, 1998
10.32 -- Credit Enhancement Fee Agreement (Bank Credit Agreement) by and among Bankers Trust
Company, as Administrative Agent for Morgan Stanley Prime Income Trust and Van Kampen
American Capital Prime Rate Income Trust, Harrah's Operating Company, Inc. and Harrah's
Entertainment, Inc., dated October 29, 1998
10.33 -- Security Agreement, dated as of October 29, 1998, among JCC Holding Company, Jazz Casino
Company, L.L.C., CP Development, L.L.C., FP Development, L.L.C., and JCC Development
Company., L.L.C (each, an 'Assignor" and, together with any other entity that becomes a
party, the 'Assignors"), The Bank of New York, as Collateral Agent for the benefit of
Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and the Secured Creditors
10.34 -- Pledge Agreement, dated as of October 29, 1998, among JCC Holding Company, Jazz Casino
Company, L.L.C., CP Development, L.L.C., FP Development, L.L.C., and JCC Development
Company., L.L.C. (each a 'Pledgor" and collectively, the 'Pledgors"), The Bank of New
York Harrah's Entertainment, Inc., Harrah's Operating Company, Inc. and the Secured
Creditors
10.35 -- Subsidiaries Guaranty, dated as of October 29, 1998, among CP Development, L.L.C., FP
Development, L.L.C. and JCC Development Company, L.L.C. (each a "Guarantor" and,
together with any other entity that becomes a party, the "Guarantors"), and Bankers
Trust Company, as Administrative Agent, for the benefit of the Creditors
10.36 -- Assignment of Contracts and Ancillary Rights, dated as of October 30, 1998, among Jazz
Casino Company, L.L.C., Harrah's Operating Company, Inc. and Harrah's Entertainment,
Inc.
10.37 -- Amended and Restated Open Access Plans of Jazz Casino Company, L.L.C. Submitted to the
Council of the City of New Orleans on October 15, 1998.
10.38 -- Open Access Program
+21.01 -- List of Subsidiaries of JCC Holding Company
27.01 -- Financial Data Schedule
99.01 -- Opinion of New Orleans City Attorney regarding Home Rule Charter(12)
99.02 -- Opinion of New Orleans City Attorney regarding Amusement Tax(12)
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99.03 -- Opinion of Richard P. Ieyoub, Louisiana State Attorney General, regarding the Powers of
the Louisiana Gaming Control Board(3)
99.04 -- JORDAN VS. LOUISIANA GAMING CONTROL BOARD and MURPHY J. FOSTER AND BEAN VS. LOUISIANA
GAMING CONTROL BOARD AND RIVERGATE DEVELOPMENT CORPORATION, Nos. 98-C-1122, 98-C-1133
and 98-C-1134, (La. S. Ct., May 15, 1998)(13)
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+ Previously filed.
* To be filed by amendment.
(1) Incorporated by reference to Harrah's Jazz Company Annual Report on Form
10-K for the year ended December 31, 1995, File No. 33-73370.
(2) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended June 30, 1996, filed August 14, 1996, File No.
33-73370.
(3) Incorporated by reference to Harrah's Jazz Company Annual Report on Form
10-K for the year ended December 31, 1997, File No. 33-73370.
(4) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended March 30, 1997, filed May 15, 1997, File No.
33-73370.
(5) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended June 30, 1997, filed August 14, 1997, File No.
33-73370.
(6) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, filed November 14, 1997, File
No. 33-73370.
(7) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended March 31, 1998, filed May 15, 1998, File No.
33-73370.
(8) Incorporated by reference to Harrah's Jazz Company Quarterly Report on Form
10-Q for the quarter ended June 30, 1998, filed August 14, 1998, File No.
33-73370.
(9) Incorporated by reference to the Post Effective Amendment No. 1 to the Form
T-3 of the Jazz Casino Company, L.L.C., filed November 10, 1998, File No.
022-22289.
(10) Incorporated by reference to the Post Effective Amendment No. 1 to the Form
T-3 of the Jazz Casino Company, L.L.C., filed November 10, 1998, File No.
022-22291.
(11) Incorporated by reference to Amendment No. 3 to the Registration Statement
on Form S-1 of Harrah's Jazz Company and Harrah's Jazz Finance Corp., filed
August 4, 1994, File No. 33-73370.
(12) Incorporated by reference to Amendment No. 4 to the Registration Statement
on Form S-1 of Harrah's Jazz Company and Harrah's Jazz Finance Corp., filed
October 12, 1994, File No. 33-73370.
(13) Incorporated by reference to Harrah's Jazz Company Current Report on Form
8-K, filed May 19, 1998, File No. 33-73370.
<PAGE>
Exhibit 3.02
RESTATED CERTIFICATE OF INCORPORATION
OF
JCC HOLDING COMPANY
ARTICLE I.
The Corporation was incorporated under the name JCC Holding Company by
the filing of its original Certificate of Incorporation with the Secretary of
State of the State of Delaware on August 20, 1996. The Corporation has not yet
received any payment for any of its stock. This Restated Certificate of
Incorporation of the Corporation, which both restates and amends the provisions
of the Corporation's Certificate of Incorporation, was duly adopted in
accordance with the provisions of Sections 241 and 245 of the General
Corporation Law of the State of Delaware (the "DGCL"). The Certificate of
Incorporation of the Corporation is hereby amended and restated to read in its
entirety as follows:
Section 1.1. The name of the Corporation is JCC Holding Company.
Section 1.2. The address of the registered office of the Corporation in
the State of Delaware is 1013 Centre Road, Wilmington, Delaware 19805, in the
County of New Castle, and the name of its registered agent at that address is
Corporation Service Company. The address of the registered office and the
registered agent of the Corporation may be changed by the affirmative vote of
the Board of Directors of the Corporation (the "Board of Directors").
Section 1.3. The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the DGCL.
Section 1.4. The Corporation shall have perpetual existence.
ARTICLE II.
Section 2.1. The total number of shares of all classes of stock that
the Corporation shall have authority to issue is 80,000,000, consisting of (a)
20,000,000 shares of Class A common stock, par value $.01 per share (the "Class
A Common Stock"), (b) 20,000,000 shares of Class B common stock, par value $.01
per share (the "Class B Common Stock"), and (c) 40,000,000 shares of common
stock, par value $.01 per share (the "Unclassified Common Stock"). Prior to the
Transition Date, the Corporation shall not have the power to issue any shares of
Unclassified Common Stock. Upon and after the Transition Date, the Corporation
shall not have the power to issue any shares of Class A Common Stock or Class B
Common Stock. As used in this Restated Certificate of Incorporation, "Common
Stock" shall mean, prior to the Transition Date, shares of Class A Common Stock
and shares of Class B Common Stock collectively, and, upon and after the
Transition Date, only the Unclassified Common Stock.
Section 2.2. (a) On the Transition Date, each share of Class A Common
Stock and each share of Class B Common Stock issued and outstanding or held in
treasury shall automatically convert (without any action by the holders thereof)
into and become one share of Unclassified Common Stock. Stock certificates
which, prior to the Transition Date, represented such shares of Class A Common
Stock or Class B Common Stock shall thereupon and thereafter, without the
necessity of any action on
<PAGE>
the part of the holders thereof, represent the same number of shares of
Unclassified Common Stock. Upon the Transition Date, each share of Class A
Common Stock or Class B Common Stock previously issued and outstanding or held
in treasury, and converted in accordance with the foregoing provisions, shall be
automatically retired and the reissuance of such shares as part of any class or
series thereafter shall be, and is, prohibited.
(b) Except as expressly set forth in Section 2.3, Section 2.6,
Section 3.2, Section 4.1, and subsection (b) of Section 8.1, each share of
Common Stock (including, prior to the Transition Date, each share of Class A
Common Stock and each share of Class B Common Stock) shall have identical rights
and privileges, and shall rank equally, share ratably and be identical in every
respect and as to all matters, including rights with respect to dividends and in
liquidation. Except as otherwise expressly provided by law, the holders of
shares of Common Stock shall have exclusive voting rights on all matters
requiring a vote of common stockholders of the Corporation. Except as otherwise
provided in Section 2.3, Section 2.6, Section 3.2, Section 4.1 and subsection
(b) of Section 8.1, the holders of shares of Common Stock shall be entitled to
vote upon all matters submitted to a vote of the common stockholders of the
Corporation, shall be entitled to one vote for each share of Common Stock held,
and, except as otherwise provided herein or required by law, the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation; provided, however, that any shares
of Class A Common Stock Transferred from any Person to a Class B Entity (as
defined below), and any shares of Class B Common Stock Transferred from a Class
B Entity to a Person other than another Class B Entity, shall not be entitled to
vote upon any matters submitted to a vote of the holders of Common Stock of the
Corporation until such time as the Class B Entity involved in such Transfer has
complied with the provisions of Section 2.3(c).
Section 2.3. (a) Shares of Class B Common Stock may be held only by (i)
Harrah's Entertainment, Inc., a Delaware corporation ("HET"), and direct and
indirect wholly-owned subsidiaries of HET (collectively, "Harrah's Entities"),
(ii) Grand Palais Casino, Inc. ("GPCI") and any Controlled Affiliate of GPCI,
(iii) shareholders of GPCI who receive shares of Class B Common Stock in
connection with the Plan of Reorganization ("GPCI Shareholders"), (iv) any
spouse, immediate family member, or other relative who has the same principal
residence of any GPCI Shareholder (collectively, "GPCI Family Members"), (v) any
trust in which any GPCI Shareholder or any GPCI Family Member has a beneficial
interest, (vi) any Controlled Affiliate of GPCI Shareholders or GPCI Family
Members, (vii) shareholders of New Orleans/Louisiana Development Corporation
("NOLDC Shareholders"), including, without limitation, all NOLDC Shareholders as
of the Effective Date, (viii) any spouse, immediate family member, or other
relative who has the same principal residence of any NOLDC Shareholder
(collectively, "NOLDC Family Members"), (ix) any trust in which any NOLDC
Shareholder or any NOLDC Family Member has a beneficial interest, (x) any
Controlled Affiliate of NOLDC Shareholders or NOLDC Family Members, and (xi)
First National Bank of Commerce (the entities and persons referred to in clauses
(i) through (xi) referred to herein as "Class B Entities"). Subject to and upon
compliance with the provisions of Section 2.3 (c), if a Class B Entity Transfers
any shares of Class B Common Stock to a Person other than another Class B
Entity, then upon such Transfer, the shares of Class B Common Stock so
Transferred shall be converted into an equal number of shares of Class A Common
Stock. If a Class B Entity Transfers shares of Class B Common Stock to another
Class B Entity, such shares shall remain shares of Class B Common Stock
subsequent to such Transfer. Subject to and upon compliance with the provision
of Section 2.3 (c), if any shares of Class A Common Stock are Transferred from a
Person who is not a Class B Entity to a Class B Entity, then upon such Transfer,
the shares of Class A Common Stock so Transferred shall be converted into an
equal number of shares of Class B Common Stock. Notwithstanding the previous
sentence, upon a Change of Control, the Harrah's Entities may acquire a number
of shares of Class A
2
<PAGE>
Common Stock from a Person other than the Corporation which shall not convert to
shares of Class B Common Stock upon the acquisition of such shares by the
Harrah's Entities (the "Class A Non-Converting Stock"), which is less than or
equal to the number of shares of Class A Common Stock acquired by the Conflicted
Entity whose acquisition of shares of Class A Common Stock effected such Change
of Control; provided, however, that if the Conflicted Entity who effected such
Change of Control Transfers shares of Class A Common Stock such that such
Conflicted Entity owns less than 20% of the issued and outstanding shares of
Class A Common Stock at any time, the Harrah's Entities shall be deemed to have
granted a proxy to the Class A Directors with respect to all of the Harrah's
Entities' voting rights in connection with the Class A Non-Converting Stock
acquired in response to the Conflicted Entity which effected such Charge of
Control (the "Class A Directors Proxy"); provided, further, however, that such
proxy is irrevocable unless a Change of Control occurs after the grant of such
proxy, whether effected by the Conflicted Entity that effected such previous
Change of Control or any other Conflicted Entity, at which time the Class A
Directors Proxy shall be deemed to be revoked. Notwithstanding anything to the
contrary in the preceding sentence, the Harrah's Entities shall not be entitled
to vote any Class A Non-Converting Stock in excess of the number of shares held
by a Conflicted Entity which effects a Change in Control which has occurred and
is continuing. Shares of Class A Non-Converting Stock may only be Transferred
between Harrah's Entities. If shares of Class A Common Stock or Class B Common
Stock are Transferred prior to a meeting of the stockholders of the Corporation
but subsequent to the record date for such meeting, then such Transferred shares
shall, for purposes of voting at such meeting, be deemed to belong to the class
that such shares belonged to on the record date. Prior to the Transition Date,
the Harrah's Entities shall at all times own not less than 51% of the issued and
outstanding shares of Class B Common Stock, and the attempted or purported
Transfer of any shares of Class B Common Stock shall be null and void, and shall
not be recognized by the Corporation, if such Transfer would cause Harrah's
Entities to own less than 51% of the issued and outstanding shares of Class B
Common Stock; provided, however, that the Harrah's Entities may own such lesser
percentage of the issued and outstanding shares of Class B Common Stock as shall
be approved by a majority of the Class A Directors then in office and a majority
of the Class B Directors then in office.
(b) Notwithstanding subsection (a) of this Section 2.3 (but
subject to the last sentence of subsection (a) of Section 2.3), a Class B Entity
may pledge shares of Class B Common Stock to a pledgee pursuant to a bona fide
pledge of such shares as collateral security for indebtedness due to a pledgee
which is not a Class B Entity, provided that such pledgee does not have the
power to vote such shares and such shares remain subject to the provisions of
this Section 2.3. In the event of foreclosure or other similar action by the
pledgee such shares shall then be deemed to have been Transferred and, subject
to and upon compliance with the provisions of Section 2.3 (c), such shares shall
be converted into an equal number of shares of Class A Common Stock; provided,
however, that if such foreclosure or other similar action is cancelled or
annulled so that the pledgor retains the right to vote such shares, such shares
shall then be deemed to have been Transferred and such shares shall subject to
and upon compliance with the provisions of Section 2.3 (c), be converted into an
equal number of shares of Class B Common Stock.
(c) Within seven (7) calendar days after the date of any
Transfer of (i) shares of Class B Common Stock from a Class B Entity to a Person
other than another Class B Entity, or (ii) shares of Class A Common Stock from
any Person to a Class B Entity, the Class B Entity involved in such Transfer
must provide the stock transfer agent appointed for such purpose by the
Corporation with Written Notice. In the event of a Transfer due to foreclosure
or similar action or cancellation or annulment of the same, Written Notice must
be given by the Class B Entity as soon as reasonably possible after such
Transfer. If the Transfer is of shares of Class B Common Stock from a Class B
Entity to a Person other than another Class B Entity, then the certificate(s)
3
<PAGE>
representing such shares of Class B Common Stock must be surrendered to the
stock transfer agent at the time Written Notice is given. For the purpose of
this Section 2.3(c), "Written Notice" shall mean duly executed written notice of
such Transfer which shall list the record and beneficial owner of the shares of
Common Stock to be Transferred, the name and address of the Class B Entity
involved in the Transfer, the Person to which the Common Stock is to be
Transferred, the class and number of shares of Common Stock to be Transferred,
the class into which the shares of Common Stock will be converted upon such
Transfer and the date the Transfer occurred. Written Notice shall be deemed to
have been duly given when received if personally delivered; the day after it is
sent, if sent for next day delivery to a domestic address by recognized
overnight delivery service; and upon receipt, if sent by certified or registered
mail, postage prepaid, return receipt requested.
(d) Upon and after the Transition Date, shares of Common Stock
may be held by any Person legally entitled to hold such shares (but subject to
the provisions of Section 2.6).
Section 2.4. (a) Prior to the Transition Date, subject to any other
provisions of this Restated Certificate of Incorporation, as it may be amended
from time to time, holders of Common Stock shall be entitled to receive such
dividends and other distributions in cash, property or shares of capital stock
of the Corporation as may be declared thereon by the Board of Directors from
time to time out of assets or funds of the Corporation legally available
therefor; provided, however, that no dividend or distribution, including without
limitation, dividends or distributions of cash, shares of capital stock of the
Corporation, other securities, or any other property, may be declared or paid on
the outstanding shares of either the Class A Common Stock or the Class B Common
Stock unless an identical per share dividend or distribution is simultaneously
declared and paid on all of the outstanding shares of Common Stock; provided,
further, however, that a dividend of shares of Common Stock may be declared and
paid in Class A Common Stock to holders of Class A Common Stock and in Class B
Common Stock to holders of Class B Common Stock if the number of shares paid per
share to holders of Class A Common Stock and to holders of Class B Common Stock
shall be the same. Under no circumstance shall a dividend of shares be declared
and paid in Class A Common Stock to anyone other than holders of Class A Common
Stock, and under no circumstance shall a dividend of shares be declared and paid
in Class B Common Stock to anyone other than holders of Class B Common Stock. If
the Corporation shall in any manner subdivide, combine or reclassify the
outstanding shares of Class A Common Stock or Class B Common Stock, the
outstanding shares of the other class of Common Stock shall be subdivided,
combined or reclassified proportionally in the same manner and on the same basis
as the outstanding shares of Class A Common Stock or Class B Common Stock, as
the case may be, have been subdivided, combined or reclassified.
(b) Upon and after the Transition Date, subject to any other
provisions of this Restated Certificate of Incorporation, as it may be amended
from time to time, holders of Common Stock shall be entitled to receive such
dividends and other distributions in cash, property or shares of capital stock
of the Corporation as may be declared thereon by the Board of Directors from
time to time out of assets or funds of the Corporation legally available
therefor.
(c) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Common
Stock shall be entitled to receive all the remaining assets of the Corporation
available for distribution to its stockholders, ratably in proportion to the
number of shares of the Common Stock held by them. For purposes of this
subsection (c) of Section 2.4, a liquidation, dissolution or winding up of the
Corporation shall not be deemed to be occasioned by or to include (i) any
consolidation or merger of the Corporation with or into another
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corporation or other entity or (ii) a sale, lease, or exchange of all or a part
of the assets of the Corporation.
Section 2.5. (a) Subject to the provisions of law and this Restated
Certificate of Incorporation, the Corporation may issue shares of Common Stock
from time to time for such consideration (not less than the par value thereof)
as may be fixed by the Board of Directors, which is expressly authorized to fix
the same in its absolute discretion subject to the foregoing conditions. Shares
so issued for which the consideration shall have been paid or delivered to the
Corporation shall be deemed fully paid stock and shall not be liable to any
further call or assessment thereon, and the holders of such shares shall not be
liable for any further payments in respect of such shares.
(b) Subject to the provisions of law and of this Restated
Certificate of Incorporation, the Corporation shall have authority to create and
issue rights and options entitling the holders thereof to purchase shares of the
Corporation's capital stock of any class or series or other securities of the
Corporation, and such rights and options shall be evidenced by one or more
instruments approved by the Board of Directors. The Board of Directors shall be
empowered to set the exercise price, duration, time for exercise and other terms
of such rights or options; provided, however, that the consideration to be
received for any shares of capital stock subject thereto shall not be less than
the par value thereof.
Section 2.6. (a) Notwithstanding any other provision of this Restated
Certificate of Incorporation to the contrary, outstanding shares of Common Stock
or any other class or series of stock of the Corporation shall always be subject
to redemption by the Corporation, by action of the Board of Directors, if, in
the judgment of the Board of Directors, any holder of such stock is determined
by any gaming regulatory agency to be unsuitable, has an application for a
license or permit rejected, or has a previously issued license or permit
rescinded, suspended, revoked or not renewed, as the case may be, whether or not
any of the foregoing is final and nonappealable, or if such action otherwise
should be taken, pursuant to Section 151(b) of the DGCL or any other applicable
provision of law, to the extent necessary to avoid any regulatory sanctions
against, or to prevent the loss of or secure the reinstatement of any license,
franchise or entitlement from any governmental agency held by the Corporation,
any Affiliate of the Corporation (including, but not limited to, HET and its
Affiliates) or any entity in which the Corporation or such Affiliate is an
owner, which license, franchise or entitlement is (i) conditioned upon some or
all of the holders of the Corporation's stock of any class or series possessing
prescribed qualifications, or (ii) needed to allow the conduct of any portion of
the business of the Corporation or any such Affiliate or other entity.
(b) Outstanding shares of Common Stock or any other class or
series of stock of the Corporation shall also be subject to redemption by the
Corporation, by action of the Board of Directors, if any holder of such stock is
designated a Non-Qualified Person (as defined in the Management Agreement) in a
written notice from the Manager to JCC pursuant to the Management Agreement.
(c) The terms and conditions of a redemption pursuant
to either the Section 2.6(a) or Section 2.6(b) shall be as follows:
(1) the redemption price of the shares to be redeemed pursuant
to this Section 2.6 shall be equal to the Fair Market Value of such
shares (excluding any dividends thereon not entitled to be received
pursuant to clause (5) of this Section 2.6(c)) or such other redemption
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price as required by any applicable law, regulation, rule or resolution
or order of a gaming regulatory agency;
(2) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof;
(3) if less than all the shares held by Disqualified Holders
or Non-Qualified Persons are to be redeemed, the shares to be redeemed
shall be selected in such manner as shall be determined by the Board of
Directors, which may include selection first of the most recently
purchased shares thereof, selection by lot or selection in any other
manner determined by the Board of Directors;
(4) at least 20 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be
redeemed (unless waived in writing by any such holder), provided that
the Redemption Date may be the date on which written notice shall be
given to record holders if the cash or Redemption Securities necessary
to effect the redemption shall have been deposited in trust for the
benefit of such record holders and subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be
redeemed;
(5) from and after the Redemption Date or such earlier date as
mandated by any applicable law, regulation, rule or resolution or order
of a gaming regulatory agency, any and all rights of whatever nature,
which may be held by the owners of shares selected for redemption
(including without limitation any rights to vote or participate in
dividends declared on stock of the same class or series as such
shares), shall cease and terminate and they shall thenceforth be
entitled only to receive the cash or Redemption Securities payable upon
redemption; and
(6) such additional terms and conditions as the Board of
Directors shall determine.
ARTICLE III.
Section 3.1. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
Section 3.2. Prior to the Transition Date, the following
provisions of this Section 3.2 shall be in effect:
(a) Except as set forth in subsections (b), (c) and (d) of
this Section 3.2, the total number of authorized directors shall be six, and the
directors shall consist of three directors elected by the affirmative vote of a
plurality of the issued and outstanding shares of Class A Common Stock present
in person or represented by proxy at a meeting of stockholders and entitled to
vote on the election of directors (the "Class A Directors"), and three directors
elected by the affirmative vote of a plurality of the issued and outstanding
shares of Class B Common Stock present in person or represented by proxy at a
meeting of stockholders and entitled to vote on the election of directors (the
"Class B Directors"). The Board of Directors shall be divided into three groups,
designated Group I, Group II and Group III. Except as provided in the last
sentence of this subsection (a) of Section 3.2, each group shall consist of one
Class A Director and one Class B Director. The initial directors in Group I,
listed in subsection (b) of this Section 3.2, shall be elected for a term
expiring on the date of
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the annual meeting of stockholders occurring in 1999. Subject to subsection (b)
of this Section 3.2, directors in Group II shall be elected for a term expiring
on the date of the annual meeting of stockholders occurring in 2000 and
directors in Group III shall be elected for a term expiring on the date of the
annual meeting of stockholders occurring in 2001. At each succeeding annual
meeting of stockholders, successors to the group of directors whose term expires
at that annual meeting shall be elected for a three-year term in accordance with
this subsection (a) of Section 3.2. If the number of directors increases due to
the occurrence of an Extraordinary Flip Event as set forth in subsection (c) of
this Section 3.2, or a Change of Control as set forth in subsection (d) of this
Section 3.2, such additional director(s) shall be members of the group whose
term is next to expire.
(b) Upon the filing of this Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware, there shall
be two authorized directors consisting of one Class A Director and one Class B
Director who shall collectively comprise Group I. The Class A Director in Group
I shall be Seth E. Lemler and the Class B Director in Group I shall be Colin V.
Reed. The total number of authorized directors shall increase by two, for a
total of four, with such directors comprising Group II, only at such time as (i)
a second Class A Director has been appointed pursuant to subsection (e) of this
Section 3.2, (ii) a second Class B Director has been appointed pursuant to
subsection (e) of this Section 3.2, and (iii) the requisite gaming regulatory
agencies have made the determinations necessary to allow both of such directors
to serve on the Board of Directors. The total number of authorized directors
shall again increase by two, for a total of six, with such directors comprising
Group III, only at such time as (i) a third Class A Director has been appointed
pursuant to subsection (e) of this Section 3.2, (ii) a third Class B Director
has been appointed pursuant to subsection (e) of this Section 3.2, and (iii) the
requisite gaming regulatory agencies have made the determinations necessary to
allow both of such directors to serve on the Board of Directors. The mailing
address of each director of the Corporation is c/o JCC Holding Company, 512
South Peters, New Orleans, Louisiana 70130. Except as provided in subsections
(c) and (d) of this Section 3.2, each director, including a director appointed
to fill a vacancy, shall hold office until such director's term expires in
accordance with subsection (a) of this Section 3.2 or until his successor shall
be elected or appointed and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office.
(c) Notwithstanding the foregoing, upon the occurrence of an
Extraordinary Flip Event, (i) the authorized number of Class A Directors shall
increase by one (the "Additional Class A Director") and (ii) the authorized
number of Class B Directors shall remain the same. The Additional Class A
Director shall be elected by a majority of Class A Directors in office when the
Extraordinary Flip Event giving rise to such Additional Class A Director occurs.
If a Cure Event occurs, (A) the term of the Additional Class A Director shall
immediately expire, and (B) the number of Class A Directors shall be reduced by
one.
(d) Notwithstanding the foregoing, upon the occurrence of a
Change of Control, (i) the authorized number of Class B Directors shall increase
by one (the "Additional Class B Director") and (ii) the authorized number of
Class A Directors shall remain the same; provided, however, that the number of
Class B Directors shall not be increased to include the Additional Class B
Director if, prior to or upon the occurrence of a Change of Control, an
Extraordinary Flip Event has occurred and no corresponding Cure Event has
occurred; and provided, further, however, that the term of office of the
Additional Class B Director shall immediately expire and the number of Class B
Directors shall be reduced by one if (A) an Extraordinary Flip Event occurs
after the Change of Control, or (B) the percentage of the outstanding shares of
Class A Common Stock owned by the Conflicted Entity whose acquisition of shares
of Class A Common Stock effected the Change of
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Control is reduced such that such Conflicted Entity owns less than 20% of the
outstanding shares of Class A Common Stock. The Additional Class B Director
shall be elected by a majority of Class B Directors then in office when the
Change of Control giving rise to such Additional Class B Director occurs.
(e) Any vacancy or newly created directorship on the Board of
Directors of a Class A Director position, including any Group II or Group III
Class A Director to be appointed pursuant to subsection (b) of this Section 3.2,
may only be filled by a majority of Class A Directors then in office (or, if
only one Class A Director is then in office, by such Class A Director). Any
vacancy or newly created directorship on the Board of Directors of a Class B
Director position, including any Group II or Group III Class B Director to be
appointed pursuant to subsection (b) of this Section 3.2, may only be filled by
a majority of Class B Directors then in office (or, if only one Class B Director
is then in office, by such Class B Director). If there are no directors of one
class then in office, the holders of a majority of the shares of the class of
Common Stock that elected such class of directors shall have the right to elect
directors to fill such vacancies or newly created directorships in accordance
with this Section 3.2 at a special meeting of stockholders called for such
purpose.
(f) At all meetings of the Board of Directors, a majority of
the entire Board of Directors shall be required to constitute a quorum for the
transaction of business. Except as provided in the following sentence or as
otherwise provided by law, no action shall be taken by the Board of Directors on
behalf of the Corporation unless (i) such action is authorized by the
affirmative vote of a majority of the directors then in office, (ii) such action
is authorized by at least one Class B Director, and (iii) such action is
authorized by at least one Class A Director; provided, however, that if an
Extraordinary Flip Event has occurred and no related Cure Event has occurred,
clause (ii) shall not be applicable. Notwithstanding the previous sentence, no
Significant Transaction shall be authorized unless such Significant Transaction
(x) is authorized by the affirmative vote of a majority of the directors then in
office, (y) is authorized by the affirmative vote of a majority of the Class A
Directors then in office, and (z) is authorized by the affirmative vote of a
majority of the Class B Directors then in office; provided, however, that if an
Extraordinary Flip Event has occurred and no related Cure Event has occurred,
(A) except with respect to any amendment to this Restated Certificate of
Incorporation or the Bylaws of the Corporation (the "Bylaws"), clause (z) shall
not be applicable, and (B) no action of the Board of Directors shall affect the
holders of the Class A Common Stock and the holders of the Class B Common Stock
disproportionately without the separate approval of such action by a majority of
the Class A Directors then in office and a majority of the Class B Directors
then in office.
(g) Any Class A Director may be removed from the Board of
Directors, without cause, by the affirmative vote of the holders of a majority
of the outstanding shares of Class A Common Stock. Any Class B Director may be
removed from the Board of Directors, without cause, by the affirmative vote of
the holders of a majority of the outstanding shares of Class B Common Stock.
Section 3.3. Upon and after the Transition Date, the provisions of
Section 3.2 shall terminate and shall no longer be applicable, and the following
provisions of this Section 3.3 shall be in effect:
(a) As soon as practicable after the Transition Date, the
Board of Directors shall call a special meeting of stockholders to elect new
directors. All directors in office on the Transition Date, except directors
elected pursuant to subsections (c) and (d) of Section 3.2, shall continue to
hold
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office until such special meeting is held and their successors are duly elected.
The Board of Directors shall consist of not less than three or more than
seventeen directors, the exact number of directors to be determined from time to
time by resolution adopted by the affirmative vote of a majority of the Board of
Directors. The Board of Directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall consist, as nearly
as may be possible, of one-third of the total number of directors constituting
the entire Board of Directors. At the first annual meeting of stockholders
following the Transition Date, the terms of all Class A Directors and Class B
Directors shall expire, and new directors shall be elected as follows: Class I
directors shall be elected for a one-year term, Class II directors for a
two-year term and Class III directors for a three-year term. At each succeeding
annual meeting of stockholders, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
will a decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the year in
which his term expires and until his successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
(b) Any vacancy on the Board of Directors that results from an
increase in the number of directors shall be filled only by a majority of the
Board of Directors then in office, provided that a quorum is present, and any
other vacancy occurring in the Board of Directors shall only be filled by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall have the same remaining term
as that of his predecessor.
(c) Directors shall be elected at annual meetings of
stockholders by the affirmative vote of the holders of a plurality of the shares
of Common Stock present in person or represented by proxy at such meeting and
entitled to vote on the election of directors. Directors may be removed from the
Board of Directors, with or without cause, at any regular meeting or at any
special meeting of stockholders by the affirmative vote of holders of a majority
of the shares of Common Stock entitled to vote at an election of directors.
Unless otherwise specified in the Bylaws, elections of directors need not be by
written ballot.
(d) At all meetings of the Board of Directors, a majority of
the entire Board of Directors shall be required to constitute a quorum for the
transaction of business. No action shall be taken by the Board of Directors on
behalf of the Corporation at a meeting of the Board of Directors unless such
action is authorized by the affirmative vote of a majority of the directors
present at a duly noticed meeting of the Board of Directors at which a quorum is
present.
Section 3.4. Notwithstanding any other provision of this Restated
Certificate of Incorporation or the Bylaws, to be eligible to serve on the Board
of Directors, every director shall be a Qualified Person. If for any reason a
director is no longer a Qualified Person, such director shall immediately be no
longer eligible to serve on the Board of Directors and the term of such director
shall automatically terminate and no further remuneration of any kind shall be
paid to such director.
Section 3.5. Prior to the Transition Date, except as provided in the
last sentence of this Section 3.5, the Corporation shall not have the power to
form or maintain committees of the Board of Directors other than the Audit
Committee, the Gaming Committee, the Compensation Committee, the
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Class A Director Nomination Committee, the Class B Director Nomination Committee
and the Capital Committee, each as set forth in, and established pursuant to,
the Bylaws as in effect upon the Effective Date. Prior to the Transition Date,
upon the affirmative vote of a majority of the Class A Directors then in office
and the affirmative vote of a majority of the Class B Directors then in office,
the Corporation shall have the power to form or maintain committees of the Board
of Directors other than those listed in the first sentence of this Section 3.5.
ARTICLE IV.
Section 4.1. The Bylaws shall not contain any provision inconsistent
with this Restated Certificate of Incorporation. If the provisions of the Bylaws
conflict with this Restated Certificate of Incorporation, the provisions of this
Restated Certificate of Incorporation shall control and the Bylaws shall be of
no force and effect to the extent of such conflict. Prior to the Transition
Date, in addition to any other vote required by law, stockholders may make,
adopt, alter, amend, change or repeal the Bylaws only upon the affirmative vote
of a majority of the votes entitled to be cast by the holders of outstanding
shares of Common Stock, voting together as a single class; provided, however,
that in addition to such vote, any amendment to the Bylaws which in any way
adversely affects the rights of holders of Class A Common Stock or Class A
Directors shall also require the affirmative vote of the holders of a majority
of the outstanding shares of Class A Common Stock, and any amendment to the
Bylaws which in any way adversely affects the rights of holders of Class B
Common Stock or Class B Directors shall also require the affirmative vote of the
holders of a majority of the outstanding shares of Class B Common Stock. Upon
and after the Transition Date, in addition to any other vote required by law,
stockholders may make, adopt, alter, amend, change or repeal the Bylaws only
upon the affirmative vote of not less than 75% of the votes entitled to be cast
by the holders of outstanding shares of Common Stock, voting together as a
single class.
Section 4.2. Prior to the Transition Date, the Board of Directors is
authorized to make, adopt, alter, amend, change or repeal the Bylaws only if
such action is approved as a Significant Transaction pursuant to this Restated
Certificate of Incorporation. Upon and after the Transition Date, upon the
affirmative vote of a majority of the Board of Directors then in office, the
Board of Directors is expressly authorized to make, adopt, alter, amend, change
or repeal the Bylaws.
ARTICLE V.
Section 5.1. Special meetings of the stockholders of the Corporation,
for any purpose or purposes, may be called by either the Chairman or the
President of the Corporation or (i) prior to the Transition Date, by the
affirmative vote of a majority of the Class A Directors then in office or the
affirmative vote of a majority of the Class B Directors then in office, and (ii)
upon and after the Transition Date, by a majority of the entire Board of
Directors.
ARTICLE VI.
Section 6.1. Subject to Section 6.3, the Corporation (i) shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he (a) is or was a
director or officer of the Corporation, or (b) is or was serving at the request
of the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, and (ii) may, in the discretion of the
Board of Directors (but subject to the determinations required by Section 6.3),
indemnify any
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person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he (a) is or was an
employee or agent of the Corporation, or (b) is or was serving at the request of
the Corporation as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful;
provided, however, that the Corporation shall not be obligated to indemnify any
such person who is a party to an action, suit or proceeding by reason of the
fact that such person is a plaintiff with respect to such action, suit or
proceeding. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interest of the Corporation, or, with respect to any
criminal action or proceeding, had reasonable cause to believe his conduct was
unlawful.
Section 6.2. Subject to Section 6.3, the Corporation (i) shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he (a)
is or was a director or officer of the Corporation, or (b) is or was serving at
the request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, and (ii) may, in the
discretion of the Board of Directors (but subject to the determinations required
by Section 6.3), indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he (a) is or was an employee or agent of the Corporation, or (b) is or
was serving at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 6.3. Any indemnification under this Article VI (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 6.1 or Section 6.2, as the
case may be. Such determination shall be made (i) by the majority vote of the
directors who were not parties to such action, suit or proceeding, even though
less than a quorum, or (ii) by a committee of such directors designated by
majority vote of such directors, even though less than a quorum, or (iii) if
there are no such directors, or if such directors so direct, by outside legal
counsel in a written opinion, or (iv) by the stockholders. To the extent,
however, that a present or former director or officer of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described in Section 6.1 or Section 6.2, or in defense of any claim,
issue or matter therein, he shall be
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indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith, without the necessity of authorization
in the specific case.
Section 6.4. For purposes of any determination under Section 6.3, a
person shall be deemed to have acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the Corporation, and,
with respect to any criminal action or proceeding, to have had no reasonable
cause to believe his conduct was unlawful, if his action is based on the records
or books of account of the Corporation or another enterprise, or on information
supplied to him by the officers of the Corporation or another enterprise in the
course of their duties, or on the advice of legal counsel for the Corporation or
another enterprise or on information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the
Corporation or another enterprise. The term "another enterprise" as used in this
Section 6.4 shall mean any other corporation or any partnership, joint venture,
limited liability company, trust or other enterprise of which such person is or
was serving at the request of the Corporation as a director, officer, employee
or agent. The provisions of this Section 6.4 shall not be deemed to be exclusive
or to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 6.1 or 6.2, as the
case may be.
Section 6.5. Notwithstanding any contrary determination in the specific
case under Section 6.3, and notwithstanding the absence of any determination
thereunder, any director or officer may apply to any court of competent
jurisdiction in the State of Delaware for indemnification to the extent
otherwise permissible under Sections 6.1 and 6.2. The basis of such
indemnification by a court shall be a determination by such court that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standards of conduct set forth in Sections 6.1
or 6.2, as the case may be. Notice of any application for indemnification
pursuant to this Section 6.5 shall be given to the Corporation promptly upon the
filing of such application.
Section 6.6. (a) The right to indemnification under this Article VI
shall be a contract right and shall include the right to have the Corporation
pay the expenses incurred in defending or investigating a threatened or pending
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding within 20 calendar days after receipt by the Corporation of a
statement or statements from the claimant requesting such advances from time to
time; provided, however, that, if and to the extent that the DGCL requires, the
payment of such expenses incurred by a director, officer, employee or agent in
such person's capacity as a director or officer in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director, officer, employee or agent,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section 6.6 or
otherwise.
(b) If a claim under paragraph (a) of this Section is not paid
in full by the Corporation within 30 calendar days after a written claim has
been received by the Corporation, the claimant may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall also be entitled to be paid
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standard of conduct which makes it permissible under
the DGCL for the Corporation to indemnify the claimant for the amount claimed,
but the burden of proving such
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defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because the claimant has met the applicable standard of conduct set forth in the
DGCL, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
Section 6.7. The indemnification and advancement of expenses provided
by this Article VI shall not be deemed exclusive of any other rights to which
any person seeking indemnification or advancement of expenses may be entitled
under any Bylaw, agreement, contract, vote of stockholders or disinterested
directors or pursuant to the direction (howsoever embodied) of any court of
competent jurisdiction or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, it being the
policy of the Corporation that indemnification of, the persons indemnified in
accordance with Sections 6.1 and 6.2 shall be made to the fullest extent
permitted by law. The provisions of this Article VI shall not be deemed to
preclude the indemnification of, and advancement of expenses to, any person who
is not specified in Sections 6.1 or 6.2 but whom the Corporation has the power
or obligation to indemnify under the provisions of the DGCL, or otherwise. The
indemnification provided by this Article VI shall continue as to a person who
has ceased to be a director, officer, employee or agent of the Corporation and
shall inure to the benefit of the heirs, executors and administrators of such
person.
Section 6.8. The Corporation shall purchase and maintain insurance on
behalf of every person who is or was a director or an officer on or prior to the
Transition Date, and the Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or an officer after the Transition
Date, or any person who at any time is or was an officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VI.
Section 6.9. For purposes of this Article VI, reference to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article VI with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
Section 6.10. No director of this Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the DGCL, or (iv) for
any transaction from which the director derived an improper personal benefit. If
the DGCL is hereafter amended to authorize corporate action further limiting or
eliminating the personal liability of directors, then the liability of each
director of the
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Corporation shall be limited or eliminated to the fullest extent permitted by
the DGCL as so amended from time to time.
ARTICLE VII.
Section 7.1. Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of the DGCL or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of the DGCL, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
ARTICLE VIII.
Section 8.1. (a) The Corporation reserves the right to amend, alter,
change or repeal any provisions contained in this Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by law, and all rights
conferred upon stockholders herein are granted subject to this reservation.
Notwithstanding the foregoing or any other provision of this Restated
Certificate of Incorporation or any provision of law that might otherwise permit
a lesser or no vote, this Restated Certificate of Incorporation may not be
altered, amended, changed or repealed in any respect, and no provision
inconsistent with any provision hereof or imposing cumulative voting in the
election of directors may be added to this Restated Certificate of
Incorporation, unless such action is approved (a) prior to the Transition Date,
by the affirmative vote of the holders of not less than a majority of the
outstanding shares of Common Stock, or (b) on and after the Transition Date, by
the affirmative vote of the holders of not less than 75% of the outstanding
shares of Common Stock.
(b) Prior to the Transition Date, in addition to the
requirements of subsection (a) of this Section 8.1, any amendment to this
Restated Certificate of Incorporation which in any way affects the rights of
holders of Class A Common Stock or Class A Directors shall also require the
affirmative vote of the holders of a majority of the outstanding shares of Class
A Common Stock, and any amendment to this Restated Certificate of Incorporation
which in any way affects the rights of holders of Class B Common Stock or Class
B Directors shall also require the affirmative vote of the holders of a majority
of the outstanding shares of Class B Common Stock.
Section 8.2. In case any one or more of the provisions of this Restated
Certificate of Incorporation or the Bylaws shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
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Section 8.3. This Restated Certificate of Incorporation shall
become effective on October 29, 1998 at 9:00 a.m. Eastern Standard Time.
ARTICLE IX.
As used in this Restated Certificate of Incorporation, the
following terms shall have the meanings indicated below:
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the term
"registrant" in said Rule 12b-2 meaning, in this case, the Corporation).
"Bank Loans" shall mean those certain loans, including,
without limitation, Tranche A Term Loans, Tranche B Term Loans and Revolving
Loans under the Bank Credit Agreement to be entered into pursuant to the Plan of
Reorganization among JCC, the Corporation, the Development Entities, as
guarantors, and the lenders from time to time parties thereto, as amended or
supplemented from time to time.
"Bankruptcy Court" shall mean the United States Bankruptcy
Court for the Eastern District of Louisiana.
"Casino" shall mean that certain casino to be constructed on
the real property leased by JCC on Canal Street in New Orleans, Louisiana.
"Casino Lease" shall mean the Amended and Restated Ground
Lease to be entered into pursuant to the Plan of Reorganization for the site of
the Casino among JCC, as tenant, the Rivergate Development Corporation, as
landlord, and the City of New Orleans, as intervenor, as amended or supplemented
from time to time.
"Casino Manager" shall mean an Affiliate of HET which is the
manager of the Casino.
"Casino Operating Contract" shall mean the amended and
renegotiated Casino Operating Contract to be entered into pursuant to the Plan
of Reorganization between the State of Louisiana by and through the Louisiana
Gaming Control Board, Harrah's Jazz Company and JCC, as amended or supplemented
from time to time.
"Change of Control" shall mean the acquisition of at least 20%
of the outstanding shares of Class A Common Stock by a Conflicted Entity.
"Closing Price" on any day means the reported closing sales
price or, in case no such sale takes place, the closing bid price on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934 on which such security is listed, or, if such security is
not listed on any such exchange, the highest closing sales price or bid
quotation for such security on the National Association of Securities Dealers,
Inc. Automated Quotations System or any other system then in use, or if no such
prices or quotations are available for such day, then the highest closing sales
price or bid quotation for the most recent day within the 10 prior business days
for which such a price or quotation is available, or if no such prices or
quotations are available within the 10 business days prior to such day, the fair
market value on the day in question as determined, prior to the Transition Date,
upon the affirmative vote of a majority of the Class A Directors then in office
and the affirmative
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vote of a majority of the Class B Directors then in office and, on and after the
Transition Date, by the Board of Directors in good faith.
"Conflicted Entity" shall mean an entity (including any
Controlled Affiliates of such entity and any entity of which such entity is a
Controlled Affiliate) which (i) controls or operates, or, as of the Effective
Date, is licensed or qualified to control or operate in any of the states of
Illinois, Indiana, Louisiana, Mississippi, Missouri, Nevada or New Jersey, a
casino or casino hotel facility, or (ii) has been, within the five years prior
to the Effective Date, involved in litigation with HET which HET has disclosed
in an Annual Report on Form 10-K on or prior to the Effective Date, or which HET
would be required to disclose in its next Annual Report on Form 10-K following
the Effective Date.
"Contingent Notes" shall mean the Senior Subordinated
Contingent Notes due 2009 of JCC issued pursuant to the Plan of Reorganization.
"Contingent Notes Indenture" shall mean the Indenture, to be
entered into pursuant to the Plan of Reorganization between JCC, as obligor, the
Corporation and the Development Entities, as guarantors, and Norwest Bank
Minnesota, National Association, as Trustee, in respect of the Contingent Notes.
"Contingent Payments" with respect to the Notes and the
Contingent Notes, shall mean Contingent Payments, as defined in the Notes
Indenture and the Contingent Notes Indenture, respectively.
"Controlled Affiliate" with respect to any Person shall mean
(i) a corporation (a) a majority of whose capital stock with voting power, under
ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by such Person, by such Person and one or more of such
Person's Controlled Affiliates or by one or more of such Person's Controlled
Affiliates, or (b) in which such Person, one or more of such Person's Controlled
Affiliates, or such Person and one or more of such Person's Controlled
Affiliates possesses the power to direct the management and policies of such
corporation, (ii) a partnership in which such Person is a general partner and in
which such Person possesses the power to direct the management and policies of
such partnership, or (iii) any other entity (other than a corporation or
partnership) in which such Person, one or more of such Person's Controlled
Affiliates, or such Person and one or more of such Person's Controlled
Affiliates, (a) directly or indirectly, at the date of determination thereof,
owns at least a majority ownership interest in such entity, and (b) possesses
the power to direct the management and policies of such entity.
"CP Development" shall mean CP Development, L.L.C., a
Louisiana limited liability company and wholly-owned Subsidiary of the
Corporation.
"Cure Event" shall mean, with respect to a corresponding Flip
Event (except for Flip Events occurring pursuant to clause (h) under the
definition of Flip Event), that (A) all of the parties to the contract(s) under
which a default or event of default has occurred, and which default or event of
default has given rise to a Flip Event, have consented in writing that the
default or event of default giving rise to such Flip Event has been waived or
cured, (B) the President of the Corporation has provided to the Board of
Directors of the Corporation written notice that the written consent(s) referred
to in clause (A) have been received, and (C) the Board of Directors of the
Corporation has in good faith accepted such notice.
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"Development Entities" shall mean, collectively, JCC
Development, CP Development and FP Development.
"Disqualified Holder" shall mean any holder of shares of stock
of the Corporation of any class (or classes) or series who, either individually
or when taken together with any other holders of shares of stock of the
Corporation of any class (or classes) or series, in the judgment of the Board of
Directors, is determined by any gaming regulatory agency to be unsuitable, or
has an application for a license or permit rejected, or has a previously issued
license or permit rescinded, suspended, revoked or not renewed, as the case may
be, whether or not any of the foregoing is final and nonappealable, or whose
holding of such stock, either individually or when taken together with the
holding of shares of stock of the Corporation of any class (or classes) or
series by any other holders, may result, in the judgment of the Board of
Directors, in any regulatory sanctions against, or the loss of or the failure to
secure the reinstatement of any license, franchise or entitlement from any
governmental agency held by, the Corporation, any Affiliate of the Corporation
or any entity in which the Corporation or such Affiliate is an owner.
"Effective Date" shall mean the date upon which the Plan of
Reorganization is consummated.
"Excluded Transactions" shall mean any transaction or
transactions (i) authorized by the affirmative vote of a majority of the Class A
Directors then in office and the affirmative vote of a majority of the Class B
Directors then in office, or (ii) pursuant to or in connection with agreements
or plans (including, without limitation, any business plans, operating plans,
financing plans or marketing plans) (a) approved by the Bankruptcy Court in
connection with the Plan of Reorganization, (b) entered into by the Corporation
prior to, on, or substantially concurrently with, the Effective Date, or (c)
authorized by the affirmative vote of a majority of the Class A Directors then
in office and the affirmative vote of a majority of the Class B Directors then
in office.
"Extraordinary Flip Event" shall mean a Flip Event (including
a Flip Event resulting from Casino Manager bankruptcy events, but excluding a
Flip Event resulting from HET bankruptcy events) occurs as a result of a willful
action or failure to act by the Class B Directors of the Corporation, HET, the
Casino Manager or a Controlled Affiliate of HET as determined in a Speedy
Arbitration.
"Fair Market Value" of a share of the Corporation's stock of
any class or series shall mean the average Closing Price for such share for each
of the 45 most recent days of which shares of stock of such class or series
shall have been traded preceding the day on which notice of redemption shall be
given pursuant to Section 2.6; provided, however, that if shares of stock of
such class or series are not traded on any securities exchange or in the
over-the-counter market, "Fair Market Value" shall be determined by the Board of
Directors in good faith; and provided further, however, that "Fair Market Value"
as to any stockholder who purchased any stock of the class (or classes) or
series subject to redemption within 120 days of a Redemption Date need not
(unless otherwise determined by the Board of Directors) exceed the purchase
price paid by him for any stock of such class (or classes) or series of the
Corporation.
"Flip Event" shall mean any of the following: (a) (i) an Event
of Default (as defined in the Bank Loans) has occurred under the Bank Loans that
is uncured or unwaived, or (ii) an event of default has occurred that is uncured
or unwaived under any other financing agreement pursuant to which the
Corporation, the Development Entities or JCC is a borrower and under which the
aggregate
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amount outstanding exceeds $2.5 million, and in each case such default by the
Corporation or JCC is caused by HET, HOCI or Casino Manager related events; (b)
an Event of Default (as defined in the Notes Indenture or the Contingent Notes
Indenture, as applicable) has occurred under the Notes or the Contingent Notes
and such default by the Corporation or JCC is caused by HET, HOCI or Casino
Manager related events; (c) an Event of Default (as defined in the Casino Lease)
in respect of payments due and owing by JCC under the Casino Lease, or any other
material Event of Default under the Casino Lease in response to which any other
party to the Casino Lease would be entitled to terminate, rescind, or otherwise
deprive JCC of the benefits of, the Casino Lease and such default by the
Corporation or JCC is caused by HET, HOCI or Casino Manager related events; (d)
an Event of Default (as defined in the Casino Operating Contract) in respect of
payments due and owing by JCC under the Casino Operating Contract, or any other
material Event of Default under the Casino Operating Contract in response to
which any other party to the Casino Operating Contract would be entitled to
terminate, rescind, or otherwise deprive JCC of the benefits of, the Casino
Operating Contract and such default by the Corporation or JCC is caused by HET,
HOCI or Casino Manager related events; (e) a material Event of Default (as
defined in the Management Agreement) has occurred under the Management Agreement
and HET or the Casino Manager is the Defaulting Party (as defined in the
Management Agreement) and in response to which Event of Default any party to the
Management Agreement would be entitled to terminate or rescind the Management
Agreement; (f) HET or an Affiliate of HET has not fulfilled its obligations, or
is in default, under any of the Completion Guarantees (as defined in the Notes
Indenture) or under any material agreement relating to the Casino between HET or
any such Affiliate and the City of New Orleans or the State of Louisiana or any
agency or instrumentality of the foregoing; (g) the Corporation in violation of
its certificate of incorporation or bylaws in any material respect and such
violation is caused by HET, HOCI or Casino Manager related events; (h) HET,
HOCI, the Casino Manager, any Controlled Affiliate of either, or any entity of
which HET or the Casino Manager is a Controlled Affiliate makes a general
assignment for the benefit of creditors; admits in writing its inability to pay
its debts as they become due; files a voluntary petition in bankruptcy; is
adjudged bankrupt or insolvent; files a voluntary petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation; files an answer admitting or not contesting the material allegations
of a petition filed against it in any such proceeding; seeks or consents to or
acquiesces in the appointment of a trustee or liquidator of such entity or a
material part of its properties; or voluntarily liquidates or dissolves;
provided, however, that the actions described in clause (h) of this definition
with respect to a Controlled Affiliate of HET shall only constitute a "Flip
Event" if such action has or is reasonably likely to have an adverse effect on
the Corporation, JCC, the Casino, or the suitability of any director or officer
of the Corporation, or JCC or any other employee thereof required to be found
suitable under any Louisiana gaming law, regulation, rule, or order of a gaming
regulatory agency; or (i) the Louisiana Gaming Control Board ("LGCB"), or any
successor thereto, makes a determination in accordance with the laws of the
State of Louisiana and the rules and regulations promulgated by the LGCB that
HET is unsuitable to own an equity interest in the Corporation.
"FP Development" shall mean FP Development, L.L.C., a
Louisiana limited liability company and wholly-owned Subsidiary of the
Corporation.
"Franchise Agreement" means the Franchise Agreement between
the City of New Orleans and JCC, dated April 27, 1993, as assigned by Assignment
and Assumption of General Development Agreement and of Franchise Agreement,
dated March 15, 1994, as further assigned, amended and restated by Assigned,
Amended and Restated Franchise Agreement, dated March 15,
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1994, as assumed by JCC pursuant to the Plan of Reorganization, as the same may
be amended, modified, restated or supplemented from time to time.
"General Development Agreement" shall mean the Amended and
Restated General Development Agreement to be entered into pursuant to the Plan
of Reorganization among JCC, the Rivergate Development Corporation and the City
of New Orleans, as amended or supplemented from time to time.
"HCCIC" shall mean Harrah's Crescent City Investment Company,
a Nevada corporation.
"HOCI" shall mean Harrah's Operating Company, Inc.
"JCC" shall mean Jazz Casino Company, L.L.C., a Louisiana
limited liability company and wholly-owned Subsidiary of the Corporation.
"JCC Development" shall mean JCC Development Company, L.L.C.,
a Louisiana limited liability company and wholly-owned Subsidiary of the
Corporation.
"Management Agreement" shall mean the Amended and Restated
Management Agreement to be entered into pursuant to the Plan of Reorganization
between JCC and Harrah's New Orleans Management Company, a Nevada corporation,
relating to the management of the Casino, as it may be amended or supplemented
from time to time.
"Minimum Market Value" shall mean, for each trading day, the
sum of (i) the Closing Price of a share of Class A Common Stock multiplied by
the aggregate number of such shares issued to holders of Old Notes on the
Effective Date in connection with the Plan of Reorganization, plus (ii) the
Closing Price per $1,000 of Notes and Contingent Notes, divided by $1,000, and
multiplied by the aggregate principal amount of such notes outstanding.
"Notes" shall mean the Senior Subordinated Notes due 2009 with
Contingent Payments of JCC issued pursuant to the Plan of Reorganization.
"Notes Indenture" means the Indenture, to be entered into
pursuant to the Plan of Reorganization between JCC, as obligor, the Corporation
and the Development Entities, as guarantors, and Norwest Bank Minnesota,
National Association, as Trustee, in respect of the Notes.
"Old Notes" shall mean the 14 1/4% First Mortgage Notes due
2001 with Contingent Interest of Harrah's Jazz Company and Harrah's Jazz Finance
Corp.
"Person" shall mean both natural persons and legal entities,
unless otherwise specified.
"Plan of Reorganization" shall mean the chapter 11 plan of
reorganization for Harrah's Jazz Company, Harrah's Jazz Finance Corp., and
Harrah's New Orleans Investment Company (including all exhibits and schedules
annexed thereto), as it may be altered, amended, or modified from time to time.
"Qualified Person" shall mean any natural person found
suitable by the Louisiana Gaming Control Board (or any other gaming regulatory
agency with proper jurisdiction) to serve as a director of the Corporation, or,
if such a finding is not required, any natural person that otherwise
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meets all the requirements of the Louisiana Gaming Control Board (or any other
gaming regulatory agency with proper jurisdiction).
"Railroad Lease" means the Lease by and between The Alabama
Great Southern Railroad Company, as lessor, and JCC, as lessee, as evidenced by
Memorandum of Lease, dated November 19, 1993, as assigned by Assignment and
Assumption of Lease, dated March 15, 1994, as amended by Supplemental Agreement
dated as of August 25, 1994, as assumed by JCC pursuant to the Plan of
Reorganization, as the same may be amended, modified, restated or supplemented
from time to time.
"Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the Corporation pursuant
to Section 2.6 of this Restated Certificate of Incorporation.
"Redemption Securities" shall mean any debt or equity
securities of the Corporation, any Subsidiary or any other corporation, or any
combination thereof, having such terms and conditions as shall be approved by
the Board of Directors and which, together with any cash to be paid as part of
the redemption price, in the opinion of any nationally recognized investment
banking firm selected by the Board of Directors (which may be a firm which
provides other investment banking, brokerage or other services to the
Corporation), has a value, at the time notice of redemption is given pursuant to
Section 2.6, at least equal to the Fair Market Value of the shares to be
redeemed pursuant to Section 2.6 (assuming, in the case of Redemption Securities
to be publicly traded, such Redemption Securities were fully distributed and
subject only to normal trading activity), or such other redemption price as
required by any applicable law, regulation, rule or resolution or order of a
gaming regulatory agency.
"Significant Transactions" shall mean: (i) any amendment of
this Restated Certificate of Incorporation or the Bylaws or of the corporate
governance or organizational documents of any Subsidiary of the Corporation or
the organization of any new Subsidiary; (ii) any merger, consolidation, lease or
sale of a material portion of the Corporation's or any Subsidiaries' business or
assets; (iii) any transaction or transactions, except Excluded Transactions,
during a single fiscal year with HET or its Affiliates which in the aggregate
involve consideration to either party in excess of a threshold to be determined
by the Board of Directors (including, without limitation, any decisions
regarding the exercise, waiver or modification of rights or obligations, or the
determination of fees with respect to project development services, under the
Management Agreement); (iv) any declaration of dividends; (v) any amendment of
the Casino Operating Contract, the Casino Lease, the General Development
Agreement, or any other material contract between the Corporation and the State
of Louisiana or the City of New Orleans or any agency or instrumentality of the
foregoing; (vi) any voluntary filing for protection under Title 11 of the United
States Code or any other present or future federal or state law, statute or
regulation for the relief of debtors, any general assignment for the benefit of
creditors, any admission in writing of the Corporation's inability to pay its
debts as they become due, any filing of an answer admitting or not contesting
the material allegations of a petition filed against it in any bankruptcy or
similar proceedings, any seeking, consenting to or acquiescence in the
appointment of a trustee or liquidator for the Corporation or a material portion
of its properties, or any voluntary liquidation or dissolution; (vii) any
incurrence of, or assumption of liability for, indebtedness for borrowed money,
other than indebtedness incurred pursuant to the Plan of Reorganization, the
amendment of the terms of any indebtedness for borrowed money or any
modification, determination, consent or waiver thereunder; (viii) any issuance
of securities of the Corporation or its Subsidiaries other than issuances
pursuant to the Plan of Reorganization; (ix) any repurchase of securities of the
Corporation or any of its Subsidiaries; (x) any change in the independent
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auditors; (xi) the approval of JCC's annual operating plan and annual capital
budget; (xii) any changes to the Minimum Balance (as defined in the Management
Agreement) pursuant to Section 8.03(a) of the Management Agreement; (xiii) any
lease of real property rights of the Corporation or any of its Subsidiaries
which involves consideration to the Corporation or any of its Subsidiaries in
excess of a threshold to be determined by the Board of Directors; (xiv) the
termination of the Railroad Lease or the release by the Corporation or any of
its Subsidiaries of a material portion of the property thereunder; (xv) the
termination of the Franchise Agreement by the Corporation or any of its
Subsidiaries; and (xvi) any interest rate protection agreements (including,
without limitation, interest rate hedges, swaps, caps, floors or collars) to be
entered into by the Company or any Subsidiary.
"Speedy Arbitration" shall mean an arbitration conducted
pursuant to "Expedited Procedures" that shall take place in New York, New York
and be administered by the New York City office of the American Arbitration
Association or any successor thereto (the "AAA") in accordance with its
Commercial Arbitration Rules in effect at the time the arbitration is initiated
(collectively, the "Rules"). In accordance with the Rules, "Expedited
Procedures" shall be utilized with respect to all matters for determination in
the arbitration. As soon as a demand for arbitration shall be made, the AAA
shall appoint a single arbitrator from the National Panel of Commercial
Arbitrators without submission of lists of proposed arbitrators and the
arbitrator shall render a full, complete, conclusive and binding resolution of
the dispute (which shall be immediate, final, non-appealable, and not subject to
reconsideration) and give written notice of the decision to the Board of
Directors of the Corporation.
"Subsidiary" shall mean (i) any corporation more than 50% of
whose outstanding stock entitled to vote generally in the election of directors
is owned by the Corporation, by one or more Subsidiaries or by the Corporation
and one or more Subsidiaries or (ii) any limited liability company (including
the Development Entities), partnership, joint venture or other entity or
organization of which the Corporation or any of its Subsidiaries is the sole
member or of which the Corporation and its Subsidiaries hold collectively more
than 50% of the membership interests.
"Transfer" shall mean any type of transfer of shares of Class
A Common Stock or Class B Common Stock prior to the Transition Date, including,
without limitation, transfers by sale, exchange, gift, merger, operation of law,
pledge, devise, testamentary disposition or interspousal disposition pursuant to
a domestic relations proceeding or any transfer of the power to vote such shares
by proxy or by transferring any proxy.
"Transition Date" shall mean the date upon which the earliest
of the following events occurs: (i) the third anniversary of the date on which
the Casino is open to customers, (ii) the end of two consecutive 12-month
periods in each of which the Contingent Payments under the Notes and the
Contingent Notes equals or exceeds $15 million, and (iii) the end of a period
consisting of 30 consecutive trading days during which the average daily closing
Minimum Market Value equals or exceeds $435 million (as adjusted by the Board of
Directors in good faith to account for purchases of Common Stock by the
Corporation or issuances of additional Common Stock by the Corporation).
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IN WITNESS WHEREOF, the undersigned has executed this Restated
Certificate of Incorporation this 26th day of October, 1998.
By: /s/ Frederick W. Burford
------------------------------------------
Name: Frederick W. Burford
Office: President
<PAGE>
Exhibit 3.05
SECOND AMENDED AND RESTATED
BYLAWS
OF
JCC HOLDING COMPANY
ARTICLE I.
OFFICES
SECTION 1. Registered Office. The registered office of JCC Holding
Company (the "Corporation") shall be at Corporation Service Company, 1013 Centre
Road, Wilmington Delaware 19805 or at such other place as the Board of Directors
of the Corporation (the "Board of Directors") may from time to time determine.
SECTION 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. Meetings of the stockholders, whether
annual meetings or special meetings, shall be held at such time and place,
either within or without the State of Delaware, as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
SECTION 2. Annual Meetings. The annual meeting of stockholders shall be
held each year, on such date and at such time as may be fixed by the Board of
Directors and stated in the notice of the meeting, for the purpose of electing
directors and for the transaction of only such other business as is properly
brought before such meeting in accordance with these Bylaws.
SECTION 3. Procedures for Bringing Business before Annual Meetings. To
be properly brought before the annual meeting, business must be either (i)
specified in the notice of annual meeting (or any supplement or amendment
thereto) given by or at the direction of the Board of Directors, (ii) otherwise
brought before the annual meeting by or at the direction of the Board of
Directors, or (iii) otherwise properly brought before the annual meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
sixty days nor more than one-hundred and twenty days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that less than seventy days notice or prior public disclosure of the
date of the annual meeting is given or made to stockholders, notice by a
stockholder, to be timely, must be received no later than the close of business
on the tenth day following the day on which such notice of the date of
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the annual meeting was mailed or such public disclosure was made, whichever
first occurs. A stockholder's notice to the Secretary shall set forth (a) as to
each matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, and
(ii) any material interest of the stockholder in such business, and (b) as to
the stockholder giving the notice (i) the name and record address of the
stockholder, (ii) the class, series and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder, and (iii) whether
the stockholder intends or is part of a group which intends to solicit proxies
from other stockholders in support of any matter the stockholder proposes to
bring before the annual meeting. In no event shall the announcement of an
adjournment of a meeting commence a new time period for the giving of a
stockholder's notice as described above. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at the annual meeting
except in accordance with the procedures set forth in this Section 3 of Article
II or in Section 1 of Article III. The officer of the Corporation presiding at
an annual meeting shall, if the facts warrant, determine and declare to the
annual meeting that business was not properly brought before the annual meeting
in accordance with the provisions of this Section 3 of Article II or that the
stockholder giving notice either solicited, or was part of a group which
solicited, proxies without having made the disclosure called for in (b)(iii)
above, and if such officer should so determine, such officer shall so declare to
the annual meeting and any such business not properly brought before the meeting
shall not be transacted.
SECTION 4. Special Meetings. Unless otherwise prescribed by law or by
the Certificate of Incorporation, special meetings of stockholders, for any
purpose or purposes, may be called by either the Chairman or the President of
the Corporation and (i) prior to the Transition Date, by the affirmative vote of
a majority of the Class A Directors then in office or the affirmative vote of a
majority of the Class B Directors then in office, and (ii) upon and after the
Transition Date, by a majority of the entire Board of Directors.
SECTION 5. Notice of Meetings. Written notice of a stockholder's
meeting, whether annual or special, shall be given to each stockholder entitled
to vote thereat, by personal delivery or by mailing the same to him at his
address as the same appears upon the records of the Corporation at least ten but
not more than sixty days before the day of the meeting. Such notice shall state
the place, date and hour of the meeting, and whether such meeting is an annual
meeting or special meeting.
SECTION 6. Quorum. At any meeting of the stockholders of the
Corporation at which the holders of Common Stock are entitled to vote, no action
may be taken unless a quorum of the holders of a majority of shares of Common
Stock is present, except a vote to adjourn such meeting; provided, however, that
prior to the Transition Date, a quorum shall consist of a majority of the
holders of shares of Class A Common Stock and a majority of the holders of
shares of Class B Common Stock. Except as provided by law, the presence, in
person or by proxy, of the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at such meeting shall constitute a
quorum of the holders of shares of Common Stock, and the presence, in person or
by proxy, of the holders of a majority of the issued and outstanding shares of
each class of common stock entitled to vote at such meeting shall constitute a
quorum of such class. If the required quorum shall not be present or represented
at any meeting of the stockholders, the holders of a majority of the votes
entitled to be cast by the stockholders entitled to vote thereat, present in
person or represented by proxy, may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented by proxy. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally noticed. If the adjournment is for
more than thirty days, or if after the adjournment a new
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record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder entitled to vote at the meeting.
SECTION 7. Voting. Unless otherwise required by law and except as
otherwise set forth in the Corporation's Certificate of Incorporation, in all
matters other than the election of directors, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote thereat. The vote required for the election of directors shall
be as set forth in the Certificate of Incorporation. Each stockholder
represented at a meeting of stockholders shall be entitled to cast one vote for
each share of capital stock entitled to vote held by such stockholder, unless
otherwise provided by the Certificate of Incorporation. Such votes may be cast
in person or by proxy but no proxy shall be voted after three years from its
date, unless such proxy provides for a longer period. The Board of Directors, in
its discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in his discretion, may require that any votes cast at such meeting
shall be cast by written ballot.
SECTION 8. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
SECTION 9. Stock Ledger. The stock ledger of the Corporation shall be
the only evidence as to the stockholders entitled to examine the stock ledger,
the list required by Section 8 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
ARTICLE III.
DIRECTORS
SECTION 1. Nomination of Directors. Nominations of persons for election
to the Board of Directors of the Corporation at the annual meeting may be made
in the notice for such meeting by the Board of Directors or at such meeting by
or at the direction of the Board of Directors, by any committee or persons
appointed by the Board of Directors, in each case in accordance with Section 4
of Article IV, or by any stockholder of the Corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures set
forth in this Section 1 of Article III; provided, however, that prior to the
Transition Date, holders of shares of Class A Common Stock may only nominate
persons for election as Class A Directors, and holders of shares of Class B
Common Stock may only nominate persons for election as Class B Directors. Such
nominations by any stockholder shall be made pursuant to timely notice in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than sixty days nor more than ninety days
prior to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that less than seventy days notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by
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the stockholder, to be timely, must be received no later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made, whichever first
occurs. Such stockholder's notice to the Secretary shall set forth (i) as to
each person whom the stockholder proposes to nominate for election or reelection
as a director, (a) the name, age, business address and residence address of the
person, (b) the principal occupation or employment of the person, (c) the class
and number of shares of capital stock of the Corporation which are beneficially
owned by the person, and (d) any other information relating to the person that
is required to be disclosed in solicitations for proxies for election of
directors pursuant to the Rules and Regulations of the Securities and Exchange
Commission under Section 14 of the Securities Exchange Act of 1934, as amended;
and (ii) as to the stockholder giving the notice (a) the name and record address
of the stockholder, (b) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder, and (c) whether the
stockholder intends or is part of a group which intends to solicit proxies from
other stockholders in support of any person whom the stockholder proposes to
nominate for election or reelection as a director. In no event shall the
announcement of an adjournment of a meeting commence a new time period for the
giving of a stockholder's notice as described above. The Corporation may require
any proposed nominee to furnish such other information as may reasonably be
required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth herein. The officer of the Corporation presiding
at an annual meeting shall, if the facts warrant, determine and declare to the
meeting that a nomination was not made in accordance with the foregoing
procedure or that the stockholder giving notice either solicited, or was part of
a group which solicited proxies without having made the disclosure called for in
(ii) above, and if he should so determine, he shall so declare to the meeting
and the defective nomination shall be disregarded.
SECTION 2. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board or the President or a majority of the entire Board of
Directors. Notice thereof stating the place, date and hour of the meeting shall
be given to each director either by mail not less than forty-eight hours before
the date of the meeting, by telephone or telegram with twenty-four hours notice,
or on such shorter notice as the person or persons calling such meeting may deem
necessary or appropriate in the circumstances.
SECTION 3. Meetings by Means of Conference Telephone. Members of the
Board of Directors, or any committee thereof, may participate in a meeting of
the Board of Directors or such committee by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 3 of Article III shall constitute presence in person at such meeting.
SECTION 4. Actions by Written Consent. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all of the members of the Board of Directors
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 5. Resignation of Directors. Any director may resign at any
time by delivering a written resignation to the President or Secretary. Upon
resignation, such vacancy shall be filled as
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provided in the Certificate of Incorporation. Such resignation shall take effect
at the time specified therein, and if no time be specified, at the time of its
receipt by the President or Secretary. The acceptance of a resignation shall not
be necessary to make it effective, unless so specified therein.
SECTION 6. Compensation. (a) Prior to the Transition Date, the
Corporation shall pay to each Class A Director and each Class B Director who is
not an employee of HET or a Controlled Affiliate of HET a reasonable salary for
such person's services as a director. All of the directors may be paid their
actual out-of-pocket expenses, if any, of attendance at each meeting of the
Board of Directors. No such payments shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor.
Members of committees may be allowed like compensation for attending committee
meetings.
(b) Upon the Transition Date and thereafter, the directors
(except for HET employees) may be paid their reasonable out-of-pocket expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of committees may be allowed like compensation for attending committee meetings.
SECTION 7. Interested Directors. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholder entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
SECTION 8. Retention of Special Counsel by Class A Directors. Prior to
the Transition Date, (i) upon the occurrence of a Flip Event, (ii) upon the
affirmative vote of a majority of the Class A Directors and the affirmative vote
of the Class B Directors, or (iii) until such time as the Group III Directors
first serve on the Board of Directors, the Class A Directors shall be authorized
to select and retain independent legal counsel to advise the Class A Directors
on matters regarding the Corporation (including its Subsidiaries) and/or their
duties as directors of the Corporation. The fees and expenses of such counsel
shall be paid by the Corporation.
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ARTICLE IV.
COMMITTEES
SECTION 1. Audit Committee. (a) Subject to Section 1(b) of this Article
IV., prior to the Transition Date, an Audit Committee of the Board of Directors
shall consist of three directors. The members of the Audit Committee shall
elect, by the affirmative vote of two of such members, a Chairman. Special
meetings of the Audit Committee may be called by the Chairman thereof upon five
days notice to the other members (unless each member waives such notice before
or after the meeting). The presence, in person or by proxy, of two members of
the Audit Committee (or one member of the Audit Committee if the Audit Committee
then consists of one member) shall constitute a quorum, and the affirmative vote
of two members (or one member of the Audit Committee if the Audit Committee then
consists of one member) at a meeting at which a quorum is present shall be
required to take any action. Each member shall have one vote on all matters that
come before the Audit Committee. Any action required or permitted to be taken by
the Audit Committee may be taken without a meeting if all the members of the
Audit Committee consent to such action in writing, and such consent shall have
the same effect as a vote of the Audit Committee. The Audit Committee shall be
empowered to undertake and complete an audit or investigation, at any time, into
the business affairs of the Corporation or a Subsidiary, including JCC and the
Development Entities. The fees and expenses of independent auditors retained in
connection with such audit or investigation will be paid by the Corporation. The
Audit Committee shall be empowered to retain independent auditors to perform
such audit or investigation. Any person ceasing to be a director shall ipso
facto cease to be a member of the Audit Committee.
(b) Prior to the Transition Date, the members of the Audit
Committee shall consist of the Class A Directors (or, if less than three Class A
Directors are then in office, then such lesser number).
(c) Upon the Transition Date, the Audit Committee shall
terminate, subject only to the general power of the Board of Directors to
designate committees upon and after the Transition Date as set forth in Section
6 of this Article IV.
SECTION 2. Gaming Committee. (a) Subject to Section 2(b) of this
Article IV., prior to the Transition Date, a Gaming Committee of the Board of
Directors shall consist of two directors. The Gaming Committee shall supervise
the day-to-day activities of the Corporation and, except with respect to
Significant Transactions, shall have and may exercise, in such manner as it
shall deem to be in the best interests of the Corporation, all of the powers of
the Board of Directors in the management or direction of the business and
affairs of the Corporation, not inconsistent, however, with such specific
direction as to the conduct of the business and affairs of the Corporation as
shall have been given by the Board of Directors. Without limiting the generality
of the foregoing, (i) all changes to the capital budget of the Corporation and
JCC prior to termination of the Completion Guarantees (as defined in the Notes
Indenture), except for changes which reduce the scope and character of the
Casino as set forth in the plans and specifications outlined in the General
Development Agreement, or which exceed $5 million or such other threshold as may
be determined by the Board of Directors, must be approved by the Gaming
Committee; after the termination of the Completion Guarantees, all changes to
the capital budget of the Corporation and JCC up to $250,000 must be approved by
the Gaming Committee; and (ii) the Gaming Committee shall be entitled to
exercise any and all rights and powers incident to the ownership of membership
interests of JCC and the Development Entities that the Corporation, as owner of
such membership interests, could exercise; provided, however, that with
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respect to Significant Transactions, the exercise of such rights and powers
shall be approved by a majority of the Class A Directors then in office and a
majority of Class B Directors then in office to the extent required by the
Corporation's Certificate of Incorporation. The members of the Gaming Committee
shall elect, by the affirmative vote of two of such members, a Chairman. Special
meetings of the Gaming Committee may be called by the Chairman thereof upon five
days notice to the other member (unless each member waives such notice before or
after the meeting). The presence, in person or by proxy, of two members of the
Gaming Committee (or one member of the Gaming Committee if the Gaming Committee
then consists of one member) shall constitute a quorum, and the affirmative vote
of two members (or one member of the Gaming Committee if the Gaming Committee
then consists of one member) at a meeting at which a quorum is present shall be
required to take any action. Each member shall have one vote on all matters that
come before the Gaming Committee. Any action required or permitted to be taken
by the Gaming Committee may be taken without a meeting if all the members of the
Gaming Committee consent to such action in writing, and such consent shall have
the same effect as a vote of the Gaming Committee. Any person ceasing to be a
director shall cease to be a member of the Gaming Committee.
(b) Prior to the Transition Date:
(i) The members of the Gaming Committee shall consist
of two Class B Directors (or one Class B Director if only one
Class B Director is then in office) and such members shall be
selected by the affirmative vote of a majority of the Class B
Directors then in office;
(ii) Upon the occurrence of a Flip Event, the term of
office as members of the Gaming Committee of such Class B
Directors shall immediately expire, and the Gaming Committee
shall consist of two Class A Directors (or one Class A
Director if only one Class A Director is then in office) and
such members shall be selected by the affirmative vote of a
majority of the Class A Directors then in office; and
(iii) If a Cure Event occurs with respect to all
uncured Flip Events, the term of office as members of the
Gaming Committee of such Class A Directors shall immediately
expire, and the Gaming Committee shall consist of two Class B
Directors (or one Class B Director if only one Class B
Director is then in office) and such members shall be selected
by the affirmative vote of a majority of the Class B Directors
then in office.
(c) Upon the Transition Date, the Gaming Committee shall
terminate, subject only to the general power of the Board of Directors to
designate committees upon and after the Transition Date as set forth in Section
6 of this Article IV.
SECTION 3. Compensation Committee. (a) Subject to Section 3(b) of this
Article IV., prior to the Transition Date, a Compensation Committee of the Board
of Directors shall consist of three directors. The members of the Compensation
Committee shall elect, by the affirmative vote of two of such members, a
Chairman. Special meetings of the Compensation Committee may be called by the
Chairman thereof upon five day's notice to the other members (unless each member
waives such notice before or after the meeting). The presence, in person or by
proxy, of two members of the Compensation Committee (or one member of the
Compensation Committee if the Compensation Committee then consists of one
member) shall constitute a quorum, and the affirmative vote of two
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members (or one member of the Compensation Committee if the Compensation
Committee then consists of one member) at a meeting at which a quorum is present
shall be required to take any action. Each member shall have one vote on all
matters that come before the Compensation Committee. Any action required or
permitted to be taken by the Compensation Committee may be taken without a
meeting if all the members of the Compensation Committee consent to such action
in writing, and such consent shall have the same effect as a vote of the
Compensation Committee. The Compensation Committee shall be empowered to act on
behalf of the Corporation with respect to all matters regarding the compensation
of officers and directors of the Corporation and its Subsidiaries. Any person
ceasing to be a director shall cease to be a member of the Compensation
Committee.
(b) Prior to the Transition Date, the members of the
Compensation Committee shall consist of three Class A Directors (or, if less
than three Class A Directors are then in office, then such lesser number).
(c) Upon the Transition Date, the Compensation Committee shall
terminate, subject only to the general power of the Board of Directors to
designate committees upon and after the Transition Date as set forth in Section
6 of this Article IV.
SECTION 4. Nomination Committees. Prior to the Transition Date, a Class
A Director Nomination Committee of the Board of Directors shall consist of the
Class A Directors whose terms do not expire at the next annual meeting of
stockholders, and a Class B Director Nomination Committee of the Board of
Directors shall consist of the Class B Directors whose terms do not expire at
the next annual meeting of stockholders. The purpose of the Class A Director
Nominating Committee shall be to select the person(s) to stand for election as
Class A Director nominee(s) at any meeting of stockholders of the Corporation.
The purpose of the Class B Director Nominating Committee shall be to select the
person(s) to stand for election as Class B Director nominee(s) at any meeting of
stockholders of the Corporation. Each nominating committee may establish
procedures for the selection of its nominees and any incumbent Class A Director
or incumbent Class B Director may be nominated for additional terms without
limitation. The Class A Nominating Committee and the Class B Nominating
Committee shall terminate upon the occurrence of the Transition Date.
SECTION 5. Capital Committee. (a) Prior to the Transition Date, a
Capital Committee of the Board of Directors shall consist of two directors. The
members of the Capital Committee shall elect, by the affirmative vote of both
members, a Chairman. Special meetings of the Capital Committee may be called by
the Chairman thereof upon five days notice to the other member (unless each
member waives such notice before or after the meeting). The presence, in person
or by proxy, of both members of the Capital Committee shall constitute a quorum,
and the affirmative vote of both members at a meeting at which a quorum is
present shall be required to take any action. Each member shall have one vote on
all matters that come before the Capital Committee. Any action required or
permitted to be taken by the Capital Committee may be taken without a meeting if
both members of the Capital Committee consent to such action in writing, and
such consent shall have the same effect as a vote of the Capital Committee.
After the date on which the Completion Guarantees have been terminated, the
Capital Committee shall be empowered to act on behalf of the Corporation with
respect to all changes to the capital budget of the Corporation and JCC between
$250,000 and $2 million; and any such changes must be approved by the
affirmative vote of both members of the Capital Committee. Any person ceasing to
be a director shall cease to be a member of the Capital Committee.
(b) Prior to the Transition Date, the members of the Capital
Committee shall consist of one Class A Director and one Class B Director.
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(c) Upon the Transition Date, the Capital Committee shall
terminate, subject only to the general power of the Board of Directors to
designate committees upon and after the Transition Date as set forth in Section
6 of this Article IV.
SECTION 6. Other Committees. After the Transition Date, the Board of
Directors may designate one or more committees (including any committee in
existence prior to the Transition Date), each committee to consist of one or
more of the directors of the Corporation. The Board of Directors may designate
one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of any such committee. In the
absence or disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any absent or disqualified member. Any committee,
to the extent allowed by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation.
Each committee shall keep regular minutes and report to the Board of Directors
when required.
ARTICLE V.
OFFICERS
SECTION 1. General. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers. Any number of
offices may be held by the same person, unless otherwise prohibited by law, the
Certificate of Incorporation or these Bylaws. The officers of the Corporation
need not be stockholders of the Corporation nor, except in the case of the
Chairman of the Board of Directors, need such officers be directors of the
Corporation.
SECTION 2. Election. The Board of Directors at its first meeting held
after each annual meeting of stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. In the event that any officer of the Corporation is found
unsuitable by the Louisiana Gaming Control Board, or any other gaming regulatory
agency with proper jurisdiction over such officer, the term of such officer
shall immediately expire and no further remuneration of any kind shall be paid
to such officer.
SECTION 3. Voting Securities Owned by the Corporation. Except as
provided in Section 2 of Article IV, powers of attorney, proxies, waivers of
notice of meeting, consents and other instruments relating to securities or
membership interests owned by the Corporation may be executed in the name of and
on behalf of the Corporation by the President or any Vice President and any such
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officer may, in the name and on behalf of the Corporation, take all such actions
as any such officer may deem advisable to vote in person or by proxy at any
meeting of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
SECTION 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the signature of
the President is required, the Chairman of the Board of Directors shall possess
the same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these Bylaws or by the Board of Directors.
Following an Extraordinary Flip Event but prior to any related Cure Event, the
Chairman of the Board may be removed by the affirmative vote of the Class A
Directors then in office.
SECTION 5. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute all bonds, mortgages, contracts and other
instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these Bylaws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. The President shall also perform
such other duties and may exercise such other powers as from time to time may be
assigned to him by these Bylaws or by the Board of Directors.
SECTION 6. Vice Presidents. At the request of the President or in his
absence or in the event of his inability or refusal to act (and if there be no
Chairman of the Board of Directors), the Vice President or the Vice Presidents
if there is more than one (in the order designated by the Board of Directors)
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. Each
Vice President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there be no Chairman of
the Board of Directors and no Vice President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President or
in the event of the inability or refusal of the President to act, shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
SECTION 7. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. If the Secretary shall be unable
or shall refuse to cause to be given notice of all meetings of the stockholders
and special meetings of
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the Board of Directors, and if there be no Assistant Secretary, then either the
Board of Directors or the President may choose another officer to cause such
notice to be given. The Secretary shall have custody of the seal of the
Corporation and the Secretary or any Assistant Secretary, if there be one, shall
have authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents required by law to be kept
or filed are properly kept or filed, as the case may be.
SECTION 8. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
SECTION 9. Assistant Secretaries. Except as may be otherwise provided
in these Bylaws, Assistant Secretaries, if there be any, shall perform such
duties and have such power as from time to time may be assigned to them by the
Board of Directors, the President, any Vice President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of his disability
or refusal to act, shall perform the duties of the Secretary, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
SECTION 10. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
SECTION 11. Controller. The Controller shall establish and maintain the
accounting records of the Corporation in accordance with generally accepted
accounting principles applied on a consistent basis, maintain proper internal
control of the assets of the Corporation and shall perform such other duties as
the Board of Directors, the President or any Vice President of the Corporation
may prescribe.
SECTION 12. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board
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of Directors. The Board of Directors may delegate to any other officer of the
Corporation the power to choose such other officers and to prescribe their
respective duties and powers.
ARTICLE VI.
STOCK
SECTION 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
SECTION 2. Signatures. Any or all of the signatures on the certificate
may be a facsimile, including, but not limited to, signatures of officers of the
Corporation and countersignatures of a transfer agent or registrar. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
SECTION 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
SECTION 4. Transfers. Stock of the Corporation shall be transferable in
the manner prescribed by law, in the Certificate of Incorporation and in these
Bylaws. Transfers of stock shall be made on the books of the Corporation only by
the person named in the certificate or by his attorney lawfully constituted in
writing and upon the surrender of the certificate therefor, which shall be
cancelled before a new certificate shall be issued.
SECTION 5. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date: (i) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty (60)
nor less than ten (10) days before the date of such meeting; (ii) in the case of
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten (10) days from the date
upon which the resolution fixing the record
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date is adopted by the Board of Directors; and (iii) in the case of any other
action, shall not be more than sixty (60) days prior to such other action. If no
record date is fixed: (a) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (b) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action of the Board of Directors is required by law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (c) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
SECTION 7. Legend. Each stock certificate issued by the Corporation
shall bear the following legend: "This security is subject to redemption by the
Corporation if, among other things, the holder is required to qualify or be
found suitable under any applicable gaming law, regulation or rule and does not
meet the applicable suitability standards, all as more fully set forth in the
Restated Certificate of Incorporation of the Corporation. A copy of the Restated
Certificate of Incorporation of the Corporation is maintained at the executive
offices of the Corporation and will be provided upon request."
ARTICLE VII.
NOTICES
SECTION 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by facsimile, telegraph, telex or cable.
SECTION 2. Waivers of Notice. Whenever any notice is required by law,
the Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed, by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
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ARTICLE VIII.
GENERAL PROVISIONS
SECTION 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
SECTION 2. Disbursements. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
SECTION 3. Fiscal Year. The fiscal year of the Corporation shall end on
December 31 and the following fiscal year shall commence on January 1, unless
the fiscal year is otherwise fixed by affirmative resolution of the entire Board
of Directors.
SECTION 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal, Delaware."
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 5. Conflicts with Certificate. If the provisions of the
Corporation's Certificate of Incorporation conflict with these Bylaws, the
provisions of the Corporation's Certificate of Incorporation shall control and
the Bylaws shall be of no force and effect to the extent of such conflict.
SECTION 6. Amendments. (a) Prior to the Transition Date, stockholders
may not make, adopt, alter, amend, change or repeal these Bylaws except upon the
affirmative vote of at least a majority of the votes entitled to be cast by the
holders of outstanding shares of Common Stock, voting together as a single
class; provided, however, that in addition to such vote, any amendment to these
Bylaws which in any way adversely affects the rights of holders of Class A
Common Stock or Class A Directors shall also require the affirmative vote of the
holders of a majority of the outstanding shares of Class A Common Stock, and any
amendment to the Bylaws which in any way adversely affects the rights of holders
of Class B Common Stock or Class B Directors shall also require the affirmative
vote of the holders of a majority of the outstanding shares of Class B Common
Stock. Upon and after the Transition Date, stockholders may not make, adopt,
alter, amend, change or repeal these Bylaws except upon the affirmative vote of
at least 75% of the votes entitled to be cast by the holders of outstanding
shares of Common Stock, voting together as a single class.
(b) The Board of Directors is authorized to make, adopt,
alter, amend, change or repeal these Bylaws; provided, however, that prior to
the Transition Date the Board of Directors is authorized to make, adopt, alter,
amend, change or repeal these Bylaws only if such action is approved as a
Significant Transaction pursuant to the Restated Certificate of Incorporation.
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SECTION 7. Defined Terms. Any term used in these Bylaws, not expressly
defined herein, which is expressly defined in the Certificate of Incorporation
of the Corporation, shall have the meaning given to such term in the Restated
Certificate of Incorporation.
SECTION 8. These Bylaws shall become effective on October 29, 1998 at
9:00 a.m. Eastern Standard Time.
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CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
(1) That I am the duly elected and acting Secretary of JCC
Holding Company, a Delaware corporation; and
(2) That the foregoing Second Amended and Restated Bylaws
constitute the bylaws of said corporation as duly adopted by the written consent
of the Board of Directors of said corporation as of October 26, 1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name this
29th day of October, 1998.
/s/ L. Camille Fowler
--------------------------------------
L. Camille Fowler, Secretary
<PAGE>
NOTES COMPLETION GUARANTEE
THIS NOTES COMPLETION GUARANTEE is entered into as of October
30, 1998 (this "Completion Guarantee"), by HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation ("HET"), and HARRAH'S OPERATING COMPANY, INC., a Delaware
corporation ("HOC," and together with HET, the "Completion Guarantors," and each
a "Completion Guarantor") in favor of NORWEST BANK MINNESOTA, N.A. (together
with any successor, the "Trustee") as trustee under the Indentures (as defined
below), its successors and assigns, for the benefit of the Holders (as defined
below).
RECITALS
A. A plan of reorganization (the "Plan") of Harrah's Jazz
Company, a Louisiana general partnership ("HJC"), has been consummated as of the
date hereof in connection with the voluntary petition for an Order of Relief
under Chapter 11 of Title 11 of the United States Bankruptcy Code (the
"Bankruptcy Code") filed in the United States Bankruptcy Court on November 22,
1995 and now identified as BK No. 95-14545 in the Eastern District of Louisiana.
B. Pursuant to the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), JCC Holding Company, a
Delaware corporation ("JCC Holding"), and the Trustee, as trustee, have entered
into:
1. That certain Indenture pursuant to which the
Company has issued $187,500,000 principal amount of its Senior Subordinated
Notes due 2009 with Contingent Payments (as may be amended, modified, renewed,
restated, supplemented or refinanced from time to time, the "New Bonds"); and
2. That certain Indenture pursuant to which the
Company has issued the Senior Subordinated Contingent Notes due 2009 (as may be
amended, modified, renewed, restated, supplemented or refinanced from time to
time, the "New Contingent Bonds," and together with the New Bonds, the "Notes").
For purposes of this Completion Guarantee, "Indentures" shall mean the indenture
for the New Bonds and the indenture for the New Contingent Bonds, collectively,
as each may be amended from time to time.
C. The Company has obtained a performance bond (the
"Performance Bond") from Reliance Insurance Company and United States Fidelity
and Guaranty Company (the "Surety") for the benefit of the Trustee and the
Holders, the City of New Orleans (the "City") and the Rivergate Development
Corporation (the "RDC"), Bankers Trust Company (the "Administrative Agent") as
administrative agent for certain lenders (the "Banks"), and the Louisiana Gaming
Control Board (the "LGCB") for completion of the Phase I and II Construction (as
defined herein) excluding the Minimum FF&E (as defined in the GDA) (the
"Performance Bond Construction").
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D. The Completion Guarantors indirectly own a substantial
beneficial interest in the parent of the Company and will obtain substantial
economic and other benefits as a result of the successful completion and opening
of the Casino.
E. All capitalized terms used herein but not defined herein
shall be used herein as defined in the Indentures.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Completion Guarantors, the receipt and sufficiency of
which are hereby acknowledged, the Completion Guarantors hereby make the
following representations and warranties to the Trustee, for the benefit of the
holders of the Notes from time to time (the "Holders"), and hereby covenant and
agree for the benefit of the Holders as follows:
1. Obligations Guaranteed
1.1. The Completion Guarantors hereby irrevocably and
unconditionally, jointly and severally, guarantee:
(a) the full and complete payment and performance of
all obligations (the "Completion Obligations") of the Company diligently to
commence and complete construction of and timely to pay for all costs and
expenses of completion of the Casino whether incurred before or after the
Effective Date (as defined in the Plan) and whether due before or after the
Termination of Construction Date (as defined herein) or otherwise payable by the
Company to any person for the costs and expenses of such completion, and,
subject to receipt of any necessary regulatory approvals, to open the Casino,
including:
(i) the completion of construction (as
extended by Force Majeure (as defined herein)) in accordance with the Plans for
the Phase I and II Construction, on or before twelve (12) months after the
Effective Date,
(ii) equipping the Casino so that the Casino
is ready to open to the public for business as a casino gaming operation on or
before twelve (12) months after the Effective Date,
(iii) so long as any necessary regulatory
approvals from the LGCB, the State Police or any other State of Louisiana
regulatory authorities have been received, the opening of the Casino for
business as a casino gaming operation on or before twelve (12) months after the
Effective Date, or if such approvals have not been received, that the Casino is
in a condition to receive customers in the ordinary course of business, and
(iv) causing the Termination of Construction
Date to occur including, without limitation:
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(A) the payment of any and all costs
of completing the Phase I and II Construction, including without limitation all
labor, materials, supplies, Minimum FF&E (as defined in the GDA) and equipment
related thereto, to be paid and satisfied when due and all cost overruns not
paid by the Company;
(B) the payment, satisfaction or
discharge of liens arising from injuries or damages to persons or property in
connection with the Phase I and II Construction and all liens, charges and
claims, other than Permitted Liens (as defined in the Mortgages), arising from
the furnishing of labor, materials, supplies or equipment for the Phase I and II
Construction, that are or may be imposed upon or asserted against the Casino or
any portion thereof; and
(C) the defense and indemnification
of the Trustee and the Holders against all such liens arising from injuries or
damages to persons or property in connection with the Phase I and II
Construction and all such liens, charges and claims, other than Permitted Liens,
arising from the furnishing of labor, materials, supplies or equipment for the
Phase I and II Construction; and
(b) the full and complete payment and performance of
all obligations (the "Carry Obligations") of the Company to pay on a timely
basis all amounts due from or incurred by or otherwise payable by the Company to
any Person and due before or after the Effective Date until and through the
Termination of Construction Date, including without limitation the payment of
interest and scheduled principal payments (excluding principal on the Notes),
taxes (prior to delinquency, unless being contested in good faith by appropriate
proceedings), amounts owing to the RDC under the Lease (as defined herein),
amounts owing to the LGCB under the Casino Operating Contract, assessments,
utilities, insurance and maintenance expenses, amounts owing from injuries or
damages to person or property or amounts due pursuant to contracts or
agreements; provided that the Completion Guarantors in no event guarantee
payment of any Minimum Payment under and as defined in the Casino Operating
Contract.
1.2. In addition to Section 1.1(b) hereof, the Carry
Obligations shall include, without limitation:
(a) the obligation of the Company upon the
Termination of Construction Date to have available for working capital at least
Five Million Dollars ($5,000,000) of cash in the House Bank (as defined in the
Management Agreement) and at least Twenty Five Million Dollars ($25,000,000) of
availability for immediate drawdown(s) under the Revolving Loans (as defined in
that certain Credit Agreement with various banks and Bankers Trust Company as
administrative agent entered into by the Company and JCC Holding pursuant to the
Plan, the "Credit Agreement"), subject to the terms thereof, reduced by (i) the
amount of Letters of Credit (as defined in the Credit Agreement) not to exceed
Two Million Dollars ($2,000,000), and (ii) a drawing of Ten Million Dollars
($10,000,000) of the Revolving Loan to
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fund the Minimum Balance (as defined in the Management Agreement) on or before
the Termination of Construction Date; and
(b) the obligation of the Company to repay the
Revolving Loan together with any and all amounts of fees, interest, letter of
credit fees and other amounts due in respect of the Revolving Loan due upon an
event of default under the Credit Agreement prior to the Termination of
Construction Date.
This provision may require the Completion Guarantors to contribute working
capital directly to the Company and/or to pay down amounts outstanding under the
Revolving Loan.
1.3. The Completion Obligations, the Carry Obligations and the
Preservation Obligations are collectively referred to herein as the
"Obligations."
1.4. The Completion Guarantors, jointly and severally, agree
to perform and comply with their Obligations, whether or not the Company is
liable therefor individually or jointly or severally with others, and whether or
not recovery against the Company is or may become barred by any statute of
limitations or prescriptive or preemptive period or is or may become
unenforceable or discharged, whether in whole or in part, for any reason other
than payment or performance thereof in full. The Completion Guarantors agree
that this Completion Guarantee is a guarantee of payment and performance and not
of collection, and that each of their obligations under this Completion
Guarantee shall be primary, absolute and unconditional, irrespective of, and
unaffected by:
(a) the genuineness, validity, regularity,
enforceability or any future amendment of, or change in this Completion
Guarantee, or any other agreement, document or instrument to which the Trustee,
the Company and/or the Completion Guarantors is or are or may become a party;
(b) the absence of any action to enforce this
Completion Guarantee or any other document or the waiver or consent by the
Trustee with respect to any of the provisions thereof;
(c) any release or discharge of any one or more of
the Surety, the other Completion Guarantor, the Company or any other party of
any Obligations; or
(d) any other action or circumstances which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor;
it being agreed by each Completion Guarantor that its obligations under this
Completion Guarantee shall not be discharged except as set forth in Section 12.3
hereof. Each Completion Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations.
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1.5. Each Completion Guarantor expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel the Trustee to proceed in respect of the
Obligations against the Company, the Surety or any other party or against any
security for the payment and performance of the Obligations before proceeding
against, or as a condition to proceeding against, any Completion Guarantor. Each
Completion Guarantor agrees that any notice or directive given at any time to
the Trustee which is inconsistent with the waiver in the immediately preceding
sentence shall be null and void and may be ignored by the Trustee, and in
addition, may not be pleaded or introduced as evidence in any litigation
relating to this Completion Guarantee for the reason that such pleading or
introduction would be at variance with the written terms of this Completion
Guarantee, unless the Trustee has specifically agreed otherwise in writing.
1.6. The Completion Obligations shall not include any of the
costs which are expressly included as a part of the Carry Obligations.
1.7. Each Completion Guarantor acknowledges that it has
received copies of and is familiar with the Indentures and the Shared Security
Documents (as defined in that certain Intercreditor Agreement among HET, HOCI,
Bankers Trust Company, Norwest Bank Minnesota, National Association, as trustee,
and the other parties named therein).
1.8. Except as expressly provided in this Completion Guarantee
(in particular Sections 1.1(b) and 1.2 hereof), in no event shall the Completion
Guarantors, as a result of this Completion Guarantee, incur, directly or
indirectly, any obligation, contingent or otherwise, under the Indentures or for
the payment of the principal amount of the Notes except to the extent the Notes
are paid as a result of a foreclosure and any Completion Guarantors' funds were
used to improve the Casino ("incur" meaning to create, incur, assume, guarantee
or otherwise become liable for).
2. Default Procedures.
2.1. If for any reason whatsoever the Company:
(a) fails or neglects, even though the Company is not
at fault and whether intentional or unintentional, timely (as extended by Force
Majeure) to commence construction and diligently and expeditiously continue
construction, and complete the Phase I and II Construction within the time
period and in the manner specified in the GDA, free of liens arising from the
furnishing of labor, materials, supplies, furnishings or equipment for the Phase
I and II Construction, other than Permitted Liens; or
(b) otherwise fails to satisfy and fulfill the
Completion Obligations in a timely manner in accordance with the time periods
set forth in Section 1.1(a)(i) hereof; or
(c) fails timely to pay any of the Carry Obligations;
or
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(d) shall have filed against it a petition for relief
under any bankruptcy law, or any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future statute, law or regulation shall be filed
against the Company, and so long as the Completion Guarantors are not otherwise
in default under this Completion Guarantee, in any such event the Company shall
fail to remedy such default to the Trustee's satisfaction within sixty (60) days
after the Company's receipt of a written notice of default with respect thereto
from the Trustee; or
(e) shall be adjudged bankrupt or insolvent, the
Company shall make a general assignment for the benefit of creditors, or the
Company shall admit in writing its inability to pay its debts as they become
due, or the Company shall file a petition for relief under any bankruptcy law,
or any petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future statute, law or regulation shall be filed by the Company, or the Company
shall file an answer admitting or not contesting the material allegations of a
petition filed against it in any such proceeding, or the Company shall seek or
consent to or acquiesce in the appointment of a trustee, liquidator of the
Company or a material part of its properties, or the Company shall voluntarily
liquidate or dissolve;
then in any such event or at any time thereafter, the Trustee may give written
notice to the Completion Guarantors, the Company and the Surety of the
occurrence of such event; provided, that if any of the Completion Guarantors,
the Company or the Surety is the subject of any bankruptcy case, any inability
of the Trustee to give notice to such party as a result of the effect of the
bankruptcy case shall not affect the validity or effectiveness of the notice to
the other parties which are not the subject of any bankruptcy case.
2.2. Immediately upon receipt of such notice, the Completion
Guarantors shall take all necessary steps to maintain insurance coverage and
secure the Casino premises to prevent damage or deterioration to the Casino
premises and unauthorized entry or access to the Casino premises (the
"Preservation Obligations"). If after notice and five (5) Business Days
opportunity to cure after such notice, the Completion Guarantors shall fail to
perform the Preservation Obligations, such failure shall be a "Preservation
Obligation Default."
2.3. Commencing on the date on which the Trustee gives any
such notice to the Completion Guarantors pursuant to Section 2.1 hereof, the
Completion Guarantors, at their sole cost, (i) shall pay the Carry Obligations
then due and thereafter shall pay the Carry Obligations when due and/or (ii)
immediately commence to perform the Completion Obligations and thereafter
continue diligently and expeditiously until the Completion Obligations are fully
performed.
2.4. Subject to Section 2.5 hereof, if after notice and five
(5) Business Days opportunity to cure after such notice, the Completion
Guarantors shall fail timely to pay the Carry Obligations (a "Carry Obligation
Default"), after notice and thirty (30) days opportunity to cure after such
notice, the Completion Guarantors shall fail to commence performing the
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Completion Obligations and diligently thereafter continue to perform the
Completion Obligations through the Termination of Construction Date (a
"Completion Obligation Default"), or a Preservation Obligation Default shall
occur, then in addition to all other rights and remedies that may be available
to the Trustee under the terms of this Completion Guarantee, or the Indentures
and/or the Shared Security Documents, at law or in equity, the Trustee or its
agent, in its sole discretion, may proceed as follows:
(a) The Trustee, at its option, may elect to require
specific performance by the Completion Guarantors of any and/or all of the
Completion Obligations after a Completion Obligation Default, the Carry
Obligations after a Carry Obligation Default or the Preservation Obligations
after a Preservation Obligation Default.
(b) After any default by the Company in its
obligations timely to commence and complete the Performance Bond Construction or
the Preservation Obligations, the Trustee, at its option, shall have the right,
but shall have no obligation, to undertake to require the Surety to perform the
Performance Bond Construction or the Preservation Obligations, as the case may
be, pursuant to the Performance Bond, exercisable whether or not the Trustee
elects to proceed judicially or nonjudicially to foreclose on all or any portion
of the Collateral. The Trustee's election to require the Surety to perform the
Performance Bond Construction or the Preservation Obligations shall not release,
diminish or extinguish the liability of the Company or either Completion
Guarantor therefor to the extent the Surety fails to perform such Performance
Bond Construction or the Preservation Obligations. The Completion Guarantors
shall remain obligated to perform the Carry Obligations notwithstanding any such
election and notwithstanding the Surety's performance of the Performance Bond
Construction or the Preservation Obligations.
(c) The Trustee, at its option, shall have the right,
but shall have no obligation, to proceed judicially or nonjudicially to
foreclose on all or any portion of the Collateral, exercisable whether or not
the Trustee elects to require the Completion Guarantors to perform any or all of
the Completion Obligations after a Completion Obligation Default or Carry
Obligations after a Carry Obligation Default or the Preservation Obligations
after a Preservation Obligation Default.
(d) In addition to the Trustee's right to require
specific performance by the Completion Guarantors of any and/or all of the
Completion Obligations after a Completion Obligation Default, the Carry
Obligations after a Carry Obligation Default, and/or the Preservation
Obligations after a Preservation Obligation Default, and whether or not the
Trustee elects to proceed judicially or nonjudicially to foreclose on all or any
portion of the Collateral, and whether or not the Trustee shall have called on
the Surety pursuant to the Performance Bond, (i) the Trustee shall have the
right to recover from the Completion Guarantors all unreimbursed costs and
expenses, including but not limited to attorneys' fees, incurred by the Trustee
in protecting, preserving, enforcing or defending its interests in this
Completion Guarantee, (ii) after a Carry Obligation Default, the Completion
Guarantors shall be liable for the joint benefit of the Trustee, the LGCB, the
Administrative Agent, the City and the RDC as their interests may
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appear for any interest or delinquency costs of the Company arising from such
Carry Obligation Default; provided that the Completion Guarantors shall not be
liable for duplicate payments of the same charge with respect to any such
interest or delinquency costs of the Company regardless of whether multiple
demands are made by any or all of the RDC, the City, the LGCB, the
Administrative Agent or the Trustee, (iii) after a Completion Obligation
Default, the Completion Guarantors shall be liable for the joint benefit of the
Trustee, the City and the RDC, the Administrative Agent and the LGCB as their
interests may appear for damages to pay for the costs of performance of the
Completion Obligations arising from such Completion Obligation Default or such
other damages as may be available at law or in equity; provided that, in no
event shall the Completion Guarantors be liable for duplicate payments in
respect of such damages nor for more than one performance of the Completion
Obligations regardless of whether multiple demands are made by any or all of the
RDC, the City, the LGCB, the Administrative Agent or the Trustee, and (iv) after
a Preservation Obligation Default, the Completion Guarantors shall be liable for
the joint benefit of the Trustee, the City and the RDC, the Administrative Agent
and the LGCB as their interests may appear for damages to pay for the costs of
performance of the Preservation Obligations arising from such Preservation
Obligation Default; provided that, in no event shall the Completion Guarantors
be liable for duplicate payments in respect of such damages nor for more than
one performance of the Preservation Obligations regardless of whether multiple
demands are made by any or all of the RDC, the City, the LGCB, the
Administrative Agent or the Trustee.
(e) With respect to the Completion Obligations, each
Completion Guarantor specifically agrees that this Completion Guarantee
continues whether the Company or the Trustee (or any other agent of the Holders)
is lessee under the Lease.
(f) With respect to the Carry Obligations, each
Completion Guarantor specifically agrees that this Completion Guarantee is
intended as a contract to guarantee payment unconditionally and irrevocably on a
timely basis of all amounts included as Carry Obligations pursuant to Sections
1.1(b) and 1.2 hereof.
(g) No delay or failure by the Trustee to exercise
any remedy against the Completion Guarantors will be construed as a waiver of
that right or remedy.
2.5. The remedies set forth in Sections 2.4 and 7 hereof are
not intended to be exclusive of any remedies that the Trustee may have against
the Company under the Indentures or other documents or agreements referenced
therein or related thereto. The Completion Guarantors recognize that the choice
of remedies by the Trustee will necessarily and properly be a matter of the
Trustee's business judgment, which the passage of time and events may or may not
prove to have been the best choice to maximize recovery by the Trustee at the
lowest cost to the Company or the Completion Guarantors. Nevertheless, the
choice of alternatives by the Trustee shall not be subject to question or
challenge by the Completion Guarantors hereunder, nor shall any such choice be
asserted as a defense, set-off or basis for any claim of failure to mitigate
damages in any action or proceeding arising from this Completion Guarantee.
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3. Alteration of Obligations. In such manner, upon such terms and at
such times as the Trustee deems best, and without notice to either Completion
Guarantor, the Trustee or the Holders may, in accordance with the Indentures,
alter, compromise, accelerate, extend or change the time or manner for the
payment or performance of any of the Notes Obligations (as defined herein),
release the Company, by acceptance of a deed in lieu of foreclosure or
otherwise, as to all or any portion of the Notes Obligations, release,
substitute or add any one or more guarantors or endorsers, accept additional or
substitute security therefor, or release or subordinate any security therefor.
No exercise or non-exercise of any right hereby given to the Trustee, no dealing
by the Trustee, with the Completion Guarantors or any other guarantor, endorser
of the Notes or any other person, and no change, impairment or release of all or
any portion of the Notes Obligations or suspension of any right or remedy of the
Trustee against any person, including without limitation the Company or any
other such guarantor, endorser or other person, shall in any way affect any of
the Obligations or any security furnished by the Completion Guarantors or give
the Completion Guarantors any recourse against the Trustee. If the Trustee has
exculpated or hereafter exculpates the Company from personal liability in whole
or in part, or has agreed or hereafter agrees to look solely to the Collateral
or any other property for the satisfaction of the Company's obligations under
the Indentures or the Shared Security Documents, said exculpation and agreement
shall not affect the Obligations. Each Completion Guarantor further acknowledges
that any such exculpation or agreement that has been given or that is hereafter
given to the Company has been given or is given in reliance upon the covenants
of the Completion Guarantors contained herein.
4. Waiver
4.1. The Completion Guarantors represent, warrant and jointly
and severally agree that, as of the date of this Completion Guarantee, their
obligations under this Completion Guarantee are not subject to any recoupment,
counterclaims, offsets or defenses against the Trustee or the Company of any
kind. The Completion Guarantors further jointly and severally agree that their
obligations under this Completion Guarantee shall not be subject to any
counterclaims, offsets or defenses against the Trustee or against the Company of
any kind which may arise in the future. Each Completion Guarantor hereby
expressly waives and relinquishes all rights, defenses and remedies accorded by
applicable law to sureties or guarantors and agrees not to assert or take
advantage of any such rights, defenses or remedies, including without
limitation:
(a) any right to require the Trustee to proceed
against the Company, the Surety or any other person or to proceed against or
exhaust any security held by the Trustee at any time or to pursue any other
remedy in the power of the Trustee before proceeding against either or both of
the Completion Guarantors, including but not limited to any defense of failure
to join or non-joinder of the Company or any other person whatsoever in any
litigation instituted by the Trustee against either or both of the Completion
Guarantors;
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(b) the defense of the statute of limitations,
prescription, and preemption in any action hereunder or in any action for the
collection or performance of any of the Obligations;
(c) any defense that may arise by reason of the
discharge in bankruptcy, incapacity, lack of authority, death or disability of
any other person or the failure of the Trustee to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other person;
(d) diligence, demand, presentment, protest and
notice of any kind (whether, for non-payment or protest or of acceptance,
maturity, extension of time, change in nature or form of the Obligations,
acceptance of further security, release of further security, composition or
agreement arrived at as to the amount of, or the terms of, the Obligations,
notice of adverse change in the Company's financial condition or any other fact
which might materially increase the risk to the Completion Guarantors),
including without limitation notice of the existence, creation or incurring of
any new or additional indebtedness or obligation or of any action or non-action
on the part of the Company, the Trustee any endorser or creditor of the Company
or either Completion Guarantor or on the part of any other person under this or
any other instrument in connection with any obligation or evidence of
indebtedness held by the Trustee as collateral or in connection with any of the
Notes Obligations;
(e) any defense based upon an election of remedies by
the Trustee, including, without limitation, an election to proceed by
nonjudicial rather than judicial foreclosure, which destroys or otherwise
impairs the subrogation rights of the Completion Guarantors, the right of the
Completion Guarantors to proceed against the Company for reimbursement, or both,
or any defense that the Trustee's claims against the Completion Guarantors are
barred or diminished or premature to the extent that the Trustee has or may have
remedies available against the Company;
(f) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal;
(g) any duty on the part of the Trustee to disclose
to the Completion Guarantors any facts the Trustee may now or hereafter know
about the Company, regardless of whether the Trustee has reason to believe that
any such facts materially increase the risk beyond that which the Completion
Guarantors intend to assume, or has reason to believe that such facts are
unknown to either Completion Guarantor, or has a reasonable opportunity to
communicate such facts to either Completion Guarantor, since each Completion
Guarantor acknowledges that it is fully responsible for being and keeping
informed of the financial condition of the Company and of all circumstances
bearing on the risk of non-payment of any of the Notes Obligations;
(h) any defense arising because of the election of
the Trustee in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code;
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(i) any defense based upon any borrowing or grant of
a security interest under Section 364 of the Bankruptcy Code;
(j) waiver or estoppel or any alleged lack of
reasonable or justifiable reliance on the part of the Trustee as to the
Completion Guarantors' representations;
(k) lack, failure or insufficiency of consideration;
(l) any alleged failure of the Trustee to mitigate
injuries, losses or damages or any plea that the Trustee has any duty to
mitigate injuries, losses, or damages prior to seeking recovery under this
Completion Guarantee; and
(m) any defense that the Trustee's claims hereunder
are or may be barred because an adequate remedy at law exists.
4.2. Each Completion Guarantor agrees to forbear from exercise
of any rights of subrogation, indemnity, or contribution against each other, the
Company, the Surety or any other person who may be liable for satisfaction of
the Completion Obligations or the Carry Obligations until such Obligations have
been fully satisfied as to the Trustee.
4.3. In the event of the commencement of a bankruptcy case by
or against any Completion
Guarantor,
(a) each Completion Guarantor agrees to waive the
automatic stay under the Bankruptcy Code and further agrees to the entry of an
immediate order from the Bankruptcy Court, on the Trustee's ex parte motion
granting to the Trustee a modification of the automatic stay (and/or recognition
that the automatic stay is not applicable) allowing it to fully enforce the
provisions of this Completion Guarantee, the Completion Guarantors hereby
agreeing that in such case, "cause," as defined by the Bankruptcy Code, would
exist for the immediate entry by the Bankruptcy Court of such an order modifying
the automatic stay;
(b) whether or not the Company shall have defaulted
in its obligations to complete the Phase I and II Construction, the Trustee
shall have an allowable claim against such Completion Guarantor in an amount
equal to the then estimated amount necessary to pay for the completion of the
Phase I and II Construction, and the Preservation Obligations and any Carry
Obligations through the then estimated date of completion of the Phase I and II
Construction. Any amounts paid on such claim shall be paid for the joint benefit
of the Trustee, the LGCB, the Administrative Agent, the City and the RDC, as
their interests may appear, and shall be used solely to complete, and pay any
costs in connection with the Completion Obligations, the Preservation
Obligations, and any Carry Obligations prior to such completion of, the Phase I
and II Construction. Upon completion of the Phase I and II Construction and the
payment of all costs, liens and claims related thereto, any unused portion of
such amounts paid in respect of any claim under this Section 4.3(b) shall be
promptly reimbursed to such Completion Guarantor. The Company shall be obligated
to promptly reimburse such Completion Guarantor
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for any such amounts paid by and not previously reimbursed to such Completion
Guarantor under this Section 4.3(b).
5. Subordination. All existing and future indebtedness of the Company
to either Completion Guarantor is hereby subordinated in accordance with this
Section 5 to all of the Notes Obligations. Without limiting the foregoing,
during any time in which there is a payment default under the Credit Agreement,
without the prior written consent of the Trustee, such subordinated indebtedness
shall not be paid or withdrawn in whole or in part, nor shall either Completion
Guarantor accept any payment of or on account of any such indebtedness or as a
withdrawal of capital while this Completion Guarantee is in effect.
6. Bankruptcy
6.1. So long as any Obligations are owed to the Trustee, no
Completion Guarantor shall, without the prior written consent of the Trustee
commence, or join with any other person in commencing, any bankruptcy,
reorganization or insolvency proceeding against the Company. Subject to Section
12 hereof, the Obligations shall not be altered, limited or affected by any
proceeding, voluntary or involuntary, involving the bankruptcy, reorganization,
insolvency, receivership, liquidation or arrangement of the Company, or by any
defense which the Company may have by reason of any order, decree or decision of
any court or administrative body resulting from any such proceeding.
6.2. So long as any Obligations are owed to the Trustee,
(a) each Completion Guarantor shall file, in any
bankruptcy or other proceeding in which the filing of claims is required or
permitted by law, all claims which such Completion Guarantor may have against
the Company relating to any indebtedness of the Company to such Completion
Guarantor, and hereby assigns to the Trustee all rights of such Completion
Guarantor thereunder as security for performance of the Obligations jointly with
such assignment to the LGCB under that certain LGCB Completion Guarantee between
the Completion Guarantors and the LGCB of even date herewith (the "LGCB
Completion Guarantee"), to the Administrative Agent under that certain Bank
Completion Guarantee between the Completion Guarantors and the Administrative
Agent of even date herewith (the "Bank Completion Guarantee") and to the City
and the RDC under that certain City/RDC Completion Guarantee between the
Completion Guarantors, the City and the RDC of even date herewith (the "City/RDC
Completion Guarantee").
(b) if either Completion Guarantor does not file any
such claim, the Trustee, as attorney-in-fact for such Completion Guarantor, is
hereby authorized to do so in the name of such Completion Guarantor jointly with
such authorization to the LGCB under the LGCB Completion Guarantee, to the
Administrative Agent under the Bank Completion Guarantee and to the City and the
RDC under the City/RDC Completion Guarantee, or, in the Trustee's, the LGCB's,
the Administrative Agent's, the City's, and the RDC's joint discretion, to
assign the claim to a joint nominee and to cause proofs of claim to be filed in
the name of such
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joint nominee as security for performance of the Obligations. The foregoing
power of attorney is coupled with an interest and cannot be revoked.
(c) the Trustee, jointly with the LGCB under the LGCB
Completion Guarantee, the Administrative Agent under the Bank Completion
Guarantee and the City and the RDC under the City/RDC Completion Guarantee, or a
joint nominee, as the case may be, shall have the right to accept or reject any
plan proposed in any such proceeding and to take any other action which a party
filing a claim is entitled to take. Any exercise or non-exercise of any such
right (i) by the Trustee under this Section 6.2(c), (ii) by the LGCB under the
Section 6.2(c) of the LGCB Completion Guarantee, (iii) by the Administrative
Agent under Section 6.2(c) of the Bank Completion Guarantee, and (iv) by the
City and the RDC under Section 6.2(c) of the City/RDC Completion Guarantee,
shall not impair or diminish the Completion Guarantors' obligations under this
Completion Guarantee. In all such cases, whether in administration, bankruptcy
or otherwise, the person authorized to pay such a claim shall pay the same to
the Trustee, the LGCB under the LGCB Completion Guarantee, the Administrative
Agent under the Bank Completion Guarantee, and the City and the RDC under the
City/RDC Completion Guarantee, as their interests may appear, as security for
performance of the Obligations, and, to the full extent necessary for that
purpose, each Completion Guarantor hereby assigns to the Trustee jointly with
such assignment to the LGCB under the LGCB Completion Guarantee, to the
Administrative Agent under the Bank Completion Guarantee and to the City and the
RDC under the City/RDC Completion Guarantee all of such Completion Guarantor's
rights to all such payments or distributions (other than with respect to
Purchased Bank Indebtedness, if any) to which such Completion Guarantor would
otherwise be entitled.
6.3. This Completion Guarantee shall remain in full force and
effect and continue to be effective should any petition be filed by or against
the Company or any Completion Guarantor for liquidation or reorganization,
should the Company or any Completion Guarantor become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's or any Completion
Guarantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount or
must otherwise be restored or returned by the Trustee, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
6.4. In the event that the Company is allowed any extension of
time in connection with any proceeding, voluntary or involuntary, involving the
bankruptcy, reorganization, insolvency, receivership, liquidation or arrangement
of the Company, to cure any default relating to the Phase I and II Construction,
such extension shall not extend the time by which the Completion Guarantors are
required to cause the completion of the Phase I and II Construction in
accordance with the provisions of this Agreement.
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7. Interest, Costs and Attorneys' Fees
7.1. If the Completion Guarantors fail to pay all or any
portion of any monetary amounts due as a part of the Obligations upon notice or
demand by the Trustee, the amount of such monetary portion of the Obligations
and all other sums payable by the Completion Guarantors to the Trustee hereunder
shall bear interest from the date of such notice or demand, as the case may be,
at two percent (2%) over the prime rate of interest charged by Citibank, N.A. at
its offices in New York, New York, to borrowers on ninety (90) day unsecured
commercial loans, as the same may be changed from time to time.
7.2. If, at any time following a default by the Company in the
performance of the Completion Obligations, the Carry Obligations or the
Preservation Obligations which default entitles the Trustee to require
performance hereunder (whether or not notice is actually given pursuant to
Section 2.1), the Trustee refers this Completion Guarantee to an attorney to
enforce, construe, or defend any provision hereof, or as a consequence of any
default hereunder by the Completion Guarantors, the Trustee shall employ counsel
for advice or representation or shall incur legal or other costs and expenses,
with or without the filing of any legal action or proceeding, in connection
with:
(a) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by the Trustee, the Company, the
Completion Guarantors or any other person) in any way relating to the
enforcement of rights or remedies under this Completion Guarantee;
(b) any attempt to enforce any rights of the Trustee
hereunder against the Completion Guarantors or any other person;
(c) any attempt to defend any provision hereof; or
(d) the Performance Bond;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in any way or respect arising
in connection with or relating to any of the events or actions described herein
shall be payable, on demand, by the Completion Guarantors to the Trustee or the
Completion Guarantors shall cause the Company to make such payment, and if not
so paid, shall be additional Obligations under this Completion Guarantee;
provided that upon any engagement of counsel (i) following a default by the
Company in the performance of the Obligations and (ii) prior to the date on
which the Trustee gives written notice pursuant to Section 2.1 (the "Notice
Date"), the Trustee shall make demand on the Company for any expenses of such
counsel incurred prior to the Notice Date and such expenses shall only become an
Obligation under this Completion Guarantee if the Company shall fail timely to
pay such expenses.
The reference to "attorneys' fees" in this Section 7.2 and in all other places
in this Completion Guarantee shall also include, without limitation, such
reasonable amounts as may then be
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charged for costs and expenses of legal services furnished by attorneys retained
or employed by the Trustee. Such attorneys' fees shall include, without
limitation, those incurred in connection with any bankruptcy, reorganization,
insolvency, receivership, liquidation, arrangement, lawsuits in state or federal
court, or other similar proceedings involving either Completion Guarantor which
in any way affect the exercise by the Trustee of its rights and remedies
hereunder.
8. Cumulative Rights. All rights, powers and remedies of the Trustee
hereunder and under any other agreement now or at any time hereafter in force
between the Trustee and the Completion Guarantors, including without limitation
any other guarantee executed by either Completion Guarantor relating to any
indebtedness of the Company, shall be cumulative and not alternative, and such
rights, powers and remedies shall be in addition to all rights, powers and
remedies given to the Trustee and the Holders by law and shall not be deemed in
any way to extinguish or diminish the Trustee's rights and remedies. This
Completion Guarantee is in addition to and independent of the guarantee of any
guarantor of any Notes Obligations or other indebtedness of the Company.
9. Independent Obligations. The Obligations are independent of the
Notes Obligations, and, in the event of any default hereunder, a separate action
or actions may be brought and prosecuted against either Completion Guarantor,
whether or not the Company is joined therein or a separate action or actions are
brought against the Company. The Trustee's rights hereunder shall not be
exhausted by its exercise of any of its rights or remedies or by any such action
or by any number of successive actions unless and until all Obligations have
been satisfied and fully performed.
10. Application of Payments or Recoveries. Subject to the applicable
provisions of this Completion Guarantee and the terms of the Indentures, with or
without notice to either Completion Guarantor, the Trustee, in its sole
discretion, at any time and from time to time, and in such manner and upon such
terms as the Trustee deems fit, may apply any or all payments or recoveries from
the Company or from any other guarantor or endorser under any other instrument
or realized from any security, in such manner and order of priority as the
Trustee may determine, to any of the Notes Obligations, whether or not such
indebtedness is secured or is due at the time of such application.
11. Financial Statements. The Completion Guarantors hereby represent
and warrant that the information pertaining to the Completion Guarantors set
forth in their most recent filings with the Securities and Exchange Commission
is true and correct in all material respects, and fairly presents the financial
condition of the Completion Guarantors as of the respective dates indicated
therein and for the periods covered thereby, and that no material adverse change
has occurred in the financial condition or prospects of the Completion
Guarantors since the date of the latest information provided therein.
12. Suspension of or Excuse From Performance
12.1. Notwithstanding anything to the contrary in this
Completion Guarantee, if, at any time, there shall occur a Force Majeure with
respect to the Completion Obligations, then
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the Completion Obligations (but not the Carry Obligations) shall (except as
provided below in this Section) be suspended (the "Suspension") until such time
as such Force Majeure ends; provided, however, in no event shall the Suspension
(for Force Majeure) extend beyond eighteen (18) months from the date upon which
Notice of the Force Majeure was furnished to the LGCB, unless performance of the
Completion Obligations (in accordance with the terms of this Completion
Guarantee) are rendered impossible because of such Force Majeure and in such
event the Suspension shall continue until such time as such performance is no
longer impossible. During the period following any date of Suspension and until
the end of such Suspension, the Completion Guarantors shall each use their best
efforts to remove such Force Majeure.
12.2. The Completion Guarantors hereby agree that any
proceeding under any chapter of the Bankruptcy Code, in receivership, or any
other insolvency proceeding, whether voluntary or involuntary, by or against the
Company and/or any Completion Guarantor, shall not be considered, nor constitute
Force Majeure. The Completion Guarantors further agree that (i) any increase in
the costs to complete (including equipping) the Casino, whether or not such
increase in costs was anticipated and/or contemplated in the Approved Program
Plans, GDA and/or otherwise, (ii) the financial condition or financial inability
of the Company and/or any Completion Guarantor to complete (including equipping)
the Casino, (iii) any other adverse financial projections, financial forecasts,
financial events or financial conditions, and (iv) any failure to obtain funding
or financing (including amounts under the Credit Agreement), shall not be
considered, nor constitute Force Majeure.
12.3. The Obligations shall terminate upon the occurrence of
any of the following: (i) the termination of the Lease or the GDA other than as
a result of (a) the fault of or a breach or default by the Company or any
Completion Guarantor or (b) the voluntary termination of the Lease or the GDA by
the Company, (ii) Casino gaming operations shall no longer be permitted to be
conducted at the Casino or shall be modified, restricted, or limited in a manner
that materially diminishes the benefits afforded to the Company or the gaming
activities permitted to be conducted at the Casino pursuant to the Act (as
defined herein) by reason of a change of law or the enactment of a new law after
the Effective Date or by reason of the Company's rights under the Casino
Operating Contract having been terminated in any material respect, other than as
a result of the fault of or a breach by the Company or any Completion Guarantor,
subject to Section 12.4 hereof, (iii) only as to the Carry Obligations but not
as to the Completion Obligations or the Preservation Obligations, a Force
Majeure shall have continued for more than one (1) year from the first to occur
of a receipt of a notice from the Trustee to the Completion Guarantors pursuant
to Section 2.1 hereof or a similar notice to the Completion Guarantors from the
LGCB, the Administrative Agent, the City or the RDC (provided that the
Completion Guarantors shall have complied with the notice requirements of the
last sentence of Section 15 hereof in respect of any notices received under
Section 2.1 hereof), notwithstanding the Completion Guarantors' actual and
continuous best efforts to remove such Force Majeure; provided, however, that
the Completion Guarantors shall remain liable for all Carry Obligations that
actually came due through the expiration of such one (1) year period to the
extent not satisfied by the Company, and, provided further, that the Completion
Guarantors shall have used their best efforts to remove such Force Majeure
within said one (1) year period, or (iv) as to the
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Carry Obligations, as of and upon the occurrence of the Termination of
Construction Date and as to the Completion Obligations and the Preservation
Obligations, upon the occurrence of the Completion Obligation Termination Date.
12.4. Upon the occurrence of any of the events described in
Section 12.3(ii) hereof prior to the occurrence of the Termination of
Construction Date, the Completion Guarantors shall nevertheless be obligated to
complete the Poydras Street Support Facility and the Poydras Tunnel Area (each
as defined in the GDA), exterior site and street work, and any improvements
required to be made to the Leased Premises (as defined in the Lease) so that it
may be used for any Highest and Best Use (as defined in the Lease) as required
by Section 4.20 of the Lease.
12.5. The Completion Guarantors and/or the Company shall give
Notice as provided in the Casino Operating Contract to the Trustee of any Force
Majeure within ten (10) days of the date upon which a Force Majeure event has
occurred; provided the remedy for a failure timely to give such Notice shall be
to cause the Suspension otherwise resulting from such Force Majeure to be waived
for any period of time from the occurrence of the Force Majeure until ten (10)
days prior to the furnishing of such Notice (of Force Majeure).
12.6. Other than as set forth in this Agreement and without
waiver of the terms and conditions of this Agreement, including, without
limitation, terms and conditions of the definition of Force Majeure and of this
Section 12, the Company and the Completion Guarantors waive their rights
pursuant to Articles 1873-1878 of the Louisiana Civil Code including, without
limitation, any right to claim excuse from performance or delay of performance
due to impossibility of performance of the Completion Obligations or a
fortuitous event.
13. Definitions. As used in this Completion Guarantee, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Act" shall mean the Louisiana Economic Development and Gaming
Corporation Act as set forth in LSA R.S. 27:201 et seq., adopted by the
Legislature of the State of Louisiana as No. 384, Acts 1992 as amended, and
regulations adopted thereunder, amendments and reenactment of LSA R.S.
36:801.1(A) and enactment of LSA R.S. 27:1 et seq., adopted by the Legislature
of the State of Louisiana as Act 7, First Extraordinary Session, 1996, and
regulations adopted thereunder; the Local Option Gaming election as set forth in
LSA R.S. 18:1300.21, adopted by the Legislature of the State of Louisiana as Act
57, First Extraordinary Session 1996, and the act adopted by the Legislature of
the State of Louisiana as Act 98, First Extraordinary Session, 1996.
"Casino - Phase I" shall mean the first phase of development
and construction of the Casino, consisting of a minimum of one hundred thousand
(100,000) square feet of net gaming space, approximately fifteen thousand
(15,000) square feet of multi-function, special event, food service and meeting
room space on the first floor of the Casino, the Poydras Tunnel Area, a two
hundred fifty (250) seat buffet on the first floor of the Casino and parking
facilities.
17
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"Force Majeure" shall mean any of the following events or
circumstances, but only to the extent (a) they are not caused or fomented by the
Company, the Completion Guarantors or any affiliates of the Company or either
Completion Guarantor and (b) they delay the performance of the Completion
Obligations beyond the reasonable control of the Company and of the Completion
Guarantors:
(i) strikes, lockouts, labor disputes, inability to procure
materials (for which there is no suitable substitute or alternative that can be
timely obtained on reasonable commercial terms), failure of power;
(ii) material and adverse changes in Governmental Requirements
(as defined in the GDA) applicable to the construction of the Casino first
effective after the Plan Effective Date and after the submission to and approval
by the LGCB of the design thereof, and any material and adverse changes after
the Plan Effective Date in any orders (applicable to the Completion Obligations,
the Casino Premises or the Casino Property) of any federal, state, parish or
municipal governmental authority, including all executive, legislative, judicial
and administrative bodies thereof having jurisdiction over a party, the Casino
Premises, or the Casino Property (however, not including stop work orders due to
a building, safety or other code violation);
(iii) material and adverse changes in Governmental
Requirements first effective after the Plan Effective Date;
(iv) the breach by the LGCB of the Casino Operating Contract
(not caused or fomented by the Company, the Completion Guarantors, or any
affiliates of the Company or of either Completion Guarantor) or other action of
the LGCB (not caused or fomented by the Company, the Completion Guarantors, or
any affiliates of the Company or of either Completion Guarantor), including, as
to the required opening of the Casino-Phase I, the delay in the issuance of
required suitability findings and/or approvals required to open Casino - Phase I
for reasons not under the control of, or which could not have been avoided by
the exercise of due care of, the Company, the Completion Guarantors or any
affiliate of the Company or either Completion Guarantor;
(v) acts of God, tornadoes, hurricanes, floods, sinkholes,
fires and other casualties, landslides, earthquakes, epidemics, quarantine,
pestilence and abnormal inclement weather;
(vi) acts of public enemy, acts of war, terrorism, effects of
nuclear radiation, blockades, insurrections, riots, civil disturbances,
governmental preemption in connection with a national emergency, or national or
international calamity; and
(vii) any litigation not filed or fomented by the Company, the
Completion Guarantors, or any affiliates of either Completion Guarantor in which
any judgment, directive, ruling or order is entered by any judicial, regulatory
or administrative body which substantially restrains or substantially interferes
with the performance of the Completion Obligations.
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"GDA" shall mean the Amended and Restated General Development
Agreement entered into between the Rivergate Development Corporation, the
Company and the City pursuant to the Plan.
"Lease" shall mean the Amended and Restated Lease Agreement
entered into between the Rivergate Development Corporation, as landlord, the
Company, as tenant, and the City, as intervenor, pursuant to the Plan.
"Notes Obligations" shall mean any obligations of the Company
under the Notes, the Indentures, the Shared Security Documents or any related
documents for the benefit of the Trustee or the Holders executed by the Company
concurrently therewith.
"Phase I and II Construction" shall have the meaning set forth
in the GDA.
"Second Floor Shell Construction - Phase II" shall mean the
second phase of development and construction of the Casino on the second floor
of the Casino, which shall consist of shell construction of the second floor
non-gaming space to the stage where it is ready for tenant improvement and build
out for non-gaming entertainment purposes; provided that the build out of the
tenant improvements and the occupancy and opening for business of such second
floor non-gaming development shall not be a part of this phase and may occur
after completion of Casino - Phase I and completion of such tenant improvements
is not part of the Obligations.
"Termination of Construction Date" shall mean that date by
which:
(i) a temporary certificate of occupancy has been
issued for Casino - Phase I by the building department and other relevant
agencies;
(ii) all required permits with respect to the Phase I
and II Construction have been obtained by the Company;
(iii) a notice of completion has been duly recorded
with respect to the Phase I and II Construction;
(iv) an officers' certificate of the Completion
Guarantors has been delivered to the Trustee certifying that the Termination of
Construction Date has occurred;
(v) the Casino is equipped and ready to open for
business as a casino gaming operation;
(vi) a certificate has been delivered by the general
contractor and the project architect to the Trustee for Phase I and Phase II
Construction certifying that Phase I and Phase II Construction has been
substantially completed in accordance with the plans and specifications therefor
and all applicable building laws, ordinances and regulations; and
(vii) Casino - Phase I has opened for business as a
casino gaming operation so long as any necessary regulatory approval from the
LGCB or any other State of
19
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Louisiana regulatory authorities have been received or if such approvals have
not been received, even though timely receipt of any such approvals has been
diligently pursued by or on behalf of the Company, Casino - Phase I is in a
condition to receive customers in the ordinary course of business.
14. Completion Obligation Termination Date
14.1. Notwithstanding the occurrence of the Termination of
Construction Date, the Completion Guarantors shall continue to be obligated for
payment or making satisfactory provisions for payment as they come due of all
costs of completing the Phase I and II Construction and for all materialmen's
claims, mechanics' liens or other claims, liens or claims for liens arising from
the furnishing of labor, materials, supplies, other equipment for the Phase I
and II Construction or Minimum FF& E. The date on which all such payments or
satisfactory provisions for all such payments have been made, all lien periods
with respect to the Phase I and II Construction have expired and no liens or
privileges arising from the furnishing of labor, materials, supplies or
equipment for the Phase I and II Construction affecting or purporting to affect
the Leased Premises remain of record in Orleans Parish is herein referred to as
the "Completion Obligation Termination Date."
14.2. For purposes of this Completion Guarantee, in respect of
any Completion Obligations or Carry Obligations not satisfied as of the
Termination of Construction Date, satisfactory provision for payment of claims,
liens and claims for liens shall be deemed to have been made if (a) in respect
of any liens or claims for liens but not non-lien claims, a bond has been
established in accordance with the terms of LSA R.S. 9:4801 et seq., (b) in
respect of any non-lien claims but not liens or claims for liens, an escrow,
letter of credit or trust account for payment has been established in an amount
at least equal to one hundred five percent (105%) of the total of such
outstanding claims, liens and claims for liens with or by an independent third
party, (c) in respect of any non-lien claims, the total of such outstanding
non-lien claims has been guaranteed under a payment guarantee from a party other
than either Completion Guarantor (or any affiliate thereof) rated as an
investment grade credit by a nationally recognized credit rating agency, or (d)
other provision has been made satisfactory to the Trustee.
15. Notices. Whenever the Completion Guarantors or the Trustee shall
desire to give or serve any notice, demand, request or other communication with
respect to this Completion Guarantee, each such notice shall be in writing and
shall be effective only if the same is delivered by personal service, overnight
courier service, or mailed by certified mail, postage prepaid, return receipt
requested, addressed as follows:
20
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(a) if to either Completion Guarantor;
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Fax: (901) 537-3039
Attn: General Counsel
with a copy to the Corporate Secretary at the
same address
(b) if to the Company:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Fax: (504) 533-6100
Attn: President
(c) if to the Surety:
Reliance Insurance Company
Four Penn Center Plaza, 17th Floor
Philadelphia, Pennsylvania 19103
Attn: Claims Department
and
United States Fidelity and Guaranty Company
6225 Smith Avenue
Baltimore, Maryland 21203
Attn: Claims Department
(d) if to the Trustee, as provided in the Indentures;
or at such other address as shall have been furnished in writing by any person
described above to the party required to give notice hereunder.
Any such notice delivered personally shall be deemed to have
been received upon delivery. Any of the Completion Guarantors, the Company, the
Surety or the Trustee may change its address by giving the others written notice
of the new address as herein provided.
Any notice given or received by any Completion Guarantor to or
from the City or the RDC under the City/RDC Completion Guarantee, to or from the
Administrative Agent under the Bank Completion Guarantee or to or from the LGCB
under the LGCB Completion Guarantee
21
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shall be immediately forwarded by such Completion Guarantor to the Trustee at
the address set forth above.
16. Successors and Assigns. This Completion Guarantee shall inure to
the benefit of the Trustee, its successors and assigns, including the assignees
of any Obligations, and shall bind the heirs, executors, administrators,
personal representatives, successors and assigns of each Completion Guarantor.
This Completion Guarantee may be assigned by the Trustee, in its sole
discretion, with respect to all or any portion of the Obligations, and when so
assigned the Completion Guarantors shall be liable to the assignees under this
Completion Guarantee without in any manner affecting the liability of the
Completion Guarantors with respect to any Obligations retained by the Trustee.
Neither Completion Guarantor may assign or transfer any of its rights,
obligations or interest hereunder without the prior written consent of the
Trustee.
17. Miscellaneous Provisions
17.1. THIS COMPLETION GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK. EACH
COMPLETION GUARANTOR HEREBY SUBMITS TO PERSONAL JURISDICTION AND WAIVES
OBJECTION AS TO VENUE IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. SERVICE OF
PROCESS ON THE COMPLETION GUARANTORS IN ANY ACTION ARISING OUT OF OR RELATING TO
THIS COMPLETION GUARANTEE SHALL BE EFFECTIVE IF MAILED TO THE COMPLETION
GUARANTORS IN ACCORDANCE WITH SECTION 15 HEREOF. NOTHING HEREIN SHALL PRECLUDE
THE TRUSTEE FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION.
17.2. This Completion Guarantee shall constitute the entire
agreement of the Completion Guarantors with the Trustee with respect to the
subject matter hereof, and no representation, understanding, promise or
condition concerning the subject matter hereof shall be binding upon the Trustee
unless expressed herein.
17.3. Should any term, covenant, condition or provision of
this Completion Guarantee be determined to be illegal or unenforceable, it is
the intent of the parties that all other terms, covenants, conditions and
provisions hereof shall nevertheless remain in full force and effect.
17.4. Time is of the essence to this Completion Guarantee and
each of its provisions.
17.5. When the context and construction so require, all words
used in the singular herein shall be deemed to include the plural, the masculine
shall include the feminine and neuter, and vice versa.
22
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17.6. The word "person" as used herein shall include any
individual, company, firm, association, partnership, limited liability company,
joint venture, corporation, trust or other legal entity of any kind whatsoever.
17.7. No provision of this Completion Guarantee or right
granted to the Trustee hereunder can be waived in whole or in part, nor can
either Completion Guarantor be released from such Obligations, except by a
writing duly executed by an authorized officer of the Trustee. No provision of
this Completion Guarantee or any of the Obligations may be amended without the
prior written consent of the Completion Guarantors and the Trustee and the
consent of any additional beneficiaries hereof shall not be required.
17.8. The Trustee need not inquire into the power of the
Company or the authority of their officers, shareholders or agents acting or
purporting to act on their behalf.
17.9. The headings of this Completion Guarantee are inserted
for convenience only and shall have no effect upon the construction or
interpretation thereof.
17.10. This Completion Guarantee shall be for the sole benefit
of the Trustee, the Holders, and their respective successors and assigns. The
provisions of this Completion Guarantee shall not inure to the benefit of any
other person, including, without limitation, the Company.
17.11. Notwithstanding the foregoing, in the event that the
Completion Guarantors, or either of them, shall enter into the LGCB Completion
Guarantee, the Bank Completion Guarantee or the City/RDC Completion Guarantee,
or any supplemental agreement with respect thereto and such LGCB Completion
Guarantee, Bank Completion Guarantee or the City/RDC Completion Guarantee or
amendment or supplement thereto or the obligations created thereby provides
rights or remedies to the LGCB, the Administrative Agent, the City or the RDC
that are more favorable in any respect than the rights and remedies granted to
the Trustee hereunder (as this Completion Guarantee may from time to time be
amended), the Trustee shall be deemed to have available to it, at its option,
the benefit of the more favorable rights and remedies implemented by such LGCB
Completion Guarantee, Bank Completion Guarantee or City/RDC Completion Guarantee
or amendment or supplemental agreement and shall not under any circumstances be
deemed to have agreed to or become subject to any alterations in the LGCB
Completion Guarantee, the Bank Completion Guarantee or the City/RDC Completion
Guarantee, or any provisions of a supplemental agreement among the Completion
Guarantors, the LGCB, the Administrative Agent, the City and/or the RDC, that
are less favorable than the rights and remedies granted to the Trustee
hereunder.
18. Obligations of Surety. Notwithstanding anything to the contrary in
this Completion Guarantee, nothing herein shall expand or enlarge or otherwise
modify the obligations of the Surety pursuant to the Performance Bond.
19. Effectiveness. This Completion Guarantee shall be effective upon
the occurrence of the Effective Date. If such Effective Date shall not occur,
this Completion Guarantee shall be
23
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null and void and of no force or effect.
[SIGNATURE PAGE FOLLOWS]
24
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IN WITNESS WHEREOF, the undersigned have each executed this
Completion Guarantee as of the date first above written.
COMPLETION GUARANTORS:
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ George W. Loveland, II
----------------------------------
Name: George W. Loveland, II
----------------------------------
Title: Vice President
----------------------------------
HARRAH'S OPERATING COMPANY, INC.,
a Delaware corporation
By: /s/ George W. Loveland, II
----------------------------------
Name: George W. Loveland, II
----------------------------------
Title: Vice President
----------------------------------
Accepted and agreed:
NORWEST BANK MINNESOTA, N.A.,
as Trustee
By: /s/ Raymond S. Haverstock
----------------------------------
Name: Raymond S. Haverstock
----------------------------------
Title: Vice President
----------------------------------
<PAGE>
Exhibit 4.04
JAZZ CASINO COMPANY, L.L.C.,
Issuer, and
JCC HOLDING COMPANY,
Guarantor
$27,287,500
8% Convertible Junior Subordinated Debentures
Due 2010
---------------
INDENTURE
Dated as of October 30, 1998
------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
Section 1.01. Definitions............................................................................1
Section 1.02. Other Definitions......................................................................9
Section 1.03. Incorporation by Reference of Trust Indenture Act......................................9
Section 1.04. Rules of Construction. Unless the context otherwise requires:........................10
ARTICLE 2. THE SECURITIES........................................................................................10
Section 2.01. Form and Dating.......................................................................10
Section 2.02. Execution and Authentication..........................................................11
Section 2.03. Registrar, Paying Agent and Conversion Agent..........................................12
Section 2.04. Paying Agent to Hold Money in Trust...................................................12
Section 2.05. Holder Lists..........................................................................13
Section 2.06. Transfer and Exchange.................................................................13
Section 2.07. Replacement Securities................................................................14
Section 2.08. Outstanding Securities................................................................14
Section 2.09. Treasury Securities...................................................................14
Section 2.10. Temporary Securities..................................................................15
Section 2.11. Cancellation..........................................................................15
Section 2.12. Defaulted Interest....................................................................15
ARTICLE 3. REDEMPTION............................................................................................16
Section 3.01. Right of Redemption...................................................................16
Section 3.02. Redemption Pursuant to Applicable Laws................................................16
Section 3.03. Notice to Trustee.....................................................................16
Section 3.04. Selection of Securities to Be Redeemed................................................16
Section 3.05. Notice of Redemption..................................................................17
Section 3.06. Effect of Notice of Redemption........................................................18
Section 3.07. Deposit of Redemption Price...........................................................18
Section 3.08. Securities Redeemed in Part...........................................................18
ARTICLE 4. COVENANTS.............................................................................................19
Section 4.01. Payment of Securities.................................................................19
Section 4.02. Maintenance of Office or Agency.......................................................19
Section 4.03. SEC Reports; Other Information........................................................20
Section 4.04. Compliance Certificate................................................................21
</TABLE>
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<TABLE>
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Section 4.05. Stay, Extension and Usury Laws........................................................22
ARTICLE 5. SUCCESSORS............................................................................................22
Section 5.01. When Company and JCC Holding May Merge, Etc...........................................22
Section 5.02. Successor Corporation Substituted.....................................................23
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................................23
Section 6.01. Events of Default.....................................................................23
Section 6.02. Acceleration..........................................................................25
Section 6.03. Other Remedies........................................................................25
Section 6.04. Waiver of Past Defaults...............................................................26
Section 6.05. Rights and Remedies Cumulative........................................................26
Section 6.06. Delay or Omission Not Waiver..........................................................26
Section 6.07. Control by Holders....................................................................26
Section 6.08. Limitation on Suits...................................................................27
Section 6.09. Rights of Holders to Receive Payment..................................................27
Section 6.10. Collection Suit by Trustee............................................................27
Section 6.11. Trustee May File Proofs of Claim......................................................28
Section 6.12. Priorities............................................................................28
Section 6.13. Undertaking for Costs.................................................................29
ARTICLE 7. TRUSTEE...............................................................................................29
Section 7.01. Duties of Trustee.....................................................................29
Section 7.02. Rights of Trustee.....................................................................30
Section 7.03. Individual Rights of Trustee..........................................................31
Section 7.04. Trustee's Disclaimer..................................................................31
Section 7.05. Notice of Defaults....................................................................32
Section 7.06. Reports by Trustee to Holders.........................................................32
Section 7.07. Compensation and Indemnity............................................................32
Section 7.08. Replacement of Trustee................................................................33
Section 7.09. Successor Trustee by Merger, Etc......................................................34
Section 7.10. Eligibility; Disqualification.........................................................34
Section 7.11. Preferential Collection of Claims Against the Company.................................35
ARTICLE 8. DISCHARGE OF INDENTURE................................................................................35
Section 8.01. Termination of the Company's Obligations..............................................35
Section 8.02. Application of Trust Money............................................................36
Section 8.03. Repayment to Company..................................................................37
Section 8.04. Reinstatement.........................................................................37
ARTICLE 9. AMENDMENTS............................................................................................37
Section 9.01. Without Consent of Holders............................................................37
</TABLE>
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<TABLE>
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Section 9.02. With Consent of Holders...............................................................38
Section 9.03. Compliance with Trust Indenture Act...................................................39
Section 9.04. Revocation and Effect of Consents.....................................................39
Section 9.05. Notation on or Exchange of Securities.................................................40
Section 9.06. Trustee to Sign Amendments, Etc.......................................................40
ARTICLE 10. GUARANTY.............................................................................................40
Section 10.01. Guaranty.............................................................................40
Section 10.02. Execution and Delivery of Guaranty....................................................42
Section 10.03. Certain Bankruptcy Events.............................................................42
ARTICLE 11. SUBORDINATION OF SECURITIES..........................................................................42
Section 11.01. Agreement to Subordinate..............................................................42
Section 11.02. Certain Definitions...................................................................43
Section 11.03. Liquidation; Dissolution; Bankruptcy..................................................44
Section 11.04. Default on Senior Indebtedness........................................................45
Section 11.05. Acceleration of Securities............................................................47
Section 11.06. When Distribution Must Be Paid Over...................................................48
Section 11.07. Notice by Company.....................................................................48
Section 11.08. Subrogation...........................................................................48
Section 11.09. Relative Rights.......................................................................49
Section 11.10. Subordination May Not Be Impaired.....................................................49
Section 11.11. Distribution or Notice to Representative..............................................50
Section 11.12. Rights of Trustee and Paying Agent....................................................51
Section 11.13. Authorization to Effect Subordination.................................................51
Section 11.14. No Suspension of Remedies.............................................................51
Section 11.15. Miscellaneous.........................................................................51
ARTICLE 12. SUBORDINATION OF GUARANTY............................................................................52
Section 12.01. Agreement to Subordinate..............................................................52
Section 12.02. Certain Definitions...................................................................53
Section 12.03. Liquidation; Dissolution; Bankruptcy..................................................54
Section 12.04. Default on Guarantor Senior Indebtedness..............................................55
Section 12.05. Acceleration of Securities............................................................55
Section 12.06. When Distribution Must Be Paid Over...................................................56
Section 12.07. Notice by Guarantor...................................................................56
Section 12.08. Subrogation...........................................................................56
Section 12.09. Relative Rights.......................................................................57
Section 12.10. Subordination May Not Be Impaired.....................................................57
Section 12.11. Distribution or Notice to Guarantor Representative....................................58
Section 12.12. Rights of Trustee and Paying Agent....................................................59
Section 12.13. Authorization to Effect Subordination.................................................59
Section 12.14. No Suspension of Remedies.............................................................59
</TABLE>
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<TABLE>
<S> <C>
Section 12.15. Miscellaneous.........................................................................59
ARTICLE 13. CONVERSION...........................................................................................60
Section 13.01. Conversion Privilege..................................................................60
Section 13.02. Conversion Procedure..................................................................61
Section 13.03. Fractional Shares.....................................................................61
Section 13.04. Taxes on Conversion...................................................................62
Section 13.05. JCC Holding to Provide Stock..........................................................62
Section 13.06. Adjustment for Change in Capital Stock................................................62
Section 13.07. Adjustment for Rights Issue...........................................................62
Section 13.08. Adjustment for Other Distributions....................................................63
Section 13.09. Adjustment for Common Stock Issue.....................................................64
Section 13.10. Adjustment for Convertible Securities Issue...........................................65
Section 13.11. Consideration Received................................................................67
Section 13.12. Adjustment For Tender Offer and Certain Repurchases...................................67
Section 13.13. When Adjustment May Be Deferred.......................................................68
Section 13.14. When No Adjustment Required...........................................................68
Section 13.15. Notice of Adjustment..................................................................69
Section 13.16. Voluntary Reduction...................................................................69
Section 13.17. Notice of Certain Transactions........................................................69
Section 13.18. Reorganization of JCC Holding.........................................................70
Section 13.19. JCC Holding Determination Final.......................................................70
Section 13.20. Trustee's Disclaimer..................................................................71
Section 13.21. Converted Securities..................................................................71
Section 13.22. Joint and Several Obligation..........................................................71
ARTICLE 14. MISCELLANEOUS........................................................................................71
Section 14.01. Trust Indenture Act Controls..........................................................71
Section 14.02. Notices...............................................................................71
Section 14.03. Communication by Holders with Other Holders...........................................74
Section 14.04. Certificate and Opinion as to Conditions Precedent....................................74
Section 14.05. Statements Required in Certificate or Opinion.........................................74
Section 14.06. Rules by Trustee and Agents...........................................................75
Section 14.07. Legal Holidays........................................................................75
Section 14.08. No Recourse Against Others............................................................75
Section 14.09. Duplicate Originals...................................................................75
Section 14.10. Governing Law.........................................................................75
Section 14.11. No Adverse Interpretation of Other Agreements.........................................75
Section 14.12. Successors............................................................................75
Section 14.13. Severability..........................................................................76
Section 14.14. Counterpart Originals.................................................................76
Section 14.15. Variable Provisions...................................................................76
Section 14.16. Table of Contents, Headings, Etc......................................................76
Section 14.17. Gaming Laws...........................................................................76
</TABLE>
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<TABLE>
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Section 14.18. Waiver and Release; HET/JCC Agreement.................................................76
Section 14.19. Transfer Restrictions; Legends........................................................79
</TABLE>
EXHIBITS
Exhibit A - Form of Security
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INDENTURE, dated as of October 30, 1998, among Jazz Casino
Company, L.L.C., a Louisiana limited liability company (the "Company"), as
issuer, and JCC Holding Company, a Delaware corporation ("JCC Holding"), as
guarantor, and Norwest Bank Minnesota, National Association (the "Trustee"), as
trustee.
Each of the Company, the Guarantor (as defined herein) and the
Trustee agrees as follows for the benefit of the other party and for the equal
and ratable benefit of the holders of the Company's 8% Convertible Junior
Subordinated Debentures Due 2010 (the "Securities"), and JCC Holding (in its
capacity other than as the Guarantor) agrees solely for the purposes of the
provisions of Articles 13 and 5 and Sections 2.03, 4.02, 4.03 4.04 as follows
for the benefit of the other parties and for the equal and ratable benefit of
the holders of the Securities:
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Affiliate" means, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, beneficial ownership of 10% or more of the voting common equity of a
Person shall be deemed to be control of such Person unless ownership of a lesser
amount may be deemed to be control under the TIA. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Authorized Representative" means, with respect to (i) JCC
Holding or (ii) the Guarantor, any Officer thereof.
"Board of Directors" means the Board of Directors of JCC
Holding, the sole member of the Company, or any committee of the Board of
Directors duly authorized to act hereunder.
"Business Day" means any day other than a Legal Holiday.
"capital lease" means, at the time any determination thereof
is to be made, any lease of property, real or personal, in respect of which the
present value of the minimum rental commitment would be capitalized on a balance
sheet of the lessee in accordance with generally accepted accounting principles.
"capital lease obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease which would at such time be required
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to be capitalized on a balance sheet of the lessee in accordance with
generally accepted accounting principles.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's Capital Stock whether now outstanding or issued after the date of
this Indenture, including, without limitation, all Common Stock and Preferred
Stock.
"Cash Equivalent" means (i) securities issued or directly and
fully guaranteed, or secured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) and in each case maturing
within one year after the date of acquisition, (ii) time deposits, certificates
of deposit of any commercial bank having, or which is the principal subsidiary
of a bank holding company organized under the laws of the United States, any
State thereof, the District of Columbia or any foreign jurisdiction having,
capital and surplus in excess of $250,000,000, (iii) commercial paper issued by
a corporation that is not the Company or an Affiliate thereof which is rated at
least A-2 or the equivalent thereof by Standard & Poor's Ratings Services, a
division of the McGraw-Hill Companies, Inc., or at least P-2 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case maturing within one
year after the date of acquisition, (iv) repurchase obligations with a term of
not more than 90 days collateralized by securities issued or directly and fully
guaranteed, or secured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) entered into with any bank or
other person meeting the qualifications specified in clause (ii) above, and (v)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv).
"Casino Operating Contract" means the Amended and Renegotiated
Casino Operating Contract between the Company and the State of Louisiana for and
through Louisiana Gaming Control Board, dated as of October 30, 1998, as such
agreement may be amended (including any amendment and restatement thereof),
supplemented or modified from time to time, including any replacement or renewal
thereof.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations and other equivalents (however designated,
whether voting or nonvoting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, and includes, without
limitation, all series and classes of such common stock; provided, however, that
Common Stock does not include any Preferred Stock.
"Company" means Jazz Casino Company, L.L.C., a Louisiana
limited liability company, until a successor replaces it in accordance with
Article 5 hereof and thereafter means the successor, and shall include any and
all other obligors on the Securities.
"Corporate Trust Office" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as the Trustee
may give notice to the Company.
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"Credit Agent" means Bankers Trust Company, as Administrative
Agent under the Credit Agreement, and any successor thereto.
"Credit Agreement" means the Credit Agreement, dated as of
October 29, 1998, among the Company, JCC Holding, the various banks from time to
time parties thereto, and Bankers Trust Company, as administrative agent,
together with the related documents thereto (including, without limitation, any
guaranty agreements and security documents), in each case as such agreements may
be amended, supplemented or modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including by way of adding Subsidiaries of the Company and/or JCC Holding as
additional borrowers or guarantors thereunder) all or a portion of the
Indebtedness under such agreement or any successor or replacement agreements and
whether by the same or any other agent, lender or group of lenders.
"Current Market Price" means, with respect to the JCC Holding
Class A Common Stock, as of any date, the volume weighted average with respect
to the immediately preceding ten Trading Days of the last reported sale price
regular way (or, if no such last reported sales price is available for any such
Trading Day, the last reported closing bid price regular way on such Trading
Day) of the JCC Holding Class A Common Stock, as reported by NASDAQ or by the
NASDAQ National Market System (or if the JCC Holding Class A Common Stock is
listed on a national securities exchange, by such exchange); provided, however,
that, if the JCC Holding Class A Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on NASDAQ or the NASDAQ
National Market System, the closing bid price in the over-the-counter market, as
furnished by any New York Stock Exchange member firm that is selected from time
to time by the Company for that purpose and is reasonably acceptable to the
Trustee, shall be used for such calculation; and if the JCC Holding Class A
Common Stock is not traded in the over-the-counter market, "Current Market
Price" shall be determined by the Board of Directors in good faith.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Gaming License" means every material license, material
franchise or other material authorization on the Issue Date or thereafter
required to own, lease, operate or otherwise conduct or manage a casino facility
in any state, local or other jurisdiction including, without limitation, any
applicable material liquor licenses, and with respect to the Company (and
without limitation), the Casino Operating Contract.
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of the United States or any foreign government, any state, province,
city or other political subdivision, in each case
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whether now or hereafter in
existence, or any officer or official thereof, and any maritime authority.
"Guarantor" means JCC Holding, solely in its capacity as
Guarantor.
"guaranty" means a guaranty (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"HET" means Harrah's Entertainment, Inc., a Delaware
corporation, and its successors.
"HET/JCC Agreement" means the HET/JCC Agreement, dated as of
October 30, 1998, among HET, HOC and the Company (and any substitute or
successor agreement), and any other documents entered into in connection with
(and to the extent relating directly to) such agreement, pursuant to which HET
and HOC shall provide the Minimum Payment Guaranty for certain periods and
subject to certain terms and conditions set forth therein, as such agreement and
such documents may be amended (including any amendment and restatement thereof),
supplemented or modified from time to time, including any replacement or renewal
thereof.
"HOC" means Harrah's Operating Company, Inc., a Delaware
corporation, and its successors.
"Holder" means a person in whose name a Security is
registered.
"Indebtedness" means, with respect to any Person, at any date
and without duplication, (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments other than Interest Rate Agreements, (iii) all
reimbursement obligations and other liabilities of such Person with respect to
letters of credit issued for such Person's account, (iv) all obligations of such
Person having an original term of at least one year to pay the deferred purchase
price of property or services, except accounts payable arising in the ordinary
course of business, (v) all obligations of such Person as lessee in respect of
the capital lease obligations under capital leases and (vi) all obligations of
others of a nature described in any of clauses (i) through (v) above guaranteed
by such Person.
"Indenture" means this Indenture (including any exhibits,
schedules, annexes or appendices hereto) as amended from time to time.
"Indentures" means, collectively, this Indenture and the New
Indentures, each as amended from time to time.
"Initial Minimum Payment Guarantors" shall mean HET and HOCI.
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated October 29, 1998, by and among the New Indenture Trustee, the
Credit Agent, the Company,
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HET and HOCI, as such agreement may be amended (including any amendment and
restatement thereof), supplemented or modified from time to time, including
any replacement or renewal thereof.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge arrangement, to or under which
the Company or any of its Subsidiaries is or becomes a party or a beneficiary.
"JCC Holding" means JCC Holding Company, a Delaware
corporation and the sole member of the Company, and its successors.
"JCC Holding Class A Common Stock" means the Class A Common
Stock, $.01 par value per share, of JCC Holding, or any security of JCC Holding
which may be exchanged or otherwise substituted therefor, including, without
limitation, the shares of Common Stock of JCC Holding into which the JCC Holding
Class A Common Stock will be reclassified or converted upon the Transition Date.
"Lien" means, with respect to any asset, any mortgage, deed of
trust, lien (statutory or otherwise), pledge, charge, security interest,
assignment, deposit, arrangement, easement, hypothecation, claim, preference,
priority or other encumbrance of any kind in respect of such asset, whether or
not filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement, any capital lease, any
option or other agreement to sell and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Management Agreement" means the Second Amended and Restated
Management Agreement between the Company and Harrah's Management Company
relating to the management of the Casino dated as of October 29, 1998, as such
agreement may be amended (including amendment and restatement thereof),
supplemented or modified from time to time, including any replacement or renewal
thereof.
"Minimum Payment Guarantor" means the Initial Minimum Payment
Guarantors and any other successor or substitute entity or entities which
provides a Minimum Payment Guaranty.
"Minimum Payment Guaranty" means the Minimum Payment Guaranty
(as defined in the Casino Operating Contract) that the Casino Operating Contract
obligates the Company to cause to be provided to the State of Louisiana by and
through the Louisiana Gaming Control Board, as such agreement may be amended
(including amendment and restatement thereof), supplemented or modified from
time to time, including any replacement or renewal thereof.
"Minimum Payment Guaranty Documents" means each Minimum
Payment Guaranty and all agreements or documents (including, without limitation,
the HET/JCC Agreement) executed and delivered in connection therewith.
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"Minimum Payment Guaranty Obligations" shall have the meaning
set forth for such term in the Intercreditor Agreement.
"NASDAQ" means the NASDAQ Stock Market operated by the
National Association of Securities Dealers, Inc.
"New Bonds" means the Senior Subordinated Notes due 2009 with
Contingent Payments of the Company.
"New Contingent Bonds" means the Senior Subordinated
Contingent Notes due 2009 of the Company.
"New Indentures" means, collectively, (i) the Indenture, dated
as of October 30, 1998, among the Company, as obligor, JCC Holding Company, CP
Development, L.L.C., FP Development, L.L.C. and JCC Development Company, L.L.C.
as guarantors, and Norwest Bank Minnesota, National Association, as trustee in
connection with the New Bonds, and (ii) the Indenture, dated as of October 30,
1998, among the Company, as obligor, JCC Holding, CP Development, L.L.C., FP
Development, L.L.C. and JCC Development Company, L.L.C. as guarantors, and
Norwest Bank Minnesota, National Association, as trustee in connection with the
New Contingent Bonds, in each case as such Indentures may be amended (including
any amendment and restatement thereof), supplemented or modified from time to
time, including any agreements extending the maturity of, refinancing, replacing
or otherwise restructuring all or a portion of the Indebtedness thereunder or
any successor or replacement agreements and whether the financing thereunder is
provided by the same or any other Persons.
"New Indentures Trustee" means, collectively, the trustee
under each of the New Indentures from time to time.
"Non-Qualified Person" means a person or entity that would, if
associated with the Company, JCC Holding, Harrah's New Orleans Management
Company, a Nevada corporation (the "Manager"), or any affiliate of the Manager,
impair or cause the denial, suspension or revocation of any gaming registration,
permit, license, right or entitlement or any alcoholic beverage registration,
permit, license, right or entitlement held or applied for by the Company, JCC
Holding, the Manager or any affiliate of the Manager.
"Obligations" means, with respect to any Indebtedness or any
Interest Rate Agreement, any principal, premium, interest (including, without
limitation, interest, whether or not allowed, after the filing of a petition
initiating any proceeding referred to in Section 6.01(5), (6) or (7)),
penalties, commissions, charges, expenses, fees, indemnifications,
reimbursements and other liabilities or amounts payable under or in respect of
the documentation governing such Indebtedness or such Interest Rate Agreement.
"Officer" means the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers and delivered to the Trustee, and which shall include the statements
set forth in Section 14.05 hereof.
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"Opinion of Counsel" means a written opinion from legal
counsel who may be an employee of, or counsel to, the Company or who may be
other counsel reasonably acceptable to the Trustee.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's Capital Stock which is preferred as to the payment of dividends
or distributions, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over the Capital Stock of
any other class in such Person, whether now outstanding or issued after the date
of this Indenture.
"principal" of a debt security means the principal of the
security plus the premium, if any, on the security.
"Redemption Price," when used with respect to any Security or
portion thereof to be redeemed, means the redemption price for such redemption
set forth in Paragraph 5 in the applicable form of Security, including, to the
extent set forth therein, accrued and unpaid interest with respect to such
Security or portion thereof.
"Regulating Authority" means the Louisiana Gaming Control
Board.
"Required Regulatory Redemption" means a redemption by the
Company of any Security (a) pursuant to, and in accordance with, any order of
any Governmental Authority with appropriate jurisdiction and authority relating
to a Gaming License held by the Company or an Affiliate of the Company
(including HET and any Affiliate of HET) or a wholly owned Subsidiary of the
Company, or (b) to the extent necessary in the reasonable, good faith judgment
of the board of directors of HET, in the case of HET or one of its Affiliates,
or the Board of Directors, in the case of the Company or one of its Affiliates,
to prevent the loss, or to prevent the failure to obtain or the material
impairment or the failure to secure the reinstatement of, any such Gaming
License, in the case of both clauses (a) and (b) where such redemption or
acquisition is required because the holder or beneficial owner of such Security
is required to be found suitable or to otherwise qualify under any gaming or
other laws and is not found suitable or so qualified within a reasonable period
of time. Without limiting the generality of the foregoing, if the Company
receives written notice from Harrah's Management Company pursuant to Section
21.03 of the Management Agreement that Securities have been transferred to a
Non-Qualified Person, the Company shall be entitled to redeem such Securities
from such Non-Qualified Person and such redemption shall be a Required
Regulatory Redemption.
"SEC" means the Securities and Exchange Commission.
"Secondary Securities" shall have the meaning set forth in
Section 2.02 hereof.
"Securities" means the securities described above issued under
this Indenture, including, without limitation, any Secondary Securities.
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"Securities Act" means the Securities Act of 1933, as amended,
or any successor act.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X under the
Securities Act and the Exchange Act (as such Regulation is in effect on the date
hereof).
"Subsidiary" of any Person means any entity of which shares of
the Capital Stock or other equity interests (including partnership interests)
entitled to cast at least a majority of the votes that may be cast by all shares
or equity interests having ordinary voting power for the election of directors
or other governing body of such entity is owned by such Person directly and/or
through one or more Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Sections 9.01 and 9.03 hereof.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday, other than any day on which securities are not traded on the
applicable securities exchange or in the applicable securities market.
"Transition Date" has the meaning ascribed thereto in JCC
Holding's Restated Certificate of Incorporation to be effective October 29,
1998.
"Trust Officer" means any officer within the Corporate Trust
Group (or any successor group) of the Trustee, including any Vice President,
Assistant Vice President, Secretary, Assistant Secretary or any other officer or
assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred at the Trustee's
Corporate Trust Office because of his/her knowledge of and familiarity with the
particular subject.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture, and thereafter means the successor serving hereunder.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case under clause (i) or (ii), are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such obligation or a specific
payment of interest on or principal of any such obligation held by such
custodian for the account of the holder of a depository receipt; provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the
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obligation or the specific payment of interest on or principal of the
obligation evidenced by such depository receipt.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ---------
<S> <C>
"Bankruptcy Law"................................................................. 6.01
"Claim".......................................................................... 11.02
"Claim".......................................................................... 14.18
"Conversion Agent"............................................................... 2.03
"Converted Securities"........................................................... 13.21
"Custodian"...................................................................... 6.01
"Debtor"......................................................................... 6.01
"Event of Default"............................................................... 6.01
"Guarantor Payment Default"...................................................... 12.04
"Guarantor Representative"....................................................... 12.02
"Guarantor Senior Indebtedness".................................................. 12.02
"Initial Minimum Payment Guarantor".............................................. 14.18
"Legal Holiday".................................................................. 14.07
"Outstanding Securities"......................................................... 2.08
"Paying Agent"................................................................... 2.03
"Payment Blockage Period"........................................................ 11.04
"Payment Default"................................................................ 11.04
"Redemption Date"................................................................ 3.03
"Registrar"...................................................................... 2.03
"Representative"................................................................. 11.02
"Senior Indebtedness"............................................................ 11.02
"Specified Guarantor Indebtedness"............................................... 12.02
"Specified Senior Indebtedness".................................................. 11.02
"Unknown Claim".................................................................. 14.18
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
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"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Securities means the Company.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally
accepted accounting principles in the United States;
(3) references to "generally accepted accounting
principles" shall mean generally accepted accounting
principles in effect in the United States as of the
time when and for the period as to which such
accounting principles are to be applied;
(4) "or" is not exclusive;
(5) words in the singular include the plural, and words
in the plural include the singular;
(6) provisions apply to successive events and
transactions; and
(7) the words "include," "included" and "including" as
used herein are deemed in each case to be followed by
the phrase "without limitation."
ARTICLE 2.
THE SECURITIES
Section 2.01. Form and Dating.
The certificates representing the Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A
attached hereto, the terms of which are incorporated in and made a part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rules, agreements to which the Company is subject or
usage. Each Security shall be dated the date of its authentication. The
Securities shall be in denominations of $1.00 and integral multiples thereof,
except that Secondary Securities may be in denominations of other than $1.00 or
any integral multiple thereof; provided, however, that the Company may at its
option pay cash in lieu of issuing Secondary Securities in any denominations of
less than $1.00.
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Section 2.02. Execution and Authentication.
An Officer of the Company shall sign the Securities for the
Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities (excluding Secondary
Securities) for original issue up to the aggregate principal amount stated in
paragraph 4 of the Securities, upon a written order of the Company signed by an
Officer, which order shall set forth the amount and the date of the Securities
to be authenticated. The aggregate principal amount of Securities outstanding at
any time may not exceed the amount set forth herein, except for any Securities
that may be issued pursuant to the immediately following paragraph and except as
provided in Sections 2.07 and 2.08.
The Company may, at its option and in its sole discretion, pay
interest through the issuance of additional Securities ("Secondary Securities")
in lieu of the payment in whole or in part of interest in cash on the
Securities, (i) on any stated due date of an installment of interest on the
Securities on or prior to October 30, 2003 (the fifth anniversary following
issuance), and (ii) on any stated due date of an installment of interest on the
Securities after October 30, 2003, if the Company did not make "Contingent
Payments" (as defined in the New Indenture with respect to the New Contingent
Bonds) on the immediately preceding interest payment date for such New
Contingent Bonds. The Company shall give written notice to the Trustee of the
amount of interest to be paid in Secondary Securities not less than five
Business Days prior to the relevant stated due date of an installment of
interest on the Securities, and the Trustee or an authenticating agent (upon
written order of the Company signed by an Officer of the Company given not less
than five nor more than 45 days prior to such interest payment date) shall
authenticate for original issue (pro rata to each Holder of any Securities as of
such record date) Secondary Securities in an aggregate principal amount equal to
the amount of cash interest not paid on such interest payment date. Each
issuance of Secondary Securities in lieu of the payment of interest in cash on
the Securities shall be made pro rata with respect to outstanding Securities,
and the Company shall have the right to aggregate amounts of interest payable in
the form of Secondary Securities to a Holder of outstanding Securities and issue
to such Holder a single Secondary Security in payment thereof. Secondary
Securities may be denominated a separate series if the Company deems it
necessary to do so in order to comply with any law or other applicable
regulations or requirements, with appropriate distinguishing designations.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless limited by the term of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to
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"authentication" by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate.
Section 2.03. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain (i) an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar") and (ii) an office or agency where Securities may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent. The Company may change any Paying Agent,
Registrar or co-registrar without notice to any Holder. The Company shall
promptly notify the Trustee in writing of the name and address of any Agent not
a party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent the Trustee shall act as such. The Company
or any of its subsidiaries may act as Paying Agent, Registrar or co-registrar.
JCC Holding shall maintain an office or agency where
Securities may be presented for conversion ("Conversion Agent"). The term
"Conversion Agent" includes any additional conversion agent. JCC Holding may
change any Conversion Agent without notice to any Holder. JCC Holding shall
promptly notify the Trustee in writing of the name and address of any Conversion
Agent not a party to this Indenture. If JCC Holding fails to appoint or maintain
another entity as Conversion Agent, the Trustee shall act as such. JCC Holding
or any of its subsidiaries may act as Conversion Agent.
The Company or JCC Holding, as the case may be, shall enter
into an appropriate agency agreement with any Agent not a party to this
Indenture, which shall incorporate the provisions of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Company or JCC Holding, as the case may be, shall notify the Trustee of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent or JCC Holding fails to maintain a Conversion Agent or the Company
or JCC Holding, as the case may be, fails to give the foregoing notice, the
Trustee shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 7.07 hereof.
The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Securities. JCC Holding initially appoints the Trustee as Conversion Agent.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets and/or Secondary Securities held by
the Paying Agent for the payment of principal of, or interest on, the Securities
and shall notify the Trustee in writing of any Default by the Company in making
any such payment. If the Company or a Subsidiary of the Company acts as Paying
Agent, it shall segregate such assets and hold them as a separate trust fund for
the benefit of the Holders or the Trustee. The Company at any time may require a
Paying Agent to distribute all assets
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and/or Secondary Securities held by it to the Trustee and account for any
assets disbursed, and the Trustee may at any time during the continuance of
any payment Default, upon written request to a Paying Agent, require such
Paying Agent to distribute all assets and/or Secondary Securities held by it
to the Trustee and to account for any assets distributed. Upon distribution
to the Trustee of all assets and/or Secondary Securities that have been
delivered by the Company to the Paying Agent, the Paying Agent (if other than
the Company) shall have no further liability for such assets and/or Secondary
Securities.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Holders and shall otherwise comply with TIA Section. 312(a).
If the Trustee is not the Registrar, the Company shall cause to be furnished to
the Trustee at least seven Business Days before each interest payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders and the Company shall otherwise comply with TIA
Section. 312(a). The Trustee, the Registrar and the Company shall provide a
current securityholder list to any Gaming Authority upon demand.
Section 2.06. Transfer and Exchange.
When Securities are presented to the Registrar or a
co-registrar with a request to register, transfer or exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall
register the transfer or make the exchange if its requirements for such
transactions are met; provided, however, that any Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instruction of transfer in form reasonably satisfactory
to the Registrar and the Trustee duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations of transfers and
exchanges, the Company shall issue and the Trustee shall authenticate Securities
at the Registrar's request, subject to such rules as the Trustee may reasonably
require.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business on a Business Day 15 days before the day of any selection of Securities
for redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (ii) to register the transfer (other than by way of
conversion into JCC Holding Class A Common Stock) of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part or (iii) to register the transfer or
exchange of a Security between the record date and the next succeeding interest
payment date.
No service charge shall be made to the Holder for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than such transfer tax or similar governmental charge payable upon
exchanges (without a transfer to another Person) pursuant to Section 2.10, 3.06
or 9.05 hereof, in which event the Company will be responsible for the payment
of any such taxes).
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Prior to due presentment for registration of transfer of any
Security, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of and interest on such
Security and for all other purposes whatsoever, whether or not such Security is
overdue, and none of the Trustees, any Agent or the Company shall be affected by
notice to the contrary.
Section 2.07. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their reasonable satisfaction of
the destruction, loss or theft of any Security, the Company and the Guarantor
shall issue and the Trustee, upon the written order of the Company signed by two
Officers, shall authenticate a replacement Security if the Trustee's
requirements for replacement of Securities are met. If required by the Trustee
or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the reasonable judgment of the Trustee and the Company to protect
the Company, the Trustee, any Agent or any authenticating agent from any loss
that any of them may suffer if a Security is replaced. The Company and the
Trustee may charge for their reasonable expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section 2.07 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.08. Outstanding Securities.
The Securities outstanding (the "Outstanding Securities") at
any time are all the Securities authenticated by the Trustee, including
Secondary Securities, except for those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.
If all of the principal amount of any Security is considered
paid under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
Subject to Section 2.09 hereof, a Security does not cease to
be outstanding because the Company or one of its Affiliates holds the Security.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, JCC Holding or an Affiliate of the Company or
JCC Holding shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in
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relying on any such direction, waiver or consent, only Securities that a
Trust Officer knows are so owned shall be so disregarded.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company and the Guarantor may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
and the Guarantor shall prepare and the Trustee, upon receipt of the written
order of the Company signed by two Officers, shall authenticate definitive
Securities in exchange for temporary Securities. Until such exchange, temporary
Securities shall be entitled in all respects to the same rights, benefits and
privileges as definitive Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange, redemption, payment or conversion. The Trustee shall
promptly cancel all Securities surrendered for registration of transfer,
exchange, redemption, payment, replacement, cancellation or conversion and shall
destroy cancelled Securities (subject to the record-retention requirement of the
Exchange Act) and certification of their destruction delivered to the Company.
The Company may not issue new Securities to replace Securities that it has
redeemed or paid or that have been delivered to the Trustee for cancellation or
that any Holder has converted pursuant to Article 13 hereof. The Trustee shall
provide the Company a list of all Securities that have been cancelled from time
to time as requested by the Company.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, which date shall be at
least five Business Days prior to the payment date, in each case at the rate
provided in the Securities and in Section 4.01 hereof. The Company shall, with
the consent of the Trustee, fix or cause to be fixed each such special record
date and payment date. At least 15 days before a special record date, the
Company (or the Trustee in the name of and at the expense of the Company) shall
mail to the Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION
Section 3.01. Right of Redemption.
Redemption of Securities shall be made only in accordance with
this Article 3. At its election, the Company may redeem the Securities in whole
or in part, (a) at any time at par value plus accrued and unpaid interest to the
applicable Redemption Date (as defined herein), payable in cash, or (b) at any
time during the twelve-month period ending October 30, 2010 if the then
applicable conversion price is greater than the Current Market Price per share
of JCC Holding Class A Common Stock on the Redemption Date, at par value plus
accrued and unpaid interest to the applicable Redemption Date, payable as set
forth in paragraph 5 of the Security. Except as provided in this paragraph,
Section 3.02 and paragraph 5 of the Notes, the Notes may not otherwise be
redeemed at the option of the Obligors.
Section 3.02. Redemption Pursuant to Applicable Laws.
Notwithstanding any other provision of this Indenture, the
Securities shall also be redeemable in whole or in part, at any time pursuant
to, and in accordance with, a Required Regulatory Redemption. If the Company
requires the redemption of any Security pursuant to this Section 3.02, then the
Redemption Price shall be the principal amount thereof, plus accrued and unpaid
interest to the date of redemption (or such lesser amount as may be required by
applicable law or by order of any Gaming Authority). The Company shall tender
the Redemption Price (together with any accrued and unpaid interest) to the
Trustee no less than 20 and no more than 60 days after the Company gives the
Holder or owner of a beneficial or voting interest written notice of redemption
or such earlier date as may be required by applicable law. The Company shall
notify the Trustee of any disposition or redemption required under this Section
3.02, and upon receipt of such notice, the Trustee shall not accord any rights
or privileges under this Indenture or any Security to any Holder or owner of a
beneficial or voting interest who is required to dispose of any Security or
tender it for redemption, except to pay the Redemption Price upon tender of such
Security.
Section 3.03. Notice to Trustee.
If the Company elects to redeem Securities pursuant to Article
3 (including, without limitation, Section 3.02), it shall notify the Trustee in
writing of the date on which the applicable Securities are to be redeemed (each,
a "Redemption Date") and the principal amount thereof to be redeemed and whether
they want the Trustee to give notice of redemption to the Holders.
Section 3.04. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to Paragraph 5 thereof, the Trustee shall, if applicable, select from among such
Securities to be redeemed pro rata or by lot or by such other method as the
Trustee shall determine to be fair and appropriate and in such manner as
complies with any applicable legal and stock exchange requirements.
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The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. The Trustee may select for redemption portions (equal to
$1.00 or any integral multiple thereof) of the principal of Securities.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption.
Section 3.05. Notice of Redemption.
At least 20 days but not more than 60 days before each
Redemption Date, the Company shall mail a notice of redemption by first class
mail, postage prepaid, to each Holder whose Securities are to be redeemed
(unless a shorter notice period shall be required by applicable law). At the
Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. Each notice of redemption shall
identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued
and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent at the address
specified in such notice to collect the Redemption
Price;
(5) that, unless (a) the Company defaults in its
obligation to deposit cash or Cash Equivalents with
the Paying Agent in accordance with Section 3.07 or
(b) such redemption payment is prevented for any
reason, interest on Securities called for redemption
ceases to accrue on and after the Redemption Date and
the only remaining right of the Holders of such
Securities is to receive payment of the Redemption
Price upon surrender to the Paying Agent of the
Securities called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the
portion of the principal amount of such Security to
be redeemed and that, after the Redemption Date, and
upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the
unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed,
the identification of the particular Securities (or
portion thereof) to be redeemed, as well as the
aggregate principal amount of such Securities to be
redeemed and the aggregate principal amount of
Securities to be outstanding after such partial
redemption;
(8) the CUSIP number of the Securities to be redeemed;
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(9) in the case of a Required Regulatory Redemption, the
circumstances pursuant to which such Required
Regulatory Redemption is being effected; and
(10) that the notice is being sent pursuant to this
Section 3.05 and pursuant to the redemption
provisions of Paragraph 5 of the Form of Security
attached hereto as Exhibit A.
Section 3.06. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.05, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price. Upon surrender to the Trustee or Paying Agent,
such Securities called for redemption shall be paid at the Redemption Price;
provided that if the Redemption Date is after a regular Record Date and on or
prior to the corresponding Interest Payment Date, the accrued interest
constituting part of the Redemption Price shall be payable to the Holder of the
redeemed Securities registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
Section 3.07. Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit
with the Paying Agent cash or Cash Equivalents or JCC Holding Class A Common
Stock sufficient to pay the Redemption Price of all Securities to be redeemed on
such Redemption Date. The Paying Agent shall promptly return to the Company any
cash or Cash Equivalents so deposited which is not required for that purpose
upon the written request of the Company.
If the Company complies with the preceding paragraph and the
other provisions of this Article 3 and payment of the Securities called for
redemption is not prevented for any reason, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph and the other
provisions of this Article 3, interest shall continue to accrue and be paid from
and including the Redemption Date until such payment is made on the unpaid
principal, and, to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the rate and in the manner provided in Section 2.12
hereof and the Securities.
Section 3.08. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without charge, a new Security or Securities in an
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
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ARTICLE 4.
COVENANTS
Section 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and in this
Indenture. Principal and interest shall be considered paid on the date due if
the Paying Agent (other than the Company or an Affiliate thereof) holds on such
date in trust for the benefit of the Persons entitled to such principal and
interest money, in immediately available funds, or, to the extent permitted by
Section 2.02 hereof, Secondary Securities, deposited by the Company and
designated for and sufficient to pay all principal and interest then due;
provided, however, that money held by the Paying Agent for the benefit of
holders of Senior Indebtedness pursuant to the provisions of Article 11 hereof
shall not be considered paid within the meaning of this Section 4.01, except to
the extent of any subrogation rights pursuant to Section 11.08.
The Company shall pay interest (including interest accruing
after, or that would accrue but for the occurrence of the commencement of, any
proceeding under any Bankruptcy Law whether or not such interest is an allowable
claim in such proceeding) on overdue principal at the rate equal to the interest
rate on the Securities to the extent lawful; it shall pay interest on overdue
installments of interest (without regard to any applicable grace period) at the
same rate whether or not such interest is an allowable claim in any such
proceeding.
Section 4.02. Maintenance of Office or Agency.
(a) The Company will maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the Trustee,
Registrar or co-registrar) where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, The City of New York for such purposes. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03 hereof.
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(b) JCC Holding will maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee,
Registrar or Co-Registrar) where Securities may be presented for conversion. JCC
Holding will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time JCC Holding
should fail to maintain such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentments may be made at the
Corporate Trust Office of the Trustee.
JCC Holding hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of JCC Holding in accordance with
Section 2.03 hereof.
Section 4.03. SEC Reports; Other Information.
(a) Whether or not the Company, the Guarantor or JCC Holding
is subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company or JCC Holding shall file (which filing, in the case of the
Company, may be on a consolidated basis with the Company's direct or indirect
parent and such parent's consolidated subsidiaries) with the SEC (to the extent
permitted under the Exchange Act) on or prior to the date the Company is or
would have been required to file such with the SEC (the "Required Filing Date"),
annual and quarterly consolidated financial statements substantially equivalent
to financial statements that would have been included in reports filed with the
SEC if the Company were subject to the requirements of Section 13 or 15(d) of
the Exchange Act, including with respect to annual information only, a report
thereon by the Company's certified independent public accountants that would be
required in such reports to the SEC and, in each case, together with a
management's discussion and analysis of financial condition and results of
operations, that would be so required. The Company will also provide copies of
such annual and quarterly reports to the Trustee within 5 days after the
Required Filing Date and to Holders of Securities within 30 days after the
Required Filing Date; provided, that the Company shall not be in default of the
provisions of this Section 4.03(a) for any failure to file reports with the SEC
solely by refusal by the SEC to accept the same for filing, it being understood
that in such event such reports shall be delivered to the Trustee and the
Holders as described herein as if they had been filed with the SEC.
(b) For so long as any of the Securities remain outstanding
and are "restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, (i) each of the Company and JCC Holding will, during any period
in which it is not subject to Section 13 or 15(d) under the Exchange Act, make
available to any Holder or beneficial owner of a Security, to a prospective
purchaser of a Security who is a qualified institutional buyer within the
meaning of Rule 144A under the Securities Act, or to the Trustee for delivery to
such Holder, beneficial owner or prospective purchaser, as the case may be, in
connection with any sale thereof, in each case at the Holder's written request
to the Company, the information specified in, and meeting the requirements of,
Rule 144A(d)(4) and/or Rule 144(c)(2), as applicable, under the Securities Act
and (ii) each of the Company and JCC Holding will take such further action as is
reasonable under the circumstances to enable any such Holder to sell its
Securities without registration under the Securities Act, at the Holder's
written request to the Company.
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(c) Upon the request of any Holder of a Security, the Company
will deliver to such Holder a written statement as to whether it has complied
with the requirements of this Section 4.03.
(d) The Company, JCC Holding and any Subsidiary of JCC Holding
will report the acquisition by the Company, JCC Holding or any Subsidiary of JCC
Holding of, or any agreement by the Company, JCC Holding or any Subsidiary of
JCC Holding to acquire, whether directly or indirectly, any of the Securities or
any interest therein to the Trustee in writing within three days of any such
acquisition or agreement.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company and within 60 days after the
end of each quarterly period, an Officers' Certificate stating whether or not,
after a review of the activities of JCC Holding, the Company and its
Subsidiaries during the preceding fiscal year or quarter, as applicable, made
under the supervision of the signing Officers with a view to determining whether
the Company and JCC Holding have kept, observed, performed and fulfilled their
respective obligations under this Indenture and the Securities, and further
stating, as to each such Officer signing such certificate, that to the best of
his knowledge the Company and JCC Holding have kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and in the
Securities and are not in default in the performance or observance of any of the
terms, provisions and conditions hereof or thereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he may have knowledge and what action the Company or JCC Holding, as
applicable, is taking or proposes to take with respect thereto) and that to the
best of his knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal of or interest, if any, on the
Securities are prohibited by Article 11 hereof or otherwise or, if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants,
the annual reports delivered to the Trustee and the Holders pursuant to
Section 4.03 shall be accompanied by a written statement of the Company's or
JCC Holding's, as the case may be, independent public accountants that in
making the examination necessary for certification of such annual reports
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Section 4.01 hereof or, if any such
violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable in the
absence of bad faith, gross negligence or willful misconduct directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company will, so long as any of the Securities are
outstanding, promptly deliver to the Trustee, forthwith upon any Officer
becoming aware of any Event of Default or Default, and, in any event within five
(5) Business Days of such awareness, an Officers' Certificate specifying such
Event of Default or Default and what action the Company is taking or proposes to
take with respect thereto.
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Section 4.05. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive the Company or any Guarantor from paying all or any portion of the
principal of or interest on the Securities contemplated herein or in the
Securities or which may affect the covenants or the performance of this
Indenture, and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants (to the
extent that it may lawfully do so) that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE 5.
SUCCESSORS
Section 5.01. When Company and JCC Holding May Merge, Etc.
Neither the Company nor JCC Holding shall consolidate with or
merge with or into another Person or, directly or indirectly, sell, transfer,
lease or convey all or substantially all of its assets whether in a single
transaction or a series of related transactions, to another Person or group of
affiliated Persons, unless:
(1) the Person formed by or surviving any such
consolidation or merger (if other than the Company or
JCC Holding), or to which such sale, transfer, lease
or conveyance shall have been made, is a corporation
or limited liability company organized and existing
under the laws of the United States, any state
thereof or the District of Columbia;
(2) the corporation or limited liability company formed
by or surviving any such consolidation or merger (if
other than the Company or JCC Holding), or to which
such sale, transfer, lease or conveyance shall have
been made, assumes by supplemental indenture in a
form reasonably satisfactory to the Trustee all the
obligations of the Company or JCC Holding, as
applicable, under the Securities and this Indenture;
(3) immediately before and after the transaction no
Default or Event of Default exists; and
(4) such transaction will not result in the loss of any
Gaming License relating to the Company.
For purposes of the first sentence of this Section 5.01, the
sale, lease, conveyance or transfer of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company or JCC Holding,
which properties and assets, if held by the Company or JCC Holding, as the case
may be, instead of such Subsidiaries, would constitute all or substantially all
of the properties and assets of the Company, or JCC Holding, as the case may be,
on a consolidated
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basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company or JCC Holding, as the case may be.
The Company, or JCC Holding, as applicable, shall deliver to
the Trustee prior to the consummation of the proposed transaction an Officers'
Certificate to the foregoing effect and an Opinion of Counsel stating that the
proposed transaction and such supplemental indenture comply with this Section
5.01. The Trustee shall be entitled to rely conclusively upon such Officers'
Certificate and Opinion of Counsel.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company or JCC Holding in accordance with Section 5.01 hereof, (i) the
successor corporation or limited liability company formed by such consolidation
or into or with which the Company or JCC Holding is merged or to which such
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or JCC
Holding, as applicable, under this Indenture and in the Securities with the same
effect as if such successor Person has been named as the Company or JCC Holding,
as applicable, herein and thereafter, except in the case of a lease, the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Securities and (ii) the Guarantor shall be released of
its obligations under the Guaranty.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" wherever used herein means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) the Company defaults in the payment of interest on any
Security when the same becomes due and payable and the Default
continues for a period of 30 days whether or not payment is prohibited
by Article 11 hereof;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at maturity, upon
redemption or otherwise whether or not payment is prohibited by Article
11 hereof;
(3) the Company or JCC Holding fails to observe or perform any
covenant, condition or agreement on the part of the Company or JCC
Holding, as applicable, to be observed or performed pursuant to Section
5.01 hereof;
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(4) the Company, JCC Holding or the Guarantor fails to comply
with any of its other agreements or covenants in, or provisions of, the
Securities or this Indenture and such Default continues for the period
and after the notice specified in this Section 6.01;
(5) the Company, the Guarantor or any Significant Subsidiary
of the Company (in either case, a "Debtor") files a petition commencing
a voluntary case under title 11 of the United States Code, or a Debtor
commences a case or proceeding under any other Bankruptcy Law seeking
the adjustment, restructuring or discharge of the debts of such Debtor,
or the liquidation of such Debtor, including, without limitation, the
making by a Debtor of an assignment for the benefit of creditors; or
the taking of any corporate action by a Debtor in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing;
(6) a petition commencing an involuntary case against a Debtor
is filed under title 11 of the United States Code, with respect to
which case (a) such Debtor consents or fails to timely object to the
entry of, or fails to seek the stay and dismissal of, an order of
relief, (b) an order for relief is entered and is pending and unstayed
on the 60th day after the filing of the petition commencing such case,
or if stayed, such stay is subsequently lifted so that such order for
relief is given full force and effect, or (c) no order for relief is
entered, but the court in which such petition was filed has not entered
an order dismissing such petition by the 60th day after the filing
thereof; or a case or proceeding is commenced under any other
Bankruptcy Law against a Debtor (or any substantial part of the assets
or properties of any Debtor) seeking the adjustment, restructuring or
discharge of the debts of such Debtor, or the liquidation of such
Debtor, which case or proceeding is pending without having been
dismissed on the 60th day after the commencement thereof;
(7) a court of competent jurisdiction or the Regulating
Authority enters a judgment, decree or order appointing a Custodian (as
defined below) of a Debtor or any substantial part of the assets or
properties of a Debtor, or directing the winding-up or liquidation of
the affairs or any substantial part of the assets or property of a
Debtor, and (a) such Debtor consents or fails to timely object to the
entry of, or fails to seek the stay and dismissal of, such judgment,
decree or order, or (b) such judgment, decree or order is in full force
and effect and is not stayed on the 60th day after the entry thereof,
or, if stayed, such stay is thereafter lifted so that such judgment,
decree or order is given full force and effect; or
(8) a default in the payment of principal, premium or interest
when due at final maturity or an acceleration for any other reason of
the maturity of any Indebtedness of the Company or any Significant
Subsidiary with an aggregate principal amount in excess of $50,000,000,
including, without limitation, Indebtedness under the Credit Agreement
at such times as the aggregate principal amount of Indebtedness
thereunder exceeds $50,000,000; provided that an Event of Default shall
not be deemed to occur with respect to the failure to make such payment
at final maturity or the acceleration of the maturity of Indebtedness
of the Company or any Significant Subsidiary if such acceleration shall
be rescinded, or the Indebtedness shall be repaid in full, in each such
case within 10 days.
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The term "Bankruptcy Law" means title 11 of the United States
Code or any similar Federal or state law relating to bankruptcy, insolvency,
receivership, winding up, liquidation, reorganization or relief of debtors or
any amendment to, succession to or change in any such law. The term "Custodian"
means any receiver, trustee, assignee, liquidator, sequestrator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 30% in
principal amount of the then Outstanding Securities notify the Company and the
Trustee, of the Default and the Company, or JCC Holding, as the case may be,
does not cure the Default within 30 days after receipt of the notice. The notice
must specify the Default, demand that it be remedied and state that such notice
is a "Notice of Default."
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default
specified in clause (5), (6) or (7) of Section 6.01 hereof with respect to the
Company) occurs and is continuing, the Trustee may, by written notice to the
Company, or the Holders of at least 30% (or 25% in the case of an Event of
Default specified in Section 6.01(1) or (2) hereof) in principal amount of the
then Outstanding Securities may, by written notice to the Company, the Guarantor
and the Trustee, and the Trustee shall, upon the request of such Holders,
declare the unpaid principal of and any accrued but unpaid interest on all the
Securities to be due and payable. Upon such declaration all of the unpaid
principal of and any accrued but unpaid interest on the Securities shall be due
and payable immediately; provided, however, that if any Minimum Payment Guaranty
Obligations are outstanding or any Indebtedness is outstanding pursuant to the
Credit Agreement or the New Indentures, upon a declaration of acceleration, such
principal and interest shall be due and payable upon the earlier of (x) the day
that is five Business Days after the provision to the Company, the Minimum
Payment Guarantor, the Credit Agent and the New Indentures Trustee of such
written notice, unless such Event of Default is cured or waived prior to such
date and (y) the date of acceleration of any Minimum Payment Guaranty
Obligations or any Indebtedness under the Credit Agreement or the New
Indentures. If an Event of Default specified in clause (5), (6) or (7) of
Section 6.01 hereof occurs with respect to the Company, the unpaid principal of
and any accrued but unpaid interest on all the Securities shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. The Holders of a majority in principal
amount of the then Outstanding Securities by written notice to the Company and
to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal or interest that has become
due solely because of the acceleration) have been cured or waived. No such
rescission shall affect any subsequent Default or Event of Default or impair any
right consequent thereto.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of or
interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
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The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.
Section 6.04. Waiver of Past Defaults.
Subject to Section 9.02 hereof, the Holders of 66-2/3% in
principal amount of the then Outstanding Securities by notice to the Trustee may
waive an existing Default or Event of Default and its consequences except a
continuing Default or Event of Default in the payment of the principal of or
interest on any Security. Upon any such waiver (and except as may be otherwise
provided therein), such Default or Event of Default shall cease to exist and,
together with any Event of Default arising therefrom, shall be deemed to have
been cured for every purpose of this Indenture, but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 6.05. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 6.06. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
Section 6.07. Control by Holders.
The Holders of a majority in principal amount of the then
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or for
exercising any trust or power conferred on it. However, the Trustee may (i)
refuse to follow any direction that conflicts with law or this Indenture, that
the Trustee reasonably determines may be unduly prejudicial to the rights of
other Holders or that the Trustee reasonably believes may subject the Trustee to
personal liability or (ii) take any other action that it deems proper that is
not inconsistent with such decision. The Trustee shall be entitled to
indemnification reasonably satisfactory to it against losses or expenses caused
by the taking or not taking of such action.
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Section 6.08. Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or
the Securities only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 30% (or 25% in the case of an
Event of Default specified in Section 6.01(1) or (2)
hereof) in principal amount of the then Outstanding
Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer and, if requested,
provide, to the Trustee indemnity reasonably
satisfactory to the Trustee against any of the costs,
expenses and liabilities reasonably expected to be
incurred in compliance with such request;
(4) the Trustee does not comply with the request within
45 days after receipt of the request and the offer
and, if requested, the provision of indemnity; and
(5) during such 45-day period the Holders of a majority
in principal amount of the then outstanding
Securities do not give the Trustee a direction that,
in the reasonable opinion of the Trustee, is
inconsistent with the request.
A Holder may not use this Indenture or the Securities to
prejudice the rights of another Holder or to obtain a preference or priority
over another Holder.
Section 6.09. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture or the
Securities, but subject to Article 10 hereof, the right of any Holder to receive
payment of principal of and interest on the Security, on or after the respective
due dates expressed in the Security, or to bring suit for the enforcement of any
such payment on or after such respective dates, is absolute and unconditional
and shall not be impaired or affected without the consent of the Holder.
Section 6.10. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2)
hereof occurs and is continuing, the Trustee is authorized to recover judgment
in its own name and as trustee of an express trust against the Company for the
whole amount of principal and interest remaining unpaid on the Securities and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
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Section 6.11. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding. If the Trustee does not file a proper claim or proof of debt in the
form required in any such proceeding prior to 30 days before the expiration of
the time to file such claim or claims, then the Credit Agent shall have the
right to file and is hereby authorized to file an appropriate claim for and on
behalf of the Holders.
Section 6.12. Priorities.
If the Trustee collects any money pursuant to this Article or
through any proceeding or any arrangement or restructuring in anticipation of or
in lieu of any proceeding contemplated by this Article, it shall, subject to the
provisions of Articles 11 and 12 hereof and the Intercreditor Agreement, pay out
the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all
compensation, expenses and liabilities incurred, and all
advances made, by the Trustee and the reasonable costs and
expenses of collection;
Second: to the holders of (x) Senior Indebtedness to the
extent required by Article 11 hereof and (y) Guarantor Senior
Indebtedness to the extent required by Article 12 hereof;
Third: to the Holders for amounts due and unpaid on the
Securities for principal and interest, ratably and without
preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and interest,
respectively; and
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Fourth: to the Company provided that all sums due and owing
to the Holders and the Trustee have been paid in full as required by this
Indenture.
The Trustee may fix a record date and a payment date for
any payment to Holders.
Section 6.13. Undertaking for Costs.
In any suit for the enforcement of any right or remedy
under this Indenture or the Securities or in any suit against the Trustee for
any action taken or omitted to be taken by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not
apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.09
hereof, or a suit by Holders of more than 10% in principal amount of the then
Outstanding Securities.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event
of Default known to the Trustee:
(1) The duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee.
(2) In the absence of bad faith or willful misconduct on its
part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (2)
of this Section.
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(2) The Trustee shall comply with any order or directive of a
Gaming Authority that the Trustee submit an application for any
license, finding of suitability or other approval pursuant to any
gaming law and will cooperate fully and completely in any proceeding
related to such application, provided, however, that in the event the
Trustee in its reasonable judgment determines that complying with such
order or directive would subject it or its officers or directors to
unreasonable or onerous requirements, the Trustee may, at its option,
resign as Trustee in lieu of complying with such order or directive;
and provided, further, that no resignation shall become effective until
a successor Trustee is appointed and delivers a written acceptance in
accordance with Section 7.08 hereof.
(3) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(4) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (1), (2), (3) and (5) of this Section.
(e) Notwithstanding anything to the contrary set forth herein,
no provision of this Indenture shall require the Trustee to expend or risk its
own funds or incur any financial liability. The Trustee may refuse to perform
any duty or exercise, or any right or power unless it receives indemnity or
security satisfactory to it against any such risk, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) In the absence of bad faith or willful misconduct, the
Trustee may conclusively rely upon and shall be protected from acting or
refraining from acting based upon any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in such document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate (which shall conform to the provisions of
Section 14.05 hereof) or an Opinion of Counsel or both. In the absence of bad
faith or willful misconduct, the Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel. The Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
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(c) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction.
(d) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document,
unless requested in writing to do so by the Holders of not less than a
two-thirds majority in aggregate principal amount of the then Outstanding
Securities; provided, however, that, if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable indemnity against such
expenses or liabilities as a condition to proceeding; provided, further, the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney.
(e) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(f) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture other than any liabilities
arising out of the negligence, bad faith or willful misconduct of the Trustee.
(g) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
any of its Affiliates with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Securities or any Paying Agent other than the Trustee; it shall not be
accountable for the Company's use of the proceeds from the Securities or
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any money paid to the Company or upon the Company's direction under any
provision hereof; it shall not be responsible for the use or application of
any money received by any Paying Agent other than the Trustee; and it shall
not be responsible for any statement or recital herein or any statement in
the Securities or any other document in connection with the sale of the
Securities or pursuant to this Indenture other than its certificate of
authentication on the Securities.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is actually known to a Trust Officer of the Trustee, the Trustee shall
mail to the Holders a notice of the Default or Event of Default within 30 days
after obtaining such knowledge of the occurrence thereof and so long as any
Minimum Payment Guaranty Documents are still in effect or any Indebtedness is
outstanding pursuant to the Credit Agreement or the New Indentures, shall mail a
copy thereof to the Minimum Payment Guarantor, the Credit Agent and the New
Indentures Trustee. Except in the case of a Default or Event of Default in
payment of interest or principal on any Security, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of the Holders. The
Trustee shall not be deemed to owe any fiduciary duty to the Credit Agent or the
New Indentures Trustee.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to the Holders a
brief report dated as of such reporting date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b). The Trustee
shall also transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the
TIA, a copy of each report at the time of its mailing to Holders shall be filed
with the SEC and each stock exchange on which the Securities are listed. The
Company shall promptly notify the Trustee when the Securities are listed on any
stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee (in its individual
capacity and as Trustee) and each of its officers, directors, attorneys-in-fact
and agents for and against any loss, liability or expense incurred by it arising
out of or in connection with the acceptance or administration of its duties
under this Indenture, except as set forth in the next paragraph. The Trustee
shall notify the Company promptly of any claim for which it may seek indemnity.
Failure
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by the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld. The obligation of the Company
under this Section 7.07 shall survive the satisfaction and discharge of this
Indenture.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee or any of its officers,
directors, attorneys-in-fact or agents through its or their own negligence or
bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal of
and interest on particular Securities. Such Lien shall survive the satisfaction
and discharge of the Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(5) or (6) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign at any time and be discharged from the
trust hereby created by so notifying the Company in writing. The Holders of a
majority in principal amount of the then Outstanding Securities may remove the
Trustee at any time, with or without cause, by so notifying the Trustee and the
Company in writing. Without limiting the foregoing, the Company may also remove
the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of the Trustee for any reason, the Company shall promptly appoint a
successor Trustee that is eligible under Section 7.10 hereof and immediately
notify all Holders of such appointment, in writing; provided, however, that in
the case of a Default or an Event of Default, the Holders of a majority in
principal amount of the then Outstanding Securities shall promptly appoint a
successor Trustee that is eligible under Section 7.10 hereof. Within six months
after the successor Trustee takes
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office, the Holders of a majority in principal amount of the then Outstanding
Securities may appoint a successor Trustee that is eligible under Section
7.10 hereof to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the then
Outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section 7.10 hereof,
such Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 hereof shall continue
for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee, provided such successor is eligible and qualified under
Section 7.10 hereof.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trustee power, shall be subject to supervision or examination by
Federal or state authority and shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies
the requirements of TIA Section 310(a)(1). The Trustee is subject to TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); provided that there shall be excluded from
the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements of such
exclusions set forth in TIA Section 310(b)(1) are met.
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Section 7.11. Preferential Collection of Claims Against the Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.01. Termination of the Company's Obligations.
This Indenture shall cease to be of further effect (except
that the Company's obligations under Section 7.07 hereof and the Company's,
Trustee's and Paying Agent's obligations under Sections 8.03 and 8.04 hereof
shall survive) when all outstanding Securities (including any Secondary
Securities) theretofore authenticated and issued have been delivered (other than
destroyed, lost or stolen Securities that have been replaced or paid) to the
Trustee for cancellation and the Company has paid all sums payable hereunder. In
addition, the Company may terminate all of its obligations under this Indenture
if:
(1) the Company irrevocably deposits in trust with the Trustee
or, at the option of the Trustee, with a trustee reasonably
satisfactory to the Trustee and the Company under the terms of an
irrevocable trust agreement in form and substance satisfactory to the
Trustee, U.S. legal tender money or U.S. Government Obligations
sufficient (in the reasonable opinion of a nationally recognized firm
of independent accountants) to pay principal of and interest on the
Securities to maturity or redemption, as the case may be, and to pay
all other sums payable by it hereunder; provided that (i) the trustee
of the irrevocable trust shall have been irrevocably instructed to pay
such money or the proceeds of such U.S. Government Obligations to the
Trustee and (ii) the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government Obligations to
the payment of said principal and interest with respect to the
Securities;
(2) the Company delivers to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with, and an Opinion of
Counsel to the same effect;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or before 90 days after the date
of such deposit;
(4) the Company has paid or caused to be paid all sums then
payable by the Company hereunder and under the Securities;
(5) such deposit shall not result in a breach or violation of,
or constitute a default under, this Indenture or any other instrument
to which the Company is a party or by which the Company or any of its
assets or properties are bound; and
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(6) the Holders, or the Collateral Agent under the Credit
Agreement, shall have a perfected security interest, under applicable
law (to the extent possible), in the U.S. legal tender money or U.S.
Government Obligations deposited pursuant to this Section 8.01.
Then, this Indenture shall cease to be of further effect
(except as provided in this paragraph), and the Trustee, on demand of the
Company, shall execute proper instruments acknowledging confirmation of and
discharge under this Indenture. The Company may make the deposit only if Article
10 hereof does not prohibit such payment and, in the event any Minimum Payment
Guaranty Documents are still in effect or there is Indebtedness outstanding
under the Credit Agreement, the New Bonds or the New Contingent Bonds on the
date the deposit is made, the Company has delivered to the Trustee a written
consent of the Minimum Payment Guarantor, the Credit Agent and the New
Indentures Trustee to such deposit and the satisfaction and discharge of this
Indenture. However, the Company's obligations in Sections 2.03, 2.04, 2.05,
2.06, 2.07, 4.01, 4.02, 4.05, 7.07, 7.08, 7.10, 8.03 and 8.04 hereof and in
Article 13 hereof and the Trustee's and the Paying Agent's obligations in
Section 8.03 hereof shall survive until the Securities are no longer
outstanding. Thereafter, only the Company's obligations in Section 7.07 hereof
and the Company's, the Trustee's and the Paying Agent's obligations in Section
8.03 and 8.04 hereof shall survive.
In the event that all or any portion of the Securities are to
be redeemed pursuant to Article 3 of this Indenture, the Company must make
arrangements satisfactory to the Trustee, at the time of such deposit, for the
giving of the notice of such redemption or redemptions by the Trustee in the
name and at the expense of the Company.
After such irrevocable deposit made pursuant to this Section
8.01 and satisfaction of the other conditions set forth herein, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above.
In order to have money available on a payment date to pay
principal of or interest on the Securities, the U.S. Government Obligations
shall be payable as to principal or interest at least one Business Day before
such payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.
Section 8.02. Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the
Company shall hold in trust for the benefit of the Holders money or U.S.
Government Obligations redeposited with it pursuant to Section 8.01 hereof. It
shall apply the deposited money and the money from the sale of U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
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Section 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the
Company upon written request therefor any excess money or securities held by
them.
The Trustee and the Paying Agent shall pay to the Company upon
written request therefor any money held by them for the payment of principal or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due; provided, however, that the Company shall have
either caused notice of such payment to be mailed to each Holder entitled
thereto not less than 30 days prior to such repayment or within such period
shall have published such notice in a financial newspaper of widespread
circulation published in The City of New York. After payment to the Company, the
Holders entitled to the money must look to the Company for payment as general
creditors unless an applicable abandoned property law designates another Person,
and all liability of the Trustee and such Paying Agent with respect to such
money shall cease.
Section 8.04. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 8.02 hereof by reason of
any legal proceeding or by reason of any order or judgment of any court of
competent jurisdiction or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01 hereof until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 8.02 hereof; provided, however, that if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENTS
Section 9.01. Without Consent of Holders.
The Company, the Guarantor and the Trustee may amend this
Indenture or the Securities without the consent of any Holder (provided that
such amendment is in form and substance reasonably satisfactory to the Trustee
and provided, further that any amendment to the provisions of Article 13 shall
require the consent of JCC Holding):
(1) to cure any ambiguity, defect or inconsistency in a manner
that does not adversely affect in any respect the rights or interests
of any Holder;
(2) to comply with Section 5.01 or 13.18 hereof;
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(3) to comply with any requirements of the SEC in connection
with the qualification of this Indenture under the TIA as then in
effect;
(4) to provide for uncertificated Securities in addition to
certificated Securities;
(5) to provide for Securities in bearer form in addition to
Securities in registered form; or
(6) to make any other change that does not adversely affect in
any respect the legal rights hereunder of any Holder, provided that the
Company delivers to the Trustee an opinion of counsel to such effect.
Upon the request of the Company and the Guarantor, accompanied
by a resolution of the Board of Directors authorizing the execution of any such
supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, which documents are in form and substance
reasonably satisfactory to the Trustee, the Trustee shall join with the Company
and the Guarantor in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
affects its own rights, duties or immunities under this Indenture or otherwise,
in which case the Trustee may in its discretion, but shall not be obligated to,
enter into such supplemental indenture. The Trustee, at the expense of the
Company, shall promptly mail to each Holder a copy of any supplemental indenture
entered into pursuant to this Section 9.01.
Section 9.02. With Consent of Holders.
Subject to the further terms of this Section, the Company, the
Guarantor and the Trustee may amend this Indenture or the Securities with the
written consent of the Holders of at least 66-2/3% in principal amount of the
then outstanding Securities.
Upon the request of the Company and the Guarantor, accompanied
by a resolution of the Board of Directors authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders as aforesaid, and upon
receipt by the Trustee of the documents described in Section 9.06 hereof, the
Trustee shall (if the form of the amendment complies to the Trustee's reasonable
satisfaction with the substance of the approval by the Holders) join with the
Company and the Guarantor in the execution of such supplemental indenture unless
such supplemental indenture adversely affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders of each Security affected
thereby a notice briefly describing the
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amendment or waiver. Any failure of the Company to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture or waiver. The Holders of 66-2/3% in
principal amount of the Securities then outstanding may waive compliance in a
particular instance by the Company or the Guarantor with any provision of
this Indenture or the Securities. However, without the consent of each Holder
affected, an amendment or waiver under this Section 9.02 may not:
(1) reduce the principal amount of Securities the Holders of
which must consent to an amendment or waiver;
(2) reduce the rate of or change the time for payment of
interest, including defaulted interest, on any Security;
(3) reduce the principal of or change the fixed maturity of
any Security;
(4) make any Security payable other than as stated in the
Security;
(5) make any change in Section 6.04 or 6.07 hereof or in this
sentence of this Section 9.02;
(6) make any change in Article 11 that adversely affects the
rights and interests of any Holders; or
(7) waive a Default in the payment of principal of or interest
on, or redemption payment with respect to, any Security.
No amendment or waiver under this Section 9.02 or Section 9.01
hereof shall make any change that adversely affects the rights under Article 11
or Article 12 of any holder of an issue of Senior Indebtedness or Guarantor
Senior Indebtedness, as the case may be, nor shall any amendment be made to this
sentence, unless the holders of such issue, pursuant to the terms of such Senior
Indebtedness, consent to the change. The Company shall give the Holders of the
Securities notice of the effectiveness of any amendment under this Section 9.02.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities at a time
when this Indenture shall be qualified under the TIA shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of a Security or portion of a Security that evidences the same Indebtedness as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security if the Trustee receives
written notice of revocation before the date the amendment or waiver becomes
effective. An
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amendment or waiver becomes effective in accordance with its terms and
thereafter binds every Holder. The Company may fix a record date for
determining which Holders must consent to such amendment or waiver.
Section 9.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an
amendment or waiver on any Security thereafter authenticated. The Company in
exchange for all Securities may issue and the Trustee shall authenticate new
Securities that reflect the amendment or waiver. Failure to make the appropriate
notation or issue a new Security shall not affect the validity and effect of
such amendment or waiver.
Section 9.06. Trustee to Sign Amendments, Etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive and,
subject to Section 7.01 hereof, shall, absent willful misconduct or bad faith,
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that such amendment or supplemental indenture is
authorized or permitted by this Indenture, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in accordance with its
terms. Neither the Company nor the Guarantor may sign an amendment or
supplemental indenture until the Board of Directors approves it.
ARTICLE 10.
GUARANTY
Section 10.01. Guaranty.
(a) In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and subject to Article
3, Article 12 and subsection (d) below, the Guarantor hereby irrevocably and
unconditionally guarantees (the "Guaranty") to each Holder of a Security
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Securities or the obligations of the Company under this Indenture or the
Securities, that: (w) the principal and premium (if any) of and interest on the
Securities will be paid in full when due whether at maturity, by acceleration,
Required Regulatory Redemption, upon repurchase or otherwise; (x) all other
obligations of the Company to the Holders or the Trustee under this Indenture or
the Securities will be promptly paid in full or performed, all in accordance
with the terms of this Indenture and the Securities; and (y) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, they will be paid in full when due or performed in accordance with
the terms of the extension or renewal whether at maturity, by acceleration,
Required Regulatory Redemption, upon repurchase or otherwise. Failing payment
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when due of any amount so guaranteed for whatever reason, the Guarantor shall be
obligated to pay the same before failure so to pay becomes an Event of Default.
(b) The Guarantor hereby agrees that its obligations with
regard to this Guaranty shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence of
any action to enforce the same, any delays in obtaining or realizing upon or
failures to obtain or realize upon collateral, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstances
that might otherwise constitute a legal or equitable discharge or defense of the
Guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company or
right to require the prior disposition of the assets of the Company to meet its
obligations, protest, notice and all demands whatsoever and covenants that this
Guaranty will not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture. Without limiting the
generality of the foregoing, the Guarantor acknowledges and agrees that the
guaranty provided herein is a guaranty of payment and not of collection.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or the Guarantor, or any Custodian,
Trustee, or similar official acting in relation to the Company or the Guarantor,
any amount paid by the Company or the Guarantor to the Trustee or such Holder,
this Guaranty, to the extent theretofore discharged, shall be reinstated in full
force and effect. The Guarantor agrees that it will not be entitled to any right
of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until the principal of, premium, if any, and interest on all
Securities issued hereunder shall have been paid in full. The Guarantor further
agrees that, as between the Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 6.02 for the purposes of this
Guaranty, notwithstanding any stay, injunction or other prohibition preventing
such acceleration as to the Company of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of those obligations as
provided in Section 6.02, those obligations (whether or not due and payable)
will forthwith become due and payable by the Guarantor for the purpose of this
Guaranty.
(d) It is the intention of the Guarantor and the Company that
the obligations of the Guarantor hereunder shall be, but not in excess of, the
maximum amount permitted by applicable law. Accordingly, if the obligations in
respect of the Guaranty would be annulled, avoided or subordinated to the
creditors of the Guarantor by a court of competent jurisdiction in a proceeding
actually pending before such court as a result of a determination both that such
Guaranty was made without fair consideration and, immediately after giving
effect thereto, or at the time that any demand is made thereupon, the Guarantor
was insolvent or unable to pay its debts as they mature or left with an
unreasonably small capital, then the obligations of the Guarantor under such
Guaranty shall be reduced by such an amount, if any, that would result in the
avoidance of such annulment, avoidance or subordination; provided, however, that
any reduction pursuant to this paragraph shall be made in the smallest amount as
is necessary to reach such result. For purposes of this paragraph, "fair
consideration," "insolvency," "unable to pay its debts as they mature,"
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.
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(e) The Guarantor shall be subrogated to all rights of the
Holders against the Company under the Securities or this Indenture in respect of
any amounts paid by the Guarantor pursuant to the provisions of the Guaranty or
this Indenture; provided, however, that the Guarantor shall not be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation until the principal of, premium, if any, and interest (including
Contingent Payments to the extent due and payable hereunder) on all Securities
issued hereunder shall have been paid in full.
Section 10.02. Execution and Delivery of Guaranty.
To evidence its Guaranty set forth in Section 10.01, the
Guarantor agrees that this Indenture shall be executed on behalf of the
Guarantor by an Authorized Representative, by manual or facsimile signature.
If, following such Authorized Representative's execution of
this Indenture, such Authorized Representative ceases to hold the office held by
such Authorized Representative at the time of such execution, the Guaranty of
subsequently authenticated Securities shall be valid nevertheless. The delivery
of any Security by the Trustee, after the authentication thereof hereunder,
shall constitute due delivery of the Guaranty set forth in this Indenture on
behalf of the Guarantor.
Section 10.03. Certain Bankruptcy Events.
The Guarantor hereby covenants and agrees that in the event of
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, the Guarantor shall not file (or join in any filing of), or otherwise
seek to participate in the filing of, any motion or request seeking to stay or
to prohibit (even temporarily) execution on the Guaranty and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.
ARTICLE 11.
SUBORDINATION OF SECURITIES
Section 11.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Security
consents and agrees, that the Indebtedness evidenced by the Security and all
Obligations of the Company under this Indenture and the payment of any Claims
are subordinated in right of payment, to the extent and in the manner provided
in this Article 11, to the prior payment in full of all Senior Indebtedness, and
that this subordination is for the benefit of the holders of Senior Indebtedness
and they and/or each of them may enforce such subordination.
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Section 11.02. Certain Definitions.
"Claim", for purpose of this Article 11, means any claim
arising for the rescission of the purchase of the Securities, for damages
arising from the purchase of the Securities or for reimbursement or contribution
on account of such a claim.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness and, in the case of Senior
Indebtedness outstanding under the Credit Agreement, the Credit Agent, and, in
the case of any of the Minimum Payment Guaranty Documents or Minimum Payment
Obligations, the Minimum Payment Guarantor.
"Senior Indebtedness" means (i) all Minimum Payment Guaranty
Obligations and all Indebtedness of the Company now or hereafter existing under
or in respect of the Credit Agreement, the New Bonds or the New Contingent
Bonds, whether for principal, reimbursement of amounts drawn under letters of
credit issued pursuant to the Credit Agreement, interest (including, without
limitation, interest accruing after the filing of a petition initiating any
proceeding referred to in Section 6.01(5) or Section 6.01(6) hereof, whether or
not such interest is an allowable claim under such proceedings), fees, expenses
or otherwise and all Obligations and claims relating thereto and any refinancing
(in whole or in part) of the Minimum Payment Guaranty Obligations, the Credit
Agreement, the New Bonds or the New Contingent Bonds (or any previous
refinancing thereof); provided that, notwithstanding anything in this Indenture
to the contrary, the term Senior Indebtedness shall not be construed to include
any Indebtedness under or in respect of the Credit Agreement, the New Bonds or
the New Contingent Bonds, any Obligations and claims relating thereto, or any
refinancings of any of the foregoing (or any previous refinancing thereof) to
the extent such Indebtedness exceeds, without duplication, the principal amount
(or in the case of the Credit Agreement, the maximum commitment amount), of the
Credit Agreement, the New Bonds (together with New Bonds issued in lieu of the
payment of cash interest in accordance with the New Bond Indenture) or the New
Contingent Bonds as of October 30, 1998, as applicable, plus any accrued and
unpaid interest thereon, other amounts owing in connection with the refinanced
Indebtedness and fees and expenses owing in connection with the refinancing and
(ii) all Obligations of the Company that are expressly senior in right of
payment to, or pari passu in right of payment with, the Minimum Payment Guaranty
Obligations, the Credit Agreement, the New Bonds and the New Contingent Bonds.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include (A) any Indebtedness of the Company to JCC Holding or any of
its or the Company's Subsidiaries, (B) Indebtedness incurred for the purchase of
goods or materials or for services (other than services provided by the Minimum
Payment Guarantor, the Credit Agent, the New Indentures Trustee or any other
financial institution which is a party to an agreement evidencing Senior
Indebtedness pursuant to or related to such agreement) obtained in the ordinary
course of business, (C) Indebtedness under that certain Completion Loan
Agreement, as amended, supplemented or modified from time to time, by and among
the Company, HET and HOCI and any other indebtedness with respect to amounts
advanced to the Company by HET, HOCI or any of their respective Affiliates with
respect to the obligations of HET or HOCI (or their respective assignees) under
that certain Completion Guaranty made by HET and HOCI, (D) Indebtedness under
that certain credit agreement (the "Subordinated Credit Agreement"), as amended,
supplemented or modified from time to time, among the Company, JCC Holding, JCC
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Intermediary, HET and HOCI, together with any related agreements, and (E) any
Indebtedness that, by its terms, or the terms of the instrument creating or
evidencing such Indebtedness, is pari passu with, or expressly subordinate in
right of payment to, the Securities. Senior Indebtedness under or in respect of
the Minimum Payment Guaranty Obligations, the Credit Agreement, the New Bonds
and the New Contingent Bonds shall continue to constitute Senior Indebtedness
for all purposes of this Indenture, and the provisions of this Article 11 shall
continue to apply to such Senior Indebtedness, notwithstanding that such Senior
Indebtedness or any Obligations or claims in respect thereof may be disallowed,
avoided or subordinated pursuant to any Bankruptcy Law or other applicable
insolvency law or equitable principles.
"Specified Senior Indebtedness" means (i) the Minimum Payment
Guaranty Obligations, (ii) Indebtedness under or in respect of the Credit
Agreement, (iii) Indebtedness outstanding pursuant to the New Bonds or (iv)
Indebtedness outstanding pursuant to the New Contingent Bonds.
A distribution may consist of cash, securities or other
property, by set-off or otherwise, and a payment or distribution on account of
any Obligations or any Claims with respect to the Securities shall include any
redemption, purchase or other acquisition of the Securities.
For the purposes of this Article 11, all Minimum Payment
Guaranty Obligations and all Indebtedness now or hereafter existing under the
Credit Agreement and the New Indentures (or any refinancings thereof) shall not
be deemed to have been paid in full unless the holders or owners thereof shall
have received payment in full in cash of such Indebtedness and all Obligations
and claims relating thereto.
Section 11.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a total
or partial liquidation or dissolution of the Company or in bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property or in an assignment for the benefit of creditors, or an
arrangement, adjustment, composition or relief of the Company or its debts or
any marshalling of the assets and liabilities of the Company:
(1) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash or Cash Equivalents of all Obligations
due or to become due with respect to the Senior Indebtedness (including
interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Indebtedness, whether or not such
interest is an allowable claim under each such proceeding) and all
claims relating thereto before Holders shall be entitled to receive any
payment or distribution on account of any Obligations with respect to
the Securities or on account of any Claim with respect thereto, other
than amounts previously set aside with the Trustee pursuant to Article
8, or payments previously made; and
(2) until all Obligations with respect to Senior Indebtedness
(as provided in subsection (1) above) and all claims relating thereto
are paid in full, any payment or distribution, including, without
limitation, any payment or distribution which may be
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payable or deliverable by reason of the payment of any other
Indebtedness of the Company being subordinated to the payment of the
Securities to which Holders would be entitled but for this Article
shall be made to holders of Senior Indebtedness, as their interests
may appear, for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for the
payment or prepayment of, the Senior Indebtedness to the extent
necessary to pay in full in cash or Cash Equivalents all such Senior
Indebtedness and all Obligations and claims relating thereto in
accordance with the terms thereof, after giving effect to any
concurrent payment or distribution to or for the holders of such
Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company with or into, another Person or the liquidation or dissolution of the
Company following the sale, assignment, conveyance, transfer, lease or other
disposal of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article 5 shall not be deemed
a dissolution, winding up, liquidation, reorganization, assignment for the
benefit of creditors or marshaling of assets and liabilities of the Company for
the purposes of this Section.
Section 11.04. Default on Senior Indebtedness.
Unless Section 11.03 shall be applicable,
(a) In the event that any default in the payment of any Senior
Indebtedness or any Obligation or claim relating thereto shall have occurred and
be continuing, whether at maturity (by lapse of time, acceleration or
otherwise), upon redemption or otherwise (a "Payment Default") unless and until
such Payment Default shall have been cured or waived in writing by the holders
of such Senior Indebtedness, no direct or indirect payment or distribution
(including, without limitation, any payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the Company
being subordinated to payment of the Securities) except for the issuance of
Secondary Securities in lieu of cash interest on the Securities in accordance
with Paragraph 2 thereof, shall be made by or on behalf of the Company for or on
account of any Obligations with respect to the Securities or on account of any
Claim, and neither the Trustee nor any Holders shall receive from the Company,
directly or indirectly, any payment or distribution, including, without
limitation, from or by way of collateral, on account of any Obligations with
respect to the Securities or on account of any Claim.
(b) Upon receipt by the Company and the Trustee of written
notice from the Minimum Payment Guarantor of any default (including an unmatured
event of default) under the Minimum Payment Guaranty Documents, other than a
Payment Default, or that a payment or distribution by the Company with respect
to any Security would, immediately after giving effect thereto, result in such a
default, and unless such default shall have been cured or waived in writing in
accordance with the terms of the Minimum Payment Guaranty Documents and written
notice thereof is delivered to the Trustee, no direct or indirect payment or
distribution (including, without limitation, any payment or distribution which
may be payable or deliverable by reason of the payment of any other Indebtedness
of the Company being subordinated to payment of the Securities), except for the
issuance of Secondary Securities in lieu of cash interest on the Securities in
accordance with Paragraph 2 thereof, may be made by or on behalf of the Company
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for or on account of the Obligations with respect to the Securities or on
account of any Claim and neither the Trustee nor any Holder shall receive from
the Company, directly or indirectly, any payment or distribution, including,
without limitation, from or by way of collateral, in respect of the Obligations
with respect to the Securities or on account of any Claim during a period (a
"MPG Payment Blockage Period") commencing on the receipt by the Company and the
Trustee of such notice and ending on the earlier of (i) 179 days thereafter or
(ii) the day on which all such defaults shall have been cured or waived or on
which the Minimum Payment Guaranty Obligations are discharged or paid in full
or, as acceptable to the Minimum Payment Guarantor, in any other manner, after
which, in the case of clauses (i) and (ii), the Company shall promptly resume
making (subject to the provisions of Section 11.03 and the other provisions of
this Section 11.04) any and all required payments in respect of the Securities,
including any missed payments.
(c) Upon receipt by the Company and the Trustee of written
notice from the Credit Agent of any default (including an unmatured event of
default) under the Credit Agreement, other than a Payment Default, or that a
payment or distribution by the Company with respect to any Security would,
immediately after giving effect thereto, result in such a default, and unless
such default shall have been cured or waived in writing in accordance with the
terms of the Credit Agreement and written notice thereof is delivered to the
Trustee, no direct or indirect payment or distribution (including, without
limitation, any payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of the Company being
subordinated to payment of the Securities), except for the issuance of Secondary
Securities in lieu of cash interest on the Securities in accordance with
Paragraph 2 thereof, may be made by or on behalf of the Company for or on
account of the Obligations with respect to the Securities or on account of any
Claim and neither the Trustee nor any Holder shall receive from the Company,
directly or indirectly, any payment or distribution, including, without
limitation, from or by way of collateral, in respect of the Obligations with
respect to the Securities or on account of any Claim during a period (a "CA
Payment Blockage Period") commencing on the receipt by the Company and the
Trustee of such notice and ending on the earlier of (i) 179 days thereafter or
(ii) the day on which all such defaults shall have been cured or waived or on
which such Specified Senior Indebtedness is discharged or paid in full or, as
acceptable to the holders of such Specified Senior Indebtedness, in any other
manner, after which, in the case of clauses (i) and (ii), the Company shall
promptly resume making (subject to the provisions of Section 11.03 and the other
provisions of this Section 11.04) any and all required payments in respect of
the Securities, including any missed payments.
(d) Upon receipt by the Company and the Trustee of written
notice from the New Indenture Trustee of any default (including an unmatured
event of default) under the New Indentures, other than a Payment Default, or
that a payment or distribution by the Company with respect to any Security
would, immediately after giving effect thereto, result in such a default, and
unless such default shall have been cured or waived in writing in accordance
with the terms of the applicable New Indenture and written notice thereof is
delivered to the Trustee, no direct or indirect payment or distribution
(including, without limitation, any payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the Company
being subordinated to payment of the Securities), except for the issuance of
Secondary Securities in lieu of cash interest on the Securities in accordance
with Paragraph 2 thereof, may be made by or on behalf of the Company for or on
account of the Obligations with respect to the
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Securities or on account of any Claim and neither the Trustee nor any Holder
shall receive from the Company, directly or indirectly, any payment or
distribution, including, without limitation, from or by way of collateral, in
respect of the Obligations with respect to the Securities or on account of
any Claim during a period (each such period and each MPG Payment Blockage
Period and CA Payment Blockage Period are referred to herein as a "Payment
Blockage Period") commencing on the receipt by the Company and the Trustee of
such notice and ending on the earlier of (i) 179 days thereafter or (ii) the
day on which all such defaults shall have been cured or waived or on which
such Specified Senior Indebtedness is discharged or paid in full or, as
acceptable to the holders of such Specified Senior Indebtedness, in any other
manner, after which, in the case of clauses (i) and (ii), the Company shall
promptly resume making (subject to the provisions of Section 11.03 and the
other provisions of this Section 11.04) any and all required payments in
respect of the Securities, including any missed payments.
(e) Any number of payment blockage notices may be given;
provided, however, that (i) during any 360 consecutive days, the aggregate
length of all Payment Blockage Periods shall not exceed 180 days, (ii) there
shall be a period of at least 180 consecutive days during each continuous
360-day period when no Payment Blockage Period is in effect under any of clauses
(b), (c) and (d), and (iii) no default which, to the knowledge of the
Representative of Specified Senior Indebtedness existed or was continuing on the
date of the commencement of any Payment Blockage Period by such Representative
shall be, or be made, the basis for the commencement of a second or other
subsequent Payment Blockage Period by such Representative, whether or not within
a period of 360 consecutive days, unless such default shall have been cured or
waived for a period of not less than 90 consecutive days during which no Payment
Blockage Period was in effect; provided, however, that (A) a default or event of
default that resulted in the commencement of a 180-day period may be the basis
for the commencement of another 180-day period if such default or event of
default was cured or waived for at least 90 days, (B) for the purposes of this
clause (iii), separate breaches of the same covenant shall be deemed to give
rise to separate defaults or events of default, and (C) for the purposes of this
clause (iii), any breach of a financial covenant for a subsequent period shall
be deemed to give rise to a separate default or event of default.
(f) The Company shall deliver a notice to the Trustee promptly
after the date on which any non-payment Default is cured or waived or ceases to
exist or on which the Specified Senior Indebtedness related thereto is
discharged or paid in full, in cash or Cash Equivalents or, as acceptable to the
holders of Senior Indebtedness, in any other manner, and the Trustee is
authorized to act in reliance on such notice, but failure to give such notice
shall not affect the subordination of the Securities and all Claims to the
Senior Indebtedness provided in this Article.
Section 11.05. Acceleration of Securities.
If payment of the Securities is accelerated because of an
Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration.
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Section 11.06. When Distribution Must Be Paid Over.
If a distribution is made to the Trustee, any Paying Agent or
any Holder that because of this Article 11 should not have been made to it, the
Trustee, such Paying Agent or such Holder who receives the distribution shall
segregate such distribution from its other funds and property and hold it in
trust for the benefit of, and, upon written request, pay it over (in the same
form as received, with any necessary endorsement but without recourse,
representation or warranty) to, the holders of Senior Indebtedness as their
interests may appear, or their agent or representative or the trustee under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness may
have been issued, as their respective interests may appear, for application (in
the case of cash) to, or as collateral (in the case of non-cash property or
securities) for the payment or prepayment of, Senior Indebtedness remaining
unpaid to the extent necessary to pay in full, in cash or Cash Equivalents, such
Senior Indebtedness and all Obligations and claims relating thereto in
accordance with the terms thereof, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Indebtedness (it being
understood, in the event such a distribution is made to the Trustee, that the
Trustee's obligation so to segregate such distribution and hold it in trust
shall be subject to the Trustee's knowledge determined in accordance with
Section 11.12 hereof). In the event the Trustee is uncertain as to whom payment
should be made pursuant to this paragraph, the Trustee shall be permitted to
bring an interpleader action.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other person money or assets to which
any holders of Senior Indebtedness are entitled by virtue of this Article 11,
except if such payment is made as a result of the negligence or willful
misconduct of the Trustee.
Section 11.07. Notice by Company.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Securities or of any Claim to violate this
Article, but failure to give such notice shall not affect the subordination of
the Securities and all Claims to the Senior Indebtedness provided in this
Article.
Section 11.08. Subrogation.
After all Senior Indebtedness and all such Obligations and
claims relating thereto are paid in full in cash or Cash Equivalents and until
the Securities are paid in full in cash, Holders shall be subrogated to the
rights of holders of Senior Indebtedness to receive distributions applicable to
Senior Indebtedness to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Indebtedness. A distribution
made under this Article
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11 to holders of Senior Indebtedness which otherwise would have been made to
Holders is not, as between the Company and Holders, a payment by the Company
on the Securities.
Section 11.09. Relative Rights.
This Article defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the obligation
of the Company, which is absolute and unconditional, to pay principal
of and interest on the Securities in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders.
If the Company fails because of this Article 11 to pay
principal of or interest on a Security on the due date, the failure may still
become a Default or Event of Default.
Section 11.10. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness or any Obligation or claims relating thereto to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act in good faith by any such holder, or by
any act, failure to act or noncompliance by the Company, the Trustee or any
Agent with the terms and provisions and covenants herein, regardless of any
knowledge thereof any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders or owners of Senior Indebtedness or any Obligation or
claim relating thereto may at any time and from time to time, without the
consent of or notice to the Trustee or any Holder, without incurring
responsibility to any Holder and without impairing or releasing the
subordination provided in this Article 11 or the obligations hereunder of the
Holders to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, all or any of the Senior Indebtedness
(including any change in the rate of interest thereon), or otherwise amend or
supplement in any manner, or grant any waiver or release with respect to, Senior
Indebtedness or any Obligation or claim relating thereto or any instrument
evidencing the same or any agreement under which Senior Indebtedness or any
Obligation or claim relating thereto is outstanding; (ii) sell, exchange,
release, not perfect or otherwise deal with any property at any time pledged,
assigned or mortgaged to secure or otherwise securing, Senior Indebtedness or
any Obligation or claim relating thereto, or amend, or grant any waiver or
release with respect to, or consent to any departure from any guarantee for all
or any of the Senior Indebtedness or any Obligation or claim relating thereto;
(iii) subject to Section 11.08 hereof, release any person liable in any manner
under or in respect of
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Senior Indebtedness or any Obligation or claim relating thereto; (iv)
exercise or refrain from exercising any rights against, and, subject to
Section 11.08 hereof, release from obligations of any type, the Company and
any other person; and (v) apply any sums from time to time received to the
Senior Indebtedness or any Obligation or claim relating thereto; provided,
however, that in no event shall any such actions limit the right of the
Holders of the Securities to take any action to accelerate the maturity of
the Securities pursuant to Article 6 of this Indenture or to pursue any
rights or remedies hereunder, under the Securities or under applicable laws
if the taking of such action does not otherwise violate the terms of this
Article.
All rights and interests under this Indenture of the Minimum
Payment Guarantor, the Credit Agent, the New Indentures Trustee and the other
holders of Senior Indebtedness or any Obligation or claim relating thereto, and
all agreements and obligations of the Trustee, the Holders and the Company under
Sections 6.02, 6.03 and 6.09 hereof and under this Article 11 shall remain in
full force and effect irrespective of (i) any lack of validity or enforceability
of any Minimum Payment Guaranty Documents, the Credit Agreement or the New
Indentures, any promissory notes evidencing the Indebtedness thereunder, or any
other agreement or instrument relating thereto or to any other Senior
Indebtedness or any Obligation or claim relating thereto, including, without
limitation, any agreement referred to in the definition of Credit Agreement, or
(ii) any other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Trustee, any Holder or the Company.
The provisions set forth in Sections 6.02, 6.03 and 6.09
hereof and in this Article 11 constitute a continuing agreement and shall (i) be
and remain in full force and effect until payment in full of all Senior
Indebtedness and all Obligations and claims relating thereto at such time as no
lender shall have any commitment to make any advances in respect of Senior
Indebtedness, (ii) be binding upon the Trustee, the Holders and the Company and
their respective successors, transferees and assigns, and (iii) inure to the
benefit of, and be enforceable directly by, each of the Holders and their
respective successors, transferees and assigns.
Each of the Minimum Payment Guarantor, the Credit Agent and
the New Indentures Trustee is hereby authorized to demand specific performance
of the provisions of this Article 11, whether or not the Company shall have
complied with any of the provisions of Article 11 applicable to it, at any time
when the Trustee or any Holder shall have failed to comply with any of these
provisions. The Trustee and the Holders hereby irrevocably waive any defense
based on the adequacy of a remedy at law that might be asserted as a bar to such
remedy of specific performance.
Section 11.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative, if any.
Upon any payment or distribution of assets of the Company
referred to in this Article 11, the Trustee and the Holders shall be entitled to
rely in good faith upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to
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the Holders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 11.
Section 11.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment or
distribution by the Trustee, or the taking of any action by the Trustee pursuant
to this Article 11, and the Trustee or Paying Agent may continue to make
payments on the Securities unless it shall have received at its Corporate Trust
Office at least two Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Securities to violate this Article. Only the Company, a Representative, the
Conversion Agent or a holder of an issue of Senior Indebtedness that has no
Representative may give the notice. Nothing in this Article 11 shall apply to
amounts due to, or impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
Section 11.13. Authorization to Effect Subordination.
Each Holder of a Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate as between the Holders of the Securities and the
holders of Senior Indebtedness the subordination as provided in this Article 11,
and appoints the Trustee his attorney-in-fact for any and all such purposes.
Section 11.14. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the
Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article 6 of this Indenture or to pursue
any rights or remedies hereunder, under the Securities or under applicable law,
subject to the rights, if any, under this Article of the holders, from time to
time, of Senior Indebtedness to receive the cash, property or securities
receivable upon the exercise of such rights or remedies.
Section 11.15. Miscellaneous.
(a) Each Holder and the Company hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Senior Indebtedness and any Obligation or claim relating thereto, and any
requirement that the Minimum Payment Guarantor, the Credit Agent or any other
holder of Senior Indebtedness and any Obligation or claim relating thereto
protect, secure, perfect or insure any security interest or Lien or any property
subject
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thereto or exhaust any right or take any action against the Company or any
other person or entity or any collateral.
(b) The agreement contained in this Article 11 shall continue
to be effective or be reinstated, as the case may be, if at any time any payment
of any of the Senior Indebtedness or any Obligation or claim relating thereto is
rescinded or must otherwise be returned by any holder of Senior Indebtedness or
any Obligation or claim relating thereto upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made.
(c) Unless and until written notice shall be given by the
Company, the Minimum Payment Guarantor and the Credit Agent to the Trustee at
its Corporate Trust Office notifying the Trustee that, as the case may be, no
Minimum Payment Guaranty Obligations are outstanding and that Indebtedness is no
longer outstanding under the Credit Agreement, the Trustee shall assume that
such Indebtedness is outstanding. The Company agrees to give, and to cause the
Credit Agent to give, such notice to the Trustee promptly after the first date
on which no Indebtedness shall be outstanding under the Credit Agreement. For
the purposes of this Indenture, Indebtedness shall be outstanding under the
Credit Agreement whenever either (i) such Indebtedness and all Obligations and
claims relating thereto shall not have been paid in full in cash or Cash
Equivalents or (ii) commitments to lend under the Credit Agreement shall not
have expired or been cancelled or terminated.
(d) Unless and until written notice shall be given by the
Company and the New Indentures Trustee to the Trustee at its Corporate Trust
Office notifying the Trustee that Indebtedness is no longer outstanding under
either of the New Indentures, the Trustee shall assume that such Indebtedness is
outstanding. The Company agrees to give, and to cause the New Indentures Trustee
to give, such notice to the Trustee promptly after the first date on which no
Indebtedness shall be outstanding under either of the New Indentures. For the
purposes of this Indenture, Indebtedness shall be outstanding under the New
Indentures whenever either (i) such Indebtedness and all Obligations and claims
relating thereto shall not have been paid in full in cash or Cash Equivalents or
(ii) "Contingent Payments" may be earned under either of such New Indentures
with respect to the then current or any future interest period.
ARTICLE 12.
SUBORDINATION OF GUARANTY
Section 12.01. Agreement to Subordinate.
The Guarantor agrees, and each Holder by accepting a Security
consents and agrees, that the Indebtedness evidenced by the Guaranty and all
Obligations of the Guarantor under this Indenture and the Guaranty are
subordinated in right of payment, to the extent and in the manner provided in
this Article 12, to the prior payment in full of all Guarantor Senior
Indebtedness, and that this subordination is for the benefit of the holders of
Guarantor Senior Indebtedness and they and/or each of them may enforce such
subordination.
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Section 12.02. Certain Definitions.
"Guarantor Senior Indebtedness" means (i) all Indebtedness of
the Guarantor now or hereafter existing under or in respect of the Guarantor's
guaranty of the Company's Obligations under the Credit Agreement, the New Bonds
or the Contingent Bonds, whether for principal, interest (including, without
limitation, interest accruing after the filing of a petition initiating any
proceeding referred to in Section 6.01(5) or Section 6.01(6) hereof, whether or
not such interest is an allowable claim under such proceedings), fees, expenses
or otherwise and all Obligations and claims relating thereto and any refinancing
(in whole or in part) of the Credit Agreement, the New Bonds or the New
Contingent Bonds (or any previous refinancing thereof); provided that,
notwithstanding anything in this Indenture to the contrary, the term Guarantor
Senior Indebtedness shall not be construed to include any Indebtedness of the
Guarantor under or in respect of the Guarantor's guaranty of the Company's
Obligations under the Credit Agreement, the New Bonds or the New Contingent
Bonds, any Obligations and claims relating thereto, or any refinancings of any
of the foregoing (or any previous refinancing thereof) to the extent such
Indebtedness of the Guarantor exceeds, without duplication, the principal amount
(or in the case of the Credit Agreement, the maximum commitment amount) of the
Credit Agreement, the New Bonds or the New Contingent Bonds as of October 30,
1998, plus any accrued and unpaid interest thereon, other amounts owing in
connection with the refinanced Indebtedness and fees and expenses owing in
connection with the refinancing and (ii) all Obligations of the Guarantor that
are expressly senior in right of payment to, or pari passu in right of payment
with, Indebtedness of the Guarantor under the Credit Agreement or either New
Indenture. Notwithstanding anything to the contrary in the foregoing, Guarantor
Senior Indebtedness shall not include (A) any Indebtedness of the Guarantor to
any of its direct or indirect Subsidiaries, (B) Indebtedness incurred for the
purchase of goods or materials or for services (other than services provided by
the Credit Agent, the New Indentures Trustee or any other financial institution
which is a party to an agreement evidencing Guarantor Senior Indebtedness
pursuant to or related to such agreement) obtained in the ordinary course of
business, (C) Indebtedness under that certain credit agreement (the
"Subordinated Credit Agreement"), as amended, supplemented or modified from time
to time, among the Company, the Guarantor, JCC Intermediary, HET and HOCI,
together with any related agreements, and (D) any Indebtedness that, by its
terms, or the terms of the instrument creating or evidencing such Indebtedness,
is pari passu with, or expressly subordinate in right of payment to, the
Guaranty. Guarantor Senior Indebtedness under or in respect of the Credit
Agreement, the New Bonds and the New Contingent Bonds shall continue to
constitute Guarantor Senior Indebtedness for all purposes of this Indenture, and
the provisions of this Article 12 shall continue to apply to such Guarantor
Senior Indebtedness, notwithstanding that such Guarantor Senior Indebtedness or
any Obligations or claims in respect thereof may be disallowed, avoided or
subordinated pursuant to any Bankruptcy Law or other applicable insolvency law
or equitable principles.
"Guarantor Representative" means the indenture trustee or
other trustee, agent or representative for any Guarantor Senior Indebtedness
and, in the case of Guarantor Senior Indebtedness outstanding under the Credit
Agreement, the Credit Agent.
"Specified Guarantor Senior Indebtedness" means (i)
Indebtedness of the Guarantor pursuant to its guaranty under or in respect of
the Credit Agreement, (ii) Indebtedness
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of the Guarantor pursuant to its guaranty under or in respect of the New
Bonds or (iii) Indebtedness of the Guarantor pursuant to its guaranty under
or in respect of the New Contingent Bonds.
For the purposes of this Article 12, all Indebtedness of the
Guarantor now or hereafter existing under the Credit Agreement and the New
Indentures (or any refinancings thereof) shall not be deemed to have been paid
in full unless the holders or owners thereof shall have received payment in full
in cash of such Indebtedness and all Obligations and claims relating thereto.
Section 12.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Guarantor in a total
or partial liquidation or dissolution of the Guarantor or in bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Guarantor or its property or in an assignment for the benefit of creditors, or
an arrangement, adjustment, composition or relief of the Guarantor or its debts
or any marshalling of the assets and liabilities of the Guarantor:
(1) holders of Guarantor Senior Indebtedness shall be entitled
to receive payment in full in cash or Cash Equivalents of all
Obligations due or to become due with respect to the Guarantor Senior
Indebtedness (including interest after the commencement of any such
proceeding at the rate specified in the applicable Guarantor Senior
Indebtedness, whether or not such interest is an allowable claim under
each such proceeding) and all claims relating thereto before Holders
shall be entitled to receive any payment or distribution on account of
any Obligations with respect to the Guaranty, other than amounts
previously set aside with the Trustee pursuant to Article 8, or
payments previously made; and
(2) until all Obligations with respect to Guarantor Senior
Indebtedness (as provided in subsection (1) above) and all claims
relating thereto are paid in full, any payment or distribution,
including, without limitation, any payment or distribution which may be
payable or deliverable by reason of the payment of any other
Indebtedness of the Guarantor being subordinated to any payments
pursuant to the Guaranty to which Holders would be entitled but for
this Article shall be made to holders of Guarantor Senior Indebtedness,
as their interests may appear, for application (in the case of cash)
to, or as collateral (in the case of non-cash property or securities)
for the payment or prepayment of, the Guarantor Senior Indebtedness to
the extent necessary to pay in full in cash or Cash Equivalents all
such Guarantor Senior Indebtedness and all Obligations and claims
relating thereto in accordance with the terms thereof, after giving
effect to any concurrent payment or distribution to or for the holders
of such Guarantor Senior Indebtedness.
The consolidation of the Guarantor with, or the merger of the
Guarantor with or into, another Person or the liquidation or dissolution of the
Guarantor following the sale, assignment, conveyance, transfer, lease or other
disposal of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article 10 shall not be
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deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshaling of assets and liabilities of the
Guarantor for the purposes of this Section.
Section 12.04. Default on Guarantor Senior Indebtedness.
Unless Section 12.03 shall be applicable,
(a) In the event that any default in the payment of any
Guarantor Senior Indebtedness or any Obligation or claim relating thereto shall
have occurred and be continuing, whether at maturity (by lapse of time,
acceleration or otherwise), upon redemption or otherwise (a "Guarantor Payment
Default") unless and until such Guarantor Payment Default shall have been cured
or waived in writing by the holders of such Guarantor Senior Indebtedness, no
direct or indirect payment or distribution (including, without limitation, any
payment or distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of the Guarantor being subordinated to payment
of the Guaranty), shall be made by or on behalf of the Guarantor for or on
account of any Obligations with respect to the Guaranty, and neither the Trustee
nor any Holders shall receive from the Guarantor, directly or indirectly, any
payment or distribution, including, without limitation, from or by way of
collateral, on account of any Obligations with respect to the Guaranty.
(b) Upon the occurrence and during the continuance of any
Payment Blockage Period (as defined in Section 11.04(d)) (provided that there is
a default with respect to any Guarantor Senior Debt or any Senior Debt
guaranteed by the Guarantor), no direct or indirect payment or distribution
(including, without limitation, any payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the
Guarantor being subordinated to payment of the Guaranty), may be made by or on
behalf of the Guarantor for or on account of the Obligations with respect to the
Guaranty and neither the Trustee nor any Holder shall receive from the
Guarantor, directly or indirectly, any payment or distribution, including,
without limitation, from or by way of collateral, in respect of the Obligations
with respect to the Guaranty during such period.
(c) The Guarantor shall deliver a notice to the Trustee
promptly after the date on which any non-payment Default is cured or waived or
ceases to exist or on which the Specified Guarantor Senior Indebtedness related
thereto is discharged or paid in full, in cash or Cash Equivalents or, as
acceptable to the holders of Guarantor Senior Indebtedness, in any other manner,
and the Trustee is authorized to act in reliance on such notice, but failure to
give such notice shall not affect the subordination of the Guaranty to the
Guarantor Senior Indebtedness provided in this Article 12.
Section 12.05. Acceleration of Securities.
If payments under the Guaranty are required because of an
acceleration of the Securities because of an Event of Default, the Guarantor
shall promptly notify holders of Guarantor Senior Indebtedness of the
acceleration.
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Section 12.06. When Distribution Must Be Paid Over.
If a distribution is made to the Trustee, any Paying Agent or
any Holder that because of this Article 12 should not have been made to it, the
Trustee, such Paying Agent or such Holder who receives the distribution shall
segregate such distribution from its other funds and property and hold it in
trust for the benefit of, and, upon written request, pay it over (in the same
form as received, with any necessary endorsement but without recourse,
representation or warranty) to, the holders of Guarantor Senior Indebtedness as
their interests may appear, or their agent or representative or the trustee
under the indenture or other agreement (if any) pursuant to which Guarantor
Senior Indebtedness may have been issued, as their respective interests may
appear, for application (in the case of cash) to, or as collateral (in the case
of non-cash property or securities) for the payment or prepayment of, Guarantor
Senior Indebtedness remaining unpaid to the extent necessary to pay in full, in
cash or Cash Equivalents, such Guarantor Senior Indebtedness and all Obligations
and claims relating thereto in accordance with the terms thereof, after giving
effect to any concurrent payment or distribution to or for the holders of
Guarantor Senior Indebtedness (it being understood, in the event such a
distribution is made to the Trustee, that the Trustee's obligation so to
segregate such distribution and hold it in trust shall be subject to the
Trustee's knowledge determined in accordance with Section 12.12 hereof). In the
event the Trustee is uncertain as to whom payment should be made pursuant to
this paragraph, the Trustee shall be permitted to bring an interpleader action.
With respect to the holders of Guarantor Senior Indebtedness,
the Trustee undertakes to perform only such obligations on the part of the
Trustee as are specifically set forth in this Article 12, and no implied
covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness, and shall not be liable to any such holders if the Trustee shall
pay over or distribute to or on behalf of Holders or the Guarantor or any other
person money or assets to which any holders of Guarantor Senior Indebtedness are
entitled by virtue of this Article 12, except if such payment is made as a
result of the negligence or willful misconduct of the Trustee.
Section 12.07. Notice by Guarantor.
The Guarantor shall promptly notify the Trustee and the Paying
Agent of any facts known to the Guarantor that would cause a payment of any
Obligations with respect to the Guaranty to violate this Article, but failure to
give such notice shall not affect the subordination of the Guaranty to the
Guarantor Senior Indebtedness provided in this Article.
Section 12.08. Subrogation.
After all Guarantor Senior Indebtedness and all such
Obligations and claims relating thereto are paid in full in cash or Cash
Equivalents and until the Obligations under the Guaranty are paid in full in
cash, Holders shall be subrogated to the rights of holders of Guarantor Senior
Indebtedness to receive distributions applicable to Guarantor Senior
Indebtedness to the extent that distributions otherwise payable to the Holders
have been applied to the payment of Guarantor Senior Indebtedness. A
distribution made under this Article 12 to holders of
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Guarantor Senior Indebtedness which otherwise would have been made to Holders
is not, as between the Guarantor and Holders, a payment by the Guarantor on
the Guaranty.
Section 12.09. Relative Rights.
This Article defines the relative rights of Holders and
holders of Guarantor Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Guarantor and Holders, the
obligation of the Guarantor, which is absolute and unconditional, to
make any payment under the Guaranty in accordance with its terms;
(2) affect the relative rights of Holders and creditors of the
Guarantor other than their rights in relation to holders of Guarantor
Senior Indebtedness; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Guarantor Senior Indebtedness to
receive distributions and payments otherwise payable to Holders.
If the Guarantor fails because of this Article 12, to make any
payment under the Guaranty on the due date, the failure may still become a
Default or Event of Default.
Section 12.10. Subordination May Not Be Impaired.
No right of any present or future holder of any Guarantor
Senior Indebtedness or any Obligation or claims relating thereto to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act in good faith by any such holder, or by
any act, failure to act or noncompliance by the Guarantor, the Trustee or any
Agent with the terms and provisions and covenants herein, regardless of any
knowledge thereof any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders or owners of Guarantor Senior Indebtedness or any
Obligation or claim relating thereto may at any time and from time to time,
without the consent of or notice to the Trustee or any Holder, without incurring
responsibility to any Holder and without impairing or releasing the
subordination provided in this Article 12 or the obligations hereunder of the
Holders to the holders of Guarantor Senior Indebtedness, do any one or more of
the following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, all or any of the Guarantor Senior
Indebtedness (including any change in the rate of interest thereon), or
otherwise amend or supplement in any manner, or grant any waiver or release with
respect to, Guarantor Senior Indebtedness or any Obligation or claim relating
thereto or any instrument evidencing the same or any agreement under which
Guarantor Senior Indebtedness or any Obligation or claim relating thereto is
outstanding; (ii) sell, exchange, release, not perfect or otherwise deal with
any property at any time pledged, assigned or mortgaged to secure or otherwise
securing, Guarantor Senior Indebtedness or any Obligation or claim relating
thereto, or amend, or grant any waiver or release with respect to, or consent to
any departure from any
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guarantee for all or any of the Guarantor Senior Indebtedness or any
Obligation or claim relating thereto; (iii) subject to Section 12.08 hereof,
release any person liable in any manner under or in respect of Guarantor
Senior Indebtedness or any Obligation or claim relating thereto; (iv)
exercise or refrain from exercising any rights against, and, subject to
Section 12.08 hereof, release from obligations of any type, the Guarantor and
any other person; and (v) apply any sums from time to time received to the
Guarantor Senior Indebtedness or any Obligation or claim relating thereto;
provided, however, that in no event shall any such actions limit the right of
the Holders of the Securities to take any action to accelerate the maturity
of the Securities pursuant to Article 6 of this Indenture or to pursue any
rights or remedies hereunder, under the Securities or under applicable laws
if the taking of such action does not otherwise violate the terms of this
Article.
All rights and interests under this Indenture of the Credit
Agent, the New Indentures Trustee and the other holders of Guarantor Senior
Indebtedness or any Obligation or claim relating thereto, and all agreements and
obligations of the Trustee, the Holders and the Guarantor under Article 10
hereof and under this Article 12 shall remain in full force and effect
irrespective of (i) any lack of validity or enforceability of the Credit
Agreement or the New Indentures, any promissory notes evidencing the
Indebtedness thereunder, or any other agreement or instrument relating thereto
or to any other Guarantor Senior Indebtedness or any Obligation or claim
relating thereto, including, without limitation, any agreement referred to in
the definition of Credit Agreement, or (ii) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Trustee, any
Holder or the Guarantor.
The provisions set forth in Article 10 hereof and in this
Article 12 constitute a continuing agreement and shall (i) be and remain in full
force and effect until payment in full of all Guarantor Senior Indebtedness and
all Obligations and claims relating thereto at such time as no lender shall have
any commitment to make any advances in respect of Guarantor Senior Indebtedness,
(ii) be binding upon the Trustee, the Holders and the Guarantor and their
respective successors, transferees and assigns, and (iii) inure to the benefit
of, and be enforceable directly by, each of the Holders and their respective
successors, transferees and assigns.
Each of the Credit Agent and the New Indentures Trustee is
hereby authorized to demand specific performance of the provisions of this
Article 12, whether or not the Guarantor shall have complied with any of the
provisions of Article 12 applicable to it, at any time when the Trustee or any
Holder shall have failed to comply with any of these provisions. The Trustee and
the Holders hereby irrevocably waive any defense based on the adequacy of a
remedy at law that might be asserted as a bar to such remedy of specific
performance.
Section 12.11. Distribution or Notice to Guarantor Representative.
Whenever a distribution is to be made or a notice given to
holders of Guarantor Senior Indebtedness, the distribution may be made and the
notice given to their Guarantor Representative, if any.
Upon any payment or distribution of assets of the Guarantor
referred to in this Article 12, the Trustee and the Holders shall be entitled to
rely in good faith upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Guarantor
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Representative or of the liquidating trustee or agent or other person making
any distribution to the Trustee or to the Holders for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of the Guarantor Senior Indebtedness and other Indebtedness of the
Guarantor, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article 12.
Section 12.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 12 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment or
distribution by the Trustee, or the taking of any action by the Trustee pursuant
to this Article 12, and the Trustee or Paying Agent may continue to make
payments relating to the Guaranty unless it shall have received at its Corporate
Trust Office at least two Business Days prior to the date of such payment
written notice of facts that would cause the payment of any Obligations with
respect to the Guaranty to violate this Article. Only the Guarantor, a Guarantor
Representative, the Conversion Agent or a holder of an issue of Guarantor Senior
Indebtedness that has no Guarantor Representative may give the notice. Nothing
in this Article 12 shall apply to amounts due to, or impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold
Guarantor Senior Indebtedness with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
Section 12.13. Authorization to Effect Subordination.
Each Holder of a Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate as between the Holders of the Securities and the
holders of Guarantor Senior Indebtedness the subordination as provided in this
Article 12, and appoints the Trustee his attorney-in-fact for any and all such
purposes.
Section 12.14. No Suspension of Remedies.
Nothing contained in this Article shall limit the right of the
Trustee or the Holders of Securities to take any action pursuant to Article 10
of this Indenture or to pursue any rights or remedies hereunder, under the
Guaranty or under applicable law, subject to the rights, if any, under this
Article of the holders, from time to time, of Guarantor Senior Indebtedness to
receive the cash, property or securities receivable upon the exercise of such
rights or remedies.
Section 12.15. Miscellaneous.
(a) Each Holder and the Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guarantor Senior Indebtedness and any Obligation or claim relating thereto, and
any requirement that the Credit Agent or any other holder of Guarantor Senior
Indebtedness and any Obligation or claim relating thereto protect, secure,
perfect or insure any security interest or Lien or any property subject
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thereto or exhaust any right or take any action against the Guarantor or any
other person or entity or any collateral.
(b) The agreement contained in this Article 12 shall continue
to be effective or be reinstated, as the case may be, if at any time any payment
of any of the Guarantor Senior Indebtedness or any Obligation or claim relating
thereto is rescinded or must otherwise be returned by any holder of Guarantor
Senior Indebtedness or any Obligation or claim relating thereto upon the
insolvency, bankruptcy or reorganization of the Guarantor or otherwise, all as
though such payment had not been made.
(c) Unless and until written notice shall be given by the
Guarantor and the Credit Agent to the Trustee at its Corporate Trust Office
notifying the Trustee that Indebtedness is no longer outstanding under the
Credit Agreement, the Trustee shall assume that such Indebtedness is
outstanding. The Guarantor agrees to give, and to cause the Credit Agent to
give, such notice to the Trustee promptly after the first date on which no
Indebtedness shall be outstanding under the Credit Agreement. For the purposes
of this Indenture, Indebtedness shall be outstanding under the Credit Agreement
whenever either (i) such Indebtedness and all Obligations and claims relating
thereto shall not have been paid in full in cash or Cash Equivalents or (ii)
commitments to lend under the Credit Agreement shall not have expired or been
cancelled or terminated.
(d) Unless and until written notice shall be given by the
Guarantor and the New Indentures Trustee to the Trustee at its Corporate Trust
Office notifying the Trustee that Indebtedness is no longer outstanding under
either of the New Indentures, the Trustee shall assume that such Indebtedness is
outstanding. The Guarantor agrees to give, and to cause the New Indentures
Trustee to give, such notice to the Trustee promptly after the first date on
which no Indebtedness shall be outstanding under either of the New Indentures.
For the purposes of this Indenture, Indebtedness shall be outstanding under the
New Indentures whenever either (i) such Indebtedness and all Obligations and
claims relating thereto shall not have been paid in full in cash or Cash
Equivalents or (ii) "Contingent Payments" may be earned under either of such New
Indentures with respect to the then current or any future interest period.
ARTICLE 13.
CONVERSION
Section 13.01. Conversion Privilege.
A Holder of a Security may convert it or any portion specified
below into JCC Holding Class A Common Stock at any time after October 1, 2002.
The number of shares issuable upon conversion of a Security is determined as
follows: Divide the principal amount to be converted by the conversion price in
effect on the conversion date. Round the result to the nearest 1/100th of a
share.
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The initial conversion price shall be $25.00 per share. The
conversion price is subject to adjustment as provided in this Article 13.
A Holder may convert a portion of a Security if the portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to conversion of all of a Security also apply to conversion of a portion
of it.
Section 13.02. Conversion Procedure.
To convert a Security a Holder must satisfy the requirements
in paragraph 7 of the Securities. The date on which the Holder satisfies all
those requirements is the conversion date. As soon as reasonably practicable,
but in no event later than 30 days after the conversion date, JCC Holding shall
deliver through the Conversion Agent a certificate for the number of full shares
of JCC Holding Class A Common Stock issuable upon the conversion and a check for
any fractional share. The person in whose name the certificate is registered
shall be treated as a stockholder of record on and after the conversion date.
No payment or adjustment will be made for accrued interest but
unpaid on a converted Security or dividends on any JCC Holding Class A Common
Stock issued.
If a Holder converts more than one Security at the same time,
the number of full shares issuable upon the conversion shall be based on the
total principal amount of the Securities converted.
Upon surrender of a Security that is converted in part, JCC
Holding shall issue and the Trustee shall authenticate for the Holder a new
Security equal in principal amount to the unconverted portion of the Security
surrendered.
If the last day on which a Security may be converted is a
Legal Holiday in a place where a Conversion Agent is located, the Security may
be surrendered to that Conversion Agent on the next succeeding day that is not a
Legal Holiday.
Section 13.03. Fractional Shares.
JCC Holding will not issue a fractional share of JCC Holding
Class A Common Stock upon conversion of a Security. Instead, JCC Holding will
deliver its check for the current market value of the fractional share. The
current market value of a fraction of a share is determined as follows: Multiply
the current market price of a full share by the fraction. Round the result to
the nearest cent.
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The current market price of a share of JCC Holding Class A
Common Stock is the Current Market Price of the JCC Holding Class A Common Stock
determined as of the last trading day prior to the conversion date.
Section 13.04. Taxes on Conversion.
If a Holder of a Security converts it, JCC Holding shall pay
any documentary, stamp or similar issue or transfer tax due on the issue of
shares of JCC Holding Class A Common Stock upon the conversion. However, the
Holder shall pay any such tax which is due because the shares are issued in a
name other than the Holder's or its nominee's name.
Section 13.05. JCC Holding to Provide Stock.
JCC Holding has reserved and shall continue to reserve out of
its authorized but unissued JCC Holding Class A Common Stock enough shares of
such JCC Holding Class A Common Stock to permit the conversion of the Securities
in full.
All shares of JCC Holding Class A Common Stock which may be
issued upon conversion of the Securities shall be fully paid and non-assessable.
JCC Holding will endeavor to comply in good faith and in a
reasonably expeditious manner with all securities laws regulating the offer and
delivery of shares of JCC Holding Class A Common Stock upon conversion of
Securities and will endeavor to list such shares on each national securities
exchange on which the JCC Holding Class A Common Stock is listed.
Section 13.06. Adjustment for Change in Capital Stock.
If JCC Holding:
(1) pays a dividend or makes a distribution on Common Stock in
shares of its Common Stock;
(2) subdivides the outstanding shares of Common Stock into a
greater number of shares; or
(3) combines the outstanding shares of Common Stock into a
smaller number of shares,
then the conversion price in effect immediately prior to such
action shall be adjusted so that the Holder of a Security thereafter converted
may receive the number of shares of Common Stock of JCC Holding which he would
have owned immediately following such action if he had converted the Security
immediately prior to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
Section 13.07. Adjustment for Rights Issue.
If JCC Holding distributes any rights or warrants to all
holders of Common Stock entitling them for a period expiring within 60 days
after the record date mentioned below to
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purchase shares of JCC Holding Common Stock at a price per share less than
the Current Market Price per share determined as of that record date, the
conversion price shall be adjusted in accordance with the formula:
[GRAPHIC OMITTED]
where:
C' = the adjusted conversion price;
C = the current conversion price;
O = the number of shares of JCC Holding Common Stock outstanding
on the record date;
N = the number of additional shares of JCC Holding Common Stock
issuable upon exercise of all such rights or warrants;
P = the exercise price per share for such rights or warrants; and
M = the Current Market Price per share of JCC Holding Common Stock
on the record date.
The adjustment shall be made successively whenever any such
rights or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the rights
or warrants. If, at the end of the period during which such warrants or rights
are exercisable, not all warrants or rights shall have been exercised, the
conversion price shall be immediately readjusted to what it would have been if
"N" in the above formula had been the number of shares actually issued.
In the event JCC Holding implements a stockholder rights plan,
such rights plan shall provide that upon conversion of the Securities the
Holders will receive, in addition to the JCC Holding Class A Common Stock
issuable upon such exercise, the rights issued under such rights plan
(notwithstanding the occurrence of an event causing such rights to separate from
the JCC Holding Class A Common Stock at or prior to the time of exercise).
Section 13.08. Adjustment for Other Distributions.
If JCC Holding distributes to all Holders of Common Stock any
of its (or its Subsidiaries') assets (including cash) or debt securities or
equity securities (other than Common Stock) or any rights or warrants to
purchase assets, debt securities, equity securities (other than distributions
covered by Section 13.06 or Section 13.07 of this Indenture) or other securities
of JCC Holding, the conversion price shall be adjusted in accordance with the
formula:
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[GRAPHIC OMITTED]
where:
C' = the adjusted conversion price;
C = the current conversion price;
M = the Current Market Price per share of JCC Holding
Common Stock on the record date mentioned below; and
F = the fair market value on the record date of the
assets, securities, rights or warrants applicable to
one share of JCC Holding Common Stock. The Board of
Directors shall determine the fair market value in a
resolution filed with the Trustee, which
determination, if made in good faith, shall be
conclusive.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If, upon application of the formula set forth above, M - F is equal to or less
than zero, such formula will not determine the adjustment of the conversion
price and the Board of Directors shall in good faith adjust the conversion price
in a manner consistent with the intent of this Section 13.08. An adjustment by
the Board of Directors in accordance with the preceding sentence shall be
conclusive and binding.
This Section 13.08 does not apply to (a) customary and
ordinary course cash dividends paid out of consolidated current or retained
earnings as shown on the books of JCC Holding or (b) rights or warrants referred
to in Section 13.07.
Section 13.09. Adjustment for Common Stock Issue.
If JCC Holding issues shares of JCC Holding Common Stock for a
consideration per share less than the current market price per share on the date
JCC Holding fixes the offering price of such additional shares, the conversion
price shall be adjusted in accordance with the formula:
[GRAPHIC OMITTED]
where:
C' = the adjusted conversion price;
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C = the then current conversion price;
O = the number of shares of JCC Holding Common Stock
outstanding immediately prior to the issuance of such
additional shares;
P = the aggregate consideration received for the issuance
of such additional shares of JCC Holding Common
Stock;
M = the Current Market Price per share on the date of
issuance of such additional shares of JCC Holding
Common Stock; and
A = the number of shares of JCC Holding Common Stock
outstanding immediately after the issuance of such
additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This Section does not apply to (i) any of the transactions
described in Sections 13.07, 13.08 and 13.10, (ii) the conversion of Securities,
or the conversion or exchange of other securities convertible or exchangeable
for JCC Holding Class A Common Stock, (iii) JCC Holding Common Stock issued to
JCC Holding's or the Company's employees under bona fide employee benefit plans
adopted by the Board of Directors and approved by the holders of JCC Holding
Common Stock when required by law, if such JCC Holding Common Stock would
otherwise be covered by this Section (but only to the extent that the aggregate
number of shares excluded hereby and issued after the date of this Indenture
shall not exceed 5% of the JCC Holding Common Stock outstanding at the time of
the adoption of any such plans, exclusive of antidilution adjustments
thereunder), (iv) JCC Holding Common Stock issued to acquire, or in the
acquisition of, all or any portion of a business as a going concern in an
arm's-length transaction between JCC Holding and an unaffiliated third party,
whether such acquisition shall be effected by purchase of assets, exchange of
securities, merger, consolidation or otherwise, (v) JCC Holding Common Stock
issued in a bona fide public offering pursuant to a firm commitment
underwriting, (vi) JCC Holding Common Stock issued on exercise of rights if and
to the extent Holders of Securities have received or are entitled to receive
such rights upon conversion or (vii) JCC Holding Common Stock issued pursuant to
that certain Warrant, dated as of October 30, 1998, issued by JCC Holding and
registered as of the date of this Indenture in the name of Harrah's Crescent
City Investment Company, as such Warrant may be amended (including amendment and
restatement thereof), supplemented or modified from time to time, including any
replacement or renewal thereof; provided, however, that no such amendment,
supplement or modification decreases the exercise price thereof or provides that
the holder or holders thereof receives additional shares of JCC Holding Common
Stock upon the exercise thereof.
Section 13.10. Adjustment for Convertible Securities Issue.
If JCC Holding issues any securities convertible into or
exchangeable for JCC Holding Common Stock (other than the Securities or
securities issued in transactions described in Sections 13.07 and 13.08) for a
consideration per share of JCC Holding Common Stock initially
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deliverable upon conversion or exchange of such securities less than the
current market price per share on the date of issuance of such securities,
the conversion price shall be adjusted in accordance with this formula:
[GRAPHIC OMITTED]
where:
C' = the adjusted conversion price;
C = the then current conversion price;
O = the number of shares of JCC Holding Common Stock
outstanding immediately prior to the issuance of such
securities;
P = the aggregate consideration received for the issuance
of such securities, determined in accordance with
Section 13.11;
M = the Current Market Price per share of JCC Holding
Common Stock on the date of issuance of such
securities;
D = the maximum number of shares of JCC Holding Common
Stock deliverable upon conversion or in exchange for
such securities at the initial conversion or exchange
rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance. If
all of the JCC Holding Common Stock deliverable upon conversion or exchange of
such securities has not been issued when such securities are no longer
outstanding, then the conversion price shall promptly be readjusted to the
conversion price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of JCC Holding Common Stock issued upon conversion or exchange of such
securities.
This Section 13.10 does not apply to (i) convertible
securities issued to acquire, or in the acquisition of, all or any portion of a
business as a going concern or of developed, undeveloped or mixed real property,
in an arm's-length transaction between JCC Holding and an unaffiliated third
party, whether such acquisition shall be effected by purchase of assets,
exchange of securities, merger, consolidation or otherwise, or (ii) convertible
securities issued in a bona fide public offering pursuant to a firm commitment
underwriting.
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Section 13.11. Consideration Received.
For purposes of any computation respecting consideration
received pursuant to Sections 13.09 and 13.10, the following shall apply:
(1) in the case of the issuance of shares of JCC Holding
Common Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by JCC Holding for
any underwriting of the issue or otherwise in connection therewith;
(2) in the case of the issuance of shares of JCC Holding
Common Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors
(irrespective of the accounting treatment thereof), whose determination
shall be conclusive, and described in a Board resolution which shall be
filed with the Trustee; and
(3) in the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received
therefor shall be deemed to be the consideration received by JCC
Holding for the issuance of such securities plus the additional minimum
consideration, if any, to be received by JCC Holding upon the
conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (1) and (2) of
this Section 13.11).
Section 13.12. Adjustment For Tender Offer and Certain Repurchases.
If JCC Holding consummates a tender offer for, or otherwise
repurchases, shares of JCC Holding Common Stock and the aggregate number of
shares of JCC Holding Common Stock purchased, together with the aggregate number
of shares of JCC Holding Common Stock purchased by JCC Holding in other tender
offers and repurchases, is in excess of 5% of the outstanding shares of JCC
Holding Common Stock at the Expiration Time (as defined below) or the purchase
date of JCC Holding Common Stock pursuant thereto for a per share consideration
having a fair market value, as of the last time (the "Expiration Time") that
tenders may be made pursuant to such tender offer (as it shall have been
amended) or at the purchase date, that exceeds the current market price per
share of JCC Holding Common Stock at the Expiration Time or at the purchase date
the conversion price shall be adjusted in accordance with the following formula:
[Graphic Omitted]
where:
C' = the adjusted conversion price;
C = the conversion price immediately prior to the
Expiration Time or repurchase date;
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M = the current market price per share of JCC Holding
Common Stock immediately prior to the Expiration Time
or repurchase date;
O = the number of shares of JCC Holding Common Stock
outstanding (including any tendered shares) at the
Expiration Time or repurchase date;
F = the fair market value of the aggregate consideration
paid for all shares of JCC Holding Common Stock
purchased; and
N = the number of shares of JCC Holding Common Stock
accepted for payment in such tender offer or
otherwise purchased.
If the number of shares accepted for payment in a tender offer
or the aggregate consideration payable therefor have not been finally determined
by the opening of business on the day following the Expiration Time, the
adjustment required by this subsection (g) shall, pending such final
determination, be made based upon the preliminary announced results of such
tender offer, and, after such final determination shall have been made, the
adjustment required by this subsection (g) shall be based upon the number of
shares accepted for payment in such tender offer and the aggregate consideration
payable therefor as so finally determined. If, upon application of the formula
set forth above, (i) O - N is equal to or less than zero or (ii) (M x O) - F is
equal to or less than zero, such formula will not determine the adjustment of
the conversion price and the Board of Directors shall in good faith adjust the
conversion price in a manner consistent with the intent of this Section 13.12.
An adjustment by the Board of Directors in accordance with the preceding
sentence shall be conclusive and binding.
Section 13.13. When Adjustment May Be Deferred.
No adjustment in the conversion price need be made unless the
adjustment would require an increase or decrease of at least 1% in the
conversion price. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment.
All calculations under this Article 13 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
Section 13.14. When No Adjustment Required.
No adjustment need be made for rights to purchase JCC Holding
Common Stock pursuant to a JCC Holding plan for reinvestment of dividends or
interest if issued at a no greater discount than 3%.
No adjustment need be made for a change in the par value or no
par value of the JCC Holding Common Stock.
To the extent the Securities become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
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Notwithstanding anything herein to the contrary, the
conversion price per share shall not be less than the par value per share. In
the event an adjustment provided for herein would result in a conversion price
of less than the par value per share, such adjusted conversion price shall be
the par value per share.
Section 13.15. Notice of Adjustment.
Whenever the conversion price is adjusted, JCC Holding shall
promptly mail to Holders a notice of the adjustment. JCC Holding shall file with
the Trustee a certificate from JCC Holding's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. The certificate shall be conclusive evidence that the adjustment is correct,
absent manifest error.
Section 13.16. Voluntary Reduction.
JCC Holding from time to time may reduce the conversion price
by any amount for any period of time if the period is at least 20 days and if
the reduction is irrevocable during the period, provided that in no event may
the conversion price be less than the par value of a share of JCC Holding Common
Stock.
Whenever the conversion price is reduced, JCC Holding shall
mail to Holders a notice of the reduction. JCC Holding shall mail the notice at
least 15 days before the date the reduced conversion price takes effect. The
notice shall state the reduced conversion price and the period it will be in
effect.
A reduction of the conversion price does not change or adjust
the conversion price otherwise in effect for purposes of Sections 13.06, 13.07,
13.08, 13.09, 13.10 and 13.12.
Section 13.17. Notice of Certain Transactions.
If:
(1) JCC Holding takes any action that would require an
adjustment in the conversion price pursuant to Section 13.06, 13.07,
13.08, 13.09, 13.10 or 13.12;
(2) JCC Holding takes any action that would require a
supplemental indenture pursuant to Section 13.18; or
(3) there is a liquidation or dissolution of JCC Holding,
JCC Holding shall mail to Holders a notice stating the
proposed record date for a dividend or distribution or the proposed effective
date of a subdivision, combination, reclassification, consolidation, merger,
transfer, lease, liquidation or dissolution. JCC Holding shall mail the notice
at least 15 days before such date. Failure to mail the notice or any defect in
it shall not affect the validity of the transaction.
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Section 13.18. Reorganization of JCC Holding.
In case of any consolidation or merger of JCC Holding with or
into any other Person, any merger of another Person with or into JCC Holding
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of JCC Holding Common Stock) or
any conveyance, sale, transfer or lease of all or substantially all of the
assets of JCC Holding, the Person formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each then Outstanding Security shall have the right thereafter, during the
period such Security shall be convertible as specified in this Article 13, to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by a holder of the number of shares of JCC Holding Common
Stock into which such Security would have been converted immediately prior to
such consolidation, merger, conveyance, sale, transfer or lease, assuming such
holder of JCC Holding Common Stock (i) is not a Person with which JCC Holding
consolidated or merged with or into or which merged into or with JCC Holding or
to which such conveyance, sale, transfer or lease was made, as the case may be
("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer, or lease is not the same for each share of JCC
Holding Common Stock held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by any Person, other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("Non-electing Share"), then for the purpose of
this Section 13.18 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer or lease
by the holders of each Non-electing Share shall be deemed to be the kind and
amount so receivable per share by a plurality of the Non-electing Shares). Such
supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article. The above provisions of this Section 13.18 shall similarly apply to
successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture and a brief description
of the transaction to which it relates shall be given by JCC Holding, or JCC
Holding shall cause the Trustee to give such notice, to the Holder of each
Security.
If this Section 13.18 applies, Section 13.06 does not apply.
Section 13.19. JCC Holding Determination Final.
Any determination that JCC Holding or the Board of Directors
must make pursuant to Section 13.03, 13.06, 13.08, 13.09, 13.10, 13.11, 13.12 or
13.14, or with respect to the Current Market Price of JCC Holding Common Stock,
is conclusive absent manifest error.
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Section 13.20. Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under
this Article should be made, how it should be made or what it should be. The
Trustee has no duty to determine whether any provisions of a supplemental
indenture under Section 13.18 are correct. The Trustee makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities. The Trustee shall not be responsible for JCC
Holding's failure to comply with this Article. Each Conversion Agent other
than JCC Holding shall have the same protection under this Section as the
Trustee.
Section 13.21. Converted Securities.
All Securities delivered to the Conversion Agent pursuant to
this Article (hereinafter in this Section called "Converted Securities")
shall be imprinted or otherwise marked by the Conversion Agent with a legend
indicating such conversion and a photocopy thereof shall be delivered by the
Conversion Agent to JCC Holding in exchange for JCC Holding Class A Common
Stock and cash, if any, delivered by JCC Holding to the Conversion Agent
pursuant to Section 13.02. Such Securities shall thereafter be held by JCC
Holding or, if transferred by JCC Holding to the Company, the Company, and
may, at any time at the direction of JCC Holding or the Company, whichever is
the holder, be delivered to the Trustee for cancellation. Converted
Securities shall not be transferred except to the Company or to any
Subsidiary of JCC Holding. Converted Securities shall not be further
convertible into JCC Holding Class A Common Stock, and shall not be
redeemable unless all Securities at the time outstanding shall be redeemed at
the same time.
Section 13.22. Joint and Several Obligation.
The obligations to deliver JCC Holding Class A Common Stock on
conversion of the Securities shall constitute a joint and several obligation
of the Company and JCC Holding.
ARTICLE 14.
MISCELLANEOUS
Section 14.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with another provision which is required or deemed to be included in this
Indenture by the TIA the required provision shall control. If any provision
of this Indenture modifies or excludes any provision of the TIA that may be
so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.
Section 14.02. Notices.
Any notice or communication by the Company, the Guarantor, the
Trustee, the Credit Agent, the Initial Minimum Payment Guarantors or a Holder
to the other is duly given if in writing and delivered in person or mailed by
first-class mail (registered or certified, return receipt
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requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the other's address:
If to the Company or JCC Holding:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: Corporate Secretary
Telecopier No.: (504) 533-6100
with a copy to:
Alston & Bird LLP
One Atlantic Center
Atlanta, Georgia 30309-3424
Attention: Michael R. McAlevey
Telecopier No.: (404) 881-4777
If to the Trustee:
Norwest Bank Minnesota, National Association
Norwest Center, Sixth and Marquette
Minneapolis, MN 55479-0069
Attention: Corporate Trust Department
Telecopier No.: (612) 667-9825
If to the Credit Agent:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Mary Kay Coyle
Telecopier No.: (212) 250-7218
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036-2787
Attention: Eric L. Berg
Telecopier No.: (212) 354-8113
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If to the New Indentures Trustee:
Norwest Bank Minnesota, National Association
Northwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Department
Telecopier No.: (612) 667-9825
If to the Initial Minimum Payment Guarantors:
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
Attention: General Counsel
Telecopier No.: (901) 762-8777
with a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071-2007
Attention: James P. Beaubien
Telecopier No.: (213) 891-8763
If to any Holder, at such Holder's last known address
appearing on the books of the Company or JCC Holding maintained for such
purpose.
The Company, the Guarantor, the Trustee, the Credit Agent or
the Initial Minimum Payment Guarantors by notice to the others may designate
additional or different addresses for subsequent notices or communications.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
In addition to any other notices required or permitted to be
given pursuant to this Indenture, the Trustee shall, promptly after its
delivery of any written notice to the Company (x) which specifically states
that an Event of Default is in existence or (y) pursuant to the first
paragraph of Section 6.02 (or promptly after its receipt of any such notice
delivered to it by the Holders), send to the Regulating Authority (at the
address set forth below) a copy of such written notice; provide , however,
that any failure or delay in giving any such notice shall not affect or
impair the validity of said notice or any action taken pursuant thereto (or
otherwise pursuant to this Indenture) and shall give rise to no liability
(monetary or otherwise) on the part of the Trustee to any Holder, the
Regulating Authority or any Person. All notices to the Regulating Authority
pursuant to this paragraph shall be mailed (or addressed as the Regulatory
Authority provides to the Trustee from time to time for its receipt of
notices pursuant to this paragraph):
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Louisiana Gaming Control Board
9100 Bluebonnet Centre BoulevardSuite 500
Baton Rouge, LA 70809
Attention: Chairman
Section 14.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIAss. 312(b) with other
Holders with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIAss. 312(c).
Section 14.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(2) if customary or reasonably requested by the Trustee, an
Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 14.05
hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
Section 14.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
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Section 14.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
Section 14.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions or trust companies in The City of New York or at a place
of payment are authorized or obligated by law, regulation or executive order
to remain closed. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.
Section 14.08. No Recourse Against Others.
A director, officer, employee, lawyer or stockholder of the
Company or JCC Holding, as such, shall not have any liability for any
obligations of the Company, JCC Holding or the Trustee under the Securities
or the Indenture or for any claim based on, in respect of or by reason of
such obligations. Each Holder by accepting a Security waives and releases all
such liability.
Section 14.09. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.
Section 14.10. Governing Law.
The laws of the State of New York, including, without
limitation, sections 5-1401 and 5-1402 of the New York General Obligations
Law and NY CPLP 327(b), shall govern and be used to construe this Indenture
and the Securities.
Section 14.11. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 14.12. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
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Section 14.13. Severability.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 14.14. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together shall
represent the same agreement.
Section 14.15. Variable Provisions.
The Company initially appoints the Trustee as Paying Agent,
Conversion Agent and Registrar.
Section 14.16. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
Section 14.17. Gaming Laws.
This Indenture and the Securities are and shall remain subject
to the Louisiana Economic Development and Gaming Corporation Act, La. R.S.
27:1 et seq., La. R.S. 27:201 et seq. and the rules and regulations
thereunder, as may be amended from time to time (collectively the act and the
rules and regulations referred to herein as "Gaming Regulations"). The
Company represents and warrants that all requisite approvals under the Gaming
Regulations have been obtained for the execution, performance and issuance of
this Indenture and the Securities.
Section 14.18. Waiver and Release; HET/JCC Agreement.
(a) (i) As a condition to the effectiveness of the
confirmation of the Plan of Reorganization of Harrah's Jazz Company ("HJC"),
the predecessor of the Company, the Initial Minimum Payment Guarantors have
entered into that certain HET/JCC Agreement, dated as of October 30, 1998
(the "Initial HET/JCC Agreement") in favor of the Louisiana Gaming Control
Board (the "LGCB"). The Initial HET/JCC Agreement provides that the Initial
Minimum Payment Guarantors will guarantee the Company's payment to the LGCB
of the Minimum Payments required under the Amended and Renegotiated Casino
Operating Contract (the "COC") between HJC, the Company and State of
Louisiana (by and through the LGCB) for the Casino Fiscal Years (as defined
in the COC) ending March 31, 1999 and March 31, 2000, renewable for the four
Fiscal Years thereafter through March 31, 2004, subject to termination or
non-renewal in accordance with the terms of the Initial HET/JCC Agreement
(any such Guaranty as so provided by HET and HOCI is hereinafter referred to
as a "Guaranty"). As a prerequisite to maintaining the effectiveness of the
COC, the COC requires that the Company annually provide to the LGCB
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a Minimum Payment Guaranty (as defined in the COC). In entering into the
Initial HET/JCC Agreement, the Initial Minimum Payment Guarantors have no
obligation to provide a Minimum Payment Guaranty for the entire term of the
COC, but rather have agreed only to provide it for the period and on terms
and conditions specified therein. The Initial Minimum Payment Guarantors have
expressly informed the Company and the Trustee (acting on behalf of the
Holders) that they have not agreed to renew the Initial HET/JCC Agreement
beyond March 31, 2004, or in any prior year where the Initial Minimum Payment
Guarantors' obligation to furnish a Guaranty does not renew by the express
terms of Section 1(b) of the Initial HET/JCC Agreement. The Initial Minimum
Payment Guarantors have informed the Company and the Trustee (acting on
behalf of the Holders) that any decision they make concerning whether to
renew any Guaranty or the Initial HET/JCC Agreement will be made in their
sole discretion, acting only in their best interests. Each of the Company and
the Trustee (acting on behalf of the Holders) hereby acknowledges that (A)
the Initial Minimum Payment Guarantors are not obligated to and have not
given it any assurance that they will renew the Initial HET/JCC Agreement
beyond March 31, 2004, or renew any Guaranty for any earlier Casino Fiscal
Year in which the Initial Minimum Payment Guarantors' obligation to furnish a
Guaranty does not renew under the express terms of Section 1(b) thereof, (B)
the Initial Minimum Payment Guarantors have the right to make any such
renewal decision by considering only their best interests, and (C) the
Initial Minimum Payment Guarantors need not consider the interests of any
other parties in making any such renewal decision, notwithstanding that the
Initial Minimum Payment Guarantors are involved in a number of capacities in
respect of the Company.
(ii) Each of the Company and the Trustee (acting on
behalf of the Holders) hereby agrees that by entering into the Initial
HET/JCC Agreement or providing a Guaranty or otherwise, the Initial Minimum
Payment Guarantors are not now, and in the past have not, made any assurances
or guarantees concerning the financial results of the Casino (as defined in
the New Indentures), nor are or have the Initial Minimum Payment Guarantors
made any assurances or guarantees that the Casino will be financially
successful or will perform as projected in the projections and/or feasibility
studies included in HJC's (and certain other parties') Third Amended Joint
Plan or Reorganization (the "Plan") and the Disclosure Statement distributed
in connection with the Plan confirmation process.
(iii) Each of the Company and the Trustee (acting on
behalf of the Holders) hereby agrees and acknowledges that any future
representation, warranty, assurance or other guaranty by the Initial Minimum
Payment Guarantors or any of their subsidiaries or other affiliates to the
Company or the Trustee concerning the renewal of any Guaranty or the Initial
HET/JCC Agreement, the operation of the Casino, the financial results of the
Casino, or any other matter concerning the Casino or the Plan shall only be
effective if set forth in writing and properly executed by the party to be
charged.
(b) (i) Each of the Company and the Trustee (acting on behalf
of the Holders) hereby releases and waives and agrees not to bring any Claims
against the Initial Minimum Payment Guarantors, whether a known Claim or an
Unknown Claim, to the extent that such Claims may arise in any way, in whole
or in part, out of (A) the Initial Minimum Payment Guarantors' decision
either to renew or not renew any Guaranty or the Initial HET/JCC Agreement,
(B) the Initial Minimum Payment Guarantors acting in their own best interests
in
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connection with the execution, renewal or failure to renew any Guaranty or
the Initial HET/JCC Agreement, and/or (C) any alleged assurance or guarantee
by the Initial Minimum Payment Guarantors concerning the operation of the
Casino, the financial results of the Casino or any other matter concerning
the Casino or the Plan, unless such Claim is based on a writing (but in any
event cannot be based on the Initial HET/JCC Agreement or any Guaranty)
properly executed by the party against whom such a claim is being made.
(ii) Each of the Company and the Trustee also hereby
specifically waives any rights it might have under Louisiana Civil Code
Article 3083 and all other applicable or similar law to this same or similar
effect as the matters described in Section 14.18(b)(i) hereof, including but
not limited to, any purported right to challenge the validity or seek
rescission of, or to vitiate, the releases set forth above in Section
14.18(b)(i) hereof on the ground that any information was kept concealed from
it and agrees that no remedy shall be available for any such alleged
non-disclosure, and that the right to rescind the above release on any such
ground is hereby expressly waived.
(c) For the purposes of Section 14.18(b)(i) and (ii) hereof:
(i) "Claim" or "Claims" shall mean, for purposes only of
this Section 14.18, any action or actions, cause or causes of action, in law
or equity, suits, debts, liens, liabilities, claims, demands, damages,
punitive damages, losses, costs or expenses, and/or reasonable attorneys'
fees of any nature whatsoever.
(ii) "Initial Minimum Payment Guarantor" shall include
HET, HOCI, Harrah's New Orleans Investment Company, Harrah's Crescent
Investment Company, Harrah's New Orleans Management Company, their successors
and assigns, and all direct or indirect subsidiaries, and each of their
parents, subsidiaries, officers, directors, corporate representatives,
employees, agents, lawyers and accountants and all persons acting or claiming
through, under or in concert with any of them.
(iii) "Unknown Claim" or "Unknown Claims" means any and
all Claims, including without limitation, any Claim which any of the parties
hereto does not know or even suspect to exist in his, her, or its favor at
the time of the giving of the releases and waivers set forth in Section
14.18(b) hereof which, if known by him, her or it might have affected his,
her or its decision regarding the releases and waivers. Each of the parties
acknowledges that he, she or it might hereafter discover facts in addition to
or different from those which he, she, or its now knows or believes to be
true with respect to the matters herein released and waived, but each shall
be deemed to have fully, finally and forever released any and all Claims.
(d) Each of the Company and the Trustee (acting on behalf of
the Holders) hereby acknowledges that each Guaranty and the CRGA provide that
there shall be no third party beneficiaries thereof. Each of the Company and
the Trustee also agrees that it shall not claim or assert it is a third party
beneficiary or possesses any derivative claims under any Guaranty or the
HET/JCC Agreement.
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(e) Each of the Company and the Trustee (acting on behalf of
the Holders) hereby acknowledges that the Initial Minimum Payment Guarantors
have informed it (i) not to infer or assume that the Initial Minimum Payment
Guarantors will renew any Guaranty or the Initial HET/JCC Agreement; (ii)
that the Initial Minimum Payment Guarantors will consider only their own best
interests in determining whether to renew any Guaranty or the Initial HET/JCC
Agreement; (iii) that the Initial Minimum Payment Guarantors are involved in
a number of different capacities in connection with the reorganization of
HJC, the governance of the Company and JCC Holding, and the operation of the
Casino; and (iv) that there can be no assurance that the Casino will perform
as set forth in the projections and/or feasibility study set forth in the
Plan and Disclosure Statement circulated therewith.
(f) Each Guaranty is provided on the express condition that
the Company shall not amend or modify the COC in any way to increase the
obligations under any Guaranty or adversely affect the Initial Minimum
Payment Guarantors without the prior written agreement of the Initial Minimum
Payment Guarantors, and any such amendment or modification shall have no
force or effect in respect of the Initial Minimum Payment Guarantors or any
Guaranty.
(g) The Initial HET/JCC Agreement is independent of and shall
survive any cancellation or termination of the COC.
Section 14.19. Transfer Restrictions; Legends.
(a) Until the expiration of the Restricted Period (as defined
below), any Person that purchases or otherwise acquires Securities, JCC
Holding Class A Common Stock issued upon the conversion or redemption of
Securities pursuant to this Indenture (together with any JCC Common Stock
into which such JCC Holding Class A Common Stock is reclassified or
converted, "Conversion Shares"), any part thereof or any interest therein
shall, prior to such purchase or other acquisition, duly and fully execute a
Purchaser Letter, substantially in the form of Annex A to the Form of
Security attached hereto as Exhibit A, and deliver such executed Purchaser
Letter to the Company, JCC Holding and the Holder selling, assigning or
otherwise transferring such Securities or Conversion Shares; provided,
however, that a Purchaser Letter shall not be required pursuant to this
Section 14.19 in the event the Holder selling, assigning or otherwise
transferring such Securities or Conversion Shares reasonably believes that
the Person that purchases or otherwise acquires Securities is a "Qualified
Institutional Buyer" as such term is defined under Rule 144A of the
Securities Act. Each Holder, by its purchase or other acquisition of
Securities or Conversion Shares, is deemed to agree that it will not sell,
assign or otherwise transfer Securities, Conversion Shares, any part thereof
or any interest therein to any Person unless such Person shall have complied
with the foregoing sentence to the extent required.
"Restricted Period" means the period ending on (a) with
respect to any Security, the date upon which it cease to be a "restricted
security" within the meaning of Rule 144(a)(3), (b) the date which is two
years (or if the period specified by Rule 144(k) under the Securities Act (or
any successor law, rule or regulation) is not two years, the period specified
thereby) after the later of the original issue date of the Securities or the
Conversion Shares, as the case may be (or, in either case, of any predecessor
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security thereof), or the last date on which the Company, JCC Holding or any
of their Affiliates was the owner thereof (or, in either case, of any
predecessor security thereof) and (c) such later date, if any, during which
the transfer of the Securities or the Conversion Shares, as the case may be,
is restricted in any manner pursuant to the Securities Act or applicable
state securities law.
(b) It is understood and acknowledged that upon the original
issuance thereof and at all times thereafter, each certificate representing
the Securities and each certificate representing Conversion Shares shall bear
a legend to the following effect:
THIS SECURITY IS SUBJECT TO REDEMPTION BY [JAZZ CASINO COMPANY,
L.L.C.]*[JCC HOLDING COMPANY]** IF, AMONG OTHER THINGS, THE HOLDER IS
REQUIRED TO QUALIFY OR BE FOUND SUITABLE UNDER ANY APPLICABLE GAMING
LAW, REGULATION OR RULE AND DOES NOT MEET THE APPLICABLE SUITABILITY
STANDARDS, ALL AS MORE FULLY SET FORTH IN THE RESTATED CERTIFICATE OF
INCORPORATION OF JCC HOLDING COMPANY[, THE SOLE MEMBER OF JAZZ CASINO
COMPANY, L.L.C.].* A COPY OF THE RESTATED CERTIFICATE OF INCORPORATION
OF JCC HOLDING COMPANY IS MAINTAINED AT THE EXECUTIVE OFFICES OF JCC
HOLDING COMPANY AND WILL BE PROVIDED UPON REQUEST.
- --------------------
* To be included for securities of the Company only.
** To be included for securities of JCC Holding only.
(c) It is understood and acknowledged that until the
expiration of the Restricted Period, (i) each certificate representing the
Securities (and each certificate representing any other security issued in
exchange therefor or in substitution therefor, other than certificates
representing Conversion Shares) and (ii) each certificate representing
Conversion Shares (and each certificate representing any other security
issued in exchange therefor or in substitution therefor) shall bear the
following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. THIS
SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, HYPOTHECATED, SOLD OR TRANSFERRED, NOR WILL ANY ASSIGNEE OR
TRANSFEREE THEREOF BE RECOGNIZED BY [JAZZ CASINO COMPANY, L.L.C.][JCC
HOLDING COMPANY] (THE "COMPANY") AS HAVING ANY INTEREST IN SUCH
SECURITY, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH
RESPECT TO THE SECURITY UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAW, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
80
<PAGE>
SIGNATURES
Dated as of October 30, 1998 JAZZ CASINO COMPANY, L.L.C.
By JCC Holding Company, its sole member
By /s/ L. Camille Fowler
-----------------------------------
Name: L. Camille Fowler
-----------------------------
Title: V.P./Secretary
----------------------------
Dated as of October 30, 1998 JCC HOLDING COMPANY
By /s/ L. Camille Fowler
-----------------------------------
Name: L. Camille Fowler
-----------------------------
Title: V.P./Secretary
----------------------------
Dated as of October 30, 1998 NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
as Trustee
By /s/ Ray Haverstock
-----------------------------------
Name: Ray Haverstock
-----------------------------
Title: V.P.
----------------------------
81
<PAGE>
EXHIBIT A
THIS SECURITY IS SUBJECT TO REDEMPTION BY [JAZZ CASINO COMPANY, L.L.C.]*[JCC
HOLDING COMPANY]** IF, AMONG OTHER THINGS, THE HOLDER IS REQUIRED TO QUALIFY OR
BE FOUND SUITABLE UNDER ANY APPLICABLE GAMING LAW, REGULATION OR RULE AND DOES
NOT MEET THE APPLICABLE SUITABILITY STANDARDS, ALL AS MORE FULLY SET FORTH IN
THE RESTATED CERTIFICATE OF INCORPORATION OF JCC HOLDING COMPANY[, THE SOLE
MEMBER OF JAZZ CASINO COMPANY, L.L.C.].* A COPY OF THE RESTATED CERTIFICATE OF
INCORPORATION OF JCC HOLDING COMPANY IS MAINTAINED AT THE EXECUTIVE OFFICES OF
JCC HOLDING COMPANY AND WILL BE PROVIDED UPON REQUEST.
- --------------------
* To be included for securities of the Company only.
** To be included for securities of JCC Holding only.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. THIS SECURITY HAS
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, HYPOTHECATED, SOLD
OR TRANSFERRED, NOR WILL ANY ASSIGNEE OR TRANSFEREE THEREOF BE RECOGNIZED BY
[JAZZ CASINO COMPANY, L.L.C.][JCC HOLDING COMPANY] (THE "COMPANY") AS HAVING ANY
INTEREST IN SUCH SECURITY, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT TO THE SECURITY UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAW, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
A-1
<PAGE>
(Face of Security)
CUSIP No. 472143 AC 0
No.
Jazz Casino Company, L.L.C.
Convertible Junior Subordinated Debenture Due 2010
Jazz Casino Company, L.L.C., a limited liability company organized
and existing under the laws of the State of Louisiana, promises to pay to
___________________________ or its registered assigns, the principal sum of
_________ Dollars on May 15, 2010 as set forth herein.
Interest Payment Dates: May 15 and November 15. The first interest payment
date is May 15, 1999.
Record Dates: May 1 and November 1. The first record date is
May 1, 1999.
Reference is made to the further provisions of this Security on the reverse
side, which will, for all purposes, have the same effect as if set forth at
this place.
JAZZ CASINO COMPANY, L.L.C.
By: JCC Holding Company, its sole member
By_________________________________________
Name:__________________________________
Title:_________________________________
Certificate of Authentication: This is one
of the Securities referred to in the within
mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
AS TRUSTEE
By:______________________________
Authorized Officer
Dated:____________________________
A-2
<PAGE>
(Back of Security)
Jazz Casino Company, L.L.C.
Convertible Junior Subordinated Debenture Due 2010
1. Interest. Jazz Casino Company, L.L.C., a Louisiana limited
liability company (the "Company"), promises to pay interest on the principal
amount of this Security at the rate of 8% per annum.
The Company shall pay interest semi-annually in arrears on May 15 and
November 15 of each year to the holders of record of this Security
("Holders") at the close of business on the May 1 and November 1,
respectively, next preceding the applicable interest payment date, commencing
May 1, 1999. Interest shall initially accrue from the date of issuance and
the first interest payment date will be May 15, 1999. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company shall pay interest on the Securities
(except defaulted interest) to the persons who are registered Holders of
Securities at the close of business on the record date for the next interest
payment date even though Securities are cancelled after the record date and
on or before the interest payment date. Holders must surrender Securities to
a Paying Agent to collect principal payments. The Company may, at its option
and in its sole discretion, pay interest through the issuance of additional
Securities ("Secondary Securities") in lieu of the payment in whole or in
part of interest in cash on the Securities, (i) on any stated due date of an
installment of interest on the Securities on or prior to October 30, 2003
(the fifth anniversary following issuance), and (ii) on any stated due date
of an installment of interest on the Securities after October 30, 2003 if the
Company did not make "Contingent Payments" (as defined in the New Indenture)
with respect to the Company's Senior Subordinated Contingent Notes due 2009
(the "New Contingent Bonds") on the immediately preceding interest payment
date for such New Contingent Bonds. This Security may be redeemed for cash or
for shares of Class A Common Stock, par value $.01 per share (the "JCC
Holding Class A Common Stock"), of JCC Holding Company, a Delaware
corporation ("JCC Holding"), as set forth in Paragraph 5. With respect to
cash principal payments at maturity or upon redemption or cash interest
payments, the Company may pay such principal and interest by check. The
Company may mail an interest check, any Secondary Securities or certificates
for JCC Holding Class A Common Stock to a Holder's registered address.
3. Paying Agent, Registrar and Conversion Agent. Norwest Bank
Minnesota, National Association, as Trustee (the "Trustee"), shall act as
initial Paying Agent, Registrar and Conversion Agent. The Company may change
any Paying Agent, Registrar, Conversion Agent or Co-Registrar without prior
notice. The Company or any of its subsidiaries may act in any such capacity.
4. Indenture; Defined Terms. The Company issued the Securities under
an Indenture dated as of October 30, 1998 (as amended, supplemented or
otherwise modified from
A-3
<PAGE>
time to time, the "Indenture") among the Company, JCC Holding and the
Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act
of 1939 (15 U.S.C.ss.ss. 77aaa-77bbbb) as in effect on the date of the
Indenture. The Securities are subject to, and qualified by, all such terms,
certain of which are summarized herein, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent that this
Security conflicts with the Indenture, the Indenture shall control. Unless
otherwise defined in this Security, capitalized terms shall have the meanings
set forth in the Indenture.
The Securities are unsecured general obligations of the Company
limited to $27,287,500 in initial aggregate principal amount, as such amount
may be increased from time to time by the issuance of Secondary Securities.
5. Optional Redemption. The Company may redeem the Securities in whole
or in part (a) at any time at par value plus accrued interest to the
applicable Redemption Date, payable in cash or (b) at any time during the
twelve-month period immediately preceding October 30, 2010 at par value plus
accrued interest to the applicable Redemption Date, payable (i) in shares of
JCC Holding Class A Common Stock (the number of such shares to be determined
according to the conversion price then in effect pursuant to Paragraph 7 of
the Security and Article 13 of the Indenture as if the Holder had converted
such Securities in accordance therewith), or (ii) in a combination of cash
and shares of JCC Holding Class A Common Stock, in either case only if the
then applicable conversion price is greater than the Current Market Price on
the Redemption Date.
6. Notice of Redemption. Notice of redemption shall be mailed at least
20 days but no more than 60 days before the Redemption Date to each Holder
whose Securities are to be redeemed at his registered address. Securities in
denominations larger than $1.00 may be redeemed in part but only in whole
multiples of $1.00. In the event of a redemption of less than all of the
Securities, the Securities shall be chosen for redemption by the Trustee,
generally pro rata or by lot. On and after the Redemption Date, if the
Company has complied with Section 3.05 of the Indenture interest ceases to
accrue on Securities or portions thereof called for redemption.
If this Security is redeemed subsequent to a record date with respect
to any interest payment date specified above and on or prior to such interest
payment date, then any accrued interest shall be paid to the person in whose
name this Security is registered at the close of business on such record date.
7. Conversion. A Holder of a Security may convert it into JCC Holding
Class A Common Stock at any time after October 1, 2002. In addition, if the
Security is called for redemption at any time (whether prior to or following
October 1, 2002), the Holder of such Security may convert it at any time
before the close of business on the Redemption Date (but not later, unless
the Company shall default in payment due upon redemption thereof); provided,
however, that such Holder may not convert such Security if such Security is
called for redemption pursuant to a Required Regulatory Redemption. The
initial conversion price of $25.00 per share is subject to adjustment as
provided in Article 13 of the Indenture. To determine the number of shares
issuable upon conversion of a Security, divide the principal amount to be
converted by the
A-4
<PAGE>
conversion price in effect on the conversion date. On conversion, no payment
or adjustment for interest will be made. However, interest will be paid on
any interest payment date with respect to Securities surrendered for
conversion after a record date for the payment of interest to the registered
holder on such record date. In lieu of issuing fractional shares of JCC
Holding Class A Common Stock, JCC Holding will deliver a check for the
current market value of the fractional share.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to
a Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Registrar or Conversion Agent, and (4) pay any
transfer or similar tax if required. A Holder may convert a portion of a
Security if the portion is $1,000 or an integral multiple of $1,000.
The conversion price is subject to adjustment as set forth in the
Indenture in certain events, including: the issuance of stock of JCC Holding
as a dividend or distribution on the JCC Holding Common Stock; subdivisions
and combinations of the JCC Holding Common Stock; certain reclassifications,
consolidations, mergers and sales of property of JCC Holding; the issuance to
all holders of JCC Holding Common Stock of certain rights or warrants
entitling them to subscribe for JCC Holding Common Stock at less than the
current market price; the distribution to all holders of JCC Holding Common
Stock of debt securities or assets of JCC Holding or rights or warrants to
purchase assets, debt securities or other securities of JCC Holding
(excluding cash dividends or distributions from retained earnings); the
issuance of shares of JCC Holding Common Stock, in certain circumstances, for
less consideration than the current market price; and the issuance, in
certain circumstances, of securities convertible into or exchangeable for
shares of JCC Holding Common Stock (other than pursuant to transactions
described above) for a consideration per share of JCC Holding Common Stock
deliverable on such conversion or exchange that is less than the current
market price of the JCC Holding Common Stock on the date of issuance of such
security. No adjustment in the conversion price will be required unless such
adjustment would require an increase or decrease of at least 1% in the
conversion price then in effect; but any adjustment that would otherwise be
required to be made shall be carried forward and taken into account in any
subsequent adjustment. No adjustment need be made for rights to purchase JCC
Holding Common Stock pursuant to a JCC Holding dividend or interest
reinvestment plan.
JCC Holding from time to time may voluntarily reduce the conversion
price for a period of time, provided that the conversion price is not less
than the par value of a share of JCC Holding Class A Common Stock.
If JCC Holding is a party to a consolidation or merger or a transfer or
lease of all or substantially all of its assets, the right to convert a
Security into JCC Holding Class A Common Stock may be changed into a right to
convert it into cash or securities or other assets of JCC Holding or another
Person.
8. Subordination. As more fully described in the Indenture, the
Securities are subordinated to Senior Indebtedness, which includes (a) all
Minimum Payment Guaranty Obligations and all Indebtedness of the Company
arising under or in connection with the Credit
A-5
<PAGE>
Agreement, the New Bonds or the New Contingent Bonds and all Obligations and
claims with respect thereto, and (b) all Obligations of the Company that are
expressly senior in right of payment to, or pari passu in right of payment
with, the Minimum Payment Guaranty Obligations, the Credit Agreement, the New
Bonds and the New Contingent Bonds. Indebtedness is defined in the Indenture
to include obligations in respect of borrowed money; obligations evidenced by
bonds, debentures, notes or similar instruments (other than Interest Rate
Agreements); obligations represented by letters of credit (including
reimbursement obligations and other liabilities with respect thereto);
obligations representing the balance of the deferred and unpaid purchase
price of any property or services; capital lease obligations; and, to the
extent not otherwise included, the guaranty of items which are included in
the definition of Indebtedness. To the extent provided in the Indenture,
Senior Indebtedness must be paid before the Securities may be paid. The
Company agrees, and each Holder by accepting a Security agrees, to the
subordination provided in the Indenture and authorizes the Trustee to give it
effect.
9. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1.00 and integral multiples of
$1.00, except as provided in Section 2.02 of the Indenture. The transfer of
Securities may be registered and Securities may be exchanged as provided in
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Indenture. The Registrar need
not exchange or register the Transfer of any Security or portion of a
Security selected for redemption. Also, it need not exchange or register the
transfer of any Securities for a period of 15 days before a selection of
Securities to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Security shall be
treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Securities may be amended with the consent of the Holders of
at least 66-2/3% in principal amount of the then outstanding Securities, and
any existing Default may be waived with the consent of the Holders of 66-2/3%
in principal amount of the then outstanding Securities. Without the consent
of any Holder, the Indenture or the Securities may be amended to, among other
things, (a) cure any ambiguity, defect or inconsistency, (b) provide for the
assumption by another Person of the Company's or JCC Holding's obligations to
Holders or (c) make any other change that does not adversely affect the legal
rights of any Holder under the Indenture.
12. Defaults and Remedies. An Event of Default is: default for 30 days
in payment of interest on the Securities; default in payment of principal on
the Securities; failure by the Company or JCC Holding after notice to it to
comply with certain of its agreements in the Indenture or the Securities;
failure by the Company for 30 days after notice to it to comply with any of
its other agreements in the Indenture or the Securities; and certain events
of bankruptcy or insolvency. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 30% (or 25% in the case of a default
with respect to payment of principal of or interest on the Securities) in
principal amount of the then Outstanding Securities may declare the principal
amount of the Securities to be due and payable immediately; provided,
however, that if any Minimum Payment Guaranty Obligations are outstanding or
any Indebtedness is outstanding
A-6
<PAGE>
pursuant to the Credit Agreement or the New Indentures, upon a declaration of
acceleration, such principal and interest shall be payable upon the earlier
of (x) the day that is five Business Days after the provision to the Company,
the Minimum Payment Guarantor, the Credit Agent and the New Indentures
Trustee of notice thereof, unless such an Event of Default has been cured or
waived prior to such date and (y) the date of acceleration of any Minimum
Payment Guaranty Obligation or any Indebtedness under the Credit Agreement or
the New Indentures. In the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all Outstanding Securities become due and
payable immediately without further action or notice. Holders may not enforce
the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or Securities. Subject to certain limitations, Holders of a
majority in principal amount of the then Outstanding Securities may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee, lawyer
or stockholder, as such, of the Company or JCC Holding shall not have any
liability for any obligations of the Company, JCC Holding or the Trustee
under the Securities or the Indenture or for any claim based on, in respect
of or by reason of such obligations. Each Holder by accepting a Security
waives and releases all such liability. The waiver and release are part of
the consideration for the issue of the Securities.
15. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT Ten (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (=
Uniform Gifts to Minors Act).
17. Indenture. Each Holder, by accepting a Security, agrees to be bound
by all the terms and provisions of the Indenture, as the same may be amended
from time to time.
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Securities and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either
as printed on the Securities or as contained in any notice of redemption, and
reliance may be placed only on the other identification numbers placed hereon.
A-7
<PAGE>
19. Gaming Laws. The rights of the Holder of this Security and any
owner of any beneficial interest herein are subject to the gaming laws and
regulations, and the jurisdiction and requirements, of the governmental
authorities with the power to regulate gaming in any jurisdiction where the
Company is subject to such regulation, and any corresponding governmental
authorities with responsibility to interpret and enforce the laws and
regulations applicable to gaming in any such jurisdiction, as well as the
further limitations and requirements set forth in the Indenture.
20. Transfer Restrictions; Legends. Until the expiration of the
Restricted Period (as defined below), any Person that purchases or otherwise
acquires this Security, JCC Holding Class A Common Stock issued upon the
conversion or redemption of this Security pursuant to the Indenture (together
with any JCC Common Stock into which such JCC Holding Class A Common Stock is
reclassified or converted, "Conversion Shares"), any part thereof or any
interest therein shall, prior to such purchase or other acquisition, duly and
fully execute a Purchaser Letter, substantially in the form attached hereto
as Annex A, and deliver such executed Purchaser Letter to the Company, JCC
Holding and the Holder selling, assigning or otherwise transferring such
Securities or Conversion Shares; provided, however, that a Purchaser Letter
shall not be required in the event the Holder selling, assigning or otherwise
transferring such Securities or Conversion Shares reasonably believes that
the Person that purchases or otherwise acquires Securities is a "Qualified
Institutional Buyer" as such term is defined under Rule 144A of the
Securities Act. Each Holder, by its purchase or other acquisition of this
Security or the Conversion Shares, is deemed to agree that it will not sell,
assign or otherwise transfer Securities, Conversion Shares, any part thereof
or any interest therein to any Person unless such Person shall have complied
with the foregoing sentence, to the extent required. This Security and the
certificates representing the Conversion Shares shall bear legends as
provided in Section 14.19 of the Indenture.
"Restricted Period" means the period ending on (a) with respect to any
Security, the date upon which it cease to be a "restricted security" within
the meaning of Rule 144(a)(3), (b) the date which is two years (or if the
period specified by Rule 144(k) under the Securities Act (or any successor
law, rule or regulation) is not two years, the period specified thereby)
after the later of the original issue date of the Securities or the
Conversion Shares, as the case may be (or, in either case, of any predecessor
security thereof), or the last date on which the Company, JCC Holding or any
of their Affiliates was the owner thereof (or, in either case, of any
predecessor security thereof) and (c) such later date, if any, during which
the transfer of the Securities or the Conversion Shares, as the case may be,
is restricted in any manner pursuant to the Securities Act or applicable
state securities law.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to: Jazz Casino Company,
L.L.C., 512 South Peters, New Orleans, Louisiana 70130, Attention: Secretary.
21. Subordinated Guaranty. This Security is entitled to the benefits of
the Guaranty made by the Guarantor, as described in the Indenture, pursuant
to which the Guarantor has irrevocably and unconditionally guaranteed on a
subordinated basis (as provided in Article 12 of the Indenture) the punctual
payment when due, whether at stated maturity, by acceleration,
A-8
<PAGE>
redemption or otherwise, of all obligations of the Company under the
Indenture and this Security. The Guarantor shall be released from its
Guaranty upon the terms and subject to the conditions set forth in the
Indenture.
A-9
<PAGE>
<TABLE>
<CAPTION>
ASSIGNMENT FORM CONVERSION NOTICE
<S> <C>
To Assign this Security, fill in the To convert this security into Class A
form below: Common Stock of JCC Holding,
check the box: |_|
I, or we, assign and transfer this
Security to_____________________
$
(Insert assignee's Soc. Sec. or tax To convert only part of this Security,
I.D. No.) ________________ state the aggregate principal amount to
be converted:
____________________________ $
____________________________ If you want the stock certificate made
out in another person's name, check the box
____________________________ and fill in the form below: |_|
____________________________
(Print or type assignee's name,
address and zip code)
and irrevocably appoint
____________________________ (Insert other persons Soc.
agent to transfer this Security on Sec. or I.D. No.) ________________
the books of the Company. The agent
may substitute another to act for him. ____________________________
____________________________
____________________________
____________________________
(Print or type other person's name,
address and zip code)
Your Signature:_________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
Date:_______________________________
Signature Guarantee:______________________________________________________________________________
</TABLE>
A-10
<PAGE>
Annex A to Security
Purchaser Letter
Jazz Casino Company, L.L.C.
512 South Peters
New Orleans, Louisiana 70130
JCC Holding Company
c/o Jazz Casino Company, L.L.C.
512 South Peters
New Orleans, Louisiana 70130
- ---------------------------------
- ---------------------------------
- ---------------------------------
(Name and Address of Transferring Holder)
Ladies and Gentlemen:
The undersigned is delivering this letter in connection with its
purchase or other acquisition of (i) $_______ aggregate principal amount of
the 8% Convertible Junior Subordinated Debentures Due 2010 (the "Securities")
of Jazz Casino Company, L.L.C., a Louisiana limited liability company (the
"Company"), which are convertible into shares of Class A Common Stock, $.01
par value per share ("JCC Holding Class A Common Stock"), of JCC Holding
Company, a Delaware corporation ("JCC Holding"), pursuant to the Indenture
dated as of October 30, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Indenture") among the Company, JCC Holding and
Norwest Bank Minnesota, National Association, as trustee, and/or (ii)
________ shares of JCC Holding Class A Common Stock issued upon the
conversion or redemption of Securities pursuant to the Indenture (together
with any shares of common stock of JCC Holding into which such shares of JCC
Holding Class A Common Stock is reclassified or converted, the "Conversion
Shares"). The undersigned (a) understands that the Company, JCC Holding and
the transferring holder of the Securities and/or the Conversion Shares will
rely upon the confirmations, representations and agreements of the
undersigned contained herein and (b) represents and warrants that the
information contained herein is complete and accurate.
The undersigned hereby confirms, represents and warrants that:
(i) The undersigned is (A) an institution (and not an individual) and
is an "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act of 1933, as amended (the "Securities Act"))
or (B) an entity in which all of the equity owners are accredited
investors (collectively, an "Institutional Accredited Investor"). The
undersigned has such knowledge and experience in financial and business
matters that the undersigned is capable of evaluating the merits and
risks of purchasing the Securities and/or the Conversion Shares.
(ii) The undersigned is purchasing or otherwise acquiring the
Securities (including, without limitation, any shares of JCC Holding
Class A Common Stock to be issued upon the conversion or redemption
thereof and any shares of common stock of JCC Holding into which such
shares of JCC Holding Class A Common Stock shall be reclassified or
converted) and/or the
A-11
<PAGE>
Conversion Shares, as the case may be (collectively, the "Restricted
Securities"), for investment for the undersigned's own account (i.e.,
with the intent of holding the Restricted Securities for investment and
without the intent of participating directly or indirectly in the
distribution of any Restricted Securities) and without the participation
of any other person in any part of the purchase or other acquisition.
(iii) The undersigned has received a copy of the Indenture and
acknowledges that the undersigned has had access to such financial and
other information, and has been afforded the opportunity to ask such
questions of representatives of the Company and JCC Holding and receive
answers thereto, as the undersigned deems necessary in connection with
its decision to purchase the Restricted Securities.
The undersigned understands that the Restricted Securities were
originally offered and sold by the Company and JCC Holding, and the
Restricted Securities are being offered and sold to the undersigned by the
transferring holder thereof, in transactions not involving any public
offering within the meaning of the Securities Act and that the Restricted
Securities have not been registered under the Securities Act or any
applicable state securities laws, and the undersigned agrees that if in the
future the undersigned decides to resell or otherwise transfer any Restricted
Securities, such Restricted Securities may be resold or otherwise transferred
only pursuant to a registration statement which has been declared effective
under the Securities Act or in a transaction that is exempt from, or not
subject to, the Securities Act. In addition, the undersigned agrees that any
such resale or other transfer of Restricted Securities shall be in accordance
with applicable state securities and in accordance with the legends set forth
on the certificates representing the Restricted Securities. The undersigned
further agrees to provide any purchaser or other acquiror of any of the
Restricted Securities from the undersigned a notice advising such purchaser
or other acquiror that any sale, assignment or other transfer of such
Restricted Securities are restricted as stated herein. Furthermore, no such
sale, assignment or other transfer of the Restricted Securities may be made,
except upon presentation of evidence satisfactory to the Company and JCC
Holding that the foregoing restrictions on transfer have been complied with.
The undersigned further agrees that:
(a) The undersigned will not sell, assign or otherwise transfer any
Restricted Security unless the undersigned, the Company and JCC Holding shall
have received, prior thereto, a duly and fully executed letter (substantially
in the form hereof) from the Institutional Accredited Investor to which such
sale, assignment or other transfer is to be made; provided, however, that
such a letter shall not be required in the event the undersigned sells,
assigns or otherwise transfers a Restricted Security to a person the
undersigned reasonably believes to be a "Qualified Institutional Buyer" as
such term is defined under Rule 144A of the Securities Act.
(b) The undersigned will notify you promptly in writing if any of its
representations, warranties or confirmations herein ceases to be accurate and
complete.
A-12
<PAGE>
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
(Name of Purchaser)
By:_____________________________________
Name:___________________________________
Title:__________________________________
Address:________________________________
A-13
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- ----------------- ---------
<S> <C>
310(a)(1)........................................................................ 7.10
(a)(2)........................................................................ 7.10
(a)(3)........................................................................ N.A.
(a)(4)........................................................................ N.A.
(b)........................................................................... 7.08; 7.10; 12.02
(c)........................................................................... N.A.
311(a)........................................................................... 7.11
(b)........................................................................... 7.11
(c)........................................................................... N.A.
312(a)........................................................................... 2.05
(b)........................................................................... 12.03
(c)........................................................................... 12.03
313(a)........................................................................... 7.06
(b)(1)........................................................................ N.A.
(b)(2)........................................................................ 7.06
(c)........................................................................... 7.06; 12.02
(d)........................................................................... 7.06
314(a)........................................................................... 4.03; 12.02
(b)........................................................................... N.A.
(c)(1)........................................................................ 12.04
(c)(2)........................................................................ 12.04
(c)(3)........................................................................ N.A.
(d)........................................................................... N.A.
(e)........................................................................... 12.05
(f)........................................................................... N.A.
315(a)........................................................................... 7.01(2)
(b)........................................................................... 7.05; 12.02
(c)........................................................................... 7.01(1)
(d)........................................................................... 7.01(3)
(e)........................................................................... 6.13
316(a) (last sentence)........................................................... 2.09
(a)(1)(A)..................................................................... 6.07
(a)(1)(B)..................................................................... 6.04
(a)(2)........................................................................ N.A.
(b)........................................................................... 6.09
317(a)(1)........................................................................ 6.10
(a)(2)........................................................................ 6.11
(b)........................................................................... 2.04
318(a)........................................................................... 12.01
</TABLE>
--------------------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture
<PAGE>
Exhibit 4.05
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of October 30, 1998,
among Jazz Casino Company, L.L.C., a Louisiana limited liability company (the
"Company"), JCC Holding Company, a Delaware corporation ("JCC Holding"), Salomon
Smith Barney Inc., Donaldson, Lufkin & Jenrette, Inc. and BT Alex. Brown
Incorporated (collectively, the "Underwriters"), and each of the Participating
Banks listed in Schedule A hereto (the "Participating Banks" and, together with
the Underwriters and any Affiliates of any of such Underwriters or the
Participating Banks and any Permitted Transferees thereof, the "Initial
Holders").
W I T N E S S E T H:
WHEREAS, the Company has agreed to issue and sell to the
Initial Holders, and the Initial Holders have agreed to purchase from the
Company, $27,287,500 aggregate principal amount of 8% Convertible Junior
Subordinated Debentures Due 2010 (the "Debentures") in connection with that
certain Third Amended Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code as modified through October 13, 1998 and filed by, inter alia,
Harrah's Jazz Company (the "Plan"); and
WHEREAS, pursuant to the Plan and in order to induce the
Initial Holders to accept the Debentures, the Company has agreed to provide
registration rights with respect thereto, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the parties hereto hereby agree as follows:
1. Definitions. (a) The following terms shall have the
following respective meanings (such meanings being equally applicable to both
the singular and plural form of the terms defined):
"Additional Selling Holders" has the meaning set
forth in Section 2(a).
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such Person; provided, however, that no holder of Debentures shall be
deemed to be an Affiliate of any other holder of Debentures solely by reason of
any investment in the Company or JCC Holding. For the purpose of this
definition, the term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" means this Registration Rights Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
<PAGE>
"Common Stock" means, prior to the Transition Date (as defined
in the Amended and Restated Certificate of Incorporation), the Class A Common
Stock of JCC Holding and on and after the Transition Date, the Unclassified
Common Stock of JCC Holding.
"Conversion Shares" means the shares of Common Stock issued or
issuable upon conversion of the Debentures.
"Delay Periods" has the meaning set forth in Section
4.
"Demand Registration" has the meaning set forth in
Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect from time to time.
"Hold Back Periods" has the meaning set forth in
Section 3(a).
"Indemnified Party" has the meaning set forth in
Section 7.
"Indemnifying Party" has the meaning set forth in
Section 7.
"Initiating Holder" has the meaning set forth in
Section 2(a).
"Inspectors" has the meaning set forth in Section
4(g).
"Interruption Period" has the meaning set forth in
Section 4.
"Maximum Offering Size" has the meaning set forth in
Section 2(d).
"NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Permitted Transferee" means any Person to whom any Registrable Security is
transferred provided that such transfer is pursuant to the terms of the
Indenture.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Public Offering" means an underwritten public offering of the
Registrable Securities pursuant to an effective registration statement under the
Securities Act.
"Records" has the meaning set forth in Section 4(g).
"Redemption Shares" means the shares of Common Stock issued or
issuable as payment of the redemption price upon redemption of the Debentures.
2
<PAGE>
"Registrable Securities" means (i) the Debentures and any
Related Registrable Securities, (ii) any Conversion Shares and any Related
Registrable Securities and (iii) any Redemption Shares and any Related
Registrable Securities. As to any particular Registrable Securities, once issued
such securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) they shall have been sold
publicly as permitted by Rule 144 (or any successor provision) under the
Securities Act, (c) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered by the Company or JCC Holding and subsequent public distribution of
them shall not require registration of them under the Securities Act, or (d)
they shall have ceased to be outstanding.
"Registration Expenses" means (i) all registration and filing
fees, (ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) reasonable fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 4(h) hereof),
(vi) the reasonable fees and expenses of any special experts retained by the
Company in connection with such registration, (vii) reasonable fees and expenses
of one counsel for the Initiating Holder selected by the Initiating Holder
holding a majority of the Registrable Securities to be registered in connection
with a Demand Registration, (viii) fees and expenses in connection with any
review of underwriting arrangements by the NASD, including fees and expenses of
any "qualified independent underwriter," (ix) fees and expenses of listing the
Shares into which the Debentures are convertible on an exchange or other trading
system and (x) fees and disbursements of underwriters customarily paid by
issuers or sellers of securities; but shall not include any underwriting fees,
discounts or commissions attributable to the sale of the Registrable Securities,
or any out-of-pocket expenses (except as set forth in clause (vii) above) of the
holders of the Registrable Securities (or the agents who manage their accounts)
or any fees and expenses of underwriter's counsel.
"Related Registrable Securities" means any securities issued
or issuable with respect to any Debentures, Conversion Shares or Redemption
Shares, as the case may be, by way of a dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.
"Requesting Holder" has the meaning set forth in
Section 2(a).
"SEC" means the Securities and Exchange Commission.
3
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect from time to time.
"Shares" means all Common Stock.
(b) The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a
whole, including the schedules and exhibits hereto, as the same may from time to
time be amended or supplemented, and not to any particular section, subsection
or clause contained in this Agreement.
(c) The sign "$" shall mean, unless otherwise
indicated, the lawful money of the United States.
2. Demand Registration. (a) Upon the written
request of any Initial Holder that purchased $5 million or greater of the
aggregate amount of the Registrable Securities held by Initial Holders on
October 30, 1998 or any Permitted Transferee of any such Initial Holder that
at the time of the written request owns $5 million or greater of the
aggregate amount of Registrable Securities held by Initial Holders on that
date (an "Initiating Holder") requesting in writing that the Company or JCC
Holding, as the case may be, effect the registration under the Securities Act
of such Initiating Holder's Registrable Securities (or a portion thereof),
and specifying the intended method of disposition thereof, the Company or JCC
Holding, as the case may be, will promptly give written notice of such
requested registration (the "Demand Registration") at least 30 days prior to
the anticipated filing date of the registration statement relating to such
Demand Registration to any other Initial Holders who hold Registrable
Securities at such time (based on the books and records of the transfer agent
or registrar with respect to the Registrable Securities), and thereupon will
use its commercially reasonable efforts to effect, as soon as reasonably
practicable, the registration under the Securities Act of:
(i) the Registrable Securities that the
Company or JCC Holding has been so requested to register by the
Initiating Holder then held by the Initiating Holder; and
(ii) all Registrable Securities
that any other Initial Holder has requested the Company or JCC Holding
to register by written request received by the Company or JCC Holding,
as the case may be, within 20 days after the delivery to such Initial
Holders of the written notice given by the Company or JCC Holding, as
the case may, pursuant to Section 2(a) above (such other Initial
Holders who have requested registration being referred to herein as
"Additional Selling Holders" and, together with the Initiating Holder,
as the "Requesting Holders"),
all to the extent necessary to permit the disposition in an underwritten
offering (in accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered; provided that the Company or JCC
Holding, as the case may be, shall not be obligated to effect more than one
Demand Registration pursuant to this Section 2 for any Initiating Holder and no
more than two Demand Registrations in the aggregate; provided further that no
Initial Holder(s)
4
<PAGE>
will be permitted to require any Demand Registration prior to the earlier of (i)
18 months after the Casino (as defined in the Plan) opens for business and (ii)
the filing by the Company of its third Annual Report on Form 10-K under the
Exchange Act; provided further that the Company or JCC Holding, as the case may
be, shall not be obligated to effect the Demand Registration contemplated by
this Section 2(a) unless the aggregate Registrable Securities requested to be
included in such Demand Registration by the Requesting Holders would have a
gross sales price of at least $5 million.
Promptly after the expiration of the 20-day period
referred to in Section 2.1(a)(ii) hereof, the Company or JCC Holding, as the
case may be, will notify the Initiating Holder of any Additional Selling Holders
and the amount of Registrable Securities requested to be included in the Demand
Registration by such Additional Selling Holders. The Initiating Holder
requesting a registration under this Section 2(a) may, at any time prior to the
effective date of the registration statement relating to such registration,
revoke such request, without liability to any of the other Requesting Holders,
by providing a written notice to the Company or JCC Holding, as the case may be,
and such other Requesting Holders revoking such request, in which case such
request, so revoked, shall not be considered the Demand Registration if, and
only if, any fees and expenses incurred by the Company or JCC Holding as a
result of such revoked request are paid by the Initiating Holder; provided,
however, that the Initiating Holder may only revoke such request if the
Initiating Holder owns a majority of the aggregate amount of Registrable
Securities to be included in such Demand Registration.
(b) Except as provided in Section 2(a), the
Company or JCC Holding will pay all Registration Expenses in connection with the
first Demand Registration so long as not more than $4.999 million aggregate
principal amount of Registrable Securities remains outstanding after giving
effect to the registration of Registrable Securities pursuant to such Demand
Registration. If more than $4.999 million aggregate principal amount of
Registrable Securities remains outstanding after giving effect to the first
Demand Registration, then in the first and each subsequent Demand Registration
each Requesting Holder shall be severally liable for, and shall pay for, its pro
rata share (i.e., the percentage resulting from dividing its Registrable
Securities subject to the applicable Demand Registration by all Registrable
Securities subject to such Demand Registration) of one half of all Registration
Expenses relating to the applicable Demand Registration and the Company or JCC
Holding will pay the balance of such Registration Expenses.
(c) A registration requested pursuant to this
Section 2 shall not be deemed to have been effected (i) unless the registration
statement relating thereto (x) has become effective under the Securities Act and
(y) has remained effective for a period of at least 90 days (or such shorter
period in which all Registrable Securities of the Requesting Holders have
actually been sold thereunder), (ii) if after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason not
attributable to the Requesting Holders and has not thereafter become effective,
or (iii) if the conditions to closing specified in the underwriting agreement,
if any, entered into in connection with such registration are not satisfied or
waived, other than by reason of a failure on the part of the Requesting Holders.
5
<PAGE>
(d) If the managing underwriter of the
underwritten offering shall advise the Company or JCC Holding, as the case may
be, in writing (with a copy to each Requesting Holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering within a price range acceptable to the Requesting Holders
owning the majority of the Registrable Securities requested to be included in
such registration, the Company or JCC Holding, as the case may be, will include
in such registration, to the extent of the number which the Company or JCC
Holding, as the case may be, is so advised can be sold in such offering (the
"Maximum Offering Size"), Registrable Securities requested to be included in
such registration allocated among the Requesting Holders on a pro rata basis
(based upon the amount of Registrable Securities requested to be registered by
each such Requesting Holder, as compared to the aggregate amount of Registrable
Securities requested so to be registered).
(e) JCC Holding and the Company will cooperate
in the performance of their obligations under this Section 2.
(f) The underwriter or underwriters of the
underwritten offering of the Registrable Securities so to be registered shall be
selected by the mutual agreement of the Company or JCC Holding, as the case may
be, and the holders of a majority of the Registrable Securities so to be
registered.
(g) Whenever the Company or JCC Holding shall
effect a registration pursuant to this Section 2 in connection with the
underwritten offering by one or more Requesting Holders of Registrable
Securities, no securities other than Registrable Securities shall be included
among the securities covered by such registration unless the managing
underwriter of such offering shall have advised each Requesting Holder of
Registrable Securities to be covered by such registration in writing that the
inclusion of such other securities would not adversely affect such offering.
3. Holdback Agreements. (a) If (i) the Company
or JCC Holding, as the case may be, shall file a registration
statement (other than in connection with the registration of
securities issuable pursuant to an employee stock option, stock
purchase or similar plan or pursuant to a merger, exchange offer
or a transaction of the type specified in Rule 145(a) under the
Securities Act) with respect to the Common Stock or similar
securities or securities convertible into, or exchangeable or
exercisable for, such securities and (ii) with reasonable prior
notice, the Company or JCC Holding, as the case may be, (in the
case of a nonunderwritten public offering by the Company or JCC
Holding, as the case may be, pursuant to such registration
statement) advises Initial Holders in writing that a public sale
or distribution of any Registrable Securities would materially
adversely affect such offering or the managing underwriter or
underwriters (in the case of an underwritten public offering by
the Company or JCC Holding, as the case may be, pursuant to such
registration statement) advise the Company or JCC Holding, as the
case may be, in writing (in which case the Company or JCC
Holding, as the case may be, shall notify the Initial Holders
with a copy of such underwriter's notice) that a public sale or
distribution of Registrable Securities would materially adversely affect such
offering, then each Initial Holder shall, to the extent not inconsistent with
applicable law, refrain from effecting any public sale or distribution of
Registrable Securities (including any sale pursuant to Rule 144)
6
<PAGE>
during the ten (10) days prior to the effective date of such registration
statement and until the earliest of (A) the abandonment of such offering, (B) 90
days after the effective date of such registration statement and (C) if such
offering is an underwritten offering, the termination in whole or in part of any
"hold back" period obtained by the underwriter or underwriters in such offering
from the Company or JCC Holding, as the case may be, in connection therewith
(each such period, a "Hold Back Period").
(b) Each of the Company and JCC Holding agrees
not to effect any public sale or distribution (other than public sales or
distributions solely by and for the account of the Company or JCC Holding of
securities issued pursuant to any employee benefit or similar plan or any
dividend reinvestment plan) of any securities during the period commencing on
the date the Company or JCC Holding, as the case may be, receives a request from
an Initiating Holder pursuant to Section 2 and continuing until 90 days after
the commencement of a Public Offering, if requested by the managing underwriter
in such Public Offering, or for any such shorter period as the managing
underwriter shall request; provided, however, that neither the Company nor JCC
Holding shall be required to comply with this Section 3(b) on more than one
occasion.
4. Registration Procedures. Whenever an Initiating
Holder requests that any Registrable Securities be registered pursuant to
Section 2 hereof, the Company or JCC Holding, as the case may be, will, subject
to the provisions of such Section, use commercially reasonable efforts to effect
the registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof as soon as practicable, and in
connection with any such request:
(a) The Company or JCC Holding, as the case may
be, will as soon as reasonably practicable prepare and file with the SEC a
registration statement on any form for which the Company or JCC Holding then
qualifies or which counsel for the Company or JCC Holding shall deem appropriate
and which form shall be available for the sale of the Registrable Securities to
be registered thereunder in accordance with the intended method of distribution
thereof, and use commercially reasonable efforts to cause such filed
registration statement to become and remain effective for a period of not less
than 90 days.
(b) The Company or JCC Holding, as the case may
be, will, if requested, prior to filing a registration statement or prospectus
or any amendment or supplement thereto, furnish to each Requesting Holder and
each underwriter, if any, of the Registrable Securities covered by such
registration statement copies of such registration statement as proposed to be
filed, and thereafter the Company or JCC Holding, as the case may be, will
furnish to such Requesting Holder and underwriter, if any, such number of copies
of such registration statement, each amendment and supplement thereto (in each
case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Requesting Holder or
underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder.
(c) After the filing of the registration
statement, the Company or JCC Holding, as the case may be, will promptly notify
each Requesting Holder holding Registrable
7
<PAGE>
Securities covered by such registration statement of any stop order or cease
trade order issued by the SEC and take all reasonable actions required to
prevent the entry of such stop order or cease trade order or to remove or revoke
it if entered.
(d) The Company and JCC Holding, as the case may
be, will use commercially reasonable efforts to (i) register or qualify the
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions in the United States as any
Requesting Holder holding such Registrable Securities reasonably (in light of
such Requesting Holder's intended plan of distribution) requests and (ii) cause
such Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company or JCC Holding and do any and all other
acts and things that may be reasonably necessary or advisable to enable such
Requesting Holder to consummate the disposition of the Registrable Securities
owned by such Requesting Holder; provided that neither the Company nor JCC
Holding will be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C)
consent to general service of process in any such jurisdiction.
(e) The Company or JCC Holding, as the case may
be, will immediately notify each Requesting Holder holding such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will contain complete and accurate disclosure of all material facts
relating to the securities covered thereby and will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made and promptly prepare and
make available to each such Requesting Holder any such supplement or amendment.
(f) The Company or JCC Holding, as the case may
be, will enter into customary agreements (including an underwriting agreement in
customary form, including, without limitation, customary provisions for
indemnification and contribution) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of Registrable
Securities in any such Public Offering, including the engagement of a "qualified
independent underwriter" in connection with the qualification of the
underwriting arrangements with the NASD.
(g) Upon the execution of customary
confidentiality agreements in form and substance reasonably satisfactory to the
Company or JCC Holding, as the case may be, the Company or JCC Holding, as the
case may be, will make available for inspection by any Requesting Holder and any
underwriter participating in any disposition pursuant to a registration
statement being filed by the Company or JCC Holding, as the case may be,
pursuant to this Section 4 and any attorney, accountant or other professional
retained by any such Requesting Holder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company or JCC Holding (collectively, the "Records") as
shall be reasonably necessary to enable them to exercise their due diligence
8
<PAGE>
responsibility, and cause the Company's or JCC Holding's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records that the Company or JCC
Holding, as the case may be, determines to be confidential and that it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such registration statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each Initial Holder agrees that information obtained by
it as a result of such inspections shall be deemed confidential and shall not be
used by it as the basis for any market transactions in the securities of the
Company or JCC Holding, as the case may be, unless and until such information,
to the extent material, is made generally available to the public. Each Initial
Holder further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company or JCC Holding, as the case may be, and allow the Company or JCC
Holding, as the case may be, at its expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential.
(h) The Company or JCC Holding, as the case may
be, will furnish to each Requesting Holder and to each such underwriter, if any,
a signed counterpart, addressed to such underwriter, of (i) an opinion or
opinions of counsel to the Company or JCC Holding, as the case may be, and (ii)
a comfort letter or comfort letters from the Company's or JCC Holding's
independent public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the owners of a majority of the amount of Registrable Securities being
sold for the account of the Requesting Holders or the managing underwriter
therefor reasonably requests.
(i) The Company or JCC Holding, as the case may
be, will otherwise use all reasonable efforts to comply with all applicable
rules and regulations of the SEC, including, without limitation, making
available to its security holders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three months
after the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
(j) The Company or JCC Holding, as the case may
be, may require each Requesting Holder to promptly furnish in writing to the
Company or JCC Holding, as the case may be, such information regarding the
distribution of the Registrable Securities as the Company or JCC Holding, as the
case may be, may from time to time reasonably request and such other information
legally required in connection with such registration.
(k) Each Initial Holder agrees that, upon
receipt of any notice from the Company or JCC Holding, as the case may be, of
the happening of any event of the kind described in Section 4(e) hereof, such
Initial Holder, to the extent it participates in the Demand Registration as a
Requesting Holder, will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Initial Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 4(e) hereof (such period during
which disposition is discontinued being an "Interruption Period"), and, if so
directed by the Company or JCC Holding, such Initial Holder will deliver to
9
<PAGE>
the Company or JCC Holding all copies, other than any permanent file copies then
in such Initial Holder's possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. The Company or JCC
Holding, as the case may be, shall be entitled to postpone the filing of any
registration statement otherwise required to be prepared and filed by the
Company or JCC Holding, as the case may be, pursuant to Section 2, or suspend
the use of any effective registration statement under Section 2, for a
reasonable period of time which shall be as short as practicable, but in any
event not in excess of 90 days (a "Delay Period"), if the Company or JCC
Holding, as the case may be, determines in good faith that the registration and
distribution of the Registrable Securities covered or to be covered by such
registration statement would materially interfere with any pending material
financing, acquisition or corporate reorganization or other material corporate
development involving the Company or JCC Holding or any of their subsidiaries or
would require premature disclosure thereof and promptly gives the Initial
Holders written notice of such determination, containing a statement of the
reasons for such postponement and an approximation of the period of the
anticipated delay. If the Company or JCC Holding shall so postpone the filing of
a registration statement, the holders of Registrable Securities to be registered
shall have the right to withdraw the request for registration by giving written
notice from the holders of a majority of the Registrable Securities that were to
be registered to the Company or JCC Holding, as the case may be, within 45 days
after receipt of the notice of postponement or, if earlier, the termination of
such Delay Period. The time period for which the Company or JCC Holding, as the
case may be, is required to maintain the effectiveness of any registration
statement shall be extended by the aggregate number of days of all Delay
Periods, all Hold Back Periods and all Interruption Periods occurring during
such registration. No more than one Delay Period may be invoked pursuant to this
Section with respect to a Demand Registration.
5. Indemnification by the Company and JCC Holding. The Company
and JCC Holding agree to indemnify and hold harmless each Requesting Holder, its
officers, directors, employees and agents, and each person, if any, who controls
such Requesting Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including those resulting from any order made or any
inquiry, investigation or proceeding commenced by any securities regulatory
authority, stock exchange or by any other competent authority) caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities (as
amended or supplemented if the Company or JCC Holding shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, except insofar as such
losses, claims, damages or liabilities are based upon (i) any such untrue
statement or omission or alleged untrue statement or omission in any such
registration statement or prospectus made or omitted, as the case may be, in
reliance upon and in conformity with information furnished in writing to the
Company or JCC Holding by such Requesting Holder or on such Requesting Holder's
behalf expressly for use therein or (ii) a Requesting Holder's failure to send
or give a copy of the final prospectus to the Persons asserting an untrue
statement or omission or alleged untrue statement or omission at or prior to the
written confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such
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<PAGE>
final prospectus. The Company and JCC Holding also agree to indemnify any
underwriters of the Registrable Securities, their officers, directors, employees
and agents and each person who controls such underwriters (other than in respect
of loss of profit or information relating solely to the underwriters) on
substantially the same basis as that of the indemnification of the Requesting
Holders provided in this Section 5 and which indemnification shall provide, in
addition, an indemnity in respect of any breach of representation or warranty of
the Company contained in any underwriting agreement in respect of Registrable
Securities.
6. Indemnification by Initial Holders. Each Initial
Holder, to the extent it participates in the Demand Registration as a Requesting
Holder, agrees, severally but not jointly, to indemnify and hold harmless the
Company and JCC Holding, its officers, directors and agents and each person, if
any, who controls the Company or JCC Holding within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company and JCC Holding to such
Initial Holder, but only with respect to information furnished in writing by
such Initial Holder or on such Initial Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. Each such
Initial Holder also agrees to indemnify and hold harmless underwriters (other
than in respect of loss of profit or information relating to the underwriters)
of the Registrable Securities, their officers, directors, employees and agents
and each person who controls such underwriters on substantially the same basis
as that of the indemnification of the Company and JCC Holding provided in this
Section 6. As a condition to including Registrable Securities in any
registration statement filed in accordance with Sections 2 hereof, the Company
or JCC Holding may require that it shall have received an undertaking reasonably
satisfactory to it from any underwriter to indemnify and hold it harmless to the
extent customarily provided by underwriters with respect to similar securities.
7. Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Sections 5 and 6 hereof, such person (an "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Party") in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses; provided that the
failure of any Indemnified Party so to notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder except to the extent
that the Indemnifying Party is materially prejudiced by such failure to notify.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties,
11
<PAGE>
such firm shall be designated in writing by the Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent (not to be unreasonably withheld), but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Party is or
could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.
8. Contribution . If the indemnification provided for in
Sections 5 and 6 hereof is unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, 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, claims, damages or liabilities (i) as between the Company or JCC
Holding and the Requesting Holders, on the one hand, and the underwriters on the
other, in such proportion as is appropriate to reflect the relative benefits
received by the Company or JCC Holding and such Requesting Holders on the one
hand, and the underwriters on the other, from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company or JCC Holding and such Requesting Holders, on
the one hand, and of such underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) as
between the Company or JCC Holding, on the one hand, and each such Requesting
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company or JCC Holding and of each such Requesting Holder
in connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Company or JCC
Holding and such Requesting Holders, on the one hand, and such underwriters on
the other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company or JCC Holding and such Requesting
Holders bear to the total underwriting discounts and commissions received by
such underwriters, in each case as set forth in the table on the cover page of
the prospectus. The relative fault of the Company or JCC Holding and such
Requesting Holders on the one hand and of such underwriters on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or JCC Holding
and such Requesting Holders or by such underwriters. The relative fault of the
Company or JCC Holding on the one hand and of each such Requesting Holder on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
12
<PAGE>
The Company and JCC Holding and each of the Initial Holders
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no
underwriter shall be required to contribute any amount in excess of the amount
of the total fees, discounts and commissions received by it, and no Requesting
Holder shall be required to contribute any amount in excess of the amount of the
proceeds received by such Requesting Holder in respect of a sale of Registrable
Securities. 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. Each such
Requesting Holder's obligation to contribute pursuant to this Section 8 is
several in the proportion that the proceeds of the offering received by such
Requesting Holder bears to the total proceeds of the offering received by all
such Requesting Holders and not joint.
9. Participation in Public Offering. No Person may
participate in any Public Offering hereunder unless such Person (a) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and the provisions of
this Agreement.
10. Rule 144. The Company and JCC Holding shall take
all actions reasonably necessary to enable holders of Registrable Securities
to sell such Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC including, without
limiting the generality of the foregoing, JCC Holding's filing on a timely
basis all reports required to be filed by the Exchange Act. Upon the request
of any holder of Registrable Securities, the Company and JCC Holding will
deliver to such holder a written statement as to whether they have complied
with such requirements.
11. Miscellaneous.
(a) No Inconsistent Agreements. The Company
will not, and JCC Holding will not, hereafter enter into any agreement with
respect to its securities which is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement.
(b) Remedies. Each holder of Registrable
Securities, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. Each of JCC Holding and the Company agrees that
monetary damages would not be adequate compensation for any loss
13
<PAGE>
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
(c) Amendment; Waiver; Termination. (i) Except
as otherwise provided herein, the provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departure from the
provisions hereof may not be given unless consented to in writing by the
Company, JCC Holding and Initial Holders owning at least a majority of the
Registrable Securities then held by all Initial Holders.
(ii) This Agreement shall expire on the
earlier to occur of (A) the date upon which the Registrable Securities
are no longer outstanding, whether following redemption, maturity,
conversion or otherwise (B) the date on which none of the Initial
Holders holds Registrable Securities which are "restricted securities"
within the meaning of Rule 144(a)(3) of the Securities Act and (C) May
15, 2010.
(d) Notice Generally. Any notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder to be made pursuant to the provisions of this Agreement shall be
sufficiently given or made if in writing and either delivered in person with
receipt acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy answerback,
addressed as follows:
(i) if to the Company or JCC Holding, to:
JCC Holding Company
512 South Peters Street
New Orleans, Louisiana 70130
Attention: Corporate Secretary
with a copy to:
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Michael R. McAlevey
(ii) if to any holder of Registrable Securities, at its
last known address appearing on the books of the
Company or JCC Holding maintained for such purpose;
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which
14
<PAGE>
personally delivered, with receipt acknowledged, telecopied and confirmed by
telecopy answerback or five days after the same shall have been deposited in the
mail, postage prepaid. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
(e) Assigns. Rights and benefits under this
Agreement shall not be assignable by the Initial Holders.
(f) Headings. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(g) Governing Law. This Agreement shall be
governed by the laws of the State of New York.
(h) Severability. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
(i) Entire Agreement. This Agreement represents
the complete agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to the subject matter
hereof.
15
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of
the date first above written.
JAZZ CASINO COMPANY, L.L.C.
By: JCC Holding Company, its sole member
By: /s/ L. Camille Fowler
-----------------------------------
Name: L. Camille Fowler
Title: V.P./Secretary
JCC HOLDING COMPANY
By: /s/ L. Camille Fowler
-----------------------------------
Name: L. Camille Fowler
Title: V.P./Secretary
DONALDSON, LUFKIN & JENRETTE, INC.
By: /s/ Timothy J. Mayopoulos
-----------------------------------
Name: Timothy J. Mayopoulos
Title: VP's Associate General Counsel
SALOMON SMITH BARNEY INC.
By: /s/ Marion B. Chan
-----------------------------------
Name: Marion B. Chan
Title: 1st VP
BT ALEX. BROWN INCORPORATED
By: /s/ David S. Baley
-----------------------------------
Name: David S. Baley
Title: Managing Director
BANKERS TRUST COMPANY
By: /s/ Gregory P. Shefrin
-----------------------------------
Name: Gregory P. Shefrin
Title: Vice President
(Signatures continued on next page)
16
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FIRST NATIONAL BANK OF COMMERCE
By: /s/ Richard Spiehler
-----------------------------------
Name: Richard Spiehler
Title: Senior V.P.
17
<PAGE>
SCHEDULE A
Participating Banks
Bankers Trust Company
First National Bank of Commerce
18
<PAGE>
Exhibit 4.06
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
JCC HOLDING COMPANY
and
HARRAH'S CRESCENT CITY INVESTMENT COMPANY
Dated as of October 30, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. Definitions.....................................................................................1
SECTION 2. Securities Subject to this Agreement............................................................3
(a) Registrable Securities..........................................................................3
(b) Holders of Registrable Securities...............................................................3
SECTION 3. Shelf Registration..............................................................................3
(a) Shelf Registration..............................................................................3
(b) Registration Statement Form.....................................................................3
(c) Term............................................................................................3
(d) Selection of Underwriters.......................................................................4
SECTION 4. Hold-Back Agreements............................................................................4
(a) Restrictions on Public Sale by the Company and Others...........................................4
(b) Restrictions on Public Sale by Holder of Registrable Securities.................................4
SECTION 5. Registration Procedures.........................................................................4
SECTION 6. Registration Expenses...........................................................................9
SECTION 7. Indemnification................................................................................10
(a) Indemnification by Company.....................................................................10
(b) Indemnification by Holder of Registrable Securities............................................11
(c) Contribution...................................................................................12
SECTION 8. Rule 144.......................................................................................13
SECTION 9. Participation in Underwritten Registrations....................................................13
SECTION 10. Miscellaneous..................................................................................13
(a) Remedies.......................................................................................13
(b) No Inconsistent Agreements.....................................................................13
(c) Adjustments Affecting Registrable Securities...................................................13
(d) Amendments and Waivers.........................................................................14
(e) Notices........................................................................................14
(f) Successors and Assigns.........................................................................14
</TABLE>
i
<PAGE>
<TABLE>
Page
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<S> <C> <C>
(g) Counterparts...................................................................................14
(h) Headings.......................................................................................14
(i) Governing Law..................................................................................14
(j) Severability...................................................................................14
(k) Entire Agreement...............................................................................15
</TABLE>
ii
<PAGE>
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of
October 30, 1998 and entered into by and between JCC HOLDING COMPANY, a Delaware
corporation (the "Company"), and HARRAH'S CRESCENT CITY INVESTMENT COMPANY, a
Nevada corporation ("HCCIC").
This Agreement is made pursuant to the Third Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code As Modified Through
October 13, 1998 of Harrah's Jazz Company ("HJC"), Harrah's New Orleans
Investment Company and Harrah's Jazz Finance Corp. (the "Plan of
Reorganization"). Pursuant to the Plan of Reorganization, the Company has agreed
to provide the registration rights set forth in this Agreement.
The parties hereby agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
AMEX: The American Stock Exchange.
Casino: The casino to be located at the site of the former Rivergate
Convention Center in New Orleans, Louisiana that is operated pursuant to the
Casino Operating Contract.
Casino Opening Date: The date upon which the Casino first opens to the
public and commences business.
Casino Operating Contract: The amended and renegotiated casino
operating contract, dated as of October 30, 1998, between the State of Louisiana
by and through the Louisiana Gaming Control Board, and HJC and Jazz Casino
Company, L.L.C., as it may be amended or supplemented from time to time.
Common Stock: Prior to the Transition Date (as defined in the Company's
Restated Certificate of Incorporation, filed with the Secretary of State of
Delaware on October 27, 1998), the Class B Common Stock, $.01 par value, of the
Company, and on and after the Transition Date, the unclassified common stock,
$.01 par value, of the Company.
Exchange Act: The Securities Exchange Act of 1934, as amended from time
to time.
HET: Harrah's Entertainment, Inc., a Delaware corporation.
JCC: Jazz Casino Company, L.L.C., a single member Louisiana limited
liability company and wholly-owned subsidiary of the Company.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and
<PAGE>
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
Registrable Securities: (i) All Common Stock held by HET, HCCIC or any
other wholly-owned subsidiary of HET during the term of the Agreement, and (ii)
the Warrant Shares. Registrable Securities shall also include any securities
which may be issued or distributed with respect to, or in exchange for, such
Registrable Securities pursuant to a stock dividend, stock split or other
distribution, merger, consolidation, recapitalization or reclassification or
similar transaction; provided, however, that any such Registrable Securities
shall cease to be Registrable Securities to the extent (i) a Registration
Statement with respect to the sale of such Registrable Securities has been
declared effective under the Securities Act and such Registrable Securities have
been disposed of in accordance with the plan of distribution set forth in such
Registration Statement, (ii) such Registrable Securities are distributed
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) such Registrable Securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent public
distribution of them shall not require registration of them under the Securities
Act, or (iv) such Registrable Securities shall have ceased to be outstanding;
provided, further, however, that any securities that have ceased to be
Registrable Securities cannot thereafter become Registrable Securities, and any
securities that are issued or distributed in respect of securities that have
ceased to be Registrable Securities are not Registrable Securities.
Registration Expenses: See Section 6 hereof.
Registration Statement: Any registration statement of the Company filed
with the SEC under the rules and regulations promulgated under the Securities
Act which covers Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration Statement.
Securities Act: The Securities Act of 1933, as amended from time to
time.
SEC: The Securities and Exchange Commission.
Suspension Date: The date on which the Company suspends the use of such
Registration Statement by the holders of the Registrable Securities covered
thereby if the Company reasonably and in good faith determines that there has
occurred any event of the type described in Section 5(c)(7) hereof.
Suspension Period: The period commencing on the first calendar day
immediately following the subject Suspension Date, and ending on the date after
the subject Suspension Date on which the Company no longer suspends the use of
the Registration Statement or the date any supplement or amendment to the
Registration Statement is declared effective.
Underwritten Registration or Underwritten Offering: A Registration
Statement pursuant to which securities of the Company are sold to an underwriter
for reoffering to the public.
Warrants: The warrants to purchase shares of Common Stock, issued
pursuant to the Plan of Reorganization and the Warrant Agreement of even date
herewith (the "Warrant Agreement"), by and between the Company and HCCIC.
2
<PAGE>
Warrant Shares: Any shares of Common Stock issued or issuable upon
exercise of the Warrants.
SECTION 2. Securities Subject to this Agreement.
(a) Registrable Securities. The securities entitled to the benefits of
this Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is deemed to be a
holder of Registrable Securities whenever such Person owns Registrable
Securities or has the right to acquire such Registrable Securities.
SECTION 3. Shelf Registration. (a) Shelf Registration. Upon the written
request of HCCIC, which request shall not be made prior to the second
anniversary of the Casino Opening Date and shall only be made once, the Company
shall, as promptly as practicable, prepare and file with the SEC a Registration
Statement under the Securities Act for an offering to be made on a continuous
basis pursuant to Rule 415 (or any similar rule that may be adopted by the SEC)
under the Securities Act covering all the Registrable Securities (the "Shelf
Registration").
(b) Registration Statement Form. The Shelf Registration shall be on
Form S-1 or Form S-3 (or any successor to such Forms) or another appropriate
form permitting registration of such Registrable Securities for resale by
holders of Registrable Securities in the manner designated by them.
(c) Term. The Company shall use its best efforts to cause the Shelf
Registration to become effective under the Securities Act in accordance with
Section 3(a) hereof and shall keep the Shelf Registration or a subsequent
Registration Statement continuously effective through the third anniversary of
the day on which the initial Shelf Registration first becomes effective (the
"Term"). The Company shall also supplement or make amendments to any Shelf
Registration if required by the rules, regulations or instructions applicable to
the registration form used by the Company or if required by the Securities Act.
The Term shall be extended by the aggregate number of days of any Suspension
Period(s) or any other period(s) during which the effectiveness of the
Registration Statement is suspended. Notwithstanding anything else in this
Agreement, no Suspension Period shall last longer than 45 trading days.
(d) Selection of Underwriters. If the holders of Registrable Securities
desire to sell Registrable Securities in an Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be mutually agreed to by the holders of a majority
of the Registrable Securities included in such offering and the Company.
SECTION 4. Hold-Back Agreements.
(a) Restrictions on Public Sale by the Company and Others. The Company
agrees:
(1) Not to effect any public or private sale or distribution of its
equity securities, including a sale pursuant to Regulation D under the
Securities Act, during the 14-day period prior to, and during the
90-day period (exclusive of any Suspension Periods) beginning on, the
effective date of a Registration Statement filed under Section 3
hereof or the commencement of the public distribution of securities to
the extent timely notified in writing by a holder of Registrable
Securities covered by such Registration Statement or the managing
3
<PAGE>
underwriters (the "Holdback Period") (except as part of such
Underwritten Registration or pursuant to registrations on Forms S-4 or
S-8 or any successor form to such Forms), and
(2) to cause each holder of its privately placed equity securities
issued by the Company at any time on or after the date of this
Agreement to agree not to effect any public sale or distribution of
any such securities during the Holdback Period, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
Underwritten Registration, if permitted).
(a) Restrictions on Public Sale by Holder of Registrable Securities.
Each holder of Registrable Securities whose Registrable Securities are covered
by a Registration Statement filed pursuant to Section 3 hereof agrees, if timely
requested in writing by the managing underwriters in an underwritten offering,
not to effect any public sale or distribution of securities of the Company of
the same class as the securities included in such Registration Statement,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten registration), during the 14-day period prior to, and
during the 90-day period (exclusive of any Suspension Periods) following, the
effective date of the Registration Statement for each underwritten offering made
pursuant to such Registration Statement. The foregoing provisions shall not
apply, however, to any holder of Registrable Securities if such holder is
prevented by an applicable statute or regulation from entering into any such
agreement.
SECTION 5. Registration Procedures. In connection with the Company's
registration obligations pursuant to Section 3 hereof, the Company will use its
best efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:
(a) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to the holders of Registrable
Securities covered by such Registration Statement and the underwriters, if any,
copies of all such documents proposed to be filed, which documents will be
subject to the review of such holders and the underwriters, and the Company will
not file any Registration Statement or amendment thereto or any Prospectus or
any supplement thereto to which the holders of Registrable Securities covered by
such Registration Statement or the underwriters, if any, shall reasonably
object; provided, however, that for purposes of this Section 5(a), objections to
information specifically required to be included in a Registration Statement by
the SEC or pursuant to statutes or rules shall not be deemed reasonable;
(b) prepare and file with the SEC such amendments and post-effective
amendments to any Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period; cause
the related Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act;
(c) notify the holders of Registrable Securities and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such notice in writing,
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective,
4
<PAGE>
(2) of the receipt of any comments from the SEC,
(3) of any request by the SEC for amendments or supplements to the
Registration Statement or the Prospectus or for additional
information,
(4) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose,
(5) if at any time the representations and warranties of the
Company contemplated by paragraph (n) below cease to be true and
correct,
(6) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose,
(7) of the existence of any fact or the happening of any event
which results in the Registration Statement, the Prospectus or any
document incorporated therein by reference containing an untrue
statement of material fact or omitting to state 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, and
(8) of the determination of the Company that a post-effective
amendment to a Registration Statement would be appropriate,
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any
Registrable Securities for sale or exchange in any jurisdiction of the United
States of America, at the earliest possible moment;
(e) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an Underwritten
Offering, immediately incorporate in a Prospectus supplement or post-effective
amendment such necessary information as the managing underwriters and the
holders of a majority of the Registrable Securities being sold agree should be
included therein relating to the plan of distribution with respect to such
Registrable Securities, including, without limitation, information with respect
to the amount of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with respect to any
other terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(f) furnish to each selling holder of Registrable Securities and each
managing underwriter, if any, without charge, at least one conformed copy of the
Registration Statement or Registration Statements and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference or deemed incorporated therein by reference
and all exhibits (including those incorporated by reference), at the earliest
practicable time under the circumstances after the filing of such documents with
the SEC;
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<PAGE>
(g) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request (it being understood that during the Term
the Company consents to the use of the Prospectus or any amendment or supplement
thereto by each of the selling holders of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto) and such other documents as such selling holder may reasonably request
in order to facilitate the disposition of the Registrable Securities by such
holder and underwriters, if any;
(h) prior to any public offering of Registrable Securities, register or
qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any selling
holder of Registrable Securities or any underwriter reasonably requests in
writing; keep such registration or qualification (or exemption therefrom)
effective during the Term and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided that the Company will
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(j) use its reasonable best efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by paragraph (c)(7)
or (c)(8) above, as promptly as practicable thereafter, prepare and file with
the SEC a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated therein
by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
the Prospectus will not contain an untrue statement of a material fact or omit
to state any 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;
(l) cause all Registrable Securities covered by the Registration
Statement to be quoted on NASDAQ-NMS or listed on each securities exchange on
which similar securities issued by the Company are then listed if requested by
the holders of a majority of such Registrable Securities or the managing
underwriters, if any;
(m) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and provide the
applicable transfer agent with
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<PAGE>
printed certificates for the Registrable Securities which are in a form eligible
for deposit with Depositary Trust Company;
(n) enter into agreements (including underwriting agreements) and take
all other appropriate actions in order to expedite or facilitate the disposition
of such Registrable Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration is an
Underwritten Registration:
(1) make such representations and warranties to the holders of such
Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in primary Underwritten Offerings and covering matters including but
not limited to, the Plan of Reorganization;
(2) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority of the Registrable Securities being sold)
addressed to each selling holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in
Underwritten Offerings and such other matters as may be reasonably
requested by such holders and underwriters;
(3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
selling holders of Registrable Securities and the underwriters, if
any, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by underwriters in
connection with primary Underwritten Offerings;
(4) if an underwriting agreement is entered into, cause the same to
set forth in full the indemnification provisions and procedures of
Section 7 hereof with respect to all parties to be indemnified
pursuant to said Section; and
(5) deliver such documents and certificates as may be requested by
the holders of a majority of the Registrable Securities being sold and
the managing underwriters, if any, to evidence compliance with
paragraph (k) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
The above shall be done at the effectiveness of such Registration Statement,
each closing under any underwriting or similar agreement as and to the extent
required thereunder and from time to time as may be requested by any selling
holder in connection with the disposition of Registrable Securities pursuant to
such Registration Statement;
(o) make available for inspection by a representative of the holders of
a majority of the Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney or
accountant retained by the sellers or the underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with the registration; provided that any records,
information or documents that are designated by the Company in writing as
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<PAGE>
confidential shall be kept confidential by such Persons unless disclosure of
such records, information or documents is required by court or administrative
order; provided, further, that HCCIC may disclose any records, information or
documents that are designated by the Company in writing as confidential to HET
and any of its wholly-owned subsidiaries;
(p) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make generally available to its security
holders, earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 45 days after the end of any 12-month period (or
90 days, if such period is a fiscal year) (1) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in an
Underwritten Offering, or, if not sold to underwriters in such an offering, (2)
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statements shall
cover said 12-month periods;
(q) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD); and
(r) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or the Prospectus
(after initial filing of the Registration Statement) provide copies of such
document to counsel to the selling holders of Registrable Securities and to the
managing underwriters, if any, make the Company's representatives available for
discussion of such document and make such changes in such document prior to the
filing thereof as counsel for such selling holders or underwriters may
reasonably request.
The Company may require each seller of Registrable Securities under a
Registration Statement to furnish to the Company such information regarding the
distribution of such securities as the Company may from time to time reasonably
request in writing and each holder in acquiring such Registrable Securities
agrees to supply such information to the Company promptly upon such request.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(k) hereof, such holder
will forthwith discontinue disposition of Registrable Securities until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or until it is advised in writing by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
the Prospectus, and, if so directed by the Company, such holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods during which such
Registration Statement shall be maintained effective shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when each seller of Registrable Securities
covered by such Registration Statement either receives the copies of the
supplemented or amended prospectus contemplated by Section 5(k) hereof or is
advised in writing by the Company that the use of the Prospectus may be resumed.
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<PAGE>
SECTION 6. Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be paid by the Company, regardless of whether the
Registration Statement becomes effective, including without limitation:
(1) all registration and filing fees (including, without
limitation, with respect to filings required to be made with the SEC
and any Exchange);
(2) fees and expenses of compliance with securities or blue sky
laws (including, without limitation, fees and disbursements of counsel
for the underwriters or selling holders in connection with blue sky
qualifications of the Registrable Securities and determination of
their eligibility for investment under the laws of such jurisdictions
as the managing underwriters or holders of a majority of the
Registrable Securities being sold may designate);
(3) printing (including, without limitation, expenses of printing
or engraving certificates for the Registrable Securities in a form
eligible for deposit with the Depositary Trust Company and of printing
prospectuses), messenger, telephone and delivery expenses;
(4) fees and disbursements of counsel for the (i) Company, (ii) the
underwriters, and (iii) the sellers of the Registrable Securities
(subject to the provisions of Section 6(b) hereof);
(5) fees and disbursements of all independent certified public
accountants of the Company (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by
or incident to such performance);
(6) fees and disbursements of underwriters, if any, (excluding
discounts, commissions or fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals relating
to the distribution of the Registrable Securities or legal expenses of
any Person other than the Company, the underwriters and the selling
holders of Registrable Securities);
(7) securities acts liability insurance if the Company so desires
or if the underwriters or selling holders of a majority of the
Registrable Securities so require;
(8) fees and expenses of other Persons retained by the Company; and
(9) fees and expenses associated with any Exchange filing required
to be made in connection with the Registration Statement, including,
if applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of any Exchange (all such
expenses being herein called "Registration Expenses").
The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange on which similar securities issued by
the Company are then listed, rating agency fees and the fees and expenses of any
Person, including special experts, retained by the Company.
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<PAGE>
(b) In connection with the Registration Statement required hereunder,
the Company will reimburse the holders of Registrable Securities being
registered pursuant to such Registration Statement for the reasonable fees and
disbursements of not more than one counsel (or more than one counsel if a legal
opinion is required from more than one counsel by the terms of any underwriting
agreement relating to an Underwritten Offering) chosen by the holders of a
majority of such Registrable Securities.
SECTION 7. Indemnification.
(a) Indemnification by Company. The Company agrees to indemnify and
hold harmless each holder of Registrable Securities, its officers, directors,
employees and agents and each Person who controls such holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
(each such person being sometimes hereinafter referred to as an "Indemnified
Holder") from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses) arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary prospectus, or arising out of or
based upon 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, except
insofar as such losses, claims, damages, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or allegation thereof based
upon information furnished in writing to the Company by such holder expressly
for use therein; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in any Prospectus or preliminary prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is corrected in an amendment or supplement to the Prospectus or preliminary
prospectus and if, having previously been furnished by or on behalf of the
Company with copies of the Prospectus or preliminary prospectus as so amended or
supplemented, such holder thereafter fails to deliver such Prospectus or
preliminary prospectus as so amended or supplemented, prior to or concurrently
with the sale of a Registrable Security to the person asserting such loss,
claim, damage, liability or expense who purchased such Registrable Security
which is the subject thereof from such holder. This indemnity will be in
addition to any liability which the Company may otherwise have. The Company will
also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
to the same extent as provided above with respect to the indemnification of the
Indemnified Holders of Registrable Securities.
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against an Indemnified Holder in
respect of which indemnity may be sought from the Company, such Indemnified
Holder shall promptly notify the Company in writing, and the Company shall
assume the defense thereof, including the employment of counsel satisfactory to
such Indemnified Holder and the payment of all expenses; provided, however, that
the delay or failure to so notify the Company shall not relieve the Company from
any obligation or liability except to the extent that the Company has been
prejudiced by such failure or delay. Such Indemnified Holder shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Holder unless (a) the Company has agreed to pay such
fees and expenses or (b) the Company shall have failed to assume the defense of
such action or proceeding and has failed to employ counsel reasonably
satisfactory to such
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Indemnified Holder in any such action or proceeding or (c) the named parties to
any such action or proceeding (including any impleaded parties) include both
such Indemnified Holder and the Company, and such Indemnified Holder shall have
been advised by counsel that there may be one or more legal defenses available
to such Indemnified holder which are different from or additional to those
available to the Company (in which case, if such Indemnified Holder 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 or proceeding on behalf of such Indemnified Holder, it being understood,
however, that the Company shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings 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 at any time for such Indemnified Holder and any
other Indemnified Holders, which firm shall be designated in writing by such
Indemnified Holders). The Company shall not be liable for any settlement of any
such action or proceeding effected without its written consent, but if settled
with its written consent, or if there be a final judgment for the plaintiff in
any such action or proceeding, the Company agrees to indemnify and hold harmless
such Indemnified Holders from and against any loss or liability by reason of
such settlement or judgment.
(b) Indemnification by Holder of Registrable Securities. Each holder of
Registrable Securities agrees, severally not jointly, to indemnify and hold
harmless the Company, its directors and officers and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such holder, but only with respect to information
relating to such holder furnished in writing by such holder expressly for use in
any Registration Statement or Prospectus, or any amendment or supplement
thereto, or any preliminary prospectus. In case any action or proceeding shall
be brought against the Company or its directors or officers or any such
controlling person, in respect of which indemnity may be sought against a holder
of Registrable Securities, such holder shall have the rights and duties given
the Company and the Company or its directors or officers or such controlling
person shall have the rights and duties given to each holder by the preceding
paragraph. In no event shall the liability of any selling holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement or any amendment or
supplement thereto, or any preliminary prospectus.
(c) Contribution. If the indemnification provided for in this Section 7
is unavailable to an indemnified party under Section 7(a) or Section 7(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, 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, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the Company on the
one hand and of the Indemnified Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of the Indemnified Holder
on the other shall be determined by reference to, among
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other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 7(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and each holder of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 7(c)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
7(c), an Indemnified Holder shall not be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities sold by such Indemnified Holder or its affiliated Indemnified Holders
and distributed to the public were offered to the public exceeds the amount of
any damages which such Indemnified Holder, or its affiliated Indemnified Holder,
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 8. Rule 144. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or, if the Company
is not required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available such information as necessary to
permit sales pursuant to Rule 144 under the Securities Act), and it will take
such further action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such information and requirements.
SECTION 9. Participation in Underwritten Registrations. No Person may
participate in any Underwritten Registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
SECTION 10. Miscellaneous.
(a) Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein, in the Plan of
Reorganization, the Warrant Agreement and granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and
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hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with the rights granted to holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
(c) Adjustments Affecting Registrable Securities. The Company will not
take any action, or permit any change to occur, with respect to the Registrable
Securities which would adversely affect the ability of holders of Registrable
Securities to include such Registrable Securities in a registration undertaken
pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of holders of a
majority of the outstanding Registrable Securities.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to the Company in accordance with the provisions of
this Section 10(e), which address initially is, with respect to HET, HCCIC and
any other wholly-owned subsidiary of HET, 1023 Cherry Road, Memphis, Tennessee
38117, Attention: Stephen H. Brammell, with a copy to Latham & Watkins, 633 West
Fifth Street, Los Angeles, California 90071, Attention: James P. Beaubien, Esq.;
and
(ii) if to the Company, initially at 512 South Peters Street, New
Orleans, Louisiana 70130, Attention: Corporate Secretary and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 10(e), with a copy to Alston & Bird LLP, One Atlantic Center, 1201
West Peachtree Street, Atlanta, Georgia 30309-3424, Attention: Michael R.
McAlevey.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent holders of Registrable Securities.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(Signature Page to Follow)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
JCC HOLDING COMPANY
By: /s/ Frederick W. Burford
--------------------------------------------
Name: Frederick W. Burford
Title: President
HARRAH'S CRESCENT CITY INVESTMENT COMPANY
By: /s/ Stephen H. Brammell
--------------------------------------------
Name: Stephen H. Brammell
Title: Authorized Representative
S-1
<PAGE>
WARRANT AGREEMENT
BY AND BETWEEN
JCC HOLDING COMPANY
and
HARRAH'S CRESCENT CITY INVESTMENT COMPANY
Dated as of October 30, 1998
<PAGE>
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. Definitions.........................................................................................1
SECTION 2. Warrant Certificates................................................................................2
SECTION 3. Execution of Warrant Certificates...................................................................2
SECTION 4. Registration........................................................................................2
SECTION 5. Registration of Transfers and Exchanges.............................................................3
SECTION 6. Warrants; Exercise of Warrants......................................................................3
SECTION 7. Payment of Taxes....................................................................................5
SECTION 8. Mutilated or Missing Warrant Certificates...........................................................5
SECTION 9. Reservation of Warrant Shares; Rights...............................................................5
SECTION 10. Obtaining Stock Exchange Listings.................................................................6
SECTION 11. Adjustment of Exercise Price and Number of Warrant Shares Issuable................................6
(a) Adjustment for Change in Capital Stock............................................................7
(b) When De Minimis Adjustment May Be Deferred........................................................8
(c) When No Adjustment Required.......................................................................8
(d) Notice of Adjustment..............................................................................8
(e) Notice of Certain Transactions....................................................................8
(f) Reorganization of Company.........................................................................9
(g) Company Determination Final.......................................................................9
(h) When Issuance or Payment May Be Deferred.........................................................10
(i) Adjustment in Number of Shares...................................................................10
(j) Limitation on Exercise of Warrants...............................................................11
(k) Antidilution.....................................................................................11
(l) Form of Warrants.................................................................................12
SECTION 12. Fractional Interests.............................................................................12
SECTION 13. Redemption of Warrants...........................................................................13
SECTION 14. Notices to Warrant Holders.......................................................................13
</TABLE>
- ------------------
* This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
i
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<TABLE>
<S> <C>
SECTION 15. Notices to Company and Warrant Holders...........................................................15
SECTION 16. Supplements and Amendments.......................................................................16
SECTION 17. Successors.......................................................................................16
SECTION 18. Assignment; Transfer.............................................................................16
SECTION 19. Termination......................................................................................16
SECTION 20. Governing Law....................................................................................16
SECTION 21. Benefits of This Agreement.......................................................................16
SECTION 22. Counterparts.....................................................................................17
</TABLE>
ii
<PAGE>
THIS WARRANT AGREEMENT (the "Agreement") is dated as of
October 30, 1998 and entered into by and between JCC HOLDING COMPANY, a
Delaware corporation (the "Company"), and HARRAH'S CRESCENT CITY INVESTMENT
COMPANY, a Nevada corporation ("HCCIC").
WHEREAS, the Company proposes to issue to HCCIC, or its
designee, Common Stock Purchase Warrants, as hereinafter described (the
"Warrants"), to purchase (subject to the limitations of Section 11(j) hereof) up
to an aggregate of 4,000,000 shares of Common Stock (as defined herein) of the
Company (the Common Stock issuable on exercise of the Warrants being referred to
herein as the "Warrant Shares"), pursuant to the Third Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code As Modified Through
October 13, 1998, of Harrah's Jazz Company, a Louisiana general partnership
("HJC"), Harrah's Jazz Finance Corp., a Delaware corporation, and Harrah's New
Orleans Investment Company, a Nevada corporation (the "Plan of Reorganization").
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Definitions
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Affiliate: Any person who, with respect to any other person,
directly or indirectly controls or is controlled by or is under the direct or
indirect common control with such other person.
Casino: The casino to be located at the site of the former
Rivergate Convention Center in New Orleans, Louisiana that is operated pursuant
to the Casino Operating Contract.
Casino Opening Date: The date upon which the Casino first
opens to the public and commences business.
Casino Operating Contract: The amended and renegotiated casino
operating contract among the State of Louisiana by and through the Louisiana
Gaming Control Board, HJC and JCC, executed October 30, 1998, as it may be
amended or supplemented from time to time.
Class A Common Stock: Prior to the Transition Date, the class
A common stock, $.01 par value, of the Company.
Common Stock: After the Transition Date, the unclassified
common stock, $.01 par value, of the Company.
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JCC: Jazz Casino Company, L.L.C., a Louisiana limited
liability company and whollyowned subsidiary of the Company.
New Bonds: The Senior Subordinated Notes due 2009 with
Contingent Payments of JCC issued pursuant to the Plan of Reorganization.
Permitted Transferee: HET or its Affiliates.
New Contingent Bonds: The Senior Subordinated Contingent
Notes due 2009 of JCC issued pursuant to the Plan of Reorganization.
Transition Date: Transition Date shall have the meaning set
forth in the Restated Certificate of Incorporation of the Company filed with the
Secretary of State of Delaware on October 27, 1998.
SECTION 2. Warrant Certificates . The certificates evidencing
the Warrants (the "Warrant Certificates") to be delivered pursuant to this
Agreement shall be in registered form only and shall be substantially in the
form set forth in Exhibit A attached hereto.
SECTION 3. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President or a Vice President and by its Secretary or an Assistant
Secretary under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 4. Registration. The Company shall number and
register the Warrant Certificates in a register as they are issued.
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SECTION 5. Registration of Transfers and Exchanges. The
Company shall from time to time register the transfer by HET or its Affiliate to
a Permitted Transferee of any outstanding Warrant Certificates in a Warrant
register to be maintained by the Company upon surrender of such Warrant
Certificates accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee(s) and the surrendered Warrant
Certificate shall be canceled and disposed of by the Company.
The Warrant holders agree that each certificate representing
Warrant Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH
LAWS."
Warrant Certificates may be exchanged at the option of the
holder(s) thereof, when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled and disposed of by the Company.
SECTION 6. Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each holder of a Warrant shall have the right, which
may be exercised at any time after the opening of business on the Transition
Date until on or before 5:00 p.m., New York time on the sixth anniversary of the
Casino Opening Date (the "Exercise Period"), to receive from the Company the
number of fully paid and nonassessable Warrant Shares which the holder may at
the time be entitled to receive on exercise of such Warrants and payment to the
Company of the Exercise Price (as defined below) then in effect for such Warrant
Shares. In the alternative, to the extent the Common Stock is listed on any
securities exchange registered under the Exchange Act of 1934, as amended, or
quoted on the NASDAQNMS, each holder of a Warrant may exercise its right, during
the Exercise Period, to receive Warrant Shares on a net basis, such that,
without the exchange of any funds, such holder of a Warrant receives that number
of Warrant Shares otherwise issuable (or payable) upon exercise of its Warrants
less that number of Warrant Shares having a Current Market Price (as defined in
Section 12) at the time of exercise equal to the aggregate Exercise Price that
would otherwise have been paid by such holder of Warrant Shares. Each Warrant
not exercised prior to 5:00 p.m., New York
3
<PAGE>
time, on the sixth anniversary of the Casino Opening Date shall become void and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease as of such time.
A Warrant may be exercised at any time during the Exercise
Period upon surrender to the Company at its office designated for such purpose
(the address of which is set forth in Section 15 hereof) of the certificate or
certificates evidencing the Warrants to be exercised with the form of election
to purchase on the reverse thereof duly filled in and signed, which signature
shall be guaranteed by a bank or trust company having an office or correspondent
in the United States or a broker or dealer which is a member of a registered
securities exchange or the National Association of Securities Dealers, Inc., and
upon payment to the Company of the exercise price (the "Exercise Price") which
is set forth in the form of Warrant Certificate attached hereto as Exhibit A,
subject to adjustment pursuant to Section 11, for the number of Warrant Shares
in respect of which such Warrants are then exercised. Payment of the aggregate
Exercise Price shall be made in cash or by certified or official bank check
payable to the order of the Company.
Subject to the provisions of Section 7 hereof, upon such
surrender of Warrants and payment of the Exercise Price the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the holder and in such name or names as the Warrant holder may
designate, a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrants together with cash as provided in
Section 12; provided, however, that if any consolidation, merger or lease or
sale of assets is proposed to be effected by the Company as described in
subsection (f) of Section 11 hereof, or a tender offer or an exchange offer for
shares of Common Stock of the Company shall be made, upon such surrender of such
Warrants and payment of the Exercise Price as aforesaid, the Company shall, as
soon as possible, but in any event not later than two business days thereafter,
issue and cause to be delivered the full number of Warrant Shares issuable upon
the exercise of such Warrants in the manner described in this sentence together
with cash as provided in Section 12. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable at any time during the
Exercise Period, at the election of the holders thereof, either in full or from
time to time in part and, in the event that a certificate evidencing Warrants is
exercised in respect of fewer than all of the Warrant Shares issuable on such
exercise at any time prior to the date of expiration of the Warrants, a new
certificate evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section 6 and of Section 3 hereof.
All Warrant Certificates surrendered upon exercise of Warrants
shall be canceled and disposed of by the Company. The Company shall keep copies
of this Agreement and any notices given or received hereunder available for
inspection by the holders during normal business hours at its office.
4
<PAGE>
SECTION 7. Payment of Taxes . The Company will pay all
documentary stamp taxes, if any, attributable to the initial issuance of Warrant
Shares upon the exercise of Warrants; provided, however, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or any certificates
for Warrant Shares in a name other than that of the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant, and the Company
shall not be required to issue or deliver such Warrant Certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
SECTION 8. Mutilated or Missing Warrant Certificates. In
case any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue, in exchange and substitution
for and upon cancellation of the mutilated Warrant Certificate, or in lieu of
and substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also reasonably satisfactory to it.
SECTION 9. Reservation of Warrant Shares; Rights. The
Company will at all times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued Common Stock or its
authorized and issued Common Stock held in its treasury, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon exercise of
Warrants, the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
The Company shall issue, together with each Warrant Share
issued upon exercise of a Warrant, any rights issued to holders of Common Stock
in addition thereto or in replacement therefor, whether or not such rights shall
be exercisable at such time, but only if such rights are issued and outstanding
and held by other holders of Common Stock at such time and have not expired.
The Company or, if appointed, the transfer agent for the
Common Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will furnish such Transfer Agent a copy
of all notices of adjustments and certificates related thereto, transmitted to
each holder pursuant to Section 14 hereof.
Before taking any action which would cause an adjustment
pursuant to Section 11 hereof to reduce the Exercise Price below the then par
value (if any) of the Warrant
5
<PAGE>
Shares, the Company will take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants will, upon issue, be fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof.
SECTION 10. Obtaining Stock Exchange Listings . The Company
will from time to time take all action which may be necessary so that the
Warrant Shares, immediately upon their issuance upon the exercise of Warrants,
will be listed on the principal securities exchanges and markets within the
United States of America, if any, on which other shares of Common Stock are then
listed.
The Company shall grant each Warrant holder such registration
rights with respect to the Warrant Shares subject to Warrants as are set forth
in the Registration Rights Agreement between the Company and HCCIC dated as of
October 30, 1998 (the "Registration Rights Agreement").
SECTION 11. Adjustment of Exercise Price and Number of
Warrant Shares Issuable . The Exercise Price and the number of Warrant Shares
issuable upon the exercise of each Warrant are subject to adjustment from time
to time upon the occurrence of the events enumerated in this Section 11. For
purposes of this Section 11, "Common Stock" means shares now or hereafter
authorized of any class of common stock of the Company and any other stock of
the Company, however designated, that has the right (subject to any prior rights
of any class or series of preferred stock) to participate in any distribution of
the assets or earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock or preferred stock; or
6
<PAGE>
(5) issues by reclassification of its Common Stock any
shares of its capital stock;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
In the case of a dividend or distribution the adjustment shall
become effective immediately after the record date for determination of holders
of shares of Common Stock entitled to receive such dividend or distribution, and
in the case of a subdivision, combination or reclassification, the adjustment
shall become effective immediately after the effective date of such corporate
action.
If after an adjustment a holder of a Warrant upon exercise of
the Warrant may receive shares of two or more classes of capital stock of the
Company, the Company shall determine the allocation of the adjusted Exercise
Price between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to Common Stock
in this Section 11.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(c) When No Adjustment Required.
No adjustment need be made for a transaction referred to in subsection (a) of
this Section 11 if Warrant holders are to participate in the transaction on a
basis and with notice that the board of directors of the Company (the "Board of
Directors") determines to be fair and appropriate in light of the basis and
notice on which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
7
<PAGE>
No adjustment need be made for a change in the par value or no
par value of the Common Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
(d) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall
provide the notices required by Section 14 hereof.
(e) Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an
adjustment in the Exercise Price pursuant to subsection (a) of this
Section 11 and if the Company does not arrange for Warrant holders to
participate pursuant to subsection (c) of this Section 11;
(2) the Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (f) of this
Section 11; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
(f) Reorganization of Company.
If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any person, upon
consummation of such transaction the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after the consolidation,
merger, transfer or lease if the holder had exercised the Warrant immediately
before the effective date of the transaction. Concurrently with the consummation
of such transaction, the corporation formed by or surviving any such
consolidation or merger if other than the Company, or the person to which such
sale or conveyance shall have been made, shall enter into a supplemental Warrant
Agreement so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Section 11. The successor Company shall mail to Warrant holders a notice
describing the supplemental Warrant Agreement.
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If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
If this subsection (f) applies, subsection (a) of this Section
11 do not apply.
(g) Company Determination Final.
Any determination that either the Company or the Board of
Directors must make pursuant to Section 12 or subsections (a) and (c) of this
Section 11 is conclusive.
(h) When Issuance or Payment May Be Deferred.
In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record date
the Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price,
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 12; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(i) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this
Section 11, each Warrant outstanding prior to the making of the adjustment in
the Exercise Price shall thereafter evidence the right to receive upon payment
of the adjusted Exercise Price that number of shares of Common Stock (calculated
to the nearest hundredth) obtained from the following formula:
E
N/ = N x___
E/
where:
N/ = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted
Exercise Price.
N = the number of Warrant Shares previously issuable
upon exercise of a Warrant by payment of the Exercise
Price prior to adjustment.
E/ = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
9
<PAGE>
(j) Limitation on Exercise of Warrants.
Notwithstanding anything to the contrary in this Agreement,
Harrah's Entertainment, Inc., a Delaware corporation ("HET"), and all
Subsidiaries (as defined herein) of HET, including HCCIC, will not be
permitted to exercise Warrants with respect to that number of Warrant Shares
which would cause HET and all Subsidiaries of HET to own in the aggregate
more than 50.0% of the Common Stock until such time as such exercise would
not cause HET and all Subsidiaries of HET to own in the aggregate more than
50.0% of the Common Stock. "Subsidiary" with respect to HET, means (i) a
corporation a majority of whose capital stock with voting power, under
ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by HET, by HET and one or more Subsidiaries of HET or by
one or more Subsidiaries of HET or (ii) any individual, partnership, joint
venture, trust, association, jointstock company, unincorporated organization
or government or any agency or political subdivision thereof in which HET,
one or more Subsidiaries of HET, or HET and one or more Subsidiaries of HET,
directly or indirectly, at the date of determination thereof has at least
majority ownership interest.
(k) Antidilution.
The Company and HCCIC (collectively, the "Parties") hereby
acknowledge and agree that this Agreement is intended to allow HCCIC during the
Exercise Period to exercise Warrants to purchase shares of Common Stock
sufficient to entitle HET and all Subsidiaries of HET, including HCCIC, to own
in the aggregate 50.0% of the Company's Common Stock. Accordingly, the Parties
intend for HCCIC to be protected from dilution to the fullest extent possible.
Therefore, if any event or circumstance that could lead to the dilution of
HCCIC's interest upon exercise of the Warrants (such events include, without
limitation, issuances of additional Common Stock pursuant to employee benefit
plans or otherwise, issuances of securities convertible into Common Stock,
issuances of classes of equity or voting securities other than Common Stock
(including securities exercisable for, or convertible into, such securities),
extraordinary dividends, distributions to stockholders and incurrence of
indebtedness to stockholders) occurs, then, regardless of any consideration paid
to the Company in connection with such event and in addition to or as a
supplement to any other adjustment required by this Section 11, the number of
Warrant Shares shall be adjusted as necessary by the Board of Directors in good
faith to give full effect to the Parties' aforementioned intent. For purposes of
calculating the percentage of the Company's Common Stock held by HET and its
Subsidiaries with respect to this Section 11(k), any shares of Common Stock
transferred by HET or its Subsidiaries to any person or entity which is not a
Permitted Transferee shall be deemed to be held by HET and its Subsidiaries;
provided, however, that HET and its Subsidiaries shall not be deemed to hold (i)
shares transferred pursuant to options to purchase a number of shares of Common
Stock constituting in the aggregate up to 3.0% of the Common Stock issued on the
date of consummation of the Plan of Reorganization (the "Effective Date") to the
shareholders of New Orleans Louisiana Development Company, (ii) shares
transferred pursuant to options to purchase a number of shares of Common Stock
constituting in the aggregate up to 1.5% of the Common Stock issued
10
<PAGE>
on the Effective Date to First National Bank of Commerce, (iii) shares
constituting in the aggregate up to 3.5% of the Common Stock issued on the
Effective Date to senior secured bondholders of Grand Palais Casino, Inc., (iv)
shares constituting in the aggregate 2.0% of the Common Stock issued on the
Effective Date to a disbursing agent for the benefit of the holders of the $435
million of 14 1/4% First Mortgage Notes due 2001 with Contingent Interest who
consent to certain releases under the Plan of Reorganization, (v) any shares of
Common Stock which are both (a) transferred after the Effective Date to HET or
any of its Subsidiaries from any person or entity which is not a Permitted
Transferred, and (b) subsequently transferred (and not reacquired) to a person
or entity which is not a Permitted Transferee, prior to the date as of which the
percentage of the Company's Common Stock held by HET and its Subsidiaries is
calculated.
(l) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 12. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 12,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Current Market Price on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction. As used in this Agreement, the "Current Market Price" per
share of Common Stock on any date is the average of the Quoted Prices of the
Common Stock for 30 consecutive trading days commencing 45 trading days before
the date in question. The "Quoted Price" shall, as of any date, be the average
with respect to the preceding 10 consecutive trading days as follows: (A) if the
Common Stock is listed or admitted to trading on any securities exchange, the
closing price, regular way on such day on the principal exchange on which the
Common Stock is traded, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (B) if the Common Stock is not
then listed or admitted to trading on any securities exchange, the last reported
sale price on such day, or if there is no such last reported sale price on such
day, the average of the closing bid and the asked prices on such day, as
reported by a reputable quotation source designated by the Company, or (C) if
neither clause (A) nor (B) is applicable, the average of the reported high bid
and low asked prices on such day, as reported by a reputable quotation service,
or a newspaper of general circulation in the Borough of Manhattan, City of New
York, customarily published on each business day, designated by the Company. If
there are no such prices on a business day, then the Quoted Price shall not be
determinable for such business day. In the absence of one or more such
quotations, the
11
<PAGE>
independent members of the Board of Directors shall determine the Current Market
Price on the basis of such quotations as it in good faith considers appropriate.
SECTION 13. Redemption of Warrants. If at any time after the
Transition Date the Quoted Price of the Common Stock has exceeded $20.00 per
share for 45 consecutive trading days, the Board of Directors may elect to
redeem up to 75% of the then outstanding Warrants for a redemption price equal
to $0.05 per Warrant upon 45 days' written notice to all Warrant holders;
provided, however, that each Warrant holder shall have the right to exercise
Warrants and receive Warrant Shares (in accordance with Section 6 hereof) during
such 45 day notice period and any such Warrants exercised or Warrant Shares
received during such 45 day notice period shall not be subject to redemption
under this Section 13. If fewer than 75% of the Warrants outstanding at the time
are to be redeemed, the Board of Directors shall give written notice as to the
aggregate number of Warrants to be redeemed. Warrant holders are not required to
exercise Warrants not called for redemption and such Warrants shall remain valid
and exercisable during the term of this Agreement. If (i) an election to redeem
Warrants is made pursuant to this Section 13, and (ii) during the 45 day notice
period HCCIC exercises Warrants with respect to that number of Warrant Shares
which at the time of exercise would cause HET and all Subsidiaries of HET to own
in the aggregate 50.0% of the Common Stock, then none of the Warrants called for
redemption (whether or not exercised by HCCIC) shall be redeemed.
SECTION 14. Notices to Warrant Holders. Upon any adjustment
of the Exercise Price pursuant to Section 11, the Company shall promptly
thereafter (i) cause to be filed with the Company a certificate of a firm of
independent public accountants of recognized standing selected by the Board of
Directors (who may be the regular auditors of the Company) setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate shall be conclusive evidence of
the correctness of the matters set forth therein, and (ii) cause to be given to
each of the registered holders of the Warrant Certificates at his address
appearing on the Warrant register written notice of such adjustments by
firstclass mail, postage prepaid. Where appropriate, such notice may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends
12
<PAGE>
payable in shares of Common Stock or distributions referred to in
subsection (a) of Section 11 hereof); or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action (other than
actions of the character described in subsection (a) of Section 11
hereof) which would require an adjustment of the Exercise Price
pursuant to Section 11;
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clauses (a) or (b) above)
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by firstclass mail, postage
prepaid, a written notice stating (i) the date as of which the holders of record
of shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, or (ii) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock,
or (iii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 14 or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 15. Notices to Company and Warrant Holders. Any
notice or demand authorized by this Agreement to be given or made by the
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed to the office of the
13
<PAGE>
Company expressly designated by the Company at its office for purposes of this
Agreement (until the Warrant holders are otherwise notified in accordance with
this Section 15 by the Company), as follows:
JCC Holding Company
512 South Peters Street
New Orleans, Louisiana 70130
Attn: Corporate Secretary
With a copy to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 303093425
Attn: Michael R. McAlevey
Any notice pursuant to this Agreement to be given by the
Company to the registered holder(s) of any Warrant Certificate shall be
sufficiently given when and if deposited in the mail, firstclass or registered,
postage prepaid, addressed (until the Company is otherwise notified in
accordance with this Section 15 by such holder) to such holder at the address
appearing on the Warrant register of the Company. In addition, any notice
pursuant to this Agreement to be given by the Company to the registered
holder(s) of any Warrant Certificate shall also be given to:
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: Stephen H. Brammell
With a copy to:
Latham & Watkins
633 West 5th Street, Suite 4000
Los Angeles, California 900712007
Attn: James P. Beaubien
SECTION 16. Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Warrant Certificates in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall not in any way adversely affect the interests of the
holders of the Warrant Certificates.
14
<PAGE>
SECTION 17. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 18. Assignment; Transfer. This Warrant Agreement and
the rights and obligations hereunder shall not be assignable or transferable by
HET or its Affiliates to any person other than to a Permitted Transferee.
SECTION 19. Termination. This Agreement shall terminate at
5:00 p.m., New York time on the sixth anniversary of the Casino Opening Date.
Notwithstanding the foregoing, this Agreement will terminate on any earlier date
if all Warrants have been exercised in full.
SECTION 20. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 21. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company and the registered holders
of the Warrant Certificates.
SECTION 22. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page To Follow]
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
JCC HOLDING COMPANY
By: /s/ Frederick W. Burford
-----------------------------------
Name: Frederick W. Burford
Title: President
HARRAH'S CRESCENT CITY
INVESTMENT COMPANY
By: /s/ Stephen H. Brammell
-----------------------------------
Name: Stephen H. Brammell
Title: Authorized Representative
S-1
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS.
No. 4,000,000 Warrants
Warrant Certificate
JCC HOLDING COMPANY
This Warrant Certificate certifies that ________________, or
registered assigns, is the registered holder of Warrants expiring at 5:00 p.m.,
New York time on the sixth anniversary of the Casino Opening Date (as defined in
the Warrant Agreement) (the "Warrants"), to purchase Common Stock (as defined
herein) of JCC Holding Company, a Delaware corporation (the "Company"). As used
herein, "Common Stock" shall mean, after the Transition Date (as defined in the
Warrant Agreement), the unclassified common stock, $.01 par value, of the
Company. Each Warrant entitles the holder upon exercise to receive from the
Company any time after the opening of business on the Transition Date until on
or before 5:00 p.m., New York time on the sixth anniversary of the Casino
Opening Date (the "Exercise Period"), up to one fully paid and nonassessable
share of Common Stock (a "Warrant Share") at the initial exercise price (the
"Exercise Price") of $15.00 per share payable in lawful money of the United
States of America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office of the Company designated for such purpose, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. Notwithstanding the foregoing, Warrants may
be exercised without the exchange of funds pursuant to the net exercise
provisions of Section 6 of the Warrant Agreement. The Exercise Price and number
of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
Warrants may be exercised at any time during the Exercise
Period, and to the extent not exercised during the Exercise Period such Warrants
shall become void.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the following pages hereof and such further
provisions shall for all purposes have the same effect as though fully set forth
at this place.
A-1
<PAGE>
This Warrant Certificate shall not be valid unless signed
by two officers of the Company as required in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be signed by its President and by its Secretary and has caused
its corporate seal to be affixed hereunto or imprinted hereon.
Dated:
JCC HOLDING COMPANY
By:
-------------------------------
Frederick W. Burford
President
By:
-------------------------------
L. Camille Fowler
Secretary
A-2
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring the sixth anniversary of the Casino
Opening Date entitling the holder on exercise to receive shares of Common Stock
and are issued or to be issued pursuant to a Warrant Agreement dated as of
October 30, 1998 (the "Warrant Agreement"), duly executed and delivered by the
Company, which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time during the Exercise
Period. The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in cash or by certified or official bank
check at the office of the Company designated for such purpose. In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price set forth on the face hereof may, subject to
certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
Notwithstanding anything to the contrary in the Warrant
Agreement, Harrah's Entertainment, Inc., a Delaware corporation ("HET"), and all
Subsidiaries (as defined herein) of HET, including Harrah's Crescent City
Investment Company, a Nevada corporation ("HCCIC"), will not be permitted to
exercise Warrants with respect to that number of Warrant Shares which would
cause HET and all Subsidiaries of HET to own in the aggregate more than 50.0% of
the Common Stock until such time as such exercise would not cause HET and all
Subsidiaries of HET to own in the aggregate more than 50.0% of the Common Stock.
"Subsidiary" with respect to HET, means (i) a corporation a majority of whose
capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by HET, by HET and one
or more Subsidiaries of HET or by one or more Subsidiaries of HET or (ii) any
individual, partnership, joint venture, trust, association, joint-
A-3
<PAGE>
stock company, unincorporated organization or government or any agency or
political subdivision thereof in which HET, one or more Subsidiaries of HET, or
HET and one or more Subsidiaries of HET, directly or indirectly, at the date of
determination thereof has at least majority ownership interest.
The Warrant Agreement is intended to allow HCCIC during the
Exercise Period to exercise Warrants to purchase shares of Common Stock
sufficient to entitle HET and all Subsidiaries of HET, including HCCIC, to own
in the aggregate 50.0% of the Company's Common Stock. Accordingly, the Company
and HCCIC (collectively, the "Parties") intend for HCCIC to be protected from
dilution to the fullest extent possible. Therefore, if any event or circumstance
that could lead to the dilution of HCCIC's interest upon exercise of the
Warrants occurs, then, regardless of any consideration paid to the Company in
connection with such event and in addition to or as a supplement to any other
adjustment required by Section 11 of the Warrant Agreement, the number of
Warrant Shares shall be adjusted as necessary by the Board of Directors of the
Company in good faith to give full effect to the Parties' aforementioned intent.
Subject to certain exceptions listed in the Warrant Agreement, for purposes of
calculating the percentage of the Company's Common Stock held by HET and its
Subsidiaries under this antidilution provision, any shares of Common Stock
transferred by HET or its Subsidiaries to any person or entity which is not a
Permitted Transferee (as defined herein) shall be deemed to be held by HET and
its Subsidiaries.
If at any time after the Transition Date the Quoted Price (as
defined in the Warrant Agreement) of the Common Stock has exceeded $20.00 per
share for 45 consecutive trading days, the board of directors of the Company may
elect to redeem up to 75% of the then outstanding Warrants for a redemption
price equal to $0.05 per Warrant upon 45 days' written notice to all Warrant
holders; provided, however, that each Warrant holder shall have the right to
exercise Warrants and receive Warrant Shares (in accordance with Section 6 of
the Warrant Agreement) during such 45 day notice period and any such Warrants
exercised or Warrant Shares received during such 45 day notice period shall not
be subject to redemption under Section 13 of the Warrant Agreement. If fewer
than 75% of the Warrants outstanding at the time are to be redeemed, the board
of directors of the Company shall give written notice as to the aggregate number
of Warrants to be redeemed. Warrant holders are not required to exercise
Warrants not called for redemption and such Warrants shall remain valid and
exercisable during the term of the Warrant Agreement. If (i) an election to
redeem Warrants is made pursuant to Section 13 of the Warrant Agreement, and
(ii) during the 45 day notice period HCCIC exercises Warrants with respect to
that number of Warrant Shares which at the time of exercise would cause HET and
all Subsidiaries of HET to own in the aggregate 50.0% of the Common Stock, then
none of the Warrants called for redemption (whether or not exercised by HCCIC)
shall be redeemed.
The holders of the Warrants are entitled to certain
registration rights with respect to the Common Stock purchasable upon exercise
thereof. Said registration rights are set forth in full in a Registration Rights
Agreement dated as of October 30, 1998, between the
A-4
<PAGE>
Company and HCCIC. A copy of the Registration Rights Agreement may be obtained
by the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the
Company by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Company a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, of any distribution to the holder(s) hereof, and
for all other purposes, and the Company shall not be affected by any notice to
the contrary. Neither the Warrants nor this Warrant Certificate entitles any
holder hereof to any rights of a stockholder of the Company.
This Warrant Certificate, the Warrant Agreement, and the
rights and obligations hereunder and thereunder shall not be assignable or
transferable by HET and its affiliates to any person other than a Permitted
Transferee. A "Permitted Transferee" shall mean HET or its affiliates.
A-5
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive __________ shares of
Common Stock and herewith tenders payment for such shares to the order of JCC
Holding Company in the amount of $_________ in accordance with the terms hereof
unless the holder exercises Warrants pursuant to the net exercise provisions of
Section 6 of the Warrant Agreement. The undersigned requests that a certificate
for such shares be registered in the name of ________________, whose address is
_______________________________ and that such shares be delivered to
________________ whose address is _________________________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Signature:
--------------------------------
Date:
--------------------
Signature Guaranteed:
---------------------
A-6
<PAGE>
Exhibit 4.8
SUBORDINATED LOAN AGREEMENT
THIS SUBORDINATED LOAN AGREEMENT is entered into on this 30th
day of October, 1998, by and among JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company ("JCC"), HARRAH'S OPERATING COMPANY, INC., a Delaware
corporation, and HARRAH'S ENTERTAINMENT, INC., a Delaware corporation.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995 which is currently pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case
No. 95-14545.
B. HJC has submitted, and the United States Bankruptcy Court
for the Eastern District of Louisiana has confirmed, the Plan.
C. As contemplated by the Plan, JCC has succeeded to all the
rights and obligations of HJC.
D. Pursuant to the Plan, JCC shall develop and operate the
Casino in the City at the site of the former Rivergate Convention Center.
E. In order to finance a portion of the costs required to
construct and develop the Casino, JCC desires to borrow from HOCI and HOCI is
willing to lend to JCC, up to Twenty Two Million Five Hundred Thousand Dollars
($22,500,000) of subordinated debt on the terms and conditions set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. Each of the following terms when used herein
shall have the following defined meanings:
Affiliate. "Affiliate" shall mean as to any Person the
affiliates of whom are relevant for purposes of any provisions of this
Agreement, (i) any corporation, partnership, limited liability company,
unincorporated association, joint venture, trust or individual controlled by,
under common control with, or which controls, directly or indirectly, such
Person, and (ii) a trust of which the Person, or a direct or indirect
shareholder of such Person, is a trustee, or which has as its principal
beneficiaries such Person, or any direct or indirect shareholder of such Person,
or members of the immediate family of such direct or indirect shareholder or
other Person. For
<PAGE>
purposes hereof, shares or other ownership interests held by a trust shall be
deemed to be owned pro-rata by the beneficiaries of such trust.
Agreement. "Agreement" shall mean this Subordinated Loan
Agreement.
Available Cash Flow. "Available Cash Flow" shall mean Cash
Flow remaining after payment or reserve, as the case may be, of all outstanding
cash principal and interest (including, without limitation, Contingent Payments
(as defined in the Indentures)) owing in respect of the New Bonds and the New
Contingent Bonds, the Convertible Subordinated Junior Debentures and all amounts
due and payable in respect of the Bank Debt.
Available Funds. "Available Funds" shall mean the amount of
funds available to pay amounts required for completion of the Casino
representing proceeds available to JCC from or under any and all equity
contributions actually made to JCC, the Convertible Junior Subordinated
Debentures, the Bank Debt and this Agreement.
Available Proceeds of Major Capital Events. "Available
Proceeds of Major Capital Events" shall mean Proceeds of Major Capital Events
remaining after payment or reserve, as the case may be, of all outstanding
principal and interest (including, without limitation, Contingent Payments (as
defined in the Indentures)) due and payable in respect of the New Bonds and the
New Contingent Bonds, the Convertible Junior Subordinated Debentures and all
amounts due and payable in respect of the Bank Debt.
Bank Debt. "Bank Debt" shall mean the loans and letters of
credit to be obtained by JCC on and after the effective date of the Plan
pursuant to the Credit Agreement which shall include (a) term loans not to
exceed Two Hundred Eleven Million Five Hundred Thousand Dollars ($211,500,000)
in aggregate principal amount providing for a senior secured term loan in the
amount of Sixty Million Dollars ($60,000,000) (the "A Term Loan"), a secured
term loan in the amount of One Hundred Fifty One Million Five Hundred Thousand
Dollars ($151,500,000) (the "B Term Loan"), and (b) a working capital facility
(including revolving loans, swingline loans and letters of credit) in the amount
of Twenty Five Million Dollars ($25,000,000) (the "Working Capital Facility")
and shall have such other terms and conditions as shall be set forth in the Bank
Debt Documents.
Bank Debt Documents. "Bank Debt Documents" shall mean,
collectively, the Credit Agreement, all guarantees and all other loan, security
and other documents governing the terms and conditions of, or relating to, the
Bank Debt.
Bank Restricted Payments Covenants. "Bank Restricted Payments
Covenants" shall have the meaning set forth in Section 3(a) hereof.
Business Day. "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in New York, New York are authorized or obligated by law or executive order to
close.
2
<PAGE>
Cash Flow. "Cash Flow" means all cash received by JCC from all
sources (except Major Capital Events) remaining after payment of current
expenses, liabilities, debts or obligations of JCC, including, without
limitation, any payments due under the Lease or the Casino Operating Contract.
Casino. "Casino" shall mean the development and construction
of the Casino consisting of a minimum of one hundred thousand (100,000) square
feet of net gaming space, approximately fifteen thousand (15,000) square feet of
multi-function, special event, food service and meeting room space on the first
floor of the Casino, a two hundred fifty (250) seat buffet on the first floor of
the Casino, the Poydras tunnel area, and parking facilities and the Second Floor
Shell Construction.
Casino Operating Contract. "Casino Operating Contract" shall
mean that certain Casino Operating Contract between HJC and the LGCB dated as of
July 15, 1994, as such contract may be modified pursuant to the Plan or from
time to time by the parties thereto.
City. "City" shall mean the City of New Orleans.
Completion Budget. "Completion Budget" shall have the meaning
set forth in the Completion Loan Agreement.
Completion Guarantees. "Completion Guarantees" shall have the
meaning set forth in the Completion Loan Agreement.
Completion Loan. "Completion Loan" shall have the meaning set
forth in the Completion Loan Agreement.
Completion Loan Agreement. "Completion Loan Agreement" shall
mean that certain Amended and Restated Completion Loan Agreement entered into by
and among JCC, HOCI and HET pursuant to the Plan.
Convertible Junior Subordinated Debentures. "Convertible
Junior Subordinated Debentures" shall mean the Convertible Junior Subordinated
Debentures due 2009 of JCC to be issued under the Plan in the aggregate
principal amount at issuance of approximately Twenty Seven Million, Three
Hundred Thousand Dollars ($27,300,000).
Convertible Junior Indenture. "Convertible Junior Indenture"
shall mean that certain Indenture entered into pursuant to the Plan, pursuant to
which JCC has issued the Convertible Junior Subordinated Debentures.
Credit Agreement. "Credit Agreement" shall mean that certain
Credit Agreement to be entered into by and among JCC, JCC Holding Company, a
Delaware corporation, Bankers Trust Company, and certain lenders pursuant to the
Plan, as such agreement may be amended (including any amendment and restatement
thereof), supplemented or modified from time to time, including any agreements
extending the maturity of, refinancing, replacing or otherwise restructuring
(including by way of adding subsidiaries of JCC as additional borrowers
3
<PAGE>
or guarantors thereunder) all or a portion of the indebtedness under such
agreement or any successor or replacement agreement, and whether by the same or
any other agent, lender or group of lenders.
Debt. "Debt" shall mean: (i) all obligations for borrowed
money; (ii) all obligations evidenced by bonds, debentures, notes or similar
instruments; (iii) all obligations to pay the deferred purchase price of
property or services, except trade accounts payable in the ordinary course of
business; (iv) all obligations as lessee that are capitalized in accordance with
generally accepted accounting principles; (v) all obligations to repay any bank
or other Person in respect of amounts paid or available to be drawn under a
letter of credit, banker's acceptance, surety, performance or appeal bond or
similar instrument (each such obligation to be valued at the face amount of such
instrument); and (vi) all obligations secured by a Lien or guaranteed by JCC.
Default. "Default" shall have the meaning set forth in
Section 7(a) hereof.
Default Rate. "Default Rate" shall mean the Interest Rate plus
two percent (2%), but in no event greater than the maximum rate permitted by
applicable law.
GAAP. "GAAP" shall mean United States generally accepted
accounting principles as in effect on the date hereof.
HET. "HET" shall mean Harrah's Entertainment, Inc., a Delaware
corporation, and its successors and assigns.
HET Subordinated Lender Subordination Agreements. "HET
Subordinated Lender Subordination Agreements" shall mean that certain HET
Subordinated Lender Subordination Agreement entered into for the benefit of the
trustee of the Indentures by and among HET, HOCI and Norwest Bank Minnesota,
N.A. and that certain HET Subordinated Lender Subordination Agreement entered
into for the benefit of the administrative agent under the Credit Agreement by
and among HET, HOCI and Bankers Trust Company, collectively.
HOCI. "HOCI" shall mean Harrah's Operating Company, Inc., a
Delaware corporation, and its successors and assigns.
Holder. "Holder" shall have the meaning set forth in
Section 11 hereof.
HJC. "HJC" shall have the meaning set forth in Recital A to
this Agreement.
Indemnified Parties. "Indemnified Parties" shall mean HET and
HOCI, and their officers, directors, corporate representatives, employees,
lawyers and agents thereof.
Indentures. "Indentures" shall mean those certain Indentures
entered into pursuant to the Plan, pursuant to which JCC has issued the New
Bonds and the New Contingent Bonds, collectively, as amended from time to time.
4
<PAGE>
Interest Rate. "Interest Rate" shall mean a rate equal to the
lower of (i) eight percent (8%) per annum, or (ii) the maximum rate permitted by
applicable law.
JCC. "JCC" shall have the meaning set forth in the preamble to
this Agreement.
Lease. "Lease" shall mean that certain lease by and between
Celebration Park Casino, Inc., the RDC, and the City, as intervenor, dated as of
April 27, 1993, as amended by that certain Amended Lease Agreement by and
between JCC, the RDC and the City, as intervenor, dated as of March 15, 1994, as
further amended pursuant to the Plan.
LGCB. "LGCB" shall mean the Louisiana Gaming Control Board or
any successor entity.
Lien. "Lien" shall mean, with respect to any asset of JCC, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset.
Major Capital Event. "Major Capital Event" shall mean any
borrowings or equity or debt financings (except short term borrowing in the
ordinary course of business) by JCC or otherwise relating to the Project
(excluding any Debt incurred pursuant to this Agreement, the Completion Loan
Agreement, the Credit Agreement, the Convertible Junior Indenture, or the
Indentures), any sale of all or a substantial portion of the Project or the
Company's assets (excluding dispositions of personal property and equipment in
the ordinary course of business), any insured casualty loss or any condemnation
or other involuntary conversion with respect to a substantial portion of the
Project (including losses covered by title insurance), or any revocation or
breach by the LGCB under the Casino Operating Contract.
Management Agreement. "Management Agreement" shall mean that
certain Second Amended and Restated Management Agreement entered into by and
among JCC and Manager pursuant to the Plan.
Manager. "Manager" shall mean Harrah's New Orleans Management
Company, a Nevada corporation.
Maturity. "Maturity" has the meaning set forth in Section 3
hereof.
New Bonds. "New Bonds" shall mean the Senior Subordinated
Notes due 2009 with Contingent Interest of JCC to be issued under the Plan in
the aggregate non-contingent principal amount, as of the date hereof, of One
Hundred Eighty Seven Million Five Hundred Thousand Dollars ($187,500,000), as
such instrument may be modified in accordance with the terms of the Indentures.
New Contingent Bonds. "New Contingent Bonds" shall mean the
Senior Subordinated Contingent Notes due 2009 of JCC to be issued under the
Plan.
Non-Qualified Person. "Non-Qualified Person" shall mean any
Person that would, if associated with JCC or JCC's Affiliates or with HET, in
the judgment of HET or any
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licensing authority, impair or cause the denial, suspension or revocation of any
gaming registration, permit, license, right or entitlement or alcoholic beverage
registration, permit, license, right or entitlement held or applied for by JCC,
HET, or any Affiliate of HET or JCC.
Notes. "Notes" shall have the meaning set forth in Section 2
hereof.
Obligations. "Obligations" shall mean all principal and
interest in respect of each Subordinated Loan and all other obligations pursuant
to this Agreement and any interest thereon, all whether incurred or accrued
before or after maturity or acceleration thereof.
Person. "Person" shall mean any individual, partnership,
limited liability company, corporation, unincorporated association, joint
venture, trust or other entity.
Plan. "Plan" shall mean that certain plan of reorganization of
HJC confirmed by the United States Bankruptcy Court for the Eastern District of
Louisiana for that certain case captioned In re Harrah's Jazz Company, Case No.
95-14545, as modified.
Plan Consummation Date. "Plan Consummation Date" shall mean
the effective date of the Plan which is confirmed by a final and nonappealable
order pursuant to Section 1123(b)(3)(A) of the United States Bankruptcy Code.
Prior Debt. "Prior Debt" shall mean the Bank Debt, the New
Bonds and the New Contingent Bonds and the Convertible Junior Subordinated
Debentures and any modifications, renewals or replacements of the Bank Debt, the
New Bonds and the New Contingent Bonds or the Convertible Junior Subordinated
Debentures permitted pursuant to Section 6(a) hereof.
Proceeds of Major Capital Event. "Proceeds of Major Capital
Event" shall mean the net proceeds of any Major Capital Event after deducting
any closing costs or expenses arising in connection with the Major Capital
Event, Debt repaid or required to be repaid in connection with such Major
Capital Event out of such proceeds, including without limitation as required
pursuant to Section 5 of the Indentures or pursuant to the Mortgages (as defined
in the Indentures), and any amounts reinvested in the Project or held in any
escrow or other restricted accounts for investment in the Project, including
without limitation the deduction of any Contingent Payments under and as defined
in the Lease.
Project. "Project" shall mean any business conducted at or
with respect to the Casino and such additional movable and immovable property as
JCC may determine to lease or acquire, that is either located thereat or used in
connection with or relates to the business of JCC and the Casino Operating
Contract.
RDC. "RDC" shall mean the Rivergate Development Corporation, a
Louisiana public benefit corporation.
Refinanceable Debt. "Refinanceable Debt" shall have the
meaning set forth in Section 6(a)(i) hereof.
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Refinancing. "Refinancing" shall have the meaning set forth in
Section 6(a)(i) hereof.
Refinancing Indebtedness. "Refinancing Indebtedness" shall
have the meaning set forth in Section 6(a)(i) hereof.
Second Floor Shell Construction. "Second Floor Shell
Construction" shall mean the shell construction of the second floor non-gaming
space to the stage where it is ready for tenant improvement and build out for
non-gaming entertainment purposes; provided that the build out of the tenant
improvements and the occupancy and opening for business of such second floor
non-gaming development shall not be a part of this construction and may occur
concurrently with and continue after completion of the Casino and completion of
such tenant improvements is not part of the Obligations.
Subordinated Loan. "Subordinated Loan" shall have the meaning
set forth in Section 2 hereof.
Subordinated Loan Documents. "Subordinated Loan Documents"
shall mean this Agreement, the Notes and any other documents executed in
connection with this Agreement.
Subordinated Loan Payment Date. "Subordinated Loan Payment
Date" has the meaning set forth in Section 5(a) hereof.
Subordinated Loan Payment Obligations. "Subordinated Loan
Payment Obligations" shall mean any Subordinated Loan and any interest thereon.
Substitute Holder. "Substitute Holder" shall have the meaning
set forth in Section 11 hereof.
2. Subordinated Loan. On the Plan Consummation Date and from
time to time thereafter, at JCC's request, HOCI or an Affiliate of HOCI shall
make a non-revolving loan or loans to JCC not to exceed in the aggregate Twenty
Two Million Five Hundred Thousand Dollars ($22,500,000) (each such loan a
"Subordinated Loan" and, collectively the "Subordinated Loans"). Proceeds of the
Subordinated Loans shall be used solely for funding the costs set forth on the
Completion Budget; provided that if on the Termination of Construction Date (as
defined in the Credit Agreement), JCC has not borrowed the full Twenty Two
Million Five Hundred Thousand Dollars ($22,500,000), JCC shall borrow the
remaining amount and the proceeds shall be used (i) first to pay any outstanding
principal and interest on the Tranche A-1 Term Loan (as defined in the Credit
Agreement) and (ii) second to pay any outstanding principal and interest on the
Tranche A-2 Term Loan (as defined in the Credit Agreement). All outstanding
amounts of any Subordinated Loans shall be evidenced by a promissory note or
notes in the form of Exhibit A attached hereto and by this reference
incorporated herein (each a "Note" and collectively, the "Notes").
3. Term of Obligations. All Subordinated Loans shall be due
and payable in full on the date (the "Maturity") which is six (6) months
following the maturity of the New
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Bonds; provided, however, early repayment of the Subordinated Loans shall be
allowed to the extent permitted pursuant to the "restricted payment covenants"
set forth in the Bank Debt Documents (the "Bank Restricted Payments Covenants")
and in Section 5.3 of the Indentures.
4. Interest Rate. Except as otherwise provided in Section 8(b)
hereof, the outstanding principal amount of each Subordinated Loan shall bear
interest at the Interest Rate from the date incurred until repayment in full.
5. Repayment of Subordinated Loan Payment Obligations
(a) Application of Available Cash Flow and Available
Proceeds of Major Capital Events. Subject to the satisfaction of the Bank
Restricted Payments Covenants as in effect on the date hereof and the provisions
of the HET Subordinated Lender Subordination Agreements and after the
satisfaction of (i) the Company's obligation to pay any deferred management fees
pursuant to the Management Agreement, and (ii) the Company's obligation to pay
any deferred amortization of principal pursuant to the Credit Agreement,
interest on all outstanding Subordinated Loan Payment Obligations shall be paid
in cash in arrears on a quarterly basis on the first (1st) Business Day
following the last day of each March, June, September, and December (each a
"Subordinated Loan Payment Date") from, and only to the extent of, one hundred
percent (100%) of Available Cash Flow for the month immediately preceding the
applicable Subordinated Loan Payment Date. Subject to the satisfaction of the
Bank Restricted Payments Covenants, upon the occurrence of a Major Capital
Event, all Subordinated Loan Payment Obligations then outstanding shall be
reduced by application of one hundred percent (100%) of the Available Proceeds
of Major Capital Event of such Major Capital Event.
(b) Deferral of Subordinated Loan Interest.
Notwithstanding Section 5(a) above, but subject to the satisfaction of the Bank
Restricted Payments Covenants and the provisions of the HET Subordinated Lender
Subordination Agreements:
(i) Interest on the Subordinated Loans shall
not be payable in cash for the Contingent Payment Period (as defined in the
Indentures) ended on September 30, 2000 if the Consolidated EBITDA of JCC for
such Contingent Payment Period is less than $38,800,000 (or the pro rated amount
thereof if the Casino is open for less than twelve (12) months). If the payment
of interest in cash on the Subordinated Loans for such Contingent Payment Period
is not prohibited by this Section 5(b)(i), such interest shall be due and
payable on November 15, 2000. Any interest on the Subordinated Loans that is not
permitted to be paid in cash for such Contingent Payment Period pursuant to this
Section 5(b)(i) shall be deferred ("First Year Deferred Interest"), shall be
added to the principal amount of the Subordinated Loan Payment Obligations and
bear interest at the Interest Rate. An amount equal to 50% of the First Year
Deferred Interest, if any, shall be due and payable in cash upon the first
Interest Payment Date (as defined in the Indenture for the New Bonds) which
occurs after such Contingent Payment Period and upon which the Company pays
Fixed Interest (as defined in the Indenture for the New Bonds) in cash to the
holders of New Bonds. The balance of such First Year Deferred Interest, if any,
shall be due and payable in cash (i) if the aggregate Consolidated
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EBITDA of JCC for the two consecutive Contingent Payment Periods ending on
September 30, 2001 exceeds $102,800,000, on November 15, 2001, or (ii) if the
aggregate Consolidated EBITDA of JCC for the three consecutive Contingent
Payment Periods ending on September 30, 2002 exceeds $187,100,000, on November
15, 2002, or (iii) otherwise, on November 16, 2009.
(ii) Interest on the Subordinated Loans
shall not be payable in cash for the Contingent Payment Period ended on
September 30, 2001 if the Consolidated EBITDA of JCC for such Contingent Payment
Period is less than $64,000,000. If the payment of interest in cash on the
Subordinated Loans for such Contingent Payment Period is not prohibited by this
Section 5(b)(ii), such interest shall be due and payable in cash on November 15,
2001. Any interest on the Subordinated Loans that is not permitted to be paid in
cash for such Contingent Payment Period pursuant to this Section 5(b)(ii) shall
be deferred ("Second Year Deferred Interest"), shall be added to the principal
amount of the Subordinated Loan Payment Obligations and bear interest at the
Interest Rate. An amount equal to 50% of the Second Year Deferred Interest, if
any, shall be due and payable in cash upon the first Interest Payment Date which
occurs after such Contingent Payment Period and upon which the Company pays
Fixed Interest in cash to the holders of New Bonds. The balance of such Second
Year Deferred Interest, if any, shall be due and payable in cash (i) if the
aggregate Consolidated EBITDA of JCC for the two consecutive Contingent Payment
Periods ending on September 30, 2002 exceeds $148,300,000, on November 15, 2002,
or (ii) if the aggregate Consolidated EBITDA of JCC for the three consecutive
Contingent Payment Periods ending on September 30, 2003 exceeds $239,000,000, on
November 15, 2003, or (iii) otherwise, on November 16, 2009.
(iii) From and after September 30, 2001, if
Fixed Interest on the New Bonds is paid in Secondary Securities (as defined in
the Indenture for the New Bonds), interest on the Subordinated Loans shall not
be paid in cash but shall be added to the principal amount of the Subordinated
Loan Payment Obligations and bear interest at the Interest Rate. If Fixed
Interest on the New Bonds is paid in cash, interest on the Subordinated Loans
shall be paid in cash from the Available Cash Flow.
(c) Subordination. All payments with respect to the
Subordinated Loan (whether to be made to HET, HOCI or any of their successors
and assigns) shall be subject to the terms of (and subordinated in accordance
with) the HET Subordinated Lender Subordination Agreements.
(d) Right to Receive Audit Reports. So long as any
Subordinated Loan is outstanding, at the request of HET and HOCI:
(i) JCC shall prepare and deliver to HET and
HOCI, on or before the twentieth (20th) day of each month, a statement of all
income and expenses in connection with the operation of the Casino on a line
item basis for the prior month, which statement shall include a calculation of
Available Cash Flow for the prior month and otherwise be in form satisfactory to
HET and HOCI.
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(ii) JCC shall deliver to HET and HOCI, on
or before March 1 of each year a copy of its audited financial statement for the
preceding calendar year. In the event such audited financial statement shows
that Available Cash Flow for the preceding calendar year was different from the
amount reported by JCC on a monthly basis, the amount of such difference shall
be promptly applied to, or credited against, the Subordinated Loan Payment
Obligations, as applicable.
(iii) JCC shall maintain accurate and
complete books and records evidencing calculations of Available Cash Flow. HET
and HOCI shall have the right at any time upon reasonable notice to conduct an
audit of the books and records of JCC upon which JCC's calculation of Available
Cash Flow are based.
6. Covenants and Restricted Acts
(a) Covenants
(i) JCC may incur any Debt or Lien issued in
exchange for, or the proceeds from the issuance and sale of which are used
substantially concurrently to repay, redeem, defease, refund, refinance,
discharge or otherwise retire for value, in whole or in part (a "Refinancing,"
or as appropriate, to "Refinance") the Bank Debt, the New Bonds, the New
Contingent Bonds or the Convertible Junior Subordinated Debentures
("Refinanceable Debt") in a principal amount not to exceed (after deduction of
reasonable and customary fees and expenses incurred in connection with the
Refinancing) the lesser of (i) the principal amount of the Refinanceable Debt so
Refinanced, and (ii) if such Refinanceable Debt being Refinanced was issued with
an original issue discount, the accreted value thereof (as determined in
accordance with GAAP) at the time of such Refinancing plus, in either case, the
lesser of the amount of premium actually paid at such time to Refinance the
Refinanceable Debt and the stated amount of any premium required to be paid in
connection with such a Refinancing pursuant to the terms of the Refinanceable
Debt being Refinanced ("Refinancing Indebtedness").
(ii) Except with respect to the New Bonds,
the New Contingent Bonds, the Convertible Junior Subordinated Debentures, the
Bank Debt, Debt incurred pursuant to the Completion Loan Agreement, and any
Refinancing Indebtedness pursuant to Section 6(a)(i) hereof, any Debt or Lien
incurred, modified, renewed or replaced by JCC shall be permitted only to the
extent permitted by the Indentures as in effect on the Plan Consummation Date.
(iii) JCC shall use all Available Funds for
the construction and development of the Casino in accordance with the Completion
Budget.
(b) Restricted Acts. Except as permitted by the
Indentures, JCC shall not:
(i) declare or make or become irrevocably
committed to make any redemption, acquisition or other manner of return of the
capital invested in JCC by a shareholder;
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(ii) consolidate or merge with or into any
other entity;
(iii) dissolve JCC; or
(iv) sell, lease or otherwise transfer or
dispose of, directly or indirectly, all or any substantial part of the property
of JCC.
(c) Termination of Covenants. All covenants and
restrictions set forth in this Section 6 shall terminate only upon the
satisfaction in full of all of the Obligations.
7. Default
(a) Events of Default. It shall be a default (a
"Default") under this Agreement, if any one or more of the following events
occur:
(i) failure of JCC to make payment of any
principal or interest on any Subordinated Loan or any costs and expenses
pursuant to Section 16(m) hereof within ten (10) Business Days following notice
to JCC that such payments are due and payable in accordance with the terms of
this Agreement and the HET Subordinated Lender Subordination Agreements;
(ii) a breach by JCC of any other material
obligation pursuant to any of the Subordinated Loan Documents following notice
of such breach to JCC and the failure of JCC to cure such breach within a period
of thirty (30) days following such notice;
(iii) acceleration of any of the Prior Debt
with an aggregate principal amount in excess of $50,000,000, other than any such
acceleration resulting from the failure of HET to perform the Completion
Guarantees;
(iv) the making of an assignment for the
benefit of creditors by JCC; the voluntary appointment (at the request of any
such party or with the consent of any such party) of a receiver, custodian,
liquidator or trustee in bankruptcy of the property of JCC; the filing by JCC of
a petition in bankruptcy or adjudication of it as a bankrupt or insolvent; or
the filing by JCC of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future federal, state or other law or
regulation relating to bankruptcy, insolvency or other relief for debtors;
(v) the filing against JCC of a petition
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal, state or
other law or regulation relating to bankruptcy, insolvency or other similar
relief for debtors, or the involuntary appointment of a receiver, custodian,
liquidator or trustee in bankruptcy of the property of JCC, and such petition or
appointment is not vacated or discharged within sixty (60) days after the filing
or making thereof;
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(vi) the liquidation, sale or dissolution of
JCC; or
(vii) the termination of the Management
Agreement or removal of the Manager as the manager of the Casino (other than as
a result of a voluntary termination by the Manager or a default by the Manager
thereunder or the termination of the Management Agreement by JCC at such time
that the directors of the JCC Holding Company appointed by HET, or any
subsidiary of HET, shall be a majority of the Board of Directors of JCC Holding
Company with power to control the day to day operations of JCC in accordance
with the Certificate of Incorporation and Bylaws of JCC Holding Company);
provided that notwithstanding the occurrence of a Default, HET and HOCI (and
their successors and assigns) shall forbear from exercising (and shall not be
permitted to exercise) any remedies hereunder if any Prior Debt is then
outstanding.
(b) Acts or Omissions of HET and Manager. No act or
omission of HET as a shareholder of JCC or of the Manager shall in any way
delay, postpone, restrain or otherwise interfere with the exercise by HET or
HOCI of any of their remedies hereunder; provided, however, that nothing
contained herein shall limit the liability of the Manager under the Management
Agreement.
8. Remedies
(a) Upon the occurrence and during the continuance of
a Default, HET and HOCI shall have the right immediately to declare due and
owing any or all of the Obligations with notice to JCC, but without demand to
JCC; provided that, so long as any Prior Debt is outstanding, HET and HOCI may
not declare the Obligations immediately due and owing until such outstanding
Prior Debt has also been declared immediately due and owing. Except as otherwise
limited by the terms of this Agreement or the HET Subordinated Lender
Subordination Agreements, HET and HOCI shall have all other rights and remedies
available at law or equity, under this Agreement or under any other agreements
entered into by HET and HOCI or any of their Affiliates, and each such agreement
and rights and remedies may be enforced separately and independently.
(b) Interest on any Obligations not paid when due
hereunder shall accrue at the Default Rate, provided that no interest or other
payments pursuant to this Agreement shall be due or payable (and the Default
Rate shall not apply) so long as JCC is prohibited from making payments by the
terms of this Agreement or the HET Subordinated Lender Subordination Agreements.
9. Obligations Absolute. All Obligations, unless otherwise
specifically provided herein, are unconditional, irrevocable and continuing
until paid and performed in full, and shall be paid and performed in strict
accordance with the terms of this Agreement and the HET Subordinated Lender
Subordination Agreements under all circumstances, including without limitation,
the following:
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(a) the existence of any claim, set-off, defense or
other right that JCC or any party hereto may have at any time against HET or
HOCI, or any Affiliate of HET or HOCI, or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; and
(b) any forgery, fraud, misrepresentation or
insufficiency or breach of representation or warranty, in any respect, of any
Person, other than forgery or fraud of HET or HOCI in connection with this
Agreement.
10. Lender Redemption. If the holder of a Subordinated Loan
(the "Holder") is required to qualify or be found suitable under any applicable
gaming law, regulation, rule or order and does not so qualify or otherwise does
not meet the suitability standards pursuant to any applicable gaming law,
regulation, rule or order, the Holder shall and hereby agrees to sell the
Subordinated Loan to a suitable holder or holders (the "Substitute Holder") that
assume(s) and accept(s) the rights and obligations of the Holder hereunder and
under the HET Subordinated Lender Subordination Agreements. If the Holder fails
to sell the Subordinated Loan to a Substitute Holder within thirty (30) days of
being determined unsuitable or unqualified, or such lesser period of time as
specified by any applicable gaming law, regulation, rule or order, JCC may
designate a Substitute Holder within an additional thirty (30) day period, or
such lesser period of time as specified by any applicable gaming law,
regulation, rule or order, or may at its election upon written notice to the
Holder, subject to all restrictions of any applicable gaming law, regulation,
rule or order, immediately redeem the Holder's Subordinated Loan by payment of
all principal, interest and other amounts due with respect to such Subordinated
Loan. To the extent and for so long as required by any applicable gaming law,
regulation, rule or order, the Holder agrees that upon the Holder being
determined unsuitable or unqualified, the redemption of the Holder's
Subordinated Loan and all payments to and rights of such Holder shall be subject
to all restrictions of any applicable gaming law, regulation, rule or order.
11. Rights of HET and HOCI. Subject to the terms and
conditions of this Agreement and the HET Subordinated Lender Subordination
Agreements, HET and HOCI or either of them may, at any time and from time to
time, without consent of or notice to JCC, and without incurring responsibility
to JCC, and without impairing or releasing the obligations of JCC, exercise or
refrain from exercising any rights against JCC or any other collateral or
guarantee which may secure the Obligations or otherwise act or refrain from
acting (or consent to any such action or inaction).
12. Waivers; Modifications
(a) Waivers Generally. No failure or delay on the
part of HET or HOCI to insist on strict performance in exercising any privilege,
right or remedy shall operate as a waiver thereof or a waiver of any term,
provision or condition hereof, nor shall any single or partial exercise of any
privilege, right or remedy preclude any other or further exercise thereof or the
exercise of any other privilege, right or remedy.
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(b) No Continuing Waivers. A waiver in one or more
instances of any of the terms, covenants, conditions or provisions hereof shall
apply to the particular instance or instances and at the particular time or
times only, and no such waiver shall be deemed a continuing waiver, but all of
the terms, covenants, conditions and other provisions of this Agreement shall
survive and continue to remain in full force and effect; and no waiver shall be
effective unless in writing, dated and signed by HET and HOCI.
(c) Modifications. No change, amendment,
modification, cancellation or discharge hereof, or any part hereof, shall be
valid unless in writing, dated and signed by the party against whom such change,
amendment, modification, cancellation or discharge is sought to be charged.
13. No Right of Offset. No offset or claim that JCC or any
shareholder of JCC now or may in the future have against HET or HOCI, any of
their Affiliates, or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction,
shall relieve JCC from paying any amounts owing hereunder.
14. Indemnification. JCC hereby indemnifies and agrees to
defend the Indemnified Parties and to hold each of them harmless from any cost,
expense, liability, loss, or damage, including, without limitation, reasonable
attorneys' fees, incurred by any of them as a result of their exercise of any
rights or remedies under this Agreement; provided that the Indemnified Parties
shall not be indemnified for their bad faith or willful misconduct.
15. Gaming Regulations. This Agreement, and any remedies
contemplated hereby, are and shall remain subject to the Louisiana Economic
Development and Gaming Corporation Act, La.R.S. 27:1 et seq., La.R.S. 27:201 et
seq. and the rules and regulations thereunder (as may be amended from time to
time, collectively, the "Louisiana Gaming Regulations"), and the exercise of
remedies hereunder will be subject to the Louisiana Gaming Regulations.
16. Miscellaneous
(a) Entire Agreement. This Agreement represents the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof, and all prior agreements, understandings, representations
and warranties in regard to the subject matter hereof, are and have been merged
herein and are superseded hereby.
(b) Governing Law. This Agreement and the rights of
the parties hereunder shall be governed by and interpreted in accordance with
the internal laws of the State of New York without application of conflict of
laws principles.
(c) Notices. The addresses of JCC, HET and HOCI shall
for all purposes be as set forth below unless otherwise changed by the
applicable party hereto by notice to the others as provided herein.
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JCC: Jazz Casino Corporation
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Fax: (504) 533-6100
Attn: President
HET and HOCI: Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Fax: (901) 537-3037
Attn: General Counsel
with a copy to the Corporate Secretary at the same address
All notices or other communications required or permitted to
be given pursuant to the provisions of this Agreement shall be in writing and
shall be considered as properly given if mailed by certified United States mail,
postage prepaid, with return receipt requested, by overnight courier service, or
by facsimile transmission with reception confirmed. Notices hereunder in any
manner shall be effective only if and when received by the addressee. Certified
mail receipt or express courier receipt at the above addresses shall establish
receipt for purposes of notices under this Agreement. Any of JCC , HET or HOCI
may from time to time, by notice in writing served upon the others as aforesaid,
designate a different mailing address to which, or a different person to whose
attention, all such notices or demands are thereafter to be addressed.
(d) Successors and Assigns. JCC shall not assign its
rights or obligations under this Agreement without the prior written consent of
HET and HOCI; and none of HET, HOCI or any of their successors and assigns shall
assign any of its rights or obligations under this Agreement or under any Note
unless the respective assignee agrees in writing to be bound by the terms of the
HET Subordinated Lender Subordination Agreements. Subject to the foregoing, this
Agreement (which shall at all times be subject to the terms of the HET
Subordinated Lender Subordination Agreements) shall be binding upon and inure to
the benefit of the parties hereto, their successors, assigns, heirs, legal
representatives, executors and administrators.
(e) Grammatical Changes. Whenever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, the feminine or the neuter gender shall include the masculine,
feminine and neuter gender as the circumstances require.
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(f) Captions. Captions contained in this Agreement
are inserted only as a matter of convenience and in no way define, limit or
extend the scope or intent of this Agreement or any provision hereof.
(g) Severability. If any provision of this Agreement,
or the application of such provision to any Person or circumstance, shall be
held invalid, the remainder of this Agreement, or the application of such
provision to Persons or circumstances other than those to which it is held
invalid, shall not be affected thereby; provided that the parties shall attempt
to reformulate such invalid provision to give effect to such portions thereof as
may be valid without defeating the intent of such provision and the economic
burdens and benefits of this Agreement are not impaired.
(h) Counterparts. This Agreement, or any amendment
hereto, may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same instrument,
notwithstanding that all of the parties hereto are not signatories to the
original or the same counterpart. In addition, this Agreement, or any amendment
hereto, may contain more than one counterpart of the signature pages, and this
Agreement, or any amendment hereto, may be executed by the affixing of the
signatures of each of the parties hereto to one of such counterpart signature
pages; all of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.
(i) No Third Party Rights. This Agreement is for the
sole and exclusive benefit of the parties hereto designated herein and no other
Person shall under any circumstances be deemed to be a beneficiary of any of the
rights, remedies, terms and provisions of this Agreement.
(j) Voluntary Agreement. Each party hereto has
entered into this Agreement freely and voluntarily, without coercion, duress,
distress, or undue influence by any other Persons or their respective
shareholders, directors, officers, partners, agents or employees.
(k) Advice From Counsel. Each party hereto
understands that this Agreement may affect legal rights. Each party hereto
represents to the other that it has received legal advice from counsel of its
choice in connection with the negotiation and execution of this Agreement and is
satisfied with its legal counsel and the advice received from it.
(l) Judicial Interpretation. Should any provision of
this Agreement require judicial interpretation or construction, there shall be
no presumption that the terms hereof shall be more strictly construed or
interpreted against any party hereto by reason of the rule of construction that
a document is to be construed more strictly against the party who prepared the
same.
(m) Attorneys' Fees. If any party hereto brings any
judicial action or proceeding to enforce its rights under this Agreement, the
prevailing party shall be entitled, in addition to any other remedy, to recover
from the others, regardless of whether such action or
16
<PAGE>
proceeding is prosecuted to judgment, all costs and expenses, including without
limitation reasonable attorneys' fees, incurred therein by the prevailing party.
(n) Waiver. Each of the parties hereto acknowledges
and agrees that HET and HOCI may take any separate action or actions to the
extent permitted under this Agreement as it shall determine in its sole
discretion to be in its own best interest.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement effective as of the day and year first above written.
JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company
By:/s/ Fred W Burford
---------------------------------------
Name: Fred W Burford
-------------------------------------
Title: President
------------------------------------
HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation
By:/s/ George W Loveland, II
---------------------------------------
Name: George W Loveland, II
-------------------------------------
Title: V. P.
------------------------------------
HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation
By:/s/ George W Loveland, II
---------------------------------------
Name: George W Loveland, II
-------------------------------------
Title: V. P.
------------------------------------
SIGNATURE PAGE TO
SUBORDINATED LOAN
AGREEMENT
<PAGE>
EXHIBIT A
FORM OF SUBORDINATED PROMISSORY NOTE
SUBORDINATED PROMISSORY NOTE
$22,500,000 New York, New York
___________, 1998
FOR VALUE RECEIVED, the undersigned, JAZZ CASINO COMPANY,
L.L.C., a Louisiana limited liability company ("Maker"), promises to pay to the
order of HARRAH'S OPERATING COMPANY, INC., a Delaware corporation or an
Affiliate designated by Harrah's Operating Company, Inc. ("Payee"), at 1023
Cherry Road, Memphis, Tennessee 38117, or at such other place as the holder
hereof may from time to time designate, the principal sum of Twenty Two Million
Five Hundred Thousand Dollars ($22,500,000) advanced by Payee or Harrah's
Entertainment, Inc., a Delaware corporation ("HET"), or an affiliate of HET or
both (the "Lender") pursuant to that certain Subordinated Loan Agreement (the
"Loan Agreement") effective as of even date herewith, among Maker, Payee and
HET, with interest on the unpaid principal balance from time to time
outstanding, computed on the basis of a three hundred sixty (360) day year but
for the actual number of days outstanding, at a rate equal to eight percent (8%)
per annum; but in no event greater than the maximum rate permitted by applicable
law. Payment of principal and interest shall be made in the lawful money of the
United States which shall be legal tender for public and private debts at the
time of payment.
Each principal amount advanced by Lender shall be evidenced by
a note in this form (this "Note") and shall be due and payable in full on the
date of Maturity (as defined in the Loan Agreement).
This Note is (and all payments pursuant hereto are) subject to
the terms of (and subordinated in accordance with) the HET Subordinated Lender
Subordination Agreements (as defined in the Loan Agreement).
Subject to the terms of the Loan Agreement and the HET
Subordinated Lender Subordination Agreements, at the option of the holder
hereof, this Note may be declared to be (in which case this Note shall become)
immediately due and payable, and all obligations of the holder hereof to make
any future advances shall terminate upon the occurrence and during the
continuance of any Default (as defined in the Loan Agreement).
If this Note is not paid when due, whether at maturity or by
acceleration, at such time as such payment is not prohibited by the terms of the
HET Subordinated Lender Subordination Agreements, the undersigned promises to
pay all costs of collection, including without limitation, reasonable attorneys'
fees, and all expenses in connection with the protection or realization of any
collateral securing this Note incurred by the holder on account of such
collection, whether or not suit is filed hereon; and such costs and expenses
shall include without
A-1
<PAGE>
limitation all costs, attorneys' fees and expenses incurred by the holder hereof
in connection with any insolvency, bankruptcy, reorganization, arrangement or
other similar proceedings involving Maker, which in any way affect the exercise
by the holder hereof of its rights and remedies under this Note. The amount of
such costs and expenses, together with interest at the Default Rate (as
hereinafter defined) shall be repaid to the holder hereof upon written demand
therefor. Should interest not be paid when due, it shall thereafter bear like
interest as the principal. Additionally, in the event of any default under this
Note and for so long as such default shall remain uncured, the interest rate at
which this Note shall bear interest shall immediately, without notice, increase
to two percent (2%) per annum above the otherwise applicable interest rate (the
"Default Rate"), but in no event shall the Default Rate be greater than the
Maximum Rate (as hereinafter defined); provided that no interest of other
payments under this Note shall be due or payable (and the Default Rate shall not
apply) so long as Maker is prohibited from making payments hereon by the terms
of the Loan Agreement or the HET Subordinated Lender Subordination Agreements.
Anything in this Note or any of the documents executed in
connection herewith to the contrary notwithstanding, if at any time the rate of
interest on the Note together with all fees and charges, if any (collectively,
the "Charges"), contracted for, charged, received, taken or reserved by the
holder hereof which may be treated as interest under applicable law, computed
over the full term of the Note, exceeds the maximum legal limit (if any such
limit is applicable) under United States federal law or state law (to the extent
not preempted by federal law, if any), now or hereafter governing the interest
payable on the Note (the "Maximum Rate"), then the rate of interest on the Note,
together with all Charges, shall be limited to the Maximum Rate. If from any
circumstances, the holder hereof shall ever receive as interest an amount which
would exceed the Maximum Rate, such amount which would be excessive interest
shall be applied to the reduction of the unpaid principal balance hereunder
(whether or not due and payable) and not to the payment of interest.
Presentment, demand, protest, notices of protest, dishonor and
non-payment of this Note and all notices of every kind are hereby waived. To the
extent permitted by applicable law, the defense of the statute of limitations is
hereby waived by the Maker.
No single or partial exercise of any power hereunder shall
preclude other or further exercise thereof or the exercise of any other power.
The holder hereof shall at all times have the right to proceed against any
portion of any security held therefor in such order and in such manner, as the
holder may deem fit, without waiving any rights with respect to any other
security. No delay or omission on the part of the holder hereof in exercising
any right hereunder shall operate as a waiver of such right or of any other
right under this Note. No waiver of any breach of any of the covenants or
conditions of this Note shall be construed to be a waiver of or acquiescence in
or a consent to any previous or subsequent breach of the same or any other
condition or covenant.
No right, power or remedy conferred upon or reserved to the
holder hereof by this Note is intended to be exclusive of any other right, power
or remedy, but each and every such right, power and remedy shall be cumulative
and concurrent and shall be in addition to any other right, power and remedy
given hereunder or now or hereafter existing at law or in equity or by
A-2
<PAGE>
statute. Every power or remedy given by this Note to the holder hereof or to
which such holder may be entitled may be exercised from time to time and as
often as may be deemed expedient by such holder, and such holder may pursue
inconsistent remedies.
Subject to the terms of the Loan Agreement and the HET
Subordinated Lender Subordination Agreements, the undersigned may from time to
time prepay in whole or in part without penalty or premium the principal hereof.
Any prepayment of principal shall be accompanied by payment of accrued interest
on such principal to the date of such prepayment.
This Note shall be governed by and construed in accordance
with the laws of the State of New York, except to the extent preempted by United
States federal law.
The address of the Maker and the Payee shall for all purposes
be as set forth below unless otherwise changed by the applicable party hereto by
notice to the other as provided herein.
Maker: Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: President
Payee: Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
with a copy to the Corporate Secretary at the same address
All notices or other communications required or permitted to
be given pursuant to the provisions of this Note shall be in writing and shall
be considered as properly given if mailed by certified United States mail,
postage prepaid, with return receipt requested, by overnight courier service, or
by facsimile transmission with reception confirmed. Notices hereunder in any
manner shall be effective only if and when received by the addressee. Certified
mail receipt or express courier receipt at the above addresses shall establish
receipt for purposes of notices under this Note. Either the Maker or the holder
hereof may from time to time, by notice in writing served upon the other as
aforesaid, designate a different mailing address to which, or a different person
to whose attention, all such notices or demands are thereafter to be addressed.
Subject to the terms of the Loan Agreement and the HET
Subordinated Lender Subordination Agreements, time is hereby declared to be of
the essence of this Note and of every part hereof. When the context and
construction so require, all words used in the singular herein shall be deemed
to have been used in the plural and the masculine shall include the feminine and
the neuter and vice versa.
A-3
<PAGE>
This Note may not be assigned by Maker without the prior
written consent of the holder hereof and any assignee shall (as a condition to
any such assignment) agree in writing to be bound by the terms of the HET
Subordinated Lender Subordination Agreements. Subject to the foregoing
restriction, this Note shall inure to the benefit of the holder hereof, its
successors, assigns and representatives and shall bind Maker, its successors,
assigns and representatives. This Note may not be modified, amended or
terminated except by a written agreement signed by the Maker and holder hereof.
If any provision of this Note or the application thereof to
any person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Note and the application of such provision to other persons or
circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
No offset or claim that Maker now or may in the future have
against the holder of this Note or any of its Affiliates shall relieve Maker
from paying any amounts owing hereunder.
A-4
<PAGE>
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT (as amended, modified or supplemented
from time to time, this "Agreement"), dated as of October 29, 1998, among (u)
Harrah's Entertainment, Inc., a Delaware corporation ("HET"), Harrah's Operating
Company, Inc., a Delaware corporation ("HOC"), and any other successor or
substitute entity which becomes a party hereto as a Minimum Payment Guarantor
after the date hereof (with HET, HOC and each other such Minimum Payment
Guarantor being herein each called a "Minimum Payment Guarantor" and,
collectively, the "Minimum Payment Guarantors"), (v) Bankers Trust Company, in
its capacity as Administrative Agent (together with any successor Administrative
Agent, the "Administrative Agent"), for the Banks (as hereinafter defined) and
any other lenders under the Credit Agreement hereinafter referred to (such
Banks, the Administrative Agent and other lenders, if any, are hereinafter
called the "Bank Creditors"), (w) Norwest Bank Minnesota, National Association,
as trustee (together with any successor trustee, in such capacity, the "Senior
Subordinated Note Trustee"), for the holders from time to time of the Senior
Subordinated Notes as hereinafter defined (such holders of the Senior
Subordinated Notes are hereinafter called the "Senior Subordinated Note
Holders", and together with the Senior Subordinated Note Trustee, the "Senior
Subordinated Note Creditors"), (x) Norwest Bank Minnesota, National Association,
as trustee (together with any successor trustee, in such capacity, the "Senior
Subordinated Contingent Note Trustee"), for the holders from time to time of the
Senior Subordinated Contingent Notes as hereinafter defined (such holders of the
Senior Subordinated Contingent Notes are hereinafter called the "Senior
Subordinated Contingent Note Holders," and together with the Senior Subordinated
Contingent Note Trustee, the "Senior Subordinated Contingent Note Creditors" and
together with the Senior Subordinated Note Creditors, the "New Bond Creditors"),
(y) if one or more Banks (or any Affiliate thereof) enter into one or more
interest rate protection agreements (including, without limitation, interest
rate hedges, swaps, caps, floors, collars and similar agreements, collectively,
the "Interest Rate Protection Agreements") with, or guaranteed by, the Borrower
(as hereinafter defined), any such Bank or Banks or any Affiliate of any such
Bank or Banks (even if any such Bank subsequently ceases to be a Bank under the
Credit Agreement for any reason) so long as any such Bank or Affiliate thereof
participates in the extension of such Interest Rate Protection Agreements and
their subsequent assigns, if any (collectively, the "Other Creditors" and,
together with the Minimum Payment Guarantors, the Bank Creditors and the New
Bond Creditors, are hereinafter called the "Secured Creditors") and (z) The Bank
of New York, as Collateral Agent (as hereinafter defined). Capitalized terms
used herein and defined in Section 12 hereof shall have the meaning so provided
therein.
W I T N E S S E T H :
WHEREAS, HET and HOC have jointly and severally provided the
initial Minimum Payment Guaranty, and HET and HOC (and/or one or more other
Minimum Payment Guarantors) may hereafter provide one or more substitute or
replacement Minimum Payment Guaranties and HET, HOC and the Borrower (as
hereinafter defined) have entered into that certain HET/JCC Agreement dated
October 30, 1998 (as amended, supplemented or modified, the "HET/JCC
Agreement");
<PAGE>
WHEREAS, JCC Holding Company ("JCC Holding"), Jazz Casino
Company, L.L.C. (the "Borrower"), the lenders (the "Banks") from time to time
party thereto, and the Administrative Agent have entered into a Credit
Agreement, dated as of October 29, 1998, providing for the making of loans and
the issuance of, and participation in, letters of credit as contemplated therein
(as used herein, the term "Credit Agreement" means the Credit Agreement
described above in this paragraph, as the same may be amended, modified,
extended, renewed, replaced, restated, supplemented or refinanced from time to
time, and including any agreement extending the maturity of, or refinancing or
restructuring (including, but not limited to, the inclusion of additional
borrowers or guarantors thereunder or any increase in the amount borrowed) all
or any portion of, the indebtedness under such agreement or any successor
agreements, whether or not with the same agent, trustee, representative, lenders
or holders; provided that, with respect to any agreement providing for the
refinancing or replacement of indebtedness under the Credit Agreement, such
agreement shall only be treated as, or as part of, the Credit Agreement
hereunder if (i) either (A) all obligations under the Credit Agreement being
refinanced or replaced (if then outstanding) shall be paid in full at the time
of such refinancing or replacement, and all commitments and letters of credit
issued pursuant to the refinanced or replaced Credit Agreement shall have
terminated in accordance with their terms or (B) the Required Banks shall have
consented in writing to the refinancing or replacement indebtedness being
treated as indebtedness pursuant to the Credit Agreement, (ii) the refinancing
or replacement indebtedness shall be permitted to be incurred under the Credit
Agreement being refinanced or replaced (if such Credit Agreement is to remain
outstanding) and the other Credit Documents then in effect, under the Senior
Subordinated Note Documents referred to below (if the Senior Subordinated Notes
remain outstanding) and under the Senior Subordinated Contingent Note Documents
referred to below (if the Senior Subordinated Contingent Notes remain
outstanding) and (iii) a notice to the effect that the refinancing or
replacement indebtedness shall be treated as issued under the Credit Agreement
shall be delivered by the Borrower to the Collateral Agent);
WHEREAS, the Borrower, as issuer, JCC Holding, as guarantor,
and the Senior Subordinated Note Trustee have executed an Indenture, dated as of
October 30, 1998 (as amended, modified or supplemented from time to time, the
"Senior Subordinated Note Indenture," and together with the Senior Subordinated
Notes and all other documents and agreements relating thereto are herein called
the "Senior Subordinated Note Documents"), pursuant to which the Borrower will
issue $187,500,000 in aggregate principal amount of its Senior Subordinated
Notes with Contingent Payments (the "Senior Subordinated Notes");
WHEREAS, the Borrower, as issuer, JCC Holding, as guarantor,
and the Senior Subordinated Contingent Note Trustee have executed an Indenture,
dated as of October 30, 1998 (as amended, modified or supplemented from time to
time, the "Senior Subordinated Contingent Note Indenture" and together with the
Senior Subordinated Contingent Notes and all other documents and agreements
relating thereto are herein called the "Senior Subordinated Contingent Note
Documents"), pursuant to which the Borrower will issue its Senior Subordinated
Contingent Notes (the "Senior Subordinated Contingent Notes");
WHEREAS, the Borrower may at any time and from time to time
enter into, or guarantee obligations of its Subsidiaries under, one or more
Interest Rate Protection Agreements with one or more Other Creditors;
2
<PAGE>
WHEREAS, it is a condition precedent to the above-described
extensions of credit to the Borrower that (i) each of the Credit Parties shall
have executed and delivered each of the Shared Security Documents (as
hereinafter defined) to which it is a party and (ii) HET and HOC, as initial
Minimum Payment Guarantors, the Administrative Agent, on behalf of the Bank
Creditors, the Senior Subordinated Note Trustee, on behalf of the Senior Note
Holders, the Senior Subordinated Contingent Note Trustee, on behalf of the
Senior Contingent Note Holders, and the Collateral Agent shall have executed and
delivered this Agreement; and
WHEREAS, the Minimum Payment Guarantors, the Administrative
Agent, the Senior Subordinated Note Trustee, the Senior Subordinated Contingent
Note Trustee and the Collateral Agent desire to enter into this Agreement to
satisfy the conditions described in the preceding paragraph.
NOW, THEREFORE, it is agreed:
1. Appointment. The Secured Creditors, by their acceptance of
the benefits of the Pledge Agreement, the Security Agreement, each Mortgage, and
any other security agreements or security documents which may from time to time
be executed and delivered by JCC Holding or any of its Subsidiaries to secure
the obligations of the Credit Parties to the Secured Creditors (collectively,
but excluding any security agreement which is for the sole purpose of creating
the security interests described in Section 11(j) hereof, the "Shared Security
Documents") as required by the Minimum Payment Guaranty Documents, the Credit
Documents, the Senior Subordinated Note Documents or the Senior Subordinated
Contingent Note Documents, hereby designate The Bank of New York, as Collateral
Agent, to act as specified herein and in each of the Shared Security Documents.
Each Secured Creditor hereby irrevocably authorizes, and each holder of any
Note, Senior Subordinated Note or Senior Subordinated Contingent Note by the
acceptance of such Note, Senior Subordinated Note or Senior Subordinated
Contingent Note shall be deemed irrevocably to authorize, the Collateral Agent
to take such action on behalf of such Secured Creditor or holder pursuant to
this Agreement, the Shared Security Documents and any other documents and
agreements referred to therein (including, without limitation, the Mortgage
Policies and the Bonds) as the Collateral Agent is required to do in accordance
with and subject to the provisions of this Agreement and the Shared Security
Documents and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically required of the Collateral Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
The Collateral Agent may perform any of its duties hereunder or thereunder by or
through its authorized agents or employees.
2. Nature of Duties. (a) The Collateral Agent shall have no
duties or responsibilities except those expressly set forth herein and in the
Shared Security Documents. Neither the Collateral Agent nor any of its officers,
directors, employees or agents shall be liable for taking any action or
refraining from taking or omitting to take any action hereunder or under the
Shared Security Documents or in connection herewith or therewith, unless caused
by its or their gross negligence or willful misconduct. The duties of the
Collateral Agent shall be mechanical and administrative in nature only; the
Collateral Agent shall not have by reason of the Shared Security Documents, any
Minimum Payment Guaranty Document, any Credit Document, any
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<PAGE>
Senior Subordinated Note Document, any Senior Subordinated Contingent Note
Document or any Interest Rate Protection Agreement a fiduciary relationship in
respect of any Secured Creditor; and nothing in the Shared Security Documents,
any Minimum Payment Guaranty Document, any Credit Document, any Senior
Subordinated Note Document, any Senior Subordinated Contingent Note Document or
any Interest Rate Protection Agreement, express or implied, is intended to or
shall be so construed as to impose upon the Collateral Agent any obligations in
respect of the Shared Security Documents except as expressly set forth herein or
therein.
(b) The Collateral Agent shall receive direction from the
Required Secured Creditors as a condition to giving any consent or approval, or
commencing any enforcement action, under any Shared Security Document, the
Casino Lease or the Casino Operating Contract and upon receipt thereof shall act
in accordance with such direction, provided that the Collateral Agent shall have
no liability for failing to give any such consent or approval, or failing to
commence any such enforcement action, absent such direction.
3. Lack of Reliance on the Collateral Agent. Independently and
without reliance upon the Collateral Agent, each Secured Creditor, to the extent
it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Credit
Parties and their Subsidiaries in connection with the making and the continuance
of the Obligations and the taking or not taking of any action in connection
therewith, and (ii) its own appraisal of the creditworthiness of the Credit
Parties and their Subsidiaries, and the Collateral Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Secured Creditor with any credit or other information with respect thereto,
whether coming into its possession before the extension of any Obligations or
the purchase of any Notes, Senior Subordinated Notes or Senior Subordinated
Contingent Notes, or at any time or times thereafter. The Collateral Agent shall
not be responsible or liable to any Secured Creditor for any recitals,
statements, information, covenants, agreements, representations or warranties
herein, in the Shared Security Documents or in any document, certificate or
other writing delivered in connection herewith or therewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of the Shared Security Documents or the
Collateral or the financial condition of any Credit Party or any Subsidiary of
any Credit Party or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of the
Shared Security Documents, or the financial condition of any Credit Party or any
Subsidiary of any Credit Party, or the existence or possible existence of any
Default or Event of Default.
4. Certain Rights of the Collateral Agent; Pari Passu in
Priority of Liens; Non-Shared Collateral; Protective Advances; Etc. (a) Except
as provided in Section 4(e) hereof, no Secured Creditor shall have the right to
take any action with respect to (or against) any Collateral, or cause the
Collateral Agent to take any action with respect to (or against) any Collateral,
with only the Required Secured Creditors having the right to direct the
Collateral Agent by written instruction in accordance with Section 4(f) hereof
to take any such action. Except for actions required to be taken by the
Collateral Agent in accordance with this Agreement and the Shared Security
Documents, if the Required Secured Creditors shall fail to instruct the
Collateral Agent with respect to any act or action (including failure to act and
refrain from acting) in connection with this Agreement or the Shared Security
Documents, the Collateral Agent shall be entitled to
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<PAGE>
refrain from such act or taking such action unless and until it shall have
received express instructions from the Required Secured Creditors and to the
extent requested, appropriate indemnification in respect of actions to be taken,
and the Collateral Agent shall not incur liability to any Secured Creditor or
any other Person by reason of so refraining. Without limiting the foregoing, no
Secured Creditor shall have any right of action whatsoever against the
Collateral Agent as a result of the Collateral Agent acting or refraining from
acting (x) hereunder or under any Shared Security Document in accordance with
the instructions of the Required Secured Creditors or (y) under any Shared
Security Document as provided for therein. As used herein, (1) the term
"Required Secured Creditors" shall mean, at any time, those Secured Creditors
which (in aggregate) at such time would constitute both the Required Minimum
Payment Guarantor Secured Creditors (but only if a Minimum Payment Guaranty is
then in effect or if there are unpaid Minimum Payment Obligations which are then
due and payable in an aggregate amount equal to or in excess of $1,000,000) and
the Required Non-Minimum Payment Guarantor Secured Creditors at such time, (2)
the term "Required Minimum Payment Guarantor Secured Creditors" shall mean, at
any time, the Minimum Payment Guarantor or Minimum Payment Guarantors which are
designated as such pursuant to any then outstanding Minimum Payment Guaranty or,
if no such Minimum Payment Guaranty is then outstanding, are owed amounts which
are then due and payable (and have not yet been paid) pursuant to the respective
Minimum Payment Guaranty Documents (or if, pursuant to the terms of the Minimum
Payment Guaranty Documents, less than 100% of such Minimum Payment Guarantors
are required to take actions hereunder, such lesser percentage as may be
specified in the respective Minimum Payment Guaranty Documents) and (3) the term
"Required Non-Minimum Payment Guarantor Secured Creditors" shall mean (i) the
Required Banks at all times other than those times when either clause (ii) or
(iii) below is applicable, (ii) at all times when (and for so long as) (x) the
Credit Agreement Amount is less than $100,000,000, (y) all principal of, and
interest on, all Tranche A Term Loans and Tranche B-1 Term Loans have been
repaid in full and (z) any New Bond Obligations then remain outstanding, the
Required New Bondholders and (iii) if all Credit Agreement Obligations and New
Bond Obligations have been repaid in full and Other Obligations remain
outstanding, the Required Other Creditors. Notwithstanding anything to the
contrary contained in the immediately preceding sentence, (1) if at any time the
principal of any Credit Agreement Obligations has been accelerated, or the
maturity date with respect to any such Credit Agreement Obligations has
occurred, and as a result thereof a payment Event of Default exists under the
Credit Agreement, which payment Event of Default has continued in existence for
at least 90 consecutive days after the date of such acceleration or maturity,
and the Required Secured Creditors at such time (determined without regard to
this clause (1)) have not directed the Collateral Agent to commence enforcement
proceedings pursuant to the Security Documents, then so long as such payment
Event of Default is continuing the Required Banks shall constitute the Required
Secured Creditors for (and only for) purposes of causing the Collateral Agent to
commence enforcement proceedings pursuant to the
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<PAGE>
Shared Security Documents, (2) if at any time any Minimum Payment Obligations in
an aggregate amount in excess of $1,000,000 have not been paid when due (and
remain unpaid) or have been accelerated, and as a result thereof a payment Event
of Default exists under the Minimum Payment Guaranty Documents, which payment
Event of Default has continued in existence for least 90 consecutive days after
the date of the initial occurrence thereof, and the Required Secured Creditors
at such time (determined without regard to this clause (2)) have not directed
the Collateral Agent to commence enforcement proceedings pursuant to the Shared
Security Documents, then so long as such payment Event of Default is continuing
the Secured Creditors holding at least a majority of the outstanding Minimum
Payment Obligations subject to such payment Event of Default shall constitute
the Required Secured Creditors for (and only for) purposes of causing the
Collateral Agent to commence enforcement proceedings pursuant to the Security
Documents and (3) if at any time (x) the principal of any New Bond Obligations
have been accelerated or the maturity date with respect to any such principal
Obligations has occurred or (y) the Make-Whole Amount (as defined in the Senior
Subordinated Contingent Note Indenture) has been declared to be due and payable
pursuant to the Senior Subordinated Contingent Note Indenture, and as a result
thereof a payment Event of Default exists under the Senior Subordinated Note
Indenture or the Senior Subordinated Contingent Note Indenture, which payment
Event of Default has continued in existence for at least 90 consecutive days
after the date of such acceleration, maturity or declaration, and the Required
Secured Creditors at such time (determined without regard to this clause (3))
have not directed the Collateral Agent to commence enforcement proceedings
pursuant to the Shared Security Documents, then so long as such payment Event of
Default is continuing the Secured Creditors holding at least a majority of the
outstanding New Bond Obligations subject to such payment Event of Default shall
constitute the Required Secured Creditors for (and only for) purposes of causing
the Collateral Agent to commence enforcement proceedings pursuant to the
Security Documents; provided that in any such event specified in preceding
clauses (1) through (3) the Secured Creditors who would constitute the Required
Secured Creditors in the absence of this sentence shall have the right (but not
the obligation) to direct the manner and method of enforcement so long as such
directions do not materially delay or impair the taking of enforcement action.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the Collateral Agent is authorized, but not obligated, (i) to take
any action reasonably required to perfect or continue the perfection of the
liens on the Collateral for the benefit of the Secured Creditors and (ii) when
instructions from the Required Secured Creditors have not yet been received, to
take any action which the Collateral Agent, in good faith, believes to be
reasonably required to promote and protect the interests of the Secured
Creditors in the Collateral; provided that once instructions have been received,
the Collateral Agent shall act or refrain from acting in accordance with such
instructions and the Collateral Agent shall not take any further action which
would be contrary thereto.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Collateral Agent shall not be required to take or refrain from
taking, and shall have no liability to any Secured Creditor for taking or
refraining from taking, any action that exposes or, in the good faith judgment
of the Collateral Agent may expose, the Collateral Agent or its officers,
directors, agents or employees to personal liability (including, without
limitation, taking title to any Collateral) unless the Collateral Agent shall be
adequately indemnified as provided herein or that is, or in the good faith
judgment of the Collateral Agent may be, contrary to this Agreement, the Casino
Lease, the Casino Operating Contract, the Shared Security Documents or
applicable law.
(d) The Minimum Payment Guarantors' liens, the Bank Creditors'
liens, the New Bond Creditors' liens and the Other Creditors' liens in all
Collateral shall be subject to (x) the priorities for distributions in
accordance with the terms of Section 11 hereof and (y) the
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express subordination provisions (and only those subordination provisions)
contained in the Senior Subordinated Note Indenture, the Senior Subordinated
Contingent Note Indenture and the Credit Agreement (which provisions shall apply
in accordance with the express terms thereof). The foregoing shall be effective
at all times during the term of this Agreement, notwithstanding: (i) the
initiation of any bankruptcy, moratorium, reorganization or other insolvency
proceeding with respect to any Credit Party; (ii) the priorities which would
otherwise result from the order of creation, attachment or perfection of any
such lien; (iii) the taking of possession of any of the Collateral by the
Collateral Agent, any Minimum Payment Guarantor, any Bank Creditor, any New Bond
Creditor or any Other Creditor; (iv) the filing of any financing statement or
the recording of any mortgage or other instrument in any recording office; (v)
the order in which any of the Minimum Payment Obligations, the Credit Agreement
Obligations, the New Bond Obligations or Other Obligations is created; (vi)
whether any such lien is now perfected, hereafter ceases to be perfected, is
avoidable by any bankruptcy trustee or otherwise is set aside, invalidated or
lapses; or (vii) any other matter whatsoever; and shall continue in full force
and effect unless and until this Agreement shall have terminated in accordance
with Section 17 hereof.
(e) After the Completion Guarantors' obligations under the
Completion Guarantees have been fully satisfied, any Secured Creditor, but only
with (and to the extent of) the prior written consent of the Required Secured
Creditors (which consent shall expressly acknowledge that the respective
advances constitute Protective Advances for purposes of this Intercreditor
Agreement), may make advances for the protection of the Secured Creditors'
interest in and lien on the Collateral ("Protective Advances") solely for (i)
the payment of taxes and insurance required to be paid with respect to the
Collateral, (ii) the payment of expenses to maintain the Collateral, and (iii)
to the extent permitted by the Casino Lease, any payments required to cure any
default under the Casino Lease; provided that no portion of the proceeds of
Protective Advances shall be used to make any payments to HET, HOC or the
manager of the casino (or any of their Affiliates). Protective Advances by any
Secured Creditor pursuant to this Section 4(e) may be made directly or by
payment of such funds to the Collateral Agent to be applied by the Collateral
Agent for such purposes. Any Protective Advances made pursuant to this Section
4(e), including any interest payable with respect thereto, shall form part of
the Obligations of the applicable Credit Party to such Secured Creditor, which
shall be fully secured pursuant to the Shared Security Documents, and shall be
entitled to the benefits of the Shared Security Documents and this Agreement,
even if the other Obligations of the respective Secured Creditor are repaid or
if the respective Secured Creditor ceases to be a creditor with respect to such
other Obligations.
(f) For purposes of this Agreement, each Secured Creditor
shall appoint a Person as such Secured Creditor's authorized representative
("Authorized Representative") for the purpose of giving or delivering any
notices or instructions hereunder or under any Shared Security Document. Any
instructions given by the Required Secured Creditors to the Collateral Agent
pursuant to this Agreement or under any Shared Security Document shall be in
writing signed by the Authorized Representative(s) of the various Secured
Creditors comprising the Required Secured Creditors with respect to such
instructions and such instructions shall certify to and for the benefit of the
Collateral Agent that the Secured Creditors issuing or delivering such
instructions constitute the Required Secured Creditors for purposes of this
Section 4 and the instructions being delivered. The Collateral Agent shall be
entitled to conclusively and absolutely
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rely on such instructions and certification as to the identity of the Required
Secured Creditors with respect to such instructions, and the Collateral Agent
shall not be required to take any action, and shall not be liable to any Secured
Creditor for failing or refusing to act, pursuant to any instructions which are
not given or delivered by the Authorized Representatives of various Secured
Creditors comprising the Required Secured Creditors with respect to such
instructions. The parties hereto acknowledge that the Authorized Representative
of each of the Secured Creditors shall be (v) HET (or a successor designated by
HET), in the case of the Minimum Payment Guarantors, (w) the Administrative
Agent, in the case of the Bank Creditors, (x) the Senior Subordinated Note
Trustee, in the case of the Senior Subordinated Note Creditors, (y) the Senior
Subordinated Contingent Note Trustee, in the case of the Senior Subordinated
Contingent Note Creditors and (z) in the case of any Other Creditor, such
Authorized Representative or Authorized Representative as may be designated by
such Other Creditor by written notice to the Collateral Agent from time to time.
5. Reliance; Interpretation. The Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document signed, sent
or made by the proper Person or entity, and, with respect to all legal matters
pertaining to this Agreement or the Shared Security Documents and its duties
hereunder and thereunder, upon advice of counsel selected by it. If, in its good
faith judgment, the Collateral Agent reasonably believes that any instructions
given or delivered pursuant to this Agreement or any Shared Security Document
require judicial interpretation or are invalid or otherwise contrary to the
provisions of this Agreement, the Casino Lease, the Casino Operating Contract,
the Shared Security Documents or applicable law, the Collateral Agent shall have
the right to petition a court of competent jurisdiction to determine the
validity of, or otherwise interpret, any such instructions. In such event, the
Collateral Agent shall not be required to carry out such instructions unless
directed to do so, or it is determined that it may do so, by such court.
6. Reimbursement and Indemnification. (a) To the extent the
Collateral Agent is not reimbursed and indemnified by the Borrower or any of the
other Credit Parties under the respective Shared Security Documents to which
they are a party, the Collateral Agent shall be entitled to reimbursement from
the proceeds of Collateral, but the Collateral Agent shall have no claim against
any Secured Creditor (other than against HET as, and to the extent, provided in
Section 6(c) and (d) hereof) for reimbursement or indemnification.
(b) Notwithstanding any provision of this Intercreditor
Agreement or any Shared Security Document to the contrary, the Collateral Agent
shall have the right to forbear from taking any action or exercising any remedy
under any Shared Security Document or applicable law, including, without
limitation, the foreclosure upon or the taking of title to any Collateral, if,
in the good faith judgment of the Collateral Agent, the Collateral Agent or its
officers, directors, agents or employees are not adequately indemnified by a
Person acceptable to the Collateral Agent from any liability or claim
(including, without limitation, any environmental liability or claim) by any
person or governmental authority which would result from the taking or
refraining from taking of any such action or the exercise or refraining from
exercising of any such remedy; provided that the Collateral Agent acknowledges
that the indemnity provided in Section 6(c) and (d) hereof shall be adequate for
purposes of this Section 6(b) for so long as such
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indemnity remains in effect and the initial Minimum Payment Guarantors (or
successor Minimum Payment Guarantor or Minimum Payment Guarantors reasonably
acceptable to the Collateral Agent) remain obligated hereunder.
(c) The Minimum Payment Guarantors hereby jointly, severally
and in solido indemnify, save and hold harmless and agree to defend the
Collateral Agent, its officers, directors, shareholders, employees, agents and
representatives (the "Indemnified Parties") from and against any and all suits,
causes of action, proceedings, claims, controversies, damages, liabilities,
losses, demands, costs and expenses (including reasonable attorneys' fees and
court costs) of any kind which may at any time be brought by any Person against,
or incurred by, any Indemnified Party (collectively, "Liabilities"), arising
from or relating to (i) this Agreement, the Shared Security Documents or any
agreement or instrument to which the Collateral Agent is a party executed in
connection herewith or therewith, (ii) any Collateral, and/or (iii) any act or
omission of the Collateral Agent or any other Indemnified Party in connection
with the taking of any action (or the refraining from taking any action) in
accordance with and as provided in this Agreement or the Shared Security
Documents, excluding, with respect to any of the foregoing, (x) any and all
Liabilities caused by or resulting from the gross negligence, willful misconduct
or bad faith of any Indemnified Party and (y) any and all Liabilities to the
extent such Liabilities are fully paid, satisfied or reimbursed by the Borrower
or any other Person. The applicable Indemnified Party shall notify the Minimum
Payment Guarantors in writing of any Liability subject to indemnification under
this Section 6(c) then due and payable, which notice shall specify the amount of
any such Liability and shall include reasonable documentation evidencing the
payment or satisfaction of such Liability by such Indemnified Party or otherwise
evidencing the obligation of such Indemnified Party to pay such Liability. The
Minimum Payment Guarantors shall, within forty-five (45) days of receipt of such
notice, pay or cause to be paid in full all amounts specified in such notice.
The indemnity provided in this Section 6(c) shall be fully transferable to any
successor collateral agent retained or engaged under Section 9 hereof upon the
resignation of the Collateral Agent (but not upon the removal of the Collateral
Agent by the Required Secured Creditors pursuant to Section 9(a) hereof.
(d) Notwithstanding anything to the contrary contained in any
of the Shared Security Documents or any limitation on the Collateral Agent's
fees contained therein, to the extent the fees (which, for purposes of this
Section 6(d), shall include, without limitation, all reasonable fees incurred by
the Collateral Agent in the performance of its obligations under this Agreement
or the Shared Security Documents, to be reimbursed at the Collateral Agent's
customary hourly rates) and expenses (including, without limitation, reasonable
attorneys' fees and out-of-pocket expenses) of the Collateral Agent as provided
for and in connection with this Agreement are not timely paid by the Borrower or
any other Person, the Minimum Payment Guarantors agree to reimburse and make
whole the Collateral Agent for any such unpaid fees or other expenses within
forty-five (45) days following written demand thereof from the Collateral Agent.
(e) To the extent any amounts are paid by any Minimum Payment
Guarantor to the Collateral Agent pursuant to the provisions of preceding
Sections 6(c) and (d), the respective Minimum Payment Guarantor shall be
subrogated to the rights of the Collateral Agent
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to receive such amounts from the Borrower and/or from proceeds of distributions
which would otherwise have been made to the Collateral Agent pursuant to Section
11(a)(i) hereof.
7. The Collateral Agent in its Individual Capacity. The
Collateral Agent may accept deposits from, lend money to, and generally engage
in any kind of banking, trust or other business with the Borrower or any
Affiliate or Subsidiary of the Borrower as if it were not performing the duties
specified herein or in the Shared Security Documents, and may accept fees and
other consideration from the Borrower and any of its Affiliates and/or
Subsidiaries for services in connection with the Credit Agreement, the other
Credit Documents and otherwise without having to account for the same to the
Secured Creditors; provided that the Collateral Agent shall use reasonable good
faith efforts so that it at no time becomes a Bank Creditor or a New Bond
Creditor; provided further, that the foregoing proviso shall in no event operate
to prevent the Collateral Agent from acquiring all or any portion of the equity
interests in any other Person which itself is a Bank Creditor or a New Bond
Creditor (and as a result of which the Collateral Agent could become a Bank
Creditor or a New Bond Creditor).
8. Holders. The Collateral Agent may deem and treat the payee
of any Note or the registered owner of any Senior Subordinated Note or Senior
Subordinated Contingent Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment, transfer or endorsement thereof,
as the case may be, shall have been filed with the Collateral Agent. Any
request, authority or consent of any Person or entity who, at the time of making
such request or giving such authority or consent, is the holder of any Note or
the registered owner of any Senior Subordinated Note or Senior Subordinated
Contingent Note shall be final and conclusive and binding on any subsequent
holder, transferee, assignee or endorsee, as the case may be, of such Note,
Senior Subordinated Note or Senior Subordinated Contingent Note or Note, Senior
Subordinated Note or Senior Subordinated Contingent Note issued in exchange
therefor.
9. Resignation by the Collateral Agent. (a) The Collateral
Agent may resign from the performance of all of its functions and duties under
the Shared Security Documents at any time by giving 30 Business Days' prior
written notice to the Borrower, the Minimum Payment Guarantors, the
Administrative Agent and each of the New Bond Trustees and may be removed at any
time, with or without cause, by the Required Secured Creditors by written notice
delivered to the Borrower, the Minimum Payment Guarantors, the Administrative
Agent and each of the New Bond Trustees, provided that such resignation or
removal shall not take effect until a successor Collateral Agent shall have been
appointed and such appointment shall have become effective in accordance with
this Section 9.
(b) Upon receiving notice of any such resignation or removal,
a successor Collateral Agent shall be appointed by the Required Secured
Creditors; provided, however, that such successor Collateral Agent shall be (A)
a bank or trust company having a combined capital and surplus of at least
$100,000,000 subject to supervision or examination by a federal or state banking
authority; (B) authorized under the laws of the jurisdiction of its
incorporation or organization to assume the functions of the Collateral Agent;
and (C) qualified to act in such capacity pursuant to applicable Gaming
Regulations, if required. If the appointment of such successor shall not have
become effective (as hereafter provided) within such 30 Business Day period
after the Collateral Agent shall have given such notice, then the Required
Secured Creditors or the
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resigning Collateral Agent may petition a court of competent jurisdiction for
the appointment of a successor Collateral Agent. Such court shall, after such
notice as it may deem proper, appoint a successor Collateral Agent meeting the
qualifications specified in this Section 9(b). The Secured Creditors hereby
consent to such petition and appointment so long as such criteria are met.
(c) The resignation or removal of a Collateral Agent shall
become effective only upon the execution and delivery of such documents or
instruments as are necessary to transfer the rights and obligations of the
Collateral Agent under the Shared Security Documents and the recording or filing
of such documents, instruments or financing statements as may be necessary to
maintain the priority and perfection of any security interest granted by any
Shared Security Document. Copies of each such document or instrument shall be
delivered to each of the Borrower, the Minimum Payment Guarantors, the New Bond
Trustees and the Administrative Agent. The appointment of a successor Collateral
Agent pursuant to this Section 9 shall become effective upon the acceptance of
such appointment (and execution by such successor of the documents, instruments
or financing statements referred to above) and such successor Collateral Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Collateral Agent.
(d) After any resignation or removal hereunder of the
Collateral Agent, the indemnification provisions of this Agreement shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it in connection with its agency hereunder while it was Collateral Agent.
10. Fees and Expenses of Collateral Agent. (a) In addition to
the indemnification provisions contained in the various Shared Security
Documents, the Borrower (by its execution and delivery hereof) hereby agrees
that it shall pay to The Bank of New York, as the initial Collateral Agent, such
fees as have been separately agreed to in writing with The Bank of New York for
acting as Collateral Agent hereunder and under the Shared Security Documents. In
the event a successor Collateral Agent is at any time appointed pursuant to
Section 9 of this Agreement, the Borrower hereby agrees to pay such successor
Collateral Agent such reasonable fees for acting as such as would customarily be
charged by such Collateral Agent for acting in such capacity in similar
situations.
(b) In addition, the Borrower, by its execution and delivery
hereof, agrees to pay all reasonable out-of-pocket costs and expenses of the
Collateral Agent in connection with this Agreement and the Shared Security
Documents and any actions taken by the Collateral Agent hereunder or thereunder,
and agrees to pay all costs and expenses of the Collateral Agent in connection
with the enforcement of this Agreement or any of the Shared Security Documents
and the documents and instruments referred to therein (including, without
limitation, reasonable fees and disbursements of counsel for the Collateral
Agent).
11. Application of Proceeds; Applicability of Subordination
Provisions. (a) All moneys collected by the Collateral Agent upon any sale or
other disposition of any Collateral pursuant to the enforcement of any of the
Shared Security Documents or the exercise of any of the remedial provisions
thereof, together with all other moneys received by the Collateral Agent
hereunder or under the Shared Security Documents as a result of any such
enforcement or the
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exercise of any such remedial provisions or as a result of any distribution of
any Collateral upon the bankruptcy, arrangement, receivership, assignment for
the benefit of creditors or any other action or proceeding involving the
readjustment of the obligations and indebtedness of any Credit Party, or the
application of any Collateral to the payment thereof or any distribution of the
Collateral upon the liquidation or dissolution of any Credit Party, or the
winding up of the assets or business of any Credit Party, or under the Mortgage
Policies or the Bonds or otherwise payable under any Shared Security Documents
shall be applied as follows:
(i) first, to the payment of all amounts owing to the Collateral
Agent of the type described in clauses (vii), (viii) and (ix) of the
definition of "Obligations" and, thereafter, to all amounts owing to
any Minimum Payment Guarantor of the type described in clause (vii) of
the definition of "Obligations";
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the
outstanding First Priority Secured Obligations shall be paid to the
Secured Creditors as provided in Section 11(f) hereof, with each
Secured Creditor receiving an amount equal to its outstanding First
Priority Secured Obligations or, if the proceeds are insufficient to
pay in full all such First Priority Secured Obligations, such Secured
Creditor's Pro Rata Share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Second Priority Secured Obligations shall be paid to the
Secured Creditors as provided in Section 11(f) hereof, with each
Secured Creditor receiving an amount equal to its outstanding Second
Priority Secured Obligations or, if the proceeds are insufficient to
pay in full all such Second Priority Secured Obligations, such Secured
Creditor's Pro Rata Share of the amount remaining to be distributed;
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, an
amount equal to the outstanding Third Priority Secured Obligations
shall be paid to the Secured Creditors as provided in Section 11(f)
hereof, with each Secured Creditor receiving an amount equal to its
outstanding Third Priority Secured Obligations or, if the proceeds are
insufficient to pay in full all such Third Priority Secured
Obligations, such Secured Creditor's Pro Rata Share of the amount
remaining to be distributed;
(v) fifth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iv), inclusive, an
amount equal to the outstanding Fourth Priority Secured Obligations
shall be paid to the Secured Creditors as provided in Section 11(f)
hereof, with each Secured Creditor receiving, subject to the
provisions of following clause (e), an amount equal to its outstanding
Fourth Priority Secured Obligations or, if the proceeds are
insufficient to pay in full all such Fourth Priority Secured
Obligations, such Secured Creditor's Pro Rata Share of the amount
remaining to be distributed;
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(vi) sixth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (v), inclusive, an
amount equal to the outstanding Fifth Priority Secured Obligations
shall be paid to the Secured Creditors as provided in Section 11(f)
hereof, with each Secured Creditor receiving an amount equal to its
outstanding Fifth Priority Secured Obligations or, if the proceeds are
insufficient to pay in full all such Fifth Priority Secured
Obligations, such Secured Creditor's Pro Rata Share of the amount
remaining to be distributed;
(vii) seventh, to the extent proceeds remain after the
application pursuant to preceding clauses (i) through (vi), inclusive,
an amount equal to the outstanding Sixth Priority Secured Obligations
shall be paid to the Secured Creditors as provided in Section 11(f)
hereof with each Secured Creditor receiving an amount equal to its
outstanding Sixth Priority Secured Obligations or, if the proceeds are
insufficient to pay in full all such Sixth Priority Secured
Obligations, such Secured Creditor's Pro Rata Share of the amount
remaining to be distributed; and
(viii) eighth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) through (vii),
inclusive, and following the termination of this Agreement pursuant to
Section 17 hereof, to the respective Credit Party under its respective
Shared Security Document, or to whomever may be lawfully entitled to
receive such surplus.
(b) For purposes of this Agreement (i) "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's First
Priority Secured Obligations, Second Priority Secured Obligations, Third
Priority Secured Obligations, Fourth Priority Secured Obligations, Fifth
Priority Secured Obligations or Sixth Priority Secured Obligations, as the case
may be, and the denominator of which is the then outstanding amount of all First
Priority Secured Obligations, Second Priority Secured Obligations, Third
Priority Secured Obligations, Fourth Priority Secured Obligations, Fifth
Priority Secured Obligations or Sixth Priority Secured Obligations, as the case
may be, (ii) "First Priority Secured Obligations" shall mean all principal of,
interest on, and other amounts owing to the Secured Creditors with respect to
the Protective Advances, if any, made by them in accordance with the
requirements of Section 4(e) of this Agreement, (iii) "Second Priority Secured
Obligations" shall mean, with respect to the Minimum Payment Obligations, all
obligations pursuant to the Minimum Payment Guaranty Documents in respect of
amounts advanced pursuant to one or more Minimum Payment Guaranties, and any
indemnities, fees and expenses, enforcement costs (including reasonable
attorneys' fees) and interest on such obligations in accordance with the terms
of the relevant Minimum Payment Guaranty Documents, (iv) "Third Priority Secured
Obligations" shall mean all principal of, and interest on, all Tranche A Term
Loans under the Credit Agreement, and all regularly accruing fees owing pursuant
to the Credit Agreement with respect to any commitments relating to the Tranche
A Term Loans, and all indemnities, fees and expenses, enforcement costs
(including reasonable attorneys' fees) and interest on or relating to the
foregoing obligations, extensions of credit or commitments in respect thereof,
(v) "Fourth Priority Secured Obligations" shall mean all principal of, and
interest on, all Revolving Loans and Swingline Loans under the Credit Agreement
and the aggregate amount of all unpaid reimbursement obligations
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(together with all interest accrued thereon) with respect to Letters of Credit
issued pursuant to the Credit Agreement, the aggregate undrawn amounts of all
letters of credit issued pursuant to the Credit Agreement and all regularly
accruing fees owing by the Borrower under the Credit Agreement as same relate to
the foregoing extensions of credit or commitments in respect thereof, and all
indemnities, fees and expenses, enforcement costs (including reasonable
attorneys' fees) and interest on or relating to the foregoing obligations,
extensions of credit or commitments in respect thereof, (vi) "Fifth Priority
Secured Obligations" shall mean (x) in the case of the Credit Agreement
Obligations, all principal of, and accrued and unpaid interest on, all Tranche B
Term Loans, and all regularly accruing fees owing by the Borrower under the
Credit Agreement to the extent same relate to the commitments pursuant to the
Credit Agreement in respect of Tranche B Term Loans and (y) in the case of the
New Bond Obligations, all principal of, and accrued and unpaid interest on, the
Senior Subordinated Notes and the Senior Subordinated Contingent Notes, all
Contingent Payments which have theretofore been earned and are due and payable
in accordance with the terms of the New Bond Indentures and any Primary
Make-Whole Amount owing pursuant to the terms of the Senior Subordinated Note
Indenture as a result of any acceleration of the maturity of the Senior
Subordinated Notes in accordance with the terms thereof; provided that all
Junior Subordinated Make-Whole Amounts shall in any event constitute Sixth
Priority Secured Obligations and shall in no event constitute Fifth Priority
Secured Obligations, and (vii) "Sixth Priority Secured Obligations" shall mean
all Obligations other than First Priority Secured Obligations, Second Priority
Secured Obligations, Third Priority Secured Obligations, Fourth Priority Secured
Obligations and Fifth Priority Secured Obligations. For purposes of this
Agreement (and the preceding provisions of this clause (v)) to the extent
amounts are owing pursuant to the Credit Agreement for the Administrative
Agent's fees, costs of enforcement, indemnities and other items which are not
directly attributable to a single Tranche (as defined in the Credit Agreement)
of Loans, then such amounts shall be deemed to constitute Third Priority Secured
Obligations, Fourth Priority Secured Obligations and/or Fifth Priority Secured
Obligations on a proportionate basis, based upon the relative principal amounts
of the various such Tranches (or, if greater, in the case of Fourth Priority
Secured Obligations, the commitments relating thereto pursuant to the Credit
Agreement). Furthermore, and notwithstanding anything to the contrary contained
elsewhere in this Agreement, to the extent that, after the date of this
Agreement, the relevant Secured Creditors amend or modify the Minimum Payment
Guaranty Documents, Credit Documents or Senior Subordinated Note Documents in a
manner which has the effect of (i) increasing the outstanding principal amount
of Second Priority Secured Obligations, Third Priority Secured Obligations,
Fourth Priority Secured Obligations or Fifth Priority Secured Obligations above
the principal amounts thereof as then in effect (excluding any waivers or
amendments to the Credit Documents which (w) make available the Term Loans
under, and as defined in, the Credit Agreement in the amounts originally
contemplated pursuant to the Credit Agreement, (x) make available Fourth
Priority Secured Obligations which would otherwise not be available to the
extent that the principal amount thereof is not increased above $25 million, (y)
defer or capitalize accrued and unpaid interest or (z) in the case of Credit
Agreement Obligations incurred pursuant to any refinancing, increases to the
principal amount thereof to the extent (i) accrued and unpaid interest and/or
other amounts owing with respect to the refinanced indebtedness is refinanced
and/or (ii) of the fees and expenses incurred in connection with the refinancing
indebtedness), any such increased principal amounts (but only to the extent of
such increase) shall constitute Sixth Priority Secured Obligations rather than
obligations with the higher priority indicated above in this
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Section 11(b) and (ii) to the extent that amendments or modifications are made
pursuant to the Senior Subordinated Note Documents which directly increase the
amount of Contingent Payments or Make-Whole Amounts (as defined in the relevant
Senior Subordinated Note Documents), then to the extent additional amounts are
owing as a result thereof, such additional amounts shall be deemed to constitute
Sixth Priority Secured Obligations rather than Obligations with the higher
priority otherwise provided in the first sentence of this Section 11(b).
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 11 only) (i) first, to their First Priority Secured Obligations, (ii)
second, to their Second Priority Secured Obligations, (iii) third, to their
Third Priority Secured Obligations, (iv) fourth, to their Fourth Priority
Secured Obligations, (v) fifth, to their Fifth Priority Secured Obligations and
(vi) sixth, to their Sixth Priority Secured Obligations.
(d) Each of the Secured Creditors agrees and acknowledges that
if the Bank Creditors are to receive a distribution on account of undrawn
amounts with respect to letters of credit issued pursuant to the Credit
Agreement (which shall only occur after all outstanding Revolving Loans and
Swingline Loans and all unpaid reimbursement obligations with respect to drawn
letters of credit have been paid in full), such amounts shall be paid to the
Administrative Agent under the Credit Agreement and held by it, for the equal
and ratable benefit of the Bank Creditors holding Fourth Priority Secured
Obligations, as cash security for the repayment of all Fourth Priority Secured
Obligations owing to the Bank Creditors as such. If any amounts are held as cash
security pursuant to the immediately preceding sentence, then upon the
termination of all outstanding letters of credit issued pursuant to the Credit
Agreement, and after the application of all such cash security to the repayment
of all Fourth Priority Secured Obligations after giving effect to the
termination of all such letters of credit, if there remains any excess cash,
such excess cash shall be returned by the Administrative Agent to the Collateral
Agent for distribution in accordance with Section 11(a) hereof.
(e) Each of the Secured Creditors agrees and acknowledges
that, with respect to amounts distributed pursuant to clause (vi) of Section
11(a), in instances where the amount to be distributed is not sufficient to
repay in full all Fifth Priority Secured Obligations, each Secured Creditor's
Pro Rata Share of the amount to be distributed pursuant to said clause (vi)
shall be determined and, to the extent amounts are to be distributed in respect
of the Credit Agreement Obligations (and although the amounts to distributed to
the Bank Creditors shall be determined on the basis of their total Fifth
Priority Secured Obligations of the type described in clause (x) of the
definition thereof contained herein), the amounts so distributed to the Bank
Creditors shall first be applied to all principal of, and interest on, all
Tranche B-1 Term Loans, and all regularly accruing fees owing by the Borrower
under the Credit Agreement to the extent same relate to the commitments pursuant
to the Credit Agreement in respect of Tranche B-1 Term Loans and any
indemnities, fees and expenses, enforcement costs (including reasonably
attorneys' fees) and interest on such obligations in accordance with the terms
of the relevant Credit Documents, until all such amounts have been paid in full,
and only after all such amounts have been paid in full shall the amounts so
distributed in respect of the Fifth Priority Secured Obligations of the type
described in clause (x) of the definition thereof contained herein be
distributed in respect of amounts owing
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with respect to the Tranche B-2 Term Loans. The New Bond Creditors and the Bank
Creditors acknowledge and agree that the foregoing provisions of this clause (e)
affect the order of distribution (as among the Bank Creditors only) of amounts
to outstanding Credit Agreement Obligations constituting Fifth Priority Secured
Obligations, but that all Fifth Priority Secured Obligations shall be taken into
account in determining the amounts to be distributed pursuant to clause (vi) of
Section 11(a) to the Bank Creditors, on the one hand, and to the New Bond
Creditors, on the other hand.
(f) All payments required to be made hereunder shall be made
(u) if to the Collateral Agent, directly to the Collateral Agent, (v) if to the
Minimum Payment Guarantors, directly to the respective Minimum Payment
Guarantors (including, if to HET, directly to HET), (w) if to the Bank
Creditors, to the Administrative Agent under the Credit Agreement for the
account of (and for distribution to) the Bank Creditors, (x) if to the Senior
Note Creditors, to the Senior Subordinated Note Trustee for the account of (and
for distribution to) the Senior Note Creditors, (y) if to the Senior Contingent
Note Creditors, to the Senior Subordinated Contingent Note Trustee for the
account of (and for distribution to) the Senior Contingent Note Creditors, and
(z) if to the Other Creditors, to the trustee, paying agent or other similar
representative for the Other Creditors or, in the absence of such a
representative, directly to the Other Creditors. All amounts so distributed
shall be applied in accordance with the requirements of this Section 11.
(g) For purposes of applying payments received in accordance
with this Section 11, the Collateral Agent shall be entitled to rely upon the
Authorized Representative of the respective Secured Creditors, on behalf
thereof, for a determination (which such Authorized Representative shall provide
to the Collateral Agent in writing upon the request of the Collateral Agent,
prior to the distribution of any monies by the Collateral Agent) of the
outstanding Second Priority Secured Obligations, Third Priority Secured
Obligations, Fourth Priority Secured Obligations, Fifth Priority Secured
Obligations and Sixth Priority Secured Obligations owed to the Minimum Payment
Guarantors, the Bank Creditors, the New Bond Creditors or the Other Creditors,
as the case may be. For purposes of applying payments received in accordance
with this Section 11, the Collateral Agent shall be entitled to rely upon the
Authorized Representatives for each class of Obligations at such time to be
taken into account for purposes of determining the Required Secured Creditors
for a determination of the First Priority Secured Obligations then outstanding.
Unless it has actual knowledge (including by way of written notice from a
Minimum Payment Guarantor, a Bank Creditor, a New Bond Creditor or an Other
Creditor through an Authorized Representative thereof) to the contrary, the
Minimum Payment Guarantors, the Administrative Agent, the Senior Subordinated
Note Trustee, the Senior Subordinated Contingent Note Trustee and each
Authorized Representative, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled to
assume that no First Priority Secured Obligations and no Sixth Priority Secured
Obligations are outstanding. Unless it has actual knowledge (including by way of
written notice from an Other Creditor) to the contrary, the Collateral Agent, in
acting hereunder, shall be entitled to assume that no First Priority Secured
Obligations and no Interest Rate Protection Agreements are in existence.
(h) It is understood and agreed that the Borrower shall remain
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral thereunder and the
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aggregate amount of the sums referred to in clauses (i) through (vii),
inclusive, of Section 11(a) of this Agreement.
(i) Distributions made in accordance with this Section 11
(other than to the Minimum Payment Guarantors in respect of Minimum Payment
Obligations) shall, notwithstanding anything to be contrary contained in this
Agreement, be subject to the express subordination provisions contained in the
Senior Subordinated Note Documents, the Senior Subordinated Contingent Note
Documents and the Credit Agreement and, as a result thereof, to the extent any
Secured Creditor (other than to the Minimum Payment Guarantors in respect of
Minimum Payment Obligations or to HET under Section 11(a)(i) hereof) receives a
distribution pursuant to this Section 11 which must be turned over or applied in
accordance with said subordination provisions, said subordination provisions
shall control the ultimate distribution of such amounts.
(j) The Secured Creditors and the Collateral Agent acknowledge
that the Minimum Payment Guarantors have been granted a security interest in the
House Bank to secure the Minimum Payment Obligations maintained at the Casino
and that no Secured Creditor (other than the Minimum Payment Guarantors) shall
have a lien or other security interest in the House Bank. Upon the occurrence
and during the continuance of an Event of Default under the Minimum Payment
Obligations and provided that there are then no operations at the Casino, the
Minimum Payment Guarantors agree to fully enforce and realize upon the security
interest in the House Bank (and apply all proceeds thereof to the Minimum
Payment Obligations) prior to applying the proceeds of any other Collateral to
the Minimum Payment Obligations as set forth in this Section 11.
12. Definitions. The following terms shall have the meanings
herein specified unless the context otherwise requires. Such definitions shall
be equally applicable to the singular and plural forms of the terms defined.
"Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Affiliate" shall mean, with respect to any Person, any other
Person (i) directly or indirectly controlling, (including, but not limited to,
all directors, officers and partners of such Person), controlled by, or under
direct or indirect common control with, such Person or (ii) that directly or
indirectly owns more than 5% of any class of the voting securities or capital
stock of or equity interests in such Person. A Person shall be deemed to control
another Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall have the meaning provided in the first
paragraph of this Agreement.
"Authorized Representative" shall have the meaning provided in
Section 4(f) of this Agreement.
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"Bank Creditors" shall have the meaning provided in the first
paragraph of this Agreement.
"Banks" shall have the meaning provided in the Recitals to
this Agreement.
"Bonds" shall mean any payment or performance bonds issued in
connection with the construction of the Project.
"Borrower" shall have the meaning provided in the Recitals to
this Agreement.
"Casino" shall mean the Borrower's casino to be located at the
site of the former Rivergate Convention Center in New Orleans, Louisiana.
"Casino Lease" shall mean the Amended and Restated Lease
Agreement among Rivergate Development Corporation as landlord, the Borrower, as
tenant, and the City of New Orleans, as intervenor, dated as of October 29,
1998, as amended, modified or supplemented from time to time in accordance with
the terms thereof.
"Casino Operating Contract" means the Amended and Renegotiated
Casino Operating Contract among Harrah's Jazz Company, a Louisiana general
partnership, the Borrower, and the State of Louisiana, by and through the LGCB,
dated as of October 30, 1998, as amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Class" shall have the meaning provided in Section 16 hereof.
"Collateral" shall mean all "Collateral" (or similar defined
term) under, and as defined in, the Shared Security Documents.
"Collateral Agent" shall mean (x) with respect to this
Agreement, The Bank of New York acting in its capacity as collateral agent
hereunder and (y) with respect to the Shared Security Documents, The Bank of New
York for the benefit of the Secured Creditors in its capacity as (i) "Collateral
Agent" under, and as defined in, the Security Agreement, (ii) "Pledgee" under,
and as defined in, the Pledge Agreement or (iii) "Mortgagee" under, and as
defined in, the Mortgages, in each case, to include any successor collateral
agent hereunder and under the Shared Security Documents.
"Completion Guarantees" shall mean and include the Bank
Completion Guarantee (as defined in the Credit Agreement) and any completion
guarantee delivered by any Completion Guarantor to the holders of the New Bonds
or to the City, the RDC or the LGCB.
"Completion Guarantor" shall mean each of HET and HOC.
"Contingent Payments" shall mean all Contingent Payments
under, and as defined in, the New Bond Indentures as originally in effect.
"Credit Agreement" shall have the meaning provided in the
Recitals to this Agreement.
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"Credit Agreement Obligations" shall have the meaning provided
in clause (iii) of the definition of "Obligations."
"Credit Documents" shall mean the Credit Agreement and each
instrument or document executed and delivered pursuant to or in connection
therewith, including without limitation all Credit Documents under, and as
defined in, the Credit Agreement as in effect on the date hereof.
"Credit Party" shall mean and include JCC Holding, the
Borrower and each Subsidiary of JCC Holding or the Borrower that is party to any
Shared Security Document.
"Default" shall mean any event which, with notice or lapse of
time, or both, would become an Event of Default.
"Event of Default" shall mean any Event of Default under, and
as defined in, any Minimum Payment Guaranty Document, the Credit Agreement, the
Senior Subordinated Note Indenture or the Senior Subordinated Contingent Note
Indenture, any payment default under any Interest Rate Protection Agreement or
any Shared Security Document and shall in any event, include, without
limitation, any payment default on any of the Obligations after the expiration
of any applicable grace period.
"Fifth Priority Secured Obligations" shall have the meaning
provided in Section 11(b) hereof.
"First Priority Secured Obligations" shall have the meaning
provided in Section 11(b) hereof.
"Fourth Priority Secured Obligations" shall have the meaning
provided in Section 11(b) hereof.
"Gaming Regulations" shall mean the laws, rules, regulations
and orders applicable to the gaming business of the Borrower or any of its
Subsidiaries, or any other Credit Party, as in effect from time to time,
including the Louisiana Economic Development and Gaming Corporation Act (La.
R.S. Section 27:201, et seq.) and the policies, interpretations and
administration thereof by the governmental authorities charged with their
administration and enforcement, including the LGCB.
"HET" shall have the meaning provided in the first paragraph
of this Agreement.
"HET/JCC Agreement" shall have the meaning provided in the
Recitals to this Agreement.
"HOC" shall have the meaning provided in the first paragraph
of this Agreement.
"Interest Rate Protection Agreement" shall have the meaning
provided in the first paragraph of this Agreement.
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"JCC Holding" shall have the meaning provided in the Recitals
to this Agreement.
"Junior Subordinated Make-Whole Amounts" shall mean (x) in the
case of the Senior Subordinated Notes and Senior Subordinated Note Documents,
all amounts (other than principal, accrued interest, Contingent Payments (as
defined in the Senior Subordinated Note Indenture) for prior periods which have
already become due and payable prior to such acceleration in accordance with the
terms of the Senior Subordinated Note Indenture and the Primary Make-Whole
Amount) due and payable as a result of any acceleration of the maturity of the
Senior Subordinated Notes, in any event including any Secondary Make-Whole
Amount and (y) in the case of the Senior Subordinated Contingent Notes, all
amounts (other than any Contingent Payments (as defined in the Senior
Subordinated Contingent Note Indenture) which were already due and payable prior
to such acceleration) due and payable as a result of any acceleration of the
maturity of the Senior Subordinated Contingent Notes, in any event including
Senior Subordinated Contingent Notes Make-Whole Amount.
"LGCB" mean the Louisiana Gaming Control Board and its
successors and assigns.
"Minimum Payment Guarantor" shall have the meaning provided in
the first paragraph of this Agreement.
"Minimum Payment Guaranty" shall mean the initial Minimum
Payment Guaranty issued on or before the Plan Effective Date by HET and HOC, and
any substitute or successor Minimum Payment Guaranty (as defined in Section 25.1
of the Casino Operating Contract) from time to time issued by HET, HOC or any
other Minimum Payment Guarantor, in each case so long as (x) the respective
Minimum Payment Guaranty is issued without causing a breach, violation or
default under any of the provisions of the Credit Agreement (including Sections
9.11 and 10.07 thereof), or the relevant provisions of any other Secured Debt
Agreement and (y) each party thereto as a Minimum Payment Guarantor becomes a
party to this Agreement in accordance with the provisions of Section 21 hereof.
"Minimum Payment Guaranty Documents" shall mean each Minimum
Payment Guaranty, the HET/JCC Agreement and any successor or replacement
agreement to the HET/JCC Agreement entered into with one or more Minimum Payment
Guarantors, in each case so long as the provisions of such successor agreements
do not violate the relevant provisions of the Credit Agreement (including
Sections 9.11 and 10.07 thereof) or the relevant provisions of any Secured Debt
Agreement.
"Minimum Payment Obligations" shall have the meaning provided
in clause (ii) of the definition of "Obligations."
"Mortgage" shall mean, collectively, (i) the Act of Mortgage
and Collateral Assignment dated as of the date hereof by the Borrower, as
mortgagor, in favor of the Collateral Agent, as mortgagee for the benefit of the
Secured Creditors, (ii) the Act of Mortgage and Collateral Assignment dated as
of the date hereof by JCC Development Company, L.L.C., as mortgagor, in favor of
the Collateral Agent, as mortgagee for the benefit of the Secured
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Creditors, (iii) the Act of Mortgage and Collateral Assignment dated as of the
date hereof by FP Development, L.L.C., as mortgagor, in favor of the Collateral
Agent, as mortgagee for the benefit of the Secured Creditors, (iv) the Act of
Mortgage and Collateral Assignment dated as of the date hereof by CP
Development, L.L.C., as mortgagor, in favor of the Collateral Agent, as
mortgagee for the benefit of the Secured Creditors and (v) any mortgage, deed of
trust, assignment of leases or rents or similar document executed and delivered
at any time after the date of this Agreement by JCC Holding or any of its
Subsidiaries to secure any of the Obligations.
"Mortgage Policies" shall mean any and all mortgagee title
insurance policies in favor of the Collateral Agent or the Secured Creditors
with respect to any property at any time mortgaged pursuant to any Mortgage.
"Mortgage Release Provisions" shall mean the respective
provisions designated below of the Mortgages described in clauses (ii) through
(iv), inclusive, of the definition of Mortgage contained herein, as follows:
(i) Section 34 of the Mortgage described in clause (ii) of
the definition of Mortgage contained herein;
(ii) Section 32 of the Mortgage described in clause (iii) of
the definition of Mortgage contained herein; and
(iii) Section 32 of the Mortgage described in clause (iv) of
the definition of Mortgage contained herein.
"New Bond Creditors" shall have the meaning provided in the
first paragraph of this Agreement.
"New Bond Documents" shall mean, collectively, the Senior
Subordinated Note Documents and the Senior Subordinated Contingent Note
Documents, in each case as amended, modified or supplemented from time to time.
"New Bond Indenture" shall mean, collectively, the Senior
Subordinated Note Indenture and the Senior Subordinated Contingent Note
Indenture.
"New Bond Obligations" shall have the meaning provided in
clause (v) of the definition of "Obligations."
"New Bond Trustees" shall mean, collectively, the Senior
Subordinated Note Trustee and the Senior Subordinated Contingent Note Trustee.
"New Bondholders" shall mean, collectively, the Senior
Subordinated Note Holders and the Senior Subordinated Contingent Note Holders.
"New Bonds" shall mean, collectively, the Senior Subordinated
Notes and the Senior Subordinated Contingent Notes.
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"Note" shall mean each promissory note issued from time to
time pursuant to the Credit Agreement.
"Obligations" shall mean all of the Borrower's obligations
with respect to:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of (x) the principal of and
interest on all Protective Advances made in accordance with the
requirements of Section 4(e) of this Agreement and (y) all other
obligations and indebtedness (including, without limitation,
indemnities, fees and expenses, enforcement costs (including
reasonable attorneys' fees) and interest on such obligations and
indebtedness), of each Credit Party to the Secured Creditors, whether
now existing or hereafter incurred, to the extent relating to
Protective Advances made in accordance with Section 4(e) of this
Agreement and the due performance and compliance by each Credit Party
with all the terms, conditions and agreements relating to such
Protective Advances (all such principal, interest, obligations and
liabilities described in this clause (i) being herein collectively
called the "Protective Advance Obligations");
(ii) the full and prompt payment when due (whether at the date of
maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, indemnities, fees and
expenses, enforcement costs (including reasonable attorneys' fees) and
interest on such obligations and indebtedness) of the Borrower and any
other Credit Party to the Minimum Payment Guarantors now existing or
hereafter incurred under, arising out of, or in connection with any
Minimum Payment Guaranty Document (including, without limitation, all
such obligations and indebtedness under the Minimum Payment Guaranty)
to which it is a party (in each case, to the extent such obligations
and indebtedness relate to the Minimum Payment Guaranty) and the due
performance and compliance by the Borrower and each such Credit Party
with all of the terms, conditions and agreements contained in each
such Minimum Payment Guaranty Document (all such principal, interest,
obligations and liabilities described in this clause (ii) being herein
collectively called the "Minimum Payment Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of (x) the principal of and
interest on the notes issued by, and loans made to, the Borrower under
the Credit Agreement and all reimbursement obligations and unpaid
drawings (together with interest thereon) with respect to the letters
of credit issued under the Credit Agreement and (y) all other
obligations and indebtedness (including, without limitation,
indemnities, fees and expenses, enforcement costs (including
reasonable attorneys' fees) and interest on such obligations and
indebtedness), of each Credit Party to the Bank Creditors, whether now
existing or hereafter incurred under, arising out of or in connection
with the Credit Agreement and the other Credit Documents and the due
performance and compliance by each Credit Party with all of the terms,
conditions and agreements contained in the Credit Agreement and the
other Credit Documents (all such principal, interest, obligations and
liabilities described in this clause (iii) being herein collectively
called the "Credit Agreement Obligations");
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(iv) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of (x) the principal of, and
premium, if any, and interest on the Senior Subordinated Notes and (y)
all other obligations and indebtedness (including, without limitation,
indemnities, fees and expenses, enforcement costs (including
reasonable attorneys' fees) and interest on such obligations and
indebtedness) of each Credit Party to the Senior Subordinated Note
Creditors, whether now existing or hereafter incurred under, arising
out of or in connection with the Senior Subordinated Notes, the other
Senior Subordinated Note Documents and the Shared Security Documents
and the due performance and compliance by each Credit Party with all
of the terms, conditions and agreements contained in the Senior
Subordinated Notes, the other Senior Subordinated Note Documents and
the Shared Security Documents (all such obligations and liabilities
described in this clause (iv) being herein collectively called the
"Senior Subordinated Note Obligations");
(v) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of (x) the principal of, and
premium, if any, and interest on the Senior Subordinated Contingent
Notes and (y) all other obligations and indebtedness (including,
without limitation, indemnities, fees and expenses, enforcement costs
(including reasonable attorneys' fees) and interest on such
obligations and indebtedness) of each Credit Party to the Senior
Contingent Note Creditors, whether now existing or hereafter incurred
under, arising out of or in connection with the Senior Subordinated
Contingent Notes, the other Senior Subordinated Contingent Note
Documents and the Shared Security Documents and the due performance
and compliance by each Credit Party with all of the terms, conditions
and agreements contained in the Senior Subordinated Contingent Notes,
the other Senior Subordinated Contingent Note Documents and the Shared
Security Documents (all such obligations and liabilities described in
this clause (v) being herein collectively called the "Senior
Subordinated Contingent Note Obligations" and together with the Senior
Subordinated Note Obligations, the "New Bond Obligations");
(vi) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and
liabilities owing by the Borrower to the Other Creditors under any
Interest Rate Protection Agreement, whether such Interest Rate
Protection Agreement is now in existence or hereafter arising, and the
due performance and compliance by the Borrower with all of the terms,
conditions and agreements contained therein (all such obligations and
liabilities described in this clause (vi) being herein collectively
called the "Other Obligations");
(vii) any and all amounts owing to the Collateral Agent pursuant
to, or as referenced in, this Agreement or any Shared Security
Document, and any and all amounts (but without any interest thereon)
owing to any Minimum Payment Guarantor pursuant to the subrogation
provisions contained in Section 6(e) hereof; provided that with
respect to the amounts described above as owing to any Minimum Payment
Guarantor pursuant to the subrogation provisions contained in Section
6(e) hereof, the respective amount paid by the Minimum Payment
Guarantor to the Collateral Agent shall have been actually due and
owing to the Collateral Agent at the time of the respective payment by
such Minimum Payment Guarantor;
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(viii) any and all sums advanced by the Collateral Agent in order
to preserve the Collateral or preserve its security interest in the
Collateral; and
(ix) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of the
Borrower referred to in clauses (i), (ii), (iii), (iv), (v) and (vi),
after an Event of Default shall have occurred and be continuing, the
reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Collateral Agent of its rights
hereunder or under the Shared Security Documents, together with
reasonable attorneys' fees and court costs.
"Other Creditor" shall have the meaning provided in the first
paragraph of this Agreement.
"Other Obligations" shall have the meaning provided in clause
(vi) of the definition of "Obligations."
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"Plan Effective Date" shall mean the "Effective Date" as
defined in the Plan of Reorganization (as defined in the Credit Agreement as
originally in effect).
"Pledge Agreement" shall mean the Pledge Agreement, dated as
of October 29, 1998, among JCC Holding and various of its Subsidiaries, as
Pledgors, and the Collateral Agent, as Pledgee for the benefit of the Secured
Creditors, as amended, modified or supplemented from time to time.
"Primary Make-Whole Amount" shall have the meaning assigned
that term in the Senior Subordinated Note Indenture.
"Pro Rata Share" shall have the meaning provided in Section
11(b) hereof.
"Protective Advance Obligations" shall have the meaning
provided in clause (i) of the definition of "Obligations."
"Protective Advances" shall have the meaning provided in
Section 4(e) hereof.
"Qualified Person" shall mean, with respect to any Bank party
to the Credit Agreement on the date hereof or that becomes a Bank pursuant to
Section 1.13, 16.04(b) or 16.04(c) of the Credit Agreement, a commercial bank,
financial institutions or other "accredited investor" (as defined in Regulation
D of the Securities Act), which shall not have been found unsuitable under, and,
to the extent necessary, shall have qualified or be presumed suitable under, the
Gaming Regulations applicable to lenders and the Casino Operating Contract.
"Required Banks" shall have the meaning provided in the Credit
Agreement.
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"Required Creditors" shall mean the requisite percentage of
Secured Creditors which are needed to take actions with respect to a given Class
of Obligations, i.e., whether the Required Minimum Payment Guarantor Secured
Creditors, the Required Banks, the Required Other Creditors or the Required New
Bondholders.
"Required Minimum Payment Guarantor Secured Creditors" shall
have the meaning provided in Section 4 hereof.
"Required New Bondholders" shall mean the holders from time to
time of at least a majority of the outstanding (with "outstanding" determined in
a manner consistent with the respective New Bond Indentures) principal amount of
New Bonds (for this purpose, treating as outstanding principal any contingent
payments which are actually owing in respect of New Bonds, but ignoring any
contingent payments which may become due in the future).
"Required Non-Minimum Guarantor Secured Creditors" shall have
the meaning provided in Section 4 hereof.
"Required Other Creditors" shall mean the holders of at least
a majority of all Other Obligations outstanding from time to time under the
Interest Rate Protection Agreements, determined in such reasonable fashion as is
acceptable to the Collateral Agent.
"Required Secured Creditors" shall have the meaning provided
in Section 4 hereof.
"Secondary Make-Whole Amount" shall have the meaning assigned
that term in the Senior Subordinated Note Indenture.
"Second Priority Secured Obligations" shall have the meaning
provided in Section 11(b) hereof.
"Secured Creditors" shall have the meaning provided in the
first paragraph of this Agreement.
"Secured Debt Agreements" shall mean and include the Shared
Security Documents, the Minimum Payment Guaranty Documents, the Credit
Documents, the Senior Subordinated Note Documents, the Senior Subordinated
Contingent Note Documents and any Interest Rate Protection Agreements then in
existence.
"Security Agreement" shall mean the Security Agreement, dated
as of October 29, 1998, among JCC Holding and various of its Subsidiaries as
assignors, and the Collateral Agent, as secured party for the benefit of the
Secured Creditors as amended, modified or supplemented from time to time.
"Senior Subordinated Contingent Note Creditors" shall have the
meaning provided in the first paragraph of this Agreement.
"Senior Subordinated Contingent Note Documents" shall have the
meaning provided in the Recitals to this Agreement.
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"Senior Subordinated Contingent Note Holders" shall have the
meaning provided in the first paragraph of this Agreement.
"Senior Subordinated Contingent Note Indenture" shall have the
meaning provided in the Recitals to this Agreement.
"Senior Subordinated Contingent Note Obligations" shall have
the meaning provided in clause (v) of the definition of "Obligations."
"Senior Subordinated Contingent Note Trustee" shall have the
meaning provided in the first paragraph of this Agreement.
"Senior Subordinated Contingent Notes" shall have the meaning
provided in the Recitals to this Agreement.
"Senior Subordinated Contingent Notes Make-Whole Amount" shall
mean the "Make-Whole Amount", as that term is defined in the Senior Subordinated
Contingent Note Indenture.
"Senior Subordinated Note Creditors" shall have the meaning
provided in the first paragraph of this Agreement.
"Senior Subordinated Note Documents" shall have the meaning
provided in the Recitals to this Agreement.
"Senior Subordinated Note Holders" shall have the meaning
provided in the first paragraph of this Agreement.
"Senior Subordinated Note Indenture" shall have the meaning
provided in the Recitals to this Agreement.
"Senior Subordinated Note Obligations" shall have the meaning
provided in clause (iv) of the definition of "Obligations."
"Senior Subordinated Note Trustee" shall have the meaning
provided in the first paragraph of this Agreement.
"Senior Subordinated Notes" shall have the meaning provided in
the Recitals to this Agreement.
"Shared Security Documents" shall have the meaning provided in
Section 1 hereof.
"Sixth Priority Secured Obligations" shall have the meaning
provided in Section 11(b) of this Agreement.
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of
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any class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Subsidiaries of such Person has more than a 50% equity interest at the
time.
"Third Priority Secured Obligations" shall have the meaning
provided in Section 11(b) hereof.
13. Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications hereunder shall be in writing
and shall be delivered or mailed by first class mail, postage prepaid, addressed
as follows:
(a) if to the Borrower, at:
512 S. Peters Street
New Orleans, Louisiana 70130
Attention: President
(b) if to the Administrative Agent, at:
Bankers Trust Company
130 Liberty Street
New York, NY 10006
Attention: Mary Kay Coyle
(c) if to the Collateral Agent, at:
The Bank of New York
10161 Centurion Parkway
Jacksonville, FL 32256
Telephone: (800) 705-0384
Telecopy: (904) 645-1979
Attention: Vice President
(d) if to the Senior Subordinated Note Trustee, at:
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55749
(e) if to the Senior Subordinated Contingent Note Trustee, at:
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55749
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(f) if to any Bank Creditor, either (x) to the Administrative
Agent at its address set forth above or (y) at such address as such Bank
Creditor shall have specified in the Credit Agreement;
(g) if to any Other Creditor, either (x) to the Authorized
Representative for the Other Creditors, at such address as such Authorized
Representative may have provided to the Borrower and the Collateral Agent from
time to time, or (y) directly to the Other Creditors at such address as the
Other Creditors shall have specified in writing to the Borrower and the
Collateral Agent;
(h) if to any Senior Subordinated Note Holder, to the Senior
Subordinated Note Trustee at its address set forth above;
(i) if to any Senior Subordinated Contingent Note Holder, to
the Senior Subordinated Contingent Note Trustee at its address set forth above;
(j) if to any Minimum Payment Guarantor at:
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder;
(k) in addition to any other notices required or permitted to
be given pursuant to this Agreement, the Collateral Agent shall promptly provide
to each Authorized Representative (in accordance with the foregoing provisions
of this Section 13) copies of any notices received by the Collateral Agent under
or with respect to any of the Shared Secured Documents, the Casino Operating
Contract or the Casino Lease.
(l) In addition to any other notices required or permitted to
be given pursuant to this Agreement, the Collateral Agent shall, promptly after
its taking any enforcement action pursuant to this Agreement or any of the
Shared Security Documents, give the LGCB (at the address provided in the
following sentence) written notice of the enforcement action so taken; provided
that any failure or delay in giving any such notice shall not affect or impair
the validity of any such enforcement action and shall give rise to no liability
on the part of the Collateral Agent or any Secured Creditor. All notices to the
LGCB pursuant to this sentence shall be mailed (or sent by reputable courier) to
the LGCB at the following address (or such other address as the LGCB furnishes
to the Collateral Agent from time to time for its receipt of notices pursuant to
this Section):
Louisiana Gaming Control Board
9100 Bluebonnet Centre Blvd.
Suite 500
Baton Rouge, LA 70809
Attention: Chairman
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14. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
15. Miscellaneous. This Agreement shall be binding upon the
parties hereto (including the Credit Parties) and shall inure to the benefit of
and be enforceable by the successors and assigns of the parties hereto. Any
Person that becomes a Secured Creditor after the date hereof by its provision of
any Minimum Payment Guaranty or its acceptance of any Note, any Senior
Subordinated Note, any Senior Subordinated Contingent Note or any Interest Rate
Protection Agreement or the benefits of any Shared Security Document, as the
case may be, shall be bound by the terms hereof. The headings in this Agreement
are for purposes of reference only and shall not limit or define the meaning
hereof. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one instrument. In
the event that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto.
16. Amendment or Waiver of this Agreement and the Shared
Security Documents Payment; Notice of Acceleration. (a) None of the terms and
conditions of this Agreement may be changed, waived, modified or varied in any
manner whatsoever unless in writing duly signed by the Administrative Agent
(with the consent of the Required Banks), the Required Minimum Payment Guarantor
Secured Creditors, the Senior Subordinated Note Trustee, the Senior Subordinated
Contingent Note Trustee and the Collateral Agent; provided, however, that (x) if
any such change, waiver, modification or variance adversely affects any Credit
Party, the written consent of such Credit Party shall also be required and (y)
if any Interest Rate Protection Agreements are then outstanding and any such
change, waiver, modification or variance will affect the rights and remedies of
the Other Creditors party thereto (and not all Secured Creditors in a like or
similar manner), then the written consent of the Required Other Creditors shall
also be required.
(b) None of the terms and conditions of any Shared Security
Document may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the applicable Credit Party thereto and the
Collateral Agent with the consent of the Required Secured Creditors (and, to the
extent such change, waiver, modification or variance results in the release of
all or substantially all of the Collateral pursuant to all the Shared Security
Documents, with the consent of each of the Banks and each New Bondholder);
provided, however, that (1) any change, waiver, modification or variance
affecting the rights and benefits of a single Class of Secured Creditors (and
not all Secured Creditors in a like or similar manner) shall also require the
written consent of the Required Creditors of such affected Class and (2) any
change, waiver, modification or variance to (a) any of the Mortgage Release
Provisions contained in the Mortgages described in clauses (ii) through (iv),
inclusive, of the definition of Mortgage contained herein, (b) any provision
contained in any Mortgage described in clauses (i) through (iv), inclusive, of
the definition of Mortgage contained herein, stating a maximum amount secured
thereby to the extent that the maximum amount is decreased or (c) any granting
clause in any Mortgage (or otherwise effect any release or partial release,
other than in accordance with the
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<PAGE>
Mortgagee Release Provisions) described in clause (i) through (iv), inclusive,
of the definition of Mortgage contained herein, that releases or decreases the
amount of Collateral subject to the respective Mortgage (unless, in the case of
a partial release, the respective mortgagor certifies that the Collateral so
released is not necessary to the continued use of or conduct of business, if
any, on the respective property subject to such Mortgage) shall in any event as
described in sub-clauses (a), (b) and (c) of this clause (2) require the written
consent of both (x) the Required Creditors with respect to the Credit Agreement
Obligations and (y) the Required Creditors with respect to the New Bond
Obligations; provided further, that without limiting the foregoing, it is
expressly acknowledged and agreed that other creditors may be added as "Secured
Creditors" hereunder (either as part of an existing Class of Secured Creditors
or as a newly created Class) with the consent of the Required Secured Creditors,
and that such addition shall not require the written consent of the Required
Creditors of the various Classes so long as such addition does not otherwise
give rise to an express violation of the terms of the Minimum Payment Guaranty
Documents, the Credit Agreement, the other Credit Documents, the Senior
Subordinated Note Indenture or the Senior Subordinated Contingent Note
Indenture. For the purpose of this Agreement, the term "Class" shall mean each
class of Secured Creditors, i.e., whether (u) any Secured Creditors which have
made Protective Advances, with respect to such Protective Advances, (v) the
Minimum Payment Guarantors as holders of the Minimum Payment Obligations, (w)
the Bank Creditors as holders of the Credit Agreement Obligations, (x) the New
Bondholders as holders of the New Bond Obligations, (y) the Other Creditors as
the holders of the Other Obligations or (z) any newly created class of Secured
Creditors referred to in the immediately preceding sentence. Notwithstanding
anything to the contrary contained above, additional Credit Parties may be added
as parties to the various Shared Security Documents in accordance with the terms
thereof (and without requiring any consent as otherwise contemplated by
preceding clause (b)) and, to the extent provided in Section 17 hereof,
Collateral and/or various Credit Parties may from time to time be released
pursuant to the Shared Security Documents in accordance with the provisions of
said Section 17 (and without the requirement of any additional vote pursuant to
this Section 16).
(c) Each of the Minimum Payment Guarantors, the Administrative
Agent, the Senior Subordinated Note Trustee and the Senior Subordinated
Contingent Note Trustee agrees to deliver to the others:
(i) in the case of the Administrative Agent, prompt written
notice of the acceleration of the Credit Agreement Obligations (such
notice to be provided in the same manner and substantially
contemporaneously with any notice provided to the Borrower), although
the failure to deliver any such notice shall not affect the validity
of such acceleration;
(ii) in the case of the Senior Subordinated Note Trustee, prompt
written notice of the acceleration of the Senior Subordinated Note
Obligations (such notice to be provided in the same manner and
substantially contemporaneously with any notice provided to the
Borrower), although the failure to deliver any such notice shall not
affect the validity of such acceleration;
(iii) in the case of the Senior Subordinated Contingent Note
Trustee, prompt written notice of the acceleration of the Senior
Subordinated Contingent Note Obligations
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(such notice to be provided in the same manner and substantially
contemporaneously with any notice provided to the Borrower), although
the failure to deliver any such notice shall not affect the validity
of such acceleration; and
(iv) in the case of the Minimum Payment Guarantors, prompt
written notice of any non-renewal of any then outstanding Minimum
Payment Guaranty or any acceleration of any Minimum Payment
Obligations (such notice to be provided in the same manner and
substantially contemporaneously with any notice provided to the
Borrower), although the failure to deliver any such notice shall not
affect the validity of any such non-renewal or acceleration.
17. Termination; Release. (a) This Agreement shall terminate
on the first date upon which (i) no Protective Advances are outstanding (and if
any Protective Advances have theretofore been made, all amounts owing in respect
of Protective Advance Obligations shall have been indefeasibly been paid in
full), (ii) all theretofore outstanding Minimum Payment Guaranties have expired
in accordance with their terms and when all Minimum Payment Obligations which
are then due and payable have been indefeasibly paid in full, (iii) all
commitments under, and letters of credit issued pursuant to, the Credit
Agreement have terminated, when no Note issued thereunder remains outstanding
and all Credit Agreement Obligations have been indefeasibly paid in full, (iv)
no Senior Subordinated Notes remain outstanding and all Senior Subordinated Note
Obligations have been indefeasibly paid in full, (v) no Senior Subordinated
Contingent Notes remain outstanding and all Senior Subordinated Contingent Note
Obligations have been paid in full and (vi) all Interest Rate Protection
Agreements have terminated and all Other Obligations have been indefeasibly paid
in full.
(b) In the event that any Mortgage (excluding the Mortgage
described in clause (i) of the definition thereof contained herein) contains
express release provisions which permit the release of such Mortgage under
conditions which have been (or will concurrently with the respective release be)
satisfied, and so long as the respective release does not give rise to a
violation of any of the provisions of the Credit Documents then in effect, and
so long as the respective Credit Party certifies to the Collateral Agent that
such release is permitted pursuant to the release provisions of the respective
Mortgage and does not give rise to a violation of the terms of the Credit
Documents, the Collateral Agent, at the request and expense of the respective
Credit Party, shall release the respective Mortgage in accordance with the
express release provisions contained therein.
(c) In addition to releases pursuant to preceding clause (b),
in the event that any part of the Collateral (excluding property subject to any
of the Mortgages described in clauses (i) through (iv) of the definition thereof
contained herein, which can be released only pursuant to the provisions thereof)
is sold or otherwise disposed of in connection with a sale or other disposition
permitted by the relevant provisions of the Minimum Payment Guaranty Documents,
the Credit Agreement, the Senior Subordinated Note Indenture and the Senior
Subordinated Contingent Note Indenture or is otherwise released at the direction
of the Required Minimum Payment Secured Creditors, the Required Banks and,
unless the release is permitted pursuant to the terms of the New Bond Documents,
the New Bond Trustees (and all the Banks and all New Bondholders in the case of
a release of all or substantially all of the Collateral under all the Shared
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<PAGE>
Security Documents) and so long as the respective Credit Party under the
respective Shared Security Document certifies to the Collateral Agent that such
sale or other disposition or clause is permitted by the Minimum Payment Guaranty
Documents, the Credit Agreement, the Senior Subordinated Note Indenture and the
Senior Subordinated Contingent Note Indenture and the proceeds of such sale or
other disposition or from such release shall be applied in the manner, if any,
required by the Minimum Payment Guaranty Documents, the Credit Agreement, the
Senior Subordinated Note Indenture and the Senior Subordinated Contingent Note
Indenture, the Collateral Agent, at the request and expense of the respective
Credit Party will duly assign, transfer and deliver to the respective Credit
Party (without recourse and without any representation or warranty) such of the
Collateral as is then being (or has been) so sold or otherwise disposed of or
released and as may be in the possession of the Collateral Agent and has not
theretofore been released pursuant to this Agreement or the Shared Security
Documents.
(d) At any time that any Credit Party (other than JCC Holding
or the Borrower) is released from all of its obligations pursuant to all Secured
Debt Documents (as defined in the various Shared Security Documents) then in
effect, and so long as the occurrence of such release has been certified to the
Collateral Agent by the Minimum Payment Guarantors (with respect to the Minimum
Payment Guaranty Documents), the Administrative Agent (with respect to the
Credit Documents), the New Bond Trustees (with respect to the New Bond
Obligations) and the Borrower (with respect to all Obligations), and so long as
the Borrower certifies that the respective Credit Party has been released from
all of its Obligations (including any guaranties thereof), the respective Credit
Party shall be released by the Collateral Agent as a party to any Shared
Security Documents to which it is a party at such time, in accordance with the
provisions thereof.
(e) At any time that the respective Credit Party desires that
Collateral (or any Credit Party) be released as provided in the foregoing
Section 17(a), (b), (c) or (d), it shall deliver to the Collateral Agent a
certificate signed by a principal executive officer of such Credit Party stating
that the release of the respective Collateral (or Credit Party) is permitted
pursuant to Section 17(a), (b), (c) or (d). If requested by the Collateral Agent
(although the Collateral Agent shall have no obligation to make any such
request), the respective Credit Party shall furnish appropriate legal opinions
(from counsel acceptable to the Collateral Agent) to the effect set forth in the
immediately preceding sentence. The Collateral Agent shall have no liability
whatsoever to any Secured Creditor as the result of any release of Collateral by
it as permitted by this Section 17.
18. Inconsistent Provisions. If any provision of this
Agreement shall be inconsistent with, or contrary to, any provision in any
Shared Security Document, including, without limitation, any provision of any
Shared Security Document limiting the amount payable to the Collateral Agent,
the provision in this Agreement shall be controlling, and shall supersede such
inconsistent provision to the extent necessary to give full effect to all
provisions contained in this Agreement.
19. Legends. (a) The Borrower and the Senior Subordinated Note
Creditors hereby agree that (i) the Senior Subordinated Note Indenture shall
contain an appropriate provision therein to the effect that such Senior
Subordinated Note Indenture, and the Senior
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Subordinated Notes issued thereunder, are subject to the terms of this
Agreement, and (ii) each Senior Subordinated Note issued pursuant to the Senior
Subordinated Note Indenture shall contain the following legend (which shall be
printed thereon in bold face):
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN
THE INTERCREDITOR AGREEMENT (AS DEFINED IN THE INDENTURE), WHICH INTERCREDITOR
AGREEMENT, AMONG OTHER THINGS, ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE
SECURITY FOR THIS NOTE AND THE SHARING OF PROCEEDS THEREOF WITH CERTAIN OTHER
SECURED CREDITORS (AS DEFINED IN THE INTERCREDITOR AGREEMENT). COPIES OF SUCH
INTERCREDITOR AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE UPON
REQUEST TO THE BORROWER.
(b) The Borrower and the Senior Subordinated Contingent Note
Creditors hereby agree that (i) the Senior Subordinated Contingent Note
Indenture shall contain an appropriate provision therein to the effect that such
Senior Subordinated Contingent Note Indenture, and the Senior Subordinated
Contingent Notes issued thereunder, are subject to the terms of this Agreement,
and (ii) each Senior Subordinated Contingent Note issued pursuant to the Senior
Subordinated Contingent Note Indenture shall contain the following legend (which
shall be printed thereon in bold face):
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN
THE INTERCREDITOR AGREEMENT (AS DEFINED IN THE INDENTURE), WHICH INTERCREDITOR
AGREEMENT, AMONG OTHER THINGS, ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE
SECURITY FOR THIS NOTE AND THE SHARING OF PROCEEDS THEREOF WITH CERTAIN OTHER
SECURED CREDITORS (AS DEFINED IN THE INTERCREDITOR AGREEMENT). COPIES OF SUCH
INTERCREDITOR AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE UPON
REQUEST TO THE BORROWER.
(c) The Borrower and the Banks hereby agree that (i) the
Credit Agreement shall contain an appropriate provision therein to the effect
that the Credit Agreement, and the Notes issued thereunder, are subject to the
terms of this Agreement and (ii) each Note issued pursuant to the Credit
Agreement shall contain the following legend (which shall be printed thereon in
bold face):
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN
THE INTERCREDITOR AGREEMENT (AS DEFINED IN THE AGREEMENT), WHICH INTERCREDITOR
AGREEMENT, AMONG OTHER THINGS, ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE
SECURITY FOR THIS NOTE AND THE SHARING OF PROCEEDS THEREOF WITH CERTAIN OTHER
SECURED CREDITORS (AS DEFINED IN THE INTERCREDITOR AGREEMENT). COPIES OF SUCH
INTERCREDITOR AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE UPON
REQUEST TO THE BORROWER.
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20. Co-Collateral Agents; Separate Collateral Agents. (a) If
at any time or times it shall be necessary or prudent in order to conform to any
law of any jurisdiction in which any of the Collateral shall be located, or the
Collateral Agent shall be advised by counsel, satisfactory to it and to the
Required Minimum Payment Guarantor Secured Creditors, the Administrative Agent
and the New Bond Trustees, that it is necessary or prudent in the interest of
the Collateral Agent or the Secured Creditors, then the Collateral Agent shall
be entitled to appoint one or more sub-collateral agents or co-collateral
agents, and in such case the Collateral Agent, the Borrower and each of the
other Credit Parties having an interest in the Collateral located in the State
in which such separate or sub-collateral agent or co-collateral agent is to act
shall execute and deliver all instruments and agreements necessary or proper to
constitute another bank or trust company, or one or more individuals approved by
the Collateral Agent, either to act as co-collateral agent or co-collateral
agents jointly with the Collateral Agent originally named herein or any
successor or successors, or to act as a separate or subcollateral agent or
agents of the Collateral Agent and the Secured Creditors in respect of any or
all of the Collateral. If the Borrower and each of the other Credit Parties
having an interest in the Collateral located in the State in which such separate
or sub-collateral agent or co-collateral agent is to act shall not have joined
in the execution of such instruments or agreements within 10 days after the
receipt of a written request from the Collateral Agent so to do, or if a Default
or an Event of Default shall be continuing, the Collateral Agent may act under
the foregoing provisions of this Section 20 without the concurrence of the
Borrower and the other Credit Parties, and the Borrower and each of the other
Credit Parties hereby irrevocably appoint the Collateral Agent as their agent
and attorney to act for them under the foregoing provisions of this Section 20
in either of such contingencies. Any co-collateral agent or separate or
sub-collateral agent appointed to act with respect to the Casino shall be a
Qualified Person.
(b) Every separate or sub-collateral agent (and all references
herein to a "separate collateral agent" shall be deemed to refer also to a
"sub-collateral agent" or a "collateral sub-agent") and every co-collateral
agent, other than any collateral agent which may be appointed as successor to
any Collateral Agent, shall, to the extent permitted by applicable law, be
appointed and act and be such, subject to the following provisions and
conditions, namely:
(i) all rights, remedies, powers, duties and obligations
conferred upon, reserved to or imposed upon the Collateral Agent in
respect of the custody, control and management of monies, papers or
securities shall be exercised solely by the Collateral Agent
hereunder;
(ii) all rights, remedies, powers, duties and obligations
conferred upon, reserved to or imposed upon the Collateral Agent
hereunder shall be conferred, reserved or imposed and exercised or
performed by the Collateral Agent and such separate collateral agent
or separate collateral agents or co-collateral agent or co-collateral
agents, jointly or severally, as shall be provided in the instrument
appointing such separate collateral agent or separate collateral
agents or co-collateral agent or co-collateral agents, except to the
extent that, under any law of any jurisdiction in which any particular
act or acts are to be performed, the Collateral Agent shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, remedies, powers, duties and obligations shall be
exercised and performed by such separate collateral agent or separate
collateral agents or co-collateral agent or co-collateral agents;
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(iii) no power given hereby to, or which it is provided hereby
may be exercised by, any such separate collateral agent or separate
collateral agents or co-collateral agent or co-collateral agents shall
be exercised hereunder by such separate collateral agent or separate
collateral agents or co-collateral agent or co-collateral agents
except (subject to applicable law) jointly with, or with the consent
or at the direction in writing of, the Collateral Agent;
(iv) all provisions of this Agreement relating to the Collateral
Agent or to releases of Collateral shall apply to any such separate
collateral agent or separate collateral agents or co-collateral agent
or co-collateral agents;
(v) no collateral agent constituted under this Section 20 shall
be personally liable by reason of any act or omission of any other
separate or co-collateral agent or the Collateral Agent hereunder; and
(vi) the Collateral Agent at any time by an instrument in
writing, executed by it, may accept the resignation of any such
separate collateral agent or co-collateral agent and the Collateral
Agent or the Required Secured Creditors may individually or jointly
remove any such separate collateral agent or co-collateral agent, and
in that case, by an instrument in writing executed by the Collateral
Agent or the Required Secured Creditors, as the case may be, and the
Collateral Agent or the Required Secured Creditors, as the case may
be, may appoint a successor to such separate collateral agent or
co-collateral agent, as the case may be, anything herein contained to
the contrary notwithstanding. If the Borrower and each of the other
Credit Parties shall not have joined in the execution of any such
instrument within 10 days after the receipt of a written request from
the Collateral Agent so to do, or if a Default or an Event of Default
shall be continuing, the Collateral Agent shall have the power to
accept the resignation of or remove any such separate collateral agent
or co-collateral agent and to appoint a successor to such separate
collateral agent or co-collateral agent, as the case may be, and to
execute any such instrument without the concurrence of the Borrower or
such other Credit Party, and the Borrower and each of the other Credit
Parties hereby irrevocably appoint the Collateral Agent their agent
and attorney to act for them in such connection in either of such
contingencies. If the Collateral Agent shall have appointed a separate
collateral agent or separate collateral agents or co-collateral agent
or co-collateral agents as above provided, the Collateral Agent may at
any time, by an instrument in writing, accept the resignation of or
remove any such separate collateral agent or co-collateral agent, the
successor to any such separate collateral agent or co-collateral agent
to be appointed by the Borrower and each of the other Credit Parties
and the Collateral Agent, or by the Collateral Agent alone, as
hereinabove provided in this Section 20.
(c) Notwithstanding any other provision of this Section 20,
the Collateral Agent shall not appoint any separate collateral agent or
co-collateral agent without the consent of the Minimum Payment Guarantors, the
Administrative Agent and the New Bond Trustees.
21. Special Provisions regarding Minimum Payment Guarantors.
As contemplated by Section 15 hereof, this Agreement shall be binding upon the
successors and assigns of
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HET and HOC, as the Minimum Payment Guarantors originally party hereto. In
addition to the provisions of the immediately preceding sentence, if any other
Person at any time furnishes any substitute or replacement Minimum Payment
Guaranty (unless such Minimum Payment Guaranty is being provided on an unsecured
basis), then each such person or entity which so furnishes a successor or
replacement Minimum Payment Guaranty (or becomes a Minimum Payment Guarantor,
either individually or jointly and severally with any other Person) shall be
required (and JCC Holding and the Borrower shall cause each such Person) to
become a party to this Agreement (concurrently with its providing any such
Minimum Payment Guaranty or becoming a Minimum Payment Guarantor), by executing
and delivering to the Collateral Agent an instrument in writing, in
substantially the form of Annex A hereto, pursuant to which it becomes a party
hereto as a Minimum Payment Guarantor. Any Person furnishing a Minimum Payment
Guaranty (or becoming a Minimum Payment Guarantor) which does not so become a
party hereto shall not be entitled to the benefits (and shall not be secured by)
any of the Shared Security Documents.
22. Rights under Casino Lease. The parties hereto acknowledge
that, for purposes of the Casino Lease, the Collateral Agent shall be the "First
Leasehold Mortgagee" under and as defined in the Casino Lease and the exercise
of any and all rights granted the Collateral Agent as the First Leasehold
Mortgagee under the Casino Lease shall be subject to and in accordance with the
terms and conditions of this Agreement, including, without limitation, the
provisions of Sections 4 and 11 hereof.
23. Additional Collateral. Each Secured Creditor hereby agrees
for the benefit of the other Secured Creditors that, except as otherwise
specifically provided in Section 11(j) hereof and in the immediately succeeding
sentence, to the extent any additional or substitute collateral for any of the
Obligations is delivered by JCC Holding or any of its Subsidiaries to or for the
benefit of any Secured Creditor, such collateral shall be subject to the
provisions of this Agreement and the interest of such Secured Creditor therein
shall be immediately transferred to the Collateral Agent. The foregoing
provisions shall not apply to any cash payments received by any Authorized
Representative or Secured Creditor in advance (but not more than ten Business
Days in advance) of the date such cash is to be applied to the payment of any
Obligations or to any cash or cash equivalents required to be delivered at any
time as collateral for one or more outstanding Letters of Credit pursuant to the
Credit Agreement.
24. No Third Party Beneficiaries. This Agreement is entered
into solely for the benefit of the parties hereto and their respective
successors and assigns and for the benefit of the Secured Creditors from time to
time and their respective successors and assigns and, except for the Secured
Creditors and their successors and assigns, there shall be no third party
beneficiaries hereof, nor shall any Person other than the parties hereto and
their respective successors and assigns, and the Secured Creditors and their
respective successors and assigns, be entitled to enforce the provisions hereof
or have any claims against any party hereto (or any Secured Creditor) or their
successors and assigns arising from, or under, this agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
THE BANK OF NEW YORK,
as Collateral Agent
By /s/ R. Randall Deen
----------------------------------
Title: Agent
BANKERS TRUST COMPANY,
as Administrative Agent
By /s/ Mary Kay Coyle
----------------------------------
Title: Managing Director
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Senior Subordinated Note Trustee
and as Senior Subordinated Contingent
Note Trustee
By /s/ Ray Haverstock
----------------------------------
Title: Vice President
HARRAH'S ENTERTAINMENT, INC.,
as a Minimum Payment Guarantor
By /s/ G.W. Loveland, II
----------------------------------
Title: Vice President
<PAGE>
HARRAH'S OPERATING COMPANY, INC.,
as a Minimum Payment Guarantor
By /s/ G.W. Loveland, II
----------------------------------
Title: Vice President
Acknowledged and Agreed to
as of the date first above
written:
JCC HOLDING COMPANY
By /s/ L. Camille Fowler
--------------------------
Title: Vice President/Secretary
JAZZ CASINO COMPANY, L.L.C.
By /s/ L. Camille Fowler
--------------------------
Title: Vice President/Secretary
CP DEVELOPMENT, L.L.C.
By /s/ L. Camille Fowler
--------------------------
Title: Vice President/Secretary
FP DEVELOPMENT, L.L.C.
By /s/ L. Camille Fowler
--------------------------
Title: Vice President/Secretary
<PAGE>
JCC DEVELOPMENT COMPANY, L.L.C.
By /s/ L. Camille Fowler
--------------------------
Title: Vice President/Secretary
<PAGE>
ANNEX A TO INTERCREDITOR AGREEMENT
FORM OF JOINDER AGEEMENT TO BECOME
PARTY TO THE INTERCREDITOR AGREEMENT
[Name and Address of
Collateral Agent]
Re: Intercreditor Agreement dated as of _____, 1998, as amended
Reference is hereby made to that certain Intercreditor Agreement dated
as of ____, 1998, among the various Secured Creditors described therein and you,
as Collateral Agent (the "Intercreditor Agreement"). Unless otherwise defined
herein, capitalized terms used herein and defined in the Intercreditor Agreement
are used herein as therein defined.
The undersigned hereby notifies you that it has provided, or will be
providing, a Minimum Payment Guaranty to the State of Louisiana by and through
the LGCB in accordance with the provisions of Section 25.1 of the Casino
Operating Contract. As a result of the execution and delivery of this Agreement
by the undersigned, the undersigned hereby agrees to become a party to the
Intercreditor Agreement as a Minimum Payment Guarantor thereunder, in each case
in accordance with the terms and provisions of the Intercreditor Agreement. The
undersigned agrees to comply with its obligations (including without limitation
those set forth in Section 6(c) and (d) thereof) as a party to the Intercreditor
Agreement as a Minimum Payment Guarantor thereunder.
IN WITNESS WHEREOF, this Agreement is executed and delivered as of this
____ day of ____, ____.
[Address of Minimum Payment Guarantor] [Name of Minimum Payment Guarantor]
By
-----------------------------
Name:
Title:
Accepted and Agreed as of this ___ day of ____, ____:
[Name of Collateral Agent], as Collateral Agent
By
----------------------------------
Name:
Title:
<PAGE>
Exhibit 4.10
CREDIT AGREEMENT
among
JCC HOLDING COMPANY, as a Guarantor,
JAZZ CASINO COMPANY, L.L.C., as Borrower,
VARIOUS BANKS,
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
----------------------------------
Dated as of October 29, 1998
----------------------------------
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TABLE OF CONTENTS
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SECTION 1. Amount and Terms of Credit..............................................................................1
1.01 The Commitments...............................................................................................1
1.02 Minimum Amount of Each Borrowing..............................................................................4
1.03 Notice of Borrowing...........................................................................................4
1.04 Disbursement of Funds.........................................................................................5
1.05 Notes.........................................................................................................6
1.06 Conversions Into Loans of Another Type.......................................................................10
1.07 Pro Rata Borrowings..........................................................................................10
1.08 Interest.....................................................................................................11
1.09 Interest Periods.............................................................................................12
1.10 Increased Costs, Illegality, etc.............................................................................13
1.11 Compensation.................................................................................................15
1.12 Change of Lending Office.....................................................................................16
1.13 Replacement of Banks.........................................................................................16
1.14 Conversion of Tranche A-1 and B-1 Term Loans to Tranche B-2 Term Loans.......................................18
SECTION 2. Letters of Credit.......................................................................................19
2.01 Letters of Credit............................................................................................19
2.02 Minimum Stated Amount........................................................................................20
2.03 Letter of Credit Requests....................................................................................20
2.04 Letter of Credit Participations..............................................................................21
2.05 Agreement to Repay Letter of Credit Drawings.................................................................23
2.06 Increased Costs..............................................................................................23
SECTION 3. Commitment Commission; Fees; Reductions of Commitment...................................................24
3.01 Fees ........................................................................................................24
3.02 Voluntary Termination of the Total Unutilized Revolving Loan Commitment......................................25
3.03 Mandatory Reduction of Commitments...........................................................................26
SECTION 4. Prepayments; Payments; Deferrals; Taxes.................................................................28
4.01 Voluntary Prepayments........................................................................................28
4.02 Mandatory Repayments and Commitment Reductions...............................................................29
4.03 Method and Place of Payment..................................................................................37
4.04 Net Payments.................................................................................................37
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SECTION 5. Conditions Precedent to Initial Credit Events...........................................................39
5.01 Execution of Agreement; Notes................................................................................39
5.02 Fees, etc....................................................................................................39
5.03 Officer's Certificate........................................................................................39
5.04 Opinions of Counsel..........................................................................................39
5.05 Corporate Documents; Proceedings; etc........................................................................40
5.06 Employee Benefit Plans; Collective Bargaining Agreements; Debt Agreements....................................41
5.07 Project Documents; etc.......................................................................................41
5.08 Confirmation of Plan of Reorganization.......................................................................42
5.09 Junior Subordinated Credit Facility..........................................................................42
5.10 Convertible Junior Subordinated Debentures...................................................................42
5.11 Harrah's Investor Cash Investment............................................................................42
5.12 Releases.....................................................................................................43
5.13 New Bonds....................................................................................................43
5.14 Issuance of New Class A Common Stock.........................................................................43
5.15 Management Agreement.........................................................................................43
5.16 Pledge Agreement.............................................................................................43
5.17 Security Agreement...........................................................................................43
5.18 Mortgage; Title Insurance; Surveys; etc......................................................................44
5.19 Guaranties...................................................................................................46
5.20 Intercreditor Agreement......................................................................................46
5.21 Consent Letter...............................................................................................46
5.22 Manager Subordination Agreement..............................................................................46
5.23 Completion Guarantor Loan Documents; etc.....................................................................47
5.24 Adverse Change; Approvals; Permits; etc......................................................................47
5.25 Litigation...................................................................................................48
5.26 Environmental Analyses; Evidence of Insurance; Utilities; Zoning.............................................48
5.27 Pro Forma Balance Sheet......................................................................................49
5.28 Construction Contracts.......................................................................................49
5.29 Minimum Payment Guaranty; Etc................................................................................49
5.30 No Default; Representations and Warranties...................................................................49
5.31 Notices of Borrowing; Letter of Credit Requests..............................................................50
SECTION 6. Conditions Precedent to Credit Events Occurring After the Initial Borrowing Date........................50
6.01 Absence of Certain Events of Default; Accuracy of Representations and Warranties.............................50
6.02 Notice of Borrowing; Letter of Credit Request................................................................50
6.03 Utilization of Other Available Proceeds......................................................................50
SECTION 7. Representations, Warranties and Agreements..............................................................51
7.01 Status.......................................................................................................51
7.02 Power and Authority..........................................................................................51
7.03 No Violation.................................................................................................52
7.04 Governmental Approvals.......................................................................................52
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(ii)
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7.05 Financial Statements; Financial Condition; Undisclosed Liabilities; Financial Projections;
Construction Budgets; Construction Schedule; Plans and Specifications .......................................52
7.06 Litigation...................................................................................................54
7.07 True and Complete Disclosure.................................................................................54
7.08 Use of Proceeds; Margin Regulations..........................................................................54
7.09 Tax Returns and Payments.....................................................................................54
7.10 Compliance with ERISA........................................................................................55
7.11 The Security Documents.......................................................................................55
7.12 Representations and Warranties in Documents..................................................................56
7.13 Properties...................................................................................................57
7.14 Capitalization...............................................................................................57
7.15 Subsidiaries.................................................................................................57
7.16 Compliance with Statutes, etc................................................................................57
7.17 Investment Company Act.......................................................................................58
7.18 Public Utility Holding Company Act...........................................................................58
7.19 Environmental Matters........................................................................................58
7.20 Labor Relations..............................................................................................59
7.21 Patents, Licenses, Franchises and Formulas...................................................................59
7.22 Indebtedness.................................................................................................60
7.23 Access; Utilities............................................................................................60
7.24 Project Documents............................................................................................60
7.25 Special Purpose Corporation..................................................................................61
7.26 Year 2000....................................................................................................61
SECTION 8. Affirmative Covenants...................................................................................61
8.01 Information Covenants........................................................................................61
8.02 Books, Records and Inspections...............................................................................65
8.03 Maintenance of Property; Insurance...........................................................................65
8.04 Corporate Franchises.........................................................................................66
8.05 Compliance with Statutes, etc................................................................................66
8.06 Compliance with Environmental Laws...........................................................................67
8.07 ERISA........................................................................................................67
8.08 End of Fiscal Years; Fiscal Quarters.........................................................................68
8.09 Performance of Obligations...................................................................................68
8.10 Payment of Taxes.............................................................................................68
8.11 Additional Mortgages; Further Assurances; Surveys............................................................69
8.12 Construction of Improvements; Amendments to Plans and Specifications, Construction Budget and
Construction Schedule .......................................................................................69
8.13 Inspection by the Administrative Agent.......................................................................71
8.14 Settlement of Claims.........................................................................................71
8.15 Notices......................................................................................................71
8.16 PIK Payments.................................................................................................72
8.17 Project Account; Operating Accounts; Payment of Project Costs; Etc...........................................72
8.18 Covenants With Respect to Material Leases....................................................................73
8.19 Conditions to Material Alterations or Restorations...........................................................74
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8.20 Maintaining the Premises.....................................................................................75
8.21 Releases of Mortgaged Properties..........................................................................76
SECTION 9. Negative Covenants......................................................................................76
9.01 Liens........................................................................................................76
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.......................................................79
9.03 Restricted Payments..........................................................................................80
9.04 Indebtedness.................................................................................................82
9.05 Advances, Investments and Loans..............................................................................85
9.06 Transactions with Affiliates.................................................................................86
9.07 Capital Expenditures.........................................................................................88
9.08 Consolidated Interest Coverage Ratio.........................................................................89
9.09 Minimum Consolidated EBITDA..................................................................................89
9.10 Consolidated Debt to Consolidated EBITDA.....................................................................90
9.11 Limitation on Payments of Certain Indebtedness; Modifications of Certain Indebtedness;
Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc.....................91
9.12 Limitation on Certain Restrictions on Subsidiaries...........................................................93
9.13 Limitation on Issuance of Capital Stock......................................................................93
9.14 Business.....................................................................................................93
9.15 Limitation on Creation of Subsidiaries.......................................................................94
9.16 Casino Manager...............................................................................................94
SECTION 10. Events of Default......................................................................................95
10.01 Payments.....................................................................................................95
10.02 Representations, etc.........................................................................................95
10.03 Covenants....................................................................................................95
10.04 Default Under Other Indebtedness.............................................................................95
10.05 Project Documents............................................................................................96
10.06 Bankruptcy, etc..............................................................................................96
10.07 ERISA........................................................................................................97
10.08 Security Documents...........................................................................................97
10.09 Guaranties; etc..............................................................................................97
10.10 Subordination Agreements.....................................................................................98
10.11 Judgments....................................................................................................98
10.12 Change of Control............................................................................................98
10.13 Gaming Authority.............................................................................................98
10.14 Management Agreement.........................................................................................98
10.15 Trademark Permission.........................................................................................99
10.16 Completion of Casinos........................................................................................99
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(iv)
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10.17 Minimum Payment Guaranty; Etc................................................................................99
SECTION 11. Definitions and Accounting Terms......................................................................100
11.01 Defined Terms...............................................................................................100
SECTION 12. The Administrative Agent.............................................................................143
12.01 Appointment.................................................................................................143
12.02 Nature of Duties............................................................................................143
12.03 Lack of Reliance on the Administrative Agent................................................................143
12.04 Certain Rights of the Administrative Agent..................................................................144
12.05 Reliance....................................................................................................144
12.06 Indemnification.............................................................................................144
12.07 The Administrative Agent in its Individual Capacity.........................................................145
12.08 Holders.....................................................................................................145
12.09 Resignation by the Administrative Agent.....................................................................145
SECTION 13. Subordination of Tranche B and Revolving Obligations to Tranche A Obligations........................146
13.01 Tranche B and Revolving Obligations Subordinated to Tranche A Obligations...................................146
13.02 Tranche B and Revolving Obligations Subordinated to Prior Payment of All Tranche A
Obligations on Dissolution, Liquidation, Reorganization, etc. of the Borrower ..............................146
13.03 Holders of Tranche B and Revolving Obligations to be Subrogated to Rights of Holders of Tranche A
Obligations ................................................................................................148
13.04 Obligations of the Borrower Unconditional...................................................................148
13.05 Borrower Not to Make Payments With Respect to Tranche B and Revolving Obligations in Certain Circumstances..148
13.06 Administrative Agent Entitled to Assume Payments Not Prohibited in Absence of Notice........................149
13.07 Application by Administrative Agent of Monies Deposited With It.............................................150
13.08 Subordination Rights Not Impaired by Acts or Omissions of Borrower or Holders of Tranche A Obligations......150
13.09 Holders of Tranche B and Revolving Obligations Authorize Administrative Agent to Effectuate
Subordination of Tranche B and Revolving Obligations .......................................................151
13.10 Right of Administrative Agent to Hold Tranche A Obligations; Preservation of Administrative Agent's Rights..152
13.11 Section 13 Not to Prevent Events of Default.................................................................152
13.12 Administrative Agent Not Fiduciary for Holders of Tranche A Obligations.....................................152
13.13 Certain Payments Not Subordinated...........................................................................152
SECTION 14. Lien Priorities......................................................................................153
14.01 Priorities of Various Tranches..............................................................................153
14.02 Acknowledgment of Prior Security Interest...................................................................153
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SECTION 15. Subordination of Tranche B-2 Obligations to Tranche B-1 Obligations...................................153
15.01 Tranche B-2 Obligations Subordinated to TrancheB-1 Obligations..............................................153
15.02 Tranche B-2 Obligations Subordinated to Prior Payment of All Tranche B-1 Obligations on
Dissolution, Liquidation, Reorganization, etc. of the Borrower..............................................153
15.03 Holders of Tranche B-2 Obligations to be Subrogated to Rights of Holders of Tranche B-1 Obligations.........155
15.04 Obligations of the Borrower Unconditional...................................................................155
15.05 Borrower Not to Make Payments With Respect to Tranche B-2 Obligations in Certain Circumstances..............156
15.06 Administrative Agent Entitled to Assume Payments Not Prohibited in Absence of Notice........................157
15.07 Application by Administrative Agent of Monies Deposited With It.............................................157
15.08 Subordination Rights Not Impaired by Acts or Omissions of Borrower or Holders of Tranche B-1 Obligations....157
15.09 Holders of Tranche B-2 Obligations Authorize Administrative Agent to Effectuate
Subordination of Tranche B-2 Obligations ...................................................................159
15.10 Right of Administrative Agent to Hold Tranche B-1 Obligations; Preservation of Administrative Agent's Rights159
15.11 Section 15 Not to Prevent Events of Default.................................................................159
15.12 Administrative Agent Not Fiduciary for Holders of Tranche B-1 Obligations...................................159
15.13 Certain Payments Not Subordinated...........................................................................160
15.14 Conflicting Subordination Provisions........................................................................160
SECTION 16. Miscellaneous.........................................................................................160
16.01 Payment of Expenses, etc....................................................................................160
16.02 Right of Setoff.............................................................................................161
16.03 Notices.....................................................................................................162
16.04 Benefit of Agreement........................................................................................162
16.05 No Waiver; Remedies Cumulative..............................................................................165
16.06 Payments Pro Rata...........................................................................................166
16.07 Calculations; Computations..................................................................................166
16.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL......................................167
16.09 Counterparts................................................................................................168
16.10 Effectiveness...............................................................................................168
16.11 Headings Descriptive........................................................................................168
16.12 Amendment or Waiver; etc....................................................................................168
16.13 Survival....................................................................................................171
16.14 Domicile of Loans...........................................................................................171
16.15 Application of Gaming Regulations...........................................................................171
16.16 Confidentiality.............................................................................................172
16.17 Register....................................................................................................172
16.18 Execution of Documents by the Administrative Agent and Collateral Agent.....................................173
16.19 Certain Waivers and Releases................................................................................173
16.20 No Third Party Beneficiaries................................................................................176
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(vi)
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SECTION 17. JCC Holding Guaranty.................................................................................176
17.01 The JCC Holding Guaranty....................................................................................176
17.02 Bankruptcy..................................................................................................176
17.03 Nature of Liability.........................................................................................176
17.04 Independent Obligation......................................................................................177
17.05 Authorization...............................................................................................177
</TABLE>
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Property
SCHEDULE IV Indebtedness
SCHEDULE V Insurance
SCHEDULE VI Existing Liens
SCHEDULE VII Specified Real Estate
SCHEDULE VIII Title Reinsurers
SCHEDULE IX Threshold Amounts
SCHEDULE X Tax Matters
SCHEDULE XI Options
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Tranche A-1 Term Note
EXHIBIT B-2 Tranche A-2 Term Note
EXHIBIT B-3 Tranche A-3 Term Note
EXHIBIT B-4 Tranche B-1 Term Note
EXHIBIT B-5 Tranche B-2 Term Note
EXHIBIT B-6 Revolving Note
EXHIBIT B-7 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Opinion of Latham & Watkins, Special Counsel to the
Completion Guarantors
EXHIBIT E-2 Opinion E.O. Robinson, Jr., Esq., General Counsel to
the Completion Guarantors
EXHIBIT E-3 Opinion of Phelps Dunbar L.L.P., Louisiana Counsel
to the Borrower
EXHIBIT E-4 Opinion of Winthrop, Stimson, Putnam & Roberts,
counsel to the Borrower
EXHIBIT E-5 Opinion of William H. Patrick, Esq., Special Counsel
to the Borrower for Louisiana Gaming Matters
EXHIBIT E-6 Opinion of David J. Satz, Esq., Counsel to HET and
HOC for New Jersey Gaming Matters
EXHIBIT E-7 Opinion of Schreck Morris, Counsel to HET and HOC
for Nevada Gaming Matters
(vii)
<PAGE>
EXHIBIT F Officers' Certificate
EXHIBIT G Pledge Agreement
EXHIBIT H Security Agreement
EXHIBIT I-1 Borrower Mortgage
EXHIBIT I-2 CPD Mortgage
EXHIBIT I-3 FPD Mortgage
EXHIBIT I-4 JCC Development Mortgage
EXHIBIT J Railroad Estoppel Certificate
EXHIBIT K-1 Bank Completion Guarantee
EXHIBIT K-2 HET/HOC Guaranty and Loan Purchase Agreement
EXHIBIT K-3 Subsidiaries Guaranty
EXHIBIT L Intercreditor Agreement
EXHIBIT M Consent Letter
EXHIBIT N Manager Subordination Agreement
EXHIBIT O-1 Completion Guarantor Subordination Agreement
EXHIBIT O-2 Subordinated Lender Subordination Agreement
EXHIBIT P Credit Enhancement Fee Agreement (Bank Credit
Agreement)
EXHIBIT Q-1 Certificate of General Contractor - Centex
EXHIBIT Q-2 Certificate of General Contractor - Broadmoor
EXHIBIT Q-3 Certificate of Rivergate Architect
EXHIBIT Q-4 Certificate of Poydras Street Support Facility
Architect
EXHIBIT Q-5 Certificate of Authorized Officer - Project
Certificate
EXHIBIT Q-6 Consent and Continuation Agreement
EXHIBIT R Assignment and Assumption Agreement
(viii)
<PAGE>
CREDIT AGREEMENT, dated as of October 29, 1998, among JCC
HOLDING COMPANY, a Delaware corporation, as a Guarantor ("JCC Holding"), JAZZ
CASINO COMPANY, L.L.C., a Louisiana limited liability company (the "Borrower"),
the Banks party hereto from time to time, and BANKERS TRUST COMPANY, as
Administrative Agent (all capitalized terms used herein and defined in Section
11 are used herein as therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set
forth herein, the Banks are willing to make available to the Borrower the
respective credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitments. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with a Tranche A-1 Term Loan Commitment
severally agrees to make, on the Initial Borrowing Date, a term loan or term
loans (each a "Tranche A-1 Term Loan" and, collectively, the "Tranche A-1 Term
Loans") to the Borrower, which Tranche A-1 Term Loans (i) shall, at the option
of the Borrower, be incurred and maintained as and/or converted into Base Rate
Loans or Eurodollar Loans, provided that, except as otherwise specifically
provided in Section 1.10(b), all Tranche A-1 Term Loans comprising the same
Borrowing shall at all times be of the same Type and (ii) shall be made by each
Bank in that initial aggregate principal amount as is equal to the Tranche A-1
Term Loan Commitment of such Bank on such date (before giving effect to any
reductions thereto on such date pursuant to Section 3.03(a)). Once repaid,
Tranche A-1 Term Loans incurred hereunder may not be reborrowed.
(b) Subject to and upon the terms and conditions set forth
herein, each Bank with a Tranche A-2 Term Loan Commitment severally agrees to
make, from time to time on or after the Initial Borrowing Date and on or prior
to the Tranche A-2 Term Loan Commitment Termination Date, a term loan or term
loans (each a "Tranche A-2 Term Loan" and, collectively, the "Tranche A-2 Term
Loans") to the Borrower, which Tranche A-2 Term Loans (i) shall, at the option
of the Borrower, be incurred and maintained as and/or converted into Base Rate
Loans or Eurodollar Loans, provided that, except as otherwise specifically
provided in Section 1.10(b), all Tranche A-2 Term Loans comprising the same
Borrowing shall at all times be of the same Type and (ii) made by each Bank on a
given Tranche A-2 Term Loan Borrowing Date shall not exceed, in principal
amount, the amount of such Bank's Tranche A-2 Term Loan Commitment on such date
(before giving effect to any reductions thereto pursuant to Section 3.03(b)(i)
or (ii) but after giving effect to any reductions thereto on or prior to such
date pursuant to Sections 3.03(b)(iii)). Once repaid, Tranche A-2 Term Loans
incurred hereunder may not be reborrowed.
(c) Subject to and upon the terms and conditions set forth
herein, each Bank with a Tranche A-3 Term Loan Commitment severally agrees to
make, on the Initial Borrowing Date,
<PAGE>
a term loan or term loans (each a "Tranche A-3 Term Loan" and, collectively, the
"Tranche A-3 Term Loans") to the Borrower, which Tranche A-3 Term Loans (i)
shall, at the option of the Borrower, be incurred and maintained as and/or
converted into Base Rate Loans or Eurodollar Loans, provided that, except as
otherwise specifically provided in Section 1.10(b), all Tranche A-3 Term Loans
comprising the same Borrowing shall at all times be of the same Type and (ii)
shall be made by each Bank in that initial aggregate principal amount as is
equal to the Tranche A-3 Term Loan Commitment of such Bank on such date (before
giving effect to any reductions thereto on such date pursuant to Section
3.03(a)). Once repaid, Tranche A-3 Term Loans incurred hereunder may not be
reborrowed.
(d) Subject to and upon the terms and conditions set forth
herein, each Bank with a Tranche B-1 Term Loan Commitment severally agrees to
make, on the Initial Borrowing Date, a term loan or term loans (each a "Tranche
B-1 Term Loan" and, collectively, the "Tranche B-1 Term Loans") to the Borrower,
which Tranche B-1 Term Loans (i) shall, at the option of the Borrower, be
incurred and maintained as and/or converted into Base Rate Loans or Eurodollar
Loans, provided that, except as otherwise specifically provided in Section
1.10(b), all Tranche B-1 Term Loans comprising the same Borrowing shall at all
times be of the same Type and (ii) shall be made by each Bank in that initial
aggregate principal amount as is equal to such Bank's Tranche B-1 Term Loan
Commitment on such date (before giving effect to any reductions thereto on such
date pursuant to Section 3.03(a)). Once repaid, Tranche B-1 Term Loans incurred
hereunder may not be reborrowed.
(e) Subject to and upon the terms and conditions set forth
herein, each Bank with a Tranche B-2 Term Loan Commitment severally agrees to
make, from time to time on or after the Initial Borrowing Date and on or prior
to the Tranche B-2 Term Loan Commitment Termination Date, a term loan or term
loans (each a "Tranche B-2 Term Loan" and, collectively, the "Tranche B-2 Term
Loans") to the Borrower, which Tranche B-2 Term Loans (i) shall, at the option
of the Borrower, be incurred and maintained as and/or converted into Base Rate
Loans or Eurodollar Loans, provided that, except as otherwise specifically
provided in Section 1.10(b), all Tranche B-2 Term Loans comprising the same
Borrowing shall at all times be of the same Type and (ii) made by each Bank on a
given Tranche B-2 Term Loan Borrowing Date shall not exceed, in principal
amount, the amount of such Bank's Tranche B-2 Term Loan Commitment on such date
(before giving effect to any reductions thereto pursuant to Section 3.03(c)(i)
and (ii) but after giving effect to any reductions thereto on or prior to such
date pursuant to Sections 3.03(c)(iii)). Once repaid, Tranche B-2 Term Loans
incurred hereunder may not be reborrowed.
(f) Subject to and upon the terms and conditions set forth
herein, each Bank with a Revolving Loan Commitment severally agrees to make,
from time to time on or after the Initial Borrowing Date and prior to the
Revolving Loan Maturity Date, a revolving loan or revolving loans (each a
"Revolving Loan" and, collectively, the "Revolving Loans") to the Borrower,
which Revolving Loans (i) shall, at the option of the Borrower, be incurred and
maintained as and/or converted into Base Rate Loans or Eurodollar Loans,
provided that, except as otherwise specifically provided in Section 1.10(b), all
Revolving Loans comprising the same Borrowing shall at all times be of the same
Type, (ii) may be repaid and reborrowed in accordance with the provisions
hereof, (iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of (x) such Bank's
Adjusted Percentage and (y) the
2
<PAGE>
sum of (I) the aggregate amount of all Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) at such
time and (II) the aggregate principal amount of all Swingline Loans (exclusive
of Swingline Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Revolving Loan Commitment of such Bank at such time and
(iv) shall not exceed for all Banks at any time outstanding that aggregate
principal amount which, when added to (x) the amount of all Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time and (y) the aggregate principal amount of all
Swingline Loans (exclusive of Swingline Loans which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then outstanding, equals the Total Revolving Loan Commitment at
such time.
(g) Subject to and upon the terms and conditions set forth
herein, BTCo in its individual capacity agrees to make, from time to time after
the Initial Borrowing Date and prior to the Swingline Expiry Date, a revolving
loan or revolving loans (each a "Swingline Loan" and, collectively, the
"Swingline Loans") to the Borrower, which Swingline Loans (i) shall be made and
maintained as Base Rate Loans, (ii) may be repaid and reborrowed in accordance
with the provisions hereof, (iii) shall not exceed in aggregate principal amount
at any time outstanding, when combined with the aggregate principal amount of
all Revolving Loans made by Non-Defaulting Banks then outstanding and the Letter
of Credit Outstandings at such time, an amount equal to the Adjusted Total
Revolving Loan Commitment at such time (after giving effect to any reductions to
the Adjusted Total Revolving Loan Commitment on such date) and (iv) shall not
exceed in aggregate principal amount at any time outstanding the Maximum
Swingline Amount.
(h) On any Business Day, BTCo may, in its sole discretion,
give notice to the Banks that its outstanding Swingline Loans shall be funded
with a Borrowing of Revolving Loans (provided that such notice shall be deemed
to have been automatically given upon the occurrence of a Default or an Event of
Default under Section 10.06 or upon the exercise of any of the remedies provided
in the last paragraph of Section 10), in which case a Borrowing of Revolving
Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all
Banks with a Revolving Loan Commitment (without giving effect to any reductions
thereto pursuant to the last paragraph of Section 10) pro rata based on each
Bank's Adjusted Percentage (determined before giving effect to any termination
of the Revolving Loan Commitments pursuant to the last paragraph of Section 10)
and the proceeds thereof shall be applied directly to BTCo to repay BTCo for
such outstanding Swingline Loans. Each such Bank hereby irrevocably agrees to
make Revolving Loans upon one Business Day's notice pursuant to each Mandatory
Borrowing in the amount and in the manner specified in the preceding sentence
and on the date specified in writing by BTCo notwithstanding (i) that the amount
of the Mandatory Borrowing may not comply with the minimum amount for Borrowings
otherwise required hereunder, (ii) whether any conditions specified in Section 6
are then satisfied, (iii) whether a Default or an Event of Default then exists,
(iv) the date of such Mandatory Borrowing and (v) the amount of the Total
Revolving Loan Commitment or the Adjusted Total Revolving Loan Commitment at
such time. In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including,
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without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower), then each such Bank hereby agrees
that it shall forthwith purchase (as of the date the Mandatory Borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from BTCo such
participations in the outstanding Swingline Loans as shall be necessary to cause
such Banks to share in such Swingline Loans ratably based upon their respective
Adjusted Percentages (determined before giving effect to any termination of the
Revolving Loan Commitments pursuant to the last paragraph of Section 10),
provided that (x) all interest payable on the Swingline Loans shall be for the
account of BTCo until the date as of which the respective participation is
required to be purchased and, to the extent attributable to the purchased
participation, shall be payable to the participant from and after such date and
(y) at the time any purchase of participations pursuant to this sentence is
actually made, the purchasing Bank shall be required to pay BTCo interest on the
principal amount of participation purchased for each day from and including the
day upon which the Mandatory Borrowing would otherwise have occurred to but
excluding the date of payment for such participation, at the overnight Federal
Funds Rate for the first three days and at the rate otherwise applicable to
Revolving Loans maintained as Base Rate Loans hereunder for each day thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing of any Tranche of Term Loans shall not be less than
$5,000,000, provided that any Borrowing of Tranche A-1 Term Loans or Tranche B-1
Term Loans which is split into two Borrowings, one of Tranche A-1 Term Loans or
Tranche B-1 Term Loans, as the case may be, and one of Tranche B-2 Term Loans,
as a result of a conversion pursuant to Section 1.14, shall be permitted to
remain outstanding, although a new Interest Period may be designated for any
such Borrowing upon the termination of the Interest Period applicable thereto on
the Tranche B-2 Term Loan Commitment Termination Date only if such Borrowing
meets the requirements (determined without regard to this proviso) provided in
this Section 1.02. The aggregate principal amount of each Borrowing of Revolving
Loans shall be not less than $1,000,000 and, if greater, shall be in an integral
multiple of $500,000, provided that Mandatory Borrowings shall be made in the
amounts required by Section 1.01(h). The aggregate principal amount of each
Borrowing of Swingline Loans shall not be less than $250,000 and, if greater,
shall be in an integral multiple of $50,000. More than one Borrowing may occur
on the same date, but at no time shall there be outstanding more than nine
Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to
incur Loans hereunder (excluding Borrowings (x) of Swingline Loans and Mandatory
Borrowings and (y) resulting from conversions of Tranche A-1 Term Loans and/or
Tranche B-1 Term Loans into Tranche B-2 Term Loans pursuant to Section 1.14),
the Borrower shall give the Administrative Agent at its Notice Office at least
one Business Day's prior written notice of each Base Rate Loan and at least
three Business Days' prior written notice of each Eurodollar Loan to be incurred
hereunder, provided that any such notice shall be deemed to have been given on a
certain day only if given before 11:00 A.M. (New York time) (12:00 Noon (New
York time) in the case of a Borrowing of Base Rate Loans) on such day. Each such
written notice (each a "Notice of Borrowing"), except as otherwise expressly
provided in Section 1.10, shall be irrevocable and shall be given by the
Borrower in the form of Exhibit A, appropriately completed to specify the
aggregate principal amount of the Loans to be made pursuant to such Borrowing,
the date of such
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Borrowing (which shall be a Business Day), whether the Loans being made pursuant
to such Borrowing shall constitute Tranche A-1 Term Loans, Tranche A-2 Term
Loans, Tranche A-3 Term Loans, Tranche B-1 Term Loans, Tranche B-2 Term Loans or
Revolving Loans and whether the Loans being made pursuant to such Borrowing are
to be initially maintained as Base Rate Loans or Eurodollar Loans and, if
Eurodollar Loans, the initial Interest Period to be applicable thereto. The
Administrative Agent shall promptly give each Bank which is required to make
Loans of the Tranche specified in the respective Notice of Borrowing, notice of
such proposed Borrowing, of such Bank's proportionate share thereof and of the
other matters required by the immediately preceding sentence to be specified in
the Notice of Borrowing.
(b)(i) Whenever the Borrower desires to incur Swingline Loans
hereunder, it shall give BTCo not later than 12:00 Noon (New York time) on the
date that a Swingline Loan is to be incurred, written notice or telephonic
notice promptly confirmed in writing of each Swingline Loan to be incurred
hereunder. Each such notice shall be irrevocable and specify in each case (A)
the date of Borrowing (which shall be a Business Day) and (B) the aggregate
principal amount of the Swingline Loans to be made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(h), with the Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of the Mandatory Borrowings as
set forth in Section 1.01(h).
(iii) Borrowings of Tranche B-2 Term Loans resulting from
conversions pursuant to Section 1.14 shall be made as provided therein, with the
Borrower irrevocably agreeing, by its incurrence of any Tranche A-1 Term Loans
or Tranche B-1 Term Loans, to the conversion thereof into one or more Borrowings
of Tranche B-2 Term Loans as set forth, and to the extent provided, in Section
1.14.
(c) Without in any way limiting the obligation of the
Borrower to confirm in writing any telephonic notice of any Borrowing of
Swingline Loans, BTCo may act without liability upon the basis of telephonic
notice of such Borrowing, believed by BTCo in good faith to be from an
Authorized Officer of the Borrower prior to receipt of written confirmation.
In each such case, the Borrower hereby waives the right to dispute BTCo's
record of the terms of such telephonic notice of such Borrowing of Swingline
Loans.
1.04 Disbursement of Funds. Except as otherwise specifically
provided in the second succeeding sentence, not later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 2:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not
later than 12:00 Noon (New York time) on the date specified in Section 1.01(h)),
each Bank with a Commitment of the respective Tranche will make available its
pro rata portion of each such Borrowing requested to be made on such date (or in
the case of Swingline Loans, BTCo shall make available the full amount thereof).
All such amounts shall be made available in Dollars and in immediately available
funds at the Payment Office of the Administrative Agent, and the Administrative
Agent will make available to the Borrower at the Payment Office the aggregate of
the amounts so made available by the Banks (prior to 1:00 P.M. (New York time)
on such day, to the extent of funds actually received by the Administrative
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Agent prior to 12:00 Noon (New York time) on such day). Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Administrative
Agent such Bank's portion of any Borrowing to be made on such date, the
Administrative Agent may assume that such Bank has made such amount available to
the Administrative Agent on such date of Borrowing and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Administrative Agent by such Bank, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Bank. If such
Bank does not pay such corresponding amount forthwith upon the Administrative
Agent's demand therefor, the Administrative Agent shall promptly notify the
Borrower and the Borrower agrees immediately to pay such corresponding amount to
the Administrative Agent. The Administrative Agent shall also be entitled to
recover on demand from such Bank or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower until the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if recovered from such
Bank, the overnight Federal Funds Rate and (ii) if recovered from the Borrower,
the rate of interest applicable to the respective Borrowing, as determined
pursuant to Section 1.08. Nothing in this Section 1.04 shall be deemed to
relieve any Bank from its obligation to make Loans hereunder or to prejudice any
rights which the Borrower may have against any Bank as a result of any failure
by such Bank to make Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made by each Bank shall be evidenced (i) if
Tranche A-1 Term Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-1 with blanks appropriately
completed in conformity herewith (each a "Tranche A-1 Term Note" and,
collectively, the "Tranche A-1 Term Notes"), (ii) if Tranche A-2 Term Loans, by
a promissory note duly executed and delivered by the Borrower substantially in
the form of Exhibit B-2 with blanks appropriately completed in conformity
herewith (each a "Tranche A-2 Term Note" and, collectively, the "Tranche A-2
Term Notes"), (iii) if Tranche A-3 Term Loans, by a promissory note duly
executed and delivered by the Borrower substantially in form of Exhibit B-3 with
blanks appropriately completed in conformity herewith (each a "Tranche A-3 Term
Note" and, collectively, the "Tranche A-3 Term Notes"), (iv) if Tranche B-1 Term
Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-4 with blanks appropriately completed in
conformity herewith (each a "Tranche B-1 Term Note" and, collectively, the
"Tranche B-1 Term Notes"), (v) if Tranche B-2 Term Loans, by a promissory note
duly executed and delivered by the Borrower substantially in the form of Exhibit
B-5 with blanks appropriately completed in conformity herewith (each a "Tranche
B-2 Term Note" and, collectively, the "Tranche B-2 Term Notes"), (vi) if
Revolving Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-6, with blanks appropriately
completed in conformity herewith (each a "Revolving Note" and, collectively, the
"Revolving Notes") and (v) if Swingline Loans, by a promissory note duly
executed and delivered by the Borrower substantially in the form of Exhibit B-7,
with blanks appropriately completed in conformity herewith (the "Swingline
Note").
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(b) The Tranche A-1 Term Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank and be dated
the Initial Borrowing Date (or, if issued thereafter, the date of the issuance
thereof), (iii) be in a stated principal amount equal to the aggregate principal
amount of Tranche A-1 Term Loans made by such Bank on the Initial Borrowing Date
(or, if issued after the Initial Borrowing Date, the aggregate principal amount
of Tranche A-1 Term Loans of such Bank on the date of the respective issuance)
and be payable in the principal amount of the outstanding Tranche A-1 Term Loans
evidenced thereby from time to time, (iv) mature on the Tranche A-1 and Tranche
A-2 Term Loan Maturity Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans,
as the case may be, evidenced thereby, (vi) be subject to voluntary prepayment
as provided in Section 4.01 and mandatory repayment as provided in Section 4.02,
(vii) be entitled to the benefits of this Agreement and the other Credit
Documents, except that the Tranche A-1 Term Notes shall not be entitled to the
benefits of the HET/HOC Guaranty and Loan Purchase Agreement and (viii) be
subject to mandatory conversion into Tranche B-2 Term Loans in the
circumstances, and to the extent, provided in Section 1.14.
(c) The Tranche A-2 Term Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank and be dated
the Initial Borrowing Date (or, if issued thereafter, the date of the issuance
thereof), (iii) be in a stated principal amount equal to the Tranche A-2 Term
Loan Commitment of such Bank on the Initial Borrowing Date (or, if issued
thereafter, equal to the sum of the Tranche A-2 Term Loans of such Bank then
outstanding plus the amount of such Bank's Tranche A-2 Term Loan Commitment as
then in effect) and be payable in the principal amount of the outstanding
Tranche A-2 Term Loans evidenced thereby from time to time, (iv) mature on the
Tranche A-1 and A-2 Term Loan Maturity Date, (v) bear interest as provided in
the appropriate clause of Section 1.08 in respect of Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents (including the HET/HOC Guaranty and Loan Purchase
Agreement).
(d) The Tranche A-3 Term Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank and be dated
the Initial Borrowing Date (or, if issued thereafter, the date of the issuance
thereof), (iii) be in a stated principal amount equal to the aggregate principal
amount of Tranche A-3 Term Loans made by such Bank on the Initial Borrowing Date
(or, if issued after the Initial Borrowing Date, the aggregate principal amount
of Tranche A-3 Term Loans of such Bank on the date of the respective issuance)
and be payable in the principal amount of the outstanding Tranche A-3 Term Loans
evidenced thereby from time to time, (iv) mature on the Tranche A-3 Term Loan
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment as provided
in Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents,
except that the Tranche A-3 Term Notes shall not be entitled to the benefits of
the HET/HOC Guaranty and Loan Purchase Agreement.
(e) The Tranche B-1 Term Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank and be dated
the Initial Borrowing Date (or,
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if issued thereafter, the date of the issuance thereof), (iii) be in a stated
principal amount equal to the aggregate principal amount of Tranche B-1 Term
Loans made by such Bank on the Initial Borrowing Date (or, if issued after the
Initial Borrowing Date, the aggregate principal amount of Tranche B-1 Term Loans
of such Bank on the date of the respective issuance) and be payable in the
principal amount of the outstanding Tranche B-1 Term Loans evidenced thereby
from time to time, (iv) mature on the Tranche B Term Loan Maturity Date, (v)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to voluntary prepayment as provided in Section 4.01 and
mandatory repayment as provided in Section 4.02, (vii) be subordinated to the
Tranche A Obligations in accordance with the provisions of Section 13 of this
Agreement, (viii) be entitled to the benefits of this Agreement and the other
Credit Documents, except that the Tranche B-1 Term Notes shall not be entitled
to the benefits of the HET/HOC Guaranty and Loan Purchase Agreement and (ix) be
subject to mandatory conversion into Tranche B-2 Term Loans in the
circumstances, and to the extent, provided in Section 1.14.
(f) The Tranche B-2 Term Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank and be dated
the Initial Borrowing Date (or, if issued thereafter, the date of the issuance
thereof), (iii) be in a stated principal amount equal to the Tranche B-2 Term
Loan Commitment of such Bank on the Initial Borrowing Date (or, if issued
thereafter, equal to the sum of the Tranche B-2 Term Loans of such Bank then
outstanding plus the amount of such Bank's Tranche B-2 Term Loan Commitment as
then in effect) and be payable in the principal amount of the outstanding
Tranche B-2 Term Loans evidenced thereby from time to time, (iv) mature on the
Tranche B Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of Base Rate Loans and Eurodollar
Loans, as the case may be, evidenced thereby, (vi) be subject to voluntary
prepayment as provided in Section 4.01, and mandatory repayment as provided in
Section 4.02, (vii) be subordinated to the Tranche A Obligations in accordance
with the provisions of Section 13 of this Agreement and be subordinated to the
Tranche B-1 Obligations in accordance with the provisions of Section 15 of this
Agreement and (viii) be entitled to the benefits of this Agreement and the other
Credit Documents (including the HET/HOC Guaranty and Loan Purchase Agreement).
On the Tranche B-2 Term Loan Commitment Termination Date, if any Tranche A-1
Term Loans or Tranche B-1 Term Loans are converted into Tranche B-2 Term Loans
in accordance with the provisions of Section 1.14, then on such date the
Borrower shall deliver to each Bank with Loans so converted new Tranche B-2 Term
Notes to the extent needed to reflect the increased principal amount of Tranche
B-2 Term Loans of the respective Banks then outstanding, although any failure of
the Borrower to comply with its obligations pursuant to this sentence shall in
no event affect the conversion as provided in Section 1.14 or the obligations of
the Borrower (including the obligation to pay principal and interest thereon)
with respect to the Tranche B-2 Term Loans resulting from such conversion.
(g) The Revolving Note issued to each Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of such Bank and be dated
the Initial Borrowing Date (or, if issued thereafter, the date of the issuance
thereof), (iii) be in a stated principal amount equal to the Revolving Loan
Commitment of such Bank and be payable in the principal amount of the
outstanding Revolving Loans evidenced thereby from time to time, (iv) mature on
the Revolving Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in
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respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02, (vii) be
subordinated to the Tranche A Obligations in accordance with the provisions of
Section 13 of this Agreement and (viii) be entitled to the benefits of this
Agreement and the other Credit Documents (including the HET/HOC Guaranty and
Loan Purchase Agreement).
(h) The Swingline Note issued to BTCo shall (i) be executed by
the Borrower, (ii) be payable to the order of BTCo and be dated the Initial
Borrowing Date (or, if issued thereafter, the date of the issuance thereof),
(iii) be in a stated principal amount equal to the Maximum Swingline Amount and
be payable in the principal amount of the outstanding Swingline Loans evidenced
thereby from time to time, (iv) mature on the Swingline Expiry Date, (v) bear
interest as provided in the appropriate clause of Section 1.08 in respect of the
Base Rate Loans evidenced thereby, (vi) be subject to voluntary prepayment as
provided in Section 4.01, and mandatory repayment as provided in Section 4.02,
(vii) be subordinated to the Tranche A Obligations in accordance with the
provisions of Section 13 of this Agreement and (viii) be entitled to the
benefits of this Agreement and the other Credit Documents (including the HET/HOC
Guaranty and Loan Purchase Agreement).
(i) In addition to the terms set forth above in this Section
1.05, (i) each Note shall also contain the following legend (which shall be
printed thereon in bold face):
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN
THE INTERCREDITOR AGREEMENT (AS DEFINED IN THE AGREEMENT), WHICH
INTERCREDITOR AGREEMENT, AMONG OTHER THINGS, ESTABLISHES CERTAIN RIGHTS
WITH RESPECT TO THE SECURITY FOR THIS NOTE AND THE SHARING OF PROCEEDS
THEREOF WITH CERTAIN OTHER SECURED CREDITORS (AS DEFINED IN THE
INTERCREDITOR AGREEMENT). COPIES OF SUCH INTERCREDITOR AGREEMENT WILL
BE FURNISHED TO ANY HOLDER OF THIS NOTE UPON REQUEST TO THE BORROWER.
(ii) each Tranche B-1 Term Note, each Revolving Note and each Swingline Note
shall also contain the following legend (which shall be printed thereon in bold
face):
THIS NOTE IS SUBORDINATED TO THE TRANCHE A OBLIGATIONS (AS DEFINED IN
THE AGREEMENT) IN ACCORDANCE WITH THE PROVISIONS OF SECTION 13 OF THE
AGREEMENT.
(iii) each Tranche B-2 Term Note shall also contain the following legend
(which shall be printed thereon in bold face):
THIS NOTE IS SUBORDINATED TO THE TRANCHE A OBLIGATIONS (AS
DEFINED IN THE AGREEMENT) IN ACCORDANCE WITH THE PROVISIONS OF SECTION
13 OF THE AGREEMENT AND IS SUBORDINATED TO THE
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TRANCHE B-1 OBLIGATIONS (AS DEFINED IN THE AGREEMENT) IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 15 OF THE AGREEMENT.
and (iv) each Tranche A-2 Term Note, each Revolving Note, each Swingline Note
and each Tranche B-2 Term Note shall also contain the following legend (which
shall be printed thereon in bold face), except that the bracketed language
contained below shall not appear in the Tranche A-2 Term Notes:
FURTHERMORE, [BUT SUBJECT TO THE SUBORDINATION DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE,] CERTAIN AMOUNTS PAYABLE AS
INTEREST ON THIS NOTE ARE REQUIRED TO BE PAID BY, OR ON BEHALF OF, THE
HOLDER OF THIS NOTE TO HET AND/OR HOC (EACH AS DEFINED IN THE
AGREEMENT) PURSUANT TO SECTION 1.08(f) OF THE AGREEMENT AND THE CREDIT
ENHANCEMENT FEE AGREEMENT (BANK CREDIT AGREEMENT) REFERRED TO THEREIN.
(j) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation or endorsement shall not affect the Borrower's
obligations in respect of such Loans.
1.06 Conversions Into Loans of Another Type. The Borrower
shall have the option to convert, on any Business Day, all or a portion equal to
at least (x) in the case of a conversion of Term Loans, $5,000,000 and (y) in
the case of a conversion of Revolving Loans, $1,000,000 (and, if greater, in an
integral multiple of $500,000), of the outstanding principal amount of Loans
made pursuant to one or more Borrowings (so long as of the same Tranche) of one
or more Types of Loans into a Borrowing (of the same Tranche) of another Type of
Loan, provided that (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on the last day of
an Interest Period applicable to the Loans being converted and no such partial
conversion of Eurodollar Loans shall reduce the outstanding principal amount of
such Eurodollar Loans made pursuant to a single Borrowing to less than (x) in
the case of Term Loans, $5,000,000 and (y) in the case of Revolving Loans,
$1,000,000, (ii) Base Rate Loans may only be converted into Eurodollar Loans if
no Default or Event of Default is in existence on the date of the conversion,
(iii) no conversion pursuant to this Section 1.06 shall result in a greater
number of Borrowings of Eurodollar Loans than is permitted under Section 1.02
and (iv) Swingline Loans may not be converted pursuant to this Section 1.06.
Each such conversion shall be effected by the Borrower giving the Administrative
Agent at its Notice Office prior to 12:00 Noon (New York time) at least three
Business Days' prior notice (each a "Notice of Conversion") specifying the Loans
to be so converted, the Borrowing(s) pursuant to which such Loans were made and,
if to be converted into Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank prompt notice
of any such proposed conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of Tranche A-1 Term
Loans, Tranche A-2 Term Loans, Tranche A-3 Term Loans, Tranche B-1 Term Loans,
Tranche B-2
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Term Loans and Revolving Loans under this Agreement shall be
incurred from the Banks pro rata on the basis of their Tranche A-1 Term Loan
Commitments, Tranche A-2 Term Loan Commitments, Tranche A-3 Term Loan
Commitments, Tranche B-1 Term Loan Commitments, Tranche B-2 Term Loan
Commitments or Revolving Loan Commitments, as the case may be, provided that (x)
all Borrowings of Revolving Loans made pursuant to a Mandatory Borrowing shall
be incurred from the Banks with Revolving Loan Commitments pro rata on the basis
of their Adjusted Percentages and (y) Borrowings of Tranche B-2 Term Loans
resulting from conversions pursuant to Section 1.14 shall be made through the
conversion of outstanding Tranche A-2 Term Loans and/or Tranche B-1 Term Loans
as more fully provided in, and in accordance with the provisions of, Section
1.14. It is understood that no Bank shall be responsible for any default by any
other Bank of its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan from the date the
proceeds thereof are made available to the Borrower until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Base Rate Loan and (ii)
the conversion of such Base Rate Loan to a Eurodollar Loan pursuant to Section
1.06, at a rate per annum which shall be equal to the sum of the Applicable
Margin plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Eurodollar Loan and (ii) the
conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06,
1.09 or 1.10, as applicable, at a rate per annum which shall, during each
Interest Period applicable thereto, be equal to the sum of the Applicable Margin
plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case (notwithstanding any provision of the Mortgage
that would result in a different rate of interest being applicable to any such
amount), bear interest at a rate per annum equal to the greater of (x) 2% per
annum in excess of the rate otherwise applicable to Base Rate Loans of the
respective Tranche of Loans from time to time and (y) the rate which is 2% in
excess of the rate then borne by such Loans, in each case with such interest to
be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, on any
repayment or prepayment (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
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(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
(f) Without limiting or otherwise affecting the obligations of
the Borrower to pay interest as provided above, each Bank hereby authorizes the
Administrative Agent, on its behalf, to enter into the Credit Enhancement Fee
Agreement (Bank Credit Agreement) and further agrees that from interest payments
actually received by them (or received by the Administrative Agent on their
behalf) in respect of Revolving Loans, Swingline Loans, Tranche A-2 Term Loans
and/or Tranche B-2 Term Loans (but, in the case of Tranche B-2 Term Loans, only
to the extent the aggregate principal amount of such Tranche B-2 Term Loans for
all Banks outstanding from time to time exceeds $10 million), as the case may
be, and from Letter of Credit Fees payable to the Banks pursuant to Section
3.03(c), Credit Support Fees shall be paid by the respective Banks to HET and/or
HOC as provided in the Credit Enhancement Fee Agreement (Bank Credit Agreement).
Each Bank which has outstanding Revolving Loans, Swingline Loans, Tranche A-2
Term Loans or Tranche B-2 Term Loans and/or participates in outstanding Letters
of Credit hereby authorizes and directs the Administrative Agent to deduct, from
payments of interest on the relevant Loans and Letter of Credit Fees actually
received by it, such amounts as the Administrative Agent determines from time to
time are owing as Credit Support Fees pursuant to the Credit Enhancement Fee
Agreement (Bank Credit Agreement). Each Bank further agrees that the
Administrative Agent shall have no liability if it fails to deduct the amounts
so payable, in which case the respective Bank receiving the interest or Letter
of Credit Fee shall be obligated to remit to HET and/or HOC as provided in the
Credit Fee Enhancement Agreement (Bank Credit Agreement) its share (based upon
interest payments and/or Letter of Credit Fees actually received by it) of any
such Credit Support Fees. In connection with payments made by the Administrative
Agent of Credit Support Fees as contemplated herein, it is agreed that the
Administrative Agent shall have no liability to any Person (including without
limitation the Banks, HET and/or HOC) except to the extent resulting from the
gross negligence or willfulness conduct of the Administrative Agent.
1.09 Interest Periods. At the time the Borrower gives any
Notice of Borrowing or Notice of Conversion in respect of the making of, or
conversion into, any Eurodollar Loan (in the case of the initial Interest Period
applicable thereto) or on the third Business Day prior to the expiration of an
Interest Period applicable to such Eurodollar Loan (in the case of any
subsequent Interest Period), the Borrower shall have the right to elect, by
giving the Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to such Eurodollar Loan, which Interest Period
shall, at the option of the Borrower, be a one, two, three or six-month period,
provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including
the date of any conversion thereto from a Loan of a different Type)
and each Interest Period occurring thereafter in respect of such
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Eurodollar Loan shall commence on the day on which the next preceding
Interest Period applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest
Period for a Eurodollar Loan would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a Default
or an Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of any
Tranche of Loans shall be selected which extends beyond the respective
Maturity Date for such Tranche of Loans; and
(vii) no Interest Period in respect of any Borrowing of Tranche
A-1 Term Loans, Tranche A-2 Term Loans, Tranche A-3 Term Loans,
Tranche B-1 Term Loans or Tranche B-2 Term Loans, as the case may be,
shall be selected which extends beyond any date upon which a mandatory
repayment of such Tranche of Term Loans will be required to be made
under Section 4.02(b) if the aggregate principal amount of such
Tranche of Term Loans which have Interest Periods which will expire
after such date will be in excess of the aggregate principal amount of
such Tranche of Term Loans then outstanding less the aggregate amount
of such required repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
any Bank shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto but,
with respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
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(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the
date of this Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the
force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, order, guideline or request, such as, for example, but not
limited to: (A) a change in the basis of taxation of payment to any
Bank of the principal of or interest on such Eurodollar Loan or any
other amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or profits of such
Bank pursuant to the laws of the jurisdiction in which it is organized
or in which its principal office or applicable lending office is
located or any subdivision thereof or therein) or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation
of the Eurodollar Rate and/or (y) other circumstances since the date
of this Agreement affecting such Bank or the interbank Eurodollar
market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental request (whether or not having force
of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrower and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower agrees to pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts received or
receivable hereunder (a written notice as to the additional amounts owed to such
Bank, showing the basis for the calculation thereof, submitted to the Borrower
by such Bank in good faith shall, absent manifest error, be final and conclusive
and binding on all the parties hereto) and (z) in the case of clause (iii)
above, the Borrower shall take one of the actions specified in Section 1.10(b)
as promptly as possible and, in any event, within the time period required by
law. Each of the Administrative Agent and each Bank agrees that if it gives
notice to the Borrower of any of the events described in clause (i) or (iii)
above, it shall promptly notify the Borrower and, in the case of any such Bank,
the Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Bank, the obligations of
such Bank to make Eurodollar Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained herein shall be
reinstated.
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(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii), the Borrower may, and in the
case of a Eurodollar Loan affected by the circumstances described in Section
1.10(a)(iii) the Borrower shall, either (x) if the affected Eurodollar Loan is
then being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Bank or
the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if the
affected Eurodollar Loan is then outstanding, upon at least three Business Days'
written notice to the Administrative Agent, require the affected Bank to convert
such Eurodollar Loan into a Base Rate Loan, provided that, if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that the introduction
of or any change in any applicable law or governmental rule, regulation, order,
guideline, directive or request (whether or not having the force of law and
including, without limitation, those announced or published prior to the
Effective Date) concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency, will have the effect of increasing the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
based on the existence of such Bank's Commitments hereunder or its obligations
hereunder, then the Borrower agrees to pay to such Bank, upon its written demand
therefor, such additional amounts as shall be required to compensate such Bank
or such other corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good faith and will use
averaging and attribution methods which are reasonable, provided that such
Bank's reasonable good faith determination of compensation owing under this
Section 1.10(c) shall, absent manifest error, be final and conclusive and
binding on all the parties hereto. Each Bank, upon determining that any
additional amounts will be payable pursuant to this Section 1.10(c), will give
prompt written notice thereof to the Borrower, which notice shall show the basis
for calculation of such additional amounts.
1.11 Compensation. The Borrower agrees to compensate each
Bank, upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Bank to fund its Eurodollar Loans but excluding any loss of
anticipated profit) which such Bank may sustain: (i) if for any reason (other
than a default by such Bank or the Administrative Agent) a Borrowing of, or
conversion from or into, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii)
if any repayment (including any repayment made pursuant to Section 4.01 or 4.02
or a result of an acceleration of the Loans pursuant to Section 10) or
conversion of any of its Eurodollar Loans occurs on a date which is not the last
day of an Interest Period with respect thereto; (iii) if any prepayment of any
of its Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to
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repay Loans when required by the terms of this Agreement or any Note held by
such Bank or (y) any election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event, provided that such
designation is made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 1.12 shall affect or postpone any of the obligations of the
Borrower or the right of any Bank provided in Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. If any Bank (i) becomes a
Defaulting Bank or otherwise defaults in its obligations to make Loans or fund
Unpaid Drawings, (ii) is incurring or is reasonably expected to incur costs
which are or would be material in amount and are associated with a Gaming
Authority's investigation of whether or not such Bank is a Qualified Person or
(iii) refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as provided in Section 16.12(b), the Borrower shall have the
right, in accordance with the requirements of Section 16.04(b), if no Event of
Default would exist after giving effect to such replacement, to either replace
such Bank (the "Replaced Bank") with one or more other Qualified Person or
Persons, none of whom shall constitute a Defaulting Bank at the time of such
replacement (collectively, the "Replacement Bank") acceptable to the
Administrative Agent and each Issuing Bank or, at the option of the Borrower in
cases where the various Tranches held by the Banks are affected differently or
where the respective Bank's consent is required with respect to less than all of
the Tranches in which it participates, to replace only (u) the Revolving Loan
Commitment (and outstandings pursuant thereto) of the Replaced Bank with an
identical Revolving Loan Commitment (and related outstandings) provided by the
Replacement Bank, (v) the Tranche A-1 Term Loans of the Replaced Bank with
identical Tranche A-1 Term Loans provided by the Replacement Bank, (w) the
Tranche A-2 Term Loan Commitment and/or Tranche A-2 Term Loans of the Replaced
Bank with an identical Tranche A-2 Term Loan Commitment and/or Tranche A-2 Term
Loans, as the case may be, provided by the Replacement Bank, (x) the Tranche A-3
Term Loans of the Replaced Bank with identical Tranche A-3 Term Loans provided
by the Replacement Bank, (y) the Tranche B-1 Term Loans of the Replaced Bank
with identical Tranche B-1 Term Loans provided by the Replacement Bank and/or
(z) the Tranche B-2 Term Loan Commitment and/or Tranche B-2 Term Loans of the
Replaced Bank with an identical Tranche B-2 Term Loan Commitment and/or Tranche
B-2 Term Loans, as the case may be, provided by the Replacement Bank, provided
that (i) at the time of any replacement pursuant to this Section 1.13, the
Replacement Bank shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 16.04(b) (and with all fees payable pursuant to
said Section 16.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Revolving Loan Commitment, Tranche A-1
Term Loans, Tranche A-2 Term Loans and/or Tranche A-2 Term Loan Commitment, as
the case may be, Tranche A-3 Term Loans, Tranche B-1 Term Loans, Tranche B-2
Term Loans and/or Tranche B-2 Term Loan Commitment, as the case may be, of the
Replaced Bank and, in connection therewith, shall pay to
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(x) the Replaced Bank in respect thereof an amount equal to the sum of (A) if
the Revolving Loan Commitment is being replaced, an amount equal to the
principal of, and all accrued interest on, all outstanding Revolving Loans of
the Replaced Bank and an amount equal to all Unpaid Drawings that have been
funded by (and not reimbursed to) such Replaced Bank, together with all then
unpaid interest with respect thereto at such time, (B) if the Tranche A-1 Term
Loans are being replaced, an amount equal to the principal of, and all accrued
interest on, all outstanding Tranche A-1 Term Loans of the Replaced Bank, (C) if
the Tranche A-2 Term Loans are being replaced, an amount equal to the principal
of, and all accrued interest on, all outstanding Tranche A-2 Term Loans of the
Replaced Bank, (D) if the Tranche A-3 Term Loans are being replaced, an amount
equal to the principal of, and all accrued interest on, all outstanding Tranche
A-3 Term Loans of the Replaced Bank, (E) if the Tranche B-1 Term Loans are being
replaced, an amount equal to the principal of, and all accrued interest on, all
outstanding Tranche B-1 Term Loans of the Replaced Bank, (F) if the Tranche B-2
Term Loans are being replaced, an amount equal to the principal of, and all
accrued interest on, all outstanding Tranche B-2 Term Loans of the Replaced Bank
and (G) an amount equal to all accrued, but theretofore unpaid, Fees owing to
the Replaced Bank (but only with respect to the relevant Tranche or Tranches, in
the case of the replacement of less than all Tranches in which the respective
Replaced Bank participates) pursuant to Section 3.01, (y) except in the case of
the replacement of only the Term Loans and/or Term Loan Commitments of a
Replaced Bank, the Issuing Bank an amount equal to such Replaced Bank's Adjusted
Percentage (for this purpose, determined as if the adjustment described in
clause (y) of the immediately succeeding sentence had been made with respect to
such Replaced Bank) of any Unpaid Drawing (which at such time remains an Unpaid
Drawing) to the extent such amount was not theretofore funded by such Replaced
Bank, and (z) in the case of any replacement of Revolving Loan Commitments, BTCo
an amount equal to such Replaced Bank's Adjusted Percentage of any Mandatory
Borrowing to the extent such amount was not theretofore funded by such Replaced
Bank and (ii) all obligations of the Borrower owing to the Replaced Bank (other
than those (a) specifically described in clause (i) above in respect of which
the assignment purchase price has been, or is concurrently being, paid or (b)
relating to any Tranche in which the respective Replaced Bank will continue to
participate after giving effect to the respective replacement) shall be paid in
full to such Replaced Bank concurrently with such replacement. Upon the
execution of the respective Assignment and Assumption Agreements, the payment of
amounts referred to in clauses (i) and (ii) above, recordation of the assignment
on the Register by the Administrative Agent pursuant to Section 16.17 and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Note or Notes executed by the Borrower, (x) the Replacement Bank
shall become a Bank hereunder and, unless the respective Replaced Bank continues
to participate as a Bank in any Tranche hereunder, the Replaced Bank shall cease
to constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections 1.10,
1.11, 2.06, 4.04, 12.06 and 16.01), which shall survive as to such Replaced Bank
and (y) in the case of a replacement of the Revolving Loan Commitment of a
Defaulting Bank with the Revolving Loan Commitment of a Non-Defaulting Bank, the
Adjusted Percentages of the Banks shall be automatically adjusted at such time
to give effect to such replacement (and to give effect to the replacement of a
Defaulting Bank with one or more Non-Defaulting Banks). If any event described
in clauses (i) or (ii) above shall occur and the Borrower is unable within a
reasonable period of time to replace all of the Revolving Loans and the
Revolving Loan Commitment, and/or Term Loans and related Term
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Loan Commitments, as the case may be, of any such Bank through one or more
Replacement Banks, then the Borrower may replace a portion thereof with one or
more Replacement Banks on substantially the same terms described in this Section
1.13.
1.14 Conversion of Tranche A-1 and B-1 Term Loans to Tranche
B-2 Term Loans. (a) If, for any reason whatsoever, on the Tranche B-2 Term Loan
Commitment Termination Date (and after giving effect to all Tranche B-2 Term
Loans made on such date), less than $121.5 million aggregate principal amount of
Tranche B-2 Term Loans have theretofore been incurred under this Agreement, then
on such date, and automatically and without the taking of any further action by
the Borrower or any Bank, first, outstanding Tranche A-1 Term Loans and, second,
to the extent in excess thereof, Tranche B-1 Term Loans in an aggregate
principal amount equal to the remainder of (x) $121.5 million less (y) the
aggregate principal amount of Tranche B-2 Term Loans theretofore incurred
pursuant to this Agreement (or, if less than such remainder, the aggregate
principal amount of Tranche A-1 Term Loans and Tranche B-1 Term Loans then
outstanding) shall be automatically converted into Tranche B-2 Term Loans, with
such conversion to become effective on the Tranche B-2 Term Loan Commitment
Termination Date.
(b) Each Bank which has outstanding Tranche A-1 Term Loans on
the Tranche B-2 Term Loan Commitment Termination Date shall, if Section 1.14(a)
is applicable, have converted into Tranche B-2 Term Loans that portion of the
principal of its then outstanding Tranche A-1 Term Loans as is equal to the
aggregate amount of Tranche A-1 Term Loans to be converted for all Banks into
Tranche B-2 Term Loans as described in Section 1.14(a) multiplied by a fraction
the numerator of which is the aggregate principal amount of Tranche A-1 Term
Loans of such Bank outstanding on the Tranche B-2 Term Loan Commitment
Termination Date (immediately before giving effect to the conversions on such
date pursuant to this Section) and the denominator of which is all then
outstanding Tranche A-1 Term Loans of all Banks on such date (and before giving
effect to such conversions). In addition, each Bank with Tranche A-1 Term Loans
being converted into Tranche B-2 Term Loans shall share proportionately in each
Borrowing designated as being applicable to such converted Tranche B-2 Term
Loans pursuant to following clause (d).
(c) Each Bank which has outstanding Tranche B-1 Term Loans on
the Tranche B-2 Term Loan Commitment Termination Date shall, if Section 1.14(a)
is applicable, have converted into Tranche B-2 Term Loans that portion of the
principal of its then outstanding Tranche B-1 Term Loans as is equal to the
aggregate amount of Tranche B-1 Term Loans to be converted for all Banks into
Tranche B-2 Term Loans as described in Section 1.14(a) multiplied by a fraction
the numerator of which is the aggregate principal amount of Tranche B-1 Term
Loans of such Bank outstanding on the Tranche B-2 Term Loan Commitment
Termination Date (immediately before giving effect to the conversions on such
date pursuant to this Section) and the denominator of which is all then
outstanding Tranche B-1 Term Loans of all Banks on such date (and before giving
effect to such conversions). In addition, each Bank with Tranche B-1 Term Loans
being converted into Tranche B-2 Term Loans shall share proportionately in each
Borrowing designated as being applicable to such converted Tranche B-2 Term
Loans pursuant to following clause (d).
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(d) In furtherance of the requirements of the preceding
paragraphs of this Section 1.14, on the Tranche B-2 Term Loan Commitment
Termination Date, if any Tranche A-1 Term Loans or Tranche B-1 Term Loans are
being converted into Tranche B-2 Term Loans in accordance with this Section
1.14, the Borrower shall designate one or more Borrowings (or portions thereof)
of outstanding Tranche A-1 Term Loans and/or Tranche B-1 Term Loans, as the case
may be, as being converted into Borrowings of Tranche B-2 Term Loans. At the
time of any conversion pursuant to this Section 1.14, to the extent any
borrowings then outstanding as Eurodollar Loans are so being converted, such
conversion shall be deemed to constitute a termination of the Interest Period
then applicable thereto, which for purposes of Section 1.11 shall be deemed to
constitute a payment of Eurodollar Loans on a day that is not the last day of
the Interest Period with respect thereto (and at the time of such conversion,
the Borrower shall pay any amounts owing in connection therewith pursuant to
said Section 1.11). At the time of the conversions pursuant to this Section
1.14, the Borrower may designate one or more new Interest Periods to be
applicable to the converted loans in accordance with the provisions of Section
1.06. Notwithstanding anything to the contrary contained above, however,
immediately following any conversion pursuant to this Section 1.14, all Banks
with outstanding Tranche B-2 Term Loans shall be required to hold pro rata
shares (based upon their relative principal amounts of then outstanding Tranche
B-2 Term Loans) in each Borrowing which remains outstanding after giving effect
to the conversions pursuant to this Section 1.14. In connection therewith,
portions of the Loans being converted into Tranche B-2 Term Loans shall, to the
extent needed to cause the various banks to maintain such pro rata interests, be
required to remain outstanding as a part of one or more theretofore outstanding
Borrowings of Eurodollar Loans. In such case, however, the Borrower shall
compensate each Bank which has Loans which are to be outstanding as part of a
Borrowing of Eurodollar Loans with an Interest Period which began before the
Tranche B-2 Term Loan Commitment Termination Date and which ends thereafter for
any costs to such Bank of funding its portion of such Borrowing (as a result of
a conversion of its loans as otherwise provided above) during an Interest Period
already applicable thereto. In the absence of such a designation by the
Borrower, the Administrative Agent shall make such designation in its sole
discretion.
(e) Following any conversion of Tranche A-1 Term Loans and/or
Tranche B-1 Term Loans into Tranche B-2 Term Loans pursuant to this Section
1.14, all such Loans shall, for all purposes of this Agreement and the related
Credit Documents, be thereafter treated as Tranche B-2 Term Loans, although all
interest calculations on such Loans shall treat same as Tranche A-1 Term Loans
and/or Tranche B-1 Term Loans, as the case may be, for all periods occurring on
or prior to the Tranche B-2 Term Loan Commitment Termination Date.
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that an Issuing Bank
issue, at any time and from time to time on and after the Initial Borrowing Date
and prior to the Revolving Loan Maturity Date, for the account of the Borrower
and for the benefit of any holder (or any trustee, agent or other similar
representative for any such holders) of L/C Supportable Indebtedness of the
Borrower or any of its Subsidiaries, an irrevocable standby letter of credit, in
a form customarily used by such Issuing Bank or in such other form as has been
approved by such Issuing Bank (each such standby letter of credit, a "Letter of
Credit") in support of such L/C Supportable Indebtedness.
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(b) Each Issuing Bank hereby agrees that it will (subject to
the terms and conditions contained herein), at any time and from time to time on
or after the Initial Borrowing Date and prior to the Revolving Loan Maturity
Date, following its receipt of the respective Letter of Credit Request, issue
for the account of the Borrower one or more Letters of Credit, in support of
such L/C Supportable Indebtedness of the Borrower or any of its Subsidiaries as
is permitted to remain outstanding without giving rise to a Default or an Event
of Default, provided that the respective Issuing Bank shall be under no
obligation to issue any Letter of Credit of the types described above if at the
time of such issuance:
(i) any order, judgment or decree of any governmental authority
or arbitrator shall purport by its terms to enjoin or restrain such
Issuing Bank from issuing such Letter of Credit or any requirement of
law applicable to such Issuing Bank or any request or directive
(whether or not having the force of law) from any governmental
authority with jurisdiction over such Issuing Bank shall prohibit, or
request that such Issuing Bank refrain from, the issuance of letters
of credit generally or such Letter of Credit in particular or shall
impose upon such Issuing Bank with respect to such Letter of Credit
any restriction or reserve or capital requirement (for which such
Issuing Bank is not otherwise compensated) not in effect on the date
hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Bank as of the date
hereof and which such Issuing Bank in good faith deems material to it;
or
(ii) such Issuing Bank shall have received notice from any Bank
prior to the issuance of such Letter of Credit of the type described
in the penultimate sentence of Section 2.03(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time would
exceed either (x) $10,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans made by Non-Defaulting Banks and then outstanding
and Swingline Loans then outstanding, an amount equal to the Adjusted Total
Revolving Loan Commitment at such time, (ii) each Letter of Credit shall be
denominated in Dollars and (iii) each Letter of Credit shall by its terms
terminate on or before the earlier of (x) the date which occurs 12 months after
the date of the issuance thereof (although any such Letter of Credit may be
extendible for successive periods of up to 12 months, but not beyond the
Revolving Loan Maturity Date, on terms acceptable to the Issuing Bank thereof)
and (y) the Revolving Loan Maturity Date.
2.02 Minimum Stated Amount. The Stated Amount of each Letter
of Credit shall be not less than $50,000 or such lesser amount as is acceptable
to the respective Issuing Bank.
2.03 Letter of Credit Requests. (a) Whenever the Borrower
desires that a Letter of Credit be issued for its account, the Borrower shall
give the Administrative Agent and the respective Issuing Bank at least five
Business Days' (or such shorter period as is acceptable to the respective
Issuing Bank) written notice thereof. Each notice shall be in the form of
Exhibit C (each a "Letter of Credit Request").
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(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, Section 2.01(c). Unless the respective Issuing Bank has received notice from
any Bank before it issues a Letter of Credit that one or more of the conditions
specified in Section 6 are not then satisfied, or that the issuance of such
Letter of Credit would violate Section 2.01(c), then such Issuing Bank shall
issue the requested Letter of Credit for the account of the Borrower in
accordance with such Issuing Bank's usual and customary practices. Upon its
issuance of any Letter of Credit, such Issuing Bank shall promptly notify each
Bank of such issuance, which notice shall be accompanied by a copy of the Letter
of Credit actually issued.
2.04 Letter of Credit Participations. (a) Immediately upon the
issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank shall be
deemed to have sold and transferred to each Bank with a Revolving Loan
Commitment, other than such Issuing Bank (each such Bank, in its capacity under
this Section 2.04, a "Participant"), and each such Participant shall be deemed
irrevocably and unconditionally to have purchased and received from such Issuing
Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Participant's Adjusted Percentage, in such Letter of Credit,
each drawing made thereunder and the obligations of the Borrower under this
Agreement with respect thereto, and any security therefor or guaranty pertaining
thereto. Upon any change in the Revolving Loan Commitments or Adjusted
Percentages of the Banks pursuant to Section 1.13 or 16.04 or as a result of a
Bank Default, it is hereby agreed that, with respect to all outstanding Letters
of Credit and Unpaid Drawings, there shall be an automatic adjustment to the
participations pursuant to this Section 2.04 to reflect the new Adjusted
Percentages of the assignor and assignee Bank or of all Banks with Revolving
Loan Commitments, as the case may be.
(b) In determining whether to pay under any Letter of Credit,
such Issuing Bank shall have no obligation relative to the other Banks other
than to confirm that any documents required to be delivered under such Letter of
Credit appear to have been delivered and that they appear to comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by any Issuing Bank under or in connection with any Letter of Credit
if taken or omitted in the absence of gross negligence or willful misconduct,
shall not create for such Issuing Bank any resulting liability to the Borrower
or any Bank.
(c) In the event that any Issuing Bank makes any payment under
any Letter of Credit and the Borrower shall not have reimbursed such amount in
full to such Issuing Bank pursuant to Section 2.05(a), such Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such Participant's
Adjusted Percentage of such unreimbursed payment in Dollars and in same day
funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (New York
time) on any Business Day, any Participant required to fund a payment under a
Letter of Credit, such Participant shall make available to such Issuing Bank in
Dollars such Participant's Adjusted Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Participant shall
not have so made its Adjusted Percentage of the amount of such payment available
to such Issuing Bank, such Participant agrees to pay to such Issuing Bank,
forthwith on demand such amount, together with
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interest thereon, for each day from such date until the date such amount is paid
to such Issuing Bank at the overnight Federal Funds Rate. The failure of any
Participant to make available to such Issuing Bank its Adjusted Percentage of
any payment under any Letter of Credit shall not relieve any other Participant
of its obligation hereunder to make available to such Issuing Bank its Adjusted
Percentage of any Letter of Credit on the date required, as specified above, but
no Participant shall be responsible for the failure of any other Participant to
make available to such Issuing Bank such other Participant's Adjusted Percentage
of any such payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments from the
Participants pursuant to clause (c) above, such Issuing Bank shall pay to each
Participant which has paid its Adjusted Percentage thereof, in Dollars and in
same day funds, an amount equal to such Participant's share (based upon the
proportionate aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal amount of such
reimbursement obligation and interest thereon accruing after the purchase of the
respective participations.
(e) Upon the request of any Participant, each Issuing Bank
shall furnish to such Participant copies of any Letter of Credit issued by it
and such other documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to
each Issuing Bank with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any of its Subsidiaries may have at any time
against a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any Person for whom any such transferee may
be acting), the Administrative Agent, any Participant, or any other
Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the
Borrower or any of its Subsidiaries and the beneficiary named in any
such Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
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2.05 Agreement to Repay Letter of Credit Drawings. (a) The
Borrower hereby agrees to reimburse the respective Issuing Bank, by making
payment to the Administrative Agent in immediately available funds at the
Payment Office, for any payment or disbursement made by such Issuing Bank under
any Letter of Credit issued by it (each such amount, so paid until reimbursed,
an "Unpaid Drawing"), immediately after, and in any event on the date of, the
date of such payment or disbursement, with interest on the amount so paid or
disbursed by such Issuing Bank, to the extent not reimbursed prior to 12:00 Noon
(New York time) on the date of such payment or disbursement, from and including
the date paid or disbursed to but excluding the date such Issuing Bank was
reimbursed by the Borrower therefor at a rate per annum which shall be the Base
Rate in effect from time to time plus the Applicable Margin for Revolving Loans
maintained as Base Rate Loans, provided, however, to the extent such amounts are
not reimbursed prior to 12:00 Noon (New York time) on the third Business Day
following such payment or disbursement, interest shall thereafter accrue on the
amounts so paid or disbursed by such Issuing Bank (and until reimbursed by the
Borrower) at a rate per annum which shall be the Base Rate in effect from time
to time plus the Applicable Margin for Revolving Loans maintained as Base Rate
Loans plus 2%, in each such case, with interest to be payable by the Borrower on
demand. The respective Issuing Bank shall give the Borrower prompt notice of
each Drawing under any Letter of Credit, provided that the failure to give any
such notice shall in no way affect, impair or diminish the Borrower's
obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank with respect to drawings on Letters of
Credit (each, a "Drawing") (including, in each case, interest thereon) shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower may have or
have had against any Bank (including in its capacity as issuer of the Letter of
Credit or as Participant), or any nonapplication or misapplication by the
beneficiary of the proceeds of such Drawing, the respective Issuing Bank's only
obligation to the Borrower being to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and that
they appear to comply on their face with the requirements of such Letter of
Credit; provided, however, that the Borrower shall not be obligated to reimburse
such Issuing Bank for any wrongful payment made by such Issuing Bank under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Issuing Bank. Any action
taken or omitted to be taken by any Issuing Bank under or in connection with any
Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for such Issuing Bank any resulting
liability to the Borrower.
2.06 Increased Costs. If at any time the introduction of or
any change in any applicable law, rule, regulation, order, guideline or request
or in the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Issuing Bank or any Participant with any request or directive by any such
authority (whether or not having the force of law), or any change in generally
acceptable accounting principles, shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement against
letters of credit issued by any Issuing Bank or participated in by any
Participant, or (ii) impose on any Issuing Bank or any Participant any other
conditions relating, directly or indirectly, to this Agreement or any Letter of
Credit; and the result of any of the foregoing is to increase the cost to any
Issuing Bank or any Participant of issuing,
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maintaining or participating in any Letter of Credit, or reduce the amount of
any sum received or receivable by any Issuing Bank or any Participant hereunder
or reduce the rate of return on its capital with respect to Letters of Credit
(except for changes in the rate of tax on, or determined by reference to, the
net income or profits of such Issuing Bank or such Participant pursuant to the
laws of the jurisdiction in which it is organized or in which its principal
office or applicable lending office is located or any subdivision thereof or
therein), then, upon demand to the Borrower by such Issuing Bank or any
Participant (a copy of which demand shall be sent by such Issuing Bank or such
Participant to the Administrative Agent), the Borrower agrees to pay (and shall
pay) to such Issuing Bank or such Participant such additional amount or amounts
as will compensate such Bank for such increased cost or reduction in the amount
receivable or reduction on the rate of return on its capital. Any Issuing Bank
or any Participant, upon determining that any additional amounts will be payable
pursuant to this Section 2.06, will give prompt written notice thereof to the
Borrower, which notice shall include a certificate submitted to the Borrower by
such Issuing Bank or such Participant (a copy of which certificate shall be sent
by such Issuing Bank or such Participant to the Administrative Agent), setting
forth in reasonable detail the basis for the calculation of such additional
amount or amounts necessary to compensate such Issuing Bank or such Participant.
The certificate required to be delivered pursuant to this Section 2.06 shall, if
delivered in good faith and absent manifest error, be final and conclusive and
binding on the Borrower.
SECTION 3. Commitment Commission; Fees; Reductions of
Commitment.
3.01 Fees. (a)(i) The Borrower agrees to pay to the
Administrative Agent for distribution to each Non-Defaulting Bank with a Tranche
A-2 Term Loan Commitment, a commitment commission (the "Tranche A-2 Term Loan
Commitment Commission") for the period from the Effective Date to but excluding
the Tranche A-2 Term Loan Commitment Termination Date, computed at a rate for
each day equal to the HET Applicable Commitment Commission Percentage on the
daily average Tranche A-2 Term Loan Commitment of such Non-Defaulting Bank.
Accrued Tranche A-2 Term Loan Commitment Commission shall be due and payable
quarterly in arrears on each Quarterly Payment Date and upon the date on which
the Total Tranche A-2 Term Loan Commitment is terminated.
(ii) The Borrower agrees to pay to the Administrative Agent
for distribution to each Non-Defaulting Bank with a Tranche B-2 Term Loan
Commitment, a commitment commission (the "Tranche B-2 Term Loan Commitment
Commission") for the period from the Effective Date to but excluding the Tranche
B-2 Term Loan Commitment Termination Date, computed at a rate for each day equal
to the HET Applicable Commitment Commission Percentage on the daily average
Tranche B-2 Term Loan Commitment of such Non-Defaulting Bank. Accrued Tranche
B-2 Term Loan Commitment Commission shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the date on which the Total
Tranche B-2 Term Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment a
commitment commission (the "Revolving Loan Commitment Commission") for the
period from the Effective Date to but excluding the Revolving Loan Maturity Date
(or such earlier date as the Total Revolving Loan Commitment shall have been
terminated), computed at a rate for each day equal to the HET
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Applicable Commitment Commission Percentage on the daily average Unutilized
Revolving Loan Commitment of such Non-Defaulting Bank. Accrued Revolving Loan
Commitment Commission shall be due and payable quarterly in arrears on each
Quarterly Payment Date and on the Revolving Loan Maturity Date or such earlier
date upon which the Total Revolving Loan Commitment is terminated.
(c) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment (based
on their respective Adjusted Percentages) a fee in respect of each Letter of
Credit issued hereunder (the "Letter of Credit Fee"), for the period from and
including the date of issuance of such Letter of Credit to and including the
termination of such Letter of Credit, computed at a rate per annum equal to the
Applicable Margin for Revolving Loans maintained as Eurodollar Loans as in
effect from time to time on the daily average Stated Amount of such Letter of
Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first day on or after the
termination of the Total Revolving Loan Commitment upon which no Letters of
Credit remain outstanding. Without limiting or otherwise affecting the
obligations of the Borrower as provided above in this clause (c), it is
acknowledged and agreed by the Banks that, from payments of Letter of Credit
Fees actually received, certain amounts shall be payable to HET and/or HOC as
Credit Support Fees as described in Section 1.08(f) and as more fully provided
in the Credit Enhancement Fee Agreement (Bank Credit Agreement).
(d) The Borrower agrees to pay to the respective Issuing Bank,
for its own account, a facing fee in respect of each Letter of Credit issued for
their account hereunder (the "Facing Fee") for the period from and including the
date of issuance of such Letter of Credit to and including the termination of
such Letter of Credit, computed at a rate per annum equal to 1/4 of 1% per annum
of the daily average Stated Amount of such Letter of Credit. Accrued Facing Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
on the date upon which the Total Revolving Loan Commitment has been terminated
and such Letter of Credit has been terminated in accordance with its terms.
(e) The Borrower agrees to pay, upon each payment under,
issuance of, or amendment to, any Letter of Credit, such amount as shall at the
time of such event be the administrative charge which the respective Issuing
Bank is generally imposing in connection with such occurrence with respect to
letters of credit.
(f) The Borrower agrees to pay to the Administrative Agent,
for its own account, (x) on each anniversary of the date of this Agreement
occurring on or prior to the Termination Date and (y) on the Termination Date, a
non-refundable administration fee in an amount equal to $100,000; provided that
if the Termination Date occurs on a date other than an anniversary of the date
of this Agreement, the amount of the fee payable on such Termination Date shall
be pro rated by multiplying $100,000 by a fraction the numerator of which is the
number of days which have elapsed since the preceding October 29 and the
denominator of which is 365 or 366, as the case may be.
3.02 Voluntary Termination of the Total Unutilized Revolving
Loan Commitment. (a) Upon at least two Business Days' prior notice to the
Administrative Agent at its Notice Office
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(which notice the Administrative Agent shall promptly transmit to each of the
Banks), the Borrower shall have the right, at any time or from time to time,
without premium or penalty, to terminate the Total Unutilized Revolving Loan
Commitment, in whole or in part, in integral multiples of $1,000,000 in the case
of partial reductions to the Total Unutilized Revolving Loan Commitment,
provided that (i) each such reduction shall apply proportionately to permanently
reduce the Revolving Loan Commitment of each Bank with such a Commitment, (ii)
the reduction to the Total Unutilized Revolving Loan Commitment shall in no case
be in an amount which would cause the Revolving Loan Commitment of any Bank to
be reduced (as required by preceding clause (i)) by an amount which exceeds the
remainder of (x) the Unutilized Revolving Loan Commitment of such Bank as in
effect immediately before giving effect to such reduction minus (y) such Bank's
Adjusted Percentage of the aggregate principal amount of Swingline Loans then
outstanding and (iii) prior to the occurrence of the Termination of Construction
Date, no reduction or termination of the Total Unutilized Revolving Loan
Commitment pursuant to this Section 3.02(a) shall be effective unless a written
consent thereto is furnished to the Administrative Agent by each of the
Completion Guarantors.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 16.12(b), the Borrower may, upon five Business Days' written notice to
the Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), terminate all of the
Revolving Loan Commitment and/or, if prior to the Tranche A-2 Term Loan
Commitment Termination Date, the Tranche A-2 Term Loan Commitment of such Bank
and/or, if prior to the Tranche B-2 Term Loan Commitment Termination Date, the
Tranche B-2 Term Loan Commitment of such Bank so long as all Loans, together
with accrued and unpaid interest, Fees and all other amounts, owing to such Bank
(other than amounts owing in respect of any Tranche with respect to which such
Bank shall continue to act as a Bank hereunder) are repaid concurrently with the
effectiveness of such termination (at which time Schedule I hereto shall be
deemed modified to reflect such changed amounts), and at such time, unless the
respective Bank continues to act as a Bank with respect to any Tranche, such
Bank shall no longer constitute a "Bank" for purposes of this Agreement, except
with respect to indemnifications under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 16.01), which shall
survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) In addition to
any other mandatory commitment reductions pursuant to this Section 3.03, the
Total Tranche A-1 Term Loan Commitment (and the Tranche A-1 Term Loan Commitment
of each Bank), the Total Tranche A-3 Term Loan Commitment (and the Tranche A-3
Term Loan Commitment of each Bank) and the Total Tranche B-1 Term Loan
Commitment (and the Tranche B-1 Term Commitment of each Bank) shall terminate in
its entirety on the first to occur of (i) the Initial Borrowing Date (after
giving effect to the making of Loans on such date) and (ii) December 31, 1998,
if the Initial Borrowing has not theretofore occurred.
(b) The Total Tranche A-2 Term Loan Commitment (and the
Tranche A-2 Term Loan Commitment of each Bank) shall (i) terminate in its
entirety on the first to occur of (x) the Tranche A-2 Term Loan Commitment
Termination Date (after giving effect to the making of
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Tranche A-2 Term Loans on such date) and (y) December 31, 1998, if the Initial
Borrowing Date has not theretofore occurred, (ii) be reduced, on each date upon
which any Tranche A-2 Term Loans are incurred hereunder, by the aggregate
principal amount of Tranche A-2 Term Loans so incurred on such date and (iii)
prior to the termination of the Total Tranche A-2 Term Loan Commitment as
provided in clause (i) above, be reduced from time to time to the extent
required by Section 4.02.
(c) The Total Tranche B-2 Term Loan Commitment (and the
Tranche B-2 Term Loan Commitment of each Bank) shall (i) terminate in its
entirety on the first to occur of (x) the Tranche B-2 Term Loan Commitment
Termination Date (after giving effect to the making of the Tranche B-2 Term
Loans on such date) and (y) December 31, 1998, if the Initial Borrowing Date has
not theretofore occurred , (ii) be reduced, on each date upon which any Tranche
B-2 Term Loans are incurred hereunder, by the aggregate principal amount of
Tranche B-2 Term Loans so incurred on such date and (iii) prior to the
termination of the Total Tranche B-2 Term Loan Commitment as provided in clause
(i) above, be reduced from time to time to the extent required by Section 4.02.
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Revolving Loan Commitment (and the
Revolving Loan Commitment of each Bank) shall terminate in its entirety on the
first to occur of (i) the Revolving Loan Maturity Date and (ii) December 31,
1998, if the Initial Borrowing has not theretofore occurred.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Effective Date upon which
a mandatory repayment of Term Loans pursuant to Section 4.02(d), (e), (f), (g),
(h) or (i) is required (and exceeds in amount the aggregate principal amount of
Term Loans then outstanding plus the sum of the Total Tranche A-2 Term Loan
Commitment as then in effect and the Total Tranche B-2 Term Loan Commitment as
then in effect) or would be required if Term Loans were then outstanding or
Tranche A-2 Term Loan Commitments or Tranche B-2 Term Loan Commitments were then
in effect, the Total Revolving Loan Commitment shall be permanently reduced by
the amount, if any, by which the amount required to be applied pursuant to said
Sections (determined as if an unlimited amount of Term Loans were actually
outstanding) exceeds the aggregate principal amount of Term Loans then
outstanding plus the sum of the Total Tranche A-2 Term Loan Commitment as then
in effect and the Total Tranche B-2 Term Loan Commitment as then in effect.
(f) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on the 15th day after the date on which a New
Bond Change of Control occurs, the Total Commitments (and the Commitments of
each Bank), but excluding any Commitments at such time held by HET, HOC or any
of their Affiliates which were previously purchased pursuant to the HET/HOC
Guaranty and Loan Purchase Agreement, shall be reduced to zero unless, and then
only to the extent, the Required Banks otherwise agree in writing in their sole
discretion.
(g) Each reduction to the Total Tranche A-1 Term Loan
Commitment, the Total Tranche A-2 Term Loan Commitment, the Total Tranche A-3
Term Loan Commitment, the Total Tranche B-1 Term Loan Commitment, the Total
Tranche B-2 Term Loan Commitment or the Total Revolving Loan Commitment pursuant
to this Section 3.03 (or pursuant to Section 4.02)
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shall be applied proportionately to reduce the Tranche A-1 Term Loan Commitment,
the Tranche A-2 Term Loan Commitment, the Tranche A-3 Term Loan Commitment, the
Tranche B-1 Term Loan Commitment, the Tranche B-2 Term Loan Commitment or the
Revolving Loan Commitment, as the case may be, of each Bank with such a
Commitment.
SECTION 4. Prepayments; Payments; Deferrals; Taxes.
4.01 Voluntary Prepayments. The Borrower shall have the right
to prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions: (i) the Borrower
shall give the Administrative Agent prior to 12:00 Noon (New York time) at its
Notice Office (x) at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of the Borrower's intent to
prepay Base Rate Loans (or same day notice in the case of Swingline Loans
provided such notice is given prior to 11:00 A.M. (New York time)) and (y) at
least three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) of the Borrower's intent to prepay Eurodollar Loans,
whether Tranche A-1 Term Loans, Tranche A-2 Term Loans, Tranche A-3 Term Loans,
Tranche B-1 Term Loans, Tranche B-2 Term Loans, Revolving Loans or Swingline
Loans shall be prepaid, the amount of such prepayment and the Types of Loans to
be prepaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice the Administrative Agent shall
promptly transmit to each of the Banks; (ii) each prepayment shall be in an
aggregate principal amount of at least $1,000,000 (or $250,000 in the case of
Swingline Loans), provided that if any partial prepayment of Eurodollar Loans
made pursuant to any Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than (1) in the case of Term
Loans, $5,000,000 and (2) in the case of Revolving Loans, $1,000,000, then such
Borrowing may not be continued as a Borrowing of Eurodollar Loans and any
election of an Interest Period with respect thereto given by the Borrower shall
have no force or effect; (iii) each prepayment in respect of any Loans made
pursuant to a Borrowing shall be applied pro rata among such Loans; provided
that at the Borrower's election in connection with any prepayment of Revolving
Loans pursuant to this Section 4.01, such prepayment shall not be applied to any
Revolving Loan of a Defaulting Bank; (iv) in the event of certain refusals by a
Bank as provided in Section 16.12(b) to consent to certain proposed changes,
waivers, discharges or terminations with respect to this Agreement which have
been approved by the Required Banks, the Borrower may, subject to compliance
with all the provisions of Section 16.12(b), upon five Business Days' written
notice to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks) repay all
Loans, together with accrued and unpaid interest, Fees, and other amounts owing
to such Bank (or owing to such Bank with respect to each Tranche which gave rise
to the need to obtain such Bank's individual consent) in accordance with said
Section 16.12(b) so long as (A) in the case of the repayment of Revolving Loans
of any Bank pursuant to this clause (iv) the Revolving Loan Commitment of such
Bank is terminated concurrently with such repayment (at which time Schedule I
shall be deemed modified to reflect the changed Revolving Loan Commitments) and
(B) the consents required by Section 16.12(b) in connection with the repayment
pursuant to this clause (iv) have been obtained; (v) except as provided in
preceding clause (iv), prepayments of Term Loans pursuant to this Section 4.01
shall be applied in the following manner: first, to prepay the outstanding
principal amount of Tranche A-1 Term Loans and Tranche A-2 Term Loans on a pro
rata basis (based upon the relative outstanding principal
28
<PAGE>
amounts of such Tranches of Term Loans), second, to the extent in excess
thereof, to prepay the outstanding principal amount of Tranche B-1 Term Loans,
third, to the extent in excess thereof, to prepay the outstanding principal
amount of Tranche A-3 Term Loans and fourth, to the extent in excess thereof, to
prepay the outstanding principal amount of Tranche B-2 Term Loans; and (vi)
unless the Majority Tranche A-1 and A-3 Banks (if any Tranche A-1 Term Loans or
Tranche A-3 Term Loans are then outstanding) specifically consent thereto, no
Revolving Loan or Swingline Loan shall be prepaid pursuant to this Section 4.01
at any time when an Event of Default is in existence. Each prepayment of
principal of Tranche A-1 and A-2 Term Loans, Tranche A-3 Term Loans or Tranche B
Term Loans pursuant to this Section 4.01 shall be applied to reduce the then
remaining Tranche A-1 and A-2 Scheduled Repayments, Tranche A-3 Scheduled
Repayments or Tranche B Scheduled Repayments, as the case may be, pro rata based
upon the then remaining amount of each such Tranche A Scheduled Repayments or
Tranche B Scheduled Repayments, as the case may be, after giving effect to all
prior reductions thereto.
4.02 Mandatory Repayments and Commitment Reductions. (a)(i) On
any day on which the sum of the aggregate outstanding principal amount of the
Revolving Loans of Non-Defaulting Banks, the aggregate outstanding principal
amount of Swingline Loans and the amount of Letter of Credit Outstandings
exceeds the Adjusted Total Revolving Loan Commitment as then in effect, the
Borrower agrees to prepay principal of Swingline Loans and, after the Swingline
Loans have been repaid in full, Revolving Loans of Non-Defaulting Banks in an
amount equal to such excess. If, after giving effect to the prepayment of all
outstanding Swingline Loans and Revolving Loans of Non-Defaulting Banks, the
aggregate amount of the Letter of Credit Outstandings exceeds the Adjusted Total
Revolving Loan Commitment as then in effect, the Borrower agrees to pay to the
Administrative Agent at the Payment Office on such date an amount of cash or
Cash Equivalents equal to the amount of such excess (up to a maximum amount
equal to the Letter of Credit Outstandings at such time), such cash or Cash
Equivalents to be held as security for all obligations of the Borrower to
Non-Defaulting Banks hereunder in a cash collateral account to be established by
the Administrative Agent.
(ii) On any day on which the aggregate outstanding principal
amount of the Revolving Loans made by any Defaulting Bank exceeds the Revolving
Loan Commitment of such Defaulting Bank, the Borrower agrees to prepay principal
of Revolving Loans of such Defaulting Bank in an amount equal to such excess.
(b)(i) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, but subject to the deferral
provisions contained in clause (iv) below, on each date set forth below there
shall be required to be repaid that aggregate principal amount of Tranche A-1
Term Loans and Tranche A-2 Term Loans, to the extent then outstanding, as is set
forth opposite such date (each such repayment, as the same may be (x) modified
pursuant to clause (iv) below and/or (y) reduced as provided in the last
sentence of Section 4.01, in the last paragraph of this Section 4.02(b)(i) and
in Section 4.02(h), a "Tranche A-1 and A-2 Scheduled Repayment," and each such
date, a "Tranche A-1 and A-2 Scheduled Repayment Date"):
29
<PAGE>
<TABLE>
<CAPTION>
Tranche A-1 and A-2
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
July 31, 2000 $100,000
October 31, 2000 $100,000
January 31, 2001 $100,000
April 30, 2001 $100,000
July 31, 2001 $100,000
October 31, 2001 $100,000
January 31, 2002 $100,000
April 30, 2002 $100,000
July 31, 2002 $100,000
October 31, 2002 $100,000
January 31, 2003 $100,000
April 30, 2003 $100,000
July 31, 2003 $100,000
October 31, 2003 $100,000
January 31, 2004 $100,000
April 30, 2004 $100,000
July 31, 2004 $100,000
October 31, 2004 $100,000
January 31, 2005 $100,000
April 30, 2005 $100,000
July 31, 2005 $100,000
October 31, 2005 $100,000
Tranche A-1 and A-2
Term Loan Maturity Date $27,800,000
</TABLE>
In the event that less than $20 million of Tranche A-2 Term
Loans are incurred hereunder, an amount equal to such deficiency shall be
applied to reduce the Tranche A-1 and Tranche A-2 Scheduled Repayments in
inverse order of maturity. Furthermore, in the event that any Tranche A-1 Term
Loans are converted into Tranche B-2 Term Loans pursuant to Section 1.14, an
amount equal to the principal amount of Tranche A-1 Term Loans so converted
shall apply to reduce the Tranche A-1 and Tranche A-2 Scheduled Repayment in
inverse order of maturity. All repayments of Tranche A-1 Term Loans and Tranche
A-2 Term Loans pursuant to this section 4.02(b)(i) shall be allocated to the
outstanding principal amount of Tranche A-1 Term Loans and Tranche A-2 Term
Loans on a pro rata basis (based upon the relative outstanding principal amounts
of such Tranches of Term Loans).
(ii) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, but subject to the deferral
provisions contained in clause (iv) below, on each date set forth below there
shall be required to be repaid that aggregate principal amount of Tranche A-3
Term Loans, to the extent then outstanding, as is set forth opposite such date
(each such repayment, as the same may be (x) modified pursuant to clause (iv)
below and/or
30
<PAGE>
(y) reduced as provided in the last sentence of Section 4.01, and in Section
4.02(h), a "Tranche A-3 Scheduled Repayment," and each such date, a "Tranche A-3
Scheduled Repayment Date"):
<TABLE>
<CAPTION>
Tranche A-3
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
July 31, 2000 $1,000,000
October 31, 2000 $1,000,000
January 31, 2001 $1,000,000
April 30, 2001 $1,000,000
July 31, 2001 $1,500,000
October 31, 2001 $1,500,000
January 31, 2002 $1,500,000
April 30, 2002 $1,500,000
July 31, 2002 $1,500,000
October 31, 2002 $1,500,000
January 31, 2003 $1,500,000
April 30, 2003 $1,500,000
July 31, 2003 $1,750,000
October 31, 2003 $1,750,000
January 31, 2004 $1,750,000
April 30, 2004 $1,750,000
July 31, 2004 $1,750,000
October 31, 2004 $1,750,000
January 31, 2005 $1,750,000
Tranche A-3 Term $1,750,000
Loan Maturity Date
</TABLE>
(iii) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, but subject to the deferral
provisions contained in clause (iv) below, on each date set forth below there
shall be required to be repaid that aggregate principal amount of Tranche B Term
Loans, to the extent then outstanding, as is set forth below opposite such date
(each such repayment, as the same may be (x) modified pursuant to clause (iv)
below and/or (y) reduced as provided in the last sentence of Section 4.01, in
the last paragraph of this Section 4.02(b)(iii) and in Section 4.02(h), a
"Tranche B Scheduled Repayment," and each such date, a "Tranche B Scheduled
Repayment Date"):
<TABLE>
<CAPTION>
Tranche B
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
July 31, 2000 $1,500,000
October 31, 2000 $1,500,000
January 31, 2001 $1,500,000
April 30, 2001 $1,500,000
July 31, 2001 $2,500,000
October 31, 2001 $2,500,000
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Tranche B
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
January 31, 2002 $2,500,000
April 30, 2002 $2,500,000
July 31, 2002 $2,500,000
October 31, 2002 $2,500,000
January 31, 2003 $2,500,000
April 30, 2003 $2,500,000
July 31, 2003 $2,500,000
October 31, 2003 $2,500,000
January 31, 2004 $2,500,000
April 30, 2004 $2,500,000
July 31, 2004 $2,500,000
October 31, 2004 $2,500,000
January 31, 2005 $2,500,000
April 30, 2005 $2,500,000
July 31, 2005 $4,250,000
October 31, 2005 $4,250,000
Tranche B Term
Loan Maturity Date $97,000,000
</TABLE>
In the event the aggregate principal amount of Tranche B Term
Loans incurred on or prior to the Tranche B-2 Term Loan Commitment Termination
Date (for this purpose, including the aggregate principal amount of Tranche A-1
Term Loans converted into Tranche B-2 Term Loans in accordance with the
provisions of Section 1.14) is less than $151,500,000, an amount equal to such
deficiency shall be applied to reduce the Tranche B Scheduled Repayments in
inverse order of maturity. All repayments of Tranche B Term Loans pursuant to
this Section 4.02(b)(iii) shall be allocated (i) first, to the outstanding
principal amount of Tranche B-1 Term Loans and (ii) only after the outstanding
principal of such Tranche B-1 Term Loans has been repaid in full, to the
outstanding principal of Tranche B-2 Term Loans.
(iv) (A) With respect to the Scheduled Repayments occurring on
any Scheduled Repayment Date occurring on or before October 31, 2001, the
Borrower may elect, by written notice as provided below and subject to the
conditions hereinafter contained in this clause (iv)(A), that the amount of such
Scheduled Repayments shall be deferred (in which case the amount of the
respective Scheduled Repayment as shown in clause (i), (ii) or (iii) above, as
the case may be, shall instead be added to the final Scheduled Repayment for the
respective Tranche or Tranches as otherwise provided above in clause (i), (ii)
or (iii), as the case may be). The Borrower may make an election as described in
this clause (iv)(A) only if, at the time the respective Scheduled Repayment
would otherwise be required to be made (1) for each period which has ended on or
prior to the respective Scheduled Repayment Date the Borrower has exercised its
option to defer, pursuant to Article 9.01(c) of the Management Agreement, all of
the Management Fees payable to Harrah's Management for each of said periods, (2)
for each semi-annual period ended on or prior to the respective Scheduled
Repayment Date with respect to which interest is payable on the
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<PAGE>
Senior Subordinated Notes, the Borrower shall have elected the pay-in-kind
feature applicable to the fixed interest payments in respect of the Senior
Subordinated Notes and (3) for all periods ending on or prior to the respective
Scheduled Repayment Date, HET and HOC shall have deferred and, as a condition of
such election is hereby required to defer, all Minimum Payment Guaranty Fees
pursuant to the terms of the applicable Minimum Payment Guaranty Documents. The
option of the Borrower pursuant to this clause (iv)(A) may be exercised, in the
circumstances provided above, with respect to all Scheduled Repayments occurring
on a given Scheduled Repayment Date or with respect to less than all of said
Scheduled Repayments; provided that if the election does not apply to all
Scheduled Repayments on the respective Scheduled Repayment Date the election
must apply (i) first, to defer in its entirety the Tranche B Scheduled Repayment
which would otherwise be owing on the respective Scheduled Repayment Date, (ii)
second, to defer in its entirety the Tranche A-3 Scheduled Repayment which would
otherwise be due and payable on the respective Scheduled Repayment Date and
(iii) third, to defer in its entirety the Tranche A-1 and A-2 Scheduled
Repayment which would otherwise be due and payable on the respective Scheduled
Repayment Date. To exercise its option pursuant to this clause (iv)(A) the
Borrower shall deliver a written notice to the Administrative Agent, at least
two Business Days, but not more than 10 Business Days, before the respective
Scheduled Repayment Date, notifying the Administrative Agent of its election of
such option (and specifying the amounts and dates of the Scheduled Repayments
being deferred pursuant to this clause (iv)(A) and certifying the Borrower's
entitlement (in accordance with the requirements of this clause (iv)(A)) to
exercise the option provided in this clause (iv)(A).
(B) With respect to each Scheduled Repayment Date occurring
after October 31, 2001, if Consolidated EBITDA is less than $28,500,000 for the
twelve consecutive calendar month period (taken as one accounting period) ending
on the last date of the Semiannual Period ended immediately prior to the most
recent Senior Subordinated Notes Semi-Annual Interest Payment Date ended on or
prior to the respective Scheduled Repayment Date, then, so long as the Borrower
delivers the written notice specified below and the conditions described below
are met, all Scheduled Repayments otherwise to occur on the respective Scheduled
Repayment Date shall be deferred, with the amount thereof to be added to the
final Scheduled Repayment of the respective Tranche or Tranches as provided
above in clause (i), (ii) or (iii) of this Section 4.02(b), as the case may be.
Notwithstanding anything to the contrary contained above, in no event will the
final Scheduled Repayment applicable to any Tranche or Tranches as specified
above in clause (i), (ii) or (iii) of this Section 4.02(b), as the case may be,
be deferred pursuant to this clause (iv), and in no event shall any Scheduled
Repayment applicable to any Tranche or Tranches be extended beyond the last
Scheduled Repayment Date for the respective Tranche or Tranches as specified in
clause (i), (ii) or (iii) of this Section 4.02(b), as the case may be, above. To
exercise its right pursuant to this clause (iv)(B), the Borrower shall deliver
an officer's certificate to the Administrative Agent at least two Business Days,
but not more than ten Business Days, prior to the respective Scheduled Repayment
Date, which certificate shall (1) notify the Administrative Agent of the
exercise of the option pursuant to this clause (iv)(B) for the respective
Scheduled Repayment Date, (2) provide the calculations of Consolidated EBITDA
for the respective period specified above and (3) certify that (x) fixed
interest payments on the Senior Subordinated Notes have been, or will be, paid
in-kind (and not in cash) for the Senior Subordinated Notes Semi-Annual Interest
Payment Date specified above, (y) all Management Fees will be (and in the case
33
<PAGE>
of such exercise of such right, are hereby required to be) deferred for the
semi-annual period ending on the Senior Subordinated Notes Semi-Annual Interest
Payment Date referred to in preceding clause (x) and (z) the Minimum Payment
Guaranty Fees will be (and in the case of such exercise of such right, are
hereby required to be) deferred for the respective semi-annual period ending on
the Senior Subordinated Notes Semi-Annual Interest Payment Date referred to in
preceding clause (x), in each case in accordance with the provisions of the
Senior Subordinated Note Indenture, the Management Agreement or the applicable
Minimum Payment Guaranty Documents, as the case may be.
(c) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each Semi-Annual Free
Cash Flow Payment Date, an amount equal to the Applicable ECF Percentage of
Semi-Annual Free Cash Flow for the Semi-Annual Free Cash Flow Payment Period
last ended before the respective Semi-Annual Free Cash Flow Payment Date shall
be applied as a mandatory prepayment of outstanding Term Loans and/or to reduce
the Total Tranche A-2 Term Loan Commitment and/or the Total Tranche B-2 Term
Loan Commitment on the basis required by Section 4.02(h).
(d) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date after the
Effective Date upon which JCC Holding or any of its Subsidiaries receives any
proceeds from any capital contributions or from any sale or issuance of its
equity (other than (i) equity contributions to any Subsidiary of the Borrower
made by the Borrower or any other Subsidiary of the Borrower and (ii) to the
extent utilized to make Contingent Payments as required under the Senior
Subordinated Note Indenture, the proceeds from the exercise of the HET Warrant),
an amount equal to 100% of the cash proceeds of the respective equity
contribution or sale (net of underwriting or placement discounts and commissions
and other reasonable costs associated therewith) shall be applied as a mandatory
prepayment of outstanding Term Loans and/or to reduce the Total Tranche A-2 Term
Loan Commitment and/or the Total Tranche B-2 Term Loan Commitment on the basis
required by Section 4.02(h).
(e) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date after the
Effective Date upon which JCC Holding or any of its Subsidiaries receives any
proceeds from any incurrence by JCC Holding or any of its Subsidiaries of
Indebtedness for borrowed money (other than Indebtedness for borrowed money
permitted to be incurred pursuant to Section 9.04 as such Section is in
effect on the Effective Date), an amount equal to 100% of the cash proceeds
of the respective incurrence of Indebtedness (net of underwriting or
placement discounts and commissions and other reasonable costs associated
therewith) shall be applied as a mandatory prepayment of outstanding Term
Loans and/or to reduce the Total Tranche A-2 Term Loan Commitment and/or the
Total Tranche B-2 Term Loan Commitment on the basis required by Section
4.02(h).
(f) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date after the
Effective Date upon which the JCC Holding or any of its Subsidiaries receives
proceeds from any sale of assets (but excluding sales permitted by Sections
9.02(iii) and (iv)), an amount equal to 100% of the Net Sale Proceeds
therefrom shall be applied as a mandatory prepayment of outstanding Term
Loans and/or to reduce the Total
34
<PAGE>
Tranche A-2 Term Loan Commitment and/or the Total Tranche B-2 Term Loan
Commitment on the basis required by Section 4.02(h).
(g) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on the 30th day following
each date after the Effective Date on which the Borrower or any of its
Subsidiaries receives any proceeds from any Recovery Event, an amount equal to
100% of the proceeds of such Recovery Event (net of reasonable costs incurred in
connection with such Recovery Event) shall be applied as a mandatory prepayment
of outstanding Term Loans and/or to reduce the Total Tranche A-2 Term Loan
Commitment and/or the Total Tranche B-2 Term Loan Commitment on the basis
required by Section 4.02(h), provided that such proceeds shall not be required
to be so applied on such date to the extent that the Borrower has delivered a
certificate to the Administrative Agent on or prior to such date stating that
such proceeds shall be used to replace or restore any properties or assets in
respect of which such proceeds were paid within 180 days (or such longer period
of time as is permitted by the Senior Subordinated Note Indenture, but in no
event beyond 18 months) following the date of such Recovery Event (which
certificate shall set forth the estimates of the proceeds to be so expended),
and provided further, that if all or any portion of such proceeds not required
to be applied pursuant to this Section 4.02(g) by reason of the preceding
proviso are not so used within 180 days (or such longer period of time as
provided above) after the date of the respective Recovery Event, such remaining
portion shall be applied on the date which is 180 days (or such longer period of
time as provided above) after the date of the respective Recovery Event as
provided above in this Section 4.02(g) (without giving effect to the first
proviso hereof).
(h) All amounts required to be applied pursuant to this clause
(h) as a result of the requirements of Sections 4.02(c), (d), (e), (f) and (g)
shall be applied (w) first, to repay the outstanding principal amount of Tranche
A-1 Term Loans and Tranche A-2 Term Loans (with such repayments to apply to each
such Tranche pro rata based upon the relative outstanding principal amounts
thereof ), (x) second, to the extent in excess thereof, if either (i) the
Opening Date has not yet occurred on the date of the required application
pursuant to this clause (h) or (ii) the Opening Date has theretofore occurred
but one or more Scheduled Repayments have previously been deferred pursuant to
Section 4.02(b)(iv), payments shall next be applied to repay the principal of
then outstanding Tranche B-1 Term Loans and, after the repayment in full
thereof, of outstanding Tranche A-3 Term Loans until the repayment in full
thereof; provided that if the Opening Date has theretofore occurred, the amount
to be applied pursuant to this clause (x) on any date shall not exceed, when
added to the aggregate amount theretofore applied pursuant to this clause (x)
after the Opening Date, an amount equal to the Deferred A-3 and B Amortization
Amount (as such amount is determined on the date of the respective application
pursuant to this clause (h)), (y) third, to the extent in excess of the amounts
required (or permitted) to be applied pursuant to preceding clauses (w) and (x),
such amounts shall be applied pro rata to the repayment of principal of all then
remaining outstanding Tranches of Term Loans based upon the then outstanding
relative principal amounts thereof; provided that for so long as any Tranche A-3
Term Loans or Tranche B-1 Term Loans remain outstanding, the amount applied
pursuant to this clause (y) to repay Tranche B-2 Term Loans shall not exceed,
during any fiscal year of the Borrower, the Threshold Amount for such fiscal
year and, after the Threshold Amount has been so applied to repay Tranche B-2
Term Loans, subsequent amounts to be applied pursuant to this clause (y) shall,
until all outstanding Tranche A-3 Term Loans and Tranche B-1 Term Loans have
35
<PAGE>
been repaid in full, be applied as provided in preceding clause (x), but for
this purpose determined as if the Opening Date had not yet occurred, and, after
all Tranche A Term Loans and Tranche B-1 Term Loans have been repaid in full,
any proceeds remaining to be applied pursuant to this sub-clause (y) shall be
applied to repay the principal of any Tranche B-2 Term Loans which remain
outstanding and (z) fourth, to the extent the amount to be applied pursuant to
this clause (h) exceeds the aggregate principal amount of all outstanding Term
Loans, such excess shall be applied (1) first, to reduce the Total Tranche A-2
Term Loan Commitment (if same is then in effect in an amount greater than zero)
and (2) second, to the extent in excess thereof, to reduce the Total Tranche B-2
Term Loan Commitment (if same is then in effect in an amount greater than zero).
The amount of each principal repayment of Term Loans (and the amount of each
reduction to the Total Tranche A-2 Term Loan Commitment and/or Total Tranche B-2
Term Loan Commitment) made as required by this Section 4.02(h) shall be applied
to reduce the then remaining Tranche A-1 and A-2 Scheduled Repayments, Tranche
A-3 Scheduled Repayments or Tranche B Scheduled Repayments, as the case may be,
in the inverse order of maturity after giving effect to all prior reductions
thereto. Notwithstanding the requirements of this Section 4.02(h), to the extent
amounts are distributed to the Banks representing the proceeds of Collateral
distributed in accordance with the requirements of the Bank/Bondholder
Intercreditor Agreement, the provisions of the Bank/Bondholder Intercreditor
Agreement shall govern the application thereof in the event of an inconsistency
with the requirements of this Section 4.02(h). Furthermore, and without
affecting the obligation of the Borrower to repay Loans as expressly required by
this Section 4.02, it is acknowledged by the Banks that their right to retain
certain prepayments as otherwise provided above in this Section 4.02 will be
subject to the relevant subordination provisions contained in Sections 13 and 15
of this Agreement.
(i) With respect to each repayment of Loans required by this
Section 4.02, the Borrower may designate the Types of Loans of the respective
Tranche which are to be repaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings of the respective Tranche pursuant to which
made, provided that: (i) repayments of Eurodollar Loans pursuant to this Section
4.02 may only be made on the last day of an Interest Period applicable thereto
unless all Eurodollar Loans of the respective Tranche with Interest Periods
ending on such date of required repayment and all Base Rate Loans of the
respective Tranche have been paid in full; (ii) if any repayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount less than (x) in
the case of Term Loans, $5,000,000 and (y) in the case of Revolving Loans,
$1,000,000, such Borrowing shall be converted at the end of the then current
Interest Period into a Borrowing of Base Rate Loans; (iii) each repayment of any
Tranche of Term Loans made pursuant to a Borrowing shall be applied pro rata
among the Term Loans of such Tranche; (iv) each repayment of any Revolving Loans
made by Non-Defaulting Banks pursuant to a Borrowing shall be applied pro rata
among such Revolving Loans; and (v) each repayment of any Revolving Loans made
by Defaulting Banks pursuant to a Borrowing shall be made pro rata among such
Revolving Loans. In the absence of a designation by the Borrower as described in
the preceding sentence, the Administrative Agent shall, subject to the above,
make such designation in its sole discretion.
(j) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, all then outstanding Loans
(excluding Loans at such time held by HET, HOC or any Affiliate thereof which
were previously purchased pursuant to the HET/HOC
36
<PAGE>
Guaranty and Loan Purchase Agreement) shall be repaid in full on the 15th day
after the date on which a New Bond Change of Control occurs unless, and then
only to the extent, the Required Banks otherwise agree in writing in their sole
discretion.
(k) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, (i) all then outstanding Swingline Loans shall be
repaid in full on the Swingline Expiry Date and (ii) all other then outstanding
Loans shall be repaid in full on the respective Maturity Date for such Loans.
(l) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on the Termination of the
Construction Date, all Revolving Loans and Swingline Loans shall be repaid in
full and the aggregate amount of Letter of Credit Outstandings on such date
shall not exceed $2 million; provided that not more than $10 million of new
Revolving Loans may be incurred on the Termination of Construction Date to the
extent all proceeds thereof are immediately deposited to fund the Minimum
Balance as defined in the Management Agreement, as in effect on the date hereof.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or any other
Credit Document shall be made to the Administrative Agent for the account of the
Bank or Banks entitled thereto not later than 12:00 Noon (New York time) on the
date when due and shall be made in Dollars in immediately available funds at the
Payment Office of the Administrative Agent. Whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the Borrower
hereunder, under any Note and any other Credit Document will be made without
setoff, counterclaim or other defense. Except as provided in Section 4.04(b),
all such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein with respect to such payments (but excluding, except as provided in the
second succeeding sentence, any tax imposed on or measured by the net income or
profits of a Bank or any franchise tax based on the net income of a Bank
pursuant to the laws of the jurisdiction in which it is organized or the
jurisdiction in which the principal office
37
<PAGE>
or applicable lending office of such Bank is located or any subdivision thereof
or therein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imports, duties, fees, assessments
or other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Note, after withholding or deduction for
or on account of any Taxes, will not be less than the amount provided for herein
or in such Note. If any amounts are payable in respect of Taxes pursuant to the
two preceding sentences, the Borrower agrees to reimburse each Bank, upon the
written request of such Bank, for taxes imposed on or measured by the net income
or profits of such Bank or any franchise tax based on the net income of such
Bank pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located and for
any withholding of income or similar taxes imposed by the United States of
America as such Bank shall determine are payable by, or withheld from, such Bank
in respect of such amounts so paid to or on behalf of such Bank pursuant to the
preceding two sentences and in respect of any amounts paid to or on behalf of
such Bank pursuant to this sentence. The Borrower will furnish to the
Administrative Agent within 45 days after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Bank, and reimburse such Bank upon its written request, for the amount of any
Taxes so levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Effective Date, or in the case
of a Bank that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.13 or 16.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrower and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001,
or Form W-8 and a Section 4.04(b)(ii) Certificate, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Bank to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate. Notwithstanding anything to
the contrary contained in Section 4.04(a), but subject to Section 16.04(b) and
the immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Bank which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes to the extent that such Bank has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete exemption from such
deduction or withholding and (y) the Borrower shall not be obligated pursuant to
Section 4.04(a) hereof to gross-up payments to be made to a Bank in respect of
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income or similar taxes imposed by the United States if (I) such Bank has not
provided to the Borrower the Internal Revenue Service Forms required to be
provided to the Borrower pursuant to this Section 4.04(b) or (II) in the case of
a payment, other than interest, to a Bank described in clause (ii) above, to the
extent that such Forms do not establish a complete exemption from withholding of
such taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 4.04 and except as set forth in Section
16.04(b), the Borrower agrees to pay additional amounts and to indemnify each
Bank in the manner set forth in Section 4.04(a) (without regard to the identity
of the jurisdiction requiring the deduction or withholding) in respect of any
amounts deducted or withheld by it as described in the immediately preceding
sentence as a result of any changes after the Effective Date in any applicable
law, treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of income or
similar Taxes.
(c) If the Borrower pays any additional amount under this
Section 4.04 to a Bank and such Bank determines that it has received or realized
in connection therewith any refund or any reduction of, or credit against, its
liabilities for Taxes in or with respect to the taxable year in which the
additional amount is paid, such Bank shall pay to the Borrower an amount that
the Bank shall, in its sole discretion, determine is equal to the net benefit,
after tax, which was obtained by the Bank in such taxable year as a consequence
of such refund, reduction or credit.
SECTION 5. Conditions Precedent to Initial Credit Events. The
obligation of each Bank to make Loans, and of any Issuing Bank to issue Letters
of Credit, on the Initial Borrowing Date is subject to the satisfaction of the
following conditions:
5.01 Execution of Agreement; Notes. (i) This Agreement shall
have been executed and delivered as provided in Section 16.10 and (ii) there
shall have been delivered to the Administrative Agent for the account of each of
the Banks the appropriate Tranche A-1 Term Note, Tranche A-2 Term Note, Tranche
A-3 Term Note, Tranche B-1 Term Note, Tranche B-2 Term Note and/or Revolving
Note executed by the Borrower, and to BTCo the Swingline Note executed by the
Borrower, in each case in the amount, maturity and as otherwise provided herein.
5.02 Fees, etc. Subject to the provisions of Section 16.01
hereof, on the Initial Borrowing Date, the Borrower shall have paid to the
Administrative Agent and the Banks all costs, fees and expenses (including,
without limitation, legal fees and expenses of counsel to the Administrative
Agent only, title premiums, survey charges and recording taxes and fees) payable
to the Administrative Agent and the Banks to the extent then due.
5.03 Officer's Certificate. On the Initial Borrowing Date, the
Administrative Agent shall have received a certificate dated the Initial
Borrowing Date signed on behalf of the Borrower by an Authorized Officer of the
Borrower stating that all of the conditions in Sections 5.08, 5.09, 5.10, 5.11,
5.12, 5.13, 5.14, 5.23, 5.24, 5.25, 5.29 and 5.30 have been satisfied on such
date.
5.04 Opinions of Counsel. On the Initial Borrowing Date, the
Administrative Agent shall have received (i) from Latham & Watkins, special
counsel to the Completion Guarantors, an opinion addressed to the Administrative
Agent and each of the Banks and dated
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the Initial Borrowing Date covering the matters set forth in Exhibit E-1 (with
such modifications as are acceptable to the Administrative Agent) and such other
matters incident to the transactions contemplated herein as the Administrative
Agent may reasonably request, (ii) from E.O. Robinson, Jr., General Counsel to
the Completion Guarantors, an opinion addressed to the Administrative Agent and
each of the Banks dated the Initial Borrowing Date covering the matters set
forth in Exhibit E-2 (with such modifications as are acceptable to the
Administrative Agent) and such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably request, (iii)
from Phelps Dunbar, L.L.P., Louisiana counsel to the Borrower, an opinion
addressed to the Administrative Agent and each of the Banks and dated the
Initial Borrowing Date covering the matters set forth in Exhibit E-3 (with such
modifications as are acceptable to the Administrative Agent) and such other
matters incident to the transactions contemplated herein as the Administrative
Agent may reasonably request, (iv) from Winthrop, Stimson, Putnam & Roberts, New
York counsel to the Borrower, an opinion addressed to the Administrative Agent
and each of the Banks and dated the Initial Borrowing date covering the matter
set forth in Exhibit E-4, (v) from William H. Patrick, Esq., special counsel to
the Borrower for Louisiana gaming matters, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Initial Borrowing Date
covering the matters set forth in Exhibit E-5 with such modifications as are
acceptable to the Administrative Agent and such other matters incident to the
transactions contemplated herein as the Administrative Agent may reasonably
request, (vi) from David J. Satz, Esq., counsel to HET and HOC for New Jersey
gaming matters, an opinion addressed to the Administrative Agent and each of the
Banks and dated the Initial Borrowing Date covering the matters set forth in
Exhibit E-6 (with such modifications as are acceptable to the Administrative
Agent) and such other matters incident to the transactions contemplated herein
as the Administrative Agent may reasonably request and (vii) from Schreck
Morris, Esq., counsel to HET and HOC for Nevada gaming matters, an opinion
addressed to the Administrative Agent and each of the Banks and dated the
Initial Borrowing Date covering the matters set forth in Exhibit E-7 (with such
modifications as are acceptable to the Administrative Agent) and such other
matters incident to the transactions contemplated herein as the Administrative
Agent may reasonably request.
5.05 Corporate Documents; Proceedings; etc. (a) On the Initial
Borrowing Date, the Administrative Agent shall have received a certificate,
dated the Initial Borrowing Date, signed by an Authorized Officer of each of the
Credit Parties, and attested to by another Authorized Officer of each such
Credit Party, in the form of Exhibit F with appropriate insertions, together
with copies of such Credit Party's certificate of incorporation and by-laws (or
other relevant organizational documents), as the case may be, and the
resolutions or other appropriate authorizing documents of such Credit Party
referred to in such certificate, and the foregoing shall be in form and
substance satisfactory to the Administrative Agent and the Required Banks.
(b) All corporate and legal proceedings and all instruments
and agreements in connection with the transactions contemplated by this
Agreement and the other Documents shall be satisfactory in form and substance to
the Administrative Agent and the Required Banks, and the Administrative Agent
shall have received all information and copies of all documents and papers,
including records of corporate proceedings, governmental approvals, good
standing certificates and bring-down telegrams or facsimiles, if any, which the
Administrative Agent reasonably may
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have requested in connection therewith, such documents and papers where
appropriate to be certified by proper corporate or governmental authorities.
5.06 Employee Benefit Plans; Collective Bargaining Agreements;
Debt Agreements. On the Initial Borrowing Date, there shall have been delivered
to the Administrative Agent true and correct copies, certified as true and
complete by an Authorized Officer of JCC Holding, of (i) all "employee benefit
plans" as defined in Section 3(3) of ERISA (other than multiemployer plans as
defined in Section 4001(a)(3) of ERISA), and any other plans or arrangements for
the benefit of employees of JCC Holding or any of its Subsidiaries and any
profit sharing plans and deferred compensation plans of JCC Holding or any of
its Subsidiaries (collectively, the "Employee Benefit Plans"), (ii) all
collective bargaining agreements applying or relating to any employee of JCC
Holding or any of its Subsidiaries (collectively, the "Collective Bargaining
Agreements") and (iii) all agreements evidencing or relating to Indebtedness of
JCC Holding or any of its Subsidiaries which is to remain outstanding after the
Initial Borrowing Date (collectively, the "Debt Agreements"); all of which
Employee Benefit Plans, Collective Bargaining Agreements and Debt Agreements
shall be in form and substance satisfactory to the Administrative Agent and the
Required Banks and shall be in full force and effect.
5.07 Project Documents; etc. (a) On the Initial Borrowing
Date, there shall have been delivered to the Administrative Agent, true and
correct copies, certified as true and complete by an Authorized Officer of the
Borrower, of all Project Documents, all of which Project Documents shall be in
form and substance satisfactory to the Administrative Agent and the Required
Banks and shall be in full force and effect. Furthermore, (i) the Collateral
Agent shall have been registered as the Registered Leasehold Mortgagee under
(and as defined in) the Casino Operating Contract, (ii) the notice address for
the Collateral Agent as Leasehold Mortgagee under (and as defined in) the Casino
Lease shall have been delivered to the RDC, and (iii) a copy of the Borrower
Mortgage and the name and address of the Collateral Agent as Leasehold Mortgagee
under (and as defined in) the Railroad Lease shall have been delivered to the
Lessor under (and as defined in) the Railroad Lease.
(b) On the Initial Borrowing Date, there shall have been
delivered to the Administrative Agent, true and correct copies, certified as
true and complete by an Authorized Officer of the Borrower, of all Construction
Contracts, all of which Construction Contracts shall provide for a guaranteed
maximum or fixed price consistent with the Construction Budget and otherwise
shall be on arms-length, commercially reasonable terms and conditions with
licensed reputable construction firms and shall be in full force and effect.
(c) On the Initial Borrowing Date, there shall have been
delivered to the Administrative Agent true and correct copies, certified as true
and complete by an Authorized Officer of the Borrower, of (i) all material
architectural contracts and Plans and Specifications (to the extent completed)
for the construction of the Project (which Plans and Specifications shall be
prepared in accordance with industry standards by a licensed reputable
engineering or architectural firm), and material contracts (including
maintenance, management, leasing and service contracts) entered into with
respect thereto, (ii) the construction budgets, as the same may be amended in
accordance with the terms hereunder (collectively, the "Construction Budget"),
prepared by the Borrower and satisfactory to the Administrative Agent setting
forth on a line by line
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basis the total Amounts Required for Casino Completion anticipated to be
incurred in connection with the completion of the Project, (iii) an itemized
analysis of any increases in Project Costs as a result of escalation,
remediation or other Project Cost increases, (iv) the Financial Forecast and (v)
a commercially reasonable timetable for the completion of the Improvements (the
"Initial Construction Schedule"), which shall show, on a monthly basis, the
anticipated progress of the work; all of which contracts shall be on arms-length
commercially reasonable terms and conditions with licensed reputable
construction, engineering and architectural firms, as applicable.
(d) On the Initial Borrowing Date, the Administrative Agent
shall receive from each General Contractor an executed Consent.
5.08 Confirmation of Plan of Reorganization. On or prior to
the Initial Borrowing Date, (i) there shall have been delivered to the
Administrative Agent true and correct copies of the Plan of Reorganization and
the Disclosure Statement, which Plan of Reorganization and Disclosure Statement
shall be in form and substance satisfactory to the Administrative Agent and the
Required Banks, (ii) a Notice of Confirmation, in form and substance
satisfactory to the Administrative Agent and the Required Banks, shall have been
entered into, (iii) the Notice of Confirmation referenced in preceding clause
(ii) shall not have been stayed and shall have become final and non-appealable
and (iv) all conditions precedent to the effective date of the Plan of
Reorganization shall have been satisfied (and not waived without the consent of
the Administrative Agent and the Required Banks) to the satisfaction of the
Administrative Agent and the Required Banks.
5.09 Junior Subordinated Credit Facility. On or prior to the
Initial Borrowing Date, (i) the Borrower and HET shall have entered into the
Junior Subordinated Credit Facility and (ii) there shall have been delivered to
the Administrative Agent true and correct copies of the Junior Subordinated
Credit Facility Documents, which Junior Subordinated Credit Facility Documents
shall be in form and substance satisfactory to the Administrative Agent and the
Required Banks (including, without limitation, as to interest rates, maturities,
amortization, covenants, subordination provisions, defaults and remedies with
respect thereto).
5.10 Convertible Junior Subordinated Debentures. On or prior
to the Initial Borrowing Date, (i) JCC shall have received approximately $27
million of gross cash proceeds from the issuance of the Convertible Junior
Subordinated Debentures and (ii) there shall have been delivered to the
Administrative Agent true and correct copies of the Convertible Junior
Subordinated Debenture Documents, which Convertible Junior Subordinated
Debenture Documents shall be in form and substance satisfactory to the
Administrative Agent and the Required Banks (including, without limitation, as
to amortization, maturities, interest rates, covenants, subordination
provisions, defaults and remedies with respect thereto).
5.11 Harrah's Investor Cash Investment. On or prior to the
Initial Borrowing Date, (i) JCC Holding shall have received, as an equity
investment, gross cash proceeds in an amount equal to the difference between $75
million and the aggregate principal amount of DIP Indebtedness then outstanding
(such difference, the "Harrah's Investor Cash Investment"), (ii) JCC Holding
shall have contributed the full amount of such cash proceeds to the capital of
the Borrower and (iii) there shall have been delivered to the Administrative
Agent true and correct
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copies of the Harrah's Investor Equity Investment Documents, which Harrah's
Investor Equity Investment Documents shall be in form and substance satisfactory
to the Administrative Agent and the Required Banks.
5.12 Releases. On or prior to the Initial Borrowing Date,
there shall have been delivered to the Administrative Agent true and correct
copies of the Releases (as defined in the Plan of Reorganization), which
Releases shall be in form and substance satisfactory to the Administrative Agent
and the Required Banks.
5.13 New Bonds. On or prior to the Initial Borrowing Date, (i)
the New Bonds shall have been issued by the Borrower and delivered to the
Bondholders and (ii) there shall have been delivered to the Administrative Agent
true and correct copies of the New Bond Documents, which New Bond Documents
shall be in form and substance satisfactory to the Administrative Agent and the
Required Banks (including, without limitation, as to amortization, maturities,
interest rates, covenants, subordination provisions, defaults and remedies with
respect thereto).
5.14 Issuance of New Class A Common Stock. On or prior to the
Initial Borrowing Date, (i) JCC Holding shall have issued approximately
5,200,000 shares of New Class A Common Stock to the Bondholders pursuant to the
Plan of Reorganization and (ii) there shall have been delivered to the
Administrative Agent true and correct copies of the New Class A Common Stock
Documents, which New Class A Common Stock Documents shall be in form and
substance satisfactory to the Administrative Agent and the Required Banks.
5.15 Management Agreement. On the Initial Borrowing Date,
there shall have been delivered to the Administrative Agent (i) a true and
correct copy, certified as true and complete by an Authorized Officer of the
Borrower, of the Management Agreement and the Management Fee Repayment Guarantee
(including all exhibits and schedules thereto), which Management Agreement and
Management Fee Repayment Guarantee shall be in form and substance satisfactory
to the Administrative Agent and the Required Banks and shall be in full force
and effect. Except for the Management Agreement and the Management Fee Repayment
Guarantee, the Borrower shall not be a party to any other management agreement
or arrangement with respect to the Casino or otherwise.
5.16 Pledge Agreement. On the Initial Borrowing Date, JCC
Holding, the Borrower and each Subsidiary Guarantor shall have duly authorized,
executed and delivered a Pledge Agreement in the form of Exhibit G (as modified,
supplemented or amended from time to time, the "Pledge Agreement") and shall
have delivered to the Collateral Agent, as Pledgee, all the Pledged Securities,
if any, referred to therein then owned by JCC Holding, the Borrower and each
Subsidiary Guarantor (to the extent required to be delivered on the Initial
Borrowing Date pursuant to the terms thereof), (x) endorsed in blank in the case
of promissory notes constituting Pledged Securities and (y) together with
executed and undated stock powers, in the case of capital stock constituting
Pledged Securities.
5.17 Security Agreement. On the Initial Borrowing Date, JCC
Holding, the Borrower and each Subsidiary Guarantor shall have duly authorized,
executed and delivered a Security Agreement in the form of Exhibit H (as
modified, supplemented or amended from time to
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time, the "Security Agreement") covering all of JCC Holding's, the Borrower's
and each Subsidiary Guarantor's present and future Security Agreement
Collateral, together with:
(a) proper Financing Statements (Form UCC-1) fully executed for
filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the opinion of the Collateral
Agent or the Administrative Agent, desirable to perfect the security
interests purported to be created by the Security Agreement;
(b) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, listing all effective financing
statements that name JCC Holding, the Borrower or any Subsidiary
Guarantor as debtor and that are filed in the jurisdictions referred
to in clause (a) above, together with copies of such other financing
statements (none of which shall cover the Collateral except to the
extent evidencing Permitted Liens or in respect of which the
Collateral Agent shall have received termination or assignment
statements (Form UCC-3) or such other termination statements as shall
be required by local law) fully executed for filing;
(c) evidence of the completion of all other recordings and
filings of, or with respect to, the Security Agreement as may be
necessary or, in the opinion of the Collateral Agent or the
Administrative Agent, desirable to perfect the security interests
intended to be created by the Security Agreement;
(d) evidence that JCC Holding, the Borrower and the Subsidiary
Guarantors have obtained all necessary consents to permit them to
assign to the Collateral Agent pursuant to the Security Agreement all
of the their right, title and interest in and to all material Permits
required to be obtained by the Initial Borrowing Date in connection
with the ownership, lease, construction, equipping and operation of
the Project or any facilities or services ancillary thereto and the
other transactions contemplated by the Credit Documents and the other
Documents and otherwise referred to herein or therein, Project
Documents, Construction Documents, architectural and engineering
documents, maintenance, management (including the Management
Agreement), leasing and service documents and franchise contracts
relating to the Project (other than (x) the Casino Operating Contract
and (y) to the extent a security interest therein cannot be so granted
under applicable law, any other Permit); and
(e) evidence that all other actions necessary or, in the opinion
of the Collateral Agent or the Administrative Agent, desirable to
perfect and protect the security interests purported to be created by
the Security Agreement have been taken.
5.18 Mortgage; Title Insurance; Surveys; etc. On the Initial
Borrowing Date, the Collateral Agent shall have received (with copies for each
of the Banks):
(a) a copy certified by the Recorder of Mortgages for Orleans
Parish, Louisiana of fully executed mortgages in the form of Exhibits
I-1 through I-4, inclusive, (as modified, supplemented or amended from
time to time, each a "Mortgage" and, collectively, the "Mortgages"),
which Mortgages shall cover (i) in the case of the Mortgage executed
and
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delivered in the form of Exhibit I-1 (as modified, supplemented or
amended from time to time, the "Borrower Mortgage"), the Casino Lease
and the Railroad Lease and the Borrower's fee simple estate or
leasehold estate or other interest, as the case may be, in such other
Real Property owned or leased by the Borrower as shall be designated
as such in Part A of Schedule III (each, a "Borrower Mortgaged
Property" and, collectively, the "Borrower Mortgaged Properties"),
(ii) in the case of the Mortgage executed and delivered in the form of
Exhibit I-4 (as modified, supplemented or amended from time to time,
the "JCC Development Mortgage"), JCC Development's interest as
sublessee in the Second Floor Sublease and JCC Development's fee
simple estate or leasehold estate or other interest, as the case may
be, in such other Real Property owned or leased by JCC Development as
shall be designated as such in Part B of Schedule III (each a "JCC
Development Mortgaged Property" and, collectively, the "JCC
Development Mortgaged Properties"), (iii) in the case of the Mortgage
executed and delivered in the form of Exhibit I-2 (as modified,
supplemented or amended from time to time, the "CPD Mortgage"), CPD's
fee simple estate or leasehold estate or other interest, as the case
may be, in such Real Property owned or leased by CPD as shall be
designated as such in Part C of Schedule III (each a "CPD Mortgaged
Property" and, collectively, the "CPD Mortgaged Properties"), and (iv)
in the case of the Mortgage executed and delivered in the form of
Exhibit I-3 (as modified, supplemented or amended from time to time,
the "FPD Mortgage"), FPD's fee simple estate or leasehold estate or
other interest, as the case may be, in such Real Property owned or
leased by FPD as shall be designated as such in Part D of Schedule III
(each a "FPD Mortgaged Property" and, collectively, the "FPD Mortgaged
Properties"), and each of which Mortgages shall have been recorded in
Orleans Parish, Louisiana to effectively create a valid and
enforceable mortgage lien (subject only to Permitted Encumbrances) on
each Mortgaged Property in favor of the Collateral Agent for the
benefit of the Secured Creditors;
(b) ALTA leasehold loan policies (or marked commitments to issue
the same or pro forma policies, if available,) with respect to the
Casino Lease and the other Mortgaged Properties (collectively, the
"Mortgage Policies") in an amount satisfactory to the Administrative
Agent and the Required Banks (it being understood and agreed that the
Administrative Agent and the Required Banks shall accept (x) a
Mortgage Policy for the Borrower Mortgaged Properties in an amount no
less than $524,000,000, (y) a Mortgage Policy for the CPD Mortgaged
Property in an amount no less than $13,000,000 and (z) a Mortgage
Policy for the FPD Mortgaged Property in an amount no less than
$4,000,000 for the benefit of the Secured Creditors and other Persons
assuring the Collateral Agent that the Mortgages on the Mortgaged
Properties are valid and enforceable mortgage liens on the Mortgaged
Properties, free and clear of all defects, interests and encumbrances
except Permitted Encumbrances, and such Mortgage Policies (i) shall
otherwise be in form and substance satisfactory to the Administrative
Agent and the Required Banks (including all endorsements thereto), and
(ii) shall be issued and may be reinsured (on a direct access basis
pursuant to facultative reinsurance agreements reasonably satisfactory
to the Administrative Agent) by and with a title insurance company
and reinsurers acceptable to the Administrative Agent and the Required
Banks (it being understood and agreed that First American Title
Insurance Company shall be an acceptable title insurance company
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and that the reinsurers set forth on Schedule VIII shall be acceptable
reinsurers for the purpose of this subsection, provided that the pro
rata allocations of liability are substantially the same as set forth
on such Schedule VIII);
(c) current surveys of each Mortgaged Property and each other
parcel of land on which the Project is to be built, which surveys and
surveyor's certification shall be in form, substance and scope
satisfactory to the Administrative Agent and the Required Banks, and
shall disclose no easements, rights of way or encumbrances other than
Permitted Encumbrances; and
(d) Estoppel Certificate substantially in the form of Exhibit J
(the "Estoppel Certificate") duly and respectively executed by The
Alabama Great Southern Railroad Company (provided, that with respect
to such Estoppel Certificate, the Borrower shall only be required to
use its best efforts to obtain the same).
5.19 Guaranties. (a) On the Initial Borrowing Date, the
Completion Guarantors shall have duly authorized, executed and delivered a
Completion Guarantee in the form of Exhibit K-1 (as modified, supplemented or
amended from time to time, the "Bank Completion Guarantee"), and the Bank
Completion Guarantee shall be in full force and effect.
(b) On the Initial Borrowing Date, HET and HOC shall have duly
authorized, executed and delivered a Guaranty and Loan Purchase Agreement in the
form of Exhibit K-2 (as modified, supplemented or amended from time to time, the
"HET/HOC Guaranty and Loan Purchase Agreement"), and the HET/HOC Guaranty and
Loan Purchase Agreement shall be in full force and effect.
(c) On the Initial Borrowing Date, each Subsidiary Guarantor
shall have duly authorized, executed and delivered a Guaranty in the form of
Exhibit K-3 (as modified, supplemented or amended from time to time, the
"Subsidiaries Guaranty"), and the Subsidiaries Guaranty shall be in full force
and effect.
5.20 Intercreditor Agreement. On the Initial Borrowing Date,
the Administrative Agent, the Banks, the Collateral Agent, the Trustee, HET and
HOC shall have duly authorized, executed and delivered an Intercreditor
Agreement in the form of Exhibit L (as modified, supplemented or amended from
time to time, the "Intercreditor Agreement"), and the Intercreditor Agreement
shall be in full force and effect.
5.21 Consent Letter. On the Initial Borrowing Date, the
Administrative Agent shall have received a letter from CT Corporation System,
presently located at 1633 Broadway, New York, New York 10019, substantially in
the form of Exhibit M, indicating its consent to its appointment by each Credit
Party as its agent to receive service of process as specified in Section 16.08
of this Agreement, Section 17.1 of the Bank Completion Guarantee, Section 25 of
the HET/HOC Guaranty and Loan Purchase Agreement and Section 20 of the
Subsidiaries Guaranty.
5.22 Manager Subordination Agreement. On the Initial Borrowing
Date, the Borrower and Harrah's Management shall have duly authorized, executed
and delivered a
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Subordination Agreement in the form of Exhibit N (as modified, supplemented or
amended from time to time, the "Manager Subordination Agreement"), and the
Manager Subordination Agreement shall be in full force and effect.
5.23 Completion Guarantor Loan Documents; etc. (a) On the
Initial Borrowing Date, the Borrower and the Completion Guarantors shall have
duly authorized, executed and delivered a Subordination Agreement in the form of
Exhibit O-1 (as modified, supplemented or amended from time to time, the
"Completion Guarantor Subordination Agreement"), and the Completion Guarantor
Subordination Agreement shall be in full force and effect.
(b) On the Initial Borrowing Date, there shall have been
delivered to the Administrative Agent true and correct copies, certified as true
and complete by an Authorized Officer of the Borrower, of all other Completion
Guarantor Loan Documents, all of which shall be satisfactory to the
Administrative Agent and the Required Banks.
(c) On the Initial Borrowing Date, the Borrower and HET shall
have duly authorized, executed and delivered a Subordination Agreement in the
form of Exhibit O-2 (as modified, supplemented or amended from time to time, the
"Subordinated Lender Subordination Agreement"), and the Subordinated Lender
Subordination Agreement shall be in full force and effect.
5.24 Adverse Change; Approvals; Permits; etc. (a) On the
Initial Borrowing Date, nothing shall have occurred (and the Administrative
Agent and the Banks shall have become aware of no facts, conditions or other
information not previously known) which the Administrative Agent or the Required
Banks determine is reasonably likely to have a material adverse effect (i) on
the rights or remedies of the Administrative Agent or the Banks, or on the
ability of any Credit Party to perform their respective obligations to the
Administrative Agent and the Banks or (ii) on the business, property, assets,
liabilities, condition (financial or otherwise) or prospects of any Credit Party
from that set forth in the Financial Forecast.
(b) On or prior to the Initial Borrowing Date, all necessary
governmental (domestic and foreign) and third party approvals (including,
without limitation, all approvals of the Bankruptcy Court having jurisdiction
over HJC's bankruptcy case) and Permits (including, without limitation, the
Casino Operating Contract) (other than approvals and Permits as are immaterial
to the construction or operation of the Project) required to be obtained by such
date in connection with the ownership, lease, construction and operation of the
Project or any facilities or services ancillary thereto and the other
transactions contemplated by the Credit Documents and the other Documents and
otherwise referred to herein or therein shall have been obtained and remain in
full force and effect on the Initial Borrowing Date, and no action shall have
been taken by any competent authority which restrains, prevents or imposes
materially adverse conditions upon the completion of the Project or the
consummation of the transactions contemplated by this Agreement and the other
Documents. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified (other than the Tucker Litigation and any
appeal that may have been filed in the McCalls Litigation) (i) challenging the
legality, validity or enforceability of any such Permit or the legality or
validity of the process pursuant to which such Permit was issued or (ii)
prohibiting
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or imposing materially adverse conditions upon the completion of the Project or
the consummation of the transactions contemplated by this Agreement and the
other Documents.
(c) On or prior to the Initial Borrowing Date, there shall
have been delivered to the Administrative Agent evidence that the Banks are
qualified under the Louisiana Gaming Regulations as financial sources or
qualifiers, or are exempt or waived from, or are presumed qualified under, the
provisions thereof, and the Administrative Agent and the Required Banks shall be
satisfied that no other Louisiana gaming license, authorization, qualification,
waiver or exemption of the Banks is required on or prior to the Initial
Borrowing Date by reason of this Agreement or the Security Documents. The
Administrative Agent and the Required Banks shall be satisfied with any
conditions or requirements imposed by Louisiana or other relevant Gaming
Authorities upon the Banks, this Agreement, the Security Documents or the
Collateral.
(d) On or prior to the Initial Borrowing Date, the Borrower,
the Completion Guarantors and Harrah's Management shall have received any
qualifications required on or prior to the Initial Borrowing Date under
applicable Gaming Regulations in connection with this Agreement, the Security
Documents and the Transaction, and the Borrower, the Completion Guarantors and
Harrah's Management shall have received all other approvals, authorizations or
consents of, or notices to or registrations with any governmental body and
required releases and consents from any other appropriate Persons in connection
with this Agreement, the Security Documents and the Transaction and required on
or prior to the Initial Borrowing Date.
(e) On the Initial Borrowing Date, there shall have been
delivered to the Administrative Agent true and correct copies, certified as true
and complete by an Authorized Officer of the Borrower, of all such approvals and
Permits referred to in this Section 5.24 and required to be obtained by the
Initial Borrowing Date.
5.25 Litigation. (a) On the Initial Borrowing Date, the
summary judgment decision of February 22, 1994 issued by the Orleans Parish
Civil District Court in respect of the McCalls Litigation shall not have been
reversed or adversely modified.
(b) On the Initial Borrowing Date, no litigation by any entity
(private or governmental) shall be pending or threatened (i) with respect to the
Credit Documents, the other Documents or with respect to the Transaction (other
than (x) the McCalls Litigation, provided that no material adverse developments
in the McCalls Litigation shall have occurred since the date of the Form 10, and
(y) the Tucker Litigation, provided that no material adverse developments in the
Tucker Litigation shall have occurred), or (ii) which the Administrative Agent
or the Required Banks shall reasonably determine could have a material adverse
effect on the business, property, assets, nature of assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower or any
Completion Guarantor.
5.26 Environmental Analyses; Evidence of Insurance; Utilities;
Zoning. On the Initial Borrowing Date, there shall have been delivered to the
Administrative Agent (i) environmental site assessments from W.D. Scott Group,
Inc. (A) dated March 26, 1993 with respect to the Rivergate Convention Center in
New Orleans, (B) dated July 14, 1993, with respect to the Norfolk Southern
Corporation, Southern Railway System Building, 1205 Saint Louis Street, New
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Orleans and (C) with respect to the other parcels of Real Property set forth on
Schedule III, the results of which shall be in form and substance satisfactory
to the Administrative Agent and the Required Banks; (ii) an insurance analysis
and review from consultants acceptable to the Administrative Agent and the
Required Banks and evidence of insurance complying with the requirements of
Section 8.03, in each case for the business and properties of the Borrower, and
in scope, form and substance satisfactory to the Administrative Agent and the
Required Banks, including by naming the Collateral Agent as an additional
insured and/or loss payee, and stating that such insurance shall not be canceled
or revised without 30 days' prior written notice by the insurer to the
Administrative Agent; (iii) letters or other assurances satisfactory to the
Administrative Agent and the Required Banks confirming the availability of
electric power, sanitation and sewage, water and other facilities, utilities and
services to service the Project; (iv) a certificate from the Casino General
Contractor substantially in the form of Exhibit Q-1; (v) a certificate from
Broadmoor, a Louisiana general partnership, as a general contractor,
substantially in the form of Exhibit Q-2; (vi) a certificate of the Rivergate
Architect substantially in the form of Exhibit Q-3; (vii) a certificate of the
Poydras Street Support Facility Architect substantially in the form of Exhibit
Q-4; and (viii) a certificate of an Authorized Officer of the Borrower
substantially in the form of Exhibit Q-5 in respect of the status of the
Project.
5.27 Pro Forma Balance Sheet. On the Initial Borrowing Date,
there shall have been delivered to the Administrative Agent a Pro Forma Balance
Sheet, which Pro Forma Balance Sheet shall be in form and substance satisfactory
to the Administrative Agent and the Required Banks.
5.28 Construction Contracts. On or prior to the Initial
Borrowing Date, each of the Administrative Agent and the Collateral Agent shall
have received evidence, in form and substance satisfactory to it, that a notice
of each Construction Contract (which conforms to the private works law of
Louisiana (La. R.S. 9:4811), with the respective performance bonds attached
thereto) shall have been filed for recordation in the proper records of Orleans
Parish, Louisiana prior to the commencement by the General Contractor under such
Construction Contract of any work in connection with the Project.
5.29 Minimum Payment Guaranty; Etc. (a) On the Initial
Borrowing Date, HET and HOC shall have duly authorized, executed and delivered
the initial Minimum Payment Guaranty in favor of the LGCB as required by Section
25.1 of the Casino Operating Contract and, in connection therewith, HET, HOC and
the Borrower shall have entered into the HET/JCC Agreement.
(b) On the Initial Borrowing Date, there shall have been
delivered to the Administrative Agent true and correct copies, certified as true
and complete by an Authorized Officer of Borrower, of all of the Minimum Payment
Guaranty Documents, all of which shall be satisfactory to the Administrative
Agent and the Required Banks.
5.30 No Default; Representations and Warranties. At the time
of each Credit Event to occur on the Initial Borrowing Date and also after
giving effect thereto (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained herein and in the other Credit
Documents shall be true and correct in all material respects with the same
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effect as though such representations and warranties had been made on the date
of the making of such Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
5.31 Notices of Borrowing; Letter of Credit Requests. (a)
Prior to the making of any Loans on the Initial Borrowing Date, the
Administrative Agent shall have received the respective Notices of Borrowing
meeting the requirements of Section 1.03.
(b) If any Letters of Credit are to be issued on the Initial
Borrowing Date, the Administrative Agent and the respective Issuing Bank shall
have received a Letter of Credit Request meeting the requirements of Section
2.03.
SECTION 6. Conditions Precedent to Credit Events Occurring
After the Initial Borrowing Date. The obligations of each Bank to make Tranche
A-2 Term Loans, Tranche B-2 Term Loans (but excluding Tranche B-2 Term Loans
made as a result of conversions pursuant to Section 1.14), Revolving Loans (but
excluding Mandatory Borrowings, which shall be made as provided in Section
1.01(h)) or Swingline Loans after the Initial Borrowing Date, and the obligation
of each Issuing Bank to issue any Letter of Credit is subject, at the time of
each such Credit Event (except as hereinafter indicated), to the satisfaction of
the following conditions:
6.01 Absence of Certain Events of Default; Accuracy of
Representations and Warranties. At the time of the making of each such Credit
Event and also after giving effect thereto (i) there shall exist no Default or
Event of Default pursuant to Section 10.01 or 10.06 or with respect to any
Guaranty pursuant to Section 10.09, and (ii) all representations and warranties
contained in the Bank Completion Guarantee and in the HET/HOC Guaranty and Loan
Purchase Agreement shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made on the
date of the making of such Credit Event (it being understood and agreed that any
representation or warranty by which its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date) and no default shall exist pursuant to the Bank Completion
Guarantee or the HET/HOC Guaranty and Loan Purchase Agreement.
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior
to the making of each such Loan (other than a Swingline Loan or a Mandatory
Borrowing), the Administrative Agent shall have received a Notice of Borrowing
meeting the requirements of Section 1.03(a). Prior to the making of any
Swingline Loan, BTCo shall have received the notice required by
Section 1.03(b)(i).
(b) Prior to the issuance of any Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.03.
6.03 Utilization of Other Available Proceeds. (a) Prior to the
incurrence of any Tranche B-2 Term Loans, all proceeds of Tranche A-1 Term
Loans, Tranche A-3 Term Loans and Tranche B-1 Term Loans and any other Available
Funds then available to the Borrower for
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such purpose shall have been expended on Amounts Required for Casino Completion
as permitted under Sections 7.08.
(b) Prior to the issuance of any Tranche A-2 Term Loans, the
conditions specified in preceding clause (a) shall be satisfied and the Borrower
shall have incurred $121,500,000 aggregate principal amount of Tranche B-2 Term
Loans pursuant to this Agreement.
The acceptance of the proceeds of each Credit Event shall
constitute a representation and warranty by the Borrower to the Administrative
Agent and each of the Banks that all of the conditions specified in Section 5
and Section 6 and applicable to such Credit Event exist as of that time. All of
the Notes, certificates, legal opinions and other documents and papers referred
to in Section 5 or in Section 6, unless otherwise specified, shall be delivered
to the Administrative Agent at the Notice Office for the account of each of the
Banks and, except for the Notes, in sufficient counterparts for each of the
Banks and shall be in form and substance reasonably satisfactory to the Banks.
SECTION 7. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the Loans,
and issue (or participate in) the Letters of Credit as provided herein, each of
JCC Holding and the Borrower makes the following representations, warranties and
agreements, all of which shall survive the execution and delivery of this
Agreement and the Notes and the making of the Loans and issuance of the Letters
of Credit, with the occurrence of each Credit Event on or after the Effective
Date being deemed to constitute a representation and warranty that the matters
specified in this Section 7 are true and correct in all material respects (or in
the case of a Credit Event occurring after the Initial Borrowing Date, being
deemed to constitute a representation and warranty that the representations and
warranties referenced in Section 6.01 are true and correct in all material
respects) on and as of the date of each such Credit Event (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).
7.01 Status. Each of JCC Holding and its Subsidiaries (i) is a
duly organized and validly existing corporation or limited liability company, as
the case may be, in good standing under the laws of the jurisdiction of its
organization, (ii) has the requisite power and authority to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the conduct of its business
requires such qualifications except for failures to be so qualified which,
individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
7.02 Power and Authority. Each of JCC Holding and its
Subsidiaries has the corporate or limited liability company, as the case may be,
power and authority to execute, deliver and perform the terms and provisions of
each of the Documents to which it is party and has taken all necessary action to
authorize the execution, delivery and performance by it of each of such
Documents. Each of JCC Holding and its Subsidiaries has duly executed and
delivered each of the Documents to which it is party, and each of such Documents
constitutes the legal, valid and
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binding obligation of such Person enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
7.03 No Violation. Neither the execution, delivery or
performance by JCC Holding or any of its Subsidiaries of the Documents to which
it is a party, nor compliance by it with the terms and provisions thereof, (i)
will contravene any provision of any applicable law, statute, rule or regulation
or any applicable order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien (except pursuant to the Security Documents) upon any of the properties
or assets of JCC Holding or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan agreement, or any
other material agreement, contract or instrument to which JCC Holding or any of
its Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
certificate of incorporation or by-laws, or other organizational documents, of
JCC Holding or any of its Subsidiaries.
7.04 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made on or prior to the Initial Borrowing
Date and excluding any such items which are not required to be obtained or in
effect as of the date the representation contained in this Section 7.04 is being
made or deemed made), or exemption by, any governmental or public body or
authority (including, without limitation, any Gaming Authority), or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Document, (ii) subject
to the exceptions provided in Section 7.16(b), the consummation of the
Transaction or (iii) the legality, validity, binding effect or enforceability of
any such Document, except where the failure to so obtain would not (x) have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
JCC Holding and its Subsidiaries taken as a whole or (y) adversely affect the
Banks, the Administrative Agent, the Collateral Agent or their rights under, or
the legality, validity, binding effect or enforceability of, any Credit
Document.
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Financial Projections; Construction Budgets; Construction Schedule;
Plans and Specifications. (a) On and as of the Initial Borrowing Date, (i) the
Financial Forecast was prepared based upon the assumptions described therein for
the periods presented, (ii) the Financial Forecast was based on good faith
assumptions and estimates, and (iii) although a range of possible different
assumptions and estimates might also be reasonable, neither JCC Holding nor the
Borrower is aware of any facts that would lead it to believe that the
assumptions and estimates on which the Financial Forecast was based are not
reasonable; provided that no assurance can be given that the projected results
will be realized or with respect to the ability of the Borrower to achieve the
projected results, and while the Financial Forecast is necessarily presented
with numerical specificity, the actual results achieved during the periods
presented in all likelihood will differ from the projected results and such
differences may be material.
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(b) On and as of the date of each Credit Event, after giving
effect to all Indebtedness being incurred or assumed and Liens created by JCC
Holding and its Subsidiaries in connection therewith, (A) each of the Borrower
and JCC Holding and its Subsidiaries taken as a whole has not incurred and does
not intend to incur, and does not believe that it will incur, debts beyond its
ability to pay such debts as such debts mature and (B) each of the Borrower and
JCC Holding and its Subsidiaries taken as a whole will have sufficient capital
with which to conduct its business. For purposes of this Section 7.05(b), "debt"
means any liability on a claim, and "claim" means (i) right to payment, whether
or not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(c) Except as fully disclosed in the Financial Forecast, the
Form 10 and the Pro Forma Balance Sheet, there were as of the Initial Borrowing
Date no liabilities or obligations with respect to JCC Holding or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to the Borrower or JCC Holding and its Subsidiaries taken as a
whole. As of the Initial Borrowing Date, neither JCC Holding nor the Borrower
knows of any basis for the assertion against it of any liability or obligation
of any nature whatsoever that is not fully disclosed in the Form 10, Financial
Forecast and Pro Forma Balance Sheet which, either individually or in the
aggregate, is material to the Borrower or JCC Holding and its Subsidiaries taken
as a whole.
(d) On and as of the Initial Borrowing Date, the Construction
Budget, Initial Construction Schedule, and Plans and Specifications prepared by
or on behalf of the Borrower and delivered to the Banks by the Administrative
Agent on or prior to the Initial Borrowing Date were based on commercially
reasonable assumptions and estimates, and although a range of possible different
assumptions and estimates might exist, neither JCC Holding nor the Borrower is
aware of any facts that would lead it to believe that the assumptions and
estimates on which the Construction Budget, Initial Construction Schedule and
Plans and Specifications were based are not commercially reasonable.
(e) The Construction Budget, Initial Construction Schedule and
Plans and Specifications (which Plans and Specifications have been prepared in
accordance with industry standards by a licensed reputable engineering or
architectural firm) prepared by or on behalf of the Borrower are realistic and
each of JCC Holding and the Borrower reasonably expects that the same can be
adhered to in achieving the Termination of Construction Date on or before the
Completion Date.
(f) The Construction Contracts provide for a guaranteed
maximum or fixed price consistent with the Construction Budget and otherwise are
on arms-length, commercially reasonable terms and conditions with licensed,
reputable construction firms having experience with respect to the work required
to be performed by such firm under the applicable Construction Contract, and are
in full force and effect. Each such Construction Contract contains (x) a waiver
by the General Contractor under such Construction Contract of its lien rights
and a subordination
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of such lien rights to the liens of the Mortgages to the extent such a waiver of
lien rights is unenforceable under applicable law and (y) requires such General
Contractor to obtain a similar waiver and subordination from its subcontractors.
7.06 Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of JCC Holding and the Borrower, threatened
(including the Tucker Litigation) (i) with respect to any Document or (ii)
except for the existence of the McCalls Litigation, as to which there have been
no material adverse developments since the date of the Form 10, that could
reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or JCC Holding and its Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of JCC Holding or the Borrower in
writing to the Administrative Agent or any Bank (including, without limitation,
all information contained in the Form 10) for purposes of or in connection with
this Agreement, the other Documents or any transaction contemplated herein or
therein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of JCC Holding or the Borrower in writing to the
Administrative Agent or any Bank, will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
the Term Loans shall be used by the Borrower to provide a portion of the funds
required to pay Amounts Required for Casino Completion, including, without
limitation, any amounts owing pursuant to this Agreement prior to the
Termination of Construction Date.
(b) All proceeds of all Revolving Loans and
all Swingline Loans shall be used to finance the Borrower's working capital
requirements and other short-term obligations (which shall not include amounts
used to pay any Project Costs); provided that prior to the occurrence of the
Termination of Construction Date proceeds of Revolving Loans and Swingline Loans
may be used to pay Project Costs; provided further, that on the Termination of
Construction Date all repayments of Revolving Loans and Swingline Loans shall be
made as required by the provisions of Section 4.02(l).
(c) No part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor the
use of the proceeds thereof nor the occurrence of any other Credit Event will
violate or be inconsistent with the provisions of Regulation T, Regulation U or
Regulation X.
7.09 Tax Returns and Payments. Each of JCC Holding and its
Subsidiaries has timely filed or caused to be timely filed, on the due dates
thereof or within applicable extension or grace periods, with the appropriate
taxing authority, all material U.S. federal, state, city and other returns,
statements, forms and reports for taxes (the "Returns") required to be filed by
or with
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respect to the income, properties or operations of JCC Holding and its
Subsidiaries. The Returns accurately reflect in all material respects all
liability for taxes of JCC Holding and its Subsidiaries for the periods covered
thereby. Each of JCC Holding and its Subsidiaries has paid all material taxes
payable by it other than taxes which are not delinquent, and other than those
contested in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles. Except as set forth on
Schedule X, there is no material action, suit, proceeding, investigation, audit,
or claim now pending or, to the best knowledge of JCC Holding and the Borrower,
threatened by any taxing authority regarding any taxes relating to JCC Holding
and its Subsidiaries. As of the Initial Borrowing Date, neither JCC Holding nor
any of its Subsidiaries has entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of JCC Holding or
such Subsidiary. Neither JCC Holding nor any of its Subsidiaries has provided,
with respect to itself or property held by it, any consent under Section 341 of
the Code.
7.10 Compliance with ERISA. Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; all contributions required to be made with respect to a
Plan have been timely made; neither JCC Holding nor any of its Subsidiaries nor
any ERISA Affiliate has incurred any material liability to or on account of a
Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects
to incur any liability (including any indirect, contingent, or secondary
liability) under any of the foregoing Sections with respect to any Plan; no
proceedings have been instituted to terminate or appoint a trustee to administer
any Plan; no condition exists which presents a material risk to JCC Holding or
any of its Subsidiaries or any ERISA Affiliate of incurring a liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no
lien imposed under the Code or ERISA on the assets of JCC Holding or any of its
Subsidiaries or any ERISA Affiliate exists or is likely to arise on account of
any Plan; and JCC Holding and its Subsidiaries may cease contributions to or
terminate any employee benefit plan maintained by any of them without incurring
any material liability. The representations and warranties in this Section 7.10
shall only apply insofar as the matters referred to in this Section 7.10 present
a risk of material liability to JCC Holding or any of its Subsidiaries or ERISA
Affiliates. With respect to a multi-employer plan as defined in Section
4001(a)(3) of ERISA, it is understood and agreed that the representations and
warranties of this Section 7.10 are based solely on nonreceipt by JCC Holding or
its Subsidiaries or ERISA Affiliates of written notice from the PBGC or a Plan
Administrator referring to material violations or material liabilities affecting
JCC Holding or its Subsidiaries or ERISA Affiliates in respect of the matters
referred to in such representations and warranties.
7.11 The Security Documents. (a) The provisions of the
Security Agreement are effective to create in favor of the Collateral Agent for
the benefit of the Secured Creditors (subject to the provisions of the
Intercreditor Agreement) a legal, valid and enforceable security interest in all
right, title and interest of the Credit Parties in the Security Agreement
Collateral described therein, and the Security Agreement, upon the filing of
Form UCC-1 financing statements or the appropriate equivalent (which filings
have been made), creates a fully perfected
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(except as otherwise expressly provided in Section 3.2(d) of the Pledge
Agreement with respect to Gaming Patron Indebtedness) lien on, and security
interest in, all right, title and interest in all of the Security Agreement
Collateral described therein, subject to no other Liens other than Permitted
Liens. The recordation of the Assignment of Security Interest in U.S. Patents
and Trademarks in the form attached to the Security Agreement in the United
States Patent and Trademark Office together with filings on Form UCC-1 made
pursuant to the Security Agreement will be effective, under applicable law, to
perfect the security interest granted to the Collateral Agent in the trademarks
and patents covered by the Security Agreement and the recordation of the
Assignment of Security Interest in U.S. Copyrights in the form attached to the
Security Agreement with the United States Copyright Office together with filings
on Form UCC-1 made pursuant to the Security Agreement will be effective under
federal law to perfect the security interest granted to the Collateral Agent in
the copyrights covered by the Security Agreement. Each Credit Party has good and
valid title to all Security Agreement Collateral described therein, free and
clear of all Liens except those described above in this clause (a).
(b) The security interests created in favor of the Collateral
Agent, as Pledgee, for the benefit of the Secured Creditors (subject to the
provisions of the Intercreditor Agreement) under the Pledge Agreement constitute
first priority perfected (except as otherwise expressly provided in Section
3.2(d) of the Pledge Agreement with respect to Gaming Patron Indebtedness)
security interests in the Pledge Agreement Collateral, subject to no security
interests of any other Person. No filings or recordings are required in order to
perfect (or maintain the perfection or priority of) the security interests
created in the Pledged Securities and the proceeds thereof under the Pledge
Agreement.
(c) Upon the establishment of any Pledged Account in
accordance with the Security Agreement, and until the termination of such
Security Agreement in accordance with its respective terms, the security
interests created in favor of the Collateral Agent for the benefit of the
Secured Creditors (subject to the provisions of the Intercreditor Agreement)
under such Security Agreement will constitute perfected security interests in
the Collateral (as defined in such Security Agreement), subject to no
security interests of any other Person (other than Permitted Liens). No
filings or recordings are required (other than those that have been made) in
order to perfect (or maintain the perfection or priority of) the security
interests created in such Collateral.
(d) The Mortgages create, as security for the obligations
purported to be secured thereby, valid and enforceable perfected security
interests in and mortgage liens on all of the Mortgaged Properties in favor of
the Collateral Agent for the benefit of the Secured Creditors (subject to the
provisions of the Intercreditor Agreement), superior to and prior to the rights
of all third Persons (except that the security interest and mortgage lien
created in the Mortgaged Properties may be subject to the Permitted Encumbrances
related thereto) and subject to no other Liens (other than Permitted Liens).
Each of JCC Holding and its Subsidiaries has good and merchantable title to all
fee-owned Mortgaged Properties and valid leasehold title to all leasehold
Mortgaged Properties, in each case free and clear of all leases, occupancy
interests and all Liens except those described in the first sentence of this
subsection (d).
7.12 Representations and Warranties in Documents. (a) On the
Initial Borrowing Date, all representations and warranties set forth in the
Documents were true and correct in all
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material respects at the time as of which such representations and warranties
were made (or deemed made).
(b) On the date of each Credit Event, all representations and
warranties contained in the other Credit Documents shall be true and correct as
if made on such date in all material respects.
7.13 Properties. Each of JCC Holding and its Subsidiaries has
good and valid title to all material properties owned by it (except as sold or
otherwise disposed of in the ordinary course of business), free and clear of all
Liens, other than Permitted Liens. On the Initial Borrowing Date, Schedule III
sets forth a true and complete description of all Real Property owned or leased
by JCC Holding and its Subsidiaries and sets forth the direct owner or lessee
thereof.
7.14 Capitalization. (a) On the Initial Borrowing Date, the
authorized capital stock of JCC Holding shall consist of 30,000,000 shares of
common stock, $.01 par value per share, of which 10,000,000 shares are issued
and outstanding. All such outstanding shares of common stock have been duly and
validly issued, are fully paid and non-assessable and are free of preemptive
rights. As of the Initial Borrowing Date, JCC Holding does not have outstanding
any securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock, other than as disclosed on Schedule XI.
(b) 100% of the Equity Interests in each of the Borrower, JCC
Development, CPD and FPD are owned by JCC Holding, and all such Equity Interests
are fully paid and nonassessable and are free of preemptive rights. As of the
Initial Borrowing Date, none of the Borrower, JCC Development, CPD or FPD has
outstanding any securities convertible into or exchangeable for its Equity
Interests or outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its Equity Interests.
7.15 Subsidiaries. As of the Initial Borrowing Date, JCC
Holding has no Subsidiaries other than the Borrower, JCC Development, CPD and
FPD, each of which is a direct Wholly-Owned Subsidiary of JCC Holding.
7.16 Compliance with Statutes, etc. (a) Each of JCC Holding
and its Subsidiaries is in compliance with all applicable statutes, laws,
ordinances, codes, rules, regulations and orders of, and all applicable
restrictions imposed by and all applicable Permits issued by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business, the
ownership of its property and the construction and operation of the Project
(including applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls) to the extent required as of the Initial
Borrowing Date, except such instances of noncompliance as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower or JCC Holding
and its Subsidiaries taken as a whole.
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(b) All necessary governmental (domestic and foreign) and
third party approvals and Permits (including, without limitation, the Casino
Operating Contract) (other than approvals or permits to relocate the Joan of Arc
statute from its present location at Convention Center Boulevard and any other
approvals and Permits as are immaterial to the construction or operation of the
Project) required to be obtained by the date upon which this representation is
being made or deemed made in connection with the ownership, lease, construction
and operation of the Project or any facilities or services ancillary thereto and
the other transactions contemplated by the Credit Documents and the other
Documents and otherwise referred to herein or therein have been obtained and
remain in full force and effect, and all applicable waiting periods shall have
expired without any action being taken by any competent authority which
restrains, prevents or imposes materially adverse conditions upon the completion
of the Project or the consummation of the transactions contemplated by this
Agreement and the other Documents. Additionally, there does not exist any
judgment, order, injunction or other restraint issued or filed or a hearing
seeking injunctive relief or other restraint pending or notified (other than the
Tucker Litigation and any appeal that may have been filed in the McCalls
Litigation) (i) challenging the legality, validity or enforceability of any such
Permit or the legality or validity of the process pursuant to which such Permit
was issued or (ii) prohibiting or imposing materially adverse conditions upon
the completion of the Project or the consummation of the transactions
contemplated by this Agreement and the other Documents.
7.17 Investment Company Act. Neither JCC Holding nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
7.18 Public Utility Holding Company Act. Neither JCC Holding
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.19 Environmental Matters. (a) Each of JCC Holding and its
Subsidiaries is in compliance with all applicable Environmental Laws and the
requirements of any Permits issued under such Environmental Laws. There are
no pending or, to the best knowledge of JCC Holding and the Borrower after
due inquiry, past or threatened Environmental Claims against JCC Holding or
any of its Subsidiaries or any Real Property owned or operated by JCC Holding
or any of its Subsidiaries that individually or in the aggregate could
reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrower or JCC Holding and its Subsidiaries taken as a
whole. There are no facts, circumstances, conditions or occurrences with
respect to the business or operations of JCC Holding or any of its
Subsidiaries or any Real Property owned or operated by JCC Holding or any of
its Subsidiaries or, to the best knowledge of JCC Holding and the Borrower
after due inquiry, on any property adjoining or in the vicinity of any such
Real Property that, to the best knowledge of JCC Holding and the Borrower
after due inquiry, could reasonably be expected (i) to form the basis of an
Environmental Claim against JCC Holding or any of its Subsidiaries or any
such Real Property that individually or in the aggregate could reasonably be
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or JCC Holding and its Subsidiaries
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taken as a whole, or (ii) to cause any such Real Property to be subject to
any restrictions on the ownership, occupancy, use or transferability of such
Real Property by JCC Holding or any of its Subsidiaries under any applicable
Environmental Law.
(b) Except as disclosed in the environmental analyses
delivered pursuant to Section 5.26, Hazardous Materials have not at any time
been generated, used, treated or stored on, or transported to or from, any Real
Property owned or operated by JCC Holding or any of its Subsidiaries where such
generation, use, treatment or storage has violated or could reasonably be
expected to violate any Environmental Law. Hazardous Materials have not at any
time been Released on or from any Real Property owned or operated by JCC Holding
or any of its Subsidiaries where such Release has violated or could reasonably
be expected to violate any applicable Environmental Law. There are no
underground storage tanks located on any Real Property owned or operated by JCC
Holding or any of its Subsidiaries that are not in compliance with all
Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section
7.19, the representations made in this Section 7.19 shall only be untrue if the
aggregate effect of all failures and noncompliances of the types described above
have, or could reasonably be expected to have, a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or JCC Holding and its Subsidiaries
taken as a whole.
7.20 Labor Relations. Neither JCC Holding nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on the Borrower or JCC Holding and
its Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending against JCC Holding or any of its Subsidiaries or, to the best
knowledge of JCC Holding and the Borrower, threatened against any of them,
before the National Labor Relations Board, and no material grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against JCC Holding or any of its Subsidiaries or, to
the best knowledge of JCC Holding and the Borrower, threatened against any of
them, (ii) no strike, labor dispute, slowdown or stoppage pending against JCC
Holding or any of its Subsidiaries or, to the best knowledge of JCC Holding and
the Borrower, threatened against JCC Holding or any of its Subsidiaries and
(iii) to the best knowledge of JCC Holding and the Borrower, no union
representation proceeding is pending with respect to the employees of JCC
Holding or any of its Subsidiaries except (with respect to any matter specified
in clause (i), (ii) or (iii) above, either individually or in the aggregate)
such as could not reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or JCC Holding and its Subsidiaries
taken as a whole.
7.21 Patents, Licenses, Franchises and Formulas. Each of JCC
Holding and its Subsidiaries owns all patents, trademarks, permits, service
marks, trade names, copyrights, licenses, franchises and formulas, or has rights
with respect to the foregoing, and has obtained assignments of all leases and
other rights of whatever nature, reasonably necessary for the present conduct of
its business, without any known conflict with the rights of others which, or the
failure to obtain which, as the case may be, would result in a material adverse
effect on the business,
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operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or JCC Holding and its Subsidiaries taken as a whole.
7.22 Indebtedness. (a) Schedule IV sets forth a true and
complete list of all Indebtedness for borrowed money of JCC Holding or any of
its Subsidiaries as of the Initial Borrowing Date and which is to remain
outstanding after giving effect thereto (excluding the Loans and the Letters of
Credit, the New Bonds, the Junior Subordinated Credit Facility and the
Convertible Junior Subordinated Debentures, the "Existing Indebtedness"), in
each case showing the aggregate principal amount thereof and the name of the
respective borrower and any other entity which directly or indirectly guaranteed
such debt.
(b) The subordination provisions contained in the Completion
Guarantor Subordination Agreement are enforceable against each Completion
Guarantor, and all Obligations hereunder and under the other Credit Documents
are within the definition of "Senior Indebtedness" included in such
subordination provisions. The subordination provisions contained in the Manager
Subordination Agreement are enforceable against Harrah's Management, and all
Obligations hereunder and under the other Credit Documents are within the
definition of "Senior Indebtedness" included in such subordination provisions.
The subordination provisions contained in the Junior Subordinated Credit
Facility Documents are enforceable against the respective holders of loans made
thereunder, and all Obligations hereunder and under the other Credit Documents
are within the definition of "Senior Indebtedness" included in such
subordination provisions. The subordination provisions contained in the
Convertible Junior Subordinated Debenture Documents are enforceable against each
of the holders of the Convertible Junior Subordinated Debentures, and all
Obligations hereunder and under the other Credit Documents are within the
definition of "Senior Indebtedness" included in such subordination provisions.
7.23 Access; Utilities. (a) All roads necessary for the
construction of the Project exist and all roads necessary for the operation of
the Project for its intended purposes either exist or will exist prior to the
commencement date of such operations.
(b) All utilities services and facilities necessary for the
construction of the Project (including, without limitation, water supply, storm
and sanitary sewer facilities, gas, electrical and telephone facilities) will be
available without impediment or delay at the boundaries of the Casino when
required and all utility services necessary for the operation of the Project
will be available at or within the boundaries thereof when needed.
(c) The Borrower possesses (or will possess when necessary
with respect to each phase of the Project) all rights and interests in property
(including, without limitation, the Casino and rights of ingress to and egress
from the Casino) and all material rights or contracts necessary for the
construction, installation, completion, operation and maintenance of the Project
as contemplated by this Agreement and the Project Documents.
7.24 Project Documents. As of the Initial Borrowing Date, each
of the Project Documents consists only of the original document (including
exhibits and schedules) and amendments thereto expressly described in the
relevant definitions appearing in Section 11 hereof or
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delivered to the Administrative Agent on the Initial Borrowing Date pursuant to
Section 5.07 and there are no other amendments or waivers or supplements,
written or oral, with respect thereto.
7.25 Special Purpose Corporation. JCC Holding engages in no
business activities and has no significant assets (other than the Equity
Interests in the Borrower, JCC Development, CPD, FPD and any other Subsidiary of
JCC Holding created or established after the Initial Borrowing Date in
accordance with the requirements of this Agreement) or liabilities (other than
the liabilities expressly permitted by this Agreement).
7.26 Year 2000. (a) Each of JCC Holding and its Subsidiaries
has undertaken to review and analyze the effects of the Year 2000 problem on
their respective businesses and operations. As of the date hereof, to the best
of the collective knowledge of JCC Holding and its Subsidiaries, the reasonably
foreseeable consequences of causing the Information Systems and Equipment to be
utilized by JCC Holding and Subsidiaries to be Year 2000 Compliant will not
result in a Default or Event of Default or a material adverse effect on the
business, property, assets, liabilities, condition (financial otherwise) or
prospects of the Borrower or JCC Holding and its Subsidiaries taken as a whole.
(b) As of the Termination of Construction Date, either (i) the
Information Systems and Equipment then utilized by JCC Holding and its
Subsidiaries will be Year 2000 Compliant, or (ii) the reasonably foreseeable
consequences of JCC Holding and its Subsidiaries not being Year 2000 Compliant
will not result in a Default or Event of Default or a material adverse effect on
the business, property, assets, liabilities, condition (financial or otherwise)
or prospects of Borrower, JCC Holding and its Subsidiaries taken as a whole.
SECTION 8. Affirmative Covenants. JCC Holding and the Borrower
hereby covenant and agree that on and after the Effective Date and until the
Total Commitments and all Letters of Credit have terminated and the Loans, Notes
and Unpaid Drawings, together with interest, Fees and all other obligations
incurred hereunder, are paid in full:
8.01 Information Covenants. JCC Holding and/or the Borrower
will furnish to each Bank:
(a) Monthly Reports. Within 30 days after the end of each fiscal
month of JCC Holding (other than the last such month of any fiscal
quarter of JCC Holding), the consolidated balance sheet of JCC Holding
and its Consolidated Subsidiaries as at the end of such fiscal month
and the related consolidated statements of income and retained
earnings and statement of cash flows for such fiscal month and for the
elapsed portion of the fiscal year ended with the last day of such
fiscal month, in each case setting forth comparative figures for the
corresponding fiscal month in the prior fiscal year and comparable
budgeted figures for such fiscal month, all of which shall be
certified by a financial officer of JCC Holding, subject to normal
year-end audit adjustments.
(b) Quarterly Financial Statements. Within 45 days after the
close of each of the first three quarterly accounting periods in each
fiscal year of JCC Holding and within 90 days after the close of the
fourth quarterly accounting period in each fiscal year of JCC
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Holding, the consolidated balance sheet of JCC Holding and its
Consolidated Subsidiaries as at the end of such quarterly accounting
period and the related consolidated statements of income and retained
earnings and statement of cash flows, in each case for such quarterly
accounting period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly accounting period, in each case
setting forth comparative figures for the corresponding periods in the
prior fiscal year and the budgeted figures for such quarterly
accounting period as set forth in the respective budget delivered
pursuant to Section 8.01(f), all of which shall be certified by a
financial officer of the Borrower, subject to normal year-end audit
adjustments.
(c) Annual Financial Statements. Within 120 days after the close
of each fiscal year of JCC Holding, (i) the consolidated balance sheet
of JCC Holding and its Consolidated Subsidiaries as at the end of such
fiscal year and the related consolidated statements of income and
retained earnings and statement of cash flows for such fiscal year
setting forth comparative figures for the preceding fiscal year and
certified by Deloitte & Touche or such other independent certified
public accountants of recognized national standing reasonably
acceptable to the Required Banks, together with a statement of such
accounting firm as to whether, in conducting their audit, anything
came to their attention to cause them to believe that JCC Holding was
not in compliance with Sections 9.08, 9.09 and 9.10, insofar as such
Sections relate to accounting and auditing matters, on the date of
such statements and (ii) management's discussions and analysis of the
important operational and financial developments during such fiscal
year.
(d) Management Letters. Promptly after the receipt thereof by JCC
Holding or any of its Subsidiaries, a copy of any "management letter"
received by the Borrower or such Subsidiary from its certified public
accountants and the management's responses thereto.
(e) Management Agreement. Promptly after receipt thereof by JCC
Holding, the certified audit, monthly operating statement and annual
plan prepared by Harrah's Management pursuant to Articles 8.02(a) and
8.02(e) of the Management Agreement, respectively, any revisions to
the annual plan or pre-opening budget referred to in the Management
Agreement as may be agreed to by the Borrower and Harrah's Management,
any submissions to arbitration in connection with such annual plan and
the results of any such arbitration.
(f) Budgets. No later than 30 days following the commencement of
the first day of each fiscal year of JCC Holding, a budget in form
satisfactory to the Administrative Agent (including budgeted
statements of income and sources and uses of cash and balance sheets)
prepared by JCC Holding for (x) each of the twelve months of such
fiscal year prepared in detail and (y) (i) prior to the Termination of
Construction Date, each of the two years immediately following such
fiscal year and (ii) after the Termination of Construction Date, for
the year immediately following such fiscal year, in each case prepared
in summary form and consolidated for JCC Holding and its Subsidiaries,
and accompanied by the statement of a financial officer of JCC Holding
to the effect that, to the best of such officer's knowledge, the
budget is a reasonable estimate for the period covered thereby.
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(g) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 8.01(b) and (c), a
certificate of an Authorized Officer of JCC Holding to the effect
that, to the best of such officer's knowledge, no Default or Event of
Default has occurred and is continuing or, if any Default or Event of
Default has occurred and is continuing, specifying the nature and
extent thereof, which certificate shall (x) set forth the calculations
required to establish whether JCC Holding was in compliance with the
provisions of Sections 4.02(c), (f), and (g), 9.03(iii) and (iv),
9.04(vi) and 9.06 through 9.10, inclusive, at the end of such fiscal
quarter or year, as the case may be and (y) set forth the amount of
Semi-Annual Free Cash Flow for the respective Semi-Annual Free Cash
Flow Payment Period and showing the calculation (in reasonable detail)
thereof.
(h) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after an Authorized Officer of JCC Holding
obtains knowledge thereof, notice of (i) the occurrence of any event
which constitutes a Default or an Event of Default, (ii) the receipt
by such Person of any information with respect to the cost to JCC
Holding and its Subsidiaries of becoming, or the failure of such
Person to become, Year 2000 Compliant which, in the reasonable
business judgment of management, could reasonably be expected to have
a material adverse effect on the business, property, assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower or JCC Holding and its Subsidiaries taken as a whole, (iii)
any material adverse development in the McCalls Litigation or the
Tucker Litigation since the Effective Date and (iv) any other
litigation or governmental investigation or proceeding (including any
investigation by any Gaming Authority) pending (x) against JCC Holding
or any of its Subsidiaries or Affiliates of any thereof (other than
the initial suitability investigations by the LGCB of directors and
officers of the Borrower and JCC Holding, but including notice of any
adverse finding in any such investigation), which could materially and
adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower or JCC Holding and its Subsidiaries taken as a whole, (y)
with respect to any material Indebtedness of JCC Holding and its
Subsidiaries taken as a whole or (z) with respect to any Document or
the Transaction.
(i) Other Reports, Notices and Filings. Promptly, copies of all
financial information, proxy materials, notices and other information
and reports, if any, which JCC Holding or any of its Subsidiaries
shall (x) file with the Securities and Exchange Commission or any
successor thereto (the "SEC") or (y) deliver to holders of the New
Bonds or any other issue of its Indebtedness if the aggregate
principal amount thereof exceeds (or upon the utilization of any
unused commitment may exceed) $5,000,000, pursuant to the terms of the
documentation governing any such Indebtedness (or any trustee, agent
or other representative therefor) or (z) deliver pursuant to any of
the Minimum Payment Guaranty Documents (including, without limitation,
any notice to the effect that the Minimum Payment Guaranty shall not
be renewed or extended).
(j) Environmental Matters. Promptly upon, and in any event within
ten Business Days after, an Authorized Officer of JCC Holding or any
of its Subsidiaries obtains knowledge thereof, notice of one or more
of the following environmental matters, unless such environmental
matters could not, individually or when aggregated with all other such
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environmental matters, be reasonably expected to materially and
adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim against
JCC Holding or any of its Subsidiaries or any Real Property owned
or operated by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by JCC Holding or any of its
Subsidiaries that (a) results in noncompliance by JCC Holding or
any of its Subsidiaries with any applicable Environmental Law or
(b) could reasonably be expected to form the basis of an
Environmental Claim against JCC Holding or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned
or operated by JCC Holding or any of its Subsidiaries that could
reasonably be expected to cause such Real Property to be subject
to any restrictions on the ownership, occupancy, use or
transferability by JCC Holding or any of its Subsidiaries of such
Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous
Material on any Real Property owned or operated by JCC Holding or
any of its Subsidiaries as required by any Environmental Law or
any governmental or other administrative agency.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial
action and JCC Holding's or such Subsidiary's response thereto. In
addition, JCC Holding will provide the Banks with copies of all
material communications with any government or governmental agency
relating to Environmental Laws, all communications with any Person
(other than its attorneys) relating to any Environmental Claim of
which notice is required to be given pursuant to this Section 8.01(j),
and such detailed reports of any such Environmental Claim as may
reasonably be requested by the Banks; provided that in any event JCC
Holding shall deliver to each Bank all notices received by it or any
of its Subsidiaries from any government or governmental agency under,
or pursuant to, CERCLA.
(k) Casino. Promptly, but in no event later than 40 Business
Days, after the completion of the Casino, a current certified survey
of the Casino with all Improvements located thereon, together with a
foundation endorsement to the Mortgage Policy delivered pursuant to
Section 5.18(b) hereof . Such surveys and surveyor's certifications
shall be in form, substance and scope satisfactory to the
Administrative Agent and shall disclose no easements, rights of way or
encumbrances other than Permitted Encumbrances.
(l) Annual Meetings with Banks. At the request of Administrative
Agent, JCC Holding shall within 120 days after the close of each
fiscal year of JCC Holding hold a
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meeting at a time and place selected by JCC Holding and acceptable to
the Administrative Agent with all of the Banks at which meeting shall
be reviewed the financial results of the previous fiscal year and the
financial condition of JCC Holding and the annual plan and budgets
presented for the current fiscal year of the Borrower and its
Subsidiaries.
(m) Other Information. From time to time, such other information
or documents (financial or otherwise) with respect to the Borrower or
its Subsidiaries as any Bank may reasonably request in writing.
8.02 Books, Records and Inspections. JCC Holding will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities. JCC Holding will,
and will cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or any Bank to visit and inspect,
during regular business hours and under guidance of officers of JCC Holding or
such Subsidiary, any of the properties of JCC Holding or such Subsidiary, and to
examine the books of account of JCC Holding or such Subsidiary and discuss the
affairs, finances and accounts of JCC Holding or such Subsidiary with, and be
advised as to the same by, its and their Authorized Officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or such Bank may request.
8.03 Maintenance of Property; Insurance. (a) Schedule V
sets forth a true and complete listing of all insurance maintained by JCC
Holding and its Subsidiaries as of the Initial Borrowing Date. JCC Holding
will, and will cause each of its Subsidiaries to, (i) keep all property
necessary in its business in good working order and condition (ordinary wear
and tear excepted), (ii) maintain insurance on all its property in at least
such amounts and against at least such risks as is consistent and in
accordance with industry practice and in compliance with the terms of the
Casino Lease and the Casino Operating Contract as in effect on the Initial
Borrowing Date and (iii) furnish to each Bank, upon written request, full
information as to the insurance carried. In addition to the requirements of
the immediately preceding sentence, JCC Holding will at all times cause
insurance of the types described in Schedule V to be maintained (with the
same scope of coverage as that described in Schedule V) at levels which are
at least as great as the respective amount described opposite the respective
type of insurance on Schedule V under the column headed "Minimum Amount
Required to be Maintained."
(b) JCC Holding will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect the insurance coverages
required by Section 13 of the Casino Lease and, to the extent not otherwise
required thereby, physical damage insurance on all real and personal property on
an all risk basis (including the perils of flood and earthquake), covering the
repair and replacement costs of all such property and consequential loss
coverage for business interruption and extra expense, and all policies
(including Mortgage Policies) or certificates (or certified copies thereof) with
respect to such insurance (and any other insurance maintained by JCC Holding or
any of its Subsidiaries) (i) shall be endorsed to the Administrative Agent's and
the Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee or
as an additional insured), (ii) shall state that
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such insurance policies shall not be canceled without 30 days' prior written
notice thereof by the respective insurer to the Collateral Agent and the
Administrative Agent, (iii) shall provide that the respective insurers
irrevocably waive any and all rights of subrogation with respect to the
Collateral Agent and the Secured Creditors, (iv) shall contain the standard
non-contributory mortgagee clause endorsement in favor of the Collateral Agent
with respect to hazard insurance coverage, (v) shall, except in the case of
public liability insurance and workers' compensation insurance, provide that any
losses shall be payable notwithstanding (A) any act or neglect of JCC Holding or
any of its Subsidiaries, (B) the occupation or use of the properties for
purposes more hazardous than those permitted by the terms of the respective
policy, (C) any foreclosure or other proceeding relating to the insured
properties or (D) any change in the title to or ownership or possession of the
insured properties and (vi) shall be deposited with the Collateral Agent. JCC
Holding will deliver to the Administrative Agent and any Bank upon the request
of the Administrative Agent or any Bank through the Administrative Agent from
time to time full information as to the insurance carried. The provisions of
this Section 8.03(b) shall be deemed supplemental to, but not duplicative of,
the provisions of the Security Agreement and the Mortgages.
(c) If JCC Holding or any of its Subsidiaries shall fail to
maintain all insurance in accordance with this Section 8.03, or if JCC Holding
or any of its Subsidiaries shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Administrative Agent and/or the
Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and JCC Holding agrees to reimburse the Administrative
Agent or the Collateral Agent, as the case may be, for all costs and expenses of
procuring such insurance.
8.04 Corporate Franchises. JCC Holding will, and will cause
each of its Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that nothing in
this Section 8.04 shall prevent (i) sales of assets by JCC Holding or any of its
Subsidiaries in accordance with Section 9.02, (ii) the withdrawal by any
Subsidiary of JCC Holding of its qualification as a foreign corporation in any
jurisdiction where such withdrawal could not reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower or
JCC Holding and its Subsidiaries taken as a whole, or (iii) the taking of any
action respecting any right, franchise, license or patent determined by the
management of JCC Holding to be in the best interests of JCC Holding or such
Subsidiary.
8.05 Compliance with Statutes, etc. JCC Holding will, and will
cause each of its Subsidiaries to, (i) comply with all applicable statutes,
laws, ordinances, codes, rules, regulations and orders of, and all applicable
restrictions imposed by and all applicable Permits issued by, and (ii) obtain
all necessary approvals and Permits from, all governmental bodies, domestic or
foreign, in respect of the conduct of its business, the ownership of its
property and the construction and operation of the Project, except such
instances of noncompliance as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower or JCC Holding and its Subsidiaries taken as a whole.
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8.06 Compliance with Environmental Laws. (a) JCC Holding
will comply, and will cause each of its Subsidiaries to comply, in all
material respects with all Environmental Laws applicable to the ownership or
use of its Real Property now or hereafter owned or operated by JCC Holding or
any of its Subsidiaries, will within a reasonable time period pay or cause to
be paid all costs and expenses incurred in connection with such compliance,
and will keep or cause to be kept all such Real Property free and clear of
any Liens imposed pursuant to such Environmental Laws. Neither JCC Holding
nor any of its Subsidiaries will generate, use, treat, store, release or
dispose of, or permit the generation, use, treatment, storage, release or
disposal of Hazardous Materials on any Real Property now or hereafter owned
or operated by JCC Holding or any of its Subsidiaries, or transport or permit
the transportation of Hazardous Materials to or from any such Real Property
except for Hazardous Materials used or stored at any such Real Property in
material compliance with all applicable Environmental Laws and reasonably
required in connection with the operation, use and maintenance of any such
Real Property.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, the Borrower will provide, at the
Borrower's sole cost and expense, an environmental site assessment report
concerning any Real Property now or hereafter owned or operated by JCC Holding
or any of its Subsidiaries, prepared by an environmental consulting firm
approved by the Administrative Agent, indicating the presence or absence of
Hazardous Materials and the potential cost of any removal or remedial action in
connection with any Hazardous Materials on such Real Property; provided that
such request may be made only if (i) there has occurred and is continuing an
Event of Default, (ii) the Administrative Agent or the Required Banks reasonably
believe that JCC Holding or any such Subsidiary or any such Real Property is not
in material compliance with any Environmental Law, or (iii) circumstances exist
that reasonably could be expected to form the basis of a material Environmental
Claim against JCC Holding or any such Subsidiary or any such Real Property. If
the Borrower fails to provide the same within 90 days after such request was
made, the Administrative Agent may order the same, and the Borrower shall grant
and hereby grants to the Administrative Agent and the Banks and their agents
access to such Real Property and specifically grants the Administrative Agent
and the Banks an irrevocable non-exclusive license, subject to the rights of
tenants, to undertake such an assessment, all at the Borrower's sole cost and
expense.
8.07 ERISA. As soon as possible and, in any event, within 10
days after JCC Holding, any of its Subsidiaries or any ERISA Affiliate knows or
has reason to know of the occurrence of any of the following, JCC Holding will
deliver to each of the Banks a certificate of an Authorized Officer of JCC
Holding setting forth details as to such occurrence and the action, if any, that
JCC Holding, such Subsidiary or such ERISA Affiliate is required or proposes to
take, together with any notices required or proposed to be given to or filed
with or by JCC Holding, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan
participant or the Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency has been incurred or
an application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan; that a contribution required to be made
to a Plan has not been timely made; that a Plan has been or may be terminated,
reorganized, partitioned or declared insolvent under
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Title IV of ERISA; that a Plan has an Unfunded Current Liability giving rise to
a lien under ERISA or the Code; that proceedings may be or have been instituted
to terminate or appoint a trustee to administer a Plan; that a proceeding has
been instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Plan; that JCC Holding, any of its Subsidiaries or any ERISA
Affiliate will or may incur any liability (including any indirect, contingent,
or secondary liability) to or on account of the termination of or withdrawal
from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
with respect to a Plan under Section 401(a)(29), 4971 or 4975 of the Code or
Section 409 or 502(i) or 502(l) of ERISA; or that JCC Holding or any of its
Subsidiaries may incur any material liability pursuant to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any employee pension benefit plan (as defined in Section 3(2)
of ERISA). JCC Holding will deliver to each of the Banks a complete copy of the
annual report (Form 5500) of each Plan required to be filed with the Internal
Revenue Service. In addition to any certificates or notices delivered to the
Banks pursuant to the first sentence hereof, copies of annual reports and any
material notices received by JCC Holding, any of its Subsidiaries or any ERISA
Affiliate with respect to any Plan shall be delivered to the Banks no later than
10 days after the date such report has been filed with the Internal Revenue
Service or such notice has been received by JCC Holding, such Subsidiary or such
ERISA Affiliate, as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. JCC Holding shall
cause (i) its, and each of its Subsidiaries', fiscal years to end on December
31, except that for purposes of the Casino Operating Contract and the Minimum
Payment Guaranty Documents, the fiscal year of the Borrower shall be deemed to
end on March 31, and (ii) its, and each of its Subsidiaries', fiscal quarters to
end on the last day of each March, June, September and December.
8.09 Performance of Obligations. JCC Holding will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each Project Document, the Casino Operating Contract, the Management
Agreement, each Construction Contract and each mortgage, indenture, security
agreement, loan agreement, credit agreement or any other material agreement,
contract or instrument (including, without limitation, architectural and
engineering agreements or contracts) by which it is bound, except such
non-performances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower or JCC Holding and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. JCC Holding will pay and discharge or
cause to be paid and discharged, and will cause each of its Subsidiaries to pay
and discharge, all material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any material
properties belonging to it, in each case on a timely basis, and all lawful
claims which, if unpaid, might become a lien or charge upon any properties of
JCC Holding or any of its Subsidiaries; provided that neither JCC Holding nor
any of its Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with generally accepted accounting principles.
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8.11 Additional Mortgages; Further Assurances; Surveys. (a)
JCC Holding will, and will cause each of its Subsidiaries to, grant to the
Collateral Agent security interests, pledge agreements, mortgages and amendments
or supplements thereto (collectively, an "Additional Mortgage") in such Real
Property or other assets (including, without limitation, leasehold interests) of
JCC Holding or any of its Subsidiaries as are not covered by the Security
Documents, to the extent acquired after the Initial Borrowing Date (but in any
event excluding the Specified Real Estate after the release thereof from the
Mortgages in accordance with the terms thereof), and as may be requested from
time to time by the Administrative Agent or the Required Banks (each such Real
Property, an "Additional Mortgaged Property"). All such Additional Mortgages
shall be granted pursuant to documentation substantially in the form of the
applicable Security Document executed on the Initial Borrowing Date or in such
other form as is reasonably satisfactory to the Administrative Agent and shall
constitute valid and enforceable perfected Liens that are, except to the extent
subject to then existing Liens permitted by Section 9.01 at the time of such
perfection, superior to and prior to the rights of all third Persons and subject
to no other Liens. The Additional Mortgages or instruments related thereto shall
have been duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of the Collateral Agent required to be granted pursuant to the Additional
Mortgages and all taxes, fees and other charges payable in connection therewith
shall have been paid in full.
(b) JCC Holding will, and will cause each of its Subsidiaries
to, at the expense of the Borrower, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates (including
Estoppel Certificates from the RDC in respect of the Casino Lease and the GDA),
real property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Administrative Agent or the Collateral Agent may reasonably
require pursuant to this Section 8.11. Furthermore, JCC Holding shall cause to
be delivered to the Collateral Agent such opinions of counsel, title insurance
and other related documents as may be reasonably requested by the Administrative
Agent or the Collateral Agent to assure itself that this Section 8.11 has been
complied with.
(c) Each of JCC Holding and the Borrower agrees that each
action required by Section 8.11(a) or (b) shall be completed as soon as
possible, but in no event later than 75 days (or 45 days in the case of the
delivery of Estoppel Certificates) after such action is requested to be taken by
the Administrative Agent, the Collateral Agent or the Required Banks.
8.12 Construction of Improvements; Amendments to Plans and
Specifications, Construction Budget and Construction Schedule. (a) The
Borrower will cause the Termination of Construction Date to occur on or
before the Completion Date and will meet any earlier construction deadlines
contained in the Casino Lease or the GDA or any of the Permits, if any, and,
in connection therewith will cause the construction and equipping of the
Improvements to be prosecuted with diligence and continuity in substantial
accordance with the Construction Budget, Construction Schedule and Plans and
Specifications.
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(b) To design, plan and construct the Improvements, the
Borrower is proceeding with construction simultaneously with completion of such
Plans and Specifications and will submit copies of the Plans and Specifications
to the Administrative Agent concurrently with its submission thereof to the
landlord under the Casino Lease or the LCGB (whichever occurs first). The
Borrower shall have the right to amend from time to time the Plans and
Specifications to the extent such amendment is commercially reasonable and does
not materially affect the design, structure, size or quality of the Improvements
by submitting to the Administrative Agent such amendment in writing and
identifying therein with particularity the proposed amendment to the Plans and
Specifications, together with a certificate of an Authorized Officer of the
Borrower that (i) such amendment is commercially reasonable and does not
materially affect the design, structure, size or quality of the Improvements,
and (ii) immediately following such amendment (x) the Plans and Specifications
will continue to provide for construction of improvements which are
substantially consistent with the Construction Budget and Construction Schedule,
and (y) the Plans and Specifications will continue to call for construction
which will permit the Termination of Construction Date to occur on or prior to
the Completion Date. To the extent any amendment to the Plans and Specifications
is not commercially reasonable or materially affects the design, structure, size
or quality of the Improvements, the Borrower shall obtain the prior written
consent of the Required Banks before proceeding with such amendment.
(c) The Borrower shall have the right to amend from time to
time the Construction Budget to the extent such amendment is commercially
reasonable to increase or decrease the amounts allocated for Line Items or to
add or delete Line Items so long as the Borrower shall submit to the
Administrative Agent a monthly report which describes such amendment and
identifies therein with particularity the Line Item(s) which were increased,
decreased, added or deleted and the amounts of the Line Item(s) as changed,
together with a certification of an Authorized Officer of the Borrower that (i)
the change identified in such amendment is commercially reasonable, and (ii)
immediately following such amendment (x) the Construction Budget continues to
provide for construction of improvements which are substantially consistent with
the Construction Schedule and the Plans and Specifications and which will permit
the Termination of Construction Date to occur on or prior to the Completion
Date, and (y) the remaining costs to achieve the Termination of Construction
Date on or prior to the Completion Date will not exceed the sum of the aggregate
amounts available to be advanced hereunder, Available Funds and funds available
to the Borrower pursuant to the Completion Guarantees and/or the Junior
Subordinated Credit Facility to the extent the Administrative Agent has received
assurances from the Completion Guarantors and/or the respective lender, as the
case may be, as to such availability under the Completion Guarantees and/or the
Junior Subordinated Credit Facility.
(d) The Borrower shall have the right to amend from time to
time the Initial Construction Schedule to the extent such amendment is
commercially reasonable by submitting to the Administrative Agent such amendment
in writing and identifying with particularity therein the dates and times to be
changed, together with a certificate of an Authorized Officer of the Borrower
that (i) the change identified in such amendment is commercially reasonable, and
(ii) immediately following such amendment the Initial Construction Schedule will
continue to provide for a schedule and manner of construction which is
substantially consistent with the Construction Budget and the Plans and
Specifications and which will permit the Termination of Construction Date to
occur on or prior to the Completion Date.
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8.13 Inspection by the Administrative Agent. Each of JCC
Holding and the Borrower shall cooperate (and shall use its best efforts to
cause the General Contractors to cooperate) with the Administrative Agent in
arranging for inspections from time to time by the Administrative Agent or any
representative of the Administrative Agent of the progress of construction. In
the course of such inspections, each of the Administrative Agent and any
representatives of the Administrative Agent shall be entitled to inspect the
Casino, including, without limitation, (i) the Improvements, (ii) all materials
to be used in the construction of the Improvements, (iii) all plans and shop
drawings which are or may be kept at the construction site, (iv) any contracts,
bills of sale, statements, receipts or vouchers in connection with the
Improvements whether or not kept at the construction site, (v) all work done,
labor performed, materials furnished in and about the Casino, (vi) all books,
contracts and records of the Borrower and the Borrower's agents and other
entities as may be contractually bound to the Borrower to provide such records
with respect to the construction of the Improvements whether or not kept at the
construction site, and (vii) any other documents relating to the construction of
the Improvements whether or not kept at the construction site. In addition to
the foregoing, the Borrower shall use reasonable efforts to insure that
representatives of the Administrative Agent shall be entitled to inspect (i) all
books, contracts and records of the General Contractors and the Borrower with
respect to the Project (whether or not related to the construction thereof) and
(ii) any other document of the General Contractors and the Borrower relating to
the Improvements whether or not related to the construction thereof and whether
or not kept at the construction site. The Borrower will cooperate and instruct
the General Contractors and all material subcontractors, in accordance with the
applicable Construction Contracts, to cooperate with the Administrative Agent
and any representatives of the Administrative Agent so that they may perform
their respective responsibilities hereunder and to comply with the
Administrative Agent's requirements.
8.14 Settlement of Claims. If the Borrower shall fail promptly
either to discharge, bond or to contest claims asserted, or having commenced to
contest the same, shall fail to prosecute such contest with diligence, or to
maintain any indemnity or security as may be required by the title insurer, or
upon adverse conclusion of any such contest, to cause any judgment or decree to
be satisfied and lien to be released, then, upon 10 days prior notice to the
Borrower, the Administrative Agent may, at its election (but shall not be
required to), procure the release and discharge of any such claims and any
judgment or decree thereon and, further, may in its sole discretion effect any
settlement or compromise of the same, or may furnish such security or indemnity
to the title insurer and any amounts so expended by the Administrative Agent,
including premiums paid or security furnished in connection with the issuance of
any surety company bonds, and the Borrower agrees to promptly reimburse the
Administrative Agent for any amounts so expended by it (with interest thereon at
the rate applicable to Base Rate Loans hereunder). In settling, compromising or
discharging any claims for lien, the Administrative Agent shall not be required
to inquire into the validity or amount of any such claim.
8.15 Notices. The Borrower shall at all times (i) maintain the
registration of the Collateral Agent as the Registered Leasehold Mortgagee under
(and as defined in) the Casino Operating Contract, (ii) provide the RDC with the
notice address for the Collateral Agent under (and as defined in) the Casino
Lease and (iii) cause a copy or will deliver a copy of any notice provided by
the LGCB or the RDC to the Collateral Agent to be delivered at the same time to
the Administrative Agent.
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8.16 PIK Payments. (a) The Borrower agrees to make all
interest payments owing with respect to the Senior Subordinated Notes by using
the pay-in-kind feature applicable thereto, rather than making such payment in
cash, to the maximum extent permitted under the terms of the Senior Subordinated
Notes Indenture and the Senior Subordinated Notes.
(b) The Borrower agrees to make all interest payments owing
with respect to the Convertible Junior Subordinated Debentures by using the
pay-in-kind feature applicable thereto, rather than making such payments in
cash, to the maximum extent permitted under the terms of the Convertible Junior
Subordinated Debenture Indenture and the Convertible Junior Subordinated
Debenture Documents.
8.17 Project Account; Operating Accounts; Payment of Project
Costs; Etc. (a) On or prior to the Initial Borrowing Date, the Borrower shall
establish a separate bank account for all funds to be used for the payment of
Project Costs (the "Project Account"). The Borrower shall cause all net cash
proceeds received by it from time to time pursuant to the Junior Subordinated
Credit Facility, from its issuance of Convertible Junior Subordinated
Debentures, from its incurrence of Term Loans and Completion Loans under the
Completion Guarantor Loan Agreement, to be immediately deposited into the
Project Account, and maintained therein until spent for the payment of Project
Costs or released and applied as provided in clause (c) below. Furthermore,
prior to the occurrence of the Termination of Construction Date, the proceeds of
Revolving Loans and Swingline Loans may, at the discretion of the Borrower, be
deposited into the Project Account. Prior to the earlier to occur of the Opening
Date or the Termination of Construction Date, any other cash proceeds available
to the Borrower may be deposited into the Project Account. From and after the
earlier to occur of the Opening Date or the Termination of Construction Date, no
cash proceeds, other than net cash proceeds received as described in the second
sentence of this Section 8.17(a), may be deposited into the Project Account.
Furthermore, none of JCC Holding, the Borrower nor any of their Subsidiaries
shall pay any Project Costs with funds other than those from time to time on
deposit in the Project Account. Pending the use of funds on deposit from time to
time in the Project Account for the payment of Project Costs, amounts from time
to time on deposit in the Project Account may be invested in cash and Cash
Equivalents.
(b) The Borrower shall also establish one or more operating
accounts, including the Bank Account (as defined in the Management Agreement)
into which the Minimum Balance (as defined in the Management Agreement) is to be
deposited, for all funds to be used for operations and working capital (the
"Operating Accounts"). After the Termination of Construction Date, the proceeds
of all Revolving Loans and Swingline Loans shall be deposited into one or more
of the Operating Accounts, and shall in no event be deposited into the Project
Account or used for the payment of Project Costs.
(c) After the occurrence of both the Opening Date and the
Termination of Construction Date, and after all Project Costs have been paid in
full (and so long as the Borrower has determined that there remain no unpaid
Project Costs), and so long as no Default or Event of Default is then in
existence, any excess funds which remain in the Project Account may be released
therefrom so long as such funds are immediately used (x) to the extent of
amounts theretofore advanced pursuant to the Completion Guarantees (without
duplication of amounts), to
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return such excess funds to the Completion Guarantors and (y) to the extent in
excess thereof, to apply same to the voluntary prepayment of Term Loans in
accordance with the requirements of Section 4.01.
8.18. Covenants With Respect to Material Leases. Except as
otherwise permitted by this Agreement, with respect to any Material Lease to be
entered into by the Borrower after the date hereof:
(i) The Borrower shall not enter into any Material Lease
without the consent of the Administrative Agent, which consent shall
not be unreasonably withheld;
(ii) each Material Lease shall be on arms-length commercially
reasonable terms and conditions;
(iii) the Borrower shall not sell, convey, assign or otherwise
transfer, whether voluntary or involuntary, or whether direct or
indirect, any interest in or grant any lien upon any such Material
Lease or the rents thereunder;
(iv) each Material Lease shall provide that such Material
Lease is subject and subordinate to all ground or underlying leases,
mortgages or deeds of trust which affect the property leased
thereunder, including the Borrower Mortgage, and all advances made
prior to or on or after the date of such Material Lease and to any
renewals, modifications, consolidations, replacements or extensions
thereof;
(v) no Material Lease shall grant to the tenant thereunder any
right or option to purchase or otherwise acquire the property leased
thereby or any interest therein;
(vi) the Borrower shall duly and punctually pay, perform and
observe in all material respects (subject to Section 8.05 of this
Agreement) all of its material obligations under any Material Lease;
(vii) the Borrower shall do all things necessary or
appropriate to enforce, preserve and keep unimpaired each Material
Lease (and the Borrower's material rights thereunder) and to enforce
the obligations of the tenant thereunder, except following any default
by the tenant thereunder;
(viii) the Borrower shall not enter into any agreement or take
any other action terminating, extending or materially modifying
(including consenting to the assignment or subletting of the tenant's
interest under or waiving any material right of the Borrower or any
material obligation of the tenant under) any Material Lease, except in
the ordinary course of business or as shall not have a material adverse
effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole;
(ix) the Borrower shall notify the Administrative Agent (A)
promptly after receipt by the Borrower, or contemporaneously when given
by the Borrower, as the case may be, of any notice of default under any
Material Lease or any notice of the termination of any
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Material Lease, (B) promptly upon learning of any condition which,
with or without the giving of notice or the passage of time or both,
would constitute a material default or cause a termination under such
Material Lease, and (C) promptly upon learning of any assignment or
subletting of the interest of the tenant under any Material Lease;
(x) the Borrower shall promptly deliver to the Administrative
Agent, upon request, copies of (A) any Material Lease entered into
after the date hereof, (B) any agreement entered into after the date
hereof terminating, extending or otherwise modifying any Material Lease
(or any lease in any material respect which causes a lease to become a
Material Lease), and (C) any notice exercising any material right or
option under any Material Lease not theretofore delivered to the
Administrative Agent pursuant to clause (viii) of this Section 8.18;
(xi) each Material Lease shall provide that such Material
Lease or the interest of the Borrower as landlord thereunder may be
assigned or mortgaged by the Borrower to any mortgagee or holder of a
deed of trust as additional security and, in the event of a foreclosure
sale under any mortgage or deed of trust, such Material Lease shall
continue in full force and effect (to the extent such Material Lease is
not in default) and the tenant thereunder shall attorn to and
acknowledge such foreclosure purchaser as landlord under the Material
Lease, or, at such purchaser's option, shall enter into a new lease for
the balance of the term of such Material Lease upon the identical terms
and provisions contained therein; and
(xii) unless the Administrative Agent otherwise agrees, the
Borrower shall grant contemporaneously with the execution of any
Material Lease, to the Collateral Agent for the benefit of the Secured
Creditors, a mortgage and/or security interest or collateral assignment
of such Material Lease and the interest created therein, together with
any and all other documents required by the Administrative Agent to
reflect or otherwise protect the interests created, with all of the
foregoing to be in form and substance satisfactory to the
Administrative Agent.
8.19 Conditions to Material Alterations or Restorations. If no
Event of Default is continuing, the Borrower may, subject to compliance with
applicable law and the terms of the Casino Lease, construct any new improvement,
or otherwise alter or restore the Borrower Mortgaged Property (but excluding the
premises leased pursuant to the Railroad Lease); provided, however, with respect
to any material Alteration or Restoration:
(i) prior to commencing any Material Alteration or
Restoration, the Borrower shall give notice thereof to the
Administrative Agent, describing in reasonable detail satisfactory to
the Administrative Agent such Material Alteration or Restoration, the
work required therefor and the Borrower's best estimate of the cost
thereof;
(ii) any Material Alteration or Restoration when completed
shall not result in a reduction of the value of the Borrower Mortgaged
Property (as so altered or restored) below the lesser of (A) the value
immediately preceding the commencement of such alteration or
restoration or (B) the value which would cause the calculation of the
ratio of
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the then-outstanding Obligations to such value to equal or exceed the
ratio thereof in effect on the Termination of Construction Date;
(iii) any Material Alteration or Restoration shall be effected
with due diligence, in a good and workmanlike manner, in compliance in
all material respects (subject to Section 8.05 of this Agreement) with
all applicable legal requirements and the insurance requirements set
forth in Section 8.03 of this Agreement;
(iv) prior to commencing any phase of any Material Alteration
or Restoration, the Borrower shall obtain all permits applicable to
such phase and other consents or approvals required therefor and shall
deliver certified copies thereof to the Administrative Agent;
(v) the Borrower shall promptly and fully pay the cost of any
Material Alteration or Restoration;
(vi) if the Borrower has actual knowledge that any Material
Alteration or Restoration will encroach upon any property adjacent to
the Borrower Mortgaged Property or will interfere with any right of way
or easement affecting the Borrower Mortgaged Property, the Borrower
shall, prior to making such Material Alteration or Restoration, obtain
an agreement permitting such encroachment or interference; provided,
however, in the case of any other encroachment or interference as a
result of any Material Alteration or Restoration, the Borrower agrees
to promptly obtain such an agreement;
(vii) upon completion of any Material Alteration or
Restoration, the Borrower shall promptly give notice thereof to the
Administrative Agent accompanied by (A) a certificate of the Borrower
that such Material Alteration or Restoration complies with the
provisions of this Section, and that the Borrower has complied in all
material respects with its obligations under this Agreement relating
thereto, (B) a certified copy of any permanent certificate of occupancy
required to permit the use and occupancy thereof, (C) if reasonably
requested by the Administrative Agent, in the case of any Material
Alteration or Restoration affecting the exterior dimensions of any
improvements on the Borrower Mortgaged Property, an as-built ALTA
survey of the Borrower Mortgaged Property (or the applicable portion
thereof) certified to the Secured Creditors in form and substance
reasonably satisfactory to the Administrative Agent showing the
existing improvements and such Material Alteration or Restoration, and
(D) if reasonably requested by the Administrative Agent, an endorsement
to the existing mortgagee's title policy in form and substance
acceptable to the Administrative Agent; and
(viii) upon request, the Borrower shall promptly furnish to
the Administrative Agent such other information and documents relating
to any Material Alteration or Restoration as the Administrative Agent
shall reasonably request.
8.20 Maintaining the Premises. With respect to the Borrower
Mortgaged Property, the Borrower (i) shall operate and maintain the Borrower
Mortgaged Property (excluding any portion of the premises leased pursuant to the
Railroad Lease not used for Casino operations), or cause the same to be operated
and maintained, in good order, repair and condition;
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(ii) shall, within a commercially reasonable time, make, or cause to be made,
all material repairs, replacements, renewals, restorations, additions and
improvements of and to the Borrower Mortgaged Property (excluding any portion of
the premises leased pursuant to the Railroad Lease not used for Casino
operations), whether interior or exterior, structural or nonstructural or
foreseen or unforeseen, necessary or appropriate to keep the same in good order,
repair and condition; (iii) shall do or cause others to do all shoring of the
Borrower Mortgaged Property or any property adjacent thereto, including the
foundations and walls of either thereof, and to take all other actions necessary
or appropriate for the preservation and safety thereof by reason of or in
connection with any excavation or other construction thereon or any property
adjacent thereto, the failure of which would reasonably be expected to
materially adversely affect the Borrower Mortgaged Property taken as a whole;
(iv) shall not, without the consent of the Administrative Agent, initiate or
affirmatively support any change in the appropriate zoning materially adversely
affecting the Borrower Mortgaged Property taken as a whole, seek any variance
(or any change in any variance) under the zoning materially adversely affecting
the Borrower Mortgaged Property taken as a whole, execute or file any
subdivision or other plat or map materially adversely affecting the Borrower
Mortgaged Property taken as a whole or consent to any of the foregoing; and (v)
shall promptly after receiving notice or obtaining knowledge of any proposed or
threatened change in the zoning materially adversely affecting the Borrower
Mortgaged Property taken as a whole which would result in the current
contemplated use of the Borrower Mortgaged Property taken as a whole being a
nonconforming use, notify the Administrative Agent thereof and diligently
contest the same.
8.21 Releases of Mortgaged Properties. JCC Holding and the
Borrower covenant and agree to take all actions as may from time to time be
required so that no Mortgaged Property is at any time released from the
respective Mortgage (whether in accordance with the express release provisions
of such Mortgage or otherwise) unless JCC Holding and the Borrower have obtained
the prior written consent of the Required Banks (or in the circumstances
required by Section 16.12, all of the Banks) to such release, even if the
respective release would otherwise have been permitted without such consent in
accordance with the release provisions of the respective Mortgage.
9. Negative Covenants. JCC Holding and the Borrower covenant
and agree that on and after the Effective Date and until the Total Commitments
and all Letters of Credit have terminated and the Loans, Notes and Unpaid
Drawings, together with interest, Fees and all other Obligations incurred
hereunder, are paid in full:
9.01 Liens. JCC Holding will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of JCC Holding or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable with recourse to JCC Holding
or any of its Subsidiaries), or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute; provided that the provisions
of this Section 9.01 shall not prevent the creation, incurrence, assumption or
existence of the following (Liens described below are herein referred to as
"Permitted Liens"):
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(i) inchoate Liens for taxes, assessments or governmental
charges, compensation or levies not yet due and payable or Liens for
taxes, assessments or governmental charges or levies being contested
in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted
accounting principles;
(ii) Liens in respect of property or assets of the Permitted
Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money,
such as carriers', warehousemen's, materialmen's and mechanics' liens
and other similar Liens arising in the ordinary course of business,
and (x) which do not in the aggregate materially detract from the
value of the respective Subsidiary's property or assets or materially
impair the use thereof in the operation of the business of the
respective Permitted Subsidiary or (y) which are being contested in
good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;
(iii) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Schedule VI,
but only to the respective date, if any, set forth in such Schedule VI
for the removal and termination of any such Liens, without any
renewals or extensions thereof;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) leases or subleases granted by any Permitted Subsidiary to
other Persons in the ordinary course of business not materially
interfering with the conduct of the business of the respective
Permitted Subsidiary or materially detracting from the value of the
assets of the respective Permitted Subsidiary;
(vii) Liens on equipment or machinery subject to Capitalized
Lease Obligations to the extent permitted by Section 9.04, provided
that (x) the amount of such Capitalized Lease Obligations outstanding
at any one time, together with the aggregate principal amount of all
Indebtedness outstanding at such time and secured by Liens permitted
by clause (ix) of this Section 9.01, shall not exceed that aggregate
amount permitted by Section 9.04(vi), (y) such Liens only serve to
secure the payment of Indebtedness arising under such Capitalized
Lease Obligation and (z) the Lien encumbering the equipment or
machinery giving rise to the Capitalized Lease Obligation does not
encumber any other asset;
(viii) Liens (other than any lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of
social security in the ordinary course of business;
(ix) Liens placed upon equipment or machinery used in the
ordinary course of business of any Permitted Subsidiary at the time of
acquisition thereof by such Permitted
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Subsidiary or within 90 days thereafter to secure Indebtedness
incurred to pay all or a portion of the purchase price thereof,
provided that (x) the aggregate outstanding principal amount of all
Indebtedness secured by Liens permitted by this clause (ix) at any
time, together with the amount of all Capitalized Lease Obligations
outstanding at such time, shall not exceed that aggregate amount
permitted by Section 9.04(vi) and (y) in all events, the Lien
encumbering the equipment or machinery so acquired does not encumber
any other asset of JCC Holding or any of its Subsidiaries;
(x) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances, and minor title deficiencies,
in each case not securing Indebtedness and not materially interfering
with the conduct of the business of JCC Holding or any Permitted
Subsidiary;
(xi) Liens arising from precautionary UCC financing statement
filings regarding operating leases entered into by the Permitted
Subsidiaries in the ordinary course of business;
(xii) Liens arising out of judgments or awards in respect of
which JCC Holding or any Permitted Subsidiary shall in good faith be
prosecuting an appeal or proceedings for review in respect of which
there shall have been secured a subsisting stay of execution pending
such appeal or proceedings, provided that the aggregate amount of all
such judgments or awards (and any cash and the fair market value of
any property subject to such Liens) does not exceed $5,000,000 at any
time outstanding;
(xiii) lessor's privileges under leases to which any Permitted
Subsidiary is a party;
(xiv) restrictions pursuant to legends on stock required by
Gaming Regulations and the Casino Operating Contract to the extent
such restrictions constitute a Lien;
(xv) restrictions pursuant to the Management Agreement, the
Casino Lease and the Casino Operating Contract on the granting of any
security interest in the House Bank and Minimum Balance (each as
defined in the Management Agreement) and the Reserve Fund;
(xvi) Liens securing Indebtedness of (x) CPD and its Subsidiaries
or (y) FPD and its Subsidiaries, in each case so long as such
Indebtedness is incurred pursuant to, and permitted under, Section
9.04(viii) and so long as such Liens are approved by the Required
Banks at the time they permit the incurrence of Indebtedness pursuant
to said Section 9.05(viii) and so long as such Liens only encumber the
assets of CPD and its Subsidiaries or FPD and its Subsidiaries, as the
case may be;
(xvii) the ownership rights of the State of Louisiana in the
Louisiana Gross Revenue Share Payments, including the State of
Louisiana's Interest in Daily Collections, each to the extent granted
to the State of Louisiana under (and as each such term is defined in)
the Casino Operating Contract as originally in effect and as modified
from time to time in compliance with Section 9.11;
(xviii) the Minimum Payment Guaranty Lien shall be permitted; and
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(xix) Liens in favor of HET and HOC in respect of the Project to
the extent required by the Completion Guarantors in the exercise of
their Completion Obligations (as defined in the Bank Completion
Guarantee), provided that such Liens are expressly subject to the
terms of the Completion Guarantor Subordination Agreement.
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
JCC Holding will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets, or enter into any sale-leaseback transactions, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets (other than purchases or other acquisitions of inventory, materials,
equipment and intangible assets in the ordinary course of business) of any
Person, except that:
(i) Capital Expenditures by the Permitted Subsidiaries shall be
permitted to the extent not in violation of Section 9.07;
(ii) investments may be made to the extent permitted by Section
9.05;
(iii) each of the Permitted Subsidiaries may make sales of
inventory, materials and equipment (including, but not limited to,
obsolete, uneconomic or worn-out equipment or materials) in the
ordinary course of business;
(iv) CPD and FPD may sell the Specified Real Estate at fair
market value (as determined in good faith by management of JCC
Holding), provided that (x) in no event shall the purchase price for
any such sale be less than the cost to HJC of such Specified Real
Estate, (y) all Net Sale Proceeds from any sale of the Specified Real
Estate (whether or not to an Affiliate of the Borrower, CPD or FPD)
shall be applied as required by Section 4.02 and (z) at least 75% of
such proceeds shall be in cash and any non-cash proceeds shall be
evidenced by a promissory note pledged to the Collateral Agent
pursuant to the Pledge Agreement;
(v) the Borrower may lease (as lessor) portions of the Casino for
retail, restaurant and other ancillary uses so long as all such leases
(i) do not in the aggregate detract from the gaming operations of the
Casino in any material respect, (ii) are permitted by the Casino
Operating Contract, the Casino Lease, the Gaming Regulations and
applicable zoning and conditional uses and (iii) are subordinate and
subject to the Borrower Mortgage;
(vi) each of the Permitted Subsidiaries may lease (as lessee)
real or personal property so long as any such lease does not create a
Capitalized Lease Obligation (other than as permitted under Section
9.04);
(vii) to facilitate the development of the Specified Real Estate,
and with prior consent of the Required Banks (which may be granted or
withheld by them in their sole discretion), CPD or FPD, as the case
may be, may transfer the Specified Real Estate owned by it to a Person
which is not a Wholly-Owned Subsidiary of JCC Holding (so long
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as equity interests in such Person are not owned by other Affiliates
of JCC Holding and so long as the respective such Person is created in
accordance with the requirements, to the extent applicable, of Section
9.15), free and clear of the Lien of the CPD Mortgage or FPD Mortgage,
as the case may be; provided that all Equity Interests in the
respective such Person owned by JCC Holding and its Wholly-Owned
Subsidiaries shall be pledged to the Collateral Agent pursuant to the
Pledge Agreement;
(viii) the Second Floor Sublease to JCC Development shall be
permitted and JCC Development may pay rent to the Borrower under the
Second Floor Sublease;
(ix) JCC Development may lease (as lessor) the Second Floor so
long as any such lease is permitted by the Casino Operating Contract,
the Casino Lease, the Gaming Regulations and applicable zoning and
conditional uses; and
(x) the Borrower may liquidate and dissolve HJC.
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Section 9.02, such Collateral (unless sold to JCC Holding or a Subsidiary
of JCC Holding other than pursuant to Section 9.02(iv) or (vii)) shall be sold
free and clear of the Liens created by the Security Documents, and the
Administrative Agent and Collateral Agent shall be authorized to take any
actions (and shall take such actions) as they deem appropriate in order to
effect the release of the respective Collateral from the Liens created by the
respective Security Documents.
9.03 Restricted Payments. JCC Holding will not, and will not
permit any of its Subsidiaries to, authorize, declare, pay or make any
Restricted Payments, except:
(i) any Subsidiary of a Permitted Subsidiary may pay
Distributions to such Permitted Subsidiary or any Wholly-Owned
Subsidiary of such Permitted Subsidiary;
(ii) any Permitted Subsidiary other than the Borrower and its
Subsidiaries may pay Distributions to JCC Holding;
(iii) from amounts paid as interest hereunder and as Letter of
Credit Fees, Credit Support Fees may be paid from time to time as
provided in the Credit Enhancement Fee Agreement (Bank Credit
Agreement) and the Credit Enhancement Fee Agreement (JCC);
(iv) the Borrower may pay the Additional Credit Support Fees, the
Management Fees and other costs and expenses pursuant to the
Management Agreement, and Minimum Payment Guaranty Fees, in each case
to the extent permitted by Section 9.06(a)(iii), (iv) and (v) and
Section 9.06(b);
(v) dividends and distributions by the Borrower to JCC Holding in
an amount equal to all Permitted Tax Payments, to the extent all
amounts so dividended or distributed pursuant to this clause (v) are
promptly (and in any event within two Business Days) used by JCC
Holding to make payments in respect of the tax obligations of the type
described in the definition of Permitted Tax Payments; provided
further that any refund
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actually received by JCC Holding shall be promptly (in any event
within two Business Days) returned to the Borrower (and if not so
returned, shall reduce the amount of payments otherwise permitted to
be made in the future by the Borrower pursuant to this clause (v));
(vi) dividends and distributions by the Permitted Subsidiaries to
JCC Holding to the extent necessary to permit JCC Holding to pay, and
so long as JCC Holding promptly (and in any event within five Business
Days) uses such dividends and distributions to pay any administrative,
overhead or holding company operating expenses incurred in the
ordinary course of business, including, without limitation, JCC
Holding's reasonable professional fees and expenses in connection with
complying with its reporting obligations and obligations to prepare
and distribute business records, financial statements or other
documents to any lender or other persons having business dealings with
JCC Holding or as may be required by law, JCC Holding's costs and
related expenses in connection with computation of federal, state,
local or foreign taxes and other governmental charges other than
Permitted Tax Payments, indemnification agreements, insurance
premiums, surety bonds and insurance brokers' fees, and JCC Holding's
expenses for directors', officers' and employees' compensation and
benefits, rent, office furnishings, fixtures and equipment and office
supplies; provided that the portion of dividends and distributions
pursuant to this clause (vi) paid by the Borrower and its Subsidiaries
shall not exceed their ratable share (as determined in good faith by
JCC Holding based upon the costs relating to its various Permitted
Subsidiaries or, to the extent not so allocable, based on allocations
deemed fair and reasonable by JCC Holding) of such amounts;
(vii) payments permitted pursuant to the last sentence of Section
9.11;
(viii) JCC Holding may purchase or redeem outstanding shares of
its common stock if no Default or Event of Default then exists or
would result therefrom to the extent necessary in the good faith
judgment of the Board of Directors of JCC Holding to prevent the
filing of a disciplinary action by the State of Louisiana or the LGCB
or to prevent the loss or secure the reinstatement of the Casino
Operating Contract; provided that the aggregate amount spent in
connection with purchases pursuant to this clause (viii) shall in no
event exceed $5,000,000 and shall only be made from the proceeds of
unsecured Indebtedness permitted to be incurred pursuant to Section
9.04(xiv);
(ix) so long as no Default or Event of Default then exists or
would result therefrom, the Borrower may make cash interest payments
to HET (or an Affiliate of HET) under the Junior Subordinated Credit
Facility in the amounts and at the times that such cash interest
payments are due and payable pursuant to the terms of the Junior
Subordinated Credit Facility;
(x) in the circumstances, and to the extent, expressly provided
in Section 8.17(c), amounts originally incurred as Completion Loans
under the Completion Loan Agreement and/or advanced pursuant to the
Completion Guarantees may be returned, from excess funds on deposit in
the Project Account, to the Completion Guarantors; and
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(xi) JCC Development may pay rents to the Borrower pursuant to
the Second Floor Sublease;
(xii) so long as no Default or Event of Default then exists or
would exist after giving effect thereto, payments may be made pursuant
to the transactions expressly permitted by clauses (vi) and (vii) of
Section 9.06(a), even though such payments would otherwise constitute
Restricted Payments;
(xiii) payments expressly permitted to be made pursuant to the
provisions of Section 8.17(c) may be made in accordance with the terms
thereof; and
(xiv) at any time after any payment is made by any Minimum
Payment Guarantor pursuant to the terms of a Minimum Payment Guaranty,
such payment may be reimbursed to the respective Minimum Payment
Guarantor by the Borrower and the Borrower may pay interest thereon in
accordance with the terms of the relevant Minimum Payment Guaranty
Documents.
9.04 Indebtedness. JCC Holding will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Indebtedness of the Borrower (which may be guaranteed on a
subordinated basis by one or more Guarantors) pursuant to the Senior
Subordinated Notes in an aggregate principal amount not to exceed (x)
$187,500,000 (plus (A) the aggregate amount of any Contingent Interest
accrued but unpaid and (B) the aggregate principal amount of
additional Senior Subordinated Notes issued as interest in lieu of
cash interest, in each case in accordance with the terms of the Senior
Subordinated Note Indenture to the extent the same may be deemed to be
principal), less (y) the aggregate principal amount of all repayments
of principal of Senior Subordinated Notes effected after the Initial
Borrowing Date;
(iii) Existing Indebtedness shall be permitted to the extent the
same is listed on Schedule IV, but no refinancings or renewals
thereof;
(iv) accrued expenses and current trade accounts payable incurred
in the ordinary course, including any Management Fees deferred
pursuant to Article 9.01(c) of the Management Agreement;
(v) Indebtedness under Interest Rate Protection Agreements
relating to Indebtedness otherwise permitted under this Section 9.04;
(vi) Indebtedness subject to Liens permitted under Sections
9.01(vii) and (ix) or evidenced by Capitalized Lease Obligations to
the extent permitted pursuant to Section 9.07, provided that (x) such
Indebtedness shall be incurred after, and shall relate solely to
assets acquired after, the Termination of Construction Date has
occurred, (y) in no event
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shall the aggregate principal amount of such Indebtedness and
Capitalized Lease Obligations exceed $10,000,000 (which amount shall
increase by $5,000,000 on each of the first three anniversaries of the
date of this Agreement, but on a prospective basis only) at any time
outstanding and (z) in no event shall more than $5,000,000 of such
amount be incurred to replace any assets owned or leased on or prior
to the Termination of Construction Date;
(vii) subordinated Indebtedness or obligations of the Borrower to
repay amounts advanced by the Completion Guarantors pursuant to the
Completion Guaranties or Completion Guarantor Loan Documents or by HET
or HOC pursuant to the Construction Lien Indemnity Obligation
Agreement and any interest or other amounts payable pursuant thereto,
which obligations may, subject to compliance by the Completion
Guarantors or HET or HOC, as the case may be, with all requirements of
applicable law and contracts, indentures and loan agreements binding
upon them, constitute subordinated Indebtedness of the Borrower, the
Completion Guarantors or HET or HOC, as the case may be, under the
Completion Guarantor Loan Agreement or the Construction Lien Indemnity
Obligation Agreement, as the case may be, in an aggregate principal
amount not to exceed the amount of any payments made by the Completion
Guarantors or HET or HOC, as the case may be, under the Completion
Guaranties or the Construction Lien Indemnity Obligation Agreement, as
the case may be, plus any increase in the principal amount thereof as
a result of capitalized interest, provided that all such obligations
and Indebtedness shall be subject to the terms of the Completion
Guarantor Subordination Agreement (and all payments with respect
thereto shall be Restricted Payments subject to the requirements of
Section 9.03);
(viii) Indebtedness of CPD, FPD or any Subsidiary of CPD or FPD
incurred in connection with, and to finance, the development of the
Specified Real Estate so long as (i) the aggregate principal amount
thereof at any time outstanding does not exceed the amount determined
in good faith by management of JCC Holding to be necessary to develop
such Specified Real Estate plus, if such Specified Real Estate was
purchased by the respective Subsidiary from CPD or FPD pursuant to
Section 9.02 (iv), the amount of cash paid to CPD or FPD, as the case
may be, by such Subsidiary to effect such purchase, (ii) the only
assets securing such Indebtedness are the respective Specified Real
Estate and the improvements, furniture, fixtures and equipment related
thereto (and any other assets of CPD, FPD or the respective Subsidiary
of CPD or FPD, as the case may be, which incurred such Indebtedness),
(iii) such Indebtedness is expressly made non-recourse to JCC Holding
and each Subsidiary of JCC Holding (other than CPD, FPD or the
respective Subsidiary of CPD or FPD, as the case may be, which
incurred such Indebtedness) and (iv) each incurrence of Indebtedness
pursuant to this clause (viii) is approved in writing by the Required
Banks, which approval may be granted or withheld by the Required Banks
in their sole discretion (it being understood and agreed that, without
limitation, if the Required Banks approve any such Indebtedness, the
Required Banks shall also retain the right to approve the principal
amount thereof and all terms of the respective Indebtedness);
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(ix) unsecured Indebtedness of the Permitted Subsidiaries
consisting of, without duplication, letters of credit (other than
Letters of Credit issued pursuant to this Agreement) and reimbursement
obligations with respect thereto so long as the aggregate amount
thereof at any time outstanding does not exceed $5,000,000;
(x) Indebtedness of Permitted Subsidiaries to JCC Holding or its
Subsidiaries to the extent permitted by Section 9.05(viii);
(xi) Indebtedness of the Borrower (which may be guaranteed on a
subordinated basis by JCC Holding) pursuant to the Convertible Junior
Subordinated Debentures in an aggregate principal amount not to exceed
the sum of (x) $27,500,000 plus (y) the aggregate principal amount of
additional Convertible Junior Subordinated Debentures issued as
interest in lieu of cash interest in accordance with the terms of the
Convertible Junior Subordinated Debenture Indenture (less any
repayments or prepayments of principal thereof);
(xii) Indebtedness of the Borrower pursuant to the Junior
Subordinated Credit Facility in an aggregate principal amount not to
exceed $22,500,000 plus any increase in the principal amount thereof
as a result of capitalized interest (less any repayments or
prepayments of principal thereof);
(xiii) Indebtedness of the Borrower (which may be guaranteed on a
subordinated basis by one or more Guarantors) pursuant to the Senior
Subordinated Contingent Notes issued in accordance with the Plan of
Reorganization (and any replacement Senior Subordinated Contingent
Notes issued in accordance with the Senior Subordinated Contingent
Note Indenture), with all payments in respect of the Senior
Subordinated Contingent Notes to be contingent payments limited to 75%
of EBITDA (as defined in the Senior Subordinated Contingent Note
Indenture) over $85 million and under $109,425,380, calculated on an
annual basis in accordance with, and as more fully provided in, the
Senior Subordinated Contingent Note Indenture, as reduced by any
repayments actually made in respect of said Senior Subordinated
Contingent Notes;
(xiv) unsecured Indebtedness of the Borrower incurred for the
sole purpose of making any payments permitted pursuant to Section
9.03(viii); provided that (x) no scheduled repayment of such
indebtedness shall be due prior to the Tranche B-2 Term Loan Maturity
Date, (y) the interest rate applicable to such Indebtedness shall not
exceed (a) if such Indebtedness is floating rate debt, the rate of
interest payable with respect to Tranche B-1 Term Loans hereunder and
(b) if the Indebtedness is fixed rate debt, the Base Rate as in effect
on the date of the incurrence of such Indebtedness plus 1.5% per
annum, and (z) the aggregate principal amount of such Indebtedness
incurred hereunder after the Effective Date shall not exceed
$5,000,000;
(xv) Indebtedness of the Borrower pursuant to the Performance
Bond in an aggregate principal amount which is the same as the
Performance Bond provided to the City pursuant to the GDA (less any
repayments or prepayments of principal thereof);
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(xvi) Indebtedness of the Borrower representing reimbursement
obligations under the Minimum Payment Guaranty Documents, so long as
the aggregate principal amount of reimbursement obligations thereunder
(excluding contingent reimbursement obligations for payments which
have not been made thereunder) at no time exceeds $5,000,000; and
(xvii) Indebtedness of JCC Holding and/or the Borrower pursuant
to guarantees delivered by them in accordance with the requirements of
Section 9.05(iv).
Notwithstanding anything to the contrary contained above, in no event may any
Indebtedness be incurred (other than pursuant to this Agreement) which would
constitute Tranche A Obligations or Tranche B-1 Obligations, in each case unless
the Required Banks specifically consent thereto (and to its treatment as Tranche
A Obligations or Tranche B-1 Obligations, as the case may be) prior to the time
of the incurrence thereof, and provided further, that any consents specifically
required by the definitions of Tranche A Obligations and Tranche B-1 Obligations
contained herein are obtained prior to the incurrence thereof.
9.05 Advances, Investments and Loans. JCC Holding will not,
and will not permit any of its Subsidiaries to, directly or indirectly, lend
money or credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any other Person, or purchase or own a futures contract
or otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents, except that the following shall be permitted:
(i) the Permitted Subsidiaries may acquire and hold cash and Cash
Equivalents;
(ii) the Permitted Subsidiaries may acquire and hold accounts
receivable owing to any of them, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance
with customary terms;
(iii) non-cash consideration received by the Permitted
Subsidiaries in connection with any sale of equipment or machinery
permitted by Section 9.02(iii), provided that the aggregate amount of
all such non-cash consideration shall not exceed $500,000 at any time
outstanding (determined without regard to any write-downs or
write-offs thereof);
(iv) JCC Holding and the Borrower may make loans and advances in
the ordinary course of business to the employees of JCC Holding and
the Borrower, and may in the ordinary course of business guarantee
mortgage loans extended to such employees, so long as (x) the
aggregate principal amount of such loans and advances at any time
outstanding (determined without regard to any write-downs or
write-offs of such loans and advances) shall not exceed $1,000,000 and
(y) the aggregate amount of such guarantees at any time outstanding
shall not exceed $1,000,000 less the aggregate amount of payments
theretofore made by JCC Holding and the Borrower pursuant to any such
guarantees to the extent same have not been reimbursed in cash to JCC
Holding or the Borrower, as the case may be;
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(v) the Borrower may enter into Interest Rate Protection
Agreements to the extent permitted in Section 9.04(v);
(vi) the Borrower may make cash investments in, and loans to, the
BDC to fund the BDC's operations and any other funding requirements
pursuant to the Open Access Program, provided that the aggregate
amount of cash investments and loans for the BDC's ongoing operations
shall not exceed $750,000 in any fiscal year of the Borrower;
(vii) transfers of Specified Real Estate may be made in
accordance with the provisions of Section 9.02(vii); and
(viii) JCC Holding and its Permitted Subsidiaries which are
parties to the Pledge Agreement may make additional loans, advances
and investments in Permitted Subsidiaries so long as (i) the aggregate
amount thereof outstanding at any one time does not exceed $1,000,000
(determined without regard to any write-downs or write-offs thereof)
and (ii) all such investments that are structured as loans shall be
evidenced by a promissory note which shall be duly pledged and
delivered to the Collateral Agent pursuant to the Pledge Agreement.
9.06 Transactions with Affiliates. (a) JCC Holding will not,
and will not permit any of its Subsidiaries to, enter into any transaction or
series of related transactions, whether or not in the ordinary course of
business, with any Affiliate of JCC Holding or any of its Subsidiaries, other
than in the ordinary course of business and on terms and conditions
substantially as favorable to JCC Holding or such Subsidiary as would reasonably
be obtained by JCC Holding or such Subsidiary at that time in a comparable
arm's-length transaction with a Person other than an Affiliate, except that:
(i) Restricted Payments may be paid to the extent provided in
Section 9.03;
(ii) loans may be made and other transactions may be entered into
by the Borrower and its Subsidiaries to the extent permitted by
Sections 9.04 and 9.05;
(iii) the Credit Enhancement Fee Agreement (Bank Credit
Agreement) and the Credit Enhancement Fee Agreement (JCC) may be
entered into and payments may be made by the respective parties to
such agreements of Credit Support Fees and Additional Credit Support
Fees, as the case may be, in accordance with the terms of such
agreements;
(iv) the Borrower may enter into the Management Agreement and,
subject to the provisions of Section 9.06(b), may pay the Management
Fees and other costs and expenses pursuant thereto, provided that (a)
except as otherwise provided below, the Base Fee shall be paid monthly
in arrears with respect to each calendar month, but not earlier than
10 days after the last day of the respective calendar month and not
later than 20 days after the last day of the respective calendar
month, (b) except as provided below, the Incentive Fee (which shall
only be payable for periods beginning after the Termination of
Construction Date) shall be paid at six month intervals on the next
Business Day following actual cash payment of all accrued fixed
interest and Contingent Payments, if any, on the
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New Bonds (and if such amounts are not paid in cash, the Incentive
Fees described herein shall be deferred and shall thereafter only be
payable as provided in following Section 9.06(b)), (c) the Base Fee
shall not be paid and the Incentive Fee shall not accrue or be paid at
any time when a Specified Event of Default shall have occurred and be
continuing, provided that if any such Base Fee is not paid during the
period in which it is first permitted to be paid because of a
Specified Event of Default exists or would exist after giving effect
to the payment thereof, then the amount thereof shall accrue (without
interest) and shall only be paid thereafter if no Specified Event of
Default then exists and in accordance with the provisions of Section
9.06(b), (d) no payment may be made by the Borrower or any of its
Subsidiaries of the Termination Fee unless and until the Total
Commitments and all Letters of Credit have terminated and all Loans,
Notes and Unpaid Drawings, together with all interest, Fees and other
Obligations incurred hereunder (as well as any refinancing of any of
the foregoing unless it is specifically otherwise agreed in the
relevant refinancing documentation) have been paid in full; provided
that the Termination Fee may be paid directly to Harrah's Management
(or its successor pursuant to Section 9.16) by a successor manager
permitted to act as such pursuant to Section 9.16 so long as neither
JCC Holding nor any of its Subsidiaries incurs any obligation to
reimburse such successor manager for all or any portion of the
Termination Fee so paid, and (e) all such Management Fees shall be
subject to the terms of the Manager Subordination Agreement.
Notwithstanding anything to the contrary contained above, and in
addition to the foregoing requirements, prior to payment of any
Management Fee permitted by this clause (iv), HET and HOC shall have
entered into a binding agreement to reimburse the Borrower promptly
for any positive difference between the amount of such payment and the
amount ultimately determined to be permitted to be paid to Harrah's
Management pursuant to this clause (iv), provided, however, that if
neither HET nor HOC promptly reimburses the Borrower for any such
positive difference, the amount of such positive difference shall be
deducted from subsequent payments permitted to be made to Harrah's
Management pursuant to this clause (iv) until the unreimbursed amount
has been fully offset by reductions to permitted payments to Harrah's
Management under this clause (iv);
(v) the Borrower may enter into the Minimum Payment Guaranty
Documents and, subject to the provisions of Section 9.06(b), may pay
the Minimum Payment Guaranty Fees and other costs and expenses
pursuant thereto, provided that (a) the Minimum Payment Guaranty Fees
payable thereunder shall not exceed $6 million per annum for the
fiscal years ending March 31, 2000 and 2001 (HET and HOC shall receive
a pro rata fee based on an annual fee of $6 million for any partial
fiscal year ending March 31, 1999 or for the fiscal year ending March
31, 2000, if it is a partial fiscal year) and $5 million per annum for
the fiscal years ending March 31, 2002, 2003 and 2004, all of which
fees shall be payable quarterly in advance;
(vi) CPD, FPD, JCC Development and the Borrower may enter into
the Development Services Agreement and pay fees and expenses owing
thereunder, so long as all fees and expenses paid thereunder are in
respect of services provided to the respective payor and are no less
favorable to the respective payor as could have been obtained for such
services from an unrelated party; and
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(vii)the Borrower at any time may lease slot machines, pursuant
to arm's length operating leases from time to time entered into with
HET, an Affiliate of HET or a third party, so long as the Borrower at
no time leases more than 1,100 such slot machines from HET, an
Affiliate of HET or a third party.
(b) Notwithstanding anything to the contrary contained in
Section 9.06(a), on and prior to October 31, 2001, no amounts may be paid
pursuant to clauses (iv) and/or (v) of Section 9.06(a) unless there has been,
and will be, no deferral of principal pursuant to Section 4.02(b)(iv)(A) for any
periods or dates occurring on or prior to October 31, 2001. Furthermore, if at
any time any amounts are deferred pursuant to Section 4.02(b)(iv)(B), then
during each six month period which begins on the respective Senior Subordinated
Notes Semi-Annual Interest Payment Date occurring immediately prior to the date
upon which the Scheduled Repayments would otherwise be made but for the
provisions of said Section 4.02(b)(iv)(B), no amounts may be paid pursuant to
clauses (iv) or (v) of preceding Section 9.06(a). In addition to the foregoing
deferrals, amounts otherwise payable from time to time pursuant to clauses (iv)
and (v) of Section 9.06(a) may be deferred pursuant to this Section 9.06(b) with
the agreement of the Borrower and Harrah's Management (or its successors as
Casino manager). To the extent any amounts otherwise payable pursuant to Section
9.06(a)(iv) or (v) are deferred (x) as contemplated by Section 4.02(b)(iv) or
this clause (b), or (y) in the case of payments pursuant to Section 9.06(a)(iv),
for the reasons described in the proviso to subclause (c) thereof, such amounts
shall be deferred and may thereafter be repaid only in accordance with the
provisions contained below in this Section 9.06(b). To the extent Consolidated
EBITDA for any Semi-Annual Free Cash Flow Payment Period exceeds $32.5 million,
and so long as no Specified Event of Default then exists or would exist after
giving effect to the respective payments described in this sentence, an amount
equal to the lesser of (x) the amount by which Consolidated EBITDA for said
Semi-Annual Free Cash Flow Payment Period exceeds $32.5 million and (y) the
Retained Percentage of Semi-Annual Free Cash Flow for such Semi-Annual Free Cash
Flow Payment Period, may be applied to pay deferred Base Fees under the
Management Agreement and any deferred Minimum Payment Guaranty Fees. To the
extent the amount available to be applied pursuant to the immediately preceding
sentence for any Semi-Annual Excess Cash Flow Payment Period exceeds the amount
of deferred and unpaid Base Fees and Minimum Payment Guaranty Fees at such time,
an amount equal to the lesser of (x) such excess and (y) the amount, if any, by
which Consolidated EBITDA for such Semi-Annual Excess Cash Flow Payment Period
exceeds $32.5 million, shall be available to repay any deferred Incentive Fees.
(c) Notwithstanding anything to the contrary contained in this
Section 9.06, neither JCC Holding nor any of its Subsidiaries shall enter into
any management or similar contract or arrangement other than the Management
Agreement.
9.07 Capital Expenditures. JCC Holding will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except:
(a) the Borrower may make Capital Expenditures required to
complete the Project;
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(b) the Borrower may make additional Capital Expenditures with
funds deposited in the Reserve Fund from time to time (so long as, and
to the extent that, the amounts required to be deposited by the
Borrower from time to time in the Reserve Fund are not increased above
the requirements as same apply on the Plan Effective Date, unless and
to the extent such increased requirements are consented to by the
Required Banks);
(c) after all A Term Loans have been repaid in full, the Borrower
may make additional Capital Expenditures at any time in an amount not
to exceed the Cumulative Retained Free Cash Flow Amount as then in
effect; and
(d) JCC Development, CPD, FPD and their Subsidiaries may make
additional Capital Expenditures with the prior written consent of the
Required Banks.
9.08 Consolidated Interest Coverage Ratio. The Borrower will
not permit the Consolidated Interest Coverage Ratio for any Test Period ended on
the last day of a Fiscal Test Quarter described below to be less than the ratio
set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Test Periods Ended Ratio
<S> <C>
The last day of the fifth and sixth 1.00:1.00
Fiscal Test Quarters
Thereafter and on or prior to the last day of 1.10:1.00
the tenth Fiscal Test Quarter
Thereafter and on or prior to the last day of 1.12:1.00
the twelfth Fiscal Test Quarter
Thereafter and on or prior to the last day of 1.15:1.00
the thirteenth Fiscal Test Quarter
Thereafter and on or prior to the last day of 1.25:1.00
the fourteenth Fiscal Test Quarter
Thereafter and on or prior to the last day of 1.30:1.00
the sixteenth Fiscal Test Quarter
Thereafter and on or prior to the last day of 1.35:1.00
the eighteenth Fiscal Test Quarter
The last day of each Fiscal Test Quarter thereafter 1.40:1.00
</TABLE>
9.09 Minimum Consolidated EBITDA. The Borrower will not permit
Consolidated EBITDA for any Test Period ended on the last day of a Fiscal Test
Quarter described below to be less than the amount set forth opposite such
fiscal quarter below:
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<TABLE>
<CAPTION>
Test Period Ended Amount
<S> <C>
The last day of the first $2.0 million
Fiscal Test Quarter
The last day of the second $3.0 million
Fiscal Test Quarter
The last day of the third $5.0 million
Fiscal Test Quarter
The last day of the fourth $20 million
Fiscal Test Quarter
The last day of the fifth $30.0 million
Fiscal Test Quarter
The last day of the sixth $35.0 million
Fiscal Test Quarter
The last day of the seventh $37.5 million
Fiscal Test Quarter
The last day of the eighth $41.25 million
Fiscal Test Quarter
The last day of the ninth $47.0 million
Fiscal Test Quarter
The last day of the tenth $52.0 million
Fiscal Test Quarter
The last day of the eleventh $57.0 million
Fiscal Test Quarter
The last day of the twelfth $62.5 million
Fiscal Test Quarter
The last day of each Fiscal Test Quarter thereafter $65.0 million
</TABLE>
9.10 Consolidated Debt to Consolidated EBITDA. The Borrower
will not permit the ratio of (i) Consolidated Debt (as determined at any
time) to (ii) Consolidated EBITDA (with Consolidated EBITDA to be determined
for the Test Period last ended on or prior to the date of determination), to
be greater than, during any period set forth below, the ratio set forth below
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opposite such period, provided that the ratio shall not be tested until the
last day of the fifth Fiscal Test Quarter:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
The last day of the fifth Fiscal Test Quarter 7.00:1.00
through and including the day before
the last day of the sixth Fiscal Test Quarter
The last day of the sixth Fiscal Test Quarter 6.00:1.00
through and including the day before
the last day of the seventh Fiscal Test Quarter
The last day of the seventh Fiscal Test Quarter 5.50:1.00
through and including the day before
the last day of the eighth Fiscal Test Quarter
The last day of the eighth Fiscal Test Quarter 5.00:1.00
through and including the day before
the last day of the ninth Fiscal Test Quarter
The last day of the ninth Fiscal Test Quarter 4.50:1.00
through and including the day before
the last day of the tenth Fiscal Test Quarter
The last day of the tenth Fiscal Test 4.0:1.00
Quarter through and including the day
before the last day of the eleventh Fiscal Test Quarter
At all times thereafter 3.75:1.00
</TABLE>
9.11 Limitation on Payments of Certain Indebtedness;
Modifications of Certain Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Other Agreements; etc. JCC Holding will not,
and will not permit any of its Subsidiaries to, without the prior written
consent of the Required Banks, (i) make (or give any notice in respect of) any
voluntary or optional payment or prepayment on or redemption or acquisition for
value of, or any prepayment or redemption as a result of any change of control
or similar event of (including in each case, without limitation, by way of
depositing with the trustee with respect thereto or any other Person money or
securities before due for the purpose of paying when due), any New Bonds, any
Convertible Junior Subordinated Debentures or the Junior Subordinated Credit
Facility, (ii) amend or modify, or permit the amendment or modification of, any
provision of the Completion Guarantor Loan Documents, the Junior Subordinated
Credit Facility Documents, the Convertible Junior Subordinated Debenture
Documents, the Minimum Payment Guaranty Documents, the Plan of Reorganization or
the Construction Lien Indemnity Obligation Agreement, except (x)
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such amendments, modifications or changes which could not be adverse in any
respect to the interests of the Borrower or the Banks and (y) in the case of the
Minimum Payment Guaranty Documents, any substitute or successor Minimum Payment
Guaranty Documents executed and delivered by a substitute or successor Minimum
Payment Guarantor without causing a Default or Event of Default pursuant to
clause (ii) of Section 10.17, in each case so long as such substitute or
successor Minimum Payment Guaranty Documents are not adverse in any respect to
the interests of the Borrower or the Banks (including without limitation, so
long as the nature and amount of obligations guaranteed thereunder is not
adversely changed or increased, and so long as the financial terms thereof are
not made worse from the perspective of the Borrower) from the terms as applied
in the original Minimum Payment Guaranty Documents, (iii) amend or modify, or
permit the amendment or modification of, any provision of the New Bond Documents
other than Permitted Amendments, (iv) amend, modify or change its certificate of
incorporation (including, without limitation, by the filing or modification of
any certificate of designation), by-laws or other applicable organizational
documents, except such modifications as could not be adverse to the interests of
the Banks in any respect, (v) amend, modify or change any provision of the
Casino Lease, any other Project Document or the Casino Operating Contract except
to the extent that any such amendment, modification or change could not be
adverse to the interests of the Banks in any respect, (vi) amend, modify or
change any provision of the Management Agreement, any Subordination Agreement or
any Security Document (except such amendments, modifications or changes to the
Management Agreement which are solely for the benefit of the Borrower and could
not be adverse in any respect to the interests of the Borrower or the Banks) or
(vii) terminate or agree to terminate any Construction Contract, unless such
termination is (x) for cause and (y) the Borrower has entered into, before or
contemporaneously with such termination, a replacement contract for the work to
be performed under such Construction Contract and such replacement contract is
for a guaranteed maximum or fixed price consistent with the Construction Budget
and on commercially reasonable terms with a licensed reputable construction
firm; and such replacement contract provides for (together with all other
applicable Construction Contracts) the Termination of Construction Date to be
achieved on or before the Completion Date. JCC Holding will not, and will not
permit any of its Subsidiaries to, enter into any settlement or compromise of
any lawsuit or dispute affecting the Project that (x) adversely affects the
Casino Lease or the title of the City or the Borrower to any Real Property or is
adverse (except in the case of payments subject to clause (y) below) to the
interests of the Borrower or the Banks or (y) involves the payment by the
Borrower of any amount (not paid or fully covered by a reputable and solvent
insurance company which has agreed in writing to pay the same) in excess of
$5,000,000 in the aggregate with respect thereto, without the prior written
consent of the Required Banks. Notwithstanding anything to the contrary
contained in clauses (i) and (ii) of this Section 9.11, the Borrower may prepay,
repurchase, redeem, defease or otherwise retire New Bonds and/or Convertible
Junior Subordinated Debentures if no Default or Event of Default then exists or
would result therefrom (excluding the provisions of clauses (i) and (ii) of this
Section 9.11) to the extent necessary in the good faith judgment of management
of the Borrower to prevent the filing of a disciplinary action by any Gaming
Authority or to prevent the loss or secure the reinstatement of any license or
franchise from any governmental agency (including any Gaming Authority) held by
the Borrower or any of its Affiliates which license or franchise is conditioned
upon some or all of the holders of the New Bonds possessing prescribed
qualifications, if such loss or failure to reinstate would have a material
adverse effect upon the business, operations,
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property, assets, liabilities, conditions (financial or otherwise) or prospects
of the Borrower or JCC Holding and its Subsidiaries taken as a whole; provided
that the aggregate amount spent in connection with purchases pursuant to this
sentence shall in no event exceed $5,000,000.
9.12 Limitation on Certain Restrictions on Subsidiaries. JCC
Holding will not, and will not permit any of its Subsidiaries (other than CPD,
FPD and their respective Subsidiaries) to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (a) pay dividends or make
any other distributions on its capital stock or any other interest or
participation in its profits owned by JCC Holding or any Subsidiary of JCC
Holding, or pay any Indebtedness owed to JCC Holding or a Subsidiary of JCC
Holding, (b) make loans or advances to JCC Holding or any of JCC Holding'
Subsidiaries or (c) transfer any of its properties or assets to JCC Holding,
except for such encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Agreement and the other Credit Documents, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of JCC Holding or a Subsidiary of JCC Holding and (iv)
customary provisions restricting assignment of any licensing agreement entered
into by JCC Holding or a Subsidiary of JCC Holding in the ordinary course of
business.
9.13 Limitation on Issuance of Capital Stock. a)" \*
MERGEFORMAT (a) JCC Holding shall not issue (i) any class of preferred stock or
(ii) any class of redeemable (except at the sole option of JCC Holding) common
stock.
(b) JCC Holding will not permit any of its Subsidiaries to
issue any Equity Interests (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into, Equity
Interests, except (i) for transfers and replacements of then outstanding shares
of capital stock, (ii) for stock splits, stock dividends and additional
issuances which do not decrease the percentage ownership of JCC Holding in any
class of the capital stock or partnership interest of such Subsidiary and (iii)
to qualify directors to the extent required by applicable law.
9.14 Business. (a) JCC Holding will engage in no business
other than its ownership of the Equity Interests in the Borrower, JCC
Development, CPD and FPD (except activities associated therewith and with its
rights and obligations otherwise permitted pursuant to this Agreement and not
prohibited by the Casino Operating Contract, the Casino Lease, the Gaming
Regulations or applicable zoning and conditional uses).
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than the
operation of the Casino and the sublease and development of the Second Floor and
the businesses ancillary thereto.
(c) JCC Development will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than the
leasing (and subleasing) and development of the Second Floor and the businesses
ancillary thereto.
(d) JCC Holding shall not permit CPD or any of its
Subsidiaries to engage (directly or indirectly) in any business other than the
ownership and development of the Specified
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Real Estate owned by CPD on the Effective Date, the ownership of Equity
Interests in any Person to whom such Specified Real Estate has been contributed
and businesses ancillary thereto.
(e) JCC Holding shall not permit FPD or any of its
Subsidiaries to engage (directly or indirectly) in any business other than the
ownership and development of the Specified Real Estate owned by FPD on the
Effective Date, the ownership of Equity Interests in any Person to whom such
Specified Real Estate has been contributed and businesses ancillary thereto.
9.15 Limitation on Creation of Subsidiaries. JCC Holding will
not establish, create or acquire any Subsidiaries (other than the Borrower, JCC
Development, CPD, FPD and any Subsidiary of the Borrower, JCC Development, CPD
and/or FPD formed in accordance with the following requirements of this Section
9.15) without the prior written consent of the Required Banks and no Subsidiary
of JCC Holding will establish, create, or acquire any Subsidiaries (except that
(i) the Borrower may form one or more Wholly-Owned Subsidiaries to operate
certain ancillary and support functions in connection with the Casino, (ii) JCC
Development may form one or more Subsidiaries in connection with the development
and leasing of the Real Property subject to the Second Floor Sublease, (iii) CPD
may form one or more Subsidiaries in connection with the 3CP parcel of the
Specified Real Estate (listed as Item 1 on Schedule VII) and (iv) FPD may form
one or more Subsidiaries in connection with its development of the Fulton Street
Properties (listed as Item 2 on Schedule VII)) without the prior written consent
of the Required Banks. Furthermore, unless specifically consented to in writing
by the Required Banks, no Subsidiary of JCC Holding shall directly or indirectly
guarantee any Indebtedness of JCC Holding or any of its other Subsidiaries
(including, without limitation, the New Bonds). At the time of the establishment
or creation of any Wholly-Owned Subsidiary of JCC Holding (whether directly or
indirectly owned by JCC Holding) pursuant to this Section 9.15, such newly
formed or created Wholly-Owned Subsidiary of JCC Holding shall be required to
become a Subsidiary Guarantor by executing and delivering to the Administrative
Agent a counterpart of the Subsidiaries Guaranty, and to become party to the
Pledge Agreement and Security Agreement by executing and delivering counterparts
thereof, and if requested by the Administrative Agent or the Required Banks, by
entering into such other security documentation, and covering such assets of
such Wholly-Owned Subsidiary, as may be required by the Administrative Agent or
the Required Banks, and in connection therewith shall deliver such opinions of
counsel and take such other action as would have been required of such
Wholly-Owned Subsidiary had it been a Credit Party on the Initial Borrowing
Date. Furthermore, in connection with any consent to the creation of a
Subsidiary which is not otherwise permitted pursuant to this Section 9.15, it is
understood that the Required Banks may require that any such Subsidiary take the
actions specified in the immediately preceding sentence for Wholly-Owned
Subsidiaries of JCC Holding established or created after the Effective Date.
9.16 Casino Manager. Neither JCC Holding nor the Borrower will
permit any Person, other than Harrah's Management, to act as the "manager" or in
a similar capacity with respect to the Casino, provided that, any other
Wholly-Owned Subsidiary of HET reasonably satisfactory to the Administrative
Agent and the Required Banks may be substituted for Harrah's Management as the
casino manager so long as (i) at least 30 days prior written notice thereof has
been given to the Administrative Agent and the Banks and, during the 30 days
after the giving of such notice, neither the Administrative Agent nor the
Required Banks have objected in writing to
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the substitution, (ii) no Default or Event of Default exists at the time of such
substitution, (iii) all necessary regulatory and other approvals (including,
without limitation, all approvals required of any relevant Gaming Authorities)
are obtained in connection with such substitution, (iv) after giving effect to
the substitution, there is no conflict with any applicable law, rule, regulation
or contract applicable to JCC Holding or its Subsidiaries, the Casino or the new
manager, (v) any successor to Harrah's Management shall have assumed all of its
obligations pursuant to all relevant contracts (including, without limitation,
the Management Agreement and the Manager Subordination Agreement) pursuant to
documentation in form and substance satisfactory to the Administrative Agent and
(vi) the Administrative Agent shall have received such opinions of counsel with
respect to the foregoing and otherwise relating to the substitution as shall
have been reasonably requested by the Administrative Agent.
SECTION 10. Events of Default. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for three or more days, in the payment when
due of any Unpaid Drawings or interest on any Loan or Note, or any Fees or any
other amounts owing hereunder or thereunder; or
10.02 Representations, etc. Any representation, warranty or
statement made by or on behalf of JCC Holding or any of its Subsidiaries herein
or in any other Credit Document or in any certificate delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
10.03 Covenants. JCC Holding or the Borrower shall (i) default
in the due performance or observance by it of any term, covenant or agreement
contained in Section 8.01(h)(i), 8.08, 8.16, 8.17 or 8.21 or Section 9 or (ii)
default in the due performance or observance by it of any other term, covenant
or agreement contained in this Agreement and such default shall continue
unremedied for a period of 30 days after written notice to the Borrower by the
Administrative Agent or any Bank; or
10.04 Default Under Other Indebtedness. (i) JCC Holding or any
of its Subsidiaries shall (x) default in any payment of any Indebtedness (other
than the Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created or (y) default
in the observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (ii) any Indebtedness (other than
the Obligations) of JCC Holding or any of its Subsidiaries shall be declared to
be due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof, provided
that it shall not be a Default or an Event of Default under this Section 10.04
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unless the aggregate principal amount of all Indebtedness as described in
preceding clauses (i) and (ii) is at least $5,000,000; or
10.05 Project Documents. There shall occur and be continuing
(i) a Termination Event under any Project Document or the Casino Operating
Contract, or (ii) a default or an event of default by the Borrower or any of its
Subsidiaries as described and defined in any of the Project Documents or the
Casino Operating Contract, or (iii) any event or condition which could, either
immediately or with the giving of notice or lapse of time or both, enable any
party to any Project Document or the Casino Operating Contract other than the
Borrower or any of its Subsidiaries to terminate or suspend its obligations
under such Project Document or the Casino Operating Contract, or (iv) a breach
by the Borrower or any of its Subsidiaries of any term, covenant or agreement
contained in any Project Document or the Casino Operating Contract, or if, in
the case of this clause (iv), in the determination of the Required Banks, such
breach could reasonably be expected to have a material adverse effect on either
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole or
on the completion of the Project, and if such Termination Event or other event
or condition described in the preceding clause (i), (ii), (iii) or (iv) (each, a
"Project Default") remains uncured for 30 days after the occurrence thereof;
provided that (I) except as provided in the following clause (II), if (A) such
Project Default cannot be cured within such 30-day period, (B) such Project
Default is susceptible of cure by the Borrower, (C) the Borrower is proceeding
with diligence and in good faith to cure such Project Default, (D) the existence
of such Project Default does not impair the Liens on the Collateral or any
leasehold interest in Collateral and (E) the Administrative Agent shall have
received a certificate of the Borrower stating what action the Borrower is
taking to cure such Project Default, then, the time within which such Project
Default may be cured shall be extended to such date, not to exceed a total of
120 days after the occurrence of such Project Default, as shall be necessary for
the Borrower diligently to cure such Project Default and, (II) notwithstanding
anything to the contrary contained above, there shall be no grace period, and it
shall be an immediate Event of Default, if any of the Casino Leases or Casino
Operating Contracts are the subject of a Termination Event of the type described
in clause (b) of the definition thereof; or
10.06 Bankruptcy, etc. JCC Holding or any of its Subsidiaries
(excluding Insignificant Subsidiaries) shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against JCC Holding or
any of its Subsidiaries (excluding Insignificant Subsidiaries) and the petition
is not controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
JCC Holding or any of its Subsidiaries (excluding Insignificant Subsidiaries),
or JCC Holding or any of its Subsidiaries (excluding Insignificant Subsidiaries)
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to JCC
Holding or any of its Subsidiaries (excluding Insignificant Subsidiaries), or
there is commenced against JCC Holding or any of its Subsidiaries (excluding
Insignificant Subsidiaries) any such proceeding which remains undismissed for a
period of 60 days, or JCC Holding or any of its Subsidiaries (excluding
Insignificant Subsidiaries) is adjudicated insolvent or bankrupt; or
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any order of relief or other order approving any such case or proceeding is
entered; or JCC Holding or any of its Subsidiaries (excluding Insignificant
Subsidiaries) suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or JCC Holding or any of its Subsidiaries (excluding
Insignificant Subsidiaries) makes a general assignment for the benefit of
creditors; or any corporate action is taken by JCC Holding or any of its
Subsidiaries (excluding Insignificant Subsidiaries) for the purpose of effecting
any of the foregoing; or
10.07 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code, any Plan shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan is, shall have been or is likely to
be terminated or to be the subject of termination proceedings under ERISA, any
Plan shall have an Unfunded Current Liability, a contribution required to be
made to a Plan has not been timely made, JCC Holding or any of its Subsidiaries
or any ERISA Affiliate has incurred or is likely to incur a liability to or on
account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the
Code, or JCC Holding or any of its Subsidiaries has incurred or is likely to
incur liabilities pursuant to one or more employee welfare benefit plans (as
defined in Section 3(1) of ERISA) that provide benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA) or
employee pension benefit plans (as defined in Section 3(2) of ERISA); (b) there
shall result from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a material risk of incurring
a liability; (c) which lien, security interest or liability, in the opinion of
the Required Banks, will have a material adverse effect upon the business,
operations, condition (financial or otherwise) or prospects of the Borrower or
JCC Holding and its Subsidiaries taken as a whole; or
10.08 Security Documents. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease in to give the Collateral Agent for the benefit of
the Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected (except as otherwise
expressly provided in Section 3.2(d) of the Pledge Agreement with respect to
Gaming Patron Indebtedness) security interest in, and Lien on, all of the
Collateral), in favor of the Collateral Agent, superior to and prior to the
rights of all third Persons (except as permitted by Section 9.01), and subject
to no other Liens (except as permitted by Section 9.01), or any Credit Party
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any of the
Security Documents and such default shall continue beyond any cure or grace
period specifically applicable thereto pursuant to the terms of such Security
Document; or
10.09 Guaranties; etc. Any Guaranty or any provision thereof
shall cease to be a legal, valid and binding obligation enforceable against the
obligor thereof, or any Guarantor or any Person acting for or on behalf of any
Guarantor shall deny or disaffirm such Guarantor's obligations under its
Guaranty, or any Guarantor shall default in its due performance of any term,
covenant or agreement on its part to be performed or observed pursuant to its
Guaranty, or any default or event of default under, and as defined in, a
Guaranty shall be in existence; or
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10.10 Subordination Agreements. (a) Any Subordination
Agreement or any provision thereof shall cease to be a legal, valid and
binding obligation enforceable against any party to such Subordination
Agreement who has agreed to subordinate any obligations pursuant thereto, or
any such party to a Subordination Agreement or any Person acting by or on
behalf of any such party shall deny or disaffirm such party's obligations
under any such Subordination Agreement, or any such party shall default in
the due performance of any term, covenant or agreement on its part to be
performed or observed pursuant to any such Subordination Agreement, or (b) at
any time there shall be any manager of the Casino which has not executed and
delivered to the Administrative Agent a counterpart to the Manager
Subordination Agreement or an assumption of the obligations of Harrah's
Management thereunder in accordance with the requirements of Section 9.16; or
10.11 Judgments. One or more judgments or decrees shall be
entered against JCC Holding or any of its Subsidiaries (excluding Insignificant
Subsidiaries) involving in the aggregate for JCC Holding and its Subsidiaries
(excluding Insignificant Subsidiaries) a liability (not paid or fully covered by
a reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 60 consecutive days, and the
aggregate amount of all such judgments exceeds $5,000,000; or
10.12 Change of Control. A Change of Control shall occur;
provided that a Change of Control shall not constitute an Event of Default at
any time when all Loans and Commitments pursuant to this Agreement are at such
time held by HET, HOC and/or one or more Affiliates thereof and if such Loans
and Commitments have been purchased pursuant to the HET/HOC Guaranty and Loan
Purchase Agreement; or
10.13 Gaming Authority. Any Gaming Authority having
jurisdiction over the Casino shall determine that JCC Holding, Harrah's
Management, any Completion Guarantor or any of their respective Subsidiaries, to
the extent that any of the foregoing Persons are required to be found suitable
under the Gaming Regulations, does not qualify, or that a required suitability
finding or license (including, without limitation, the Casino Operating
Contract) of any of them with respect to the Casino should be revoked, not
renewed or suspended for more than 10 days, or any such Gaming Authority shall
have appointed a conservator, supervisor or trustee to oversee any of the
operations of the Borrower (except, with respect to the foregoing, if (i) any
such failure to be found suitable timely shall have been appealed by JCC
Holding, Harrah's Management, any Completion Guarantor or any of their
respective Subsidiaries, as the case may be, and any such determination is
stayed or otherwise does not prevent continued gaming operations at the Casino
or (ii) such failure to be found suitable is cured within any applicable cure
periods, and does not prevent continued gaming operations at the Casino); or
10.14 Management Agreement. The Management Agreement or any
material provision thereof shall cease to be in full force and effect or any
party thereto shall deny or disaffirm its obligations thereunder or shall
default in the due performance or observance of any material term, covenant or
agreement on its part to be performed or observed pursuant thereto; or
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10.15 Trademark Permission. At any time the Casino (i) shall
be operated under a name other than "Harrah's Casino New Orleans" or "Harrah's
Jazz Casino" or (ii) shall for any reason not be entitled to utilize the
Harrah's Marks in connection with the gaming business conducted in the Casino or
in any advertising incident thereto; or
10.16 Completion of Casinos. The Termination of Construction
Date shall not have occurred on or prior to the Completion Date; or
10.17 Minimum Payment Guaranty; Etc. At any time (i) the
Minimum Payment Guarantor at such time shall give notice to the Borrower or the
LGCB that the Minimum Payment Guaranty shall not be extended, or at any time the
Minimum Payment Guaranty shall expire in accordance with its terms, or any other
event shall occur with respect to the Minimum Payment Guaranty, in each case
which occurrence permits (or requires) the termination of the Casino Operating
Contract or (ii) any Person other than HET or HOC becomes a substitute or
successor guarantor providing a Minimum Payment Guaranty, unless at least 30
days' prior written notice thereof is furnished to the Administrative Agent and
the Banks and such substitute or successor guarantor meets all requirements
contained in Section 25.1 of the Casino Operating Contract, assumes all
obligations of HET and HOC under the HET/JCC Agreement or obligations under any
substitute or successor document and executes documentation in favor of the
Administrative Agent and the Banks which is substantially the same as the
documentation (including, without limitation, the Intercreditor Agreement)
entered into by the Minimum Payment Guarantor on or prior to the Initial
Borrowing Date hereunder;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of the Administrative
Agent, any Bank or the holder of any Note to enforce its claims against any
Credit Party (provided that, if an Event of Default specified in Section 10.06
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent to the Borrower as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitments terminated,
whereupon all Commitments of each Bank shall forthwith terminate immediately and
any Commitment Commission shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued interest
in respect of all Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; (iii) terminate any Letter of Credit,
which may be terminated, in accordance with its terms; (iv) direct the Borrower
to pay (and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 10.06 with respect to the
Borrower, it will pay) to the Administrative Agent at the Payment Office such
additional amount of cash, to be held as security by the Administrative Agent,
as is equal to the aggregate Stated Amount of all Letters of Credit issued for
the account of the Borrower and then outstanding; (v) direct the respective
Collateral Agent to enforce all of the Liens and security interests created
pursuant to the respective Security Documents subject to the terms of the
Intercreditor Agreement to the extent applicable to such Security Document; and
(vi) apply any cash collateral as provided in Section 4.02.
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SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Additional Credit Support Fees" shall have the meaning
provided in the Credit Enhancement Fee Agreement (JCC).
"Additional Mortgage" shall have the meaning provided in
Section 8.11(a).
"Additional Mortgaged Property" shall have the meaning
provided in Section 8.11(a).
"Additional Security Documents" shall mean any security
documents executed and delivered after the Effective Date in accordance with the
relevant requirements of Section 9.15 and/or 8.11.
"Adjusted Certificate of Deposit Rate" shall mean, on any day,
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by
dividing (x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market as
published in the most recent Federal Reserve System publication entitled "Select
Interest Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by the Administrative Agent on the basis of quotations
for such certificates received by it from three certificate of deposit dealers
in New York of recognized standing or, if such quotations are unavailable, then
on the basis of other sources reasonably selected by the Administrative Agent,
by (y) a percentage equal to 100% minus the stated maximum rate of all reserve
requirements as specified in Regulation D applicable on such day to a
three-month certificate of deposit of a member bank of the Federal Reserve
System in excess of $100,000 (including, without limitation, any marginal,
emergency, supplemental, special or other reserves), plus (2) the then daily net
annual assessment rate as estimated by the Administrative Agent for determining
the current annual assessment payable by the Administrative Agent to the Federal
Deposit Insurance Corporation for insuring three-month certificates of deposit.
"Adjusted Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank, such Bank's Percentage and (y) at a time when a
Bank Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii)
for each Bank that is a Non-Defaulting Bank, the percentage determined by
dividing such Bank's Revolving Loan Commitment at such time by the Adjusted
Total Revolving Loan Commitment at such time, it being understood that all
references herein to Revolving Loan Commitments and the Adjusted Total Revolving
Loan Commitment at a time when the Total Revolving Loan Commitment or Adjusted
Total Revolving Loan Commitment, as the case may be, has been terminated shall
be references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination,
provided that (A) no Bank's Adjusted Percentage shall
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change upon the occurrence of a Bank Default from that in effect immediately
prior to such Bank Default if after giving effect to such Bank Default, and any
repayment of Revolving Loans and Swingline Loans at such time pursuant to
Section 4.02(a) or otherwise, the sum of (i) the aggregate outstanding principal
amount of Revolving Loans of all Non-Defaulting Banks plus (ii) the aggregate
outstanding principal amount of Swingline Loans plus (iii) the Letter of Credit
Outstandings, exceed the Adjusted Total Revolving Loan Commitment; (B) the
changes to the Adjusted Percentage that would have become effective upon the
occurrence of a Bank Default but that did not become effective as a result of
the preceding clause (A) shall become effective on the first date after the
occurrence of the relevant Bank Default on which the sum of (i) the aggregate
outstanding principal amount of the Revolving Loans of all Non-Defaulting Banks
plus (ii) the aggregate outstanding principal amount of Swingline Loans plus
(iii) the Letter of Credit Outstandings is equal to or less than the Adjusted
Total Revolving Loan Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted
Percentage is changed pursuant to the preceding clause (B) and (ii) any
repayment of such Bank's Revolving Loans or of Unpaid Drawings with respect to
Letters of Credit or of Swingline Loans, that were made during the period
commencing after the date of the relevant Bank Default and ending on the date of
such change to its Adjusted Percentage must be returned to the Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of the
Borrower, then the change to such Non-Defaulting Bank's Adjusted Percentage
effected pursuant to said clause (B) shall be reduced to that positive change,
if any, as would have been made to its Adjusted Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted Percentage of
the outstanding principal amount of Swingline Loans and of Letter of Credit
Outstandings equaling such Bank's Revolving Loan Commitment at such time.
"Adjusted Total Revolving Loan Commitment" shall mean at any
time the Total Revolving Loan Commitment less the aggregate Revolving Loan
Commitments of all Defaulting Banks.
"Administrative Agent" shall mean Bankers Trust Company, in
its capacity as Administrative Agent for the Banks hereunder, and shall include
any successor to the Administrative Agent appointed pursuant to Section 12.09.
"Affiliate" shall mean, with respect to any Person, any other
Person (i) directly or indirectly controlling (including, but not limited to,
all directors, officers and partners of such Person), controlled by, or under
direct or indirect common control with, such Person or (ii) except for purposes
of determining Affiliates of HET, that directly or indirectly owns more than 5%
of any class of the voting securities or capital stock of or equity interests in
such Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
thereof), extended, renewed, refinanced or replaced from time to time.
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"Amounts Required for Casino Completion" shall mean all
amounts required to pay and perform all Completion Obligations, Carry
Obligations and Preservation Obligations (as each such term is defined in the
Bank Completion Guarantee).
"Applicable ECF Percentage" shall mean (x) until such time as
all principal of outstanding Tranche A-1 Term Loans and Tranche A-2 Term Loans
has been repaid in full, 100% and (y) at such times as (and to the extent that)
preceding clause (x) is not applicable, 50%; provided that from and after the
first date upon which any Scheduled Repayment is deferred pursuant to Section
4.02(b)(iv), the Applicable ECF Percentage specified in preceding clause (y)
shall be increased to 75% and shall at all times thereafter remain at 75% except
that, at any time when the aggregate amount of mandatory repayments of Tranche
A-3 Term Loans and Tranche B Term Loans actually applied pursuant to Section
4.02(h) (which shall include mandatory repayments of such Term Loans made, and
so applied, pursuant to Sections 4.02(c) through (g), inclusive), equals or
exceeds the Deferred A-3 and B Amortization Amount as then in effect, the
Applicable ECF Percentage specified in preceding clause (y) shall be reduced to
50% for so long as such conditions continue in existence.
"Applicable Margin" at any time shall mean a percentage per
annum equal to (i) in the case of (A) Tranche A-1 and A-3 Term Loans maintained
as Eurodollar Loans, 1.00%, (B) Tranche B-1 Term Loans maintained as Eurodollar
Loans, 2.50%, (C) Tranche A-2 and B-2 Term Loans (subject to the provisions of
the immediately succeeding sentence) maintained as Eurodollar Loans, 2.50% plus
that percentage (not to exceed 1.00%), if any, by which the HET Applicable
Margin as then in effect exceeds .50%, and (D) Revolving Loans maintained as
Eurodollar Loans, (x) at all times prior to the Carry Obligation Termination
Date, the HET Applicable Margin as then in effect, and (y) at all times on and
after the Carry Obligation Termination Date, the sum of 2.50%, plus that
percentage (not to exceed 1.00%), if any, by which the HET Applicable Margin as
then in effect exceeds .50% and (ii) in the case of Loans of any Tranche
maintained as Base Rate Loans, that percentage (not below 0%) which, at such
time, is 1.00% less than the Applicable Margin for Loans of such Tranche (or in
the case of Swingline Loans, Revolving Loans) at such time maintained as
Eurodollar Loans. Notwithstanding anything to the contrary contained above,
Tranche B-2 Term Loans at any time outstanding in an aggregate principal amount
equal to the lesser of (x) the aggregate principal amount of Tranche B-2 Term
Loans then outstanding or (y) $10,000,000, shall instead have an Applicable
Margin which shall be a percentage per annum equal to (i) in the case of such
Tranche B-2 Term Loans maintained as Eurodollar Loans, the HET Applicable Margin
as then in effect or (ii) in the case of Tranche B-2 Term Loans maintained as
Base Rate Loans, that percentage (not below 0%) which, at such time, is 1.00%
less than the Applicable Margin for Tranche B-2 Term Loans maintained as
Eurodollar Loans; provided that, at any time when the aggregate principal amount
of Tranche B-2 Term Loans exceeds $10,000,000, the Borrower shall designate the
Tranche B-2 Term Loans from time to time bearing interest as provided in this
sentence (as opposed to the immediately preceding sentence) and, in the absence
of any such designation, the Administrative Agent shall make such designation in
its sole discretion; provided further, that (x) at no time shall the designation
apply with respect to more than $10,000,000 of outstanding Tranche B-2 Term
Loans and (y) the designation of Tranche B-2 Term Loans must be made on such
basis so that all Banks with outstanding Tranche B-2 Term Loans share on a
proportionate basis (based upon their relative
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outstanding principal amount of Tranche B-2 Term Loans) in the Tranche B-2 Term
Loans which bear interest as provided in this sentence (as opposed to the
immediately preceding sentence).
"Architects" shall mean the Rivergate Architect and the
Poydras Street Support Facility Architect.
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement substantially in the form of Exhibit R
(appropriately completed).
"Authorized Officer" of any Credit Party shall mean any of the
Chairman of the Board, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary, any Assistant Secretary or any
Assistant Treasurer of such Credit Party or any other officer of such Credit
Party which is designated in writing to the Administrative Agent, BTCo and the
Issuing Bank by any of the foregoing officers of such Credit Party as being
authorized to give such notices under this Agreement.
"Available Funds" shall mean the amount of funds actually
available to pay Amounts Required for Casino Completion representing proceeds
available to the Borrower from the Junior Subordinated Credit Facility, the
Convertible Junior Subordinated Debentures, the Harrah's Investor Equity
Investment and any other available funds of the Borrower (other than proceeds of
Loans and other than the Minimum Balance as defined in the Management Agreement,
as in effect on the date hereof).
"Bank" shall mean each financial institution listed on
Schedule I, as well as (x) any Person which becomes a "Bank" hereunder pursuant
to Section 1.13 and/or 16.04(b), (y) HET or HOC and their successors or assigns
pursuant to Section 1.13 and/or 16.04(b) following an acquisition of any Loans
by HET or HOC, as the case may be, pursuant to the HET/HOC Guaranty and Loan
Purchase Agreement.
"Bank Completion Guarantee" shall have the meaning provided in
Section 5.19(a).
"Bank Completion Guarantee Termination of Construction Date"
shall mean the Termination of Construction Date under, and as defined in, the
Bank Completion Guarantee.
"Bank Debt" shall mean all Obligations under this Agreement
and under the related Credit Documents.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.04(c) or (ii) a Bank having notified in writing the Borrower
and/or the Administrative Agent that it does not intend to comply with its
obligations under Section 1.01(b), (e), (f) or (h) or Section 2, in the case of
either clause (i) or (ii) as a result of any takeover of such Bank by any
regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section
10.06.
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"Bankruptcy Court" shall mean the United States Bankruptcy
Court for the Eastern District of Louisiana having jurisdiction over the
bankruptcy case of HJC.
"Bankruptcy Law" means the Bankruptcy Code or any similar
Federal, state or foreign law relating to bankruptcy, insolvency or the relief
of debtors.
"Base Fee" shall have the meaning provided in the Management
Agreement as in effect on the Initial Borrowing Date.
"Base Rate" at any time shall mean the higher of (i) 1% in
excess of the Adjusted Certificate of Deposit Rate as then in effect and (ii)
1/2 of 1% in excess of the Prime Lending Rate as then in effect.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii)
each other Loan designated or deemed designated as such by the Borrower at the
time of the incurrence thereof or conversion thereto.
"BDC" shall mean the small business development corporation
established (or to be established) in accordance with the terms of the Open
Access Program and Plans established pursuant to the Casino Lease and the GDA.
"Bondholders" shall mean the holders and beneficial owners of
the Old Bonds.
"Borrower" shall have the meaning provided in the first
paragraph.
"Borrower Mortgage" shall have the meaning provided in Section
5.18(a).
"Borrower Mortgaged Property" shall have the meaning provided
in Section 5.18(a).
"Borrowing" shall mean the borrowing by the Borrower of one
Type of Loan of a single Tranche from all the Banks having Commitments of the
respective Tranche (or from BTCo in the case of Swingline Loans) on a given date
(or resulting from a conversion or conversions on such date) having in the case
of Eurodollar Loans the same Interest Period, provided that Base Rate Loans
incurred pursuant to Section 1.10(b) shall be considered part of the related
Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day which
shall be in New York City a legal holiday or a day on which banking institutions
are authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and payments
of principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.
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"Capital Expenditures" shall mean, with respect to any Person,
all expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with
generally accepted accounting principles) and the amount of Capitalized Lease
Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting principles, are or
will be required to be capitalized on the books of such Person, in each case
taken at the amount thereof accounted for as indebtedness in accordance with
such principles.
"Carry Obligation Termination Date" shall mean that date, if
any, upon which the "Carry Obligations" under, and as defined in, the Bank
Completion Guarantee no longer remain guaranteed pursuant to the terms of the
Bank Completion Guarantee in accordance with the terms thereof.
"Cash Equivalents" shall mean (i) securities issued or
directly and fully guaranteed, or secured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) and in each case
maturing within one year after the date of acquisition, (ii) time deposits and
certificates of deposit of any commercial bank having, or which is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States, any State thereof, the District of Columbia or any foreign
jurisdiction having capital and surplus in excess of $250 million and commercial
paper issued by others rated at least A-2 or the equivalent thereof by Standard
& Poor's Corporation or at least P-2 or the equivalent thereof by Moody's
Investors Services, Inc. and in each case maturing within one year after the
date of acquisition, (iii) repurchase obligations with a term of not more than
90 days collateralized by securities issued or directly and fully guaranteed, or
secured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof) entered into with any bank or other Person meeting
the qualifications specified in clause (ii) above, and (iv) investments in money
market funds substantially all of whose assets are comprised of securities of
the types described in clauses (i) through (iii).
"Casino" means the casino to be located at the site of the
former Rivergate Convention Center in New Orleans, Louisiana, together with all
support facilities and improvements appurtenant and related thereto (including,
without limitation, the Poydras Street Support Facility and the Tunnel and shell
construction of the Second Floor), as described in the Disclosure Statement, but
excluding tenant improvements and non-gaming development of the Second Floor.
"Casino Construction Contract" shall mean the agreement, dated
October 10, 1994, between the Borrower and the Casino General Contractor, as
amended by the Settlement Agreement by and among HJC and the General Contractor,
dated November 25, 1996, and as such Settlement Agreement was amended on October
29, 1998, for the construction and equipping of the Casino (less and except the
Poydras Street Support Facility and the Tunnel).
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"Casino General Contractor" shall mean Centex Landis
Construction Co., Inc., a Louisiana corporation, the general contractor for the
construction and equipping of the Casino (less and except the Poydras Street
Support Facility and the Tunnel).
"Casino Lease" shall mean the Amended and Restated Lease
Agreement among the RDC, as landlord, the Borrower, as tenant, and the City, as
intervenor, dated as of October 29, 1998, as amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof.
"Casino Operating Contract" means the Amended and Renegotiated
Casino Operating Contract among the Borrower, HJC and the State of Louisiana, by
and through the LGCB, dated as of October 29, 1998, as amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Section 9601 et seq.
"Change of Control" shall mean (i) HET shall have ceased to
manage, directly or indirectly through a Wholly-Owned Subsidiary, the Casino,
(ii) JCC Holding shall at any time cease to own 100% of the Equity Interests of
the Borrower, (iii) HET shall at any time cease to own directly or through one
or more Wholly-Owned Subsidiaries at least (x) prior to the occurrence of the
Transition Date, 51% of the outstanding shares of New Class B Common Stock (or
of any other class of capital stock into which the New Class B Common Stock is
converted or exchanged) of JCC Holding, or (y) at any time after the occurrence
of the Transition Date, 20% of the common stock (treating all classes of common
stock of JCC Holding as a single class for this purpose) of JCC Holding, (iv)
the Board of Directors of HET shall not consist of a majority of Continuing
Directors, or (v) a New Bond Change of Control shall occur or any "change of
control" or similar event shall occur under any other issue of Indebtedness of
the Borrower in an aggregate principal amount which exceeds (or upon the
utilization of any unused commitments may exceed) $25,000,000.
"City" means the City of New Orleans, Louisiana.
"Class A Directors" shall have the meaning set forth in the
Restated Articles of Incorporation of JCC Holding.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder. Section references to the Code are to the Code, as in effect
at the date of this Agreement, and to any subsequent provision of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or
personal) with respect to which any security interests have been granted (or
purported to be granted) pursuant to any Security Document, including, without
limitation, all Pledge Agreement Collateral, all Security
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Agreement Collateral, all Mortgaged Properties and all cash and Cash Equivalents
delivered as collateral pursuant to Section 4.02 or 10 or pursuant to any
Security Document.
"Collateral Agent" shall mean The Bank of New York, or any
successor Collateral Agent, acting as collateral agent for the Secured Creditors
pursuant to the Security Documents and any sub-agents or sub-trustees appointed
pursuant to the Bank/Bondholder Intercreditor Agreement and permitted under
applicable Gaming Regulations.
"Collective Bargaining Agreements" shall have the meaning
provided in Section 5.06.
"Commitment" shall mean any of the commitments of any Bank
under this Agreement, i.e., whether the Tranche A-1 Term Loan Commitment, the
Tranche A-2 Term Loan Commitment, the Tranche A-3 Term Loan Commitment, the
Tranche B-1 Term Loan Commitment, the Tranche B-2 Term Loan Commitment or the
Revolving Loan Commitment.
"Commitment Commission" shall mean the Tranche A-2 Term Loan
Commitment Commission, the Tranche B-2 Term Loan Commitment Commission and the
Revolving Loan Commitment Commission.
"Completion Date" shall mean (x) the date which is twelve
months after the Plan Effective Date, which date may be extended, but not by
more than twelve months, in the event of the occurrence of, and by the duration
of, Force Majeure (as defined in the GDA) events which actually occur, or (y)
such earlier date as may be required for the Completion Date for the Casino
under and as defined in the GDA.
"Completion Guarantee" shall mean and include the Bank
Completion Guarantee and any completion guarantee delivered by any Completion
Guarantor to the holders of the New Bonds or to the City, the RDC or the LGCB.
"Completion Guarantor" shall mean each of HET and HOC.
"Completion Guarantor Loan Agreement" shall mean the Amended
and Restated Completion Loan Agreement, dated as of October 29, 1998, by and
among the Borrower, HET and HOC as amended, modified or supplemented from time
to time in accordance with the terms hereof and thereof.
"Completion Guarantor Loan Documents" shall mean the
Completion Guarantor Loan Agreement, and all other documents, notes and
instruments executed and delivered in accordance with the terms of the
Completion Guarantor Loan Agreement.
"Completion Guarantor Subordination Agreement" shall have the
meaning provided in Section 5.23(a).
"Consent" shall mean a Consent and Continuation Agreement
substantially in the form of Exhibit Q-6.
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"Consolidated Cash Interest Expense" shall mean, for any
period, the total consolidated interest expense (but excluding any amounts
attributable to, Contingent Payments which would otherwise be included in such
consolidated interest expense during such period) of the Borrower and its
Consolidated Subsidiaries for such period (calculated without regard to any
limitations on the payment thereof) plus, without duplication, that portion of
Capitalized Lease Obligations of the Borrower and its Consolidated Subsidiaries
representing the interest factor for such period, but excluding, however, (w)
amortization of deferred financing costs incurred in connection with the
Transaction, and amortization of any premium or discount and other similar
non-cash items that are part of such consolidated interest expense, (x) any
interest expense on loans and any other advances (not made pursuant to the
Junior Subordinated Credit Facility made to the Borrower or any of its
Subsidiaries from any Completion Guarantor as a result of support required to be
provided pursuant to one or more Completion Guaranties so long as (i) any
payments of interest with respect to such loans or advances would constitute
Restricted Payments subject to Section 9.03 and (ii) the respective obligee of
such loan or advance has entered into a Subordination Agreement with respect
thereto, (y) any interest payment made through the issuance of additional Senior
Subordinated Notes and/or Senior Subordinated Contingent Notes, as the case may
be, in lieu of cash, in each case in accordance with the terms of the respective
New Bond Indenture, and (z) any interest payment made through the issuance of
additional Convertible Junior Subordinated Debentures in lieu of cash in
accordance with the terms of the Convertible Junior Subordinated Debenture
Indenture or any similar occurrence with respect to any outstanding Indebtedness
which results in the capitalization of interest with respect thereto. Without
duplication of amounts already included above, Consolidated Cash Interest
Expense shall include (x) amounts payable during the respective period as
described in Section 9.06(a)(iv) and (y) all Minimum Payment Guaranty Fees which
accrue during the respective period, except to the extent that payment of such
amounts is actually deferred pursuant to Section 9.06(b). Notwithstanding
anything to the contrary contained above, Consolidated Cash Interest Expense for
any period shall not include amounts deferred pursuant to the provisions of
Section 9.06(b) for one or more prior periods, even though such amounts are paid
during the respective period, so long as the payment of such deferred amounts is
made in accordance with the express terms of Section 9.06(b).
"Consolidated Debt" shall mean, at any time, all Indebtedness
of the Borrower and its Subsidiaries, determined on a consolidated basis, with
respect to borrowed money or other obligations of such Persons which would
appear on a consolidated balance sheet of the Borrower as indebtedness
(including, without limitation, the principal component of Capitalized Lease
Obligations and consideration for discounts and premiums in accordance with
GAAP), excluding, however, (1) all Senior Subordinated Notes and Senior
Subordinated Contingent Notes, (2) all Convertible Junior Subordinated
Debentures and (3) any loans or other advances made pursuant to the Junior
Subordinated Credit Facility or made to the Borrower or any of its Subsidiaries
from any Completion Guarantor as a result of support required to be provided
pursuant to one or more Completion Guaranties so long as (i) any payments of
principal or interest with respect to such loans or advances would constitute
Restricted Payments subject to Section 9.03 and (ii) the respective obligee of
such loan or advance has entered into a Subordination Agreement with respect
thereto.
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"Consolidated EBIT" shall mean, for any period, the
Consolidated Net Income plus (without duplication) the amount of consolidated
interest expense (to the extent same was deducted in determining Consolidated
Net Income for such period), the amount of fees described in Sections
9.06(a)(iv) and (v) which accrued during such period (to the extent same reduced
Consolidated Net Income for such period) and provision for taxes (to the extent
deducted in determining Consolidated Net Income for such period) and without
giving effect to any extraordinary gains or losses or gains or losses from sales
of assets, other than sales pursuant to Section 9.02(iii).
"Consolidated EBITDA" shall mean, for any period, Consolidated
EBIT, adjusted by (x) adding thereto the amount of all amortization of
intangibles and depreciation that were deducted in arriving at Consolidated EBIT
for such period and (y) subtracting therefrom the amount of all Contingent
Payments made during such period and all amounts applied during such period to
pay deferred Base Fees and Minimum Payment Guaranty Fees in accordance with the
provisions of Section 9.06(b); provided that for purposes of Sections
4.02(b)(iv)(B) and 9.06(b) (and only for purposes of said Sections)
"Consolidated EBITDA" shall have the meaning assigned that term in the Senior
Subordinated Note Indenture as originally in effect (and without giving effect
to any subsequent amendments, modifications or supplements thereto).
"Consolidated Interest Coverage Ratio" for any period shall
mean the ratio of Consolidated EBITDA to Consolidated Cash Interest Expense for
such period.
"Consolidated Net Income" shall mean, for any period, the net
income of the Borrower and its Consolidated Subsidiaries for such period
determined in accordance with GAAP; provided that (without duplication of
exclusions) (i) the net income (to the extent positive) of any Person that is
not a Subsidiary of the Borrower or that is accounted for by the equity method
of accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the Borrower or a Wholly-Owned Subsidiary thereof,
(ii) to the extent Consolidated Net Income reflects amounts attributable to
minority interests in Subsidiaries that are not Wholly-Owned Subsidiaries of the
Borrower, Consolidated Net Income shall be reduced by the amounts attributable
to such minority interests, (iii) the net income of any Subsidiary (other than
the Borrower) shall be excluded to the extent that the declaration or payment of
dividends and distributions by that Subsidiary of net income is not at the date
of determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders and
(iv) the net income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded.
Notwithstanding anything to the contrary contained above, Consolidated Net
Income for any period shall not be reduced by amounts described in Section
9.06(b) which represent deferrals of amounts from prior periods, so long as any
payments of such deferred amounts are made expressly in accordance with the
terms of said Section 9.06(b).
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with GAAP.
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"Construction Budget" shall have the meaning provided in
Section 5.07(c).
"Construction Contracts" shall mean the Casino Construction
Contract, Poydras Street Support Facility and Tunnel Construction Contract and
any Other General Contractor Construction Contract.
"Construction Lien Indemnity Obligation Agreement" shall mean
the Construction Lien Indemnity Obligation Agreement, dated as of October 29,
1998, by and among the Borrower and HOC.
"Contingent Obligation" shall mean, as to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing (including, without limitation, as a result of such Person being a
general partner of the other Person, unless the underlying obligation is
expressly made non-recourse as to such general partner) any Indebtedness or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keepwell, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect the obligee against loss in respect thereof (in whole or
in part), provided that the term Contingent Obligation shall not include
endorsements for collection or deposit in the ordinary course of business.
"Contingent Payments" shall mean all contingent payments at
any time owed with respect to the New Bonds in accordance with the terms of the
New Bond Indenture as in effect on the Plan Effective Date.
"Continuing Directors" shall mean the directors of HET on the
Effective Date and each other director, if such other director's nomination for
election to the Board of Directors of HET is recommended by a majority of the
then Continuing Directors.
"Convertible Junior Subordinated Debenture Documents" shall
mean the Convertible Junior Subordinated Debentures and all agreements, notes,
mortgages, indentures and other documents executed and delivered in connection
with the Convertible Junior Subordinated Debentures.
"Convertible Junior Subordinated Debenture Indenture" shall
mean the Indenture, dated as of October 30, 1998, between the Borrower and
Norwest Bank, Minnesota N.A., as trustee, as amended, modified or supplemented
from time to time in accordance with the terms thereof and hereof.
"Convertible Junior Subordinated Debentures" shall mean the
Borrower's 8% Convertible Junior Subordinated Debentures due 2010 in an
aggregate principal amount equal to $27,500,000.
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"CPD" shall mean CP Development, L.L.C., a Louisiana limited
liability company which, on the Initial Borrowing Date, is a direct Wholly-Owned
Subsidiary of JCC Holding.
"CPD Mortgage" shall have the meaning provided in Section
5.18(a).
"CPD Mortgaged Property" shall have the meaning provided in
Section 5.18(a).
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note, the HET/HOC Guaranty and Loan Purchase Agreement, each Guaranty, the
Intercreditor Agreement, each Security Document, the Credit Enhancement Fee
Agreement (Bank Credit Agreement) and each Subordination Agreement.
"Credit Enhancement Fee Agreement (Bank Credit Agreement)"
shall mean that Credit Enhancement Fee Agreement (Bank Credit Agreement), dated
October 29, 1998, entered into by the Administrative Agent, each Bank party
hereto as of the Effective Date (other than any Bank which has no Tranche A-2
Term Loans, Tranche B-2 Term Loans or Revolving Loan Commitment) and HOC and
acknowledged and agreed by HET and in the form attached hereto as Exhibit P.
"Credit Enhancement Fee Agreement (JCC)" shall mean that
Credit Enhancement Fee Agreement (JCC), dated October 29, 1998, entered into by
the Borrower and HOC.
"Credit Event" shall mean the making of any Loan (other than
in respect of a Mandatory Borrowing) or the issuance of any Letter of Credit.
"Credit Party" shall mean JCC Holding, the Borrower, each
Completion Guarantor, each Subsidiary Guarantor and each party (other than the
Collateral Agent, the Administrative Agent and the Banks) to any Guaranty or
Subordination Agreement.
"Credit Support Fees" shall mean the Credit Support Fees
under, and as defined in, each of the Credit Enhancement Fee Agreement (Bank
Credit Agreement) and the Credit Enhancement Fee Agreement (JCC).
"Cumulative Retained Free Cash Flow Amount" shall mean, on any
date of determination, an amount determined on a cumulative basis equal to (i)
the Retained Percentage of Semi-Annual Free Cash Flow for all Semi-Annual Free
Cash Flow Periods ending after the Initial Borrowing Date and prior to such date
of determination, less (ii) the aggregate amount of payments theretofore made
pursuant to Section 9.06(b), less (iii) the amount of all Capital Expenditures
previously made pursuant to Section 9.07(c).
"Debt Agreements" shall have the meaning provided in Section
5.06.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
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"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Deferred A-3 and B Amortization Amount" at any time shall
mean the aggregate amount of all Tranche A-3 Scheduled Repayments and Tranche B
Scheduled Repayments theretofore deferred pursuant to section 4.02(b)(iv)
(determined without regard to any subsequent repayments of such deferred
amounts).
"Deferred Amortization Amount" at any time shall mean the
aggregate amount of all principal payments theretofore deferred pursuant to the
provisions of Section 4.02(b)(iv) (determined without reduction for any
subsequent repayments of such deferred amounts).
"Development Services Agreement" shall mean that certain
Development Services Agreement entered into by HET, HOC, the Borrower, JCC
Development, CPD and FPD pursuant to the Plan of Reorganization.
"DIP Indebtedness" shall mean, at the time of determination,
all principal, interest and other amounts then outstanding in respect of the
debtor-in-possession loans (other than loans made pursuant to the Junior
Subordinated Credit Facility) made by HOC or any of its Affiliates to HJC
pursuant to orders of the Bankruptcy Court entered at any time on or before the
Effective Date.
"Disclosure Statement" means the Sixth Amended Joint
Disclosure Statement dated October 13, 1998 pursuant to Section 1125 of the
Bankruptcy Code relating to the Plan of Reorganization, as approved by the
Bankruptcy Court.
"Disposition" shall mean the sale, assignment, transfer,
lease, conveyance or other disposition by the Borrower or any of its
Subsidiaries of any Collateral, including, without limitation, an involuntary
disposition as a result of a casualty or condemnation.
"Distribution" with respect to any Person shall mean that such
Person has declared or paid a dividend or returned any equity capital to any
holder or holders of its Equity Interests or authorized or made any other
distribution, payment or delivery of property (other than common stock of such
Person) or cash to any holder or holders of its Equity Interests as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
a consideration any shares of any class of its capital stock or any partnership
interests or any other Equity Interests outstanding on or after the Effective
Date (or any options or warrants issued by such Person with respect to its
capital stock or any partnership interests or any other Equity Interests), or
set aside any funds for any of the foregoing purposes, or shall have permitted
any of its Subsidiaries to purchase or otherwise acquire for a consideration any
shares of any class of the capital stock or any partnership interests or any
other Equity Interests of such Person outstanding on or after the Effective Date
(or any options or warrants issued by such Person with respect to its capital
stock or any other Equity Interests). Without limiting the foregoing,
"Distributions" with respect to any Person shall also include all payments made
or required to be made by such Person with respect to any stock appreciation
rights, plans, equity incentive or achievement plans or any similar plans or
setting aside of any funds for the foregoing purposes.
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"Documents" shall mean the Credit Documents, the Project
Documents, the Casino Operating Contract, the Management Agreement, the
Completion Guarantor Loan Documents, the Construction Lien Indemnity Obligation
Agreement, the Construction Contracts, the Junior Subordinated Credit Facility
Documents, the Convertible Junior Subordinated Debenture Documents, the Harrah's
Investor Equity Investment Documents, the New Class A Common Stock Documents,
the New Bond Documents and the Minimum Payment Guaranty Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Effective Date" shall have the meaning provided in Section
16.10.
"Employee and Bus Parking Support Facility Premises" shall
have the meaning provided in the Casino Lease.
"Employee Benefit Plans" shall have the meaning provided in
Section 5.06.
"Encroachment Areas" shall have the meaning provided in the
Casino Lease.
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" means any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, guideline,
written policy and rule of common law now or hereafter in effect and in each
case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
to the extent binding on the Borrower or any of its Subsidiaries, relating to
the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq.; the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 3803 et
seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C.
Section 11001 et seq., the Hazardous Material Transportation Act, 49 U.S.C.
Section 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq. (to the extent it regulates occupational exposure to
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Hazardous Materials); and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Equity Interests" of any Person shall mean all equity
interests therein, including without limitation any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any common
stock, preferred stock, any limited or general partnership interest and any
limited liability company membership interest.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrower or any Subsidiary of the
Borrower would be deemed to be a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code.
"Estoppel Certificate" shall have the meaning provided in
Section 5.18(d).
"Eurodollar Loan" shall mean each Loan (excluding Swingline
Loans) designated as such by the Borrower at the time of the incurrence thereof
or conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to
first-class banks in the New York interbank Eurodollar market by BTCo for Dollar
deposits of amounts in immediately available funds comparable to the outstanding
principal amount of the Eurodollar Loan of BTCo with maturities comparable to
the Interest Period applicable to such Eurodollar Loan commencing two Business
Days thereafter as of 10:00 A.M. (New York time) on the date which is two
Business Days prior to the commencement of such Interest Period, divided (and
rounded off to the nearest 1/16 of 1%) by (b) a percentage equal to 100% minus
the then stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves
required by applicable law) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section
10.
"Existing Indebtedness" shall have the meaning provided in
Section 7.22.
"Facing Fee" shall have the meaning provided in Section
3.01(d).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received
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by the Administrative Agent from three Federal Funds brokers of recognized
standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred
to in Section 3.01.
"Financial Forecast" shall mean the Financial Forecast
attached as Exhibit B to the Disclosure Statement, without giving effect to any
subsequent modifications or amendments thereto.
"Fiscal Test Quarter" shall mean each fiscal quarter of the
Borrower, beginning with the first Fiscal Test Quarter (as defined in the
immediately succeeding sentence). As used herein, the first Fiscal Test Quarter
shall mean the first full fiscal quarter beginning on or after, and ended after,
the Start Date. The number of each subsequent Fiscal Test Quarter (e.g., the
second Fiscal Test Quarter, third Fiscal Test Quarter, etc.) shall be the
respective subsequent fiscal quarter of the Borrower counted consecutively from
the first Fiscal Test Quarter.
"Force Majeure" shall have the meaning provided in the Bank
Completion Guarantee.
"Form 10" shall mean that certain Form 10, General Form for
Registration of Securities pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act, as filed with the SEC on September 25, 1998, by JCC Holding as
registrant to register the New Class A Common Stock.
"Former Bank" shall have the meaning provided in Section
16.04(c).
"FPD" shall mean FP Development, L.L.C., a Louisiana limited
liability company which, on the Initial Borrowing Date, is a direct Wholly-Owned
Subsidiary of JCC Holding.
"FPD Mortgage" shall have the meaning provided in Section
5.18(a).
"FPD Mortgaged Property" shall have the meaning provided in
Section 5.18(a).
"GAAP" shall have the meaning provided in Section 16.07.
"Gaming Authority" shall mean the governmental authorities
charged with the administration and the enforcement of the Gaming Regulations.
"Gaming Patron Indebtedness" shall have the meaning provided
such term in the Pledge Agreement.
"Gaming Regulations" shall mean the laws, rules,
regulations and orders applicable to the gaming business of the Borrower or
any of its Subsidiaries, or any other Credit Party, as in effect from time to
time, including the Louisiana Economic Development and Gaming Corporation Act
(La. R.S. Section 27:201, et seq.) and the policies, interpretations and
administration thereof by the Gaming Authorities, including the LGCB.
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"GDA" shall mean the Amended and Restated General Development
Agreement among the RDC, JCC and the City, as intervenor, dated as of October
29, 1998.
"General Contractors" shall mean the Casino General
Contractor, Poydras Street Support Facility and Tunnel General Contractor and
any Other General Contractor.
"Ground Lease" shall mean the Amended and Restated Lease
Agreement for the site of the Casino between the RDC and the City, dated as of
March 15, 1994 and as amended on October 29, 1998, by that certain First
Amendment to Amended and Restated Lease Agreement.
"Guaranteed Obligations" shall mean all obligations of the
Borrower (i) to each Bank for the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of the principal and interest
on each Note issued by the Borrower to such Bank, and Loans made, under this
Agreement and all reimbursement obligations and Unpaid Drawings with respect to
Letters of Credit, together with all the other obligations and liabilities
(including, without limitation, indemnities, Fees and interest thereon) of the
Borrower to such Bank now existing or hereafter incurred under, arising out of
or in connection with this Agreement or any other Credit Document and the due
performance and compliance with all the terms, conditions and agreements
contained in the Credit Documents by the Borrower and (ii) to each Bank and each
Affiliate of a Bank (even if such Bank subsequently ceases to be a Bank under
this Agreement for any reason) so long as such Bank or Affiliate participates in
such Interest Rate Protection Agreement, and their subsequent assigns, if any,
which enters into an Interest Rate Protection Agreement with the Borrower, the
full and prompt payment when due (whether by acceleration or otherwise) of all
obligations of the Borrower owing under any such Interest Rate Protection
Agreement whether now in existence or hereafter arising, and the due performance
and compliance with all terms, conditions and agreements contained therein.
"Guaranteed Tranche A Obligations" shall have the meaning
provided in Section 17.09(a).
"Guaranteed Tranche B and Revolving Obligations" shall have
the meaning provided in Section 17.09(a).
"Guaranteed Tranche B-1 Obligations" shall have the meaning
provided in Section 17.10(a).
"Guaranteed Tranche B-2 Obligations" shall have the meaning
provided in Section 17.10(a).
"Guaranties" shall mean the Bank Completion Guarantee, the JCC
Holding Guaranty, the HET/HOC Guaranty and Loan Purchase Agreement and the
Subsidiaries Guaranty, and the term "Guaranty" shall mean any of the foregoing.
"Guarantor" shall mean each of HET, HOC, each Completion
Guarantor, JCC Holding and each Subsidiary Guarantor.
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"Harrah's Investor" shall mean Harrah's Crescent City
Investment Company, a Nevada corporation, and/or any of its Affiliates.
"Harrah's Investor Cash Investment" shall have the meaning
provided in Section 5.11.
"Harrah's Investor Equity Investment Documents" shall mean the
agreements, instruments and other documents executed and delivered in connection
with the Harrah's Investor Cash Investment.
"Harrah's Management" shall mean Harrah's New Orleans
Management Company, a Nevada corporation; provided that after any successor
becomes the manager with respect to the Casino in accordance with the proviso to
Section 9.16, such successor entity shall thereafter be deemed to be Harrah's
Management (although the predecessor of such entity shall not be relieved of any
of its obligations under the Manager Subordination Agreement theretofore
received by it).
"Harrah's Marks" shall mean (i) the trademark, Harrah's
(Block), U.S. Trademark Registration number 1,067,887, (ii) the trademark,
Harrah's and Design, U.S. Trademark Registration number 1,237,716, (iii) the
trademark, Harrah's and Design, U.S. Trademark Registration number 1,295,055,
(iv) the trademark, Harrah's (Block), U.S. Trademark Registration number
1,297,101 and any other registered trademark consistently used throughout the
Harrah's casino system that is material to the advertising and marketing plan
for the Casino.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous substances," "restricted hazardous waste,"
"toxic substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and (c) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority under Environmental Laws.
"HET" shall mean Harrah's Entertainment, Inc., a Delaware
corporation.
"HET Applicable Commitment Commission Percentage" at any time
shall mean the "Applicable Commitment Commission Percentage" under, and as
defined in, the HET Credit Agreement. It is understood that, for purposes of
this Agreement, the HET Applicable Commitment Commission Percentage shall be
calculated without giving effect to any revisions thereto or to the HET Credit
Agreement made after the Effective Date, and shall be determined as provided
above regardless of whether the HET Credit Agreement is terminated or there are
no unutilized commitments thereunder.
"HET Applicable Margin" at any time shall mean the "Applicable
Margin" under, and as defined in, the HET Credit Agreement. It is understood
that, for purposes of this Agreement, the HET Applicable Margin shall be
calculated without giving effect to any revisions
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thereto or to the HET Credit Agreement made after the Effective Date, and shall
be determined as provided above regardless of whether the HET Credit Agreement
is terminated or there are no outstandings thereunder.
"HET Credit Agreement" shall mean the Credit Agreement, dated
as of July 22, 1993, and amended and restated as of June 9, 1995, and as further
amended and restated as of April 1, 1998, among HET, HOC, certain Subsidiaries
of HOC, the lenders from time to time party thereto, BTCo, The Bank of New York,
CIBC Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of California,
The Long-Term Credit Bank of Japan, Limited, New York Branch, NationsBank of
Georgia, N.A., Societe Generale and The Sumitomo Bank, Limited, New York Branch,
as agents, and BTCo, as administrative agent, as in effect on the Effective
Date, but without giving effect to any amendments or modifications thereto, or
terminations thereof, made after the Effective Date.
"HET/HOC Guaranty and Loan Purchase Agreement" shall have the
meaning provided in Section 5.19(b).
"HET/JCC Agreement" shall mean that certain HET/JCC Agreement
by and among the Borrower, HET and HOC, dated as of even date herewith.
"HET/JCC Agreement Documents" shall mean and include any
Minimum Payment Guaranty to which HET and HOC (or any of their Subsidiaries) is
a party, the HET/JCC Agreement and any other documents entered into in
connection with (and to the extent directly relating to) the foregoing.
"HET Warrant" means that certain Warrant Agreement between
Harrah's Investor and JCC Holding, of even date herewith shall have the meaning
provided in the Plan of Reorganization.
"HJC" shall mean Harrah's Jazz Company, a Louisiana general
partnership.
"HOC" shall mean Harrah's Operating Company, Inc., a Delaware
corporation.
"Improvements" shall mean the Casino, the Borrower Mortgaged
Property and parking spaces to be constructed in connection therewith, in each
case in substantial accordance with the Plans and Specifications, with all
landscaping and other off and on site work related thereto.
"Incentive Fee" shall have the meaning provided in the
Management Agreement as in effect on the Initial Borrowing Date.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, (iv) all obligations of such person as lessee
which are capitalized in accordance with generally accepted accounting
principles, (v) all obligations of such Person to
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reimburse or repay any bank or other Person in respect of amounts paid or
available to be drawn under a letter of credit, banker's acceptance, surety,
performance or appeal bond or any similar instrument (each such obligation to be
valued at the face amount of such instrument), including without limitation all
obligations of JCC Holding and its Subsidiaries pursuant to the Minimum Payment
Guaranty Documents, (vi) all Indebtedness of others secured by a Lien on any
asset of such Person, (vii) all Contingent Obligations of such Person and (viii)
all obligations under any Interest Rate Protection Agreement or under any
similar type of agreement.
"Information Systems and Equipment" means all computer
hardware, firmware and software, as well as other information processing
systems, or any equipment continuing embedded microchips, whether directly
owned, licensed, leased, operated or otherwise controlled by the JCC Holding or
any of its Subsidiaries, including through third-party service providers, and
which, in whole or in part, are used, operated, relied upon, or integral to, JCC
Holding or any of its Subsidiaries' conduct of their respective businesses.
"Initial Borrowing Date" shall mean the date occurring on or
after the Effective Date on which the initial Borrowing of Loans occurs
hereunder.
"Initial Construction Schedule" shall have the meaning
provided in Section 5.07(c).
"Insignificant Subsidiaries" at any time shall mean one or
more Subsidiaries of JCC Holding (in each case, excluding the Borrower), subject
to events of the type described in Section 10.06 and/or 10.11, so long as such
Subsidiaries when taken together on a combined basis, would have (x) had
combined consolidated net income before interest and provision for taxes
(excluding non-recurring gains or losses) and adjusted by adding thereto the
amount of all amortization of intangibles and depreciation deducted in arriving
at consolidated net income for such period for the four consecutive fiscal
quarters last ended (taken as one accounting period) prior to the date of any
determination pursuant to this definition and for which financial information is
then available of less than $500,000 and (y) combined consolidated assets
(valued at the higher of fair market value or on a book basis) of less than
$1,000,000.
"Intercreditor Agreement" shall have the meaning provided in
Section 5.20.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest collar agreement,
interest rate hedging agreement, interest rate floor agreement or other similar
agreement or arrangement.
"Issuing Bank" shall mean BTCo and any Bank which at the
request of the Borrower and with the consent of the Administrative Agent agrees,
in such Bank's sole discretion,
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to become an Issuing Bank for the purpose of issuing Letters of Credit pursuant
to Section 2. The sole Issuing Bank on the Initial Borrowing Date is BTCo.
"JCC Development" shall mean JCC Development Company, L.L.C.,
a Louisiana limited liability company which is a direct Wholly-Owned Subsidiary
of JCC Holding.
"JCC Development Mortgage" shall have the meaning provided in
Section 5.18(a).
"JCC Development Mortgaged Property" shall have the meaning
provided in Section 5.18(a).
"JCC Holding" shall have the meaning provided in the first
paragraph.
"JCC Holding Guaranty" shall mean the guaranty of JCC Holding
as provided in Section 17.
"Junior Subordinated Credit Facility" shall mean the junior
subordinated credit facility, dated as of October 29, 1998, between HET and the
Borrower as in effect on the Initial Borrowing Date and as the same may be
amended, modified or supplemented from time to time pursuant to the terms
thereof and hereof.
"Junior Subordinated Credit Facility Documents" shall mean the
Junior Subordinated Credit Facility and all other agreements, notes, instruments
and documents executed and delivered in accordance with the terms of the Junior
Subordinated Credit Facility.
"Lafayette Subsurface Area" shall have the meaning provided in
the Casino Lease.
"L/C Supportable Indebtedness" shall mean (i) obligations of
the Borrower or its Subsidiaries incurred in the ordinary course of business
with respect to insurance obligations and workers' compensation, surety bonds
and other similar statutory obligations and (ii) such other obligations of the
Borrower or any of its Subsidiaries (other than Indebtedness for borrowed money)
as are reasonably acceptable to the respective Issuing Bank and otherwise
permitted to exist pursuant to the terms of this Agreement.
"Leaseholds" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under any lease.
"Leases" shall mean the Ground Lease, the Casino Lease and the
Railroad Lease.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01(c).
"Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate Stated Amount of all outstanding Letters of Credit and
(ii) the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
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"LGCB" means, collectively, the Louisiana Gaming Control
Board, and its successors and assigns.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Line Items" shall mean the line items in the Construction
Budget.
"Loan" shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.
"Majority Banks" of any Tranche shall mean those
Non-Defaulting Banks which would constitute the Required Banks under, and as
defined in, this Agreement (determined without giving effect to the proviso to
the first sentence of the definition of Required Banks contained herein) if all
outstanding Obligations of the other Tranches under this Agreement were repaid
in full and all Commitments with respect thereto were terminated.
"Majority Tranche A Banks" shall mean those Non-Defaulting
Banks holding Tranche A Term Loans which would constitute the Required Banks
under, and as defined in, this Agreement (determined without giving effect to
the proviso to the first sentence of the definition of Required Banks contained
herein) if all outstanding Obligations of the other Tranches under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
"Majority Tranche A-1 and A-3 Banks" shall mean those
Non-Defaulting Banks holding Tranche A-1 Term Loans and Tranche A-3 Term Loans
(or the related Commitments) which would constitute the Required Banks under,
and is defined in, this Agreement (determined without giving effect to the
proviso to the first sentence of the definition of Required Banks contained
herein) if all outstanding Obligations of the other Tranches under this
Agreement were repaid in full and all Commitments with respect thereto were
terminated.
"Majority Tranche A-1, A-3 and B-1 Banks" shall mean those
Non-Defaulting Banks holding Tranche A-1 Term Loans, Tranche A-3 Term Loans,
Tranche B-1 Term Loans (or the related Commitments) which would constitute the
Required Banks under, and as defined in, this Agreement (determined without
giving effect to the proviso to the first sentence of the definition of Required
Banks contained herein) were repaid in full.
"Majority Tranche B-1 Banks" shall mean those Non-Defaulting
Banks holding Tranche B-1 Term Loans and/or Tranche B-1 Term Loan Commitments
which would constitute the Required Banks under, and as defined in, this
Agreement (determined without giving effect to the proviso to the first sentence
of the definition of Required Banks contained herein) if all outstanding
Obligations of the other Tranches under this Agreement were repaid in full and
all Commitments with respect thereto were terminated.
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"Majority Tranche A-2, B-2 and Revolving Banks" shall mean
those Non-Defaulting Banks holding Tranche B-2 Term Loans, Tranche B-2 Term Loan
Commitments, Revolving Loan Commitments, Tranche A-2 Term Loans, Tranche A-2
Term Loan Commitments, or outstandings related to Revolving Loan Commitments
which would constitute the Required Banks under, and as defined in, this
Agreement (determined without giving effect to the proviso to the first sentence
of the definition of Required Banks contained herein) if all Obligations
relating to Tranche A-1 Term Loans, Tranche A-2 Term Loans and Tranche B-1 Term
Loans were repaid in full and all Commitments with respect thereto were
terminated.
"Management Agreement" shall mean the Second Amended and
Restated Management Agreement by and between Harrah's Management and the
Borrower, dated October 29, 1998 as amended, modified or supplemented from time
to time in accordance with the terms hereof and thereof.
"Management Fees" shall mean the Base Fee, the Incentive Fee
and the Termination Fee.
"Management Fee Repayment Guarantee" shall mean the Guarantee
of Repayment of certain Management Fees entered into by HET and HOC pursuant to
Article 9.01(c) of the Management Agreement.
"Manager Subordination Agreement" shall have the meaning
provided in Section 5.22.
"Mandatory Borrowing" shall have the meaning provided in
Section 1.01(h).
"Margin Stock" shall have the meaning provided in Regulation
U.
"Material Alteration or Restoration" shall mean, any
alteration or restoration with respect to the Borrower Mortgaged Property which
(i) materially affects the exterior dimensions or the structural components of
any building on the Borrower Mortgaged Property, (ii) involves the construction
of a new building on the Borrower Mortgaged Property, or (iii) except if from
funds deposited from time to time by the Borrower in the Reserve Fund, costs
$10,000,000 or more (with respect to any item of work or series of, or related,
items of work constituting a single project) or $15,000,000 or more in the
aggregate over a twelve (12) month period.
"Material Lease" shall mean a lease, sublease or other
occupancy agreement by the Borrower to any Person of any part of the Borrower
Mortgaged Property (excluding any lease or sublease with respect to the Second
Floor) of (either individually or when aggregated with any other lease, sublease
or other occupancy agreement by the Borrower to such Person) greater than ten
thousand (10,000) net rentable square feet or for an projected annual rent of
One Million Dollars ($1,000,000) or greater.
"Maturity Date" shall mean, with respect to any Tranche of
Loans, the Tranche A-1 and A-2 Term Loan Maturity Date, Tranche A-3 Term Loan
Maturity Date, the Tranche B Term Loan Maturity Date, the Revolving Loan
Maturity Date or the Swingline Expiry Date, as the case may be.
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"Maximum Swingline Amount" shall mean $10,000,000.
"McCalls Litigation" shall mean the lawsuit captioned Henry
George McCall v. Harry McCall, Jr., City of New Orleans, Board of Commissioners
of the Port of New Orleans, and Rivergate Development Corporation, No. 93-6683,
filed in the Civil District Court for the Parish of Orleans, State of Louisiana.
"Minimum Payment Guarantor" shall mean HET and HOC as joint
and several obligors, or any successor or substitute guarantor providing a
Minimum Payment Guaranty in accordance with the requirements of the Casino
Operating Contract and without giving rise to an Event of Default pursuant to
Section 10.17.
"Minimum Payment Guaranty" shall have the meaning set forth in
Section 25.1 of the Casino Operating Contract.
"Minimum Payment Guaranty Documents" shall mean and include
each Minimum Payment Guaranty and all agreements or documents (including without
limitation the HET/JCC Agreement Documents) executed and delivered in connection
therewith (in each case to the extent directly relating thereto) or any
successor documents approved in accordance with Section 10.17.
"Minimum Payment Guaranty Fees" shall mean the fees paid by
the Borrower pursuant to Section 2 of the HET/JCC Agreement or pursuant to the
terms of any successor Minimum Payment Guaranty Documents.
"Minimum Payment Guaranty Lien" shall mean the Lien, in each
case created under the Security Documents, securing the Borrower's obligations
pursuant to the HET/JCC Agreement or pursuant to any successor Minimum Payment
Guaranty Documents.
"Mortgage" shall have the meaning provided in Section 5.18(a).
"Mortgage Policies" shall have the meaning provided in Section
5.18(b).
"Mortgaged Property" shall mean and be a collective reference
to the Borrower Mortgaged Properties, the JCC Development Mortgaged Properties,
the CPD Mortgaged Properties and the FPD Mortgaged Properties, as well as any
Additional Mortgaged Properties.
"Net Sale Proceeds" shall mean for any sale of assets, the
gross cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and when
received) received from any sale of assets, net of reasonable transaction costs
and payments of unassumed liabilities relating to the assets sold at the time
of, or within 60 days after, the date of such sale and the amount of such gross
cash proceeds required to be used to repay any Indebtedness (other than Senior
Debt or Indebtedness owed to Affiliates of the Borrower) which is secured by the
respective assets which were sold and the estimated marginal increase in income
taxes which will be paid by JCC Holding's consolidated group with respect to the
fiscal year in which the sale occurs as a result of such sale. Notwithstanding
anything to contrary contained above, in the case of any mandatory repayments
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required pursuant to Section 4.02(f), to the extent that the Senior Subordinated
Note Indenture does not permit 100% of the Net Sale Proceeds as determined
pursuant to the immediately preceding sentence to be applied to the repayment of
Bank Debt (but instead requires that a portion of said proceeds be applied to
repayments of, or offers to repurchase, New Bonds), then the amount of Net Sale
Proceeds shall be deemed reduced by the amount so required to be applied to the
repayment, or offers to repurchase, New Bonds; provided further that (x) no
effect shall be given to any amendments or modifications to the Senior
Subordinated Note Indenture which have the effect of placing greater
restrictions on repayments of Bank Debt from asset sales or required increased
payments, or offers to purchase, New Bonds and (y) if any offers to repurchase
New Bonds are made and if the full amount of cash proceeds reserved for such
repurchases are not in fact used to repurchase New Bonds, on the first date upon
which such funds are available to the Borrower or any other Credit Party, the
amount thereof shall be deemed to constitute Net Sale Proceeds which shall be
required in accordance with the provisions of Section 4.02(f).
"New Bond Change of Control" shall mean a "change of control"
under, and as defined in, either New Bond Indenture.
"New Bond Documents" shall mean the New Bond Indenture, the
Senior Subordinated Notes, the Senior Subordinated Contingent Notes and all
other documents executed and delivered in connection therewith.
"New Bond Indenture" shall mean, collectively, the Senior
Subordinated Note Indenture and the Senior Subordinated Contingent Note
Indenture.
"New Bonds" shall mean, collectively, the Senior Subordinated
Notes and the Senior Subordinated Contingent Notes.
"New Class A Common Stock" shall mean the Class A common stock
of JCC Holding, $.01 par value per share.
"New Class A Common Stock Documents" shall mean the
agreements, instruments and other documents executed and delivered in connection
with the issuance of the New Class A Common Stock.
"New Class B Common Stock" shall mean the Class B Common Stock
of JCC Holding, $.01 par value per share.
"Non-Defaulting Bank" shall mean and include each Bank other
than a Defaulting Bank.
"Note" shall mean each Tranche A-1 Term Note, each Tranche A-2
Term Note, each Tranche A-3 Term Note, each Tranche B-1 Term Note, each Tranche
B-2 Term Note, each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03(a).
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"Notice of Confirmation" shall mean the notice from the
Bankruptcy Court confirming the Plan of Reorganization pursuant to Sections 1128
and 1129 of the Bankruptcy Code entered on February 2, 1997, as incorporated by
reference and supplemented by subsequent orders entered on April 16, 1998, and
October 13, 1998.
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Administrative
Agent located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York
10006, Attention: Mary Kay Coyle, or such other person as the Administrative
Agent may hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the
Administrative Agent, the Collateral Agent, any Issuing Bank or any Bank
pursuant to the terms of this Agreement or any other Credit Document.
"Old Bonds" shall mean the 14 1/4% First Mortgage Notes due
2001 in an aggregate principal amount equal to $435,000,000 issued by HJC and
Harrah's Jazz Finance Corp.
"Open Access Program" shall mean the Open Access Program
attached as Exhibit C to the Casino Lease.
"Opening Date" shall have the meaning provided in the
Management Agreement.
"Operating Accounts" shall have the meaning provided in
Section 8.17.
"Other General Contractor" shall mean a general contractor,
other than the Casino General Contractor and the Poydras Street Support Facility
and Tunnel General Contractor, which is a party to a general construction
contract with the Borrower in excess of $5,000,000 and which is reputable,
possesses all applicable Permits and has experience of a kind similar to the
work called for in such general construction contract.
"Other General Contractor Construction Contract" shall mean an
agreement for the construction and equipping of the Project, other than the
Casino Construction Contract and the Poydras Street Support Facility and Tunnel
Construction Contract, equal to or in excess of $5,000,000 between the Borrower
and any Other General Contractor.
"Participant" shall have the meaning provided in Section
2.04(a).
"Payment Office" shall mean the office of the Administrative
Agent located at One Bankers Trust Plaza, 130 Liberty Street, New York, New York
10006, or such other office as the Administrative Agent may hereafter designate
in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Pedestrian Bridge Areas" shall have the meaning provided in
the Casino Lease.
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"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, provided that, if the Percentage of any
Bank is to be determined after the Total Revolving Loan Commitment has been
terminated, then the Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.
"Performance Bond" shall mean that certain Performance Bond
among the Borrower, Reliance Insurance Company and United States Fidelity and
Guaranty Company in favor of the City of New Orleans, the RDC, the LGCB, Norwest
Bank Minnesota, National Association as trustee for the holders of the New Bonds
and the Administrative Agent, as in effect on the Initial Borrowing Date.
"Permits" shall mean any and all actions, approvals,
certificates, consents, waivers, exemptions, variances, franchises, orders,
permits, authorizations, rights or licenses of or from any governmental
authority or agency (including any Gaming Authority), including, without
limitation, the Casino Operating Contract.
"Permitted Amendment" shall mean any waiver, amendment or
consent to either New Bond Indenture which is entered into (i) to cure any
ambiguity, defect or inconsistency therein so long as any such amendment or
consent is not adverse to the interests of the Banks in any respect, (ii) to
evidence or provide for a replacement trustee thereunder or (iii) to modify any
covenant, obligation or event of default thereunder so long as the respective
waiver, amendment or consent does not impose any obligations or restrictions on
the Borrower greater than those set forth in the respective New Bond Indenture
as in effect at the time of such amendment or consent before giving effect
thereto. In no event will a Permitted Amendment increase the rate of interest,
fees or other amounts payable in connection with the New Bonds or under the New
Bond Indenture, or alter the provisions with respect to the deferral of any
payments thereunder (except to the extent the respective amendment further
extends such deferral).
"Permitted Encumbrance" shall mean, with respect to any
Mortgaged Property, such exceptions to title as are set forth in the title
insurance policy or title commitment delivered on or prior to the Initial
Borrowing Date with respect thereto, all of which exceptions must be acceptable
to the Administrative Agent in its reasonable discretion.
"Permitted Liens" shall have the meaning provided in Section
9.01.
"Permitted Subsidiary" shall mean and include each of the
Borrower, JCC Development, CPD, FPD and any other Subsidiary of JCC Holding
formed after the Effective Date in accordance with the requirements of Section
9.15.
"Permitted Tax Payment" means (for any taxable year of the
Borrower in which it joins in filing a consolidated federal income tax return
with JCC Holding) a payment (including any estimated tax payment based on any
estimated tax liability for such year) by the Borrower to JCC Holding in an
amount not in excess of the lesser of (i) the separate return federal income tax
liability (if any) of the affiliated group (within the meaning of Section 1504
of which the Borrower
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would be the parent (the "JCC Group") if it were not a member of another
affiliated group for that or any other taxable year, and (ii) the actual tax
liability (if any) of the affiliated group of which the Borrower is actually a
member (the "Guarantor Group") for such year allocable to the JCC Group;
provided, that such payment can be made by the Borrower no earlier than the date
on which the Guarantor Group is required to make federal income tax payments for
such year to the Internal Revenue Service; and provided, further, that for
purposes of clause (ii) the actual tax liability of the Guarantor Group shall be
computed without regard to any income, gain, loss, deduction or credit generated
by a corporation other than JCC Holding, the Borrower or a Subsidiary of the
Borrower. In the event that JCC Holding and any member of the JCC Group join in
filing any combined or consolidated (or similar) state or local income or
franchise tax returns, then Permitted Tax Payment shall include payments with
respect to such state or local income or franchise taxes determined in a manner
as similar as possible to that provided in the preceding sentence for federal
income taxes.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan,
as defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of), the Borrower or a
Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the
five year period immediately following the latest date on which the Borrower, a
Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed or had
an obligation to contribute to such plan.
"Plan Effective Date" shall mean the "Effective Date" as
defined in the Plan of Reorganization.
"Plan of Reorganization" shall mean the Third Amended Joint
Plan of Reorganization of HJC and Harrah's Jazz Finance Company, a Louisiana
corporation, as modified through October 13, 1998, under Chapter 11 of the
Bankruptcy Code (including all exhibits and schedules thereto), as in effect on
the Effective Date, but without giving effect to any subsequent modifications
thereto unless in form and substance satisfactory to the Required Banks.
"Plans and Specifications" shall mean the plans and
specifications prepared in accordance with industry standards by or on behalf of
the Borrower by a licensed reputable engineering or architectural firm, as
applicable, for the renovation, construction and/or equipping, as the case may
be, of the Project in a first class manner consistent with the description of
the Project set forth in the Disclosure Statement, as the same may be amended in
accordance with the terms hereof. The Plans and Specifications shall include,
but not be limited to, architectural, structural, mechanical and electrical
plans and specifications, together with all plan revisions and addenda to the
specifications which continue to be prepared and completed as initial
construction progresses.
"Pledge Agreement" shall have the meaning provided in Section
5.16.
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"Pledge Agreement Collateral" shall mean all Collateral under,
and as defined in, the Pledge Agreement.
"Pledged Securities" shall mean "Collateral" as defined in the
Pledge Agreement.
"Poydras Street Support Facility" shall mean the support
facilities and improvements appurtenant to the Casino to be constructed on the
Poydras Street Support Facility Premises, as described in the Plans and
Specifications.
"Poydras Street Support Facility Architect" shall mean
Broadmoor, a Louisiana general partnership.
"Poydras Street Support Facility and Tunnel Construction
Contract" shall mean the agreement, dated October 10, 1994, between the Borrower
and the Poydras Street Support Facility and Tunnel General Contractor, as
amended by the Settlement Agreement by and between HJC and the Poydras Street
Support Facility and Tunnel General Contractor, dated October 15, 1996, for the
construction and equipping of the Poydras Street Support Facility.
"Poydras Street Support Facility and Tunnel General
Contractor" shall mean Broadmoor, a Louisiana general partnership, the general
contractor for the construction and equipping of the Poydras Street Support
Facility.
"Poydras Street Support Facility Premises" shall have the
meaning provided in the Casino Lease.
"Poydras Tunnel Area" shall have the meaning provided in the
Casino Lease.
"Prime Lending Rate" shall mean the rate which BTCo announces
from time to time as its prime lending rate, the Prime Lending Rate to change
when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. BTCo may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending Rate.
"Pro Forma Balance Sheet" shall mean an unaudited pro forma
consolidated balance sheet of the Borrower and related funds flow statement
prepared in accordance with generally accepted accounting principles except as
specifically set forth in the notes thereto, immediately after giving effect to
the Transaction, which pro forma consolidated balance sheet and related funds
flow statement shall be in form and substance satisfactory to the Administrative
Agent and the Required Banks and a copy of which is attached as Exhibit B to the
Disclosure Statement.
"Project" shall mean the lease, renovation, construction,
equipping and operation of the Casino, and all related facilities at the
Borrower Mortgaged Property, including, without limitation, the Poydras Street
Support Facility Premises, the Servitude Areas, the Pedestrian Bridge Areas, the
Poydras Tunnel Area, the Encroachment Areas and the Lafayette Subsurface Area,
but excluding the Second Floor (other than the shell construction thereof).
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"Project Account" shall have the meaning provided in Section
8.17.
"Project Costs" shall mean all Completion Obligations, Carry
Obligations and Preservation Obligations under, and as defined in, the Bank
Completion Guarantee.
"Project Default" shall have the meaning provided in Section
10.05.
"Project Documents" shall mean the Leases, the GDA, the Open
Access Program and the Management Fee Repayment Guarantee.
"Qualified Person" shall mean, with respect to any Bank party
to this Agreement on the date hereof or that becomes a Bank pursuant to Section
1.13, 16.04(b) or 16.04(c), a commercial bank, financial institution or other
"accredited investor" (as defined in Regulation D of the Securities Act), which
shall not have been found unsuitable under, and, to the extent necessary, shall
have qualified or be presumed suitable under, the Louisiana Gaming Regulations
applicable to lenders and the Casino Operating Contract.
"Quarterly Payment Date" shall mean each March 31, June 30,
September 30 and December 31 occurring after the Effective Date.
"Railroad Lease" shall mean that certain Amended and Restated
Lease, dated as of November 19, 1993, between The Alabama Great Southern
Railroad Company (successor by merger to New Orleans Terminal Company) and Grand
Palais Casino, Inc., a Delaware corporation, as assigned by that certain
Assignment and Assumption of Lease, dated as of March 15, 1994, to the Borrower,
as same may be amended, supplemented or modified from time to time.
"RCRA" shall mean the Resource Conservation and Recovery Act,
as the same may be amended from time to time, 42 U.S.C.Section 6901 et seq.
"RDC" shall mean the Rivergate Development Corporation, a
Louisiana public benefit corporation established by the City.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any
of its Subsidiaries of any cash insurance proceeds or condemnation award payable
(i) by reason of theft, loss, physical destruction or damage or any other
similar event with respect to any property or assets of the Borrower or any of
its Subsidiaries and (ii) under any policy of insurance required to be
maintained under Section 8.03.
"Register" shall have the meaning provided in Section 16.17.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
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"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migration into the environment.
"Replaced Bank" shall have the meaning provided in Section
1.13. "Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section
4043(b) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks, the sum of
whose outstanding Term Loans (and, (x) if prior to the Tranche A-2 Term Loan
Termination Date, Tranche A-2 Term Loan Commitments and (y) if prior to the
Tranche B-2 Term Loan Commitment Termination Date, Tranche B-2 Term Loan
Commitments) and Revolving Loan Commitments (or, if after the Total Revolving
Loan Commitment has been terminated, outstanding Revolving Loans and Adjusted
Percentage of outstanding Swingline Loans and Letter of Credit Outstandings)
represent an amount greater than fifty percent of the sum of all outstanding
Term Loans (and, (x) if prior to the Tranche A-2 Term Loan Termination Date,
Tranche A-2 Term Loan Commitments and (y) if prior to the Tranche B-2 Term Loan
Commitment Termination Date, Tranche B-2 Term Loan Commitments) of
Non-Defaulting Banks and the Adjusted Total Revolving Loan Commitment (or after
the termination thereof, the sum of the then total outstanding Revolving Loans
of Non-Defaulting Banks and the aggregate Adjusted Percentages of all
Non-Defaulting Banks of the total outstanding Swingline Loans and Letter of
Credit Outstandings at such time); provided that (x) except for purposes of
taking actions pursuant to the last paragraph of Section 10, at all times when
any Tranche A-1 Term Loans, Tranche A-3 Term Loans, Tranche B-1 Term Loans or
related Commitments remain in effect or outstanding, the Required Banks shall in
each case be required to also include Non-Defaulting Banks which would, at such
time, constitute the Majority Tranche A-1, A-3 and B-1 Banks and (y) for
purposes of taking actions pursuant to the last paragraph of Section 10, the
Required Banks shall mean either (i) the Required Banks as determined pursuant
to this definition without giving effect to the proviso to this sentence or the
Majority Tranche A-1, A-3 and B-1 Banks. Notwithstanding anything to the
contrary contained above or elsewhere in this Agreement, in making
determinations pursuant to the immediately preceding sentence, all outstanding
Term Loans and Revolving Loan Commitments (and/or related outstandings or
commitments, as the case may be) held by any of HET, HOC or any Affiliate
thereof shall be treated as if same were not outstanding and, accordingly, the
Required Banks shall be determined as if such extensions of credit did not
exist; provided that this
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sentence shall not be applicable at any time when 100% of the outstanding
Obligations and Commitments are so held by HET, HOC and Affiliates thereof.
"Required Secured Creditors" shall have the meaning assigned
that term in the Bank/Bondholder Intercreditor Agreement.
"Reserve Fund" shall mean the Capital Replacement Fund as
defined in the Management Agreement, as in effect on the date hereof.
"Restricted Payments" shall mean (a) any authorization,
declaration or payment of any Distributions with respect to JCC Holding or any
of its Subsidiaries or any other payment to any of their Affiliates (excluding
the Borrower), (b) the making (or the giving of any notice in respect thereof)
by JCC Holding or any of its Subsidiaries of any voluntary or mandatory payment,
purchase, acquisition or redemption, whether by the making of any payments of
the principal, interest or otherwise, in respect of any loan, advance or
extension of credit made to JCC Holding or any of its Subsidiaries by, or in
respect of any guarantee or Contingent Obligation made for the benefit of JCC
Holding or any of its Subsidiaries by, or in respect of any other obligation of
JCC Holding or any of its Subsidiaries owed to, HET, HOC or any Affiliate of HET
or HOC (excluding the Borrower and its Wholly-Owned Subsidiaries), whether
pursuant to any Document or otherwise, (c) the making (or the giving of any
notice in respect thereof) by JCC Holding or any of its Subsidiaries of any
payment whatsoever in respect of, or pursuant to, any of the Junior Subordinated
Credit Facility Documents, any Completion Guaranty, the Completion Guarantor
Loan Documents, the HET/JCC Agreement Documents or the Construction Lien
Indemnity Obligation Agreement and (d) the payment of any Management Fees or any
other fees or expenses (including the reimbursement thereof by JCC Holding or
any of its Subsidiaries) pursuant to the Management Agreement or any other
agreement with an Affiliate of JCC Holding or its Subsidiaries. Notwithstanding
anything to the contrary contained above, payments made in respect of the
Obligations in accordance with the terms of this Agreement shall not constitute
Restricted Payments, even if the respective Obligations are held by HET, HOC or
an Affiliate thereof.
"Retained Percentage" shall mean, with respect to any
Semi-Annual Free Cash Flow Payment Period, a percentage equal to 100% minus the
Applicable ECF Percentage which shall apply on the Semi-Annual Free Cash Flow
Payment Date for such Semi-Annual Free Cash Flow Payment Period.
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loan" shall have the meaning provided in Section
1.01(f).
"Revolving Loan Commitment" shall mean, for each Bank, the
amount set forth opposite such Bank's name in Schedule I hereto directly below
the column entitled "Revolving Loan Commitment," as same may be (x) reduced from
time to time pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time
to time as a result of assignments to or from such Bank pursuant to Section 1.13
or 16.04(b).
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"Revolving Loan Commitment Commission" shall have the meaning
provided in Section 3.01(b).
"Revolving Loan Maturity Date" shall mean January 31, 2006.
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"Revolving Obligations" shall mean and include (i) all
principal of, and interest (including any interest payable on such interest) on,
all Revolving Loans and Swingline Loans, (ii) all Unpaid Drawings and all
interest (including interest payable on interest) thereon and (iii) all
regularly accruing fees payable with respect to the foregoing outstandings or
related Commitments (which includes the Fees payable pursuant to Sections
3.01(b) and (c), but shall not include any Fees payable pursuant to Sections
3.01(a), (d), (e) and (f)). The interest included as Revolving Obligations shall
include any amounts required to be paid as Credit Support Fees in respect of
Revolving Obligations as described above pursuant to the Credit Enhancement Fee
Agreement (Bank Credit Agreement).
"Rivergate Architect" shall mean Perez Ernst Farnet/Modus,
Inc.
"Scheduled Repayment" shall mean any Tranche A-1 and A-2
Scheduled Repayment, Tranche A-3 Scheduled Repayment or Tranche B Scheduled
Repayment.
"Scheduled Repayment Date" shall mean any Tranche A-1 and A-2
Scheduled Repayment Date, Tranche A-3 Scheduled Repayment Date or Tranche B
Scheduled Repayment Date.
"SEC" shall have the meaning provided in Section 8.01(i).
"Second Floor" shall mean the non-gaming areas of the second
floor of the Casino which are subject to the Second Floor Sublease.
"Second Floor Sublease" shall mean that certain Second Floor
Non-Gaming Sublease between the Borrower as sublessor and JCC Development as
sublessee attached as Exhibit M to the Casino Lease.
"Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b).
"Section 13 Payment Default" shall have the meaning provided
in Section 13.05(b).
"Section 15 Payment Default" shall have the meaning provided
in Section 15.05(b).
"Secured Creditors" shall have the meaning provided in the
respective Security Documents and the Intercreditor Agreement.
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"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in
Section 5.17.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean the Pledge Agreement, the
Security Agreement, each Mortgage, and, after the execution and delivery
thereof, each Additional Mortgage and each Additional Security Document.
"Semi-Annual Free Cash Flow" shall mean, for any Semi-Annual
Free Cash Flow Payment Period, the remainder of (i) the sum of (A) Consolidated
EBITDA for such Semi-Annual Free Cash Flow Payment Period and (B) the aggregate
amount of cash released from the Reserve Fund (except to the extent released for
the purpose of making Capital Expenditures which are not deducted pursuant to
following clause (ii)(A)) during the respective Semi-Annual Free Cash Flow
Payment Period, less (without duplication) (ii) the sum of (A) the amount of
Capital Expenditures (but excluding Capital Expenditures (w) made in connection
with the construction, development or completion of the Casino (except for
development Capital Expenditures made with respect to the Casino after the
Termination of Construction Date, which Capital Expenditures were not part of
the original plans with respect to the development of the Casino), (x) financed
with Indebtedness, (y) made with equity issuances or capital contributions and
(z) made with insurance proceeds to the extent the receipt of such insurance
proceeds has not, and will not, increase Consolidated Net Income) made by the
Borrower and its Subsidiaries on a consolidated basis during the respective
Semi-Annual Free Cash Flow Payment Period in accordance with Section 9.07(a),
(B) the aggregate amount of cash deposited in the Reserve Fund during the
respective Semi-Annual Free Cash Flow Payment Period, (C) that portion, if any,
of EBITDA (as defined in the New Bond Indenture) generated during the respective
Semi-Annual Free Cash Flow Payment Period which the Borrower will be required to
be used to make Contingent Payments with respect to the New Bonds in accordance
with the requirements of the New Bond Indenture as originally in effect, (D) the
aggregate amount of investments made during the respective Semi-Annual Free Cash
Flow Payment Period pursuant to Section 9.05(vi) to the extent same have not
reduced Consolidated Net Income for such period, (E) the amount of taxes
actually paid in cash during the respective Semi-Annual Free Cash Flow Payment
Period, (F) all cash payments of fees, costs and expenses made during the
respective Semi-Annual Free Cash Flow Payment Period pursuant to Section
9.06(a)(iv) (except to the extent the same reduced Consolidated Net Income
during the respective Semi-Annual Free Cash Flow Payment Period), and (G)
Consolidated Cash Interest Expense for such Semi-Annual Free Cash Flow Payment
Period less all amounts included therein representing, or in respect of,
Contingent Payments (which are dealt with in preceding clause (C)).
Notwithstanding anything to the contrary contained in clause (ii) of the
immediately preceding sentence, amounts paid during the respective period
pursuant to Section 9.06(b) shall in no event be deducted in determining
Semi-Annual Free Cash Flow.
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"Semi-Annual Free Cash Flow Payment Date" shall mean each
November 15 and May 15 occurring after the Termination of Construction Date.
"Semi-Annual Free Cash Flow Payment Period" shall mean with
respect to the repayment required on each Semi-Annual Free Cash Flow Payment
Date, the immediately preceding six month period ending March 31or September 30,
as the case may be, of JCC Holding or, in the case of the first Semi-Annual Free
Cash Flow Payment Period, the period beginning on the first day of the first
month after the Termination of Construction Date and ending on the first
Semi-Annual Free Cash Flow Payment Date.
"Semiannual Period" shall have the meaning assigned that term
in the Senior Subordinated Note Indenture as originally in effect.
"Senior Debt" shall mean the Bank Debt and the New Bonds.
"Senior Subordinated Contingent Note Indenture" shall mean the
Indenture, dated as of October 30, 1998, between the Borrower and the Senior
Subordinated Contingent Notes Trustee, as amended, modified or supplemented from
time to time in accordance with the terms thereof or hereof.
"Senior Subordinated Contingent Notes" shall mean the
Borrower's Senior Subordinated Contingent Notes due 2009 issued pursuant to the
Senior Subordinated Contingent Note Indenture.
"Senior Subordinated Contingent Notes Trustee" shall mean
Norwest Bank Minnesota, N.A. and any successor thereto as trustee pursuant to
the Senior Subordinated Contingent Note Indenture.
"Senior Subordinated Note Indenture" shall mean the Indenture,
dated as of October 30, 1998, between the Borrower and the Senior Subordinated
Notes Trustee, as amended, modified or supplemented from time to time in
accordance with the terms thereof and hereof.
"Senior Subordinated Notes" shall mean the Borrower's
$187,500,000 Senior Subordinated Notes due 2009 with Contingent Payments issued
pursuant to the Senior Subordinated Note Indenture.
"Senior Subordinated Notes Semi-Annual Interest Payment Date"
shall mean November 15 and May 15 of each year, beginning with the first April
occurring after the Effective Date.
"Senior Subordinated Notes Trustee" shall mean Norwest Bank
Minnesota, N.A. and any successor thereto as trustee pursuant to the Senior
Subordinated Note Indenture.
"Servitude Areas" shall mean the Employee Bus and Parking
Facility Servitude Area, the Employee and Bus Parking Facility Access Servitude
Area, and the Observation Tower Servitude Area (each as defined in the Casino
Lease).
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"Specified Event of Default" shall mean (i) any Default or
Event of Default under Section 10.01, 10.04(ii), 10.05(i) or (iii), 10.06, 10.08
(so long as the respective Default or Event of Default under Section 10.08
materially adversely affects (x) the Collateral, (y) the priority or perfection
of the security interests purported to be created with respect to any material
portion of the Collateral or (z) the rights or remedies of the Collateral Agent
or the Secured Creditors in respect of any material portion of the Collateral),
10.09, 10.11, 10.12, 10.13, 10.14 or 10.16 or (ii) any Event of Default under
Section 10.03 as a result of a breach of any of Sections 9.01 through 9.11 and
Section 9.14.
"Specified Real Estate" shall mean those parcels of Real
Property identified on Schedule VII.
"Start Date" shall mean the first date on which the Casino is
open for business as a casino to the general public.
"Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could then be
met).
"Subordination Agreements" shall mean and include each of the
Manager Subordination Agreement, the Subordinated Lender Subordination Agreement
and the Completion Guarantor Subordination Agreement.
"Subordinated Lender Subordination Agreement" shall have the
meaning provided in Section 5.23(c).
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture, limited liability company or other entity in which such Person and/or
one or more Subsidiaries of such Person has more than a 50% equity interest at
the time.
"Subsidiary Guarantor" shall mean and include each of JCC
Development, CPD, FPD and each Subsidiary of JCC Holding, which, after the
Effective Date, becomes a party to the Subsidiaries Guaranty in accordance with
the requirements of Section 9.15.
"Subsidiaries Guaranty" shall have the meaning provided in
Section 9.15.
"Substitute Bank" shall have the meaning provided in Section
16.04(c).
"Supermajority A-1 and A-2 Banks" shall mean those
Non-Defaulting Banks which would constitute the Required Banks under, and as
defined in, this Agreement (determined without regard to the proviso to the
first sentence of the definition thereof) if (x) all outstanding Obligations of
the other Tranches under this Agreement were repaid in full and all Commitments
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with respect thereto were terminated and (y) the percentage "50%" contained
therein were changed to "66-2/3%."
"Supermajority A-3 Banks" shall mean the Supermajority Banks
holding Tranche A-3 Term Loans.
"Supermajority Banks" of any Tranche shall mean those
Non-Defaulting Banks which would constitute the Required Banks under, and as
defined in, this Agreement (determined without regard to the proviso to the
first sentence of the definition thereof) if (x) all outstanding Obligations of
the other Tranches under this Agreement were repaid in full and all Commitments
with respect thereto were terminated and (y) the percentage "50%" contained
therein were changed to "66-2/3%."
"Supermajority B Banks" shall mean, in connection with any
modification to any Tranche B Scheduled Repayment, (x) if such modification will
change the amount or timing of any payment to be received pursuant to Section
4.02(b)(iii) by any Bank holding Tranche B-1 Term Loans, the Supermajority Banks
holding Tranche B-1 Term Loans and (y) if any such amendment or modification
shall alter the amount or timing of any payment to be received pursuant to
Section 4.02(b)(iii) by any Bank holding Tranche B-2 Term Loans, the
Supermajority Banks holding Tranche B-2 Term Loans.
"Swingline Expiry Date" shall mean the date which is two
Business Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section
1.01(g).
"Swingline Note" shall have the meaning provided in Section
1.05(a).
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loan Commitment" shall mean, for each Bank, the sum of
such Bank's Tranche A-1 Term Loan Commitment, Tranche A-2 Term Loan Commitment,
Tranche A-3 Term Loan Commitment, Tranche B-1 Term Loan Commitment and Tranche
B-2 Term Loan Commitment.
"Term Loans" shall mean, collectively, Tranche A-1 Term Loans,
Tranche A-2 Term Loans, Tranche A-3 Term Loans, Tranche B-1 Term Loans and
Tranche B-2 Term Loans.
"Termination Date" shall mean the first date upon which all
Commitments have been terminated hereunder, all Letters of Credit have expired
in accordance with their terms, and all principal, interest, unpaid drawings and
other amounts owing pursuant to this Agreement have been repaid in full
(excluding continuing indemnity obligations where no amounts are due and payable
thereunder).
"Termination Event," when used with respect to a Project
Document or the Casino Operating Contract, shall mean (a) any material provision
of such Project Document or the Casino Operating Contract at any time for any
reason ceases to be valid and binding on any of the parties
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thereto or is declared to be null and void or any of the parties thereto shall
deny in writing that it has any further liability or obligation thereunder, or
(b) the termination of such Project Document or the Casino Operating Contract,
provided that the term "Termination Event" does not include the scheduled
expiration in the ordinary course of any Project Document or the Casino
Operating Contract in accordance with its terms.
"Termination Fee" shall have the meaning provided in the
Management Agreement as in effect on the Initial Borrowing Date.
"Termination of Construction Date" mean the Bank Completion
Guarantee Termination of Construction Date; provided that for purposes of
Sections 9.04(vi) and 10.16 of this Agreement, the Termination of Construction
Date shall not have occurred unless the Termination of Construction Date as
defined in the Bank Completion Guarantee shall have occurred and, concurrently
with meeting such requirements, the following additional requirements shall be
satisfied:
(i) the Casino shall have opened for business to the general
public as a casino gaming operation, with at least 2,800 new slot
machines and 100 gaming tables (in each case owned by the Borrower and
not financed, except that no more than 1100 of such slot machines may
be leased pursuant to arm's-length operating leases entered into with
HET) therein, with all necessary regulatory approvals; and
(ii) all payments required to be made pursuant to Section 4.02(l)
of this Agreement shall have been made on the Termination of
Construction Date (as defined in the Bank Completion Guarantee).
"Test Period" shall mean (i) for any determination made on or
prior to the last day of the fourth full fiscal quarter ended after the Start
Date, the period from the first day of the first full fiscal quarter ended after
the Start Date to the last day of the fiscal quarter of the Borrower then last
ended (in each case taken as one accounting period) and (ii) for any
determination made thereafter, the four consecutive fiscal quarters of the
Borrower then last ended (taken as one accounting period).
"Threshold Amount" shall mean a maximum permitted prepayment
amount for Tranche B-2 Term Loans in any fiscal year of the Borrower as set
forth on Schedule IX.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the
sum of the Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean the sum of the Total
Tranche A-1 Term Loan Commitment, the Total A-2 Term Loan Commitment, the Total
A-3 Term Loan Commitment, the Total Tranche B-1 Term Loan Commitment and the
Total Tranche B-2 Term Loan Commitment.
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"Total Tranche A Term Loan Commitment" shall mean, at any
time, the sum of the Total Tranche A-1 Term Loan Commitment, the Total Tranche
A-2 Term Loan Commitment and the Total Tranche A-3 Term Loan Commitment.
"Total Tranche A-1 Term Loan Commitment" shall mean, at any
time, the sum of the Tranche A-1 Term Loan Commitments of each of the Banks.
"Total Tranche A-2 Term Loan Commitment" shall mean, at any
time, the sum of the Tranche A-2 Term Loan Commitments of each of the Banks.
"Total Tranche A-3 Term Loan Commitment" shall mean, at any
time, the sum of the Tranche A-3 Term Loan Commitments of each of the Banks.
"Total Tranche B Term Loan Commitment" shall mean the sum of
the Total Tranche B-1 Term Loan Commitment and the Total Tranche B-2 Term Loan
Commitment.
"Total Tranche B-1 Term Loan Commitment" shall mean, at any
time, the sum of the Tranche B-1 Term Loan Commitments of each of the Banks.
"Total Tranche B-2 Term Loan Commitment" shall mean, at any
time, the sum of the Tranche B-2 Term Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at
any time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment less (y) the sum of the aggregate principal amount of Revolving Loans
and Swingline Loans outstanding plus the then aggregate amount of Letter of
Credit Outstandings.
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being seven separate Tranches,
i.e., Tranche A-1 Term Loans, Tranche A-2 Term Loans, Tranche A-3 Term Loans,
Tranche B-1 Term Loans, Tranche B-2 Term Loans, Revolving Loans and Swingline
Loans.
"Tranche A Obligations" shall mean and include (i) all
principal of, and interest (including interest payable on interest) on, all
Tranche A Term Loans and (ii) all regularly accruing fees payable with respect
to the foregoing outstandings or related Commitments (which includes the Tranche
A-2 Term Loan Commitment Commission). The interest included as Tranche A
Obligations shall include any amounts required to be paid as Credit Support Fees
in respect of Tranche A-2 Term Loans pursuant to the Credit Enhancement Fee
Agreement (Bank Credit Agreement). The Tranche A Obligations shall include, to
the same extent as if same constituted Tranche A Term Loans, any refinancing, in
whole or in part, of the outstanding Tranche A Term Loans (or any previous
refinancing thereof) so long as the respective refinancing does not increase the
principal amount of Tranche A Obligations outstanding (except to the extent (i)
accrued and unpaid interest and/or other amounts owing with respect to the
refinancing Indebtedness is refinanced and/or (ii) of the fees and expenses
incurred in connection with the refinancing Indebtedness) or decrease the
weighted-average maturity thereof; provided that (x) in no event shall Revolving
Loans or Tranche B Term Loans incurred hereunder be treated as refinancing
Indebtedness as described above and (y) refinancing Indebtedness shall only be
treated
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as described above in this sentence if the Majority Tranche A Banks (unless all
Tranche A Obligations outstanding pursuant to this Agreement have been repaid in
full), the Majority Tranche A-1 and A-3 Banks (unless all Tranche A-1 and A-3
Obligations outstanding pursuant to this Agreement have been repaid in full) and
the Majority Tranche B-1 Banks (unless all Tranche B-1 Term Loans and
Obligations with respect thereto have been repaid in full) specifically consent
thereto in writing prior to the incurrence thereof and so long as, at the time
of the incurrence of such refinancing Indebtedness, written notice thereof (and
stating that such Indebtedness shall constitute Tranche A Obligations) is
furnished by the Borrower to the Administrative Agent and the Banks.
"Tranche A Term Loan" shall mean and include each Tranche A-1
Term Loan, Tranche A-2 Term Loan and Tranche A-3 Term Loan.
"Tranche A-1 Term Loan" shall have the meaning provided in
Section 1.01(a).
"Tranche A-1 Term Loan Commitment" shall mean, for each Bank,
the amount set forth opposite such Bank's name in Schedule I hereto directly
below the column entitled "Tranche A-1 Term Loan Commitment" as same may be (x)
reduced from time to time pursuant to Section 3.03, 4.02 and/or 10 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Section 1.13 or 16.04.
"Tranche A-1 Term Note" shall have the meaning provided in
Section 1.05(a).
"Tranche A-1 and A-2 Scheduled Repayment" shall have the
meaning provided in Section 4.02 (b)(i).
"Tranche A-1 and A-2 Scheduled Repayment Date" shall have the
meaning provided in Section 4.02(b)(i).
"Tranche A-1 and A-2 Term Loan Maturity Date" shall mean
April 30, 2006.
"Tranche A-1 and A-3 Obligations" shall mean all Tranche A
Obligations, other than those Tranche A Obligations relating to Tranche A-2 Term
Loans and the Tranche A-2 Term Loan Commitments.
"Tranche A-2 Term Loan" shall have the meaning provided in
Section 1.01(b).
"Tranche A-2 Term Loan Borrowing Date" shall mean each date
occurring on or after the Initial Borrowing Date on which Tranche A-2 Term Loans
are incurred hereunder.
"Tranche A-2 Term Loan Commitment" shall mean, for each Bank,
the amount set forth opposite such Bank's name in Schedule I hereto directly
below the column entitled "Tranche A-2 Term Loan Commitment" as same may be (x)
reduced from time to time pursuant to Section 3.03, 4.02 and/or 10 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Section 1.13 or 16.04.
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"Tranche A-2 Term Loan Commitment Commission" shall have the
meaning provided in Section 3.01(a)(i).
"Tranche A-2 Term Loan Termination Date" shall mean the
Completion Date or such earlier date as the Total Tranche A-2 Term Loan
Commitment has terminated in accordance with the provisions of this Agreement.
"Tranche A-2 Term Note" shall have the meaning provided in
Section 1.05(a).
"Tranche A-3 Scheduled Repayment" shall have the meaning
provided in Section 4.02(b)(ii).
"Tranche A-3 Scheduled Repayment Date" shall have the meaning
provided in Section 4.02 (b)(ii).
"Tranche A-3 Term Loan" shall have the meaning provided in
Section 1.01(c).
"Tranche A-3 Term Loan Commitment" shall mean, for each Bank,
the amount set forth opposite such Bank's name in Schedule I hereto directly
below the column entitled "Tranche A-3 Term Loan Commitment" as same may be (x)
reduced from time to time pursuant to Section 3.03, 4.02 and/or 10 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Section 1.13 or 16.04.
"Tranche A-3 Term Loan Maturity Date" shall mean January 6,
2006.
"Tranche A-3 Term Note" shall have the meaning provided in
Section 1.05(a).
"Tranche B and Revolving Obligations" shall mean and include
all Tranche B Obligations and all Revolving Obligations.
"Tranche B Obligations" shall mean and include all Tranche B-1
Obligations and all Tranche B-2 Obligations.
"Tranche B Scheduled Repayment" shall have the meaning
provided in Section 4.02(b)(iii).
"Tranche B Scheduled Repayment Date" shall have the meaning
provided in Section 4.02(b)(iii).
"Tranche B Term Loan Maturity Date" shall mean January 31,
2006.
"Tranche B Term Loans" shall mean, collectively, the Tranche
B-1 Term Loans and the Tranche B-2 Term Loans.
"Tranche B-1 Obligations" shall mean all principal of, and
interest (including interest payable on interest) on, all Tranche B-1 Term
Loans. The Tranche B-1 Obligations shall include, to the same extent as if same
constituted Tranche B-1 Term Loans, any refinancing, in whole or in part, of the
outstanding Tranche B-1 Term Loans (or any previous refinancing
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thereof) so long as the respective refinancing does not increase the principal
amount of Tranche B-1 Obligations outstanding (except to the extent (i) accrued
and unpaid interest and/or other amounts owing with respect to the refinancing
Indebtedness is refinanced and/or (ii) of the fees and expenses incurred in
connection with the refinancing Indebtedness) or decrease the weighted-average
maturity thereof; provided that (x) in no event shall Revolving Loans or Tranche
B-2 Term loans incurred hereunder be treated as refinancing Indebtedness as
described above and (y) refinancing Indebtedness shall only be treated as
described above in this sentence if the Majority Tranche B-1 Banks (unless all
Tranche B-1 Term Loans and Obligations with respect thereto have been repaid in
full) specifically consent thereto in writing prior to the incurrence thereof
and so long as, at the time of the incurrence of such refinancing Indebtedness,
written notice thereof (and stating that such Indebtedness shall constitute
Tranche B-1 Obligations) is furnished by the Borrower to the Administrative
Agent and the Banks.
"Tranche B-1 Term Loan" shall have the meaning provided in
Section 1.01(d).
"Tranche B-1 Term Loan Commitment" shall mean, for each Bank,
the amount set forth opposite such Bank's name in Schedule I hereto directly
below the column entitled "Tranche B-1 Term Loan Commitment," as same may be (x)
reduced from time to time pursuant to Sections 3.03, 4.02 and/or 10 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Section 1.13 or 16.04.
"Tranche B-1 Term Note" shall have the meaning provided in
Section 1.05(a).
"Tranche B-2 Obligations" shall mean and include (i) all
principal of, and interest (including any interest payable on such interest) on,
all Tranche B-2 Term Loans and (ii) all regularly accruing fees payable with
respect to the foregoing outstandings or related Commitments (which includes the
Tranche B-2 Term Loan Commitment Commission). The interest included as Tranche
B-2 Obligations shall include any amounts required to be paid as Credit Support
Fees in respect of Tranche B-2 Obligations as described above pursuant to the
Credit Enhancement Fee Agreement (Bank Credit Agreement).
"Tranche B-2 Term Loan" shall have the meaning provided in
Section 1.01(e).
"Tranche B-2 Term Loan Borrowing Date" shall mean each date
occurring on or after the Initial Borrowing Date on which Tranche B-2 Term Loans
are incurred hereunder.
"Tranche B-2 Term Loan Commitment" shall mean, for each Bank,
the amount set forth opposite such Bank's name in Schedule I hereto directly
below the column entitled "Tranche B-2 Term Loan Commitment," as the same may be
(x) reduced from time to time pursuant to Sections 3.03, 4.02 and/or 10 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Section 1.13 or 16.04.
"Tranche B-2 Term Loan Commitment Commission" shall have the
meaning provided in Section 3.01(a)(ii).
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"Tranche B-2 Term Loan Commitment Termination Date" shall mean
the Completion Date or such earlier date as the Total Tranche B-2 Term Loan
Commitment has terminated in accordance with the provisions of this Agreement.
"Tranche B-2 Term Note" shall have the meaning provided in
Section 1.05(a).
"Transaction" shall mean the completion of the Project and the
financing therefor.
"Transition Date" shall have the meaning assigned that term in
the Restated Certificate of Incorporation of JCC Holding, as in effect on the
Initial Borrowing Date.
"Tucker Litigation" shall mean the lawsuit captioned Thomas
Warren Tucker v. City of New Orleans, No. 94-15484, filed in the Civil District
Court for the Parish of Orleans, State of Louisiana.
"Tunnel" shall mean the support facilities and improvements
appurtenant to the Casino to be constructed on and/or in the Poydras Tunnel
Area, as described in the Plans and Specifications.
"Type" shall mean the type of Loan determined with regard to
the interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if
any, by which the actuarial present value of the accumulated benefits under the
Plan as of the close of its most recent plan year, determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan, exceeds the fair market value of the assets allocable thereto,
determined in accordance with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States
of America.
"Unpaid Drawing" shall have the meaning provided for in
Section 2.05(a).
"Unutilized Revolving Loan Commitment" with respect to any
Bank, at any time, shall mean such Bank's Revolving Loan Commitment at such time
less the sum of (i) the aggregate outstanding principal amount of Revolving
Loans made by such Bank and (ii) such Bank's Adjusted Percentage of the Letter
of Credit Outstandings at such time in respect of Letters of Credit issued under
this Agreement.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i)
any corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/ or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
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"Withdrawal Period" shall have the meaning provided in Section
16.04(d).
"Year 2000 Compliant" means that all Information Systems and
Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise impair the accuracy
or functionality of Information Systems and Equipment.
SECTION 12. The Administrative Agent.
12.01 Appointment. The Banks hereby designate Bankers Trust
Company as Administrative Agent (for purposes of this Section 12, the term
"Administrative Agent" shall include Bankers Trust Company in its capacity as
collateral agent pursuant to any of the Security Documents where it at any time
acts as such) to act as specified herein and in the other Credit Documents. Each
Bank hereby irrevocably authorizes, and each holder of any Note by the
acceptance of such Note shall be deemed irrevocably to authorize, the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of the Administrative Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Administrative Agent may
perform any of its duties hereunder by or through its respective officers,
directors, agents, employees or affiliates.
12.02 Nature of Duties. The Administrative Agent shall not
have any duties or responsibilities except those expressly set forth in this
Agreement and the other Credit Documents. Neither the Administrative Agent nor
any of its respective officers, directors, agents, employees or affiliates shall
be liable for any action taken or omitted by it or them hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct. The duties of the
Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Bank or the holder of
any Note; and nothing in this Agreement or any other Credit Document, expressed
or implied, is intended to or shall be so construed as to impose upon the
Administrative Agent any obligations in respect of this Agreement or any other
Credit Document except as expressly set forth herein or therein.
12.03 Lack of Reliance on the Administrative Agent. (a)
Independently and without reliance upon the Administrative Agent, each Bank and
the holder of each Note, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of the Credit Parties in connection with the making and
the continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of the
Credit Parties and, except as
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expressly provided in this Agreement, the Administrative Agent shall not have
any duty or responsibility, either initially or on a continuing basis, to
provide any Bank or the holder of any Note with any credit or other information
with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter. The Administrative Agent shall not
be responsible to any Bank or the holder of any Note for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document or the financial condition of the Credit Parties, or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any other Credit Document,
or the financial condition of the Credit Parties or the existence or possible
existence of any Default or Event of Default.
(b) The Administrative Agent does not represent, warrant or
guaranty to the Banks the performance of the Borrower, any other Credit Party,
any architect, any project managers, any contractor, subcontractor or provider
of materials or services in connection with the construction of the Project and
the Borrower and the Completion Guarantors shall remain solely responsible for
all aspects of the Project, including but not limited to the quality and
suitability of the Plans and Specifications, the supervision of the work of
construction, the qualifications, financial condition and performance of all
architects, engineers, contractors, subcontractors, suppliers, consultants and
property managers, the accuracy of all applications for payment, and the proper
application of all Loans.
12.04 Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Banks;
and the Administrative Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Bank or holder of any Note
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder or
under any other Credit Document in accordance with the instructions of the
Required Banks.
12.05 Reliance. The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by any Person that the Administrative Agent believed to be
the proper Person, and, with respect to all legal matters pertaining to this
Agreement and any other Credit Document and its duties hereunder and thereunder,
upon advice of counsel selected by the Administrative Agent (which may be
counsel for the Credit Parties).
12.06 Indemnification. To the extent the Administrative Agent
is not reimbursed and indemnified by the Borrower, the Banks will reimburse and
indemnify the Administrative Agent, in proportion to their respective
"percentages" as used in determining the Required Banks, for and against any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
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judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Administrative Agent in
performing its respective duties hereunder or under any other Credit Document,
in any way relating to or arising out of this Agreement or any other Credit
Document; provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct.
12.07 The Administrative Agent in its Individual Capacity.
With respect to its obligation to make Loans or issue or participate in Letters
of Credit under this Agreement, the Administrative Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include the Administrative Agent
in its individual capacity. The Administrative Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Credit Party or any Affiliate of any Credit Party as if they
were not performing the duties specified herein, and may accept fees and other
consideration from the Borrower or any other Credit Party for services in
connection with this Agreement and otherwise without having to account for the
same to the Banks.
12.08 Holders. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Administrative Agent. (a) The
Administrative Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by
giving 15 Business Days' prior written notice to the Borrower and the Banks.
Such resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation by the Administrative
Agent, the Borrower shall appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company reasonably acceptable
to the Required Banks (it being understood and agreed that any Bank is deemed to
be acceptable to the Required Banks), provided that, if a Default or Event of
Default exists at the time of such resignation, the Required Banks shall appoint
such successor Administrative Agent.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower, shall then appoint a successor Administrative Agent who
is a Qualified Person and who shall serve as Administrative Agent hereunder or
thereunder until such time, if any, as the Borrower or Required Banks, as the
case may be, appoint a successor Administrative Agent as provided above.
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(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 30th Business Day after the date such
notice of resignation was given by the Administrative Agent, the Administrative
Agent's resignation shall become effective and the Required Banks shall
thereafter perform all the duties of the Administrative Agent hereunder and/or
under any other Credit Document until such time, if any, as the Required Banks
appoint a successor Administrative Agent as provided above.
SECTION 13. Subordination of Tranche B and Revolving
Obligations to Tranche A Obligations.
13.01 Tranche B and Revolving Obligations Subordinated to
Tranche A Obligations. The Borrower, for itself, its successors and assigns,
covenants and agrees, and each Bank, for itself, its successors, participants
and assigns, likewise covenants and agrees, that the Tranche B and Revolving
Obligations (and any renewals or extensions thereof), including the principal of
and interest thereon and any interest payable on such interest, and requirements
that the Borrower make repayments and prepayments thereof, shall be subordinate
and subject in right of payment, to the extent and in the manner hereinafter set
forth, to the prior payment in full in cash or Cash Equivalents of all Tranche A
Obligations, and that each holder of Tranche A Obligations whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Tranche A Obligations in reliance upon the covenants and
provisions contained in this Section 13.
13.02 Tranche B and Revolving Obligations Subordinated to
Prior Payment of All Tranche A Obligations on Dissolution, Liquidation,
Reorganization, etc. of the Borrower. Upon any payment or distribution of the
assets of the Borrower of any kind or character, whether in cash, property or
securities (including any collateral at any time securing the Tranche B and
Revolving Obligations) to creditors upon any dissolution, winding-up, total or
partial liquidation, reorganization, or recapitalization or readjustment of the
Borrower or its property or securities (whether voluntary or involuntary, or in
bankruptcy, insolvency, reorganization, liquidation, or receivership
proceedings, or upon an assignment for the benefit of creditors, or any other
marshaling of the assets and liabilities of the Borrower or otherwise), then in
such event,
(i) all holders of Tranche A Obligations shall first be entitled
to receive payment in full in cash or Cash Equivalents, before any
payment is made on account of Tranche B and Revolving Obligations;
(ii) any payment or distribution of assets of the Borrower, of
any kind or character, whether in cash, property or securities (other
than, to the extent issued in exchange for Tranche B and Revolving
Obligations, capital stock of the Borrower and debt securities that
are subordinated to the Tranche A Obligations (and any securities or
obligations issued in exchange for Tranche A Obligations) to the same
extent the Tranche B and Revolving Obligations are subordinated to the
Tranche A Obligations (and any securities or obligations issued in
exchange for Tranche A Obligations)), to which the holders of Tranche
B and Revolving Obligations would be entitled except for the
provisions of this Section 13, shall be paid or delivered by any
debtor or other Person making such payment or distribution, directly
to the holders of the Tranche A Obligations or their
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representative or representatives, or to the agent or trustee under
any agreement pursuant to which any instruments evidencing any of such
Tranche A Obligations may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Tranche A
Obligations held or represented by each, for application to payment of
all Tranche A Obligations remaining unpaid, to the extent necessary to
pay all Tranche A Obligations in full after giving effect to any
concurrent payment or distribution to the holders of such Tranche A
Obligations; and
(iii) in the event that, notwithstanding the foregoing provisions
of this Section 13.02, any payment or distribution of assets of the
Borrower, whether in cash, property or securities (other than, to the
extent issued in exchange for Tranche B and Revolving Obligations,
capital stock of the Borrower and debt securities of the Borrower that
are subordinated to the Tranche A Obligations (and any securities or
obligations issued in exchange for Tranche A Obligations) to the same
extent the Tranche B and Revolving Obligations are subordinated to the
Tranche A Obligations (and any securities or obligations issued in
exchange for Tranche A Obligations)), shall be received by the holders
of Tranche B and Revolving Obligations (or their agent, representative
or trustee) before all Tranche A Obligations are paid in full in cash
or Cash Equivalents, such payment or distribution (subject to the
provisions of Section 13.06 and 13.07) shall be held in trust for the
benefit of, and shall be immediately paid or delivered by such holders
of Tranche B and Revolving Obligations (or their agent, representative
or trustee), as the case may be, to the holders of Tranche A
Obligations remaining unpaid or unprovided for, or their
representative or representatives, or to the agent or trustee under
any agreement pursuant to which any instruments evidencing any of such
Tranche A Obligations may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Tranche A
Obligations held or represented by each, for application to the
payment of all Tranche A Obligations remaining unpaid, to the extent
necessary to pay all Tranche A Obligations in full after giving effect
to any concurrent payment or distribution to the holders of such
Tranche A Obligations.
The Borrower shall give prompt written notice to the
Administrative Agent of any action or plan of dissolution, winding-up,
liquidation or reorganization of the Borrower or any other facts known to it
which would cause a payment to violate this Section 13.
Upon any payment or distribution of assets of the Borrower
referred to in this Section 13, the Administrative Agent and the holders of
Tranche B and Revolving Obligations shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding-up, liquidation or reorganization proceeding is pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the Administrative Agent or to the holders of Tranche B and
Revolving Obligations, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Tranche A Obligations and
other Indebtedness of the Borrower, the amount thereof payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Section 13.
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13.03 Holders of Tranche B and Revolving Obligations to be
Subrogated to Rights of Holders of Tranche A Obligations. Subject to the payment
in full of all Tranche A Obligations in cash or Cash Equivalents, the holders of
the Tranche B and Revolving Obligations shall be subrogated (equally and ratably
with the holders of all Indebtedness of the Borrower that, by its terms, is
subordinated to the Tranche A Obligations and ranks pari passu with the Tranche
B and Revolving Obligations) to the rights of the holders of Tranche A
Obligations to receive payments or distributions of assets of the Borrower
applicable to the Tranche A Obligations until all Tranche B and Revolving
Obligations shall be paid in full, and for purposes of such subrogation, no
payments or distributions to the holders of Tranche A Obligations of assets,
whether in cash, property or securities, distributable to the holders of Tranche
A Obligations under the provisions hereof to which the holders of Tranche B and
Revolving Obligations would be entitled except for the provisions of this
Section 13, and no payment over pursuant to the provisions of this Section 13 to
the holders of Tranche A Obligations by the holders of Tranche B and Revolving
Obligations shall, as between the Borrower, its creditors (other than the
holders of Tranche A Obligations) and the holders of Tranche B and Revolving
Obligations, be deemed to be a payment by the Borrower to or on account of
Tranche A Obligations, it being understood that the provisions of this Section
13 are, and are intended, solely for the purpose of defining the relative rights
of the holders of Tranche B and Revolving Obligations, on the one hand, and the
holders of Tranche A Obligations, on the other hand.
13.04 Obligations of the Borrower Unconditional. Nothing
contained in this Section 13 or elsewhere in this Agreement or in any Credit
Document is intended to or shall impair or affect, as between the Borrower, its
creditors (other than the holders of Tranche A Obligations) and the holders of
Tranche B and Revolving Obligations, the obligation of the Borrower, which is
absolute and unconditional, to pay to the holders of Tranche B and Revolving
Obligations the full amount thereof, as and when the same shall become due and
payable in accordance with their terms, or to affect the relative rights of the
holders of Tranche B and Revolving Obligations and creditors of the Borrower
other than the holders of Tranche A Obligations, nor shall anything herein or
therein prevent or limit the Administrative Agent or any holder of Tranche B and
Revolving Obligations from exercising all remedies otherwise permitted by
applicable law upon the happening of an Event of Default hereunder, in
accordance with the provisions of Section 10 hereof and to the rights, if any,
under this Section 13 of the holders of Tranche A Obligations in respect of
assets, whether in cash, property or securities, of the Borrower received upon
the exercise of any such remedy. Nothing contained in this Section 13 or
elsewhere in this Agreement or any other Credit Document shall, except during
the pendency of any dissolution, winding-up, total or partial liquidation,
reorganization, recapitalization or readjustment of the Borrower or its
securities (whether voluntary or involuntary, or in bankruptcy, insolvency,
reorganization, liquidation or receivership proceedings, or upon an assignment
for the benefit of creditors, or any other marshaling of assets and liabilities
of the Borrower or otherwise), affect the obligation of the Borrower to make, or
prevent the Borrower from making, at any time (except under the circumstances
described in Section 13.05 hereof), payment of Tranche B and Revolving
Obligations.
13.05 Borrower Not to Make Payments With Respect to Tranche B
and Revolving Obligations in Certain Circumstances. (a) Upon the maturity of any
Tranche A Obligation by lapse of time, acceleration or otherwise, all principal
thereof and interest thereon
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and all other obligations in respect thereof shall first be paid in full in cash
or Cash Equivalents, or such payment duly provided for, before any payment is
made on account of Tranche B and Revolving Obligations in cash or property or to
acquire or repurchase same.
(b) Upon the happening of any default or event of default (as
such terms are used in related documentation) in respect of the payment of any
Tranche A Obligation (a "Section 13 Payment Default"), then, unless and until
such default or event of default shall have been cured or waived by the holders
of such Tranche A Obligation or shall have ceased to exist, no payment shall be
made by the Borrower with respect to any Tranche B and Revolving Obligations in
cash or property or to acquire or repurchase same. For purposes of the
immediately preceding sentence, if on any date payments are due with respect to
any Tranche A Obligations and with respect to any Tranche B and Revolving
Obligations, there shall be deemed to exist on such date a Section 13 Payment
Default unless and until all payments of Tranche A Obligations required to be
made on such date have been paid in full in cash or Cash Equivalents and,
accordingly, until said Tranche A Obligations have been so paid, the provisions
of the immediately preceding sentence shall prevent the payment of Tranche B and
Revolving Obligations in accordance with the terms thereof.
In the event that, notwithstanding the foregoing provisions of
this Section 13.05, any payment or distribution of assets of the Borrower,
whether in cash, property or securities, shall be received by the Administrative
Agent or the holders of Tranche B and Revolving Obligations at a time when such
payment or distribution should not have been made because of this Section 13.05,
such payment or distribution (subject to the provisions of Sections 13.06 and
13.07) shall be held in trust for the benefit of the holders of, and shall be
paid or delivered by the Administrative Agent or such holders of Tranche B and
Revolving Obligations, as the case may be, to the holders of the Tranche A
Obligations remaining unpaid or unprovided for or their representative or
representatives, or to the agent or trustee under any agreement pursuant to
which any instruments evidencing any of such Tranche A Obligations may have been
issued, ratably according to the aggregate amounts remaining unpaid on account
of the Tranche A Obligations held or represented by each, for application to the
payment of all Tranche A Obligations remaining unpaid, to the extent necessary
to pay all Tranche A Obligations in full in cash or Cash Equivalents after
giving effect to any concurrent payment or distribution to the holders of such
Tranche A Obligations.
13.06 Administrative Agent Entitled to Assume Payments Not
Prohibited in Absence of Notice. The Administrative Agent shall not at any time
be charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Administrative Agent, unless and until the
Administrative Agent shall have received written notice thereof at its Notice
Office from the Borrower or any holder of Tranche A Obligations or from any
representative thereof or agent or trustee therefor, and, prior to the receipt
of any such written notice, the Administrative Agent shall be entitled to assume
conclusively that no such facts exist, and shall be fully protected in making
any such payment in any such event.
The Administrative Agent shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of Tranche A Obligations (or an agent or a trustee on behalf of such
holder) to establish that such notice has been given by a
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holder of Tranche A Obligations or an agent or a trustee on behalf of any such
holder. In the event that the Administrative Agent determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Tranche A Obligations to participate in any payment or distribution pursuant
to this Section 13, the Administrative Agent may request such Person to furnish
evidence to the reasonable satisfaction of the Administrative Agent as to the
amount of Tranche A Obligations held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any of the
facts pertinent to the rights of such Person under this Section 13, and, if such
evidence is not furnished, the Administrative Agent may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.
13.07 Application by Administrative Agent of Monies Deposited
With It. Any deposit of monies by the Borrower with the Administrative Agent
(whether or not in trust) for the payment of Tranche B and Revolving Obligations
shall be subject to the provisions of Sections 13.01, 13.02, 13.03 and 13.05
hereof, except that, if prior to the opening of business on the second Business
Day next prior to the date on which, by the terms of this Agreement, any such
monies may become payable for any purpose the Administrative Agent shall not
have received with respect to such monies the notice provided for in Section
13.06, then the Administrative Agent shall have the full power and authority to
receive such monies and to apply such monies to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such date; without, however, limiting any rights that
holders of Tranche A Obligations may have to recover any such payments from the
holders of Tranche B and Revolving Obligations in accordance with the provisions
of this Section 13.
13.08 Subordination Rights Not Impaired by Acts or Omissions
of Borrower or Holders of Tranche A Obligations. No right of any present or
future holder of any Tranche A Obligations to enforce subordination, as herein
provided, shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Borrower or by any act or failure to act, in
good faith, by any such holder, or by any non-compliance by the Borrower with
the terms, provisions and covenants of this Agreement, any Credit Document, or
any other agreement or instrument regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
Each holder of any Tranche B and Revolving Obligations, by his
acceptance thereof, undertakes and agrees for the benefit of each holder of
Tranche A Obligations to execute, verify, deliver and file any proofs of claim,
consents, assignments or other instruments that any holder of Tranche A
Obligations may at any time require in order to prove and realize upon any
rights or claims pertaining to the Tranche B and Revolving Obligations and to
effectuate the full benefit of the subordination contained in this Section 13,
and upon failure of any holder of any Tranche B and Revolving Obligations so to
do, any such holder of Tranche A Obligations (or a trustee or representative on
its behalf) shall be deemed to be irrevocably appointed the agent and
attorney-in-fact of the holder of such Tranche B and Revolving Obligations to
execute, verify, deliver and file any such proofs of claim, consents,
assignments or other instrument.
Without limiting the effect of the first paragraph of this
Section 13.08, any holder of Tranche A Obligations may at any time and from time
to time without the consent of or notice
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to any holder of Tranche B and Revolving Obligations, without impairing or
releasing any of the rights of any such holder of Tranche A Obligations
hereunder, upon or without any terms or conditions and in whole or in part:
(1) change the manner, place or terms of payment, or change or
extend the time of payment of or increase the amount of, renew or
alter, any Tranche A Obligations or any other liability of the Borrower
to such holder, any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the provisions hereof
shall apply to the Tranche A Obligations of such holder as so changed,
extended, renewed or altered;
(2) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or however
securing, any Tranche A Obligations or any other liability of the
Borrower to such holder or any other liabilities incurred directly or
indirectly in respect thereof or hereof, or any offset against it;
(3) exercise or refrain from exercising any rights or remedies
against the Borrower or others or otherwise act or refrain from acting
or for any reason fail to file, record or otherwise perfect any
security interest in or lien on any property of the Borrower or any
other Person;
(4) settle or compromise any Tranche A Obligations or any
other liability of the Borrower to such holder or any security
therefor, or any liability incurred directly or indirectly in respect
thereof or hereof, and may subordinate the payment of all or any part
thereof to the payment of any liability (whether due or not) of the
Borrower to creditors of the Borrower other than such holder; and
(5) apply any sums by whomsoever paid and however realized to
any liability or liabilities of the Borrower to such holder (other than
in respect of the Tranche B and Revolving Obligations or any liability
or liabilities which rank pari passu or junior in right of payment to
the Tranche B and Revolving Obligations) regardless of what liability
or liabilities of the Borrower to such holder remain unpaid.
13.09 Holders of Tranche B and Revolving Obligations Authorize
Administrative Agent to Effectuate Subordination of Tranche B and Revolving
Obligations. Without purporting to limit the authority of the Administrative
Agent as may be appropriate in other circumstances, each holder of Tranche B and
Revolving Obligations by his or its acceptance thereof irrevocably authorizes
and expressly directs the Administrative Agent on his behalf of take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Section 13 and appoints the Administrative Agent his attorney-in-fact for
such purpose, including, in the event of any dissolution, winding-up or
liquidation or reorganization under Bankruptcy Law of the Borrower (whether in
bankruptcy, insolvency or receivership proceedings or otherwise), the timely
filing of a claim for the unpaid balance of its or his Tranche B and Revolving
Obligations in the form required in such proceedings and the causing of such
claim to be approved. If the Administrative Agent does not file a claim or proof
of debt substantially in the form required in such proceeding at least one day
before the expiration of the time to file such claims or proofs,
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then any of the holders of Tranche A Obligations have the right to file such
proof of claim or debt on behalf of the holders of Tranche B and Revolving
Obligations, and to take any action with respect to such proof of claim or debt
permitted to be taken by the holders of Tranche A Obligations pursuant to this
Agreement, the other Credit Documents or by law; provided, however, that no such
action by holders of Tranche A Obligations shall in any way limit or affect the
rights of the holders of Tranche B and Revolving Obligations or the
Administrative Agent hereunder or under the other Credit Documents or applicable
law.
13.10 Right of Administrative Agent to Hold Tranche A
Obligations; Preservation of Administrative Agent's Rights. The Administrative
Agent, in its individual capacity, shall be entitled to all of the rights set
forth in this Section 13 in respect of any Tranche A Obligations at any time
held by it to the same extent as any other holder of Tranche A Obligations, and
nothing in this Agreement or any other Credit Document shall be construed to
deprive the Administrative Agent of any of its rights as such holder. Nothing in
this Section 13 shall apply to claims of, or payment to, the Administrative
Agent or Collateral Agent in their capacities as such.
13.11 Section 13 Not to Prevent Events of Default. The failure
to make a payment on account of, or in respect of, any Tranche B and Revolving
Obligation by reason of any provision in this Section 13 shall not be construed
as preventing the occurrence of a Default or an Event of Default under Section
10.01 hereof.
13.12 Administrative Agent Not Fiduciary for Holders of
Tranche A Obligations. The provisions of this Section 13 are not intended to
create, nor shall they create, any trust or fiduciary relationship between the
Administrative Agent and the holders of Tranche A Obligations, nor shall any
implied covenants or obligations with respect to holders of Tranche A
Obligations (other than those expressly set forth herein) be read into this
Agreement against the Administrative Agent.
Accordingly, notwithstanding any provision of this Section 13
to the contrary, the Administrative Agent shall not be liable to any such
holders if it shall, in good faith, inadvertently pay over or distribute to
holders of Tranche B and Revolving Obligations or the Borrower or any other
Person monies or assets to which any holders of Tranche A Obligations shall be
entitled by virtue of this Section 13 or otherwise.
13.13 Certain Payments Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments made pursuant to the HET/HOC
Guaranty and Loan Purchase Agreement shall not be subordinated to the prior
payment of any Tranche A Obligations or subject to the restrictions set forth in
this Section 13 and none of the holders of Tranche B and Revolving Obligations
shall be obligated to pay over any such payment to the Borrower or any holder of
Tranche A Obligations or any other creditor of the Borrower. Notwithstanding the
foregoing, any Tranche B and Revolving Obligations purchased by HET and/or HOC
(or any other Person) pursuant to the HET/HOC Guaranty and Loan Purchase
Agreement or otherwise shall continue to be subject to the provisions of this
Section 13 (although, as provided above in this Section 13.13, the payments made
pursuant to the HET/HOC Guaranty and Loan Purchase Agreement are not subject to
the subordination provisions contained in this Section 13).
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SECTION 14. Lien Priorities.
14.01 Priorities of Various Tranches. As more fully provided
in (and subject to the express provisions of) the various Security Documents and
the Intercreditor Agreement, it is acknowledged and agreed that all proceeds
applied in accordance with the various Security Documents are required to be
applied, as between the various Tranches: (i) first, to certain Obligations (as
used in this Section 14, the term "Obligations" shall have the meaning provided
in the Intercreditor Agreement) owing to the Collateral Agent, (ii) second, to
all reimbursement obligations pursuant to the Minimum Payment Guaranty Documents
in respect of amounts actually paid pursuant to one or more Minimum Payment
Guaranties, and any interest thereon or other amounts secured thereby in
accordance with the terms of the relevant Minimum Payment Guaranty Documents,
(iii) third, to all unpaid Tranche A Obligations; (iv) fourth, to all unpaid
Revolving Obligations; and (v) fifth, subject to the provisions of following
Section 15, to all unpaid Tranche B Obligations and to certain obligations owing
in respect of the New Bonds, as provided in the Security Documents and the
Intercreditor Agreement. Proceeds distributed pursuant to the Security Documents
and/or Intercreditor Agreement shall be subject to the subordination provisions
contained in this Agreement.
14.02 Acknowledgment of Prior Security Interest. It is
acknowledged and agreed that the security interests granted pursuant to various
of the Security Documents shall also secure the Minimum Payment Obligations (as
defined in the Intercreditor Agreement) owed to HET and HOC as Minimum Payment
Guarantors and the Minimum Payment Obligations owing to any other Minimum
Payment Guarantor which becomes a party to the Intercreditor Agreement in
accordance with the terms and provisions thereof, with the Minimum Payment
Obligations so secured to be entitled to the priority in terms of distributions
described in preceding Section 14.01.
SECTION 15. Subordination of Tranche B-2 Obligations to
Tranche B-1 Obligations.
15.01 Tranche B-2 Obligations Subordinated to Tranche B-1
Obligations. The Borrower, for itself, its successors and assigns, covenants and
agrees, and each Bank, for itself, its successors, participants and assigns,
likewise covenants and agrees, that the Tranche B-2 Obligations (and any
renewals or extensions thereof), including the principal of and interest thereon
and any interest payable on such interest, and requirements that the Borrower
make repayments and prepayments thereof, shall be subordinate and subject in
right of payment, to the extent and in the manner hereinafter set forth, to the
prior payment in full in cash or Cash Equivalents of all Tranche B-1
Obligations, and that each holder of Tranche B-1 Obligations whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Tranche B-1 Obligations in reliance upon the covenants
and provisions contained in this Section 15.
15.02 Tranche B-2 Obligations Subordinated to Prior Payment of
All Tranche B-1 Obligations on Dissolution, Liquidation, Reorganization, etc. of
the Borrower. Upon any payment or distribution of the assets of the Borrower of
any kind or character, whether in cash, property or securities (including any
collateral at any time securing the Tranche B-2 Obligations)
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to creditors upon any dissolution, winding-up, total or partial liquidation,
reorganization, or recapitalization or readjustment of the Borrower or its
property or securities (whether voluntary or involuntary, or in bankruptcy,
insolvency, reorganization, liquidation, or receivership proceedings, or upon an
assignment for the benefit of creditors, or any other marshaling of the assets
and liabilities of the Borrower or otherwise), then in such event,
(i) all holders of Tranche B-1 Obligations shall first be
entitled to receive payment in full in cash or Cash Equivalents,
before any payment is made on account of Tranche B-2 Obligations;
(ii) any payment or distribution of assets of the Borrower, of
any kind or character, whether in cash, property or securities (other
than, to the extent issued in exchange for Tranche B-2 Obligations,
capital stock of the Borrower and debt securities that are
subordinated to the Tranche B-2 Obligations (and any securities or
obligations issued in exchange for Tranche B-1 Obligations) to the
same extent the Tranche B-2 Obligations are subordinated to the
Tranche B-1 Obligations (and any securities or obligations issued in
exchange for Tranche B-1 Obligations)), to which the holders of
Tranche B-2 Obligations would be entitled except for the provisions of
this Section 15, shall be paid or delivered by any debtor or other
Person making such payment or distribution, directly to the holders of
the Tranche B-1 Obligations or their representative or
representatives, or to the agent or trustee under any agreement
pursuant to which any instruments evidencing any of such Tranche B-1
Obligations may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Tranche B-1 Obligations
held or represented by each, for application to payment of all Tranche
B-1 Obligations remaining unpaid, to the extent necessary to pay all
Tranche B-1 Obligations in full after giving effect to any concurrent
payment or distribution to the holders of such Tranche B-1
Obligations; and
(iii) in the event that, notwithstanding the foregoing provisions
of this Section 15.02, any payment or distribution of assets of the
Borrower, whether in cash, property or securities (other than, to the
extent issued in exchange for Tranche B-2 Obligations, capital stock
of the Borrower and debt securities of the Borrower that are
subordinated to the Tranche B-1 Obligations (and any securities or
obligations issued in exchange for Tranche B-1 Obligations) to the
same extent the Tranche B-2 Obligations are subordinated to the
Tranche B-1 Obligations (and any securities or obligations issued in
exchange for Tranche B-1 Obligations)), shall be received by the
holders of Tranche B-2 Obligations (or their agent, representative or
trustee) before all Tranche B-1 Obligations are paid in full in cash
or Cash Equivalents, such payment or distribution (subject to the
provisions of Section 15.06 and 15.07) shall be held in trust for the
benefit of, and shall be immediately paid or delivered by such holders
of Tranche B-2 Obligations (or their agent, representative or
trustee), as the case may be, to the holders of Tranche B-1
Obligations remaining unpaid or unprovided for, or their
representative or representatives, or to the agent or trustee under
any agreement pursuant to which any instruments evidencing any of such
Tranche B-1 Obligations may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Tranche B-1
Obligations held or represented by each, for application to the
payment of all Tranche B-1 Obligations remaining unpaid,
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to the extent necessary to pay all Tranche B-1 Obligations in full
after giving effect to any concurrent payment or distribution to the
holders of such Tranche B-1 Obligations.
The Borrower shall give prompt written notice to the
Administrative Agent of any action or plan of dissolution, winding-up,
liquidation or reorganization of the Borrower or any other facts known to it
which would cause a payment to violate this Section 15.
Upon any payment or distribution of assets of the Borrower
referred to in this Section 15, the Administrative Agent and the holders of
Tranche B-2 Obligations shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such dissolution, winding-up,
liquidation or reorganization proceeding is pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Administrative Agent or to the holders of Tranche B-2 Obligations, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Tranche B-1 Obligations and other Indebtedness
of the Borrower, the amount thereof payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Section
15.
15.03 Holders of Tranche B-2 Obligations to be Subrogated to
Rights of Holders of Tranche B-1 Obligations. Subject to the payment in full of
all Tranche B-1 Obligations in cash or Cash Equivalents, the holders of the
Tranche B-2 Obligations shall be subrogated (equally and ratably with the
holders of all Indebtedness of the Borrower that, by its terms, is subordinated
to the Tranche B-1 Obligations and ranks pari passu with the Tranche B-2
Obligations) to the rights of the holders of Tranche B-1 Obligations to receive
payments or distributions of assets of the Borrower applicable to the Tranche
B-1 Obligations until all Tranche B-2 Obligations shall be paid in full, and for
purposes of such subrogation, no payments or distributions to the holders of
Tranche B-1 Obligations of assets, whether in cash, property or securities,
distributable to the holders of Tranche B-1 Obligations under the provisions
hereof to which the holders of Tranche B-2 Obligations would be entitled except
for the provisions of this Section 15, and no payment over pursuant to the
provisions of this Section 15 to the holders of Tranche B-1 Obligations by the
holders of Tranche B-2 Obligations shall, as between the Borrower, its creditors
(other than the holders of Tranche B-1 Obligations) and the holders of Tranche
B-2 Obligations, be deemed to be a payment by the Borrower to or on account of
Tranche B-1 Obligations, it being understood that the provisions of this Section
15 are, and are intended, solely for the purpose of defining the relative rights
of the holders of Tranche B-2 Obligations, on the one hand, and the holders of
Tranche B-1 Obligations, on the other hand.
15.04 Obligations of the Borrower Unconditional. Nothing
contained in this Section 15 or elsewhere in this Agreement or in any Credit
Document is intended to or shall impair or affect, as between the Borrower, its
creditors (other than the holders of Tranche B-1 Obligations) and the holders of
Tranche B-2 Obligations, the obligation of the Borrower, which is absolute and
unconditional, to pay to the holders of Tranche B-2 Obligations the full amount
thereof, as and when the same shall become due and payable in accordance with
their terms, or to affect the relative rights of the holders of Tranche B-2
Obligations and creditors of the Borrower other than the holders of Tranche B-1
Obligations, nor shall anything herein or therein prevent or limit the
Administrative Agent or any holder of Tranche B-2 Obligations from exercising
all remedies otherwise permitted by applicable law upon the happening of an
Event of Default
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hereunder, in accordance with the provisions of Section 10 hereof and to the
rights, if any, under this Section 15 of the holders of Tranche B-1 Obligations
in respect of assets, whether in cash, property or securities, of the Borrower
received upon the exercise of any such remedy. Nothing contained in this Section
15 or elsewhere in this Agreement or any other Credit Document shall, except
during the pendency of any dissolution, winding-up, total or partial
liquidation, reorganization, recapitalization or readjustment of the Borrower or
its securities (whether voluntary or involuntary, or in bankruptcy, insolvency,
reorganization, liquidation or receivership proceedings, or upon an assignment
for the benefit of creditors, or any other marshaling of assets and liabilities
of the Borrower or otherwise), affect the obligation of the Borrower to make, or
prevent the Borrower from making, at any time (except under the circumstances
described in Section 15.05 hereof), payment of Tranche B-2 Obligations.
15.05 Borrower Not to Make Payments With Respect to Tranche
B-2 Obligations in Certain Circumstances. (a) Upon the maturity of any Tranche
B-1 Obligation by lapse of time, acceleration or otherwise, all principal
thereof and interest thereon and all other obligations in respect thereof shall
first be paid in full in cash or Cash Equivalents, or such payment duly provided
for, before any payment is made on account of Tranche B-2 Obligations in cash or
property or to acquire or repurchase same.
(b) Upon the happening of any default or event of default (as
such terms are used in related documentation) in respect of the payment of any
Tranche B-1 Obligation (a "Section 15 Payment Default"), then, unless and until
such default or event of default shall have been cured or waived by the holders
of such Tranche B-1 Obligation or shall have ceased to exist, no payment shall
be made by the Borrower with respect to any Tranche B-2 Obligations in cash or
property or to acquire or repurchase same. For purposes of the immediately
preceding sentence, if on any date payments are due with respect to any Tranche
B-1 Obligations and with respect to any Tranche B-2 Obligations, there shall be
deemed to exist on such date a Section 15 Payment Default unless and until all
payments of Tranche B-1 Obligations required to be made on such date have been
paid in full in cash or Cash Equivalents and, accordingly, until said Tranche
B-1 Obligations have been so paid, the provisions of the immediately preceding
sentence shall prevent the payment of Tranche B-2 Obligations in accordance with
the terms thereof.
In the event that, notwithstanding the foregoing provisions of
this Section 15.05, any payment or distribution of assets of the Borrower,
whether in cash, property or securities, shall be received by the Administrative
Agent or the holders of Tranche B-2 Obligations at a time when such payment or
distribution should not have been made because of this Section 15.05, such
payment or distribution (subject to the provisions of Sections 15.06 and 15.07)
shall be held in trust for the benefit of the holders of, and shall be paid or
delivered by the Administrative Agent or such holders of Tranche B-2
Obligations, as the case may be, to the holders of the Tranche B-1 Obligations
remaining unpaid or unprovided for or their representative or representatives,
or to the agent or trustee under any agreement pursuant to which any instruments
evidencing any of such Tranche B-1 Obligations may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the Tranche
B-1 Obligations held or represented by each, for application to the payment of
all Tranche B-1 Obligations remaining unpaid, to the extent necessary to pay all
Tranche B-1 Obligations in full in cash or Cash Equivalents after giving effect
to any concurrent payment or distribution to the holders of such Tranche B-1
Obligations.
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15.06 Administrative Agent Entitled to Assume Payments Not
Prohibited in Absence of Notice. The Administrative Agent shall not at any time
be charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Administrative Agent, unless and until the
Administrative Agent shall have received written notice thereof at its Notice
Office from the Borrower or any holder of Tranche B-1 Obligations or from any
representative thereof or agent or trustee therefor, and, prior to the receipt
of any such written notice, the Administrative Agent shall be entitled to assume
conclusively that no such facts exist, and shall be fully protected in making
any such payment in any such event.
The Administrative Agent shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of Tranche B-1 Obligations (or an agent or a trustee on behalf of
such holder) to establish that such notice has been given by a holder of Tranche
B-1 Obligations or an agent or a trustee on behalf of any such holder. In the
event that the Administrative Agent determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Tranche B-1 Obligation to participate in any payment or distribution pursuant to
this Section 15, the Administrative Agent may request such Person to furnish
evidence to the reasonable satisfaction of the Administrative Agent as to the
amount of Tranche B-1 Obligations held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any of the
facts pertinent to the rights of such Person under this Section 15, and, if such
evidence is not furnished, the Administrative Agent may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.
15.07 Application by Administrative Agent of Monies Deposited
With It. Any deposit of monies by the Borrower with the Administrative Agent
(whether or not in trust) for the payment of Tranche B-2 Obligations shall be
subject to the provisions of Sections 15.01, 15.02, 15.03 and 15.05 hereof,
except that, if prior to the opening of business on the second Business Day next
prior to the date on which, by the terms of this Agreement, any such monies may
become payable for any purpose the Administrative Agent shall not have received
with respect to such monies the notice provided for in Section 15.06, then the
Administrative Agent shall have the full power and authority to receive such
monies and to apply such monies to the purpose for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
on or after such date; without, however, limiting any rights that holders of
Tranche B-1 Obligations may have to recover any such payments from the holders
of Tranche B-2 Obligations in accordance with the provisions of this Section 15.
15.08 Subordination Rights Not Impaired by Acts or Omissions
of Borrower or Holders of Tranche B-1 Obligations. No right of any present or
future holder of any Tranche B-1 Obligations to enforce subordination, as herein
provided, shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Borrower or by any act or failure to act, in
good faith, by any such holder, or by any non-compliance by the Borrower with
the terms, provisions and covenants of this Agreement, any Credit Document, or
any other agreement or instrument regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
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Each holder of any Tranche B-2 Obligations, by his acceptance
thereof, undertakes and agrees for the benefit of each holder of Tranche B-1
Obligations to execute, verify, deliver and file any proofs of claim, consents,
assignments or other instruments that any holder of Tranche B-1 Obligations may
at any time require in order to prove and realize upon any rights or claims
pertaining to the Tranche B-2 Obligations and to effectuate the full benefit of
the subordination contained in this Section 15, and upon failure of any holder
of any Tranche B-2 Obligations so to do, any such holder of Tranche B-1
Obligations (or a trustee or representative on its behalf) shall be deemed to be
irrevocably appointed the agent and attorney-in-fact of the holder of such
Tranche B-2 Obligations to execute, verify, deliver and file any such proofs of
claim, consents, assignments or other instrument.
Without limiting the effect of the first paragraph of this
Section 15.08, any holder of Tranche B-1 Obligations may at any time and from
time to time without the consent of or notice to any holder of Tranche B-2
Obligations, without impairing or releasing any of the rights of any such holder
of Tranche B-1 Obligations hereunder, upon or without any terms or conditions
and in whole or in part:
(1) change the manner, place or terms of payment, or change or
extend the time of payment of or increase the amount of, renew or
alter, any Tranche B-1 Obligations or any other liability of the
Borrower to such holder, any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the provisions
hereof shall apply to the Tranche B-1 Obligations of such holder as so
changed, extended, renewed or altered;
(2) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or however
securing, any Tranche B-1 Obligations or any other liability of the
Borrower to such holder or any other liabilities incurred directly or
indirectly in respect thereof or hereof, or any offset against it;
(3) exercise or refrain from exercising any rights or remedies
against the Borrower or others or otherwise act or refrain from acting
or for any reason fail to file, record or otherwise perfect any
security interest in or lien on any property of the Borrower or any
other Person;
(4) settle or compromise any Tranche B-1 Obligations or any
other liability of the Borrower to such holder or any security
therefor, or any liability incurred directly or indirectly in respect
thereof or hereof, and may subordinate the payment of all or any part
thereof to the payment of any liability (whether due or not) of the
Borrower to creditors of the Borrower other than such holder; and
(5) apply any sums by whomsoever paid and however realized to
any liability or liabilities of the Borrower to such holder (other than
in respect of the Tranche B-2 Obligations or any liability or
liabilities which rank pari passu or junior in right of payment to the
Tranche B-2 Obligations) regardless of what liability or liabilities of
the Borrower to such holder remain unpaid.
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15.09 Holders of Tranche B-2 Obligations Authorize
Administrative Agent to Effectuate Subordination of Tranche B-2 Obligations.
Without purporting to limit the authority of the Administrative Agent as may be
appropriate in other circumstances, each holder of Tranche B-2 Obligations by
his or its acceptance thereof irrevocably authorizes and expressly directs the
Administrative Agent on his behalf of take such action as may be necessary or
appropriate to effectuate the subordination provided in this Section 15 and
appoints the Administrative Agent his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding-up or liquidation or
reorganization under Bankruptcy Law of the Borrower (whether in bankruptcy,
insolvency or receivership proceedings or otherwise), the timely filing of a
claim for the unpaid balance of its or his Tranche B-2 Obligations in the form
required in such proceedings and the causing of such claim to be approved. If
the Administrative Agent does not file a claim or proof of debt substantially in
the form required in such proceeding at least one day before the expiration of
the time to file such claims or proofs, then any of the holders of Tranche B-1
Obligations have the right to file such proof of claim or debt on behalf of the
holders of Tranche B-2 Obligations, and to take any action with respect to such
proof of claim or debt permitted to be taken by the holders of Tranche B-1
Obligations pursuant to this Agreement, the other Credit Documents or by law;
provided, however, that no such action by holders of Tranche B-1 Obligations
shall in any way limit or affect the rights of the holders of Tranche B-2
Obligations or the Administrative Agent hereunder or under the other Credit
Documents or applicable law.
15.10 Right of Administrative Agent to Hold Tranche B-1
Obligations; Preservation of Administrative Agent's Rights. The Administrative
Agent, in its individual capacity, shall be entitled to all of the rights set
forth in this Section 15 in respect of any Tranche B-1 Obligations at any time
held by it to the same extent as any other holder of Tranche B-1 Obligations,
and nothing in this Agreement or any other Credit Document shall be construed to
deprive the Administrative Agent of any of its rights as such holder. Nothing in
this Section 15 shall apply to claims of, or payment to, the Administrative
Agent or Collateral Agent in their capacities as such.
15.11 Section 15 Not to Prevent Events of Default. The failure
to make a payment on account of, or in respect of, any Tranche B-2 Obligation by
reason of any provision in this Section 15 shall not be construed as preventing
the occurrence of a Default or an Event of Default under Section 10.01 hereof.
15.12 Administrative Agent Not Fiduciary for Holders of
Tranche B-1 Obligations. The provisions of this Section 15 are not intended to
create, nor shall they create, any trust or fiduciary relationship between the
Administrative Agent and the holders of Tranche B-1 Obligations, nor shall any
implied covenants or obligations with respect to holders of Tranche B-1
Obligations (other than those expressly set forth herein) be read into this
Agreement against the Administrative Agent.
Accordingly, notwithstanding any provision of this Section 15
to the contrary, the Administrative Agent shall not be liable to any such
holders if it shall, in good faith, inadvertently pay over or distribute to
holders of Tranche B-2 Obligations or the Borrower or any other Person monies or
assets to which any holders of Tranche B-1 Obligations shall be entitled by
virtue of this Section 15 or otherwise.
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15.13 Certain Payments Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments made pursuant to the HET/HOC
Guaranty and Loan Purchase Agreement shall not be subordinated to the prior
payment of any Tranche B-1 Obligations or subject to the restrictions set forth
in this Section 15 and none of the holders of Tranche B-2 Obligations shall be
obligated to pay over any such payment to the Borrower or any holder of Tranche
B-1 Obligations or any other creditor of the Borrower. Notwithstanding the
foregoing, any Tranche B-2 Obligations purchased by HET and/or HOC (or any other
Person) pursuant to the HET/HOC Guaranty and Loan Purchase Agreement or
otherwise shall continue to be subject to the provisions of this Section 15
(although, as provided above in this Section 15.13, the payments made pursuant
to the HET/HOC Guaranty and Loan Purchase Agreement are not subject to the
subordination provisions contained in this Section 15).
15.14 Conflicting Subordination Provisions. So long as any
Tranche A Obligations remain outstanding (and until same are paid in full in
cash or Cash Equivalents), to the extent the provisions of Section 13 require
that payments be made to the holders of Tranche A Obligations, rather than to
holders of the Tranche B-1 Obligations as provided in this Section 15, then the
provisions of said Section 13 shall govern (although any excess funds remaining
after the repayment in full in cash or Cash Equivalents of the Tranche A
Obligations shall remain subject to this Section 15 in accordance with the terms
hereof).
SECTION 16. Miscellaneous.
16.01 Payment of Expenses, etc. (a) The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and disbursements of White &
Case (which shall, for the period ending on the Initial Borrowing Date, be
limited to fees of $750,000 and costs and disbursements of White & Case as
billed in accordance with its customary practice) and local counsel and all
appraisal fees, trustee's fees, documentary and recording taxes, title insurance
and recording, filing and other expenses) in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein and any amendment,
waiver or consent relating hereto or thereto, and of the Administrative Agent
and each of the Banks in connection with the enforcement of this Agreement and
the other Credit Documents and the documents and instruments referred to herein
and therein (including, without limitation, the reasonable fees and
disbursements of counsel (including allocated costs of in-house counsel) for the
Administrative Agent and for each of the Banks); (ii) pay and hold each of the
Banks harmless from and against any and all present and future stamp, excise and
other similar taxes with respect to the foregoing matters and save each of the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Bank) to pay such taxes; and (iii) indemnify the Administrative Agent, each
Issuing Bank and each Bank, and each of their respective officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all liabilities, obligations (including removal or remedial
actions), losses, damages, penalties, claims, actions, judgments, suits, costs,
expenses and disbursements (including reasonable attorneys' (including allocated
costs of in-house counsel) and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any
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investigation, litigation or other proceeding (whether or not the Administrative
Agent, any Issuing Bank or any Bank is a party thereto) related to the entering
into and/or performance of this Agreement or any other Credit Document or the
use of any Letter of Credit or the proceeds of any Loans or the consummation of
any transactions contemplated herein (including, without limitation, the
Transaction or in any other Credit Document or the exercise of any of their
rights or remedies provided herein or in the other Credit Documents), or (b) the
actual or alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property owned, leased
or at any time operated by any Credit Party or any of their Subsidiaries, the
Release, generation, storage, transportation, handling or disposal of Hazardous
Materials at any location, whether or not owned or operated by any Credit Party
or any of their Subsidiaries, the non-compliance of any Real Property with
foreign, federal, state and local laws, regulations, and ordinances (including
applicable permits thereunder) applicable to any Real Property, or any
Environmental Claim relating in any way to any Credit Party or any of their
Subsidiaries, their operations, or any Real Property owned, leased or at any
time operated by any Credit Party or any of their Subsidiaries, including, in
each case, without limitation, the reasonable fees and disbursements of counsel
and other consultants incurred in connection with any such investigation,
litigation or other proceeding (but excluding any losses, liabilities, claims,
damages or expenses to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified). To the extent that the
undertaking to indemnify, pay or hold harmless the Administrative Agent, any
Issuing Bank or any Bank set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the indemnified liabilities which is permissible under applicable law.
(b) The Borrower further agrees to pay the reasonable legal
fees of gaming counsel for the Administrative Agent in Louisiana and any other
relevant state and all reasonable costs (including costs of investigation)
associated with any qualification (or exemption or waiver therefrom) of any
Issuing Bank or any Bank under, or compliance in connection with the Gaming
Regulations in connection with the syndication under this Agreement, provided
that in the event that any assignee Bank or potential assignee Bank is not
already a Qualified Person (before giving effect to any actions taken to become
such in connection with this Agreement), then all costs associated with such
Person becoming a Qualified Person shall be borne by the respective assignee
Bank or potential assignee Bank. Notwithstanding the foregoing, after a Bank has
been replaced pursuant to Section 1.13, the Borrower shall not be required to
reimburse such Bank for any such costs incurred by it after the date of such
replacement.
16.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default and
with the concurrence of the Required Banks, each Bank is hereby authorized at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to JCC Holding or any of its Subsidiaries or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of JCC Holding or any of its Subsidiaries against and
on account of the Obligations and liabilities of JCC Holding or such Subsidiary
to such Bank under this Agreement
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or under any of the other Credit Documents, including, without limitation, all
interests in Obligations purchased by such Bank pursuant to Section 16.06(b),
and all other claims of any nature or description arising out of or connected
with this Agreement or any other Credit Document, irrespective of whether or not
such Bank shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
16.03 Notices. (a) Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or delivered: if to any Credit
Party at the address specified opposite its signature below or in the other
relevant Credit Documents; if to any Bank, at its address specified opposite its
name on Schedule II below; and if to the Administrative Agent, at its Notice
Office; or, as to any Credit Party or the Administrative Agent, at such other
address as shall be designated by such party in a written notice to the other
parties hereto and, as to each Bank, at such other address as shall be
designated by such Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company, cable
company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to the Administrative Agent,
any Issuing Bank and the Borrower shall not be effective until received by the
Administrative Agent, such Issuing Bank or the Borrower, as the case may be.
(b) In addition to any other notices required or permitted to
be given pursuant to this Agreement, the Administrative Agent shall, promptly
after its delivery of any written notice to the Borrower (x) which specifically
states that an Event of Default pursuant to this Agreement is in existence or
(y) pursuant to the last paragraph of Section 10, send to the LGCB (at the
address provided in the following sentence) a copy of such written notice;
provided that any failure or delay in giving any such notice shall not affect or
impair the validity of said notice or any action taken pursuant thereto (or
otherwise pursuant to this Agreement or any other Credit Document) and shall
give rise to no liability (monetary or otherwise) on the part of the
Administrative Agent or any Bank to any Credit Party, the LGCB or any other
Person. All notices to the LGCB pursuant to this sentence shall be mailed (or
sent by reputable courier) to the LGCB at the following address (or such other
address as the LGCB furnishes to the Administrative Agent from time to time for
its receipt of notices pursuant to this Section):
Louisiana Gaming Control Board
9100 Bluebonnet Centre Blvd.
Suite 500
Baton Rouge, LA 70809
Attention: Chairman
16.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, the Borrower
may not assign or transfer any of its rights, obligations or interest hereunder
without the prior written consent of the Banks and, provided further, that,
although any Bank may transfer, assign or grant participations in its rights
hereunder, such Bank
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shall remain a "Bank" for all purposes hereunder (and may not transfer or assign
all or any portion of its Commitments hereunder except as provided in Section
16.04(b)) and the transferee, assignee or participant, as the case may be, shall
not constitute a "Bank" hereunder and, provided further, that no Bank shall
transfer or grant any participation under which the participant shall have
rights to approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would (i) extend
the final scheduled maturity of any Loan, Note or Letter of Credit (unless such
Letter of Credit is not extended beyond the Revolving Loan Maturity Date) in
which such participant is participating, or reduce the rate or extend the time
of payment of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without the consent of any participant if the participant's participation
therein is not increased as a result thereof), (ii) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement, (iii) release all or substantially all of the Collateral under all of
the Security Documents (except as expressly provided in the Credit Documents)
supporting the Obligations hereunder in which such participant is participating,
(iv) prior to the Termination of Construction Date, release either Completion
Guarantor from its obligations pursuant to the Bank Completion Guarantee or (v)
if such participant is participating in Tranche A-2 Term Loans, Tranche B-2 Term
Loans, Revolving Loans, Letters of Credit or Revolving Loan Commitments, release
HET or HOC from its obligations pursuant to the HET/HOC Guaranty and Loan
Purchase Agreement. In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the other Credit Documents
(the participant's rights against such Bank in respect of such participation to
be those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of its
Commitments and related outstanding Obligations hereunder to its parent company
and/or any affiliate of such Bank which is at least 50% owned by such Bank or
its parent company or to one or more Banks or (y) assign all, or if less than
all, a portion equal to at least $5,000,000 in the aggregate for the assigning
Bank or assigning Banks, of such Commitments and related outstanding Obligations
hereunder to one or more Qualified Persons, each of which assignees shall become
a party to this Agreement as a Bank by execution of an Assignment and Assumption
Agreement, provided that (i) at the time of each assignment pursuant to this
Section 16.04(b) Schedule I shall be deemed modified to reflect the Commitments
(and/or outstanding Term Loans of any Tranche, as the case may be) of such new
Bank and of the existing Banks, (ii) upon surrender of the old Notes, new Notes
will be issued, at the Borrower's expense, to such new Bank and to the assigning
Bank, such new Notes to be in conformity with the requirements of Section 1.05
(with appropriate modifications) to the extent needed to reflect the revised
Commitments (and/or outstanding Term Loans of any Tranche, as the case may be),
(iii) the consent of the Administrative Agent and (except in the case of an
assignment to an Assignee which is already a Bank) each Issuing Bank shall be
required in
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connection with any assignment of Revolving Loan Commitments; and (iv) the
Administrative Agent shall receive at the time of each such assignment, from the
assigning or assignee Bank, the payment of a non-refundable assignment fee of
$1,500 or, in the case of an Assignment to an Assignee which is not a Bank,
$3,500 and, provided further, that such transfer or assignment will not be
effective until recorded by the Administrative Agent on the Register pursuant to
Section 16.17. To the extent of any assignment pursuant to this Section
16.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Commitments. At the time of each assignment pursuant to
this Section 16.04(b) to a Person which is not already a Bank hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Bank shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
4.04(b)(ii) Certificate) as required pursuant to Section 4.04(b). To the extent
that an assignment of all or any portion of a Bank's Commitments and related
outstanding Obligations pursuant to Section 1.13 or this Section 16.04(b) would,
at the time of such assignment, result in increased costs under Section 1.10,
1.11 or 4.04 from those being charged by the respective assigning Bank (or in
the case of Section 4.04, otherwise being incurred by the Borrower) prior to
such assignment, then the Borrower shall not be obligated to pay such increased
costs (although the Borrower shall be obligated to pay any other increased costs
of the type described above resulting from changes after the date of the
respective assignment).
(c) If any Bank is required to qualify or be found suitable
under any applicable Louisiana Gaming Regulation and does not so qualify or
otherwise not meet the suitability standards pursuant to any such Louisiana
Gaming Regulations (in such case, a "Former Bank"), such Former Bank shall and
hereby agrees to sell its rights and obligations under this Agreement to another
Qualified Person (the "Substitute Bank") acceptable to the Administrative Agent
and each Issuing Bank. The Substitute Bank shall assume the rights and
obligations of the Former Bank under this Agreement pursuant to an Assignment
and Assumption Agreement, which assumption shall be required to comply with, and
shall become effective in accordance with, the provisions of Section 16.04(b),
provided that the purchase price to be paid by the Substitute Bank to the
Administrative Agent for the account of the Former Bank for such assumption
shall equal the sum of (i) the unpaid principal amount of any Loans held by the
Former Bank plus accrued interest thereon plus (ii) the Former Bank's pro rata
share of the aggregate amount of Drawings under all Letters of Credit that have
not been reimbursed by the Borrower, plus accrued interest thereon, plus (iii)
such Former Bank's pro rata share of accrued Fees to the date of the assumption,
and, provided further, that the Borrower shall pay all obligations owing to the
Former Bank under the Credit Documents (including all obligations, if any, owing
pursuant to Section 1.11, but excluding those amounts in respect of which the
purchase price is being paid as provided above). Each Bank agrees that if it
becomes a Former Bank, upon payment to it by the Borrower of all such amounts,
if any, owing to it under the Credit Documents, it will execute and deliver an
Assignment and Assumption Agreement, upon payment of such purchase price.
(d) Notwithstanding the provisions of subsection (c) of
this Section 16.04, if any Bank becomes a Former Bank and fails to find a
Substitute Bank pursuant to subsection (c) of this Section within 30 days of
being determined unsuitable or unqualified, or such lesser period of time as
specified by the Gaming Authorities for the withdrawal of a Former Bank (the
"Withdrawal Period"), the Borrower shall have an additional 30 day period, or
such lesser period
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of time as specified by the Gaming Authorities, to find a Substitute Bank
acceptable to the Administrative Agent and each Issuing Bank, which
Substitute Bank shall assume the rights and obligations of the Former Bank as
provided in subsection (c) of this Subsection 16.04. In the event that the
Borrower shall not have found a Substitute Bank within such period of time,
it shall immediately (i) prepay in full the outstanding principal amount of
each Loan held by such Former Bank, together with accrued interest thereon to
the earlier of (x) the date of payment or (y) the last day of any Withdrawal
Period, and (ii) at the option of the Borrower either (A) place an amount
equal to such Former Bank's Adjusted Percentage in each Letter of Credit in a
separate cash collateral account with the Administrative Agent for each
outstanding Letter of Credit which amount will be applied by the
Administrative Agent to satisfy the Borrower's reimbursement obligations to
the respective Issuing Bank in respect of Unpaid Drawings under the
applicable Letter of Credit or (B) if no Default or Event of Default then
exists, terminate the Revolving Loan Commitment of such Former Bank at which
time the other Banks' Percentages and Adjusted Percentages will be
automatically adjusted as a result thereof, provided that the option
specified in this clause (B) may only be exercised if, immediately after
giving effect thereto, no Bank's outstanding Revolving Loans, when added to
the product of (a) such Bank's Adjusted Percentage and (b) the sum of (I) the
aggregate amount of all Letter of Credit Outstandings at such time and (II)
the aggregate amount of all Swingline Loans then outstanding, would exceed
such Bank's Revolving Loan Commitment at such time. Each Bank agrees that, to
the extent and for so long as required by any applicable Louisiana Gaming
Regulation, such Bank's rights and obligations under this Agreement are
subject to the provisions of subsections (c) and (d) of this Section 16.04
and to all restrictions of any applicable Louisiana Gaming Regulation.
(e) Subject to the last sentence of this Section 16.04(e),
each Bank agrees that all assignments and participations made hereunder shall be
subject to, and made in compliance with, all Gaming Regulations applicable to
lenders. The Borrower hereby acknowledges that unless it has provided the Banks
with a written opinion of counsel as to the suitability standards applicable to
lenders of any relevant Gaming Authority with jurisdiction over the Gaming
Business of the Borrower and its Subsidiaries, no Bank shall have the
responsibility of determining whether or not a potential assignee or participant
of such Bank would be a Qualified Person under the Gaming Regulations of any
such jurisdiction.
(f) Nothing in this Agreement shall prevent or prohibit any
Bank from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank.
16.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Administrative Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit Party
and the Administrative Agent or any Bank or the holder of any Note shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies herein or in
any other Credit Document expressly provided are cumulative and not exclusive of
any rights, powers or remedies which the Administrative Agent or any Bank or the
holder of any Note would otherwise have. No notice to or demand on any Credit
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Party in any case shall entitle such Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Administrative Agent or any Bank or the holder of any Note to any other
or further action in any circumstances without notice or demand.
16.06 Payments Pro Rata. (a) Except as otherwise provided in
this Agreement, the Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of any Credit Party in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other than
any Bank that has consented in writing to waive its pro rata share of any such
payment) pro rata based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder or under any other Credit Document (whether by voluntary
payment, by realization upon security, by the exercise of the right of setoff or
banker's lien, by counterclaim or cross action, by the enforcement of any right
under the Credit Documents, or otherwise), which is applicable to the payment of
the principal of, or interest on, the Loans, Unpaid Drawings, Commitment
Commission or Letter of Credit Fees, of a sum which with respect to the related
sum or sums received by other Banks is in a greater proportion than the total of
such Obligation then owed and due to such Bank bears to the total of such
Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the Borrower to such Banks in such amount as shall result in a proportional
participation by all the Banks in such amount; provided that, if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 16.06(a) and (b) shall be subject to
(i) the express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks, (ii)
the provisions of Sections 3.03(f) and 4.02(j) which provide, in certain
circumstances, for differing treatments of Loans and Commitments held by HET,
HOC and their Affiliates from the treatment provided to other Banks (in which
case, payments received by such other Banks shall in no event be shared with
HET, HOC or their respective Affiliates), (iii) the provisions of Section
1.08(f), to the extent applicable to the respective payments received, (iv) the
provisions of Sections 13, 14 and 15 of this Agreement, to the extent applicable
in accordance with their terms and (v) the provisions of the Intercreditor
Agreements, to the extent applicable in accordance with their terms.
16.07 Calculations; Computations. (a) The financial statements
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Banks); provided that, except as otherwise specifically provided herein, all
computations of Semi-Annual Free Cash Flow and all computations determining
compliance with Section 9 shall utilize accounting principles and policies in
conformity with those used to prepare the Financial
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Forecast; provided further, that, at any time after the creation or
establishment thereof, the Specified Subsidiary shall be accounted for as an
equity investment and not as a Consolidated Subsidiary (with the foregoing
generally accepted accounting principles, subject to the preceding provisos,
herein called "GAAP").
(b) All computations of interest, Commitment Commission and
Fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest, Commitment Commission or Fees are payable.
16.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL,
EXCEPT AS OTHERWISE PROVIDED IN THE MORTGAGES OR CERTAIN OTHER SECURITY
DOCUMENTS, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF JCC
HOLDING AND THE BORROWER HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS
CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW
YORK, NEW YORK 10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT
AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY,
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH
MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH
DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH,
EACH OF JCC HOLDING AND THE BORROWER AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF
THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT.
EACH OF JCC HOLDING AND THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO JCC HOLDING OR THE BORROWER, AS THE CASE MAY BE, AT
ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY BANK OR THE HOLDER OF
ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER
JURISDICTION.
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(b) EACH OF JCC HOLDING AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED
TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
16.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Administrative Agent.
16.10 Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which JCC Holding, the Borrower, the
Administrative Agent and each of the Banks shall have signed a counterpart
hereof (whether the same or different counterpart) and shall have delivered the
same to the Administrative Agent at its Notice Office or, in the case of the
Banks, shall have given to the Administrative Agent telephonic (confirmed in
writing), written or telex notice (actually received) at such office that the
same has been signed and mailed to it. The Administrative Agent will give the
Borrower and each Bank prompt written notice of the occurrence of the Effective
Date.
16.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
16.12 Amendment or Waiver; etc. (a) Neither this Agreement nor
any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party thereto
and the Required Banks (or the Required Secured Creditors in the case of a
change, waiver, discharge or termination with respect to a Security Document),
provided that no such change, waiver, discharge or termination shall, without
the consent of each Bank (other than a Defaulting Bank) (with Obligations being
directly affected in the case of following clause (i)), (i) extend the final
scheduled maturity of any Loan or any Note, or extend the stated maturity of any
Letter of Credit beyond the Revolving Loan Maturity Date, or reduce the rate or
extend the time of payment of interest or Fees thereon, or increase the portion
of interest or Fees payable as Credit Support Fees pursuant to the Credit
Enhancement
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Fee Agreement (Bank Credit Agreement), or reduce the principal amount thereof
(except to the extent repaid in cash), (ii) release all or substantially all of
the Collateral (except as expressly provided in the Credit Documents) under all
the Security Documents, (iii) release the Bank Completion Guarantee or any
Completion Guarantor from its obligations thereunder (unless the Bank Completion
Guarantee Termination of Construction Date has occurred), (iv) amend, modify or
waive any provision of this Section 16.12, (v) reduce the percentage specified
in the definition of Required Banks (it being understood that, with the consent
of the Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Required Banks on
substantially the same basis as the Term Loan Commitments and Revolving Loan
Commitments (and related extensions of credit) are included on the Effective
Date) (vi) consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement, (vii) amend, modify or waive any
provision of Section 13, 14 or 15 of this Agreement or any defined terms as used
therein or (viii) amend, modify or waive any other provision of this Agreement
to the extent same increases the aggregate principal amount of Term Loans
outstanding (other than through a utilization of the Term Loan Commitments in
the amount originally provided in this Agreement) or increases the Total
Revolving Loan Commitment (except if, in the case of any increase in outstanding
Tranche A-2 Term Loans, Tranche B-2 Term Loans or the Total Revolving Loan
Commitment only, if HET and HOC agree in writing that said increased extensions
of credit shall be entitled to the benefits of the HET/HOC Guaranty and Loan
Purchase Agreement to the same extent as the original extension of credit
pursuant to the Tranche A-2 Term Loan Commitments, the Tranche B-2 Term Loan
Commitments and Revolving Loan Commitments); provided further, that no such
change, waiver, discharge or termination shall (o) at any time while the HET/HOC
Guaranty and Loan Purchase Agreement remains in effect or following any purchase
of Loans pursuant to Section 15 thereof, without the prior written consent of
HET, (i) extend the final scheduled maturity of any Tranche A-2 Term Loans,
Revolving Loans, Swingline Loans or Tranche B-2 Term Loans, (ii) increase the
aggregate principal amount of Tranche A-2 Term Loans, Revolving Loans, Swingline
Loans and/or Tranche B-2 Term Loans from the amounts permitted to be incurred
pursuant to this Agreement as originally in effect (it being understood and
agreed that waivers, amendments and modifications to this Agreement which have
the effect of making available extensions of credit in the amounts originally
provided pursuant to this Agreement shall not be deemed to constitute an
increase in the principal amount of such extensions of credit), (iii) extend the
date of any Scheduled Repayments with respect to the foregoing Loans unless
substantially similar adjustments are then being made to the Scheduled
Repayments relating to the other Tranches of outstanding Term Loans, (iv) waive
or extend the time for the payment of any interest or fees owing with respect to
the Tranche A-2 Term Loans, Tranche B-2 Term Loans, Swingline Loans, Revolving
Loans or outstanding Letters of Credit unless substantially similar adjustments
are then being made with respect to the other Tranches of outstanding Term
Loans, (v) change the rate of interest or Letter of Credit Fees applicable to
Tranche A-2 Term Loans, Tranche B-2 Term Loans, Swingline Loans, Revolving Loans
or outstanding Letters of Credit or (vi) alter the required application of any
prepayments or repayments (or commitment reductions) pursuant to Sections 4.01
or 4.02 (excluding Section 4.02(b)) which has the effect of allocating a lesser
prepayment, repayment or commitment reduction to the Tranche A-2 Term Loans, the
Revolving Loans (or related commitments) and/or Tranche B-2 Term Loans (although
the consent of HET shall not be required for any waiver, in whole or in part, of
any such prepayment, repayment or commitment
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reduction, so long as the application, as amongst various Tranches, of any such
prepayment, repayment or commitment which is still required to be made is not
altered), (p) without the consent of each Bank (other than Banks holding solely
Tranche A-1 Term Loans, Tranche A-3 Term Loans and Tranche B-1 Term Loans)
release HET or HOC from its obligations under the HET/HOC Guaranty and Loan
Purchase Agreement, (q) without the consent of the Majority Tranche A-2, B-2 and
Revolving Banks, amend, modify or waive any provision of the HET/HOC Guaranty
and Loan Purchase Agreement, (r) without the consent of the Majority Tranche A
Banks (if any Tranche A Obligations are then outstanding pursuant to this
Agreement), the Majority Tranche A-1 and A-3 Banks (unless all Tranche A-1 and
A-3 Obligations outstanding pursuant to this Agreement have been repaid in full)
and the Majority Tranche B-1 Banks (if any Tranche B-1 Obligations are then
outstanding pursuant to this Agreement), amend, modify or waive the requirements
of the proviso to the definition of "Tranche A Obligations" contained herein,
(s) without the consent of the Majority Tranche B-1 Banks (if any Tranche B-1
Term Loans or Obligations relating thereto are then outstanding pursuant to this
Agreement), amend, modify or waive the requirements of the proviso to the
definition of "Tranche B-1 Obligations" contained herein, (t) increase the
Commitments of any Bank over the amount thereof then in effect without the
consent of such Bank (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default or of a mandatory
reduction in the Total Commitment shall not constitute an increase of the
Commitment of any Bank, and that an increase in the available portion of any
Commitment of any Bank shall not constitute an increase in the Commitment of
such Bank), (v) without the consent of each Issuing Bank, amend, modify or waive
any provision of Section 2 or alter its rights or obligations with respect to
Letters of Credit issued by it, or without the consent BTCo, amend, modify or
waive any provision relating to the rights or obligations of BTCo or with
respect to Swingline Loans, (w) without the consent of the Administrative Agent,
amend, modify or waive any provision of Section 12 as same applies to the
Administrative Agent or any other provision as same relates to the rights or
obligations of the Administrative Agent, (x) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent, (y) without the consent of the Majority
Banks of each Tranche which is being allocated a lesser prepayment, repayment or
commitment reduction as a result of the actions described below (or without the
consent of the Majority Banks of each Tranche in the case of an amendment to the
definition of Majority Banks), amend the definition of Majority Banks or alter
the required application of any prepayments or repayments (or commitment
reduction), as between the various Tranches, pursuant to Section 4.01 or 4.02
(excluding Section 4.02(b)) (although the Required Banks may waive, in whole or
in part, any such prepayment, repayment or commitment reduction, so long as the
application, as amongst the various Tranches, of any such prepayment, repayment
or commitment reduction which is still required to be made is not altered), or
(z) without the consent of the Supermajority A-1 and A-2 Banks, the
Supermajority A-3 Banks or the Supermajority B Banks, as the case may be, amend,
modify or waive any Tranche A-1 and A-2 Scheduled Repayment, Tranche A-3
Scheduled Repayment or Tranche B Scheduled Repayment, as the case may be.
(b) If, in connection with any proposed change, waiver,
discharge or termination with respect to any of the provisions of this Agreement
as contemplated by clauses (i) through (viii), inclusive, of the first proviso
to Section 16.12(a), the consent of the Required Banks is obtained but the
consent of one or more of such other Banks whose consent is required is not
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obtained, then the Borrower shall have the right, so long as all non-consenting
Banks whose individual consent is required are treated as described in either
clause (A) or (B) below, to either (A) replace each such non-consenting Bank or
Banks (or, at the option of the Borrower if the respective Bank's consent is
required with respect to less than all Tranches of Loans (or related
Commitments), to replace only the respective Tranche or Tranches of Commitments
and/or Loans of the respective non-consenting Bank which gave rise to the need
to obtain such Bank's individual consent) with one or more Replacement Banks
pursuant to Section 1.13 so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Bank's Revolving Loan
Commitment (if such Bank's consent is required as a result of its Revolving Loan
Commitment), terminate such non-consenting Bank's Tranche A-2 Term Loan
Commitment (if not theretofore terminated and such Bank's consent is required as
a result of its Tranche A-2 Term Loan Commitment) and/or Tranche B-2 Term Loan
Commitment (if not theretofore terminated and such Bank's consent is required as
a result of its Tranche B-2 Term Loan Commitment) and/or repay in full each
Tranche of outstanding Loans of such non-consenting Bank which gave rise to the
need to obtain such Bank's consent, in accordance with Sections 3.02(b) and/or
4.01(a)(iv), provided that, unless the Commitments terminated, and Loans repaid,
pursuant to preceding clause (B) are immediately replaced in full at such time
through the addition of new Banks or the increase of the Commitments and/or
outstanding Loans of existing Banks (who in each case must specifically consent
thereto), then in the case of any action pursuant to preceding clause (B) the
Required Banks (determined before giving effect to the proposed action) shall
specifically consent thereto, provided further, that in any event the Borrower
shall not have the right to replace a Bank, terminate any of its Commitments or
repay its Loans solely as a result of the exercise of such Bank's rights (and
the withholding of any required consent by such Bank) pursuant to the second
proviso to Section 16.12(a).
16.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 16.01, shall
survive the execution, delivery and termination of this Agreement, the Notes and
any Letters of Credit, and the making and repayment of the Loans.
16.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any office, Subsidiary or Affiliate of such
Bank. Notwithstanding anything to the contrary contained herein, to the extent
that a transfer of Loans pursuant to this Section 16.14 would, at the time of
such transfer, result in increased costs under Section 1.10, 1.11, 2.06 or 4.04
from those being charged by the respective Bank (or in the case of Section 4.04,
otherwise being incurred by the Borrower) prior to such transfer, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
16.15 Application of Gaming Regulations. (a) JCC Holding, the
Borrower and each Bank acknowledge that (i) the consummation of the transactions
contemplated by the Credit Documents is subject to the Gaming Regulations (and
JCC Holding and the Borrower represent and warrant that all requisite approvals
thereunder have been duly obtained except approvals which are not required to be
obtained or in effect as of the date the representation contained in this
Section 16.15(a) is being made or deemed made), (ii) the exercise of remedies
under the
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Security Documents with respect to the Collateral will be subject to the Gaming
Regulations and (iii) the LGCB may rely upon these acknowledgments.
(b) Notwithstanding any provision of any Credit Documents to
the contrary, the Credit Documents shall grant no security or other interest or
right in or to (i) the Casino Operating Contract, (ii) the House Bank (as
defined in the Management Agreement, as in effect on the Effective Date), or
(iii) the Louisiana Gross Gaming Revenue Share Payments (including the State of
Louisiana's Interest in Daily Collections) (as such terms are defined in the
Casino Operating Contract, as in effect on the Effective Date).
16.16 Confidentiality. (a) Subject to the provisions of clause
(b) of this Section 16.16, each Bank agrees that it will use its best efforts
not to disclose without the prior consent of the Borrower (other than to its
employees, auditors, advisors or counsel or to another Bank if the Bank or such
Bank's holding or parent company in its sole discretion determines that any such
party should have access to such information, provided such Persons shall be
subject to the provisions of this Section 16.16 to the same extent as such Bank)
any information with respect to the Credit Parties or any of their Subsidiaries
which is now or in the future furnished pursuant to this Agreement or any other
Credit Document and which is designated by the Borrower to the Banks in writing
as confidential, provided that any Bank may disclose any such information (a) as
has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
such Bank or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or elsewhere)
or their successors, (c) as may be required or appropriate in respect to any
summons or subpoena or in connection with any litigation, (d) in order to comply
with any law, order, regulation or ruling applicable to such Bank, (e) to the
Administrative Agent or the Collateral Agent and (f) to any prospective or
actual transferee or participant in connection with any contemplated transfer or
participation of any of the Notes or Commitments or any interest therein by such
Bank, provided that such prospective transferee agrees with such Bank to be
bound by the provisions of this Section 16.16.
(b) Each of JCC Holding and the Borrower hereby acknowledges
and agrees that each Bank may share with any of its affiliates any information
related to JCC Holding or any of its Subsidiaries (including, without
limitation, any nonpublic customer information regarding the creditworthiness of
the Credit Parties and their Subsidiaries, provided such Persons shall be
subject to the provisions of this Section 16.16 to the same extent as such
Bank).
16.17 Register. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 16.17, to maintain a register (the "Register") on which it will
record the Commitments from time to time of each of the Banks, the Loans made by
each of the Banks and each repayment in respect of the principal amount of the
Loans of each Bank. Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such
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Commitments and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Commitments and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
16.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Agent in performing
its duties under this Section 16.17.
16.18 Execution of Documents by the Administrative Agent and
Collateral Agent. By their execution and delivery of this Agreement, each of the
Banks hereby authorize the Administrative Agent and the Collateral Agent to
execute each of the Credit Documents to which such Person is to be a party.
Without limiting the foregoing, each Bank hereby authorizes the Administrative
Agent to enter into the Intercreditor Agreement and the Credit Enhancement Fee
Agreement (Bank Credit Agreement) on behalf of the Banks and each Bank hereby
irrevocably agrees that, upon such execution by the Administrative Agent, each
Bank (whether such Bank is a Bank on the Effective Date or subsequently becomes
a Bank) shall be bound by the terms of the Intercreditor Agreement and the
Credit Enhancement Fee Agreement (Bank Credit Agreement) as fully as if it were
a direct signatory thereto.
16.19 Certain Waivers and Releases.
(a) No Assurances
(i) As a condition to the effectiveness of the confirmation of
the Plan of Reorganization, HET and HOC have entered into the HET/JCC
Agreement. The HET/JCC Agreement provides that the HET and HOC will
provide the Minimum Payment Guaranty required under the Casino
Operating Contract for the Fiscal Years (as defined in the Casino
Operating Contract) ending March 31, 1999 and March 31, 2000,
renewable for the four Fiscal Years thereafter through March 31, 2004,
subject to termination or non-renewal in accordance with the terms of
the HET/JCC Agreement. As a prerequisite to maintaining the
effectiveness of the Casino Operating Contract, the Casino Operating
Contract requires that the Borrower annually cause to be provided the
Minimum Payment Guaranty. In entering into the HET/JCC Agreement, HET
and HOC have no obligation to provide a Minimum Payment Guaranty for
the entire term of the Casino Operating Contract, but rather have
agreed only to provide a Minimum Payment Guaranty for the period and
on terms and conditions specified therein. HET and HOC have expressly
informed the Administrative Agent on behalf of the Banks that HET and
HOC have not agreed to renew the Minimum Payment Guaranty beyond March
31, 2004 or in any prior year where HET's and HOC's obligation to
furnish a Minimum Payment Guaranty does not renew by the express terms
of Section 1(b) of the HET/JCC Agreement. HET and
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HOC have informed the Administrative Agent on behalf of the Banks that
any decision HET and HOC make concerning whether to renew any Minimum
Payment Guaranty or the HET/JCC Agreement will be made in HET's and
HOC's sole discretion, acting only in their best interests. The
Administrative Agent and each Bank hereby acknowledge that (A) HET and
HOC are not obligated to, and have not given any assurances to the
Administrative Agent or the Banks that HET and HOC will, renew the
Minimum Payment Guaranty beyond March 31, 2004, or renew the Minimum
Payment Guaranty for any earlier Fiscal Year in which the obligation
of HET and HOC to furnish a Minimum Payment Guaranty does not renew
under the express terms of Section 1(b) of the HET/JCC Agreement, (B)
HET and HOC have the right to make any such renewal decision by
considering only their best interests, and (C) HET and HOC need not
consider the interests of any other parties in making any such renewal
decision, notwithstanding that HET and HOC are involved in a number of
capacities in respect of the Borrower.
(ii) The Administrative Agent and each Bank hereby agree that HET
and HOC, by entering into the HET/JCC Agreement or providing a Minimum
Payment Guaranty or otherwise, are not now, and in the past have not,
made any assurances or guarantees concerning the financial results of
the Casino, nor are or have HET or HOC made any assurances or
guarantees that the Casino will be financially successful or will
perform as projected in the projections and/or feasibility studies
included in the Disclosure Statement distributed in connection with
the Plan of Reorganization confirmation process.
(iii) The Administrative Agent and each Bank hereby agree and
acknowledge that any future representation, warranty, assurance or
other guaranty by HET or HOC or any of their subsidiaries or other
affiliates to the Administrative Agent or the Banks concerning the
renewal of any Minimum Payment Guaranty or the HET/JCC Agreement, the
operation of the Casino, the financial results of the Casino, or any
other matter concerning the Casino or the Plan of Reorganization shall
only be effective if set forth in writing and properly executed by the
party to be charged.
(b) Releases
(i) The Administrative Agent and each Bank hereby release and
waive and agree not to bring any Claims against the Identified
Parties, whether a known Claim or an Unknown Claim, to the extent same
arise out of (A) HET's and/or HOC's decision either to renew or not
renew any Minimum Payment Guaranty or the HET/JCC Agreement, (B) HET's
and/or HOC's acting in their own best interests in connection with the
execution, renewal or failure to renew any Minimum Payment Guaranty or
the HET/JCC Agreement, and/or (C) any alleged assurance or guarantee
by HET and/or HOC concerning the operation of the Casino, the
financial results of the Casino or any other matter concerning the
Casino or the Plan of Reorganization, unless such Claim is based on a
writing (but in any event cannot be based on HET/JCC Agreement or any
Minimum Payment Guaranty) properly executed by the party against whom
such a claim is being made.
(ii) The Administrative Agent and the Bank also hereby
specifically waive any rights each might have under Louisiana Civil
Code Article 3083 and all other applicable or
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similar laws to this same or similar effect as the matters described
in Section 16.19(b)(i) hereof, including but not limited to, any
purported right to challenge the validity or seek rescission of, or to
vitiate, the releases set forth above in Section 16.19(b)(i) hereof on
the ground that any information was kept concealed from it and agrees
that no remedy shall be available for any such alleged non-disclosure,
and that the right to rescind the above release on any such ground is
hereby expressly waived.
(c) Definitions. For the purposes of Sections 16.19(b)(i) and
(ii) hereof:
(i) "Claim" or "Claims" shall mean any action or actions, cause
or causes of action, in law or equity, suits, debts, liens,
liabilities, claims, demands, damages, punitive damages, losses, costs
or expenses, and/or reasonable attorneys' fees of any nature
whatsoever.
(ii) "Identified Parties" shall include HET, HOC, Harrah's New
Orleans Investment Company, Harrah's Crescent City Investment Company,
Harrah's New Orleans Management Company, their successors and assigns,
and all direct or indirect subsidiaries, and each of their parents,
subsidiaries, officers, directors, corporate representatives,
employees, agents, lawyers and accountants and all persons acting or
claiming through, under or in concert with any of them ; provided that
the term "Identified Parties" shall not include JCC Holding, the
Borrower or any of their Subsidiaries.
(iii) "Unknown Claim" or "Unknown Claims" means any and all
Claims, including without limitation, any Claim which any of the
parties hereto does not know or even suspect to exist in his, her, or
its favor at the time of the giving of the releases and waivers set
forth in Section 16.19 hereof which, if known by him, her or it might
have affected his, her or its decision regarding the releases and
waivers. Each of the parties acknowledges that he, she or it might
hereafter discover facts in addition to or different from those which
he, she or it now knows or believes to be true with respect to the
matters herein released and waived, but each shall be deemed to have
fully, finally and forever released any and all Claims to the extent
expressly provided in Section 16.19(b).
(d) No Third Party Beneficiaries. The Administrative Agent and
the Banks hereby acknowledge that each Minimum Payment Guaranty and the HET/JCC
Agreement provide that there shall be no third party beneficiaries thereof. The
Administrative Agent and each Bank also hereby agrees that it shall not claim or
assert it is a third party beneficiary or possesses any derivative claims under
any Minimum Payment Guaranty or the HET/JCC Agreement.
(e) Disclosure. The Administrative Agent and the Banks hereby
acknowledge that HET and HOC have informed it (i) not to infer or assume that
HET and HOC will renew any Minimum Payment Guaranty or the HET/JCC Agreement;
(ii) that HET and HOC will consider only their own best interests in determining
whether to renew any Minimum Payment Guaranty or the HET/JCC Agreement; (iii)
that HET and HOC are involved in a number of different capacities in connection
with the reorganization of HJC, the governance of the Borrower and JCC Holding,
and the operation of the Casino; and (iv) that there can be no assurance that
the Casino will
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perform as set forth in the projections and/or feasibility study set forth in
the Disclosure Statement circulated in connection with the Plan of
Reorganization.
(f) Amendment of Obligations. Each Minimum Payment Guaranty
provided under the HET/JCC Agreement is provided on the express condition that
the Borrower shall not amend or modify the Casino Operating Contract in any way
to increase the obligations under any Minimum Payment Guaranty or adversely
affect HET or HOC without the prior written agreement of HET and HOC, and any
such amendment or modification shall have no force or effect in respect of the
HET or HOC or any Minimum Payment Guaranty provided thereby.
16.20 No Third Party Beneficiaries. This Agreement is entered
into solely for the benefit of the parties hereto and their respective
successors and assigns (including all Banks from time to time) and there shall
be no third party beneficiaries hereof, nor shall any Person other than the
parties hereto and their respective successors and assigns be entitled to
enforce the provisions hereof or have any claims against any party hereto or
their successors of assigns arising from, or under, this Agreement.
SECTION 17. JCC Holding Guaranty.
17.01 The JCC Holding Guaranty. In order to induce the Banks
to enter into this Agreement and to extend credit hereunder and in recognition
of the direct benefits to be received by JCC Holding from the proceeds of the
Loans and the issuance of the Letters of Credit and to induce the Banks or any
of their respective Affiliates to enter into Interest Rate Protection
Agreements, JCC Holding hereby agrees with the Banks as follows: JCC Holding
hereby unconditionally and irrevocably guarantees as primary obligor and not
merely as surety the full and prompt payment when due, whether upon maturity, by
acceleration or otherwise, of any and all of the Guaranteed Obligations of the
Borrower to the Secured Creditors. If any or all of the Guaranteed Obligations
of the Borrower to the Secured Creditors becomes due and payable hereunder, JCC
Holding unconditionally promises to pay such indebtedness to the Secured
Creditors, on order, or demand, together with any and all reasonable expenses
which may be incurred by the Administrative Agent or the Secured Creditors in
collecting any of the Guaranteed Obligations.
17.02 Bankruptcy. Additionally, JCC Holding unconditionally
and irrevocably guarantees the payment of any and all of the Guaranteed
Obligations of the Borrower to the Secured Creditors whether or not then due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of
the events specified in Section 10.06, and unconditionally and irrevocably
promises to pay such Guaranteed Obligations to the Secured Creditors, on order,
or demand, in lawful money of the United States.
17.03 Nature of Liability. (a) The liability of JCC Holding
hereunder is exclusive and independent of any security for or other guaranty of
the Guaranteed Obligations of the Borrower whether executed by JCC Holding, any
other Guarantor or by any other party, and the liability of JCC Holding
hereunder shall not be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, or (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations of the Borrower, or (c) any
payment on or in reduction of any such other
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guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Administrative Agent or the Secured Creditors on the indebtedness which the
Administrative Agent or such Secured Creditors repay the Borrower pursuant to
court order in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding, and JCC Holding waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
(b) If claim is ever made upon any Secured Creditor for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Guaranteed Obligations and any of the aforesaid payees repays all
or part of said amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over such payee or any of its
property or (ii) any settlement or compromise of any such claim effected by such
payee with any such claimant (including the Borrower), then and in such event
JCC Holding agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon JCC Holding, notwithstanding any revocation
hereof or other instrument evidencing any liability of the Borrower, and JCC
Holding shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such payee.
(c) It is the desire and intent of JCC Holding and the Secured
Creditors that this JCC Holding Guaranty shall be enforced against JCC Holding
to the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. If, however, and to the extent
that, the obligations of JCC Holding under this JCC Holding Guaranty shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the Guaranteed
Obligations of JCC Holding shall be deemed to be reduced and JCC Holding shall
pay the maximum amount of the Guaranteed Obligations which would be permissible
under applicable law.
17.04 Independent Obligation. The obligations of JCC Holding
hereunder are independent of the obligations of any other guarantor or the
Borrower, and a separate action or actions may be brought and prosecuted against
JCC Holding whether or not action is brought against any other guarantor or the
Borrower and whether or not any other guarantor or the Borrower be joined in any
such action or actions. JCC Holding waives, to the fullest extent permitted by
law, the benefit of any statute of limitations affecting its liability hereunder
or the enforcement thereof. Any payment by the Borrower or other circumstance
which operates to toll any statute of limitations as to the Borrower shall
operate to toll the statute of limitations as to JCC Holding. This Guaranty is a
continuing one and all liabilities to which it applies or may apply under the
terms hereof shall be conclusively presumed to have been created in reliance
hereon.
17.05 Authorization. JCC Holding authorizes the Administrative
Agent and the Secured Creditors without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting or
impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate
or alter, any of the Guaranteed
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Obligations (including any increase or decrease in the rate of
interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the JCC Holding
Guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset there against;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors,
the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of the Borrower to its creditors
other than the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower to the Secured Creditors
regardless of what liability or liabilities of JCC Holding or the
Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge
of JCC Holding from its liabilities under this Section 17.
17.06 Reliance. It is not necessary for the Administrative
Agent or the Secured Creditors to inquire into the capacity or powers of the
Borrower or the officers, directors, partners or agents acting or purporting to
act on its behalf, and any Guaranteed Obligations made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
17.07 Subordination. Any of the indebtedness of the Borrower
now or hereafter owing to JCC Holding is hereby subordinated to the Guaranteed
Obligations of the Borrower owing to the Administrative Agent and the Secured
Creditors; and if the Administrative Agent so requests at a time when an Event
of Default exists, all such indebtedness of the Borrower to JCC Holding shall be
collected, enforced and received by JCC Holding for the benefit of the Secured
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Creditors and be paid over to the Administrative Agent on behalf of the Secured
Creditors on account of the Guaranteed Obligations of the Borrower to the
Secured Creditors, but without affecting or impairing in any manner the
liability of JCC Holding under the other provisions of this JCC Holding
Guaranty. Prior to the transfer by JCC Holding of any note or negotiable
instrument evidencing any of the indebtedness of the Borrower to JCC Holding,
JCC Holding shall mark such note or negotiable instrument with a legend that the
same is subject to this subordination. Without limiting the generality of the
foregoing, JCC Holding hereby agrees with the Secured Creditors that it will not
exercise any right of subrogation which it may at any time otherwise have as a
result of this JCC Holding Guaranty (whether contractual, under Section 509 of
the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been
irrevocably paid in full in cash.
17.08 Waiver. (a) JCC Holding waives any right (except as
shall be required by applicable statute and cannot be waived) to require the
Administrative Agent or the Secured Creditors to (i) proceed against the
Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrower, any other guarantor or any other
party or (iii) pursue any other remedy in the Administrative Agent's or the
Secured Creditors' power whatsoever. JCC Holding waives any defense based on or
arising out of any defense of the Borrower, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations. The Administrative
Agent and the Secured Creditors may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or the Secured
Creditors by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative Agent and the Secured Creditors may have against the Borrower or
any other party, or any security, without affecting or impairing in any way the
liability of JCC Holding hereunder except to the extent the Guaranteed
Obligations have been paid. JCC Holding waives any defense arising out of any
such election by the Administrative Agent and the Secured Creditors, even though
such election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of JCC Holding against any Borrower or any
other party or any security.
(b) JCC Holding waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this JCC Holding Guaranty, and notices of the existence, creation or
incurring of new or additional Guaranteed Obligations. JCC Holding assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which JCC Holding assumes and incurs hereunder, and agrees that the
Administrative Agent and the Secured Creditors shall have no duty to advise JCC
Holding of information known to them regarding such circumstances or risks.
17.09 Subordination of Guaranteed Tranche B and Revolving
Obligations to Guaranteed Tranche A Obligations. (a) JCC Holding, for itself,
its successors and assigns,
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covenants and agrees, and each Bank, for itself, its successors, participants
and assigns, likewise covenants and agrees, that Guaranteed Obligations
constituting Tranche B and Revolving Obligations (and any renewals or extensions
thereof) (the "Guaranteed Tranche B and Revolving Obligations") shall be
subordinate and subject in right of payment, to the extent and in the manner
hereinafter set forth, to the prior payment in full in cash or Cash Equivalents
of all Guaranteed Obligations constituting Tranche A Obligations (the
"Guaranteed Tranche A Obligations"), and that each holder of Guaranteed Tranche
A Obligations whether now outstanding or hereafter created, incurred, assumed or
guaranteed shall be deemed to have acquired Guaranteed Tranche A Obligations in
reliance upon the covenants and provisions contained in this Section 17.09.
(b) JCC Holding and the Banks hereby agree that the
Guaranteed Tranche B and Revolving Obligations shall be subordinate and
subject in right of payment to the prior payment in full in cash or Cash
Equivalents of all Guaranteed Tranche A Obligations on the same basis as the
Tranche B and Revolving Obligations are subordinate and subject in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Tranche A Obligations as provided in Sections 13.01 through 13.13, inclusive,
which Sections, together with all definitions applicable to such Sections,
are hereby incorporated by reference as if set forth herein in their
entirety, provided that:
(i) all references to "the Borrower" therein shall mean and be a
reference to "JCC Holding" herein;
(ii) all references to "Tranche B and Revolving Obligations"
therein shall mean and be a reference to "Guaranteed Tranche B and
Revolving Obligations" herein;
(iii) all references to "Tranche A Obligations" therein shall
mean and be a reference to "Guaranteed Tranche A Obligations" herein;
and
(iv) all references to "Section 13 Payment Default" therein shall
mean and be a reference to "Section 17.09 Payment Default" herein.
17.10 Subordination of Guaranteed Tranche B-2 Obligations to
Guaranteed Tranche B-1 Obligations. (a) JCC Holding, for itself, its
successors and assigns, covenants and agrees, and each Bank, for itself, its
successors, participants and assigns, likewise covenants and agrees, that
Guaranteed Obligations constituting Tranche B-2 Obligations (and any renewals
or extensions thereof) (the "Guaranteed Tranche B-2 Obligations") shall be
subordinate and subject in right of payment, to the extent and in the manner
hereinafter set forth, to the prior payment in full in cash or Cash
Equivalents of all Guaranteed Obligations constituting Tranche B-1
Obligations (the "Guaranteed Tranche B-1 Obligations"), and that each holder
of Guaranteed Tranche B-1 Obligations whether now outstanding or hereafter
created, incurred, assumed or guaranteed shall be deemed to have acquired
Guaranteed Tranche B-1 Obligations in reliance upon the covenants and
provisions contained in this Section 17.10.
(b) JCC Holding and the Banks hereby agree that the Guaranteed
Tranche B-2 Obligations shall be subordinate and subject in right of payment
to the prior payment in full in cash or Cash Equivalents of all Guaranteed
Tranche B-1 Obligations on the same basis as
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the Tranche B-2 Obligations are subordinate and subject in right of payment
to the prior payment in full in cash or Cash Equivalents of the Tranche B-1
Obligations as provided in Sections 15.01 through 15.14, inclusive, which
Sections, together with all definitions applicable to such Sections, are
hereby incorporated by reference as if set forth herein in their entirety,
provided that:
(i) all references to "the Borrower" therein shall mean and be a
reference to "JCC Holding" herein;
(ii) all references to "Tranche B-2 Obligations" therein
shall mean and be a reference to "Guaranteed Tranche B-2 Obligations"
herein;
(iii) all references to "Tranche B-1 Obligations"
therein shall mean and be a reference to "Guaranteed Tranche B-1
Obligations" herein; and
(iv) all references to "Section 15 Payment Default"
therein shall mean and be a reference to "Section 17.10 Payment
Default" herein.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address: JCC HOLDING COMPANY, as Guarantor
512 South Peters
New Orleans, LA 70130
By /s/ L. Camille Fowler
--------------------------------
Title: Vice President & Secretary
512 South Peters JAZZ CASINO COMPANY, L.L.C.,
New Orleans, LA 70130 as Borrower
By /s/ L. Camille Fowler
--------------------------------
Title: Vice President & Secretary
BANKERS TRUST COMPANY
Individually and as Administrative Agent
By /s/ Mary Kay Coyle
--------------------------------
Title: Managing Director
<PAGE>
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST
By: /s/ Sheila A. Finnerty
--------------------------------
Name: Sheila A. Finnerty
Title: Vice President
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
--------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
<PAGE>
Schedule I
COMMITMENTS
<TABLE>
<CAPTION>
Tranche A-1 Tranche A-2 Tranche A-3 Tranche B-1 Tranche B-2 Revolving
Term Loan Term Loan Term Loan Term Loan Term Loan Loan
Bank Commitment Commitment Commitment Commitment Commitment Commitment
<S> <C> <C> <C> <C> <C> <C>
Bankers Trust $10,000,000 $20,000,000 20,000,000. $30,000,000 $121,500,000 $25,000,000
Company
Morgan Stanley $5,000,000
Dean Witter
Van Kampen $5,000,000
American Capital
---------- ---------- ---------- ---------- ----------- ----------
$10,000,000 $20,000,000 $30,000,000 $30,000,000 $121,500,000 $25,000,000
</TABLE>
<PAGE>
Schedule II
BANK ADDRESSES
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Telephone No.: (212) 250-9094
Telecopier No.: (212) 250-7218
Attention: Mary Kay Coyle
Morgan Stanley Dean Witter Two World Trade Center
New York, NY 10048
Telephone No.: (212) 392-1600
Telecopier No.: (212) 392-5345
Attention: Sheila Finnerty
Van Kampen American Capital Prime Rate Department
One Parkview Plaza
Oakbrook, IL 60181
Telephone No.: (630) 684-6438
Telecopier No.: (630) 684-6740
Attention: Jeffrey Maillet
<PAGE>
Schedule III
(Section 5.18(a) and 7.13)
REAL PROPERTY
Entity Description of Real Property
A. Jazz Casino Company, L.L.C. See Exhibits "1", "2" and "3" to
Jazz Casino Company, L.L.C. Act of
Mortgage and Collateral Assignment
B. JCC Development Company, L.L.C. See Definition of "Second Floor" in
JCC Development Company, L.L.C. Act
of Mortgage and Collateral
Assignment
C. CP Development, L.L.C. See Exhibit 1 to CP Development,
L.L.C. Act of Mortgage and
Collateral Assignment
D. FP Development, L.L.C. See Exhibit 1 to FP Development,
L.L.C. Act of Mortgage and
Collateral Assignment
<PAGE>
Schedule IV
(Sections 7.22 and 9.04 (iii))
INDEBTEDNESS
None.
<PAGE>
Schedule V
(Section 8.03)
INSURANCE
<PAGE>
Schedule VI
(Section 9.01(iii))
EXISTING LIENS
None.
<PAGE>
Schedule VII
(Section 11.01 (Definition of "Specified Real Estate"))
SPECIFIED REAL ESTATE
1. 3CP Property See Exhibit "1" to CP Development,
L.L.C. Act of Mortgage and
Collateral Assignment
2. Fulton Street Properties See Exhibit "1" to FP Development,
L.L.C. Act of Mortgage and
Collateral Assignment
<PAGE>
SCHEDULE VIII
(Section 5.18(b))
TITLE REINSURERS
<PAGE>
Schedule IX
(Sections 4.02 and 11.01 (Definition of "Threshold Amount"))
THRESHOLD AMOUNTS
For the one year period beginning on the first Semi-Annual Free Cash
Flow Payment Date to but excluding the third Semi-Annual Free Cash Flow Payment
Date, $0.
For the one year period beginning on the third Semi-Annual Free Cash
Flow Payment Date to but excluding the fifth Semi-Annual Free Cash Flow Payment
Date, $7,600,000.
For the one year period beginning on the fifth Semi-Annual Free Cash
Flow Payment Date to but excluding the seventh Semi-Annual Free Cash Flow
Payment Date, $6,800,000.
For the one year period beginning on the seventh Semi-Annual Free Cash
Flow Payment Date to but excluding the ninth Semi-Annual Free Cash Flow Payment
Date, $7,200,000.
For the one year period beginning on the ninth Semi-Annual Free Cash
Flow Payment Date to but excluding the eleventh Semi-Annual Free Cash Flow
Payment Date, $7,000,000.
Each one year period thereafter, $12,900,000.
<PAGE>
Schedule X
(Section 7.09)
TAX MATTERS
1. Franchise Tax. Proposed assessment against Harrah's Jazz Finance Corp.,
a Delaware corporation ("HJFC"), of Louisiana Corporate Franchise
Taxes, interest and penalties pursuant to a Notice of Proposed
Assessment dated March 17, 1997 and Proofs of Claim in the HJFC
bankruptcy case.
2. Property Tax. Ad Valorem Property Tax for 1996-1998 and interest due
to the City of New Orleans by Harrah's Jazz Company, a Louisiana
general partnership.
<PAGE>
Schedule XI
(Section 7.14)
OPTIONS
1. NOLDC/FNBC Options
- Shareholders of New Orleans/Louisiana Development Company
("NOLDC") to receive options to acquire from HET shares of
Class B stock of JCC Holding Company equal to 3% of the equity
of JCC Holding outstanding as of the Plan Consummation Date.
The Option Price shall be $1 for each Shareholder and the
Options may be exercised any time after one year from the Plan
Consummation Date until 62 months following the Plan
Consummation Date.
- Shareholders of NOLDC shall receive the right to put to HET
any stock acquired pursuant to their options at a put price
equal to $1 million per 1/3% of JCC Holding Stock. Such put
may be exercised during a 60 day period commencing 60 months
after the Plan Consummation Date and ending 62 months
following the Plan Consummation Date.
- First National Bank of Commerce ("FNBC") shall receive the
option to acquire from HET shares of Class B stock of JCC
Holding equal to 1.5% of the equity of JCC Holding outstanding
as of the Plan Consummation Date. The FNBC Option Price shall
be $1 and the FNBC Option shall may be exercised any time
after the Plan Consummation Date until 62 months following the
Plan Consummation Date. FNBC shall receive the right to put to
HET any stock acquired by FNBC pursuant to its option for $4.5
million per 1.5% of JCC Holding Stock. Such put may be
exercised during a 60 day period commencing 60 months after
the Plan Consummation Date and ending 62 months following the
Plan Consummation Date.
2. HET Warrant
- Harrah's Crescent City Investment Company ("Harrah's
Investor") to receive HET Warrant entitling it to purchase
additional shares of common stock of JCC Holding Company (the
"New Common Stock") such that, upon exercise of the HET
Warrant in its entirety, Harrah's Investor would own 50.0% of
the New Common Stock.
- The number of shares issuable upon exercise of the HET Warrant
to be set and/or adjusted as necessary to account for the
transfer of shares pursuant to exercise of options by NOLDC
and conversion of the Convertible Junior Subordinated
Debentures prior to the exercise of the HET Warrant.
- Exercisable at any time after the Transition Date (which will
occur no later than the third anniversary of the opening of
the Casino) until the sixth anniversary of the opening of the
Casino, in whole or in part, at a price of $15.00 per share of
New Common Stock.
- If at any time after the Transition Date the closing bid price
of the New Common
<PAGE>
Stock has exceeded $20 per share for sixty consecutive trading
days, JCC Holding Company's board of directors may elect to
give written notice to Harrah's Investor of an election to
redeem 75% of the warrants at $0.05 per warrant unless
Harrah's Investor exercises the warrants within forty-five
days after the date of such notice.
3. Convertible Junior Subordinated Debt
- Convertible Junior Subordinated Debentures are convertible at
the Conversion Price (as defined below) in whole or in part,
at any time after October 1, 2002 at the option of the holder
into Class A Common Stock of JCC. Conversion Price is $25.00
per share of Class A Common Stock, subject to certain
adjustments.
4. Employee Stock Option Plan
- Employee stock purchase plan to be established to purchase
JCC Holding Company stock.
<PAGE>
AMENDED AND RESTATED
LEASE AGREEMENT
AMONG
RIVERGATE DEVELOPMENT CORPORATION
as Landlord
AND
JAZZ CASINO COMPANY, L.L.C.
as Tenant
AND
CITY OF NEW ORLEANS
as Intervenor
October 29, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I. DEFINITION OF TERMS.................................................................................3
1.1. Act ................................................................................................3
1.2. Additional Charges..................................................................................4
1.3. Affiliate...........................................................................................4
1.4. Amended and Restated Completion Loan Agreement......................................................4
1.5. Amended and Restated Construction Lien Indemnity Obligation Agreement...............................4
1.6. Annual Business Plan................................................................................5
1.7. Basin Street Casino Lease Termination Agreement.....................................................5
1.8. Books and Records...................................................................................6
1.9. Business Days.......................................................................................6
1.10. Capital Transaction.................................................................................6
1.11. Cash Flow...........................................................................................7
1.12. Casino ............................................................................................11
1.13. Casino Gaming Operations...........................................................................11
1.14. Casino Management Agreement........................................................................11
1.15. Casino Manager/Operator............................................................................11
1.16. Casino Operating Contract..........................................................................11
1.17. Casino Premises....................................................................................12
1.18. City ..............................................................................................12
1.19. City Council.......................................................................................12
1.20. City Lease.........................................................................................12
1.21. COC Fiscal Year....................................................................................12
1.22. COC Minimum Payment................................................................................13
1.23. Common Stock.......................................................................................13
1.24. Component..........................................................................................13
1.25. Construction Credit Facility.......................................................................13
1.26. Control ...........................................................................................13
1.27. Convertible Junior Subordinated Debentures.........................................................13
1.28. CPI ...............................................................................................14
1.29. Default Rate.......................................................................................14
1.30. Development........................................................................................14
1.31. Discriminatory.....................................................................................14
1.32. Effective Date.....................................................................................15
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1.33. Encroachment Area..................................................................................15
1.34. Environmental Law..................................................................................15
1.35. Equity Amount......................................................................................16
1.36. Event of Default...................................................................................16
1.37. Execution Date.....................................................................................16
1.38. Expiration Date....................................................................................16
1.39. Extended Term......................................................................................16
1.40. FF&E ..............................................................................................16
1.41. Financial Statements...............................................................................17
1.42. Financially Conditioned............................................................................17
1.43. Financing..........................................................................................17
1.44. Fiscal Year........................................................................................17
1.45. GAAP ..............................................................................................17
1.46. Gaming Authorities.................................................................................18
1.47. Gaming Devices.....................................................................................18
1.48. Gaming Space.......................................................................................18
1.49. GDA ...............................................................................................18
1.50. Governmental Requirements..........................................................................18
1.51. Gross Gaming Revenue...............................................................................19
1.52. Gross Non-Gaming Revenues..........................................................................23
1.53. HCCIC .............................................................................................25
1.54. HET ...............................................................................................25
1.55. HET/JCC Agreement..................................................................................26
1.56. Highest and Best Use...............................................................................26
1.57. HNOMC .............................................................................................26
1.58. HOCI ..............................................................................................26
1.59. Improvements.......................................................................................26
1.60. Initial Term.......................................................................................26
1.61. JCC Development....................................................................................27
1.62. JCC Holding........................................................................................27
1.63. JCC Intermediary...................................................................................27
1.64. Lafayette Subsurface Area..........................................................................27
1.65. Landlord ..........................................................................................27
1.66. Lease..............................................................................................28
1.67. Leased Premises....................................................................................28
1.68. Leasehold Mortgage.................................................................................28
1.69. Leasehold Mortgagee................................................................................28
1.70. LGCB ..............................................................................................28
1.71. Loan Default.......................................................................................28
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1.72. Manager's Property.................................................................................28
1.73. MAR ...............................................................................................29
1.74. Master Plan........................................................................................29
1.75. Mayor .............................................................................................29
1.76. New Bond Documents.................................................................................29
1.77. New Bonds..........................................................................................29
1.78. New Contingent Bonds...............................................................................29
1.79. Open Access Plans..................................................................................29
1.80. Open Access Program................................................................................30
1.81. Opening Date.......................................................................................30
1.82. Original Amended Lease Execution Date..............................................................30
1.83. Partial Fiscal Year................................................................................30
1.84. Pedestrian Bridge Areas............................................................................30
1.85. Person ............................................................................................30
1.86. Phase ...........................................................................................31
1.87. Phase I and II Construction........................................................................31
1.88. Poydras Street Support Facility Premises...........................................................31
1.89. Poydras Tunnel Area................................................................................31
1.90. Proceeds of Major Capital Event(s).................................................................31
1.91. Rent ..............................................................................................31
1.92. Second Floor Non-Gaming Sublease...................................................................31
1.93. Secured Debt.......................................................................................32
1.94. Shareholder(s).....................................................................................32
1.95. Site Mobilization..................................................................................32
1.96. Site Reactivation Date.............................................................................32
1.97. SMSA ..............................................................................................32
1.98. Space Lease........................................................................................32
1.99. Space Tenant.......................................................................................32
1.100. Square 26 Property.................................................................................33
1.101. Subdebt ...........................................................................................33
1.102. Substantial Completion.............................................................................33
1.103. Suitable Lender....................................................................................33
1.104. Support Facilities.................................................................................37
1.105. Support Facilities Premises........................................................................37
1.106. System Marks.......................................................................................37
1.107. Tenant ............................................................................................37
1.108. Tenant's Property..................................................................................38
1.109. Term ..............................................................................................38
1.110. Other Defined Terms................................................................................38
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ARTICLE II. LEASED PROPERTY....................................................................................44
Section 2.1. Unsubordinated Lease...............................................................................44
ARTICLE III. TERM OF LEASE......................................................................................45
Section 3.1. Term ..............................................................................................45
Section 3.2. Extension Procedure................................................................................45
ARTICLE IV. RENT AND ADDITIONAL CHARGES........................................................................46
Section 4.1. Initial Lease Payments.............................................................................46
Section 4.2. Mobilization Payment...............................................................................47
Section 4.3. Rent ..............................................................................................47
Section 4.4. Gross Gaming Payments..............................................................................48
Section 4.4.1. City Payments..............................................................................50
Section 4.5. Resident Parking Payment...........................................................................52
Section 4.5.1. Additional Payments.......................................................................52
Section 4.5.2. Trade Name Licenses........................................................................53
Section 4.6. School Board Payments..............................................................................53
Section 4.7. Audubon Park Payments..............................................................................54
Section 4.8. Contingent Payment Agreement.......................................................................55
Section 4.9. Gross Non-Gaming Payments..........................................................................56
Section 4.9.1. Interim Payments.............................................................................58
Section 4.9.2. Pre-Opening Date Rent........................................................................59
Section 4.10. Net Lease..........................................................................................60
Section 4.11. Prorated Payments..................................................................................60
Section 4.12. Payment Terms......................................................................................60
Section 4.13. Second Floor Non-Gaming Sublease...................................................................61
Section 4.14. Late Payment of any Amounts Due under this Lease...................................................64
Section 4.15. Market Appreciation Right..........................................................................65
Section 4.16. Conveyance of Certain Support Facilities...........................................................66
Section 4.17. Square 26 Property Donation........................................................................66
Section 4.18. Employee and Bus Parking Support Facility Premises, Employee and Bus Parking Facility Servitude
Area, Employee and Bus Parking Facility Access Servitude Area and Observation Tower Servitude
Area...............................................................................................66
Section 4.18.1. Maintenance and Usage of Employee and Bus Parking Facility Servitude Area, Employee and
Bus Parking Facility Access Servitude Area and Observation Tower Servitude Area.............68
Section 4.18.2. Casino Design...............................................................................69
Section 4.19. Minimum Payments...................................................................................70
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Section 4.20. Change of Use and Adjustment of Rent and Additional Charges upon Change of Law.....................71
Section 4.21. Waiver of Certain Credits..........................................................................74
Section 4.22. Credit for Pre-Opening Date Rent Payments..........................................................74
ARTICLE V. OTHER PAYMENTS AND CONSIDERATIONS..................................................................75
Section 5.1. Open Access Program................................................................................75
Section 5.2. Residency Requirement..............................................................................76
Section 5.3. Casino Management Agreement........................................................................78
Section 5.4. General Development Agreement......................................................................84
Section 5.5. Fringe Benefit Plan; Salary Practices..............................................................85
Section 5.6. JCC Holding; JCC Development.......................................................................85
Section 5.7. Commencement of Employment Activities..............................................................86
ARTICLE VI. CONDITIONS, WARRANTIES OF TITLE AND PEACEABLE POSSESSION...........................................87
Section 6.1. Representations and Warranties.....................................................................87
Section 6.2. Actual Possession..................................................................................93
Section 6.3. Condition of Leased Premises.......................................................................93
Section 6.4. Assumption of Responsibility; Indemnity............................................................95
Section 6.5. Possession.........................................................................................97
Section 6.6. Limitation of Liability............................................................................97
ARTICLE VII. OWNERSHIP OF IMPROVEMENTS; SURRENDER OF LEASED PREMISES...........................................106
Section 7.1. Ownership of Improvements.........................................................................106
Section 7.2. Surrender.........................................................................................109
ARTICLE VIII. USE OF LEASED PREMISES; COMPLIANCE WITH LAWS AND ORDINANCES.......................................109
Section 8.1. Permitted Uses....................................................................................109
Section 8.2. Limitation of Use and Penalties...................................................................111
Section 8.3. Covenant to Comply with Certain Obligations.......................................................111
Section 8.4. Uses of Development Revenues......................................................................112
ARTICLE IX. IMPOSITIONS.......................................................................................113
Section 9.1. Payment of Impositions............................................................................113
Section 9.2. Impositions in the Year of Expiration.............................................................115
Section 9.3. Contest of Impositions............................................................................116
Section 9.4. Reports ..........................................................................................117
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Section 9.5. Impositions Payable in Installments...............................................................118
Section 9.6. Certain Taxes Not Impositions.....................................................................118
Section 9.7. Amusement Tax.....................................................................................118
ARTICLE X. CONSTRUCTION OF IMPROVEMENTS; GENERAL DEVELOPMENT.................................................119
Section 10.1. Initial Construction..............................................................................119
Section 10.2. Liens and Claims..................................................................................120
ARTICLE XI. ENVIRONMENTAL ....................................................................................121
Section 11.1. Environmental Obligations.........................................................................121
Section 11.2. Landlord's Right to Perform.......................................................................122
Section 11.3. Notice ...........................................................................................123
ARTICLE XII. DAMAGE TO OR DESTRUCTION OF LEASED PREMISES.......................................................124
Section 12.1. Damage or Destruction.............................................................................124
Section 12.2. Use of Insurance Proceeds.........................................................................124
Section 12.3. No Abatement of Rent and Additional Charges.......................................................132
ARTICLE XIII. INSURANCE.........................................................................................133
Section 13.1. Property/Casualty Insurance Coverage..............................................................133
Section 13.2. Liability Insurance...............................................................................135
Section 13.3. Business Interruption Insurance...................................................................140
Section 13.4. Form of Insurance and Insurers....................................................................142
Section 13.5. Other Policies....................................................................................143
Section 13.6. Adjustment of Insurance...........................................................................143
Section 13.7. Insurance Notice..................................................................................143
Section 13.8. Keep in Good Standing.............................................................................144
Section 13.9. Unearned Premiums.................................................................................144
Section 13.10. Blanket Policies..................................................................................145
Section 13.11. Change of Circumstances or Conditions.............................................................145
Section 13.12. Sublessee Insurance...............................................................................146
ARTICLE XIV. FINANCIAL AND ACCOUNTING RECORDS, BUDGETS AND REPORTING REQUIREMENTS...............................146
Section 14.1. Financial and Accounting Records..................................................................146
Section 14.2. Financial Statements Quarterly Meetings...........................................................147
Section 14.3. Review and Audit..................................................................................149
Section 14.4. Confidentiality...................................................................................152
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Section 14.5. Errors in Financial and Accounting Records.......................................................153
Section 14.6. Annual Business Plan.............................................................................156
ARTICLE XV. CONDEMNATION ....................................................................................156
Section 15.1. Definitions......................................................................................156
Section 15.2. Duty to Resist...................................................................................157
Section 15.3. Major Condemnation...............................................................................157
Section 15.4. Minor Condemnation...............................................................................160
ARTICLE XVI. ALTERATIONS AND MODIFICATIONS BY TENANT .........................................................163
Section 16.1. Alterations and Modifications of Improvements After Substantial Completion.......................163
Section 16.2. Manner of Performance............................................................................166
ARTICLE XVII. ENTRY UPON LEASED PREMISES BY LANDLORD; INSPECTION...............................................167
Section 17.1. Access and Inspection............................................................................167
Section 17.2. Access to Secured Areas..........................................................................168
ARTICLE XVIII. INDEMNIFICATION OF LANDLORD AND OTHER WARRANTIES AND COVENANTS BY TENANT.........................169
Section 18.1. General Indemnification..........................................................................169
Section 18.2. Environmental Indemnification....................................................................174
Section 18.3. Exceptions to Environmental Indemnification......................................................174
Section 18.4. Special Environmental Responsibilities of Tenant.................................................175
Section 18.5. Disclosure.......................................................................................176
ARTICLE XIX. MANAGEMENT AND OPERATION OF CASINO...............................................................176
Section 19.1. Inaugural Ceremonies.............................................................................176
Section 19.2. Casino Operation.................................................................................177
Section 19.3. Savings and Retirement Plan......................................................................177
Section 19.4. Marketing Program................................................................................178
Section 19.5. Financing Representations; Restrictions..........................................................180
Section 19.6. House Bank.......................................................................................181
Section 19.7. Time of Operations...............................................................................182
Section 19.8. Capital Replacement Fund.........................................................................183
Section 19.9. Age Limitation...................................................................................188
Section 19.10. EMS Services.....................................................................................189
Section 19.11. Maintenance and Repairs..........................................................................189
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Section 19.12. Computerized Accountability...................................................................191
Section 19.13. Minimum Internal Controls.....................................................................191
Section 19.14. Plan Financing and the HET/JCC Agreement......................................................193
Section 19.15. Transition Period.............................................................................193
ARTICLE XX. APPROVAL AND CONSENT RIGHTS...................................................................193
Section 20.1. Negotiation Rights............................................................................193
ARTICLE XXI. DEFAULT BY TENANT.............................................................................194
Section 21.1. Events of Default.............................................................................194
Section 21.2. Notice of Default.............................................................................201
Section 21.3. Landlord's Remedies...........................................................................201
Section 21.4. Transfers Upon Termination....................................................................210
ARTICLE XXII. ASSIGNMENT, SUBLEASING, MORTGAGING, TRANSFER RESTRICTIONS, ETC................................211
Section 22.1. Landlord Approval.............................................................................211
Section 22.2. Assignment of Lease...........................................................................211
Section 22.3. Subleasing Rights.............................................................................214
Section 22.4. Management and Operation Contracts............................................................217
Section 22.5. Transfer Restriction..........................................................................220
ARTICLE XXIII. LEASEHOLD MORTGAGES...........................................................................220
Section 23.1. Granting of Certain Leasehold Mortgages.......................................................220
Section 23.2. Subsequent Financings.........................................................................221
Section 23.3. Transfer by Leasehold Mortgagee...............................................................222
Section 23.4. Leasehold Mortgagee Notices and Cure Periods..................................................224
Section 23.5. Leasehold Mortgagee's Right to Extend.........................................................227
Section 23.6. Leasehold Mortgagee's Right to Lease..........................................................227
Section 23.7. Leasehold Mortgagee's Possession of Leased Premises, Obligation to Cure and Right to Assign...229
Section 23.8. Subordination of Fee Mortgages................................................................230
Section 23.9. Section 365(h) Waiver.........................................................................230
Section 23.10. Loan Default..................................................................................231
Section 23.11. Non-Merger....................................................................................232
Section 23.12. Assumption by Leasehold Mortgagee.............................................................233
Section 23.13. Subordination of Landlord's Lien..............................................................233
Section 23.14. No Voluntary Termination or Amendment.........................................................234
Section 23.15. Third Party Beneficiary.......................................................................234
Section 23.16. Interim Operations; Receivership..............................................................234
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ARTICLE XXIV. TRANSFERS AND TERMINATION.....................................................................235
Section 24.1. Transfers by Shareholders of Tenant or Affiliates.............................................235
ARTICLE XXV. EXISTENCE OF PARTNERSHIP OR JOINT VENTURE DENIED..............................................240
Section 25.1. No Joint Venture or Partnership...............................................................240
ARTICLE XXVI. UTILITIES.....................................................................................240
Section 26.1. Utilities.....................................................................................240
ARTICLE XXVII. COVENANTS AGAINST WASTE.......................................................................242
Section 27.1. Covenant Against Waste........................................................................242
ARTICLE XXVIII. TRASH AND GARBAGE DISPOSAL....................................................................242
Section 28.1. Trash and Garbage Disposal....................................................................242
ARTICLE XXIX. NO WAIVER.....................................................................................242
Section 29.1. No Waiver.....................................................................................242
ARTICLE XXX. COVENANTS TO BIND AND BENEFIT PARTIES.........................................................243
Section 30.1. Covenants Binding.............................................................................243
ARTICLE XXXI. BROKERAGE.....................................................................................243
Section 31.1. Brokerage.....................................................................................243
ARTICLE XXXII. MISCELLANEOUS PROVISIONS......................................................................244
Section 32.1. Equal Employment Opportunity..................................................................244
Section 32.2. Force Majeure.................................................................................244
Section 32.3. Partial Invalidity............................................................................247
Section 32.4. Intervention by City..........................................................................248
Section 32.5. Responsibility For Costs And Risks of Operations..............................................250
Section 32.6. Notice........................................................................................250
Section 32.7. Applicable Law................................................................................253
Section 32.7.1. Venue and Personal Jurisdiction...........................................................253
Section 32.8. Public Purpose; Economic Benefit; Total Consideration.........................................254
Section 32.9. Estoppel Certificate..........................................................................255
Section 32.10. Prior Agreements; Amendments..................................................................257
Section 32.11. Survival......................................................................................259
Section 32.12. Memorandum of Lease...........................................................................259
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Section 32.13. Expiration of Casino Operating Contract.......................................................260
Section 32.14. Non-Compete...................................................................................261
Section 32.15. Compliance....................................................................................261
Section 32.16. Captions......................................................................................261
Section 32.17. Number and Gender.............................................................................262
Section 32.18. No Drafting Presumptions......................................................................262
Section 32.19. No Third Party Beneficiary....................................................................263
Section 32.20. Performance by Affiliate......................................................................263
Section 32.21. Cost of Investigation.........................................................................263
Section 32.22. Canal Street Ferry............................................................................264
Section 32.23. Acknowledgment Of Cure Periods................................................................264
Section 32.24. Effectiveness of Lease........................................................................265
Section 32.25. Matters Relating to State Guaranty............................................................265
</TABLE>
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<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit "A-1" Casino Premises 1.17
Exhibit "A-2" Employee and Bus Parking Support Facility
Premises 4.18(a)
Exhibit "A-3" Employee and Bus Parking Facility Servitude
Area 4.18(b)
Exhibit "A-4" Employee and Bus Parking Facility Access
Servitude Area 4.18(c)
Exhibit "A-5" Observation Tower Servitude Area 4.18(d)
Exhibit "A-6" Lafayette Subsurface Area 1.64
Exhibit "A-7" Poydras Street Support Facility Premises 1.88
Exhibit "A-8" Poydras Tunnel Area 1.89
Exhibit "A-9" Pedestrian Bridge Areas 1.84
Exhibit "A-10" Encroachment Area 1.33
Exhibit "B" Railroad Lease 4.18(a)
Exhibit "C" Open Access Program 1.80
Exhibit "D-1" Ordinance Calendar No. 18,481 6.1(a)(iii)
Exhibit "D-2" Ordinance Calendar No. 19,025 6.1(a)(iii)
Exhibit "D-3" Ordinance Calendar No. 22,194 6.1(a)(iii)
Exhibit "E-1" Ordinance Calendar No. 18,483 6.1(a)(iv)
Exhibit "E-2" Ordinance Calendar No. 19,027 6.1(a)(iv)
</TABLE>
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<CAPTION>
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Exhibit "E-3" Landlord Board of Directors' Resolution dated
April 23, 1993 6.1(a)(iv)
Exhibit "E-4" Landlord Board of Directors' Resolution dated
March 9, 1994 6.1(a)(iv)
Exhibit "E-5" Consent 6.1(a)(iv)
Exhibit "F-1" Ordinance Calendar No. 22,193 6.1(a)(v)
Exhibit "F-2" Landlord Board of Directors' Resolution dated
October 21, 1998 6.1(a)(v)
Exhibit "G" Exceptions to Title 6.1(a)(vii)(3)
Exhibit "H" Casino Management Agreement 1.14, 5.3(a)
Exhibit "I" Annual Business Plan 1.6
Exhibit "J" Jazz Casino Company, L.L.C. Benefits Summary 5.5
Exhibit "K" Environmental Disclosure 6.3, 6.4(a),
6.4(b), 18.4,
18.5
Exhibit "L" Financial Statements 1.41
Exhibit "M" Second Floor Non-Gaming Sublease 1.92
Exhibit "N-1" City Lease 1.20
Exhibit "N-2" City Lease Amendment 1.20
Exhibit "O" Ordinance Calendar No. 18,430 1.65, 6.1(a)(i)
Exhibit "P" JCC Holding Letter Agreement 5.6
Exhibit "Q" Manager Subordination Agreement (Landlord) 5.3(g)
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Exhibit "R" McCall Litigation Agreement 6.6(c)
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<PAGE>
AMENDED AND RESTATED
LEASE AGREEMENT
AMONG
RIVERGATE DEVELOPMENT CORPORATION, LANDLORD,
AND
JAZZ CASINO COMPANY, L.L.C., TENANT,
AND
CITY OF NEW ORLEANS, LOUISIANA, INTERVENOR
THIS AMENDED AND RESTATED LEASE is executed as of this date, by and
among JAZZ CASINO COMPANY, L.L.C., a Louisiana limited liability company having
its principal place of business in the State of Louisiana ("Tenant"), as the
successor by operation of law to Harrah's Jazz Company, a Louisiana general
partnership ("Harrah's Jazz Company"), RIVERGATE DEVELOPMENT CORPORATION, a
Louisiana public benefit corporation ("Landlord"), and CITY OF NEW ORLEANS,
LOUISIANA, as Intervenor (the "City"), and amends and restates in their entirety
the provisions of that certain Amended Lease Agreement by and between the
Landlord, Harrah's Jazz Company, and the City, dated as of March 15, 1994 (the
"Original Amended Lease"); provided, however, that pursuant to Section 32.10 of
this Lease, the execution and delivery of this Lease shall continue the
obligations of Tenant under the Original Amended Lease on the amended and
restated terms set forth in this
<PAGE>
Lease and shall in no way constitute a novation of such obligations (as modified
herein).
RECITALS
WHEREAS, Harrah's Jazz Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code on November 22, 1995 in
the United States Bankruptcy Court for the Eastern District of Louisiana (the
"Bankruptcy Court"), Case No. 95-14545;
WHEREAS, the Bankruptcy Court as of October 13, 1998 has confirmed a
Third Amended Joint Plan of Reorganization, as modified, under Chapter 11 of the
United States Bankruptcy Code as submitted by Harrah's Jazz Company and certain
other parties (the "Plan");
WHEREAS, as contemplated by the Plan, Tenant is succeeding by operation
of law to all rights and obligations of Harrah's Jazz Company under the Original
Amended Lease;
WHEREAS, as of August 15, 1996, Harrah's Jazz Company, Landlord, and
the City entered into that certain Agreement Regarding Modifications and Related
Agreements in Respect of Amended and Restated Canal Street Casino Lease,
Termination of Basin Street Casino Lease, Amended and Restated General
Development Agreement, the Conditional Use Ordinances
2
<PAGE>
and other Regulatory Matters (the "City Agreement"), requiring, among other
things, the amendment and restatement of certain terms of the Original Amended
Lease as of the effective date of the Plan (the "Plan Effective Date") in
accordance with the terms of this Lease.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITION OF TERMS
For the purposes of this Lease, the following terms, in addition to
terms defined elsewhere in this Lease, shall have the meanings set forth below
when initially capitalized herein, unless otherwise expressly provided in this
Lease:
1.1. Act means the Louisiana Economic Development and Gaming Corporation Act
as set forth in LSA R.S. 4:601, et seq., adopted by the Legislature of the State
of Louisiana as No. 384, Acts 1992, as amended, and regulations adopted
thereunder, amendments and reenactment of LSA R.S. 36:801.1(A) and enactment of
LSA R.S. 27:1, et seq., adopted by the Legislature of the State of Louisiana as
Act 7, First Extraordinary Session, 1996, and regulations adopted thereunder;
the Local Option Gaming election as set forth in LSA R.S.
3
<PAGE>
18:1300.21, adopted by the Legislature of the State of Louisiana as Act 57,
First Extraordinary Session, 1996, and the act adopted by the Legislature of the
State of Louisiana as Act 98, First Extraordinary Session, 1996.
1.2. Additional Charges means any and all obligations assumed, payments,
charges, Impositions, costs, expenses and penalties (other than the Rent) that
are required to be paid by Tenant under this Lease.
1.3. Affiliate means any Person which directly or indirectly Controls, is
Controlled by, or is under common Control with, Tenant, JCC Intermediary (if
formed in accordance with Section 5.6 of this Lease), JCC Development, JCC
Holding or the Casino Manager/Operator and/or which directly or indirectly owns
or holds a two and one-half percent (2.5%) or more interest in Tenant.
1.4. Amended and Restated Completion Loan Agreement means that certain
Amended and Restated Completion Loan Agreement by and among Tenant, HET and HOCI
entered into pursuant to the Plan and as more particularly defined therein.
1.5. Amended and Restated Construction Lien Indemnity Obligation Agreement
means that certain Amended and Restated Construction Lien Indemnity Obligation
Agreement by and between Tenant and HOCI entered into pursuant to the Plan and
as more particularly defined therein.
4
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1.6. Annual Business Plan means an annual report for the forthcoming Fiscal
Year to be prepared by Tenant or the Casino Manager/Operator for Landlord
consisting of an estimate of revenues, expenses, Rent, Gross Gaming Payments,
Gross Non-Gaming Payments, School Board Payments, Audubon Payments, City
Payments, payments under Section 4.5.1 of this Lease, Contingent Payments, and
the MAR Payment, if applicable, in the form of Exhibit "I" attached to this
Lease and made a part hereof, and a proposed cash flow and operating budget for
the premises subject to the Second Floor Non-Gaming Sublease; provided that
information as to expenses or Contingent Payments or the MAR Payment shall not
be disclosed by such report if such disclosure is prohibited by the United
States Securities and Exchange Commission rules and regulations or if such
disclosure would require general public disclosure by the United States
Securities and Exchange Commission. The information contained in said plan will
be warranted by Tenant and the Casino Manager/Operator as being based on the
same and most current information that is used for presentation to Tenant's
member(s).
1.7. Basin Street Casino Lease Termination Agreement means that certain
Basin Street Casino Lease Termination Agreement among Harrah's Jazz Company,
Landlord and the City, dated as of January 15, 1997.
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1.8. Books and Records means the internal control standards adopted by the
Casino Manager/Operator and the records required thereby and customer records
(both of which shall be available only to Landlord's Accepted Auditor), all
revenue records and any other accounting or financial documents or records,
including financial data produced pursuant to Section 19.12 of this Lease,
general ledgers, accounts receivable, accounts payable, invoices, payroll
records, expense records, or income records, relating to or concerning the
business operations of Tenant and the Development. Books and Records shall not
include any information Tenant or the Casino Manager/Operator is required by law
not to disclose.
1.9. Business Days means all days except Saturdays, Sundays and all days
that are official legal holidays of the City, the State of Louisiana or the
United States. Unless specifically stated as "Business Days," a reference to
"days" means calendar days.
1.10. Capital Transaction means (1) the sale, transfer, assignment or
alienation by Tenant of all or a portion of: (a) the Development (including any
sale, transfer, assignment or alienation by Tenant of all or any portion of its
interest in the Second Floor Non-Gaming Sublease) but not including the sale,
transfer, assignment or alienation by Tenant of its rental income stream from
the Second Floor Non-Gaming Sublease, (b) Tenant's Property, (c) this Lease, or
(d)
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Tenant's assets; (2) insurance proceeds paid to Tenant under Section 12.2(c) of
this Lease; (3) condemnation proceeds paid to Tenant under Section 15.4 of this
Lease in the event of condemnation of the Development; and (4) any Financing or
pledge of the Development, Tenant's Property, this Lease or Tenant's assets;
provided, however, that none of the following transactions shall constitute a
Capital Transaction: (i) the vesting of the assets of Harrah's Jazz Company in
Tenant on the Plan Effective Date; (ii) the issuance of the New Bonds and the
New Contingent Bonds; (iii) the issuance and use of the Subdebt and the
Convertible Junior Subordinated Debentures; (iv) the issuance and use of the
Construction Credit Facility; (v) the issuance and use of the Amended and
Restated Construction Lien Indemnity Obligation Agreement; (vi) the issuance and
use of the Amended and Restated Completion Loan Agreement; (vii) the issuance of
the Common Stock; and (ix) the exercise, in whole or in part on a pro rata
basis, of warrants in favor of HET and certain of its affiliates permitting the
purchase of additional shares of Common Stock at an exercise price of Fifteen
and 00/100 Dollars ($15.00) per share such that, upon exercise of such warrants
in their entirety, HET and its affiliates would own up to fifty percent (50%) of
the Common Stock.
1.11. Cash Flow means all cash, the fair market value of all property, and
the value of any other consideration or benefits paid directly or indirectly, by
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or on behalf of Tenant to the Shareholder(s), any Affiliate (other than JCC
Development for leasing, operations and development under the Second Floor
Non-Gaming Sublease), or any party related thereto (collectively or separately,
as the case may be, a "Related Party"), regardless of its characterization. For
example, those types of distributions and payments made to Related Parties that
are included within the definition of Cash Flow include, unless excluded below,
but are not limited to, distributions of profits, capital withdrawals,
distributions on the termination or liquidation of Tenant; unreasonable expense
reimbursement; unreasonable rent, tax reimbursements, consulting or management
fees; unreasonable marketing payments; unreasonable tax accounting fees; and
unreasonable charges assessed by a Related Party on a loan by said party to
Tenant. Excluded from the definition of Cash Flow are, among other things, the
following: (1) all commercially reasonable payments to Related Parties for
goods, services or materials provided to Tenant as measured against goods,
services or materials of a like kind or quality provided by unrelated parties
("arms length transaction"); (2) all reasonable debt service payments paid on
loans from Related Parties; and (3) payments consented to by Landlord.
Landlord's Accepted Auditor shall have the right to review the Books and Records
as to any and all distributions or payments to Related Parties to assure they
are reasonable and made on an
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"arm's length transaction" basis. If they are not, Landlord may object to the
exclusion from Cash Flow of such portions of those amounts as are unreasonable.
If Landlord's Accepted Auditor and Tenant's Accepted Auditor disagree as to the
characterization of any payment, the dispute, if not resolved by mutual
agreement of Landlord and Tenant, shall be submitted to a court for resolution,
with the losing party paying the costs, fees and expenses of the other and
interest on any resulting over or underpayment of the Contingent Payments from
the date of payment or non-payment as the case may be. Landlord acknowledges
that the following distributions and payments to Related Parties are reasonable
and hence excluded from Cash Flow: (1) the management fees paid to the Casino
Manager/Operator under the Casino Management Agreement; (2) any principal or
interest at eight percent (8%) paid to HET or any of its affiliates under the
Amended and Restated Completion Loan Agreement or other amounts paid to HET or
any of its affiliates pursuant to Sections 6 or 20(m) of the Amended and
Restated Completion Loan Agreement, as disclosed in the Plan; (3) any principal,
interest, or contingent interest paid in connection with the Subdebt, the
Convertible Junior Subordinated Debentures, the Construction Credit Facility,
the New Bonds and the New Contingent Bonds; (4) any principal or interest at
eight percent (8%) paid to HOCI under the Amended and Restated Construction Lien
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Indemnity Obligation Agreement, as disclosed in the Plan; (5) any fees paid to
HET or any of its affiliates for any guarantee provided by such entity with
respect to the Construction Credit Facility pursuant to the Credit Enhancement
Fee Agreements to be entered into by Tenant pursuant to the Plan, as disclosed
in the Plan; and (6) any fees or other amounts paid to HET or HOCI under the
HET/JCC Agreement as disclosed in Exhibit G to the Casino Operating Contract.
Also excluded from Cash Flow are distributions of Proceeds of Major Capital
Events; provided that if Tenant has used cash flow from operation of the Casino
to effect replacement, any proceeds which Tenant receives under Articles XIII or
XV of this Lease which are distributed rather than applied to the replacement
for which Tenant received them shall be considered Cash Flow. In the case of any
Capital Transaction where cash flow is used to prepay Tenant debt and a
refinancing of such debt occurs within twelve (12) months thereafter, proceeds
of such refinancing shall be considered Cash Flow. Notwithstanding the foregoing
or anything to the contrary contained in this Lease, Cash Flow shall not include
rent received by Tenant from JCC Development under the terms of the Second Floor
Non-Gaming Sublease and shall not include any of the following payments or
distributions made by Tenant as a part of consummation of the Plan: (i) the
issuance of the Subdebt, the Convertible Junior Subordinated Debentures, the New
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Bonds and the New Contingent Bonds, (ii) the issuance of the Common Stock and
(iii) payments to or for the benefit of holders of various Non-Insider Claims.
"Non-Insider Claims" shall mean any claims by any person or entity other than an
"insider" as defined in 11 U.S.C. Section 101(31)(C).
1.12. Casino means the Improvements on the Casino Premises or the games
and gaming operations conducted therein, as the context may require.
1.13. Casino Gaming Operations means any gaming operations permitted under
the Act and offered or conducted at or on the Development.
1.14. Casino Management Agreement means that certain Second Amended and
Restated Casino Management Agreement by and between Tenant and HNOMC of even
date herewith pertaining to the management and/or operation of the Casino, a
copy of which is attached to this Lease as Exhibit "H" and made a part hereof.
1.15. Casino Manager/Operator means HNOMC or any other Person(s) approved by
the City (other than employees hired by the Casino Manager/Operator or Tenant)
engaged, hired and/or retained by Tenant to manage and/or operate the Casino
Gaming Operations.
1.16. Casino Operating Contract means that certain Amended and Renegotiated
Casino Operating Contract by and among the State of Louisiana by and through the
LGCB, or its successor, Harrah's Jazz Company and Tenant, or its
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successor, entered into pursuant to the Plan, as it may be amended from time to
time, authorizing gaming operations at the Casino in accordance with LSA R.S.
27:201 through 286, as amended.
1.17. Casino Premises means the land described in Exhibit "A-1" attached to
this Lease and made a part hereof.
1.18. City means the City of New Orleans. Whenever the term City is used as
an indemnitee or an insured, the term City shall include the City and the Mayor
and City Council members of the City, and the employees, agents and
representatives of the City.
1.19. City Council means the Council of the City.
1.20. City Lease means that certain Amended and Restated Lease Agreement,
dated as of March 15, 1994, pursuant to which the City, as landlord, leased the
Leased Premises and the existing Improvements thereon to the Rivergate
Development Corporation, as tenant, a copy of which is attached to this Lease as
Exhibit "N-1" and made a part hereof, as amended by that certain First Amendment
to Amended and Restated Lease Agreement, a copy of which is attached to this
Lease as Exhibit "N-2" and made a part hereof (the "City Lease Amendment").
1.21. COC Fiscal Year means the period beginning April 1 of each calendar
year and ending March 31 of the following calendar year.
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1.22. COC Minimum Payment means the sum of One Hundred Million Dollars
($100,000,000) due the State of Louisiana by and through the LGCB for each COC
Fiscal Year.
1.23. Common Stock means the common stock issued by JCC Holding in connection
with the Plan.
1.24. Component shall have the meaning set forth in the GDA.
1.25. Construction Credit Facility means the new bank financing to be
obtained by Tenant on the Plan Effective Date pursuant to Section 6.2(h) of the
Plan which shall include term loans and a revolving credit facility to be
obtained by Tenant on the Plan Effective Date pursuant to Section 6.2(h) of the
Plan.
1.26. Control including the terms Controlling, Controlled by and under
common Control with, and their correlative meanings, means with respect to a
Person the ownership of more than fifty percent (50%) of the beneficial interest
or voting power of such Person or the ability, by contract or otherwise, to
elect a majority of the directors of a corporation, or otherwise to select, or
have the power to remove and select, a majority of those Persons exercising
governing authority over an entity.
1.27. Convertible Junior Subordinated Debentures means the convertible junior
subordinated debentures to be issued by Tenant in the
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approximate aggregate principal amount of Twenty-Seven Million Dollars
($27,000,000) pursuant to the Plan.
1.28. CPI means the Consumer Price Index for all Urban Consumers, United
States City Average, prepared by the Bureau of Labor Statistics of the
Department of Labor of [1984-1986=100], or, if such index shall cease to be
published, such other comparable index of inflation as may be reasonably
selected by Tenant's Accepted Auditor with Landlord's consent not to be
unreasonably withheld or delayed.
1.29. Default Rate means a floating rate of interest at all times equal to
the greater of (a) the prime rate of Citibank, N.A., or its successor, plus four
percent (4%) per annum or (b) fourteen percent (14%) per annum; provided,
however, the Default Rate shall not exceed the maximum rate allowed by
applicable law.
1.30. Development means the Leased Premises and the Improvements.
1.31. Discriminatory means those acts or things which adversely affect
Tenant, Landlord or the Development (or any part or use thereof), as the context
permits, to the exclusion of others of a like class, or which treat Tenant or
the Development (or any part or use thereof) as a class of one. An act or thing
shall not be deemed Discriminatory merely because its cost or effect takes into
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consideration the unique or monopoly characteristics of the Development so long
as the procedure or methodology for its determination or its implementation is
not Discriminatory.
1.32. Effective Date means April 27, 1993.
1.33. Encroachment Area means those areas within Poydras Street, Convention
Center Boulevard, South Peters Street, Fulton Street, Lafayette Street, Girod
Street and Canal Street and adjacent sidewalks and rights of ways upon which the
Improvements encroach as generally described in Exhibit "A-10" attached to this
Lease and made a part hereof.
1.34. Environmental Law means any of the following laws and all regulations
validly promulgated thereunder: Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et
seq.), the Hazardous Material Transportation Act, as amended (49 U.S.C. Section
1801, et seq.), the Resource Conservation and Recovery Act, as amended (42
U.S.C. Section 6901, et seq.), the Toxic Substance Control Act, as amended (15
U.S.C. Section 2601, et seq.), the Louisiana Environmental Quality Act, as
amended (LSA R.S. 30:2001, et seq.), the Louisiana Solid Waste Management and
Resource Recovery Law, as amended (LSA R.S. 30:2151, et seq.), the Louisiana
Hazardous Waste Control Law, as amended (LSA R.S. 30:2171, et seq.), the
Louisiana Resource Recovery and Development Act, as
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amended (LSA R.S. 30:2301, et seq.), and the Hazardous Materials Transportation
and Motor Carrier Safety Law, as amended (LSA R.S. 32:1501, et seq.).
1.35. Equity Amount means (i) Three Hundred Twenty Million Dollars
($320,000,000), less (ii) the sum of (A) the average aggregate market value of
the New Contingent Bonds and the New Bonds over the first twenty (20) days of
trading to the extent such amount is in excess of One Hundred Eighty-Seven
Million Five Hundred Thousand Dollars ($187,500,000) and (B) the weighted
average closing share price of the Common Stock over the first twenty (20) days
of trading times the number of outstanding shares.
1.36. Event of Default means any of the events described in Section 21.1 of
this Lease.
1.37. Execution Date means the date as of which this Lease is executed and
delivered by the parties hereto and the Plan Effective Date has occurred.
1.38. Expiration Date means the last day of the Term, whether by expiration
of the Term or early termination of this Lease.
1.39. Extended Term means an extended term of this Lease as provided in
Section 3.1 of this Lease.
1.40. FF&E means all furniture, furnishings, equipment and fixtures necessary
or appropriate to fully and properly operate the Casino.
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1.41. Financial Statements means the balance sheet and related statements of
income and cash flows prepared in conformity with GAAP substantially in the form
attached as Exhibit "L" attached to this Lease and made a part hereof.
1.42. Financially Conditioned means the imposition of an increase in Rent or
Additional Charges or other charge, fee, or similar extraction (other than
reasonable review, consulting and processing charges in the ordinary course) in
connection with the issuance or granting of a consent or approval.
1.43. Financing means the act or process or an instance of raising funds for
the Development through the issuance of stocks, bonds, notes, mortgages or other
debt or security issuance.
1.44. Fiscal Year means the fiscal year of Tenant that ends on December 31 of
each calendar year. The first Fiscal Year shall be the period commencing on the
Plan Effective Date and ending on December 31 of the year in which the Plan
Effective Date occurs. The term "Full Fiscal Year" means any Fiscal Year
containing not fewer than three hundred sixty-four (364) days. Each Partial
Fiscal Year shall constitute a separate Fiscal Year.
1.45. GAAP means principles of accounting for casinos set forth in the Audit
and Accounting Guide for Audits of Casinos, with conforming changes as of May 1,
1992, prepared by the American Institute of Certified Public
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Accountants, as amended from time to time, or if not thereby addressed, other
generally accepted accounting principles.
1.46. Gaming Authorities means all agencies, authorities and
instrumentalities of the City, State of Louisiana or United States, or any
subdivision thereof, having jurisdiction over the gaming or related activities
at the Casino, including, but not limited to, the LGCB or its successor.
1.47. Gaming Devices means slot machines, roulette tables, card tables, and
any other device that is used for gaming operations at the Casino.
1.48. Gaming Space means that area of the Casino in which gaming activity
takes place and does not include support, storage, entertainment, service and
other such areas.
1.49. GDA means that certain Amended and Restated General Development
Agreement by and between Landlord, Tenant and the City dated of even date
herewith, pursuant to which Tenant agrees to construct the Casino and the
Support Facilities and undertakes certain other pre-opening obligations.
1.50. Governmental Requirements means all laws, ordinances, statutes, zoning
requirements, and agreements of any governmental authority, including but not
limited to the Act, that are applicable to the acquisition, demolition,
development, construction and operation of the Casino and the Support
Facilities.
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1.51. Gross Gaming Revenue means the total of all: (a) cash received as
winnings; and (b) net credit extended to patrons for the purpose of gaming
whether or not evidenced by a credit instrument (including any cashless wagering
system); and (c) compensation received for conducting any game in which Tenant
or its agent is not a party to a wager; less the total of all cash paid out as
losses to patrons directly or indirectly, and those amounts paid to purchase
annuities to fund losses paid to patrons over several years by independent
financial institutions. In calculating Gross Gaming Revenue, any prizes,
premiums, drawings, benefits or tickets, or other items that are redeemable for
money or merchandise or other promotional allowance, except money or tokens paid
at face value directly to a patron as a result of a specific wager and the
amount of cash paid to purchase an annuity to fund winnings paid to that patron
over several years by an independent financial institution, must not be deducted
as losses from winnings at any game, and this shall include, but not be limited
to, travel expenses, food, refreshments, lodging or other services provided by
Tenant. "Losses" shall also not include amounts paid to any vendor of gaming
devices or equipment, measured by, or paid from, the revenue from any device or
equipment, for example "bucket sales", "participation" agreements or "sharing"
in the drop.
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For these purposes, "credit instrument" means a writing which
evidences a gaming debt, and includes any writing taken in consolidation,
redemption or payment of a previous credit instrument. Credit instruments shall
include, but not be limited to, all markers, IOUs, promissory notes, returned
checks, hold checks or other similar credit instruments, or any other credit
arrangement, regardless of the location where the credit is extended, including
but not limited to credit cards, lines of credit, cash advances or draws.
Amounts collected under a credit instrument shall not be included in the
calculation of Gross Gaming Revenue to the extent they have already been
properly included under Section 1.51(b) of this Lease.
For these purposes, "cash" and "credit" shall include any transfer,
in whole or in part, by computer, electronic or telephonic funds transfer.
For purposes of this Section 1.51, "net credit" shall mean the
amount of credit extended to patrons less a Two Million Dollar ($2,000,000)
reduction for bad debts or other uncollected amounts for each Fiscal Year (or
such lower amount as shall be applicable on a pro rata basis to a Partial Fiscal
Year).
For purposes of illustrating the computation set forth above, the
following shall apply:
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(1) For each table game, Gross Gaming Revenue equals
the closing bank roll plus credit slips for cash, chips, or tokens
returned to the casino cage plus drop, less opening bank roll and
fills to the table.
(2) For each slot machine, Gross Gaming Revenue equals
drop less fills to the machine, jackpot payouts and, if Tenant
retains detailed documentation supporting the deduction, the actual
cost to Tenant, its agent or employee, or a person Controlling,
Controlled by, or under common Control with Tenant, of any personal
property (other than the cost of travel, food, lodging, services,
and food and beverages) provided for or distributed to the patron
as winnings. The initial hopper load is not a fill and does not
affect Gross Gaming Revenue. The initial hopper load will be
reduced to an assumed average balance of fifty percent (50%) and
shall be offset against Gross Gaming Revenue over the first twelve
(12) months following placement of such slot machine in service.
Thereafter it will be assumed that all hoppers are fifty percent
(50%) full and there will be no further recognition of or offset
against Gross Gaming Revenue owing to changes in hopper loads until
the Expiration Date, or, if
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sooner, upon removal of any slot machine from service, at which
time any difference between fifty percent (50%) of the initial
hopper load and the hopper load at closing will be recognized as,
or, if negative, reduce, Gross Gaming Revenue. Nevertheless, Tenant
shall have the right to review and verify changes in hopper loads
against Tenant's computerized inventory tracking system or other
records accounting for hopper inventory, if existing, to protect
its interest in a full reporting of revenues.
(3) For each counter game, Gross Gaming Revenue equals
the money accepted by Tenant on events or games that occur during
the month or will occur in subsequent months, less money paid out
during the month to patrons on money wagers.
(4) For each card game, and any other game in which
Tenant is not party to a wager, Gross Gaming Revenue equals all
money received by Tenant as compensation for conducting the game.
(5) Tenant shall not include either shill win or shill
loss in Gross Gaming Revenue computations.
(6) Tenant shall not deduct as losses: (i) theft or
embezzlement losses, (ii) money paid out on wagers or (iii) other
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payments and losses to patrons, that are in violation of the Act,
from Gross Gaming Revenue.
(7) If in any month the Gross Gaming Revenue is less
than zero, that loss may be carried forward or backward to offset
Gross Gaming Revenue within that Fiscal Year. Gross gaming losses
may not be offset against Gross Non-Gaming Revenue.
(8) The foregoing illustrations do not otherwise
affect the computation of net credit extended to patrons.
1.52. Gross Non-Gaming Revenues means the total of all value,
compensation, interest and income of any kind received by Tenant including,
but not limited to, cash and payment of checks, drafts, vouchers, notes, and
instruments, and derived from:
(1) All sales by Tenant or an Affiliate of
Tenant at or from the Development of
food, beverages, goods, services,
entertainment, parking, rides, wares
and/or merchandise or other permitted
non-gaming uses, not including any such
sales, other than sales by Tenant or an
Affiliate of Tenant, within the premises
then covered by the Second Floor
Non-Gaming Sublease;
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(2) All Space Tenants or any other person who
otherwise gains commercial advantage or
revenue from a presence or association
with the Development;
(3) The operation of any cafeteria or
restaurant operated by Tenant or an
Affiliate of Tenant on the Development;
(4) The operation of any business or
enterprise owned or operated by Tenant or
an Affiliate of Tenant on the
Development, including, but not limited
to, entertainment and retail
establishments; and
(5) The sales within the SMSA of any souvenir
or clothing items bearing any tradename
or servicemark associated with the Casino
such as "Harrah's", "Casino", "New
Orleans", or any combination thereof.
Gross Non-Gaming Revenues shall also include the profit (as determined by GAAP)
derived by Tenant, JCC Holding, any direct or indirect subsidiary of JCC
Holding, or any Affiliate Controlling or Controlled by Tenant, from the
promotion of any commercial event in the SMSA that uses the trade names and/or
good will associated with the Casino.
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Notwithstanding the foregoing, Gross Non-Gaming Revenues shall not
include: (i) amounts received that are refunded later as a result of merchandise
returns or for any other reason; (ii) the amount of all sales and other taxes
collected and paid to the appropriate taxing authorities; (iii) amounts received
from the sale of lottery tickets (other than commissions); (iv) amounts received
in connection with any bulk sale, sale of trade fixtures or any other sale out
of the ordinary course of business; (v) returned security deposits and any other
types of returned deposits unless retained and applied to rent or any other item
that would be income to Tenant; (vi) delivery charges; (vii) amounts received
from charitable collections and promotional sales in connection with charitable
collections to the extent those amounts received are contributed to charity;
(viii) amounts received as reimbursements from Space Tenants for taxes,
insurance, utilities, and common area expenses; and (ix) rent paid by JCC
Development pursuant to the Second Floor Non-Gaming Sublease. Gross Non-Gaming
Revenues shall be determined using the cash method of accounting.
1.53. HCCIC means Harrah's Crescent City Investment Company, a Nevada
corporation.
1.54. HET means Harrah's Entertainment, Inc., a Delaware corporation.
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1.55. HET/JCC Agreement means that certain HET/JCC Agreement by and between
HET, HOCI and Tenant, dated as of even date herewith attached as Exhibit G to
the Casino Operating Contract, or any successor or substitute agreement
providing for the furnishing of a Minimum Payment Guaranty (as defined in
Section 25.1 of the Casino Operating Contract).
1.56. Highest and Best Use means the reasonably probable and legal use of
vacant land or improved property, which is physically possible, for which demand
is appropriately evidenced, supported, financially feasible, and that results in
the highest value.
1.57. HNOMC means Harrah's New Orleans Management Company, a Nevada
corporation.
1.58. HOCI means Harrah's Operating Company, Inc., a Delaware corporation.
1.59. Improvements means, to the extent permanently attached to the ground
or a component part of a building or other construction permanently attached to
the ground, any buildings, structures, roads, roadways, mechanical devices,
landscaping, facilities and appurtenances constructed and situated now or at
anytime hereafter upon the Leased Premises.
1.60. Initial Term means the initial term of this Lease as provided in
Section 3.1 of this Lease.
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1.61. JCC Development means JCC Development Company, L.L.C., a Louisiana
limited liability company, and its successors and assigns.
1.62. JCC Holding means JCC Holding Company, a Delaware corporation, and its
successors and assigns.
1.63. JCC Intermediary means JCC Intermediary Company, L.L.C., a Louisiana
limited liability company, and its successors and assigns, if formed in
accordance with Section 5.6 of this Lease.
1.64. Lafayette Subsurface Area means the property described in Exhibit "A-6"
attached to this Lease and made a part hereof.
1.65. Landlord means the Rivergate Development Corporation, a Louisiana
public benefit corporation formed on the 7th day of April, 1993 by virtue of
Louisiana Revised Statute Title 12, Sections 201-269 and Title 41:1212(G), and
Ordinance Calendar No. 18,430, adopted by the City Council on April 1, 1993, as
amended on the date Ordinance Calendar No. 18,483 was adopted by the City
Council, a certified copy of which is attached to this Lease as Exhibit "O" and
made a part hereof, together with its successors, successors-in-title,
transferees and assigns. Whenever the term Landlord is used as an indemnitee,
the term Landlord shall include the Landlord and the shareholders, officers,
directors, employees, agents and representatives of Landlord.
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1.66. Lease means this amended and restated lease document, as it may be
amended, modified, restated or supplemented from time to time including all
exhibits thereto.
1.67. Leased Premises means the Casino Premises, the Poydras Street Support
Facility Premises, the Poydras Tunnel Area, the Lafayette Subsurface Area, the
Pedestrian Bridge Areas and the Encroachment Area.
1.68. Leasehold Mortgage means a mortgage on this Lease and the Improvements.
1.69. Leasehold Mortgagee means the holder from time to time of a Leasehold
Mortgage.
1.70. LGCB means the Louisiana Gaming Control Board or its successors.
1.71. Loan Default means a default by Tenant on an obligation to a
Leasehold Mortgagee that entitles the Leasehold Mortgagee to exercise the right
to foreclose upon, acquire, or possess this Lease and the Improvements.
1.72. Manager's Property means any System Marks, confidential or proprietary
information or other property which may be subject to removal from the Casino by
the Casino Manager/Operator pursuant to Section 12.02 of the Casino Management
Agreement.
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1.73. MAR means the market appreciation right of Landlord as provided in
Section 4.15 of this Lease.
1.74. Master Plan shall have the meaning set forth in the Second Floor
Non-Gaming Sublease.
1.75. Mayor means the Mayor of the City.
1.76. New Bond Documents means the documentation in connection with the New
Bonds and the New Contingent Bonds, as more particularly defined in the Plan.
1.77. New Bonds means the Senior Subordinated Notes due 2009 to be issued
pursuant to the Plan in the aggregate noncontingent principal amount of One
Hundred Eighty-Seven Million Five Hundred Thousand Dollars ($187,500,000), as
more particularly defined in the Plan.
1.78. New Contingent Bonds means the Senior Subordinated Contingent Notes
due 2009 to be issued under the Plan, as more particularly defined in the Plan.
1.79. Open Access Plans means the Amended and Restated Open Access Plans
adopted by Tenant pursuant to this Lease and in connection with the Open Access
Program.
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<PAGE>
1.80. Open Access Program means the program hereby established by Landlord
and Tenant as the Open Access Program, a copy of which is attached as Exhibit
"C" to this Lease and made a part hereof.
1.81. Opening Date means the first day on which the Casino is open for
business to the general public.
1.82. Original Amended Lease Execution Date means March 15, 1994.
1.83. Partial Fiscal Year means any of (i) the partial Fiscal Year commencing
with the Opening Date and ending on December 31 of the year in which the Opening
Date occurs or (ii) the partial Fiscal Year commencing after the end of the last
Full Fiscal Year of the Term and ending with the expiration of the Term or
earlier termination of this Lease.
1.84. Pedestrian Bridge Areas means those areas above the surface of Poydras,
Fulton and Lafayette Streets described in Exhibit "A-9" attached hereto and made
a part hereof.
1.85. Person means any individual, partnership, corporation, association,
unincorporated organization, trust or other entity, including but not limited
to, any government or agency or subdivision thereof, and the heirs, executors,
administrators, legal representatives, successor and assigns of such Person
where the context so permits.
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<PAGE>
1.86. Phase shall have the meaning set forth in the GDA.
1.87. Phase I and II Construction shall have the meaning set forth in the
GDA.
1.88. Poydras Street Support Facility Premises means the land described in
Exhibit "A-7" attached to this Lease and made a part hereof.
1.89. Poydras Tunnel Area means the property described on Exhibit "A-8"
attached to this Lease and made a part hereof.
1.90. Proceeds of Major Capital Event(s) means the net proceeds of any
Capital Transaction (after deduction of closing costs and expenses), but
excluding proceeds (1) used to discharge outstanding debt of Tenant or (2) used
for dividends or distributions from JCC Holding to the Shareholders until such
time as the Shareholders have received dividends or distributions from JCC
Holding in a cumulative aggregate amount equal to the Equity Amount.
1.91. Rent means the rent described in Section 4.3 of this Lease.
1.92. Second Floor Non-Gaming Sublease means that certain Second Floor
Non-Gaming Sublease between Tenant and JCC Development of even date herewith
pertaining to the sublease of approximately one hundred thirty thousand
(130,000) square feet of net rentable area on the second floor of the Casino, as
outlined on the floor plan attached as Exhibit "B" to the Second Floor
Non-
31
<PAGE>
Gaming Sublease, for non-gaming uses, a copy of which is attached hereto as
Exhibit "M" and made a part hereof.
1.93. Secured Debt means a debt of Tenant secured by a Leasehold Mortgage.
1.94. Shareholder(s) means the shareholders of JCC Holding as described in
the Plan or their (if required, approved) successors and assigns, or any of
them.
1.95. Site Mobilization means December 31, 1994.
1.96. Site Reactivation Date shall have the meaning set forth in the GDA.
1.97. SMSA means the Greater New Orleans Standard Metropolitan Statistical
Area, as defined by the United States Department of Commerce, United States
Census Department, in the 1990 Census.
1.98. Space Lease means any lease, sublease, including, without limitation,
the Second Floor Non-Gaming Sublease, franchise, license or other agreement
other than this Lease or the Casino Management Agreement that would permit or
allow a Person to use and/or maintain space as a tenant in or on the
Development.
1.99. Space Tenant means the tenant under a Space Lease.
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<PAGE>
1.100. Square 26 Property means the land and the improvements thereon donated
to the City by Harrah's Jazz Company by that certain Act of Donation dated
November 15, 1994 and recorded in the Conveyance Office of the Parish of Orleans
on November 16, 1994 at Book 928, Folio 748 as document No. 94-52753.
1.101. Subdebt means the Ten Million Dollar ($10,000,000) junior subordinated
credit facility to be provided by HET or an affiliate of HET to Tenant pursuant
to the Plan (including, without limitation, the issuance of securities, if any).
1.102. Substantial Completion shall have the meaning set forth in the GDA.
1.103. Suitable Lender means:
(1) any insurance company as defined in Section 2(13) of the
Securities Act of 1933, as amended;
(2) any investment company registered under the Investment
Company Act of 1940, as amended;
(3) any business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940, as amended;
33
<PAGE>
(4) any small business investment company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958, as amended;
(5) any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its employees;
(6) any employee benefit plan within the meaning of Title I of
the Employee Retirement Income Security Act of 1974, as amended;
(7) any trust fund whose trustee is a bank or trust company and
whose participants are exclusively plans of the types identified in
paragraph (5) or (6) of this Section 1.103;
(8) any business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940, as amended;
(9) any organization described in Section 501(c)(3) of the
Internal Revenue Code, as amended, corporation, partnership, or
Massachusetts or similar business trust;
34
<PAGE>
(10) any investment adviser registered under the Investment
Advisers Act of 1940, as amended;
(11) any real estate investment trust registered with the United
States Securities and Exchange Commission, excluding Tenant and Tenant's
Affiliates;
(12) any dealer registered pursuant to Section 15 of the
Securities and Exchange Act of 1934, as amended;
(13) any entity, all of the equity owners of which are
"qualified institutional buyers" (as defined in Rule 144A under the
Securities Act of 1933, as amended) acting for its own account or the
accounts of other qualified institutional buyers;
(14) any bank as defined in Section 3(a)(2) of the Securities
Act of 1933, as amended, any savings and loan association or other
institution as referenced in Section 3(a)(5)(A) of the Securities Act of
1933, as amended, or any foreign bank or savings and loan association or
equivalent institution or any investment fund that participates in a
bank syndication (and purchaser that takes an assignment interest in the
bank syndication), excluding Tenant and Tenant's Affiliates;
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<PAGE>
(15) any investor or group of investors purchasing debt
securities of Tenant in any public offering registered pursuant to the
Securities Act of 1933, as amended, or any private placement;
(16) HET and HOCI as to any loan made pursuant to, or arising as
a result of advances made pursuant to, the Amended and Restated
Completion Loan Agreement, the Amended and Restated Construction Lien
Indemnity Obligation Agreement, the guarantee by HET and HOCI of the
Construction Credit Facility pursuant to the Plan, the indemnity by HET
or HOCI to the provider of the surety bond attached as Exhibit C to the
GDA, the guaranty provided by HET and HOCI pursuant to the HET/JCC
Agreement, and the Subdebt; provided that such treatment shall not allow
HET or HOCI to have any additional or longer cure period than is
provided to Leasehold Mortgagees pursuant to Article XXIII of this
Lease; and
(17) HET and entities Controlled by, under common Control with,
or Controlling HET as to any Financing made by such entity pursuant to
Section 23.2 of this Lease; provided that such treatment shall not allow
HET or HOCI to have any additional or longer
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<PAGE>
cure period than is provided to Leasehold Mortgagees pursuant to
Article XXIII of this Lease.
1.104. Support Facilities means the Improvements on the Support Facilities
Premises or the business and operations conducted thereon, as the context may
require.
1.105. Support Facilities Premises means the Poydras Street Support Facility
Premises, the Employee and Bus Parking Support Facility Premises, the Employee
and Bus Parking Facility Servitude Area, the Employee and Bus Parking Facility
Access Servitude Area, the Observation Tower Servitude Area, the Poydras Tunnel
Area, the Lafayette Subsurface Area, the Pedestrian Bridge Areas and the
Encroachment Area.
1.106. System Marks shall have the meaning set forth in the Casino Management
Agreement.
1.107. Tenant means Jazz Casino Company, L.L.C., a Louisiana limited liability
company, its assignees as same are permitted in the Lease or any successors in
interest. Whenever the term Tenant is used as an indemnitee, the term Tenant
shall mean Tenant, JCC Intermediary (if formed in accordance with Section 5.6 of
this Lease), JCC Development and JCC Holding and their respective shareholders,
officers, directors, employees, agents and representatives.
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<PAGE>
1.108. Tenant's Property means all movable property leased or owned by Tenant
that has been brought onto the Development by Tenant or its employees, agents,
servants or contractors, including, but not limited to, gaming devices and
machines, removable temporary buildings, and card or gaming tables. Tenant's
Property shall not include the Improvements, any of Manager's Property, any
property owned by Landlord or the City or any immovable property.
1.109. Term means the Initial Term and any Extended Term for which the option
to extend as provided in this Lease has been properly exercised.
1.110. Other Defined Terms . The following terms shall have the meaning
defined for such terms in the Sections of this Lease set forth below:
<TABLE>
<CAPTION>
<S> <C>
1992 Act ............................................................................Section 32.3
Accelerated Liability.........................................................Section 21.3(c)(ii)
Accepted Auditor.....................................................................Section 14.3
Adjustment........................................................................Section 4.20(b)
Alterations.......................................................................Section 16.1(a)
Annual Audit......................................................................Section 14.3(b)
Architect.........................................................................Section 12.2(a)
Audubon Payments......................................................................Section 4.7
Bankruptcy Court.........................................................................Recitals
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Big Six Firms........................................................................Section 14.2
Budget ..............................................................................Section 19.1
Budget Escrow Account................................................................Section 19.1
Capital Replacement Fund..........................................................Section 19.8(a)
Change in Use.....................................................................Section 4.20(a)
Change of Control.................................................................Section 24.1(c)
City Agreement...........................................................................Recitals
City-Controlled Entity............................................................Section 32.4(d)
City/Landlord Award..................................................................Section 15.3
City Lease Amendment.................................................................Section 1.20
City Payments.......................................................................Section 4.4.1
Condemnation......................................................................Section 15.1(a)
Condemnation Escrow Account..........................................................Section 15.4
Condemnation Escrow Agent............................................................Section 15.4
Condemnation Work....................................................................Section 15.4
Contingent Payments................................................................Section 4.8(a)
Deadline Date.........................................................................Section 3.2
Discount Rate.....................................................................Section 21.3(j)
Disputed Funds....................................................................Section 21.1(g)
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Disputed Funds Escrow Account.....................................................Section 21.1(g)
Disputed Funds Escrow Agent.......................................................Section 21.1(g)
Donated Property.....................................................................Section 4.16
Employee and Bus Parking Facility Access Servitude Area...........................Section 4.18(c)
Employee and Bus Parking Facility Servitude Area..................................Section 4.18(b)
Employee and Bus Parking Support Facility Premises................................Section 4.18(a)
Environmental Matters................................................................Section 18.2
Equivalent Payments............................................................Section 6.6(g)(ii)
Excess ........................................................................Section 21.3(b)(i)
Excess Proceeds...................................................................Section 23.3(c)
Exchange Act.........................................................................Section 14.2
First Leasehold Mortgagee..........................................................Section 6.6(e)
Full Fiscal Year.....................................................................Section 1.44
Gaming Percentage Statement........................................................Section 4.4(b)
Gross Gaming Payments.................................................................Section 4.4
Gross Gaming Percentage Amount.....................................................Section 4.4(a)
Gross Non-Gaming Payments.............................................................Section 4.9
Guaranty ........................................................................Section 32.25(a)
Harrah's Jazz Company....................................................................Preamble
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Harrah's S&RP........................................................................Section 19.3
House Bank...........................................................................Section 19.6
ICS.................................................................................Section 19.13
Impositions........................................................................Section 9.1(a)
Insurance Trustee.................................................................Section 12.2(a)
JCC S&RP ............................................................................Section 19.3
Key Casino Personnel...............................................................Section 5.3(b)
Landlord's Audit..................................................................Section 14.3(b)
Landlord's Sublease Rent..........................................................Section 4.13(c)
Liens ............................................................................Section 10.2(a)
Local Firm........................................................................Section 14.3(a)
Major Condemnation................................................................Section 15.1(b)
MAR Exercise Notice..................................................................Section 4.15
MAR Payment..........................................................................Section 4.15
Marks .............................................................................Section 5.3(d)
Minimum Payments.....................................................................Section 4.19
Minor Condemnation................................................................Section 15.1(c)
Morris F.X. Jeff Auditorium..........................................................Section 4.21
Natural Breakpoint.................................................................Section 4.9(b)
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Net Market Appreciation..............................................................Section 4.15
New Lease............................................................................Section 23.6
Nominee ..........................................................................Section 23.3(a)
Non-Gaming Minimum Payment.........................................................Section 4.9(a)
Non-Gaming Percentage Payment......................................................Section 4.9(b)
Non-Gaming Percentage Statement....................................................Section 4.9(b)
Non-Insider Claims...................................................................Section 1.11
Non-Structural Alteration.........................................................Section 16.1(d)
Observation Tower Servitude Area..................................................Section 4.18(d)
Option Period......................................................................Section 6.6(f)
Original Amended Lease...................................................................Preamble
Other Operator.....................................................................Section 6.6(e)
Plan.....................................................................................Recitals
Plan Effective Date......................................................................Recitals
Possession Date.......................................................................Section 6.3
Pre-Opening Date Rent...............................................................Section 4.9.2
Preservation Costs...................................................................Section 19.6
Proceeds .........................................................................Section 15.1(d)
Profit............................................................................Section 24.1(e)
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Property/Casualty Insurance.......................................................Section 13.1(a)
Qualified Appraiser...............................................................Section 4.20(c)
Qualified Net Worth..................................................................Section 22.2
Railroad Lease....................................................................Section 4.18(a)
Related Party........................................................................Section 1.11
Re-letting Expenses...........................................................Section 21.3(b)(ii)
Rental Adjustment Date................................................................Section 4.3
Repair Work.......................................................................Section 12.2(a)
Replacement Casino.............................................................Section 6.6(g)(ii)
Riverboat Casino......................................................................Section 8.4
School Board Payments.................................................................Section 4.6
Second Audit......................................................................Section 14.3(b)
Secured Areas........................................................................Section 17.2
Secured Obligations................................................................Section 6.6(e)
Special Event Charges.................................................................Section 9.7
Statutory Limit..................................................................Section 32.13(b)
Tenant Award.........................................................................Section 15.3
Tenant's Notice....................................................................Section 5.3(d)
Third Party Environmental Matters....................................................Section 18.3
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Transfer..........................................................................Section 24.1(a)
Transferee........................................................................Section 24.1(c)
Transferor........................................................................Section 24.1(e)
Transfer Payment..................................................................Section 24.1(e)
Transition Fund......................................................................Section 19.6
Transition Period....................................................................Section 19.6
Uncured Event of Default..........................................................Section 21.3(a)
</TABLE>
ARTICLE II.
LEASED PROPERTY
Section 2.1. Unsubordinated Lease
In consideration of the obligation of Tenant to pay Rent and the
Additional Charges and to construct, build and operate the Casino and the
Support Facilities in accordance with this Lease and the GDA, and in
consideration of the other terms, provisions, covenants and conditions of this
Lease, Landlord hereby leases to Tenant and Tenant hereby takes, accepts and
leases of and from Landlord the Leased Premises and the Improvements existing on
the Leased Premises. Landlord and Tenant acknowledge that Tenant has entered
into the Second Floor
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<PAGE>
Non-Gaming Sublease, and Landlord consents to and approves the Second Floor
Non-Gaming Sublease.
ARTICLE III.
TERM OF LEASE
Section 3.1. Term
The Initial Term of this Lease shall be thirty (30) years plus the amount
of time between the Effective Date and the Execution Date commencing on the
Effective Date. Tenant shall have the right and option to extend this Lease and
concurrently therewith, the Second Floor Non-Gaming Sublease (unless the Second
Floor Non-Gaming Sublease shall be sooner terminated pursuant to the terms and
conditions set forth therein), for three (3) consecutive Extended Terms of ten
(10) years each unless this Lease shall be sooner terminated pursuant to the
terms and conditions set forth herein; provided, however, that the option to
extend this Lease and the Second Floor Non-Gaming Sublease for Extended Terms
may be exercised only if there is no outstanding Event of Default.
Section 3.2. Extension Procedure
Tenant may exercise its right to extend this Lease and the Second Floor
Non-Gaming Sublease for each of the Extended Terms by giving notice to Landlord
not less than one (1) year (the "Deadline Date") prior to the expiration of the
then current Initial or Extended Term. If Tenant does not timely notify
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<PAGE>
Landlord of Tenant's election to renew by the Deadline Date, Landlord shall at
any time after the expiration of the Deadline Date give to Tenant and to each
Leasehold Mortgagee a written notice stating that the Deadline Date has passed.
Tenant or any Leasehold Mortgagee may nevertheless exercise the right to renew
within thirty (30) days after the receipt of Landlord's notice. Notwithstanding
the foregoing, if Tenant or any Leasehold Mortgagee does not exercise its option
to extend the Term for any Extended Term, the Lease and the Second Floor
Non-Gaming Sublease shall terminate at the end of the then current Term, giving
to Landlord all rights, title and interest in the Development, including, but
not limited to, the right to enter the property and take full possession of the
Development and all Improvements without any compensation or payment to Tenant
free and clear of any mortgages or security interests. The terms, covenants,
conditions and provisions in effect during the Extended Terms shall be the same
as those in effect during the Initial Term.
ARTICLE IV.
RENT AND ADDITIONAL CHARGES
Section 4.1. Initial Lease Payments
On the Effective Date, Harrah's Jazz Company, as Tenant's predecessor in
interest under the Original Amended Lease, paid to Landlord a
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<PAGE>
non-refundable payment of Fifteen Million Dollars ($15,000,000), receipt of
which is hereby acknowledged by Landlord. Harrah's Jazz Company, as Tenant's
predecessor in interest under the Original Amended Lease, has paid an additional
nonrefundable (except as provided in Section 4.20 of this Lease) payment of
Fifteen Million Dollars ($15,000,000) (which was reduced by Six Hundred Fifty
Thousand Dollars ($650,000), the amount paid by Harrah's Jazz Company to the
City on October 8, 1993), which was deemed earned on the Effective Date.
Section 4.2. Mobilization Payment
In addition to the payments described in Section 4.1 of this Lease,
Harrah's Jazz Company has paid to Landlord a non-refundable mobilization payment
of Eight Million Seven Hundred Fifty Thousand Dollars ($8,750,000), which was
deemed earned on the Effective Date.
Section 4.3. Rent
Subject to Section 4.19 of this Lease, commencing on the Opening Date (or,
if applicable, as set forth in Section 4.9.2 of this Lease), Tenant shall pay to
Landlord as rent (the "Rent") the amount of Five Million Dollars ($5,000,000)
per year for each of the first five (5) years after the Opening Date. On the
fifth anniversary of the Opening Date and on each fifth anniversary thereafter
during the Term (each a "Rental Adjustment Date"), unless the provisions of
Section
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23.10 of this Lease are applicable, the Rent shall be increased by Two Million
Five Hundred Thousand Dollars ($2,500,000) unless such increase would cause the
Rent to exceed three percent (3%) of Gross Gaming Revenues for the Fiscal Year
immediately preceding the Rental Adjustment Date, in which case the Rent for the
five (5) year period following the Rental Adjustment Date will be the greater of
(i) the Rent for the Fiscal Year immediately preceding the Rental Adjustment
Date or (ii) an amount equal to three percent (3%) of Gross Gaming Revenues for
the Fiscal Year immediately preceding the Rental Adjustment Date.
Section 4.4. Gross Gaming Payments
Subject to Section 4.19 of this Lease and in addition to the Rent,
commencing on the Opening Date, Tenant shall pay to Landlord gross gaming
payments based on Gross Gaming Revenues (the "Gross Gaming Payments"). The Gross
Gaming Payments for each Fiscal Year shall equal the amount by which the Gross
Gaming Percentage Amount for that Fiscal Year exceeds the Rent payable in the
same Fiscal Year.
(a) "Gross Gaming Percentage Amount" for a Fiscal Year shall be equal to
the sum of the amounts obtained by multiplying the following applicable
percentages by the following incremental amounts of the Gross Gaming Revenues
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<PAGE>
received in that Fiscal Year plus One Hundred Thousand Dollars ($100,000) per
year:
<TABLE>
<CAPTION>
Gross Gaming Revenues
(Millions) Applicable
In Excess of: To: Percentage
------------- --- ----------
<S> <C> <C> <C>
0 350.0 3.000%
350.0 375.0 3.500%
375.0 400.0 4.000%
400.0 425.0 4.500%
425.0 450.0 5.000%
450.0 475.0 5.500%
475.0 500.0 6.000%
500.0 525.0 6.500%
525.0 550.0 7.000%
550.0 575.0 7.500%
575.0 -- 8.000%
</TABLE>
"For example, if in Fiscal Year "A" the amount of the Gross
Gaming Revenues is $400,000,000, then the Gross Gaming
Percentage Amount in Fiscal Year "A" would be $12,475,000
[($350,000,000 x .0300) + ($25,000,000 x .0350) + ($25,000,000
x .0400) + ($100,000)]. Further illustrating, if the Rent
payable in Fiscal Year "A" is $5,000,000, then the amount of
Gross Gaming Payments payable in Fiscal Year "A" would be
$7,475,000 ($12,475,000 - $5,000,000)."
(b) On or before the twentieth day after the end of each month beginning
with the first full month after the Opening Date, Tenant shall deliver to
Landlord a statement (the "Gaming Percentage Statement") of the Gross Gaming
Revenues for the previous month and for the Fiscal Year to date. At such time as
Gross Gaming Revenues for the Fiscal Year to date exceed Three Hundred Fifty
Million
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<PAGE>
Dollars ($350,000,000), as set forth on the Gaming Percentage Statement, Tenant
shall pay to Landlord with the Gaming Percentage Statement for such month, and
for each month thereafter, any unpaid Gross Gaming Percentage Amount then due in
accordance with this Section 4.4. Gross Gaming Payments shall be computed
separately with respect to each Fiscal Year based on the amount of the Gross
Gaming Revenues received in that Fiscal Year, and there shall be no carry backs
or carry forwards with respect to any Fiscal Year.
Section 4.4.1. City Payments
Commencing on the Opening Date, Tenant shall make payments to the City
(the "City Payments") in the amount of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000) for each Fiscal Year during the Term in which Tenant
receives Gross Gaming Revenue in the amount of Three Hundred Fifty Million
Dollars ($350,000,000) or more. The City Payments shall be payable in monthly
installments in the amount of One Hundred Four Thousand One Hundred Sixty-Seven
Dollars ($104,167) each. The first such installment shall be payable on the
Opening Date and subsequent installments shall be due on the same day of each
succeeding calendar month during the Term.
Not later than ninety (90) days after the end of each Fiscal Year, Tenant
shall submit to the City a report showing:
(1) Gross Gaming Revenue for such Fiscal Year;
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<PAGE>
(2) The total amount of the City Payments made and overpayment
credits applied, if any, for such Fiscal Year; and
(3) The amount of the City Payments due for such Fiscal Year.
If the amount of the City Payments due to the City for any Fiscal Year is
less than the amount paid, Tenant shall receive a credit in the amount of the
overpayment only against the installments of the next year's City Payments in
the order in which they become due. If Tenant does not receive Gross Gaming
Revenue of Three Hundred Fifty Million Dollars ($350,000,000) or more in a
Fiscal Year, the credit for the City Payments made with respect to that Fiscal
Year shall continue to be carried forward to the earliest succeeding Fiscal Year
for which City Payments are due; provided that any such credit shall only be
applied against any such City Payments and not as a credit or setoff against
Rent or other Additional Charges due or to become due Landlord or the City
pursuant to this Lease or otherwise. At the end of the Term or any earlier
termination pursuant to the terms and conditions of this Lease, any unused
credit shall be extinguished and deemed released by Tenant and neither the City
nor Landlord shall have any obligation to refund to Tenant, nor shall Tenant
have any claim to recover, any such unused credit. The City Payments shall be
prorated for each Partial Fiscal Year during the Term. The City Payments shall
not constitute or be deemed a
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<PAGE>
payment for support services within the meaning of LSA R.S. 27:247, and the
parties to this Lease acknowledge and agree that Tenant is not liable for
payment of support services under LSA R.S. 27:247.
The City has released and returned undrawn the letter of credit in the
amount of One Million Five Hundred Thousand Dollars ($1,500,000) issued by
Bankers Trust Company in favor of the City securing the payment of the City
Payments. No such security shall henceforth be required with respect to the City
Payments.
Section 4.5. Resident Parking Payment
In the event that an ordinance of the City becomes effective creating
24-hour residential parking zones and 24-hour residential parking programs in
the French Quarter, Faubourg Marigny and/or Treme, Tenant shall pay to the City
within thirty (30) days after opening the Casino the sum of Sixty Thousand
Dollars ($60,000) for the first year of operation of the Casino to administer
these programs.
Section 4.5.1. Additional Payments
(a) Tenant agrees to pay to the City a one-time payment equal to Eight
Hundred Seventy-Five Thousand Dollars ($875,000) on or before December 31, 1999.
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(b) After the first anniversary of the Opening Date and on or prior to the
second anniversary of the Opening Date, Tenant agrees to pay to the City a
one-time payment equal to Eight Hundred Seventy-Five Thousand Dollars
($875,000).
(c) Tenant agrees to pay to the City an aggregate amount of Five Hundred
Thousand Dollars ($500,000) during the second year after the Opening Date, which
shall be payable in four (4) equal installments of One Hundred Twenty-Five
Thousand Dollars ($125,000) in accordance with this Section 4.5.1. The first
installment of One Hundred Twenty-Five Thousand Dollars ($125,000) shall be paid
to the City on the fifteen month anniversary of the Opening Date and each
installment thereafter shall be paid to the City on the three month anniversary
of the preceding payment, with the final installment of One Hundred Twenty-Five
Thousand Dollars ($125,000) to be paid to the City on the second anniversary of
the Opening Date.
Section 4.5.2. Trade Name Licenses
In the event Tenant licenses to third parties the manufacture and/or
distribution of trademarked, copyrighted or other intellectual property, the
licensing program will be open to third party applicants and local vendors who
meet Tenant's licensing standards at reasonable and nondiscriminatory rates.
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<PAGE>
Section 4.6. School Board Payments
Tenant agrees (by payment into a segregated account) to pay to the City
Two Million Dollars ($2,000,000) per Fiscal Year (or such lower amount as shall
be applicable on a pro rata basis to a Partial Fiscal Year) during the Initial
Term and any Extended Term after the Opening Date with the first payment to be
made within six (6) months after the Opening Date and thereafter on each annual
anniversary thereof (the "School Board Payments"). The School Board Payments
shall be dedicated to capital projects addressing health, safety, and teaching
and learning environment issues in the school facilities, with any disbursement
to the Orleans Parish School Board for such capital projects to be the sole
responsibility of the City Council. The School Board Payments shall increase
cumulatively on each annual anniversary of the Opening Date by a percentage
equal to the annual percentage increase in the revised CPI.
Section 4.7. Audubon Park Payments
Harrah's Jazz Company assumed, and Tenant has succeeded to Harrah's Jazz
Company's obligation with respect to, the City's financial obligation in the
amount of Two Hundred Thousand Dollars ($200,000) per year to the Audubon Park
Commission under Section 11.2 of the Riverfront Economic Development Agreement
dated April 30, 1992, between the City, the Board of Commissioners of the Port
of New Orleans and the Audubon Park Commission (the "Audubon
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Payments"). Subject to Section 4.19 of this Lease, Tenant shall make these
payments under the terms and conditions provided in that agreement.
Section 4.8. Contingent Payment Agreement
(a) Subject to the provisions of Section 4.15 of this Lease, Tenant shall
pay Landlord four and 99/100 percent (4.99%) of Cash Flow and Proceeds of Major
Capital Events dividended or distributed to the Shareholder(s) (the "Contingent
Payments"). The Contingent Payments shall be paid to Landlord at the time the
proceeds are dividended or distributed to Shareholder(s), loaned to
Shareholder(s) or their affiliates or applied to pay the separate obligations of
Shareholder(s). Distributions of Cash Flow or Proceeds of Major Capital Events
by Tenant to JCC Holding (or, if JCC Intermediary is formed in accordance with
Section 5.6 of this Lease, distributions of Cash Flow and Proceeds of Major
Capital Events by Tenant to JCC Intermediary or by JCC Intermediary to JCC
Holding) shall not result in an obligation to make a Contingent Payment, nor
shall the transfer by Harrah's Jazz Company to Tenant of the rights and
obligations of this Lease and related documents. Tenant shall not determine or
distribute Cash Flow or Proceeds of Major Capital Events in a manner that is
Discriminatory to Landlord vis a vis the Shareholder(s). Notwithstanding
anything to the contrary herein, it is agreed that neither Landlord nor the City
shall be entitled to an equity
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or ownership interest in Tenant and that the Contingent Payments provided in
this Section 4.8 constitute additional consideration under this Lease.
(b) Notwithstanding any provision, contract or agreement to the contrary,
if Tenant shall pay or otherwise distribute anything of value to the Casino
Manager/Operator as a Termination Fee (as defined in the Casino Management
Agreement), such payment and/or distribution of anything of value shall have no
effect and be null and void unless, prior to such payment or distribution,
Tenant shall pay to Landlord two and one-half percent (2.5%) of the total
payment or distribution to be made to the Casino Manager/Operator. At least
thirty (30) days prior to any proposed payment or distribution to the Casino
Manager/Operator as provided in this Section 4.8, Tenant shall notify Landlord
of any such proposed payment or distribution. Anything to the contrary
notwithstanding, the foregoing provisions shall not apply to a Leasehold
Mortgagee which is a Suitable Lender; provided that such exclusion shall not
operate to exclude from this Section 4.8 any payment to the Casino
Manager/Operator from a Leasehold Mortgagee which is a Suitable Lender.
Section 4.9. Gross Non-Gaming Payments
Subject to Section 4.19 of this Lease, commencing on the Opening Date,
Tenant shall pay to Landlord gross non-gaming payments based on Gross Non-
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Gaming Revenues (the "Gross Non-Gaming Payments"). The Gross Non-Gaming Payments
in any Fiscal Year shall be an amount equal to the sum of the following
Non-Gaming Minimum Payments and Non-Gaming Percentage Payments. In no event
shall the Gross Non-Gaming Payment be less than One Million Seven Hundred
Thousand Dollars ($1,700,000) per Fiscal Year (or such lower amount as shall be
applicable on a pro rata basis to a Partial Fiscal Year).
(a) The "Non-Gaming Minimum Payment" is equal to One Million Seven Hundred
Thousand Dollars ($1,700,000) per Fiscal Year (or such lower amount as shall be
applicable on a pro rata basis to a Partial Fiscal Year). The Non-Gaming Minimum
Payment shall be payable in equal monthly installments of One Hundred Forty-One
Thousand Six Hundred Sixty-Six and 67/100 Dollars ($141,666.67) as part of the
Minimum Payments.
(b) The "Non-Gaming Percentage Payment" for each Fiscal Year is equal to
six percent (6%) of the amount by which Gross Non-Gaming Revenues in that Fiscal
Year exceeds Twenty-Eight Million Three Hundred Thirty-Three Thousand Three
Hundred Thirty-Three and 33/100 Dollars ($28,333,333.33) (or such lower amount
as shall be applicable on a pro rata basis to a Partial Fiscal Year) (the
"Natural Breakpoint"). On or before the twentieth day after the end of each
month beginning with the first full month after the Opening Date, Tenant shall
deliver to
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Landlord a statement (the "Non-Gaming Percentage Statement") of the Gross
Non-Gaming Revenues for the preceding month and for the Fiscal Year to date. If
the Non-Gaming Percentage Payment payable for the Fiscal Year to date, as shown
on the Non-Gaming Percentage Statement, exceeds the amount of the Non-Gaming
Percentage Payment paid for the Fiscal Year to date, Tenant shall pay to
Landlord with the Non-Gaming Percentage Statement the amount then due.
Non-Gaming Percentage Payments shall be computed separately with respect to each
Fiscal Year based on the Gross Non-Gaming Revenues received in that Fiscal Year,
and there shall be no carry backs or carry forwards with respect to any Fiscal
Year. Notwithstanding the foregoing, if during any period prior to the Opening
Date, any portion of the Development other than the Casino is placed into
commercial use (excluding the uses existing at the time of the Effective Date
and any non-material changes thereto), then Tenant shall pay to Landlord, on or
before the twentieth day after the end of each calendar month (or part thereof)
during such period prior to the Opening Date, six percent (6%) of the Gross
Non-Gaming Revenues derived by Tenant during such calendar month from such
portion.
Section 4.9.1. Interim Payments
Harrah's Jazz Company has paid Landlord the sum of Fifty Thousand Dollars
($50,000) each month for the period commencing on the day which was
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sixty (60) days after the Original Amended Lease Execution Date and ending on
July 15, 1994, the day Harrah's Jazz Company executed its initial casino
operating contract.
Section 4.9.2. Pre-Opening Date Rent
Tenant shall pay to Landlord as pre-Opening Date rent (the "Pre-Opening
Date Rent") the amount of Seven Hundred Thirty-Six Thousand Dollars ($736,000)
per month on the first day of each month from the Plan Effective Date through
the Opening Date; provided, however, if the Opening Date has not occurred on or
prior to November 1, 1999 (unless and only to the extent extended pursuant to
Article XII of the GDA), the amount of Pre-Opening Date Rent for any period
after and including the month of November 1999 and prior to the Opening Date
shall be increased to the Minimum Payments as provided in Section 4.19 of this
Lease. If the Plan Effective Date shall occur on a date other than the first day
of a month, the remaining prorated portion of any Seven Hundred Thirty-Six
Thousand Dollars ($736,000) per month interim rent previously paid by Tenant for
such month pursuant to the City Agreement shall be offset against Pre-Opening
Date Rent payable under this Lease for the period from the Plan Effective Date
until the end of the month in which the Plan Effective Date occurs.
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Section 4.10. Net Lease
It is the purpose and intent of Landlord and Tenant that the Rent and
Additional Charges payable hereunder shall be net to Landlord so that this Lease
shall yield to Landlord a sum not less than the payments specified in this Lease
in each year that such is applicable during the Term and that all costs,
expenses and charges of every kind and nature relating to the Development that
may be attributed to, or become due during the Term of, this Lease after the
Plan Effective Date shall be paid by Tenant, specifically excluding any
Impositions, charges or assessments of any nature which are Discriminatory,
unless provided for in this Lease.
Section 4.11. Prorated Payments
Should any payment required by this Lease be due for a period less than a
full week, month, quarter, year or other installment period (e.g., a payment due
in the middle of a month), the amount due shall be prorated on a per diem basis
calculated on the number of days in the applicable installment period.
Section 4.12. Payment Terms
All Rent and Additional Charges coming due under this Lease shall be paid
to Landlord, except as otherwise expressly provided to the contrary in this
Lease, without notice or demand and without abatement, deduction, reduction or
setoff at Landlord's address set forth in Section 32.6 of this Lease, or at such
other place as
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Landlord may designate by prior written notice to Tenant. If the scheduled date
for a payment is not a Business Day, the payment shall be due and payable on the
next succeeding Business Day. All Rent and Additional Charges shall be paid or
caused to be paid by Tenant in lawful money of the United States of America by
wire transfer or any other method of payment acceptable to Landlord and Tenant.
Section 4.13. Second Floor Non-Gaming Sublease
(a) On the Execution Date, Tenant has entered into the Second Floor
Non-Gaming Sublease. Landlord, Tenant and JCC Development shall agree upon the
Master Plan in accordance with the Second Floor Non-Gaming Sublease, which
establishes guidelines for the development of the second floor regarding rent,
tenant improvements and concessions, permissible uses, brokerage fees and an
initial capital improvement budget; provided that any failure of Landlord,
Tenant and JCC Development to agree upon the Master Plan or the City Council to
approve the Master Plan shall not be a breach or default under this Lease by
Landlord, Tenant or the City. Tenant shall not consent to any waiver of or
modification to the Second Floor Non-Gaming Sublease or the Master Plan without
the prior written consent of Landlord, the City and the City Council.
(b) Subject to LGCB approval and the terms of the Second Floor Non-Gaming
Sublease, Tenant may convert any portion of the second floor space to
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Gaming Space; provided that (i) if such a conversion of second floor space to
Gaming Space occurs, such space shall thereupon no longer be governed by the
terms of the Second Floor Non-Gaming Sublease and shall thereafter be governed
solely by the terms of this Lease and (ii) if such conversion would result in
less Second Floor Non-Gaming Sublease revenue to Landlord, Landlord shall be
made whole by Tenant for such reduction in Second Floor Non-Gaming Sublease
revenue in accordance with Section 5 of the Second Floor Non-Gaming Sublease. If
the Second Floor Non-Gaming Sublease shall terminate, Section 3 of the Second
Floor Non-Gaming Sublease, including the rental payment provisions provided for
in such Section 3, shall be made a part of this Lease as if originally included
herein. Tenant and Landlord shall sponsor and support at the required times the
necessary steps to gain regulatory approvals and conditional use modifications
consistent with the Master Plan.
(c) If the rent payable to Landlord under Section 3.1 of the Second Floor
Non-Gaming Sublease ("Landlord's Sublease Rent") remains unpaid fifteen (15)
Business Days after the date of written notice to Tenant and JCC Development of
non-payment thereof when and as due pursuant to the Second Floor Non-Gaming
Sublease, Landlord may thereupon by written notice to Tenant and JCC
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Development terminate the Second Floor Non-Gaming Sublease effective on the date
of termination set forth in such notice by Landlord.
(d) Tenant shall notify Landlord in writing at least twenty (20) days
prior to the time an annual audit of the non-gaming operations conducted on the
premises subject to the Second Floor Non-Gaming Sublease will occur. Landlord's
duly appointed Accepted Auditor shall have the right, during the process of the
aforesaid audit, whensoever same occurs and during normal business hours, after
reasonable written notice to Tenant and to JCC Development, to independently
examine, audit, inspect and transcribe the Books and Records of Tenant and JCC
Development in connection with the premises subject to the Second Floor
Non-Gaming Sublease. Tenant shall make available Books and Records for the
aforesaid purpose. Notwithstanding the foregoing, Landlord's Accepted Auditor
shall not have the right to examine, audit, inspect or transcribe any Books and
Records or information that Tenant or JCC Development is required by law not to
disclose. Tenant shall be required, however, to provide Books and Records for a
review and audit pursuant to this Section 4.13(d) in accordance with GAAP.
(e) At the end of each Fiscal Year, Tenant shall, upon the written request
of Landlord, prepare and submit to Landlord a reconciliation of any differences
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between the proposed cash flow and operating budget for the premises subject to
the Second Floor Non-Gaming Sublease as set forth in the Annual Business Plan
and the actual results of operations with respect to the premises subject to the
Second Floor Non-Gaming Sublease for such Fiscal Year based on the annual
Financial Statements submitted to Landlord pursuant to Section 14.2 of this
Lease.
Section 4.14. Late Payment of any Amounts Due under this Lease
Subject to and in addition to Landlord's rights contained in Article XXI
of this Lease, if Tenant shall fail to pay when due the Rent (Section 4.3), the
Gross Gaming Payments (Section 4.4), the Gross Non-Gaming Payments (Section
4.9), the City Payments (Section 4.4.1) or any other amounts due under the terms
of this Lease, in whole or in part, Tenant shall pay the outstanding balance
plus interest thereon at the Default Rate from the date when such payment was
due to the date of the delivery of the payment thereof to Landlord and such
interest shall be deemed Additional Charges. Notwithstanding the provisions of
the preceding sentence, a penalty shall not commence to accrue on a late payment
of Rent, Gross Gaming Payments, Gross Non-Gaming Payments or City Payments until
five (5) Business Days after the date that same was due so long as Tenant shall
not have failed more than twice in any
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calendar year to have paid said installment on the date that same was due. If
Tenant shall have failed more than twice in any calendar year to have paid said
installments on the date when same is due, thereafter the installment is due on
the specific date provided in this Lease without any grace period within that
calendar year as provided for in this Section 4.14. Notwithstanding the
obligations imposed on Tenant by this Section 4.14, Landlord's rights and
entitlements under Article XXI of this Lease shall not be reduced, diminished,
altered or superseded.
Section 4.15. Market Appreciation Right
At any time during the Term, Landlord shall have a one time right, with
the prior written consent of the City Council and upon thirty (30) days prior
written notice to Tenant specifying Landlord's exercise of its right under this
Section 4.15 (the "MAR Exercise Notice"), to receive a payment of additional
rent (the "MAR Payment") equal to four and 99/100 percent (4.99%) of the amount,
if any (the "Net Market Appreciation"), by which (i) the weighted average
closing trading price of the Common Stock over the twenty (20) days of trading
immediately prior to delivery of the MAR Exercise Notice times the number of
outstanding shares of Common Stock, is greater than (ii) Three Hundred Twenty
Million Dollars ($320,000,000). Upon Tenant's payment of the MAR Payment to
Landlord, Landlord shall have no further right to receive any Contingent
Payments described in Section 4.8 of this Lease or any additional payments under
this Section 4.15.
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Section 4.16. Conveyance of Certain Support Facilities
Harrah's Jazz Company has donated to the City the Poydras Street Support
Facility Premises and the improvements thereon (the "Donated Property").
Pursuant to the terms of the City Lease and the Original Amended Lease, the
Donated Property and the Improvements thereon have been included as part of the
property leased by the City to Landlord under the City Lease and by Landlord to
Tenant under this Lease.
Section 4.17. Square 26 Property Donation
Harrah's Jazz Company has donated the Square 26 Property to the City.
Notwithstanding anything to the contrary contained herein, there shall be no
reversion of the Square 26 Property, whether or not any part of the Donated
Property reverts to Tenant, Harrah's Jazz Company or any other Person for any
reason, or upon any event identified herein.
Section 4.18. Employee and Bus Parking Support Facility Premises, Employee
and Bus Parking Facility Servitude Area, Employee and Bus Parking
Facility Access Servitude Area and Observation Tower Servitude
Area
(a) Tenant leases certain premises from The Alabama Great Southern
Railroad Company pursuant to that certain Amended and Restated Lease dated as of
November 18, 1993, as amended (the "Railroad Lease"), a copy of which is
attached as Exhibit "B" to this Lease and made a part hereof. A portion of the
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premises subject to the Railroad Lease is described on Exhibit "A-2" attached to
this Lease and made a part hereof (the "Employee and Bus Parking Support
Facility Premises"). Tenant agrees to maintain the Employee and Bus Parking
Support Facility Premises during the term of the Railroad Lease. If this Lease
should terminate prior to the termination of the Railroad Lease, Tenant, subject
to any required consents and approvals, agrees at Landlord's option, to assign
the Railroad Lease to Landlord, except if a Leasehold Mortgagee elects to obtain
a New Lease pursuant to Section 23.6 of this Lease.
(b) For and in consideration of the benefits which have accrued and will
accrue to the City as a result of this Lease and for other good and valuable
consideration, the City does hereby grant to Tenant the exclusive right of use
over those certain former street premises more fully described on Exhibit "A-3"
attached to this Lease and made a part hereof (the "Employee and Bus Parking
Facility Servitude Area").
(c) For and in consideration of the benefits which have accrued and will
accrue to the City as a result of this Lease and for other good and valuable
consideration, the City does hereby grant to Tenant the nonexclusive right of
ingress and egress through, over and across the property more fully described on
Exhibit "A-4" attached to this Lease and made a part hereof (the "Employee and
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Bus Parking Facility Access Servitude Area") for purposes of vehicular access
between the Employee and Bus Parking Support Facility Premises and Lafitte
Avenue.
(d) For and in consideration of the benefits which have accrued and will
accrue to the City as a result of this Lease and for other good and valuable
consideration, the City does hereby grant to Tenant the exclusive right of use
with respect to the property more fully described on Exhibit "A-5" attached to
this Lease and made a part hereof (the "Observation Tower Servitude Area").
(e) The rights granted by the City to Tenant in the Employee and Bus
Parking Facility Servitude Area, the Employee and Bus Parking Facility Access
Servitude Area and the Observation Tower Servitude Area pursuant to Sections
4.18(b), (c) and (d) of this Lease shall terminate upon the expiration or
earlier termination of the Railroad Lease or this Lease.
Section 4.18.1. Maintenance and Usage of Employee and Bus Parking Facility
Servitude Area, Employee and Bus Parking Facility Access
Servitude Area and Observation Tower Servitude Area
(a) Tenant shall have the sole obligation to maintain the Employee and Bus
Parking Facility Servitude Area, the Employee and Bus Parking Facility Access
Servitude Area and the Observation Tower Servitude Area. Tenant may, upon prior
written notice to and with the consent of a property management officer
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of the City, which consent is not to be unreasonably withheld or delayed, use
reasonable portions of any property owned by the City or Landlord adjacent to
the Employee and Bus Parking Facility Servitude Area, the Employee and Bus
Parking Facility Access Servitude Area or the Observation Tower Servitude Area
for purposes of construction, maintenance and/or repair of any portions of the
Employee and Bus Parking Facility Servitude Area, the Employee and Bus Parking
Facility Access Servitude Area or the Observation Tower Servitude Area in order
to comply with Tenant's obligations pursuant to this Section 4.18.1(a).
(b) The City's use of the Employee and Bus Parking Facility Access
Servitude Area shall not materially interfere with Tenant's rights in the
Employee and Bus Parking Facility Access Servitude Area granted pursuant to
Section 4.18(c) of this Lease or otherwise materially interfere with any efforts
by Tenant to fulfill its maintenance obligations thereon pursuant to Section
4.18.1(a) of this Lease. The City shall not construct structures or other
improvements which would materially interfere with Tenant's right to use the
Employee and Bus Parking Facility Access Servitude Area.
Section 4.18.2. Casino Design
Tenant agrees that it will not grant to any other Person the rights to
construct or operate any building with a design substantially similar to that of
the
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Casino in any other location without Landlord's and the City's prior written
consent, which consent may be denied for any reason. This provision shall
survive termination of this Lease. Tenant represents and warrants it is the sole
owner of all blueprints, renderings, design rights, plans, specifications and
other rights necessary to complete the intent of the above covenant.
Section 4.19. Minimum Payments
Notwithstanding any other provisions in this Lease, the minimum of the
annual payments to Landlord provided for in Sections 4.3, 4.4, 4.7 and 4.9 of
this Lease (the "Minimum Payments") shall be Twelve Million Five Hundred
Thousand Dollars ($12,500,000) per year (or such lower amount as shall be
applicable on a pro rata basis to the Partial Fiscal Year) commencing on the
Opening Date. On the first day of each month after the Opening Date, Tenant
shall pay an amount equal to the number of days in such month multiplied by a
per diem amount calculated as Twelve Million Five Hundred Thousand Dollars
($12,500,000) (or such lower amount as shall be applicable on a pro rata basis
to a Partial Fiscal Year) divided by the number of days in such Fiscal Year (or
Partial Fiscal Year); provided, however, Tenant agrees to pay the Minimum
Payments due on January 1, 2000 no later than December 31, 1999 (and, after
making such
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payment, no Minimum Payments shall thereafter be due on January 1, 2000 or
otherwise for the month of January 2000).
Section 4.20. Change of Use and Adjustment of Rent and Additional Charges
upon Change of Law
(a) If, by reason of a change of law or the enactment of a new law, Casino
Gaming Operations shall no longer be permitted to be conducted on the Casino
Premises or shall be modified, restricted or limited in a manner that materially
diminishes the benefits afforded to Tenant or the gaming activities permitted to
be conducted on the Casino Premises pursuant to LSA R.S. 27:201, et seq., as
currently enacted, Landlord and Tenant agree to renegotiate, modify and
re-establish this Lease in good faith and to determine the Highest and Best Use
of the Leased Premises in order to reflect the change in conditions and
permissible uses under prevailing Governmental Requirements (such event being a
"Change in Use"). The Rent and Additional Charges payable under this Lease shall
be renegotiated, modified and re-established in accordance with Sections 4.20(b)
through 4.20(d) of this Lease for any new use made of the Development by Tenant,
effective as of the date of commencement of such new use. During any period
between the effective date of the change of law or new law and commencement of a
new use, the Rent and Additional Charges shall be twenty percent (20%) of Cash
Flow.
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(b) The parties shall endeavor, for ninety (90) days after a new use is
determined to agree upon the rent and additional charges (the "Adjustment") for
the new use of the Leased Premises.
(c) If the parties cannot agree upon the Adjustment within the period
described in the previous subsection, then they shall endeavor to agree upon a
Qualified Appraiser to resolve the dispute and determine the Adjustment and
other necessary changes to this Lease. If they cannot agree upon a single
Qualified Appraiser within thirty (30) days, then, within fourteen (14) days
after the occurrence of such failure, each shall appoint a Qualified Appraiser.
The two Qualified Appraisers shall within thirty (30) days after both have been
appointed designate a third Qualified Appraiser; if they do not, then either
party shall be entitled to apply to a court of competent jurisdiction for
designation of the third Qualified Appraiser. The Adjustment and other necessary
changes shall be determined by either the one agreed-upon Qualified Appraiser or
by the three Qualified Appraisers so chosen, as applicable. "Qualified
Appraiser," as used in this Lease, shall mean an appraiser who shall: (i) hold a
general certification from the State of Louisiana Real Estate Appraisal
Subcommittee; (ii) be a designated member of a nationally recognized appraisal
organization with a recognized educational program and code of ethics including
the Uniform Standards of
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Professional Appraisal Practices; and (iii) have at least ten (10) years'
experience in commercial real estate transactions in Orleans Parish. Each party
shall pay the fees and costs of the Qualified Appraiser that they appoint. The
fees and costs of the third Qualified Appraiser shall be split equally between
Landlord and Tenant.
(d) Within thirty (30) days after the Qualified Appraiser(s) has been
selected, each party shall submit to the Qualified Appraiser(s) any information
in said parties' possession needed or required by the Qualified Appraiser(s) to
determine the fair and reasonable Adjustment and other charges necessary to
facilitate the Change in Use for the duration of such Change in Use. The
Qualified Appraiser(s) shall, within sixty (60) days after having been
designated, determine (by majority vote, if three) the fair and reasonable
Adjustment. The determination of the Qualified Appraiser(s) shall bind the
parties from and after the Change in Use, for the duration of such Change in
Use. Nothing in this Lease shall be deemed to require Tenant to make a Change in
Use or to prevent or preclude Tenant from restoring use of the Leased Premises
to the uses originally contemplated by this Lease, at which time the original
Rent and Additional Charges and other terms of this Lease shall again become
fully effective and enforceable.
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Section 4.21. Waiver of Certain Credits
Other than as provided in Section 4.22 of this Lease, Tenant acknowledges
that it shall not be entitled to, and hereby waives, releases and forgives, any
credit or offset against Rent and Additional Charges payable hereunder for any
reason arising prior to the Execution Date, including, but not limited to, any
credit or offset for previously completed kitchen work at the Morris F.X. Jeff
Auditorium (formerly known as the Municipal Auditorium) located at 1201 Saint
Peter Street, New Orleans, Louisiana (the "Morris F.X. Jeff Auditorium") or for
the replacement cost of the curtains and eight thousand (8,000) folding chairs
in the Morris F.X. Jeff Auditorium purchased pursuant to Section 5.4 of the
Basin Street Casino Lease Termination Agreement.
Section 4.22. Credit for Pre-Opening Date Rent Payments
For the balance of any month in which the Opening Date occurred on a day
other than the first day of such month, Tenant may offset against Rent payable
hereunder for any month in which the Opening Date occurs a prorated portion of
the Pre-Opening Date Rent paid for such month, if any, by Tenant to Landlord
pursuant to Section 4.9.2 of this Lease.
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ARTICLE V.
OTHER PAYMENTS AND CONSIDERATIONS
Section 5.1. Open Access Program
As additional consideration for the right to lease the Leased Premises and
the Improvements, Tenant hereby adopts and, from and after the Plan Effective
Date, shall implement the Open Access Program and the Open Access Plans and the
requirements of the Open Access Program and the Open Access Plans. The City and
Landlord agree that Tenant shall not be liable for any violation of the open
access program adopted by Harrah's Jazz Company and attached as Exhibit G to the
Original Amended Lease or the final open access plans of Harrah's Jazz Company
implemented in connection therewith, which program and plans shall be of no
further force and effect and shall be superseded by the Open Access Program and
the Open Access Plans, respectively, as of the Plan Effective Date. Tenant will
use the efforts specified in the Open Access Program and Open Access Plans and
all due diligence to achieve the goals and objectives and to satisfy the
commitments stated in the Open Access Program and the Open Access Plans under
the penalties provided therein. Tenant covenants it will, and will require the
Casino Manager/Operator and JCC Development to, comply with the Open Access
Program and the Open Access Plans in all hiring, employment and
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contracting decisions. Tenant will not amend the Open Access Program or the Open
Access Plans without Landlord's and the City Council's prior written consent.
Section 5.2. Residency Requirement
(a) Commencing on the Opening Date and for the twelve (12) month period
immediately thereafter, not less than fifty-five percent (55%) of the employees
of Tenant and JCC Development in the aggregate shall live and reside in Orleans
Parish during their employment by Tenant or JCC Development, as the case may be,
during any particular quarter reported by Tenant, with two percent (2%) annual
increases in such minimum required percentage amount beginning with the first
anniversary of the Opening Date and continuing on each anniversary of the
Opening Date thereafter until the minimum required percentage amount of
employees of Tenant and JCC Development in the aggregate who shall live and
reside in Orleans Parish during their employment by Tenant or JCC Development,
as the case may be, during any particular quarter reported by Tenant, shall be
sixty-five percent (65%), and in each year thereafter such minimum required
percentage shall be sixty-five percent (65%). Tenant agrees to use its best
efforts to maximize its hiring in Orleans Parish with the post-employment goal
that eighty percent (80%) of employees of Tenant and JCC Development in the
aggregate live
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and reside in Orleans Parish. This requirement is in furtherance of (i) Tenant's
commitment as a good corporate citizen of the City and is based upon Tenant's
review of existing economic studies regarding the benefits of the Development to
the New Orleans community and the potential burdens to the New Orleans community
if those benefits were not directed to the New Orleans community and (ii)
Tenant's interest in ensuring that the persons employed in connection with the
Development continue to meet the requirements set by the City and the State of
Louisiana. If this Section 5.2 is found by a court of competent jurisdiction in
a final non-appealable judgment to be unenforceable, invalid, null, or void, or
if the inclusion of this Section 5.2 is found by a court of competent
jurisdiction in a final non-appealable judgment to render the remainder of this
Lease unenforceable, invalid, null, or void for any reason, then the percentage
of employees required to be residents of Orleans Parish while employed shall be
the maximum permitted by law (but not more than the minimum required percentage
amount then applicable in accordance with this Section 5.2), and if no
percentage requirement is permitted by law, then this Section 5.2 shall be of no
force and effect and shall be severed and removed from this Lease ab initio, as
if it had never been written or included herein, and the remainder of this Lease
shall remain valid and in full force and effect.
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(b) If Section 5.2(a) of this Lease is declared null and void, then Tenant
releases Landlord and the City from any and all liability (including costs and
attorneys' fees) arising out of Tenant's compliance with its obligations
pursuant to this Section 5.2.
Section 5.3. Casino Management Agreement
(a) As additional consideration for the right to lease the Leased Premises
and the Improvements existing at the Execution Date, Tenant shall implement and
abide by the terms of the Casino Management Agreement that may materially affect
the interest of Landlord under this Lease. The Casino Management Agreement shall
not be amended in a manner which materially and adversely affects the interest
of Landlord under this Lease without Landlord's and the City Council's prior
written consent, which consent shall not be unreasonably withheld, financially
conditioned or delayed. A copy of the final terms and conditions of the Casino
Management Agreement, which has been reviewed by the City Council in
substantially the same form as the final agreement, is attached as Exhibit "H"
to this Lease and made a part hereof. Any proposed amendment to the Casino
Management Agreement, shall be delivered to Landlord and the City Council for
review and consent if required. If Landlord's interest is viewed as being
materially and adversely affected by the amendment, written notice shall be
given to Tenant
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within ten (10) Business Days of receipt of the proposed amendment by Landlord
and the City Council.
(b) All persons employed at the Development shall be employees of Tenant
or JCC Development (except for certain Key Casino Personnel (as defined in the
Casino Management Agreement) to be employed by the Casino Manager/Operator). All
persons employed by Tenant and JCC Development, and the Key Casino Personnel, in
the aggregate, shall be subject to the provisions of the Open Access Program and
Open Access Plans. To the degree permitted by law and contract, Tenant and JCC
Development in their hiring directed toward opening of the Casino and as
practicable thereafter will give a priority to consideration of the former
employees of the temporary casino operated by Harrah's Jazz Company in 1994 at
the Morris F.X. Jeff Auditorium in an evaluation of candidate qualifications. To
the extent Tenant, JCC Development, or the Casino Manager/Operator contracts for
off-premises services with any Affiliate (for example accounting, financial, tax
or management services), the number of full-time employees performing such
services off-premises shall not exceed one-half of one percent (0.5%) of the
total number of employees performing services at, or relating to, the
Development.
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(c) Tenant shall give Landlord no less than six (6) months advance notice
of any termination of the Casino Management Agreement or any other event that
would result in the inability to use System Marks at the Development prior to
expiration of the Term; provided, however, that Tenant may terminate the Casino
Management Agreement upon shorter notice if Landlord and the City Council have
approved a substitute Casino Manager/Operator and a substitute Casino Management
Agreement. In either case Tenant shall provide a written plan to provide for the
continuous operation of the Casino Development without material interruption.
Such plan shall provide for replacement of all signs and items bearing System
Marks; replacement or assignment of proprietary or nonproprietary computer
systems and the data and information thereon related to the Casino; assignment
of occupancy agreements and operating agreements as materially necessary for
continued operations; and substitution of marketing, accounting and insurance
services. Such plan shall also provide for (1) replacement of all named gaming
related items, such as: cards, dice, chips, tokens, uniforms, slot fronts, table
felts, and other gaming consumables; (2) replacement of all permanently affixed
or moveable logoed items, for example: signs, carpets, fixtures, trade fixtures,
furniture, equipment, and improvements; (3) replacement of all marketing and
advertising materials, whether or not located at the
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Development, for example: billboards, handbills, flyers, and media tapes; (4)
replacement of any other property that contains or bears any System Mark or the
trademark, service mark, trade name or copyright of any other Person, whether or
not proprietary in nature, including, without limitation, non-gaming consumables
such as napkins, flatware, glassware and stationery; (5) replacement or
assignment of proprietary or nonproprietary computer hardware/software and
management information systems and the data and information thereon related to
the Casino; and (6) transition of control of the Development and of the House
Bank and the Capital Replacement Fund to Tenant, Landlord, the First Leasehold
Mortgagee or any party entitled thereto, as their interests may appear. Tenant
shall simultaneously provide Landlord with any notice given under Section 8.6 of
the Casino Operating Contract.
(d) Upon termination of this Lease other than at the expiration of the
Term, in order to assist Landlord in the transition of operation of the Casino,
Landlord shall, subject to required licenses and any required approvals or prior
rights of the LGCB or any prior rights of any Leasehold Mortgagee, have the
option to lease, or sublease (subject to requisite lessor approval), as the case
may be, Tenant's Property, at fair market rental, without warranty, and on such
other terms and conditions, as are then used in industry standard forms of
gaming
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equipment leases from non-manufacturers. Landlord shall, in any notice of Lease
termination given pursuant to Section 21.3(a) of this Lease, notify Tenant of
its election to lease Tenant's Property, specifying a term which shall not,
unless approved by Tenant, exceed one (1) year (or, if shorter, the remaining
term of any lease with respect to Tenant's Property). All Manager's Property and
tradenames, service marks and trademarks ("Marks") of others, including Tenant
(except those of the manufacturer of Tenant's Property), shall be removed, at
Tenant's or the terminating Casino Manager/Operator's cost, from Tenant's
Property prior to the inception of such term. Tenant shall, within ten (10)
Business Days after Landlord's termination notice (if such notice elects to
lease Tenant's Property), give written notice to Landlord ("Tenant's Notice") of
the proposed fair market rental for Tenant's Property subject to Landlord and
Tenant agreeing upon the amount as such fair market rental.
(e) In either of the above cases, if there should be a change in the name
under which the Casino is operated, Tenant shall, at Tenant's or the terminating
Casino Manager/Operator's costs, comply or arrange for compliance with the plan
to provide for continuous operation of the Casino specified in Section 5.3(c) of
this Lease, and remove or cause to be removed from the Casino Premises all
Tenant's Property bearing any System Mark (including, if applicable, the name
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"Harrah's") or any Marks of Tenant or others and all Manager's Property, and
may, subject to Section 19.8(d) of this Lease, use funds in the Capital
Replacement Fund to effectuate such removal. Following thirty (30) days notice
and opportunity to cure, if Tenant, the Casino Manager/Operator or any Leasehold
Mortgagee shall have failed to cause such Tenant's Property to be removed from
the Casino Premises pursuant to this Section 5.3(e), Landlord may, in whole or
in part, (i) remove such property from the Casino Premises and may use funds in
the Capital Replacement Fund for such purposes or (ii) claim ownership to such
property and use such property as its own regardless of any Marks or System
Marks; provided that Landlord shall have no right to claim any ownership or,
except as otherwise provided in this Lease, other rights with respect to any
such Marks or System Marks. Such actions shall be taken without a material
interruption in the operations of the Casino.
(f) Tenant shall pay to Landlord at the time of termination of this Lease
prior to expiration of the Term due to Tenant's default, Five Million Dollars
($5,000,000) to be used by Landlord to transition the Casino (excluding that
portion of the Casino, if any, subject to the Second Floor Non-Gaming Sublease)
to a new tradename, servicemark or other identification, unless in the twelve
(12) month period preceding Landlord's notice of termination under Section
21.3(a) of
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this Lease, Landlord has received Rent and Additional Charges or other payments
pursuant to this Lease totaling Twenty-Five Million Dollars ($25,000,000). Both
the Five Million Dollar ($5,000,000) and Twenty-Five Million Dollar
($25,000,000) amounts shall be adjusted annually beginning on the second
anniversary of the Opening Date to reflect changes in the CPI following the
first anniversary of the Opening Date.
(g) Concurrently with the execution of this Lease, Tenant shall cause to
be delivered to Landlord a Manager Subordination Agreement (Landlord) executed
by the Casino Manager/Operator substantially in the form of Exhibit "Q" attached
to this Lease and made a part hereof.
Section 5.4. General Development Agreement
As additional consideration for the right to lease the Leased Premises and
the Improvements, Tenant shall comply with the terms of the GDA.
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Section 5.5. Fringe Benefit Plan; Salary Practices
Tenant initially will provide, or cause to be provided, to employees of
Tenant, JCC Development and the Casino Manager/Operator fringe benefits similar
to those offered by HET and its subsidiaries, in other casinos operated by same,
benefits substantially similar to those set forth in the Jazz Casino Company,
L.L.C. Benefits Summary attached as Exhibit "J" to this Lease and made a part
hereof, which benefits may be changed from time to time. The salary practices of
Tenant and JCC Development shall be consistent with gaming industry market
salaries in the regional area in which the Casino competes.
Section 5.6. JCC Holding; JCC Development
Except as otherwise provided in Section 6.2(a) of the Plan, (a) JCC
Holding's only assets shall be and shall continue to be its membership interests
in Tenant and JCC Development, and JCC Holding shall be the sole legal and
beneficial owner of Tenant and JCC Development; provided, however, HET may elect
to form JCC Intermediary pursuant to Section 12.12 of the Plan, in which case
JCC Holding's only assets shall be and shall continue to be, unless and until
JCC Intermediary is liquidated, its membership interests in JCC Intermediary and
JCC Development, and (b) JCC Holding shall function as a holding company with no
business operations other than the ownership of its membership interests in
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Tenant (or JCC Intermediary, unless and until JCC Intermediary is liquidated, if
HET elects to form JCC Intermediary) and JCC Development. If HET elects to form
JCC Intermediary in accordance with this Section 5.6, the sole asset of JCC
Intermediary shall be its membership interest in Tenant and JCC Intermediary
shall function as a holding company with no business operations other than the
ownership of its membership interest in Tenant. As set forth in that certain
letter agreement dated as of the Execution Date, a copy of which is attached as
Exhibit "P" to this Lease and made a part hereof, JCC Holding agrees that it
will comply, and will cause JCC Intermediary, if formed in accordance with this
Section 5.6, to comply, with the foregoing provisions of this Section 5.6. JCC
Holding shall remain the sole member of JCC Development; it being understood
that the purpose of this covenant is to protect Landlord from transfers of funds
to JCC Development or to any of these entities that will or may have an adverse
affect on Landlord's rights to the Contingent Payments.
Section 5.7. Commencement of Employment Activities
Tenant agrees that on or before four (4) months after the Plan Effective
Date, Tenant will have opened an employment office information center in the
City and will have scheduled and held at least six (6) community meetings in
locations that are consistent with both the employment needs of the business and
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the obligations contained in the Open Access Program and the Open Access Plans
for the purpose of disseminating information concerning hiring of Casino
personnel, and (ii) on or before eight (8) months after the Plan Effective Date,
Tenant will have commenced accepting job applications, interviewing Casino job
applicants and scheduling job training sessions for prospective employees.
ARTICLE VI.
CONDITIONS, WARRANTIES OF TITLE AND PEACEABLE POSSESSION
Section 6.1. Representations and Warranties
(a) Landlord and the City represent and warrant the following:
(i) Landlord is a Louisiana public benefit corporation duly formed on
April 7, 1993 in accordance with LSA R.S. 12:201 through 269 and 41:1212(G) and
Exhibit "O" to this Lease, validly existing and in good standing under the laws
of the State of Louisiana.
(ii) Landlord and the City have all right, power and authority to
enter into this Lease and to grant the leasehold rights conveyed herein subject
to any servitude of record and to grant the servitude rights granted to Tenant
pursuant to Section 4.18 of this Lease.
(iii) The City Lease and the City Lease Amendment are in full force
and effect. Landlord was duly authorized and empowered to enter into the City
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Lease, as amended by the City Lease Amendment, by virtue of: (1) Ordinance
Calendar No. 18,481, as amended and adopted by the City Council on April 15,
1993, a certified copy of which is attached as Exhibit "D-1" to this Lease and
made a part hereof; (2) Ordinance Calendar No. 19,025 as amended and adopted by
the City Council on March 3, 1994, a certified copy of which is attached as
Exhibit "D-2" to this Lease and made a part hereof; and (3) Ordinance Calendar
No. 22,194, adopted by the City Council on October 15, 1998, a certified copy of
which is attached as Exhibit "D-3" to this Lease and made a part hereof.
(iv) Landlord was duly authorized and empowered to enter into the
Original Amended Lease by virtue of: (1) Ordinance Calendar No. 18,483, as
amended and adopted by the City Council on April 15, 1993, a certified copy of
which is attached as Exhibit "E-1" to this Lease and made a part hereof; (2)
Ordinance Calendar No. 19,027 adopted by the City Council on March 3, 1994, a
certified copy of which is attached as Exhibit "E-2" to this Lease and made a
part hereof; (3) a resolution of Landlord's Board of Directors dated April 23,
1993, a certified copy of which is attached as Exhibit "E-3" to this Lease and
made a part hereof; (4) a resolution of Landlord's Board of Directors dated
March 9, 1994, a certified copy of which is attached as Exhibit "E-4" to this
Lease and made a part hereof; and (5) the Consent adopted on the date that
Ordinance Calendar 19,027
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was adopted and executed on the Original Execution Date attached as Exhibit
"E-5" to this Lease and made a part hereof.
(v) Landlord is duly authorized and empowered to enter into this Lease
by virtue of: (1) Ordinance Calendar No. 22,193 adopted by the City Council on
October 15, 1998, a certified copy of which is attached as Exhibit "F-1" to this
Lease and made a part hereof and (2) a resolution of Landlord's Board of
Directors dated October 21, 1998, a certified copy of which is attached as
Exhibit "F-2" to this Lease and made a part hereof.
(vi) This Lease, the GDA, the City Lease and the City Lease Amendment
have been duly authorized, executed and delivered by Landlord and the City, and
Landlord and the City have complied with all legal requirements applicable to
them in order to execute and deliver this Lease, the GDA, the City Lease and the
City Lease Amendment and to perform their obligations under each agreement,
however, Tenant acknowledges that its ability to operate a casino on the Casino
Premises may be subject to Tenant's ability to maintain in effect the Casino
Operating Contract and to Tenant's compliance with, and the validity of, all
applicable laws, rules and regulations related to gaming, and that Landlord's
warranty is limited by this acknowledgment.
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(vii) The City is the owner of the Casino Premises and the
improvements existing thereon as of the Effective Date, and this property is
subject to no claims, liens, encumbrances, leases, rights of possession or
occupancy or covenants on the title that would materially interfere with or
prevent the construction and operation of the Casino as contemplated by this
Lease other than the following:
(1) the City Lease and the City Lease Amendment;
(2) the Second Floor Non-Gaming Sublease; and
(3) the exceptions to title set forth in the schedule
attached as Exhibit "G" to this Lease and made a part
hereof.
(b) Tenant represents and warrants the following:
(i) Tenant is a Louisiana limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Louisiana,
and has full power to enter into this Lease and execute all documents required
hereunder.
(ii) The making, execution, delivery and performance of this Lease by
Tenant has been duly authorized and approved by all requisite action of the
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member(s) of Tenant, and this Lease has been duly executed and delivered by
Tenant.
(iii) Tenant is not a party to any agreement, or to any lease or other
agreement or instrument, that has a material adverse affect on the ability of
Tenant or Landlord (other than agreements executed in connection with the Plan
and this Lease, Tenant's title insurance policy and the Casino Operating
Contract) to carry out their obligations under this Lease.
(iv) To the best of Tenant's and the Casino Manager/Operator's
knowledge, they are unaware of any condition or fact that would render Tenant or
the Casino Manager/Operator unsuitable to obtain a Casino Operating Contract
under the Act. Neither Tenant nor the Casino Manager/Operator has received
notice from the LGCB that they or any of their Affiliates are unsuitable.
(v) Except for Tenant's obligations to cooperate and assist its title
insurer under its title insurance policy, Tenant, the Casino Manager/Operator
and their Affiliates will not participate, assist or cooperate with parties
having an interest adverse to the City in the lawsuit captioned McCall v.
McCall, et al., filed on April 26, 1993 in the Civil District Court for the
Parish of Orleans, State of Louisiana or litigation of a similar nature or basis
in fact.
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(vi) Except as otherwise provided in Section 6.2(a) of the Plan, (A) JCC
Holding's only assets shall be its membership interests in Tenant (or JCC
Intermediary, unless and until JCC Intermediary is liquidated, if JCC Holding
elects to form JCC Intermediary in accordance with Section 5.6 of this Lease)
and JCC Development, and (B) JCC Holding functions as a holding company with no
business operations other than the ownership of its membership interests in
Tenant (or JCC Intermediary, unless and until JCC Intermediary is liquidated, if
JCC Holding elects to form JCC Intermediary in accordance with Section 5.6 of
this Lease) and JCC Development. If formed in accordance with Section 5.6 of
this Lease, the sole asset of JCC Intermediary shall be its membership interest
in Tenant and JCC Intermediary shall function as a holding company with no
business operations other than the ownership of its membership interest in
Tenant. All dividends and distributions by Tenant to JCC Holding (or, if JCC
Intermediary is formed in accordance with Section 5.6 of this Lease, dividends
and distributions by Tenant to JCC Intermediary or by JCC Intermediary to JCC
Holding) shall concurrently therewith be dividended or distributed by JCC
Holding to the Shareholders.
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Section 6.2. Actual Possession
Landlord and the City bind themselves to maintain Tenant in actual
possession of the Casino Premises, and to the extent of their own acts or
omissions the remainder of the Leased Premises, during the Term. Should Tenant
be disturbed by any Person (other than a Leasehold Mortgagee) alleging an
interest or right to the Casino Premises or should Tenant be cited to appear
before a court of justice to answer to a complaint of any Person claiming the
whole or any part of the Casino Premises, Tenant shall notify Landlord of such
occurrences and the circumstances of same and Landlord and the City shall have
the obligation at Landlord's and the City's sole cost and expense to defend
Tenant in any such proceedings unless Tenant is partially or wholly responsible
for the disturbance of possession.
Section 6.3. Condition of Leased Premises
It is understood and agreed by the parties that, subject to the provisions
of Section 6.5 of this Lease, the Leased Premises and the existing improvements
were accepted in the condition they were in on the "Possession Date", such date
hereby acknowledged and agreed by the parties as November 30, 1994. Landlord and
the City warrant as of the Original Amended Lease Execution Date that they knew
of no defect in the Leased Premises except for those defects known by (1)
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The Office of Emergency Preparedness of the City; (2) The Health Department of
the City; (3) The Property Management Department of the City; or (4) The
Department of Safety and Permits of the City, and disclosed by the City to
Tenant as set forth in Exhibit "K" attached to this Lease and made a part
hereof. Except for such warranty, Landlord and the City do not warrant or
guarantee the condition of the premises for a particular purpose nor do they
warrant or guarantee that the Leased Premises are free of any defects of any
kind or nature, including but not limited to any defects and/or any
environmentally unsafe condition or any condition in violation of any
Environmental Laws. Subject to the foregoing, Tenant accepted the Leased
Premises in an "as is," "where is" basis without any duty or requirement on the
part of Landlord or the City to repair, clean or otherwise remedy any defective
or environmentally unsafe condition that is found or may be found on the Leased
Premises except for breach of Landlord's warranty set forth above and subject to
the provisions of Section 6.5 of this Lease. Tenant also waives any right Tenant
might have as a result of said condition of the Leased Premises: (a) to the
return of all or any portion of the Rent, (b) to cancel this Lease or (c) to
have Landlord repair or replace all or any part of the property leased.
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Section 6.4. Assumption of Responsibility; Indemnity
(a) Except as otherwise provided herein, effective as of the Possession
Date, Harrah's Jazz Company assumed the sole responsibility for the condition,
use, operation, demolition, remediation, construction, completion, security and
maintenance of the Development for the term of the Original Amended Lease.
Tenant has succeeded to such responsibilities and shall duly and timely perform
and observe all obligations of Tenant now or hereafter arising for which the
Development or any part thereof is now, or any part thereof may, by reason of
Tenant's use, operation, demolition, remediations, security, construction,
completion and maintenance thereof during the Term become subject, and Tenant
shall indemnify and hold Landlord and the City harmless to the same extent set
forth in Article XVIII of this Lease and Landlord shall have no responsibility
in respect thereof and shall have no liability for damage to any Person for
personal injury and/or property damage to the property of Tenant, any Space
Tenants or any other third party (except (a) to the extent caused by the
intentional acts or omissions, or the sole negligence of Landlord or the City or
their employees, agents, or contractors or (b) where Landlord or the City or
their employees, agents, or contractors are liable with a third party or parties
other than Tenant, its employees, agents or contractors). Landlord and the City
shall have no
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responsibility for defects in the Leased Premises except those known by: (1) The
Office of Emergency Preparedness of the City; (2) The Health Department of the
City; (3) The Property Management Department of the City; or (4) The Department
of Safety and Permits of the City and not disclosed by the City to Tenant as set
forth in Exhibit "K" to this Lease. The foregoing exception to liability of
Landlord and the City shall not apply to defects that were within the actual
knowledge of employees or officers of Harrah's Jazz Company or Affiliates
charged with responsibility for the construction of the Improvements on the
Casino Premises. Except with respect to Tenant's obligations under Sections
18.2, 18.3, 18.4 and 18.5 of this Lease, Landlord and the City shall defend,
indemnify and hold harmless Tenant from and against any and all obligations and
liabilities arising out of or in any way connected with the Development or any
acts or occurrences thereon before the Possession Date unless resulting from
actions or inactions of Harrah's Jazz Company.
(b) All rights of Harrah's Jazz Company in and to that certain Agreement
by and among Landlord, the City and Harrah's Jazz Company, a copy of which is
included as a part of Exhibit "K" to this Lease, are hereby assigned to Tenant
and all obligations of Harrah's Jazz Company thereunder are hereby assumed by
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Tenant and the City and Landlord hereby consent to such assignment and
assumption.
Section 6.5. Possession
Notwithstanding anything to the contrary in this Lease, Landlord retained
possession and control of the Development until the Possession Date. Until the
Possession Date, (a) Landlord or the City retained all rights with respect to
the Development, including but not limited to all parking revenues generated by
the parking garage and (b) Landlord or the City remained responsible for all
obligations and liabilities pertaining to the Development (including without
limitation all Impositions) and any and all acts and occurrences thereon.
Landlord delivered possession of the Development to Harrah's Jazz Company
on the Possession Date in accordance with applicable provisions of the Original
Amended Lease.
Section 6.6. Limitation of Liability
(a) Landlord and the City shall have no liability if one or more of the
following should occur:
(i) a court of competent jurisdiction determines that the law
permitting a land-based Casino is unconstitutional, illegal or
unenforceable; or
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(ii) the laws permitting a land-based Casino are repealed or
otherwise modified by the legislature of the State of
Louisiana.
(b) If one or more of the following should occur:
(i) this Lease is determined or declared invalid, illegal, void or
otherwise unenforceable by a court of competent jurisdiction;
or
(ii) Landlord does not have clear title to the Casino Premises,
which defect would materially interfere with or prevent the
construction and operation of the Casino as contemplated by
this Lease; or
(iii) Landlord is unable to grant and convey the leasehold rights as
provided in this Lease; or
(iv) Landlord is determined or declared not to have the right,
power and authority to enter into this Lease; or
(v) Landlord is unable to maintain Tenant in actual possession of
the Casino Premises through the exercise of reasonable
diligence, care and action;
and after receiving a final non-appealable judgment on the issue of possession,
then this Lease shall terminate and upon termination the sole liability of the
City
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and Landlord to Tenant, for loss of property, loss of revenues, damages
resulting from business interruption or loss of business, shall be limited to
the actual damages of Tenant, which damages (1) shall be reduced by any
collateral source payments; (2) shall specifically exclude consequential
damages, such as the loss of future potential profits and damages arising from
or in relation to the Casino Management Agreement, or any other agreement,
contract or claim for damages by or with any Affiliate; and (3) shall be further
limited to future proceeds received by the City or Landlord from the sale, lease
or other disposition or use of all or any portion of the Casino Premises during
the period that is the lesser of (A) the remainder of the Term or (B) ten (10)
years from the date of such occurrence. The City and Landlord shall use
reasonable best efforts to maintain the validity of this Lease, to maintain
Tenant in actual possession of the Casino Premises, and to perfect the City's
good and merchantable title to the Casino Premises. Nothing contained in this
Section 6.6 shall be construed to impose any liability on Landlord with respect
to Sections 6.6(a)(i) and (ii) and 6.6(b)(i) through (v) above, if such
liability would not otherwise exist.
(c) Attached as Exhibit "R" hereto and made a part hereof is an agreement
concerning limitation of liability evolving from the McCall litigation or
litigation of a similar nature or basis in fact referenced in Section 6.1(b)(v)
of this
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Lease. Pursuant to the Plan, Tenant has succeeded to all rights and interests of
Harrah's Jazz Company in such agreement and Landlord and the City hereby consent
to such transfer.
(d) If Landlord and the City are unable to keep Tenant in actual
possession of the Casino Premises as a result of a failure of title to the
Casino Premises, then the Donated Property, but not the Square 26 Property,
shall immediately revert to Tenant in accordance with the terms and conditions
of the Act of Donation for the Poydras Street Support Facility Premises.
(e) If Landlord and the City are unable to keep Tenant in possession of
the Casino Premises and the Lease is terminated as provided in Section 6.6(b) of
this Lease, and Landlord and the City regain their ability to re-lease the
Casino Premises within five (5) years after termination as provided in Section
6.6(b) of this Lease, Tenant shall have the option to: (i) re-lease the Casino
Premises under the same terms and conditions of this Lease provided Landlord and
the City shall not be liable to Tenant for any damages of whatsoever kind or
nature including those provided in Section 6.6(b) of this Lease and further
provided that Tenant shall release Landlord and the City from and against any
and all damages of whatsoever kind or nature that may have resulted from the
termination, disturbance or loss of possession or (ii) not exercise its option
to re-lease the
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Casino Premises and seek liability and damages as allowed in Section 6.6(b) of
this Lease. The rights described in Sections 6.6(e)(i) and (ii) of this Lease
shall not be applicable or enforceable if Tenant, the Casino Manager/Operator or
any entity (hereinafter referred to as the "Other Operator") formed by any
Affiliates Controlling, Controlled by or under common Control with Tenant or the
Casino Manager/Operator now or at anytime hereafter existing, run a land-based
casino or engage in any other land-based casino operations in Orleans Parish,
unless: (1) the Other Operator sells its interests in any other land-based
casino or ceases operations of any other land-based casino at or before the
re-opening of the Casino or (2) such other land-based casino is exempted from
the application of Section 32.14 of this Lease. In the event that Tenant does
not or cannot exercise its rights under either Section 6.6(e)(i) or (ii) of this
Lease, then the Leasehold Mortgagee or, if more than one, the Leasehold
Mortgagee who holds the highest priority among the Leasehold Mortgagees with any
outstanding indebtedness under the notes or other obligations (the "Secured
Obligations") secured by the respective Leasehold Mortgages (the "First
Leasehold Mortgagee"), for so long as it is a Suitable Lender, shall have the
right to re-lease; provided that a subordinate Leasehold Mortgagee may accede to
the rights of a senior Leasehold Mortgagee
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(including the First Leasehold Mortgagee) by satisfying and discharging all
Secured Obligations owing to such senior Leasehold Mortgagee.
(f) If Landlord and the City regain the ability to re-lease the Casino
Premises, as provided in Section 6.6(e) of this Lease, Landlord and the City
shall notify Tenant and the First Leasehold Mortgagee of their ability to
re-lease the property within thirty (30) days after receiving such right. Tenant
shall have thirty (30) days in which to exercise its option by providing written
notice of its decision to exercise its option to re-lease the Casino Premises
(the "Option Period") to Landlord and the First Leasehold Mortgagee. If Tenant
fails to deliver said notice to re-lease within the Option Period, Tenant's
option right shall expire, whereupon the First Leasehold Mortgagee shall have
the option to re-lease exercisable within thirty (30) days after expiration of
Tenant's option, which, for the purposes of Section 6.6(e) of this Lease, shall
be deemed an exercise by Tenant. After the expiration of said options to
re-lease, the Landlord and/or the City shall be free to re-lease the Casino
Premises to any Person. Such options to re-lease shall survive any termination
provided in Section 6.6(b) of this Lease. If Tenant or the First Leasehold
Mortgagee exercises its option to re-lease, the Donated Property shall be
re-donated to Landlord and the City within thirty (30) days of exercising such
option, under the same terms and conditions as the original donation.
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(g) (i) If this Lease should terminate pursuant to Section 6.6(b) of this
Lease, Landlord and the City agree that neither Landlord nor the City shall,
directly or through any public entity, own, lease or operate a land-based casino
within Orleans Parish (other than a Riverboat Casino that is acquired by the
City by seizure or foreclosure), or authorize any Person other than Tenant or
its designee to operate such a casino, for a period equal to the unexpired
portion of the Initial Term provided Tenant releases the City and Landlord from
and against any and all liabilities, losses, damages of any kind or nature,
including but not limited to consequential damages, costs, expenses, fees,
claims, obligations, penalties, and cause of action (including without
limitation, reasonable attorneys' fees and expenses), asserted against, claimed
against and/or sought against Landlord or the City by Tenant or any Affiliate
Controlling, Controlled by or under common Control with Tenant concerning or
relating to: (1) the title to the Casino Premises, (2) the inability of Landlord
and City to keep Tenant in peaceable possession and/or actual possession of the
Casino Premises, and (3) the inability of Landlord and City to grant and convey
the leasehold rights as provided in this Lease, provided the City and Landlord
shall use reasonable efforts to maintain the validity of this Lease, to maintain
Tenant in possession of the Leased
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Premises, and to perfect the City's good and merchantable title to the Leased
Premises.
(ii) Tenant agrees that Tenant will, from and after opening by Tenant of
any other land-based casino, other than a land-based casino exempted by Section
32.14 of this Lease, at another location within Orleans Parish permitted by the
Act and approved by the Gaming Authorities (the "Replacement Casino"), make
payments to Landlord equal to the Rent and Additional Charges that would have
been payable by Tenant to Landlord under the Lease had the Lease not terminated
(the "Equivalent Payments"). If the Replacement Casino is located on other land
owned by the City, then the City, Landlord and Tenant shall, in good faith,
negotiate an amendment to the remaining provisions of this Lease that will
accommodate differences in the site, facility and circumstances of the
Replacement Casino. If the Replacement Casino is located on land that is not
owned by the City or an entity owned by the City, Tenant shall have no
obligation to donate or lease such land and facility and Tenant's sole
obligation shall be to make the Equivalent Payments for the unexpired portion of
the Term (assuming this Lease was not terminated and all Extended Terms will be
exercised). After the opening of the Replacement Casino, Landlord may put the
Casino Premises to any non-casino use and Landlord's use shall not affect
Tenant's requirement to
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make all Equivalent Payments after Tenant opens the Replacement Casino. This
Section 6.6(g) shall not be effective if more than one (1) land-based casino is
permitted and allowed by State of Louisiana law in Orleans Parish. Landlord and
the City shall be released from the restrictions of Section 6.6(g)(i) of this
Lease, on the failure of Tenant to make the payment(s) set forth in this Section
6.6(g)(ii), or upon the opening of a Replacement Casino by Tenant or any Other
Operator. If a Replacement Casino is opened by any Other Operator, Tenant shall
have no obligation to make Equivalent Payments.
(h) If after the Original Amended Lease Execution Date, Tenant or JCC
Development is disturbed in the continued and uninterrupted use of the Casino
Premises, the City and Landlord shall use reasonable best efforts to maintain
and preserve Tenant's and JCC Development's continued and uninterrupted use of
the Casino Premises.
(i) If the City and Landlord are unable to maintain Tenant's and JCC
Development's continued and uninterrupted use of the Casino Premises as a result
of any legal injunction relating to title, then the time for performance
provided in this Lease shall be tolled for the period of such interruption and
at Tenant's option, at any time during the interruption, if it shall exceed
ninety (90) continuous uninterrupted days, this Lease shall terminate and the
Donated Property, but not
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the Square 26 Property, shall revert to Tenant for no charge, in which case the
City shall be liable only as provided in Section 6.6(b) of this Lease and the
provisions of Sections 6.6(e), (f) and (g) of this Lease shall also apply.
ARTICLE VII.
OWNERSHIP OF IMPROVEMENTS
SURRENDER OF LEASED PREMISES
Section 7.1. Ownership of Improvements
(a) Upon the expiration of the Term or earlier termination of the Lease as
a result of default by Tenant as provided herein, all Improvements shall
immediately become the property of Landlord in full ownership, without
compensation of any kind to Tenant, JCC Development or any Leasehold Mortgagee
or any other person or entity, free and clear of any mortgages or encumbrances;
provided that, notwithstanding the foregoing, any New Lease granted to a
Leasehold Mortgagee pursuant to Section 23.6 of this Lease shall include a lease
of all such Improvements. During the Term and subject to the terms of the Second
Floor Non-Gaming Sublease, Tenant shall own and retain title to all Improvements
and Tenant's Property subject to all privileges and liens provided by Louisiana
law. After Site Mobilization and subject to the terms of the Second Floor
Non-Gaming Sublease, Harrah's Jazz Company, and after the Plan Effective Date,
Tenant, shall have the sole and exclusive right and entitlement to
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claim depreciation on all Improvements and Tenant's Property located on the
Leased Premises. Upon the termination of the Lease by default, expiration of the
Term or as otherwise provided herein, Tenant will remain the owner of Tenant's
Property on the Development subject to all liens and privileges provided by
Louisiana law, including but not limited to all removable temporary buildings,
gaming devices and machines.
(b) Upon the termination of this Lease by default, Term expiration or as
otherwise provided herein, if Tenant shall decide not to remove any part of
Tenant's Property, Tenant shall notify Landlord in writing not less than three
(3) months prior to the expiration of the Term of this Lease or termination
thereof, or, if earlier, fifteen (15) days from receipt of a notice under
Section 21.3(a) of this Lease, specifying the items of Tenant's Property which
it has decided not to remove. If, within thirty (30) days after the service of
such notice, Landlord shall request Tenant to remove any of Tenant's Property,
Tenant shall at its sole expense remove the same in accordance with such
request. As to Tenant's Property that Landlord does not request Tenant to
remove, the same shall be, if left by Tenant, deemed abandoned by Tenant and
thereupon the same shall immediately become the property of Landlord without
notice or compensation of any kind to Tenant. At Landlord's option, Tenant shall
remove the signs designated by Landlord
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subject to the rights of the owner(s) of the affected names, trade names,
trademarks, and logos.
(c) If, prior to the expiration of this Lease by termination or otherwise,
Tenant does not remove any of Tenant's Property or signs which Landlord has
requested Tenant to remove pursuant to Section 7.1(b) of this Lease, Landlord
shall have the right to remove and to dispose of the property and to replace the
same with like kind and quality without incurring liability to Tenant and at the
sole cost and expense of Tenant and Landlord may use funds in the Capital
Replacement Fund to remove such Tenant's Property or signs and to replace the
same with like kind and quality, subject to the provisions of Section 19.8(d) of
this Lease. Landlord may use such property as its own regardless of any Marks or
System Marks; provided that Landlord may not exercise any ownership or, except
as otherwise provided in this Lease, other rights in respect of any such Marks
or System Marks. In case of any damage to the Development resulting from the
removal of Tenant's Property, Tenant shall repair such damage or, in default
thereof, shall reimburse Landlord for Landlord's cost for repairing such damage.
This obligation shall survive termination of this Lease.
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Section 7.2. Surrender
On the last day of the Term, or upon any earlier termination of this Lease
by default or as otherwise provided herein, Tenant shall surrender to Landlord
the Leased Premises, Tenant's Property deemed abandoned, and the Improvements in
good order, condition and repair, reasonable wear and tear excepted, free and
clear of all liens and encumbrances, other than those, if any, created by
Landlord, or as to which Landlord has expressly consented may survive surrender,
and, if requested to do so, Tenant shall execute, acknowledge and deliver to
Landlord such instruments of further assurance as in the reasonable opinion of
Landlord are necessary or desirable to confirm or perfect Landlord's right,
title and interest in and to all of the property hereinabove described including
all Improvements constructed or erected on the Leased Premises.
ARTICLE VIII.
USE OF LEASED PREMISES; COMPLIANCE WITH LAWS AND ORDINANCES
Section 8.1. Permitted Uses
Tenant may occupy and use the Casino Premises and the Improvements thereon
for the purpose of conducting Casino Gaming Operations pursuant to and in
compliance with the Act and for any use related or incidental thereto. Uses
related or incidental to Casino Gaming Operations include: (i) food service at
the
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Casino to the extent permitted under LAC 42:IX.3587 as in effect as of the date
hereof or thereafter amended or enacted so long as such amendment or newly
enacted ordinance is not Discriminatory; (ii) live entertainment on the first
floor of the Casino to the extent approved by the zoning laws and ordinances of
the City in effect as of the Execution Date or thereafter amended or enacted so
long as any such amendment or newly enacted ordinance is not Discriminatory;
(iii) retail use on the first floor of the Casino in an area not to exceed five
thousand (5,000) square feet, to the extent approved by the zoning laws and
ordinances of the City in effect as of the Execution Date or thereafter amended
or enacted so long as such amendment or newly enacted ordinance is not
Discriminatory; and (iv) exterior signs on the Leased Premises in appropriate
locations, sizes, numbers and appearance identifying performers or performances.
In addition, Tenant is permitted to charge an admittance fee for boxing or other
specialty events not normally conducted by businesses in the immediate vicinity
of the Casino, as more particularly agreed to in the conditional use ordinances,
subject to the application of any Special Event Charges in accordance with
Section 9.7 of the Lease. Tenant may occupy and use the Support Facilities
Premises and the Improvements thereon for parking, casino support, employee
training, offices and any other use permitted by zoning laws and the ordinances
of the City. Tenant
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and JCC Development may permit the premises subject to the Second Floor
Non-Gaming Sublease to be occupied and used for non-gaming uses of the type to
be described in the Master Plan, and for any use related or incidental thereto,
and for no other purpose. Except as otherwise provided in the Lease, Tenant
shall not use the Development for any other purpose without Landlord's prior
written consent.
Section 8.2. Limitation of Use and Penalties
Tenant shall not occupy, improve, use or suffer or permit the use,
improvement or occupancy of, the Development or any part thereof, in any
unlawful manner or for any illegal purpose or in violation of the terms and
conditions of this Lease and/or of any certificate of occupancy or other similar
certificate, permit or approval applicable to the Development or any part
thereof. Tenant shall not use, improve or occupy or permit the use, improvement
or occupancy of the Development or any part thereof in violation of the zoning
and planning resolutions and laws of any government agency applicable to the
Development.
Section 8.3. Covenant to Comply with Certain Obligations
Tenant, at all times during the term of this Lease and at Tenant's sole
expense, shall promptly comply with and conform to:
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(a) all requirements of any national or local board of Fire
Underwriters, or any other body performing similar functions to the
extent applicable to the Development;
(b) all requirements of the policies of insurance affecting the
Development or any part thereof;
(c) all state and local codes, such as: buildings codes, electrical
codes and other similar statutes ordinances or regulations; and
(d) all provisions of the Act.
Section 8.4. Uses of Development Revenues
Notwithstanding the permitted uses described in Section 8.1 of this Lease
or other permitted uses within the Development, Tenant shall not, and Tenant
shall not permit JCC Development to, use any revenues generated at the
Development to subsidize Persons that will compete unfairly with the businesses
located in Orleans Parish, such as restaurants, hotels or other commercial
enterprises. Furthermore, Tenant shall not, and Tenant shall not permit JCC
Development to, operate taxis, limousines or other forms of ground
transportation in the metropolitan New Orleans area. The foregoing prohibitions
shall not restrict Tenant's ability to operate shuttle bus service for employees
of the Development and shuttle bus service for patrons of the Development to and
from the Casino and
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their hotels, except in areas where the operation of buses is prohibited by City
traffic ordinances of general application in effect as of the date hereof or as
hereafter amended or enacted, so long as such amendment or newly enacted
ordinance is not Discriminatory. Notwithstanding the above, Tenant or JCC
Development shall not operate a licensed gaming riverboat (a "Riverboat Casino")
without the prior written consent of Landlord, the City and the City Council,
which consent can be withheld in each of these parties' respective sole
discretion.
ARTICLE IX.
IMPOSITIONS
Section 9.1. Payment of Impositions
(a) Subject to the right to contest described in Section 9.3 of this
Lease, Tenant shall be obligated to pay or cause to be paid, and pay timely, on
or before the last day on which they may be paid without penalty or interest,
all non-Discriminatory real estate taxes and assessments (ordinary and
extraordinary, unforeseen as well as foreseen), water rents, sewer and other
charges, value added tax, use and occupancy tax, sales tax, vault tax, amusement
taxes on Special Event Charges and other taxes, duties and charges, fees or
payments imposed by any governmental, quasi-governmental, or public authority,
or utility or entity, which are imposed, assessed, levied, or become due or
payable or become a charge or
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lien upon, or arise in connection with the ownership, use, occupancy or
possession of the Development, or any part thereof, or any of the Improvements
thereon, or any appurtenances thereto (all of the foregoing being herein
collectively referred to as "Impositions") during the Term after Site
Mobilization, and in each case shall submit to Landlord on or before ten (10)
days after the last day upon which the same may be paid without penalty or
interest a receipt or receipts showing the payment thereof or if no such receipt
is then available a certificate of a senior officer of Tenant that such payment
has been made. All payments of or with respect to the Impositions shall be fully
and promptly made or caused to be made by Tenant directly to the respective
authorities, utilities or entities rendering the charges therefor or to whom
such payments are due or payable.
(b) Tenant waives any rights it may have under Article VII, Section 21(H)
of the Louisiana Constitution in relation to the Development and further, in the
event Tenant is relieved by Section 627 of Louisiana Act 384 of 1992 (or by any
local and special state legislation now in effect or hereafter enacted that
applies only to Tenant, or only to the tenant of the Casino as such), from the
obligation to pay ad valorem taxes to the City in connection with the ownership,
use, occupancy, or possession of the Development, or any part thereof, or any of
the Improvements thereon, or any appurtenances thereto after Site Mobilization,
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then in that event Tenant will make a voluntary annual payment in cash to the
City for itself and on behalf of all tax recipient authorities in an amount
equal to the taxes that would have been paid by Tenant to the City if Tenant had
not been relieved by special and local state legislation from the obligation to
pay such taxes.
(c) The City agrees that, in connection with its exercise of zoning or
other powers, if the City shall assess any Imposition against Tenant or the
Development that is Discriminatory, Tenant shall have the right to contest the
Imposition in accordance with the rules, regulations and laws of the City and
the State of Louisiana. If a court finds by an unappealable final judgment that
an Imposition is Discriminatory and the City is unable to re-pay or otherwise
reimburse Tenant for any such Imposition paid by Tenant, then Tenant shall be
entitled to set off against Rent and Additional Charges the Discriminatory
portion of any such Discriminatory Imposition that was paid by Tenant.
Section 9.2. Impositions in the Year of Expiration
All Impositions for the tax years in which Site Mobilization and the
Expiration Date fall (whether or not such Impositions or any of them are then
liens on the Development or any part thereof) shall be apportioned between
Landlord and Tenant as of the Site Mobilization or Expiration Date so that
Tenant shall pay
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and bear such portion thereof as relates to the period within
the Term after Site Mobilization.
Section 9.3. Contest of Impositions
Tenant, after notice to Landlord, may in good faith contest any Imposition
by appropriate proceedings conducted promptly at Tenant's expense, in Tenant's
name, or (whenever necessary) in Landlord's or the City's name and, in such
event, Landlord and the City agree, at Tenant's expense, to cooperate with
Tenant with respect to such contest and Tenant agrees to indemnify and hold
harmless Landlord and the City against any reasonable cost, expense (including
reasonable attorneys' fees and expenses) or liability, other than revenue lost
as a result of diminution of such Imposition, that Landlord or the City may
suffer or incur arising out of or in any manner relating to such cooperation.
Upon Landlord's or the City's request, but at Landlord's and City's sole cost
and expense, Tenant shall permit Landlord or the City to participate in such
proceedings with counsel of Landlord's or the City's choosing. However,
Landlord's obligation under this Section 9.3 shall not require any conduct by
Landlord or the City, if such conduct would have any elements of state or
governmental action, including but not limited to the reduction of property
assessments. Tenant shall be entitled to any refund received by Tenant, Landlord
or the City from any taxing authority to the
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extent that such refund relates to or is based upon an Imposition payment that
was made, and whose economic burden was borne, by Tenant in connection with any
Imposition. If Tenant contests any Imposition as being Discriminatory, Tenant's
payment of such Imposition under protest or nonpayment, if allowed under
applicable law, of such Imposition shall not be a default under this Lease until
such time as such Imposition is determined by final unappealable judgment not to
be Discriminatory.
Section 9.4. Reports
As between the parties hereto, Tenant alone shall have the duty and right
of attending to, making or filing any declaration, statement or report that may
be provided or required by law as the basis of or in connection with the
determination, equalization, reduction or payment of any and every Imposition
that is to be borne or paid or that may become payable by Tenant under the
provisions of this Article IX, and Landlord shall not be or become responsible
to Tenant therefor nor for the contents of any such declaration, statement or
report. To the extent any information is required to permit Tenant to prepare
any such declaration, statement or report, Landlord and the City shall, upon
written request of Tenant, promptly provide such information to Tenant. Tenant
shall deliver copies of any such declarations, statements or reports to Landlord
not later than
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ten (10) days after their submission by Tenant to the appropriate governmental
agency.
Section 9.5. Impositions Payable in Installments
If an Imposition may be paid in installments (whether or not interest
shall accrue on the unpaid balance of the Imposition), Tenant may exercise the
option to pay the Imposition (and any accrued interest on the unpaid balance of
the Imposition) in installments and, in such event, shall pay the installments
as they become due during the Term of this Lease.
Section 9.6. Certain Taxes Not Impositions
Nothing contained in this Lease shall require or be construed to obligate
Tenant to pay any franchise, corporation, capital stock, capital levies,
transfer, estate or inheritance, income or excess profits tax imposed upon
Landlord or upon its successors or assigns.
Section 9.7. Amusement Tax
Notwithstanding any provision of law or ordinance to the contrary, Tenant
shall be obligated to collect and remit, and shall cause JCC Development to
collect and remit, to the City amusement tax only with respect to amounts, if
any, paid solely for the purpose of gaining entrance to concerts, boxing matches
or other special events or for cover charges in lounges or food, beverages or
merchandise sold at such special events, at the Casino, or held by Tenant or JCC
Development,
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as the case may be, at any other location (hereinafter referred to as "Special
Event Charges") and neither Tenant, the Casino Manager/Operator nor any other
Person shall be obligated to collect and remit any amusement tax on wagers or
Gross Gaming Revenue derived from the operation of the Casino. In the event a
court of competent jurisdiction determines in a final non-appealable judgment
that the amusement tax is applicable to Tenant's and JCC Development's receipts
other than Special Event Charges, Tenant shall be entitled to set off the amount
of the amusement tax collected and remitted (except for the amusement tax on
Special Event Charges) against future Rents, future Gross Gaming Payments, and
future Gross Non-Gaming Payments.
ARTICLE X.
CONSTRUCTION OF IMPROVEMENTS; GENERAL DEVELOPMENT
Section 10.1. Initial Construction
Tenant shall construct, erect, build or cause to be constructed and
completed on the Casino Premises the Casino and other Improvements in conformity
with and as more fully described in the GDA. Tenant shall also construct, erect,
build or cause to be constructed and completed on the Support Facilities
Premises, the Support Facilities, including parking facilities and necessary
employee, service and support facilities for the Casino as more specifically
defined and described in
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the GDA. Except as otherwise provided in this Lease, Tenant shall obtain prior
written approval from Landlord to construct, erect, build or demolish or cause
to be constructed or demolished any Improvement on the Leased Premises not
specifically identified in this Lease or in the GDA.
Section 10.2. Liens and Claims
(a) During the Term, Tenant shall not suffer or permit to be enforced
against the Development, or any part thereof, any mechanics', materialmen's,
contractors', vendors', laborers' or subcontractors' liens growing out of the
work, except work by or for Landlord or the City, on any building, construction,
repair, alteration, restoration, replacement or improvement, and Tenant shall
pay or cause to be paid all of said liens, claims or demands before any action
is brought to enforce the same against the Development. Tenant agrees to
indemnify and hold Landlord and the City and the Development free and harmless
from all liability for any and all such liens, claims, demands and actions
(collectively the "Liens"), together with reasonable attorney's fees and all
costs and expenses in connection therewith. Tenant shall notify Landlord of the
filing of a Lien within ten (10) Business Days after Tenant has actual knowledge
thereof.
(b) Notwithstanding the foregoing, Tenant shall have the right to contest
any such Lien and if Tenant shall in good faith contest the validity of such
Lien,
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then Tenant shall, at its sole expense, defend itself, Landlord and the City
against the same and shall pay and satisfy any adverse expense or cost or any
adverse judgment and costs and other expenses related thereto that may be
rendered thereon before the enforcement thereof against Landlord, the City or
the Development. If Landlord shall require, Tenant shall furnish to Landlord a
surety bond or other security reasonably satisfactory to Landlord in an amount
at least equal to such contested Lien indemnifying Landlord and the City against
liability for the same, and holding the Development free from the effect of such
Lien.
(c) Landlord reserves the right at any time and from time to time to post
and maintain on the Development such notices of nonresponsibility or other
notices as may be necessary to protect Landlord and the City against liability
for all Liens.
ARTICLE XI.
ENVIRONMENTAL
Section 11.1. Environmental Obligations
Subject to the limitations of Section 18.3 of this Lease, Tenant shall not
cause, permit or allow any violation of any Environmental Laws about or beneath
the Development or any portion thereof by Tenant, its agents, employees,
contractors, Space Tenants, invitees or any other Person under the control or
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direction of Tenant. Tenant shall not cause or permit its agents, employees,
contractors, Space Tenants, invitees or other Persons under the control or
direction of Tenant to violate any of the Environmental Laws upon, about or
beneath the Development or any portion thereof. Tenant shall obtain, or cause to
be obtained, at no expense to Landlord, any and all permits necessary or
required under the Environmental Laws in connection with or arising out of
Tenant's demolition, destruction, construction, and building of Improvements on
the Leased Premises and use of the Development. Landlord had reason to believe
that the Improvements on the Casino Premises at the Effective Date contained
asbestos. Harrah's Jazz Company has had a properly licensed asbestos abatement
contractor remove the asbestos to a properly licensed disposal site.
Section 11.2. Landlord's Right to Perform
Should Tenant fail to perform or observe any of its obligations or
agreements pertaining to the Environmental Laws, then Landlord (directly or
through the appropriate City department) shall have the right, but not the duty,
without limitation upon any of the rights of Landlord pursuant to this Lease, to
enter the Development personally or through its agents, consultants or
contractors and perform the same, and Tenant shall pay for and reimburse
Landlord (or the City as the case may be) for its performance of Tenant's
duties, which
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reimbursement shall be paid at the Default Rate. Landlord (or the City, as the
case may be) shall not exercise such right unless (i) it is required by
governmental authorities or courts pursuant to Environmental Laws and (ii) (a)
Tenant or any Space Tenant is not contesting the compliance of Tenant or Space
Tenant with Environmental Laws or (b) Tenant or any Space Tenant is not curing
such failure in a manner acceptable to governmental authorities or courts, as
the case may be, having jurisdiction over such matters.
Section 11.3. Notice
If Tenant shall become aware of or receive notice or other communication
concerning any actual, alleged, suspected or threatened violation of any of the
Environmental Laws in connection with the Development or past or present
activities of any Person thereon, then Tenant shall deliver to Landlord within
five (5) days after receipt of such notice or communication by Tenant, a copy of
any such notice or communication. Receipt of such notice shall not be deemed to
create any obligation on the part of Landlord to defend or otherwise respond to
any such notification.
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ARTICLE XII.
DAMAGE TO OR DESTRUCTION OF LEASED PREMISES
Section 12.1. Damage or Destruction
In the event of damage to or destruction of Improvements on the Leased
Premises or any part thereof by fire, casualty or otherwise, Tenant, at its sole
expense and whether or not the insurance proceeds, if any, shall be sufficient
therefor, shall promptly, after the insurance proceeds have been adjusted,
repair and restore the Development, as nearly as possible, to the same condition
of the Development or such part as existed prior to such damage or destruction,
using materials of an equal or superior quality to those existing in the
Development prior to such casualty, so that the Development shall contain at
least the same usable area existing prior to such fire or casualty. If required,
Tenant shall obtain a permanent certificate of occupancy as soon as practicable
after the completion of such repair and restoration.
Section 12.2. Use of Insurance Proceeds
(a) All proceeds of casualty insurance on the Development shall be made
available to pay for the cost of restoration and repair if any part of the
Development is damaged or destroyed in whole or in part by fire or other
casualty. All work required to be performed in connection with such restoration
and repair is hereinafter called the "Repair Work." All such insurance proceeds,
less the cost
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of collection, shall be paid into a trust account to be created by an
independent third party (the "Insurance Trustee") to be chosen by Tenant and
Landlord within ten (10) days of when the proceeds are made available (and
approved by each Leasehold Mortgagee), which shall be located in the City. If
Tenant or Landlord for whatever reason, cannot or will not participate in the
selection of the Insurance Trustee, then the other party (with approval of each
Leasehold Mortgagee) shall select the Insurance Trustee. Tenant shall name the
Insurance Trustee appointed pursuant to this Section 12.2 as the sole loss payee
on Tenant's casualty insurance. If those parties who participate in the
selection process cannot agree on the selection of the Insurance Trustee, either
Landlord, Tenant or any Leasehold Mortgagee may apply to the Civil District
Court for the Parish of Orleans, State of Louisiana for the appointment of a
national bank located in the City as the Insurance Trustee. The Insurance
Trustee shall hold the insurance proceeds in trust to be disbursed in stages to
pay for the cost of the Repair Work, as hereafter provided. The Insurance
Trustee shall deposit the insurance proceeds in an interest bearing account and
any after-tax interest earned thereon shall be added to the insurance proceeds.
If the insurance proceeds are insufficient to pay for the Repair Work, Tenant
shall, nevertheless, complete the Repair Work and, after the funds in the trust
account have been exhausted, pay for it in full using its own
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funds. Tenant shall submit a certificate of a licensed and qualified architect
or engineer, as may be appropriate (an "Architect"), and its own certificate
certifying that the Repair Work has been completed and paid for in full, and
specifying the amount paid by Tenant. Any certificates required to be given by
Tenant under this Article XII shall be executed and acknowledged by a senior
officer of Tenant and shall be in form and substance reasonably satisfactory to
Landlord and each Leasehold Mortgagee.
(b) Promptly following any damage or destruction to the Development by
fire or casualty, Tenant shall:
(i) give written notice of such damage or destruction to Landlord
and each Leasehold Mortgagee;
(ii) engage an Architect to prepare plans and specifications for the
Repair Work;
(iii) cause the Architect to prepare preliminary plans and
specifications for the Repair Work;
(iv) prepare an itemized cost breakdown of the total cost of the
Repair Work by appropriate trades and other costs entailed in the Repair
Work;
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(v) produce a proposed contract (or series of contracts with
subcontractors and a contract with a construction manager) between Tenant
and a reputable contractor or contractors experienced in the performance
of comparable work for the performance of the Repair Work; each contract
shall provide for no less than a five percent (5%) holdback and all such
contracts shall be made subject to, and shall comply with, the Open Access
Program and the Open Access Plans;
(vi) produce a building permit, if required, issued by the
appropriate government agency or agencies authorizing the Repair Work as
complying with all applicable codes and obtain all other licenses and
permits required by law as a condition to the commencement of the Repair
Work;
(vii) deliver evidence satisfactory to Landlord and each Leasehold
Mortgagee that the Development is capable of substantial restoration and
reconstruction of its condition immediately prior to the fire or casualty;
and
(viii) deliver an agreement by Tenant to complete the Repair Work
(which completion may initially be evidenced by the issuance of a
temporary certificate of occupancy for the Development) in a reasonable
amount of time plus periods of time as performance by Tenant is prevented
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by force majeure events (other than financial inability) specified in
Section 32.2(a) of this Lease after occurrence of the fire or casualty.
The identity of the Architect and contractor, and the preliminary plans
and specifications shall be subject to the written approval of Landlord and each
Leasehold Mortgagee, which approval Landlord and each Leasehold Mortgagee agree
not to unreasonably withhold, financially condition or delay. The Insurance
Trustee shall not advance any part of the insurance proceeds to pay for the cost
of the Repair Work until all of the above items have been delivered to it and
Landlord and each Leasehold Mortgagee has approved the Architect, contractor,
and the preliminary plans and specifications, which approval shall not be
unreasonably withheld, financially conditioned or delayed. No material changes
in approved plans and specifications shall be permitted without the prior
written consent of Landlord and each Leasehold Mortgagee, which consent shall
not be financially conditioned.
(c) After satisfaction of the conditions specified in Section 12.2(b) of
this Lease, the Insurance Trustee shall, from time to time, but not more
frequently than once a month, advance insurance proceeds to pay for Tenant's
costs in performing the Repair Work and other reasonable and necessary soft
costs incurred in connection with the Repair Work, such as Architect's and other
professional fees
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and building permit fees. These advances shall be made in response to a written
request therefor signed by Tenant specifying the amount due and the party to
whom it is to be paid, and, if the payment is to contractors for part of the
Repair Work, it shall be accompanied by the request for payment signed by the
contractor giving a brief description of the Repair Work completed, services or
materials for which payment is requested, stating the progress of the Repair
Work to the date of said certificate, that the Repair Work completed to the date
of the certificate materially conforms with the plans and specifications
approved by Landlord and each Leasehold Mortgagee, that the payment requested is
owing under the contract in question, and the Repair Work for which payment is
requested has not been made the subject of any prior payment. Such certificate
of a contractor shall be accompanied by a certificate of the Architect stating
that the payment requested is due under the contract in question and that, to
the best of the Architect's knowledge, the Repair Work completed to date
materially conforms to the plans and specifications approved by Landlord and
each Leasehold Mortgagee. Upon receipt of these items, the Insurance Trustee
shall make payments directly to the contractors as specified in the requests
submitted with the approval of the Architect and Tenant, or to Tenant to
reimburse Tenant for costs expended. The Insurance Trustee shall continue to
disburse the proceeds in response to these
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requests for payment until the Repair Work is completed and paid for in full or
until the insurance proceeds are exhausted. In the latter case, Tenant shall pay
for all costs in excess of the insurance proceeds. On completion of the Repair
Work and payment therefor in full, Tenant shall submit to Landlord and each
Leasehold Mortgagee a certificate of the Architect and of Tenant certifying that
the Repair Work is complete in accordance with the plans and specifications, and
Tenant shall submit a certificate stating that all of the obligations of Tenant
to any contractor, subcontractor, materialman, supplier or any other person
performing the Repair Work, providing services or supplying material in
connection with the Repair Work have been satisfied and discharged in connection
therewith, and all appropriate lien waivers must be delivered to Landlord and
each Leasehold Mortgagee at that time. Any insurance proceeds remaining in the
hands of the Insurance Trustee following the delivery of these certificates
shall be paid to Tenant, subject to the rights of the Leasehold Mortgagees.
(d) Notwithstanding anything in this Section 12.2 to the contrary,
insurance proceeds for any fire or casualty of less than Five Hundred Thousand
Dollars ($500,000) shall not be paid to the Insurance Trustee to be disbursed as
provided in this Section 12.2, but instead such proceeds shall be paid by the
insurer directly into a segregated account established by Tenant for the purpose
of
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funding the Repair Work. This account is established as an assurance fund to
guarantee the completion of the Repair Work. Tenant does retain the right to
withdraw funds from this account to pay for the Repair Work and to any excess
funds in the account following completion of the Repair Work. Upon receipt of
such proceeds in the account, Tenant shall promptly undertake and complete the
Repair Work in accordance with this Article XII, and upon completion of the
Repair Work, Tenant shall furnish Landlord and each Leasehold Mortgagee with (i)
a reasonably detailed report describing the damage or destruction, the Repair
Work performed, and the cost thereof, (ii) a certificate executed and
acknowledged by a senior officer of Tenant, in form and substance reasonably
satisfactory to Landlord and each Leasehold Mortgagee, stating that all of the
obligations of Tenant to any contractor, subcontractor, materialman, supplier or
any other person performing Repair Work, providing services or supplying
material in connection with the Repair Work have been satisfied and discharged
in full or otherwise provided for to Landlord's and each Leasehold Mortgagee's
reasonable satisfaction, together with all appropriate lien waivers in
connection therewith, (iii) a copy of the plans and specifications prepared in
connection with the Repair Work, and (iv) a certificate of the Architect and of
Tenant certifying
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that the Repair Work is complete in accordance with the plans
and specifications for the Repair Work.
Section 12.3. No Abatement of Rent and Additional Charges
(a) Except as provided in Section 12.3(b) of this Lease, no destruction of
or damage to the Development, or any portion thereof or property therein by
fire, flood or other casualty, whether such damage or destruction be partial or
total, shall permit Tenant to surrender or terminate this Lease, permit JCC
Development to surrender or terminate the Second Floor Non-Gaming Sublease,
relieve Tenant from its obligation to pay in full the Rent and Additional
Charges and other sums and charges payable to Landlord and the City under this
Lease or relieve JCC Development from its obligation to pay in full Landlord's
Sublease Rent and other sums and charges payable under the Second Floor
Non-Gaming Sublease.
(b) If destruction or damage to the Development occurs during the last
five (5) years of the Term, such that Tenant determines that it is impracticable
to repair such destruction or damage, Tenant shall, but only if Tenant is in
compliance with Section 13.1 of this Lease, at Tenant's election, be entitled to
terminate this Lease upon: (i) giving written notice to Landlord; (ii) payment
to Landlord of the Rent for the remainder of the Term; (iii) assignment to
Landlord
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of Property/Casualty Insurance proceeds; and (iv) satisfaction and/or removal by
Tenant of all liens and encumbrances on the Development created by Tenant.
ARTICLE XIII.
INSURANCE
Section 13.1. Property/Casualty Insurance Coverage
(a) Tenant, at its sole cost and expense, shall keep, with an insurance
company authorized to do business in the State of Louisiana having an A.M. Best
Rating of A-:VIII or better, the Improvements insured beginning on the
Possession Date and throughout the Term for the mutual benefit of Landlord, the
City and each Leasehold Mortgagee, as additional insureds, and Tenant, as the
named insured, against loss or damage by fire, explosion, lightning, and other
risks embraced by coverage of the type now known as the broad form of extended
coverage, including, but not limited to, riot and civil commotion, smoke,
windstorm, aircraft, vehicle, strike, riot, and vandalism and malicious mischief
with additional coverage for broad form water damage, sprinkler leakage, flood,
boiler and machinery and against such other risks or hazards as reasonably
required by Landlord consistent with industry standards in an amount not less
than one hundred percent (100%) of the then full replacement cost of the
Improvements (exclusive of the cost of excavations, foundations and footings)
without deduction
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for physical depreciation (the "Property/Casualty Insurance"). The peril of
flood will be insured in the amount of Fifty Million Dollars ($50,000,000)
applicable to the Improvements and Fifty Million Dollars ($50,000,000)
applicable to business interruption insurance. The full replacement cost shall
be appropriately recalculated in accordance with industry standards at regular
intervals no more frequently than annually; provided that if there is a material
change to the Development, an interim recalculation may be required by Landlord.
Such policy or policies maintained shall include a deductible of not more than
One Hundred Thousand Dollars ($100,000) per occurrence, exclusive of the perils
of windstorm and flood. For windstorm, the deductible shall be Five Hundred
Thousand Dollars ($500,000), unless Landlord approves a higher deductible amount
because of commercial unavailability. For flood, the deductible, after purchase
of the limits available from the National Flood Insurance Program, shall be Five
Hundred Thousand Dollars ($500,000). Tenant shall be solely responsible for all
losses within the deductibles, if any. Tenant, at its sole cost and expense,
shall also maintain insurance to cover Tenant's contractual indemnity
obligations assumed in this Lease but only insofar as such obligations relate to
tort indemnities, and only to the extent that insurance is available at
commercially reasonable rates. Tenant, at its sole cost and expense, shall keep
the Development insured throughout the
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Term for loss of Rent and Additional Charges for a two (2) year period with
Landlord and the City as additional insureds, as their interests may appear.
(b) During construction of the Improvements pursuant to the GDA, Tenant
shall maintain or cause to be maintained Builder's Risk Insurance on an "All
Risk" form, including fire and extended coverage. The policy shall name
Landlord, the City and each Leasehold Mortgagee as additional insureds, as their
interests may appear. The deductible shall not exceed One Hundred Thousand
Dollars ($100,000) per occurrence. For flood, the deductible, after purchase of
the limits available from the National Flood Insurance program, shall be Five
Hundred Thousand Dollars ($500,000).
(c) The specific policy limits and deductibles provided above (as adjusted
for changes in industry standards) shall be increased at least once every five
(5) years to an amount which represents the equivalent, after inflation, of the
sums hereinabove specified, as determined by a certified public accountant
designated by Landlord using generally accepted indices of inflation.
Section 13.2. Liability Insurance
(a) Tenant, at its sole cost and expense, but with Landlord, the City and
each Leasehold Mortgagee as additional insureds and Tenant as the named insured,
shall maintain or cause to be maintained the following insurance with an
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insurance company authorized to do business in the State of Louisiana having an
A.M. Best Rating of A-:VIII or better during the Term of this Lease after the
Possession Date:
(i) Commercial General Liability insurance on an "occurrence basis"
against claims for bodily injury, death or property damage occurring upon, in or
about the Development or any elevators or any escalators therein and on, in or
about the non-public streets and passageways on the Leased Premises. The
insurance required to be maintained by Tenant under this paragraph: (1) shall
afford immediate minimum protection in the amount specified below on the
Possession Date and (2) at all times thereafter shall have such limits as
Landlord shall, from time to time, reasonably require in accordance with
industry standards. As of the date of this Lease, Landlord requires limits of
liability under such insurance of not less than the following:
<TABLE>
<CAPTION>
<S> <C>
General Aggregate Limit (other than Products-
Completed Operations) ...........................$2,000,000
Products-Completed Operations Aggregate Limit ............$2,000,000
Personal & Advertising Injury Limit ......................$1,000,000
Each Occurrence Limit ....................................$1,000,000
Fire Damage Limit ...........................................$50,000
Medical Expense Limit ........................................$5,000
</TABLE>
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(ii) Boiler and pressure vessel insurance, including air tanks,
pressure piping and major air conditioning equipment, provided the Improvements
contain equipment of the nature ordinarily covered by such insurance, in an
amount not less than Fifteen Million Dollars ($15,000,000) or such larger sum as
Landlord may reasonably require in accordance with industry standards.
(iii) Comprehensive Motor Vehicle Liability Insurance with limits of
not less than One Million Dollars ($1,000,000) combined single limit bodily
injury liability and property damage. Coverages are to include all owned, hired
and non-owned vehicles.
(iv) Worker's Compensation and Employers' Liability Insurance in
accordance with the statutory limits of the State of Louisiana, including any
and all States Endorsements which will provide coverage for claims under both
the Louisiana Workers' Compensation Act and, when applicable, the Federal
Longshoremen's and Harbor Workers' Compensation Act with United States statutory
limits. The limits of liability under the Employers' Liability Section of the
Workers' Compensation and Employers' Liability insurance policy or policies
required hereunder shall be in the amount of One Million Dollars ($1,000,000).
(v) Commercial Umbrella Liability Insurance in excess of the coverages
described in Sections 13.2(a)(i), (iii) and (iv) above, with limits of not
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less than Seventy-Five Million Dollars ($75,000,000) and a self-insured
retention of not more than Fifty Thousand Dollars ($50,000).
(vi) Such other insurance, and in such amounts, as may from time to
time be reasonably required by Landlord consistent with industry standards
against the same or other insurable hazards which at the time are commonly
insured against in the case of premises similarly situated, due regard being
given to the height and type of buildings thereon, their construction, use and
occupancy.
(b) Tenant shall require its general contractor or construction manager
engaged in or doing construction or Alterations to or on the Leased Premises to
provide and maintain, during such time, at no cost or expense to the Landlord or
the City, such insurance that will name as additional insureds and protect
Landlord, the City, each Leasehold Mortgagee and Tenant from any and all claims
for damage to public or private property or personal injury, including death, to
the said employees of said general contractor or construction manager, or to any
members of the public, which may arise from any or all operations under the
contract between Tenant and said contractor or construction manager or to any of
their respective subcontractors. The insurance required by this Section 13.2(b)
shall comply with all of the general requirements applicable to the coverages
required hereunder, including the requirement that the insurance coverage
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provided by any contractor or construction manager pursuant to this Section
13.2(b) must be issued by an insurance company authorized to do business in the
State of Louisiana and having an A.M. Best Rating of A-:VIII or better. The
insurance coverages required by this Section 13.2(b) shall extend to all
occurrences that are the result of or arise from work performed by or under such
contractor and/or construction manager; provided, however, that products and
completed operations coverages shall extend for a period of two (2) years after
the date on which such work is completed. Nothing contained in the foregoing
provisions of this Section 13.2(b) shall be construed as requiring any such
contractor and/or construction manager to maintain the coverage required during
any period of time during which no contract by and between Tenant and such
contractor or construction manager is in effect and/or no work is being
performed in, on or to the Development by such contractor or construction
manager.
(c) Tenant shall cause the principal architect and engineer to obtain and
secure Architects' and Engineers' Professional Liability Insurance covering all
architectural and engineering services and work performed in connection with any
construction or Alterations affecting the construction performed by or on behalf
of Tenant or any Space Tenants with coverage limits not less than Five Million
Dollars ($5,000,000) with a deductible of not more than Two Hundred Fifty
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Thousand Dollars ($250,000) per occurrence. Such policy or policies of insurance
shall include coverage for insuring losses caused by architects' errors and
omissions. Such policy or policies shall delete exclusions with reference to
contractual liability, joint ventures, parks, amusement devices and skateboards
whenever applicable; provided that such insurance is commercially available.
(d) The specific policy limits and deductibles provided above (as adjusted
for changes in industry standards) shall be increased at least once every five
(5) years to an amount which represents the equivalent, after inflation, of the
sums hereinabove specified, as determined by a certified public accountant
designated by the Landlord using generally accepted indices of inflation.
Notwithstanding the aforesaid, the base limits for liability coverages may be
increased through Commercial Umbrella Liability Insurance, where applicable.
Section 13.3. Business Interruption Insurance
Commencing on the Opening Date and thereafter throughout the Term, Tenant
shall maintain, at its sole cost and expense, a policy or policies of Business
Interruption Insurance insuring Tenant (and naming each Leasehold Mortgagee, the
City and Landlord as additional insureds, as their interests may appear) against
the actual loss of average daily net profits, Additional Charges, City Payments,
Gross Gaming Payments and Gross Non-Gaming Payments (to the extent not
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covered by the Property/Casualty Insurance), fixed charges and expenses,
including extra expense coverage, which may be occasioned by a casualty or
catastrophe which interrupts the normal business and earnings of Tenant and
Tenant's ability to pay the Rent, Additional Charges, City Payments, Gross
Gaming Payments and Gross Non-Gaming Payments due under the Lease and Landlord's
Sublease Rent due under the Second Floor Non-Gaming Sublease. The terms Gross
Gaming Payments and Gross Non-Gaming Payments as used in this Section 13.3 are
intended to represent not only those payments due prior to the interruption, but
also, those payments which would have become due had no interruption in business
occurred. The computation of the amount which would have become due shall be
based upon payments made in the preceding year of operations or a fraction
thereof if no complete year of business operations has taken place. The
Leasehold Mortgagees shall have priority with respect to the proceeds of such
insurance, in accordance with their respective interests, to pay Tenant's
monetary obligations to such Leasehold Mortgagee except in the case of loss of
Rent and Additional Charges insurance where Landlord and the City are additional
insureds and sole payees of the proceeds. Such policy or policies may contain a
time deductible of not more than forty-eight (48) hours; provided that
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Tenant shall be solely responsible for all losses within the deductible period,
if any.
Section 13.4. Form of Insurance and Insurers
(a) All policies of insurance provided for in this Article XIII and
elsewhere in this Lease shall be effected under valid and enforceable policies,
in such forms as may from time to time be as hereinbefore specified, issued by
insurers of recognized responsibility and reasonably satisfactory to Landlord
and each Leasehold Mortgagee and which are authorized to transact business in
the State of Louisiana. Upon the execution of this Lease and thereafter prior to
the expiration date of each policy furnished pursuant to this Article XIII or
elsewhere in this Lease, a copy of each policy or a certificate thereof required
to be furnished shall be delivered by Tenant to Landlord and each Leasehold
Mortgagee.
(b) Landlord and Tenant hereby mutually waive their respective rights of
recovery against each other, the other's officers, directors, agents,
representatives, employees, successors and assigns for any loss insured by fire,
extended coverage and other property insurance policies existing for the benefit
of the respective parties. Each party shall apply to their insurers to obtain
said waivers. Each party shall obtain any special endorsements if required by
their insurer to evidence compliance with the aforementioned waiver.
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Section 13.5. Other Policies
Unless otherwise required by a Leasehold Mortgagee, Tenant shall not take
out separate insurance concurrent in form, or contributing in the event of loss,
with that required in this Article XIII unless Landlord and the City are
additional insureds therein, with loss payable as provided in Section 13.6 of
this Lease. Tenant shall immediately notify Landlord of the taking out of any
such separate insurance and shall cause the original policies in respect thereof
or certificates therefor to be delivered as required in Section 13.4 of this
Lease.
Section 13.6. Adjustment of Insurance
All policies provided for in Sections 13.1 and 13.3 of this Lease shall
provide for loss thereunder to be adjusted with Tenant and payable to Tenant,
Landlord and each Leasehold Mortgagee as their interest may appear with respect
to any particular casualty resulting in damage or destruction to the Casino and
Improvements, except as otherwise provided by this Lease.
Section 13.7. Insurance Notice
Each such policy or certificate therefore issued by the insurer shall to
the extent obtainable contain (a) a provision that no act or omission of Tenant
which would otherwise result in forfeiture or reduction of the insurance therein
provided shall affect or limit the obligation of the insurance company so to
pay, in accordance with Section 13.6 of this Lease, the amount of any loss
sustained and
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(b) an agreement by the insurer that such policy shall not be canceled or
modified without at least thirty (30) days prior written notice by registered
mail, return receipt requested, to Landlord, the City and each Leasehold
Mortgagee.
Section 13.8. Keep in Good Standing
Tenant shall observe and comply with the requirements of all policies of
public liability, fire and other policies of insurance at any time in force with
respect to the Development and Tenant shall so perform and satisfy the
requirements of the companies writing such policies so that at all times
companies of good standing satisfactory to Landlord and each Leasehold Mortgagee
shall be willing to write or to continue such insurance. Tenant shall, in the
event of any violations or attempted violations of the provisions of this
Section 13.8 by any permitted Space Tenant, take steps, immediately upon
knowledge of such violation or attempted violation, to remedy or prevent the
same as the case may be.
Section 13.9. Unearned Premiums
Upon the expiration or earlier termination of this Lease unearned premiums
upon any of such insurance policies which are transferred to Landlord, if any,
shall be apportioned between Landlord and Tenant; provided that if Tenant shall
then be in default causing the termination of this Lease, the portion of such
unearned
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premiums to which Tenant would otherwise be entitled shall be applied first
against any amount due under the default.
Section 13.10. Blanket Policies
Any insurance provided for in this Article XIII may be effected by a
policy or policies of blanket insurance; provided, however, that the amount of
the total insurance allocated to the Development shall be such as to furnish in
protection the equivalent of separate policies in the amounts herein required,
and provided further that in all other respects, any such policy or policies
shall comply with the other specific insurance provisions and Tenant shall
deposit the original policy or policies or a copy thereof or a certificate
thereof with Landlord and each Leasehold Mortgagee.
Section 13.11. Change of Circumstances or Conditions
If any insurance required to be maintained under this Lease is not
available at commercially reasonable levels, Tenant and Landlord shall
renegotiate the type of insurance that may be required to fully protect
Landlord, the City and Tenant (or, if an alternative type of insurance is not
available at commercially reasonable levels, Tenant and Landlord shall negotiate
an alternative arrangement to protect Landlord, City and Tenant subject to
approval of the City Council).
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Section 13.12. Sublessee Insurance
Without limitation of Tenant's obligation to comply or cause compliance
with this Article XIII, Tenant may elect to require JCC Development and JCC
Development's tenants under its Space Lease, and all sublessees of Tenant under
their Space Leases, to comply with any of the requirements of this Article XIII
as to the portion of the Development subject to the Second Floor Non-Gaming
Sublease or any Space Lease to the extent that such provisions relate to said
portion. JCC Development, its tenants under its Space Lease and any sublessee of
Tenant shall be required to name Landlord and the City as additional insureds
under any such policies.
ARTICLE XIV.
FINANCIAL AND ACCOUNTING RECORDS, BUDGETS
AND REPORTING REQUIREMENTS
Section 14.1. Financial and Accounting Records
Tenant shall maintain and keep, or shall cause to be maintained and kept,
full and accurate Books and Records at the Development or at such other location
as shall be approved by Landlord, in writing, of all business conducted or
transacted in, upon or from the Development, including, but not limited to, all
business and gaming operations conducted by the Casino Manager/Operator, which
may reasonably assist Landlord in determining the Rent and Additional
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Charges to be paid by Tenant under this Lease. This includes but is not limited
to full and accurate Books and Records of all business and gaming operations
conducted at the Casino. Tenant shall maintain and require the Casino
Manager/Operator to maintain and make available to Landlord full and accurate
Books and Records reflecting the results of the operation of the Casino. If
Tenant maintains permanent records in a computerized or microfiche fashion,
Tenant shall provide to Landlord, upon reasonable requests, a detailed index to
the microfiche or computerized record, which must be indexed by department and
date. The Books and Records are subject to the record retention and storage
policies required by this Lease and by applicable Governmental Requirements.
Tenant shall retain and maintain Books and Records for at least five (5) years.
Section 14.2. Financial Statements Quarterly Meetings
Tenant shall provide or require the Casino Manager/Operator to provide
Landlord with accurate unaudited Financial Statements of the Development for
each calendar quarter within sixty (60) days after the end of each quarter
certified as accurate and prepared in accordance with GAAP by Tenant or the
Chief Financial Officer of the Casino/Manager Operator. The annual Financial
Statements of Tenant relating to the Development shall be audited by one of the
six largest national certified public accounting firms (the "Big Six Firms") or
such
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other firm acceptable to Landlord and Tenant at Tenant's expense and provided to
Landlord within one hundred twenty (120) days after the end of the Fiscal Year.
Each quarter, the Financial Statements of Tenant and the Casino Manager/Operator
will be presented and explained to Landlord at a meeting organized and presented
by Tenant and/or the Casino Manager/Operator. Other information to be supplied
to Landlord by Tenant and the Casino Manager/Operator at such quarterly meeting
shall include: (1) a ninety (90) day projection for Gross Gaming Revenue and
Gross Non-Gaming Revenue and (2) the statistical analysis of gaming operations
at the Casino. In addition to the annual audited Financial Statements, the
Financial Statements for the last Fiscal Year shall be audited at the
termination of this Lease. Notwithstanding the foregoing, if Tenant, the Casino
Manager/Operator or any Affiliate Controlling, Controlled by or under common
Control with Tenant or the Casino Manager/Operator is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), Tenant shall submit to Landlord both quarterly or annual Financial
Statements and quarterly or annual reports filed with the United States
Securities and Exchange Commission at the same time such reports are required to
be filed under the Exchange Act.
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This provision shall not limit Landlord's review and audit rights under
Section 14.3 of this Lease.
Section 14.3. Review and Audit
(a) Each of Landlord and Tenant shall retain one of the Big Six Firms, and
may also retain another local public accounting firm ("Local Firm") to joint
venture with the Big Six Firm, to perform audits and accounting work for
Landlord and Tenant, respectively (the "Accepted Auditor"). If Landlord retains
a Local Firm together with a Big Six Firm, both firms shall certify in writing
to Landlord that they do not have any conflicts of interest. If all of the Big
Six Firms have a conflict of interest, Landlord may select its Accepted Auditor
from among the ten (10) largest public accounting firms. Three (3) years after
the Opening Date, a Local Firm may be chosen as Landlord's Accepted Auditor
without the involvement of a Big Six Firm if the Local Firm has gained
sufficient experience and knowledge to adequately and professionally conduct the
audits and accounting work.
(b) Tenant shall notify Landlord in writing at least twenty (20) days
prior to the time Tenant's duly appointed Accepted Auditor will be performing
its annual audit or review functions (the "Annual Audit"). Landlord's duly
appointed Accepted Auditor, shall have the right, during the process of the
Annual Audit,
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whensoever the same occurs and during normal business hours, after reasonable
written notice to Tenant and to the Casino Manager/Operator that Landlord's
Accepted Auditor will be participating with Tenant's Accepted Auditor, to
independently examine, audit, inspect and transcribe the Books and Records of
Tenant and the Casino Manager/Operator (the "Landlord's Audit"). Tenant shall
make available Books and Records of the Casino Manager/Operator for the
aforesaid purpose. Notwithstanding the foregoing, Landlord's Accepted Auditor
shall not have the right to examine, audit, inspect or transcribe (i) any
customer records or (ii) any Books and Records or information that Tenant is
required by law not to disclose. Tenant shall be required, however, to provide
Books and Records and information to Landlord's Accepted Auditor for a review
and audit in accordance with GAAP, including information that is reasonably
sufficient to confirm the calculation of net credit. In addition, if Tenant so
desires, it may retain another Accepted Auditor to do a second audit (the
"Second Audit"). This firm shall also be required to use GAAP. The Second Audit
must be commenced within thirty (30) days after Landlord advises Tenant of the
results of Landlord's Audit and completed within ninety (90) days thereafter.
If, upon completion of the Annual Audit, (i) Landlord's Audit shows that Gross
Gaming Revenues and Gross Non-Gaming Revenues, in the aggregate, have been
understated by two
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percent (2%) or more over a period of a full Fiscal Year and Tenant does not
elect to have a Second Audit performed or (ii) any Second Audit shows that Gross
Gaming Revenues and Gross Non-Gaming Revenues, in the aggregate, have been
understated by two percent (2%) or more over a period of a full Fiscal Year,
Tenant shall pay to Landlord within thirty (30) days after demand the actual
cost to Landlord of Landlord's Audit for such Fiscal Year. If Landlord's Audit
shows that Gross Gaming Revenues and Gross Non-Gaming Revenues, in the
aggregate, have been understated by two percent (2%) or more over a period of a
full Fiscal Year and any Second Audit shows that such understatement is less
than two percent (2%) over a period of a full Fiscal Year, Tenant shall only pay
to Landlord the actual cost to Landlord of Landlord's Audit for such Fiscal Year
if a court of competent jurisdiction determines that Gross Gaming Revenues and
Gross Non-Gaming Revenues, in the aggregate, have been understated by two
percent (2%) or more over the full Fiscal Year at issue. Notwithstanding the
foregoing, if Landlord's Audit or any Second Audit shows that Gross Gaming
Revenues and Gross Non-Gaming Revenues, in the aggregate, have been understated
or overstated over a period of a full Fiscal Year, thereafter, during the next
succeeding Fiscal Year, Landlord may conduct independent audits, through its
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Accepted Auditor, at times other than during the Annual Audit upon reasonable
written notice and during normal business hours.
Section 14.4. Confidentiality
Landlord agrees to treat, and to cause Landlord's Accepted Auditor to
treat, all Books and Records, Financial Statements and other financial
information as confidential and, except in response to a valid court order or an
administrative order from the LGCB, shall not divulge any of the records to
third parties without the prior written consent of Tenant and, with respect to
information from the Casino Manager/Operator, the prior written consent of the
Casino Manager/Operator; provided that Tenant and, with respect to information
from the Casino Manager/Operator, the Casino Manager/Operator, have treated and
handled such Books and Records, Financial Statements and other financial
information as confidential by marking or otherwise designating the material as
confidential in a visible manner reasonably calculated to provide actual notice
to Landlord and Landlord's Accepted Auditor of its confidential status and by
taking due care to prevent disclosure of the material except to authorized
persons. Notwithstanding the foregoing, Landlord shall have the right to provide
the information to the Mayor and the City Council with the understanding and
agreement that the information shall also be maintained in strictest confidence
by
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the Mayor and the various City Council members. Notwithstanding anything to the
contrary, Landlord, Landlord's Accepted Auditor and the City shall have the
right to divulge confidential information (a) if required by law, (b) if already
public as a result of disclosure by Tenant or the Casino Manager/Operator, (c)
in an enforcement proceeding by Landlord against Tenant pertaining to this
Lease, or, if needed, (d) to their accountants and/or attorneys. Other than
disclosure pursuant to (b) above, before the City and Landlord may divulge
confidential information, any reasonable action necessary to keep the
information confidential, including the execution of confidentiality agreements,
will be undertaken. The identity of customers will not be divulged.
Section 14.5. Errors in Financial and Accounting Records
(a) If, upon completion of Landlord's Audit, Landlord's Audit shows that
Gross Gaming Revenues and Gross Non-Gaming Revenues, in the aggregate, have been
understated for a period of a full Fiscal Year or otherwise shows any deficiency
in Rent or Additional Charges and Tenant does not elect to have a Second Audit
performed, Tenant shall pay to Landlord within fourteen (14) days after demand
any amounts then due Landlord pursuant to this Lease based upon Landlord's
Audit. If, upon completion of Landlord's Audit, Tenant elects to have a Second
Audit performed and such Second Audit shows that Gross Gaming
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Revenues and Gross Non-Gaming Revenues, in the aggregate, have been understated
for a period of a full Fiscal Year or otherwise shows any deficiency in Rent or
Additional Charges, Tenant shall provide Landlord with copies of the Second
Audit within five (5) days of receipt thereof and shall pay to Landlord within
fourteen (14) days after demand any amounts then due Landlord pursuant to this
Lease based upon the Second Audit. If any amount by which Gross Gaming Revenues
and Gross Non-Gaming Revenues, in the aggregate, have been understated over a
Fiscal Year or any deficiency in Rent or Additional Charges, as determined by
Landlord's Audit, exceeds any such determination pursuant to the Second Audit,
Tenant shall only pay to Landlord any such greater amount due under this Lease
in excess of those previously paid by Tenant pursuant to this Section 14.5(a)
upon the determination by a court of competent jurisdiction that such greater
amount is due. Any amounts payable to Landlord pursuant to this Section 14.5(a)
shall include interest at the Default Rate from the date due until paid.
(b) If, upon completion of Landlord's Audit, Landlord's Audit shows that
Gross Gaming Revenues and Gross Non-Gaming Revenues, in the aggregate, have been
overstated for a period of a full Fiscal Year or otherwise shows an overpayment
of Rent or Additional Charges and Tenant does not elect to have a
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Second Audit performed, Tenant shall receive a credit (or shall be entitled to a
refund if this Lease has terminated prior to the completion of Landlord's Audit
and full application of any such credit against Rent and Additional Charges)
against Rent and Additional Charges thereafter due equal to any excess amounts
paid to Landlord pursuant to this Lease during the Fiscal Year at issue based
upon the amount of the overstatement as determined by Landlord's Audit. If
Tenant elects to have a Second Audit performed and such Second Audit shows that
Gross Gaming Revenues and Gross Non-Gaming Revenues, in the aggregate, have been
overstated for a period of a full Fiscal Year or otherwise shows an overpayment
of Rent or Additional Charges in an amount less than that determined by
Landlord's Audit, the amount of Tenant's credit pursuant to this Section 14.5(b)
shall be based upon the Second Audit. If any amount by which Gross Gaming
Revenues and Gross Non-Gaming Revenues, in the aggregate, have been overstated
over a Fiscal Year or any overpayment of Rent or Additional Charges, as
determined by the Second Audit, exceeds such determination pursuant to
Landlord's Audit, Tenant shall only be entitled to any such greater credit upon
the determination by a court of competent jurisdiction that such greater credit
is due.
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Section 14.6. Annual Business Plan
In the Fiscal Year prior to the Opening Date, and annually thereafter,
Tenant shall prepare or cause to be prepared an Annual Business Plan for the
following Fiscal Year. Landlord shall be allowed to review and make notes from
the Annual Business Plan no later than thirty (30) days after the beginning of
each Fiscal Year; provided that Landlord shall keep the information contained in
the Annual Business Plan confidential, shall treat such information as
confidential in accordance with Section 14.4 of this Lease and shall not
photocopy or take possession of the Annual Business Plan. Landlord's Chief
Financial Officer and the Casino Manager/Operator shall meet within thirty (30)
days after presentation of the Annual Business Plan to Landlord to discuss those
aspects of the Annual Business Plan addressing marketing, City revenues, the
Open Access Program and the Open Access Plans adopted pursuant thereto then in
operation and other relevant issues.
ARTICLE XV.
CONDEMNATION
Section 15.1. Definitions
When used in this Lease, the following terms shall have the following
meanings:
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(a) "Condemnation" means a taking of all or any part of the Development by
eminent domain, condemnation, compulsory acquisition or similar proceeding by a
competent authority for a public or quasi-public use or purpose.
(b) "Major Condemnation" means a Condemnation either (i) of the entire
Development or (ii) of a portion of the Development if, as a result of the
Condemnation, it would be imprudent or unreasonable to continue to operate the
Casino even after making all reasonable repairs and restorations.
(c) "Minor Condemnation" means a Condemnation that is not a Major
Condemnation.
(d) "Proceeds" means the compensation paid by the condemning authority to
the City, Landlord and/or Tenant in connection with a Condemnation, whether
recovered through litigation or otherwise.
Section 15.2. Duty to Resist
The City, Tenant and Landlord shall cooperate fully to resist and defend
any Condemnation. The City, Tenant and Landlord recognize that any Condemnation
would detrimentally affect the City, Tenant and Landlord.
Section 15.3. Major Condemnation
If a Major Condemnation by the City or one of its political subdivisions
or agencies occurs, Tenant shall have the right to receive just compensation
from the
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condemnor to the full extent of Tenant's loss; provided, however, that all
Leasehold Mortgagees shall be paid in full. If a Major Condemnation by a
condemning authority other than the City or one of its political subdivisions or
agencies occurs, the City, Landlord and Tenant shall each be entitled to claim
and recover from the condemning authority just compensation for loss of or
damage to its respective interest in the Development, and all other elements of
compensation to which it is entitled under applicable law; provided, however,
that all Leasehold Mortgagees shall be paid in full pursuant to the priority of
application set forth below and, if insufficient, before any Proceeds shall be
shared by the City and Landlord, if such Major Condemnation occurs during the
first ten (10) years of the Initial Term after the Execution Date, and,
thereafter, Leasehold Mortgagees shall receive all of the Proceeds payable to
Tenant plus the percentage of the Proceeds payable to the City and/or Landlord
as set forth below if such Major Condemnation occurs during the eleventh through
the twentieth year of the Initial Term after the Execution Date:
<TABLE>
<CAPTION>
<S> <C>
11th year - 90% 16th year - 40%
12th year - 80% 17th year - 30%
13th year - 70% 18th year - 20%
14th year - 60% 19th year - 10%
15th year - 50% 20th year - 0%
</TABLE>
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Notwithstanding the foregoing, a Leasehold Mortgagee shall return to the City
and/or Landlord, as the case may be, the portion of any award received with
respect to the interest of the City or Landlord (the "City/Landlord Award") to
the extent such portion of the award, when added to any award received with
respect to the interest of Tenant (the "Tenant Award"), exceeds the aggregate
amount of principal, interest, costs, fees and other monetary obligations owed
to such Leasehold Mortgagee (excluding for purposes of this sentence any
prepayment penalties, if applicable). Leasehold Mortgagees shall apply Tenant's
Award as aforesaid prior to applying the City/Landlord Award. Landlord and the
City hereby agree to cooperate with Tenant and any Leasehold Mortgagee in good
faith to obtain the maximum Condemnation award and agree that Tenant shall not
be liable to the City or Landlord as a result of any payment to Tenant or any
Leasehold Mortgagee pursuant to this Section 15.3. If a Major Condemnation
occurs, this Lease shall terminate, and no party to this Lease shall have any
claims, rights, obligations, or liabilities towards any other party arising
after termination; provided that the obligations of Landlord and the City under
Section 6.6 of this Lease shall survive termination.
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Section 15.4. Minor Condemnation
If a Minor Condemnation occurs or the use or occupancy of the Development
or any part thereof is temporarily requisitioned by a civil or military
governmental authority, then (a) this Lease shall continue in full force and
effect; (b) the Rent, City Payments, Additional Charges and other obligations
under this Lease, and Landlord's Sublease Rent payable under the Second Floor
Non-Gaming Sublease, shall be equitably adjusted taking into account the effect
of such Minor Condemnation on Tenant's and JCC Development's business and
operations; and (c) Tenant shall promptly perform all work (the "Condemnation
Work") required in order to repair any physical damage to the Development caused
by the Condemnation, and to restore the Development, to the extent reasonably
practicable, to its condition immediately before the Condemnation. If a Minor
Condemnation occurs, the Proceeds will be and are hereby, to the extent
permitted by applicable law and agreed to by the condemnor, assigned to and
shall be withdrawn and paid into an interest-bearing escrow account (the
"Condemnation Escrow Account") to be created by an escrow agent (the
"Condemnation Escrow Agent") selected by Landlord and Tenant within ten (10)
days of when such Proceeds are made available (and acceptable to each Leasehold
Mortgagee). If Tenant or Landlord for whatever reason cannot or will not
participate in the
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selection of the Condemnation Escrow Agent, then the other party (with approval
of each Leasehold Mortgagee) shall select the Condemnation Escrow Agent. This
transfer of the Proceeds, to the extent permitted by applicable law and agreed
to by the condemnor, shall be self-operative and shall occur automatically upon
the availability of the Proceeds and such Proceeds shall be payable into the
Condemnation Escrow Account on the naming of the Condemnation Escrow Agent to be
applied as provided in this Section 15.4. If the parties who participate in the
selection process are unable to agree upon the selection of the Condemnation
Escrow Agent, Landlord, Tenant or any Leasehold Mortgagee may apply to the Civil
District Court for the Parish of Orleans, State of Louisiana for the appointment
of a national bank located in the City as the Condemnation Escrow Agent. The
Condemnation Escrow Agent shall deposit the Proceeds in the Condemnation Escrow
Account and any after-tax interest earned thereon shall be added to the
Proceeds. The Condemnation Escrow Agent shall disburse funds from the
Condemnation Escrow Account to pay the cost of the Condemnation Work in a manner
substantially similar to, and following the procedures described in, Section
12.2(b) and (c) of this Lease. The Proceeds shall be allocated among the
following elements of compensation and disbursed by the Condemnation Escrow
Agent in the following order:
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(a) First, the Condemnation Escrow Agent shall disburse the
portion of the Proceeds allocable to loss or damage with
respect to Tenant's interest in the Improvements.
(b) Second, the Condemnation Escrow Agent shall disburse the
portion of the Proceeds allocable to loss or damage with
respect to the City's and Landlord's interest in the
Improvements.
(c) Third, the Condemnation Escrow Agent shall disburse the
portion of the Proceeds allocable to Tenant's interest other
than Tenant's interest in the Improvements.
(d) Fourth, the Condemnation Escrow Agent shall disburse the
portion of the Proceeds allocable to Landlord's interest other
than the City's and Landlord's interest in the Improvements.
If the cost of the Condemnation Work exceeds the total amount of the Proceeds,
Tenant shall be responsible for paying the excess cost. If the Proceeds exceed
the cost of the Condemnation Work, the Condemnation Escrow Agent shall
distribute the excess Proceeds to the City, Landlord and Tenant in accordance
with their respective interests after final payment for completion of the
Condemnation Work, subject to the rights of the Leasehold Mortgagees with
respect to Tenant's share of the Proceeds.
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ARTICLE XVI.
ALTERATIONS AND MODIFICATIONS BY TENANT
Section 16.1. Alterations and Modifications of Improvements After Substantial
Completion
(a) After Substantial Completion of all Components and Phases of the
Development under the GDA, Tenant shall not make or cause or permit the making
of any demolition, alteration, reconstruction, remodeling, additions,
modifications, renovations or improvements (collectively referred to as
"Alterations") in or to the Development other than Non-Structural Alterations
unless Landlord and the City Council shall have given their prior written
approval and consent, except as otherwise permitted herein or in the Second
Floor Non-Gaming Sublease and except as set forth in the GDA. All Alterations
shall be at the sole cost, expense and risk of Tenant, and neither Landlord nor
the City shall have any liability or responsibility therefor or in connection
therewith.
(b) Landlord agrees that it will not unreasonably withhold, financially
condition or delay its consent to any Non-Structural Alteration; provided that
prior to the commencement of any such Non-Structural Alteration, Tenant shall
give Landlord written notice thereof, together with detailed plans and
specifications, if any. The City's approval for Non-Structural Alterations shall
not be required except to the extent required by Governmental Requirements. If
Tenant does not,
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simultaneously with the submission of its plans and specifications to Landlord,
deliver to Landlord an unqualified certificate from an independent licensed
engineer or architect that the work set forth in such plans and specifications
constitutes a Non-Structural Alteration, then Tenant shall reimburse Landlord
promptly upon demand for any commercially reasonable costs or expenses incurred
by Landlord to third parties in connection with Landlord's review of Tenant's
plans and specifications. Promptly upon completion of any Non-Structural
Alteration, Tenant shall deliver plans and specifications of such Non-Structural
Alteration to Landlord.
(c) Landlord's consent to a Non-Structural Alteration (or related series
of Non-Structural Alterations within any two (2) month period) shall not be
required if the total cost of performing same does not exceed Two Hundred Fifty
Thousand Dollars ($250,000). Furthermore, Tenant shall not be required to give
Landlord notice of or plans and specifications pertaining to a Non-Structural
Alteration that costs less than Two Hundred Fifty Thousand Dollars ($250,000),
provided Tenant shall continue to comply with all Governmental Requirements.
However, Tenant shall provide to Landlord a copy of the "As Built" plans and
specifications on completion of the Non-Structural Alterations, if any have been
prepared for Tenant.
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(d) A "Non-Structural Alteration" shall mean any Alteration that does not
(i) affect the structural strength of the Improvements or any of their
structural parts or components; or (ii) adversely affect the proper functioning
of any of the mechanical, heating, ventilation and air conditioning, electrical,
sanitary or other systems of the Improvements; or (iii) affect the outside
appearance, exterior presentation or exterior signage.
(e) Landlord shall not be liable for any labor or materials furnished or
to be furnished to Tenant upon credit, and no mechanic's or other lien for such
labor or materials shall attach to or affect the reversion or other estate or
interest of Landlord in and to the Development.
(f) After Substantial Completion of all Components and Phases of the
Development under the GDA, during Alterations that may affect Tenant's income
producing capabilities, Tenant shall pay to Landlord the Gross Gaming Payments
and the Gross Non-Gaming Payments at a rate based upon the average of those paid
during the immediately preceding three (3) full Fiscal Years.
(g) After Substantial Completion of all Components and Phases of the
Development under the GDA, if an Alteration or a related series of Alterations
within any two (2) month period involves a total cost in excess of Two Hundred
Fifty Thousand Dollars ($250,000), then, at the request of Landlord, Tenant
shall
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also deposit with Landlord a certificate or other evidence satisfactory to
Landlord showing that Tenant has furnished a bond or that Tenant's building
contractor, if any, has furnished a bond in favor of Tenant and, if possible, in
favor of Landlord, with a surety approved by Landlord, guaranteeing the
performance of said contract free and clear of all liens.
(h) Notwithstanding the foregoing, Alterations contemplated by the Master
Plan shall not require the consent of Landlord so long as Tenant and JCC
Development comply with the terms of such Master Plan with respect to such
Alterations.
Section 16.2. Manner of Performance
Any Alterations after Substantial Completion of all Components and Phases
of the Development under the GDA shall be performed in accordance with the
provisions of Section 16.1 of this Lease and the following:
(a) All Alterations shall be done in a good and workmanlike manner and in
no event shall the quality of the Alteration or of the workmanship be less than
the current quality of work existing at the Development.
(b) All Alterations shall be effected in compliance with all applicable
laws, ordinances, rules and regulations of governmental bodies having
jurisdiction over the Development.
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(c) During the progress of any Alterations for which Landlord's approval
is required, such Alterations shall be subject to inspection by representatives
of Landlord, who shall be permitted access and the opportunity to inspect, at
all reasonable times upon not less than seven (7) hours prior notice (except in
the case of an emergency, in which event no notice shall be required), but this
provision shall not in any way whatsoever create any obligation on Landlord to
conduct such an inspection or create any obligation or liability (or relieve
Tenant of any obligations under this Lease) in the event Landlord does conduct
such an inspection, or give Landlord the right to direct the performance of such
Alterations.
ARTICLE XVII.
ENTRY UPON LEASED PREMISES BY LANDLORD; INSPECTION
Section 17.1. Access and Inspection
(a) Landlord or its agents or designees shall have the right at all
reasonable times, upon reasonable notice to Tenant (except in the case of
emergency, in which event no notice shall be required), which notice shall be
deemed given upon receipt and which notice must be given in writing, to enter
the Development for the purposes of: (1) inspection, (2) making of such repairs
that Landlord shall have the right to make by the Lease provisions, (3)
determining
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whether Tenant is complying with the terms and conditions of this Lease,
including, but not limited to, compliance with Environmental Laws, or (4)
exercising Landlord's right to review the Books and Records.
(b) Tenant may, during such inspection, have an employee or agent of
Tenant escort any person so inspecting the Development. Landlord shall be
allowed to take all material into and upon the Development that may be required
for the repairs above mentioned as the same is required for such purpose,
without the same constituting an eviction of Tenant in whole or in part and the
Rent and Additional Charges shall in no way be abated while said repairs are
being made by reason of loss or interruption of the business of Tenant because
of the prosecution of any such work. In performing any such repairs, Landlord
agrees to use reasonable efforts to minimize to the extent practicable any
disruption of or interference with occupancy, business or operation of Tenant or
any Space Tenant; provided that nothing contained herein shall require Landlord
to perform such repair on an overtime or premium paid basis.
Section 17.2. Access to Secured Areas
Landlord acknowledges that by virtue of the nature of its business Tenant
may have certain security and confidentiality requirements, including, but not
limited to, those imposed by the Casino Manager/Operator, and that,
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consequently, portions of the Casino may be locked or otherwise made
inaccessible to persons unauthorized by Tenant (such areas are hereinafter
called "Secured Areas"). Landlord covenants and agrees that Tenant shall have
the right and discretion to protect any information or activities subject to
such security and confidentiality requirements and to establish such Secured
Areas; provided, however, Landlord shall be permitted to enter such Secured
Areas in accordance with procedures established by Tenant and the Casino
Manager/Operator and accepted by Landlord which procedures shall be adopted
prior to the Opening Date. Tenant shall deliver floor plans of the Casino to
Landlord designating the Secured Areas for Landlord's approval.
ARTICLE XVIII.
INDEMNIFICATION OF LANDLORD AND
OTHER WARRANTIES AND COVENANTS BY TENANT
Section 18.1. General Indemnification
(a) After the Possession Date, Tenant shall defend, indemnify and hold
harmless Landlord and the City from and against any and all liabilities, losses,
damages, costs, expenses, claims, obligations, penalties, and causes of action
(including without limitation, reasonable attorneys' fees and expenses) whether
based upon negligence, strict liability, absolute liability, product liability,
misrepresentation, contract, implied or express warranty or any other principle
of
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law or equity, that are imposed upon, incurred by or asserted against Landlord
or the City or which Landlord or the City may suffer or be required to pay
(except (A) to the extent caused by the intentional acts or omissions, or the
sole negligence of Landlord or the City or their employees, agents, or
contractors or (B) where Landlord or the City or their employees, agents or
contractors are liable with a third party or parties other than Tenant or JCC
Development or their respective employees, agents, or contractors) and which
arise out of or relate in any manner to:
(i) the ownership, possession, use, condition or occupancy of the
Leased Premises or any part thereof or any Improvement thereon;
(ii) the operation or management of the Development;
(iii) any failure on the part of Tenant to perform or comply with any
of the terms of this Lease, the Second Floor Non-Gaming Sublease, the GDA or any
other agreement affecting the Casino or the Development to which Tenant is a
party;
(iv) any failure on the part of JCC Development to perform or comply
with any of the terms of the Second Floor Non-Gaming Sublease;
(v) the construction or remodeling of the Casino (including any
Alterations) or the performance of any labor or services or the furnishing of
any
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material for or on the Development or any part thereof, any enforcement thereon
after the Possession Date or the failure to pay for such labor, service or
furnishing of material as and when required;
(vi) any personal injury, death or property damage suffered or alleged
to have been suffered by Tenant or JCC Development (including Tenant's or JCC
Development's employees, agents or servants), the Casino Manager/Operator
(including its employees, agents or servants), any Space Tenant or any third
person on or about the Development after the Possession Date;
(vii) any work or things whatsoever done in, on or about the
Development or any portion thereof after the Possession Date;
(viii) any act or omission of a design professional, contractor,
subcontractor, equipment lessor, consultant or other Person performing labor or
services or providing equipment in connection with the performance of any
service or the furnishing of any material in or about the Development or any
portion thereof after the Possession Date;
(ix) the condition of any building, facilities or Improvements on the
Leased Premises or any non-public street, or any curb or sidewalk on the Leased
Premises, or of any vaults, tunnels, malls, passageways, or space therein;
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(x) any breach or default on the part of Tenant in the
payment, performance, or observance of any of the Rent, Additional Charges,
covenants, agreements or conditions on the part of Tenant to be paid, performed
or observed pursuant to the terms and provisions of this Lease or pursuant to
the terms and provisions of any other agreement or instrument affecting the
Leased Premises or any part thereof;
(xi) any breach or default on the part of JCC Development in
the payment, performance or observance of any of Landlord's Sublease Rent,
covenants, agreements or conditions on the part of JCC Development to be paid,
performed or observed pursuant to the terms and provisions of the Second Floor
Non-Gaming Sublease or pursuant to the terms and provisions of any other
agreement or instrument affecting the Leased Premises or any part thereof;
(xii) any breach or default on the part of Tenant or JCC
Development for the payment, performance or observance of any of Tenant's or JCC
Development's, as the case may be, obligations under all agreements entered into
by Tenant, or JCC Development, or any of its Affiliates, as the case may be,
relating to the performance of services or supplying of materials to the
Development;
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(xiii) any act, omission or negligence of Tenant or any Space
Tenant, or any of their respective agents, contractors, servants, employees,
licensees or under tenants;
(xiv) any failure of Tenant or JCC Development (including
their respective employees, agents or servants) to comply in all respects with
all applicable laws, rules and regulations and orders including the payment of
all taxes, assessments and governmental charges imposed upon the Leased Premises
which are not Discriminatory; and
(xv) those other matters expressly described elsewhere in this
Lease requiring indemnification of Landlord and/or the City by Tenant.
(b) In case any action or proceeding shall be brought against Landlord or
the City based upon any claim in respect of which Tenant has agreed to indemnify
Landlord and the City, Tenant will, upon notice from Landlord or the City,
defend such action or proceeding on behalf of Landlord and the City at Tenant's
sole cost and expense and will keep Landlord and the City fully informed of all
developments and proceedings in connection therewith and will furnish Landlord
and the City with copies of all papers served or filed therein, irrespective of
by whom served or filed. Tenant shall defend such action with counsel of its own
choosing, which counsel is reasonably satisfactory to Landlord. Landlord shall
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have the right, but not the obligation, at its own cost, to be represented in
any such action by counsel of its own choosing. The foregoing indemnity shall
not apply to any cause of action that arose prior to the Possession Date, but
Tenant will be responsible for any cleanup, remediation, disposal and abatement
of violations of Environmental Law on or under the Development at the Possession
Date pursuant to, and subject to any limitations set forth in, Sections 18.2,
18.3 and 18.4 of this Lease.
Section 18.2. Environmental Indemnification
After the Possession Date, Tenant covenants and agrees to indemnify, hold
harmless and defend Landlord and the City from and against any and all costs,
expenses, fines, penalties, claims, demands, proceedings, suits, losses,
interest, and payment, including the payment of the actual fees and expenses of
experts and reasonable attorney's fees, resulting from any and all violations of
any Environmental Law (such violations being hereinafter collectively referred
to as "Environmental Matters").
Section 18.3. Exceptions to Environmental Indemnification
The covenant and indemnity agreement in Section 18.2 of this Lease shall
not apply to Environmental Matters that arose prior to the Possession Date,
except for those Environmental Matters delineated as Tenant's sole
responsibility in
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Section 18.4 of this Lease or any violations of Environmental Laws resulting
from the actions or inactions of Tenant or JCC Development or their respective
agents and employees. It is the intent of the parties that no party will
indemnify the other for Environmental Matters that are the fault of, or caused
by parties other than the City, Landlord, Tenant or JCC Development (the "Third
Party Environmental Matters"). Accordingly, the foregoing covenants and
indemnity of Tenant shall not apply to any Third Party Environmental Matters,
including, without limitation, Environmental Matters that result from, or are
traced to violations of any Environmental Law on, about or under premises other
than the Development.
Section 18.4. Special Environmental Responsibilities of Tenant
Tenant covenants to clean-up, remediate, abate, transport, and dispose of
all Environmental Matters unknown to The Office of Emergency Preparedness of the
City, the Health Department of the City, the Property Management Department of
the City or the Department of Safety and Permits of the City. Harrah's Jazz
Company has cleaned up, remedied, abated, transported and disposed of all
Environmental Matters described in the Environmental Site Assessment, prepared
by W.D. Scott Group, Inc., dated March 26, 1993, for Celebration Park Casino,
Inc., including, but not limited to, the clean-up, remediation, abatement,
transportation and disposal of all asbestos, lead, polychlorinated biphenyl, and
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stored materials located on, about or under the Development subject to rights of
indemnification from the City and Landlord as set forth in Exhibit "K" to this
Lease.
Section 18.5. Disclosure
Landlord and the City represent and warrant to Tenant that, to the best of
their knowledge, Exhibit "K" to this Lease contains all records of Landlord and
the City, current as of the Original Amended Lease Execution Date, as to
Environmental Matters maintained by the departments listed in Section 18.4 of
this Lease.
ARTICLE XIX.
MANAGEMENT AND OPERATION OF CASINO
Section 19.1. Inaugural Ceremonies
Tenant shall advise and consult with Landlord with respect to the
inaugural ceremonies for the Casino and plan and implement such ceremonies as
are approved by Landlord. Tenant shall pay for and reimburse Landlord and the
City for the reasonable cost and expenses incurred for providing special
services for the inaugural ceremonies including costs and expenses for
police, fire, sanitation, and other pre-opening expenses. At least thirty
(30) days before the inaugural ceremonies, Tenant, Landlord and
representatives from the City shall meet to determine the proposed budget
(the "Budget") for the pre-opening and inaugural ceremonies, Tenant, Landlord
and representatives from the City shall meet to determine the proposed budget
(the "Budget") for the pre-opening and inaugural
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ceremonies. Tenant shall deposit such sums as shall be established by the
parties during such meeting in an approved escrow account (the "Budget Escrow
Account") and Tenant shall maintain sufficient funds therein to pay all
pre-opening and inaugural expenses incurred by the City and Landlord as outlined
in the Budget which amounts shall be paid from the Budget Escrow Account within
thirty (30) days after the Opening Date.
Section 19.2. Casino Operation
Tenant agrees to diligently and efficiently operate the Casino directly or
through an approved Casino Manager/Operator in a manner generally consistent
with the operation of first class casinos by leaders in the industry, and in
compliance with this Lease, the Casino Operating Contract and the Casino
Management Agreement.
Section 19.3. Savings and Retirement Plan
Subject to restrictions under applicable law and any changes therein that
may from time to time be elected by Tenant, JCC Development or the Casino
Manager/Operator, employees of the Casino will be given the opportunity to
participate in a Tenant savings and retirement plan (the "JCC S&RP") no less
favorable than the savings and retirement plan of HET and its affiliates or any
other successor in effect on the Plan Effective Date (the "Harrah's S&RP"), as
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thereafter substituted or amended, or if HNOMC or a HET affiliate shall no
longer be the Casino Manager/Operator and a successor Casino Manager/Operator
shall have been approved by the City and Landlord, no less favorable than any
savings and retirement plan of such successor Casino Manager/Operator as may be
approved by the City and Landlord. Changes or modifications to the JCC S&RP
shall not be a default under this Lease or in any way actionable by the City or
Landlord so long as such modified JCC S&RP is (i) no less favorable than the
Harrah's S&RP or any approved savings and retirement plan of any approved
successor Casino Manager/Operator, as the case may be and (ii) not
discriminatory against employees of Tenant.
Section 19.4. Marketing Program
(a) Tenant or its Casino Manager/Operator shall develop and implement a
marketing program and shall disclose to Landlord and the City in the Annual
Business Plan a general summary containing non-confidential information about
such marketing program, including the total amounts budgeted and spent for the
marketing program each year. The purpose of this disclosure is to permit
coordination of marketing efforts between the City and Tenant. Such marketing
program may include direct sales, direct mail and media advertising promotion,
public relations and publicity efforts.
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(b) Commencing on the Execution Date and on each anniversary of the
Execution Date thereafter during the Term, Tenant shall contribute One Million
Dollars ($1,000,000) to the destination marketing program of the City for the
joint benefit of the City and Tenant in order to promote the City and the Casino
as destinations. The City, upon receipt of such annual contributions, shall
promptly transfer said funds directly to the entity or agency that the City is
utilizing during that year for the majority of the tourism marketing conducted
by or on behalf of the City. Tenant shall exercise control over the spending of
said One Million Dollar ($1,000,000) annual contribution for destination
marketing. If at the end of the first year after the Execution Date or the end
of any year thereafter ending on an anniversary of the Execution Date, Tenant
shall have failed to designate the content for any portion of its destination
marketing, such portion of the destination marketing for such year shall
thereafter not be subject to Tenant's control. The City shall cause the entity
undertaking the destination marketing for the City to designate One Million
Dollars ($1,000,000) of such entity's budget on an annual basis, which budget is
presently funded through designated tax revenues, for use in a destination
marketing plan which shall include promotion of the Casino. With respect to such
One Million Dollars ($1,000,000) of marketing expenditure, the City shall
exercise control over the content of said destination marketing.
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Failure of Tenant to contribute annually as provided above shall be an Event of
Default under Section 21.1(b) of this Lease.
Section 19.5. Financing Representations; Restrictions
In no event may Tenant represent that Landlord is or in any way may be
liable for the obligations of Tenant in connection with any financing agreement
or any public or private offering of securities. If Tenant or any Affiliate
Controlled by, Controlling or under common Control with, Tenant shall at any
time sell or offer to sell any securities issued by Tenant or such Affiliate
through the medium of any prospectus or otherwise that relates to the Casino or
its operation, it shall do so only in compliance with all applicable federal and
state securities laws, and shall clearly disclose to all purchasers and offerees
that (i) Landlord and the City shall not in any way be deemed to be an issuer or
underwriter of such securities and (ii) Landlord and the City and its officers,
directors, agents, and employees have not assumed and shall not have any
liability arising out of or related to the sale or offer of such securities,
including, without limitation, any liability or responsibility for any financial
statements, projections or other information contained in any prospectus or
similar written or oral communication. Tenant agrees to indemnify, defend or
hold Landlord and the City and its officers, directors, agents and employees
free and harmless from, any and all liabilities,
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costs, damages, claims or expenses arising out of or related to the breach of
its obligations under this Section 19.5.
Section 19.6. House Bank
Tenant shall provide the House Bank (as defined in the Casino Management
Agreement) in accordance with the terms of the Casino Management Agreement.
Tenant or the Casino Manager/Operator may grant a security interest in the cash
portion of the House Bank to HET and HOCI (or any substitute or successor entity
providing a Minimum Payment Guaranty as defined in and pursuant to the Casino
Operating Contract); provided that the security documents evidencing such
security interest shall provide that at no time, including, without limitation,
after an Event of Default and prior to the termination of this Lease (whether by
a voluntary surrender, expiration of any Leasehold Mortgagee cure period or
otherwise) (the "Transition Period"), shall HET and HOCI (or any substitute or
successor entity providing a Minimum Payment Guaranty as defined in and pursuant
to the Casino Operating Contract) be permitted to withdraw from the House Bank
pursuant to any exercise of existing remedies under such security documents or
at law any amounts in excess of such amount as shall leave a remaining balance
in the House Bank of less than Three Hundred Fifty Thousand Dollars ($350,000),
which amount (the "Transition Fund") may be used in
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accordance with Section 19.15 of this Lease during any such Transition Period to
maintain insurance coverage and to secure the Development to prevent damage or
deterioration to the Development and unauthorized entry or access to the
Development (the "Preservation Costs") and, after the expiration of any such
Transition Period, any remaining balance not so used to pay for Preservation
Costs may be withdrawn pursuant to any exercise of remedies under such security
documents. Concurrent with the recordation of such security documents, Tenant or
the holders of such security interest shall provide notice in a form approved by
Landlord to the financial institution at which the House Bank is maintained,
together with copies of such security documents, evidencing Landlord's rights in
the House Bank under Sections 19.6 and 19.15 of this Lease. Except pursuant to
such security documents, neither Tenant nor the Casino Manager/Operator shall
use the House Bank as security for any loan or debt.
Section 19.7. Time of Operations
Some Additional Charges payable hereunder are determined as a function of
the revenue from the operation of the Casino and the Support Facilities. Tenant
covenants that from the Opening Date it shall, during the Term, operate or cause
the operation of the Casino Gaming Operations and food and beverage service at
the Casino and operate the Support Facilities in a manner consistent with the
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operation of first class casinos by leaders in the industry and in compliance
with the provisions of Section 8.2 of this Lease, the Act and the rules and
regulations of the LGCB concerning hours of operation. The failure of Tenant to
maintain the maximum allowable hours for Casino Gaming Operations shall
constitute a material default under Section 21.1(k) of this Lease.
Notwithstanding the foregoing, Tenant shall have the right from time to time to
close the Casino and the Support Facilities or parts thereof for such reasonable
periods of time as may be required to make repairs, alterations, maintenance,
remodeling, or for any reconstruction, or as required because of casualty,
condemnation, governmental order or force majeure events specified in Section
32.2(a) of this Lease.
Section 19.8. Capital Replacement Fund
(a) Beginning on the Opening Date, Tenant shall establish or cause to be
established a reserve in a form reasonably acceptable to Landlord for capital
replacements in a capital replacement fund in accordance with the procedural
requirements of Section 7.07 of the Casino Management Agreement (the "Capital
Replacement Fund"). Commencing on the first full calendar month after the
Opening Date, and monthly thereafter, Tenant shall fund or cause to be funded
into the Capital Replacement Fund: (i) one-twelfth (1/12) of Three Million
Dollars ($3,000,000) for each of the first twelve (12) months following the
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Opening Date; (ii) one-twelfth (1/12) of Four Million Dollars ($4,000,000) for
each of the second twelve (12) months following the Opening Date; and (iii)
one-twelfth (1/12) of Five Million Dollars ($5,000,000) for each of the third
twelve (12) months following the Opening Date. For each month during each
successive twelve (12) month period thereafter, Tenant shall fund or cause to be
funded into the Capital Replacement Fund an amount equal to two percent (2%) of
Gross Gaming Revenue and Gross Non-Gaming Revenue.
(b) Tenant and the Casino Manager/Operator may grant a security interest
in the Capital Replacement Fund in connection with the Construction Credit
Facility, the New Bond Documents and the HET/JCC Agreement; provided that the
security documents evidencing such security interest shall provide that such
security interest shall be subject to the use of the Capital Replacement Fund by
Tenant or Landlord in accordance with Sections 5.3(e), 7.1(c) and 19.8(d) of
this Lease. Concurrent with the recordation of such security documents, Landlord
and Tenant or the holders of such security interest shall provide notice to the
financial institution maintaining the segregated account in which the Capital
Replacement Fund is maintained, together with copies of such security documents,
evidencing Landlord's rights in the Capital Replacement Fund under Sections
5.3(e) and 7.1(c) of this Lease. In accordance with the Annual Business Plan (as
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may be modified in accordance with the Casino Management Agreement), the Capital
Replacement Fund shall be established as a segregated bank account as an
assurance fund to guarantee necessary capital improvements or replacements and
shall be utilized first for any necessary capital improvements, or replacements
to the Development. No funds other than those required to be deposited in the
Capital Replacement Fund by this Section 19.8, Section 13.7 of the Casino
Operating Contract, Article 7.08 of the Casino Management Agreement or otherwise
designated for capital replacements shall be deposited into or commingled with
the Capital Replacement Fund. Any amounts remaining in the Capital Replacement
Fund at the close of each Fiscal Year shall be carried forward and retained in
the Capital Replacement Fund. If the amount in the Capital Replacement Fund is
insufficient at the time the funds are planned for expenditure in accordance
with the Annual Business Plan (as may be modified in accordance with the Casino
Management Agreement) or as otherwise provided in Section 19.8(e) of this Lease,
Tenant shall supply or cause to be supplied such shortfall of funds by deposit
into the Capital Replacement Fund within thirty (30) days after receipt of
notice of the shortfall. Notwithstanding the foregoing, at the end of any Fiscal
Year, and after the payment of all capital improvements and replacements for the
year, Tenant may withdraw funds in excess of Twenty-Five Million Dollars
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($25,000,000) adjusted for CPI from the Capital Replacement Fund if the capital
expenditures planned for the ensuing Fiscal Year are equal to or less than
Twenty-Five Million Dollars ($25,000,000) less Tenant's anticipated
contributions to the Capital Replacement Fund for such ensuing Fiscal Year.
(c) All net cash proceeds from the sale of capital items from the Casino
no longer needed in the operation of the Casino shall be deposited into the
Capital Replacement Fund unless otherwise approved by Landlord and the City.
(d) Upon termination of this Lease, the balance of the Capital Replacement
Fund shall first be used to restore the Improvements to first class condition,
reasonable wear and tear excepted. Upon cancellation or termination of the
Casino Operating Contract or any other event which results in the inability to
use (i) the System Marks in relationship to the operation of the Casino or (ii)
the Proprietary Systems (as defined in the Management Agreement) at a time at
which there is not available for use at the Casino a replacement for such
systems from a third party, and this Lease is terminated as a result thereof,
Tenant and the Casino Manager/Operator shall remove or cause to be removed from
the Leased Premises any of Manager's Property or any Marks of Tenant or others
used in the operation of the Casino and the balance of the Capital Replacement
Fund may be used for such purpose. If Tenant or the Casino Manager/Operator fail
to cause such
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removal after forty-five (45) days of receipt of a notice of termination given
pursuant to Section 21.3(a), Landlord may (1) remove such Manager's Property and
Marks of Tenant or others used in the operation of the Casino and may use funds
in the Capital Replacement Fund for such purposes or (2) use such property as
its own; provided that Landlord shall have no right to claim any ownership or,
except as otherwise provided in this Lease, other rights with respect to any
Marks or System Marks. The balance, if any, may be paid over to the Casino
Manager/Operator or Leasehold Mortgagees, as their interests may appear, or
retained by Tenant.
(e) Notwithstanding Tenant's obligations to maintain a first class
condition standard imposed in Section 19.11 of this Lease, with respect to
capital expenditures for the Casino, its FF&E, and Tenant's Property located in
or used in connection with the Casino, Tenant's obligations shall be measured by
comparison to casinos located in the United States. Tenant shall make all
capital expenditures necessary to maintain this standard regardless of the
amounts allocated in the Capital Replacement Fund. In the event Landlord
determines in good faith that such standard is not being maintained, Landlord
shall provide Tenant with written notice thereof, and if the parties cannot
agree to a cure, either may petition a court of competent jurisdiction to
resolve the dispute. It is only upon the failure of
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Tenant to implement the court's decision, within the time frames set forth in
such decision, that an Event of Default shall exist and be treated as such under
Section 21.1(j) of this Lease.
Section 19.9. Age Limitation
(a) Tenant shall exercise all reasonable care to insure that no person
under the age of twenty-one (21), unless otherwise allowed under applicable law,
shall:
(i) play, or be allowed to play, any licensed game or Gaming
Devices at the Casino;
(ii) loiter, or be permitted to loiter, where any licensed game is
conducted at the Casino;
(iii) be employed as a gaming employee or operator of Gaming Devices
at the Casino; and
(iv) serve, be served or be allowed to consume alcoholic beverages
at the Casino.
(b) In order to accomplish the requirements of Section 19.9(a) of this
Lease, Tenant shall:
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(i) draft and implement policies and procedures to satisfy the
requirements, including policies pertaining to specific
documents relating to proof of age;
(ii) develop and establish measures to implement policies and
procedures in the Master Plan with respect to the
patronization of businesses on the second floor of the Casino
by persons under the age of twenty-one (21); and
(iii) provide adequate security to enforce these policies and
procedures.
Section 19.10. EMS Services
Tenant shall provide emergency medical transport services to the Casino on
a 24-hour basis, seven (7) days a week. Hiring and contracting for this service
shall comply with the Open Access Program.
Section 19.11. Maintenance and Repairs
(a) Landlord shall not be required or obligated to make any changes,
alterations, additions, improvements or repairs in, on or about the Development
or any part thereof, during the Term; provided, however, that the City agrees
that it will take the necessary actions to move the Joan of Arc statue to an
alternative location other than the Casino Premises satisfactory to the City
promptly after the
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Execution Date in order to permit Tenant to satisfy its completion obligations
under the GDA and existing conditional use ordinances. Tenant shall comply with
the payment to assist City in the relocation of this statue as provided for in
the conditional use ordinances. At all times during the Term, Tenant shall, at
its sole cost and expense, keep and maintain the Development, including, but not
limited to, parks, grassy areas, driveways, curbs and sidewalks, in first class
condition, order and repair, ordinary wear and tear and casualties excepted, and
in conformity with all applicable statutes, ordinances and building codes and
shall keep and maintain the entire Development and all landscaping and
undeveloped areas thereon in a clean, sanitary, orderly and attractive
condition, free from weeds, rubbish and debris. All repairs, alterations,
replacements or additions to the Improvements shall be done in a first class
manner. Tenant shall also adopt and maintain such standards of property
maintenance and housekeeping as shall be reasonable and customary for similar
operations or enterprises and shall use reasonable best efforts to enforce
compliance by all Space Tenants with such standards. Tenant shall indemnify,
defend and save harmless Landlord and the City against all actions, claims and
damages by reason of Tenant's failure to comply with any of the foregoing
provisions. Tenant shall have the right and be
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obligated to maintain the Development during the Term, with no abatement or
reduction of rental obligations (except as provided in this Lease).
(b) Tenant agrees and covenants to maintain the open space facilities in
first class condition. The Development shall be protected by safety and security
patrols of sufficient quantity to reasonably deter unlawful acts on the
Development.
(c) Notwithstanding the standard of condition set forth in Section
19.11(a) of this Lease, with respect to the Casino, its FF&E and Tenant's
Property located in or used in relationship to the Casino, the first class
condition standard for repairing and maintaining the same shall be measured by
comparison to casinos located in the United States.
Section 19.12. Computerized Accountability
Gaming Devices, other than table games, must be linked to a central
computerized system capable of data exchange and communication while providing
security, integrity and financial accountability.
Section 19.13. Minimum Internal Controls
(a) Tenant shall establish or cause to be established administrative and
accounting procedures for the purpose of determining the amount of Gross Gaming
Payments and for the purpose of exercising effective control over the
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Casino's internal financial affairs. The internal control system ("ICS")
approved and required by the rules and regulations of the LGCB shall be deemed
to satisfy this requirement and such supplemental ICS consistent therewith as
may be required by Tenant's Accepted Auditor. If the Gaming Authorities do not
require and approve an ICS, or require approval of its amendment, then Tenant
shall prepare and submit the ICS, and any amendments, to Landlord's Accepted
Auditor for approval prior to the Opening Date.
(b) Tenant shall cause to be prepared an annual report of the Casino
Manager/Operator's compliance with procedures delineated in the ICS. The report
shall be prepared by Tenant's Accepted Auditor. The report shall be addressed
and submitted to Landlord and Tenant within one hundred twenty (120) days
following the end of each Fiscal Year after the Opening Date. Within thirty (30)
days following receipt of the report, Tenant shall submit a statement to
Landlord addressing each item of non-compliance noted in the report and
describing the corrective measures to be taken. This provision will be satisfied
if the Act requires an annual report that is substantially similar to that
specified and it, together with the statement regarding non-compliance, is
submitted to Landlord in a timely manner. This annual report shall not be
considered substantially similar if not prepared by an Accepted Auditor.
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(c) The cost of complying with the requirements of this Section 19.13
shall be paid by Tenant.
Section 19.14. Plan Financing and the HET/JCC Agreement
Tenant hereby represents and warrants that it has obtained the
Construction Credit Facility and that it has entered into the HET/JCC Agreement.
Section 19.15. Transition Period
During any Transition Period, Tenant or any Leasehold Mortgagee may use
the Transition Fund to pay for the Preservation Costs. If neither Tenant nor any
Leasehold Mortgagee shall pay for Preservation Costs after notice from the
Landlord and five (5) days to cure, Landlord may fund such Preservation Costs
and shall have a right of reimbursement from the Transition Fund for any such
Preservation Costs funded by Landlord. Landlord's right of reimbursement
pursuant to this Section 19.15 shall be superior to the rights of Tenant or any
Leasehold Mortgagee in the Transition Fund.
ARTICLE XX.
APPROVAL AND CONSENT RIGHTS
Section 20.1. Negotiation Rights
In any instance where Landlord or the City has retained the right to
approve or consent to any action of Tenant or the Casino Manager/Operator,
Landlord or
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the City shall negotiate in good faith and without unreasonable delay,
reasonable terms and conditions for Landlord's or the City's approval or
consent.
ARTICLE XXI.
DEFAULT BY TENANT
Section 21.1. Events of Default
The occurrence of any of the following shall constitute a material default
and breach of this Lease by Tenant (an "Event of Default"):
(a) if Tenant fails to pay the Rent as provided in Section 4.3 of this
Lease, the Gross Gaming Payments as provided in Section 4.4 of this Lease, the
City Payments as provided in Section 4.4.1 of this Lease, the Gross Non-Gaming
Payments as provided in Section 4.9 of this Lease or the Minimum Payments as
provided in Section 4.19 of this Lease within fifteen (15) Business Days after
the date of Tenant's receipt of written notice of nonpayment thereof from the
Landlord; or
(b) if Tenant fails to pay any of the other payments as provided in
Sections 4.4.1, 4.5, 4.5.1, 4.9.2, 4.6, 4.7, 4.8, 4.15 and 19.4 of this Lease
within fifteen (15) Business Days after Tenant's receipt of written notice of
non-payment thereof from the Landlord or City; or
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(c) if Tenant shall make a general assignment for the benefit of
creditors; or shall admit in writing its inability to pay its debts as they
become due; or shall file a petition in bankruptcy; or shall be adjudged
bankrupt or insolvent; or shall file a petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future statute, law or regulation; or shall file an
answer admitting or not contesting the material allegations of a petition filed
against it in any such proceeding; or shall seek or consent to or acquiesce in
the appointment of a trustee, liquidator of Tenant or a material part of its
properties; or shall voluntarily liquidate or dissolve, and in any such event
Tenant shall fail to remedy such default to the Landlord's satisfaction within
sixty (60) Business Days after Tenant's receipt of a written notice of default
with respect thereto from the Landlord; or
(d) if Tenant shall sell, assign, pledge, mortgage, or transfer this Lease
or the leasehold interest created hereby, or the Improvements, in whole or in
part, except as specifically authorized in this Lease, and if Tenant shall fail
to remedy such default within fifteen (15) Business Days after Tenant's receipt
of a written notice of default with respect thereto from the Landlord; or
(e) if the Casino closes or ceases operations, other than as permitted in
Section 19.7 of this Lease, and Tenant shall fail to remedy the default within
five
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(5) Business Days after Tenant's receipt of written notice with respect thereto
from Landlord; or
(f) if Tenant shall fail to perform or comply with any material covenant,
term, representation, warranty, or condition of this Lease not specifically
addressed in this Section 21.1; or if Tenant fails to comply with the material
terms of the GDA (other than the provisions of Section 2.13(a) of the GDA which
are the subject of Section 21.1(m) of this Lease); or if Tenant fails to comply
with its obligations pursuant to the first sentence of Section 4.1 of the Second
Floor Non-Gaming Sublease; or if an event of default by JCC Holding shall occur
pursuant to the last sentence of the JCC Holding letter agreement attached as
Exhibit "P" to this Lease; or if Tenant amends the Casino Management Agreement
in a manner which materially and adversely affects any interests of the
Landlord, including, but not limited to, Sections 7.07, 7.08, 7.09, 7.12 and
10.01 thereof; or if Tenant shall contract, hire or otherwise retain a new
Casino Manager/Operator without the approval and prior written consent of
Landlord in compliance with Section 22.4(a) of this Lease; or if HET shall cease
to Control the Casino Manager/Operator without the approval and prior written
consent of Landlord in compliance with Section 22.4(b) of this Lease; and in any
such event Tenant shall fail to remedy the default within thirty (30) Business
Days after Tenant's receipt of
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written notice of default with respect thereto from Landlord; provided, however,
that if any curable default under this Section 21.1(f) cannot with due diligence
be cured by Tenant within thirty (30) Business Days, and if Tenant commences to
cure the default within thirty (30) Business Days and diligently prosecutes the
cure to completion, then the thirty (30) Business Day period shall be extended
for the period of time required for Tenant to complete the cure. For purposes of
any default under this Lease that is based upon a conflict between the
requirements of this Lease and subsequent amendments to the 1992 Act, the time
periods specified above shall be forty-five (45) Business Days rather than
thirty (30) Business Days; or
(g) Notwithstanding the foregoing, if (i) Tenant in good faith disputes a
determination by Landlord that a default under the Lease exists and (ii) Tenant
or a Leasehold Mortgagee, within the applicable cure period, institutes and
thereafter diligently prosecutes appropriate legal proceedings in a court of
competent jurisdiction seeking a judicial determination as to whether the
asserted default exists, then the applicable cure period shall not commence
until the date of the issuance of a final nonappealable judgment in those
proceedings determining that the asserted default exists. If the asserted
default involves a dispute over the amount of a payment, Tenant shall pay the
amount that is not in dispute and
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deposit the amount in dispute (the "Disputed Funds") into an interest-bearing
escrow account (the "Disputed Fund Escrow Account") to be created by an escrow
agent (the "Disputed Fund Escrow Agent") acceptable to Landlord and Tenant.
After payment into the Disputed Fund Escrow Account, neither Tenant nor Landlord
shall withdraw the Disputed Funds until the issuance of a final unappealable
judgment. The Disputed Fund Escrow Agent shall be authorized to release the
Disputed Funds plus interest to the prevailing party in the judicial proceeding.
The provisions of this Section 21.1(g) shall not apply to the Events of Default
described below in Sections 21.1(h) and (i) of this Lease; or
(h) If the Casino Operating Contract is revoked or terminated by a final
nonappealable action of the LGCB; or if Tenant shall fail to apply for or obtain
an extension, renewal, or replacement of the Casino Operating Contract at its
expiration; or
(i) if Tenant shall fail to comply with a final, non-appealable judgment
pursuant to Part IV of the Open Access Program within thirty (30) Business Days
after the date the judgment becomes final and non-appealable; provided, however,
if the court rendering said judgment shall determine that Tenant cannot with due
diligence cure the non-compliance within said thirty (30) Business Days, then
Tenant must cure the non-compliance within whatever period that court shall
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determine to be necessary to effectuate a cure. If, however, that court should
refuse a motion by either party to determine the time necessary to cure the
non-compliance, then such determination shall be made by the court in a summary
proceeding or other appropriate suit, action or proceeding brought pursuant to
Section 21.3(a) of this Lease. In either case, Tenant's failure to cure the
non-compliance within the period set by the relevant court shall constitute an
Event of Default; or
(j) if Tenant shall fail to comply with the obligations placed upon Tenant
to implement a final, non-appealable judgment obtained pursuant to Section
19.8(e) of this Lease, within the periods of time set forth in that judgment; or
(k) if there is a breach in the covenants regarding hours of operation of
the Casino as required by Section 19.7 of this Lease and Tenant does not
diligently commence a cure to the breach within five (5) Business Days after
notice thereof; if such diligent prosecution is undertaken and continues
uninterrupted, Tenant shall be given an additional period of time as reasonably
required in good faith to complete the cure. If the cure can be accomplished
solely by the payment of money, the failure to pay is not a diligent prosecution
of cure; or
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(l) if Tenant breaches any representation or warranty of Tenant under
Section 6.1(b) of this Lease if the breach has a material adverse effect on
Landlord, and if Tenant shall fail to remedy such material adverse effect within
thirty (30) Business Days after Tenant's receipt of a written notice of default
with respect thereto from Landlord; or
(m) if the Phase I and II Construction shall not have commenced on or
before the Site Reactivation Date, subject to adjustment for Force Majeure (as
defined in Section 12.2 of the GDA) and the five (5) Business Day cure period
set forth in Section 2.4 of the completion guarantee issued pursuant to Section
11.1 of the GDA; or
(n) if Tenant shall terminate the Casino Management Agreement and such
termination shall be effective less than forty-five (45) days after the date of
such notice unless a successor manager has been obtained to manage the Casino
and maintain continuous and uninterrupted operations of the Casino; or
(o) if the Phase I and II Construction shall not be Completed (as defined
in the GDA) on or before June 30, 2000, subject to adjustment for Force Majeure
(as defined in Section 12.2 of the GDA); or
(p) if Tenant files a lawsuit or an administrative action either (i)
seeking to invalidate the Open Access Program or the Open Access Plans or (ii)
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challenging the constitutionality or legal validity of the Open Access Program
or the Open Access Plans, which lawsuit or action is not dismissed by Tenant
within ten (10) days after written demand for a dismissal thereof by the City or
Landlord.
Section 21.2. Notice of Default
A notice of default given under Section 21.1 of this Lease shall state the
nature of the default and the Section of the Lease alleged to have been
violated.
Section 21.3. Landlord's Remedies
(a) After the occurrence of an Event of Default and upon the expiration of
all applicable cure periods in favor of any Leasehold Mortgagee under Section
23.4, if the Leasehold Mortgagees fail to cure such Event of Default under
Section 23.4 (an "Uncured Event of Default"), Landlord may elect, without
prejudice to any other right or remedy Landlord may have hereunder, but subject
to the rights of any Leasehold Mortgagee under Section 23.6 of this Lease, to
terminate this Lease by notice to Tenant and each Leasehold Mortgagee specifying
the date of termination, which shall not be less than forty-five (45) days after
Tenant's receipt of such notice; provided that upon the occurrence of an Event
of Default under Sections 21.1(h), (k) or (m) of this Lease, such date of
termination shall not be less than fifteen (15) days after Tenant's receipt of
such notice. Tenant shall not have the right to cure the Event of Default after
Landlord sends the notice of
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termination. Tenant shall vacate the Development on or before the date of
termination. Upon such termination, Landlord shall have the right to re-enter
the Development, to dispossess Tenant and any other occupants of the
Development, including without limitation Space Tenants (except as otherwise
provided in Section 22.3 of this Lease), the Casino Manager/Operator or
Leasehold Mortgagees, by a summary proceeding or other appropriate suit, action
or proceeding, or otherwise, and to have, hold and enjoy the Development and the
right to receive all rental and other income from the Development without
payment of any kind to Tenant, Leasehold Mortgagees or any other Persons.
(b) If following any Uncured Event of Default Landlord elects to terminate
this Lease under Section 21.3(a) of this Lease, except if this Lease is
terminated by reason of the occurrence of the expiration of the Term, a Major
Condemnation, or any other reason that is not an Event of Default, Landlord may
recover from Tenant, and Tenant shall immediately pay to Landlord or the
appropriate Person, as the case may be, all accrued and unpaid Rent and
Additional Charges and other amounts then due under this Lease. In addition,
Tenant shall pay to Landlord as liquidated damages, and not as a penalty, at the
election of Landlord, either:
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(i) a sum that at the time of such termination of this Lease represents
the then value, utilizing the Discount Rate, of the excess (hereinafter called
the "Excess"), if any, of
(A) the aggregate of the Rent and Additional Charges payable
hereunder that would have been payable by Tenant for the
period commencing with such termination of this Lease and
ending with the Expiration Date then in effect, had this Lease
not so terminated, over
(B) the fair rental value of the Development for the same period;
or
(ii) the sum equal to the Rent and Additional Charges payable hereunder
over the remaining Term that would have been payable by Tenant had this Lease
not so terminated and had Landlord not so re-entered the Development, payable
upon the due dates therefor specified herein following such termination;
provided, however, that if Landlord shall re-let the Development during said
period, Landlord shall credit Tenant with the net rents received by Landlord
from such re-letting, such net rents to be determined by first deducting from
the gross rents if and when received by Landlord from such re-letting the
expenses incurred or paid by Landlord in
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terminating this Lease and in reentering the Development and in securing
possession thereof, as well as the reasonable expenses of re-letting
(hereinafter called the "Re-letting Expenses"), including altering and preparing
the Development for new tenants, brokers' commissions, and all other expenses
properly chargeable against the Development and the rental thereof, it being
understood that any such re-letting may be for a period shorter or longer than
the remaining term of this Lease; but in no event shall Tenant be entitled to
receive any excess of such net rents over the sums payable by Tenant to Landlord
hereunder, nor shall Tenant be entitled, in any suit for the collection of
damages pursuant to this Section 21.3(b), to a credit in respect of any net
rents from a re-letting, except to the extent that such net rents are actually
received by Landlord. Notwithstanding the foregoing provisions of this Section
21.3(b), any Re-letting Expenses incurred by Landlord during the period that
would have been the last thirty (30) months of the Term had this Lease not been
terminated shall be amortized on a straight line basis over the term of such
applicable re-letting and shall be deducted from the gross rents received by
Landlord to the extent attributable to the period prior to the date this Lease
would have expired had it not been terminated.
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If the Development or any part thereof be re-let by Landlord to a Person other
than an affiliate of Landlord for the unexpired period of the Term, or any part
thereof, before presentation of proof of such damages to any court, commission
or tribunal, the amount of rent received upon such re-letting shall, prima
facie, be the fair rental value for the Development, or part thereof, so re-let
during the term of the re-letting.
(c) If following any Uncured Event of Default, Landlord does not elect to
terminate this Lease under Section 21.3(a) of this Lease, in conjunction with
the continued possession of the Development by Tenant, Landlord may, at its
option,
(i) enforce Tenant's obligations to pay the Rent and Additional Charges
due under this Lease (together with interest thereon at the Default Rate), and
Landlord may, at its option, enforce any of Tenant's other obligations hereunder
that are in default by an action for specific performance or by any other
action; or
(ii) notify Tenant of its election and require that Tenant shall pay to
Landlord a sum equal to the present value of the aggregate Rent and Additional
Charges, and any interest thereon then accrued, for the whole unexpired Term of
this Lease from the date of the Event of Default to the Expiration Date then in
effect less any Rent and Additional Charges already
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paid by Tenant for such period (such amount, in the aggregate, the "Accelerated
Liability"). The present value of the Accelerated Liability shall be determined
using the applicable Discount Rate pursuant to Section 21.3(j) hereof. Such
Accelerated Liability shall at once become due, collectible, and exigible and
thus Landlord may at once demand and sue for the entire amount of the
Accelerated Liability.
(d) If Tenant shall at any time fail to pay Impositions within the time
therein permitted, subject to extension for periods during which Tenant is
contesting any such items by appropriate proceedings diligently conducted in
good faith, or to pay for or maintain any of the insurance policies required
under Article XIII of this Lease, then Landlord, without waiving or releasing
Tenant from any obligation of Tenant hereunder, may (but shall not be required
to) pay such taxes, assessments or other charges, or pay for and maintain such
insurance policies, and all sums so paid by Landlord and all costs and expenses
incurred by Landlord in connection with the payment or collection thereof shall
be paid by Tenant to Landlord (together with interest thereon at the Default
Rate) immediately on demand without any limitation of Landlord's other rights
upon the occurrence of an Event of Default. Landlord shall not be limited in the
proof of damages that Landlord may claim against Tenant arising out of or by
reason of
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Tenant's failure to provide and keep in force insurance as aforesaid, to the
amount of the insurance premium or premiums not paid or incurred by Tenant and
that would have been payable upon such insurance, but Landlord shall also be
entitled to recover as damages for such breach the uninsured amount of any loss
(to the extent of any such deficiency in the insurance required by the
provisions of this Lease), damages, costs and expenses of suit, including
attorneys' fees, suffered or incurred by reason of damage to, or destruction of,
the property occurring during any period for which Tenant shall have failed or
neglected to provide insurance as aforesaid.
(e) The failure of Landlord to relet the Development or any part or parts
thereof shall not release or affect Tenant's liability for Rent and Additional
Charges under this Lease and damages or any deficiency as set forth in this
Lease. Landlord shall in no event be liable in any way whatsoever for failure to
relet the Leased Premises or any part thereof, or in the event that the Leased
Premises or any part thereof is relet, failure to collect the rents thereof
under such reletting.
(f) Mention in this Lease of any particular remedy shall not preclude
Landlord from any other remedy in law or in equity.
(g) The specific remedies to which Landlord may resort under the terms of
this Lease are cumulative and are not intended to be exclusive of any other
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remedies or means of redress to which it may be lawfully entitled in case of any
breach or threatened breach of any provision of this Lease. The failure of
Landlord to insist in any one or more cases upon the strict performance of any
of the conditions, terms or covenants of this Lease shall not be construed as a
waiver or relinquishment for the failure of such or any other covenant,
condition or term.
(h) In the event of a breach or threatened breach by Tenant of any of the
covenants, conditions or provisions hereof, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not herein provided for.
(i) Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant being
evicted or dispossessed for any cause, or in the event of Landlord obtaining
possession of the Leased Premises, by reason of the violation or default by
Tenant under any of the covenants, conditions or terms of this Lease or
otherwise.
(j) The term "Discount Rate" shall mean the per annum rate (based on a
three hundred sixty (360) day year) of United States Government Treasury
securities substantially in the same amount as the Excess of the Accelerated
Liability, as the case may be, and having a maturity date that is the same as,
or is the nearest date subsequent to, the Expiration Date in effect on the date
of any
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notice given pursuant to Section 21.3(b) of this Lease, or the date of re-entry
of the Development by Landlord, in the case of Section 21.3(b) of this Lease (as
reported in The Wall Street Journal or other similar financial journal).
(k) Nothing herein contained shall be construed to limit, reduce or
preclude recovery by Landlord against Tenant of any sums or damages to which, in
addition to the damages particularly provided above, Landlord may lawfully be
entitled by reason of any default hereunder on the part of Tenant. Nothing
herein contained shall be construed to limit or prejudice the right of Landlord
to prove for and obtain as liquidated damages by reason of the termination of
this Lease or re-entry of the Development for the default of Tenant under this
Lease, an amount equal to the maximum allowed by any statute or rule of law in
effect at the time when, and governing the proceedings in which, such damages
are to be proved whether or not such amount be greater, equal to, or less than
any of the sums referred to in Section 21.3(b) of this Lease.
(l) In addition to any other remedies, penalties, or similar types of
recourse specified in this Lease, Landlord shall have the further right to
impose a monetary fine upon Tenant if Tenant, the Casino Manager/Operator, or
any Affiliate Controlling, Controlled by or under common Control with Tenant or
the Casino Manager/Operator has permitted or suffered an Event of Default under
this
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Lease to occur or has violated any law or ordinance of the State of Louisiana,
Orleans Parish, or the City, on more than three (3) separate occasions within a
single twenty-one (21) day period. The maximum monetary fine shall be equal to
Ten Thousand Dollars ($10,000) during the calendar year 1998, and shall increase
cumulatively thereafter by an annual percentage increase equal to the annual
percentage increase in the CPI. Landlord shall have the right to impose this
monetary fine during any number of successive twenty-one (21) day periods.
Landlord shall apply the fine especially, but not only, in the case of repeated
Events of Default, or repeated violations of laws or ordinances, involving
matters of public inconvenience and public morals, including, but not limited
to, queuing of buses in the public right of way, underage drinking, and similar
problems.
Section 21.4. Transfers Upon Termination
At the termination of this Lease by default or otherwise, and if Landlord
so elects, Tenant shall, to the extent assignable, assign, transfer and convey
to Landlord all service agreements, concessions, leases, subleases and other
agreements necessary for the continued operation of the Casino and the Support
Facilities to Landlord, except if a Leasehold Mortgagee elects to obtain a New
Lease under Section 23.6 of this Lease. Tenant shall make its Casino management
staff and such other staff of Tenant as Landlord deems necessary available to
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Landlord on a reasonable basis and at no cost for a period of sixty (60) days to
insure an orderly and uninterrupted transition of Casino management and
operation.
ARTICLE XXII.
ASSIGNMENT, SUBLEASING, MORTGAGING, TRANSFER RESTRICTIONS, ETC.
Section 22.1. Landlord Approval
To the extent required by LSA R.S. 41:1216, but without acknowledging the
applicability of that statute, Landlord hereby approves, without reservation
except for the restrictions and conditions provided in this Lease, (a) any
mortgage, pledge, hypothecation or other encumbrance of this Lease and the
Improvements and (b) any sale or other assignment thereof to any Leasehold
Mortgagee or by any Leasehold Mortgagee, or any seizure or sale resulting from a
Leasehold Mortgagee's exercise of rights under its Leasehold Mortgage.
Section 22.2. Assignment of Lease
Landlord and the City hereby approve the succession by Tenant to all
rights and obligations of Harrah's Jazz Company in respect of the Original
Amended Lease as contemplated by the Plan. Except as otherwise provided in this
Lease with respect to Leasehold Mortgagees, Tenant shall not directly or
indirectly assign, sell or transfer this Lease or the Improvements or any
interest in either
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without the prior written consent of Landlord and the City Council, which shall
not be unreasonably withheld, financially conditioned or delayed. In the
exercise of their approval, Landlord and the City Council may consider whether
the assignee and any guarantors of the assignee meet all of the following: (a)
possess a net worth (shareholder equity in the case of a corporation or partner
equity in the case of a partnership) of at least Twenty-Five Million Dollars
($25,000,000) (the "Qualified Net Worth") or be a Suitable Lender; (b) possess
required permits, approvals and licenses to own and operate the Casino Premises;
(c) possess experience in operating facilities of character comparable to the
Casino Premises in at least two (2) other locations for no less than three (3)
years preceding the date of assignment (provided that this subsection (c) may be
satisfied by assignee's employment of a management company having such
experience and which satisfies clause (b) above); and (d) possess the ability to
perform all monetary and non-monetary obligations of Tenant under the Open
Access Program and the Open Access Plans. Evidence of Qualified Net Worth, in
the form of an audited balance sheet, as of a date no more than one hundred
eighty (180) days prior to the date of the transaction, and written
certification by the treasurer of the assignee (and guarantor) if a corporation,
or otherwise by the assignee (and guarantor), that, as of the effective date of
the assignment, there has been no material adverse change
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therein, shall be provided to Landlord at or before the time of assignment and
shall be conclusive evidence of compliance with this condition. Evidence of
licensing by the State of Louisiana and a resume of prior operating experience
shall also be provided. Although Landlord and the City shall not be required to
grant approval of an assignee that, together with the guarantors of such
assignee, satisfy the above criteria, Landlord and the City shall have the
burden of establishing valid reasons for denying approval of such an assignee.
Landlord and the City Council may not assess any charge other than a reasonable
fee to reimburse actual costs incurred in review of any request for assignment
and any Contingent Payments under Section 4.8 of this Lease. Tenant shall be
released from liability upon any approved assignment. The right of Landlord and
the City Council to approve or consent to any assignment, sale, or transfer of
this Lease or the Improvements pursuant to this Section 22.2 shall not apply to
any assignment, sale or transfer in connection with any foreclosure sale or any
assignment, sale or transfer by any Leasehold Mortgagee (or Nominee) or to, but
not by, any title insurer(s), and such title insurer(s) must comply with the
terms and conditions of the Lease, including the requirement of continuous
operation of the Casino and the provisions of this Article XXII, subject to the
provisions of Section 22.5 of this Lease. Without limiting the generality of the
foregoing, any assignment pursuant to this Section
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22.2 shall be in a form that requires any assignee to perform or cause to be
performed all of Tenant's obligations under this Lease, including, without
limitation, any of Tenant's obligations under the Open Access Program or the
Open Access Plans, but only to the extent Tenant has not performed such
obligations. With respect to Tenant's obligations under the Open Access Program
and the Open Access Plans, (i) any monetary obligation of Tenant then due and
payable must be paid by Tenant or its assignee as a condition of any such
assignment, and (ii) any non-monetary obligations, including the right to appeal
any fines assessed against Tenant, shall be assumed by Tenant's assignee and
such assignee shall have no more or no less rights than Tenant.
Section 22.3. Subleasing Rights
(a) Tenant may not enter or permit JCC Development to enter into any Space
Lease within the Development with any Person without the prior written approval
and consent of Landlord, which approval shall not be unreasonably withheld,
financially conditioned or delayed; provided, however, Landlord has approved the
terms of the Second Floor Non-Gaming Sublease, and Space Leases in accordance
with such Second Floor Non-Gaming Sublease and the Master Plan shall not require
the prior written approval or consent of Landlord. Landlord or the City shall
not have approval rights as to the identity of the person who is the
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Space Tenant, but only as to the type of business of such proposed sublease.
However, no such approval may permit use or operation of the Development that is
unlawful or not permitted by the ordinances of the City or the laws or
regulations of the State of Louisiana or the United States. Space Tenants may
not make any alterations, modifications or changes to the Improvements that
would substantially affect their design, decor and purpose without obtaining the
prior written consent and approval of Landlord, which shall not be unreasonably
withheld, financially conditioned or delayed; provided, however, such
alterations, modifications and changes which are in accordance with the Second
Floor Non-Gaming Sublease and the Master Plan shall not require the prior
written approval or consent of Landlord. The rental, rental requirements, or
fair market value of all tangible and intangible property received by Tenant
from any Space Lease (other than the Second Floor Non-Gaming Sublease and
further Space Leases affecting the premises demised thereunder), shall
constitute part of Gross Non-Gaming Revenues. Subject to the approval of
Landlord, if such approval is required hereunder, Tenant shall have the right to
enter into Space Leases; provided, however, that: (1) the maximum duration of
any such Space Lease (based collectively on the initial term and any renewal
terms thereof) shall not extend beyond the day immediately preceding the
expiration date of the Term; (2) each
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Space Lease must be for not more than fifteen thousand (15,000) rentable square
feet in the Improvements; (3) each Space Lease shall include the authority for
the Space Tenant, upon Tenant's eviction, to pay its rent directly to Landlord
(provided such rent is not subject to a perfected pre-existing security interest
allowed under this Lease) upon notice to the Space Tenant by Landlord of
Tenant's eviction; and (4) promptly after the delivery of a fully executed Space
Lease to the Space Tenant, Tenant shall deliver a copy thereof to Landlord. The
terms of the foregoing proviso shall apply only to Space Leases other than the
Second Floor Non-Gaming Sublease and further Space Leases affecting the premises
demised thereunder. No Space Lease shall affect or diminish in any way the
obligations of Tenant with respect to the payment, performance and observance of
all the Rent, terms, covenants and conditions on the part of Tenant to be paid,
performed and observed hereunder.
(b) With respect to any Space Lease to which Landlord consents or which is
otherwise permitted hereunder other than the Second Floor Non-Gaming Sublease,
Landlord covenants and agrees that if this Lease and the Second Floor Non-Gaming
Sublease are terminated for any reason before the expiration of the term of the
Space Lease (including any renewals granted to the Space Tenant therein), then
the termination of this Lease and the Second Floor Non-Gaming
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Sublease shall not result in a termination of the Space Lease, partial or
otherwise, and that the Space Lease shall continue for the duration of the term
thereof (and any renewals granted to the Space Tenant thereunder) as a direct
lease between Landlord and the Space Tenant, with the same force and effect as
if Landlord had originally entered into the Space Lease as the lessor. The
provisions of this Section 22.3(b) shall be self-operative and shall occur
automatically upon the termination of this Lease and the Second Floor Non-Gaming
Sublease. Without limiting the preceding sentence, Landlord agrees to execute,
acknowledge and deliver any document reasonably requested by a Space Tenant to
which this Section 22.3(b) applies, in order to further evidence or perfect this
non-disturbance agreement and to further protect the rights of the Space Tenant
under its Space Lease.
(c) Tenant agrees to require JCC Development to use good faith efforts to
enforce the material provisions of any material Space Lease of the premises
covered by the Second Floor Non-Gaming Sublease.
Section 22.4. Management and Operation Contracts
(a) Tenant shall not enter into any agreement or contract with any Person
for the operation and/or management of the Casino and the related gaming
operations without receiving the prior written approval and consent of Landlord
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and the City Council, which consent shall not be unreasonably withheld,
financially conditioned or delayed, subject to the provisions of Section 22.5 of
this Lease, and with any necessary approvals of the LGCB, and any such
management/operation agreement shall not be effective nor shall the Casino
Manager/Operator be allowed to enter the Development until the Casino
Manager/Operator shall execute a Casino Management Agreement in form and
substance reasonably satisfactory to Landlord and the City Council, wherein the
Casino Manager/Operator shall be bound by all of the covenants, agreements,
terms, provisions and conditions that relate to the Casino Manager/Operator in
this Lease. Landlord shall retain the right to negotiate reasonable terms and
conditions for Landlord's and the City Council's approval and consent.
Notwithstanding the foregoing, Landlord and the City Council hereby approve the
Casino Management Agreement and all of its terms, including provisions for the
payment of fees, reimbursements and other charges and amounts thereunder to the
Casino Manager/Operator, and the continuation of HNOMC as the Casino
Manager/Operator. Landlord and the City further agree that so long as the
operation and management of the premises demised under the Second Floor
Non-Gaming Sublease is in accordance with the Master Plan, neither Landlord nor
the
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City shall have approval or consent rights with respect thereto under this
Section 22.4(a), subject to the provisions of Section 22.5 of this Lease.
(b) If, at any time, HET ceases to Control the Casino Manager/Operator,
then Tenant shall give Landlord prompt notice of such occurrence. Landlord may,
at any time within sixty (60) days after such notice is given, give Tenant
notice that Landlord's approval of the Casino Manager/Operator is withdrawn.
Landlord shall thereupon have the right to re-approve the Casino
Manager/Operator, such approval not to be Financially Conditioned or
unreasonably withheld or delayed. The failure of Landlord to give such notice
shall constitute re-approval of the Casino Manager/Operator. If Landlord gives
such notice, then Tenant shall give HNOMC written notice of termination as
Casino Manager/Operator to be effective upon approval by Landlord of a new
Casino Manager/Operator but not earlier than one hundred twenty (120) days after
such notice of termination. Tenant shall, within one hundred twenty (120) days
of the date of such notice, present to Landlord a new Casino Manager/Operator
for Landlord's approval. Tenant shall not be required to terminate HNOMC as the
Casino Manager/Operator until such time as Landlord shall have approved a new
Casino Manager/Operator as proposed by Tenant. The new Casino Manager/Operator
shall manage the Casino pursuant to a new casino management agreement on
substantially the same terms
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and conditions as the Casino Management Agreement or such other terms and
conditions as shall be approved by the Landlord, such approval not to be
Financially Conditioned or unreasonably withheld or delayed.
Section 22.5. Transfer Restriction
Either Landlord or the City Council may, for any reason, refuse to consent
or may financially condition any assignment, sale or transfer of any interest,
ownership or right in this Lease, the Second Floor Non-Gaming Sublease, or the
Casino Management Agreement to any entity (including any subsidiary or affiliate
thereof) that has previously operated or is currently operating a licensed
gaming establishment (including a Riverboat Casino) within Orleans Parish.
ARTICLE XXIII.
LEASEHOLD MORTGAGES
Section 23.1. Granting of Certain Leasehold Mortgages
Tenant may mortgage, pledge or otherwise encumber this Lease and the
Improvements in connection with the Construction Credit Facility, the New Bond
Documents and the HET/JCC Agreement; provided that Tenant shall not be permitted
to separately mortgage, pledge or encumber either the Lease or the Improvements.
Subject to Section 23.12, any such mortgage, pledge or encumbrance shall be in a
form that requires any Person, including any Leasehold Mortgagee, that acquires
ownership of either this Lease or the Improvements by
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virtue of such mortgage, pledge or encumbrance (whether by foreclosure, other
enforcement proceeding or otherwise) to perform or cause to be performed all of
Tenant's obligations under this Lease. Prior to the Execution Date, Tenant shall
cause any and all existing mortgages, pledges and encumbrances of its leasehold
interest, this Lease or the Improvements either (i) to be amended to conform
with the provisions of this Section 23.1 or (ii) to be canceled and erased from
all applicable public records, including mortgage and conveyance records.
Section 23.2. Subsequent Financings
After Substantial Completion of all Components and Phases of the
Development under the GDA, Tenant may mortgage, pledge or otherwise encumber
this Lease and the Improvements from time to time subject to and in compliance
with Section 23.1 of this Lease only after first obtaining Landlord's consent,
which shall not be unreasonably withheld, financially conditioned or delayed;
provided that Landlord's consent shall not be required in connection with a
Financing or the Leasehold Mortgage as security therefor, in which each lender
is a Suitable Lender, if the Financing also meets either of the following
conditions:
(a) the principal amount of Secured Debt incurred in the Financing does
not exceed the sum of (i) debt retired with proceeds of the Financing; (ii) the
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projected cost of capital improvements to be funded with proceeds of the
Financing; and (iii) customary transaction costs relating to the Financing; or
(b) the pre-tax cash flow of Tenant for the twelve (12) month period
ending on the last day of the calendar quarter preceding the calendar month in
which the Financing occurs is not less than one and one-quarter (1.25) times the
amount of annual interest payable with respect to all Secured Debt, including
Secured Debt incurred in such Financing.
Section 23.3. Transfer by Leasehold Mortgagee
(a) If, as the result of a Loan Default, a Leasehold Mortgagee forecloses
upon or otherwise acquires this Lease and the Improvements or if a Leasehold
Mortgagee acquires a New Lease pursuant to Section 23.6 of this Lease for any
reason whatsoever, (i) the transfer to such Leasehold Mortgagee (or Nominee of
the Leasehold Mortgagee) shall not require Landlord's consent and (ii) the
acquiring Leasehold Mortgagee (or Nominee) shall be permitted to transfer the
acquired interest to a Person designated by such Leasehold Mortgagee (or
Nominee) after first obtaining Landlord's consent, which shall not be
unreasonably withheld or delayed. As used in this Lease, the word "Nominee"
shall mean a Person who is designated by a Leasehold Mortgagee to act in place
of such Leasehold Mortgagee solely for the purpose of holding title to the
Development
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and performing the obligations of Tenant hereunder. Landlord's decision to grant
or withhold consent to a transfer pursuant to Section 23.3(a)(ii) of this Lease
shall be based solely on the suitability of the transferee and not on any other
criterion.
(b) For purposes of this Section 23.3, (i) any Person listed on the
official list of suitable contractors at the time of the proposed transfer to
operate the official gaming establishment maintained pursuant to LSA R.S. 27:280
or (ii) the Casino Manager/Operator if "suitable" under the Act, shall be deemed
to be a suitable transferee under this Section 23.3 and consented to by Landlord
unless Landlord can demonstrate a compelling and material reason why such Person
does not satisfy the suitability standards set forth in the Act as in effect at
the time of the proposed transfer and any applicable rules and regulations
promulgated thereunder and in effect at that time, subject to the provisions of
Section 22.5 of this Lease.
(c) Landlord shall not require, as a condition of consent, the
renegotiation of any term or provision of this Lease or any other form of
additional compensation, except in the case of a transfer in which a Leasehold
Mortgagee (or Nominee), in connection with the transfer of this Lease and the
Improvements receives consideration whose fair market value exceeds the amount
of principal, interest, and other monetary obligations owed to such Leasehold
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Mortgagee as of the date of the Loan Default, together with other non-usurious
charges such as interest, expenses, defeasance payments and applicable premiums
and other monetary obligations accruing from and after the Loan Default, and
costs of enforcement and collections (the "Excess Proceeds"). In such an event,
Landlord shall be entitled to receive fifty percent (50%) of the Excess Proceeds
subject to any rights Tenant may have to the Excess Proceeds. The fair market
value of the compensation received by the Leasehold Mortgagee (or Nominee) shall
be determined as of the time the terms of the transfer are agreed upon by the
Leasehold Mortgagee. Landlord and the City acknowledge and agree that the
lenders and other participants in the Construction Credit Facility, the holders
of the New Bonds and the New Contingent Bonds and the holders of the Convertible
Junior Subordinated Debentures or the Subdebt, if any, have not received Excess
Proceeds in connection with the transactions contemplated by the Plan, and
Landlord is entitled to no additional compensation under this Section 23.3(c) in
connection therewith.
Section 23.4. Leasehold Mortgagee Notices and Cure Periods
(a) Landlord shall give to each Leasehold Mortgagee a copy of each notice
of default given to Tenant and a copy of each notice of termination under
Section 21.3(a) of this Lease at the same time and in the same manner that the
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notice is given by Landlord to Tenant, addressed to each such Leasehold
Mortgagee who has advised Landlord in writing of its Leasehold Mortgage at its
address last furnished to Landlord. Any such notice shall state the nature of
the default and the section of this Lease alleged to have been violated. No
notice of default or termination by Landlord to Tenant under this Lease shall be
deemed to have been duly given unless and until a copy of the notice has been
served on each Leasehold Mortgagee in the manner provided in this Section 23.4.
(b) Landlord shall give a notice of an Event of Default to each Leasehold
Mortgagee who has advised Landlord in writing of its Leasehold Mortgage, which
notice shall state the failure of Tenant to cure the default specified in the
notice of default given to the Leasehold Mortgagees pursuant to Section 23.4(a)
of this Lease. Upon receipt of notice of an Event of Default, each Leasehold
Mortgagee shall have a period equal to and in addition to the cure period
afforded to Tenant that shall run consecutively with the cure period afforded to
Tenant and concurrently with the cure period afforded to each other Leasehold
Mortgagee, within which to diligently commence to remedy the default or cause
the default to be remedied; provided that, with respect to an Event of Default
pursuant to Section 21.1(j) or (n) of this Lease, the Leasehold Mortgagee cure
period shall equal twenty (20) Business Days. If diligent commencement to remedy
a curable
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default is undertaken and continued without interruption, Leasehold Mortgagees
shall be given an additional period of time as reasonably required in good faith
to complete the cure; provided, however, that any such additional period of time
shall not affect Landlord's rights under this Lease with respect to any other
default or Event of Default. If the cure can be accomplished solely by the
payment of money, the failure to pay is not a diligent commencement of cure.
Each Leasehold Mortgagee, if an Event of Default has occurred, shall, within the
period set forth in this Section 23.4(b) and otherwise as herein provided, have
the right to remedy such default or to cause the same to be remedied. Landlord
will accept performance by any Leasehold Mortgagee of any covenant, condition,
or agreement required to be performed by Tenant hereunder with the same force
and effect as if performed by Tenant. Except for a default under Section 21.1(o)
of this Lease, no default or Event of Default with respect to the performance of
work required to be performed, or acts to be done, or conditions to be remedied,
shall be deemed to exist, so long as a Leasehold Mortgagee shall have promptly
commenced good faith efforts to cure the default and shall prosecute the same to
completion with diligence and continuity in accordance with this Section
23.4(b). The time available to a Leasehold Mortgagee to cure a default by Tenant
that can reasonably be cured only if such Leasehold Mortgagee is in possession
of the
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Development shall be deemed extended to include the period of time required by
such Leasehold Mortgagee to obtain possession of the Development (by foreclosure
or otherwise) with due diligence; provided, however, that during such period all
other obligations of Tenant under this Lease, including payment of Rent and
Additional Charges, but excluding the payment of any liquidated damages or
Accelerated Liabilities due pursuant to Section 21.3 of this Lease except upon a
default by a Leasehold Mortgagee subsequent to obtaining possession, shall be
duly performed.
Section 23.5. Leasehold Mortgagee's Right to Extend
Any Leasehold Mortgagee shall be entitled to exercise, on behalf of
Tenant, Tenant's right to extend this Lease, by giving notice to Landlord,
whether or not there is an outstanding Event of Default, but the exercise shall
not prejudice Landlord's rights to enforce its remedies as to an Uncured Event
of Default.
Section 23.6. Leasehold Mortgagee's Right to Lease
If this Lease is terminated or ceases to exist by reason of the occurrence
of an Event of Default or otherwise, Landlord shall give notice of such
termination to each Leasehold Mortgagee in accordance with Section 23.4(a) of
this Lease. Landlord shall, on written request of a Leasehold Mortgagee made any
time prior to the effective date of any Lease termination specified in the
notice of termination
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delivered to Tenant and each Leasehold Mortgagee in accordance with Section
21.3(a) of this Lease (if more than one Leasehold Mortgagee makes such request,
the rights under this paragraph shall be afforded to the requesting Leasehold
Mortgagee who holds the highest priority with respect to the respective Secured
Obligations of all requesting Leasehold Mortgagees; provided that Landlord shall
have no obligation to determine the respective priorities of such requesting
Leasehold Mortgagees), execute and deliver a new lease (the "New Lease"), to be
effective upon termination of this Lease, to such Leasehold Mortgagee or its
designee or nominee, for the remainder of the Term, upon the same terms and
conditions contained in this Lease, including, but not limited to, the same Rent
and Additional Charges and any Extended Terms provided in this Lease; provided
that, contemporaneously with the execution and delivery of the New Lease, the
Leasehold Mortgagee shall be required to cure any defaults existing under this
Lease (including payment of all accrued and unpaid Rent and Additional Charges)
except those which such Leasehold Mortgagee (but only if such Leasehold
Mortgagee is a Suitable Lender) does not have the power to cure, but excluding
the payment of any liquidated damages or Accelerated Liabilities due pursuant to
Section 21.3 of this Lease, except upon an event of default under such New Lease
by the Leasehold Mortgagee subsequent to obtaining possession, up to and
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including the date of the commencement of the term of the New Lease, together
with all expenses incurred by Landlord, including reasonable attorneys' fees and
provided that the Leasehold Mortgagee or Nominee complies with all licensing
requirements of the Gaming Authorities.
Section 23.7. Leasehold Mortgagee's Possession of Leased Premises, Obligation
to Cure and Right to Assign
Nothing herein contained shall be deemed to impose any obligation on the
part of Landlord to deliver physical possession of the Development or any part
thereof to a Leasehold Mortgagee for so long as Tenant is in possession of the
Development, but Landlord shall cooperate with any Leasehold Mortgagee (by
joining as a party in any appropriate action or proceeding, or otherwise) at the
sole cost and expense of such Leasehold Mortgagee for the purpose of enabling
such Leasehold Mortgagee to obtain possession of the Development. After a
Leasehold Mortgagee becomes the owner of either the Lease and/or the
Improvements by virtue of its Leasehold Mortgage, the Leasehold Mortgagee shall
be required to cure any defaults (including payment of all accrued and unpaid
Rent and Additional Charges) existing except those which such Leasehold
Mortgagee (but only if such Leasehold Mortgagee is a Suitable Lender) does not
have the power to cure, and the Leasehold Mortgagee shall not be required to pay
any liquidated damages or Accelerated Liabilities due pursuant to Section 21.3
of this Lease or
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any damages except upon an event of default under such New Lease by the
Leasehold Mortgagee subsequent to obtaining possession. No Leasehold Mortgagee
shall be required to continue possession or foreclosure of the Development if
any default has been cured.
Section 23.8. Subordination of Fee Mortgages
Neither this Lease nor any New Lease, nor any renewal thereof, nor the
leasehold estate created hereby, nor the Second Floor Non-Gaming Sublease, shall
be subject to the lien of any mortgage, lien, charge or encumbrance hereafter
placed upon the fee title to the Leased Premises. Any fee mortgage and any
leasehold mortgage on the City Lease shall be subject to this Lease or any New
Lease, notwithstanding any agreement hereafter made modifying or amending this
Lease or any New Lease.
Section 23.9. Section 365(h) Waiver
Tenant does hereby assign to the First Leasehold Mortgagee for as long as
it remains a Leasehold Mortgagee, Tenant's right to make the election provided
by Section 365(h) of the United States Bankruptcy Code in connection with a
bankruptcy proceeding in which Landlord is the debtor. Landlord hereby consents
to this assignment. Landlord agrees to exercise, for the benefit of Tenant and
the First Leasehold Mortgagee its right to remain in possession under the City
Lease,
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as such right is provided by Section 365(h) of the United States Bankruptcy
Code, in connection with a proceeding in which the City is the debtor. For
purposes of Section 365(h) of the United States Bankruptcy Code, the term
"possession," when used in the preceding sentence, shall mean the right to
possession of the Leased Premises granted to Landlord in its capacity as
"tenant" under the City Lease whether or not all or part of the Leased Premises
has been subleased and whether or not Landlord is in actual occupancy of the
Leased Premises.
Section 23.10. Loan Default
If, as a result of a Loan Default, this Lease and the Improvements is
transferred to a new tenant, then: (a) the aggregate amount of Rent, Gross
Gaming Payments, Gross Non-Gaming Payments and Landlord's Sublease Rent for each
full or partial Fiscal Year after the transfer shall be at least eighty percent
(80%) of the aggregate amount of Rent, Gross Gaming Payments, Gross Non-Gaming
Payments and Landlord's Sublease Rent paid with respect to the same period of
the immediately preceding full or corresponding partial Fiscal Year (but no less
than the amount of the Minimum Payments) and (b) the Rent increases as set forth
in Section 4.3 of this Lease shall be suspended. These adjustments shall no
longer apply as soon as the aggregate amount of the Rent, Gross Gaming Payments,
Gross Non-Gaming Payments and Landlord's Sublease Rent for a full or partial
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Fiscal Year exceeds eighty percent (80%) of the aggregate amount of Rent, Gross
Gaming Payments, Gross Non-Gaming Payments and Landlord's Sublease Rent paid
with respect to the immediately preceding full or corresponding partial Fiscal
Year.
Section 23.11. Non-Merger
There shall be no merger of this Lease, nor of the leasehold estate
created by this Lease, with the estate created by the City Lease or fee estate
in the Leased Premises by reason of the fact that this Lease or the leasehold
estate created by this Lease or any interest in this Lease or any such leasehold
estate may be held, directly or indirectly, by or for the account of any Person
or Persons who shall own the City Lease or fee interest in the Leased Premises,
or any interest therein. No such merger shall occur unless and until all Persons
at the time having an interest in the Leased Premises and all Persons having an
interest in this Lease and the City Lease, or in the leasehold estate created by
this Lease and the City Lease, including any Leasehold Mortgagee, shall join in
a written instrument effecting such merger and shall duly record the same.
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Section 23.12. Assumption by Leasehold Mortgagee
No Leasehold Mortgagee shall become liable under the provisions of this
Lease, unless and until such time as it becomes, and then only for so long as it
remains, the owner of this Lease and/or the Improvements.
Section 23.13. Subordination of Landlord's Lien
Landlord and the City hereby subordinate Landlord's liens and privileges
(except for those Impositions recognized in Section 9.1 of this Lease) they may
have now or at any time hereafter on or against any property of Space Tenants or
Tenant's Property on the Leased Premises, whether the lien or privilege is
granted by law or contract, in favor of any and all mortgages, security
interests, liens, privileges, lessors' rights, and other security rights and
interests now or at any time hereafter held as security for one or more loans or
leases to Tenant or any Space Tenant. This subordination shall be
self-operative, however, Landlord and the City agree to execute from time to
time one or more documents reflecting this agreement, which documents shall be
in form and substance reasonably satisfactory to the requesting lender.
Notwithstanding any other provision contained in this Lease, Landlord and the
City do not subordinate any lien against any property or rights to property,
whether movable or immovable, if the lien
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results from a failure to pay taxes after demand, or if the lien results from
the exercise of any similar governmental authority.
Section 23.14. No Voluntary Termination or Amendment
Landlord and Tenant shall not (whether unilaterally or mutually) amend,
voluntarily terminate (whether pursuant to the terms of this Lease or otherwise)
or accept a surrender of this Lease without the prior written consent of each
Leasehold Mortgagee, which consent shall not be unreasonably withheld,
conditioned or delayed.
Section 23.15. Third Party Beneficiary
Notwithstanding Section 32.19 of this Lease, each Leasehold Mortgagee
shall be a third party beneficiary of the provisions of this Lease pertaining to
Leasehold Mortgagees.
Section 23.16. Interim Operations; Receivership
Landlord and the City acknowledge and agree that in the event a Leasehold
Mortgagee is exercising its rights to obtain possession and continue the
operation of the Development, the LGCB requires the Development to be operated
by an approved receiver until the receivership is terminated. Landlord and the
City agree that any receiver approved by the LGCB is permitted to so operate the
Development in accordance with the terms of this Lease, subject to the
applicable provisions of the Act and the rules and regulations promulgated
thereunder.
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ARTICLE XXIV.
TRANSFERS AND TERMINATION
Section 24.1. Transfers by Shareholders of Tenant or Affiliates
(a) The sale, assignment, transfer, alienation, liquidation or any other
disposition by any affiliate of any beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of the voting stock of Tenant or any other
Affiliate or any merger, consolidation or reorganization involving Tenant or any
Affiliate (each a "Transfer") which results in a Change of Control of Tenant
requires the prior written consent of Landlord, which consent shall not be
unreasonably withheld, Financially Conditioned or delayed, except: (i) as
provided in Section 24.1(e) of this Lease and (ii) for the curing of any
monetary Event of Default.
(b) Notwithstanding the provisions of Section 24.1(a) of this Lease, there
shall be no restrictions upon:
(i) Transfers between existing or previously approved Affiliates;
(ii) Transfers as part of public offerings of securities by Tenant
or JCC Holding and any Transfers of publicly traded securities of Tenant
or JCC Holding or any Transfers of any securities of Tenant or JCC Holding
approved and issued pursuant to Section 6.2 of the Plan;
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(iii) the pledge or encumbrance by any Affiliate of the securities
of Tenant or any other Affiliate to, or enforcement of such pledge or
encumbrance by, a Suitable Lender, or the subsequent Transfer from such
Suitable Lender;
(iv) any reorganization, merger, consolidation or restructuring of
Tenant or Affiliate(s) solely between them or any of them;
(v) Transfers by HOCI (the immediate parent entity of HCCIC), any of
its parents, or its successors;
(vi) Transfers to or among immediate family members including
parents, spouses, children, grandparents and grandchildren or to trusts
(for their sole benefit) of any Affiliate who is a natural Person or
Transfers in connection with such Person's estate planning or estate;
(vii) Transfers by an underwriter in connection with any public
offering; and
(viii) Transfers by Affiliate(s) owning material assets other than
their interest in the Development such that the sale of such interest has
an independent business purpose and is not the sole or primary reason for
such Transfer.
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(c) For purposes of this Section 24.1, "Change of Control" means a
Transfer or series of prearranged Transfers to a Person other than the existing
Affiliates ("existing" is determined as of the date hereof) (the "Transferee")
with the result that after such Transfers, the Transferee possesses directly or
indirectly the power to direct the management and policies of Tenant; provided,
however, that in no event shall a Change of Control be deemed to occur if after
such Transfer the Transferee: (i) does not have beneficial ownership (as defined
in Rule 13d-3 under the Exchange Act) of the voting stock of Tenant of a
percentage exceeding the aggregate percentage of beneficial ownership of the
voting stock of Tenant of all of the remaining beneficial owners (defined as
those Affiliates existing as of the date hereof combined) or (ii) does not have
beneficial ownership of more than thirty percent (30%) of the voting stock of
Tenant. Tenant shall provide Landlord written notice of any direct or indirect
Transfer of two and one-half percent (2.5%) or more of Tenant unless such
Transfer is of stock which is publicly traded, in which event this notice
requirement will not apply. Such notice must be received by Landlord within five
(5) Business Days before such Transfer. In evaluating a Change of Control,
Landlord and the City shall be guided by its effect upon Tenant, applying the
standards established by Section 22.2 of this Lease for approval of an
assignment of this Lease.
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(d) Landlord's sole remedy for breach of Section 24.1(a) of this Lease
shall be to seek an injunction preventing the Transferees who acquire their
interests, or the transferring party(ies) who transfer their interests, in
violation of Section 24.1(a) of this Lease, and/or the Affiliate in which the
Transferee obtains an interest, from participation in or allowing the
participation of Transferee in the management of Tenant. This does not preclude
Landlord from taking actions against breaching parties which have no effect on
the interests of Tenant or Affiliates under this Lease.
(e) If any Affiliate effectuates a Transfer, then the Affiliate effecting
such Transfer (the "Transferor") shall pay to Landlord two and one-half percent
(2.5%) of the Profit realized by such Affiliate from such Transfer (such payment
being referred to herein as the "Transfer Payment"); provided that no such
Transfer Payment shall be due in the case of any Transfer of Class A New Common
Stock (as defined in the Plan) or other publicly traded Common Stock. Each
Transfer Payment shall be due seven (7) days following the Transferor's receipt
of proceeds of Transfer. Transferor's Profit shall be calculated without
deduction for the Transfer Payment. If all or part of the consideration for a
Transfer is intangible property other than cash (for example a promissory note),
or if the transfer is non-taxable for federal tax purposes, then a pro-rata
portion of the
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Transfer Payment relating to such consideration shall be paid at the time of (i)
conversion of such property to cash, whether by sale, transfer, assignment of
such property or payment of such promissory note or (ii) upon receipt of
exchanged or substituted property, based on the greater of its fair market value
or the full amount of all outstanding obligations of or related to such property
or note at the time of issuance. "Profit" shall mean proceeds of a Transfer
received by a Transferor less: (a) that portion of such proceeds that are
attributable to retained or undistributed earnings; (b) portions of such
proceeds that are reinvested by the Transferor in the Development (directly, or
indirectly by capitalization of Tenant or an Affiliate); (c) Transferor's
invested capital (cash plus the agreed value (not to exceed fair market value)
of other property paid or invested by Transferor in the assets sold and
determined without regard to earnings or distributions); and (d) normal and
customary closing costs. Transfer Payments made with respect to any Transfer,
inflated by CPI, shall be credited against and reduce the Contingent Payments
due in respect of Capital Transactions occurring at any time during the ten (10)
year period following such Transfer.
(f) Payment of the Transfer Payment shall be enforced only against the
Transferor or any Transferee and shall not be a default under this Lease. Any
non-publicly traded evidence of ownership of Tenant, JCC Intermediary (if
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formed in accordance with Section 5.6 of this Lease) or JCC Holding which is the
subject of Sections 24.1(a) and (e) of this Lease shall bear restrictive legends
advising of these restrictions.
(g) All Transferees shall hold their interests subject to the restrictions
of this Article XXIV.
ARTICLE XXV.
EXISTENCE OF PARTNERSHIP OR JOINT VENTURE DENIED
Section 25.1. No Joint Venture or Partnership
Under no circumstances shall this Lease, the payment by Tenant to Landlord
of any portion of Rent and Additional Charges, or any action of the parties
taken in furtherance of this Lease be construed to create either a partnership
or a joint venture between Landlord and Tenant, the existence of same being
hereby specifically denied.
ARTICLE XXVI.
UTILITIES
Section 26.1. Utilities
Tenant agrees to obtain all utilities and other services required to
maintain and operate the Development from public utility and other companies
serving the Development. Tenant acknowledges that Landlord shall not be required
to provide or furnish any services or utilities to the Development. Tenant
agrees to
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pay, or cause to be paid, all charges that are incurred by Tenant or that might
be a charge or lien against the Development for gas, sewerage, water,
electricity, light, heat or power, telephone or other communication service
used, rendered or supplied upon or in connection with the Development throughout
the Term, and to indemnify, defend and save Landlord harmless from and against
any liability or damages on such account, except to the extent caused by
Landlord's acts or omissions. Tenant shall also procure or cause to be procured
without cost to Landlord, any and all necessary permits, licenses or other
authorizations required for the lawful and proper installation and maintenance
upon the Development of wires, pipes, conduits, tubes and other equipment and
appliances for use in supplying any such service to and upon the Development.
Landlord and the City shall grant utility servitudes to the companies providing
utility service to the Development to the extent necessary to provide necessary
utility services to the Development. Tenant shall pay all costs for
installation, construction or modification of utility lines within the
Development including sewerage, gas, water, electricity, telephone, telegraph
and cable service. All utility services shall be separately metered and
installed in the name of Tenant, and Tenant shall pay all costs of said
utilities.
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ARTICLE XXVII.
COVENANTS AGAINST WASTE
Section 27.1. Covenant Against Waste
Tenant shall not cause or permit any waste, damage or injury to the
Development or any part thereof (other than normal wear and tear).
ARTICLE XXVIII.
TRASH AND GARBAGE DISPOSAL
Section 28.1. Trash and Garbage Disposal
After the Possession Date, Tenant shall at its expense arrange for and
cause pick up and/or disposition away from the Development of all trash and
garbage generated by or through its operations and Landlord shall have no
responsibility therefor.
ARTICLE XXIX.
NO WAIVER
Section 29.1. No Waiver
The receipt by Landlord of any Rent or Additional Charges with knowledge
of the breach of any term, condition, covenant or provision of this Lease shall
not be deemed a waiver of such breach. No provision of this Lease shall be
deemed to have been waived by Tenant or Landlord unless the waiver shall be in
writing and signed by Tenant or Landlord. No payment by Tenant or receipt by
Landlord of a
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lesser amount than the Rent and Additional Charges herein stipulated shall be
deemed to be other than on account of the earliest stipulated Rent and
Additional Charges as the case may be, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as Rent and Additional
Charges be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the balance of any
such Rent or Additional Charges or pursue any other remedy in this Lease.
ARTICLE XXX.
COVENANTS TO BIND AND BENEFIT PARTIES
Section 30.1. Covenants Binding
Except as may otherwise be expressly provided in this Lease, the terms,
conditions, covenants and provisions contained in this Lease shall run with the
Development and shall be binding on and inure to the benefit of the parties
hereto, and their respective heirs, administrators, executors, permitted
successors and permitted assigns.
ARTICLE XXXI.
BROKERAGE
Section 31.1. Brokerage
Tenant and Landlord covenant, represent and warrant that neither has had
dealings or communications with any broker or agent in connection with the
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consummation of this Lease, and both covenant and agree to pay, hold harmless
and indemnify each other from and against any and all cost, expense (including
reasonable attorneys' fees) or liability for any compensation, commissions or
charges claimed by any broker or agent with respect to this Lease or the
negotiation thereof.
ARTICLE XXXII.
MISCELLANEOUS PROVISIONS
Section 32.1. Equal Employment Opportunity
In all hiring or employment by Tenant, JCC Development or the Casino
Manager/Operator made possible by or resulting from this Lease, there will not
be any discrimination against any employee or applicant for employment because
of race, color, religion, sex, sexual preference, national origin, or
disability. In furtherance of this commitment, Tenant has adopted the Open
Access Program. All solicitations or advertisements for employees shall state
that all qualified applicants will receive consideration for employment without
regard to race, color, religion, sex, sexual preference, national origin, or
physical handicap.
Section 32.2. Force Majeure
(a) Extensions of time for the performance of obligations under the GDA
resulting from the occurrence of Force Majeure (as defined in Section 12.2 of
the GDA) shall be governed solely by the GDA. Other than as set forth in, and
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without waiver of the terms and conditions of, this Lease or the GDA, including,
without limitation, the terms and conditions of Section 12 of the GDA or the
terms and conditions of the definition of "Force Majeure" set forth in Section
12.2 of the GDA, the parties hereto acknowledge and agree that neither Force
Majeure (as defined in Section 12.2 of the GDA) nor fortuitous events shall
operate to excuse Tenant from the prompt payment of Rent or Additional Charges
required by the terms and provisions of this Lease. As to any other obligation
imposed by this Lease, if either party hereto shall be delayed or hindered or
prevented from the performance of any act required hereunder by reason of
strikes, lockouts, labor disputes, inability to procure materials, failure of
power, restrictive governmental laws or regulations, riots or insurrection, or
other causes beyond the reasonable control of such party and not the fault of
the party delayed in performing work or doing acts required under the terms of
this Lease (which shall not include a default under or the termination of the
Casino Management Agreement), then the performance of such acts shall be excused
as a period of delay and the period for such performance of any such act shall
be extended for the period equivalent to the period of such delay.
(b) Tenant hereby acknowledges and agrees that any proceeding under any
Chapter of the Bankruptcy Code, in receivership or any other insolvency
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proceeding, whether voluntary or involuntary, by or against Tenant and/or HET,
HOCI or any completion guarantor under the completion guarantee issued pursuant
to Section 11.1 of the GDA or any surety under any bond shall not be considered
nor constitute Force Majeure (as defined in Section 12.2 of the GDA) nor
otherwise excuse or suspend Tenant's performance hereunder. Tenant further
acknowledges and agrees that (i) any increase in the cost to complete (including
equipping) the Casino, whether or not such increase in cost was anticipated
and/or contemplated in the GDA or otherwise, (ii) the financial condition or
financial inability of Tenant and/or HET, HOCI or any completion guarantor under
the completion guarantee issued pursuant to Section 11.1 of the GDA to complete
(including equipping) the Casino, (iii) any other adverse financial projections,
financial forecasts, financial events or financial conditions, or (iv) any
failure to obtain funding or financing, shall not be considered nor constitute
Force Majeure (as defined in Section 12.2 of the GDA) nor otherwise excuse or
suspend Tenant's performance hereunder.
(c) Other than as set forth in, and without waiver of the terms and
conditions of, this Lease or the GDA, including, without limitation, the terms
and conditions of Section 12 of the GDA or the terms and conditions of the
definition of "Force Majeure" set forth in Section 12.2 of the GDA, Tenant
waives its rights
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pursuant to Articles 1873-1878 and 3506(15) of the Louisiana Civil Code and,
without limitation, any right to claim excuse from performance or delay of
performance due to impossibility of performance, irresistible force or a
fortuitous event.
Section 32.3. Partial Invalidity
If any term, covenant, condition, or provision of this Lease or the
application thereof to any Person or circumstance shall, at any time or to any
extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant, condition or provision to Persons or
circumstance other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, covenant, condition, and provision
of this Lease shall be valid and be enforced to the fullest extent permitted by
law. All parties to this Lease recognize and agree that any term or provision in
this Lease that conflicts with or usurps the powers of LSA R.S. 4:601, et seq.,
adopted by the Legislature of the State of Louisiana as Act No. 384, of 1992
(the "1992 Act"), shall be superseded by the 1992 Act. Tenant's failure to
comply with any provision of this Lease that is superseded by or in conflict
with the 1992 Act shall not be a default by Tenant under this Lease.
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Section 32.4. Intervention by City
(a) The City intervenes in this Lease for the purpose of confirming each
of its undertakings in this Lease and to confirm and consent to Landlord's
agreements, representations, and warranties contained in this Lease and further
to agree that in the event of a default by Landlord to the City under the City
Lease, this Lease shall not be affected and the City will succeed to Landlord's
rights and obligations to Tenant under this Lease.
(b) Without limiting the generality of the foregoing, the City covenants
and agrees that if the City Lease is terminated for any reason before the
expiration of the Term of this Lease (including any Extended Terms), then the
termination of the City Lease shall not result in a termination of this Lease,
partial or otherwise, and that this Lease shall continue for the duration of the
Term (and any Extended Terms that Tenant may exercise hereunder) as a direct
lease between the City and Tenant, with the same force and effect as if the City
had originally entered into this Lease as landlord hereunder. The provisions of
this section shall be self-operative and shall occur automatically upon the
termination of the City Lease as aforesaid. Without limiting the preceding
sentence, the City hereby agrees to execute, acknowledge and deliver any
documents reasonably requested by Tenant
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or any Leasehold Mortgagee in order to further evidence or perfect the
provisions of this Section 32.4.
(c) To the extent permitted by applicable law, the City further covenants
and agrees that in the event of the dissolution of Landlord or a judicial
declaration of the invalidity of Landlord before the expiration of the Term,
this Lease shall continue, with the same force and effect, for the duration of
the Term as a direct lease between the City and Tenant. The provisions of this
Section 32.4(c) shall be self-operative and shall occur automatically upon the
dissolution or declaration of the invalidity of Landlord as aforesaid. Without
limiting the preceding sentence, the City hereby agrees to execute, acknowledge
and deliver any documents and take such action as may be reasonably requested by
Tenant or any Leasehold Mortgagee in order to further evidence, implement or
perfect the provisions of this Section 32.4(c).
(d) If the direct lease by the City to Tenant described above is
determined, through a final non-appealable judgment of a court of competent
jurisdiction, to be null and void or unenforceable for any reason whatsoever,
then the City agrees either (i) to enter into a lease with a public benefit
corporation or other board or entity under the control of the City (a
"City-Controlled Entity"), with respect to the Development, on the same terms
and conditions as contained in
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the City Lease or (ii) to transfer the Development, subject to this Lease, to a
City-Controlled Entity, and in either event the City shall thereafter cause the
City-Controlled Entity to enter into a lease with Tenant on the same terms and
conditions as contained herein.
Section 32.5. Responsibility For Costs And Risks of Operations
Tenant shall pay all costs and assume all risks in doing work, or carrying
on operations, now or hereafter permitted or required under the terms and
conditions of this Lease, except as may be otherwise specifically designated in
this Lease, or in written instructions given or agreement made by proper
authority under the terms and conditions of this Lease. Tenant shall pay all
costs, reasonable attorney's fees and other expenses incurred by Landlord in any
litigation in which Landlord is the prevailing party enforcing the covenants of
this Lease.
Section 32.6. Notice
All notices required or permitted to be given under this Lease except as
provided otherwise shall be in writing and shall be deemed given when delivered
by hand or four (4) Business Days after mailing, postage paid, by certified
mail, return receipt requested, to the parties and to the LGCB at the following
address:
LANDLORD:
Rivergate Development Corporation
Suite 1276
1515 Poydras Street
New Orleans, LA 70112
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with copies to:
City Attorney
1300 Perdido Street
City Hall
New Orleans, LA 70112
and
Roy J. Rodney, Jr.
Rodney, Bordenave, Boykin, Bennette & Boyle
400 Poydras Street
Suite 2450
New Orleans, LA 70130
CITY:
City of New Orleans
1300 Perdido Street
City Hall
New Orleans, LA 70112
Attention: City Clerk
with copies to: Mayor's Office
1300 Perdido Street
City Hall
New Orleans, LA 70112
City Attorney
1300 Perdido Street
City Hall
New Orleans, LA 70112
and
Bernhard & Leslie, Chtd.
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3980 Howard Hughes Parkway
Suite 550
Las Vegas, NV 89109
Attn: Bruce Leslie
TENANT:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, LA 70130
Attn: President
with copies to:
Harrah's New Orleans Management Company
512 South Peters Street
New Orleans, LA 70130
Attn: General Counsel
LGCB:
Louisiana Gaming Control Board
9100 Bluebonnet Centre Boulevard
Suite 500
Baton Rouge, Louisiana 70809
Attn: Chairman of Louisiana Gaming Control Board
with copies to: Attorney General
State of Louisiana
Post Office Box 94005
Baton Rouge, Louisiana 70804
Attn: First Assistant Attorney General
and
Attorney General
State of Louisiana
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Post Office Box 44307
Baton Rouge, Louisiana 70804
Attn: Director, Gaming Division
Additionally, notices required or permitted to be given under this Lease
shall be given in the manner provided herein to such Leasehold Mortgagees at
such addresses as identified by such Leasehold Mortgagees and furnished to the
parties to this Lease in writing.
Section 32.7. Applicable Law
This is a Louisiana contract and shall be governed, interpreted and
enforced in accordance with the laws of the State of Louisiana.
Section 32.7.1. Venue and Personal Jurisdiction
(a) Each party to this Lease hereby submits to the jurisdiction of the
State of Louisiana and the courts thereof and to the jurisdiction of the Civil
District Court for the Parish of Orleans, State of Louisiana for the purposes of
any suit, action or other proceeding arising out of or relating to this Lease,
and hereby agrees not to assert by way of a motion as a defense or otherwise
that such action is brought in an inconvenient forum or that the venue of such
action is improper or that the subject matter thereof may not be enforced in or
by such courts.
(b) If at any time during the Term, Tenant is not a resident of the State
of Louisiana or has no officer, director, employee, or agent thereof available
for
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service of process as a resident of the State of Louisiana, or if any permitted
assignee thereof shall be a foreign corporation, partnership or other entity or
shall have no officer, director, employee, or agent available for service of
process in the State of Louisiana, Tenant or its assignee hereby designates the
Secretary of State, State of Louisiana, its agent for the service of process in
any court action between it and Landlord or arising out of or relating to this
Agreement and such service shall be made as provided by the laws of the State of
Louisiana for service upon a nonresident; provided, however, that at the time of
service on the Secretary of State, a copy of such service shall be delivered to
Tenant in the manner provided in Section 32.6 of this Lease.
Section 32.8. Public Purpose; Economic Benefit; Total Consideration
Landlord hereby declares and acknowledges that the execution of this Lease
and the construction and implementation of the development hereunder including,
without limitation, development and operation of the Casino and related
Improvements and other amenities on the Leased Premises, shall enhance the
public benefit and welfare and therefore constitute a public purpose in that
they prevent and combat community deterioration along Poydras Street in New
Orleans, Louisiana; increase employment opportunities in the City; increase and
promote tourism and enhance tourist amenities on Poydras Street in New Orleans,
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Louisiana; and preserve and improve the aesthetic quality inuring to the
economic health of the central business district of the City. The above-cited
items constitute important public benefits to the City. Further, additional
public benefits of this Lease and the construction and implementation of the
Development consist of increased taxes and other revenues from the operation of
the Casino on the Leased Premises, together with other related commercial
activities to take place on the Leased Premises. Further, Landlord hereby
declares and acknowledges that the letting of this Lease was done on the basis
of an objective evaluation of factors relating to the public benefit and
welfare, and the public purposes, hereinabove described, including, but not
limited to, rental return, quality of products and services to be provided on
the Leased Premises, financial stability of Tenant, architectural design of the
Development, uniqueness of operation of the Development in the City,
particularly the central business district. Landlord hereby further declares and
acknowledges that, as described hereinabove, this Lease provides a fair and
equitable return of revenue to Landlord.
Section 32.9. Estoppel Certificate
(a) Tenant shall, at any time and from time to time, upon not less than
ten (10) Business Days prior written notice from Landlord, execute, acknowledge
and deliver to Landlord a statement in writing certifying that this Lease is
unmodified
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and in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the dates to which the rental and other charges are paid in
advance, if any, and the amounts so paid and acknowledging that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder,
or specifying such defaults if any are claimed. Any such statement may be relied
upon by any prospective purchaser or encumbrancer of the Leased Premises.
Tenant's failure to deliver such statement within such time shall be conclusive
upon Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there are no
uncured defaults in Landlord's performance, and (iii) that not more than one (1)
month's rental has been paid in advance.
(b) Landlord shall, at any time and from time to time, upon not less than
fifteen (15) Business Days prior written notice from Tenant, or any Leasehold
Mortgagee, execute, acknowledge and deliver to Tenant or any Leasehold Mortgagee
a statement in writing certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
dates to which the rental and other charges are paid in advance, if any, and the
amounts
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so paid and acknowledging that there are not, to Landlord's knowledge, any
uncured defaults on the part of Tenant hereunder, or specifying such defaults if
any are claimed. Any such statement may be relied upon by any assignee permitted
hereunder or any Leasehold Mortgagee. Landlord's failure to deliver such
statement within such time shall be conclusive upon Landlord (i) that this Lease
is in full force and effect, without modification except as may be represented
by Tenant, (ii) that there are no uncured defaults in Tenant's performance, and
(iii) that not more than one (1) month's rental has been paid in advance.
Section 32.10. Prior Agreements; Amendments
(a) This Lease, and all documents and agreements described or referred to
herein, contain all the agreements of the parties hereto with respect to any
matters covered or mentioned in this Lease, and no agreement or understanding
pertaining to any such matter shall be effective for any purpose unless covered
in this Lease or such other documents and agreements. Notwithstanding the
foregoing, this Lease supersedes and controls in its entirety over the City
Agreement.
(b) The provisions of this Lease constitute an amendment and restatement
in the entirety of the provisions of the Original Amended Lease;
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provided, however, that it is hereby acknowledged and agreed by the parties to
this Lease that the execution and delivery of this Lease is intended to continue
the obligations of Tenant as successor by operation of law to Harrah's Jazz
Company under the Original Amended Lease on the amended terms set forth in this
Lease and should in no way constitute a novation of such obligations (as
modified herein and therein).
(c) No provision of this Lease may be amended or added except by an
agreement in writing signed by the parties hereto or their respective successors
and assigns. In addition, Tenant agrees, and agrees to cause JCC Development,
not to waive or modify any material provision of the Second Floor Non-Gaming
Sublease without Landlord's prior written consent, such consent not to be
financially conditioned, unreasonably withheld or delayed. If there is an
inconsistency between the terms of this Lease and any other agreement described
in this Lease (including but not limited to the Casino Management Agreement and
the GDA), then (i) the terms of this Lease shall prevail and (ii) Tenant's
failure to comply with an inconsistent provision of the other agreement shall
not be a default under this Lease if Tenant is complying with the provisions of
this Lease.
(d) Pursuant to Section 8.3 of the Basin Street Casino Lease Termination
Agreement, the Basin Street Casino Lease Termination Agreement shall survive
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the Plan Effective Date and is deemed assigned by Harrah's Jazz Company to
Tenant as of the Plan Effective Date.
Section 32.11. Survival
Upon the expiration or other termination of this Lease, neither party
shall have any further obligation or liability to the other except as otherwise
expressly provided in this Lease and except for such obligations as by their
nature or under the circumstances can only be, or by the provisions of this
Lease may be, performed after such expiration or other termination; and in any
event, unless otherwise expressly provided in this Lease, any liability for a
payment that shall have accrued to or with respect to any period ending at the
time of expiration or other termination of this Lease shall survive the
expiration or other termination of this Lease.
Section 32.12. Memorandum of Lease
Each party, shall, at the request of the other party, execute and deliver
an amended memorandum of this Lease in recordable form for the purpose of
recording, but said amended memorandum of this Lease shall not in any
circumstances be deemed to modify or to change any of the provisions of this
Lease.
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Section 32.13. Expiration of Casino Operating Contract
(a) If the initial term of the Casino Operating Contract shall expire
prior to the expiration of the Initial Term or the Casino Operating Contract
shall fail to be renewed or extended, following due application, then, Tenant
and Landlord shall each have the right to terminate this Lease and upon such
termination the parties hereto shall have no further rights or obligations
hereunder. In the event Landlord or Tenant elects not to terminate this Lease in
such circumstance, Tenant shall be obligated to pay only the Rent, Impositions,
School Board Payments, Contingent Payments or the MAR Payment, if applicable,
and Tenant shall be excused from complying with all obligations of this Lease
which directly or indirectly require operation of the Development for Casino
Gaming Operations until such time as a Casino Operating Contract is re-acquired
by Tenant.
(b) Landlord and Tenant acknowledge that the Act now limits the Casino
Operating Contract to an initial term of twenty (20) years with a single ten
(10) year renewal period (the "Statutory Limit"). Unless the Act is amended to
allow Tenant or any successor holder of the exclusive land-based Casino
Operating Contract to obtain, extend or renew the Casino Operating Contract,
upon reaching the Statutory Limit, or any later Statutory Limit that may be
established short of the potential sixty (60) year term of this Lease, the
provisions of Section 4.20 of
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this Lease may be invoked by Tenant or, alternatively, Tenant shall have the
right to terminate this Lease and shall have no further rights or obligations
hereunder.
Section 32.14. Non-Compete
Neither Tenant, JCC Intermediary (if formed in accordance with Section 5.6
of this Lease), JCC Holding nor any Affiliate under Tenant's Control shall
operate a land based casino in the State of Louisiana or within two hundred
(200) miles of the Development during the Term without the prior written consent
of Landlord. The parties acknowledge that, as of the date hereof, dockside
gaming is not permitted in Orleans Parish or in the State of Louisiana. A
violation of this Section 32.14 shall be enforceable only by injunctive remedy
or specific performance against the Person or affiliate breaching same, and
shall not result in a default of this Lease.
Section 32.15. Compliance
Any provision that permits or requires a party to take action shall be
deemed to permit or require, as the case may be, the party to cause the action
to be taken.
Section 32.16. Captions
The captions in this Lease are solely for convenience of reference and
shall not affect its interpretation.
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Section 32.17. Number and Gender
All terms used in this Lease, regardless of the number or gender in which
they are used, shall be deemed to include any other number and any other gender
as the context may require.
Section 32.18. No Drafting Presumptions
The parties to this Lease agree and acknowledge that each has had
significant input into the drafting of this Lease. Consequently, and
notwithstanding the provisions of Articles 2056 or 2057 of the Louisiana Civil
Code to the contrary, nothing contained in this Lease shall be presumptively
construed against a party on the basis of any drafting responsibility. Further,
the parties agree and acknowledge that the drafting of this Lease was
facilitated and expedited by the specific undertaking of the parties and their
respective counsel, and in order to induce each other to make reasonable
drafting accommodations, that no revision (by insertion or deletion) to any
draft of this Lease either shall constitute or ever be used by or on behalf of
any of them as an interpretive aid or as the basis of any contention to the
effect that any such deletion or insertion or change from prior drafts proves
facts or circumstances concerning the intent or agreement of a party in a
subsequent draft or drafts.
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Section 32.19. No Third Party Beneficiary
Except for the City and except as otherwise provided in Section 23.15 of
this Lease with respect to Leasehold Mortgagees, there shall be no third party
beneficiaries with respect to this Lease, including, without limitation, (i) the
School Board, notwithstanding Section 4.6 of this Lease; (ii) the Audubon Park
Commission, notwithstanding Section 4.7 of this Lease; (iii) any Person claiming
to be a third party beneficiary under Sections 5.5, 19.3 or 19.4 of this Lease;
or (iv) any other third party pursuant to any other provision of this Lease.
Except for the City, Landlord and Tenant, no party shall have any independent
right of action or any other rights and remedies pursuant to this Lease. The
City, Landlord and Tenant may terminate, compromise, amend, modify, surrender or
otherwise alter any terms, conditions or provisions of this Lease without the
consent, approval or any other action on the part of any third party.
Section 32.20. Performance by Affiliate
Any payment due from an Affiliate pursuant to Section 24.1 of this Lease
shall be, and hereby is, guaranteed by the Affiliate, if any, that Controls such
Affiliate.
Section 32.21. Cost of Investigation
If as a result of the Lease, Landlord or any of its directors or officers,
the Mayor or any City Council members, or any employee, agent, or representative
of
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the City is required to be licensed, approved, or otherwise investigated by LGCB
or any other state law enforcement agency, all reasonable costs of such
licensing, approval or investigation shall be paid by Tenant within five (5)
Business Days following receipt of a written request from Landlord. All costs
paid by Tenant in any year shall be recovered by set-off against Rent or
Additional Charges due from Tenant under this Lease for the shorter of: (i) the
next succeeding five (5) years of the Term or (ii) the remaining years of the
Term, in equal installments over such period.
Section 32.22. Canal Street Ferry
Tenant shall not initiate or support a plan proposed by others to move the
Canal Street ferry from its present location. Notwithstanding the foregoing,
breach of this provision shall not afford Landlord or the City any rights or
remedies hereunder or otherwise.
Section 32.23. Acknowledgment Of Cure Periods
Notwithstanding anything in this Lease to the contrary, the parties hereto
acknowledge and agree that, for purposes only of paragraph B of LSA R.S.
41:1217, rent payable hereunder shall not be deemed to fall due until the
expiration of all applicable cure periods available to any Leasehold Mortgagee
and any rent paid prior to such date shall be deemed punctually paid; provided,
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however, this sentence shall not affect the commencement date of any cure
periods or the obligation of Tenant to pay interest at the Default Rate as
provided in this Lease.
Section 32.24. Effectiveness of Lease
This Lease shall be effective on the Execution Date. If the Plan Effective
Date shall not occur, this Lease shall be null and void and of no further force
or effect but the Original Amended Lease shall remain in full force and effect.
Section 32.25. Matters Relating to State Guaranty
(a) Concurrently with the execution of this Lease, (i) HET and HOCI have
provided the LGCB with a guaranty of Tenant's payment to the LGCB of the COC
Minimum Payment for the COC Fiscal Years ending March 31, 1999 and March 31,
2000 (the "Guaranty") and (ii) Tenant, HET and HOCI have entered into the
HET/JCC Agreement, to which neither the City nor Landlord is a party. Tenant,
the City and Landlord acknowledge and agree that the City and Landlord did not
request that HET and HOCI enter into the Guaranty or the HET/JCC Agreement and
that the City and Landlord did not participate and were not involved in the
negotiation of the Guaranty or the HET/JCC Agreement.
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(b) Landlord and the City hereby acknowledge that they are not intended to
be third party beneficiaries to the Guaranty or the HET/JCC Agreement and that
neither the Guaranty or the HET/JCC Agreement provide them with any rights.
(c) Landlord and the City hereby acknowledge and agree that, in connection
with the HET/JCC Agreement, neither HET nor HOCI has any legal obligation or
duty, express or implied, to the City or Landlord to provide any renewal
guaranty beyond any COC Fiscal Year in which a Guaranty is provided in writing.
Notwithstanding the foregoing, nothing herein shall be deemed to affect the
obligation of HET and HOCI to provide a completion guarantee pursuant to Section
11.1 of the GDA or the obligation of Tenant to obtain a surety bond in
accordance with Section 11.1 of the GDA. In connection therewith, Landlord and
the City hereby acknowledge that HET and HOCI have informed them and they agree
that they may not infer or assume that (i) HET and HOCI will renew any Guaranty
or the HET/JCC Agreement; or (ii) HET and HOCI will, other than at their sole
discretion, determine whether to renew any Guaranty or the HET/JCC Agreement
notwithstanding that HET and HOCI are involved in a number of different
capacities in connection with the reorganization of Harrah's Jazz Company, the
governance of Tenant and JCC Holding and the operation of the Casino; or (iii)
any projections and/or feasibility study set forth in the Plan and
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Disclosure Statement circulated therewith constitute any representation or
warranty by either HET or HOCI upon which the City or Landlord may rely, nor is
it intended that any other Person may rely thereon.
(d) Landlord and the City understand and acknowledge that HET and HOCI are
entering into the Guaranty and the HET/JCC Agreement in reliance on this Section
32.25, and Landlord and the City agree that HET and HOCI may so rely on this
Section 32.25. The parties hereto also agree that the provisions of this Section
32.25 cannot be amended or modified without the written consent of HET and HOCI,
and if so amended or modified and not consented to by HET and HOCI, no such
amendment or modification shall be effective as against HET or HOCI.
[SIGNATURE PAGE FOLLOWS]
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THUS DONE AND SIGNED in multiple originals, on the day and date first
above written, before the undersigned competent witnesses and the appearers,
after due reading of the whole.
Witnesses: LANDLORD:
RIVERGATE DEVELOPMENT CORPORATION
/s/ Gwendolyn M. Johnson By: /s/ Helen S. Kohlman
- ---------------------------- -----------------------------
Gwendolyn M. Johnson Name: /s/ Helen S. Kohlman
---------------------------
/s/ Yolanda Johnson Title: Vice-President
- ---------------------------- --------------------------
Yolanda Johnson TENANT:
JAZZ CASINO COMPANY, L.L.C.
By:
- ---------------------------- ------------------------------
Name:
---------------------------
Title:
- ---------------------------- ----------------------------
INTERVENOR:
CITY OF NEW ORLEANS
By:
- ---------------------------- -----------------------------
Name: Marc H. Morial
Title: Mayor
- ----------------------------
<PAGE>
THUS DONE AND SIGNED in multiple originals, on the day and date first
above written, before the undersigned competent witnesses and the appearers,
after due reading of the whole.
Witnesses: LANDLORD:
RIVERGATE DEVELOPMENT CORPORATION
By:
- ---------------------------- -----------------------------
Name:
---------------------------
Title:
- ---------------------------- --------------------------
TENANT:
JAZZ CASINO COMPANY, L.L.C.
[Sig] By: /s/ Fred W. Burford
- ---------------------------- ------------------------------
Name: Fred W. Burford
---------------------------
/s/ S. Jay Novatney Title: President
- ---------------------------- ----------------------------
S. Jay Novatney INTERVENOR:
CITY OF NEW ORLEANS
By:
- ---------------------------- -----------------------------
Name: Marc H. Morial
Title: Mayor
- ----------------------------
<PAGE>
THUS DONE AND SIGNED in multiple originals, on the day and date first
above written, before the undersigned competent witnesses and the appearers,
after due reading of the whole.
Witnesses: LANDLORD:
RIVERGATE DEVELOPMENT CORPORATION
By:
- ---------------------------- -----------------------------
Name:
---------------------------
Title:
- ---------------------------- --------------------------
TENANT:
JAZZ CASINO COMPANY, L.L.C.
By:
- ---------------------------- ------------------------------
Name:
---------------------------
Title:
- ---------------------------- ----------------------------
INTERVENOR:
CITY OF NEW ORLEANS
/s/ Gwendolyn M. Johnson By: /s/ Marc H. Morial
- ---------------------------- -----------------------------
Name: Marc H. Morial
Title: Mayor
/s/ Yolanda Johnson
- ----------------------------
<PAGE>
A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 29th day of October, 1998,
-- -------
BEFORE ME, the undersigned authority, duly commissioned, qualified
and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Helen S. Kohlman, appearing in her capacity as the Vice-President
of RIVERGATE DEVELOPMENT CORPORATION,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that she executed the same on
behalf of said corporation with full authority and that the said instrument is
the free act and deed of the said corporation and was executed for the uses,
purposes and benefits therein expressed.
WITNESSES:
- ----------
/s/ Gwendolyn M. Johnson /s/ Helen S. Kohlman
- ---------------------------- ----------------------------
/s/ Yolanda Johnson
- ----------------------------
/s/ Illegible
------------------------------------
NOTARY PUBLIC
<PAGE>
A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 28th day of October, 1998,
-- -------
BEFORE ME, the undersigned authority, duly commissioned, qualified
and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Fred W. Burford, appearing in his capacity as the President of
JAZZ CASINO COMPANY, L.L.C.,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said limited liability company with full authority and that the said
instrument is the free act and deed of the said limited liability company and
was executed for the uses, purposes and benefits therein expressed.
WITNESSES:
/s/ Illegible /s/ Fred W. Burford
- ---------------------------- ----------------------------
Fred W. Burford
/s/ S. Jay Novatney
- ----------------------------
S. Jay Novatney
/s/ Daniel E. Davillier
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NOTARY PUBLIC
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A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 29th day of October, 1998,
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BEFORE ME, the undersigned authority, duly commissioned, qualified
and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Marc H. Morial, appearing in his capacity as the Mayor of the CITY
OF NEW ORLEANS,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said corporation with full authority and that the said instrument is
the free act and deed of the said corporation and was executed for the uses,
purposes and benefits therein expressed.
WITNESSES:
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/s/ Gwendolyn M. Johnson /s/ Marc H. Morial
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Marc H. Morial
/s/ Yolanda Johnson
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/s/ Illegible
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NOTARY PUBLIC
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Exhibit 10.02
AMENDED AND RESTATED
GENERAL DEVELOPMENT AGREEMENT
AMONG
RIVERGATE DEVELOPMENT CORPORATION,
JAZZ CASINO COMPANY, L.L.C.
AND
CITY OF NEW ORLEANS
as Intervenor
October 29, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS............................................................................................2
1.1. Definitions.........................................................................................2
1.2. Use of Words and Phrases...........................................................................16
1.3. Louisiana Statutes.................................................................................16
ARTICLE II. GENERAL PROVISIONS...................................................................................16
2.1. Purpose............................................................................................16
2.2. Findings...........................................................................................16
2.3. Intent.............................................................................................17
2.4. Tenant's Proposal and the Development..............................................................17
2.5. Tenant's Development Obligations...................................................................17
2.6. Narrative Description of the Casino................................................................17
2.7. Off Site Improvements Narrative Description........................................................20
2.8. Poydras Street Support Facility Narrative Description..............................................20
2.9. Employee and Bus Parking Narrative Description.....................................................21
2.10. Poydras Tunnel Area Narrative Description.........................................................22
2.11. Integrated Complex................................................................................22
2.12. Hard Construction Costs of the Improvements.......................................................22
2.13. Project Completion................................................................................23
2.14. Authorized Representative.........................................................................26
2.15. Procedures for Approvals Provided by this GDA.....................................................26
2.16. Prompt Responses..................................................................................26
2.17. Transportation and Utility Improvements or Relocation.............................................27
2.18. Quality of Work and Materials.....................................................................27
2.19. Amended Descriptions..............................................................................27
ARTICLE III. MATTERS AS TO TIME..................................................................................28
3.1. Nature of Agreement................................................................................28
3.2. Certain Dates......................................................................................28
ARTICLE IV. DESIGN DOCUMENTS; PERMITS............................................................................28
4.1. Preparation and Submission of Design Documents.....................................................28
4.2. Design Documents...................................................................................29
4.3. Review and Approval of Design Documents............................................................30
4.4. Architect(s) and Consultants.......................................................................32
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4.5. RDC Not Responsible for Design Documents...........................................................33
4.6. Permits............................................................................................33
4.7. Development Services...............................................................................35
4.8. Model..............................................................................................36
4.9. Presentation Illustrations.........................................................................36
4.10. Presentation Site Plans...........................................................................36
ARTICLE V. FINANCING.............................................................................................37
5.1. Financing..........................................................................................37
ARTICLE VI. SITE MATTERS.........................................................................................37
6.1. Geotechnical Subsurface and Soil Investigation.....................................................37
ARTICLE VII. CONSTRUCTION PHASE..................................................................................38
7.1. General............................................................................................38
7.2. Performance of the Work............................................................................38
7.3. Construction Schedule..............................................................................42
7.4. Notice to Proceed..................................................................................42
7.5. Commencement of the Work...........................................................................43
7.6. Contractor; Subcontractors.........................................................................43
7.7. Bond...............................................................................................44
7.8. Claims and Liens...................................................................................45
7.9. Inspection.........................................................................................45
7.10. Protection of the Work............................................................................47
7.11. Minor Changes to the Work.........................................................................47
7.12. Change Orders.....................................................................................47
7.13. Substantial Completion Inspection.................................................................48
7.14. Final Inspection..................................................................................48
7.15. Construction Matters..............................................................................49
ARTICLE VIII. REPRESENTATIONS, WARRANTIES AND COVENANTS OF TENANT...............................................52
8.1. Representations and Warranties of Tenant...........................................................52
ARTICLE IX. REPRESENTATIONS, WARRANTIES AND COVENANTS OF RDC.....................................................53
9.1. Representations and Warranties.....................................................................53
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ARTICLE X. TERMINATION...........................................................................................53
10.1. Termination.......................................................................................53
ARTICLE XI. COMPLETION GUARANTEE; SURETY BOND....................................................................54
11.1. Completion Guarantee; Surety Bond.................................................................54
ARTICLE XII. EXTENSIONS OF TIME..................................................................................55
12.1. Application for Extension of Time.................................................................55
12.2. Force Majeure.....................................................................................55
12.3. Force Majeure Delays..............................................................................56
12.4. Injunction Delays.................................................................................57
12.5. RDC Delay.........................................................................................58
12.6. Approval of Delay.................................................................................58
ARTICLE XIII. NON-DISCRIMINATION; OPEN ACCESS PROGRAM; INSURANCE.................................................58
13.1. Non-Discrimination................................................................................58
13.2. Open Access Program...............................................................................58
13.3. Insurance.........................................................................................58
ARTICLE XIV. MISCELLANEOUS.......................................................................................58
14.1. Assignment........................................................................................58
14.2. Notices...........................................................................................59
14.3. Non-Action on Failure to Observe Provisions of this GDA...........................................59
14.4. Severability......................................................................................59
14.5. Applicable Law and Construction...................................................................59
14.6. Submission to Jurisdiction........................................................................59
14.7. Estoppel Certificates.............................................................................60
14.8. Complete Agreement................................................................................60
14.9. Holidays..........................................................................................60
14.10. Exhibits.........................................................................................61
14.11. No Brokers.......................................................................................61
14.12. Independent Contractors..........................................................................61
14.13. Governmental Authorities.........................................................................61
14.14. Technical Amendments.............................................................................61
14.15. Unlawful Provisions Deemed Stricken..............................................................62
14.16. No Liability for Approvals and Inspections.......................................................62
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14.17. Consents or Approval.............................................................................62
14.18. Intervention by City.............................................................................62
14.19. Effectiveness....................................................................................63
14.20. Disclaimer of Representations and Prohibited Reliance............................................63
Exhibits
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Exhibit A Traffic Signalization and Intersection Improvements (Section 2.17(b))
Exhibit B Completion Guarantee (Section 11.1)
Exhibit C Surety Bond (Section 11.1)
Exhibit D Construction Bonds (Section 7.7(b))
</TABLE>
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AMENDED AND RESTATED
GENERAL DEVELOPMENT AGREEMENT
THIS AMENDED AND RESTATED GENERAL DEVELOPMENT AGREEMENT (the "GDA") is
executed as of this 29th day of October, 1998 by and among the RIVERGATE
DEVELOPMENT CORPORATION, a Louisiana corporation ("RDC"), JAZZ CASINO COMPANY,
L.L.C., a Louisiana limited liability company, having its principal place of
business in the State of Louisiana ("Tenant") and the CITY OF NEW ORLEANS, as
Intervenor (the "City"). This GDA amends in its entirety that certain Amended
General Development Agreement dated March 15, 1994 (the "Initial GDA") by and
between RDC and Harrah's Jazz Company, a Louisiana general partnership
("Harrah's Jazz Company"), and the City.
W I T N E S S E T H:
WHEREAS, Harrah's Jazz Company filed a voluntary petition for
relief under Chapter 11 of the United States Bankruptcy Code on November 22,
1995 in the United States Bankruptcy Court for the Eastern District of Louisiana
(the "Bankruptcy Court"), Case No. 95-14545;
WHEREAS, the Bankruptcy Court has confirmed a Third Amended
Joint Plan of Reorganization, as modified through December 10, 1997, under
Chapter 11 of the United States Bankruptcy Code as submitted by Harrah's Jazz
Company and certain other parties (the "Plan");
WHEREAS, as contemplated by the Plan, Tenant is succeeding to
all rights and obligations of Harrah's Jazz Company under the Initial GDA;
WHEREAS, as of August 15, 1996, Harrah's Jazz Company, RDC,
and the City entered into that certain Agreement Regarding Modifications and
Related Agreements in Respect of Amended and Restated Canal Street Casino Lease,
Termination of Basin Street Casino Lease, Amended and Restated General
Development Agreement, the Conditional Use Ordinances and other Regulatory
Matters (the "City Agreement"), requiring, among other things, the amendment and
restatement of certain terms of the Initial GDA as of the effective date of the
Plan (the "Plan Effective Date") in accordance with the terms hereof;
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WHEREAS, construction of the Development (as defined below)
was halted during the pendency of Harrah's Jazz Company's bankruptcy
proceedings, and thereafter is to recommence;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, and in the Lease (as defined below), the parties
hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1. Definitions
(a) The terms defined in this Article I shall have the
following meanings for purposes of this GDA when initially capitalized herein:
(1) "Addenda" means changes in the Design Documents
for a Component or Phase of the Development made prior to the
execution of a Contractor Agreement therefor.
(2) "Architect" means an architectural firm retained
by Tenant to prepare Design Documents and perform other Design
Services.
(3) "Architect Agreement" means an agreement between
Tenant and an Architect for the performance of Design
Services.
(4) "Architect of Record" for a Component means the
Architect with ultimate responsibility for preparation of the
Design Documents and for providing Design Services for the
Component or Phase of the Development.
(5) "Authorized Representative" means Tenant's
Representative or the RDC Project Manager, as appropriate.
(6) "Bankruptcy Court" has the meaning set forth in
the recitals hereto.
(7) "Business Days" means all weekdays except
Saturday and Sunday and those that are official legal holidays
of the City, the
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State of Louisiana or the United States. Unless specifically
stated as "Business Days" a reference to "days" means calendar
days.
(8) "Casino" means all the Improvements on the Casino
Premises when and as developed.
(9) "Casino Manager/Operator" means Harrah's New
Orleans Management Company, a Nevada corporation.
(10) "Casino - Phase I" shall mean the first phase of
development and construction of the Development pursuant to
the Plan and in accordance with the Plans and Specifications
consisting of a minimum of one hundred thousand (100,000)
square feet of Net Gaming Space, approximately fifteen
thousand (15,000) square feet of multi-function, special event
and meeting room space on the first floor of the Casino, a two
hundred fifty (250) seat buffet on the first floor of the
Casino, the Employee and Bus Parking Support Facility, the
Poydras Tunnel Area, the Poydras Street Support Facility, and
Landscape Improvements.
(11) "Casino Premises" has the meaning set forth in
the Lease.
(12) "Centex Construction Agreement" shall mean that
certain Construction Agreement between Tenant and Centex
Landis Construction Co., Inc. ("Centex Landis"), as amended by
that certain Settlement Agreement between Tenant and Centex
Landis dated as of November 25, 1996 pursuant to which the
Casino is being constructed, as further amended in accordance
with the Plan.
(13) "Change Order" means a written order issued
during the Construction Phase of any Component or any Phase of
the Development authorizing a change in the Work with respect
thereto, and, if appropriate, any adjustment in the Schedules
and costs related thereto.
(14) "City" has the meaning set forth in the
preamble.
(15) "City Lease" has the meaning set forth in the
Lease.
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(16) "Commencement Date" for a Component and each
Phase of the Development means the date of commencement of the
Work with respect thereto.
(17) "Completion," "Completed" or "Substantial
Completion" means for a Component and each Phase of the
Development the completion of the Work with respect thereto
(excluding Substantial Completion Punch List Items) without
material deviation from the Design Documents, as evidenced by
(i) the issuance of a temporary certificate of occupancy by
the City or other appropriate Governmental Authority and (ii)
certification by Tenant, RDC and the Architect of Record for
the Component or Phase of the Development that the Work with
respect thereto is substantially complete so that the
Component or Phase of the Development can be occupied and used
for its intended purposes.
(18) "Completion Date" or "Substantial Completion
Date" means for a Component or Phase of the Development the
date of Substantial Completion thereof.
(19) "Completion Inspection" or "Substantial
Completion Inspection" for a Component or Phase of the
Development means the inspection of that Component or Phase of
the Development by the Architect of Record, Tenant and RDC
pursuant to Section 7.13 of this GDA.
(20) "Component" means the individual components
comprising the Development, which are the Casino, the Poydras
Tunnel Area, the Poydras Street Support Facility, the Employee
and Bus Parking Support Facility, Landscape Improvements and
other facilities that may be added as Components by amendment
to this GDA.
(21) "Contract Documents" for a Component or Phase of
the Development means the Architect Agreement(s), the
Contractor Agreement(s) and the Construction Documents
therefor.
(22) "Construction Documents" for a Component or
Phase of the Development means the drawings and
specifications, including Addenda and Change Orders, for the
Component
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or Phase of the Development to be prepared by the Architect(s
therefor which shall be in sufficient detail for review by
the City or other appropriate Governmental Authority as
necessary for the issuance of a building permit and for
construction of the Component or Phase of the Development.
(23) "Construction Phase" with respect to a Component
or Phase of the Development means the period of time beginning
on the Commencement Date therefor and ending on the
Substantial Completion Date therefor.
(24) "Construction Schedule" means the schedule that
outlines the events and time periods necessary for the
construction of each Component and Phase of the Development,
as the same may be modified or adjusted in accordance with
this GDA.
(25) "Consultants" means the Architect, engineers,
planners and other consultants retained by Tenant to perform
Development Services and Design Services, not including any
Contractor or subcontractor.
(26) "Contractor" means one or more firms licensed as
a contractor in the State of Louisiana, approved by RDC (which
approval shall not be unreasonably withheld, delayed or
Financially Conditioned (as defined in the Lease) registered
with the City or Parish as required by applicable law, bonded
to the extent required by applicable law and this GDA and
hired by Tenant pursuant to a Contractor Agreement, to
construct all or part of the Development.
(27) "Contractor Agreement" means an agreement
between Tenant and a Contractor for construction of all or
part of the Development.
(28) "Design Development Documents" for a Component
or Phase of the Development means the intermediate level
plans, drawings and specifications for the Component to be
prepared by the Architect(s) and other Consultants that set
forth the requirements for the construction of the Component
or Phase of the Development in sufficient detail to establish
the size and character of the Component
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or Phase of the Development, including architectural,
structural, mechanical and electrical systems, materials and
other elements.
(29) "Design Documents" for a Component or Phase of
the Development means, collectively, the Schematic Design
Documents, the Design Development Documents and the
Construction Documents therefor.
(30) "Design Phase" for a Component or Phase of the
Development means the period of time during which the Design
Documents therefor are prepared by the Architect(s) and other
Consultants. The Design Phase for a Component or Phase of the
Development may overlap with the Construction Phase therefor.
(31) "Design Services" for a Component or Phase of
the Development means those services to be provided by the
Architect(s) and other Consultants in connection with the
design of the Component or Phase of the Development and the
periodic inspections, reviews, approvals, disapprovals of the
Work relating thereto and any other services customarily
performed by an architect or design consultants.
(32) "Development" has the meaning set forth in the
Lease.
(33) "Development Commencement Date" means the first
of the Commencement Dates of all Components and Phases of the
Development.
(34) "Development Completion Date" means the last of
the Final Completion Dates of all Components and Phases of the
Development.
(35) "Development Schedule" means the schedule
outlining the events and estimated time periods necessary for
the completion of all elements related to the Development
including but not limited to design, permitting, equipment and
material deliveries, financing, construction and completion of
each Component and Phase of the Development, as the same may
be modified or adjusted in accordance with this GDA. The
Development Schedule may include and
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supersede the Construction Schedule, if mutually agreed upon
between RDC and Tenant, both parties agreeing to be
reasonable.
(36) "Development Services" for a Component or Phase
of the Development means all services required to be performed
or procured by Tenant for such Component or Phase of the
Development under this GDA other than the Design Services and
the Work therefor.
(37) "Employee and Bus Parking Support Facility"
means the Improvements on the Employee and Bus Parking Support
Facility Premises or the business and operations conducted
thereon, as the context may require.
(38) "Employee and Bus Parking Support Facility
Premises" has the meaning set forth in the Lease.
(39) "Environmental Assessment" shall mean that
certain environmental assessment prepared by W.D. Scott Group,
Inc. dated March 26, 1993.
(40) "Environmental Laws" mean any applicable laws
pertaining to health or the environment including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, as
hereafter amended ("CERCLA"), the Resource Conservation and
Recovery Act of 1976, as amended by the Used Oil Recycling Act
of 1980, the Hazardous and Solid Waste Amendments of 1984, as
hereafter amended ("RCRA"), the Federal Water Pollution
Control Act, as now or hereafter amended ("WPCA"), and any
laws of the State of Louisiana, or any subdivision thereof,
relating to the presence of, removal, spill, release, leaking,
or disposal of oil, petroleum, toxic pollutants, solid waste
or other hazardous substances. The terms "hazardous substance"
and "release" shall have the meanings specified in CERCLA and
RCRA; the term "solid waste" and "disposal," or "disposed,"
shall have the meanings specified in RCRA; the terms "oil,"
"petroleum," and "toxic pollutant" shall have the meanings
specified in WPCA and RCRA; provided that, to the extent that
the Laws of the State of Louisiana, as
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currently enacted or hereafter amended, establish a meaning
for "oil," "petroleum," "toxic pollutant," "hazardous
substance," "release," "solid waste" or "disposal" which is
broader than that specified in either CERCLA, RCRA, or WPCA
such broader meaning shall apply.
(41) "Estimated Opening Date" means the projected
opening date of each Component and each portion of the
Development which is the subject of a Phase, as set forth in
the Construction Schedule and/or the Development Schedule.
(42) "Execution Date" means the date as of which this
GDA is executed and delivered by the parties hereto as set
forth in the preamble hereof and the Plan Effective Date has
occurred.
(43) "Exhibits" means those agreements, diagrams,
drawings, specifications, instruments, forms of instruments,
and other documents attached hereto on the date hereof or
added to this GDA and designated as exhibits to, and
incorporated in and made a part of, this GDA.
(44) "FF&E" means all furniture, furnishings,
equipment and fixtures (including but not limited to gaming
devices) necessary for the conducting of gaming operations at
the Casino.
(45) "Final Completion" for a Component or Phase of
the Development means the time when all Work for the Component
or Phase of the Development has been Completed (including
Substantial Completion Punch List Items) as evidenced by a
certification to that effect by Tenant, RDC and the Architect
of Record for the Component or Phase of the Development.
(46) "Final Completion Date" for a Component or Phase
of the Development means the date of Final Completion of the
Component or Phase of the Development.
(47) "Final Inspection" of a Component or Phase of
the Development means the inspection of the Component or Phase
of the Development by the Architect of Record, Tenant and RDC
pursuant to Section 7.14 of this GDA.
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(48) "Force Majeure" means those events described in
Section 12.2.
(49) "Gaming Authorities" has the meaning set forth
in the Lease.
(50) "GDA" means this Amended and Restated General
Development Agreement including all exhibits hereto, as the
same may be amended, modified, restated or supplemented from
time to time.
(51) "Governmental Authority" or "Governmental
Authorities" means any federal, state, parish or municipal
governmental authority, including all executive, legislative,
judicial and administrative bodies thereof.
(52) "Governmental Requirements" means all laws,
ordinances, statutes, zoning requirements and agreements of
any Governmental Authority that are applicable to the
acquisition, remediation, renovation, demolition, development,
construction and operation of the Development and the related
Components including, without limitation, all required
permits, approvals and any rules, guidelines or restrictions
created or imposed by Governmental Authorities (including,
without limitation, any Gaming Authorities).
(53) "Hard Construction Costs" means all costs and
expenses of Tenant for developing, designing and constructing
the Improvements, including but not limited to payments under
the Contractor Agreement(s), fees and expenses of the
Architect(s) and other Consultants, overhead, and costs of
bonds, insurance, permits, licenses and inspections, but
excluding interest and other financing costs, legal fees and
expenses and pre-opening and related marketing or advertising
expenses.
(54) "Harrah's Jazz Company" has the meaning set
forth in the preamble.
(55) "Improvements" means any buildings, structures,
roads, roadways, mechanical devices, landscaping, facilities
and appurtenances constructed and situated now or at any time
thereafter
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upon the Leased Premises including, without limitation, any
non-gaming development on the second floor of the Casino, but
shall not include FF&E.
(56) "Initial GDA" has the meaning set forth in the
preamble.
(57) "Interior Leasable Space" means the floor area
located in the various Components available for lease to third
parties for retail or service use when and as developed.
(58) "Landscape Improvements" are the improvements to
be constructed on certain portions of the Leased Premises.
(59) "Lease" means that certain Amended Lease
Agreement among Harrah's Jazz Company, RDC, and the City as
intervenor dated as of March 15, 1994, as amended and restated
by that certain Amended and Restated Lease Agreement of even
date herewith by and among Tenant, RDC, and the City as
intervenor, including all exhibits thereto, as the same may be
amended, modified, restated or supplemented from time to time.
(60) "Leased Premises" has the meaning set forth in
the Lease.
(61) "Leasehold Mortgagee" has the meaning set forth
in the Lease.
(62) "Minimum FF&E" means not less than two thousand
(2,000) usable and non-obsolete slot machines and one hundred
(100) gaming tables and other furniture, furnishings,
equipment and fixtures sufficient to conduct full gaming
operations in one hundred thousand (100,000) square feet of
Net Gaming Space in the Casino.
(63) "Net Gaming Space" means that area of the Casino
in which gaming activity takes place and does not include
support, storage, entertainment, service and other such areas.
(64) "Notice to Proceed" for a Component or Phase
means the written notice given by RDC to Tenant to commence
the Work for the
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Component or Phase of the Development, as provided in Section
7.4 of this GDA.
(65) "Open Access Program" has the meaning set forth
in the Lease.
(66) "Open Access Plans" has the meaning set forth in
the Lease.
(67) "Parish" means Orleans Parish, Louisiana.
(68) "Permits" means all licenses, permits,
approvals, consents and authorizations that Tenant is required
to obtain from any Governmental Authority to perform and carry
out its obligations under this GDA including but not limited
to permits and licenses necessary to demolish, build, open,
operate and occupy the Development or any portion thereof.
(69) "Person" shall mean any individual, partnership,
corporation, association, limited liability company or other
entity, including but not limited to, any government or agency
or subdivision thereof, and the heirs, executors,
administrators, legal representatives, successors and assigns
of such Person where the context so admits.
(70) "Phase" shall mean, with respect to the
Development, each of, and "Phases" shall mean, with respect to
the Development, all of, the Phase I and II Construction and
any Subsequent Phase.
(71) "Phase I and II Construction" shall mean the
construction work for Casino Phase I and Second Floor Shell
Construction - Phase II to be performed pursuant to the Centex
Construction Agreement and the other Hard Construction Costs,
including any work pursuant to any Change Orders approved
pursuant to this GDA and the Centex Construction Agreement and
including the installation of the Minimum FF&E but excluding
any restoration or other work on the Municipal Auditorium, the
close-in work performed by Centex Landis pursuant to that
certain Close-In Agreement dated as of March 5, 1996, as
approved by the Bankruptcy Court, and any other work performed
prior to the date hereof.
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(72) "Plan" has the meaning set forth in the recitals
hereto.
(73) "Plan Effective Date" has the meaning set forth
in the recitals hereto.
(74) "Plans and Specifications" means the Design
Documents and any other site plans, grading plans,
construction drawings, surveys, materials, specifications,
architectural plans and drawings, design drawings,
construction drawings, elevations, construction models,
engineering plans and drawings, approved plats and other
plans, drawings, studies or reports required for the
construction of the Development.
(75) "Poydras Street Support Facility" means the
Improvements on the Poydras Street Support Facility Premises
or the business and operations conducted thereon, as the
context may require.
(76) "Poydras Street Support Facility Premises" has
the meaning set forth in the Lease.
(77) "Poydras Tunnel Area" has the meaning set forth
in the Lease.
(78) "Project Area" means the Leased Premises,
staging areas, and temporary construction servitudes (if any),
provided for construction of the Development.
(79) "RDC" is the public benefit corporation formed
on the 7th day of April, 1993 by virtue of Louisiana Revised
Statutes 12:201-269 and 41:1212(G), and Ordinance No. 15,777,
adopted by the Council of the City of New Orleans on April 1,
1993.
(80) "RDC Delay" means any period of time during
which the performance by Tenant of any of its duties and
obligations under this GDA is delayed by the act, failure to
act or neglect of RDC, or any employee, agent or other
representative of RDC, or any separate contractor employed by
RDC, by changes in the Work required by RDC, or by any other
event or circumstance which constitutes or is deemed to be an
RDC Delay in accordance with the specific terms
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and provisions of this GDA. An RDC Delay shall not include any
period of time provided in this GDA for the exercise by RDC of
a right or privilege granted by this GDA or any delay caused
by Force Majeure.
(81) "RDC Project Manager Expenses" shall have the
meaning set forth in Section 7.2(a)(8) of this GDA.
(82) "RDC Project Manager" means the Person retained
by RDC to be its duly designated, official and Authorized
Representative and to represent RDC in all matters pertaining
to this GDA.
(83) "Scheduled Completion Date" with respect to a
Component or Phase of the Development means the date on which
the Component or Phase of the Development is scheduled to be
Completed, as set forth in Section 3.2 of this GDA.
(84) "Schedules" means the Working Development
Schedule, the Development Schedule and the Construction
Schedule with respect to each Component and Phase of the
Development.
(85) "Schematic Design Documents" for a Component or
Phase of the Development means a site plan, schematic designs,
preliminary specifications and elevations prepared by the
Architect(s) for the Component or Phase of the Development.
(86) "Second Floor Shell Construction - Phase II"
shall mean the second phase of development and construction of
the Casino pursuant to the Plan and in accordance with the
Plans and Specifications of the multi-purpose non-gaming
development on the second floor of the Casino, which shall
consist of shell construction of the second floor non-gaming
space to make such space ready for non-gaming tenant
improvements.
(87) "Site Mobilization" has same meaning as set
forth in the Lease.
(88) "Site Preparation Work" means the following
actions with respect to the Leased Premises, as required: (a)
demolition and removal of structures; (b) demolition and
removal of surface paving
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and sidewalks; (c) removal of underground and overhead utility
facilities, and capping of any remaining lines at the property
lines of the Leased Premises (including without limitation the
removal of all sanitary sewer, storm and drainage facilities);
(d) removal and abatement of all toxic or hazardous
substances, materials or wastes disclosed by the Environmental
Assessment, including without limitation all contaminated soil
if any and (e) grading of the Leased Premises to be level with
the adjacent property lines grades and proper compaction of
all soils, including backfill.
(89) "Site Reactivation Date" means the first day
after the Execution Date when personnel and/or equipment first
enter the Development for the purpose of preparing the
property for construction of the Improvements required by the
GDA; provided, however, preliminary or preparatory work shall
not be considered site reactivation activities. The Site
Reactivation Date shall be no later than thirty (30) days
after the Execution Date.
(90) "Subsequent Phase" means any subsequent
development of the Development following Completion of the
Phase I and II Construction, as Tenant may propose and
undertake with Landlord's approval under this GDA.
(91) "Substantial Completion Punch List Items" for a
Component or Phase of the Development means the items of Work
with respect thereto that are incomplete as of the Substantial
Completion Date for that Component or Phase of the
Development. "Substantial Completion Punch List" means the
list of those items as contemplated by Section 7.13 of this
GDA.
(92) "Supplemental Instruction" means a change to the
Construction Documents for a Component or Phase of the
Development during the Construction Phase therefor, including
minor changes necessary to clarify a specification or resolve
a technical execution problem, as contemplated by Section
7.11(b) of this GDA.
(93) "Support Facilities" shall mean the Improvements
on the "Support Facilities Premises", as defined in the Lease,
or the business and operations conducted thereon, as the
context may require.
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(94) "Tenant" means Jazz Casino Company, L.L.C., a
Louisiana limited liability company, having its principal
place of business in the State of Louisiana, and its assigns
or any successor in interest as may be permitted in the Lease.
(95) "Tenant Delay" means any period of time during
which the performance by Tenant of any of its duties and
obligations under this GDA is delayed by the act, failure to
act or neglect of Tenant, or any employee, agent or other
representative of Tenant, or any separate contractor employed
by Tenant, by changes in the Work required by Tenant or by any
other event or circumstance which constitutes or is deemed to
be a Tenant Delay in accordance with the specific terms and
provisions of this GDA. Tenant Delay shall not include any
period of time provided in this GDA for the exercise by Tenant
of a right or privilege granted by this GDA, or any delay
caused by Force Majeure.
(96) "Tenant's Representative" means the Person
employed or retained by Tenant to be its duly designated,
official and Authorized Representative and to represent Tenant
in all matters pertaining to this GDA.
(97) "Termination Date" means the date that this GDA
is terminated pursuant to Section 10.1 of this GDA.
(98) "Work" means the construction of the
Improvements in accordance with the Construction Documents for
any Component or Phase of the Development, and includes labor,
materials and equipment to be furnished by a Contractor or
subcontractor pursuant to a Contractor Agreement. The Work
shall include the Site Preparation Work.
(99) "Working Development Schedule" means the
schedule to be prepared by Tenant outlining the events and
estimated time periods necessary for the completion of the
Site Preparation Work and the significant milestones for
design, permitting, construction and completion of each
Component and each Phase of the Development, including
revisions and adjustments as provided by the terms of this
GDA. The Working Development Schedule for each Component and
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<PAGE>
each Phase of the Development is an intermediate schedule and
will be superseded by the Development Schedule therefor and
the Construction Schedule therefor, when those schedules are
prepared.
(b) Any other initially capitalized terms defined within the
text of this GDA shall have the meaning set forth therein for
purposes of this GDA.
(c) Any other initially capitalized terms used in this GDA and
not defined herein shall, for purposes of this GDA, have the
meaning set forth in the Lease.
1.2. Use of Words and Phrases. Words of the masculine gender shall
be deemed and construed to include correlative words of the feminine and neuter
genders. "Herein," "hereby," hereunder," hereof," "hereinbefore," "hereinafter"
and other equivalent words refer to this GDA and not solely to the particular
portion thereof in which any such word is used.
1.3. Louisiana Statutes. All references herein to statutes are to
the Louisiana Revised Statutes, as amended.
ARTICLE II.
GENERAL PROVISIONS
2.1. Purpose. The purpose of this GDA is:
(a) To set forth the relationship between Tenant and RDC, the
respective duties, responsibilities and obligations of each and the procedures
to be followed relating to the design and construction of the Development; and
(b) To provide a means by which the Development can be
designed, constructed and completed by Tenant, with the cooperation of RDC, and
for the coordination of efforts on the part of each to ensure the timely and
expedited construction and Completion of the Development.
2.2. Findings. RDC does hereby ascertain, determine, declare and
find, and Tenant does hereby acknowledge, that:
(a) The Development is appropriate to the needs and
circumstances of the City and will provide or preserve gainful employment for
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citizens of the City, make a significant contribution to the economic growth of
the City and serve a public purpose by, among other things, advancing economic
prosperity.
(b) The Development furthers the interests of the City and
RDC.
2.3. Intent. It is the intent of the parties to this GDA that:
(a) The Development is to be accomplished by Tenant as
provided herein.
(b) This GDA sets forth the duties, obligations, rights and
responsibilities of RDC and Tenant with respect to the development, design and
construction of the Development.
(c) RDC and Tenant will cooperate and work together to the
extent reasonably necessary to accomplish the mutual intent of the parties that
the Development be successfully completed as expeditiously as is reasonably
possible.
2.4. Tenant's Proposal and the Development. The Development is in
the best interests of the City and RDC and is consistent with and furthers the
objectives of RDC.
2.5. Tenant's Development Obligations. Tenant shall diligently
prosecute or cause to be prosecuted to Completion the Development Services, the
Design Services, the Site Preparation Work, the Phase I and II Construction and
any other Work for all the Components and Phases of the Development, subject to
and in accordance with the terms of this GDA. The following narrative
descriptions of each of the Components and the Phases of the Development are a
summary of the development plans as of the Execution Date. In any conflict
between the Design Documents and the narrative descriptions set forth below, the
Design Documents shall prevail.
2.6. Narrative Description of the Casino. Tenant agrees to
construct the Casino, a building capturing New Orleans architectural history and
heritage on the Casino Premises, which will include up to approximately one
hundred thirty thousand (130,000) square feet of Net Gaming Space if certain
conditions are met, but in no event less than one hundred thousand (100,000)
square feet of Net Gaming Space, a two hundred fifty (250) seat buffet on the
first floor of the
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Casino and space for tenant improvement and build out for non-gaming purposes
on the second floor of the Casino. Casino - Phase I will result in the
completion of that portion of the Casino consisting of a minimum of one
hundred thousand (100,000) square feet of Net Gaming Space, approximately
fifteen thousand (15,000) square feet of multi-function, special event and
meeting room space on the first floor of the Casino, parking garages, the
Poydras Tunnel Area, and the two hundred fifty (250) seat buffet on the first
floor of the Casino. Second Floor Shell Construction - Phase II will result
in the completion of that portion of the Casino consisting of shell
construction of multi-purpose non-gaming space on the second floor of the
Casino that is to be ready for tenant improvement and build out following the
completion of Casino - Phase I. The Subsequent Phases will consist of any
subsequent development of the Casino following Casino - Phase I and Second
Floor Shell Construction - Phase II as Tenant may propose and undertake with
Landlord's approvals under this GDA. The Casino's footprint will occupy
approximately two hundred eleven thousand (211,000) square feet of the
approximately three hundred five thousand (305,000) square foot Casino
Premises, providing a relationship of curb to building which recognizes a
desire for continuing the urban ambiance of the City, but which also
recognizes the need for relief from the solidity and hardness of building
materials through the introduction of green space and landscaped areas.
The building will have four floors, two above grade and two below
grade. The two above grade floors will be new construction erected on the site
of the former Rivergate Exhibition Hall ground level floor. The two below grade
floors will be comprised of the existing below grade levels of the Rivergate
Exhibition Hall building plus the abandoned Riverfront expressway tunnel. These
areas will be renovated to provide valet parking, back of house and Casino
support areas. The former Rivergate Exhibition Hall building has been demolished
to its current first floor slab level.
The first floor of the building will be at the same elevation as the
former Rivergate Exhibition Hall ground floor, or approximately eight (8) feet
above existing grade. This floor will contain entry lobbies, the themed main
atrium area, retail area, concession areas, the special event area, food service
area, lounges, restrooms, and no less than one hundred thousand (100,000) square
feet of Net Gaming Space. The second level, or the mezzanine floor, will be at
an elevation twenty-four (24) feet or twenty (20) feet above the first floor
grade. This level will contain approximately one hundred fifty thousand
(150,000) square feet of
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multi-purpose non-gaming space. A central atrium one hundred twenty (120) feet
square and approximately sixty (60) feet high will provide a striking visual
focal point from each of the main entrances to the Casino.
The two levels below grade will provide parking for approximately four
hundred (400) to five hundred (500) cars plus one hundred forty-five thousand
(145,000) square feet of back of house and Casino support areas including
loading docks, Casino offices, hard count, soft count, employee locker rooms,
employee dining, uniform storage and warehousing, and central mechanical and
electrical systems. The loading dock will be located in the lower basement. The
parking space areas will be primarily used for valet parking and secondarily
used for Casino patron parking.
The Casino will provide four separate distinct entrances for guests
providing access from each of the streets surrounding the Casino. Each facade
will be a finished elevation. The South Peters Street elevation will have minor
interruptions created by the two entrance and exit areas to the below grade
parking and Casino service areas. The main entrance to the Casino will be at the
intersection of Canal and South Peters Streets. This entrance will be a featured
pedestrian entrance which will reinforce the established pedestrian patterns. It
will be designed to be a pedestrian only entrance so guests will not cross paths
with autos, limos, and taxis. The pedestrian character of this important
intersection will be articulated by the creation of an expansive plaza with
decorative paving patterns and landscape treatment.
A vehicular entrance will anchor the lower end of Canal Street near its
intersection with Convention Center Boulevard. This entrance will feature a
monumentally scaled porte cochere with a five lane access drive. This drive will
cross the Casino Premises diagonally across the corner formed by Canal Street
and Convention Center Boulevard.
The other two entrances will be located at the corner of Poydras Street
and Convention Center Boulevard, and on South Peters near Poydras Street, and
will serve Poydras Street and South Peters Street respectively. A bus staging
area for the Casino will be provided in the Poydras Street Support Facility.
Each of the four Casino entrances will lead the patron into the Casino,
which will be highlighted by distinctively themed gaming areas, clustered around
the central atrium located below the building's domed roof. Each of the themed
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gaming areas will be distinctively unique in their decor, and each will
emphasize traditional Louisiana and New Orleans heritage. Main circulation
aisles will dissect the building into these unique areas. The potentially
intimidating size of the interior of the building will be reduced to comfortable
proportion space by these main aisles. Ceiling heights at the first floor level
will be primarily fifteen (15) feet above the floor, but will be interspersed
with varying heights of up to forty-three (43) feet to provide a variety of
decorative and spacious experiences.
The building layout is organized to respond to the site and its
surroundings. It responds to the urban architecture of downtown New Orleans
encompassing the majority of the area surrounding the Casino Premises, but
reduces the potential of creating an intimidating building form by providing
green areas and landscaping around the perimeter of the Casino Premises. The
four building facades will be composed of classical architectural elements
culminating in exciting entrance porticos flanked at the Canal Street and
Poydras Street entrances with finely scaled tower structures. Building facades
will consist of materials indigenous to the New Orleans architectural
environment and will include plaster, natural stones, and prefabricated elements
composed to capture details and features reflecting the architecture of the New
Orleans community. Windows and door openings will replicate traditional mullion
patterns and contemporary materials.
2.7. Off Site Improvements Narrative Description. Off site
improvements will include upgrading of certain existing street lighting,
additional new landscaping and distinctive sidewalk paving patterns in selected
areas.
2.8. Poydras Street Support Facility Narrative Description. The
Poydras Street Support Facility will house parking and a bus staging area for
the Casino, plus commercial space at the street level. The Poydras Street
Support Facility is comprised of two parking structures, one bounded by Poydras
Street, Convention Center Boulevard, Lafayette Street Mall and Fulton Street
Mall ("Square Four"), and the second bounded by Convention Center Boulevard,
Girod Street, Fulton Street Mall and Lafayette Street Mall ("Square Five").
The Poydras Street Support Facility will provide for a maximum of one
thousand five hundred fifty (1,550) parking spaces and approximately
thirty-three thousand nine hundred (33,900) square feet of commercial space,
twenty-four thousand eight hundred (24,800) square feet for a bus staging area,
and ten thousand three hundred (10,300) square feet of lobby areas.
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The structure on Square Five will contain six (6) levels of above
ground parking and will be sixty-nine (69) feet at its primary height with
heights of architectural elements ranging up to seventy-five (75) feet, six (6)
inches in height. The parking facility on Square Four will contain eleven (11)
levels of parking and will range from a primary height of one hundred twelve
(112) feet to one hundred thirty-nine (139) feet for certain architectural
elements. A tunnel under Poydras Street will connect the Square Four parking
structure with the lower level of the Casino.
The Square Five parking structure will house a bus staging area for the
Casino which will contain space for five (5) buses. Buses using this facility
will discharge and pick up patrons at scheduled times, but will not be allowed
to park for extended periods at this location. Tour buses will be required to
park at remote locations including the Employee Bus Parking and Support Facility
described in Section 2.9 of this GDA.
The architectural style of the Poydras Street Support Facility will
complement the Casino and the adjacent warehouse district and Poydras Street
architecture in both design and building massing. Access and egress for both
parking facilities will be from Convention Center Boulevard.
Elevators and stairs from the parking garages will all terminate at the
street level near exits to the exterior of the building. Special vertical
transportation will provide an option for guests to access the Poydras Street
Tunnel Area going to the Casino.
2.9. Employee and Bus Parking Narrative Description. Tenant will
provide employee parking and bus staging areas at sites remote from the Casino.
The remote employee parking will total at least one thousand (1,000) spaces,
which will be located at the Employee and Bus Parking Support Facility Premises.
Fifty (50) spaces for tour bus staging will be provided at the Employee and Bus
Parking Support Facility Premises. The total parking provided at the Employee
and Bus Parking Support Facility Premises will be in excess of that required for
Casino employees and tour bus staging. The Employee and Bus Parking Support
Facility Premises may also be the location for Casino employment offices, Casino
employee training and limited Casino warehouse space.
Remote parking areas will be landscaped and fenced to reflect both
security needs as well as tasteful architectural settings.
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2.10. Poydras Tunnel Area Narrative Description. Tenant will
construct an 18-foot wide by 8-foot high subterranean passageway between the
Casino and the Poydras Street Support Facility to be used only as a passageway.
This tunnel will provide employee and service passage to and from the Casino and
the Poydras Street Support Facility, access and egress for the Casino for guests
arriving from the Poydras Street Support Facility, and emergency exits from the
Casino. The tunnel will be tastefully decorated in a manner providing a "sense
of arrival" to the Casino.
2.11. Integrated Complex. The Casino and the Support Facilities
shall be designed as an integrated complex. The goal of the Development is that
the buildings, landscaping and other pertinent improvements will blend together
and join pleasantly with adjacent properties to create an elegant environment.
The Development shall be consistent with the provisions, standards and
requirements of applicable City codes, regulations or ordinances.
2.12. Hard Construction Costs of the Improvements
(a) Tenant represents and warrants that the total amount
expended prior to the Execution Date for the Hard Construction Costs of the
Improvements for the following items is not less than the following amounts:
<TABLE>
<S> <C>
Pre-petition Casino - Phase I, Second Floor $88,596,000
Shell Construction - Phase II,
and Poydras Street Tunnel Area
Poydras Street Support Facility $13,812,000
Casino close-in work $8,500,000
Employee and Bus Parking Support Facility $3,000,000
Cure amounts payable to Centex Landis $34,000,000
on the Plan Effective Date
Poydras Street Support Facility cure $2,237,000
amounts payable on the Plan Effective Date
Other cure amounts payable on the Plan $3,200,000
Effective Date
</TABLE>
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<TABLE>
<S> <C>
Amounts expended during reorganization, $9,300,000
including remediation
TOTAL $162,645,000
</TABLE>
(b) Tenant represents and warrants that the remaining Hard
Construction Costs of the Improvements as of July 31, 1998 is not more than
$122,948,000.
(c) Tenant represents and warrants that upon the Completion of
the Phase I and II Construction the Casino shall contain the Minimum FF&E.
(d) Exterior construction materials on the Casino and
Support Facilities shall be of high quality.
2.13. Project Completion (a) The Commencement Date for the Phase I and
II Construction shall be the Site Reactivation Date. Notwithstanding the
foregoing, the parties acknowledge that the Commencement Dates for the Poydras
Street Support Facility, the Poydras Tunnel Area and the Employee and Bus
Parking Support Facility have occurred and that the Commencement Date for the
Landscape Improvements shall be within ninety (90) days of the Site Reactivation
Date. Tenant shall diligently, expeditiously and continuously prosecute to Final
Completion the Phase I and II Construction in accordance with the terms and
conditions of this GDA, including (i) paying, or making satisfactory provision
for the payment of, all costs to Complete the Phase I and II Construction and
for all materialmen's claims, mechanics' liens or other claims, liens or claims
for liens arising from the furnishing of labor, materials, supplies or equipment
for the Phase I and II Construction and (ii) causing the expiration of all lien
periods with respect to the Phase I and II Construction to occur without any
liens or privileges arising from the furnishing of labor, materials, supplies or
equipment for the Phase I and II Construction affecting or purporting to affect
the Leased Premises remaining of record in Orleans Parish, Louisiana. The
Completion Date for the Phase I and II Construction shall be on or before twelve
(12) months after the Plan Effective Date. Notwithstanding the foregoing, the
parties acknowledge that the Completion Date for the Employee and Bus Parking
Support Facility has occurred. During the continuance of any Force Majeure, the
obligations of Tenant pursuant to this Section 2.13 shall be subject to
adjustment pursuant to Section 12.3(a) of this GDA.
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(b) RDC hereby approves and accepts the Commencement Dates and
the Completion Dates for the Phase I and II Construction and each of the
Components pursuant Sections 2.13(a) and (b) of this GDA. As the various Design
Documents for these Components and Phases are prepared and approved, and as
construction planning evolves, Tenant shall prepare the Working Development
Schedule, the Development Schedule and the Construction Schedule for each of
these Components and Phases and updated versions thereof as necessary. The
Schedules for these Components and Phases shall reflect their respective
Commencement Dates and Completion Dates. Any such Schedules for any Subsequent
Phase shall be prepared, approved and accepted pursuant to the procedures set
forth in this GDA at such time as may be agreed by Tenant and RDC.
(i) To enable the Development to be planned, scheduled and
constructed in an orderly and expeditious manner, Tenant shall prepare
and submit to RDC for its approval the initial version of the Schedules
and updated versions thereof that are consistent with the status of the
Development. The initial version of the Working Development Schedule
for each Component and each Phase of the Development shall be delivered
to RDC concurrently with the submission of the applicable Schematic
Design Documents, and, if necessary, shall be revised and updated upon
submission of the applicable Design Development Documents and the
Construction Documents pursuant to Section 4.2 of this GDA.
(ii) Upon the occurrence of an event of Force Majeure, all
Schedules shall be adjusted to reflect the additional time required for
the performance of the duties or obligations of Tenant under this GDA
as a result of such event; and, in the event of a delay caused by RDC,
all Schedules shall be adjusted to reflect the additional time required
for the performance of the duties or obligations of Tenant under this
GDA as a result of such event.
(iii) In addition to adjustments pursuant to Section
2.13(b)(ii) of this GDA, the Schedules may be changed from time to
time. Tenant punctually shall notify RDC of any such changes. Any such
adjustment to the Schedules that affects the Development Completion
Date must be submitted, in writing, to RDC for RDC's approval within
fifteen (15) days following the actual discovery of the cause of delay.
The notice of the delay must describe the portion of the design and/or
construction work actually
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delayed, the source of the delay, how the source affects the progress
of the work, and an estimate of the probable effect of each delay on
the Schedules. Within fifteen (15) days after its receipt of any
written request by Tenant for a change to the various schedules, RDC
shall notify Tenant of its approval or disapproval of such proposed
change, and the reasons for disapproval. All such changes in the
Schedules shall be evidenced in writing. If RDC fails to respond within
fifteen (15) days, the request will be deemed approved.
(iv) If there is a conflict among the Construction Schedule,
the Development Schedule or the Working Development Schedule for any
Component or any Phase of the Development, the Development Schedule
shall prevail.
(v) The Construction Documents shall describe methods to
reasonably minimize community disruptions during construction of the
Improvements. The Construction Documents shall describe the methods of
construction that reduce the negative impact of construction on
adjacent properties and on businesses in the vicinity of the
construction. These shall include policies regarding scheduling of
certain activities (e.g., delivery of materials and equipment) that
disrupt vehicular and pedestrian traffic, such activities being limited
to off-peak hours whenever possible; policies concerning the placement
of temporary structures (e.g., field offices, scaffolding, hoists);
temporary utility connections (e.g., light, heat, power) that may
adversely affect surrounding businesses; and the coordinated scheduling
of the public paving, sidewalks, sewers, curbs and utility hookups.
Upon receipt of Construction Documents for any Component or any Phase
of the Development, RDC shall review the Construction Documents to
ensure that such Construction Documents are in accordance with
generally acceptable construction practices. During this period Tenant
will also meet with pertinent City departments, commissions/agencies
and adjacent property owners to discuss the proposed schedules and
construction plans. Based on its plan review and meetings, RDC will
present to Tenant, in writing, its recommendations on Tenant's plans to
mitigate the potential effect of construction on neighboring
properties.
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2.14. Authorized Representative
(a) Unless provided otherwise, whenever approval or action by
RDC or Tenant is required by this GDA, such action or approval shall be taken or
given by the RDC Project Manager and Tenant's Representative, respectively, each
being the duly Authorized Representative of its principal. Written notice of the
designation of an Authorized Representative (and any subsequent change in the
Authorized Representative) shall be given by the designating party to the other
party in the manner provided in Section 14.2 of this GDA. Nothing in this GDA is
intended to impose personal liability on an Authorized Representative except as
may exist by law or contract between a party and its agent or Authorized
Representative.
(b) RDC agrees to communicate with the Contractor(s), the
Architect(s) and any other party engaged in the performance of any of the
Development Services, Design Services or the Work only through Tenant's
Representative. Tenant's Representative agrees to communicate with RDC through
the RDC Project Manager, unless directed to do otherwise.
2.15. Procedures for Approvals Provided by this GDA. Wherever an
approval is required of RDC pursuant to the terms of this GDA, the failure of
RDC to respond within the applicable time period shall be deemed disapproval by
RDC, unless otherwise provided herein. Any delay caused by RDC's failure to
respond within the applicable time period and any delay caused by RDC's
disapproval that is later reversed shall be deemed an RDC Delay. Furthermore,
upon the failure of RDC to respond to a request for approval within the
applicable time period, Tenant shall be entitled to proceed with the Development
despite RDC's deemed disapproval; however, if the necessary approval is not
subsequently obtained, Tenant shall at RDC's request restore any of the deemed
disapproved Work that does not conform to the requirements of this GDA, at
Tenant's sole cost and expense.
2.16. Prompt Responses. The parties agree that the time limits and
time periods provided herein are of the essence in this GDA. The parties
mutually agree to exercise their mutual and separate best efforts to consider
and respond promptly and as expeditiously as reasonably possible notwithstanding
any time period provided in this GDA.
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2.17. Transportation and Utility Improvements or Relocation
(a) Tenant shall, at Tenant's sole cost and expense, be
responsible for the location, identification and condition of all utilities
serving the Development, including but not limited to electrical, gas, water and
sewerage. Tenant shall, at Tenant's sole cost and expense, relocate any utility
facilities serving the Development and/or property outside the Development that
will be damaged or interrupted by the construction and/or operation of the
Development; and Tenant shall indemnify RDC and hold it harmless from all costs,
expenses and damages to RDC or any third party that may result from any such
damage or interruption.
(b) Tenant shall construct the traffic signalization and
intersection improvements as reflected in the Development Schedule as shown on
Exhibit "A" attached hereto and by this reference made a part hereof, subject,
however, to all ordinary governmental and regulatory reviews, approvals, and
inspections, such reviews, approvals and inspections to be received by Tenant in
a timely fashion without any discriminatory conditions from the City. RDC shall
submit Plans and Specifications for such traffic signalization and intersection
improvement work to the Department of Public Works for approval prior to the
commencement of construction for such work. All work shall be performed in
accordance with such Plans and Specifications as approved by the Department of
Public Works. Except as set forth in this Section 2.17(b), no other
transportation or roadway improvements shall be required of Tenant by RDC.
2.18. Quality of Work and Materials. All Work shall be performed in
a good and workmanlike manner and in accordance with good construction
practices. All materials used in the construction of the Development shall be
new and/or of high quality.
2.19. Amended Descriptions. The descriptions set forth in Sections
2.6, 2.7, 2.8, 2.9 and 2.10 of this GDA shall be deemed automatically modified
and revised, without any further action, approval or consent by RDC, City or the
City Council, to conform with any change relating to the design, structure,
operations or appearance of the Development as same may be modified to satisfy
any or all provisos and/or other requirements which may be imposed upon Tenant
pursuant to any ordinance adopted by the City Council approving the Development
or any part thereof, as a conditional use. RDC and City agree to grant to Tenant
such reasonable servitudes as are necessary for the foundation of the
Development to be
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constructed in accordance with its final plans and specifications, and Tenant
shall pay only reasonable processing and review fees in connection with any such
grants.
ARTICLE III.
MATTERS AS TO TIME
3.1. Nature of Agreement. Tenant and RDC acknowledge that the
Commencement Date and Completion Date for each Component and each Phase of the
Development will be determined by the procedures set forth in Article IV.
However, RDC and Tenant have reached an understanding on certain dates as set
forth in Section 3.2 of this GDA.
3.2. Certain Dates
(a) The Site Reactivation Date shall occur within thirty (30)
days of the Execution Date.
(b) Site Mobilization has occurred.
(c) The Completion Date for any Subsequent Phase shall be at
such time as Tenant and RDC so agree.
(d) The Completion Date for each element of the Interior
Leasable Space (excluding the portion of the Casino to be completed during
Second Floor Shell Construction - Phase II and tenant improvements to unleased
commercial space) shall be concurrent with the Completion Date for the Component
or Phase of the Development in which such Interior Leasable Space is located.
The actual Commencement Date and Completion Date for each Component and each
Phase of the Development shall be subject to adjustment as provided herein.
ARTICLE IV.
DESIGN DOCUMENTS; PERMITS
4.1. Preparation and Submission of Design Documents. For the
purposes of performing the Design Services for any Component or any Phase of the
Development, Tenant shall enter into various design services agreements and
shall cause the design consultants to prepare, and shall submit to RDC for its
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review and approval in accordance with Section 4.3 of this GDA, the Schematic
Design Documents for such Component or Phase as provided in Section 4.2(a) of
this GDA, the Design Development Documents for such Component or Phase as
provided in Section 4.2(b) of this GDA, and the Construction Documents for such
Component or Phase as provided in Section 4.2(c) of this GDA.
4.2. Design Documents
(a) RDC has approved the Schematic Design Documents for those
portions of the Improvements constructed pursuant to the original Notice to
Proceed issued to Harrah's Jazz Company. To the extent any Schematic Design
Documents have not previously been submitted to RDC, Tenant shall, on or before
one (1) month after the Execution Date, submit to RDC for review and approval
such Schematic Design Documents, if any, as provided in Section 4.3 of this GDA
and an initial Working Development Schedule. If desired by RDC, RDC may schedule
and appropriate representatives of Tenant and the various design consultants,
including the applicable Architect(s), shall attend a meeting for the review of
the Schematic Design Documents not previously approved, if any.
(b) RDC has approved the Design Development Documents for
those portions of the Improvements constructed pursuant to the original Notice
to Proceed issued to Harrah's Jazz Company. To the extent any Design Development
Documents have not previously been submitted to RDC, Tenant shall, on or before
three (3) months after the Execution Date, submit to RDC for review and approval
as provided in Section 4.3 of this GDA such Design Development Documents, if
any, and an updated Working Development Schedule. If desired by RDC, RDC may
schedule and appropriate representatives of Tenant and the various design
consultants, including the applicable architect(s), shall attend a meeting for
review of the Design Development Documents not previously approved, if any.
(c) RDC has approved the Construction Documents for those
portions of the Improvements constructed pursuant to the original Notice to
Proceed issued to Harrah's Jazz Company. To the extent any Construction
Documents have not previously been submitted to RDC, Tenant shall, on or before
four (4) months after the Execution Date, submit such Construction Documents, if
any, to RDC for review and approval as provided in Section 4.3 of this GDA.
Tenant may prepare Construction Documents not previously approved in parts for
review and approvals. If Tenant submits such Construction Documents in parts,
RDC hereby agrees to receive and review parts of such Construction Documents
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in lieu of all such documents being submitted at one time. If desired by RDC,
RDC may schedule, and appropriate representatives of Tenant and the various
design consultants, including the applicable architect(s), shall attend a
meeting for review of such Construction Documents.
(d) RDC understands that Tenant intends to phase its
submission of Design Documents and RDC agrees that Tenant may do so as long as
neither the Site Reactivation Date nor the Completion Dates for the Components
or Phases are delayed as a result thereof.
4.3. Review and Approval of Design Documents
(a) Upon receipt by RDC of Design Documents not previously
approved and the other items submitted by Tenant, RDC shall promptly and
diligently review the items submitted and either approve them as submitted or
notify Tenant in writing of the required changes in each of them, within
fourteen (14) days after receipt thereof as to Schematic Design Documents for
any Component or any Phase of the Development, within fourteen (14) days after
receipt thereof as to Design Development Documents for any Component or any
Phase of the Development, and within fourteen (14) days after receipt thereof as
to Construction Documents for any Component or any Phase of the Development.
This review and action shall be concurrent with any other review by applicable
Governmental Authorities. Review and approval actions by Governmental
Authorities are governed by the laws, rules and regulations applicable thereto
and are not required by this GDA to be accomplished within the same fourteen
(14) day period under which the RDC is required to act. The applicable
Governmental Authorities, however, shall conduct their review and approval
processes as efficiently and expeditiously as possible. If RDC fails to approve
the submittal, or notify Tenant of the required changes within the applicable
time period specified above for any reason, any delay in such approval beyond
the applicable time period shall be deemed to be an RDC Delay. RDC shall approve
Design Documents for each Component and each Phase of the Development that are
materially consistent with previously approved Design Documents for such
Component or Phase. If there is any conflict between the design approved by RDC
and the design approved by any applicable Governmental Authority, including but
not limited to the City Planning Commission and/or the Central Business District
Historic Districts Landmarks Commission, the design approved by the applicable
Governmental Authority shall prevail, and RDC shall be deemed to have approved
the Design Documents approved by the applicable
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Governmental Authority. Notwithstanding the previous sentence, Tenant shall use
its reasonable best efforts to resolve any discrepancies between the Design
Documents for any Component or any Phase of the Development approved by RDC and
those approved by the applicable Government Authority.
(b) If RDC requires changes to any of the Design Documents for
any Component or any Phase of the Development that are necessary to conform the
currently submitted Design Documents to the previously approved Design Documents
for such Component or Phase, Tenant shall make such changes to such Design
Documents within fourteen (14) days after receiving the changes from RDC and, if
necessary, shall change the Schedules appropriately. RDC shall have seven (7)
days to review and approve or reject the changes.
(c) RDC may request other changes to the Design Documents for
any Component or any Phase of the Development that (i) are not material, (ii)
result from regulations beyond the control of RDC or (iii) are reasonable
changes mutually agreeable to the parties. RDC shall use its best efforts to
diligently and reasonably complete the negotiations within twenty (20) days
after RDC's notice to Tenant requesting these changes. Tenant shall notify RDC
of any changes that will be required to be made in the applicable Schedules as a
result of changes to such Design Documents. Provided RDC elects to proceed with
the changes after receipt of such notice from Tenant (which election shall be
made by notice from RDC to Tenant within five (5) days of Tenant's notice), then
Tenant shall promptly direct the Architect(s) to make such changes to such
Design Documents, and Tenant shall make such changes to such Schedules as are
caused by the changes to such Design Documents, and such changes shall be deemed
approved by RDC.
(d) After RDC has approved the Design Development Documents
for any Component or any Phase of the Development, Tenant may submit to RDC for
RDC's approval changes in Construction Documents for such Component or Phase
from the plans previously approved by RDC. Tenant shall describe changes in the
applicable Schedules that will result from these changes. RDC shall diligently
complete the review thereof in the manner and procedure set forth in Section
4.3(a) of this GDA.
(e) Any proposed Design Documents, or changes thereto,
disapproved by RDC under this Section shall be revised by Tenant and submitted
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to RDC within fourteen (14) days after the notice to Tenant of RDC's disapproval
of such proposed Design Documents, or changes thereto.
(f) The cost of making changes to the Design Documents
necessary to have such documents conform to those previously approved by RDC
shall be the responsibility of, and shall be paid for by, Tenant. The cost of
making changes to the Design Documents pursuant to Section 4.3(c) of this GDA
shall be paid for by Tenant.
(g) If RDC or the RDC Project Manager observes or otherwise
becomes aware of any fault or defect in any of the Design Documents, RDC or the
RDC Project Manager shall give prompt written notice thereof to Tenant, however,
notwithstanding the above, this subsection does not create liability on behalf
of RDC or the RDC Project Manager for the failure to observe any fault or
defect, or the failure to give notice or to take action related thereto.
4.4. Architect(s) and Consultants
(a) RDC and Tenant agree that the selection and performance of
the Architect(s) or other Consultants is the responsibility of Tenant. RDC did
not participate in the selection of the Architect(s) or Consultants and will not
participate in the selection of any successor Architect or Consultant; provided,
however, RDC shall have the right to make reasonable objection to the
appointment of any successor Architect or Consultant prior to such appointment
becoming effective and Tenant shall comply with the provisions of Section 13.2
of this GDA (Open Access Program). Any objection by RDC to a successor Architect
or Consultant shall be delivered by written notice to Tenant within fifteen (15)
days of receipt by RDC of Tenant's notice of the selection of the successor
Architect or Consultant. Upon receipt of a reasonable objection to the proposed
successor, Tenant shall withdraw its selection of the successor Architect or
Consultant and promptly select another firm or individual to serve as Architect
or Consultant and submit its selection to RDC. If Tenant's compliance with RDC's
objection to a successor Architect or Consultant would result in a material
increase in the cost of the Work, Tenant may select such successor Architect or
Consultant notwithstanding RDC's objection. In the event of an objection to a
successor Architect or Consultant which affects the Schedules, the Schedules
shall be equitably adjusted.
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(b) Neither the Architect(s) nor any other Consultants are
agents, either expressed or implied of RDC.
(c) Within thirty (30) days after the completion of all Design
Documents for any Component or any Phase of the Development, the latest
reproducible copies of such Design Documents shall be delivered to RDC by
Tenant. This delivery shall not deprive Tenant or the Architect(s) or other
Consultants of the right to retain the originals or other reproducible copies of
such Design Documents or the right to re-use information contained in them in
the normal course of the Architects' or other Consultants' professional
activities.
(d) The resumes of the principals of the Architect(s) and
other Consultants working on the Development shall be provided in writing to
RDC. In the event that any of the principals of the Architect(s) and other
Consultants working on the Development are changed during the Design Phase of
any Component or any Phase of the Development, Tenant shall notify RDC
immediately upon learning of such change.
4.5. RDC Not Responsible for Design Documents. RDC shall not be
responsible for:
(a) an error or omission in the Design Documents approved by
RDC prior to the Execution Date, or for failure of the Design Documents approved
by RDC prior to the Execution Date, or a part thereof, to comply with
Governmental Requirements in effect prior to the Execution Date;
(b) an error or omission in the Design Documents approved by
RDC following the Execution Date, or for failure of the Design Documents
approved by RDC following the Execution Date, or a part thereof, to comply with
the Governmental Requirements in effect as of the Execution Date; or
(c) for Design Documents that result in or cause a defective
design or construction.
4.6. Permits
(a) Except where prohibited by law, Tenant shall be the
applicant for any and all necessary Permits. Tenant shall coordinate and manage
all professional and technical services in connection with the preparation and
filing of applications for and obtaining all Permits. Tenant shall be
responsible for
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diligently preparing and filing all applications for, and pursuing and
obtaining, the Permits.
(b) RDC and the City, as the case may be, shall cooperate with
and assist Tenant in securing the Permits; provided, however, that nothing in
this GDA shall adversely affect, limit, restrict or reduce the right of the City
or the Parish, as Governmental Authorities, to exercise their respective
governmental powers and authority and to act in regulatory matters in accordance
with applicable Governmental Requirements.
(c) RDC and the City, as the case may be, shall act or join as
applicant for any of the Permits when required by law.
(d) The cost of the Permits and any normal and customary fees,
relating to the demolition of the improvements on the Casino Premises and
construction of the Development shall be the responsibility of Tenant.
(e) Tenant shall use all reasonable efforts to obtain all
Permits necessary to commence construction of each Component and each Phase of
the Development on or before the Commencement Date therefor. If, despite such
efforts and through no fault of Tenant, the Permits required to have been
obtained have not been obtained or could not have been obtained as of the
Commencement Date stated in the applicable Development Schedule, then Tenant
shall diligently proceed to exercise all reasonable efforts to obtain the
necessary Permits as promptly as possible, and such Development Schedule shall
be adjusted to reflect all additional time that will be required for the
performance of the duties or obligations of Tenant under this GDA as a result of
the delay in obtaining the Permits. Tenant shall not be entitled to an
adjustment in the Commencement Date for a Component or a Phase of the
Development for any delays in the issuance of the Permits caused by the failure
of Tenant to reasonably, timely and diligently apply for and proceed toward
obtaining the Permits or the failure of any of the applicable Design Documents
to comply with Governmental Requirements in effect as of the time of the Permit
applications.
(f) Because building Permits are unique and by designation are
Discriminatory (as defined in the Lease), Tenant shall have the right to contest
Permit requirements as provided by law.
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4.7. Development Services
(a) During the Design Phase for each Component and each Phase
of the Development, the Construction Phase for each Component and each Phase of
the Development and throughout the course of the Development, in addition to
other services required by this GDA, Tenant shall provide the following
Development Services:
(1) Serving as the contact point for RDC for all
aspects of the Development and providing coordination of all
architects, engineers, consultants, contractors, attorneys and
others retained by Tenant who are involved in the performance
of the Design Services or the Work;
(2) Coordinating, monitoring and reviewing the
Architects' preparation of the Design Documents;
(3) Informing RDC on the selection of materials,
building systems and equipment, the progress of construction
and time requirements for installation and construction;
(4) Evaluating compliance with the Schedules and
recommending changes that Tenant deems necessary, and
coordinating and integrating the Development Services, the
Design Services and the Work with the Schedules;
(5) Preparing and revising time estimates at various
stages of preparation of the Design Documents:
(6) Reviewing the Design Documents during preparation
by the Architect(s) and other Consultants and recommending
alternatives whenever design details affect construction
feasibility or schedules;
(7) Determining applicable requirements for equal
employment opportunity programs for the Development as well as
taking steps to achieve the Open Access goals outlined in the
Open Access Program;
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(8) Negotiating and preparing contracts with
architects, engineers, consultants, contractors and other
persons participating in any of the Development Services, the
Design Services and the Work;
(9) Providing logistical planning and scheduling for
architects, engineers, consultants, contractors and attorneys
during the Design Phase for each Component and each Phase of
the Development;
(10) Obtaining, performing and/or analyzing
environmental, geotechnical, soil and subsurface tests and
other engineering tests and reports necessary to the design,
engineering, permitting and construction of the Development;
and
(11) Working closely with the RDC Project Manager to
keep him informed of the progress of the Development and to
receive his advice on matters that require RDC approval or
consent.
4.8. Model. Tenant has constructed a 1" = 30' scale model of the
Development and will donate the model to RDC. The model is of sufficient detail
to show the physical relationship of the facilities to each other as well as to
the surrounding properties. This model also shows the buildings' fenestration,
facade treatments and exterior architectural detail. The model is based on the
Schematic Design Documents which have been approved by RDC pursuant to Section
4.2(a) of this GDA.
4.9. Presentation Illustrations. Tenant shall provide to RDC
updated presentation quality illustrations of the Casino interiors. These
illustrations will include a view of the gaming floor, atrium area, and two
additional views recommended by Tenant and approved by RDC.
4.10. Presentation Site Plans. Tenant has prepared for the Employee
and Bus Parking Support Facility a presentation-quality site plan of appropriate
scale with illustrative elevations (each elevation based on schematic design).
These plans and elevations are of sufficient detail to convey the facilities'
landscaping, fencing and architectural detail, if applicable.
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ARTICLE V.
FINANCING
5.1. Financing. Tenant shall have obtained the Construction Credit
Facility (as defined in the Lease) as of the Plan Effective Date and prior to
the effectiveness of this GDA.
ARTICLE VI.
SITE MATTERS
6.1. Geotechnical Subsurface and Soil Investigation
(a) Tenant has obtained, performed and analyzed all reasonably
appropriate geotechnical data, soil and subsurface tests and other soil
engineering tests and reports necessary for the design, engineering, permitting
and construction of the Development. The preliminary geotechnical, soil and
subsurface testing, design and engineering has been completed.
(b) Tenant has timely obtained all reasonably appropriate
tests described in Subsection 6.1(a) and such tests were performed with the
appropriate standard of care.
(c) A level one environmental assessment, including a
hazardous waste and contamination investigation, of the Leased Premises and the
existing structures situated thereon, has been submitted to RDC. RDC agrees that
such an assessment is sufficient for purposes of this Article VI. Tenant has
required that samples taken from the Leased Premises pursuant to such
environmental assessment be archived and maintained in an appropriate place of
storage for future examination and analysis, consistent with the customary time
for storage for work of this nature.
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ARTICLE VII.
CONSTRUCTION PHASE
7.1. General
(a) Each Component and each Phase of the Development shall be
constructed by the Contractor for such Component or Phase pursuant to the
Contractor Agreement and the Construction Documents for such Component or Phase
under Tenant as monitored and reviewed by RDC and shall be Completed in
accordance with the applicable Construction Schedule and the terms of this GDA.
(b) Should any information or approval be required from RDC as
Work progresses, Tenant shall request such information or approval in writing.
7.2. Performance of the Work
(a) Tenant or the Contractor(s) shall:
(1) Perform all of the Work.
(2) Perform the Work in accordance with the true
intent and meaning of the Construction Documents.
(3) Select the means and methods of construction,
provided that only adequate and safe procedures, methods,
structures and equipment shall be used.
(4) Provide all scaffolding, hoists, or any temporary
structures, light, heat, power, toilets and temporary
connections, as well as all equipment, tools and materials and
whatever else may be required for the proper performance of
the Work.
(5) Order and have delivered all materials at such
times and in such quantities as will ensure the orderly
progress of the Work, and be responsible for all materials so
delivered to remain in good condition.
(6) Collect all paper, cartons and other debris
caused by the performance of the Work or by their personnel
and periodically remove same from the Project Area.
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(7) Furnish all materials new unless stated
otherwise; and, when materials are specified to conform to a
standard, the materials delivered to the Project Area shall
meet such standards, except that such substitutions, when
approved, may be used.
(8) Provide, furnish and maintain at the Project Area
a field office with a telephone during the period of
construction in which an authorized officer, employee or agent
shall be reasonably accessible during regular business hours,
and where copies of the Construction Documents and all
Progress Reports (as hereinafter defined) shall be kept.
Tenant shall pay or reimburse the reasonable fees and expenses
incurred by the RDC for the services of the RDC Project
Manager and his staff, furnishing an office to the RDC Project
Manager, and monitoring each Phase of the Development
(collectively, the "RDC Project Manager Expenses") according
to the following schedule:
(A) Phase I and II Construction. Commencing
on the Execution Date, Tenant shall pay to RDC an
amount not to exceed Two Hundred Forty-Eight Thousand
Four Hundred Ninety-Six Dollars ($248,496) for the
RDC Project Manager Expenses incurred by the RDC in
connection with the Substantial Completion of the
Phase I and II Construction; provided that, if the
period from the date RDC issues and delivers to
Tenant a Notice to Proceed for the Phase I and II
Construction until Substantial Completion of the
Phase I and II Construction shall exceed twelve (12)
months other than as a result of cessation of work
caused by the sole fault of RDC or the City, Tenant
shall pay RDC the RDC Project Manager Expenses in an
amount not to exceed Twenty Thousand Seven Hundred
Eight Dollars ($20,708) (or a pro rated portion
thereof for any partial month) for each month in
excess of said twelve (12) months;
(B) Period From Substantial Completion until
Final Completion of Phase I and II Construction.
Tenant shall reimburse RDC for the RDC Project
Manager Expenses incurred by RDC in the period
following Substantial Completion of the Phase I and
II Construction until the earlier of Final Completion
of the Phase I and II Construction or
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ninety (90) days after Substantial Completion of the
Phase I and II Construction in an amount not to
exceed Ten Thousand Three Hundred Fifty-Four Dollars
($10,354) per month (or a pro rated portion thereof
for any partial month) for each month during such
period.
(C) Second Floor Tenant Build-Out. Tenant
shall reimburse RDC for the RDC Project Manager
Expenses incurred by RDC for the period of tenant
improvements and build-out on the second floor of the
Casino for a duration and in amounts to be agreed
upon by RDC and Tenant prior to the commencement of
any such tenant improvements and build-out on the
second floor of the Casino.
(D) Cessation of Work. Landlord shall take
reasonable and prudent steps during any cessation of
the Work as a result of Force Majeure to mitigate the
RDC Project Manager Expenses including, without
limitation, termination of RDC Project Manager and
the RDC Project Manager's staff services in the case
of any Work stoppage greater than sixty (60) days.
(9) Preserve all properties adjacent to the Project
Area from damage caused by the Work and restore and repair any
such properties damaged by the Work to substantially the same
condition that existed prior to such damage, whether such
properties are publicly or privately owned.
(10) Review or cause to be reviewed shop drawings and
samples to verify conformance with the Construction Documents.
(11) Administer and supervise, to the extent
necessary, the subcontractor bidding process and negotiation
of contracts between Tenant or the Contractor(s) and selected
subcontractors.
(12) Deliver to RDC copies of the temporary and final
Certificates of Occupancy for each Component and each Phase of
the Development.
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(a) Tenant shall give all notices and comply with all federal,
state and local laws, rules, ordinances and regulations and any competitive or
other bidding requirements applicable to the Work, and shall obtain all permits,
licenses or other authorizations necessary for the prosecution of the Work.
(b) Tenant shall take reasonable precautions to protect from
damage caused by the Work, and shall not cause damage to, property adjacent to
or in close proximity to the Development and shall be responsible for damage or
injury to adjacent public and private property resulting from its construction
operations. This applies, but is not limited, to public utilities, trees, lawn
areas, buildings, monuments, fences, pipes and underground structures and public
streets (except natural wear and tear of streets resulting from legitimate use
thereof by Tenant) and, wherever such property is damaged due to the activities
of Tenant, it shall be restored promptly by Tenant, at its own expense, to
substantially the condition which existed immediately before such damage. In
case of failure on the part of Tenant to restore or take steps to restore and
diligently prosecute such restoration, or make good such damage or injury, RDC
may, upon ten (10) days written notice to Tenant, proceed to repair, rebuild, or
otherwise restore such property as may be necessary, and the cost thereof will
be added to the amounts due to RDC.
(c) Tenant shall confine the equipment, apparatus, materials
and supplies of Tenant, the Contractor(s), the Architect(s), Consultants,
subcontractors and all employed by them to the limits of the Project Area and as
required by law, ordinances or permits.
(d) In the performance of the Work, Tenant, the Contractor(s),
the Architect(s), Consultant(s) and all subcontractors shall materially comply
with all Governmental Requirements pertaining to protection of the environment.
(e) If RDC receives a citation from any environmental agency
as a result of Work performed by Tenant, Tenant shall become a party-respondent
under said citation and RDC shall immediately notify Tenant and deliver a copy
of said citation. Tenant shall comply, contest or resolve the requirements of
the citation and shall be fully responsible for all fines and/or penalties.
(f) RDC and the City acknowledges that certain temporary
construction servitudes or other rights may be necessary for the performance of
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the Work, and RDC and City agree to provide the necessary temporary servitudes
or other rights, subject to their reasonable approval.
7.3. Construction Schedule. Tenant shall prepare, or cause to be
prepared, within sixty (60) days of RDC's approval of the Construction Documents
for each Component and each Phase of the Development in accordance with Article
IV of this GDA, a Construction Schedule setting forth in detail the various
tasks for construction and completion of the construction of such Component or
Phase and the Estimated Opening Date for such Component or the portion of the
Development which is the subject of such Phase or at Tenant's option will
prepare or cause to be prepared a Development Schedule in lieu thereof within
this time frame, which, in addition to other information, will contain the same
detail as above stated with respect to the Construction Schedule.
Notwithstanding the foregoing, the preparation of such Construction Schedule or
Development Schedule, as the case may be, shall not delay the Site Reactivation
Date or the Completion Date of any such Component or Phase. Throughout the
Construction Phase for any Component or any Phase of the Development, Tenant
shall keep RDC informed of the status of its adherence to the applicable
Construction Schedule or that corresponding portion of the applicable
Development Schedule. If Tenant desires to prepare or cause to be prepared a
Construction Schedule for any Component or any Phase of the Development, Tenant
shall submit the Development Schedule applicable thereto to RDC
contemporaneously with submittal of such Construction Schedule.
7.4. Notice to Proceed. RDC has issued and delivered to Harrah's
Jazz Company a Notice to Proceed for the Phase I and II Construction and the
Poydras Street Support Facility, the Employee and Bus Parking Facility, and
Landscape Improvements. Provided RDC has approved the Construction Documents for
any other remaining Component or Phase of the Development, and provided there is
no outstanding Event of Default under the Lease, RDC shall issue and deliver to
Tenant a Notice to Proceed for any other remaining such Component or Phase on or
before ten (10) days after the approval by RDC of such Construction Documents
pursuant to Section 4.3 of this GDA. If such Notice to Proceed is not issued
within the time allowed, the delay thereafter in the issuance of the Notice to
Proceed shall constitute an RDC Delay. Furthermore, upon the failure of RDC to
issue the Notice to Proceed within the applicable time period, Tenant shall be
entitled to proceed with the Work, but at Tenant's risk that such Notice to
Proceed will not be subsequently issued.
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7.5. Commencement of the Work
(a) Tenant shall commence the Work on each Component or Phase
of the Development within fourteen (14) days after the date of its receipt of
both the Notice to Proceed for such Component or Phase and the required Permits
but in no event shall commencement of the Work for the Phase I and II
Construction be required sooner than the Site Reactivation Date.
(b) Time being of the essence, Tenant, after receipt of the
Notice to Proceed and all required Permits, shall, subject to the terms and
provisions of this GDA, prosecute the Work relating to the applicable Component
or Phase of the Development diligently, using such means and methods of
construction as will maintain the progress of such Work substantially in
accordance with the applicable Construction Schedule and will Complete each
Component of the Development and each Phase of the Development in accordance
with the requirements of the applicable Construction Documents no later than the
applicable Completion Date.
7.6. Contractor; Subcontractors
(a) No later than the submittal of the Construction Documents
to RDC for any Component or any Phase of the Development pursuant to Article IV,
Tenant shall submit to RDC the name of the Contractor and the form of the
Contractor Agreement for such Component or Phase (to the extent such information
has not been previously submitted to RDC), which agreement shall contain a
provision that, in the event of a default by Tenant and upon a request from RDC,
the Contractor agrees to continue with the Work in accordance with the
Contractor Agreement provided that RDC pays the Contractor for work performed
pursuant to this Section 7.6(a).
(b) Tenant and RDC agree that the selection and performance of
the Contractor(s) is the responsibility of Tenant, notwithstanding any consent
by RDC to the selection by Tenant of the Contractor(s).
(c) In the event of a termination of an initial Contractor,
RDC will not participate in the selection of any successor Contractor; provided,
however, RDC shall have the right to make reasonable objection to the
appointment of any successor Contractor prior to such appointment becoming
effective and Tenant shall comply with the provisions of Section 13.2 of this
GDA (Open Access Program). Any objection by RDC to a successor Contractor shall
be delivered by
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written notice to Tenant within fifteen (15) days of receipt by RDC of Tenant's
notice of the selection of the successor Contractor. Upon receipt of a
reasonable objection to the successor Contractor, Tenant shall withdraw its
selection of the successor Contractor and promptly select another firm to serve
as Contractor and submit its selection to RDC as provided in this Section 7.6.
If Tenant's compliance with RDC's objection to a successor Contractor would
result in an increase in the cost of the Work, Tenant may select such successor
Contractor notwithstanding RDC's objection. In the event of an objection to a
successor Contractor which affects the Schedules, the Schedules shall be
equitably adjusted.
(d) No Contractor is an agent, either expressed or implied, of
RDC.
(e) Upon prior written request by RDC during the Construction
Phase for a Component or a Phase of the Development, Tenant shall furnish to RDC
a list of all known subcontractors who will be performing Work on such Component
or Phase.
(f) Tenant shall cause appropriate provisions to be included
in all Contractor Agreements and subcontracts pertaining to the Work to bind the
Contractor(s) and all subcontractors to the terms of this GDA, as applicable to
the Work of the Contractor(s) or the subcontractor(s).
(g) Any approval, consent or failure to object to successor
Contractor(s) by RDC shall not relieve Tenant of any of its responsibilities,
duties and liabilities under this GDA.
(h) Nothing in this GDA or in the Construction Documents,
including any Contractor Agreements, shall create any contractual relationship
between RDC and the Contractor(s) or any subcontractor.
7.7. Bond
(a) Except as otherwise permitted by the Open Access Program,
before the Commencement Date for a Component or a Phase of the Development,
Tenant shall furnish and deliver to RDC a copy of the applicable Contractor
Agreement and a performance and payment bond for the construction of such
Component or Phase in the full value of the Contractor Agreement (and Tenant has
done so for those Components or Phases for which the Commencement Date has
previously occurred).
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(b) Each bond has been or shall be, as applicable, executed by
the applicable Contractor and by a corporate surety company satisfactory to RDC,
having a rating of not less than an A-status as rated in the most recent edition
of Best Insurance Reports, which is authorized to execute and deliver such bonds
in the State of Louisiana. Such bond has been or shall be, as applicable,
written in a form customarily used by surety companies and for an amount equal
to the contract price for the work, whether demolition or construction. Such
bond has been or shall be, as applicable, conditioned to secure the performance
of the contract, within a reasonable time after delivery of the bond, free of
all claims and liens of sub-contractors, mechanics, laborers and materialmen,
and to indemnify RDC and the City against and save them harmless from any loss,
cost, damage, expense, including attorneys' fees, or liability in any manner
arising out of or connected with such claims; and it shall provide that on
default of such performance or payment by the Contractor, the surety shall be
required to perform such contract or make such payments. The bonds for the Phase
I and II Construction shall be in substantially the form attached hereto as
Exhibit "D" and by this reference made a part hereof. Any other bonds that are
to be hereafter delivered pursuant to this Subsection 7.7(b) shall be subject to
approval by the RDC and the City Council, which shall not be unreasonably
withheld, conditioned or delayed.
7.8. Claims and Liens. Tenant shall not suffer or permit to be
enforced against the Development any contractors', sub-contractors', mechanics'
or materialmen's lien arising from any of the aforesaid Work. Tenant shall
promptly pay, bond out or cause to be paid or bonded out all of said claims,
demands or liens before any action is brought to enforce the same against the
Development, RDC and/or the City. Tenant agrees to indemnify, defend, and hold
RDC, the City and the Development free and harmless from any such claims,
together with any and all attorneys' fees, costs and expenses in connection
therewith. Tenant shall have the right to contest such Liens as allowed in
Section 10.2 of the Lease.
7.9. Inspection
(a) RDC, upon reasonable notice, shall have access to the
Development during all working hours and the right to observe the Work and all
facilities where the Work or any part thereof is being fabricated or stored,
provided RDC shall not delay, hinder or interfere with the performance of the
Work. The inspection of any Work shall not relieve Tenant of any of its
obligations to perform proper and satisfactory Work as herein specified, except
to
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the extent a specific deviation from the Construction Documents is or has
been approved in writing by RDC.
(b) Finished or unfinished Work found not to be in accordance
with the Construction Documents in any material respect shall be replaced or
caused to be replaced by Tenant as directed by RDC, except to the extent a
specific deviation from the Construction Documents is or has been approved in
writing by RDC.
(c) RDC, through Tenant, shall have the right to reject
materials and workmanship which are defective or not in conformance with the
Construction Documents. Rejected Work and materials must be promptly removed
from the Project Area.
(d) Failure or neglect on the part of RDC to condemn or reject
defective or inferior Work or materials shall not be construed to imply an
acceptance of such Work or materials discovered at any time prior to Completion,
except to the extent a specific deviation from the Construction Documents is or
has been approved in writing by RDC.
(e) Should it be considered necessary or reasonably advisable
by RDC at any time before Completion of a Component or Phase of the Development
to examine Work already completed therein by removing or tearing out all or
portions of such Work, Tenant shall, on request of RDC, promptly furnish all
necessary facilities, labor and material for that purpose. If such Work is found
to be defective in any material respect due to the fault of Tenant, its
Architect(s), Contractor(s) or subcontractors, Tenant shall pay all expenses of
such examination. If, however, such Work is not found to be defective in any
material respect, RDC shall pay all expenses of such examination and restoration
of the Work. The Schedules shall also be adjusted equitably.
(f) If the Construction Documents or any Governmental
Requirements require that any Work be inspected or tested, Tenant shall use its
best efforts to give RDC not fewer than three (3) days prior written notice of
readiness of the Work for inspection or testing and the date fixed for such
inspection or testing.
(g) RDC shall promptly notify Tenant of defective or
non-conforming Work actually discovered by RDC after such discovery.
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7.10. Protection of the Work. During performance of the Work for
each Component and each Phase of the Development and until the completion and
correction of all Substantial Completion Punch List Items applicable thereto,
Tenant shall, or shall cause its Contractor(s) to, take reasonable precautions
to protect the Work from loss or damage.
7.11. Minor Changes to the Work
(a) Without RDC approval, Tenant shall have the right to make
changes in the Work for a Component or Phase of the Development not resulting in
any material delay in Completion thereof or any material deviation from the
originally approved design.
(b) Without RDC approval, Tenant shall have the right to issue
Supplemental Instructions ordering changes in the Work for a Component or Phase
of the Development providing that the Supplemental Instructions involve no
material delay in Completion thereof or any material deviation from the
originally approved design.
(c) Any change to a Component or Phase of the Development that
calls for an increase or decrease in the total value of a specific item of such
Component or Phase of the Development in excess of One Hundred Fifty Thousand
Dollars ($150,000) or twenty-five percent (25%) of the total value of such item
shall not be considered a minor change.
7.12. Change Orders
(a) Changes requested by Tenant in the quantity or character
of the Work for a Component or Phase of the Development after a Construction
Contract has been entered into for that Work, which are not properly the subject
of Supplemental Instructions and which exceed the limits set forth in Section
7.11(c) of this GDA, including without limitation all changes resulting in
changes in the time of Completion thereof, shall be authorized only by a Change
Order approved by RDC.
(b) At its own risk Tenant may start work on any changes
described in Subsection 7.12 (a) although a Change Order setting forth the
changes has not been approved by RDC; however, if the necessary approval is not
subsequently obtained, Tenant shall at RDC's request restore any disapproved
change that does not conform to the requirements of this GDA.
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(c) On approval of any Change Order increasing the contract
price for a Component or Phase of the Development, Tenant shall ensure that the
applicable performance and completion bonds are increased in an amount
reflecting the net increase in such price, and shall provide RDC with evidence
that adequate funds exist to complete Tenant's increased obligations.
(d) A proposed Change Order shall be prepared by Tenant in the
same form as American Institute of Architects Form G701. The proposed Change
Order shall be submitted by Tenant to RDC and shall carry the signature and
approval of the applicable Contractor, Tenant and the Architect of Record. RDC
shall promptly approve or disapprove all requested Change Orders.
7.13. Substantial Completion Inspection
(a) When Tenant determines that a Component or a Phase of the
Development is ready for a Substantial Completion Inspection, Tenant shall
provide not fewer than three (3) days written notice to RDC of a date and time
for the Substantial Completion Inspection.
(b) At the Substantial Completion Inspection for any Component
or any Phase of the Development, Tenant, RDC, and the Architect of Record shall
mutually inspect the Work relating thereto and shall prepare the Substantial
Completion Punch List applicable thereto. If the inspection reveals that the
Work for the Component or Phase is not Substantially Completed, Tenant shall
promptly perform the necessary unperformed Work and then shall request a
reinspection by the same procedure set forth in Section 7.13(a) of this GDA. If
the Substantial Completion Inspection (or reinspection as the case may be)
reveals the Work for the Component or Phase has been Substantially Completed
(subject to the Substantial Completion Punch List), RDC shall issue the
certificate required to evidence the Substantial Completion.
7.14. Final Inspection
(a) When Tenant determines that a Component or Phase of the
Development is ready for a Final Inspection, a date and time for Final
Inspection of the Work relating thereto shall be set by Tenant in a written
notice to RDC, which date shall not be less than three (3) days after the date
of the receipt of the written notice by RDC.
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(b) At the Final Inspection for any Component or any Phase of
the Development, Tenant, RDC and the Architect of Record shall mutually inspect
the Work relating thereto. If the Final Inspection reveals that the Work for the
Component or Phase is not completed, Tenant shall promptly perform any
unperformed Work and then shall request a reinspection by the same procedure set
forth in Section 7.14(a) of this GDA providing for a reinspection date not less
than three (3) days after date of receipt of the written notice by RDC. If the
Final Inspection (or reinspection, as the case may be) reveals the Work for the
Component or Phase is Completed (including Substantial Completion Punch List
Items), RDC shall issue the certificate required to evidence the Final
Completion of such Component or Phase.
(c) Within ninety (90) days after the Final Completion Date of
a Component or Phase of the Development, Tenant shall deliver to RDC two
complete sets of reproducible as-built drawings for the Component or Phase,
including and noting the Work relating thereto as physically constructed, all
Supplemental Instructions, Change Orders and any other Addenda or modifications
to the Construction Documents relating thereto, certified by the Architect of
Record that the as-built drawings are a true and correct compilation of the
information submitted to the Architect of Record, and certified by the
Contractor that the as-built drawings correctly reflect the Work as physically
constructed.
(d) Tenant shall complete the work for Final Completion of a
Component or a Phase of the Development and secure the certificate of Final
Completion of such Component or Phase within ninety (90) days after the
Completion Date thereof. If the Final Inspection and corresponding certificate
for any Component or Phase of the Development have not been secured within the
ninety (90) day time period, then Tenant shall pay RDC liquidated damages in the
sum of Two Thousand Dollars ($2,000) per day for each day after the ninety (90)
day time period until Final Inspection, unless Tenant and RDC agree to a
reasonable extension.
7.15. Construction Matters
(a) Workers. Tenant, the Contractor(s), and the subcontractors
shall endeavor to employ for the Work competent and trustworthy workers. Tenant
shall at all times enforce strict discipline and good order among its employees,
the Contractor(s) and their employees, and the subcontractors and their
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employees, and require that the Development be free of illegal drugs, firearms
and alcoholic beverages.
(b) Records. Tenant and the Contractor(s) shall check all
materials, equipment and labor used in the Work and shall keep such full and
detailed accounts, as shall be sufficient to verify the costs of each Component
and each Phase of the Development. RDC shall be afforded access to Tenant's and
the Contractors' records, books, correspondence, instructions, drawings,
receipts, vouchers, memorandum and similar data relating to this GDA, and Tenant
and the Contractor(s) shall preserve all such records pertaining to each
Component and each Phase of the Development for a period of five (5) years, or
for such longer period as may be required by law, after the Completion Date for
such Component or Phase.
(c) Job Meetings. No less than bi-weekly, Tenant shall conduct
job meetings which shall be attended by designated representatives of Tenant,
the Contractor(s), and any subcontractors whose portion of the Work may be
relevant to that particular job meeting and which may be attended by the RDC
Project Manager. Tenant shall provide reasonable notice in writing to all
parties of the date and time of the job meetings.
(d) Progress Reports. Tenant shall prepare minutes of each job
meeting as part of a bi-weekly project progress report ("Progress Report") and
deliver the Progress Report to RDC at or before the next job meeting. The
Progress Report shall report the status of the Construction Schedule for each
Component and each Phase of the Development, events causing delays and the
discussions and decisions made at the job meeting. The Progress Report shall
identify the party or parties responsible for following up on any particular
delay item, job problem or approval. Subsequent Progress Reports should identify
the status of open items identified in previous Progress Reports. Tenant shall
provide RDC with copies of all reports on construction status that are provided
by Tenant to any Leasehold Mortgagee.
(e) Patents, Royalties, etc. Whenever Tenant is required or
desires to use any design, device, material or process covered by letters of
patent or copyright, other than those specified by RDC, Tenant shall indemnify,
defend at its cost, and save harmless RDC, its officers, agents and employees
from any and all claims for infringement by reason of the use of any such
patented design, device, tool, material, equipment or process to be performed
under this GDA, and
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shall indemnify RDC, its officers, agents and employees for any costs, expenses
and damages which may be incurred by reason of such infringement at any time
during the prosecution or after Completion of the Work for any Component or any
Phase of the Development.
(f) Litigation. If any action at law or suit in equity is
brought against RDC or City, any of its officers, agents or employees for or on
account of the failure, omission or neglect of Tenant, the Contractors(s), the
Architect(s), the Consultants or any subcontractor or their officers, employees
or agents, to do or perform any of the covenants, acts, matters or things by
this Article VII undertaken to be done or performed by Tenant, the
Contractor(s), the Architect(s), Consultants or any subcontractor or their
officers, employees or agents, then Tenant shall immediately assume and take
charge of the defense of such actions or suits in like manner and to all intents
and purposes as if said actions or suits have been brought directly against
Tenant. Tenant shall also indemnify and save harmless RDC, its officers, agents
and employees from any and all loss, cost or damage whatever arising out of such
actions or suits, in like manner and to all intents and purposes as if said
actions or suits had been brought directly against Tenant.
(g) Lien Claims. Subject to the provisions of Section 7.8 of
this GDA, Tenant shall and does hereby assume all liability for, and agrees to
indemnify RDC against, any or all loss, costs, damages and liability for any or
by reason of any lien claims or demands for payment in connection with any Work.
(h) Liability Unaffected. Nothing in this GDA shall in any
manner create liability against RDC for labor, services or materials of a
Contractor or a subcontractor, nor affect the liability of Tenant or the surety
upon any completion bond to be provided in connection with this Article VII.
(i) Indemnification Provisions. All indemnification and
defense provisions set forth in this GDA shall survive the termination of this
GDA.
(j) Safety And Health Regulations. Tenant shall cause the
Contractor(s) and subcontractors to comply with the applicable regulations of
the U. S. Department of Labor, safety and health regulations for construction
promulgated under the Occupational Safety and Health Act of 1970 (Pub.L. 91-596)
and any other safety and health regulations applicable to the Work. Nothing in
these laws shall be construed to supersede or in any manner affect any
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workers' compensation law or statutory rights, duties or liabilities of
employers and employees under any law with respect to injuries, diseases or
death of employees arising out of, or in the course of, employment.
(k) Safety Precautions. Tenant through its Contractor(s) shall
be responsible for initiating, maintaining and supervising all safety
precautions and programs in connection with the Work. Tenant through its
Contractor(s) shall take all reasonable precautions for the safety of, and the
prevention of injury to, Contractor(s) and subcontractors and their employees,
agents and officers, visitors and other persons who may be affected thereby.
(l) Possession, Control and Security. Tenant has been granted
(1) access to and possession of the Project Area for the purpose of demolition
of the existing Improvements and building the Development, storing materials and
equipment, securing the property and materials thereon and removing any
unauthorized person or persons or trespasser or trespassers, and (2) the right
and authority to carry out such purposes. In connection therewith Tenant is
hereby granted the express authority to post signs restricting access to the
Project Area, or specific areas of the Project Area, and to remove, bar and
prosecute trespassers and to undertake legal and equitable actions against
trespassers. In granting such authority, legal standing and possession of the
Project Area to Tenant, RDC does not waive any right it may have under this GDA
for RDC to have access to the Project Area or any right it may have at law or in
equity to enforce this GDA against Tenant or to remove, bar or prosecute
trespassers. RDC specifically reserves such rights.
(m) Compliance with Governmental Requirements. Tenant shall
comply with all Governmental Requirements.
ARTICLE VIII.
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF TENANT
8.1. Representations and Warranties of Tenant. Tenant represents
and warrants to RDC that each of the following statements is true and accurate
as of the Execution Date:
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(a) Tenant is a limited liability company duly organized and
validly existing under the laws of the State of Louisiana, and has all requisite
power and authority to enter into and perform its obligations under this GDA.
(b) This GDA and, to the extent such documents presently exist
in a form accepted by RDC and Tenant, each document contemplated or required by
this GDA to which Tenant is a party has been duly authorized by all necessary
action on the part of, and has been or will be duly executed and delivered by,
Tenant.
ARTICLE IX.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF RDC
9.1. Representations and Warranties. RDC represents and
warrants to Tenant that each of the following statements is true and accurate
as of the Execution Date:
(a) RDC is a validly existing public benefit corporation of
the State of Louisiana and has all requisite power and authority to enter into
and perform its obligations under this GDA.
(b) This GDA and, to the extent such documents presently exist
in a form accepted by RDC and Tenant, each document contemplated or required by
this GDA to which RDC or the City is a party has been duly authorized by all
necessary action on the part of, and has been or will be duly executed and
delivered by, RDC or the City, as the case may be.
ARTICLE X.
TERMINATION
10.1. Termination. Except for the provisions that by their terms
survive, this GDA shall terminate on the earlier of (i) the Development
Completion Date or (ii) the termination of the Lease, whether by default or
otherwise. Any termination of this GDA and the exercise of the rights granted to
RDC in this Section 10.1 are subject to the rights granted to the Leasehold
Mortgagees in the Lease as set forth in Section 14.1 of this GDA.
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If this GDA is terminated upon termination of the Lease as a result
of the occurrence of an Event of Default thereunder, Tenant shall (i)
immediately discontinue all further operations on the Work, (ii) promptly quit
the Leased Premises, leaving behind all materials, equipment, tools and supplies
belonging to Tenant and all Construction Documents shall become the property of
RDC and (iii) immediately provide to RDC without charge all plans,
specifications, illustrations and models for the Development.
If this GDA is terminated upon termination of the Lease as a result of
the occurrence of an Event of Default by Tenant thereunder, RDC may, unless a
new lease is executed pursuant to Section 23.6 of the Lease, have any Work
completed or any defective Work repaired or replaced or anything else done to
complete any Work in strict accordance with the Construction Documents by such
means and in such manner, by contract without public letting, or otherwise, as
it may deem advisable, utilizing for such purpose without additional cost to RDC
such of Tenant's materials, equipment, tools, and supplies remaining on the
Leased Premises, and also the Contractor(s) or any subcontractor as RDC may deem
advisable. RDC shall reimburse all parties, including itself, for the expense of
such completion and Tenant shall pay the amount of such reimbursement to RDC.
ARTICLE XI.
COMPLETION GUARANTEE; SURETY BOND
11.1. Completion Guarantee; Surety Bond. Concurrent with the
delivery by the RDC and City of this GDA to Tenant, Tenant will cause
Harrah's Entertainment, Inc. and Harrah's Operating Company, Inc. (collectively,
the "Completion Guarantors") to issue and deliver for the benefit of the RDC and
the City with respect to the Development a completion guarantee and in
connection therewith, Tenant will cause a surety bond having a rating of not
less than an A-status as rated in the most recent edition of the Best Insurance
Reports to be issued by a corporate surety company authorized to execute and
deliver such surety bond in the State of Louisiana. Such surety bond shall be in
an amount not to exceed the remaining Hard Construction Costs of the
Improvements as of the date of delivery of such surety bond, which amount shall
be subject to the approval of the RDC Project Manager. Such completion guarantee
shall be in the form attached hereto as Exhibit "B" and by this reference made a
part hereof and such surety bond shall be in the form attached hereto as Exhibit
"C" and by this reference
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made a part hereof. Such completion guarantee when executed and delivered and
the Plan Effective Date has occurred supersedes that certain Notes Completion
Guarantee dated as of November 16, 1994 by Embassy Suites, a Delaware
corporation, and The Promus Companies Incorporated, a Delaware corporation, in
favor of First National Bank of Commerce, a national banking association, and
RDC and the City as additional named beneficiaries (the "Old Notes Completion
Guarantee"), which is of no further force and effect.
ARTICLE XII.
EXTENSIONS OF TIME
12.1. Application for Extension of Time. Any application by Tenant
for an adjustment to the Schedules or for any other extension of time, must be
in writing, must set forth in detail the reasons and causes of delay, and must
be submitted to RDC within fifteen (15) days following the actual discovery of
the cause of the delay. Tenant shall use due diligence to discover the
occurrence of any delays. To the extent reasonably possible, the notice of the
delay must describe the portion of the Design Services, the Development Services
or the Work actually delayed, a description of the cause of the delay, and a
description of how the cause of the delay affected the progress of the Design
Services, the Development Services or the Work. To the extent reasonably
possible, Tenant shall provide an estimate of the probable effect of such delay
on the Schedules. RDC agrees to notify Tenant, within five (5) days after
receipt of Tenant's notice, whether or not RDC concurs with Tenant's assessment
of the delay.
12.2. Force Majeure. An event of "Force Majeure" shall mean the
following events or circumstances, but only to the extent they are not caused or
fomented by Tenant, the Completion Guarantors or any affiliates of Tenant or
either Completion Guarantor and they delay the performance, beyond the
reasonable control of Tenant and of the Completion Guarantors, of the Design
Services, the Development Services or the Work, the performance of Tenant of its
other duties and obligations under this GDA, or the performance by RDC under
this GDA:
(a) Strikes, lockouts, labor disputes, inability to procure
materials (for which there is no suitable substitute or alternative that can be
timely obtained on reasonable commercial terms), failure of power;
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(b) Material and adverse changes in Governmental Requirements
applicable to the construction of a Component or a Phase of the Development,
first effective after the Plan Effective Date and after the submission to and
approval by the LGCB of the design thereof, and any material and adverse changes
after the Plan Effective Date in any orders (applicable to the Completion
Obligations, the Project Area, the Casino Premises or the Development) of any
Governmental Authority having jurisdiction over a party, the Project Area, the
Casino Premises or the Development (however, not including stop work orders due
to a building, safety or other code violation);
(c) Acts of God, tornadoes, hurricanes, floods, sinkholes,
fires and other casualties, landslides, earthquakes, epidemics, quarantine,
pestilence and abnormal inclement weather;
(d) Acts of a public enemy, acts of war, terrorism, effects of
nuclear radiation, blockades, insurrections, riots, civil disturbances,
governmental preemption in connection with a national emergency, or national or
international calamity; and
(e) Any judgment, directive, ruling or order that is entered
by any judicial, regulatory or administrative body which substantially restrains
or substantially interferes with Substantial Completion of the Phase I and II
Construction.
12.3. Force Majeure Delays
(a) Tenant shall be entitled to an adjustment of the Schedules
for Force Majeure events described in Section 12.2 of this GDA, but only for the
number of days due to such causes and only to the extent that such occurrences
actually delay the Design Services, the Development Services or the Work. Tenant
shall also be entitled to an adjustment in the time for the performance of any
other duty or obligation of Tenant under this GDA including, without limitation,
Tenant's obligation to cause the Completion of any Phase or Component of the
Development by the Completion Date therefor, for Force Majeure events described
in Section 12.2 of this GDA, but only for the number of days due to such causes
and only to the extent that such occurrences actually delay the performance of
such duty or obligation. Tenant agrees to provide RDC notice upon the occurrence
of any Force Majeure; provided, however, the failure by Tenant timely to provide
such notice shall not affect Tenant's right to any
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adjustment for Force Majeure, nor the date from which any such adjustment is
measured.
(b) Delays caused by failure of Tenant, its Contractor(s),
Architect(s), Consultants or the subcontractors to furnish in a timely manner
approved working or shop drawings, materials, fixtures, equipment, appliances or
other fittings or to perform their work in a timely manner shall not constitute
a basis of extension of time, except to the extent caused by an event of Force
Majeure that would allow an extension of time pursuant to Section 12.3(a) of
this GDA.
(c) Tenant hereby acknowledges and agrees that any proceeding
under any Chapter of the United States Bankruptcy Code, in receivership or any
other insolvency proceeding, whether voluntary or involuntary, by or against
Tenant and/or HET, HOCI or any completion guarantor under the completion
guarantee issued pursuant to Section 11.1 of this GDA or any surety under any
bond shall not be considered, nor constitute Force Majeure nor otherwise excuse
or suspend Tenant's performance hereunder. Tenant further acknowledges and
agrees that (i) any increase in the cost to complete (including equipping) the
Casino, whether or not such increase in cost was anticipated and/or contemplated
in this GDA or otherwise, (ii) the financial condition or financial inability of
Tenant and/or HET, HOCI or any completion guarantor under the completion
guarantee issued pursuant to Section 11.1 of this GDA to complete (including
equipping) the Casino, (iii) any other adverse financial projections, financial
forecasts, financial events or financial conditions, or (iv) any failure to
obtain funding or financing, shall not be considered nor constitute Force
Majeure nor otherwise excuse or suspend Tenant's performance hereunder.
(d) Other than as set forth in, and without waiver of the
terms and conditions of, the Lease and this GDA, including, without limitation,
the terms and conditions of Section 12 of this GDA or the terms and conditions
of the definition of Force Majeure set forth herein, Tenant waives its rights
pursuant to Articles 1873-1878 and 3506(15) of the Louisiana Civil Code, and,
without limitation, any right to claim excuse from performance or delay of
performance due to impossibility of performance, irresistible force or a
fortuitous event.
12.4. Injunction Delays. If the City and Landlord are unable to
keep and maintain Tenant's continued and uninterrupted use of the Leased
Premises in accordance with the requirements of Section 6.2 of the Lease, then
the time
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periods for performance provided in this GDA shall be tolled for the period of
such interruption.
12.5. RDC Delay. Tenant shall be entitled to an adjustment of the
Schedules for an RDC Delay, but only for the number of days of delay due to an
RDC Delay and only to the extent that such occurrences actually delay the Design
Services, the Development Services or the Work.
12.6. Approval of Delay. Tenant punctually shall notify RDC of any
RDC Delay. Within fifteen (15) days after its receipt of any such written notice
from Tenant, RDC shall notify Tenant of its approval or disapproval of such
proposed delay, and the reasons for disapproval. If RDC fails to respond within
fifteen (15) days, the request for delay will be deemed approved.
ARTICLE XIII.
NON-DISCRIMINATION; OPEN ACCESS PROGRAM; INSURANCE
13.1. Non-Discrimination. Tenant agrees that it will not
discriminate upon the basis of race, color, creed, religion, national origin,
age, disability or sex in the construction of any Component or Phase of the
Development and that each solicitation or advertisement for employees, and each
contract or agreement with respect thereto to which Tenant is a party shall
specifically contain a provision to this effect.
13.2. Open Access Program. Tenant confirms that it has adopted and
shall implement the Open Access Program. Tenant shall comply with the Open
Access Program. Tenant will not amend the Open Access Program without RDC's
prior written consent. RDC agrees to approve amendments to the Open Access Plans
as may be required by the Open Access Program.
13.3. Insurance. Tenant shall carry the insurance required by the
Lease.
ARTICLE XIV.
MISCELLANEOUS
14.1. Assignment. Tenant may sell, convey, assign, donate,
transfer, mortgage or encumber any or all of its right, title or interest and
obligations in, to or under this GDA or any part thereof during the term of this
GDA only pursuant
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to the terms of and in conjunction with the Lease. The Lease has granted the
Leasehold Mortgagees certain rights with respect to the Development. All such
rights shall also extend to this GDA, including without limitation all rights of
the Leasehold Mortgagees to receive notices of default, to cure defaults and to
succeed to the interest of Tenant.
14.2. Notices. Notices shall be given in the same manner as set
forth in the Lease.
14.3. Non-Action on Failure to Observe Provisions of this GDA.
The failure of RDC or Tenant to promptly insist upon strict performance of any
term, covenant, condition or provision of this GDA, or any Exhibit hereto, or
any other agreement contemplated hereby, shall not be deemed a waiver of any
right or remedy that RDC or Tenant may have, and shall not be deemed a waiver of
a subsequent default or nonperformance of such term, covenant, condition or
provision.
14.4. Severability. If any provision of this GDA is held invalid,
the remainder of this GDA shall not be affected thereby if such remainder would
then continue to conform to the requirements of applicable laws and if the
remainder of this GDA can substantially be reasonably performed without material
hardship, so as to accomplish the intent and the goals of all the parties
hereto.
14.5. Applicable Law and Construction. The laws of the State of
Louisiana shall govern the validity, performance and enforcement of this GDA.
This GDA has been negotiated by RDC and Tenant, and this GDA, including, without
limitation, the Exhibits hereto, shall not be deemed to have been negotiated and
prepared by RDC or Tenant, but by both equally.
14.6. Submission to Jurisdiction
(a) Each party to this GDA hereby submits to the jurisdiction
of the State of Louisiana and the courts thereof for the purposes of any suit,
action or other proceeding arising out of or relating to this GDA, and hereby
agrees not to assert by way of a motion as a defense or otherwise that such
action is brought in an inconvenient forum or that the venue of such action is
improper or that the subject matter thereof may not be enforced in or by such
courts.
(b) If at any time during the term of this GDA, Tenant is not
a resident of the State of Louisiana or has no officer, director, employee, or
agent
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thereof available for service of process as a resident of the State of
Louisiana, or if any permitted assignee thereof shall be a foreign corporation,
partnership or other entity or shall have no officer, director employee, or
agent available for service of process in the State of Louisiana, Tenant or its
assignee hereby designates the Secretary of State, State of Louisiana, its agent
for the service of process in any court action between it and RDC or arising out
of or relating to this GDA and such service shall be made as provided by the
laws of the State of Louisiana for service upon a non-resident; provided,
however, that at the time of service on the Secretary of State, copy of such
service shall be delivered to Tenant in the manner provided in Section 14.2 of
this GDA.
14.7. Estoppel Certificates. Tenant and RDC shall at any time and
from time to time, upon not less than ten (10) days prior notice by the other
party, execute, acknowledge and deliver to the other a statement in recordable
form certifying that this GDA has not been modified and is in full force and
effect (or if there have been modifications that the said GDA as modified is in
full force and effect and setting forth a notation of such modifications), with
the dates to which any charges have been paid in advance, if any, and that to
the knowledge of such party, neither it nor the other party is then in default
hereof (or if the other party is then in default hereof, stating the nature and
details of such default) it being intended that any such statement delivered
pursuant to this Section 14.7 may be relied upon by any prospective purchaser,
mortgagee, assignee of any mortgage or assignee of the respective interest in
the Development, if any, of either party made in accordance with the provisions
of this GDA.
14.8. Complete Agreement. This GDA, and all the documents and
agreements described or referred to herein, including without limitation the
Exhibits, and the Lease and exhibits thereto, constitute the full and complete
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes and controls in its entirety over any and all prior agreements,
understandings, representations and statements whether written or oral, by each
of the Partners of Tenant. This GDA supersedes and controls over that certain
General Development Agreement dated April 27, 1993 and the Initial GDA. This GDA
cannot be changed except by written amendment signed by all parties to this GDA.
14.9. Holidays. It is hereby agreed and declared that whenever a
notice or performance under the terms of this GDA is to be made or given on a
day other than a Business Day, it shall be postponed to the next following
Business Day.
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14.10. Exhibits. Each Exhibit referred to and attached to this GDA
is an essential part of this GDA.
14.11. No Brokers. RDC and Tenant hereby represent, agree and
acknowledge that no real estate broker or other person is entitled to claim or
to be paid a commission as a result of the execution and delivery of this GDA.
14.12. Independent Contractors. During the term of this GDA, no
Contractor or subcontractor of Tenant individually or collectively shall be
deemed an agent or contractor of RDC. Nothing contained in this GDA shall be
construed or deemed to name, designate, or cause (either directly or implicitly)
Tenant, or any Contractor(s) to be an agent of or in partnership with RDC or the
City. Tenant and its Contractor(s) are independent contractors under this GDA.
Personnel services provided by Tenant and the Contractor(s) shall be by
employees of Tenant and the Contractor(s) and subject to the supervision by
Tenant and the Contractor(s), and not as officers, employees or agents of RDC.
Personnel policies, tax responsibilities, social security and health insurance,
employee benefits, purchasing policies and other similar administrative
procedures applicable to services rendered under this GDA shall be those of
Tenant and the Contractor(s).
14.13. Governmental Authorities. Notwithstanding any other provisions
of this GDA, any required permitting, licensing or other regulatory approvals by
any Governmental Authorities shall be subject to and undertaken in accordance
with the established procedures and requirements of such authority, as may be
applicable, with respect to similar projects and in no event shall the
Governmental Authority by virtue of any provision of this GDA be obligated to
take any actions concerning regulatory approvals except through its established
processes.
14.14. Technical Amendments. In the event that there are minor
inaccuracies contained herein or any Exhibit attached hereto or any other
agreement contemplated hereby, or the parties agree that changes are required
due to unforeseen events or circumstances, or technical matters arising during
the term of this GDA, which changes do not alter the substance of this GDA, the
respective presiding officers of RDC, and the officers of Tenant, are authorized
to approve such changes, and are authorized to execute any required instruments,
to make and incorporate such amendment or change to this GDA or any Exhibit
attached hereto or any other agreement contemplated hereby.
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14.15. Unlawful Provisions Deemed Stricken. If this GDA contains any
unlawful provisions not an essential part of this GDA and which shall not appear
to have a controlling or material inducement to the making thereof, such
provisions shall be deemed of no effect and shall be deemed stricken from this
GDA without affecting the binding force of the remainder. In the event any
provision of this GDA is capable of more than one interpretation, one which
would render the provision invalid and one which would render the provision
valid, the provision shall be interpreted so as to render it valid.
14.16. No Liability for Approvals and Inspections. Except as may be
otherwise expressly provided herein, no approval to be made by RDC under this
GDA or any inspection of the Work or the Development by RDC under this GDA,
shall render RDC liable for failure to discover any defects or non-conformance
with this GDA, or a violation of or noncompliance with any federal, state or
local statute, regulation, ordinance or code.
14.17. Consents or Approval. Any consent or approval required by
either party shall not be unreasonably withheld or delayed.
14.18. Intervention by City
(a) The City intervenes in this GDA for the purpose of
confirming each of its undertakings in this GDA and to confirm and consent to
RDC's agreements, representations, and warranties contained in this GDA and
further to agree that in the event of a default by RDC to the City under the
City Lease, this GDA shall not be affected and the City will succeed to RDC's
rights and obligations to Tenant under this GDA.
(b) Without limiting the generality of the foregoing, the City
covenants and agrees that if the City Lease is terminated for any reason before
the termination of this GDA, then the termination of the City Lease shall not
result in a termination of this GDA, partial or otherwise, and that this GDA
shall continue for the remainder or its intended duration as a direct agreement
between the City and Tenant, with the same force and effect as if the City had
originally entered into this GDA in lieu of RDC. The provisions of this section
shall be self-operative and shall occur automatically upon the termination of
the City Lease as aforesaid. Without limiting the preceding sentence, the City
hereby agrees to execute, acknowledge and deliver any documents reasonably
requested
62
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by Tenant or any Leasehold Mortgagee in order to further evidence or
perfect the provisions of this section.
(c) If the provisions of Section 32.4(c) of the Lease become
operative and the City is obligated either (i) to enter into a lease with a
public benefit corporation or other board or entity under the control of the
City (a "Controlled Entity"), with respect to the Development, on the same terms
and conditions as contained in the City Lease, or (b) to transfer the
Development, subject to the Lease, to a Controlled Entity, then in either event
the City shall thereafter cause the Controlled Entity to enter into an agreement
with Tenant on the same terms and conditions as contained herein.
14.19. Effectiveness. This GDA shall be effective immediately upon
execution and delivery by the parties hereto and the occurrence of the Plan
Effective Date.
14.20. Disclaimer of Representations and Prohibited Reliance. Tenant
acknowledges that the RDC and the City have made no representation that the
contemplated work can be constructed within the required time periods of within
proposed budgets or that the financing described in Section 5.1 hereof and other
sources of funding will be sufficient to Complete the construction of the Work
as required or that the Architects, Consultants or Contractors engaged by Tenant
are sufficiently skilled to accomplish the construction or work on time, within
budget or as required by this GDA. Neither Tenant nor any other Person,
including a Leasehold Mortgagee, may rely on any approval given by the RDC or
the City or its representatives in connection with the exercising of the RDC's
construction approval rights.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have set their hands and had
their seals affixed on the dates set forth after their respective signatures.
Witnesses: RDC:
RIVERGATE DEVELOPMENT CORPORATION
/s/ Gwendolyn M. Johnson
- ---------------------------------------
By: /s/ Helen S. Kohlman
-------------------------------
/s/ Yolanda Johnson Vice-President
- ---------------------------------------
Yolanda Johnson
INTERVENOR:
CITY OF NEW ORLEANS
- ---------------------------------------
By:
------------------------------
Marc H. Morial, Mayor
- ---------------------------------------
TENANT:
JAZZ CASINO COMPANY, L.L.C.
By:
-------------------------------
Name:
- --------------------------------------- -----------------------------
Title:
- --------------------------------------- -----------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and had
their seals affixed on the dates set forth after their respective signatures.
Witnesses: RDC:
RIVERGATE DEVELOPMENT CORPORATION
- ---------------------------------------
By:
President
- ---------------------------------------
INTERVENOR:
CITY OF NEW ORLEANS
/s/ Gwendolyn M. Johnson ILLEGIBLE
- ---------------------------------------
By: /s/ Marc H. Morial
------------------------------
/s/ Yolanda Johnson Marc H. Morial, Mayor
- ---------------------------------------
TENANT:
JAZZ CASINO COMPANY, L.L.C.
- --------------------------------------- By:
-------------------------------
Name:
- --------------------------------------- -----------------------------
Title:
- --------------------------------------- -----------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and had
their seals affixed on the dates set forth after their respective signatures.
Witnesses: RDC:
RIVERGATE DEVELOPMENT CORPORATION
- ---------------------------------------
By:
President
- ---------------------------------------
INTERVENOR:
CITY OF NEW ORLEANS
- ---------------------------------------
By:
------------------------------
Marc H. Morial, Mayor
- --------------------------------------
TENANT:
JAZZ CASINO COMPANY, L.L.C.
/s/ S. Jay Novatney
- ---------------------------------------
S. Jay Novatney By: /s/ Frederick W. Burford
-------------------------------
Name: /s/ Frederick W. Burford
-----------------------------
ILLEGIBLE Title: President
- --------------------------------------- -----------------------------
<PAGE>
A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 29th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Helen S. Kohlman, appearing in her capacity as the Vice-
President of RIVERGATE DEVELOPMENT CORPORATION,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that she executed the same on
behalf of said corporation with full authority and that the said instrument is
the free act and deed of the said corporation and was executed for the uses,
purposes and benefits therein expressed.
WITNESSES:
/s/ Gwendolyn M. Johnson /s/ Helen S. Kohlman
- --------------------------------- ------------------------------
Helen S. Kohlman
/s/ Yolanda Johnson
- ---------------------------------
ILLEGIBLE
-----------------------------
NOTARY PUBLIC
<PAGE>
A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 29th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Marc H. Morial, appearing in his capacity as the Mayor of
THE CITY OF NEW ORLEANS,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said city with full authority and that the said instrument is the free
act and deed of the said city and was executed for the uses, purposes and
benefits therein expressed.
WITNESSES:
/s/ Gwendolyn M. Johnson /s/ Marc H. Morial
- --------------------------------- ------------------------------
Marc H. Morial
/s/ Yolanda Johnson
- ---------------------------------
ILLEGIBLE
-----------------------------
NOTARY PUBLIC
<PAGE>
A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 28th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned, qualified and
sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Fred W. Burford, appearing in his capacity as the President
of JAZZ CASINO COMPANY, L.L.C.
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said limited liability company with full authority and that the said
instrument is the free act and deed of the said limited liability company and
was executed for the uses, purposes and benefits therein expressed.
WITNESSES:
/s/ S. Jay Novatney /s/ Fred W. Burford
- --------------------------------- ------------------------------
S. Jay Novatney Fred W. Burford
ILLEGIBLE
- ---------------------------------
Daniel E. Davillier
-----------------------------
NOTARY PUBLIC
[NOTARY SEAL]
<PAGE>
EXHIBIT A
NEW TRAFFIC SIGNAL SYSTEMS
AND
THE MODIFICATION OF EXISTING SYSTEMS
INCLUDING INTERSECTION STRIPING
LOCATION IMPROVEMENTS
Canal Street/Convention Center Boulevard Modification
Poydras Street/Convention Center New
Boulevard
Canal Street/Tchoupitoulas Street Modification
Poydras Street/Tchoupitoulas Street Modification
Poydras Street/South Peters Street Modification
Convention Center Boulevard/Garage New
Entrance between Girod and Lafayette
Streets
A-1
<PAGE>
EXHIBIT B
[insert Completion Guarantee]
B-1
<PAGE>
EXHIBIT C
[insert Surety Bond]
C-1
<PAGE>
EXHIBIT D
[insert Construction Bonds]
D-1
<PAGE>
Exhibit 10.05
AMENDED AND RENEGOTIATED
CASINO OPERATING CONTRACT
EFFECTIVE AS OF October 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I. POLICY, PURPOSE AND SUBJECT MATTER.................................................................2
1.1. Public Policy and Amendment and Renegotiation.........................................................3
1.2. Subject Matter........................................................................................3
1.3. Exclusive Contract....................................................................................4
ARTICLE II. DEFINITIONS.....................................................................................11
ARTICLE III. GRANT OF AUTHORITY.............................................................................48
3.1. Grant of Authority...................................................................................48
3.2. Permitted Use........................................................................................49
3.3. Approval Prerogative.................................................................................49
3.4. Location of Official Gaming Establishment............................................................50
ARTICLE IV. WARRANTIES AND REPRESENTATIONS...................................................................50
4.1. Gaming Board Warranties; Due Authorization...........................................................50
4.2. Casino Operator Warranties...........................................................................50
ARTICLE V. TERM AND EXTENDED TERM............................................................................51
5.1. Initial Term.........................................................................................52
5.2. Extended Term........................................................................................52
ARTICLE VI. COMPENSATION PAYMENTS; AMOUNTS AND METHODS......................................................52
6.1. Fixed Payment Obligations............................................................................52
6.2. Louisiana Gross Gaming Revenue Share Payments........................................................54
6.3. Remittance and Monthly Adjustments...................................................................57
6.4. State's Interest in Daily Collections................................................................59
6.5. Daily Deposits.......................................................................................59
6.6. Casino Operator's Right to Grant Security Interest...................................................60
6.7. Late Payment Interest................................................................................60
6.8. No Reduction in Payment..............................................................................60
6.9. Continuing Payment Requirement.......................................................................61
ARTICLE VII. OTHER CONSIDERATIONS............................................................................61
7.1. Open Access..........................................................................................61
7.2. Gaming Board's Controlled Space......................................................................61
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ARTICLE VIII. CASINO MANAGER AND CASINO MANAGEMENT CONTRACT..................................................62
8.1. Subcontracting of Casino Operator's Obligations......................................................62
8.2. Subcontracting by Casino Operator....................................................................63
8.3. Casino Operator's Obligations Under the Casino Management Contract...................................64
8.4. Acts and Omissions of the Casino Manager.............................................................64
8.5. Access to Casino Manager's Books and Records of the Casino...........................................65
8.6. Notice of Termination of Casino Management Contract..................................................65
8.7. Casino Name Change...................................................................................66
8.8. Termination Transition Payment.......................................................................67
8.9. Leasehold Mortgagee Exemption........................................................................67
ARTICLE IX. CASINO OPERATOR'S AFFIRMATIVE COVENANTS..........................................................67
9.1. General..............................................................................................67
9.2. Official Gaming Establishment........................................................................67
9.3. Payment..............................................................................................68
9.4. Initial Plan Financing and Site Possession...........................................................68
9.5. Financial Stability..................................................................................68
9.6. Non-Discrimination Policies..........................................................................73
9.7. Minority Employment Policies.........................................................................73
9.8. Compulsive Gaming Program............................................................................73
9.9. Maintain Qualifications..............................................................................73
9.10. On-Site Inspections.................................................................................74
9.11. Cooperate in Investigations.........................................................................74
9.12. Access to Information, Materials and Data...........................................................74
9.13. Maintain Books and Records After Termination or Expiration..........................................75
9.14. Documents for Investigations........................................................................75
9.15. Cooperation to Facilitate Restrictive Use Casino Operating Contracts................................75
9.16. Maintain Suitability................................................................................75
9.17. Information Concerning Creditors....................................................................76
9.18. Business Ability and Casino Gaming Experience.......................................................77
9.19. Notice of Claims....................................................................................77
9.20. Insurance Coverages.................................................................................77
9.21. Essential Agreements................................................................................77
9.22. Casino Bankroll.....................................................................................78
9.23. Days and Hours of Operation.........................................................................78
9.24. Age Limitations.....................................................................................79
9.25. Maintenance of Casino...............................................................................80
9.26. Computerized Accountability.........................................................................80
9.27. Minimum Internal Controls...........................................................................83
9.28. Utilization of Louisiana Goods and Services.........................................................84
9.29. Timetables and Outside Dates........................................................................85
9.30. Rivergate/City Payments.............................................................................85
</TABLE>
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9.31. Payment of Impositions..............................................................................86
9.32. Payment to Unsecured Creditors......................................................................86
ARTICLE X. CASINO OPERATOR'S NEGATIVE COVENANTS.............................................................86
10.1. General.............................................................................................86
10.2. Food and Restaurant Facilities and Service..........................................................87
10.3. No Lodging..........................................................................................88
10.4. Prohibited Contacts with Public Officers............................................................88
10.5. Improper Activities.................................................................................88
10.6. Prohibited Sale of Certain Products.................................................................89
10.7. Exclusion and Detention of Certain Persons..........................................................89
10.8. Environmental Laws..................................................................................90
10.9. Other Prohibited Activities.........................................................................90
ARTICLE XI. DESIGN AND CONSTRUCTION.........................................................................91
11.1. Casino Design.......................................................................................91
11.2. Casino Construction.................................................................................91
11.3. Poydras Street Support Facility and Poydras Tunnel Construction.....................................91
11.4. Effect of Delivery..................................................................................92
11.5. Changes to Construction Documents...................................................................92
11.6. Material Change Approval Procedure..................................................................92
11.7. Disclaimer of Representations and Prohibited Reliance...............................................94
11.8. Compliance with Governmental Requirements...........................................................95
11.9. Delivery of Notice..................................................................................95
11.10. Commencement Dates.................................................................................95
11.11. Completion Dates...................................................................................95
11.12. Reports and Monitoring.............................................................................95
ARTICLE XII. FINANCIAL AND ACCOUNTING RECORDS, ACCESS AND REPORTING REQUIREMENTS, CONFIDENTIALITY............97
12.1. Financial and Accounting Records....................................................................97
12.2. Financial Statements and Quarterly Meetings.........................................................98
12.3. Expiration or Termination Audit.....................................................................99
12.4. Public Company Disclosure...........................................................................99
12.5. Review and Audit....................................................................................99
12.6. Cooperation with the Legislative Auditor...........................................................101
12.7. Public Records Access..............................................................................101
12.8. Errors in Financial and Accounting Records Resulting in Overpayment to the Gaming Board............103
ARTICLE XIII. FUNDS AND FINANCING...........................................................................104
13.1. Financing..........................................................................................104
</TABLE>
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13.2. Amount of Initial Plan Financing...................................................................104
13.3. Source of Initial Plan Financing...................................................................104
13.4. Evidence of Initial Plan Financing.................................................................104
13.5. Financing Representations; Restrictions............................................................105
13.6. Limitations on Financing...........................................................................106
13.7. Capital Replacement Fund...........................................................................106
ARTICLE XIV. INSURANCE......................................................................................109
14.1. Property and Casualty Insurance Coverage...........................................................109
14.2. Builder's Risk Insurance...........................................................................111
14.3. Adjustments to Policy Limits and Deductibles.......................................................111
14.4. Liability Insurance................................................................................111
14.5. Contractor Insurance...............................................................................113
14.6. Other Contractor Insurance.........................................................................114
14.7. Architect and Engineer Insurance...................................................................117
14.8. Business Interruption Insurance....................................................................118
14.9. Adjustments to Policy Limits for Liability Insurance...............................................119
14.10. Form of Insurance and Insurers....................................................................119
14.11. Other Policies....................................................................................120
14.12. Adjustment of Insurance...........................................................................120
14.13. Insurance Notice..................................................................................120
14.14. Keep in Good Standing.............................................................................121
14.15. Blanket Policies..................................................................................121
14.16. Change of Circumstances...........................................................................122
ARTICLE XV. DAMAGE TO OR DESTRUCTION OF THE CASINO..........................................................122
15.1. Damage or Destruction..............................................................................122
15.2. Insurance Proceeds.................................................................................123
15.3. Utilization of Insurance Proceeds..................................................................123
15.4. Damage at End of Casino Term.......................................................................125
ARTICLE XVI. ALTERATIONS AND MODIFICATIONS TO CASINO PREMISES AFTER COMPLETION..............................125
16.1. Alteration Approvals...............................................................................125
16.2. Manner of Performance..............................................................................126
ARTICLE XVII. ENTRY UPON CASINO PREMISES BY GAMING BOARD; INSPECTION........................................126
17.1. Access and Inspection Rights.......................................................................126
ARTICLE XVIII. INDEMNIFICATION..............................................................................127
</TABLE>
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<S> <C>
18.1. Indemnification....................................................................................127
18.2. Defense of Proceedings.............................................................................130
18.3. Right to Participate in Defense....................................................................130
18.4. No Settlement Without Gaming Board Approval........................................................131
18.5. Payment of Judgment................................................................................131
18.6. Indemnity of State.................................................................................131
ARTICLE XIX. CRITERIA FOR OPENING CASINO...................................................................131
19.1. Financing Completed................................................................................131
19.2. Insurance Coverages................................................................................131
19.3. Landlord Approvals and Consents....................................................................131
19.4. Completion Acceptance..............................................................................132
19.5. Occupancy Permits and Licenses.....................................................................132
19.6. Suitability and Licensing..........................................................................132
19.7. Operational Checkout...............................................................................132
19.8. Casino Manager's Certification.....................................................................133
19.9. No Default.........................................................................................133
ARTICLE XX. CASINO OPERATOR'S DEFAULT.......................................................................133
20.1. Events of Default..................................................................................133
20.2. Notice; Opportunity to Cure........................................................................137
20.3. Payment Disputes...................................................................................138
20.4. Remedies...........................................................................................138
20.5. Right to Injunctive Relief.........................................................................140
20.6. No Limitation on Available Remedies................................................................140
20.7. Costs..............................................................................................142
20.8. Fines, Penalties...................................................................................142
ARTICLE XXI. BANKRUPTCY AND INSOLVENCY......................................................................143
21.1. Bankruptcy or Insolvency. If the Casino Operator..................................................143
21.2. Regulation; Exercise of Police and Regulatory Powers...............................................144
21.3. Cash Collateral....................................................................................144
21.4. Performance; Assumption or Rejection...............................................................144
21.5. No Performance Excused.............................................................................145
21.6. Notice of Filing...................................................................................145
21.7. Relief from Automatic Stay.........................................................................145
21.8. Cure Periods Not Tolled............................................................................146
ARTICLE XXII. DEFAULT BY THE GAMING BOARD...................................................................146
22.1. Default by Gaming Board............................................................................146
22.2. Remedies...........................................................................................147
22.3. Exclusivity - Default by the Gaming Board and Remedies.............................................147
</TABLE>
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<TABLE>
<S> <C>
ARTICLE XXIII. LEASEHOLD MORTGAGEES.........................................................................147
23.1. General............................................................................................148
23.2. Registered Leasehold Mortgagee.....................................................................148
23.3. Notices to Registered Leasehold Mortgagees.........................................................148
23.4. Opportunity to Cure................................................................................149
23.5. Revocation/Suspension Proceedings..................................................................150
23.6. Receivership/Foreclosure Proceedings...............................................................151
23.7. Effect of Appointment of Receiver..................................................................155
23.8. No Effect On Suit to Enforce.......................................................................155
23.9. Third Party Beneficiaries..........................................................................155
23.10. No Lien on this Casino Operating Contract.........................................................155
ARTICLE XXIV. SUITABILITY OF OTHERS.........................................................................155
24.1. Suitability Requirements...........................................................................155
24.2. Unsuitability - Casino Manager.....................................................................156
24.3. Unsuitability - Holders of Equity or Debt Interests................................................156
24.4. Safe Harbor........................................................................................157
ARTICLE XXV. GUARANTEES AND ASSURANCES......................................................................159
25.1. Rolling Minimum Payment Guaranty...................................................................159
25.2. Completion Guarantee...............................................................................161
25.3. Additional Guarantees and Assurances...............................................................162
25.4. Matters Relating to Minimum Payment Guaranty.......................................................163
ARTICLE XXVI. TRANSFER RESTRICTIONS.........................................................................164
26.1. Casino Operator Transfers - Casino Operating Contract..............................................164
26.2. Casino Operator Transfers - Essential Agreements...................................................165
26.3. Other Actions or Transfers Requiring Approval......................................................165
26.4. Conditions to Approval of Proposed Transfer........................................................165
26.5. Five Percent Accumulation..........................................................................165
26.6. Transfer Restriction Legend........................................................................167
26.7. Notice and Cure Period; Safe Harbor................................................................167
ARTICLE XXVII. NOTICES......................................................................................168
27.1. Manner of Giving Notice............................................................................168
ARTICLE XXVIII. MISCELLANEOUS...............................................................................169
28.1. No Joint Venture or Partnership....................................................................169
28.2. No Waiver..........................................................................................169
28.3. Partial Invalidity.................................................................................169
</TABLE>
<PAGE>
<TABLE>
<S> <C>
28.4. Responsibility for Costs and Risks of Operations...................................................170
28.5. Applicable Law.....................................................................................170
28.6. Venue, Personal Jurisdiction and Forum Selection...................................................170
28.7. Compliance.........................................................................................171
28.8. Captions...........................................................................................171
28.9. Number and Gender..................................................................................172
28.10. No Drafting Presumptions..........................................................................172
28.11. Prior Agreements; Amendment.......................................................................172
28.12. Intervention by Casino Manager....................................................................173
28.13. Time of the Essence...............................................................................173
28.14. Successors and Assigns............................................................................173
28.15. No Third Party Beneficiary........................................................................173
28.16. Assignment........................................................................................173
28.17. No Novation.......................................................................................174
28.18. Counterparts......................................................................................174
</TABLE>
<TABLE>
<CAPTION>
Section
Exhibits Reference
- -------- ---------
<S> <C>
A Approved Program Plans 11.1
B Form of Completion Guarantee 25.2
C Form of Performance Bond 25.2
D Form of State Release Agreement Recitals
E-1 Legal Description of Employee and Bus Support Parking
Facilities 2.145
E-2 Legal Description of Poydras Street Parking Facilities 2.145
F Legal Description of Casino Premises 2.27
G Form of HET/JCC Agreement 25.4
H. Form of Initial Unconditional Minimum Payment Guaranty 25.1
I. Form of Unconditional Guaranty for Fiscal Year
Ending March 31, ____ 25.1
</TABLE>
vii
<PAGE>
State of Louisiana
Orleans Parish
AMENDED AND RENEGOTIATED CASINO OPERATING CONTRACT
This Amended and Renegotiated Casino Operating Contract is
made and entered into this 30th day of October, 1998 among the State of
Louisiana by and through the Louisiana Gaming Control Board (the "Gaming Board")
assuming the regulatory authority, control and jurisdiction of the Louisiana
Economic Development Control Board pursuant to R.S. 27:15, Harrah's Jazz
Company, a Louisiana general partnership ("HJC"), and Jazz Casino Company,
L.L.C., a Louisiana limited liability company ("Jazz Casino Company" or "JCC").
RECITALS
WHEREAS, on July 15, 1994 the Louisiana Economic Development
and Gaming Corporation entered into a Casino Operating Contract (the "Initial
Operating Contract") with HJC, whereby HJC was authorized to construct and
operate the Official Gaming Establishment; and
WHEREAS, HJC filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code on or about November 22, 1995;
and
WHEREAS, on or about May 1, 1996, pursuant to R.S. 27:15 the
Gaming Board assumed, among other things, all regulatory authority, control and
jurisdiction over gaming activities authorized under the LEDGC Act; and
WHEREAS, HJC has submitted and the United States Bankruptcy
Court has confirmed a plan of reorganization (the "Plan") in the bankruptcy
proceedings of HJC; and
WHEREAS, pursuant to the Plan, the assets and business of HJC
will vest in Jazz Casino Company, a newly formed Louisiana limited liability
company, on the Plan Effective Date; and
WHEREAS, the Gaming Board has agreed to renegotiate this
Casino Operating Contract with HJC and has Approved the amendment, renegotiation
and assignment of this Casino Operating Contract as amended and renegotiated to
JCC as HJC's successor pursuant to the Plan as of the Plan Effective Date; and
WHEREAS, pursuant to the Plan, the single membership interest
in Jazz Casino Company will be wholly owned by JCC Holding Company, a publicly
traded company which, upon consummation of the Plan, a subsidiary of Harrah's
Entertainment, Inc. ("HET") shall purchase Class B New Common Stock (issued
pursuant to the Plan) equivalent to forty-nine and nine tenths percent (49.9%)
of the equity of JCC Holding Company (some of which will be disbursed as per the
Plan), the holders of the 14 1/4% First Mortgage Notes Due
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2001 with Contingent Interest issued by HJC and Harrah's Jazz Finance Corp.
shall receive pro rata, Class A New Common Stock (issued pursuant to the Plan)
equivalent to thirty-seven and one-tenth percent (37.1%) of the equity of JCC
Holding Company, and a disbursing agent for the benefit of said holders shall
receive Class A New Common Stock equivalent to thirteen percent (13%) of the
equity of JCC Holding Company; and
WHEREAS, pursuant to the Plan, HJC has been authorized to
execute this Amended and Renegotiated Casino Operating Contract; and
WHEREAS, pursuant to the Plan JCC Holding Company as the sole
member of Jazz Casino Company has duly authorized the execution of the Amended
and Renegotiated Casino Operating Contract, the Board of Directors of JCC
Holding Company (together with Jazz Casino Company, the "JCC Entities") has duly
authorized the execution of this Casino Operating Contract, and the Board of
Directors of JCC Holding Company will consist of an equal number of directors
elected by the holders of a majority of shares of Class B stock - the HET
Directors - and directors elected by a majority of the shares of the Class A
stock - the Independent Directors, with the HET Directors generally supervising
the day-to-day activities of each of the JCC Entities, unless and until such
day-to-day supervision rights terminate pursuant to the Certificate of
Incorporation of JCC Holding Company and the Articles of Organization of Jazz
Casino Company as a result of events of default under the Casino Operator's loan
documents or the indentures for the new notes and new contingent notes issued
pursuant to the Plan, payment or material events of default under the Casino
Lease, certain events of default under this Amended and Renegotiated Casino
Operating Contract, material events of default under the Casino Management
Agreement, breach of the completion guarantees from Harrah's Operating Company,
Inc. ("Harrah's Operating") and HET pursuant to the Plan and certain other
default events as described in said Certificate of Incorporation and Articles of
Organization; and
WHEREAS, as part of the Plan and with the approval of the
Gaming Board, Jazz Casino Company has been authorized to assume the role of
Casino Operator subject to the requirements of this Amended and Renegotiated
Casino Operating Contract and the Suitability Requirements; and
WHEREAS, effective as of the Plan Effective Date certain
claims of the parties and others will be resolved pursuant to that certain State
Release Agreement attached as Exhibit D hereto and by this reference
incorporated herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties agree as follows:
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<PAGE>
ARTICLE I. POLICY, PURPOSE AND SUBJECT MATTER
1.1. Public Policy and Amendment and Renegotiation
(a) Amendment and Renegotiation. Pursuant to the Casino Act,
the Gaming Board and HJC hereby amend and renegotiate the Initial Casino
Operating Contract on the terms set forth in this Amended and Renegotiated
Casino Operating Contract, which shall be revocable in accordance with the terms
hereof. The Initial Casino Operating Contract, as hereby amended and
renegotiated, and any future amendments, changes, modifications, renegotiations
or restatements, is hereinafter referred to as the "Casino Operating Contract."
(b) Public Policy. The Parties acknowledge the public policy
and provisions of the Casino Act. The purpose of this Casino Operating Contract
is to set forth the conditions, covenants, obligations, requirements and terms
under which the Casino Operator shall provide and furnish the Casino and shall
be entitled to conduct Gaming Operations in the Official Gaming Establishment or
Casino; to set forth the rights and privileges of the Gaming Board under this
Casino Operating Contract and the corresponding duties, responsibilities and
obligations of the Casino Operator to the Gaming Board under this Casino
Operating Contract; and to set forth the rights of the Casino Operator with
respect to the Gaming Board.
1.2. Subject Matter.
The subject matter of this Casino Operating Contract is the
Official Gaming Establishment or Casino to be constructed, furnished, equipped
and operated by the Casino Operator on the site known as the "Rivergate" and
numbered 4 Canal Street in the City of New Orleans, Orleans Parish, Louisiana.
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1.3. Exclusive Contract
(a) Exclusivity Protection. Subject to the conditions,
obligations, requirements, provisions and terms of this Casino Operating
Contract, this Casino Operating Contract is exclusive as to land-based gaming in
the Parish of Orleans as more particularly set forth in R.S. 27:241(H) as in
effect January 1, 1997 and Section 1.3(b) - "Violations Generally." Except as
otherwise permitted in this Section 1.3 - "Exclusive Contract," no other
land-based gaming facility shall be contracted or licensed in the Parish of
Orleans during the term of this Casino Operating Contract or any renewal or
extensions hereof.
(b) Violations Generally.
(A) Violations. The Casino Operator shall be relieved of the
obligation to make the Minimum Payment, Daily Payment and Louisiana Gross Gaming
Revenue Share Payments (collectively, the "Revenue Share Payments") as set forth
in Section 1.3(c) - "Judicial Relief for Exclusivity Violations" only if all of
the following three conditions ((i) through (iii)) occur:
(i) there is a Material violation of the exclusivity
provisions of R.S. 27:241(H) or of Section 1.3(a) -
"Exclusivity Protection" (as qualified and defined
hereinafter in this Section 1.3(b) - "Violations
Generally") as a result of
(a) a change, other than a "Permitted Amendment"
(as defined below), in State law (adopted by
statute, regulation or rule) from that in
effect January 1, 1997,
(1) permitting any Game (whether
authorized at the Casino or at any
other land based facility) or
Gaming Device (except video poker
operations authorized pursuant to
the Video Draw Poker Devices
Control Law as in effect January 1,
1997) at another land-based
facility in the Parish of Orleans,
or
(2) permitting riverboats (other than a
Permitted Riverboat (as defined
below)) to conduct dockside gaming
in
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<PAGE>
Orleans Parish beyond the scope of
R.S. 27:65(B)(1), as in effect
January 1, 1997
(collectively, a "Change in State Law");
provided, however, a Change in State Law
shall not include a change in State law
authorizing at any time or from time to time
one or more licensed riverboats to remain
dockside and conduct dockside gaming beyond
the scope of R.S. 27:65(B)(1), as in effect
January 1, 1997; provided that, with respect
to Orleans Parish, the authorization shall
be limited to not more than one licensed
riverboat at any time (a "Permitted
Riverboat") which must be located on Lake
Pontchartrain in Orleans Parish, and
provided, further, that the authorization
(as to Orleans Parish) includes the
following prohibitions:
(A) a prohibition against a
Permitted Riverboat
conducting gaming
activities in an area(s)
exceeding thirty thousand
(30,000) square feet in the
aggregate;
(B) a prohibition against the
owner or operator of a
Permitted Riverboat
participating directly or
indirectly in the
ownership, construction,
operation or subsidization
of any hotel of a size
exceeding three hundred
ninety-nine (399) guest
rooms within a distance of
one (1) mile from the
berthing area of a
Permitted Riverboat; and
(C) a prohibition against a
Permitted Riverboat
maintaining or offering for
patron or public use on the
vessel and at its terminal,
berthing area and any hotel
referred to above, more
than eight thousand (8,000)
square feet of restaurant
facilities in the aggregate
(exclusive of food
preparation and handling
areas) .
Any change in State law authorizing
a Permitted Riverboat to remain
dockside and conduct dockside gaming
beyond the scope of R.S. 27:65(B)(1)
as in effect January 1, 1997, and
subject to the foregoing
prohibitions, shall be a "Permitted
Amendment."
(b) a failure by the State, or an agency
or instrumentality of the State, to
enforce the State law regarding
land-based gaming in the Parish of
Orleans (other than Dockside
5
<PAGE>
Violations which are subject to the
exclusive remedies set forth in
Section 1.3(d) - "Dockside
Violations" and Permitted Amendment
Violations which are subject to the
exclusive remedies set forth in
Section 1.3(e) - "Permitted
Amendment Violations"),
(c) the Gaming Board and/or the State
permitting riverboats to conduct
gaming operations in the Parish of
Orleans if the riverboats do not
meet the requirements of R.S.
27:44(4) and 27:44(23)(c) and (d),
as in effect January 1, 1997, or
(d) Indian Gaming Operations being
conducted in the Parish of Orleans,
(each such Material violation, (a) through (d), an
"Exclusivity Violation");
(ii) such Exclusivity Violation continues after
Notice (of such Exclusivity Violation) from
the Casino Operator to the Gaming Board and
the passage of a sixty (60) Day cure period
for the Gaming Board or the State to remedy
such Exclusivity Violation; and
(iii) a court of competent jurisdiction renders a
final non-appealable judgment holding that
such Exclusivity Violation did occur and was
not timely cured within sixty (60) Days
after Notice thereof from the Casino
Operator to the Gaming Board.
It is hereby agreed that Dockside Violations and Permitted Amendment Violations
are not, and will not form the basis for, any Exclusivity Violations.
(B) Matters Not Constituting Prohibited Land-Based Gaming. For
purposes of this Section 1.3(b) - "Violations Generally", the following shall
not constitute prohibited land-based gaming as described in Section 1.3(a) -
"Exclusivity Protection" or this Section 1.3(b) - "Violations Generally":
(i) gaming operations upon riverboats while
cruising or sailing or dockside in
accordance with the Louisiana Riverboat
Economic Development and Gaming Control Act
(as in effect January 1, 1997),
6
<PAGE>
(ii) riverboat dockside gaming in accordance with
any Permitted Amendment to State law as
provided in Section 1.3(b)(A)(i)(a) hereof,
(iii) video poker operations authorized pursuant
to the Video Draw Poker Devices Control Law
(as in effect January 1, 1997),
(iv) authorized charitable gaming activities,
lottery games conducted pursuant to the
provisions of the Louisiana Lottery
Corporation Law (as in effect January 1,
1997), and
(v) pari-mutuel wagering as authorized by the
provisions of Chapter 4 of Title 4 of the
Louisiana Revised Statutes of 1950 (as in
effect January 1, 1997).
(c) Judicial Relief for Exclusivity Violation. Any judicial
relief sought by the Casino Operator with respect to an Exclusivity Violation
shall include a prayer for a determination as to the date of such Exclusivity
Violation and the duration of such Exclusivity Violation. The Casino Operator,
with a reservation of all its legal rights, shall continue to pay the Revenue
Share Payments while any judicial action brought by the Casino Operator with
respect to an Exclusivity Violation is prosecuted to a final non-appealable
judgment. If such judicial action results in a final non-appealable judgment
that an Exclusivity Violation has occurred, the Casino Operator shall be
relieved of its obligation to make further Revenue Share Payments from the date
of such final non-appealable judgment, subject to the additional cure rights set
forth in Section 1.3(f) - "Notice and Cure Subsequent to Judicial Relief." The
Casino Operator's obligation to make future Revenue Share Payments shall resume
in accordance with the Judicial Declaration of Cure provisions in Section 1.3(f)
- - "Notice and Cure Subsequent to Judicial Relief." The Casino Operator shall be
entitled to an offset against future Revenue Share Payments for an amount equal
to any Revenue Share Payments
7
<PAGE>
paid to the Gaming Board and/or the State during the judicially determined
period of any Exclusivity Violation.
(d) Dockside Violations. The State and the Gaming Board shall
not permit any Dockside Violations. A "Dockside Violation" shall mean any
riverboat conducting dockside gaming in the Parish of Orleans in violation of
the requirements of R.S. 27:65(B)(1), as in effect January 1, 1997, provided
that a dockside violation shall not include gaming on a riverboat (i) while
cruising or sailing or dockside in accordance with the Louisiana Riverboat
Economic Development and Gaming Control Act as in effect January 1, 1997 if such
violation is not a Material violation, that is, if such riverboat sails or
cruises in Material accordance with the requirements of R.S. 27:65(B)(1), as in
effect January 1, 1997 or (ii) remaining dockside pursuant to a Permitted
Amendment. If any Dockside Violation continues after Notice from the Casino
Operator to the Gaming Board and sixty (60) Days opportunity to cure by the
Gaming Board or the State, and if a court of competent jurisdiction renders a
judgment (subject to applicable appellate rights) holding that Dockside
Violations did occur and were not timely cured within sixty (60) Days after
receipt by the Gaming Board of Notice from the Casino Operator, the Casino
Operator will be entitled to seek only the following remedies: (i) specific
performance by the Gaming Board and/or the State of the obligations under this
Section 1.3(d) - "Dockside Violations," not to permit Dockside Violations,
and/or (ii) mandamus against the Gaming Board or any other appropriate
governmental authority not to permit Dockside Violations. During the pendency of
any judicial action and through final non-appealable judgment concerning
Dockside Violations and at all times thereafter, the Casino Operator shall not
be relieved of its obligation to pay
8
<PAGE>
the Revenue Share Payments. Any finding of a Dockside Violation by a judgment of
a court of competent jurisdiction shall not at that time or any time thereafter
relieve the Casino Operator of its obligation to pay the Revenue Share Payments.
(e) Permitted Amendment Violations. The State and the Gaming
Board shall not permit any Permitted Amendment Violations. A "Permitted
Amendment Violation" shall mean a Permitted Riverboat conducting gaming in the
Parish of Orleans in violation of a Permitted Amendment. If any Permitted
Amendment Violation continues after Notice from the Casino Operator to the
Gaming Board and 60 days opportunity to cure by the Gaming Board or the State,
and if a court of competent jurisdiction renders a judgment (subject to
applicable appellate rights) holding that Permitted Amendment violations did
occur and were not timely cured within sixty (60) Days after receipt by the
Gaming Board of Notice from the Casino Operator, the Casino Operator will be
entitled to seek only the following remedies: (i) specific performance by the
Gaming Board and/or the State of the obligations under this Section 1.3(e) -
"Permitted Amendment Violations," not to permit Permitted Amendment Violations,
and/or (ii) mandamus against the Gaming Board or any other appropriate
governmental authority not to permit Permitted Amendment Violations. During the
pendency of any judicial action and through final non-appealable judgment
concerning Permitted Amendment Violations and at all times thereafter, the
Casino Operator shall not be relieved of its obligation to pay the Revenue Share
Payments. Any finding of a Permitted Amendment Violation by a judgment of a
court of competent jurisdiction shall not at that time or at any time thereafter
relieve the Casino Operator of its obligation to pay the Revenue Share Payments.
9
<PAGE>
(f) Notice and Cure Subsequent to Judicial Relief.
Notwithstanding the terms of any final non-appealable judgment resulting in a
court holding that an Exclusivity Violation occurred and was not cured within
sixty (60) Days after Notice from the Casino Operator (a "Judicial Declaration
of Violation"), the Gaming Board and/or the State shall have twenty-four (24)
months after the date such Judicial Declaration of Violation is rendered to cure
such Exclusivity Violation and to file an action for declaratory relief seeking
a declaration from a court of competent jurisdiction confirming that such
Exclusivity Violation has been cured and the date and duration of any one or
more period or periods of cure after the original sixty (60) day cure period as
provided for in Section 1.3(b) during which such cure was effected up to the
last day with respect to which the court accepts evidence on the issue (a
"Judicial Declaration of Cure"). The parties recognize that the period of any
such cure may occur, if at all, only after such Judicial Declaration of
Violation and that such cure may be achieved during some, but not all, of that
twenty-four (24) month period. If such Judicial Declaration of Cure determines
that such Exclusivity Violation has been cured within the specified twenty-four
(24) months, the Casino Operator's obligations to make Revenue Share Payments
shall be reinstated for any period of cure as established by such Judicial
Declaration of Cure and continue from the latest date of cure and thereafter,
subject to any prior rights of offset pursuant to Section 1.3(c) - "Judicial
Relief for Exclusivity Violation" for any Revenue Share Payments previously paid
by the Casino Operator during any period of an Exclusivity Violation. In the
event of any Exclusivity Violation(s) subject to a Judicial Declaration of Cure
the provisions of Sections 1.3(a), (b), (c), (d) and (e) shall remain
applicable.
10
<PAGE>
(g) Moratorium. The Casino Operator shall not initiate any
action for judicial relief concerning any Exclusivity Violation, Dockside
Violation or Permitted Amendment Violation until the expiration of eighteen (18)
months after the Actual Opening Date of the Casino, although the Notice and cure
provisions of both parties set forth in this Section 1.3 - "Exclusive Contract"
shall be in force during such eighteen (18) month period. In no event shall the
Casino Operator be restricted during such eighteen (18) month period from
asserting any Exclusivity Violation, Dockside Violation or Permitted Amendment
Violation as a defense or in any other procedural manner required under the
circumstances to properly seek the relief specified in Sections 1.3(b), (c), (d)
and (e) in response to any action initiated by the Gaming Board to (i) terminate
this Casino Operating Contract, or (ii) challenge the financial suitability of
the Casino Operator caused substantially by the said Exclusivity Violation,
Dockside Violation and/or Permitted Amendment Violation; provided that such
action by the Gaming Board or defense by the Casino Operator shall not include
matters relating to routine operational regulatory interaction between the
Gaming Board and/or the State and the Casino Operator.
ARTICLE II. DEFINITIONS
For the purposes of this Casino Operating Contract, the
following words and phrases, in addition to words and phrases defined elsewhere
in this Casino Operating Contract, shall have the meanings set forth below,
unless otherwise expressly provided in this Casino Operating Contract:
2.1. "Additional Charges" means any and all payments, costs, expenses,
fines and penalties (other than the remittance of the Louisiana Gross Gaming
Revenue Share Payments
11
<PAGE>
and the Daily Payments) that are required to be paid by the Casino Operator to
the Gaming Board pursuant to the provisions of this Casino Operating Contract or
the Rules and Regulations.
2.2. "Affiliate" means with respect to a particular Person, any other
Person who, directly or indirectly Controls, or is Controlled by, or is under
common Control with the Person specified. "Affiliate" means and includes a Key
Person. Whenever the term "Affiliate" is used with respect to the Casino
Operator, the term also means and includes any Person holding a direct or
indirect shareholder interest that gives such Person the ability to Control the
Casino Operator or any Person owning a five percent (5%) or more direct interest
in the Casino Operator. For purposes of calculating the percentage of ownership
interest, the following shall be attributed to such Person, (a) the ownership,
income or profit interest held by a trustee of a trust of which a Person is a
beneficiary, and (b) the interest held by a member of such Person's immediate
family. "Immediate family" means a person's spouse, children, parents, brothers,
sisters, nieces, nephews and cousins to the first degree. Notwithstanding the
foregoing, a shareholder owning, directly or indirectly, five percent (5%) or
more ownership, income or profit interest in a corporation the shares of which
are widely held and publicly traded shall not be an "Affiliate" of a Person
unless the Gaming Board determines the shareholder Controls that Person.
2.3. "Alterations" has the meaning set forth in Section 16.1 -
"Alteration Approvals."
2.4. "Annual Audit" means the audit performed each Fiscal Year by the
Independent CPA of the Fiscal Year Financial Statements of the Casino Operator.
The
12
<PAGE>
Annual Audit shall be performed in accordance with the requirements of Section
12.5 - "Review and Audit."
2.5. "Annual Business Plan" means an annual plan for the forthcoming
Fiscal Year to be prepared by or for the Casino Operator for the Gaming Board
consisting of an estimate of revenue and expenses, including the Louisiana Gross
Gaming Revenue Share Payments and other economic items. The information
contained in each Annual Business Plan shall be certified by the Casino Operator
and by the Casino Manager as being true and complete.
2.6. "Approve," "Approves," "Approved," "Approval" mean, when used with
respect to the Gaming Board that the Gaming Board shall have the right, prior to
an action, to approve, confirm, uphold or grant permission with respect to the
subject matter thereof. Appeals of the actions, decisions or orders of the
Gaming Board, a hearing examiner or the Chairman, when exercising its duty or
prerogative to Approve, shall be in accordance with R.S. 27:255(B). When the
term "approve," "approves," "approved" or "approval" is used without an initial
capital "A," it shall mean the Gaming Board has contractual approval rights
only. When the term "approve," "approves," "approved" or "approval" is used with
an initial capital "A" it shall mean the Gaming Board has regulatory Approval
rights.
2.7. "Approved Financial Institution" means either of the following:
(a) a state or federal bank domiciled in the State or with a
branch or correspondent bank located in the State and which satisfies the
following requirements:
(i) the bank has capital and surplus in excess of Two Hundred
Fifty Million Dollars ($250,000,000);
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<PAGE>
(ii) there is no enforcement action against the bank by any
regulatory authority that would lead to a receiver being appointed; and
(iii) no current member of the board of directors or senior
officer of the bank or its holding company has ever been convicted of a felony
involving the activities of the bank or been the subject of civil money
penalties imposed as a result of a regulatory action involving the bank; or
(b) any other financial institution Approved by the Gaming Board.
The Approved Financial Institution (i) shall waive all contractual and legal
rights of setoff against all funds of the Casino Operator on deposit in or
otherwise held by that financial institution other than contractual setoff
rights provided by security or collateral documents Approved by the Gaming
Board; and (ii) if not domiciled in the State, shall, for purposes of any action
brought by the Gaming Board, appoint an agent for service of process in the
State and consent to jurisdiction and venue in the State.
2.8. "Architect Agreement" means one or more of the contracts between
the Casino Operator and the Casino Operator's Architect.
2.9. "Books and Records" means all financial statements, revenue,
expense and other accounting or financial documents or records, including
general ledgers, accounts receivable, accounts payable, invoices, payroll
records, ownership records, expense records, income records and other documents
or records required by the Internal Control System (including detailed records
by game, drop and shift) and all other documents or records maintained by the
Casino Operator or the Casino Manager whether in print, electronic, magnetic,
optical, digital or other media form relating to or concerning the Casino.
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2.10. "Business Days" means all days except Saturdays, Sundays and all
days that are official legal holidays of the State, the City or the United
States. Unless specifically stated as "Business Days," a reference to "day"
means a calendar day and "days" means consecutive calendar days.
2.11. "Capital Replacements" means the capital improvements and
replacements to the Casino that are required from time to time in order to keep
and maintain the Casino in a first class, efficient operating condition.
2.12. "Capital Replacement Fund" is a replacement reserve fund which
shall be established and maintained by the Casino Operator in a segregated
account as an assurance fund to guarantee all necessary Capital Replacements to
the Casino. The Capital Replacement Fund shall be maintained in an Approved
Financial Institution or invested in U.S. government securities, certificates of
deposit issued by an Approved Financial Institution or any other investments
Approved by the Gaming Board.
2.13. "Casino" means the entirety of the building and improvements
located at the Rivergate site in the Parish of Orleans. The Gaming Board shall
retain jurisdiction and approval rights over the Second Floor Master Plan and
the right to require any lessee or sub-lessee to comply with all licensing,
permitting and Suitability requirements of the Casino Act, Rules and Regulations
and Section 8.2 - "Subcontracting by Casino Operator."
2.14. "Casino Act" means R.S. 27:201 to 286 (Redesignated from R.S.
4:601 by Acts 1996, 1st Ex. Sess. Section 3, eff. May 1, 1996) and all other
relevant provisions of R.S. 27:1 et seq., as it may be amended from time to
time.
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2.15. "Casino Bankroll" means the amount necessary to pay promptly all
undisputed winning wagers to Casino patrons without excuse, forbearance or
delay. The initial Casino Bankroll shall be the "Minimum Balance" plus the
"House Bank" as defined in the Casino Management Agreement. The amount of the
Casino Bankroll may be changed from time to time by the Rules and Regulations to
ensure the payment of the full amount of winning wagers to Casino patrons as and
when due without excuse, extension, forbearance or delay.
2.16. "Casino Employee" is an individual who is employed by the Casino
Operator or the Casino Manager and who performs work or services at or in
connection with the Casino.
2.17. "Casino Gaming Day" means the twenty-four (24) hour period
commencing at 6:00 a.m. Central Standard Time or Central Daylight Savings Time
when in effect in Louisiana, or such other time periods selected by the Casino
Operator and Approved.
2.18. "Casino Lease" means that written agreement of lease originally
entered into among Rivergate Development as Landlord, the City as intervenor and
Celebration Park Casino, Inc. as tenant, a multiple counterpart original of
which was registered on April 27, 1993 in the Office of the Register of
Conveyances for Orleans Parish as COB Instrument No. 68200, Notarial Archives
No. 93-18036, as amended by that certain amended lease agreement among Rivergate
Development as Landlord, the City as intervenor and Harrah's Jazz Company, as
tenant, dated March 15, 1994, which was registered on March 16, 1994 in the
office of the Registrar of Conveyances of Orleans Parish as COB Instrument No.
83942,
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Notarial Archives No. 94-13887, as further amended by the Amended and Restated
Casino Lease Agreement entered pursuant to the Plan, as it may be amended from
time to time.
2.19. "Casino Manager" means Harrah's New Orleans Management Company or
other Person with whom the Casino Operator contracts to provide all or
substantially all of the services necessary for the day-to-day management of the
Casino pursuant to this Casino Operating Contract and the Rules and Regulations
who or which has been Approved and found Suitable by the Gaming Board.
2.20. "Casino Management Contract" means a written agreement, Approved
by the Gaming Board, between the Casino Operator and the Casino Manager through
which the latter agrees to provide all or substantially all of the services
necessary for the day-to-day management and operation of the Casino pursuant to
this Casino Operating Contract and the Rules and Regulations.
2.21. "Casino Opening Date" means the day upon which the Casino opens
for business to the general public (not to include testing days authorized by
the Gaming Board nor pre-opening special events) ("Actual Opening Date");
provided, however, for purposes of Section 25.1 - "Rolling Minimum Payment
Guaranty," Section 2.67 - "Fiscal Year," and Section 2.115 - "Minimum Payment,"
Section 6.2(b) - "Minimum Payment Default," and Section 6.3 "Remittance and
Monthly Adjustments", the "Casino Opening Date" shall mean the earlier of (i)
the Actual Opening Date, or (ii) the date on which the Casino would have been
open for business to the general public as provided in Section 9.29 "Timetables
and Outside Dates," if the Casino Operator had timely performed its obligations
under the Casino Operating Contract to have the Casino fully operational and
open for business so long as any
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necessary regulatory approvals from the LGCB, the State Police or
any other State regulatory authorities have been received, provided that timely
receipt of any such approvals has been diligently pursued by or on behalf of the
Company in accordance with the Rules and Regulations for such approvals..
2.22. "Casino Operating Contract" has the meaning set forth in Section
1.1 - "Public Policy and Amendment and Renegotiation" hereof.
2.23. "Casino Operator" means Jazz Casino Company and any other Person
who or which, with the prior Approval of the Gaming Board, has succeeded to the
Casino Operator's right, powers and duties under this Casino Operating Contract.
2.24. "Casino Operator's Architect"
means one or more-licensed architects engaged by the Casino
Operator pursuant to the Architect Agreement to prepare the Design Development
Documents and to supervise construction of the Casino improvements.
2.25. "Casino Premises" means the real estate described in the legal
description attached hereto as Exhibit F and by this reference incorporated
herein.
2.26. "Casino Property" means all personal and movable property that
legally belongs to either the Casino Operator, the Casino Manager or gaming
suppliers, manufacturers and distributors and that has been brought onto the
Casino Premises by or for the Casino Operator, the Casino Manager or their
respective employees, agents, servants, suppliers, distributors or contractors
for use in connection with the operation of the Casino. Casino Property
includes, but is not limited to, all Gaming Devices, equipment and supplies and
card or gaming tables.
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2.27. "Casino Representatives" are those persons employed by the Casino
Operator or by the Casino Manager, who shall be duly authorized to represent the
Casino Operator or the Casino Manager before or in meetings with the Gaming
Board or its representatives.
2.28. "Certificate" means a written statement signed by a Person (or
such Person's duly authorized representative) having knowledge of the
truthfulness of the facts and circumstances recited therein sworn to under oath
to the best of such Person's Knowledge.
2.29. "Certify" means to attest to the truthfulness of facts and
circumstances by signing a Certificate.
2.30. "Chairman" means the Chairman of the Gaming Board or his designee
consistent with the terms of R.S. 27:31.
2.31. "Change in State Law" shall have the meaning set forth in Section
1.3(b)(A)(i) - "Violations Generally."
2.32. "City" means the City of New Orleans, Louisiana.
2.33. "Claims" means any and all claims, demands or causes of action of
every kind and character, whether foreseen or unforeseen and asserting liability
for performance or entitlement to recover value for any loss, cost, damage,
outlay, expense, obligation, penalty, fine or monetary sum whatsoever (including
reasonable attorney's fees or other costs of proceedings) and based on any
theory or principle of law or equity whatsoever, including but not limited to
tort, negligence, failure to act, strict liability, absolute liability,
vicarious liability, product liability, fraud, misrepresentation, contract,
quasi-contract, inducement to breach a contract, express or implied warranties.
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2.34. "Completion Date" shall have the meaning set forth in Section
9.29(c) hereof
2.35. "Completion Guarantee" shall have the meaning set forth in
Section 25.2 - "Completion Guarantee".
2.36. "Consumer Price Index" or "CPI" means the Consumer Price Index
for all Urban Consumers, U.S. City Average, prepared by the Bureau of Labor
Statistics of the United States Department of Labor [1982-1984 = 100], or, if
such index shall cease to be published, such other comparable index of inflation
as may be reasonably selected by the Gaming Board.
2.37. "Construction Documents" means the drawings and specifications in
sufficient detail for review by appropriate governmental authorities for the
issuance of a building permit.
2.38. "Contractor" means the one or more firms licensed as a contractor
in the State engaged by the Casino Operator, each of which shall carry such
insurance and be bonded to the extent required by applicable law, the General
Development Agreement and this Casino Operating Contract.
2.39. "Contractor Agreement" means the principal construction contract
between the Casino Operator and Centex-Landis for construction of the Casino and
the construction contract with Broadmoor for construction of the parking
garages.
2.40. "Contractor Notice to Proceed" means the notice issued by the
Casino Operator to the Contractor to proceed with the construction of the Casino
pursuant to the Plan.
2.41. "Control" means with respect to a Person, the ability in the sole
opinion and discretion of the Gaming Board, to exercise a significant influence
over the activities of such
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Person. Nothing in this Section shall restrict the rights of the Gaming Board
under R.S. 27:236(E).
2.42. "Control Relationship" means an affiliation between a Person and
another Person who Controls or is Controlled by or is Controlled with the first
Person.
2.43. "Daily Payments" has the meaning set forth in Section 6.3 -
"Remittance and Monthly Adjustments."
2.44. "Date of Substantial Completion" means the date when the
construction of the Casino is substantially complete so that it can be occupied
and used for its intended purpose.
2.45. "Day" or "Days" when not preceded by the word "business" mean a
calendar day or consecutive calendar days, respectively.
2.46. "Debt" means all obligations to repay money, which are (a)
secured or unsecured, (b) from advances, borrowings, final judgments, loans,
obligations or sale of debt instruments and (c) obtained from and due to any
source or Person. Debt does not include current liabilities incurred in the
ordinary course of business.
2.47. "Default Interest Rate" means a floating rate of interest at all
times equal to the greater of (a) the prime rate of Citibank, N.A. or its
successor plus five percent (5%) or (b) fifteen percent (15%) per annum,
whichever is greater, provided, however, that the Default Interest Rate shall
not exceed the maximum interest rate allowed by applicable law.
2.48. "Default Notice" shall have the meaning set forth in Section
6.2(b) - "Minimum Payment Default."
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2.49. "Design Development Documents" means the intermediate level
plans, drawings and specifications for the construction of the Casino. The
American Institute of Architects professional standards for design development
documents shall be applied in determining the sufficiency of the Design
Development Documents.
2.50. "Distributions" means payments (a) to Affiliates of income or
profits, return of capital, reimbursement of expenses, repayment of advances,
salaries, Debt, consulting fees or other guaranteed payments; (b) to any other
Person in a Control Relationship with any Affiliate in excess of Fifty Thousand
Dollars ($50,000) (annually) including payments for advances, salaries, Debt,
consulting fees or other guarantee payments, advertising purchases, accounting
fees or management fees, or on account of any Insider Financing.
2.51. "Dockside Violation" has the meaning set forth in Section 1.3(d)
- - "Dockside Violations."
2.52. "Effective Date" means the date upon which the LEDGC and HJC
executed the Initial Operating Contract. This Casino Operating Contract shall be
effective immediately upon execution, and shall not alter the term which will
remain twenty (20) years with one (1) ten (10) year renewal option (relating
back to July 15, 1994).
2.53. "Environmental Laws" means any applicable law, rule or regulation
pertaining to health, safety or the environment including without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, as
hereafter amended ("CERCLA"), the Resource Conservation and Recovery Act of 1976
as amended by the Used Oil Recycling Act of 1980, the Hazardous and Solid Waste
Amendments of 1984, as
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hereafter amended ("RCRA"), the Federal Water Pollution Control Act, as now or
hereafter amended ("WPCA"), and any laws of the State or any subdivision or
governmental unit thereof, relating to abatement, disposal, existence,
generation, handling, leaking, presence, release, threatened release, removal,
storage, transportation or use of hazardous substances, oil, petroleum, solid
waste or toxic pollutants about, from, in, on, to or under the Casino or any
additions to the Casino made during the Term of this Casino Operating Contract.
The terms "hazardous substance" and "release" shall have the meanings specified
in CERCLA and RCRA; the terms "solid waste" and "disposal" or "disposed" shall
have the meanings specified in RCRA; the terms "oil," "petroleum," and "toxic
pollutant" shall have the meanings specified in WPCA and RCRA; provided that, to
the extent that the laws of the State, as currently enacted or hereafter
amended, establish a meaning for "oil," "petroleum," "toxic pollutants"
"hazardous substance," "release," solid waste" or "disposal" that is broader
than that specified in CERCLA, RCRA or WPCA, such broader meaning shall apply.
2.54. "Essential Agreements" means the Articles of Organization and
Operating Agreement, if any, of the Casino Operator and the Casino Management
Contract.
2.55. "Event of Default" has the meaning specified in Section 20.1 -
"Events of Default."
2.56. "Evidence of Title" means a certified copy of a title insurance
policy or a letter of commitment to issue title insurance to Jazz Casino Company
pursuant to the First American Settlement Agreement entered into by HJC, First
American Title Company and other parties.
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2.57. "Exclusivity Violation" has the meaning set forth in Section
1.3(b) - "Violations Generally."
2.58. "Excusable Temporary Cessation of Operations" means any of the
following circumstances to the extent and only for such time that it causes
temporary closure or temporary cessation of operations of the Casino beyond the
reasonable control of JCC, and further provided that the Casino Operator
diligently and in good faith seeks to reopen the Casino and to recommence Casino
Operations:
(a) strikes, lockouts, inability to procure materials, failure of
power;
(b) arbitrary or capricious State, local or municipal governmental
action (but in no event shall an Excusable Temporary Cessation
of Operations pursuant to this clause (b) exceed a period of
six (6) months);
(c) acts of God, hurricanes, floods, sinkholes, fires and other
casualties, earthquakes, epidemics, or quarantine;
(d) acts of a public enemy, acts of war, terrorism, blockades,
insurrections, riots, civil disturbances, governmental
preemption in connection with a national emergency, or
national or international calamities;
(e) the entry of a judgment, order or ruling in litigation not
filed by JCC or any Affiliates of JCC and which judgment,
order or ruling was not entered substantially as the result of
the fault of JCC or any Affiliates of JCC and which judgment,
order or ruling restrains or substantially interferes with
operations of the Casino;
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(f) any action by the legislature or any governmental agency the
result of which is that gaming as currently proposed to be
conducted at the Casino is materially diminished;
(g) any other causes related to or arising out of the causes
stated in subsections (a) through (g) above beyond the
reasonable control of JCC (excluding any bankruptcy of JCC or
failure of JCC to obtain financing or to pay its financial
obligations as they come due) and not substantially the result
of the fault of JCC; and
(h) any other cause which the Gaming Board in its sole discretion
formally determines to be an Excusable Temporary Cessation of
Operations.
2.59. "Expiration Date" means the last Day of the Term whether by
expiration through lapse of time, automatic expiration before the end of the
Term or termination as a result of an Event of Default.
2.60. "Extended Term" means the additional ten (10) year extension
period following the end of the Initial Term.
2.61. "FF&E" means all furniture, furnishings, equipment and fixtures
(including but not limited to Gaming Devices) necessary for the conducting of
Gaming Operations at the Casino.
2.62. "Financial Statements" means a Person's balance sheet and related
statements of income and operations, partnership or shareholder equity and cash
flow prepared in conformity with GAAP, the requirements of this Casino Operating
Contract and the Rules and Regulations.
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2.63. "Financially Stable" with respect to the Casino Operator means
that the Casino Operator is in full compliance with the objective financial
stability requirements of this Casino Operating Contract, as determined by the
Gaming Board.
2.64. "Financing" means the act or process or an instance of raising
funds relating to the Casino through the issuance of shares of stock, bonds,
notes, mortgages, debentures or other devices evidencing debt or equity
interests.
2.65. "Financing Affiliate" means any corporation, the stock of which
is wholly owned by the Casino Operator and that is utilized solely for the
purpose of Financing.
2.66. "Financing Arrangement" shall mean any lease, installment
purchase, purchase money security interest, use right subject to a participation
in profits, or other financing method used for acquisition, purchase or use of
FF&E.
2.67. "Fiscal Quarter" means the three calendar month period that
begins on the first day of January, April, July and October of each Fiscal Year
as the case may be.
2.68. "Fiscal Year" means the period that begins on April 1st and ends
on March 31st of the following year. The "First Fiscal Year" shall be the period
commencing on the Casino Opening Date and ending on the first March 31st to
occur after the Casino Opening Date. The term "Full Fiscal Year" means any
Fiscal Year containing not fewer than three hundred sixty-five (365) days. A
Fiscal Year containing three hundred sixty-six (366) days is a "Fiscal Leap
Year." Any partial Fiscal Year ending with the expiration of the Term but not
ending due to a termination as a result of an Event of Default shall constitute
the "Last Fiscal Year."
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2.69. "Game" means any banking or percentage game conducted in the
Casino that is played with cards, dice or any electronic, electrical or
mechanical device or machine for money, property or any thing of value. "Game"
includes any form of wagering that may hereafter be authorized at the Casino by
the Casino Act. "Game" does not mean or include wagering, betting or risking
anything of value on either lottery, bingo, charitable games, raffles,
electronic video bingo, pull tabs, cable television bingo, wagering on dog
races, sports betting or wagering on any type of sports events, inclusive but
not limited to football, basketball, baseball, hockey, boxing, tennis,
wrestling, jai alai or other sports contest or event.
2.70. "Gaming Authority" or "Gaming Authorities" means the Gaming Board
and all other Louisiana governmental agencies, related State authorities and
instrumentalities having regulatory oversight of the gaming or related
activities of the Casino Operator, the Casino Manager, their respective
Affiliates or any Person in a Control Relationship with any of them.
2.71. "Gaming Board" means the Louisiana Gaming Control Board created
pursuant to R.S. 27:11, its successors and assigns.
2.72. "Gaming Board's Controlled Space" shall have the meaning set
forth in Section 7.2 - "Gaming Board's Controlled Space."
2.73. "Gaming Device" means any equipment or mechanical,
electromechanical or electronic contrivance, component or machine used directly
or indirectly in connection with Gaming or any Game which affects the result of
a wager by determining win or loss. The term includes a system for processing
information which can alter the normal criteria of random selection, which
affects the operation of any Game or which determines the outcome
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of any Game. "Gaming Device" does not include a system or device which affects a
Game solely by stopping its operation so that the outcome remains undetermined.
2.74. "Gaming Employee" means any Person employed or working in any
capacity at the Casino in the operation or supervision of a Game including but
not limited to (a) pit bosses, floormen, boxmen, dealers, croupiers, machine
mechanics, designated gaming area security personnel, count room personnel, cage
personnel, slot machine and slot booth personnel, credit and collection
personnel, casino surveillance personnel, (b) supervisory personnel authorized
to make discretionary decisions that regulate Gaming Operations including but
not limited to shift bosses, credit executives, casino cashier supervisors,
gaming managers and assistant managers, and (c) any other individual (but not
non-gaming equipment maintenance personnel, cleaning personnel, waiters,
waitresses and secretaries) whose duties require or authorize access to
designated gaming areas.
2.75. "Gaming Operations" or "Gaming Activities" means the offering or
conducting of any Game or Gaming Device at the Casino in accordance with the
provisions of the Casino Act, this Casino Operating Contract and the Rules and
Regulations.
2.76. "Gaming Supplies" means all materials and supplies (other than
Gaming Devices) that the Gaming Board Approves to be used or expended in Gaming
Operations through the Rules and Regulations.
2.77. "General Development Agreement" means that written contract
originally entered into among Rivergate Development, the City as intervenor, and
Celebration Park Casino, Inc., a multiple counterpart of which was registered on
April 27, 1993 in the conveyance records of Orleans Parish as Instrument No.
68201, Notarial Archives No. 93-
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18037, as amended in its entirety by that certain written contract among
Rivergate Development, the City as intervenor, and the Casino Operator, dated
March 15, 1994, which was registered in the conveyance records of Orleans Parish
on March 16, 1994 as Instrument No. 83943, Notarial Archives No. 94-13889, as
further amended in its entirety in that certain Amended and Restated General
Development Agreement executed pursuant to the Plan and pursuant to which the
Casino Operator agrees and obligates itself to construct and equip the Casino
and the related Support Facilities and to undertake certain other obligations
therein contained, as it may be amended from time to time with the Approval of
the Gaming Board.
2.78. "Generally Accepted Accounting Principles" or "GAAP" means
principles of accounting for casinos as set forth in the Audit and Accounting
Guide for Audits of Casinos, with conforming changes as of May 1, 1992 prepared
by the American Institute of Certified Public Accountants, as amended from time
to time, or if not thereby addressed, other generally accepted accounting
principles.
2.79. "Governance Documents" means (a) with respect to a corporation,
the articles of incorporation, by-laws, shareholder's agreements, resolutions of
the board of directors and any other document relating to the organization of
the corporation, (b) with respect to a partnership, the partnership agreement
and any other documents relating to the organization of the partnership, and (c)
with respect to any other type of entity, the documents relating to the
organization of the entity or establishing the right of the owners of the entity
with respect to the entity or each other.
2.80. "Governmental Requirements" means all laws, ordinances, statutes,
rules, regulations of any governmental authority or Gaming Authority, including
but not limited to
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the Casino Act and the Rules and Regulations that are applicable to the
acquisition, renovation, development, construction, equipping, use, occupancy or
operation of the Casino, as modified by any waivers, variances or approvals
obtained pursuant thereto.
2.81. "Gross Gaming Revenue" means the total receipts of the Casino
Operator from Gaming Operations, including all cash, checks, property and credit
extended to a patron for purposes of gaming less the total value of all (i)
amounts paid out as winnings to patrons and (ii) credit instruments or checks
which are uncollected subject to an annual cap of uncollected credit instruments
and checks of four percent (4%) of the total receipts of the Casino Operator
from Gaming Operations, including all cash, checks, property and credit extended
to a patron for purposes of gaming in a Fiscal Year. Winnings for purposes of
the definition of Gross Gaming Revenue means the total amount delivered by a
Gaming Device as win to a patron or the amount determined by the approved table
game odds as win to a patron, exclusive of any double jackpots, increased
payouts in addition to table game odds or other increased payouts that result
from promotional activities, unless approved in advance by the Gaming Board.
2.82. "HET/JCC Agreement" shall have the meaning set forth in Section
25.4(a) - "Agreement."
2.83. "HJC" shall have the meaning set forth in the preamble of this
Casino Operating Contract.
2.84. "Impositions" shall have the meaning set forth in Section 9.31 -
"Payment of Impositions."
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2.85. "Independent Counsel" means an attorney at law or law firm
selected by the Casino Operator and Approved by the Gaming Board to defend the
Gaming Board in accordance with the Indemnity provisions of this Casino
Operating Contract.
2.86. "Independent CPA" means the auditor engaged by the Casino
Operator to perform the Annual Audit. The Independent CPA shall be either (i)
one of the six (6) largest accounting firms having a national practice in the
United States of America or (ii) any other accounting firm that is selected by
the Casino Operator and Approved by the Gaming Board. The Gaming Board may
require the Casino Operator to select a different Independent CPA if the Gaming
Board for good cause determines the Independent CPA is not sufficiently
independent of the Casino Operator to perform its required functions, which
determination shall not be based solely on the fact that the Independent CPA is
or has been engaged by an Affiliate of the Casino Operator. The Casino Operator
shall Notify the Gaming Board of a change of the selection of the Independent
CPA and the reasons for the change. Without the Gaming Board's Approval, the
Casino Operator shall not change an Independent CPA who has been engaged to
perform the Annual Audit for a Fiscal Year before the Independent CPA has
completed the audit of that Fiscal Year. The Independent CPA's engagement
arrangements shall require that all audited Persons waive any applicable
confidentiality privilege in order to enable the Independent CPA to fully and
completely report to the Gaming Board and that the Gaming Board shall have full
access to the Independent CPA's workpapers. The Independent CPA shall prepare
and deliver to the Gaming Board a management letter that complies with the
requirements of the Rules and Regulations and the Internal Control System.
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2.87. "Information" shall have the meaning set forth in Section 12.7 -
"Public Records Access."
2.88. "Initial Costs" shall have the meaning set forth in Section
6.1(b) - "Suitability and Other Advances and Accounting."
2.89. "Initial Operating Contract" shall have the meaning set forth in
the first Whereas clause of this Casino Operating Contract.
2.90. "Initial Plan Financing" means the closing of one or more
transactions contemplated in the Plan necessary to provide sufficient money to
the Casino Operator, in addition to the funds otherwise available to the Casino
Operator, to fund the design, construction and opening of the Casino, the Casino
Bankroll, and other necessary Casino operating expenses pursuant to the Plan,
including without limitation, the new bank financing to be obtained by the
Casino Operator pursuant to the Plan and Leasehold Mortgage for the benefit of
the lenders of such new bank financing, the new notes and the new contingent
notes to be issued pursuant to the Plan to the holders of the 14 1/4% first
mortgage notes due 2001 with contingent interest issued by HJC and Harrah's Jazz
Finance Corp. and Leasehold Mortgage for the benefit of the holders of such new
notes and new contingent notes.
2.91. "Initial Term" means the time period of the Initial Operating
Contract and this Casino Operating Contract, commencing on the Effective Date
and ending at midnight twenty (20) years thereafter unless sooner terminated
(including automatic expiration) pursuant to the provisions of this Casino
Operating Contract.
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2.92. "Initial Term Expiration Date" means the day ending at midnight
twenty (20) years after the Effective Date unless the Initial Term automatically
expires or is terminated pursuant to this Casino Operating Contract.
2.93. "Insider Financing" means advances, borrowings or loans made to
or for the benefit of the Casino Operator (or its Financing Affiliate) by
Affiliates of the Casino Operator or any Person in a Control Relationship with
any of them (other than holders of over five percent (5%) of the ownership
interests of any company whose shares are widely held and publicly traded on a
recognized national stock exchange), including advances, borrowings or loans
resulting from the performance of obligations under completion and other
guarantees or assurances provided to the Gaming Board.
2.94. "Insurance Coverages" means those insurance coverages described
in this Casino Operating Contract in Article XIV - "Insurance."
2.95. "Internal Control System" means the system of internal controls
containing administrative and accounting procedures necessary for the complete
and accurate calculation and reporting of financial data including the Louisiana
Gross Gaming Revenue Share Payments as approved by the Gaming Board.
2.96. "Jazz Casino Company" shall have the meaning set forth in the
preamble of this Casino Operating Contract.
2.97. "JCC Development Company" shall mean JCC Development Company,
L.L.C., a Louisiana limited liability company, which is wholly owned by JCC
Holding Company.
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2.98. "Judicial Declaration of Cure" has the meaning set forth in
Section 1.3(e) -"Notice and Cure Subsequent to Judicial Relief."
2.99. "Judicial Declaration of Violation" has the meaning set forth in
Section 1.3(e) -"Notice and Cure Subsequent to Judicial Relief."
2.100. "Key Person" means a Person who in the opinion of the Gaming
Board exercises critical or significant management or operating authority over
the activities of the Casino Operator.
2.101. "Knowledge" means actual knowledge of a Person including such
knowledge as would have been obtained by a diligent inquiry and knowledge
imputed to a Person by operation of law.
2.102. "Landlord" means the Rivergate Development Corporation.
2.103. "Late Payment Interest" shall have the meaning set forth in
Section 6.7 - "Late Payment Interest."
2.104. "Leasehold Mortgage" means a mortgage on the Casino Operator's
leasehold interest in the Casino Lease, including all immovable improvements so
situated upon the land, including but not limited to a lien in favor of the
Minimum Payment Guarantor, holders of the new notes and new contingent notes
issued pursuant to the Plan (and related trustees and successor trustees), the
Lenders of the financing to be obtained by the Casino Operator pursuant to the
Plan or any other creditor. Every provision of a Leasehold Mortgage shall be
subject to the provisions of the Casino Act and this Casino Operating Contract.
2.105. "Leasehold Mortgagee" means the holder, from time to time, of a
Leasehold Mortgage, including but not limited to the Minimum Payment Guarantor,
holders of the new
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notes and new contingent notes issued pursuant to the Plan (and related trustees
and successor trustees), the Lenders of the financing to be obtained by the
Casino Operator pursuant to the Plan or any other creditor. The Gaming Board
shall have the right to Approve any Leasehold Mortgagee; provided, however, by
executing this Casino Operating Contract, the Gaming Board (i) hereby approves
the Leasehold Mortgagees that hold interests in the Leasehold Mortgages pursuant
to the Plan including, the holders of the new notes and new contingent notes
issued pursuant to the Plan (and related trustees) and the Lenders of the
financing to be obtained by the Casino Operator pursuant to the Plan and (ii)
further declares that such holders shall be deemed Suitable Lenders, subject to
the Gaming Board's rights over debtholders as provided in the Casino Act, the
Rules and Regulations and Section 2.142 of this Casino Operating Contract.
2.106. "LEDGC" means the Louisiana Economic Development and Gaming
Corporation, its successors and assigns.
2.107. "Legislative Auditor" means the Legislative Auditor of the State
and persons designated by the Legislative Auditor as its representatives.
2.108. "Legislature" means the Legislature of the State as it may be
constituted from time to time.
2.109. "Lender" means:
(a) any insurance company regulated by any state of the United
States;
(b) any investment company registered under the Investment Company
Act of 1940;
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(c) any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees;
(d) any trust fund the trustee of which is a bank or trust company
and the participants of which are exclusively plans of the type identified in
subsection (c) of this Section 2.108 - "Lender";
(e) any investment adviser registered under the Investment
Advisers Act of 1940;
(f) any real estate investment trust registered with the United
States Securities and Exchange Commission;
(g) any dealer registered pursuant to Section 15 of the Securities
and Exchange Act of 1934;
(h) any "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933), and any entity, all of the equity owners of
which are "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act of 1933), acting for its own account or the accounts of other
qualified institutional buyers;
(i) any bank as defined in Section 3(a)(2) of the Securities Act
of 1933, any savings and loan association or other institution as referenced in
Section 3(a)(5)(A) of the Securities Act of 1933, or any foreign bank or savings
and loan association or equivalent institution or any investment fund that
participates in a bank syndication (and purchaser that takes an assignment
interest in the bank syndication);
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(j) any investor or group of investors purchasing debt securities
of the Casino Operator (or a subsidiary or direct or indirect parent of the
Casino Operator) in any public offering registered pursuant to the Securities
Act of 1933, receiving debt securities of the Casino Operator (or a subsidiary
thereof) pursuant to Section 1145 of the Bankruptcy Code or through any private
placement, and any investor purchasing such securities in a subsequent sale,
provided, however, that any of the foregoing securities are publicly traded, and
the investor holds no more than twenty percent (20%) of the Casino Operator's
total debt (or its subsidiary or direct or indirect parent) or fifty percent
(50%) of a material debt issue of the Casino Operator (or its subsidiary or
direct or indirect parent) unless otherwise Approved by the Gaming Board, so as
not to give such investor the ability to Control the Casino Operator or the
Casino Manager;
(k) any business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940;
(l) any business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(m) HET or Harrah's Operating and their wholly owned subsidiaries,
as to any loan made to the Casino Operator, including without limitation any
loan made as a result of advances made pursuant to that certain Completion Loan
Agreement entered into by Harrah's Entertainment, Inc., Harrah's Operating and
the Casino Operator pursuant to the Plan, that certain Amended and Restated
Construction Lien Indemnity Obligation Agreement entered into by HET, Harrah's
Operating and the Casino Operator pursuant to the Plan, the guarantee by HET and
Harrah's Operating of the new bank financing pursuant to the Plan, any
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Demand Loan made pursuant to that certain HET/JCC Agreement entered into by the
Casino Operator, HET and Harrah's Operating, the Subordinated Loan to be made to
the Casino Operator by HET or Harrah's Operating pursuant to the Plan, and the
indemnity by HET or Harrah's Operating to the provider of the Performance Bond
pursuant to Section 25.2 - "Completion Guarantee".
(n) any other Person found Suitable and Approved by the Gaming
Board.
2.110. "Louisiana Gaming Board Architect" means the architect
designated from time to time by the Gaming Board to perform consulting functions
to or for the Gaming Board with regard to the construction and equipping of the
Casino.
2.111. "Louisiana Casino Revenue Account" means an account established
in the State Treasury into which the Casino Operator shall deposit or cause to
be deposited all sums (including the Daily Payment and other components of the
Louisiana Gross Gaming Revenue Share Payments and Additional Charges) which
become due and payable to the State by and through the Gaming Board pursuant to
this Casino Operating Contract.
2.112. "Louisiana Gross Gaming Revenue Share Payments" has the meaning
set forth in Section 6.2(a) - "Payments."
2.113. "Material" shall mean compliance with the obligations of Section
1.3(b) - "Violations Generally" and 1.3 (d) - "Dockside Violations" in all
respects other than minor or unimportant violations.
2.114. "Material Change" means for the purposes of Article XI - "Design
and Construction" a change that either (a) reduces the gaming area of the Casino
by more than five percent (5%), or (b) constitutes a change that materially
affects the structural integrity of the
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Casino, or (c) materially alters the design or composition (e.g. materials) of
the exterior of the Casino or (d) impairs the ability of the Casino Operator (or
any Casino Manager) to remain in compliance with this Casino Operating Contract,
including the Internal Control System.
2.115. "Minimum Payment" means the sum of One Hundred Million Dollars
($100,000,000) per Full Fiscal Year. For the First Fiscal Year commencing on the
Casino Opening Date and for the Last Fiscal Year, the Minimum Payment shall be
the product of the Daily Payment and the number of Days in such First or Last
Fiscal Year.
2.116. "Minimum Payment Default" has the meaning set forth in Section
6.2(b) - "Minimum Payment Default."
2.117. "Minimum Payment Guarantor" has the meaning set forth in Section
25.1 - "Rolling Minimum Payment Guaranty."
2.118. "Minimum Payment Guaranty" has the meaning set forth in Section
25.1 - "Rolling Minimum Payment Guaranty."
2.119. "19th JDC" has the meaning set forth in Section 28.6 - "Venue,
Personal Jurisdiction and Forum Selection."
2.120. "Notice" means a writing sent or delivered to a party at its
address and in the manner provided in Article XXVII - "Notices."
2.121. "Official Gaming Establishment" means the Casino. The terms
"Official Gaming Establishment" and "Casino" shall have the same meaning and are
used interchangeably in this Casino Operating Contract.
2.122. "Other Contractors" has the meaning set forth in Section 14.6 -
"Other Contractor Insurance."
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2.123. "Outside Dates" means the dates set forth in Section 9.29 -
"Timetables and Outside Dates."
2.124. "Payment Credit" has the meaning set forth in Section 6.1(b) -
"Suitability and Other Advances and Accounting".
2.125. "Permit" or "Permits" means all licenses, permits, approvals,
consents and authorizations required by Governmental Authorities in connection
with the demolition, construction, renovation improvement, opening, occupancy or
operation of the Casino.
2.126. "Permitted Amendment" shall have the meaning set forth in
Section 1.3(b)(A)(1)(a) - "Violations Generally."
2.127. "Permitted Amendment Violation" shall have the meaning set forth
in Section 1.3(e) - "Permitted Amendment Violations."
2.128. "Permitted Riverboat" shall have the meaning set forth in
Section 1.3(b)(A)(i)(a) - "Violations Generally."
2.129. "Person" means any individual, partnership, corporation,
association, unincorporated association or organization, limited liability
company, limited liability partnership, trust or other juridical entity or any
governmental agency, body or subdivision.
2.130. "Plan" means the Joint Plan of Reorganization under Chapter 11
of the United States Bankruptcy Code, consolidated Case Numbers 95-14545,
95-14544, 95-14871, filed by the Harrah's Jazz Company, Harrah's Jazz Finance
Corp., and Harrah's New Orleans Investment Company, which plan was confirmed by
the United State Bankruptcy Court, Eastern District of Louisiana on January 29,
1998, as subsequently modified.
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2.131. "Plan Effective Date" shall mean the Effective Date as defined
in the Plan which date shall also be concurrent with the effectiveness of the
obligations, terms and conditions of this Casino Operating Contract.
2.132. "Reduced Operations Period" means any period of time during the
Term after the Casino Opening Date when the Casino is not fully open for
business (other than temporary adjustments made by the Casino Operator to the
number of open Casino areas or Games made on the basis of the number of patrons
then in the Casino), including but not limited to any time period during which
the Casino is not fully open for business as a result of (a) the Gaming Board's
enforcement or regulatory proceedings, (b) any fire, flood or other casualty or
(c) the performance of Work or Alterations.
2.133. "Required Payments" has the meaning set forth in Section 6.3(a)
- - "Amount and Payment of Daily Payment."
2.134. "Revenue Share Payments" has the meaning set forth in Section
1.3(b)(A) - "Violations Generally."
2.135. "RFQ/P" means the Request for Qualifications and Proposals
issued by the LEDGC dated April 29, 1994.
2.136. "Rivergate Development" means the Rivergate Development
Corporation, a Louisiana public benefit corporation, and its successors,
transferees and assigns.
2.137. "Rules and Regulations" means the rules and regulations of the
Gaming Board now existing and hereafter adopted in order to implement the
legislative policy declared in the Casino Act pursuant to R.S. 27:24 as well as
any regulations adopted by the LEDGC that remain in effect pursuant to R.S.
27:31(E).
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2.138. "Second Floor Sublease" means that certain sublease from the
Casino Operator to JCC Development Company with respect to the non-gaming areas
of the second floor of the Casino.
2.139. "Second Floor" means the leased premises pursuant to the Second
Floor Sublease.
2.140. "Secured Debt" means a debt of the Casino Operator secured by a
Leasehold Mortgage or a security interest in Gaming Devices or Gaming Supplies.
2.141. "Space Lease" means any concession, franchise, lease, license,
sublease or other agreement other than the Casino Lease, or the Casino
Management Contract that would permit or allow a Person to use and maintain
non-gaming space as a tenant in the building on the Rivergate site, including
the second floor.
2.142. "Space Lease Operator" means the Person entitled to use and/or
maintain space under a Space Lease.
2.143. "State" means the State of Louisiana.
2.144. "Suitable" or "Suitability Requirements" means, as applicable to
any Person, the criteria provided for in R.S. 27:234, R.S. 27:235, and in the
Rules and Regulations, as the same may be amended, modified or restated from
time to time.
2.145. "Suitable Lender" means a Lender described in Section 2.108 -
"Lender," subsections (a) through (n) or any other Lender presumed suitable by
the Rules and Regulations unless at any time either (i) such Lender exercises
Control or intends to exercise Control over the Casino Operator or the Casino
Manager, or (ii) the Gaming Board receives information indicating that such
Lender may not meet the Suitability requirements. If the
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Gaming Board in its sole discretion determines that a condition described in
either (i) or (ii) exists with respect to a particular lender, the presumption
may no longer exist for that lender and the lender shall be required to
demonstrate its Suitability in accordance with the terms of the Casino Act.
Neither the commencement of a foreclosure proceeding and the seeking of a
receiver in accordance with R.S. 27:275 et seq. nor the acceptance of a debt or
equity interest in JCC Holding Company pursuant to the Plan shall, in and of
itself, lead to the loss of the presumption unless the Gaming Board, in its sole
discretion, determines that the Lender is exercising Control of the Casino
Operator.
2.146. "Support Facilities" means the employee and bus support parking
facilities on the land legally described on Exhibit E-1 attached hereto and by
this reference incorporated herein and the Poydras Street parking facilities on
the land legally described on Exhibit E-2 attached hereto and by this reference
incorporated herein.
2.147. "System Marks" means all service marks, trademarks, copyrights,
trade names, patents or similar rights or registrations under which the Casino
may be operated pursuant to the Casino Management Agreement.
2.148. "Term" means the Initial Term and any Extended Term of this
Casino Operating Contract.
2.149. "Termination Event" shall have the meaning set forth in Section
20.6(b) - "Termination of Casino Operating Contract."
2.150. "Transfer" means to alienate, assign, bequeath, bestow, cede,
change control, convey, dispose of, divest, donate, give, grant an interest in,
grant a security or secured interest in, hypothecate, mortgage, pawn, pledge or
sell.
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2.151. "Work" means the labor, material and professional design and
other services which must be performed in order to repair and restore the Casino
following damage or destruction resulting from fire, flood or other casualty.
ARTICLE III. GRANT OF AUTHORITY
3.1. Grant of Authority. Subject to the conditions, covenants,
obligations, requirements and terms herein contained and in consideration of the
obligation and agreement of the Casino Operator to provide for and furnish the
Official Gaming Establishment, to collect and remit the Louisiana Gross Gaming
Revenue Share Payments and Additional Charges due and to become due to the State
by and through the Gaming Board in accordance with this Casino Operating
Contract and the Rules and Regulations and in consideration of other conditions,
covenants, obligations, requirements and terms agreed to by the Casino Operator
(some of which may be more extensive or onerous than the basic obligations
provided for in the Casino Act but are authorized pursuant to the Casino Act,
and particularly, without limitation, R.S. 27:241(D) and R.S. 27:244 (A)(10)),
the Gaming Board does hereby grant to the Casino Operator the exclusive
authority to conduct Games and Gaming Operations at the Casino for the benefit
of the Gaming Board (and through the Gaming Board, for the benefit of the State)
and the Casino Operator.
3.2. Permitted Use. The Casino Operator may use the Casino solely for
the purposes of conducting Games and Gaming Operations therein pursuant to and
in compliance with the Casino Act, this Casino Operating Contract and the Rules
and Regulations and for such other uses as may be permitted by the Casino Act
and the Rules and Regulations. The Casino Operator shall not use or suffer the
use of the Casino for any illegal or unlawful
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purpose or in violation of Governmental Requirements, the Casino Lease, or the
requirements of the Insurance Coverages.
3.3. Approval Prerogative. The Casino Operator acknowledges and
consents to the Gaming Board's right to allow, permit or sanction a proposed
action or request by the Casino Operator (including requests to do and requests
not to do) whenever and wherever by virtue of the Casino Act, this Casino
Operating Contract or the Rules and Regulations, the Gaming Board's prior
approval, consent or satisfaction is a prerequisite condition, subject to appeal
or review as provided in this Casino Operating Contract.
3.4. Location of Official Gaming Establishment. The Official Gaming
Establishment shall be located at the site of the former Rivergate Convention
Center in Orleans Parish.
ARTICLE IV. WARRANTIES AND REPRESENTATIONS
4.1. Gaming Board Warranties; Due Authorization. The Gaming Board
warrants to the Casino Operator that it is a duly established State regulatory
agency under Louisiana law and pursuant to the Gaming Act is authorized to
execute and deliver this Casino Operating Contract on its own behalf and on
behalf of the State.
4.2. Casino Operator Warranties. The Casino Operator warrants and
represents that on the Plan Effective Date:
(a) Due Organization and Good Standing. HJC and JCC are duly
organized and in good standing under Louisiana law and have the full right,
power and authority to enter into this Casino Operating Contract and to perform
all of its conditions and obligations hereunder. The making, execution, delivery
and performance of this Casino
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Operating Contract by HJC and the Casino Operator has been duly authorized and
approved by requisite action of HJC and the Casino Operator in accordance with
the requirements of its Governance Documents and applicable law.
(b) Financial Capacity. The Casino Operator has and shall have the
requisite authority and ability (financial or otherwise) to perform, as and when
timely performance is required, all of its obligations under this Casino
Operating Contract and the Rules and Regulations, as such authority and ability
is contemplated by the Plan and by the financial stability tests set forth in
Section 9.5 - "Financial Stability" of this Casino Operating Contract.
(c) No Material Misrepresentation. There is not any material
misrepresentation contained in any warranty or representation made by the Casino
Operator in this Casino Operating Contract or in any Plan Document (as defined
in the Plan) that has been submitted to the Gaming Board by the Casino Operator.
(d) No Knowledge of Unsuitability. The Casino Operator does not
have knowledge of any fact or circumstance not disclosed to the Gaming Board in
writing that would render unsuitable any Person who or which is required by the
Casino Act, this Casino Operating Contract or the Rules and Regulations to be
found Suitable pursuant to the Casino Act.
(e) Evidence of Title to Casino. The Casino Operator has the right
to possession and use of the Casino pursuant to the Casino Lease, and the Casino
Operator has obtained the evidence of its leasehold interest in the Casino in
the form of the Evidence of Title.
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ARTICLE V. TERM AND EXTENDED TERM
5.1. Initial Term. The Initial Term shall be twenty (20) consecutive
years commencing on the Effective Date and expiring at midnight on the Initial
Term Expiration Date, unless this Casino Operating Contract expires or is sooner
terminated as provided in this Casino Operating Contract.
5.2. Extended Term. Provided that this Casino Operating Contract has
not been terminated as provided in this Casino Operating Contract, the Term of
this Casino Operating Contract shall be automatically extended for the Extended
Term, an additional ten (10) year extension period following the end of the
Initial Term, unless the Casino Operator has given notice to the Gaming Board of
its election not to extend the Term a minimum of eighteen (18) months prior to
the expiration of the Initial Term.
ARTICLE VI. COMPENSATION PAYMENTS; AMOUNTS AND METHODS
6.1. Fixed Payment Obligations
(a) Initial Payment. As partial consideration for the rights
granted to the Casino Operator pursuant to the Initial Operating Contract, the
Gaming Board acknowledges that HJC paid the initial payment of One Hundred
Twenty-Five Million Dollars ($125,000,000) to the LEDGC.
(b) Suitability and Other Advances and Accounting. As partial
consideration for the personnel costs incurred by the Gaming Board in connection
with initial suitability, investigations and the State's reasonable fees for
work previously performed and to be performed by its principal contract counsel
and for work regarding the negotiation of terms and conditions of this Casino
Operating Contract and related documents, and subject to
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the payment schedule set forth below, the Casino Operator shall advance to the
Gaming Board an amount (the "Initial Costs"), except as provided hereinafter,
not to exceed Three Million Five Hundred Thousand Dollars ($3,500,000) to
reimburse the Gaming Board and the State for actual costs, including, but not
limited to Gaming Board, State Police and Attorney General personnel and any
contract staff or firms appropriate to the suitability process and for work
previously performed or to be performed by the principal contract counsel firm
for the LGCB and/or the Attorney General and State for work regarding the
negotiation of terms and conditions for the Casino Operating Contract and
related documents that were or are incurred in connection with the suitability
findings and negotiations necessary for the drafting and execution of the Casino
Operating Contract and related documents and the opening of the Casino. It is
acknowledged by the Gaming Board that the Casino Operator advanced Five Hundred
Thousand Dollars ($500,000) of the Initial Costs to the Gaming Board prior to
the Plan Effective Date to cover Initial Costs. The Casino Operator shall
advance an additional Three Million Dollars ($3,000,000) of the Initial Costs to
the Gaming Board on or before the Plan Effective Date. Six (6) months after the
Plan Effective Date, the Gaming Board will provide the Casino Operator with a
full accounting of the amounts spent to that date and projections as to any
additional Initial Costs that are anticipated. Upon Notice from the Gaming Board
to the Casino Operator, accompanying the referenced projections as to additional
anticipated Initial Costs, the Gaming Board may notify the Casino Operator that
the Initial Costs have exceeded the Three Million Five Hundred Thousand Dollars
($3,500,000) previously advanced. In making such projections the Gaming Board
and State will give an appropriate credit to the Casino Operator for any funds
collected or anticipated by the Gaming
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Board or the State in the form of Suitability fees. The Casino Operator shall be
required, within thirty (30) days after such notice, to advance an amount
necessary to cover but not to exceed such excess costs. Within thirty (30) Days
after the opening of the Casino, the Gaming Board shall prepare and provide the
Casino Operator with a final accounting of the Initial Costs which includes all
actual costs and fees incurred by the Gaming Board, the Louisiana State Police
and the Attorney General as described above. If the Initial Costs advanced by
the Casino Operator as described herein exceed the actual costs and fees as set
forth in the final accounting, the Casino Operator shall be entitled to a credit
for the difference between the Initial Costs advanced and the actual costs and
fees (the "Payment Credit"). In the event the actual costs and fees exceed Three
Million Five Hundred Thousand Dollars ($3,500,000), the Gaming Board and/or the
State may require the Casino Operator to pay such deficiency, which will be paid
within fifteen (15) days of demand, and if not timely paid said deficiency will
be payable with interest at the rate provided in Section 6.7 - "Late Payment
Interest."
6.2. Louisiana Gross Gaming Revenue Share Payments. (a) Payments. In
addition to the payment of the Initial Payment previously paid by HJC and as
further consideration for the rights granted to the Casino Operator pursuant to
this Casino Operating Contract, the Casino Operator shall pay an amount to the
Gaming Board (the "Louisiana Gross Gaming Revenue Share Payments") to be
calculated in the following manner. Subject to the terms of the relief, if any,
from payment set forth in Section 1.3 (b), (c), (e) and (f), the Louisiana Gross
Gaming Revenue Share Payments for each Fiscal Year from the Casino shall equal
the greater of (i) the Minimum Payment or (ii) the sum of the following
percentages of
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Gross Gaming Revenue from the Casino in that Fiscal Year: (A) eighteen and
one-half percent (18.5%) of Gross Gaming Revenue up to and including Six Hundred
Million Dollars ($600,000,000); plus (B) twenty percent (20%) of Gross Gaming
Revenue in excess of Six Hundred Million Dollars ($600,000,000) up to and
including Seven Hundred Million Dollars ($700,000,000); plus (C) twenty two
percent (22%) of Gross Gaming Revenue in excess of Seven Hundred Million Dollars
($700,000,000) up to and including Eight Hundred Million Dollars ($800,000,000);
plus (D) twenty four percent (24%) of Gross Gaming Revenue in excess of Eight
Hundred Million Dollars ($800,000,000) up to and including Nine Hundred Million
Dollars ($900,000,000); plus (E) twenty five percent (25%) of Gross Gaming
Revenue in excess of Nine Hundred Million Dollars ($900,000,000).
(b) Minimum Payment Default. If following the Casino Opening Date (i)
an Event of Default has occurred pursuant to Section 20.1(o), (ii) the Casino
Operator has failed to make the Daily Payments and failed to cure such
non-payment (plus any interest pursuant to Section 6.7 - "Late Payment Interest"
within fifteen (15) Days of Notice by the Gaming Board to Casino Operator, JCC
Holding and the Minimum Payment Guarantor of a failure to make a Daily Payment
(the "Default Notice") and the Gaming Board thereafter notifies the Casino
Operator, JCC Holding and the Minimum Payment Guarantor that such failure has
not been cured or (iii) the Casino Operator has filed for bankruptcy and has
ceased continuing Gaming Operations (each, a "Minimum Payment Default"), then as
of the Minimum Payment Default, the Minimum Payment Guarantor shall be obligated
in accordance with the terms and conditions of the Minimum Payment Guaranty to
pay to the Gaming Board all Daily Payments which have not been paid (plus Late
Payment Interest as
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provided in Section 6.7 - "Late Payment Interest") and thereafter to pay to the
Gaming Board all Daily Payments on a daily basis for the remainder of the Fiscal
Year in which the Minimum Payment Default occurs to the extent such Daily
Payments have not been paid by the Casino Operator; provided that after the
Actual Opening Date the Minimum Payment Guarantor shall not be obligated to make
any Daily Payments due for any Day which is twenty (20) days or more prior to
any Default Notice from the Gaming Board pursuant to clause (ii) of this Section
6.2(b) - "Minimum Payment Default." Notwithstanding the above, if a Minimum
Payment Default occurs in the First Fiscal Year, the Casino Operator shall be
obligated to pay the Daily Payment until the Day prior to the first anniversary
of the Casino Opening Date, and the obligation of the Minimum Payment Guarantor
shall apply to, and the Minimum Payment Guarantor shall pay, any unpaid Daily
Payments, plus interest as provided in Section 6.7 - "Late Payment Interest,"
for the remainder of the period ending on such Day prior to the first
anniversary of the Casino Opening Date; provided that after the Actual Opening
Date the Minimum Payment Guarantor shall not be obligated to make any Daily
Payments due for any Day which is twenty (20) days or more prior to any such
Default Notice from the Gaming Board pursuant to clause (ii) of this Section
6.2(b) - "Minimum Payment Default." If any Leasehold Mortgagee shall effect a
cure by paying the State, by and through the Gaming Board, the past due Daily
Payments (plus interest as provided in Section 6.7 - "Late Payment Interest") at
any time prior to forty-five (45) Business Days after the Minimum Payment
Default, the amount paid by any such Leasehold Mortgagee to effect any such cure
shall become an obligation of the Casino Operator to such Leasehold Mortgagee
and shall be secured by such Leasehold Mortgagee's Leasehold Mortgage.
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6.3. Remittance and Monthly Adjustments. Beginning on the Casino
Opening Date and continuing until the Expiration Date, the Casino Operator shall
make daily payments of the Louisiana Gross Gaming Revenue Share Payments (the
"Daily Payments") as follows:
(a) Amount and Payment of Daily Payment. The parties intend that
at all times during each Fiscal Year, the Gaming Board shall be paid an amount
not less than the Daily Payment times the number of Days that have elapsed to
date in the Fiscal Year (the "Required Payments"), with a true-up for any
Louisiana Gross Gaming Revenue Share Payments in excess of the Minimum Payment
to occur at the end of each Fiscal Year; provided however, the Required
Payments/Daily Payments shall be suspended if there is an Excusable Temporary
Cessation of Business pursuant to Section 2.58(b) hereof (in no event to exceed
six (6) months) or a business interruption insurance claim period pursuant to
Section 15.3 - "Utilization of Insurance Proceeds." The amount of the Daily
Payment in a non-leap Fiscal Year shall be the sum of Two Hundred Seventy-Three
Thousand Nine Hundred Seventy-Two and 60/100 Dollars ($273,972.60). The amount
of the Daily Payment in a Fiscal Leap Year shall be the sum of Two Hundred
Seventy-Three Thousand Two Hundred Twenty-Four and 04/100 Dollars ($273,224.04).
The Daily Payment shall be paid each Business Day on the terms provided in
Section 6.5 - "Daily Deposits." The Daily Payment for each non-Business Day
shall be carried forward without interest and paid on the next Business Day. The
Casino Operator shall be entitled to a set-off against any Daily Payment due in
an amount equal to the Payment Credit. The Casino Operator shall also be
entitled to offset against each Daily Payment due during the second Full Fiscal
Year a per diem amount
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equal to Four Million Eight Hundred Twelve Thousand Four Hundred Forty Seven
Dollars ($4,812,447) divided by the number of days in such second Full Fiscal
Year as a credit for the overpayment of funds previously paid by the Casino
Operator to the LEDGC. Except as provided hereinabove in this Section 6.3(a)
"Amount and Payment of Daily Payment," there shall be no abatement in, any right
of offset, setoff, or recoupment of, or any right to withhold or fail to pay the
Daily Payment as required in Section 6.5 - "Daily Deposits."
(b) Daily Gross Gaming Revenue Report. The Casino Operator shall,
in accordance with the Rules and Regulations of the Gaming Board, submit to the
Gaming Board or its representative a daily gaming revenue report.
(c) Monthly Report - Adjustments to Louisiana Gross Gaming Revenue
Share Payments. On or before the 15th day following the end of each month, the
Casino Operator shall submit to the Gaming Board a report showing:
- Gross Gaming Revenue for the previous month and the
Fiscal Year to date.
- Any adjustments to the Gross Gaming Revenue
calculation including, without limitation,
adjustments for bad debt writeoffs (subject to a cap
of four percent (4%) of gross gaming revenue),
progressive jackpot accruals or other appropriate
adjustments.
- Total amount of Daily Payment paid during the
previous month.
- The actual amount of the Required Payments remitted
to the Gaming Board during the Fiscal Year through
the end of the previous month.
- In the last month of the Fiscal Year, the actual
amount of the Louisiana Gross Gaming Revenue Share
Payments actually due for the Fiscal Year based on
the amount of Gross Gaming Revenue for that period.
If the actual amount due to the Gaming Board as Louisiana Gross Gaming Revenue
Share Payments for the Fiscal Year, after accounting for Gross Gaming Revenue
adjustments,
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exceeds the aggregate amount paid to the Gaming Board as Required
Payments in the Fiscal Year, the Casino Operator shall pay the difference
without interest on or before the due date of the final monthly report in each
Fiscal Year.
6.4. State's Interest in Daily Collections. The State shall own that
portion of the daily collections from Gaming Operations equal to the greater of
(a) the Daily Payment or (b) the Gaming Board's interest in the actual amount of
the collections from Gaming Operations for that Day (the "State's Interest in
Daily Collections"). No other Person shall have any interest whatsoever in or to
the State's Interest in Daily Collections. The Casino Operator shall not enter
into any contract or other agreement that permits or purports to permit the
Casino Operator or any other Person to claim any ownership or collateral or
security right or interest in or to the Louisiana Gross Gaming Revenue Share
Payments, including the State's Interest in Daily Collections, and the Casino
Operator shall indemnify the State against all loss suffered by the State as a
result of the Claims of other Persons to the Louisiana Gross Gaming Revenue
Share Payments, including the State's Interest in Daily Collections.
6.5. Daily Deposits. The State's Daily Payment for each Casino Gaming
Day shall be deposited by wire or electronically directly into the Louisiana
Casino Revenue Account, or such other account designated by the State by and
through the Gaming Board, by 5:00 p.m. Central Standard Time (or Central
Daylight Savings Time when in effect in Louisiana) of the next Business Day
following the close of that Casino Gaming Day (unless the Gaming Board directs a
different method). For example, the State's Daily Payment for the Casino Gaming
Day ending 6:00 a.m. on Thursday, June 11, 1998 shall be deposited in the
Louisiana Casino Revenue Account by 5:00 p.m. on Friday, June 12, 1998.
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6.6. Casino Operator's Right to Grant Security Interest. The Casino
Operator shall have the right to grant to one or more Leasehold Mortgagees a
security interest or lien in the funds owned by the Casino Operator, provided
that the instrument granting the security interest or lien clearly states that
the security instrument does not extend to the State's ownership interest in the
Louisiana Gross Gaming Revenue Share Payments, including the State's Interest in
Daily Collections and provided the Casino Operator obtains the Approval of the
Gaming Board. The Leasehold Mortgagee shall acknowledge that its Leasehold
Mortgage does not extend to the State's ownership interest in the Louisiana
Gross Gaming Revenue Share Payments, including the State's Interest in Daily
Collections.
6.7. Late Payment Interest. If the Casino Operator fails to pay as and
when due any amount due to the State or the Gaming Board under this Casino
Operating Contract, the amount past due shall bear interest at the Default
Interest Rate from the due date until paid ("Late Payment Interest"), regardless
of whether such amount shall be paid to the State or the Gaming Board by the
Casino Operator, the Minimum Payment Guarantor, a Leasehold Mortgagee or any
other payor.
6.8. No Reduction in Payment. All payments due to the State or the
Gaming Board pursuant to this Casino Operating Contract shall be made in
immediately available lawful money of the United States of America, by
electronic funds transfer and except as provided herein, without notice or
demand and without abatement, deduction, reduction or setoff.
6.9. Continuing Payment Requirement. During any Reduced Operations
Period, the Casino Operator shall continue to pay all sums due to the State or
the Gaming Board,
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including the Louisiana Gross Gaming Revenue Share Payments, subject, however,
to the suspension set forth in Section 15.3 - "Utilization of Insurance
Proceeds." Notwithstanding actual Gross Gaming Revenue during the time period
that Work or Alterations are undertaken, the Louisiana Gross Gaming Revenue
Share Payments after the Casino Opening Date shall never be less than the
Minimum Payment.
ARTICLE VII. OTHER CONSIDERATIONS
7.1. Open Access. As additional consideration for the right to operate
the Casino, the Casino Operator agrees that it shall comply with the
requirements of R.S. 27:202(F) and (G).
7.2. Gaming Board's Controlled Space. As additional consideration for
this Casino Operating Contract and in order to permit the Gaming Board to
perform on-site its regulatory duties and to monitor the Casino Operator's
performance under this Casino Operating Contract, the Casino Operator shall
provide at no cost to the Gaming Board reasonable space in the Casino (the
"Gaming Board's Controlled Space") for the Gaming Board, its representatives,
personnel, the State Police and equipment. The Gaming Board's Controlled Space
shall be specifically configured (in one or more locations in the Casino) and
equipped at the Casino Operator's expense as the Gaming Board directs from time
to time. The Gaming Board's Controlled Space shall be secure space accessible
only to the Gaming Board and its representatives and the State Police. All of
the Gaming Board equipment in the Gaming Board Space shall be secure and
accessible only to the Gaming Board and its representatives and the State
Police.
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ARTICLE VIII. CASINO MANAGER AND CASINO MANAGEMENT CONTRACT
8.1. Subcontracting of Casino Operator's Obligations. This Casino
Operating Contract is personal to the Casino Operator. The performance of the
Casino Operator's duties and obligations under this Casino Operating Contract
may not be subcontracted, assigned or otherwise delegated to any other Person
without the Gaming Board's Approval. In connection with the obligation of the
Casino Operator to demonstrate that it is capable of conducting, and likely to
conduct, the activities for which it is licensed and that it has acquired, or
guarantees that it will acquire, adequate business competence and experience in
the operation of Casino Gaming Operations, the Gaming Board has agreed to permit
the Casino Operator to enter into a single, comprehensive management agreement,
subject to its approval, so long as necessary, through which a knowledgeable and
experienced Person shall covenant and agree with the Casino Operator to operate
the Casino in accordance with this Casino Operating Contract, and Rules and
Regulations as promulgated by the Board. Except for the Casino Management
Contract between the Casino Operator and the Casino Manager, the Casino Operator
shall not have the right further to subcontract, assign or delegate performance
of the Casino Operator's duties and obligations under this Casino Operating
Contract or receive performance from any other Person without the Gaming Board's
prior Approval. No Person subcontracting Casino management with the Casino
Operator shall have different or greater rights than the Casino Operator nor
shall such Person have the right further to subcontract or assign, or delegate
performance of its obligations under the Casino Management Contract to other
Persons without the Gaming Board's Approval. No provision of the Casino
Management Contract that conflicts with the provisions of this Casino Operating
Contract shall be valid and each such conflicting provision is hereby declared
to be
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void and of no effect. Without limiting the generality of the foregoing, no
provision of the Casino Management Contract which provides for or otherwise
imposes a penalty or liquidated damages for termination shall be valid or
enforceable if the Gaming Board orders the Casino Management Contract
terminated, limited or restricted as a result of the Casino Manager's violation
of the obligations imposed on the Casino Operator under this Casino Operating
Contract.
8.2. Subcontracting by Casino Operator. The Casino Operator or JCC
Development Company may enter into Space Leases concerning non-gaming activities
and enter into incidental contracts with vendors, suppliers, contractors or
consultants as long as such incidental contracts do not, either alone or when
aggregated, constitute a Casino Management Contract; provided that the Gaming
Board (i) retains the right to require compliance by such Persons with the
licensing, permitting and Suitability Requirements of the Casino Act and the
Rules and Regulations of the Gaming Board and (ii) shall have the authority to
approve all subleases and to license and permit any sub-lessees of any of the
Second Floor Space to ensure that the sublessee is Suitable and that any desired
use of the Second Floor is consistent with and complies with the Casino Act and
the Rules and Regulations. In connection with the development of the Second
Floor, the Casino Operator shall deliver a master plan for the initial build-out
and leasing of the Second Floor, and any subsequent build-out, for the Gaming
Board's approval based upon the terms of the Gaming Act; provided, however, the
Casino Operator shall not seek and the Gaming Board shall not approve any use
that (i) targets, solicits or encourages persons under the age of twenty-one
(21) to patronize businesses on the Second Floor; or (ii) authorizes the Casino
Operator or
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anyone affiliated with the Casino Operator to offer seated restaurant facilities
to the general public (subject to the right of the Gaming Board pursuant to R.S.
27:243 to authorize the Casino Operator to lease non-gaming space on the Second
Floor to any business or entertainment facility which is not affiliated with the
Casino Operator that may offer food to the general public).
8.3. Casino Operator's Obligations Under the Casino Management
Contract. The Casino Operator shall at all times hereafter implement the Casino
Management Contract and abide by the terms of the Casino Management Contract
that do not conflict with the obligations imposed on the Casino Operator under
this Casino Operating Contract. The Casino Operator shall operate the Casino
diligently and efficiently and in a manner consistent with the operation of
first class casinos by leaders in the industry and in accordance with this
Casino Operating Contract and the Rules and Regulations.
8.4. Acts and Omissions of the Casino Manager. The acts and omissions
of the Casino Manager shall be conclusively deemed to be the acts and omissions
of the Casino Operator for all purposes under this Casino Operating Contract.
Without limiting the generality of the foregoing in any way, all Gross Gaming
Revenue received by the Casino Manager shall be conclusively deemed to have been
contemporaneously received for and on the joint account of the Casino Operator
and the Gaming Board in accordance with Section 6.4 - "State's Interest in Daily
Collections." The required timely performance by the Casino Operator of this
Casino Operating Contract shall not be excused by virtue of the acts or
omissions of the Casino Manager. For purposes of this Casino Operating Contract,
the Casino Operator shall be responsible for the acts and omissions of all
Casino Employees.
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8.5. Access to Casino Manager's Books and Records of the Casino. The
Gaming Board or its designee shall at all times during the Term have full and
unrestricted access to the Books and Records irrespective of whether the same
are maintained by the Casino Operator, Casino Manager or any other Person.
8.6. Notice of Termination of Casino Management Contract. The Casino
Operator shall give the Gaming Board no less than twelve (12) months' advance
Notice of any intended termination of the Casino Management Contract (or any
other event that would result in the Casino Operator's inability to use System
Marks at the Casino), provided, however, that the Casino Operator may terminate
the Casino Management Contract upon shorter Notice and without penalty if the
Gaming Board has ordered the Casino Management Contract to be terminated and/or
has Approved a substitute Casino Manager and a substitute Casino Management
Contract. In any case of planned termination, the Casino Operator shall provide
to the Gaming Board a written plan providing for the continuous operation of the
Casino without material interruption. A continuous operation plan shall provide
for the continuous uninterrupted operation of the Casino and provide for the
orderly replacement of all signs and items bearing trade names or System Marks
that the Casino Operator no longer has the right to use; replacement or
assignment of the right to continue to use proprietary or non-proprietary
computer systems; assignment of occupancy agreements and operating agreements as
materially necessary for continued Casino operations; and substitution of
services provided under the Casino Operating Contract for marketing, accounting
and insurance services. A Casino continuous operations plan shall also provide
for orderly replacement of all System Marks, labeled Gaming Supplies and Gaming
Devices; removal of
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all permanently affixed or movable System Mark items such as signs, carpets,
fixtures, trade fixtures, furniture, equipment, and improvements; replacement of
all marketing and advertising materials, whether or not located at the Casino,
such as billboards, handbills, flyers, and media tapes; and replacement of any
other Casino Property that contains or bears any System Mark, whether or not
proprietary in nature, such as computer hardware/software, management
information systems, and non-gaming consumables such as napkins, flatware,
glassware and stationery.
8.7. Casino Name Change. Any name change of the Casino shall be subject
to prior approval of the Gaming Board. If there is a change in the name of the
Casino, the Casino Operator shall, at the Casino Operator's sole cost and
expense, comply with the continuous operation plan to provide for uninterrupted
operation of the Casino and remove or cause to be removed from the Casino all
property bearing any System Mark of the Casino Manager or any of its Affiliates
(including, if applicable, the name "Harrah's").
8.8. Termination Transition Payment. [TEXT DELETED - NOT APPLICABLE]
8.9. Leasehold Mortgagee Exemption. [TEXT DELETED - NOT APPLICABLE]
ARTICLE IX. CASINO OPERATOR'S AFFIRMATIVE COVENANTS
9.1. General. Throughout the Term, the Casino Operator covenants with
the Gaming Board to observe and to cause the Casino Manager, where applicable,
to observe the covenants contained in this Article IX - "Casino Operator's
Affirmative Covenants" as well as those found elsewhere in this Casino Operating
Contract.
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9.2. Official Gaming Establishment. The Casino Operator shall be solely
responsible for providing, improving and maintaining the Casino and shall
provide all FF&E, Gaming Devices and Gaming Supplies and other things or
services necessary for the efficient conduct of Games and Gaming Operations at
the Official Gaming Establishment. The Casino Operator shall conduct all Games
and Gaming Operations at the Official Gaming Establishment in accordance with
this Casino Operating Contract, the Rules and Regulations and the Casino Act.
The Casino Operator shall provide or cause to be provided the Casino Employees
and other personnel and such other services or goods as required by this Casino
Operating Contract and the Rules and Regulations necessary to comply with its
obligations under this Casino Operating Contract. The Casino Operator shall
comply with the requirements of R.S. 27:244, shall provide, improve and maintain
the Casino and shall be responsible for payment of all expenses of Casino Gaming
Operations and other operations of the Casino. The Casino Operator shall provide
private security for the detection and prevention of offenses against patrons
and for the orderly operation of the Casino. The Casino shall have at least one
hundred thousand (100,000) square feet of usable space in a single structure
upon the Date of Substantial Completion and shall commence operations with
usable and non-obsolete FF&E, which shall be sufficient to conduct full Gaming
Operations in the 100,000 square feet of usable space.
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9.3. Payment. The Casino Operator shall pay the Louisiana Gross Gaming
Revenue Share Payments and the Additional Charges due to the Gaming Board in
accordance with the provisions of this Casino Operating Contract.
9.4. Initial Plan Financing and Site Possession. As a significant and
material inducement to execute this Casino Operating Contract, and without which
the Gaming Board would not have signed this Casino Operating Contract, the
Casino Operator has represented to the Gaming Board that the Casino Operator,
either alone or through its Financing Affiliate, has the present and future
ability to obtain the Initial Plan Financing and to proceed to complete
construction of the Casino in accordance with the Plan.
9.5. Financial Stability. In order to maintain its Suitability, the
Casino Operator shall at all times be and remain Financially Stable and, to the
extent it meets such requirements, the Casino Operator shall be deemed to be
financially suitable. The Casino Operator shall at all times during the Term
demonstrate its financial stability and its ability to perform under this Casino
Operating Contract. The Casino Operator shall, through periodic compliance
reports to the Gaming Board (which until a different reporting period is ordered
by the Gaming Board by Notice to the Casino Operator, shall be quarterly and
delivered to the Gaming Board not later than the fifth (5th) Business Day of
each Fiscal Quarter) demonstrate by clear and convincing evidence its ability to
comply with the financial requirements of this Casino Operating Contract and the
Essential Agreements as and when required and without seeking extensions or
delays. The periodic compliance reports shall be Certified by the Casino
Operator and by the president and the chief financial officer of the Casino
Manager, or their respective designees. The Casino Operator shall be deemed to
be Financially Stable only
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when its periodic compliance reports demonstrate the required compliance with
each of the financial stability standards set forth in subsections (a) through
(d) of this Section 9.5 - "Financial Stability."
(a) Maintenance of Casino Bankroll. The Casino Operator shall be
able to demonstrate its ability to maintain the Casino Bankroll in the amount
established in this Casino Operating Contract and the Rules and Regulations. The
Casino Operator shall establish its compliance with this financial stability
standard only when it proves by clear and convincing evidence that it has
continuously maintained the Casino Bankroll required by this Casino Operating
Contract and has not failed to pay the full amount of winning wagers to Casino
patrons as and when due and without excuse, extension, forbearance or delay.
(b) Performance and Payment of Operating Expense Obligations. The
Casino Operator shall be able to demonstrate its ability to pay in full when due
all sums due under this Casino Operating Contract and all other undisputed
operating expenses of the Casino of every kind and character other than Debt
(which is governed by subsection (c) below), including but not limited to timely
payment of (i) the Louisiana Gross Gaming Revenue Share Payments, (ii) the
Additional Charges, rent and other payments due under the Casino Lease or other
leases, and (iii) the Daily Payment, all without excuse, extension, forbearance
or delay, and, as a result, the Casino Operator has funds to pay when due other
undisputed operating expenses. The Casino Operator shall establish its
compliance with this financial stability standard only by proving by clear and
convincing evidence that it has paid all such sums not disputed as and when due
or has been excused from performance or otherwise received an extension of time,
forbearance or delay.
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(c) Performance and Payment of Debt Obligations. The Casino
Operator shall demonstrate its continuing ability to pay, exchange, refinance
or extend Debt that will mature or otherwise become due and payable during
the ensuing twelve (12) month period, or otherwise to manage a default with
respect thereto in a manner Approved by the Gaming Board. The Casino Operator
shall establish its compliance with this financial stability standard only by
proving by clear and convincing evidence that it has the continuing ability
to pay, exchange, refinance or extend its Debt that will mature or otherwise
become due and payable during the ensuing twelve (12) month period. The
periodic financial report required by this subsection (c) shall also state
the source, manner and timing of all payment of Debt for the ensuing twelve
(12) month period.
(d) Capital Maintenance Expenses. The Casino Operator shall
demonstrate its ability to make all capital maintenance expenditures necessary
to ensure the maintenance of the Casino in a first-class operating condition.
The Casino Operator shall establish its compliance with this financial stability
standard only by proving by clear and convincing evidence that it has made all
payments to the Capital Replacement Fund as and when due and without excuse,
extension, forbearance or delay and that it has met all of the Capital
Replacement Fund requirements set forth in the Casino Management Contract, or if
the Casino Management Contract with Harrah's New Orleans Management Company has
expired or has been terminated, as set forth in the Rules and Regulations.
(e) Financial Stability Default. If, at any time, the Casino
Operator is unable to demonstrate that it is Financially Stable, then and in any
such event, the Casino Operator after Notice from the Gaming Board to cure a
failure to comply with the
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requirements of the Gaming Board shall be subject to the regulatory authority of
the Gaming Board as provided below. The cure period for any default in
maintaining the Casino Bankroll as set forth in Section 9.5(a) - "Maintenance of
Casino Bankroll," shall be ten (10) days after Notice from the Gaming Board. The
cure period for any default in performance and payment of operating expense
obligations, as set forth in Section 9.5(b) - "Performance and Payment of
Operating Expense Obligations," shall be three (3) months after Notice from the
Gaming Board (except for any payment due to the Gaming Board which shall be
subject to a fifteen (15) Day cure period). The cure period for any default in
performance and payment of Debt Obligations, as set forth in Section 9.5(c) -
"Performance and Payment of Debt Obligations" shall be six (6) months after
Notice from the Gaming Board. The cure period for any default in Capital
Maintenance expenditures, as set forth in Section 9.5(d) - "Capital Maintenance
Expenses" shall be three (3) months after Notice from the Gaming Board. During
the cure period the Gaming Board may make and impose orders or regulatory
conditions, including but not limited to the following: (1) shortening the
period for periodic reporting concerning financial stability; (2) changing the
required content of periodic reporting concerning financial stability; (3)
interdicting or placing restrictions on Distributions by the Casino Operator to
its Affiliates or any other Person in a Control Relationship with any of them;
(4) appointing a representative to act as fiscal agent for the Casino which
person shall have authority to interdict or restrict Distributions by the Casino
Operator to its Affiliates or to any other person in a Control Relationship with
any of them. Notwithstanding the foregoing, Distributions for the following
purposes shall not be interdicted or restricted: (i) payments for reasonable and
necessary goods and services in amounts not exceeding the cost of similar goods
and services
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from independent third parties; (ii) salaries to Key Employees in an amount not
exceeding one and five-hundredths (1.05) times that person's salary in the prior
year; and (iii) repayment of Debt or indebtedness to any Leasehold Mortgagee,
debtholder or any "institutional investors" (as defined in the Rules and
Regulations), to the extent funds are available after all required payments to
the Gaming Board have been made. If, after the applicable cure period has
expired, the Gaming Board makes a final determination that the Casino Operator
is not Financially Stable and if this determination is appealed by the Casino
Operator to the proper court within the applicable period provided by law, the
Gaming Board shall not terminate the Casino Operating Contract as a result of
the determination of financial instability/suitability until the appeal is
dismissed or the proper court renders a final non-appealable judgment upholding
the Gaming Board's determination. Provided further, if an appeal from the Gaming
Board's determination concerning financial stability/suitability is filed by the
Casino Operator, the Gaming Board may, pending the appeal, take such steps as
the Gaming Board in its sole opinion deems appropriate in order to protect the
public interest, the integrity of the Casino (including Gaming Operations), and
the fiscal interest of the Gaming Board and the State, including but not limited
to the immediate appointment of a conservator who shall have such powers and
duties with respect to the Casino and Gaming Operations as the Gaming Board
approves by emergency or other Rules and Regulations including the power to
interdict or restrict all Distributions. In the event of the appointment of a
receiver in accordance with the terms of the Casino Act, the conservatorship
shall be terminated and the receiver shall be governed by the Rules and
Regulations adopted by the Gaming Board.
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9.6. Non-Discrimination Policies. The Casino Operator shall adhere to
non-discrimination policies and practices embodied in all applicable federal,
state and local law or regulation and as required by R.S. 27:202(G)(1) and the
Rules and Regulations.
9.7. Minority Employment Policies. The Casino Operator shall, as nearly
as practicable, employ minorities at least consistent with the minority
population of the State, all as required by R.S. 27:202(G)(2) and the Rules and
Regulations and all applicable law.
9.8. Compulsive Gaming Program. The Casino Operator shall develop,
adopt and implement a program for persons suffering from compulsive or problem
gaming activities in accordance with HJC's response to the RFQ/P.
9.9. Maintain Qualifications. The Casino Operator shall maintain its
qualifications, including strict adherence to the Suitability Requirements.
9.10. On-Site Inspections. The Casino Operator shall permit and not
hinder, delay or obstruct either (a) the Gaming Board's or its representatives'
on-site inspections of the Casino, the Casino Premises, Gaming Devices, Gaming
Supplies, the Support Facilities, the Casino Operator's and the Casino Manager's
on-site and off-site offices (including office or building space in the Casino
occupied by the Casino Manager or its personnel pursuant to occupancy rights
granted in the Casino Management Contract) or (b) the Gaming Board's examination
and review of the Books and Records and the operations and business of the
Casino Operator or the Casino Manager.
9.11. Cooperate in Investigations. The Casino Operator shall cooperate
fully in any investigation by the Gaming Board into:
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(a) the qualifications of each applicant for a contract, license
or permit requested or to be issued pursuant to the Casino Act; or
(b) the circumstances surrounding any act or failure to act or
transaction for which the Gaming Board's review, notification or Approval is
required; or
(c) violations of any of the Governmental Requirements relating to
Gaming or Gaming Operations at the Casino.
9.12. Access to Information, Materials and Data. The Casino Operator
shall provide to the Gaming Board (and its representatives) continuing and
unobstructed access to the Books and Records and such other information,
material or data concerning the Casino Operator and the Casino Manager as
provided in R.S. 27:231(A)(8) and (C)(4)(a) and the Rules and Regulations.
9.13. Maintain Books and Records After Termination or Expiration. The
Casino Operator shall maintain the Books and Records in accordance with the
terms of this Casino Operating Contract for three (3) years following expiration
or termination of this Casino Operating Contract.
9.14. Documents for Investigations. The Casino Operator shall supply
upon demand by the Gaming Board and cause the Casino Manager to supply upon
demand by the Gaming Board such information, documents, data (electronic or
otherwise) necessary to permit the Gaming Board to perform its investigative
duties under the Casino Act and the Rules and Regulations.
9.15. Cooperation to Facilitate Restrictive Use Casino Operating
Contracts. The Casino Operator shall fully cooperate with the Gaming Board and
its representatives as
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and when required by the Gaming Board in order to enable the Gaming Board to
enter into restrictive use agreements with Gaming Authorities.
9.16. Maintain Suitability. The Casino Operator (including, without
limitation, the officers and directors of the Casino Operator) and the Casino
Manager shall be Suitable at the Plan Effective Date of this Casino Operating
Contract and shall remain Suitable at all times during the Term as required by
R.S. 27:234 and 27:235 and the Rules and Regulations. For purposes of this
Casino Operating Contract and subject to cure, safe harbor provisions and
financial stability provisions contained herein: the Casino Operator shall be
and remain a person of good character, honesty and integrity; shall not be
disqualified under R.S. 27:235; shall be and remain capable and likely to
conduct the Casino and Gaming Operations in accordance with the conditions,
covenants, obligations, requirements and terms of this Casino Operating Contract
and the Rules and Regulations; shall possess adequate business experience and
competence and have adequate financing from sources required to be found
Suitable by the Gaming Board; shall be and remain capable of complying with R.S.
27:234(C)(3) with respect to bonds or financial guarantees; shall continually
inform the Gaming Board as required by Rules and Regulations of material changes
in its respective affiliations, businesses, financial standing, operations,
ownership and relationships; shall provide upon the Gaming Board's demand such
information, data and documentation necessary to a continuing Suitability
determination; shall not be convicted or enter pleas of guilty or nolo
contendere to any offense punishable by imprisonment for more than one year;
shall have no Control Relationship with a Person who is not Suitable (subject,
however, to any "safe harbor" provisions applicable to the Casino Operator).
Additionally, the Casino Operator shall
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comply with the Rules and Regulations in
connection with any contract for fixtures, furniture, equipment or supplies or
the conduct of any business relating to the Casino or Gaming Operations.
9.17. Information Concerning Creditors. Upon the Gaming Board's
request, the Casino Operator shall produce information, documentation and
assurances concerning any holders of indentures, notes or other evidences of
indebtedness either in effect or proposed which bear any relation to the
Official Gaming Establishment, Games or Gaming Operations in order to enable the
Gaming Board to perform its duties pursuant to R.S. 27:242(A).
9.18. Business Ability and Casino Gaming Experience. In conformity with
the requirements of R.S. 27:242(B), upon the Gaming Board's request, the Casino
Operator shall furnish to the Gaming Board such information, documentation and
assurances as may be required to establish by clear and convincing evidence that
the Casino Operator has sufficient business ability and casino gaming experience
or is capable of obtaining employees with such experience to establish the
Casino Operators' ability to conduct Gaming Operations in accordance with the
provisions of this Casino Operating Contract and the Rules and Regulations.
9.19. Notice of Claims. Subject to the confidentiality provisions
contained in the Casino Act, the Casino Operator shall give Notice to the Gaming
Board concerning each threatened or pending Claim, administrative proceeding,
criminal or investigative proceeding (including grand jury investigations) or
lawsuit concerning the Casino Operator, the Casino Manager, their respective
Affiliates or any other Person in a Control Relationship with any of them known
to the Casino Operator which may be material to the Casino Operator's or the
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Casino Manager's ability to perform under this Casino Operating Contract or to
the Gaming Board's interests herein.
9.20. Insurance Coverages. The Casino Operator shall effect and
maintain the Insurance Coverages.
9.21. Essential Agreements. The Casino Operator shall timely perform
all of its obligations under each of the Essential Agreements, the Casino Lease
and the General Development Agreement and shall not default or suffer a default
under any Essential Agreements, the Casino Lease or the General Development
Agreement if a default would adversely affect the Casino Operator's ability to
perform any of its obligations under this Casino Operating Contract. The Casino
Operator shall not permit the amendment, cancellation, modification or
restatement of any of the Essential Agreements without the Approval of the
Gaming Board unless Gaming Board approval of any such amendment, cancellation,
modification or restatement is not required pursuant to the Rules and
Regulations.
9.22. Casino Bankroll. The Casino Operator shall provide the Casino
Bankroll as required by Section 9.5(a) - "Maintenance of Casino Bankroll."
9.23. Days and Hours of Operation. After the Casino Opening Date, the
Casino Operator shall keep the Casino open for business twenty-four (24) hours
per day or the operating hours proposed by the Casino Operator and approved by
the Gaming Board. Notwithstanding the foregoing, the Casino Operator, with the
Approval of the Gaming Board, may close the Casino from time to time as
necessary to effect Work or Alterations which cannot be effected while the
Casino is open for business. The Casino Operator may make
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temporary adjustments to the Casino area being operated based on the number of
patrons then present in the Casino. However, no closing of the Casino or
reduction in hours of operation, with or without the Approval of the Gaming
Board, shall relieve the Casino Operator of its obligations to make all payments
required under this Casino Operating Contract, except with respect to the
payment forbearance provided herein with respect to delays occasioned by the
adjustment of losses concerning business interruption insurance as set forth in
Section 14.12 - "Adjustment of Insurance."
9.24. Age Limitations. The Casino Operator shall take all reasonable
steps necessary to prevent persons under the age of twenty-one (21), unless
otherwise permitted under applicable law, to:
(a) play or be allowed to play any Game or Gaming Device at the
Casino;
(b) loiter or be permitted to loiter in or about any room,
premises, or designated area where any Game or Gaming Device is located,
operated or conducted at the Casino;
(c) be employed as a Gaming Employee or an operator of any Game
or Gaming Device at the Casino; or
(d) serve or be served, consume or be allowed to consume any
alcoholic beverage at the Casino.
The Casino Operator shall draft and implement policies and procedures designed
to satisfy the requirements, including policies and procedures pertaining to
documentation relating to proof of age and the examination of such document by
responsible Casino Employees and to provide suitable security to enforce the
policies and procedures. Notwithstanding the
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provisions of R.S. 27:260, the Casino Operator covenants and agrees that it
shall at all times be subject to the Gaming Board's regulatory authority and
that the Gaming Board may, by the Rules and Regulations provide for incremental
fines and/or penalties for any violation of the same kind or involving the same
Person in addition to those fines and/or penalties stipulated in R.S. 27:260.
9.25. Maintenance of Casino. The Casino Operator shall maintain the
Casino, including the landscaped areas, driveways, sidewalks and pedestrian and
vehicular passageways in a clean, safe, sanitary first-class condition and in
compliance with the Governmental Requirements.
9.26. Computerized Accountability.
(a) Centralized Computer. In order to provide necessary security,
integrity and financial accountability for Casino Operations at the Casino, the
Casino Operator shall maintain the Books and Records relating to Casino
Operations in the Casino Operator's/Casino Manager's Casino Management System
("CMS System") and the Slot Data System ("SDS System") with terminals located at
the Casino Premises or at such other location within the State as may be
approved by the Gaming Board or the Louisiana State Police. All Gaming Devices
that can be linked to the SDS System, excluding table games and similar gaming
devices, shall be linked to the SDS System.
(b) Access to Computer Records. The Gaming Board and the Louisiana
State Police shall be afforded complete and unrestricted access to information
stored on-line in the SDS and CMS Systems relating to Casino Operations
(excluding employee information which information shall be available upon
request by the Gaming Board or the Louisiana
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State Police) in accordance with the procedures specified below with the
understanding that such access is not intended to expand the statutory rights of
the Gaming Board to request and obtain information as set forth in the Casino
Act or other applicable law.
(i) The Casino Operator/Casino Manager shall provide the Gaming
Board and the Louisiana State Police with a computer terminal and printer to be
located in the Gaming Board Controlled Space or other approved area in the
Casino to access the information in the CMS and SDS Systems in accordance with
the terms hereof. If information requested is not available for review at such
terminal by the Gaming Board or the Louisiana State Police due to technical
problems, the Casino Operator/Casino Manager shall cooperate with the Gaming
Board and the Louisiana State Police in providing immediate alternative access
to requested information.
(ii) The access to the computer terminal that is provided to the
Gaming Board and the Louisiana State Police shall be on an inquiry-only basis
and shall not include any ability to enter updates or otherwise add, delete,
modify, program or reorganize the data in the Casino Operator's/Casino Manager's
SDS and CMS Systems.
(iii) Due to the public reporting requirements imposed upon the
Casino Operator under the federal securities laws and due to the propriety and
confidential nature of much of the information maintained on-line in the SDS and
CMS Systems, the Gaming Board (its employees, servants, agents, including the
Louisiana State Police) agree to treat all information obtained from its review
of the SDS and CMS Systems, in a confidential manner and to use it solely for
its investigatory, administrative and audit functions permitted by the Casino
Act.
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(iv) At any given time, the Gaming Board and the Louisiana State
Police shall designate, in the aggregate, no more than eight (8) employees who
may access Information in the SDS and CMS systems, provided, however, nothing
herein shall prevent such employees from sharing and utilizing any information
obtained with authorized employees of the Louisiana State Police, the Attorney
General's Office or the Gaming Board in connection with the performance of their
duties. The Casino Operator or the Casino Manager shall provide such employees
designated by the Gaming Board and the Louisiana State Police with special
passwords that shall provide access to the information identified herein to the
designated employees without further assistance of the Casino Operator/Casino
Manager, provided, however, that the Casino Operator/Casino Manager agrees to
provide the designated employees with instructions and training on how to access
the data banks identified in subsection (ii) above. No other Gaming Board
employee or agent shall be trained or permitted to access the SDS and CMS
Systems. The Gaming Board and the Louisiana State Police shall take appropriate
internal measures to protect the security of the information in the SDS and CMS
Systems.
(v) To ensure the integrity of the direct access relationship to
the proprietary and confidential material maintained on the SDS and CMS Systems,
the Casino Operator or the Casino Manager may keep through such SDS and CMS
Systems an audit trail of the activity on the terminal that is made available to
the Gaming Board pursuant to this Section 9.26 - "Computerized Accountability,"
including: (a) the date, time and duration of the access; (b) the identity of
the employee gaining access; and (c) the data screens reviewed. The specific
elements recorded on the audit trail may also include a designation of which
data
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screens were printed. The audit trail shall not be used by the Casino
Operator or the Casino Manager to thwart, interfere with or undermine a Gaming
Board investigation or audit.
(vi) If the Casino Operator or the Casino Manager determines
through its review of the audit trail that a Gaming Board employee or agent has
exceeded the rights granted by this Section 9.26 - "Computerized Accountability"
or that a Gaming Board employee or agent may have disclosed information to an
unauthorized person, then the Casino Operator or the Casino Manager shall notify
the Gaming Board. If the Gaming Board determines that one of its employees
accessed or used information contrary to the terms of this Section 9.26 -
"Computerized Accountability," the Gaming Board shall take appropriate action
against such employee or agent and it shall take all steps to prevent the misuse
of information obtained from the Casino Operator or the Casino Manager,
including the prosecution of all available remedies against any unauthorized
Persons that have access to such information.
(vii) This Section 9.26 - "Computerized Accountability" creates
no new or independent obligation for the Casino Operator or the Casino Manager
to revise their computer screens or create new computer screens, so long as the
Gaming Board and the Louisiana State Police have terminal access to all
information that is otherwise on-line in the SDS and CMS Systems.
9.27. Minimum Internal Controls. The Casino Operator shall establish or
cause to be established a system of internal controls containing administrative
and accounting procedures necessary for the complete and accurate calculation
and reporting of financial data including the Louisiana Gross Gaming Revenue
Share Payments (the "Internal Control
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System"). The Internal Control System shall be Approved by the Gaming Board. The
Gaming Board shall at all times during the Term have the right to modify the
requirements for the Internal Control System by Rules and Regulations. The
Casino Operator shall cause to be prepared by the Independent CPA an annual
report of the Casino Operator concerning compliance with the policies and
procedures set forth in the Internal Control System. The Casino Operator's
annual compliance report shall be delivered to the Gaming Board not later than
one hundred twenty (120) Days following the close of each calendar year after
the Casino Opening Date. The compliance report shall address the adequacy of the
design of the Internal Control System and the effectiveness of the Casino
Operator's implementation of the Internal Control System in order to assure the
Casino Operator's compliance with this Casino Operating Contract. The compliance
report shall include a listing of all material matters or items of
non-compliance with the Internal Control System that have come to the
Independent CPA's attention. Within thirty (30) days of delivery of the
Independent CPA's compliance report, the Casino Operator shall (a) advise the
Gaming Board in writing as to the manner in which it has corrected or proposes
to correct each material matter or material item of non-compliance identified in
the compliance report, and (b) provide a timetable for completing each material
matter or material item of noncompliance not then corrected. The Gaming Board
may at any time direct the Casino Operator to correct any item of material
non-compliance with the Internal Control System (whether reported by the
Independent CPA, by the Casino Manager or coming to the attention of the Gaming
Board in any other manner) in a manner Approved by the Gaming Board.
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9.28. Utilization of Louisiana Goods and Services. In purchasing or
contracting for goods and services, the Casino Operator shall give preference
and priority to Louisiana residents, laborers, vendors and suppliers except in
those instances wherein the Casino Operator establishes that it is not
reasonably possible to do so without added expense, substantial inconvenience or
sacrifice in operational efficiency.
9.29. Timetables and Outside Dates. The Casino Operator shall meet the
timetables and achieve the Outside Dates for the following events:
(a) Initial Plan Financing shall be obtained in accordance with
Section 13.4 - "Evidence of Initial Plan Financing" no later than the Plan
Effective Date.
(b) Construction on the Casino shall re-commence no later than
thirty (30) days after the Plan Effective Date.
(c) The Casino shall be fully operational and open for business no
later than twelve (12) months after the Plan Effective Date (the "Completion
Date"). The Outside Dates shall be extended by the number of Days as set forth
in Section 1.1(a)(i) of the Completion Guarantee issued pursuant to Section 25.2
- - "Completion Guarantee" of this Casino Operating Contract and attached as
Exhibit B hereto and by this reference incorporated herein, and the Casino
Operator's obligation to complete the Casino by the Outside Date shall be
subject to such extensions and limitations as set forth in Article 12 of the
Completion Guarantee.
9.30. Rivergate/City Payments. Within sixty (60) Days after the end of
each Fiscal Year, the Casino Operator shall deliver to the Gaming Board a
certified statement detailing the date, purpose and amount of all payments made
to Rivergate Development, the City or
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other Persons pursuant to the Casino Lease or any other agreement with the City
or Rivergate Development for the previous Fiscal Year.
9.31. Payment of Impositions. The Casino Operator shall pay or cause to
be paid, and pay timely, on or before the last day on which they may be paid
without penalty or interest, all non-discriminatory and uncontested real estate
taxes and assessments (ordinary and extraordinary, unforeseen as well as
foreseen), water rents, sewer and other charges, value added tax, use and
occupancy tax, sales tax, vault tax and other taxes, duties and charges, fees or
payments imposed by any governmental, quasi-governmental or public authority, or
utility or entity, which is imposed, assessed, levied or becomes due or payable
or becomes a charge or lien upon, or arises in connection with the ownership,
use, occupancy or possession of the Casino Premises, or any part thereof, or any
of the improvements thereon, or any appurtenances thereto (all of the foregoing
being herein collectively referred to as "Impositions") during the Term of this
Casino Operating Contract.
9.32. Payment to Unsecured Creditors. The Allowed General Unsecured
Creditors as designated in the Plan shall be paid cash by the Casino Operator
equal to the amounts of their Allowed General Unsecured Claims on the Plan
Effective Date, which payments shall be guaranteed by the Completion Guarantee
(attached hereto as Exhibit B) issued by HET and Harrah's Operating.
ARTICLE X. CASINO OPERATOR'S NEGATIVE COVENANTS
10.1. General. Throughout the Term, the Casino Operator covenants with
the Gaming Board to duly and timely observe and to cause the Casino Manager,
where applicable, to duly and timely observe each and every one of the following
covenants as well
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as the other covenants, requirements and terms found elsewhere
in this Casino Operating Contract to wit:
10.2. Food and Restaurant Facilities and Service. To the extent
prohibited by State law and in order to comply with State law, the Casino
Operator shall not offer seated restaurant facilities with table food service in
the Casino for Casino patrons other than limited cafeteria style food services
for Casino patrons, provided, however, that: (a) seating for any such food
facility shall not exceed two hundred fifty (250) persons; and (b) no food
prepared by the Casino Operator shall be given away or subsidized at such
facility by the Casino Operator or any licensee. In accordance with the
authorization to the Gaming Board to provide for a system or concession in the
Casino whereby area restaurant owners and food preparers may elect or offer to
provide for service in the Casino food service areas, food prepared and offered
at their restaurants accompanied by identification of the restaurant providing
the food and in an effort to encourage the Casino Operator to conduct business
with local restaurants and food preparers, the Casino Operator shall comply with
the regulation in effect on the date of the execution of this Casino Operating
Contract as set forth in the preamble to the Casino Operating Contract,
LAC:IX.3587 (or any such modification thereof as may be required by a final
judicial non-appealable judgment). Subject to any prohibition provided by State
law, nothing herein shall prevent the leasing of non-gaming space by the Casino
Operator or JCC Development on the second floor of the building on the Rivergate
site to any business or entertainment facility unaffiliated with the Casino
Operator that may offer food to the general public.
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10.3. No Lodging. The Casino Operator shall not, to the extent
prohibited by State law (a) offer lodging in the Casino or (b) engage in any
practice or enter into any business relationship to give any hotel or lodging
facility any advantage or preference not available to all similarly situated
hotels or lodging facilities. To the extent required by State law, the Casino
Operator shall obtain the approval of the Gaming Board prior to entering into
any contract with any hotel or lodging facility.
10.4. Prohibited Contacts with Public Officers. The Casino Operator
shall not engage in any business activity with any person whom the Casino
Operator knows or should know is a public officer as defined in R.S. 42:1,
including but not limited to those business activities described in R.S. 27:261
except as a patron in the Casino. The Casino Operator and the Casino Manager
shall not make campaign contributions to any person seeking election or
re-election to a public office as defined in R.S. 42:1. Nor shall the Casino
Operator make a contribution, loan or expenditure on behalf of a political
candidate or group connected thereto or as otherwise prohibited by the Casino
Act, the Governmental Requirements and the Rules and Regulations. The Casino
Operator and Casino Manager shall further comply with all restrictions on direct
and indirect campaign contributions under State law as it may be amended from
time to time.
10.5. Improper Activities. The Casino Operator shall not divert or
"skim revenues" in violation of R.S. 27:262 or engage in illegal activities or
reduce competition from other gaming entities in violation of R.S. 27:240(l)(b)
or conduct Games or Gaming Operations so as to prevent guests from patronizing
local businesses other than the Casino in violation of R.S. 27:240(l)(c).
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10.6. Prohibited Sale of Certain Products. To the extent prohibited by
State law or the Rules and Regulations, the Casino Operator shall not engage in
the sale of products that are not directly related to Games or Gaming
Operations.
10.7. Exclusion and Detention of Certain Persons. In order to
effectuate the policies of the Casino Act and in order to effectively maintain
strict regulation of Games and Gaming Operations, the Casino Operator shall not
knowingly admit and shall exclude and eject from the Official Gaming
Establishment, all persons whose presence in the Casino is determined by the
Gaming Board by Notice to the Casino Operator to pose a threat to the interests
of the State, the Gaming Board, licensed gaming or all of them. The Casino
Operator shall further use its best efforts to provide security for the
detection and prevention of offenses against patrons. In connection with these
requirements, and in accordance with the legislative mandates in R.S. 27:239,
244(A)(6), 240(3), 265 and 260 to 264, in the event the Casino Operator, Casino
Manager, or their employees and agents, have reasonable cause to believe that a
Person at the Casino: (a) is or has violated any provision of the Casino Act or
the Rules and Regulations; (b) is subject to exclusion or ejection pursuant to
the Involuntary Exclusion List as provided in the Rules and Regulations; (c) has
engaged in an act that is subject to the ejectment criteria as provided in the
Rules and Regulations; or (d) is or may be threatening the safety or welfare of
any patron or employee within the Casino, the Casino Operator, Casino Manager
and their employees or agents may escort such Person to an approved Security
Officer for questioning and, if appropriate, notification and turnover to
regulatory or law enforcement authorities, including, without limitation, the
Gaming Board, the New Orleans Police Department or the State Police. In
connection with any detention and
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questioning of a Person as provided herein, the Casino Operator shall ensure
that there is surveillance coverage of any detention and questioning. The Gaming
Board, as promptly as possible following the execution of the Casino Operating
Contract, shall promulgate regulations to implement the terms of this Section.
10.8. Environmental Laws. The Casino Operator shall not cause, permit
or allow any violation of any Environmental Laws on, about or beneath the
Casino. The Casino Operator shall obtain all permits and approvals necessary
under the Environmental Laws in connection with the remodeling, demolition or
construction of the Casino.
10.9. Other Prohibited Activities. The Casino Operator shall not engage
in any other activity or activities prohibited by the Casino Act, this Casino
Operating Contract, the Rules and Regulations or the Governmental Requirements.
The Casino Operator and the Casino Manager shall not knowingly employ, or enter
into a consulting agreement with, a person who was the Mayor or a City Council
member of the City during 1993 or any managerial level employee of or consultant
to the City and who provided services to the City of New Orleans relating to the
negotiation and execution of the Casino Lease. The employment or consulting
prohibition in the previous sentence shall end with respect to a person two
years after termination of the person's employment or consulting relationship
with the City.
ARTICLE XI. DESIGN AND CONSTRUCTION
11.1. Casino Design. The Casino Operator has presented to the Gaming
Board and the Gaming Board has approved, the Casino Operator's program plans for
the Casino, as more fully identified in Exhibit A as "Approved Program Plans"
attached hereto and by this
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reference incorporated herein. The Casino Operator shall cause the Casino
Operator's Architect to prepare the Design Development Documents and the
Construction Documents relating to the first and second floor changes for the
Casino. The Design Development Documents and the Construction Documents shall be
consistent with the Approved Program Plans for the Casino attached hereto as
Exhibit A and with sound architectural and engineering practices. Upon
completion of the Construction Documents for the Casino, reproducible copies of
the Construction Documents shall be submitted to the Gaming Board and its
authorized representative, as further detailed in Section 11.12 - "Reports and
Monitoring." The Gaming Board and its representative shall have access to said
documents and their preparers for plan review during the Design Development and
Construction Document preparation phases.
11.2. Casino Construction. The Casino Operator shall, at its sole cost
and expense, cause the Casino to be constructed in substantial conformity to the
Casino Construction Documents.
11.3. Poydras Street Support Facility and Poydras Tunnel Construction.
The Casino Operator shall, at its sole cost and expense, cause the Poydras
Street support facility and the Poydras tunnel to be constructed in conformity
with the Poydras Street support facility Construction Documents and Poydras
tunnel Construction Documents, respectively.
11.4. Effect of Delivery. Any delivery of Design Development Documents
or the Construction Documents contemplated hereby or described herein shall not
deprive the Casino Operator or the Casino Operator's Architect of the right to
retain the originals or other
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reproducible copies of the Design Development Documents or the Construction
Documents, as the case may be, or the right to re-use information contained
therein.
11.5. Changes to Construction Documents. The Casino Operator shall
obtain prior approval from the Gaming Board of any Material Change to the Design
Development Documents set forth in Section 11.1 - "Casino Design" or the
Construction Documents in accordance with the procedures set forth in Section
11.6 - "Material Change Approval Procedure." Changes to the Design Development
Documents or the Construction Documents not constituting a Material Change may
be made by the Casino Operator from time to time without approval, provided that
the Casino Operator delivers documentation of all changes to the Gaming Board
within a reasonable period of time following completion of the documents.
11.6. Material Change Approval Procedure.
(a) The Casino Operator may from time to time submit to the Gaming
Board for approval Material Changes to the Design Development Documents or the
Construction Documents, as the case may be. Each request for approval shall be
in writing and shall include a detailed description of the requested change or,
if applicable or requested, drawings from the Design Development Documents or
plans and specifications from the Construction Documents relating to the
requested change and shall contain a certification by the Casino Operator and
its applicable contractor of the effect upon time and costs to complete. The
Gaming Board shall not withhold its consent to a proposed change required by
Governmental Requirements.
(b) Promptly after receipt of a request for approval of a proposed
Material Change, the Gaming Board shall notify the Casino Operator in writing
whether the proposed
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Material Change is approved, approved as noted or disapproved. A notice of
disapproval shall describe in reasonable detail the reasons for the disapproval.
If the Gaming Board fails to so Notify the Casino Operator in writing in a
reasonable time after receipt of the proposed Material Change, the proposed
Material Change shall be deemed approved, unless the Gaming Board has notified
the Casino Operator of the necessity for additional time.
(c) If the Gaming Board disapproves a proposed Material Change,
the Casino Operator may, at its option, (i) abandon the proposed Material
Change, (ii) resubmit to the Gaming Board for its approval one or more revised
versions of the proposed Material Change, or (iii) notify the Gaming Board in
writing that the Casino Operator contends the Gaming Board has unreasonably
withheld its approval of the proposed Material Change. If the Casino Operator
resubmits a revised version of the proposed Material Change, the submission
shall be treated as a new request for approval and shall be governed by the
procedures described above in this Section 11.6 - "Material Change Approval
Procedure." If the Casino Operator notifies the Gaming Board that it contends
the Gaming Board has unreasonably withheld its approval, the Casino Operator and
the Gaming Board shall diligently and in good faith attempt to resolve the
dispute. If the Casino Operator and the Gaming Board are unable to resolve the
dispute within a reasonable period after receipt by the Gaming Board of the
Casino Operator's notice, the Casino Operator may, at its option, either abandon
the disputed Material Change or appeal the Gaming Board's decision in accordance
with the Casino Act.
(d) The Casino Operator may at its own risk start the work called
for by any changes to the Construction Documents for which approval of the
Gaming Board is
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required and for which approval of the Gaming Board is pending or disputed.
However, if the necessary approval is not subsequently obtained, the Casino
Operator shall, at the request of the Gaming Board, restore any work that does
not conform to the requirements of this Casino Operating Contract.
11.7. Disclaimer of Representations and Prohibited Reliance. The Casino
Operator acknowledges that the Gaming Board has made no representation that the
contemplated work can be constructed within the required time periods or within
proposed budgets or that proposed Financing and other sources of funding will be
sufficient to complete the construction of the work as required or that the
design professionals or Contractors engaged by the Casino Operator are
sufficiently skilled to accomplish the construction or work on time, within
budget or as required by the General Development Agreement. Neither the Casino
Operator nor any other Person, including a lender, may rely on any approval
given by the Gaming Board or its representatives in connection with the
exercising of the Gaming Board's construction approval rights.
11.8. Compliance with Governmental Requirements. The work described
above shall fully and strictly conform in all respects with all Governmental
Requirements, including but not limited to federal, state and local regulation
and building and life-safety codes.
11.9. Delivery of Notice. The Casino Operator shall deliver to the
Gaming Board a full and complete copy of any notice or other demand for
compliance which may be received by the Casino Operator from the Landlord or
delivered by the Casino Operator to the Landlord.
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11.10. Commencement Dates. The Casino Operator shall cause construction
of the Casino to re-commence no later than the date required therefor by Section
9.29 - "Timetables and Outside Dates."
11.11. Completion Dates. Once the required construction has
re-commenced, the Casino Operator shall prosecute the construction diligently to
completion. The Casino Operator shall cause the Completion Date for the Casino
to occur no later than the date required therefor by Section 9.29 - "Timetables
and Outside Dates."
11.12. Reports and Monitoring. From the date construction re-commences,
the Casino Operator shall provide a written progress report to the Gaming Board
on a monthly basis, which shall describe in reasonable detail the status of
preparation of the Construction Documents for the Casino and the progress of
construction, as appropriate. In addition, during the period of construction of
the Casino, an authorized representative of the Gaming Board shall have the
right to conduct on-site monitoring, at the expense of the Casino Operator as
set forth at the end of this Section 11.12 - "Reports and Monitoring", to
confirm that construction is proceeding in accordance with this Casino Operating
Contract. During the construction phase of the Casino, the Casino Operator shall
deliver the following to the Chairman:
(a) a copy of all required building permits for the Casino and for
all other construction work required by this Casino Operating Contract;
(b) a copy of each request for advance of construction draws by
the General Contractor to the Casino Operator and by the Casino Operator to the
applicable lender or fund in conformance with A.I.A. documents;
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(c) certificates of payments;
(d) schedule of values which has been approved by all persons
whose approval is required;
(e) a copy of all change orders approved by the Casino Operator
and the general contractor to the general construction contract, the contract to
provide FF&E, and the contract to provide security and surveillance, provided
however a Material Change shall be subject to approval by the Gaming Board;
(f) a true copy of the general construction contract for the
Casino; the contract for the fixtures, furniture, and equipment of the Casino,
and the contract for the security and surveillance together with all copies of
any amendments to such contracts; and
(g) copies of any notice of defaults from the City, Rivergate
Development, and any contractor or lender. To provide sufficient funds to the
Gaming Board for its monitoring of construction, the Casino Operator shall pay
to the Gaming Board the sum of Eleven Thousand Three Hundred Sixty-Three and
64/100 Dollars ($11,363.64) per month beginning one month from the execution of
this Casino Operating Contract and ending the month in which the Date of
Substantial Completion occurs.
ARTICLE XII. FINANCIAL AND ACCOUNTING RECORDS, ACCESS
AND REPORTING REQUIREMENTS, CONFIDENTIALITY
12.1. Financial and Accounting Records. The Casino Operator shall
maintain and keep, or shall cause to be maintained and kept, full, complete and
accurate Books and Records, of all business conducted or transacted in, upon or
from the Casino, including but not limited to all business and Gaming Operations
conducted by the Casino Operator, the
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extension of credit to Casino patrons and other information which may reasonably
assist the Gaming Board in performing its duties under this Casino Operating
Contract, including determining the amounts of the payments due and to be paid
by the Casino Operator to the Gaming Board and in determining whether the Casino
Operator is in compliance with this Casino Operating Contract, the Internal
Control System, the Rules and Regulations and the Essential Agreements. The
Books and Records shall be maintained in accordance with the Rules and
Regulations of the Gaming Board. The Casino Operator shall also provide to the
Gaming Board, without cost or charge, detailed information and instructions
concerning use of and access to the Books and Records including an index, if an
index exists. The Casino Operator shall observe the record retention and storage
policies required by the Rules and Regulations and the Governmental
Requirements.
12.2. Financial Statements and Quarterly Meetings. Within forty-five
(45) Days following the end of each Fiscal Quarter, the Casino Operator shall
provide to the Gaming Board complete, accurate and unaudited Fiscal Quarter
Financial Statements of the business and Gaming Operations undertaken from or
concerning the Casino said reporting to be done in accordance with the Rules and
Regulations. The Casino Operator shall also provide the Gaming Board or its
authorized representative audited Quarterly Statements on Gross Gaming Revenue
with said reporting to be done in accordance with Rules and Regulations. The
Fiscal Quarter Financial Statements shall be prepared in accordance with GAAP
and shall be Certified as accurate by the Casino Operator and by the Casino
Manager. Within ninety (90) Days after the end of each calendar year, the
calendar year Financial Statements audited by the Independent CPA shall be
provided to the Gaming Board. The form for the Fiscal Quarter
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Financial Statements and calendar year Financial Statement reporting will be
prescribed in the Rules and Regulations. Within ten (10) Days of the delivery of
each Fiscal Quarter Financial Statement, but in no event later than fifty-five
(55) Days following the close of each Fiscal Quarter and within ten (10) Days
after delivery of each calendar year Financial Statement, but in no event later
than one hundred (100) Days following the close of each calendar year, the
Financial Statements shall be explained to the Gaming Board by the Casino
Operator. Before each Fiscal Quarter, the Casino Operator shall also provide the
Gaming Board, through it's Chairman, with the following additional information:
(a) A ninety (90) day or Fiscal Quarter projection for revenue and
expenses; and
(b) A statistical analysis of Games and Gaming Operations at the
Casino for the preceding Fiscal Quarter. The Casino Operator shall further
provide the Gaming Board with such other reports as required by the Rules and
Regulations.
12.3. Expiration or Termination Audit. In addition to the Fiscal Year
Financial Statements prepared during the Term, the Financial Statements for the
Last Fiscal Year of the Term shall be audited at the expiration or termination
of this Casino Operating Contract.
12.4. Public Company Disclosure. Notwithstanding the foregoing, if the
Casino Operator, or any Affiliate is subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended, there shall be no requirement
to submit to the Gaming Board a quarterly or annual Financial Statement until
the statement or the information therein becomes a matter of public record by
the inclusion of the statement or the information therein in a report filed with
the Securities and Exchange Commission, provided, however, this provision
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shall not limit the Gaming Board's review and audit rights under this Casino
Operating Contract.
12.5. Review and Audit. The Casino Operator shall notify the Gaming
Board in writing at least twenty (20) Days prior to the date that the
Independent CPA will commence the calendar year audit. The Gaming Board shall
have the right (through its employees or agents or through outside auditors,
accountants, attorneys or other consultants) to review the Books and Records at
any time, without prior notice or demand and shall have the right, during the
time that the Independent CPA is conducting the Annual Audit to participate with
the Independent CPA, and independently to examine, audit, inspect and transcribe
the Books and Records of the Casino Operator and the Casino Manager. If, upon
completion of an audit conducted by the Gaming Board, the audit reveals that the
Casino Operator has understated Gross Gaming Revenue or any other material
financial information or has failed to pay to the Gaming Board all sums due to
the Gaming Board by the Casino Operator, then the Casino Operator shall pay to
the Gaming Board, within seven (7) Days after demand, sums as are due to the
Gaming Board together with interest at the Default Interest Rate. If the amount
of the understatement exceeds two percent (2%) of the amounts due for the period
subject to the audit, the Casino Operator shall pay to the Gaming Board the
actual cost to the Gaming Board of the Gaming Board's audit. Nothing contained
in this Section shall prevent the Gaming Board from exercising any other remedy
available to address underpayments including the imposition of incremental fines
or penalties upon the Casino Operator, the Casino Manager or any Person found
responsible for an underpayment to the Gaming Board.
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12.6. Cooperation with the Legislative Auditor. The Legislative
Auditor, or persons designated by him, shall have the right to audit or review
the Books and Records of the Casino Operator and/or Casino Manager subject to
and in accordance with Governmental Requirements. The Casino Operator and Casino
Manager shall cooperate fully in connection with any audit of the Casino
Operator or Casino Manager by the Legislative Auditor. The Legislative Auditor
will maintain the confidentiality of information as required by the AICPA Code
of Professional Conduct, Section 3.01, and the terms of R.S. 24:513(f) and (h).
Nothing in this Casino Operating Contract shall restrict or enlarge the review
and audit rights of the Legislative Auditor as provided by this Casino Operating
Contract or by applicable law.
12.7. Public Records Access. The Casino Operator acknowledges that
records obtained by the Gaming Board may be subject to public disclosure as
required by R.S. 27:237 and R.S. 27:21 and other applicable "public records" and
"freedom of information" laws or regulations as such laws and regulations
presently exist and as they may be amended from time to time. To the extent
deemed confidential by State law, the Gaming Board agrees to treat the Books and
Records, Financial Statements and other financial information (collectively, the
"Information") received or obtained from the Casino Operator, the Casino Manager
or their respective Affiliates as confidential provided that the Casino
Operator, the Casino Manager or their respective Affiliates have treated and
handled the same as confidential by marking or otherwise designating the
Information as confidential in a visible manner reasonably calculated to provide
actual notice to the Gaming Board of confidential status and by taking due care
to prevent disclosure of the Information except to authorized persons.
Confidential Information or data which is obtained by the Gaming Board shall not
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be released or revealed, in whole or in part, except in the course of the proper
administration of the Gaming Act or as otherwise provided by law.
Notwithstanding any entitlement to status as "confidential" of any Information
provided to it by the Casino Operator or obtained by the Gaming Board from any
source, the Gaming Board shall have the complete right to provide any
Information which it possesses to:
(a) the Louisiana State Police, Gaming Division and the Louisiana
Attorney General, Gaming Division, both in connection with their
responsibilities under the Casino Act; and
(b) any law enforcement agency in connection with any violation or
perceived violation of this Casino Operating Contract, the Rules and
Regulations, the Internal Control System or Governmental Requirements; and
(c) other Gaming Authorities having regulatory supervision over
the Casino Operator, the Casino Manager, their respective Affiliates or any
Person in a Control Relationship with any of them; and
(d) any court or other tribunal in connection with the enforcement
of the Gaming Board's rights under this Casino Operating Contract or under the
Casino Act or the Rules and Regulations; and
(e) the Gaming Board's representatives, including but not limited
to accountants, auditors, employees, agents, attorneys and consultants, provided
that any such disclosure shall be limited to information that in the Gaming
Board's opinion is required to be disclosed under the circumstances. The Gaming
Board shall take steps reasonably designed to protect the confidentiality of
confidential information.
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(f) The Gaming Board, as promptly as possible following the
execution of this Casino Operating Contract, shall promulgate regulations
elaborating on the public records and confidentiality sections in R.S. 27:237
and R.S. 27:21 to enhance and preserve the public trust in the regulatory
process while also facilitating the free flow of information of the Casino
Operator, Casino Manager and their employees and Affiliates that is not
otherwise publicly available and is deemed confidential by State law. At a
minimum, such regulations shall (i) establish procedures for the release of
public records to the public, and (ii) protect against public disclosure of
Information deemed confidential under R.S. 27:237 and/or R.S. 27:21, including
any such confidential Information obtained in a background investigation or a
continuing investigation of the suitability of any Person. The term "background
investigation" shall include the Gaming Board's continuing investigation of the
Casino Operator or Casino Manager, and any applicants, licensees, permittee or
Person required to be found Suitable.
12.8. Errors in Financial and Accounting Records Resulting in
Overpayment to the Gaming Board. If an audit by the Independent CPA discloses
errors that resulted in an overpayment of sums due to the Gaming Board pursuant
to this Casino Operating Contract, and if the Gaming Board Approves the proposed
adjustment, or if an audit by the Gaming Board discloses errors that resulted in
an overpayment of sums due to the Gaming Board pursuant to this Casino Operating
Contract, the Gaming Board shall refund the amount of the overpayment to the
Casino Operator within thirty (30) Business Days after the Gaming Board receives
the results of and approves such audit. If the Gaming Board's available
resources at the time repayment is due are not sufficient to permit repayment in
full, the Gaming Board
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may allow the Casino Operator to deduct the amount of the overpayment and
interest from the next ensuing Daily Payment.
ARTICLE XIII. FUNDS AND FINANCING
13.1. Financing. The Casino Operator shall provide all funds necessary
to comply with this Casino Operating Contract through its own resources or
through Approved Financing with a Suitable Lender.
13.2. Amount of Initial Plan Financing. The Casino Operator shall have
obtained Initial Plan Financing as of the Plan Effective Date.
13.3. Source of Initial Plan Financing. The Casino Operator shall raise
Initial Plan Financing as described in the Plan.
13.4. Evidence of Initial Plan Financing. The Casino Operator shall be
deemed to have obtained Initial Plan Financing when the equity contributions
required by the Plan and the balance of the amount of the Initial Plan Financing
has been funded to the Casino Operator or committed under a legally binding
agreement subject to no exceptions other than those exceptions which have been
Approved by the Gaming Board which shall occur as of or before the Plan
Effective Date. By executing this Casino Operating Contract, the Gaming Board
shall be deemed to have Approved the Initial Plan Financing, including the terms
and conditions of all related agreements, with such approval including all
approvals required by the Rules and Regulations for the Initial Plan Financing.
13.5. Financing Representations; Restrictions. The Casino Operator
shall not represent to any Person that the Gaming Board or the State is, or in
any way may be, liable or responsible for any of the representations or
obligations of the Casino Operator in connection
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with any Financing, including but not limited to public or private offering of
securities. If the Casino Operator or its Financing Affiliate shall at any time
sell or offer to sell any securities issued by the Casino Operator or its
Financing Affiliate, whether by prospectus or otherwise, that relate to the
Casino or its operations, it shall do so only in full compliance with all
applicable federal and state securities laws and shall disclose to all
prospective purchasers and offerees that neither the Gaming Board nor the State
shall in any way be deemed to be an issuer or underwriter of any such securities
and that the Gaming Board, its directors, officers, agents, employees,
attorneys, accountants and other professional consultants and the State have not
assumed and shall not have any liability arising out of or related to the sale
or offer of any such securities, including without limitation, any liability or
responsibility for any financial statements, projections or other information
contained in or omitted from any prospectus, placement memorandum or similar
written or oral communication. The Casino Operator, shall defend, indemnify and
hold the Gaming Board harmless from any and all Claims relating to a breach of
the Casino Operator's obligations under this Section in accordance with the
provisions of Article XVIII "Indemnification" hereof.
13.6. Limitations on Financing. The Casino Operator or its Financing
Affiliate may obtain Debt after the Initial Plan Financing is obtained only from
a Suitable Lender and with the Approval of the Gaming Board, provided that the
Gaming Board Approval shall not be required in connection with any Financing
(whether secured or unsecured) that is obtained from a Suitable Lender and that
meets any one or more of the following conditions:
(a) the principal amount of Debt incurred in the Financing does
not exceed the sum of (i) debt retired with proceeds of the Financing, (ii) the
projected cost of capital
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improvements to be funded with proceeds of the Financing; and (iii) customary
transaction costs relating to the Financing; or
(b) the pre-tax cash flow of the Casino Operator for the
twelve-month period ending on the last day of the calendar quarter preceding the
calendar month in which the Financing occurs is not less than one and
twenty-five hundredths (1.25) times the amount of annual interest payable with
respect to Secured Debt incurred in the Financing; or
(c) the Financing is permitted by the Rules and Regulations
without prior Approval by the Gaming Board and is from a Suitable Lender,
provided that the Financing must meet all of the requirements imposed by the
Rules and Regulations.
13.7. Capital Replacement Fund.
(a) Beginning after the Casino Opening Date, the Casino Operator
shall establish or cause to be established a reserve for Capital Replacements in
accordance with this Section 13.7 (the "Capital Replacement Fund"). Commencing
on the first full calendar month after the Casino Opening Date, and monthly
thereafter, the Casino Operator shall deposit (a) one-twelfth (1/12) of Three
Million Dollars ($3,000,000) for each month during the first year following the
opening of the Casino, (b) one-twelfth (1/12) of Four Million Dollars
($4,000,000) for each month during the second year after the opening of the
Casino, (c) one-twelfth (1/12) of Five Million Dollars ($5,000,000) for each
month during the third year after the opening of the Casino, and (d) two percent
(2%) of monthly gross gaming revenue and gross non-gaming revenue for each month
during each ensuing year thereafter as required by the Casino Management
Agreement. It is intended that this Capital Replacement Fund and the Capital
Replacement Fund maintained pursuant to the Casino Lease shall be the same and
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are not separate funds. Any amounts in the Capital Replacement Fund maintained
pursuant to the Casino Lease shall satisfy and reduce the amounts of the Capital
Replacement Fund required pursuant to this Section 13.7 - "Capital Replacement
Fund."
(b) In accordance with each Annual Business Plan (as it may be
modified in accordance with the Casino Management Contract), the Capital
Replacement Fund shall be established as a segregated account and shall be used
first for any necessary Capital Replacements to the Casino and the Support
Facilities. Any amounts remaining in the Capital Replacement Fund at the close
of each Fiscal Year shall be carried forward and retained in the Capital
Replacement Fund. If the amount in the Capital Replacement Fund is insufficient
at the time the funds are planned for expenditure in accordance with the Annual
Business Plan (as it may be modified in accordance with the Casino Management
Contract), the Casino Operator shall supply or cause to be supplied such
additional funds as may be required by deposit into the Capital Replacement Fund
within thirty (30) days following notice of the shortfall or deficit.
Notwithstanding the foregoing, at the end of any calendar year, and after
payment of all capital improvements and replacements for the calendar year, if
(i) the Capital Replacement Fund balance exceeds Twenty Five Million Dollars
($25,000,000) (adjusted for changes in the CPI), and (ii) the capital
replacement expenditures planned for the ensuing calendar year, less the Casino
Operator's anticipated contributions to the Capital Replacement Fund for such
ensuing calendar year, are equal to or less than Twenty Five Million Dollars
($25,000,000) (adjusted for CPI), the Casino Operator may withdraw the excess
amount from the Capital Replacement Fund. The amount in the Capital Replacement
Fund can be reduced with the Approval of the Gaming Board.
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(c) All net cash proceeds from the sale of capital items from the
Casino no longer needed in the operation of the Casino shall be deposited into
the Capital Replacement Fund unless otherwise Approved by the Gaming Board;
provided, however, this Section 13.7(c) shall not apply if the Casino Operator
uses such proceeds to acquire replacement items.
(d) Upon the expiration or termination of this Casino Operating
Contract, the balance in the Capital Replacement Fund shall be first used to
restore the Casino to first class condition, reasonable wear and tear excepted.
Upon any expiration or termination of this Casino Operating Contract that
results in the inability to use the Casino Operator's or Casino Manager's trade
names, trademarks or system marks (collectively the "Marks") in connection with
the operation of the Casino, and if the Casino Lease is terminated as a result
thereof, the balance in the Capital Replacement Fund shall also be used to
effectuate the replacement and removal of the Marks from the Casino. So long as
there then exists no Event of Default and no other monies are due to the Gaming
Board, in the event of the expiration of termination of this Casino Operating
Contract, the balance in the Capital Replacement Fund, if any, may be paid over
to the Casino Manager or Leasehold Mortgagees, as their interests may appear, or
retained by the Casino Operator.
(e) Notwithstanding the Casino Operator's obligation to maintain
the Casino and related amenities in a "first class condition" as set forth in
this Casino Operating Contract, with respect to Capital Replacements, the Casino
Operator's obligations shall be measured in comparison to other casinos located
in the United States of America. The Casino Operator shall make or shall cause
to be made all Capital Replacements necessary to maintain
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this standard regardless of the amount allocated to or contained in the Capital
Replacement Fund. If the Gaming Board determines that the required standard is
not being maintained, the Gaming Board shall provide the Casino Operator with
written notice to that effect specifying the deficiencies in reasonable detail.
The Casino Operator may appeal the decision of the Gaming Board in accordance
with the Casino Act. It is only upon the failure of the Casino Operator to
implement the court's decision concerning Capital Replacements within the time
frames set forth in the decision that an Event of Default for such failure shall
exist and be treated as such under Article XX - "Casino Operator's Default."
ARTICLE XIV. INSURANCE
14.1. Property and Casualty Insurance Coverage. The Casino Operator, at
its sole cost and expense, commencing on the Plan Effective Date and through the
remainder of the Term, shall keep the Casino insured, through an insurance
company or companies authorized to do business in Louisiana having an A-M Best
Rating of A-:VIII or better, for the mutual benefit of the Casino Operator as
the named insured, and the Gaming Board, the Landlord and each Leasehold
Mortgagee as additional insureds (to the extent of their insurable interest),
against loss or damage by fire, explosion, lightning, and other risks embraced
by coverage of the type now known as the broad form of extended coverage,
including, but not limited to, riot and civil commotion, smoke, windstorm,
aircraft, vehicle, strike, riot, and vandalism and malicious mischief with
additional coverage for broad form water damage, sprinkler leakage, flood,
boiler and machinery and against such other risks or hazards as consistent with
industry standards in an amount not less than one hundred percent (100%) of the
then full replacement cost of the Casino (exclusive of the cost of undamaged
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excavations, foundations and footings) without deduction for physical
depreciation. The peril of flood applicable to improvements will be insured in
the amount of Fifty Million Dollars ($50,000,000) for the Casino. The full
replacement cost of the Casino shall be appropriately recalculated at regular
intervals no less frequently than annually, unless there is a material change to
the Casino. Such policy or policies may include a deductible of not more than
One Million Dollars ($1,000,000) per occurrence, exclusive of the perils of
windstorm and flood. For windstorm, the deductible shall be Two Million Five
Hundred Thousand Dollars ($2,500,000), unless the Gaming Board Approves a higher
deductible amount because of commercial unavailability. For flood insurance, the
deductible, after purchase of the limits available from the National Flood
Insurance Program, shall be Five Hundred Thousand Dollars ($500,000). The Casino
Operator shall be solely responsible for all losses within the deductibles, if
any. The Casino Operator, at its sole cost and expense, shall also maintain
insurance to cover the Casino Operator's contractual indemnity obligations
undertaken in this Casino Operating Contract but only insofar as such
obligations relate to indemnities for personal injury, death or property damage.
14.2. Builder's Risk Insurance. During the construction of the
improvements pursuant to the General Development Agreement, the Casino Operator
shall maintain or cause to be maintained Builder's Risk Insurance on an "All
Risk" form, including fire and extended coverage. The deductible shall not
exceed One Hundred Thousand Dollars ($100,000) per occurrence. For flood, the
deductible, after purchase of the limits available from the National Flood
Insurance program, shall not exceed Five Hundred Thousand Dollars ($500,000).
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14.3. Adjustments to Policy Limits and Deductibles. The specific policy
limits and deductibles provided above with respect to property and casualty
policies including builders risk insurance (as adjusted for changes in industry
standards) shall be increased periodically to an amount that represents the
equivalent, after inflation, of the sums hereinabove specified consistent with
industry standards.
14.4. Liability Insurance. The Casino Operator with the Gaming Board,
the Landlord, the City and each Leasehold Mortgagee as additional insureds and
Casino Operator as the named insured, shall maintain or cause to be maintained
with an insurance company or companies authorized to do business in Louisiana
having an A.M. Best Rating of A-:VIII or better during the Term of this Casino
Operating Contract with respect to the Casino, the following:
(a) General Aggregate Limit (other than Products-Completed
Operations) - Two Million Dollars ($2,000,000)
(b) Products-Completed Operations Aggregate Limit - Two Million
Dollars ($2,000,000)
(c) Commercial General Liability insurance on an "occurrence
basis" against claims for bodily injury, death or property damage occurring
upon, in or about the Casino or any elevators or any escalators therein and on,
in or about the non-public streets and passageways on the Casino. The insurance
required to be maintained by the Casino Operator under this subsection (i) shall
afford immediate minimum protection in the amount specified below on the Plan
Effective Date and (ii) at all times thereafter shall have such limits as may
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be necessary consistent with industry standards. As of the date of this Casino
Operating Contract, the limits of liability under such insurance are the
following:
<TABLE>
<CAPTION>
Type of Coverage Minimum Policy Limits
- ---------------- ---------------------
<S> <C>
General Aggregate Limits (other than Products-Completed Operations) $2,000,000
Products-Completed Operations Aggregate Limits $2,000,000
Personal and Advertising Injury Limit $1,000,000
Each Occurrence Limit $1,000,000
Fire Damage Limit $ 50,000
Medical Expense Limit $ 5,000
</TABLE>
(d) Boiler and pressure vessel insurance including air tanks,
pressure piping and major air conditioning equipment provided the Improvements
contain equipment of the nature ordinarily covered by such insurance and for an
amount not less than Fifteen Million Dollars ($15,000,000) or such larger sum as
the Gaming Board may require from time to time in accordance with industry
standards.
(e) Comprehensive Motor Vehicle Liability Insurance with limits of
not less than One Million Dollars ($1,000,000) combined single limit bodily
injury liability and property damage. Coverages are to include all owned, hired
and non-owned vehicles.
(f) Workers' Compensation and Employers' Liability Insurance in
accordance with Louisiana statutory limits, including any and all State
Endorsements which will provide coverage for claims under both the Louisiana
Workers' Compensation Act and, when applicable, the Federal Longshoremen's and
Harbor Workers' Compensation Act with United States statutory limits. The limits
of liability under the Employers' Liability Section of the Workers' Compensation
and Employers' Liability insurance policy or policies required
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hereunder shall be in the amount of One Million Dollars ($1,000,000). The
Workers' Compensation and Employer's Liability Insurance may be self-insured if
the self-insurance plan complies with Louisiana law.
(g) Commercial Umbrella Liability Insurance in excess of the
coverages described in Commercial General Liability, Business Automobile
Liability and Employers Liability above, with limits of not less than Seventy
Five Million Dollars ($75,000,000) and a self-insured retention of not more than
Fifty Thousand Dollars ($50,000).
14.5. Contractor Insurance. Casino Operator shall require each
Contractor under a Contractor Agreement engaged during construction or
alterations on the Casino Premises to provide and maintain, during such time, at
no cost or expense to the Gaming Board such insurance that will name as
additional insureds and protect the Gaming Board and the Casino Operator,
Rivergate Development, the City and each Leasehold Mortgagee from any and all
claims for damage to public or private property or personal injury or death to
the employees of the Contractor, or to any members of the public, that may arise
from any or all operations under the contract between the Casino Operator and
the Contractor or to any of their respective subcontractors. The insurance
required by this Section shall comply with all of the general requirements
applicable to the coverages required by Section 14.2 - "Builder's Risk
Insurance" and Section 14.4 - "Liability Insurance", and such insurance coverage
provided by any Contractor pursuant to this paragraph must be issued by an
insurance company authorized to do business in Louisiana and having an A.M. Best
rating of A-:VIII or better. The insurance coverages required hereby shall
extend to all occurrences that are the result of or arise from work performed by
or under such Contractor, provided, however, that products and
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completed operations coverages shall extend for a period of two (2) years after
the date on which such work is completed. Nothing contained in the foregoing
provisions of this Section shall be construed as requiring any such Contractor
to maintain the coverage required during any period of time during which the
contract has been suspended or after such time as the contract has been
terminated or completed.
14.6. Other Contractor Insurance. The Casino Operator shall require
contractors other than Contractors ("Other Contractors"), prior to commencing
work, to provide to the Casino Operator proof of the following insurance
coverages required by this Casino Operating Contract. Insurance is to be placed
with insurers authorized to do business in the State with an A. M. Best's rating
of no less than A: VI. This rating requirement will be waived for the workers'
compensation coverage and policies written through Lloyds of London or Institute
of London Underwriter (ILU) companies. The Casino Operator will in turn furnish
Certificates of Insurance to the Gaming Board regarding such insurance coverage.
All such insurance provided under this Section 14.6 - "Other
Contractor Insurance" will name as additional insureds and protect the Gaming
Board and Rivergate Development from any and all claims for damage to public or
private property or personal injury or death to the employees of the Other
Contractor, or to any members of the public, that may arise from any or all
operations under the contract between the Casino Operator and the Other
Contractor or to any of the subcontractors of the Other Contractor.
All such insurance policies shall require thirty (30) days
prior notice of cancellation to be given to the Casino Operator and all
additional insureds by registered mail,
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return receipt requested. All notices will name the Other Contractor and any
subcontractor and identify the contract.
Insurance coverage specified in ALA Document A 201, 1987 Edition
will be provided by the Other Contractors, and any other insurance described
below shall be furnished with the following minimum limits:
(a) Workers' Compensation. Statutory - in compliance with the
Compensation Law of the State.
(b) Commercial General Liability Insurance with a Combined Single
Limit Per Occurrence for Bodily Injury and Property Damage: This insurance shall
include coverage for bodily injury and property damage for the seven (7)
coverages listed below unless the Gaming Board approves the Casino Operator's
request that such insurance coverage should be waived because said insurance is
not applicable to the work and/or not commercially available. The seven (7)
coverages are:
(i) Premises - Operations;
(ii) Broad Form Contractual Liability;
(iii) Products and Completed Operations;
(iv) Use of Contractors and Subcontractors;
(v) Personal Injury;
(vi) Broad Form Property Damage; and
(vii) Explosion, Collapse and Underground (XCU) Coverage.
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On the certification of insurance, under the description of operations, the
following wording is required: THE AGGREGATE LOSS LIMIT APPLIES TO EACH PROJECT,
or a copy of ISO form CG2503 (Ed. 11-85) shall be submitted.
The combined single limit (CSL) amount of insurance required shall be:
<TABLE>
<CAPTION>
Contracts Contracts
Contracts Under $100,001 -- Over
New Buildings and Renovation $100,000 $1,000,000 $1,000,000
- ------------------------------ --------------- ----------- -----------
<S> <C> <C> <C>
Each Occurrence/Minimum Limit $ 500,000 $1,000,000 $3,000,000
Aggregate (Applicable to this Contract ONLY) $ 500,000 $1,000,000 $3,000,000
</TABLE>
(c) Business Automobile Liability Insurance. This coverage shall
have a combined single limit of One Million Dollars ($1,000,000) per occurrence
for bodily injury and property damage, unless otherwise indicated. This
insurance shall include for bodily injury and property damage the following
coverages:
(i) Owned automobiles;
(ii) Hired automobiles; and
(iii) Non-owned automobiles.
(d) Owner's and Contractor's Protective Liability Insurance shall
be furnished by the Other Contractor as indicated below:
<TABLE>
<CAPTION>
Contracts Contracts Contracts
All Construction Under $100,001 -- Over $1,000,000
$100,000 $1,000,000
----------------- ---------- ------------ ------------------
<S> <C> <C> <C>
CSL - Each Occurrence $500,000 $1,000,000 $3,000,000
</TABLE>
(e) An Umbrella Policy may be used to meet minimum requirements
as set forth in Sections 14.6(a) - "Workers Compensation," 14.6(b) - "Commercial
General Liability Insurance with a Combined Single Limit Per Occurrence for
Bodily Injury and Property
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Damage," 14.6(c) - "Business Automobile Liability Insurance" and 14.6(d) -
"Owner's and Contractor's Protective Liability Insurance" above.
(f) All policies of insurance shall be approved by the Casino
Operator prior to the inception of any work.
14.7. Architect and Engineer Insurance. The Casino Operator shall cause
its principal architect and engineers subcontracted to the principal architect
to obtain and secure Architects' and Engineers' Professional Liability Insurance
covering all architectural and engineering services and work performed in
connection with the construction of the Casino with coverage limits not less
than Ten Million Dollars ($10,000,000) with a deductible of not more than Two
Hundred Fifty Thousand Dollars ($250,000) per occurrence. Such policy or
policies of insurance shall include coverage for ensuring losses caused by
architects' or engineers' errors and omissions. Such policy or policies shall
delete exclusions with reference to contractual liability, joint ventures,
parks, amusement devices and skateboards whenever applicable provided that such
insurance is commercially available.
14.8. Business Interruption Insurance. Beginning on the Commencement
Date and thereafter throughout the Term, the Casino Operator shall maintain, at
its sole cost and expense, a policy or policies of Business Interruption
Insurance insuring the Casino Operator and naming the Gaming Board as an
additional insured (as its interests may appear) against the loss in the amount
described below which may be occasioned by a casualty or catastrophe that
interrupts the normal business and earnings of the Casino Operator and the
Casino Operator's ability to pay the Louisiana Gross Gaming Revenue Share
Payments due and to become due under this Casino Operating Contract. Except as
otherwise provided in Section
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15.3 - "Utilization of Insurance Proceeds," the existence of such insurance
coverage shall not relieve the Casino Operator of any payment obligation to the
Gaming Board under this Casino Operating Contract when due hereunder. For
purposes of this Section 14.8 - "Business Interruption Insurance", the Gaming
Board's interest in the proceeds of business interruption insurance for the
Casino (unless the Minimum Payment obligation ceases pursuant to Section 1.3 -
"Exclusive Contract") shall be Two Hundred Seventy Three Thousand Nine Hundred
Seventy-Three Dollars ($273,973) per day minus, in each case, the amount of the
Louisiana Gross Gaming Revenue Share Payments actually paid for the same period.
In the event the Minimum Payment obligation ceases pursuant to Section 1.3 -
"Exclusive Contract" hereof, the obligation to obtain business interruption
insurance for the Casino shall also cease.
14.9. Adjustments to Policy Limits for Liability Insurance. The kinds
and types of insurance coverages, the specific policy limits and the deductibles
provided above (as adjusted for changes in industry standards) may be changed or
increased periodically subject to the Approval and/or requirements of the Gaming
Board to an amount which represents the equivalent coverages, limits and
deductibles, after inflation and adjusted for changes in the CPI as determined
by a risk manager. Notwithstanding the foregoing, the primary limits for
liability coverages may be increased through Commercial Umbrella Liability
Insurance, where applicable.
14.10. Form of Insurance and Insurers. All policies of insurance
required by this Casino Operating Contract shall be effected under valid and
enforceable policies, in such forms as authorized for use in Louisiana and
issued by insurers of required responsibility and who are authorized to transact
business in Louisiana and shall name the State and the Gaming
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Board as additional insureds. Upon the execution of this Casino Operating
Contract and thereafter prior to the expiration date of each policy, a copy of
each policy or a certificate thereof required to be furnished shall be delivered
by the Casino Operator to the Gaming Board.
If at any time any of the insurance policies required herein shall be
or become unsatisfactory to the Gaming Board as to form or substance, or if a
company issuing any such policy shall be or become unsatisfactory to the Gaming
Board, subject to such rights being exercised only in a commercially reasonable
circumstance, the Casino Operator shall cause the Contractor upon notice to that
effect from the Gaming Board to the Casino Operator, promptly to obtain a new
policy, submit the same to the Gaming Board for Approval and submit a
certificate thereof as hereinabove provided.
In policies of Workers' Compensation and Employer's Liability coverage
as required herein, the Casino Operator shall cause the Contractor to secure an
agreement from the insurer to waive all rights of subrogation against the State
and the Gaming Board, its officers, officials, employees, boards, commissions or
volunteers for losses arising from work performed by the Contractor for the
Casino Operator.
14.11. Other Policies. Unless otherwise required by a Leasehold
Mortgage, the Casino Operator shall not take out separate insurance concurrent
in form, or contributing in the event of loss, with that required in this
Article unless the Gaming Board is an additional insured therein, with loss
payable as provided in this Casino Operating Contract. The Casino Operator shall
notify the Gaming Board of the taking out of any such separate insurance and
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shall cause the original policies in respect thereof or certificates therefor to
be delivered to the Gaming Board.
14.12. Adjustment of Insurance. All insurance policies required by this
Article XIV - "Insurance" shall provide for loss thereunder to be adjusted with
the Casino Operator, and payable to the insured and the additional insureds as
their respective interests may appear with respect to any particular casualty
resulting in damage or destruction to the Casino.
14.13. Insurance Notice. Each policy on which the Gaming Board is an
additional insured shall, to the extent obtainable, contain a provision that no
act or omission of the Casino Operator or the Casino Manager that would
otherwise result in forfeiture or reduction of the insurance therein provided
shall affect or limit the obligation of the insurer so to pay the amount of any
loss sustained by the Gaming Board and an agreement by the insurer that such
policy shall not be canceled or modified without at least thirty (30) days prior
written notice by registered mail, return receipt requested, to the Gaming
Board.
14.14. Keep in Good Standing. The Casino Operator shall observe and
comply with the requirements of all policies of public liability, fire and other
policies of insurance at any time in force with respect to the Casino and the
Casino Operator shall so perform and satisfy the requirements of the companies
writing such policies so that at all times there shall be a company of good
standing willing to write or to continue such insurance. The Casino Operator
shall, in the event of any violations or attempted violations of the provisions
of this Section 14.14 - "Keep in Good Standing" by any permitted Space Lease
Operator, take steps, immediately upon knowledge of such violation or attempted
violation, to remedy or prevent the same as the case may be.
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14.15. Blanket Policies. Any insurance coverages required to be
provided by the Casino Operator pursuant to this Casino Operating Contract may
be effected by a policy or policies of blanket insurance; provided, however,
that the amount of the total insurance allocated to the Casino shall be such as
to furnish in protection the equivalent of separate policies in the amounts
herein required, and provided further that in all other respects, any such
policy or policies shall comply with the other specific insurance provisions and
the Casino Operator shall deposit the original policy or policies or a copy
thereof or a certificate thereof with the Gaming Board.
14.16. Change of Circumstances. If any insurance required to be
maintained under the Casino Operating Contract is not available at commercially
reasonable rates, the Casino Operator shall make good faith efforts to procure
alternative insurance. If alternative insurance is not available at commercially
reasonable rates, the Casino Operator and the Gaming Board shall negotiate in
good faith to arrive at a practical solution that reasonably protects their
respective interests.
ARTICLE XV. DAMAGE TO OR DESTRUCTION OF THE CASINO
15.1. Damage or Destruction. In the event of damage to or destruction
of the buildings or improvements constituting the Casino or any part thereof,
including the related Support Facilities by fire, other casualty or otherwise,
the Casino Operator, at its sole expense and whether or not the insurance
proceeds, if any, shall be sufficient therefor, shall promptly, after the
insurance proceeds have been adjusted, repair and restore the Casino as nearly
as possible to the same condition of the Casino or such part thereof as the same
existed prior to such damage or destruction, using materials of an equal or
superior quality to those existing in
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the Casino before such casualty, so that the Casino shall contain at least the
same usable area existing before such fire, flood or other casualty. If
required, the Casino Operator shall obtain a permanent certificate of occupancy
as soon as practicable after the completion of the repair and restoration.
15.2. Insurance Proceeds. Subject to the requirements of the Casino
Lease, and any Leasehold Mortgage, all insurance proceeds on the Casino, except
as to the Gaming Board's interest in the business interruption insurance
required by Section 14.8 - "Business Interruption Insurance," shall be made
available to pay for the cost of restoration if the Casino or any part thereof
is damaged or destroyed in whole or in part by fire, flood or other casualty. If
the insurance proceeds are insufficient to pay for the Work, the Casino Operator
shall, nevertheless, complete the Work at its sole cost and expense.
15.3. Utilization of Insurance Proceeds. Except as provided in Section
15.4 - "Damage at End of Casino Term" below, no destruction of or damage to the
Casino or any part thereof or property therein by fire, flood or other casualty,
whether such damage or destruction be partial or total, shall permit the Casino
Operator to surrender or terminate this Casino Operating Contract or relieve the
Casino Operator from its timely payment and performance obligations to the
Gaming Board under this Casino Operating Contract. Notwithstanding anything to
the contrary in this Casino Operating Contract, the Casino Operator may suspend
Daily Payments of the Louisiana Gross Gaming Revenue Share Payments (and related
pro rata share of the Minimum Payment) in the event of a casualty loss requiring
closure of all or a part of the Casino and requiring adjustment of business
interruption insurance until the earlier of (i) the date on which the Casino
re-opens to the
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general public for business, or (ii) the receipt by the Casino Operator of the
business interruption insurance proceeds related to such loss, provided that:
(a) Business interruption insurance meeting the criteria of this
Casino Operating Contract is in full force and effect at the time of the loss;
(b) The Casino Operator proceeds in good faith and in due
diligence to adjust the claim with the insurer;
(c) Upon adjustment of the claim and payment by the insurer to the
Casino Operator, the Casino Operator shall pay all past due Louisiana Gross
Gaming Revenue Share Payments, including any interest paid upon adjustment of
the claim (paid pro rata based upon interest paid on the entire claim).
If the closure of the Casino is a partial closure, the suspension
of the daily payments of the Louisiana Gaming Gross Revenue Share Payment
pursuant to this Section shall be a pro rata suspension in proportion to the
percentage of Gaming Operations which have been suspended at the Casino as a
result of such partial closure, and such suspended Daily Payments shall resume
on the earlier to occur of (i) the date on which the partial closure is
re-opened to the general public for business, or (ii) the receipt by the Casino
Operator of the business interruption insurance proceeds related to such partial
closure.
If the Casino Operator's claim for business interruption insurance
is denied, and, if the denial is challenged by the Casino Operator, and a final
judgment affirming such denial is entered, the Casino Operator shall be liable
to the State for all unpaid payments of the Louisiana Gross Gaming Revenue Share
Payments which were not paid for the period of the suspension of such payments.
If the Casino Operator does not challenge the denial of the
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claim, the Casino Operator shall pay all Louisiana Gaming Gross Revenue Share
Payments for the period of the suspension of such payments.
15.4. Damage at End of Casino Term. If destruction or damage to the
Casino occurs during the last three (3) years of the Term and the Casino
Operator determines that it is impracticable to repair the destruction or
damage, the Casino Operator shall, at the Casino Operator's election, be
entitled to terminate this Casino Operating Contract upon:
(a) giving written Notice to the Gaming Board;
(b) payment to the Gaming Board monthly for the remainder of the
Term one-twelfth (1/12) of the greater of (i) the average annual amount of the
Louisiana Gross Gaming Revenue Share Payments for the previous three (3) Full
Fiscal Years or (ii) the Minimum Payment; the Casino Operator shall be entitled
to a credit against the monthly payments in an amount equal to the business
interruption insurance actually paid to the Gaming Board plus the payments
actually made to the Gaming Board from a new casino operator or manager during
the remainder of the Term;
(c) assignment to Landlord of Property/Casualty Insurance
proceeds;
(d) the Casino Operator's satisfying or removing all liens and
encumbrances on the Casino Premises created by the Casino Operator; and
(e) the Casino Operator's surrender and cancellation of the Casino
Lease.
ARTICLE XVI. ALTERATIONS AND MODIFICATIONS TO CASINO
PREMISES AFTER COMPLETION
16.1. Alteration Approvals. After the Completion Date of the Casino,
the Casino Operator shall not make, cause or permit the making of any
demolition, alteration, reconstruction, addition, modification, renovation or
improvement that is a Material Change
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(collectively referred to as "Alterations") to the Casino without prior Notice
to the Gaming Board. All Alterations shall be made at the sole cost and expense
of the Casino Operator and the Gaming Board shall have no liability or
responsibility therefor.
16.2. Manner of Performance. All Alterations shall be performed in a
good and workmanlike manner and in no event shall the quality of the Alterations
be less than the quality of the Casino under the approved Construction Documents
by this Casino Operating Agreement. All Alterations shall be subject to
inspection by the Gaming Board through its designated representatives; however,
the Gaming Board shall have no obligation to inspect and in the event that the
Gaming Board does inspect, the Gaming Board shall have no liability to the
Casino Operator or to any other Person as a result of its inspection.
ARTICLE XVII. ENTRY UPON CASINO PREMISES BY GAMING BOARD; INSPECTION
17.1. Access and Inspection Rights. The Gaming Board and its
representatives shall have complete, immediate and unrestricted right at all
times and without notice or demand to the Casino Operator and/or the Casino
Manager or to any other Person, to enter the Casino, including so-called
"secured" areas, as defined by Rules and Regulations for purposes of inspection
and determining whether the Casino Operator and/or the Casino Manager are
complying with the obligations of this Casino Operating Contract, including
exercising the Gaming Board's right to examine the Books and Records. The Casino
Operator shall not delay, hinder, impede or restrict the Gaming Board's or its
authorized representatives' immediate access to the totality of the Casino and
any area, building or location leased, owned or operated by or on behalf of the
Casino Operator relative to Casino operations, and shall not permit the Casino
Manager or any other Person to do so. The Casino Operator shall deliver to
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the Gaming Board accurate scale drawings of the floor plans of the Casino
showing and designating the use for each room or enclosed area, the "secured"
areas, and particularly areas where gross gaming receipts and other Casino
revenues are handled. The Casino Operator shall deliver updated copies of the
scale drawings to the Gaming Board as changes are made in the use of any room or
enclosed area.
ARTICLE XVIII. INDEMNIFICATION
18.1. Indemnification. From and after the Plan Effective Date, the
Casino Operator shall defend, indemnify and hold the Gaming Board harmless from
and against any and all Claims that are asserted against, incurred by or imposed
upon the Gaming Board or that the Gaming Board may be required to pay or observe
that arise out of or are in any manner related to the possession, construction,
operation and management of the Casino by the Casino Operator or the Casino
Manager and their respective employees and agents including, but not limited to,
Claims based or grounded in whole or in part on:
(a) the failure of the Casino Operator or the Casino Manager and
any Space Lease Operator to comply with the terms of this Casino Operating
Contract;
(b) the construction or remodeling of the Casino or the
performance of any work or therein or thereon;
(c) the Gaming Board's review or refusal to review and/or Approve
of Construction Documents, Design Development Documents, life safety systems,
fire safety systems or any other aspect relating to the design or construction
of the Casino or the qualifications of any design professional contractor or
sub-contractor;
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(d) the failure of the Casino Operator, the Casino Manager, any
Space Lease Operator and their respective employees, agents and servants to
comply with the terms of the Casino Lease, any Essential Agreements or any other
agreement affecting the Casino to which the Casino Operator, the Casino Manager
or a Space Lease Operator is a party;
(e) any personal injury, death or property damage suffered or
alleged to have been suffered by the Casino Operator, the Casino Manager, any
Space Lease Operator and their respective employees, agents or servants or any
other Person in, on or about the Casino;
(f) any act, omission or other negligence of the Casino Operator,
the Casino Manager, any Space Lease Operator or their respective employees,
agents or servants;
(g) any failure of the Casino Operator, the Casino Manager, any
Space Lease Operator or their respective employees, agents or servants to comply
in all respects with the all applicable Governmental Requirements, the
Environmental Laws or any other law, ordinance, code or rule or regulation
applicable to the Casino or the Casino operations;
(h) the performance of any labor, service or the furnishing of any
material for the Casino or the condition of any building, improvement or
component part forming the Casino or any non-public street, curb or sidewalk on
or about the Casino or any vaults, tunnels, malls, passageways or space therein
or thereabout or the failure to pay for such labor, service or furnishing of
material as and when required;
(i) any breach of any agreement between the Casino Operator and
other Persons, including but not limited to the Casino Operator's shareholders
or Affiliates and any Person in a Control Relationship with the Casino Operator,
or vendors, investors,
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underwriters, financiers, lenders, creditors, suppliers, contractors,
sub-contractors, materialmen, real property lessors, equipment lessors,
accountants, attorneys, consultants or advisors, employees, agents or Space
Lease Operators, Casino patrons, invitee, guests and any other Person whomsoever
or whatsoever;
(j) any act or omission of the Casino Manager or any Space Lease
Operator or any Person for whom either the Casino Manager or a Space Lease
Operator is vicariously responsible;
(k) any act or omission of a design professional, Contractor,
subcontractor, equipment lessor, consultant or other Person performing labor or
services or providing equipment in connection with the construction of the
Casino or any Work or Alterations; or
(l) those other circumstances or matters expressly described
elsewhere in this Casino Operating Contract requiring indemnification of the
Gaming Board by the Casino Operator; Provided however, no indemnification shall
be required with respect to Claims that are based upon (i) the sole negligence
or intentional fault of the Gaming Board or (ii) a finding of unsuitability that
has been adjudicated by a proper court to have been arbitrary and capricious,
(iii) the joint or solidary fault of the Gaming Board the State or any Person
for whom either is vicariously liable with a third party or parties other than
the Casino Operator, the Casino Manager or their respective Affiliates (iv) a
breach of this Casino Operating Contract by the Gaming Board; or (v) any
allegation of breach of Section 4.1 - "Gaming Board Warranties; Due
Authorization" hereof.
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18.2. Defense of Proceedings. If an action or proceeding is brought or
asserted against the Gaming Board based upon a Claim in respect of which the
Casino Operator is obligated to indemnify the Gaming Board, the Casino Operator
shall upon Notice from the Gaming Board:
(a) defend the Claim on behalf of the Gaming Board through
Independent Counsel;
(b) pay all costs of defense without exclusion;
(c) keep the Gaming Board fully and completely advised of all
material developments and proceedings in connection therewith;
(d) furnish the Gaming Board with true, correct and complete
copies of all papers filed or served in the proceeding, irrespective of by whom
served or filed; and
(e) pay or otherwise discharge any final judgment or award
rendered therein.
18.3. Right to Participate in Defense. The Gaming Board shall have the
unrestricted right, but not the obligation, at the Gaming Board's expense to be
represented in any such Claim subject to indemnification by the Attorney General
of the State or one or more special assistant Attorneys General engaged by the
Attorney General.
18.4. No Settlement Without Gaming Board Approval. The Gaming Board
shall have the right to approve the conditions of any proposed settlement of a
Claim subject to indemnification, including any agreement to acknowledge
liability or pay money, unless the proposed settlement involves no
acknowledgment of responsibility or liability on the part of the Gaming Board.
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18.5. Payment of Judgment. The Casino Operator shall promptly pay and
discharge any final and non-appealable judgment or ruling rendered on a Claim
subject to indemnification.
18.6. Indemnity of State. The Casino Operator shall indemnify the State
in the event a judgment is rendered against the State as a result of the actions
of the Casino Operator or its agents.
ARTICLE XIX. CRITERIA FOR OPENING CASINO
19.1. Financing Completed. The Casino Operator shall have obtained the
Initial Plan Financing and delivered to the Gaming Board all guarantees or
assurances required by this Casino Operating Contract before it shall be
entitled to open the Casino.
19.2. Insurance Coverages. The Casino Operator shall have procured and
paid for the Insurance Coverages for the Casino before it shall be entitled to
open the Casino.
19.3. Landlord Approvals and Consents. The Casino Operator shall have
obtained all required Landlord approvals and consents required under the Casino
Lease for the opening of the Casino or shall have provided written evidence of
the Landlord's waiver of the Landlord approvals and consents before it shall be
entitled to open the Casino.
19.4. Completion Acceptance. All construction relating to the Casino
shall have been accepted as substantially complete by the Landlord and the
Casino Operator's Architect or the architect providing contract administration
before the Casino Operator shall be entitled to open the Casino.
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19.5. Occupancy Permits and Licenses. The Casino Operator shall have
obtained all necessary occupancy licenses and permits and delivered copies of
the same to the Gaming Board before the Casino Operator shall be entitled to
open the Casino.
19.6. Suitability and Licensing. All persons who must be found Suitable
and/or licensed by the Gaming Board for opening the Casino shall be found
Suitable and/or licensed before the Casino Operator shall be entitled to open
the Casino.
19.7. Operational Checkout. The Casino Operator shall not be entitled
to open the Casino until the Gaming Board has completed its on-site inspection
of the Casino and found all Games, Gaming Devices, Gaming Supplies, Books and
Records, accounting and other systems to be in full compliance with this Casino
Operating Contract and the Rules and Regulations. The Gaming Board's onsite
inspection shall include, but is not limited to, pre-opening inspections and
audits consisting of tests of gaming equipment, casino operations and casino
employees and personnel, and shall include testing of internal control, security
and surveillance procedures. The Casino Operator shall submit to post-opening
testing as ordered by the Gaming Board.
19.8. Casino Manager's Certification. The Casino Operator shall not be
entitled to open the Casino until it has delivered to the Gaming Board a
Certificate of the Casino Manager attesting that the Casino Manager has
completed its inspection of the Casino and accepts to the best of the Casino
Manager's knowledge, all construction, Games, Gaming Devices, Gaming Supplies,
Books and Records, accounting and other systems as operational and in conformity
with this Casino Operating Contract and the Rules and Regulations. No
certification by the Casino Manager shall be deemed to be a waiver of the Casino
Operator's
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or the Casino Manager's claims against vendors, suppliers, manufacturers or any
other third Person.
19.9. No Default. The Casino Operator shall not be entitled to open the
Casino if there is then existing any Event of Default under this Casino
Operating Contract.
ARTICLE XX. CASINO OPERATOR'S DEFAULT
20.1. Events of Default. The occurrence of any of the following shall
constitute a default under this Casino Operating Contract by the Casino
Operator, which if not cured after Notice and opportunity to cure as provided in
this Casino Operating Contract shall be an "Event of Default":
(a) If Casino Operator fails to pay the Daily Payment, Louisiana
Gross Gaming Revenue Share Payments, or Additional Charges or any other Payment
due to the Gaming Board hereunder as and when due, and such default is not
remedied within fifteen (15) Days following delivery of Notice of non-payment
from the Gaming Board to the Casino Operator; or
(b) If the Casino Operator is not Financially Stable, and the
applicable cure period in Section 9.5(e) - "Financial Stability" has elapsed; or
(c) If the Gaming Board makes a final determination that either
the Casino Operator or the Casino Manager is not Suitable, provided that any
suitability determination that is financially related shall be first subject to
the cure period set forth in Section 9.5(e) - "Financial Stability" and provided
further that if any suitability determination is appealed by the Casino Operator
or the Casino Manager to the court of competent jurisdiction within the
applicable period provided by law, the Gaming Board shall not terminate this
Casino
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Operating Contract as a result of the determination of unsuitability until the
appeal is dismissed or the proper court renders a final non-appealable judgment
upholding the Gaming Board's determination. If an appeal to the Gaming Board's
determination is filed by the Casino Operator or the Casino Manager, the Gaming
Board may, pending the appeal, take such steps as the Gaming Board in its sole
opinion deems appropriate in order to protect the public interest, the integrity
of the Casino (including Gaming Operations), and the fiscal interest of the
Gaming Board and the State, including but not limited to appointing a fiscal
agent who shall be empowered to approve all disbursements made or expenses
incurred by the Casino Operator or the Casino Manager or the appointment of a
conservator who shall have such powers and duties with respect to the Casino and
Gaming Operations as the Gaming Board approves by emergency or other Rules and
Regulations; or
(d) If the Gaming Board makes a final determination that any other
Person required to be Suitable including but not limited to a Partner or any
Affiliate of the Casino Operator, the Casino Manager, a Partner or any Person in
a Control Relationship with any of them is not Suitable, and the Casino Operator
fails to comply with the safe harbor requirements of Section 24.3 -
"Unsuitability - Holders of Equity or Debt Interests' and Section 24.4 - "Safe
Harbor"; or
(e) If the Casino Operator is in material non-compliance with any of
the affirmative or negative covenants contained in this Casino Operating
Contract, provided that any financial covenants (excluding any covenants or
obligations to pay money to the Gaming Board) shall be subject to the cure
period in Section 9.5(e) - "Financial Stability" and Section 20.2 - "Notice;
Opportunity to Cure"; or
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(f) If the Casino Operator contracts with, engages or otherwise or
utilizes a casino manager without the Approval of the Gaming Board; or
(g) If the Casino Operator assigns or subcontracts or attempts to
assign or subcontract any of the casino operator's material duties or
obligations to provide or to operate the Casino in violation of this Casino
Operating Contract except as specifically authorized in this Casino Operating
Contract; or
(h) If the Casino Operator is convicted of conduct that, in the
applicable jurisdiction, is punishable as a felony or equates to a felony in the
State; or
(i) If the Casino Operator Transfers this Casino Operating
Contract or any interest herein except with the Approval of the Gaming Board; or
(j) If the Casino Operator is adjudicated to be in default under
any Essential Agreement, the Casino Lease or the General Development Agreement
that, in the Gaming Board's sole opinion, materially affects the Casino
Operator's ability to perform its obligations under this Casino Operating
Contract; or
(k) If the Casino Operator amends or permits the amendment of any
Essential Agreement without the Approval of the Gaming Board; or
(l) If this Casino Operating Contract, or any right created
hereby, is taken pursuant to any execution or other process of law directed
against the Casino Operator, or pursuant to any seizure or attachment by any
creditor of the Casino Operator or claimant against the Casino Operator, and
such execution, seizure or attachment is not fully released, discharged or
disposed of within five (5) Days after such execution, seizure or attachment
becomes effective; or
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(m) If the Casino Operator makes a general assignment for the
benefit of creditors; or admits in writing its insolvency or its inability to
pay its debts as they come due; or is adjudged to be insolvent in any judicial
or administrative proceeding; or files a petition or other request for relief
seeking any reorganization (other than any filings in connection with the Plan),
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future statute, law or regulation; or files an
answer or other pleading or response admitting or not contesting the material
allegations of, and/or stipulating to the relief sought in, a petition filed
against it in any such proceeding; or seeks or consents to or acquiesces in the
appointment of a trustee, administrator, or liquidator for the Casino Operator
or a material part of its assets; or voluntarily liquidates or dissolves; or
(n) If the Casino Operator fails to perform or to comply with any
other material obligation contained in this Casino Operating Contract but not
specifically addressed in this Article XX "Casino Operator's Default;" or
(o) If the Casino Operator, other than as a result of an Excusable
Temporary Cessation of Operations closes the Casino or ceases Gaming Operations
and fails to reopen the Casino and resume Gaming Operations within seven (7)
days; or
(p) If the Casino Operator shall not have caused to be provided
and continuously maintained a Minimum Payment Guaranty as required by Section
25.1 - "Rolling Minimum Payment Guaranty."
20.2. Notice; Opportunity to Cure. The Casino Operator acknowledges and
agrees that time is of the essence of this Casino Operating Contract and of the
Casino Operator's observance and performance of its duties and obligations under
this Casino Operating
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Contract. A default under any of subsections (b), (e), (f), (g), (h), (j), (k),
(l), or (n) of Section 20.1 - "Events of Default" shall not be an Event of
Default unless the Casino Operator fails to remedy the default within thirty
(30) Days after Notice of default by the Gaming Board (subject to such
additional period for financial stability related issues as set forth in Section
9.5(e) - "Financial Stability" hereof) provided however, if the default is not
susceptible with due diligence of being cured by the Casino Operator within
thirty (30) Days and the Casino Operator commences to cure the default within
thirty (30) Days of Notice of default and diligently and continuously prosecutes
the cure to completion, then the thirty (30) Day period shall be extended for
the period of time required to complete the cure. The occurrence of the events
under subsections (a), (c), (d), (i), (m), (o) or (p) of Section 20.1 - "Events
of Default" shall constitute an Event of Default without any other notice or
opportunity to cure.
20.3. Payment Disputes. Notwithstanding any of the foregoing, the
following provisions shall apply to a default that involves any payment or
charge due hereunder, or which may be cured by the expenditure of funds by
Casino Operator. If the asserted default involves a good faith dispute over the
amount of a payment due to the Gaming Board, the Casino Operator shall, before
the lapsing of the applicable cure period, pay and transfer to the Gaming Board
the entire amount asserted by the Gaming Board to be due and payable, including
that portion thereof which is in dispute, otherwise such failure shall be an
Event of Default. If the Casino Operator subsequently proves that all or a
portion of the disputed amount was not in fact due, then in the Gaming Board's
sole discretion, the Gaming Board shall either return the amounts determined not
to have been due to the Casino Operator or
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designate that the amounts paid shall be setoff against the next ensuing
payments of the Louisiana Gross Gaming Revenue Share Payments.
20.4. Remedies.
(a) Termination. Upon the occurrence of an Event of Default and
subject to the rights of the Leasehold Mortgagees set forth below in Article
XXIII - "Leasehold Mortgagees", the Gaming Board shall have the right, without
prejudice to any other right or remedy the Gaming Board may have hereunder, to
terminate this Casino Operating Contract by delivery of Notice specifying the
date of termination; provided, however, upon the occurrence of an Event of
Default that is also a Termination Event, the provisions of Section 20.6(b) -
"Termination of Casino Operating Contract" shall apply.
(b) Specific Performance. If the Gaming Board does not terminate
this Casino Operating Contract, the Gaming Board may, at its option, (a) enforce
the Casino Operator's obligations to pay all amounts due under this Casino
Operating Contract together with interest at the Default Interest Rate, (b)
enforce the Casino Operator's other obligations hereunder by an action for
specific performance or by restricting, limiting or suspending the Casino
Operator's rights under this Casino Operating Contract, or (c) enforce any other
remedy available to the Gaming Board in law or in equity. The remedies to which
the Gaming Board may resort under this Casino Operating Contract are cumulative
and are not intended to be exclusive of other remedies or means of redress to
which the Gaming Board may be entitled in case of any breach or threatened
breach of this Casino Operating Contract. Election of any particular default
remedy shall not preclude the Gaming Board from electing any other available
remedy in law or in equity. The failure of the Gaming Board to insist
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upon the strict compliance with any law or regulation applicable to the Casino
and/or the Casino Operator, or the strict compliance with or performance of any
of the conditions of this Casino Operating Contract shall not be construed as a
waiver or relinquishment of any right or remedy for the failure of such or any
other obligation, including the right to insist upon complete and timely
performance of all obligations of the Casino Operator. Under no circumstances
shall any action, inaction or delay which may be suffered in connection with the
Casino Operator's performance hereunder create any custom, course of dealing or
other basis for any claim of estoppel or detrimental reliance by the Casino
Operator.
20.5. Right to Injunctive Relief. In the event of a breach or
threatened breach by the Casino Operator of any of the obligations of this
Casino Operating Contract, the Gaming Board shall have the right to seek
temporary and injunctive relief in addition to any other remedy at law or
equity, without the necessity of furnishing bond.
20.6. No Limitation on Available Remedies.
(a) General. Nothing herein shall be construed to limit, reduce
or preclude recovery by the Gaming Board against the Casino Operator of any
sums or damages to which, in addition to any fines, penalties, or damages
particularly provided for herein, the Gaming Board may lawfully be entitled
by reason of any Event of Default hereunder on the part of the Casino
Operator. Subject to Section 20.6(b)--"Termination of Casino Operating
Contract," nothing herein contained shall be construed to limit or prejudice
the right of the Gaming Board to prove and obtain as liquidated damages by
reason of the termination of this Casino Operating Contract as a result of an
Event of Default, an amount equal to the maximum allowed by any law in effect
at the time and governing the proceedings in which such
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damages are to be proved, whether or not such amount is greater, equal to, or
less than any of the sums referred to in other Sections of this Casino Operating
Contract. Moreover, the Casino Operator acknowledges the authority of the Gaming
Board to impose the fines and seek other remedies provided in the Rules and
Regulations subject to review under applicable law.
(b) Termination of Casino Operating Contract. The Casino Operator
hereby agrees to the immediate termination of this Casino Operating Contract,
including any rights to operate the Casino, if either (i) the Casino Operator,
other than as a result of an Excusable Temporary Cessation of Operations, closes
the Casino or ceases Gaming Operations and fails to reopen the Casino and resume
Gaming Operations within seven (7) days, or (ii) the Casino Operator fails
timely to post the Minimum Payment Guaranty pursuant to the requirements of this
Casino Operating Contract (either of (i) or (ii) above, a "Termination Event"),
and upon the occurrence of either Termination Event, this Casino Operating
Contract shall be deemed terminated without further action.
If any such Termination Event occurs after the Casino Opening Date
and provided that (i) the Gaming Board has received the greater of the Minimum
Payment for that Fiscal Year (or in the case of the Initial Unconditional
Minimum Payment Guaranty attached hereto as Exhibit H for the three hundred
sixty five (365) days after the Casino Opening Date) or the Louisiana Gross
Gaming Revenue Share Payments for that Fiscal Year as of the Termination Event
(plus any Late Payment Interest, if any), no later than ten (10) days following
the end of such Fiscal Year, and (ii) this Casino Operating Contract has been
terminated, the State and the Gaming Board, except as provided below in this
Section, shall
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not seek or assert an affirmative claim against the Casino Operator for
additional Louisiana Gross Gaming Revenue Share Payments for the remaining
balance of the Term of the terminated Casino Operating Contract.
Notwithstanding the above, nothing herein shall limit any claims
of the Gaming Board for any Additional Charges or for Louisiana Gross Gaming
Revenue Share Payments due and owing but not paid for a prior Fiscal Year and/or
for indemnity and/or contribution or limit the Gaming Board's right to assert
such claims as a defense, offset and/or recoupment in any action or proceeding.
If any one or more of the Casino Operator, JCC Holding, HET,
Harrah's Operating, the Casino Manager or any of their respective successors, or
any of their controlled affiliates (as may be determined by the court of law in
which the litigation is pending) institutes legal action against the Gaming
Board and/or the State asserting any claims related to this Casino Operating
Contract or any such person(s) or entity(ies) assert that the Casino Operator
has any continuing rights to operate the Casino, then the Gaming Board's remedy
limitation set forth in this Section 20.6(b) shall not apply.
20.7. Costs. If the Gaming Board is the prevailing party, all costs
incurred by the Gaming Board to collect any amounts and damages owing by the
Casino Operator under the provisions of this Casino Operating Contract or to
enforce any provision of this Casino Operating Contract, including reasonable
Litigation Expenses and other expenses of enforcement from the date any such
matter is turned over to an attorney, shall be recoverable by the Gaming Board
from the Casino Operator. "Litigation Expenses" include, but are not limited to,
the following: the reasonable fees and charges of attorneys, legal assistants,
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paralegals, law clerks and other personnel used by attorneys and under attorney
supervision and all costs incurred or advanced by any of them irrespective of
whether incurred in or advanced before the initiation of any legal, equitable,
arbitration, administrative, bankruptcy, trial or similar proceedings and any
appeal from any of same, expert expenses and court costs.
20.8. Fines, Penalties. In addition to any other remedies, penalties,
or similar types of recourse specified in this Casino Operating Contract, the
Gaming Board shall have the right to impose monetary fines upon the Casino
Operator as provided in the Rules and Regulations.
ARTICLE XXI. BANKRUPTCY AND INSOLVENCY
21.1. Bankruptcy or Insolvency. If the Casino Operator
(a) files a voluntary petition under any chapter of the Bankruptcy
Code; or
(b) an involuntary petition is filed against the Casino Operator
under any chapter of the Bankruptcy Code which petition is not dismissed within
sixty (60) Days after filing, then the following provisions shall apply: All
references in this Article to the "Bankruptcy Code" shall mean Title 11 of the
United States Code as it exists or may hereafter be amended in the form
applicable to the Casino Operator's case and related proceedings. All references
in this Article XXI - "Bankruptcy and Insolvency" shall mean the United States
Bankruptcy Court in which the Casino Operator's bankruptcy case was filed,
and/or such other court as may have jurisdiction of and act with respect to the
case. All references in this Section to the "Casino Operator" shall apply
equally to: (i) the Casino Operator; (ii) the Casino Operator as debtor and/or
debtor in possession in any bankruptcy case; (iii) any Trustee of the Casino
Operator's estate appointed under any Chapter of the Bankruptcy Code; and (iv)
any assignee of or purported assignee of this Casino Operating Contract pursuant
to
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an assumption and assignment order by the Bankruptcy Court. All time periods
provided for hereunder shall be considered to run continuously and without
interruption; that is, it is intended and agreed by the Casino Operator that no
time period shall be considered to be interrupted or suspended by the automatic
stay or by the occurrence of any event such as the conversion of a pending
bankruptcy case, appointment of a trustee, entry of an order for relief in an
involuntary case, or similar event. No provision hereunder addressing the
attempted assignment of this Casino Operating Contract by the Casino Operator
shall be considered to waive or modify any other provision hereof prohibiting
the Casino Operator from assigning this Casino Operating Contract. Such
provisions are included only in order to provide for the situation in which the
Gaming Board is compelled by the Bankruptcy Court to acquiesce in an assignment
duly approved by the Bankruptcy Court.
21.2. Regulation; Exercise of Police and Regulatory Powers. The Casino
Operator acknowledges and agrees that for purposes of the Bankruptcy Code, the
enforcement of the Casino Act by the Gaming Board, this Casino Operating
Contract and the Rules and Regulations, are an exercise by a governmental unit
of its police and regulatory powers not subject to the automatic stay imposed by
Section 362 of the Bankruptcy Code.
21.3. Cash Collateral. The Casino Operator acknowledges and agrees that
it has no ownership claims to the Louisiana Gross Gaming Revenue Share Payments,
including the State's Interest in Daily Collections.
21.4. Performance; Assumption or Rejection. The Casino Operator
acknowledges and agrees that the Casino Act, the Rules and Regulations and all
other laws and regulations applicable to this Casino Operating Contract
including but not limited to those addressing
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Suitability as well as the purpose and subject matter hereof render this Casino
Operating Contract, or any part hereof, inappropriate for "assumption" by the
Casino Operator pursuant to Section 365 of the Bankruptcy Code. The Casino
Operator further acknowledges and agrees that:
(a) "Applicable law" as that term is defined in Section 365 of the
Bankruptcy Code in all cases would excuse the Gaming Board from accepting
performance from any entity other than the Casino Operator to whom the Casino
Operator might propose to "assign" or Transfer all or any part of this Casino
Operating Contract; and
(b) The Gaming Board has no duty to consent or consider whether it
might consent to any proposed assumption and assignment, pursuant to Section 365
of the Bankruptcy Code, of this Casino Operating Contract and any rights
hereunder.
21.5. No Performance Excused. Irrespective of whether the Casino
Operator is in default under this Casino Operating Contract at the time of
commencement of the voluntary or involuntary case, the Casino Operator shall not
be excused from full and timely performance under this Casino Operating
Contract.
21.6. Notice of Filing. The Casino Operator agrees to give the Gaming
Board Notice contemporaneously with the commencement of a voluntary case, and
within twenty-four (24) hours of the Casino Operator's receipt of notice, formal
or informal, of the commencement of an involuntary case against the Casino
Operator.
21.7. Relief from Automatic Stay. The Casino Operator agrees to entry
of an immediate order from the Bankruptcy Court, on the Gaming Board's ex parte
motion: (1) granting to the Gaming Board a modification of the automatic stay
(and/or recognition that the automatic stay is not applicable) allowing it to
fully enforce the provisions of this Casino
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Operating Contract, the Casino Operator hereby agreeing that in such case,
"cause," as defined by the Bankruptcy Code would exist for the immediate entry
by the Bankruptcy Court of such an order modifying the automatic stay; and (2)
if deemed necessary or advisable by the Gaming Board, compelling the Casino
Operator to appear immediately and to show cause why this Casino Operating
Contract should not be immediately terminated and/or, if appropriate, "rejected"
under Bankruptcy Code Section 365.
21.8. Cure Periods Not Tolled. Neither the commencement of a case nor
the automatic stay shall interrupt or suspend the tolling of any applicable cure
period. If the Casino Operator is in default under any provision of this Casino
Operating Contract and any required notice has not been given with respect to
such default at the time of commencement of the voluntary or involuntary case,
then Casino Operator agrees that cause exists for and agrees to the immediate
entry by the Bankruptcy Court, on the Gaming Board's ex parte motion, of an
order granting the Gaming Board relief from the automatic stay in order to give
any required notice and allow such cure period to toll, and further, upon the
expiration of such cure period, to proceed to enforce any and all rights under
this Casino Operating Contract for the preservation or enforcement of Gaming
Board's rights hereunder.
ARTICLE XXII. DEFAULT BY THE GAMING BOARD
22.1. Default by Gaming Board. In the event of a default by the Gaming
Board of any of its obligations under this Casino Operating Contract, except as
provided in Section 22.3 hereinbelow, the Casino Operator shall provide a
written Notice of default to the Gaming Board. The Gaming Board shall have
thirty (30) Business Days after delivery of the Notice of default within which
to cure the default. If, however, the default cannot with due diligence be
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cured by the Gaming Board within thirty (30) Business Days and if the Gaming
Board commences to cure the default within thirty (30) Business Days and
diligently and continuously prosecutes the cure to completion, then the thirty
(30) Business Day period shall be extended for the period of time required for
the Gaming Board to complete the cure.
22.2. Remedies. If the Gaming Board fails to cure a default within the
time period provided above, the Casino Operator shall be entitled to compel
specific performance of the Gaming Board's obligations. The Casino Operator
shall also be entitled to any other remedy provided or permitted by law.
22.3. Exclusivity - Default by the Gaming Board and Remedies. The
provisions of Section 22.1 - "Default by Gaming Board" and Section 22.2 -
"Remedies," including, without limitation, the notice, cure and remedy
provisions set forth therein, shall not apply to the provisions of Section 1.3 -
"Exclusive Contract," it being understood that the rights and obligations of the
parties with respect to the matters set forth in Sections 1.3(a) through (g)
inclusive of this Casino Operating Contract shall be governed exclusively by the
terms set forth therein.
ARTICLE XXIII. LEASEHOLD MORTGAGEES
23.1. General. To encourage the lending of money to the Casino
Operator, to foster economic development and growth, to ensure the continuity of
employment of Louisiana citizens and to maintain the integrity and regulation of
Gaming Activities, the Gaming Board in accordance with the terms of the Casino
Act, hereby provides for certain protections of the rights of Leasehold
Mortgagees including the receivership provisions contained in the Casino Act.
The actions of the receiver during the term of the receivership shall be
governed by and
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taken in strict accordance with the Rules and Regulations promulgated by the
Gaming Board. No rule or regulation and no provision in this Casino Operating
Contract executed pursuant to authority granted in R.S. 27:275 shall be the
basis for any cause of action in contract, tort or otherwise against the State,
the Gaming Board, or their respective employees, agents or attorneys. The Gaming
Board shall have the right, but not the obligation, to Approve the terms of any
future Leasehold Mortgage, as well as the term of the transaction or
transactions as required by the Rules and Regulations.
23.2. Registered Leasehold Mortgagee.
A Leasehold Mortgagee may provide a written registration
notice to the Gaming Board. The registration notice shall advise the Gaming
Board of the existence of the Leasehold Mortgage, the name of the Leasehold
Mortgagee and the name and address of not more than four persons to whom Notices
of default from the Gaming Board should be sent. Upon delivery of the
registration notice, the Leasehold Mortgagee shall be a "Registered Leasehold
Mortgagee."
23.3. Notices to Registered Leasehold Mortgagees. The Gaming Board
shall send to each Registered Leasehold Mortgagee a copy of each written Notice
of default given by the Gaming Board to the Casino Operator. The copy of the
Notice of default shall be sent to each Registered Leasehold Mortgagee at the
same time the Notice of default is sent to the Casino Operator. The Gaming Board
shall also send each Registered Leasehold Mortgagee notice if the Casino
Operator has been notified by the Gaming Board that the Casino Operator is under
investigation for any act that may lead to suspension or revocation of the
authorization to engage in Gaming Operations pursuant to this Casino Operating
Contract.
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Notwithstanding the provisions of this Article XXIII - "Leasehold
Mortgagees", the Gaming Board has no obligation to provide Notice to any
Registered Leasehold Mortgagee prior to the termination of this Casino Operating
Contract under the provisions of Section 20.6(b) "Termination of Casino
Operating Contract," but shall provide reasonably prompt subsequent notification
pursuant to such Section of the occurrence of any Termination Event.
23.4. Opportunity to Cure. With respect to any default with respect to
which the Casino Operator is granted cure rights pursuant to this Casino
Operating Contract, a Leasehold Mortgagee shall have the right to cure or cause
to be cured any such default specified by the Gaming Board in its Notice of
default. A Leasehold Mortgagee shall have a period of up to forty-five (45)
Business Days after the expiration of the Casino Operator's cure period within
which to remedy such a default but in no event shall such cure period extend
beyond the occurrence of a Termination Event. The Gaming Board shall have the
right at any time after the expiration of the cure period afforded to the Casino
Operator to appoint a fiscal agent who shall be authorized to pay to the Gaming
Board all current and past due Louisiana Gross Gaming Revenue Share Payments and
take any other action as may be provided by Rules and Regulations, including
providing the protection of the rights of holders of security interests in
property owned by the Casino Operator in accordance with R.S. 27:275. The
Leasehold Mortgagees have only the right, but not the obligation, to cure a
default. Except as provided in Section 20.6(b) - "Termination of Casino
Operating Contract," this Casino Operating Contract shall not terminate as a
result of an Event of Default until after the Gaming Board has provided Notice
of its intent to terminate to each Registered Leasehold
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Mortgagee and the passage of forty-five (45) Business Days during which the
Leasehold Mortgagees may seek the appointment of a receiver in accordance with
terms of this Casino Operating Contract, provided the Gaming Board shall have
the right during this forty-five (45) Business Day period to appoint a fiscal
agent who shall be authorized to pay to the Gaming Board all current and past
due Louisiana Gross Gaming Revenue Share Payments and to take any other action
as may be provided by Rules and Regulations. Nothing contained in this Article
XXIII - "Leasehold Mortgagees" is intended to, nor shall it provide any
Leasehold Mortgagee or any Person with any right to cure any default or Event of
Default which also constitutes a Termination Event (as provided in Section
20.6(b) - "Termination of Casino Operating Contract").
23.5. Revocation/Suspension Proceedings. The Gaming Board shall provide
notice to the Registered Leasehold Mortgagees of any administrative hearing or
other public proceeding that might lead to a suspension or revocation of the
authorization to engage in Gaming Operations pursuant to this Casino Operating
Contract, and each Leasehold Mortgagee shall have the right to participate in
any such hearing or proceeding, including any appeal from any such proceeding.
23.6. Receivership/Foreclosure Proceedings. The Gaming Board shall
maintain a list of at least three Persons who meet the Suitability Requirements
to operate the Official Gaming Establishment in the event of a receivership.
This list shall be known as the "Receivership List."
(a) Receivership Proceeding - Gaming Board as Nominal Defendant.
If a Leasehold Mortgagee wishes to continue the operation of the Official Gaming
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Establishment during and after the filing of a suit to enforce its security
interest, the Leasehold Mortgagee shall name the Gaming Board as a nominal
defendant in such suit and request the appointment of a receiver from among the
persons on the Receivership List. Upon proof of the Casino Operator's default
under the Leasehold Mortgage and the Leasehold Mortgagee's right to enforce the
Leasehold Mortgage, the court shall appoint a receiver from the Receivership
List.
(b) Bond. Upon the appointment of a receiver by the court, such
receiver shall be required to furnish a fidelity bond in favor of the Leasehold
Mortgagee, the Casino Operator and the Gaming Board in an amount set by the
court after consultation with the Gaming Board, the Leasehold Mortgagee and the
Casino Operator. No cause or right of action shall exist to test the sufficiency
of the Bond.
(c) Provisional Contract. Upon the appointment and posting of a
bond by the receiver, the receiver so appointed shall be issued a one-time,
nonrenewable provisional contract by the Gaming Board to continue Gaming
Operations until the receivership is terminated for any reason, including, but
not limited to, the following: (i) the Transfer of the Casino to a duly approved
or authorized Person or pursuant to Section 23.6(g) - "Transfers in Connection
with Foreclosures," (ii) the payment in full or release (including without
limitation unpaid interest) of all obligations due to the Leasehold Mortgagee,
(iii) an agreement for the termination of the receivership signed by the
Leasehold Mortgagee and the Casino Operator, and approved by the Gaming Board
and the court, (iv) the lapse of five (5) years from the date of the initial
appointment of the receiver, or (v) notice to the Gaming Board and the court
from the Leasehold Mortgagee that provoked the receivership of its
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intention to withdraw its financial support of the Receivership at a specified
time not less than ninety (90) Days from the date of notice. In any proceeding
thereafter by the court or by any parties to the suit other than the Gaming
Board to remove the receiver for cause or to appoint a successor receiver in the
event of death, disability or resignation of the receiver, the Gaming Board
shall be served with a notice of such action and shall have standing to contest
or concur in the action to remove the receiver or to appoint a successor
receiver. No Person may be appointed as a successor receiver unless such Person
is named in the Receivership List.
(d) Operations by Receiver/Accounting. The actions of the receiver
during the term of the receivership shall be governed by and taken in strict
accordance with the Rules and Regulations. The receiver shall be required to
account to both the court and, the Gaming Board during the receiver's tenure at
such times and in such detail as may be required by the Rules and Regulations.
Fees of the receiver and the authority for expenditures of the receiver shall be
established by the Rules and Regulations and shall be considered costs of
operations of the Official Gaming Establishment.
(e) Cost of Receivership. The Leasehold Mortgagee that provoked
the appointment of a receiver shall be required to pay the cost of the
receiver's bond and the cost of operating the Official Gaming Establishment
during the term of the receivership to the extent that such costs exceed
available revenues in accordance with the Rules and Regulations; provided that
if the Leasehold Mortgagee that provoked the receivership provides notice to the
Gaming Board of its intention to withdraw financial support of the receivership
at a specified time not less than ninety (90) days from the date of such notice,
the Leasehold Mortgagee shall not be responsible for any costs or expenses of
the receivership
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after the date specified in the notice, except reasonable costs and fees of the
receiver in concluding the receivership and the costs of a final accounting.
(f) Effect of Termination of Receivership. If the receivership is
terminated as a result of (i) the payment in full of all obligations due to the
Leasehold Mortgagee or (ii) an agreement for termination of the receivership
(which may include a Transfer of the property as provided in Section 23.6(g) -
"Transfers in Connection with Foreclosures," including this Casino Operating
Contract, subject to the Gaming Board's Approval) signed by the Leasehold
Mortgagee and the Casino Operator and approved by the Gaming Board and the
court, the Casino Operator may simultaneously be restored to the same position
as if the receivership had never occurred. If the receivership is terminated due
to (i) the Transfer of the property subject to the receivership and/or this
Casino Operator Contract to a duly approved or authorized Person, (ii) as a
result of the lapse of five (5) years from the date of the initial appointment
of the receiver or (iii) by the withdrawal of financial support of the
receivership by the Leasehold Mortgagee, the authority of the Casino Operator
may be revoked by the Gaming Board, and if this Casino Operating Contract has
not been sold or transferred to a duly approved or authorized person this Casino
Operating Contract may be terminated and the right to operate the Official
Gaming Establishment may be rebid.
(g) Transfers in Connection with Foreclosures. Subject to
approvals from the Gaming Board required under the Casino Act and the Rules and
Regulations, the following Transfers shall be permitted: (i) any Transfer of the
Casino to a Leasehold Mortgagee or its nominee by foreclosure or deed in lieu of
foreclosure, (ii) a Transfer by such Leasehold Mortgagee or such nominee to a
third party following the foreclosure by such
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Leasehold Mortgagee or deed in lieu of foreclosure to such Leasehold Mortgagee
or nominee, or (iii) a Transfer to a third party pursuant to a foreclosure sale
upon a foreclosure by a Leasehold Mortgagee. In connection with any transfer of
the Casino pursuant to clauses (i), (ii), and (iii) of the preceding sentence,
this Casino Operating Contract (subject to Gaming Board approval) may be
Transferred to the party acquiring the Casino and subject to a prior finding of
Suitability of the transferee by the Gaming Board and compliance with the Casino
Act and the Rules and Regulations and compliance by the transferee with the
terms of this Casino Operating Contract, including, without limitation, the
requirement of providing a Minimum Payment Guaranty pursuant to Section 25.1 -
"Rolling Minimum Payment Guaranty." For purposes of this Section, a "nominee"
shall mean a Person who is designated by a Leasehold Mortgagee to act in place
of such Leasehold Mortgagee solely for the purpose of holding the interest
represented by such Leasehold Mortgagee's Leasehold Mortgage and performing the
obligations of Leasehold Mortgagee thereunder.
23.7. Effect of Appointment of Receiver. Upon the appointment of a
receiver and posting of bond, the authority of the Casino Operator shall be
conditioned, subject to full reinstatement by the Gaming Board according to the
Rules and Regulations. If the Casino Operator is operating pursuant to a
contract with the Gaming Board, the receiver shall be considered to have all of
the rights and obligations of the contract formerly held by the Casino Operator.
23.8. No Effect On Suit to Enforce. The appointment of a receiver shall
have no effect on the subsequent prosecution of the action to enforce the
security interest of a Leasehold Mortgagee.
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23.9. Third Party Beneficiaries. A Leasehold Mortgagee shall have the
right to rely on and shall be a third party beneficiary of the provisions of
this Article XXIII - "Leasehold Mortgagees."
23.10. No Lien on this Casino Operating Contract. The Casino Operator
shall not pledge, hypothecate or grant a lien or security interest in or
otherwise encumber this Casino Operating Contract, and each Leasehold Mortgage
shall contain a provision expressly excluding this Casino Operating Contract
from any pledge, lien, security interest, hypothecation or encumbrance granted
by such Leasehold Mortgage.
ARTICLE XXIV. SUITABILITY OF OTHERS
24.1. Suitability Requirements. The Casino Act provides the Gaming
Board with discretion to require that certain Persons in addition to the Casino
Operator satisfy the Suitability Requirements. These Persons include the Casino
Manager, certain holders of debt and/or equity interests in one or more of the
Casino Operator, and its Affiliates and any other Person who, in the opinion of
the Gaming Board has the ability to exercise a significant influence over the
activities of the Casino Operator. If the Gaming Board determines that a Person
required to be found Suitable is not Suitable, the Gaming Board shall notify the
Casino Operator of this determination and the Casino Operator shall take the
actions specified below.
24.2. Unsuitability - Casino Manager. If the Gaming Board makes a final
determination that the Casino Manager is not Suitable after providing the Casino
Manager with notice and an opportunity for a hearing and after exhaustion of all
administrative and judicial rights, the Casino Operator shall terminate the
Casino Management Contract within
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thirty (30) Business Days (or such shorter period of time as ordered by the
Gaming Board) after receipt of notice by the Casino Operator of the Gaming
Board's final determination on Suitability.
24.3. Unsuitability - Holders of Equity or Debt Interests. If the
Gaming Board makes a final determination that a holder of a debt or equity
interest in the Casino Operator, or any of its Affiliates is not Suitable, the
Casino Operator (or an Affiliate of the Casino Operator, as the case may be)
shall upon receipt of Notice from the Gaming Board (a) undertake and prosecute
diligent good faith efforts to cause the disqualified holder to dispose of his
interests, and (b) insulate the disqualified holder from the Casino Operator by
ensuring that the disqualified holder: (i) does not receive dividends or
interest on the securities of the Casino Operator or, if applicable, its
Affiliates; (ii) does not exercise, directly or indirectly, including through a
trustee or nominee, any right conferred by the securities of the Casino Operator
or, if applicable, its Affiliates; (iii) does not receive any remuneration from
the Casino Operator or its Affiliates; (iv) does not receive any economic
benefit from the Casino Operator or its Affiliates; and (v) subject to the
disposition requirements of this Section 24.3 "Unsuitability - Holders of Equity
or Debt Interests" does not continue in an ownership or economic interest in the
Casino Operator or, if applicable, remain as a manager, officer, director of the
Casino Operator or its intermediary holding companies, as the case may be.
24.4. Safe Harbor. If at any time the Gaming Board finds that a holder
of a debt or equity interest in the Casino Operator, or its respective
Affiliates, that is required to be and remain Suitable has failed to demonstrate
Suitability, the Gaming Board may, consistent with the Casino Act and this
Casino Operating Contract, take any action that the Gaming Board
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deems necessary to protect the public interest. Provided however, if a holder of
a debt or equity interest in the Casino Operator or its Affiliates associated
with the Casino Operator has failed to demonstrate Suitability, the Gaming Board
shall take no action to declare the Casino Operator or its Affiliate, as the
case may be, not Suitable based upon such finding, if the affected Casino
Operator or its Affiliate takes immediate good-faith action (including the
prosecution of all legal remedies) and complies with any order of the Gaming
Board to cause such Person failing to demonstrate Suitability to dispose of such
Person's interest in the affected Casino Operator or Affiliate, and, that,
pending such disposition such affected Casino Operator, or Affiliate, from the
date of Notice from the Gaming Board of a finding of failure to demonstrate
Suitability, ensures that the Person failing to demonstrate Suitability:
(i) does not receive dividends or interest on the securities of
the Casino Operator or Affiliate;
(ii) does not exercise, directly or indirectly, including through
a trustee or nominee, any right conferred by the securities of the Casino
Operator or its Affiliates;
(iii) does not receive any remuneration from the Casino Operator
or Affiliate;
(iv) does not receive any economic benefit from Casino Operator or
Affiliate;
(v) subject to the disposition requirements of this Section, does
not continue in an ownership or economic interest in the Casino Operator or
Affiliate or to remain
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as a manager, officer, director, employee, consultant or agent of the Casino
Operator or Affiliate.
Nothing contained in this Section 24.4 - "Safe Harbor" shall prevent the Gaming
Board from taking any action against the Casino Operator if the Casino Manager
fails to be or to remain Suitable. Moreover, nothing contained in this Section
shall prevent the Gaming Board from taking regulatory action against the Casino
Manager, Casino Operator or its Affiliate as the case may be, if the Casino
Operator, Casino Manager or Affiliate, as the case may be, (i) had actual or
constructive knowledge or should have had knowledge of the facts that are the
basis of the Gaming Board regulatory action and failed to take appropriate
action or (ii) is so tainted by such Person failing to demonstrate Suitability
so as to affect the suitability of the Casino Operator, the Casino Manager or
Affiliates under the standards of the Casino Act or the Rules and Regulations,
or (iii) cannot meet the Suitability standards contained in the Casino Act and
the Rules and Regulations.
ARTICLE XXV. GUARANTEES AND ASSURANCES
25.1. Rolling Minimum Payment Guaranty. For each Fiscal Year during the
Term, the Casino Operator shall cause to be provided to the Gaming Board a
letter of credit, surety arrangement or guaranty of the Minimum Payment that
shall as to form and substance be subject to Approval by the Gaming Board (the
"Minimum Payment Guaranty"). The Minimum Payment Guaranty shall be (i) for the
first three hundred sixty five (365) days (three hundred sixty-six (366) days if
a leap year) including and after the Casino Opening Date, substantially in the
form of the Initial Unconditional Minimum Payment Guaranty attached hereto as
Exhibit H and by this reference incorporated herein, and for subsequent Fiscal
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Years, substantially in the form of the Unconditional Guaranty for Fiscal Year
Ending March 31, ____ attached hereto as Exhibit I and by this reference
incorporated herein, (ii) in the form of a commercial letter of credit in form
and substance acceptable to the Gaming Board with the sole drawing condition to
be notice from the Gaming Board that a Minimum Payment Default has occurred, or
(iii) such other form as may be approved by the Gaming Board. The Minimum
Payment Guaranty may be provided by (i) HET and Harrah's Operating, pursuant to
Section 25.4 - "Matters Relating to Minimum Payment Guaranty" and subject to the
continuing Suitability requirements (financial and otherwise) of the Casino Act
and the Rules and Regulations or (ii) any Suitable Lender or Lenders or others
as Approved by the Gaming Board and which have sufficient resources to provide
the Minimum Payment Guaranty (the "Minimum Payment Guarantor"). The Casino
Operator shall provide an Initial Unconditional Minimum Payment Guaranty in the
form of Exhibit H attached hereto to the Gaming Board on the Plan Effective
Date. The Casino Operator agrees to provide the Gaming Board Notice and a copy
of any communication from the then Minimum Payment Guarantor that it may not or
will not provide the required Minimum Payment Guaranty to the Gaming Board in
the subsequent Fiscal Year concurrent with any public announcement of such
event. In addition, the Casino Operator shall provide further Notice to the
Gaming Board in the event it has not procured the required Minimum Payment
Guaranty for the next Fiscal Year at least thirty (30) Days prior to the first
Day of each Fiscal Year; provided, however, that the Gaming Board agrees that
the Casino Operator shall have until the last Day of the Fiscal Year to provide
the required Minimum Payment Guaranty to the Gaming Board for the next Fiscal
Year. The failure of the Casino Operator to provide the required Minimum Payment
Guaranty to the
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Gaming Board at least one day prior to the first Day of each and
every Fiscal Year shall be an Event of Default and a Termination Event,
resulting in the immediate termination of this Casino Operating Contract in
accordance with Section 20.6(b) "Termination of Casino Operating Contract" with
no right of the Casino Operator or any Person to cure. In no event shall the
Minimum Payment Guarantor be liable to the State and/or the Gaming Board for any
amount in excess of the difference between the Minimum Payment for any Fiscal
Year and the total of the Louisiana Gross Gaming Revenue Share Payments which
have been paid to the Gaming Board for that one Fiscal Year in which there is a
Minimum Payment Default or be responsible for any Daily Payments in any Fiscal
Year following a Fiscal Year in which there is a Minimum Payment Default except
as to the Minimum Payment Guarantor providing the Initial Unconditional Minimum
Payment Guaranty, who shall be obligated as provided in the Minimum Payment
Guaranty attached as Exhibit H hereto.
25.2. Completion Guarantee. The Casino Operator shall cause HET and its
wholly-owned subsidiary Harrah's Operating to provide a solidary guarantee to
the Gaming Board to complete the construction, equip and furnish the Casino for
opening of the Casino, and open the Casino for Gaming Operations, and pay all
costs and expenses related thereto, so long as, with respect to opening the
Casino, all necessary regulatory approvals from the LGCB or other State
regulatory authorities have been received, provided that timely receipt of any
such approvals has been diligently pursued by or on behalf of the Casino
Operator, (the "Completion Guarantee") as required by the terms of this Casino
Operating Contract and in the form of Exhibit "B" - "Form of Completion
Guarantee," attached hereto and by this reference incorporated herein. The
Casino Operator shall also post a commercial surety bond
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issued by a qualified surety company to assure completion of the Casino, and the
payment of all costs and expenses related thereto, in the form of Exhibit "C" -
"Form of Performance Bond" attached hereto and incorporated herein. Payment of
reimbursement obligations with respect to the Completion Guarantee may be made
pursuant to that certain Amended and Restated Completion Loan Agreement, by and
among HET, Harrah's Operating and the Casino Operator. If, before completion of
construction of the Casino, either (a) the financial condition of HET or
Harrah's Operating, in the reasonable judgment of the Gaming Board, deteriorates
to such an extent that their ability timely to perform under the Completion
Guarantee is materially impaired; or (b) HET or Harrah's Operating contests the
validity or enforceability, or fails timely to comply with the terms, of the
Completion Guarantee and if, in either such case, the Casino Operator fails to
provide, within thirty (30) days after receipt of notice and demand from the
Gaming Board, a substitute Completion Guarantee reasonably acceptable to the
Gaming Board, the Gaming Board may require the Casino to substitute a
guarantor(s) reasonably acceptable to the Gaming Board and the failure to do so
shall constitute an Event of Default.
25.3. Additional Guarantees and Assurances. The Casino Operator, in
order to guarantee successful completion of and compliance with this Casino
Operating Contract or such other projects that are regulated by the Gaming
Board, shall:
(a) provide the Completion Guarantee and surety bond as required
in Section 25.2 - "Completion Guarantee";
(b) provide the Evidence of Title required in Section 4.2(e) -
"Evidence of Title to Casino";
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(c) perform all of its obligations under the Essential Agreements
as required in Section 9.21 - "Essential Agreements";
(d) maintain Financial Stability as required in Section 9.5 -
"Financial Stability";
(e) maintain the Insurance Coverages required by Article XIV -
"Insurance," including Business Interruption Insurance as required in Section
14.8 - "Business Interruption Insurance";
(f) maintain a capital replacement fund as required in Section
13.7 - "Capital Replacement Fund";
25.4. Matters Relating to Minimum Payment Guaranty
(a) Agreement. Concurrently with the execution of this Casino
Operating Contract, (i) HET and Harrah's Operating have provided the Gaming
Board that certain Initial Unconditional Minimum Payment Guaranty in the form of
Exhibit H attached hereto, and (ii) the Casino Operator, HET and Harrah's
Operating have entered into that certain HET/JCC Agreement (the "HET/JCC
Agreement") attached hereto as Exhibit G and by this reference incorporated
herein, to which neither the State nor the Gaming Board is a party.
(b) No Third Party Beneficiaries. The Gaming Board hereby
acknowledges that there are no third party beneficiaries to the HET/JCC
Agreement.
(c) Acknowledgment and Disclosure. The State and the Gaming Board
hereby acknowledge and agree that in connection with the HET/JCC Agreement,
neither HET nor Harrah's Operating has any legal obligation or duty, express or
implied, to the State or the Gaming Board to provide any renewal guaranty beyond
any Fiscal Year in which an HET
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Guaranty is provided in writing. In connection therewith, the State and the
Gaming Board hereby acknowledge that HET and Harrah's Operating have informed
them and they agree that they may not infer or assume that (i) HET and Harrah's
Operating will renew any HET Guaranty or the HET/JCC Agreement; or (ii) HET and
Harrah's Operating will, other than at their sole discretion, determine whether
to renew any HET Guaranty or HET/JCC Agreement notwithstanding that HET and
Harrah's Operating are involved in a number of different capacities in
connection with the reorganization of HJC, the governance of the Casino Operator
and JCC Holding, and the operation of the Casino; or (iii) any projections
and/or feasibility study set forth in the Plan and Disclosure Statement
circulated therewith constitute any representation or warranty upon which the
Gaming Board or the State may rely nor is it intended that any other Person may
rely thereon.
(d) Reliance. The State and the Gaming Board understand and
acknowledge that HET and Harrah's Operating are entering into the HET/JCC
Agreement and providing any HET Guaranty in reliance on Section 20.6(b) -
"Termination of Casino Operating Contract" and this Section 25.4 - "Matters
Relating to Minimum Payment Guaranty." The State, the Gaming Board and JCC agree
that the provisions of Section 20.6(b) - "Termination of Casino Operating
Contract" and this Section 25.4 - "Matters Relating to Minimum Payment Guaranty"
cannot be amended or modified without the written consent of HET and Harrah's
Operating so long as any Minimum Payment Guaranty provided by HET and Harrah's
Operating remains in effect, and if any such provisions are amended or modified
and not consented to by HET and Harrah's Operating, no such amendment or
modification shall be effective as against HET or Harrah's Operating.
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ARTICLE XXVI. TRANSFER RESTRICTIONS
26.1. Casino Operator Transfers - Casino Operating Contract. The Casino
Operator shall not Transfer this Casino Operating Contract, or any interest
herein or subcontract the performance of any of the Casino Operator's duties or
obligations hereunder to any Person without first obtaining the Approval of the
Gaming Board.
26.2. Casino Operator Transfers - Essential Agreements. Except a
Transfer to a Leasehold Mortgagee in compliance with the Casino Lease or in
connection with the Initial Plan Financing, or a Transfer pursuant to Section
23.6(g) - "Transfer in Connection with Foreclosure," the Casino Operator shall
not voluntarily or involuntarily Transfer the Casino Lease, the General
Development Agreement, or any interest therein to any Person without first
obtaining the Approval of the Gaming Board.
26.3. Other Actions or Transfers Requiring Approval. The Casino
Operator shall not amend its Governance Documents and no Person shall Transfer
any direct interest in the Casino Operator to any Person without first obtaining
the Approval of the Gaming Board. The Persons who are shareholders of any
company holding a direct interest in the Casino Operator shall not Transfer any
interest in an Affiliate of the Casino Operator that results in a change of
Control of the Casino Operator without first obtaining the Approval of the
Gaming Board. This Section is not intended to restrict the transfer of publicly
traded securities, provided that the Gaming Board maintains the power to require
the holder of any such securities subsequently to be found Suitable.
26.4. Conditions to Approval of Proposed Transfer. The Gaming Board may
Approve the sale, transfer, or assignment of the Casino Operating Contract, or
an interest
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therein, or may grant such Approval subject to the conditions imposed by the
Gaming Board or by applicable law.
26.5. Five Percent Accumulation. Pursuant to the terms of the Casino
Act, any Person acquiring five percent (5%) or more direct economic interest in
the Casino Operator is required to obtain the Approval of the Gaming Board prior
to the acquisition. The Casino Operator agrees to facilitate the Gaming Board's
enforcement of the restriction by providing written Notice to the Gaming Board
of an accumulation requiring the prior Approval of the Gaming Board within two
(2) Business Days after the Casino Operator obtains knowledge of the
accumulation. The Casino Operator acknowledges the authority of the Gaming Board
to take appropriate action against a Person who accumulates without first
obtaining the required Approval of the Gaming Board. However, an accumulation
without the required prior Approval of the Gaming Board shall not be a default
by the Casino Operator under this Casino Operating Contract if, upon receipt of
Notice from the Gaming Board, the Casino Operator (or an Affiliate of the Casino
Operator) (a) undertakes and prosecutes diligent good faith efforts to cause the
disqualified Person to dispose of the interest, and (b) insulates the
disqualified Person by insuring that the disqualified Person: (i) does not
receive dividends or interest on the securities of the Casino Operator or, if
applicable, its Affiliates, (ii) does not exercise directly or indirectly,
including through a trustee or nominee, any right conferred by the securities of
the Casino Operator, or, if applicable, its Affiliates; (iii) does not receive
any remuneration from the Casino Operator or if applicable its Affiliates; (iv)
does not receive any economic benefit from the Casino Operator or if applicable
its Affiliates; (v) subject to the disposition requirement of this Section 26.5
- - "Five Percent Accumulation", does not continue
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in an ownership or economic interest in the Casino Operator or, if applicable,
its affiliates, and (vi) does not remain as a manager, officer, director of the
Casino Operator, or if applicable its Affiliates.
26.6. Transfer Restriction Legend. All instruments evidencing ownership
interests in the Casino Operator or pursuant to which the ownership interest is
issued shall contain a statement in form acceptable to the Gaming Board setting
forth the transfer restrictions imposed by R.S. 27:236, this Casino Operating
Contract and the Rules and Regulations.
26.7. Notice and Cure Period; Safe Harbor. Before revoking this Casino
Operating Contract for a violation of this Article XXVI "Transfer Restrictions,"
the Gaming Board shall give Notice and a reasonable opportunity to cure the
violation to the Casino Operator. With respect to a Transfer by anyone other
than the Casino Operator in violation of the terms of this Article XXVI -
"Transfer Restrictions," the Transfer shall not be a default by the Casino
Operator under this Casino Operating Contract if, upon receipt of Notice from
the Gaming Board, the Casino Operator (or an Affiliate of the Casino Operator)
(a) undertakes and prosecutes diligent good faith efforts to cause the
disqualified Person to dispose of the interest, and (b) insulates the
disqualified Person by insuring that the disqualified Person: (i) does not
receive dividends or interest on the securities of the Casino Operator or, if
applicable, its Affiliates, (ii) does not exercise directly or indirectly,
including through a trustee or nominee, any right conferred by the securities of
the Casino Operator, or, if applicable, its Affiliates; (iii) does not receive
any remuneration from the Casino Operator or if applicable its Affiliates; (iv)
does not receive any economic benefit from the Casino Operator or if applicable
its Affiliates; (v) subject to the disposition requirement of this Section
26.7.
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"Notice and Cure Period; Safe Harbor", does not continue in an ownership or
economic interest in the Casino Operator or, if applicable, its affiliates, and
(vi) does not remain as a manager, officer, director of the Casino Operator, or
if applicable its Affiliates.
ARTICLE XXVII. NOTICES
27.1. Manner of Giving Notice. All notices required or permitted to be
given under this Casino Operating Contract shall be in writing and shall be
deemed given or delivered when delivered by hand or three (3) Business Days
after mailing, postage prepaid, by certified or registered mail, return receipt
requested to the parties at the following addresses:
Casino Operator:
Jazz Casino Company, L.L.C.
512 South Peters
New Orleans, LA 70130
Attn: President
with a copy to: Harrah's New Orleans Management Company
1023 Cherry Road
Memphis, TN 38117
Attn: President
Gaming Board: Louisiana Gaming Control Board
9100 Bluebonnet Centre Boulevard
Suite 500
Baton Rouge, LA 70809
Attn: Chairman of Louisiana Gaming Control Board
with a copy to: Attorney General
State of Louisiana
Post Office Box 94005
Baton Rouge, LA 70804
Attn: First Assistant Attorney General
and Attorney General
State of Louisiana
Post Office Box 44307
Baton Rouge, LA 70804
Attn: Director, Gaming Division
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ARTICLE XXVIII. MISCELLANEOUS
28.1. No Joint Venture or Partnership. Under no circumstances shall
this Casino Operating Contract or the cooperative endeavor aspects of the Casino
Act or this Casino Operating Contract or any action taken by the parties in
furtherance of this Casino Operating Contract be deemed to create either a joint
venture or a partnership between the Gaming Board and the Casino Operator such
that either shall be deemed to have the duties and obligations of a partner or
joint venturer toward the other or to authorize either to act for or bind the
other, the same being expressly negated.
28.2. No Waiver. The receipt by the Gaming Board of any payment from
the Casino Operator with knowledge of the breach of any term hereof shall not be
deemed a waiver of such breach. No provision of this Casino Operating Contract
shall be deemed to have been waived by the Gaming Board unless the waiver is in
writing and signed by a duly authorized representative of the Gaming Board. No
payment by the Casino Operator or receipt by the Gaming Board of any amount less
than the payment actually due shall be deemed to be other than on account of the
earliest payment due. No endorsement or statement on any check or letter
accompanying any check shall be deemed to be an accord and satisfaction, and the
Gaming Board may accept any check or payment without prejudice to the Gaming
Board's rights to recover the balance of such payment or to pursue any other
remedy available to the Gaming Board.
28.3. Partial Invalidity. If any term of this Casino Operating Contract
or the application thereto to any Person or circumstance, shall at any time or
to any extent, be invalid or unenforceable, the remainder of this Casino
Operating Contract, or the application of such
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term of this Casino Operating Contract to Persons or circumstances other than
those as to which the same has been held invalid or unenforceable, shall not be
affected thereby, and each term of this Casino Operating Contract shall be valid
and be enforced to the fullest extent permitted by law.
28.4. Responsibility for Costs and Risks of Operations. The Casino
Operator shall bear and pay all costs and assume all risks of doing work and
carrying on operations permitted under this Casino Operating Contract and the
prevailing party in any judicial proceeding shall have the right to recover from
the other party, all costs, reasonable attorney's fees and other expenses
incurred to enforce, secure or protect its rights under this Casino Operating
Contract, whether by litigation or settlement.
28.5. Applicable Law. This Casino Operating Contract shall be governed,
interpreted and enforced in accordance with Louisiana law.
28.6. Venue, Personal Jurisdiction and Forum Selection. The Casino
Operator, Casino Manager and JCC Holding hereby submit to and will have the
Minimum Payment Guarantor submit to the jurisdiction of the State and the courts
thereof and to the jurisdiction of the 19th Judicial District Court in and for
East Baton Rouge Parish ("19th JDC") for purposes of any suit, action or other
proceeding arising out of or relating to this Casino Operating Contract and
agrees not to assert by way of motion as a defense or otherwise that such suit
action or other proceeding is brought in an inconvenient forum or that the venue
of such suit action or other proceeding is improper or that the subject matter
thereof may not be enforced in or by such court or assert that any suit or
action filed in the 19th JDC may be removed to Federal Court, and the Casino
Operator, Casino Manager and JCC Holding agree
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that the 19th JDC shall have the exclusive jurisdiction for purposes of any
suit, action or other proceeding brought by any of them relating to or arising
out of this Casino Operating Contract.
If at any time during the Term, the Casino Operator, JCC Holding
or the Casino Manager is not a resident of the State or has no officer,
director, employee or agent available for service of process as a resident of
the State, or if any permitted Transferee shall be a foreign Person having no
officer, director, employee or agent available for service of process in the
State, the Casino Operator, JCC Holding and the Casino Manager and each
permitted Transferee hereby designates the Secretary of State of Louisiana as
its agent for service of process in any suit, action or proceeding involving the
Gaming Board or arising out of or relating to this Casino Operating Contract and
such service shall be made as provided by Louisiana law for service on an
insurance company through the Secretary of State.
28.7. Compliance. Any condition, covenant, obligation, requirement or
term hereof that requires the Casino Operator to take action or to refrain from
taking action shall be deemed to require the Casino Operator to cause the action
to be taken or to cause the action not to be taken, as the case may be.
28.8. Captions. The captions in this Casino Operating Contract are
solely for convenience of reference and shall not affect the interpretation of
this Casino Operating Contract.
28.9. Number and Gender. All words used in this Casino Operating
Contract, regardless of the number or gender in which the words are used shall
be deemed to include the other number and each other gender.
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28.10. No Drafting Presumptions. The parties agree and acknowledge that
each has had significant input into the drafting of this Casino Operating
Contract. Consequently, and notwithstanding the provisions of Article 2056 or
2057 of the Louisiana Civil Code to the contrary, nothing contained in this
Casino Operating Contract shall be presumptively construed against a party on
the basis of any drafting responsibility. Further, the parties agree and
acknowledge that the drafting of this Casino Operating Contract was facilitated
and expedited by the specific undertaking of the parties and their respective
counsel, and in order to induce each other to make reasonable drafting
accommodations, that no revision (by insertion or deletion) to any draft of this
Casino Operating Contract either shall constitute or ever be used by or on
behalf of any of them as an interpretive aid or as the basis of any contention
to the effect that any such deletion or insertion or change from prior drafts
proves facts or circumstances concerning the intent or agreement of a party in a
subsequent draft or drafts.
28.11. Prior Agreements; Amendment. This Casino Operating Contract
contains the entire agreement between the parties with respect to the subject
matter described in this Casino Operating Contract. This Casino Operating
Contract supersedes all prior and contemporaneous agreements, whether written or
oral, between the parties relating or pertaining to the subject matter of this
Casino Operating Contract. This Casino Operating Contract may be amended or
modified only by an agreement in writing signed by both the Gaming Board and the
Casino Operator.
28.12. Intervention by Casino Manager. The Casino Manager intervenes
herein for the sole purpose of acknowledging the terms hereof applicable to the
Casino Manager. This
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intervention is not a guarantee of the Casino Operator's financial obligations
under this Casino Operating Contract.
28.13. Time of the Essence. Time is of the essence of this Casino
Operating Contract. No Notice, demand or putting in default shall be required
except as herein expressly provided for.
28.14. Successors and Assigns. This Casino Operating Contract shall be
binding on and enforceable against the parties and their respective successors
and assigns.
28.15. No Third Party Beneficiary. Except as otherwise provided in
Article XXIII - "Leasehold Mortgagees" or Section 25.4(d) - "Reliance," there
shall be no third party beneficiaries of this Casino Operating Contract.
28.16. Assignment. This Amended and Renegotiated Casino Operating
Contract is hereby assigned to JCC, as successor to HJC, as set forth in the
Plan. Pursuant to R.S. 27:236(B) and LAC 42:IX 2901 et seq., the Gaming Board
Approves such assignment by HJC to JCC. JCC hereby undertakes the obligations of
the Casino Operator under this Amended and Renegotiated Casino Operating
Contract.
28.17. No Novation. This Casino Operating Contract is an amendment and
renegotiation of the Initial Casino Operating Contract and is not and shall not
be construed as a novation of the Initial Casino Operating Contract.
28.18. Counterparts. This Casino Operating Contract may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an orginal,
but all of which shall together constitute one and the same instrument.
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S-4 The parties have signed this Casino Operating Contract on the dates
noted below their respective signatures.
The State of Louisiana by and through
the LOUISIANA GAMING CONTROL
BOARD
By: /s/ Hillary Crain
-----------------------
Name: Hillary Crain
-----------------------
Title: Chairman
-----------------------
Date: 10/30/98
-----------------------
S-1
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HARRAH'S JAZZ COMPANY,
a Louisiana general partnership
By: HARRAH'S NEW ORLEANS
INVESTMENT COMPANY,
a Nevada corporation, General Partner
Name: /s/ G.W. Loveland II
-----------------------
Title: Vice President
-----------------------
Date: 10/30/98
-----------------------
By: NEW ORLEANS/LOUISANA
DEVELOPMENT CORPORAITON,
a Louisiana corporation, General Partner
Name: /s/ Deborah M. Sulzer
-----------------------
Title: Vice President
-----------------------
Date: 10/30/98
-----------------------
By: GRAND PALAIS CASINO, INC.,
a Delaware corporation, General Partner
Name: /s/ Christopher Hemmeter
-----------------------
Title: Chairman
-----------------------
Date: 10/30/98
-----------------------
S-2
<PAGE>
JAZZ CASINO COMPANY L.L.C.,
Louisiana limited liability company
By: /s/ Frederick W. Burford
-----------------------
Name: Frederick W. Burford
-----------------------
Title: President
-----------------------
Date: 10/30/98
-----------------------
INTERVENOR:
HARRAH'S NEW ORLEANS
MANAGEMENT COMPANY,
a Nevada corporation
By: /s/ G.W. Loveland II
-----------------------
Name: G.W. Loveland II
-----------------------
Title: Vice President
-----------------------
Date: 10/30/98
-----------------------
S-3
<PAGE>
The undersigned hereby intervenes in said
Casino Operating Contract and agrees thereto
to the extent it is applicable to the undersigned.
JCC HOLDING COMPANY, a Delaware corporation
By: /s/ Frederick W. Burford
-----------------------
Name: Frederick W. Burford
-----------------------
Title: President
-----------------------
Date: 10/30/98
-----------------------
S-4
<PAGE>
Exhibit 10.06
SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT
BY AND BETWEEN
HARRAH'S NEW ORLEANS MANAGEMENT COMPANY
AND
JAZZ CASINO COMPANY, L.L.C.
Dated: October 29, 1998
<PAGE>
EXHIBITS
"A" - Legal Description of Real Property
"B" - Current Form of Operating Statement
"C" - Owner's Insurance Requirements
"D" - Memorandum of Management Agreement
"E" - Banking Resolution (Form)
"F" - Approved Program Plans
"G" - Pre-Opening Budget
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1. DEFINITIONS.....................................................................................2
1.01. Definitions...............................................................................2
ARTICLE 2. SCOPE OF AGREEMENT.............................................................................18
2.01. Amendment and Restatement................................................................18
2.02. Subject Matter...........................................................................18
2.03. Development..............................................................................18
2.04. Grant and Acceptance of Management Responsibility........................................18
2.05. Funding..................................................................................19
2.06. Limitation on Expenditures...............................................................19
ARTICLE 3. TERM AND RENEWALS..............................................................................19
3.01. Initial Term.............................................................................19
3.02. Extension Term...........................................................................19
3.03. Early Termination; Termination of Authorized Lease.......................................19
ARTICLE 4. COVENANTS OF OWNER.............................................................................20
4.01. Licensing and Permitting.................................................................20
4.02. Title; Quiet Enjoyment...................................................................20
4.03. Manager Subordination Agreements; Mortgages..............................................21
ARTICLE 5. PRE-OPENING....................................................................................22
5.01. Pre-Opening Budget.......................................................................22
5.02. Payment of Pre-Opening Expenses..........................................................22
5.03. Pre-Opening Hiring and Training of Employees.............................................23
5.04. Pre-Opening Inspection...................................................................24
ARTICLE 6. STANDARDS AND MANAGER'S CONTROL................................................................24
6.01. Casino Operational Standards.............................................................24
6.02. Manager's Obligations....................................................................24
6.03. Owner's Obligations......................................................................28
6.04. Owner Self-Help..........................................................................32
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6.05. Payments.................................................................................33
6.06. Manager's Control........................................................................33
ARTICLE 7. OPERATION OF THE CASINO........................................................................33
7.01. Permits..................................................................................33
7.02. Equipment and Supplies...................................................................33
7.03. Employees................................................................................34
7.04. Sales, Marketing and Advertising.........................................................38
7.05. Maintenance and Repairs..................................................................38
7.06. Capital Improvement and Replacements.....................................................38
7.07. Capital Replacement Fund for Capital Replacements
and Improvements.........................................................................38
7.08. Periodic Contributions to Capital Replacement Fund.......................................39
7.09. Use and Allocation of Capital Replacement Fund...........................................39
7.10. Emergency Expenditures...................................................................40
7.11. Compliance with Legal Requirements.......................................................40
7.12. Disbursement on Termination or Expiration................................................40
7.13. Occupancy Agreements.....................................................................41
7.14. Transactions with Affiliates.............................................................43
ARTICLE 8. FISCAL MATTERS.................................................................................43
8.01. Accounting Matters and Fiscal Periods....................................................43
8.02. Approved Budget..........................................................................45
8.03. Bank Account(s); House Bank..............................................................50
8.04. Internal Controls........................................................................51
ARTICLE 9. FEES TO MANAGER................................................................................52
9.01. Management Fee...........................................................................52
9.02. Accounting Fee...........................................................................55
9.03. Property Tax, Income Tax, Insurance, Benefit Plan
Administration and Other Services........................................................55
9.04. Proprietary Systems......................................................................56
ARTICLE 10. DISBURSEMENTS.................................................................................56
10.01. Disbursements of Net Revenues............................................................56
10.02. Adjustment to Bank Account(s)............................................................57
10.03. Payment of Ownership Costs...............................................................57
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10.04. Payment of Gaming, Sales and Other Operational
Payments and Taxes.......................................................................58
ARTICLE 11. HARRAH'S SERVICES.............................................................................58
11.01. Nature of Services..........................................................................58
ARTICLE 12. SYSTEM MARK SIGNS AND SYSTEM MARKS............................................................60
12.01. Signs.......................................................................................60
12.02. System Marks................................................................................60
12.03. Litigation..................................................................................62
ARTICLE 13. INSURANCE.....................................................................................63
13.01. Insurance Coverage..........................................................................63
ARTICLE 14. INDEMNIFICATION AND RELATED MATTERS...........................................................63
14.01. Scope....................................................................................63
14.02. Defense..................................................................................64
ARTICLE 15. DAMAGE TO AND DESTRUCTION OF THE CASINO.......................................................65
15.01. Obligation to Restore......................................................................65
15.02. Termination................................................................................65
ARTICLE 16. CONDEMNATION..................................................................................67
16.01. Termination................................................................................67
16.02. Restoration and Continuation...............................................................68
ARTICLE 17. DEFAULT AND TERMINATION.......................................................................69
17.01. Events of Default..........................................................................69
17.02. Termination; Termination Fee...............................................................71
ARTICLE 18. NOTICES ......................................................................................73
18.01. Procedure..................................................................................73
18.02. Landlord and LGCB Notice...................................................................74
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ARTICLE 19. RELATIONSHIP, AUTHORITY AND FURTHER
ACTIONS......................................................................................74
19.01. Relationship...............................................................................74
19.02. Contractual Authority......................................................................74
19.03. Further Actions............................................................................74
ARTICLE 20. APPLICABLE LAW AND ARBITRATION................................................................75
20.01. Scope......................................................................................75
20.02. Arbitration................................................................................75
ARTICLE 21. SUCCESSORS AND ASSIGNS........................................................................77
21.01. Assignment by Manager......................................................................77
21.02. Termination Rights Upon Certain Assignments or
Transfers by Owner......................................................................78
21.03. Manager's Termination Right...............................................................79
21.04. Binding Effect............................................................................80
ARTICLE 22. RECORDING OF MEMORANDUM.......................................................................80
22.01. Memorandum of Agreement...................................................................80
ARTICLE 23. FORCE MAJEURE.................................................................................80
23.01. Operation of Casino.......................................................................80
23.02. Extension of Time.........................................................................81
23.03. Extension of Completion Deadline and Opening Date.........................................81
ARTICLE 24. TERMINATION...................................................................................81
24.01. Surviving Obligations.....................................................................81
24.02. Termination; Expiration...................................................................82
ARTICLE 25. GENERAL PROVISIONS............................................................................85
25.01. Authorization.............................................................................85
25.02. Interest..................................................................................85
25.03. Formalities...............................................................................85
25.04. Documents.................................................................................85
25.05. Personal Service Contract.................................................................85
25.06. Exhibits..................................................................................85
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ARTICLE 26. RESTRICTIVE COVENANTS.........................................................................85
26.01. Other Use of Site or Building.............................................................85
26.02. Diversion of Business.....................................................................86
26.03. Competition...............................................................................86
ARTICLE 27. CONFLICTS BETWEEN AGREEMENTS,
JURISDICTION AND THIRD PARTY
BENEFICIARIES........................................................................87
27.01. Conflicts Between Agreements..............................................................87
27.02. Jurisdiction..............................................................................87
27.03. Third Party Beneficiaries.................................................................87
</TABLE>
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<PAGE>
SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED MANAGEMENT AGREEMENT (this
"Agreement") is entered into this 29th day of October, 1998, by and between JAZZ
CASINO COMPANY, L.L.C., a Louisiana limited liability company ("Owner"), and
HARRAH'S NEW ORLEANS MANAGEMENT COMPANY, a Nevada corporation ("Manager").
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership ("HJC"),
filed a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code on November 22, 1995, which is now pending in the United States
Bankruptcy Court for the Eastern District of Louisiana (the "Bankruptcy Court"),
Case No. 95-14545.
B. HJC and certain other parties have submitted, and the Bankruptcy
Court has confirmed, the Plan (as defined herein).
C. As contemplated by the Plan, Owner has succeeded to all the rights
and obligations of HJC under that certain Amended and Restated Management
Agreement between HJC and Manager dated as of March 14, 1994 (the "Prior
Management Agreement").
D. The Plan requires the amendment and restatement of the Prior
Management Agreement in its entirety in accordance with the terms hereof.
E. The parties desire to amend and restate the Prior Management
Agreement on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE 1.
DEFINITIONS
1.01. Definitions. As used herein the following terms shall have the
respective meanings indicated below:
Accepted Auditor - as defined in Article 8.01(a).
Accountants - as defined in Article 20.02(b).
Accounting Fee - as defined in Article 9.02.
Adjustment Date - the date on which an applicable percentage
designated herein is adjusted to reflect a change in the CPI from the Opening
Date until the date of such adjustment.
Affiliate - as to any person the affiliates of whom are
relevant for purposes of any provisions of this Agreement, (i) any corporation,
partnership, limited liability company, joint venture, trust or individual
controlled by, under common control with, or which controls, directly or
indirectly, such person, (ii) a trust of which the person, or a direct or
indirect shareholder of such person, is a trustee, or which has as its principal
beneficiaries such person, or any direct or indirect shareholder of such person,
or members of the immediate family of such direct or indirect shareholder or
other person, and (iii) any members of such person's immediate family, or the
member of the immediate family of any direct or indirect shareholder of such
person. For purposes hereof, shares or other ownership interests held by a trust
shall be deemed to be owned pro-rata by the beneficiaries of such trust, and
members of the immediate family of any person shall include all collateral
relatives of such person having a common linear ancestor with such person, and
the spouse or any former spouse of such person or any such collateral relatives.
Agreement - this Second Amended and Restated Management
Agreement by and between Owner and Manager, as the same may be amended,
supplemented or otherwise modified from time to time.
Annual Plan - as defined in Article 8.02(a).
2
<PAGE>
Annual Report - any Annual Report filed by any person or
entity on Form 10-K with the United States Securities and Exchange Commission or
any successor thereof.
Approved Program Plans - the Approved Program Plans shall be
those described in Exhibit "F" to this Agreement for Casino - Phase I, together
with any modifications thereto proposed by Owner and approved by Manager in its
reasonable business judgment.
Architect - Perez Ernst Farnet/Modus, Inc., Suite 2250, 909
Poydras, New Orleans, Louisiana, or any other architect who is selected by Owner
and approved by Manager.
Authorized GDA - that certain General Development Agreement by
and among Celebration Park Casino, Inc., Landlord and the City of New Orleans,
as intervenor, dated April 27, 1993, as amended by that certain Amended General
Development Agreement by and among HJC, Landlord and the City of New Orleans, as
intervenor, dated March 15, 1994, and as further amended by that certain Amended
and Restated General Development Agreement by and among Owner, Landlord and the
City of New Orleans, as intervenor, entered into pursuant to the Plan.
Authorized Lease - that certain lease by and among Celebration
Park Casino, Inc., Landlord and the City of New Orleans, as intervenor, dated
April 27, 1993, as amended by that certain Amended Lease Agreement by and among
HJC, Landlord and the City of New Orleans, as intervenor, dated March 15, 1994,
including without limitation, the Open Access Program attached thereto, and as
further amended by that certain Amended and Restated Lease Agreement by and
among Owner, Landlord and the City of New Orleans, as intervenor, entered into
pursuant to the Plan.
Authorized Mortgage - (i) the Mortgage, and (ii) any other
mortgage(s), deed(s) of trust, security agreements, or other forms of agreements
securing payment of indebtedness, the proceeds of which are used solely to
construct, improve, restore, or repair the Casino, or to refinance any
indebtedness in connection with any Authorized Mortgage, with a lien or
equivalent security interest against the Casino, provided that the holder of any
Authorized Mortgage referred to in this clause (ii) has executed and delivered
to Manager and has agreed in writing to be bound by a Subordination,
Non-Disturbance and
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Attornment Agreement or such other similar document, in either case in such form
as may be negotiated between Manager and the holder of an Authorized Mortgage.
Bank Account(s) - as defined in Article 8.03(a).
Banking Resolution - as defined in Article 8.03(a).
Bank Loans - the loans and letters of credit to be made to or
for Owner pursuant to the Credit Agreement.
Bankruptcy Court - as defined in Recital A.
Base Fee - as defined in Article 9.01(a).
Budget - as defined in Article 8.02(a).
Building - all buildings, structures and improvements now
located or hereafter constructed on the Site and all fixtures, Furnishings and
Equipment attached to, forming a part of, or necessary for the operation of such
buildings, structures and improvements as a casino, or any non-gaming
development on the second floor of the building on the Casino premises as
described on Exhibit "A" to this Agreement or elsewhere at the Site, and all:
(i) restaurants, bars and other public areas, if any,
(ii) commercial space, including concessions and shops;
(iii) storage, parking and service areas;
(iv) permanently affixed signage; and
(v) other buildings, facilities and appurtenances, as may
now or hereafter, pursuant to this Agreement or with
Manager's advance written approval, replace, be
attached to and form a part of the Building.
Capital Improvements - any addition to the Building following
its initial construction, furnishing and equipping, the cost of which is
capitalized and depreciated, rather than being expensed, applying generally
accepted accounting principles.
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Capital Replacement - any alteration, rebuilding or renovation
of the Building, and any replacement of Furnishings and Equipment, the cost of
which is capitalized and depreciated, rather than being expensed, applying
generally accepted accounting principles.
Capital Replacement Fund - as defined in Article 7.07.
Casino - a collective term for the Site, the Building, the
Furnishings and Equipment, the Operating Equipment and the Operating Supplies,
including Casino - Phase I. The non-gaming development on the second floor of
the building on the Casino premises as described on Exhibit "A" to this
Agreement subleased pursuant to the Second Floor Non-Gaming Sublease shall not
be included in this definition of the Casino unless converted into Gaming Space
in accordance with the provisions of the Second Floor Non-Gaming Sublease.
Casino Employees - all employees retained to perform duties
required in the operation of the Casino or other related properties, including
Key Casino Personnel.
Casino Employment Policies - as defined in Article 7.03(g).
Casino Operating Contract - that certain Amended and
Renegotiated Casino Operating Contract among Owner, HJC and the State of
Louisiana by and through the LGCB authorizing and regulating activities at the
Casino, entered into pursuant to the Plan.
Casino Operational Standards - those standards and policies
described herein, all as may be amended or modified from time to time by
agreement between Owner and Manager. The standard by which the physical plant of
the Casino is gauged shall be its condition following Completion of its
construction and its furnishing and equipping, all as described by the Plans and
Specifications, together with any Capital Improvements required by Manager for
all casinos of similar market and type after such time, or, should there fail to
be such similar casinos, Harrah's Atlantic City Casino, or, if such casino
should cease to be operated by Manager's Affiliate as a Harrah's Casino, such
other casino operated as a Harrah's Casino by Manager's Affiliate as Manager may
reasonably designate, having regard to its similarity of physical character to
the Casino. The standard by which operational practices are gauged shall be the
operational practices applied at Harrah's Atlantic City Casino as of the Opening
Date, as
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hereafter supplemented, or, if such casino shall cease to be operated by
Manager's Affiliate as a Harrah's Casino, such other casino operated by Manager
or any Manager's Affiliate as Manager may reasonably designate, having regard
for its similarity in operational and market characteristics to the Casino.
Casino Operational Standards may include requirements that the Owner purchase,
lease or otherwise obtain, either through Manager or Manager's designated
suppliers, certain computer and other systems that Manager determines to be
necessary for Manager's operation of the Casino. Such systems may include, but
not be limited to, a slot data system, time and attendance system, scheduling
and forecasting system and a reservation and ticketing system. In addition,
Manager may incur on behalf of Owner certain fees and/or assessments in
connection with the shared or other use of certain of Manager's proprietary or
non-proprietary computer systems, including but not limited to, Manager's
computer-based Casino Management System and WINet, purchasing and inventory
control systems and accounting systems.
Casino - Phase I - the first phase of development and
construction of the Casino constructed in accordance with the Plans and
Specifications consisting of a minimum of one hundred thousand (100,000) square
feet of net Gaming Space, approximately fifteen thousand (15,000) square feet of
multi-function, special event, food service and meeting room space and a two
hundred fifty (250) seat buffet on the first floor of the building on the Casino
premises as described on Exhibit "A" to this Agreement and parking facilities.
Casino Standard Accounting Principles - generally accepted
principles of accounting for casinos set forth in the Audit and Accounting Guide
for Audits of Casinos, with conforming changes as of May 1, 1992 prepared by the
American Institute of Certified Public Accountants, as amended from time to
time, and as applied by and subject to such elections and variations consistent
therewith as may be adopted by Manager and Manager's Affiliates in accounting
for operations at casinos managed by Manager or Manager's Affiliates.
Claim - any action or actions, cause or causes of action, in
law or in equity, suits, debts, liens, liabilities, claims, demands, damages,
punitive damages, losses, costs or expenses, and reasonable attorneys' fees of
any nature whatsoever (including, without limitation, claims based upon legal
fault, negligence, offense, quasi-offense, contract, quasi-contract, or any
other theory) whether fixed or contingent.
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Compensation - the direct salaries and wages paid to, or
accrued for the benefit of, any Casino Employee, including incentive
compensation, together with all fringe benefits payable to or accrued for the
benefit of such executive or other employee, including employer's contribution
under F.I.C.A., unemployment compensation or other employment taxes, pension
fund contributions, workers' compensation, group life, accident and health
insurance premiums and costs, and profit sharing, severance, retirement,
disability, relocation, housing and other similar benefits.
Completion - as defined in the Authorized GDA. "Complete" and
"Completed" have corresponding meanings.
Completion Deadline - twelve (12) months after the effective
date of the Plan under and as defined therein, subject to extension resulting
from Force Majeure (as defined in the Authorized GDA).
Confidential and Proprietary Information - as defined in
Article 12.02(c).
Consolidated EBITDA - as defined in the Indenture for the
Senior Subordinated Debentures.
Controlled Affiliate - has the meaning provided in that
certain Amended and Restated Certificate of Incorporation of JCC Holding as in
effect as of the date hereof.
Continuing Directors - the directors of JCC Holding on the
effective date of the Plan under and as defined therein and each other director,
if such other director's nomination for election to the Board of Directors of
JCC Holding is recommended by a majority of the then Continuing Directors.
CPI - the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics of the United States Department of
Labor, U.S. City Average, all items, (1982-84 = 100), or any successor or
replacement index thereto. If the CPI shall, after the date hereof, be converted
to a different standard reference base or shall otherwise be revised, any
determination hereunder which uses the CPI shall be made with the use of such
conversion factor, formula or table for converting the CPI as may be published
by the Bureau of Labor Statistics, or, if said Bureau shall not publish the
same, then with the use of such conversion factor, formula or table as may be
published by Prentice Hall, Inc., or, having such
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publication, by any other nationally recognized publisher of similar statistical
information. If the CPI shall cease to be published, then for the purpose of
this Agreement there shall be substituted for the CPI such other similar index
as Manager shall reasonably determine which measures changes in the relative
purchasing power of United States currency over the term of this Agreement.
Credit Agreement - that certain Credit Agreement among Owner,
as borrower, JCC Holding, as a guarantor, various banks and Bankers Trust
Company, as administrative agent, entered into pursuant to the Plan.
Defaulting Party - as defined in Article 17.01.
Deferral Amount - as defined in Article 9.01(c)(ii).
Deficiencies - as defined in Article 5.04.
Department - those general divisional categories shown in the
Annual Plan (e.g. slot machines, table games, other games, beverages or food),
but not the subcategories (e.g. tax & license, labor) appearing in each such
divisional category.
Development Period - the period between the date hereof and
the Opening Date.
Ensuing Year - as defined in Article 7.09.
Extension Term - as defined in Article 3.02.
Event of Default - as defined in Article 17.01.
Fiscal Period, Fiscal Quarter, Fiscal Month, Fiscal Year - as
defined in Article 8.01(c).
Furnishings and Equipment - all furniture, furnishings and
equipment (except Operating Equipment) required for the operation of the Casino
in accordance with the standards set forth in this Agreement, including, without
limitation:
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(i) cashier, money sorting and money counting
equipment, surveillance and communication
equipment, and security equipment;
(ii) slot machines, video games of chance, table games,
keno equipment and other gaming equipment;
(iii) office furnishings and equipment;
(iv) specialized equipment necessary for the operation of
any portion of the Casino for non-gaming or accessory
purposes, including equipment for kitchens,
laundries, dry cleaning, cocktail lounges,
restaurants, public rooms, commercial and parking
spaces, and recreational facilities; and
(v) all other furnishings and equipment hereafter located
and installed in or about the Casino which are used
in the operation of the Casino in accordance with the
standards set forth in this Agreement.
Gaming Act - the Louisiana Economic Development and Gaming
Corporation Act as set forth in LSA R.S. 27:201 et seq. (redesignated from LSA
R.S. 4:601 et seq. by Acts 1996, First Extraordinary Session), adopted by the
Legislature of the State of Louisiana as No. 384, Acts 1992, as amended, and the
regulations adopted thereunder, amendments and reenactments of LSA R.S.
36:801.1(A) and enactment of LSA R.S. 27:1 et seq., adopted by the Legislature
of the State of Louisiana as Act 7, First Extraordinary Session, 1996, as
amended, and the regulations adopted thereunder, the Local Option Gaming
Election set forth in LSA R.S. 18:1300.21, adopted by the Legislature of the
State of Louisiana as Act 57, First Extraordinary Session, 1996, and the act
adopted by the Legislature of the State of Louisiana as Act 98, First
Extraordinary Session, 1996.
Gaming Space - that area of the Casino in which gaming
activity takes place, not including support, storage, entertainment, service and
other such areas.
Gross Revenues - all revenues and income of any nature derived
directly or indirectly from the Casino or from the use or operation thereof,
including, without limitation, (i) Win (Gaming), (ii) food and beverage revenue,
(iii) telephone, telegraph, satellite or cable video and telex revenue,
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(iv) entertainment revenue, (v) parking revenue, (vi) rental payment from any
lessees or concessionaires, and (vii) merchandise sales revenue, interest
income, and the actual cash proceeds of business interruption, increased cost of
operation, use, occupancy or similar insurance. Notwithstanding the foregoing,
Gross Revenues shall expressly exclude:
(i) proceeds from the sale or other disposition of the
Casino or other assets of Owner;
(ii) proceeds of property insurance payable in connection
with any damage to the Casino except for business
interruption, increased cost of operations, use,
occupancy or similar insurance proceeds;
(iii) condemnation awards other than awards for either
temporary takings (i.e. condemnations of twelve (12)
months or less) or regulatory takings;
(iv) proceeds of financing or refinancing of the Casino;
(v) sales taxes, excise taxes, use taxes, gross receipts
taxes, admission taxes, entertainment taxes, tourist
taxes or charges and similar charges required by law
to be collected from patrons or guests of the Casino
or as part of the sales price for goods, services or
entertainment at the Casino which must be remitted to
governmental authorities; and
(vi) any amounts or credits received for lost or damaged
Casino merchandise.
Harrah's Atlantic City Casino - the casino owned or managed by
Manager's Affiliate and located in the marina area of Atlantic City, New Jersey.
Harrah's Casinos - a collective term for the casinos owned or
managed by Manager or Manager's Affiliates or licensed to operate under the name
"Harrah's(C)" or System Marks.
Harrah's Services - as defined in Article 11.01(a).
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Harrah's System - a collective term for the casino services
provided to the public by Manager or Manager's Affiliates, or their successors
or assigns, through management or license of Harrah's Casinos.
HET - Harrah's Entertainment, Inc., a Delaware corporation.
HJC - as defined in Recital A.
HOCI - Harrah's Operating Company, Inc., a Delaware
corporation.
House Bank - the amount of cash, chips, tokens and plaques
that Manager from time to time determines necessary to have at the Casino daily
to meet the Casino's cash needs.
Impositions - shall mean and include:
(i) all ad valorem taxes, water and sewer use charges or
assessments, stand pipe charges and assessments, or
other charges or assessments imposed upon the real
and personal property comprising the Casino; and
(ii) annual consideration payable under the Casino
Operating Contract or other charge or assessment
imposed by governmental or quasi governmental
authority or by any other entity empowered by law to
assess charges against the Casino or the activities
conducted thereat, with or without lien rights for
the enforcement thereof.
Incentive Fee - as defined in Article 9.01(a).
Indenture - collectively, those certain indentures by and
among Owner, as issuer, JCC Holding, as guarantor, and Norwest Bank Minnesota,
National Association, as trustee for the benefit of the holders of the Senior
Subordinated Debentures, entered into pursuant to the Plan.
Initial Term - as defined in Article 3.01.
Interest Rate - as defined in Article 25.02.
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JCC Holding - JCC Holding Company, a Delaware corporation and
the parent of Owner.
Key Casino Personnel - as defined in Article 5.03.
Landlord - as defined in the Authorized Lease.
Legal Requirements - as defined in Article 7.11.
LGCB - the Louisiana Gaming Control Board or any successor
entity.
Licenses and Permits - as defined in Article 4.01.
Management Fee - as defined in Article 9.01(a).
Manager's Affiliate - Manager's ultimate parent entity
(currently HET) and any of its Affiliates.
Manager Matters - as defined in Article 6.02.
Manager Subordination Agreements - as defined in Article 4.03.
Minimum Balance - as defined in Article 8.03(a).
Monetary Default - any failure of Owner to make any payment to
Manager or to a third party as required by this Agreement or to perform any
other obligation required of Owner by this Agreement which might be satisfied by
the payment of money. The amount of a Monetary Default shall be the amount of
the payment required, the liquidated amount of any liquidated obligation, or the
estimated amount of any unliquidated obligation determined by mutual agreement
of Owner and Manager or, if Owner and Manager do not agree upon the estimated
amount of any unliquidated obligation, arbitration pursuant to Article 20.02. An
obligation shall be deemed liquidated if the amount is fixed and determined
without further action of Manager or by Manager's incurring such cost.
Mortgage - the Borrower Mortgage (as defined in the Credit
Agreement) in favor of HET and HOCI (or any successor or substitute therefor
providing a Minimum Payment Guaranty under and as defined in the Casino
Operating Contract), the lenders under the Credit Agreement and the holders of
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the Senior Subordinated Debentures, subject to the terms of the Intercreditor
Agreement (as defined in the Credit Agreement).
Net Revenues - Gross Revenues less:
(i) the retail value of Promotional Allowances;
(ii) any gratuities or service charges added to a customer's
bill; and
(iii) any credits or refunds made to customers, guests or
patrons.
New Bonds, New Contingent Bonds - as defined in Article
9.01(b).
Non-Defaulting Party - as defined in Article 17.01.
Non-Qualified Person - any person or entity that would, if
associated with Owner, JCC Holding, Manager or any Affiliate of Manager, in the
reasonable judgment of Manager or any licensing authority, impair or cause the
denial, suspension or revocation of any gaming registration, permit, license,
right or entitlement or any alcoholic beverage registration, permit, license,
right or entitlement held or applied for by Owner, Manager, JCC Holding or any
Affiliate of Manager.
Non-Qualified Purchaser - as defined in Article 21.02(c).
Occupancy Agreements - as defined in Article 7.13(a).
Open Access Program - as defined in the Authorized Lease.
Opening Date - the date upon which Manager first opens the
Casino to the public and commences business. The parties shall hereafter confirm
the date of the Opening Date in a separate addendum to this Agreement which is
incorporated herein by this reference.
Operating Agreements - all agreements for the delivery of
goods and/or services to the Casino and all Occupancy Agreements.
Operating Costs - the following costs and expenses incurred by
Manager in connection with the operation of the Casino:
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(i) the cost of replacement of Operating Supplies and
Operating Equipment in the ordinary course of Casino
operations (but not the cost of initial inventories
of such property);
(ii) the cost of Promotional Allowances;
(iii) the cost of Compensation;
(iv) the cost of advertising for the Casino;
(v) the cost of employee training programs;
(vi) the cost of utilities and energy;
(vii) the fees for Licenses and Permits required for the
operation of the Casino;
(viii) all expenditures made by Manager for maintenance and
repairs to keep the Casino in good condition and
repair pursuant to Article 7.05;
(ix) the Management Fee and Travel Fee;
(x) the Accounting Fee and, if elected by Owner, any one
or more of tax, insurance, employee benefit plan
administration or other service fees provided for in
Article 9.03;
(xi) System Fees;
(xii) uninsured liabilities for which Manager is entitled
to indemnity pursuant to Article 14 relating to
injury to persons or property incurred by Manager in
connection with the operation of the Casino;
(xiii) such other costs incurred by Manager in connection
with the operation of the Casino as are treated as
operating costs under Casino Standard Accounting
Principles and as Manager may elect to treat as
Operating Costs under this Agreement; and
(xiv) any other costs or expenses incurred in connection
with Manager Matters.
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Operating Equipment - all equipment required for the operation
of a casino, including accessory gaming table equipment, chinaware, glassware,
linens, silverware, utensils, uniforms, and all other similar items.
Operating Supplies - food and beverages (alcoholic and
non-alcoholic) and other consumable items used in the operation of a casino,
such as playing cards, tokens, chips, plaques, dice, fuel, soap, cleaning
materials, matches, paper goods, stationery and all other similar items.
Owner Matters - as defined in Article 6.03.
Ownership Costs - the following costs and expenses incurred by
Owner in connection with the operation of the Casino:
(i) required contributions to the Capital Replacement Fund;
(ii) rent or other charges under the Authorized Lease;
(iii) Impositions affecting the Casino;
(iv) expenditures under Articles 7.06, 7.10, 7.11, 15 and
16.02, including costs for Capital Replacements;
(v) audit, legal and other professional or special fees with
respect to the Casino;
(vi) insurance premiums with respect to the Casino;
(vii) costs of leasing any Furnishings and Equipment or other
goods incorporated into or used in connection with the
Casino (whether pursuant to operating or capital
leases);
(viii) costs of amortization and depreciation with respect to
the Casino;
(ix) any gaming, sales and other operational payments and
taxes set forth in Article 10.04;
(x) such other Casino costs or expenses which are normally
treated as capital expenditures under Casino Standard
Accounting Principles; and
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(xi) any other costs or expenses incurred in connection with
Owner Matters.
Permitted Exceptions - (i) the Authorized Lease; (ii) any
Authorized Mortgage; (iii) liens for Impositions not yet delinquent; (iv)
undetermined or inchoate liens or charges for labor or materials supplied to the
Casino in connection with the construction or operation thereof, which have not
been filed or recorded in the public records and the payment for which is not
yet delinquent; and (v) easements, restrictions, rights of way or other title
matters which do not, in the aggregate or individually, impair the use of the
Casino for its intended purpose or adversely affect the amount of fees payable
to Manager hereunder. Permitted Exceptions shall, without limiting the
foregoing, include all of those matters set forth as exceptions to the title
insurance policy or title commitment delivered on or prior to the effective date
of Plan with respect to the Site.
PIK Election - as defined in Article 9.01(c)(i).
Plan - the Third Amended Joint Plan of Reorganization, as
modified, under Chapter 11 of the United States Bankruptcy Code of HJC,
confirmed by the Bankruptcy Court on October 13, 1998 for that certain case
captioned In re Harrah's Jazz Company, Case No. 95-14545.
Plans and Specifications - as defined in the Authorized GDA.
Pre-Opening Budget - as defined in Article 5.01.
Pre-Opening Expenses - as defined in Article 5.01.
Prior Management Agreement - as defined in Recital C.
Project Account - as defined in Article 5.02.
Promotional Allowance - goods and services, such as
complimentary rooms, food, beverages, entertainment and parking, given to
customers of the Casino as an inducement to gamble at the Casino.
Proprietary Systems - as defined in Article 6.02(n).
Qualified Purchaser - as defined in Article 21.02(c).
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Second Floor Non-Gaming Sublease - the Second Floor Non-Gaming
Sublease entered into by and between Owner and JCC Development Company, L.L.C.,
a Louisiana limited liability company, pursuant to the Plan, pertaining to the
sublease of the second floor of the building on the Casino premises as described
on Exhibit "A" to this Agreement for non-gaming uses, a copy of which is
attached to the Authorized Lease.
Senior Subordinated Debentures - as defined in Article
9.01(b).
Site - the parcel(s) of land, together with all easements and
rights appurtenant thereto, more particularly described in Exhibit "A" to this
Agreement.
Six Month Period - as defined in Article 9.01(a)
Suitable Lender - has the meaning provided in the Casino
Operating Contract.
System Marks - as defined in Article 12.02(a).
System Fees - as defined in Article 11.01(a).
Term - a collective term for the Initial Term and the
Extension Term, if elected by Manager.
Termination Fee - as defined in Article 17.02(b).
Transition Date - as defined in that certain Amended and
Restated Certificate of Incorporation of JCC Holding as in effect on the date
hereof.
Travel Fee - as defined in Article 7.03(c).
Twelve Month Period - as defined in Article 9.01(a)
Win (Gaming) - the difference between gaming wins and losses
before deducting costs and expenses determined according to Casino Standard
Accounting Principles.
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ARTICLE 2.
SCOPE OF AGREEMENT
2.01. Amendment and Restatement. This Agreement amends, restates and
supersedes the Prior Management Agreement in its entirety.
2.02. Subject Matter. The subject matter of this Agreement is the
Casino to be constructed, furnished and equipped by Owner on the Site known as
the Rivergate and numbered 4 Canal Street in the City of New Orleans, Orleans
Parish, Louisiana, subject to approval of the LGCB. The Casino may be operated
under the name and style "Harrah's New Orleans Casino." The non-gaming
development on the second floor of the building on the Casino premises as
described on Exhibit "A" to this Agreement and any space which is from time to
time included as demised premises pursuant to the Second Floor Non-Gaming
Sublease is expressly excluded from this Agreement.
2.03. Development. Owner agrees that it shall, at its sole cost,
acquire or lease, pursuant to the Authorized Lease, the Site and Building,
provide for and complete construction, furnishing and equipping of Casino -
Phase I, and achieve Completion of and deliver to Manager, for management and
operation, the Completed Casino - Phase I on or before the Completion Deadline.
Design of the Casino shall be proposed by Owner but subject to approval of
Manager. Construction, furnishing and equipping of Casino - Phase I shall be
diligently and continuously prosecuted to Completion on or before the Completion
Deadline. If Owner elects to construct any portion of the Casino in excess of
one hundred thousand (100,000) square feet in the aggregate of net Gaming Space
(which may include additional gaming space on either or both of the first and
second floors of the building on the Casino premises as described on Exhibit "A"
to this Agreement), Owner agrees, at its sole cost, that it shall provide for
and complete construction, furnishing and equipping of any such portion of the
Casino in excess of one hundred thousand (100,000) square feet in the aggregate
of net Gaming Space and deliver to Manager, for management and operation, the
Completed Casino with such additional net Gaming Space in accordance with the
Approved Program Plans for such additional net Gaming Space approved by Manager
in its reasonable business judgment.
2.04. Grant and Acceptance of Management Responsibility. Owner grants
to Manager the right to supervise and direct the Casino Employees regarding the
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management and operation of the Casino for the account of Owner subject to the
terms of this Agreement. Manager accepts said grant and agrees that it will
supervise and direct the management and operation of the Casino subject to the
terms of this Agreement.
2.05. Funding. Owner agrees to provide all funds, both initially and
throughout the term of this Agreement, as shall be necessary to perform and
satisfy Owner's covenants and responsibilities under this Agreement.
Notwithstanding any provision of this Agreement to the contrary, under no
circumstance shall Manager be obligated to advance any of its funds to pay for
Ownership Costs or Operating Costs of the Casino, and Manager shall be excused
from performing any act under this Agreement for which Owner has failed to make
available or provide sufficient money.
2.06. Limitation on Expenditures. Notwithstanding anything to the
contrary set forth herein, any expenditure of funds by Manager pursuant to this
Agreement may only be made if and to the extent such expenditures are permitted
by the Pre-Opening Budget, the Budget or otherwise permitted pursuant to Article
8.02(c), (d) and (e).
ARTICLE 3.
TERM AND RENEWALS
3.01. Initial Term. The initial term ("Initial Term") of this Agreement
shall be deemed to have begun on the date hereof, and shall continue for a
period of twenty (20) years thereafter.
3.02. Extension Term. Manager shall have the option to extend the term
of this Agreement for four (4) consecutive extension terms of ten (10) years
each ("Extension Term") and the term of this Agreement shall be so extended,
provided Manager is not in default under this Agreement at the time any such
Extension Term is to commence. Manager shall be deemed to have exercised its
option to extend the term of this Agreement for each Extension Term unless it
shall have delivered to Owner written notice to the contrary at least one
hundred eighty (180) days prior to the date on which the respective Extension
Term is to commence.
3.03. Early Termination; Termination of Authorized Lease. This
Agreement may be terminated prior to the expiration of the Initial Term or any
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then current Extension Term as provided in Articles 15, 16 and 17. In addition,
this Agreement shall terminate without any further action of the parties hereto
immediately upon the occurrence of the termination of the Authorized Lease by
Landlord as a result of Owner's failure timely to Complete construction of the
Casino; provided that such termination shall not entitle Manager to any
Termination Fee.
ARTICLE 4.
COVENANTS OF OWNER
4.01. Licensing and Permitting
(a) Owner's Licenses and Permits. Owner represents and covenants that
it will, on or before the earlier of the Opening Date or the Completion
Deadline, have obtained, and throughout the Term will maintain, the Casino
Operating Contract and all federal, state and local decrees, acts, orders,
consents, licenses and permits, other than those described in Article 4.01(b)
but including without limitation, suitability for Casino Employees (including
Key Casino Personnel), gaming, restaurant and alcoholic beverage licenses,
required to enable Owner to own the Casino and to operate the Casino with
Manager's assistance (including without limitation, all casino facilities,
kitchens, laundry, restaurant, and alcoholic beverage facilities) (collectively,
the "Licenses and Permits"). If the Casino Operating Contract, once issued,
shall be revoked through no fault of the Owner, such event shall not be a
violation of this Article 4.01, but shall be treated as a condemnation under
Article 16.01.
(b) Manager's Licenses and Permits. Manager represents and covenants
that it will, on or before the earlier of the Opening Date or the Completion
Deadline, have obtained, and throughout the Term will maintain, all casino
gaming licenses or other licenses or permits (other than those described in
Article 4.01(a)) necessary or required to enable Manager to manage the Casino
and to perform its duties as Casino manager under this Agreement and will
cooperate with Owner for purposes of Owner obtaining any suitability
determination necessary for Casino Employees (including Key Casino Personnel).
4.02. Title; Quiet Enjoyment. Owner represents and covenants that it
has acquired, and throughout the Term will maintain, a valid and continuing
leasehold estate (pursuant to the Authorized Lease) to the Casino, subject only
to the
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Permitted Exceptions and the provisions of Article 4.03. Owner covenants that
during the Term Manager shall and may peaceably possess and quietly enjoy the
Casino in accordance with the terms of this Agreement, free from molestation,
eviction and disturbance by Owner or by any other person or entity (other than
any person or entity claiming through Manager to the extent such claims relate
to Manager). Owner shall, at Owner's expense, undertake and prosecute all
actions, judicial or otherwise, required to assure such quiet enjoyment and
peaceable possession by Manager. Notwithstanding the foregoing, any termination
of the Authorized Lease that is not caused by any act or omission of Owner,
shall not be a violation of this Article 4.02 but shall be treated as a casualty
for purposes of Article 15.
4.03. Manager Subordination Agreements; Mortgages. A memorandum of this
Agreement sufficient to place the public on constructive notice of its terms,
and substantially in the form annexed as Exhibit "D" to this Agreement, shall be
recorded in the public records for the Parish of Orleans after the recording of
the Mortgage. Owner and Manager acknowledge that concurrently herewith, (i) the
trustee for, and acting on behalf of, the holders of the Senior Subordinated
Debentures, Manager, and Owner have entered into that certain Manager
Subordination Agreement (Senior Subordinated Notes), (ii) the administrative
agent for, and acting on behalf of, the lenders under the Credit Agreement, and
Manager have entered into that certain Manager Subordination Agreement
(Lenders), and (iii) Landlord, the City of New Orleans and Manager have entered
into that certain Manager Subordination Agreement (Landlord) (collectively, the
"Manager Subordination Agreements"). Any party (other than the holder of the
Mortgage) holding a mortgage, deed of trust, security agreement, assignment of
rents, revenues or profits, lease (including any sale leaseback or like
arrangement), or other form of security interest in or affecting the Casino
shall, as a condition to the effectiveness of such interest and/or qualification
thereof as an Authorized Mortgage, enter into a Subordination, Non-Disturbance
and Attornment Agreement, in such form as may be negotiated between Manager and
the holder of the Authorized Mortgage. Upon any foreclosure upon the Mortgage,
Manager's rights hereunder in relation to the holder of the Mortgage shall not
be disturbed or affected by any such foreclosure other than as set forth in the
Manager Subordination Agreements referred to in this Article 4.03.
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ARTICLE 5.
PRE-OPENING
5.01. Pre-Opening Budget. A pre-opening budget for the period after the
effective date of the Plan and prior to the Opening Date, including a
pre-opening budget for Casino - Phase I (as the same may be modified in
accordance with this Article 5.01, the "Pre-Opening Budget"), is attached to
this Agreement as Exhibit "G". Owner approves the Pre-Opening Budget attached as
Exhibit "G". The Pre-Opening Budget contains contingency line items which
Manager may allocate to any line items which are exceeded. Manager also shall be
entitled to reallocate amounts among line items of the Pre-Opening Budget
without further approval from Owner. If Casino - Phase I is not Completed and
the Opening Date does not occur by the Completion Deadline, Manager shall be
entitled to expend amounts in excess of the Pre-Opening Budget as necessary to
pay continuing Compensation of Casino Employees and continue performance under
existing contracts (the cost of which would not have exceeded the Pre-Opening
Budget but for such delay) without further approval from Owner. The Pre-Opening
Budget sets forth expenses (the "Pre-Opening Expenses") which Manager
anticipates to be necessary or desirable after the effective date of the Plan
and prior to the Opening Date in order to prepare for the Opening Date,
including without limitation, cash for disbursements, Furnishings and Equipment,
initial Operating Equipment and Operating Supplies, hiring, training, relocation
and temporary lodging of employees, advertising and promotion, office overhead
and office space (whether on- or off-Site) and travel and business entertainment
(including opening celebrations and ceremonies). Owner recognizes that the
Pre-Opening Budget has been prepared well in advance of the Opening Date and is
intended only to be a reasonable estimate, subject to variation due to a number
of factors, some of which will be outside of Manager's control (e.g. the time of
Completion, inflationary factors and varying conditions, in their respective
markets, for the goods and services required). Owner agrees that the Pre-Opening
Budget may be modified from time to time, subject to approval of Owner in
accordance with the procedure established by Article 8.02(e) for adjustments to
the Budget contained within any Annual Plan.
5.02. Payment of Pre-Opening Expenses. Owner agrees that any
Pre-Opening Expenses shall be promptly paid directly by Owner, with payment to
be made in accordance with the terms of each invoice approved by Manager and
delivered to Owner for payment. Owner shall establish a bank account for the
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Project Account (as defined in the Credit Agreement) into which Owner shall
deposit funds to pay for the budgeted Pre-Opening Expenses for the Casino, which
shall be paid by Owner from the Project Account. Manager is authorized and shall
have the option to elect, in lieu of submitting third party invoices to Owner
for direct payment, to pay Pre-Opening Expenses from its own funds, on behalf of
Owner. Owner shall, in such case, reimburse the Manager on demand, for all
amounts paid from Manager's own funds (together with interest on any portion
thereof advanced by Manager from its funds at the Interest Rate from and
including the date of advancement until and including the date of repayment) to
pay such Pre-Opening Expenses, so long as such expenses are within the
Pre-Opening Budget. All Pre-Opening Expenses advanced or incurred by Manager
shall be itemized, scheduled and submitted to Owner along with each demand for
payment. Reimbursement shall be made by Owner to Manager within ten (10) days
after the date of submission of each such schedule. Owner shall increase the
amount in the Project Account, on request of Manager, to provide all funds
required to pay for Pre-Opening Expenses authorized by Article 5.01.
5.03. Pre-Opening Hiring and Training of Employees. Manager agrees, at
Owner's cost, and as employees of Owner, to recruit, hire on behalf of Owner and
train employees of Owner to manage and operate the Casino in accordance with
this Agreement. In hiring, Manager shall give preference and priority to
Louisiana residents, except where not reasonably possible to do so without added
expense, substantial inconvenience, or sacrifice in operational efficiency, and
shall comply with the provisions of Sections 5.1 (Open Access Program), 5.2
(Residency Requirements) and 5.3(b) (Open Access and Former Employees) of the
Authorized Lease. To the extent pre-Completion occupancy is permitted by
applicable insurance policies and Licenses and Permits for the Building,
pre-opening recruiting, relocation, hiring, and training may be conducted at the
Casino during the Development Period (unless and until Owner determines and
advises Manager in writing that such activities unreasonably interfere with the
Completion of the Casino) and employees involved in such recruiting, hiring and
training may be housed at the Casino. All costs of recruiting, hiring and
training (including any expenses of off Site training or temporary lodging)
shall be included as a Pre-Opening Expense. The General Manager, Vice President
of Operations, Vice President of Marketing, Vice President and General Counsel,
Vice President of Services, and Vice President - Controller and other full time
employees of the Casino involved in the management of the Casino who report
directly to the General Manager (collectively, "Key Casino Personnel"), may be
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hired by Manager as employees of Manager and assigned to the Casino at such time
during the Development Period as Manager, in its discretion, deems necessary.
The salaries, temporary lodging, and other expenses of all Key Casino Personnel
and employees of Owner hired by Manager paid or incurred prior to the Opening
Date shall be Pre-Opening Expenses.
5.04. Pre-Opening Inspection. Prior to the Opening Date, a pre-opening
inspection shall be conducted jointly by Owner and Manager. Owner agrees to take
all measures necessary to remedy any Deficiencies indicated by Manager pursuant
to such pre-opening inspection. As used herein, the term "Deficiencies" shall
mean any failure of Casino - Phase I to be constructed, Furnished and Equipped
in substantial compliance with the Approved Program Plans. Should Manager elect,
it may accept the Completed portion of the Casino conditionally, subject to such
Deficiencies being promptly remedied by Owner. Any acceptance of the Casino by
Manager shall have no binding effect as to any latent or undiscovered
Deficiencies and may be rescinded by Manager if any Deficiencies in the manner
of constructing, furnishing or equipping of the Casino subsequently shall be
discovered and/or if Owner fails to satisfactorily remedy any Deficiencies.
ARTICLE 6.
STANDARDS AND MANAGER'S CONTROL
6.01. Casino Operational Standards. Manager shall operate the Casino,
including the performance of its obligations set forth in Article 6.02, at the
expense of Owner in accordance with Casino Operational Standards, applicable
Legal Requirements and applicable provisions of the Casino Operating Contract
and the Authorized Lease, but only if required funds are made available by Owner
and Owner cooperates in such compliance as to any matters within Owner's
responsibility or control. If any Casino Operational Standard is violative of
Legal Requirements, such Casino Operational Standard as applied to the Casino
shall be modified so as to comport with Legal Requirements.
6.02. Manager's Obligations. The items listed in clauses (a)-(v) below
shall be "Manager Matters." Manager shall have the obligation, and the sole and
exclusive authority, throughout the Term, with respect to:
(a) Employees - as more particularly provided in Article 7.03,
hiring of Casino Employees, supervision of Casino Employees,
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establishing levels of Compensation for Casino Employees,
negotiating collective bargaining agreements (if applicable)
for Casino Employees, establishing labor policies with respect
to Casino Employees, paying Casino Employees from Casino funds
and discharge (as Manager deems appropriate) of Casino
Employees; administration of compliance with the requirements
of the Open Access Program and any open access plans adopted
pursuant thereto relating to hiring, purchasing and
contracting for goods and services with respect to the
operation of the Casino (specifically excluding any
construction-related compliance) and, at Owner's request,
reporting to Owner's designated open access representative(s)
with respect thereto for purposes of Owner's reporting
requirements to the applicable governmental or municipal
authority pursuant to Article 6.03(i);
(b) Gaming Policies - gaming and entertainment policies, food and
beverage menu prices and charges for the Casino;
(c) Security - security and internal control procedures for the
Casino and terms of guest admittance to the Casino;
(d) Advertising - policies relating to advertising and marketing
of the Casino, as more particularly provided in Article 7.04,
including determining, based on a best cost/time factor basis,
which entity shall provide advertising and market research and
certain national marketing functions and overseeing such
services;
(e) Promotions - policies regarding the granting of discounts,
complimentary goods or services, and other Promotional
Allowances with respect to the Casino;
(f) Suppliers - selection of suppliers of goods and services for
the Casino (except with respect to the initial construction,
furnishing and equipping of the Casino). In purchasing or
contracting for goods and services, Manager shall administer
and comply with the Open Access Program and any open access
plans adopted pursuant thereto and shall give preference
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and priority to Louisiana residents, except where not
reasonably possible to do so without added expense,
substantial inconvenience, or sacrifice in operational
efficiency;
(g) Bank Accounts - control and management of the Bank Account(s)
established by Owner for the Casino, as more particularly
provided in Article 8.03;
(h) Capital Replacement Fund - management of the Capital
Replacement Fund established by Owner for the Casino, as more
particularly provided in Articles 7.07 and 7.08;
(i) Accounting - management or performance of casino level
accounting and annual budgeting (but not, unless elected and
paid for by Owner as part of the Accounting Fee, ownership
level accounting) for the Casino, as more particularly
provided in Article 8.01;
(j) Maintenance - supervision and effecting, or causing to be
effected, ordinary maintenance and repairs required to
maintain the Casino in compliance with Casino Operational
Standards, as determined by Manager or any successor
representatives of Manager, in their sole and absolute
discretion, as more particularly provided in Article 7.05;
(k) Necessary Contracts - negotiating and, pursuant to Article
19.02, entering into any contracts deemed by Manager to be
necessary or advisable in carrying out and placing in effect
the terms and conditions of this Agreement, the cost of which
for any Fiscal Year does not cause Manager to exceed the
fiscal limitations of this Agreement;
(l) Gross Revenue - collection and disbursement of Gross Revenues
on behalf of Owner in accordance with Article 10;
(m) Administrative Services - recommending, based on a best
cost/time factor basis, what entity shall provide certain
administrative systems and services for use in the Casino,
including point of sale systems, office systems, purchasing
and
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inventory systems and financial and human resources systems,
and overseeing the use of such systems;
(n) Proprietary Systems; Customer-Related Services - determining
(i) the use of the Casino Management System and WINet and any
other operations and/or customer-related proprietary systems
owned by Manager or licensed to Manager by any of Manager's
Affiliates for use in the Casino and any data and information
thereon related to any casinos other than the Casino
("Proprietary Systems"), (ii) the use of the Slot Management
System and any other operations and/or customer-related
proprietary systems licensed from a third party and any data
and information thereon related to any casinos other than the
Casino, and (iii) the use of certain "Harrah's(C)" brand
customer-related services and promotions, including the
"Harrah's(C)" Gold Card services, the 1-800-"Harrah's(C)"
reservation center and distribution of "Harrah's(C)" World and
"Harrah's(C)" Gift Certificates; managing Owner's use of such
systems, services, promotions and data and information related
to any casinos other than the Casino and administering the
provision of accounting and the payment by and reimbursement
by Owner for the costs and benefits of such systems, services,
promotions, data and information;
(o) Regulatory Matters - assisting Owner with any matters set
forth in Article 6.03(g) to the extent requested by Owner and
accepted by Manager and managing any other regulatory matters
related to the operation of the Casino;
(p) Required Expenditures and Reimbursement - at Manager's
election, after providing written notice and opportunity to
cure as provided in Article 17.01(a), making any expenditures
required of Owner under this Agreement and recovering, as a
reimbursable expense, the cost thereof with interest from the
date of advancement to the date of repayment at the Interest
Rate from Owner, on demand;
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(q) Litigation - subject to the oversight of the Owner pursuant to
Article 6.03(r), managing and assisting Owner in connection
with any litigation as may be requested by Owner and accepted
by Manager;
(r) Payment of Impositions - paying all Impositions assessed
against the Casino as same become due;
(s) Renovations - renovating, refurbishing, reconstructing and
improving the Casino from time to time as required by Article
7.06;
(t) Enforcement of Operating Agreements and Collective Bargaining
Agreements - enforcing or waiving enforcement of all Operating
Agreements and collective bargaining agreements, subject to
applicable Legal Requirements, provided that Manager shall not
waive application of the Gaming Act's licensing or suitability
requirements in effect with respect to the Casino;
(u) Licenses - obtaining and maintaining all licenses, permits,
authorizations and consents necessary or required to enable
Manager to manage the Casino and to perform its duties as
Casino manager under this Agreement, as more particularly
provided in Article 4.01(b); and
(v) Other Manager Matters - assisting Owner with respect to any
Owner Matters or any matters set forth in Article 9.03 if
requested in writing by Owner and accepted by Manager.
Notwithstanding the foregoing, performance of items (p) through and including
(v) above shall be undertaken on behalf of and as the obligation of the Owner
and shall not subject Manager to risk except as provided in Article 14.
6.03. Owner's Obligations. The items listed in clauses (a)-(t) below
shall be "Owner Matters." Owner shall have the sole responsibility and
obligation throughout the Term with respect to:
(a) Budgets; Casino Employment Policies - approving or
disapproving Budgets presented by Manager as part of the
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Pre-Opening Budget and each Annual Plan or proposed revision
thereof, as more particularly provided in Articles 5.01 and
8.02, or other forecasting, budgeting or financial planning
matters; approving or disapproving Casino Employment Policies
proposed by Manager pursuant to Article 7.03(g);
(b) Operating Funds - providing all funds required by Manager for
the operation of the Casino, as and when required by this
Agreement;
(c) Title - maintaining Owner's leasehold estate in the Casino
pursuant to the Authorized Lease to the Casino and all legal
or beneficial interests therein, assuring Manager's quiet
enjoyment of the Casino free from all exceptions other than
Permitted Exceptions and free from interference by any party
having rights under any Permitted Exception, matters relating
to Permitted Exceptions, title insurance, the leasehold estate
for the Casino and title to the Building and Casino and
compliance with Article 4.02, or any other title-related
matters;
(d) Development Properties - the development and financing of, or
any other matters with respect to, the 3CP property, the
Fulton Street Properties and any other non-Casino land or
assets owned by JCC Holding and its subsidiaries (other than
Owner);
(e) Dispositions - any sale, leasing or other disposition of the
Casino or any other land or assets of Owner or its affiliates;
(f) Development and Construction - developing and constructing, as
the case may be, or repairing, restoring, rebuilding,
replacing any damage to (or impairment or destruction of),
reconstructing or reconfiguring, furnishing and equipping the
Casino, as required by the terms of Articles 2.03, 15 and 16;
management of the development and construction of the Casino
and achievement of completion; implementation of the Approved
Program Plans; any other development or construction matters;
and hiring, supervision and other matters related to
Foxcor/Pearson PMG, LLC, an Arkansas limited liability
company, or any other program manager or construction
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consultants, the Architect, Centex Landis Construction Co.,
Inc., Broadmoor, a Louisiana General Partnership, and any
construction-related contractors, consultants or
subcontractors;
(g) Licenses and Permits; Governmental Affairs - obtaining and
maintaining all Licenses and Permits required for Owner's
continued legal existence, authorization to conduct business,
ownership of the Casino, and continued operation of all
facilities at the Site, as more particularly provided in
Article 4.01(a), handling governmental affairs, including
without limitation acting as a liaison, negotiating,
participating in hearings, meetings and administrative
proceedings, and otherwise acting in respect of the Authorized
Lease, the Authorized GDA, Landlord, the City of New Orleans,
the State of Louisiana, the Casino Operating Contract,
compliance with the Gaming Act, conditional use proceedings,
suitability applications or any other licensing, permitting,
governmental or administrative matters;
(h) Second Floor - matters relating to the Second Floor Non-Gaming
Sublease and the development, leasing, financing, operation
and other matters relating to the second floor of the building
on the Casino premises as described on Exhibit "A" to this
Agreement;
(i) Open Access - matters relating to the Open Access Program,
including any open access plans adopted pursuant thereto;
governmental and municipal relations regarding Open Access
matters, including, without limitation, preparing and
submitting reports to the City of New Orleans, the New Orleans
City Council and/or the Office of the Mayor of the City of New
Orleans as required by the Open Access Program and any open
access plans adopted pursuant thereto; supervising
compliance-related efforts with respect to Open Access
matters, including, without limitation, efforts by Manager
relating to hiring, purchasing and contracting for goods and
services with respect to the operation of the Casino as
provided in Article 6.02(a)
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and by construction contractors, subcontractors and unions
relating to construction-related matters;
(j) Payment of Debts - paying all indebtedness from time to time
encumbering the Casino as and when such indebtedness becomes
due;
(k) Reorganization Financing - matters relating to the Indentures,
Senior Subordinated Debentures, Credit Agreement, Mortgage,
Bank Loans, and financing of the Casino or otherwise referred
to in Article 4.03;
(l) Plan - matters relating to the Plan (except as such matters
relate to Manager) or any other reorganization of Owner or JCC
Holding or its subsidiaries;
(m) Books and Records - maintaining the books and records and the
preparation of the audited and unaudited financial statements
for Owner based on the operating statements furnished by
Manager pursuant to Article 8.01(c) and for JCC Holding and
its subsidiaries (other than Owner);
(n) Securities Laws - preparation and filing of the Annual Report
and any other filings, proceedings or matters relating to the
United States Securities and Exchange Commission or Federal or
state securities laws;
(o) Investor Relations - investor relations and other matters
relating to the shareholders or ownership of JCC Holding;
(p) Community and Public Relations - handling Casino community and
public relations other than advertising, marketing and
promotions;
(q) Employee Benefits - establishing and administering employee
benefits and savings and retirement plans for Casino
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Employees, ensuring compliance with Sections 5.5 (Fringe
Benefit Plan; Salary Practices) and 19.3 (Savings and
Retirement Plan) of the Authorized Lease and other employee
benefit matters relating to Casino Employees;
(r) Counsel and Litigation - hiring, approving settlements and
supervision of counsel to represent Owner regarding any Owner
Matters and hiring counsel and overseeing Manager's management
of litigation pursuant to Article 6.02(q);
(s) Administrative Services - determining, based on
recommendations from Manager, what entity shall provide
certain administrative systems and services for use in the
Casino, including point of sale systems, office systems,
purchasing and inventory systems and financial and human
resource systems; provided that if Owner selects a party other
than Manager or its Affiliates to provide such systems and
services, any such third party provided systems and services
shall be obtained on a basis which shall not impair or
frustrate Manager's ability to (i) manage the Casino in
accordance with Casino Operational Standards, and (ii) provide
a customer casino experience and customer services consistent
with the such experience and services provided in other
casinos in the Harrah's System; and
(t) Other Owner Matters - assisting Manager with respect to any
Manager Matters if requested in writing by Manager and
accepted by Owner; all corporate, administrative and other
business activities of Owner and any other matters not
expressly set forth in Article 6.02.
6.04. Owner Self-Help. If Manager should fail to protect: (i) the
safety of the patrons or employees of the Casino from harm, or (ii) tangible
real or personal property at the Casino from destruction, following written
notice from Owner and opportunity to cure, as provided in Article 17.01(a),
delivery by Owner to Manager of all funds required to effect cure and giving by
Owner to Manager of all cooperation and assistance necessary to effect cure of
such circumstance,
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Owner may enter the Casino and take reasonable action necessary to provide the
needed protection; provided that such entry and action shall be undertaken in a
manner that does not unreasonably interfere with the operations conducted by
Manager at the Casino.
6.05. Payments. Manager shall have the right to pay from the Bank
Account(s) on a timely basis, in accordance with Article 10.01, all costs,
expenses, or charges incurred by Manager, Manager's Affiliates or Owner in
accordance with the terms of this Agreement.
6.06. Manager's Control. Manager will have uninterrupted control over
the operation of the Casino. Owner agrees not to interfere or involve itself in
any way with the day-to-day operation of the Casino; provided, however, nothing
contained in this Article 6.06 is intended to interfere with any rights of Owner
set forth in this Agreement.
ARTICLE 7.
OPERATION OF THE CASINO
7.01. Permits. Manager agrees to use all reasonable efforts within its
control to comply with any conditions or requirements set out in or imposed by
Legal Requirements or imposed by any Licenses and Permits, for so long as the
expense of such compliance shall be paid for by Owner; provided, however,
nothing contained in this Agreement shall be deemed or construed to require
Owner to pay for any cost or expense incurred by Manager in obtaining or
maintaining any licenses, permits, authorizations or consents described in
Article 4.01(b) required of Manager after the effective date of the Plan. In the
event such expense is not paid by Owner, Manager shall have the right to pay
such expenses from the Bank Account(s). To the extent Manager elects to pay such
expenses from the Bank Account(s), Owner shall replenish such amounts to the
Bank Account(s) immediately upon presentation of an invoice for such expenses.
7.02. Equipment and Supplies. Manager shall be responsible and
authorized to obtain, on behalf of Owner and at Owner's cost, subject to the
fiscal limitations of this Agreement, all replacement Operating Supplies and
Operating Equipment inventories necessary or advisable in connection with the
operation of the Casino. Owner shall be solely responsible to supply initial
Operating Supplies, Operating Equipment and Furnishings and Equipment, and such
Capital
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Improvements as from time to time are required to comply with Casino Operational
Standards. In purchasing or contracting for goods and services, Manager shall
give preference and priority to Louisiana residents, except where not reasonably
possible to do so without added expense, substantial inconvenience, or sacrifice
in operational efficiency.
7.03. Employees
(a) Authority of Manager. Manager, as agent for Owner, but acting in
Manager's sole discretion within the financial parameters established in the
Annual Plan pursuant to Article 8.02(a) and consistent with the Casino
Employment Policies, will hire, supervise, direct, judge the fitness and
qualification of, and discharge and determine the Compensation and terms of
employment of all Casino Employees. In hiring, Manager (i) shall give preference
and priority to Louisiana residents, except where not reasonably possible to do
so without added expense, substantial inconvenience, or sacrifice in operational
efficiency and (ii) shall comply with the provisions of Sections 5.1 (Open
Access Program), 5.2 (Residency Requirements), 5.3(b) (Open Access and Former
Employees), 5.5 (Fringe Benefits; Salary Practices), 19.3 (Savings and
Retirement Plan), and Exhibit J (JCC Benefits Summary) of the Authorized Lease.
All Casino Employees other than Key Casino Personnel shall be employed by Owner.
At Owner's request, Manager shall advise and consult with Owner regarding
employee-related matters. Manager shall be Owner's bargaining agent with respect
to all collective bargaining agreements and other Casino Employee matters with
full power and authority to negotiate collective bargaining agreements (which
may extend beyond the Term and exceed the Compensation authorized by the
then-current Annual Plan) and to settle all employee grievances and claims.
Manager will keep Owner advised with respect to such negotiations and any
material grievances or claims and will obtain Owner's consent prior to entering
into any collective bargaining agreements or settlements of any such material
grievances or claims.
(b) Status as an Employer. Manager and Owner acknowledge and agree
that, for purposes of LSA R.S. 23:1021 et seq.:
(i) Owner shall be considered the immediate or general
employer, and Manager shall be the borrowing or
special employer, of all Casino Employees
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(other than the Key Casino Personnel). In any event,
the services provided by the Casino Employees (other
than the Key Casino Personnel) are an integral part
of and are essential to the business, services and
operations of Owner. Alternative to any other status
as an employer pursuant to applicable worker's
compensation laws, Owner shall be considered the
statutory employer of any such Casino Employees;
(ii) Manager shall be the immediate or general employer of
the Key Casino Personnel. The services provided by
the Key Casino Personnel are an integral part of and
are essential to the business, services and
operations of Owner. Owner shall be considered the
statutory employer of the Key Casino Personnel; and
(iii) Owner and Manager agree that, notwithstanding any
characterization of Manager as the immediate,
general, borrowing, special or statutory employer of
the Casino Employees (including the Key Casino
Personnel), for purposes of this Agreement, including
the indemnification set forth in this Article
7.02(b)(iii) and as between Owner and Manager, Owner
shall be responsible for the payment of applicable
workers' compensation benefits to the Casino
Employees (including the Key Casino Personnel) and
shall indemnify and save Manager harmless for any
payments to the Casino Employees (including the Key
Casino Personnel) of worker's compensation benefits
or any other employee Claims in accordance with
Article 14.
(c) Travel. Owner shall pay Manager ONE HUNDRED THOUSAND AND 00/100
DOLLARS ($100,000) per Fiscal Year adjusted annually on each anniversary of the
Opening Date by the percentage increase in the CPI occurring between the Opening
Date and the Adjustment Date: (i) on or before the Opening Date, and (ii)
thereafter, on or before the first day of each Fiscal Year following the Opening
Date, as a fee (the "Travel Fee") for all travel expenses (including food,
beverages, temporary lodging, airfare, automobile rental or mileage, gasoline
and other necessary expenses) incurred following Completion and the Opening Date
by employees of Manager's Affiliates who are not full-time Casino Employees
relative to:
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(i) supplying the Casino;
(ii) hiring and training Casino Employees and employment
matters concerning Casino Employees, including union
contract negotiations;
(iii) maintaining the physical condition and appearance of
the Casino;
(iv) maintaining and promoting proper operational
procedures and practices;
(v) maintaining books and records;
(vi) attending judicial or administrative hearings or
otherwise complying with any judicial or
administrative decree; and
(vii) otherwise performing duties undertaken by or rights
granted to Manager in this Agreement.
Manager shall have sole discretion to determine the necessity of such travel and
shall have no obligation to account for the expenditure of such Travel Fee or
return any unused portion of the Travel Fee to Owner. Correspondingly, any
excess cost of such travel expense shall be paid by Manager without
reimbursement by Owner. All such expenses for periods prior to Completion shall
be set forth in and paid pursuant to the approved Pre-Opening Budget.
(d) Employee Cost Indemnity. Except as otherwise provided in Article
14.01(c), Owner shall be solely responsible for and shall pay, reimburse,
indemnify, defend and hold Manager harmless from and against any and all
expenses, costs, liabilities and claims related or incidental to any Casino
Employee (including, by way of example only, all salaries, vacation, sick leave,
severance or termination benefits, pension plan liabilities, savings and
retirement plan contributions, workers' compensation benefits or claims, health,
disability or life insurance contributions, state, federal or local payroll or
other employer paid or collected taxes, injury, discrimination, back pay,
grievance or wrongful termination awards and any other costs and benefits for
Casino Employees however designated). To the extent Manager elects to disburse
such costs from the Bank Account(s), Owner shall replenish such amounts to the
Bank Account(s) immediately upon presentation of an invoice for such costs. If
Manager shall pay
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or cause any such amounts to be paid other than from Casino funds, Owner shall
reimburse such amount to Manager, subject to the provisions of Article 10.01,
immediately upon presentation of an invoice for such services.
(e) Professional Consultants. The costs, fees, compensation or other
expenses of any persons engaged by Owner or by Manager (to the extent consistent
with the Annual Plan) to perform duties of a special nature, related to the
operation of the Casino, such as attorneys, engineers and the like, shall be a
direct expense of Owner and need not be paid by Manager. To the extent Manager
elects to disburse such costs from the Bank Account(s), Owner, immediately upon
presentation of an invoice for such costs, shall replenish such amounts to the
Bank Account(s). If Manager shall pay or cause any such amounts to be paid other
than from Casino funds, Owner shall reimburse such amounts to Manager
immediately upon presentation of an invoice for such services.
(f) Employee Fringe Benefit Program. Owner shall provide Casino
Employees a fringe benefit program that complies with the appropriate provisions
of the Authorized Lease and the Open Access Program. All costs and expenses
related to such employee fringe benefit program shall be paid by Owner.
(g) Casino Employment Policies. Manager shall propose to Owner, subject
to Owner's approval, policies and procedures with respect to the hiring,
promotion, training, retention and discharge of the Casino Employees which such
policies and procedures shall foster and encourage, and shall not impair or
frustrate, Manager's ability to (i) manage the Casino in accordance with Casino
Operational Standards, and (ii) provide a customer casino experience and
customer services consistent with the such experience and services provided in
other casinos in the Harrah's System (as revised from time to time by Manager
and approved by Owner, the "Casino Employment Policies"). Manager agrees that in
the exercise of its authority set forth in Article 7.03(a), Manager will comply
with (i) the Casino Employment Policies, and (ii) applicable Legal Requirements,
including, but not limited to, Title VII of the Civil Rights Act, as amended,
Americans with Disabilities Act of 1990, as amended, Age Discrimination in
Employment Act (42 U.S.C. Section 1981 et seq.), Occupational Safety and Health
Act, National Labor Relations Act, Labor Management Relations Act, Fair Labor
Standards Act, Worker Adjustment and Retraining Notification Act, Employee
Retirement Income Security Act, Family and Medical
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Leave Act, the Louisiana Employment Discrimination Law and the Louisiana
Worker's Compensation Act.
7.04. Sales, Marketing and Advertising. Manager shall and is authorized
to advertise and promote the business of the Casino, institute and supervise a
sales and marketing program, and coordinate and cooperate with the marketing
programs of the Harrah's System and other casinos in the Harrah's System, and
tour programs marketed by airlines, travel agents and government tourist
departments, whenever Manager deems the same to be advisable. Manager may also
cause the Casino to participate in sales and promotional campaigns and
activities involving Promotional Allowances, provided such participation is
customary in the casino industry or Manager's or Manager's Affiliates'
practices. In purchasing or contracting for goods and services, Manager shall
give preference and priority to Louisiana residents, except where not reasonably
possible to do so without added expense, substantial inconvenience, or sacrifice
in operational efficiency.
7.05. Maintenance and Repairs. At Owner's expense, Manager shall make
or cause to be made all repairs and maintenance as shall be required to comply
with Casino Operational Standards and Legal Requirements. All work shall be
performed in a time and manner which will assure continuous compliance of the
Casino with Legal Requirements and Casino Operational Standards and minimize
interference with or disturbance of ongoing Casino operations.
7.06. Capital Improvement and Replacements. Manager shall effect all
Capital Improvements and Capital Replacements as shall be required to maintain
the Casino in compliance with all Legal Requirements and Casino Operational
Standards and to comply with Manager's recommended programs, approved in the
Annual Plan, for renovation, modernization and improvement intended to keep the
Casino competitive in its market.
7.07. Capital Replacement Fund for Capital Replacements and
Improvements. Beginning on the Opening Date, Manager shall establish a reserve
for Capital Replacements and Capital Improvements on the books of account of the
Casino, and the cash contributions required by Article 7.08 shall be placed into
a segregated account (the "Capital Replacement Fund") established in Owner's
name at a bank designated by Owner and subject to Manager's approval, which
approval shall not be unreasonably withheld or delayed, by execution of a
Banking Resolution. Subject to the terms of the Authorized Lease, designees of
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Manager shall be the only signatories authorized to withdraw funds from the
Capital Replacement Fund. All amounts in the Capital Replacement Fund shall be
invested, to the extent that availability of funds, when required, is not
thereby impaired, in interest-bearing investments in securities issued or
guaranteed by the United States government or in securities issued by any state
or federally chartered bank and insured by the United States government or,
subject to Owner's consent, any other investment proposed by Manager. Interest
earned on amounts deposited in the Capital Replacement Fund shall be credited to
the Capital Replacement Fund and shall be available for payment of expenditures
for Capital Replacements or Capital Improvements to the Casino. This Capital
Replacement Fund shall be the "Capital Replacement Fund" specified in Article
19.8 of the Authorized Lease and Section 13.7(a) of the Casino Operating
Contract.
7.08. Periodic Contributions to Capital Replacement Fund. Manager on
behalf of Owner shall deposit into the Capital Replacement Fund (i) one-twelfth
(1/12th) of THREE MILLION AND 00/100 DOLLARS ($3,000,000) for each of the first
twelve (12) months following the Opening Date, (ii) one-twelfth (1/12th) of FOUR
MILLION AND 00/100 DOLLARS ($4,000,000) for each of the second twelve (12)
months following the Opening Date, (iii) one-twelfth (1/12th) of FIVE MILLION
AND 00/100 DOLLARS ($5,000,000) for each of the third twelve (12) months
following the Opening Date, and (iv) two percent (2%) of monthly Gross Revenues
for each Fiscal Month thereafter. The cash amounts required to be so deposited
shall be calculated and deposited into the Capital Replacement Fund, in arrears,
no later than the tenth (10th) day of the Fiscal Month immediately following the
Fiscal Month with respect to which a deposit is made. In addition, all proceeds
from the sale of capital items no longer needed for the operation of the Casino,
and the proceeds of any insurance received in reimbursement for any items
previously paid for from the Capital Replacement Fund, shall be deposited into
the Capital Replacement Fund upon receipt by Owner.
7.09. Use and Allocation of Capital Replacement Fund. Any expenditures
for Capital Replacements or Capital Improvements which have been budgeted in an
Annual Plan may be paid from the Capital Replacement Fund without further
approval from Owner. Any amounts remaining in the Capital Replacement Fund at
the close of any Fiscal Year shall be carried forward and retained in the
Capital Replacement Fund until fully used. If amounts in the Capital Replacement
Fund at the end of any Fiscal Year plus the anticipated contributions to the
Capital Replacement Fund for the year following the date of such contribution
(the
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"Ensuing Year") are not sufficient to pay for Capital Replacements or Capital
Improvements authorized by the Annual Plan for such Ensuing Year, then Owner
shall supply additional funds, in the amount of the projected deficiency, at the
time the Annual Plan for such Ensuing Year is approved.
7.10. Emergency Expenditures. If a condition should exist of an
emergency nature which, in Manager's reasonable discretion, requires immediate
action to preserve and protect the Casino, assure its continued operation,
and/or protect the comfort, health, safety and/or welfare of Casino guests or
employees, Manager is authorized to take all steps and to make all expenditures
from the Bank Account(s), or the Capital Replacement Fund (in the case of
expenditures for Capital Replacements or Capital Improvements) as it deems
necessary to repair and correct any such condition, without regard to whether
provisions have been made in the Annual Plan for any such expenditures, and the
cost thereof shall be paid or reimbursed by Owner on demand.
7.11. Compliance with Legal Requirements. If, at any time, repairs to
or additions, changes or corrections in the Casino of any nature shall be
required by reason of any laws, ordinances, rules or regulations now or
hereafter in force, or by order of any governmental or municipal power,
department, agency, authority or officer ("Legal Requirements"), such repairs,
additions, changes or corrections may, whether or not provided for in the Annual
Plan, be made by or at the direction of Manager and paid for from the Bank
Account(s), the Capital Replacement Fund (in the case of expenditures for
Capital Replacements or Capital Improvements) or other sources if such Legal
Requirement was not known to Manager at the time of submission of the then
effective Annual Plan, and the cost thereof shall be paid by Owner, or Owner
shall replenish the Bank Account(s), the Capital Replacement Fund or such other
source, as the case may be, on demand.
7.12. Disbursement on Termination or Expiration. All amounts held in
the Capital Replacement Fund shall be distributed pursuant to the provisions in
the Authorized Lease and Casino Operating Contract regarding the Capital
Replacement Fund. Upon the expiration or termination of this Agreement, all
amounts then held in the Capital Replacement Fund shall be distributed pursuant
to the provisions in the Authorized Lease and Casino Operating Contract
regarding the Capital Replacement Fund and following such distribution, any sums
remaining may be applied to any amounts then due and payable to Manager
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under this Agreement, and thereafter, any sums remaining shall be paid over to
Owner. If Manager receives any conflicting or adverse claims or demands made in
connection with the application of any or all of the amounts held in the Capital
Replacement Fund pursuant to this Agreement, the Casino Operating Contract or
the Authorized Lease, Manager shall be entitled, at its option, to refuse to
comply with any such claims or demands so long as the disagreement shall
continue and in so doing Manager shall not be liable for its failure or refusal
to comply with such conflicting or adverse claims or demands until the rights of
the claimants have been adjudicated finally or the differences adjusted among
the claimants and Manager shall have been notified thereof in writing signed by
all such claimants. Manager also shall have the right to bring an action in
interpleader to obtain the right to pay all or any such portion of the amount
then held in the Capital Replacement Fund to a court of competent jurisdiction,
deducting from said sum the costs incurred in bringing such an action.
7.13. Occupancy Agreements
(a) Terms of Occupancy Agreements. Manager shall have full authority to
enter into leases, concessions, licenses and other forms of agreement for the
occupancy (collectively and separately, "Occupancy Agreements") of commercial
areas of the Casino (including without limitation, restaurant, cocktail lounge,
retail shops, automobile parking and other accessory services) in the name of
and on behalf of Owner. Manager's authority with respect to the Occupancy
Agreements is subject to the following provisions, unless Owner otherwise
consents to a modification thereof:
(i) the term of such Occupancy Agreements shall not
extend beyond the scheduled expiration of this
Agreement;
(ii) such Occupancy Agreements may be terminated by Owner,
at Owner's option, without penalty or premium, upon
not more than ninety (90) days' notice in the case of
any termination of this Agreement prior to its
scheduled expiration;
(iii) such Occupancy Agreements shall require the occupant
to be solely responsible for all damage to persons or
property occurring within its premises and to waive
any claim against Owner with respect thereto;
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(iv) such Occupancy Agreements shall require the occupant
to maintain commercial general liability insurance,
and, if alcoholic beverages are served on such
premises, liquor liability insurance in an amount not
less than FIVE MILLION AND 00/100 DOLLARS
($5,000,000), naming Owner, Landlord and the City of
New Orleans as additional insureds; and shall further
require that all insurance maintained by the occupant
be primary to any insurance maintained by Owner and
waive any right of subrogation against the Owner;
(v) such Occupancy Agreements shall require the occupant
to indemnify, defend and hold Owner harmless from and
against any and all claims, losses, liabilities and
damages resulting or arising in any manner, in whole
or in part, out of its use or occupancy of its
premises;
(vi) such Occupancy Agreements shall require the occupant
to recognize any and all prior rights granted by
Owner pursuant to any Authorized Mortgage, including
without limitation the Mortgage; and
(vii) such Occupancy Agreements shall require the occupant
to comply with all Legal Requirements applicable to
the conduct of its business at the Casino, and shall
be terminable by Owner or Manager if the occupant
breaches or fails to perform any material obligation
or undertaking to be performed by occupant thereunder
after reasonable opportunity to cure any such breach
or default.
(b) Effects of Occupancy Agreements on this Agreement. If any Occupancy
Agreements should be entered into by Manager on behalf of the Owner, then, for
so long as such Occupancy Agreements may remain in effect:
(i) only the rent paid by the occupant shall be deemed
Gross Revenues under this Agreement;
(ii) there shall be excluded from the definitions of
Operating Costs and Ownership Costs any such costs as
are paid by the occupant;
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(iii) employees of the occupied premises shall not be
required to be employees of Manager or Owner; and
(iv) Owner agrees to look solely to the occupant, and any
insurance which may be maintained by the occupant, or
to Owner's own insurance, for any loss, cost or
damage relating to or arising out of the premises
thereby affected, and shall not hold Manager
responsible therefor in any respect.
7.14. Transactions with Affiliates. Subject to the restrictions in the
Indenture, Manager may enter into contracts or agreements for goods or services
to be provided to the Casino, including any Occupancy Agreements, with any
Affiliate of Manager on terms and conditions, and for such price or
consideration, which are no less favorable to Owner than could be obtained from
persons or entities that are not Affiliates of Manager.
ARTICLE 8.
FISCAL MATTERS
8.01. Accounting Matters and Fiscal Periods
(a) Books and Records. Books and records reflecting Casino operations
shall be kept by Manager at the Casino or at Manager's offices in New Orleans,
Louisiana in accordance with Casino Standard Accounting Principles and the
following:
(i) Manager recognizes the rights of Landlord's Accepted
Auditor pursuant to the Authorized Lease and the LGCB
and its authorized representatives pursuant to the
Casino Operating Contract to inspect such books and
records;
(ii) as a condition to Landlord and the City of New
Orleans being third party beneficiaries hereof
pursuant to Article 27.03, it shall be required that
Landlord and the City of New Orleans agree that, for
so long as such books and records are made available
to Landlord's Accepted Auditor as provided in the
Authorized Lease and the reasonable travel and
lodging expenses of the Accepted Auditor are paid by
Owner, such books and records, to the extent
permitted by the LGCB and
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the Authorized Lease, may be kept or maintained at
the national or regional offices of Manager's
Affiliates;
(iii) Owner shall be solely responsible to maintain
ownership level books and accounts reflecting
Ownership Costs and Owner's tax and accounting
matters; provided, however, that if Owner elects or
consents to have Manager's Affiliate maintain such
books and accounts for an agreed Accounting Fee, such
books and accounts may, if and to the extent legally
permitted, be maintained at the offices of Manager's
Affiliate as provided above;
(iv) Owner's and Manager's respective independent
accounting firms shall each have the right and
privilege of examining said books and records (during
normal working hours (Monday-Friday) upon no less
than forty eight (48) hours advance written notice);
and
(b) Audit. A certified audit of Casino operations shall be performed
within ninety (90) days after the end of each Fiscal Year, and upon termination
or expiration of this Agreement. Additionally, a certified audit of Gross Gaming
Revenue (as defined in the Casino Operating Contract) shall be performed
quarterly within thirty (30) days after the end of each Fiscal Quarter. Such
audit of Gross Gaming Revenue shall be performed by Deloitte & Touche LLP, or
such other accounting firm as may be selected by Owner and approved by Manager
in writing, such approval not to be unreasonably withheld; provided that nothing
herein shall restrict Owner from hiring any other accounting firm or firms to
perform any accounting, audit or other services. During such audit and review
periods, Manager agrees that each of the LGCB and its authorized representatives
pursuant to the Casino Operating Contract and Landlord's Accepted Auditor shall
have the right to retain an independent auditor to participate with the selected
Accountant to examine, audit, inspect and transcribe the Casino's books and
records. The determination of such accounting shall, unless appealed to
arbitration, be conclusive and binding on the parties as to all matters properly
addressed thereby, and Owner and/or Manager shall, promptly upon receipt
thereof, adjust between them, any over or underpayment made or received by
either of them, as the case may be, during the audited period. The cost of
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accounting services delivered by any Accountants selected by Manager shall be an
Ownership Cost.
(c) Fiscal Year. The fiscal year (the "Fiscal Year") of the Casino
shall be the calendar year; the fiscal quarter (the "Fiscal Quarter") of the
Casino shall be the calendar quarter; and the fiscal month (the "Fiscal Month")
of the Casino shall be the calendar month. On or before the twenty-fifth (25th)
day of each full calendar month following the Opening Date, Manager shall
furnish Owner with a detailed operating statement setting forth the results of
Casino operations. There is attached hereto as Exhibit "B" a form of the
operating statement currently utilized by Manager which reflects the results of
the prior month of operations as well as the cumulative year-to-date results of
operations. The form of the operating statement may be modified from time to
time by Manager at its discretion to reflect changes adopted by Manager's
Affiliates for accounting for casinos managed by Manager's Affiliates. The
fiscal periods adopted by Manager are referenced in this Agreement as "Fiscal
Month," "Fiscal Quarter," and "Fiscal Year," respectively. The term "Fiscal
Period" shall mean a Fiscal Year, Fiscal Quarter or Fiscal Month, as the context
requires.
8.02. Approved Budget
(a) Annual Plan. Manager annually shall prepare, for Owner's review and
approval, an annual plan (as proposed by Manager and approved by Owner, or
revised from time to time pursuant to Article 8.02, the "Annual Plan") for the
Casino. The Annual Plan for the first whole or partial Fiscal Year following the
Opening Date will be prepared by Manager and presented to Owner not less than
sixty (60) days before the Opening Date. The Annual Plan for each subsequent
Fiscal Year during the Term, shall be prepared and submitted to Owner not later
than sixty (60) days before the beginning of such Fiscal Year. The Annual Plan
for the Casino will consist of the following:
(i) a statement of the estimated income and expenses for
the coming Fiscal Year, including estimates as to
Gross Revenues and Operating Costs for such Fiscal
Year, such operating budget to reflect the estimated
results of the operation during each Fiscal Month of
the subject Fiscal Year;
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(ii) either as part of the statement of the estimated
income and expenses referred to in the preceding
clause (i), or separately, budgets (and timetables
and requirements of Manager) for:
(A) repairs and maintenance;
(B) Capital Replacements;
(C) Operating Equipment;
(D) advertising and business promotion programs
for the Casino;
(E) the estimated cost of Promotional
Allowances;
(iii) a business and marketing plan for the subject Fiscal
Year; and
(iv) the Minimum Balance which must remain in the Bank
Account(s) and the House Bank as of the end of each
Fiscal Month during the Fiscal Year to assure
sufficient monies for working capital purposes, the
House Bank and other expenditures authorized under
the Annual Plan subject to adjustment pursuant to
Article 8.03(a).
References herein to the "Budget," or to budgeted items, contained in the Annual
Plan, refer to the budget and budgeted amounts contained in the Annual Plan.
(b) Review. In connection with the submission of the Annual Plan to
Owner, Owner will meet with Manager within twenty (20) days from the date the
proposed Annual Plan is delivered to Owner to have an in-depth review,
including, after the first full Fiscal Year, a comparison with the previous
Fiscal Year's performance of the Casino and a discussion of marketing strategy,
identification of markets and the proposed expenditures contained in the Annual
Plan. In addition, after the Annual Business Plan (as defined in the Authorized
Lease) has been submitted to Landlord, Owner and Manager will meet with Landlord
to discuss those items of the Annual Business Plan, as provided in the
Authorized Lease, addressing marketing, city revenues, and other relevant
issues.
(c) Owner's Approval. The Annual Plan will be subject to the approval
of Owner, which will not be unreasonably withheld or delayed. It is the
intention
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of the parties to complete the review and approval of the proposed Annual Plan
no later than thirty (30) days prior to the Opening Date and commencement of
each Fiscal Year. Owner shall be required to approve or disapprove each proposed
Annual Plan within thirty (30) days after the date of delivery to Owner of each
such proposed Annual Plan by providing written notice to Manager. To be
effective, any notice which disapproves a proposed Annual Plan must contain
specific line item objections thereto in reasonable detail. If Owner fails to
provide such written notice to Manager of any specific objections to a proposed
Annual Plan within such thirty (30) day period, such Annual Plan shall be deemed
to have been approved as submitted. Owner shall review the Budgets contained in
the Annual Plan on a line-by-line basis. If Owner disapproves or raises any
objections to any line items contained in the proposed Annual Plan or any
revisions thereto, until otherwise mutually agreed, the undisputed portions
(and, in the case of the Annual Plan for the first full Fiscal Year only,
disputed portions, until such time as any disputed portion is resolved by
arbitration or joint agreement) of the proposed Annual Plan shall be deemed to
be adopted and approved. In the case of any Annual Plan after the Annual Plan
for the first full Fiscal Year, the item corresponding to the disputed item and
contained in the Annual Plan for the preceding Fiscal Year shall be substituted
in lieu of the disputed portions of the proposed Annual Plan. In each instance
where portions of the Annual Plan from the preceding Fiscal Year are deemed to
be the Annual Plan in effect until a new Annual Plan is approved, the Budget
items contained in the Annual Plan for the preceding Fiscal Year shall be
automatically increased or decreased by a percentage equal to the percent of
increase or decrease in the CPI during the preceding Fiscal Year. Calculation of
the percent of increase or decrease in the CPI shall be made by Manager based
upon the then most recently published CPI data at the time the calculation is
made. If, notwithstanding such CPI increase, Manager and Owner do not reach
agreement as to mutually acceptable Budgets within thirty (30) days after
delivery of objection by Owner, the line item(s) of the Annual Plan objected to
by Owner shall be submitted to and resolved by arbitration in accordance with
Article 20.02 and Manager shall provide Landlord with notice of the submission
to arbitration.
(d) Compliance. Manager shall be permitted to reallocate part or all of
the amount budgeted with respect to any line item to another line item in the
same Department, but may not reallocate from one Department to another
Department. Manager shall also be entitled to make expenditures on behalf of
Owner not
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authorized under the then applicable Annual Plan, subject to reimbursement by
Owner on demand, only (unless otherwise approved by Owner):
(i) in case of emergencies;
(ii) to the extent necessary to comply with Legal
Requirements or Casino Operational Standards;
(iii) to pay for the actual cost of any utilities, fuel,
fees for Licenses or Permits, insurance or
Impositions;
(iv) to pay for uninsured liabilities, including without
limitation, uninsurable claims (such as employee
claims, environmental and civil rights claims), the
amount of any uninsured or deductible portion of any
insured claim, and any assessments relating to health
or other insurance programs having cost-plus or self
insurance features;
(v) to pay for additional Compensation paid pursuant to
any collective bargaining agreement negotiated with a
union or changes in Key Casino Personnel or Casino
employee Compensation levels;
(vi) to pay for Ownership Costs incurred after approval of
an Annual Plan;
(vii) to pay for any gaming, sales or use tax deficiencies
assessed by a taxing authority; and
(viii) to pay for additional costs permitted by Article
8.02(e).
(e) Adjustment to Annual Plan
(i) If Manager encounters circumstances which require
unbudgeted and unexpected expenditures not foreseen at the time of preparation
of the Annual Plan and which Manager deems reasonably necessary, in addition to
and without limiting the instances described in Article 8.02(d) and without
regard to the requirements of Article 8.02(c), Manager may, without Owner's
approval, make such expenditures for so long as the same do not, in any Fiscal
Quarter, exceed one hundred fifteen percent (115%) of the amount budgeted for
the
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Department to which such expenditures relate or, if greater, with respect to
expenditures for the slot machines, table games, other games, food and/or
beverage Departments or non-gaming development, such expenditures will not
exceed an amount such that the ratio of the amount so expended to the revenues
of the affected Department exceeds the ratio (expressed as a percentage) of the
expenses budgeted to the revenues forecast, rounded up to the next full
percentage point. If Manager expects that such expenditures will in any future
Fiscal Quarter exceed the greater of (A) one hundred fifteen percent (115%) of
the amount budgeted for the Department to which such expenditures relate, or (B)
an amount such that the ratio of the amount so expended to the revenues of slot
machines, table games, other games, food and/or beverage Departments or
non-gaming development will exceed the ratio (expressed as a percentage) as
forecast, rounded up to the next full percentage point, Manager shall have the
right, from time to time during such Fiscal Year, to submit a revision to the
Annual Plan to Owner for approval, which approval shall not be unreasonably
withheld or delayed. Owner will review all proposed revisions to an Annual Plan
on a line-by-line basis in the same manner as the initial Annual Plan. If Owner
shall disapprove or raise any objections to any items contained in revisions to
an Annual Plan, Manager shall continue to use all reasonable efforts to comply
with the Annual Plan until a proposed revision has been approved or this
Agreement is terminated. If no revision is approved before the expiration of
thirty (30) days after any revision is submitted to Owner for approval, the
revision shall not be deemed approved, and any disagreement between Owner and
Manager with respect to the proposed revision shall be resolved by arbitration
in accordance with Article 20.02.
(ii) Manager shall not be deemed to have made any guarantee or
warranty of the fiscal estimations set forth in the Annual Plan. The parties
acknowledge that the Annual Plan is intended to set forth objectives and goals
based on Manager's best judgment of the facts and circumstances known by Manager
at the time of preparation.
(iii) Manager and Owner agree to meet monthly to discuss (A)
the then-existing Annual Plan, (B) any adverse variances of revenues or
expenditures from the Annual Plan, (C) Manager's recommendations for
modifications to the Annual Plan in view of any adverse variances of revenues or
expenditures from the Annual Plan, and (D) any other modifications to the Annual
Plan anticipated by Manager or Owner.
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8.03. Bank Account(s); House Bank
(a) Bank Account(s). Pursuant to a Banking Resolution (the "Banking
Resolution") in the form attached hereto as Exhibit "E", Owner shall establish
an operating account(s) in its name at a bank (with retail offices in the
immediate geographic vicinity of the Casino) approved by Manager (the "Bank
Account(s)") as Manager determines to be necessary or convenient for the
operation of the Casino. Manager's designees shall be the only parties
authorized to draw upon the Bank Account(s). At the time of the Opening Date,
Owner shall have an aggregate amount of not less than TEN MILLION AND 00/100
DOLLARS ($10,000,000) (or such other amount as may be required by the Gaming Act
or any regulations or orders issued by the LGCB) on deposit in the Bank
Account(s) and/or available under its revolving credit facility pursuant to the
terms of the Credit Agreement which shall serve as working capital, excluding
the House Bank, for Casino operations. Owner shall establish, prior to Opening
Date, a House Bank which shall include at least FIVE MILLION AND 00/100 DOLLARS
($5,000,000) in cash on the Opening Date. Subject to the requirements of the
Gaming Act or any regulations or orders issued by the LGCB, (i) the TEN MILLION
AND 00/100 DOLLAR ($10,000,000) amount referred to above may be adjusted jointly
by Manager or Owner at any time (as so adjusted, the "Minimum Balance") and (ii)
the House Bank may be adjusted jointly by Manager and Owner at any time. Owner
shall furnish Manager immediately, upon demand, with sufficient funds to make up
any deficiency in the Minimum Balance and/or House Bank (as so adjusted) or to
pay any Ownership Costs or Operating Costs of the Casino then due to the extent
there are insufficient funds in the Bank Account(s). Manager acknowledges that
it is advantageous to Owner to have advance notice of funding needs so that
borrowings under the Credit Agreement may be arranged at lowest costs. Manager
agrees to use commercially reasonable efforts to provide advance notice to Owner
of anticipated needs for additional funds to be deposited in the Bank Account(s)
or House Bank not less than five (5) days prior to the actual need for such
funds.
(b) Control of Bank Account(s). Manager shall have absolute control of
the Bank Account(s). Manager shall have absolute control of the House Bank. All
Gross Revenues shall pass through the Bank Account(s). All amounts on deposit in
the Bank Account(s) shall be invested in interest-bearing investments, to the
extent that availability of funds, when required, is not thereby impaired, in
securities issued or guaranteed by the United States government or in securities
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issued by any state or federally chartered bank and insured by the United States
government or, subject to Owner's consent, any other investment proposed by
Manager. Interest earned on amounts deposited in the Bank Account(s) shall be
credited to the Bank Account(s) and shall be for the benefit of Owner.
(c) No Commingling of Funds. Manager shall not commingle any funds in
the Bank Account(s), the Capital Replacement Fund, the House Bank, any payroll
accounts, petty cash funds or other Casino funds with any funds of Manager or
any Affiliate of Manager.
(d) Reconciliation of Bank Account(s). Manager shall provide Owner
copies of bank statements with respect to the Bank Account(s) as and when
received by Manager from the applicable bank(s), and shall provide Owner a
reconciliation of such bank statements to the books and records reflecting
Casino operations within twenty (20) days of Manager's receipt of such bank
statements.
8.04. Internal Controls
(a) Manager shall establish a system of internal controls to perform
the administrative and accounting procedures required by Section 9.27 of the
Casino Operating Contract.
(b) Owner shall cause the Accountants to prepare an annual compliance
report addressing the adequacy of the design of such internal control system and
the effectiveness of the implementation thereof as required by Section 9.27 of
the Casino Operating Contract. Manager agrees to cooperate with Owner and the
Accountants in the preparation of such compliance report.
(c) Upon Owner's request, Manager shall assist Owner in (i) advising
the LGCB in writing as to the manner in which each material matter or material
item of non-compliance identified in the compliance report has been corrected or
is proposed to be corrected, and (ii) providing a timetable for completing each
material matter or material item of non-compliance not then corrected.
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ARTICLE 9.
FEES TO MANAGER
9.01. Management Fee
(a) Base Fee and Incentive Fee. Owner agrees to pay to Manager a
management fee (the "Management Fee") having two components. The first component
(the "Base Fee") shall equal three percent (3.0%) of Gross Revenues. The second
component (the "Incentive Fee") shall mean (i) for the six (6) month period
ending on each March 31 after the Opening Date (the "Six Month Period"), an
amount equal to seven percent (7.0%) of Consolidated EBITDA for such Six Month
Period in excess of FORTY MILLION AND 00/100 DOLLARS ($40,000,000) and (ii) for
the twelve (12) month period ending on each September 30 after the Opening Date
(the "Twelve Month Period"), an amount equal to (A) seven percent (7.0%) of the
aggregated Consolidated EBITDA for the Twelve Month Period in excess of
SEVENTY-FIVE MILLION AND 00/100 DOLLARS ($75,000,000), less an amount equal to
(B) the Incentive Fee, if any, paid to Manager with respect to the Six Month
Period which is included in such Twelve Month Period; provided, however, that in
no event shall the amount obtained by subtracting the amount in (B) from the
amount in (A) be less than zero. Manager will refund to Owner all fees paid by
Owner under clause (i) above for any Six Month Period if Consolidated EBITDA
does not exceed SEVENTY-FIVE MILLION AND 00/100 DOLLARS ($75,000,000) for the
Twelve Month Period which includes such Six Month Period. There shall be
appropriate proration of each such threshold for any partial year following the
Opening Date and preceding the termination of this Agreement, as the case may
be. For purposes of computing the Incentive Fee, any lump sum payments
(excluding Rent, Gross Gaming Revenues, Gross Non-Gaming Revenues, any
Contingent Payment and the Minimum Payments (as each such term is defined in the
Authorized Lease)) due under the Authorized Lease or the Casino Operating
Contract from and after the date hereof shall be regarded as capital
expenditures and amortized over the term of such Authorized Lease or Casino
Operating Contract, as the case may be, on the Owner's financial statements, and
shall not be deducted from Gross Revenues, or if deducted, shall be added back,
in determining Consolidated EBITDA. Subject to the priorities set forth in
Article 9.01(b), the Base Fee shall be paid monthly, in arrears, on the first
day of each Fiscal Month following the Opening Date. The Incentive Fee shall be
paid subject to the priorities set forth in Article 9.01(b). Manager shall be
authorized to pay the Management Fee (as well as the
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Accounting Fee provided for in Article 9.02, Travel Fee provided for in Article
7.03(c), additional fees provided for in Article 9.03, System Fees provided for
in Article 11.01 and any other amounts payable to Manager pursuant to the terms
of this Agreement) to itself directly by withdrawal from the Bank Account(s) in
accordance with the terms of this Agreement. The Management Fee, Accounting Fee,
System Fees, and reimbursable amounts due for the final Fiscal Month of the Term
shall be paid on or before termination subject to the priorities set forth in
Article 9.01(b).
(b) Priorities of Payments. The Base Fee shall be payable to Manager
monthly. The Incentive Fee, if any, shall be payable to Manager at six (6) month
intervals on the next business day following actual cash payment of all accrued
fixed interest and contingent payments, if any, on those certain Senior
Subordinated Notes due 2009 with Contingent Payments of Owner (the "New Bonds")
to be issued pursuant to the Plan in the aggregate non-contingent principal
amount of ONE HUNDRED EIGHTY-SEVEN MILLION FIVE HUNDRED THOUSAND AND 00/100
DOLLARS ($187,500,000) and those certain Senior Subordinated Contingent Notes
due 2009 of Owner to be issued pursuant to the Plan (the "New Contingent Bonds"
and, together with the New Bonds, the "Senior Subordinated Debentures"). No Base
Fee shall be paid, and no Incentive Fee shall accrue or be paid, during or with
respect to any period in which Owner is in default with respect to interest or
principal payments under the Senior Subordinated Debentures or the Bank Loans;
provided that any unpaid Base Fee so deferred shall be payable to Manager at
such time as any such default is cured.
(c) Deferral of Management Fees
(i) Owner and Manager acknowledge that the New Bonds provide
for six (6) elections by Owner to pay semiannual interest in kind rather than in
cash for the first three (3) year period of the term of the New Bonds and
further require Owner to pay semiannual interest in kind on any interest payment
date thereafter if Consolidated EBITDA for the twelve (12) month period ending
on the last day of the Semiannual Period (as defined in the Indenture for the
New Bonds) immediately preceding such interest payment date did not exceed
TWENTY-EIGHT MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($28,500,000)
(collectively, the "PIK Elections"). If Owner is required by the Indenture to
cause Base Fees to be deferred and/or disgorged as a result of a PIK
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Election by Owner or is required by the Credit Agreement to defer Base Fees as a
result of a deferral of principal amortization, Manager hereby consents and
agrees to such deferrals and/or disgorgements of Base Fees.
(ii) Owner shall give written notice to Manager of each PIK
Election and specify in such notice the amount of Management Fees required to be
deferred and/or disgorged, if any, under the Indenture and/or the Credit
Agreement (the "Deferral Amount"). Such Deferral Amount shall first be applied
against any Base Fees then unpaid and thereafter accruing during the applicable
six (6) month period for such PIK Election. To the extent any such Deferral
Amount shall exceed the amount of any paid or unpaid and accrued Base Fees for
the applicable six (6) month period for such PIK Election, Manager shall refund
to Owner the amount of such Deferral Amount not to exceed the amount of any Base
Fees previously paid to Manager with respect to any portion of the applicable
six (6) month period for such PIK Election paid or accruing prior to Owner's PIK
Election. HET and HOCI shall enter into an agreement as of the date hereof
pursuant to which HET and HOCI will unconditionally guarantee Manager's
obligation to refund to Owner any deferred Management Fees to the extent Manager
is required to refund to Owner any deferred Management Fees pursuant to this
Article 9.01(c)(ii) or Article 9.01(a) hereof.
(iii) Owner and Manager acknowledge that the Indenture and the
Credit Agreement require Incentive Fees to be deferred during any corresponding
PIK Election. Manager hereby consents to such deferrals of Incentive Fees as may
be required by the Indenture and Credit Agreement.
(iv) Any Management Fees deferred pursuant to Article
9.01(c)(ii) or (iii) hereof shall bear interest at eight percent (8.0%), which
shall accrue until such deferred Management Fees are repaid. In the case of Base
Fees, interest shall accrue (A) if such deferred Base Fees are from previously
unpaid Base Fees pursuant to Article 9.01(c)(ii) hereof, from the date such Base
Fees were otherwise payable under this Agreement or (B) if such Base Fees were
refunded by Manager to Owner pursuant to Article 9.01(c)(ii) hereof, from the
date such Base Fees were refunded by Manager, as applicable.
(v) Following such time as Owner has achieved Consolidated
EBITDA of not less than SIXTY-FIVE MILLION AND 00/100 DOLLARS ($65,000,000) for
the preceding twelve (12) month period, any Base Fees deferred or refunded
pursuant to this Article 9.01(c) hereof together with interest thereon
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shall be payable to Manager pro rata with any deferred guaranty fees out of
excess cash flow (remaining after application of the excess cash flow sweep
required by the Credit Agreement for the Bank Loans) to the extent Consolidated
EBITDA exceeds SIXTY-FIVE MILLION AND 00/100 DOLLARS ($65,000,000). Following
such time as Owner has achieved Consolidated EBITDA of not less than
SEVENTY-FIVE MILLION AND 00/100 DOLLARS ($75,000,000) for the preceding twelve
(12) month period, any Incentive Fees deferred pursuant to this Article 9.01(c)
together with interest thereon shall be payable to Manager, after repayment of
any deferred Base Fees and deferred guaranty fees, out of excess cash flow
(remaining after application of the excess cash flow sweep required by the
Credit Agreement for the Bank Loans) to the extent Consolidated EBITDA exceeds
SEVENTY-FIVE MILLION AND 00/100 DOLLARS ($75,000,000); provided that if any
uncured payment default exists under the Indenture or any default occurs which
results in an acceleration under the Indenture, or if any uncured default exists
under Article 17.01(c), (d), (e), (f) or (g) hereof, any accrued but unpaid Base
Fees or Incentive Fees shall be subordinated to payments pursuant to the
Indenture in the following order:
(a) fixed interest pursuant to the Indenture;
(b) principal amounts pursuant to the Indenture;
(c) Base Fee;
(d) contingent payments pursuant to the Indenture;
(e) amounts advanced under the Completion Guarantees (as
defined in the Indenture); and
(f) Incentive Fee.
9.02. Accounting Fee. If accounting services for the Casino or Owner
shall be performed by employees of Manager other than Casino Employees, Owner
shall pay to Manager an annual accounting fee (the "Accounting Fee") for such
services to be established as part of the Annual Plan. The Accounting Fee shall
be payable in equal monthly installments, in arrears, at the time of each
payment of the Management Fee.
9.03. Property Tax, Income Tax, Insurance, Benefit Plan Administration
and Other Services. If Owner elects and Manager agrees to have Manager or any
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of Manager's Affiliates (i) place insurance for the Casino, provide ownership
level accounting services through the accounting and tax accounting departments
of Manager's Affiliate, or administer insurance related services through the
risk management department of Manager's Affiliate, (ii) monitor and pay real
estate and tangible personal property tax assessments against the Casino through
the real estate tax department of Manager's Affiliate, (iii) administer any
employee benefit plan or savings and retirement plan established and maintained
by Owner through the employee benefits department of Manager's Affiliate, or
(iv) provide accounting and other services and related computer systems which
are not Manager Matters, then Owner shall pay the service fees from time to time
established for such services as and when billed. All such service fees shall be
on such terms and conditions and for such amounts as are mutually agreed to by
Owner and Manager.
9.04. Proprietary Systems.
The Proprietary Systems owned by Manager or licensed to Manager by
any of Manager's Affiliates, when used in the Casino, shall be provided by
Manager at cost, and Manager and/or any Manager's Affiliate shall not make a
profit on assessments for the use of such Proprietary Systems. This shall allow
Manager to recover past costs of systems that have been developed by Manager or
its Affiliates by assessment against the Casino of a charge for the use of such
system when used in connection with the Casino.
ARTICLE 10.
DISBURSEMENTS
10.01. Disbursements of Net Revenues. As and when received by Manager,
Gross Revenues, exclusive of any amount withheld to pay taxes, shall be
deposited in the Bank Account(s). Manager shall disburse on a monthly basis, for
and on behalf of Owner as invoices are received or amounts become due, funds
from the Bank Account(s) to pay:
(a) the following fees and expenses of Manager:
(i) the Management Fee in accordance with the provisions
of Article 9.01;
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(ii) the Accounting Fee, Travel Fee and, if applicable,
tax, insurance, employee benefit plan administration
or other service fees or other expenses provided in
Article 9.03;
(iii) System Fees;
(iv) reimbursable expenses due Manager under this
Agreement; and
(v) any Termination Fee due to Manager under this
Agreement (if applicable);
(b) other Operating Costs;
(c) other Ownership Costs (as directed by Owner); and
(d) to Owner all amounts necessary to pay debt service (interest and
principal) relating to the Casino, whether unsecured or secured by any mortgage
or deed of trust encumbering the Casino.
10.02. Adjustment to Bank Account(s). After the disbursements pursuant
to Article 10.01 and establishment of any reasonable reserves for future
disbursements pursuant to Article 10.01 as Manager deems necessary, taking into
account anticipated cash flow and Operating Costs and Ownership Costs at the
Casino, any excess funds remaining in the Bank Account(s) over the Minimum
Balance (and such reserves) shall be disbursed to Owner on a periodic basis as
frequently as may be mutually agreed by Owner and Manager, but not less than
monthly. Correspondingly, and without limiting Owner's obligation to provide any
funds required by this Agreement at all times, if the Bank Account(s) do not
contain sufficient funds to pay all obligations of Owner under this Agreement
when and as due, Manager may pay any or all such obligations on behalf of Owner.
To the extent Manager elects to pay such expenses on behalf of the Owner, Owner
shall reimburse such amount to Manager immediately upon presentation of an
invoice for such expense.
10.03. Payment of Ownership Costs. Except when paid by Manager, Owner
shall pay for all Ownership Costs (and, should Net Revenues be insufficient to
pay for same, all Operating Costs) as same become due and payable and before any
interest or penalty may attach for non-payment thereof, or action be commenced
against the Manager for enforcement thereof, or foreclosure of any lien therefor
against the Casino. Owner shall be entitled to contest any Imposition
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so long as no liability to Manager results therefrom, the costs of such contest
are not deducted from Net Revenue to determine Consolidated EBITDA, no lien
against the Casino is foreclosed, and no interest or penalty results.
10.04. Payment of Gaming, Sales and Other Operational Payments and
Taxes. Manager shall be responsible to file all necessary returns and remit from
Gross Revenues to the governmental authorities having jurisdiction over the
Casino all compensation owed to the LGCB under the Casino Operating Contract,
all sales taxes, excise taxes, use taxes, gross receipts taxes, admission taxes,
entertainment taxes, tourist taxes and similar taxes and charges required by law
to be collected from patrons or guests as part of the sales price for goods,
services or entertainment at the Casino. Manager reserves the right to contest
the amount of any such payments or taxes; provided that Owner shall be permitted
to participate in any such contest. Manager shall have no liability for the
payment of any fines, penalties, interest or other charges or assessments for
any underpayment or overpayment or miscalculation of such payments or taxes
unless caused by the gross negligence or willful misconduct of Manager's or
Manager's Affiliate's employees charged to administer such payments, recognizing
that the manner of calculating and reporting such taxes is often vague and
subject to broad administrative discretion. All costs of any contest and all
such fines, penalties, interest or other charges or assessments shall be
Ownership Costs. Owner shall pay to Manager any sales, gross receipts or similar
tax imposed upon Manager, calculated on any payment or payments required of
Owner under this Agreement, unless the tax is an alternative to an income tax
otherwise payable by Manager. Any such payment shall be made at the time of each
payment to Manager, or, if not so paid, within ten (10) days of any request by
Manager therefor.
ARTICLE 11.
HARRAH'S SERVICES
11.01. Nature of Services
(a) System Fees. The services described in this Article 11.01
("Harrah's Services") shall be provided by Manager and accepted by Owner, with
individual charges ("System Fees") to accrue commencing as of the Opening Date
at the prevailing rates then being charged to domestic Harrah's Casinos. It is
understood
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that the System Fees for Harrah's Services shall be due and payable monthly and
shall be subject to increase or decrease as hereinafter set forth.
(b) Marketing Contribution. The presently established System Fee for
the Casino shall be a marketing contribution of four-tenths of one percent
(0.4%) of monthly Net Revenues payable monthly, in arrears. The marketing
contribution may be used by Manager for advertising services and materials;
special promotions which may target particular casinos; public relations,
including without limitation, guest utilization and satisfaction surveys and
general or specific market research; 800 number telephone technology and
services; data base/direct marketing; and overhead incurred in the
administration of the foregoing (other than costs of maintaining Manager's
principal offices at 1023 Cherry Road, Memphis, Tennessee), including without
limitation compensation, travel expense and costs of goods and services consumed
in marketing program administration. The treatment of the Casino with respect to
such marketing contribution will be no less favorable than is granted to other
participating casinos owned or managed by Manager's Affiliates or licensed to
operate under the System Marks. It is the intent of the foregoing sentence to
allow pooling of funds that would otherwise be expended as a marketing cost at
each casino, into a common fund for the benefit of all casinos operated under
the System Marks that will be used for the above described purposes.
(c) Limitations. System Fees charged under this Agreement will be the
same fees charged to all Harrah's Casinos and shall be charged on the same basis
as such fees are charged to Harrah's Casinos, provided that, owing to the
different characteristics of certain casinos (for example, casinos having hotel
rooms versus casinos not having such rooms; riverboat casinos versus land based
casinos) certain System Fees may not apply to all casinos. Increases, decreases,
additions or deletions in charges for Harrah's Services may be made from time to
time on a system-wide basis for casinos having similar characteristics. If
Manager extends other services to casinos on a system-wide basis and if a
uniform charge or charges for such services shall be applicable to other
Harrah's Casinos having characteristics similar to the Casino, then such other
services shall also be made available to the Casino.
(d) Accounting. Funds collected as System Fees shall, upon payment,
become the sole property of Manager, may be commingled with Manager's or
Manager's Affiliate's other funds, and shall not be segregated or subjected to
any
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trust, fiduciary or other limitation, and Owner shall have no claim against
Manager whatsoever to require any particular application thereof. Owner shall be
provided annually, within ninety (90) days after the close of each Fiscal Year,
with an accounting of receipts and expenditures of the marketing contribution
for all participating casinos as a whole.
ARTICLE 12.
SYSTEM MARK SIGNS AND SYSTEM MARKS
12.01. Signs. Owner agrees to maintain, in accordance with Legal
Requirements, all System Marks signs required by Manager. Owner is solely
responsible for all costs of purchasing, leasing, transporting, constructing
and/or installing the required System Marks signs, as well as for all costs of
dismantling and removing such signs at the end of the Term or earlier
termination hereof (if the Casino should cease to be authorized to use the
System Marks).
12.02. System Marks
(a) System Marks. It is understood that no rights or interests in the
names "Harrah's(C)," "Total Gold," "Harrah's Gold Card," "WINet" or any other
proprietary names or marks owned by Manager or any of Manager's Affiliates are
being granted by this Agreement. Owner agrees to recognize the exclusive right
of ownership of Manager in and to the Harrah's System and all service marks,
trademarks, copyrights, trade names, patents or similar rights or registrations
now or hereafter held or applied for in connection therewith, including all such
marks, rights, names, patents or registrations associated with Harrah's Casinos
(the "System Marks"). Manager agrees that the Casino will, from and after the
Opening Date, and subject to Owner's compliance with all of its obligations
under this Agreement, be operated by Manager under the "Harrah's(C)" brand name
utilizing the System Marks. Owner acknowledges and agrees that the use of the
System Marks in connection with the operation and management of the Casino is
vested solely in Manager. Owner disclaims any right or interest in the System
Marks, regardless of the legal protection afforded thereto. Owner covenants
that, in the event of expiration or termination of this Agreement, whether as a
result of default by Manager, Owner or otherwise, Owner shall not hold itself
out, or continue operation of the Casino, as a Harrah's Casino, without the
express prior written consent of Manager, and that, unless Manager shall have so
consented to the continued use thereof, Manager may enter the Casino and at,
Owner's expense,
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may remove all signs, furnishings, printed material, emblems, slogans or other
distinguishing characteristics which are now or may hereafter be connected or
identified with any Harrah's Casino. Upon the expiration or earlier termination
of this Agreement for any reason, Owner shall likewise discontinue the use of
any and all System Marks and remove any and all items of Operating Equipment
used in connection with Harrah's Services and any Operating Supplies that bear
any System Marks. Owner shall not convey such property to any person or entity
unless such person or entity is specifically authorized in writing by Manager
(whether under license from Manager or otherwise) to use property bearing any
System Marks.
(b) Use of Name. Owner shall not use the name "Harrah's(C)," any other
System Marks, or any variant thereof in the name of any partnership, corporation
or other business entity, nor allow the use thereof by others, without the
express prior written consent of Manager. Owner shall not make reference to the
name "Harrah's(C)," any other System Marks, or any variant thereof, directly or
indirectly, in connection with a public sale or private placement of securities
or other comparable means of financing without obtaining, in each instance the
prior written approval of Manager.
(c) Confidential and Proprietary Information. Owner agrees that Manager
has the sole and exclusive right, title and ownership to: (i) its techniques and
methods of operating gaming businesses; (ii) its techniques and methods of
designing games used in gaming businesses; (iii) its techniques and methods of
training employees in the gaming business; (iv) its techniques and methods of
marketing, advertising, promotion and its technology plans, strategies and
systems; and (v) the Proprietary Systems and the data and information thereon
related to any casinos other than the Casino and the "Harrah's(C)" Gold Card
services and other customer-related services and promotions (the "Confidential
and Proprietary Information"). The Confidential and Proprietary Information has
been developed and/or acquired over many years through the expenditure of time,
money and effort, and Manager and Manager's Affiliates maintain the Confidential
and Proprietary Information as confidential and as a trade secret(s). Manager
(or Manager's Affiliate) has, over time, identified systems, data and
information that Manager (or Manager's Affiliate) considers integral to the
management of casinos and such systems, data and information shall be
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incorporated into the Casino in accordance with standards established in other
Harrah's Casinos.
(d) Casino Customer Data; Confidentiality. Owner and Manager agree that
any Casino-related data and information on the Proprietary Systems or otherwise
concerning customers of the Casino shall be jointly owned by Owner and Manager,
and Owner and Manager agree to maintain the confidentiality of such data and
information during the term of this Agreement and following any termination of
this Agreement.
(e) Return of Confidential and Proprietary Information. Upon
termination of this Agreement, Owner agrees to discontinue use of, and maintain
the confidentiality of, the Confidential and Proprietary Information and to
return to Manager any documents, notes, memoranda, lists, computer programs,
summaries and data and information which is a part of such Confidential and
Proprietary Information. Any data and information from customers of the Casino
which is related to other casinos or otherwise not Casino-related, but obtained
by Manager through management of the Casino, shall be maintained as confidential
by Owner and Manager during the term of this Agreement and following any
termination of this Agreement.
12.03. Litigation. Owner and Manager agree that in the event Owner
and/or Manager is or are the subject of any litigation or action brought by any
party seeking to restrain the use by Owner or Manager, or either of them, of any
System Marks used by Manager for or on or in connection with the Casino, any
such litigation or action shall be defended entirely by and at the expense of
Manager, notwithstanding that Manager may not be named as a party thereto. Owner
shall not have the right to bring suit against any user of any of the System
Marks. In all cases, the conduct of any suit, whether brought by Manager or
instituted against Owner and/or Manager shall be under the absolute control of
counsel to be nominated and retained by Manager, notwithstanding that Manager
may not be a party to such suit. Manager agrees and covenants to defend and hold
Owner free and harmless from, and to indemnify Owner against, any judgments or
awards of any court or administrative agency of competent jurisdiction, whether
such awards be in the form of damages, costs or otherwise, imposed against Owner
and arising from the use by Manager of any System Marks or similar rights or
registrations for, on or in connection with the Casino in accordance with the
terms of this Agreement.
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ARTICLE 13.
INSURANCE
13.01. Insurance Coverage. Owner shall have the responsibility to
maintain, at Owner's expense and at all times during the Term, all insurance
coverage required by Exhibit "C" to this Agreement, and to comply with the
insurance provisions of the Authorized Lease.
ARTICLE 14.
INDEMNIFICATION AND RELATED MATTERS
14.01. Scope
(a) Owner's Indemnity. Owner agrees to indemnify and hold Manager free
and harmless from any and all Claims for injury to persons or damage to property
by reason of any cause whatsoever, either in and about the Casino or elsewhere,
including, without limitation, any such loss, cost or damage occurring as a
result of the performance of this Agreement by Manager, its agents, employees or
independent contractors, subject to the provisions of Article 14.01(c).
(b) Reimbursement of Indemnified Amounts. Subject to the provisions of
Article 14.01(c), Owner agrees to reimburse Manager, upon demand, for any money
or other property which Manager is required or authorized by this Agreement to
pay out for any reason whatsoever, whether the payment is for Operating Costs,
Ownership Costs or any other costs, charges or debts incurred or assumed by
Manager, or any other party, or for judgments, settlements or expenses in
defense of any Claim, civil or criminal action, proceeding, charge or
prosecution made, instituted or maintained against Manager or Owner, jointly or
severally, affecting or because of the condition or use of the Casino, or acts
or failure to act of Manager, employees, agents or independent contractors of
Manager, Owner, employees, agents or independent contractors of Owner, or
arising out of or based upon any Legal Requirement, contract or award (including
without limitation any such matter relating to the hours of employment, working
conditions, wages and/or compensation of Casino Employees or former Casino
Employees, or any severance or termination benefits of such Casino Employees),
or for any other cause in connection with the Casino; provided, however, any
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litigation or action of the type described in Article 12.03 shall be excluded
from this Article 14.01(b).
(c) Limitation on Owner's Indemnity. Notwithstanding the provisions of
Articles 14.01(a), 14.01(b) and 7.03(d), Owner shall not be liable to indemnify
and hold Manager free and harmless from any such Claim not covered by insurance
and which results solely from the proven gross negligence or willful misconduct
of any of the Key Casino Personnel or the Memphis, Tennessee-based corporate
officers of Manager or Manager's Affiliate (if and to the extent that their
gross negligence or willful misconduct involves the directing of the activity in
the operation of the Casino or in Manager's performance of its obligations under
this Agreement that results in such Claim and such Claim is proximately caused
by such direction).
(d) Manager's Indemnity. Manager shall indemnify and hold Owner free
and harmless from any and all Claims not covered by insurance and which results
solely from the proven gross negligence or willful misconduct of any of the Key
Casino Personnel or the Memphis, Tennessee-based corporate officers of Manager
or Manager's Affiliates (if and to the extent that their gross negligence or
willful misconduct involves the directing of the activity in the operation of
the Casino or in Manager's performance of its obligations under this Agreement
that results in such Claim and such Claim is proximately caused by such
direction).
14.02. Defense. Owner agrees to defend, promptly and diligently, at
Owner's expense, any Claim, action or proceeding brought against Manager or
Owner, jointly or severally, arising out of or connected with any of the matters
referred to in Article 14.01, and, to the extent required by Article 14.01(a),
(b) and (c), to hold harmless and fully indemnify Manager from any judgment,
liability, loss or settlement on account thereof. Defense of any such Claim
shall be accepted within ten (10) days after the date written notice is tendered
by Manager, or if sooner, when the first action in response to any such Claim is
required. Defense shall be with counsel approved by Manager. Failure to accept
any tender of a Claim in writing within such period shall entitle Manager to
conduct such defense at Owner's sole cost and expense. If Manager is defending a
Claim pursuant to this Article 14.02 and if Manager desires to settle such
Claim, Manager shall first make a written request to Owner for authority to
settle, specifying the proposed terms and conditions of such settlement. If
Owner fails to respond in writing within ten (10) days after such notice,
Manager shall have the
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right to enter into such settlement at Owner's cost and expense. The allegation
of facts which would excuse Owner's indemnification obligation pursuant to
Article 14.01(c) shall not excuse Owner's defense obligation, and such
obligation shall continue until gross negligence or willful misconduct of the
type described in Article 14.01(c) is proven by final unappealable judgment to
have been the sole cause of liability (in which case Owner shall be entitled to
reimbursement from Manager of, and Manager hereby undertakes to reimburse Owner
for, all reasonable attorneys' fees and costs incurred in such defense and
indemnification by Manager as provided in Article 14.01(d)).
ARTICLE 15.
DAMAGE TO AND DESTRUCTION OF THE CASINO
15.01. Obligation to Restore. At its sole cost and subject to the
provisions of this Article 15, Owner agrees to repair, restore, rebuild or
replace any damage to, or impairment or destruction of, the Casino from fire or
other casualty.
15.02. Termination
(a) Fully Insured Casualties. In the event during the Term the Building
shall be destroyed or substantially destroyed by fire or other casualty or title
to the Site or Building or the Authorized Lease shall be impaired by any matter
other than a Permitted Exception and:
(i) Owner shall have maintained insurance as required by
Article 13 and shall not have committed or omitted or
suffered any other person or entity to commit or omit
any act or omission resulting in any denial of
coverage or payment thereunder; and
(ii) the cost of repairing, restoring, rebuilding and
replacing the same, or curing such title impairment,
as the case may be, shall exceed an amount equal to
one hundred percent (100%) of the proceeds of the
insurance collectible by Owner with respect to such
fire, other casualty or title impairment, as the case
may be, plus the amount of any deductible provided
for in such insurance policies;
or if such fire, other casualty or title impairment, as the case may be, shall
cause the termination of the Authorized Lease, or proceeds of property insurance
shall
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be applied to any indebtedness secured by an Authorized Mortgage, then, in any
of such events, Owner and Manager shall each have the right and option, upon
notice served upon the other within thirty (30) days after such fire, other
casualty or title impairment, as the case may be, to terminate this Agreement.
(b) Owner-Funded Reconstruction. Anything contained in the preceding
sentence to the contrary notwithstanding, in the case of Article 15.02(a)(i) and
(ii) above, Manager shall not have the right to terminate this Agreement if:
(i) within fifteen (15) days after Owner receives
Manager's notice of termination, Owner undertakes to
pay to the insurance trustee designated by the holder
of the Authorized Mortgage with the highest priority
among Authorized Mortgages an amount sufficient to
cover the deficiency between available insurance
proceeds and the cost of repairing, restoring,
rebuilding and replacing the Building and the Site;
and
(ii) within sixty (60) days after Owner receives Manager's
notice of termination, Owner deposits the amount
described in Article 15.02(b)(i) above or provides
other assurances acceptable to Manager and the
holders of any Authorized Mortgage.
(c) Consequences of Termination. In the event of any permitted
termination by Owner or Manager pursuant to Article 15.02(a), Manager shall be
entitled to receive from Owner any amounts due or owing with respect to events
occurring prior to or in connection with termination of this Agreement (and
Owner's obligations with regard thereto shall survive such termination) but
Manager shall not be entitled to receive any Termination Fee provided in Article
17.02.
(d) Other Than Fully Insured Casualties. If the cost of curing,
repairing, restoring, rebuilding or replacing the damage, impairment or
destruction resulting from such fire, other casualty or title impairment, as the
case may be, shall be less than one hundred percent (100%) of the proceeds of
the insurance collectible by Owner with respect to such fire, other casualty or
title impairment, as the case may be, plus the amount of any deductible, or
Owner has elected to and has in fact deposited an amount equal to the deficiency
or provided other assurances as described above, and the Authorized Lease is not
terminated, and property insurance proceeds are not applied to repay any
Authorized Mortgage; or such
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cost is greater and neither party shall have served such notice within the time
aforesaid; or, in the case of Owner, if Owner shall not have maintained or
caused to be maintained adequate insurance as required by Article 13 or shall
have caused or suffered to occur any commission or omission resulting in any
denial of coverage or payment, Owner shall be obligated, at its cost, to repair,
restore, cure, rebuild or replace such damage, impairment or destruction.
(e) Failure to Complete Reconstruction. Subject to Article 23.02, if
Owner, at any time during any period commencing with the occurrence of a Flip
Event (as defined in that certain Amended and Restated Certificate of
Incorporation of JCC Holding in effect as of the date of this Agreement) and
ending with the occurrence of a Cure Event (as defined in that certain Amended
and Restated Certificate of Incorporation of JCC Holding in effect as of the
date of this Agreement) with respect to such Flip Event, for any reason, fails
to complete any obligatory cure, repair, restoration, rebuilding or replacement
as required by Article 15.02(d) within ten (10) months after the date of
occurrence of the fire, other casualty or title impairment, as the case may be,
Manager may, at its election, terminate this Agreement due to Owner's default by
delivery of written notice to Owner without any other notice or opportunity by
Owner to cure such default and shall be entitled to collect the Termination Fee
provided in Article 17.02.
ARTICLE 16.
CONDEMNATION
16.01. Termination
(a) Closing of Casino. If the whole of the Casino shall be taken or
condemned in any eminent domain, condemnation, compulsory acquisition or like
proceeding by any competent authority for any public or quasi-public use or
purpose, or if such a portion thereof shall be taken or condemned so as to cause
the termination of the Authorized Lease, result in the acceleration of any
Authorized Mortgage, or make it imprudent or unreasonable, in Owner's opinion
(provided to Manager in writing on or before the date of such taking or
condemnation), to use the remaining portion as a casino of the type and class as
the Casino immediately preceding such taking or condemnation, or if the Casino
Operating Contract is revoked through no fault of Owner, then, in any of such
events, this Agreement shall cease and terminate as of the date of such taking,
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condemnation or revocation, as the case may be. Manager, in any such event,
shall not be entitled to receive the Termination Fee provided in Article 17.02
following the condemnation of the Casino, but Manager shall be entitled (i) to
receive any amounts due or owing to Manager with respect to events occurring
prior to or in connection with termination of this Agreement (and Owner's
obligations with regard thereto shall survive termination) and (ii) to take any
and all actions it determines in its sole discretion to be necessary or
beneficial to obtain compensation from such condemning or revoking authority for
Manager's loss of property rights in respect of this Agreement resulting from
any such termination. Owner hereby agrees not to take any actions with the
purpose or effect of interfering with Manager's right to seek compensation in
respect of any condemnation of the Casino pursuant to this Article 16.01(a), and
Manager hereby agrees not to take any actions with the purpose or effect of
interfering with Owner's right to seek compensation in respect of any
condemnation of the Casino.
(b) Payments to Manager. To the extent not theretofore paid by Owner,
any amounts due and owing from Owner to Manager with respect to events occurring
prior to or in connection with the termination of this Agreement, shall be paid
from Owner's share of the proceeds of any award for such condemnation or
compensation for such revocation of the Casino Operating Contract, as the case
may be, (i) unless applied to indebtedness secured by an Authorized Mortgage or
to restore, rebuild, replace or repair the Casino and (ii) in all cases subject
to the priorities set forth in Article 9.01(b). Should any such award or
compensation be inadequate, applied to reduce any indebtedness secured by an
Authorized Mortgage, or otherwise applied to other purposes, Owner's obligation
to pay amounts due Manager from Owner shall continue unabated and shall not be
limited to the amount of the award or compensation made available to Owner.
16.02. Restoration and Continuation
(a) Partial Loss of Casino. If only a part of the Casino is taken or
condemned, and the taking or condemnation of such part does not result in
termination of the Authorized Lease or acceleration of any Authorized Mortgage
or make it unreasonable or imprudent in the opinion of Owner (noticed to Manager
in writing on or before the date of such condemnation) to operate the remaining
portion thereof as a casino of the type and class as the Casino immediately
preceding such taking or condemnation, this Agreement shall not terminate. An
amount as shall be reasonably necessary to reconstruct the Casino,
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or any part thereof, or to reconfigure the Casino, or any part thereof, so as to
render the Casino a complete and satisfactory architectural unit as a casino of
the same type and class as it was immediately preceding the taking or
condemnation, shall be made available out of any award to Owner for that
purpose. Owner shall promptly, and without awaiting recovery of such award, pay
any funds which are needed to accomplish such work. The balance of such award,
if any, after deduction of bona fide costs of restoration by Owner, and any sums
then due by Owner to Manager, shall be fairly and equitably apportioned between
Owner and Manager so as to compensate Owner and Manager for any loss of income
resulting or to result from the taking or condemnation.
(b) Failure to Complete Reconstruction. Subject to Article 23.02,
failure of Owner to effect repair and restoration of the Casino within ten (10)
months after the date of any partial condemnation which Owner has not deemed
sufficient to render further operation of the Casino unreasonable or imprudent,
shall be an Event of Default entitling Manager to terminate this Agreement
without further notice to Owner or opportunity by Owner to cure such default,
and Manager shall be entitled to collect the Termination Fee provided in Article
17.02.
ARTICLE 17.
DEFAULT AND TERMINATION
17.01. Events of Default. It shall be an event of default hereunder (an
"Event of Default") if any one or more of the following events shall occur:
(a) if there should occur a breach, default or non-compliance by a
party hereto with any covenants, obligations or agreements to be performed by
such party under this Agreement, followed by written notice of such breach,
default or non-compliance from the Non-Defaulting Party to such Defaulting Party
and failure of such Defaulting Party to remedy or correct such breach, default
or non-compliance within ten (10) days after receipt of such notice, provided
that, if such breach, default or non-compliance is other than a Monetary Default
or failure to insure, and is also of a nature such that it cannot reasonably be
cured within such ten (10) day period, then an Event of Default shall not be
deemed to have occurred for so long as the Defaulting Party commences the curing
of such default within such ten (10) day period, pursues the completion thereof
with diligence and continuity, and completes such cure within forty (40) days of
such notice;
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(b) if Owner should fail to effect any required reconstruction of the
Building following casualty or partial condemnation, as and within the time
provided in Articles 15 and 16;
(c) if a party shall voluntarily or involuntarily be dissolved; apply
for or consent to the appointment of a receiver, trustee or liquidator of all or
a substantial part of its assets; file a voluntary petition in bankruptcy (or
have filed against it any such petition which shall not have been dismissed
within sixty (60) days after filing) or otherwise seek protection of state laws
for the relief of debtors; admit in writing its inability to pay its debts as
they become due; make a general assignment for the benefit of creditors; file a
petition (or have filed against it any such petition which shall not have been
dismissed within sixty (60) days after filing) or an answer seeking to be
reorganized or arrangement with creditors or to take advantage of any insolvency
law or file an answer admitting the material allegations of any petition filed
against it in any bankruptcy, reorganization or insolvency proceeding; or
(d) if an order, judgment or decree shall be entered by any court of
competent jurisdiction, on the application of any one or more creditors of such
party, adjudicating such party a bankrupt or insolvent or approving a petition
seeking reorganization or appointing a receiver, trustee or liquidator of all or
a substantial part of its assets, and such order, judgment or decree shall
become final; or
(e) if a party shall be directly or indirectly owned or controlled by
another company or entity and an event described in Article 17.01(c) or (d)
shall occur with respect to any company or entity owning or controlling such
party; or
(f) if Owner passes title to the Casino or any part thereof in lieu of
foreclosure of any lien or other security interest in the Casino; or
(g) if an action to foreclose any mortgage, deed of trust or other
security interest in the Casino or any part thereof is instituted against Owner
and is not discharged or dismissed within thirty (30) days thereafter.
The party responsible for the occurrence of an Event of Default or on account of
whom an Event of Default shall have occurred shall be a "Defaulting Party." The
remaining party (so long as not a Defaulting Party), as to such Event of
Default, shall be a "Non-Defaulting Party." The waiver of any one Event of
Default shall
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not be construed as the waiver of any other Event of Default. No waiver shall be
effective unless embodied in a writing signed by the Non-Defaulting Party.
17.02. Termination; Termination Fee
(a) Termination. If an Event of Default occurs and has not been cured
within any cure period provided in Article 17.01, this Agreement shall terminate
at the election of the Non-Defaulting Party. Notice of termination pursuant to
this Article 17.02 may be given at any time prior to the curing of such Event of
Default, and such termination shall be effective as of the date specified in
such notice of termination, which such date shall be not less than ten (10) and
not more than forty five (45) days after the date of such notice; provided, that
any such termination shall not be effective earlier than forty five (45) days
after the date of such notice unless a successor manager has been obtained to
manage the Casino and maintain continuous and uninterrupted operations of the
Casino.
(b) Termination Fee. Upon termination of this Agreement due to an Event
of Default by Owner and in those other circumstances provided in Articles
15.02(e), 16.02(b) and 21.03, Owner shall, in addition to all other amounts due
and payable hereunder, pay to Manager a fee (the "Termination Fee") as set forth
below as liquidated damages for its default. Owner's obligation to pay for all
indemnification and defense claims (subject to Articles 14.01(c) and 14.02), to
maintain insurance after termination (with respect to occurrences before
termination) and to pay for all costs of operating the Casino prior to
termination shall be in addition to and shall survive termination of this
Agreement and payment of the Termination Fee. The Termination Fee that shall be
payable by Owner to Manager in the event of, and at the time of, termination of
this Agreement due to any Event of Default by Owner and in certain other
circumstances provided for in this Agreement shall be an amount equal to three
(3) times the average amount of annual Management Fees earned in the twenty-four
(24) Fiscal Months preceding termination, but, until the end of the third full
Fiscal Year following the Opening Date, not less than FORTY-FOUR MILLION AND
00/100 DOLLARS ($44,000,000), increased by the percentage increase in the CPI
occurring between the Opening Date and the date of termination. Notwithstanding
the foregoing, if any default or event, action or omission by Owner giving rise
to a termination by Manager results solely from an action or omission of
Manager's Affiliate in its capacity as shareholder of Owner, or the action or
omission of the directors of Owner elected by Manager's Affiliate, Manager shall
not in any such
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event receive a Termination Fee in connection with such Event of Default or
resulting termination. OWNER RECOGNIZES AND AGREES THAT IF THIS AGREEMENT IS
TERMINATED FOR THE REASONS SPECIFIED HEREIN AS ENTITLING MANAGER TO RECEIVE A
TERMINATION FEE, MANAGER WOULD SUFFER AN ECONOMIC LOSS BY VIRTUE OF THE
RESULTING LOSS OF MANAGEMENT FEES WHICH WOULD OTHERWISE HAVE BEEN EARNED UNDER
THIS AGREEMENT. BECAUSE SUCH FEES VARY IN AMOUNT DEPENDING ON THE GROSS REVENUES
EARNED AT THE CASINO AND ACCORDINGLY WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICAL TO ASCERTAIN WITH CERTAINTY, THE PARTIES AGREE THAT THE TERMINATION
FEE PROVIDED IN THIS AGREEMENT HAS BEEN DETERMINED TO CONSTITUTE A REASONABLE
ESTIMATE OF LIQUIDATED DAMAGES TO MANAGER. IT IS AGREED THAT MANAGER SHALL NOT
BE ENTITLED TO MAINTAIN A CAUSE OF ACTION AGAINST OWNER FOR SPECIFIC PERFORMANCE
OF THIS AGREEMENT OR ACTUAL DAMAGES IN EXCESS OF THE TERMINATION FEE IN ANY
CONTEXT WHERE THE TERMINATION FEE IS PROVIDED BY THIS AGREEMENT TO BE MANAGER'S
REMEDY, AND RECEIPT OF SUCH FEE TOGETHER WITH ALL OTHER AMOUNTS DUE AND PAYABLE
BY OWNER TO MANAGER WITH RESPECT TO EVENTS OCCURRING PRIOR TO OR IN CONNECTION
WITH THE TERMINATION OF THIS AGREEMENT AND MANAGER'S CONTINUING RIGHT TO
INSURANCE COVERAGE, INDEMNIFICATION FOR PRE- AND POST-TERMINATION OCCURRENCES,
AND PROTECTION OF ITS PROPRIETARY SYSTEM MARKS BY INJUNCTIVE AND OTHER
APPROPRIATE RELIEF SHALL BE MANAGER'S SOLE REMEDY AGAINST OWNER IN ANY SUCH
CASE.
(c) Reservation of Rights. In the event this Agreement is terminated
due to an Event of Default by Manager, Owner shall be free to pursue any remedy
available hereunder or at law or equity.
(d) Gaming Suitability of Manager. If Manager, or any Manager's
Affiliate that is a shareholder of Owner, is determined, by final unappealable
action of the LGCB and any court to which appeal may be taken, to be unsuitable
to conduct gaming operations at the Casino, Owner shall be entitled to terminate
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this Agreement by giving Manager thirty (30) days' advance written notice and
opportunity to cure.
(e) Termination by Owner. If the Authorized Lease or the Casino
Operating Contract are subject to the imminent risk of termination, or any
Authorized Mortgage is subject to the imminent risk of foreclosure, Owner shall
be entitled to terminate this Agreement by giving sixty (60) days' advance
written notice to Manager, without payment of the Termination Fee, but without
any other recourse against Manager or its Affiliates, if Manager should, by its
act or omission, after timely written notice from Owner and opportunity to
effect cure as provided in Article 17.01(a) and after Owner has provided all
funds, information, cooperation and assistance necessary to allow Manager to
effect such cure, fail to effect such cure; provided that this provision shall
be effective only as to terms and conditions of such agreements that are made
known to and approved in writing by Manager.
ARTICLE 18.
NOTICES
18.01. Procedure. All notices or other communications provided for in
this Agreement shall be in writing and shall be personally served, sent by
Federal Express or comparable express courier, or sent by postage prepaid
certified mail to the following addresses until such time as written notice, as
provided hereby, of a change of address with a new address to be used thereafter
is delivered to the other party:
Owner: Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attn: President
Manager: Harrah's New Orleans Management Company
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: General Manager
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Notices hereunder shall be deemed given upon receipt.
18.02. Landlord and LGCB Notice. All notices relating to an Event of
Default, arbitration or the exercise of any right or claim of termination of
this Agreement shall be given to Landlord at the address set forth in the
Authorized Lease and to the LGCB at the address set forth in the Casino
Operating Contract.
ARTICLE 19.
RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS
19.01. Relationship. Manager and Owner shall not, by virtue of this
Agreement, be construed as joint venturers or partners of each other and neither
shall have the power to bind or obligate the other except as set forth in this
Agreement.
19.02. Contractual Authority. Manager is authorized, subject to the
fiscal limitations of this Agreement, to make, enter into and perform in the
name of, for the account of, on behalf of and at the expense of Owner any
contracts and agreements deemed necessary or advisable by Manager, in its
commercially reasonable judgment, to carry out and place in effect the terms and
conditions of this Agreement. In hiring, purchasing or contracting for goods and
services, Manager shall administer and comply with the Open Access Program and
any open access plans adopted pursuant thereto with respect to the operation of
the Casino and shall give preference and priority to Louisiana residents, except
where not reasonably possible to do so without added expense, substantial
inconvenience, or sacrifice in operational efficiency. Contracts between Manager
and Manager's Affiliates for furnishing of goods and services to the Casino
shall not exceed the price for which goods and services of comparable quality
may be secured from other vendors. Contracts and agreements entered into
pursuant to this Article 19.02 shall include an express statement that such
contract or agreement is being entered into by Manager "as agent for Jazz Casino
Company, L.L.C." or words to that effect.
19.03. Further Actions. Owner agrees to execute all contracts,
agreements and documents and to take all actions necessary to comply with the
provisions of this Agreement and the intent hereof.
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ARTICLE 20.
APPLICABLE LAW AND ARBITRATION
20.01. Scope. The interpretation, validity and performance of this
Agreement shall be governed by the internal laws of the State of Nevada, except
as to mandatory provisions of the Gaming Act as to which the internal laws of
the State of Louisiana will apply, without regard to principles of conflicts of
law. If any court or appropriate judicial authority shall hold or declare that
the law of another jurisdiction is applicable, this Agreement shall remain
enforceable under the law of that jurisdiction. If any of the terms and
provisions hereof shall be held invalid or unenforceable for any reason, such
invalidity or unenforceability shall in no event affect any of the other terms
or provisions hereof, and all such other terms and provisions shall be valid and
enforceable to the fullest extent permitted by law; provided, however, if, in
any event any material part of Owner's obligations under this Agreement shall be
declared invalid or unenforceable, Manager shall have the option to terminate
this Agreement.
20.02. Arbitration
(a) Matters Subject to Arbitration. In case of a dispute with respect
to any of the following matters, either party may submit such matter to
arbitration which shall be conducted by the Accountants:
(i) computation of the Management Fee or System Fees;
(ii) results of any audit by Manager's selected
Accountant;
(iii) adjustment of any amounts required to be adjusted to
reflect changes in the CPI;
(iv) disputes concerning approval of the Pre-Opening
Budget or the Annual Plan, or any revisions thereto,
including any Budgets contained therein;
(v) equitable allocation of any award for partial
condemnation under Article 16.02; and/or
(vi) disputes as to the amount of any unliquidated
Monetary Default.
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The decision of the Accountants shall be binding on the parties.
(b) Accountants. The "Accountants" shall be one of three firms of
certified public accountants of recognized standing in the casino industry
selected by the Manager or by the parties pursuant to this Article 20.02(b).
Until otherwise agreed by the parties, the Accountants shall be KPMG Peat
Marwick, Deloitte & Touche LLP or Arthur Andersen & Co. The party desiring to
submit any matter to arbitration shall do so by written notice to the other
party, which notice shall set forth the items to be arbitrated and such party's
choice of one of the three designated firms. The party receiving such notice
shall, within fifteen (15) days after receipt of such notice, either approve
such choice or designate one of the remaining two firms by written notice back
to the first party, and the first party shall, within fifteen (15) days after
receipt of such notice, either approve such choice or disapprove the same. If
both parties shall have approved one of the three firms designated above, then
such firm shall be the Accountants for the purpose of arbitrating the dispute;
otherwise the third firm, which was not designated by either party shall be the
Accountants for such purpose. The Accountants shall be required to render a
decision in accordance with the procedures described in Article 20.02(c) within
thirty (30) days after being notified of their selection. The fees and expenses
of the Accountants with respect to an arbitration will be paid by the
non-prevailing party.
(c) Arbitration Procedures. In all arbitration proceedings submitted to
the Accountants, the Accountants shall be required to agree upon and approve the
substantive position advocated by Owner or Manager with respect to each disputed
item. Any decision rendered by the Accountants that does not adopt the
substantive position advocated by Owner or Manager shall be beyond the scope of
authority granted to the Accountants and consequently may be overturned by
either party. All proceedings by the Accountants shall be conducted in
accordance with the Uniform Arbitration Act, except to the extent the provisions
of such Act are modified by this Agreement or the mutual agreement of the
parties. Unless otherwise agreed, all arbitration proceedings shall be conducted
at the Casino. In resolving any dispute as to the Budget contained in an Annual
Plan, the arbitrators shall adopt the substantive position that will most
likely: (i) assure the continued operation of the Casino in accordance with
Casino Operational Standards and Legal Requirements; or (ii) if no Casino
Operational Standard is applicable, assure
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the continued operation of the Casino as a viable and competitive economic
enterprise.
ARTICLE 21.
SUCCESSORS AND ASSIGNS
21.01. Assignment by Manager
(a) Assignment to Affiliates. Owner's consent shall not be required for
Manager to assign any of its obligations, rights or interests as Manager
hereunder to any Manager's Affiliate that is controlled by Manager's ultimate
parent, or pursuant to a transfer of all or substantially all of the gaming
business of Manager and Manager's Affiliates, or pursuant to a corporate
reorganization of Manager and Manager's Affiliates or in connection with the
transfer of publicly-held stock in Manager or any of Manager's Affiliates whose
stock is publicly traded.
(b) Assignment for Financing Purposes. At all times, without obtaining
any consent from Owner, Manager may assign, pledge, encumber and/or hypothecate
all of Manager's rights, fees (earned and unearned), interest in insurance,
condemnation awards, indemnities and other proceeds (but not Manager's
obligations, except as provided in Article 21.01(a)) as security for any loan,
and, in any such case, the assignee shall hold and be entitled to enforce such
rights and receive such fees and/or payments, and Owner agrees to look solely to
Manager and not to any such assignee in regard to any claim which it may have
under this Agreement. Notwithstanding the foregoing, Owner shall have no
obligation to assure the payment to any such assignee of any amounts received by
Manager from the Casino and Owner shall retain all rights under this Agreement
upon an Event of Default by Manager.
(c) Consent Requirements. Except as otherwise provided in Articles
21.01(a) or (b), or in connection with any sale, sublease, assignment, transfer
or other disposition of the Casino by Owner, in which case Manager may assign or
otherwise transfer its interest in this Agreement to the purchaser, sublessee,
transferee or other successor of Owner's interest therein, however designated,
or its selected manager, Manager shall not in any manner, voluntarily or
involuntarily, directly or indirectly, partition (or seek the partition of),
sell, assign or transfer any of its legal or beneficial interest in Manager or
this Agreement or delegate the performance of any of Manager's material
obligations hereunder
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without the prior written consent of Owner (which consent may be withheld for
any reason); provided that Manager may assign its rights and obligations
hereunder to an affiliate of Manager which is wholly-owned directly or
indirectly by HET, and upon any such assignment, Manager may only be relieved of
its obligations hereunder with the consent of Owner.
21.02. Termination Rights Upon Certain Assignments or Transfers by
Owner.
(a) Change of Control of Owner. Following the Transition Date, if any
entity (including any Controlled Affiliates of such entity and any entity of
which such entity is a Controlled Affiliate) which (i) controls or operates, or,
as of the date the Plan is consummated, is licensed or qualified to control or
operate in any of the states of Illinois, Indiana, Louisiana, Mississippi,
Missouri, Nevada or New Jersey, a casino or casino hotel facility, or (ii) has
been, within the five (5) years prior to the date the Plan is consummated,
involved in litigation with HET which HET has disclosed in an Annual Report on
or prior to the date the Plan is consummated, or which HET would be required to
disclose in its next Annual Report following the date the Plan is consummated,
acquires twenty percent (20%) or more of the outstanding shares of JCC Holding
and the Board of Directors of JCC Holding shall not consist of a majority of
Continuing Directors, Manager shall be entitled to terminate this Agreement upon
ninety (90) days' written notice to Owner, but shall not be entitled to receive
a Termination Fee pursuant to Article 17.02.
(b) Sale of Casino. Following the Transition Date, if Owner shall sell,
assign or transfer any of its direct or indirect legal or beneficial interest in
the Casino, to any person other than a Qualified Purchaser approved by Manager
pursuant to Article 21.02(d) who assumes and agrees to perform all obligations
of Owner under this Agreement, Manager shall be entitled to terminate this
Agreement upon the closing of such sale, assignment or transfer, but shall not
be entitled to receive a Termination Fee pursuant to Article 17.02.
(c) Definitions. As used herein, a "Qualified Purchaser" shall mean a
Suitable Lender or any person or entity that is duly licensed or otherwise
authorized to own and operate the Casino and that:
(i) does not control or operate, or, as of the date the
Plan is consummated, is not licensed or qualified to
control or operate
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in any of the states of Illinois, Indiana, Louisiana,
Mississippi, Missouri, Nevada or New Jersey, a casino
or casino hotel facility; and
(ii) has not been, within the five (5) years prior to the
date the Plan is consummated, involved in litigation
with HET which HET has disclosed in an Annual Report
on or prior to the date the Plan is consummated, or
which HET would be required to disclose in its next
Annual Report following the date the Plan is
consummated; and
(iii) would not, if Affiliated with Manager, in the
reasonable judgment of Manager or any licensing
authority, impair or cause the denial, suspension or
revocation of any gaming registration, permit,
license, right or entitlement or alcoholic beverage
registration, permit, license, right or entitlement
held or applied for by Manager or any Affiliate of
Manager.
Any party other than a Qualified Purchaser is referred to herein as a
"Non-Qualified Purchaser."
(d) Approval. Any request for approval of a transferee as a Qualified
Purchaser shall be submitted to Manager in writing no less than thirty (30) days
prior to the anticipated date of transfer. Owner shall provide all documentation
that Manager may reasonably request to establish the identity, qualification,
reputation and creditworthiness of the transferee. Creditworthiness shall be
supported by audited financial statements for the three (3) years preceding any
request by Owner for approval of a transferee. Manager shall advise Owner of its
approval or rejection of a proposed transferee (as a Qualified Purchaser) within
thirty (30) days after Manager receives all information which it reasonably
requests to support its determination. Owner shall be prospectively released
from liability under this Agreement following a transfer to any transferee
approved by Manager pursuant to this Article 21.02(d).
21.03. Manager's Termination Right. Any transfer of any direct or
indirect legal or beneficial ownership in Owner or JCC Holding, or any
indebtedness of or other loan interest in Owner or JCC Holding, including
without limitation the Senior Subordinated Debentures and the Bank Loans, to a
Non-Qualified Person, that has not been cured within forty-five (45) days
following written notice to
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Owner by Manager of such transfer, or such shorter period as may be required by
any governmental entity with authority over the Casino, shall entitle Manager,
at its option, to terminate this Agreement and, inter alia, collect the
Termination Fee.
21.04. Binding Effect. The terms, provisions, covenants, undertakings,
agreements, obligations and conditions of this Agreement shall be binding upon
and shall inure to the benefit of the permitted successors in interest and the
permitted assigns of the parties hereto with the same effect as if mentioned in
each instance where the party hereto is named or referred to, except that no
assignment, transfer, sale, pledge, encumbrance, mortgage, lease or sublease by
or through Owner in violation of the provisions of this Agreement shall vest any
rights in the assignee, transferee, purchaser, secured party, mortgagee,
pledgee, lessee, sublessee or occupant.
ARTICLE 22.
RECORDING OF MEMORANDUM
22.01. Memorandum of Agreement. On the Opening Date, Owner and Manager
shall execute, acknowledge and deliver a memorandum of this Agreement in the
public records for the Parish of Orleans. This memorandum shall specifically
recite the provisions of Article 3, Article 21.01, Article 4.03, Article 21.02
and Article 21.03 and shall be recorded after the Mortgage, and prior to
execution and recordation of any other mortgage, deed of trust, lien,
encumbrance or security interest affecting title to the Casino or Owner's
interest therein other than the Authorized Lease.
ARTICLE 23.
FORCE MAJEURE
23.01. Operation of Casino. If (i) there shall occur any Excusable
Temporary Cessation of Operations (as defined in the Casino Operating Contract),
(ii) Owner shall not otherwise have appropriate legal or contractual authority
to operate the Casino, or (iii) the Casino shall not be in a condition suitable
for gaming operations, Manager may close and cease operation of all or part of
the Casino, reopening and commencing operation when Manager deems that such may
be done without jeopardy to the Casino, its guests and employees, provided that
the Term has not theretofore expired. Manager shall have no obligation to
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reopen the Casino if there shall be less than ninety (90) days remaining
unexpired in the Term at the time of such event.
23.02. Extension of Time. It is further understood and agreed that,
with respect to any obligation to be performed by a party during the Term
(except for defaults in the nature of failure to make any required payment or
maintain required insurance), and subject to the absolute time limitations
provided below, such party shall not be in default for failure so to do when and
only for so long as such performance is prevented by any force majeure cause
beyond the reasonable control of such party such as strike, lockout, breakdown,
accident, order or regulation of or by any governmental authority, failure of
supply or inability, by the exercise of reasonable diligence, to obtain
supplies, parts or employees necessary to perform such obligation, or war or
other emergency. Notwithstanding the foregoing, a failure by Owner to perform
Owner's obligations due to a lack of finances or due to a strike, lockout or
failure of supply caused by Owner shall not be deemed to be a cause beyond
Owner's reasonable control. The time within which such obligation shall be
performed may be extended only for a period equivalent to the delay caused by
such force majeure, and, in no event, more than sixty (60) days, except in the
case of construction delays due to the above causes in which case the extension
shall continue until the termination of the Authorized Lease.
23.03. Extension of Completion Deadline and Opening Date. Anything
contained in this Agreement to the contrary notwithstanding, in the event that
legal proceedings are pending which prevent Owner from Completing construction
or opening the Casino in accordance with the terms of this Agreement, any
Completion Deadline or any Opening Date, as the case may be, shall be extended
for as long as is necessary to resolve such legal proceedings; however, in no
event shall such extension continue beyond the termination of the Authorized
Lease.
ARTICLE 24.
TERMINATION
24.01. Surviving Obligations. In the event of any termination or
expiration of this Agreement, Owner shall remain liable to pay all fees and
other amounts due from Owner to Manager for periods through the termination
date, to maintain insurance for the benefit of and indemnify (subject to the
provisions of Articles
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14.01(c) and 14.02) Manager with respect to all occurrences before termination,
and to reimburse Manager for all expenses incurred by Manager before or in
connection with such termination or expiration.
24.02. Termination; Expiration. In connection with the expiration
and/or termination of this Agreement:
(a) Manager's Obligations. Manager shall:
(i) deliver possession of the Casino to Owner or Owner's
designated agents or employees subject to rights of
all parties in possession, in "as is" condition,
without recourse or any warranty whatsoever;
(ii) deliver to Owner correct and complete originals or
copies of all written Operating Agreements with
respect to the Casino which have not theretofore been
delivered to Owner;
(iii) deliver to Owner correct and complete originals or
copies of all agreements for or with respect to the
operation of the Casino (which have not theretofore
been furnished to Owner) that have terms extending
after such expiration or termination;
(iv) advise all Casino purveyors by mail of the expiration
or termination of this Agreement;
(v) permit Owner to have an observer at the Casino to
coordinate the turnover of Casino operations for a
period of seven (7) days prior to expiration or
termination, provided that such observer shall not
participate in the operation or management of the
Casino, give any direction to or contact any Casino
employee or otherwise interfere with Manager's
operation of the Casino, as determined by Manager's
general manager in his sole discretion. If such
observer shall be deemed by Manager's general manager
to interfere with Casino operations, then such
observer may be required to leave the Casino
immediately upon notice from the general manager;
(vi) deliver to Owner records of the Casino pertaining to:
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(A) accounts payable outstanding and unpaid at
termination or expiration, provided that
Manager shall, to the extent funds are made
available therefor by Owner and amounts due
are then known, pay all accounts payable
through and including the date of expiration
or termination;
(B) accounts receivable outstanding and
uncollected at termination or expiration,
all of which Owner agrees shall be accounted
for by Owner when collected by Owner or
Manager as Gross Revenues under this
Management Agreement; and
(C) Casino Employees who remain at the Casino
following termination or expiration of the
Management Agreement (to the extent the
information in the file is not deemed
confidential by Manager); and
(vii) after deducting therefrom any amounts due and payable
under this Agreement and not theretofore paid
(subject to the priorities set forth in Article
9.01(b)), Manager shall disburse the balance, if any,
remaining in the Bank Account(s) after termination or
expiration of this Agreement to Owner.
(b) Owner's Obligations. Owner shall be solely responsible for and
shall pay all costs of:
(i) cancelling any Operating Agreements which Owner does
not wish to continue after such termination or
expiration; or
(ii) assuming and continuing performance under any such
Operating Agreements which Owner desires to retain in
effect.
(c) Employee Severance Payments. Owner shall, without limiting Owner's
obligation as employer, be solely responsible and shall pay for all severance or
other termination benefits due any employee of Owner or Manager whose services
are terminated.
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(d) Change of Brand Identification. If the termination of this
Agreement involves a change of Casino brand identification or affiliation, as of
the date of termination or expiration, Owner shall:
(i) cooperate in the removal of all signage identifying
the casino as a Harrah's Casino or containing any
System Marks and, in the case of any such signage
supplied pursuant to an advertising contract (as in
the case of billboard advertisements) pay all costs
necessary to repaint or otherwise re-identify the
Casino and remove any System Marks from such
advertisement;
(ii) cease use of any trademark, logo, trade name,
patented or copyrighted design, name or pattern
belonging to or licensed for use by Manager or any
Affiliate of Manager at the Casino and destroy any
personal property bearing such designation unless
otherwise authorized in writing by Manager;
(iii) cause the telephone number, if it relates to the
System Marks, and all telephone advertisements for
the Casino to be changed to different telephone
numbers so as to preclude the identification of the
Casino as a Harrah's Casino; and
(iv) cause any proprietary personalty licensed for use by
Manager but not by Owner to be returned to Manager,
including any such personalty required to be at the
Casino pursuant to any Casino Operational Standard.
(e) Owner's Indemnity. Without limiting the foregoing, Owner shall
indemnify, defend and hold Manager free and harmless from and against all loss,
cost, claim or damage relating to the Casino or its operation or ownership after
termination or expiration of this Agreement unless the sole cause of the loss,
cost, claim or damage was the breach of this Agreement by Manager or an event
excluded from indemnification pursuant to Article 14.01(c).
(f) Enforceability of Covenants. The foregoing shall be covenants
running with the Casino, shall survive termination or expiration of this
Agreement, and shall be specifically enforceable by Manager and Owner.
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ARTICLE 25.
GENERAL PROVISIONS
25.01. Authorization. Owner represents that it has full power and
authority to execute this Agreement and to be bound by and perform the terms
hereof. Manager represents it has full power and authority to execute this
Agreement and to be bound by and perform the terms hereof. On request, each
party shall furnish the other evidence of such authority.
25.02. Interest. Unless otherwise provided for herein, any other
amounts payable to Manager or Owner not paid when due shall bear interest at the
lesser of: (a) the highest legal limit, or (b) two percent (2%) over the prime
rate of interest charged by Citibank, N.A. at its offices in New York, New York,
to borrowers on ninety (90) day unsecured commercial loans, as the same may be
changed from time to time (the "Interest Rate").
25.03. Formalities. Any change to or modification of this Agreement
must be in writing signed by both parties hereto. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original. The
captions for each Article are intended for convenience only.
25.04. Documents. Throughout the Term, Owner shall furnish Manager
copies of all paid property tax and insurance statements, all financing
documents (including notes and mortgages) relating to the Casino and such other
documents pertaining to the Casino as Manager shall request.
25.05. Personal Service Contract. This Agreement shall be construed as
a personal service contract which may not be assigned by Owner or Owner's
representatives in any bankruptcy, receivership, insolvency or similar
proceedings.
25.06. Exhibits. All Exhibits referred to in and attached to this
Agreement are, by such reference, intended to be incorporated within and made a
part of this Agreement.
ARTICLE 26.
RESTRICTIVE COVENANTS
26.01. Other Use of Site or Building. Owner shall not permit any use to
be made of the Site or Building other than that of the Casino provided for
herein or as permitted by the Second Floor Non-Gaming Sublease. In the event
that the use of
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the Building and Site as a Casino becomes prohibited by law, this Agreement
shall terminate as of the date that such prohibition becomes effective.
Notwithstanding the foregoing, if such prohibition shall be removed for any
reason prior to termination of the Authorized Lease, then Manager shall have the
option, at its election and its sole discretion, to reinstate this Agreement by
giving written notice to Owner specifying a date of reinstatement that is no
more than one hundred twenty (120) days following the date of such notice and,
in addition, Owner shall pay, as incurred, all costs incurred by Manager to
reinstate operations at the Casino.
26.02. Diversion of Business. Manager shall not knowingly and willfully
divert gaming business from the Casino to other Harrah's Casinos; provided,
however, that this restriction shall not limit Manager from advertising other
casinos in the Harrah's System by written, verbal, audio-visual or other
advertising or promotional techniques with the intent of promoting business
either at individual properties or at all properties in the Harrah's System,
regardless of the actual effect of such activity, and provided further, that
Owner's sole remedy for any alleged breach of this provision shall be to seek to
enjoin the practice objected to upon proof of violation of this provision.
26.03. Competition. Owner and Manager and their respective Affiliates
may engage and possess an interest in any other business venture of any nature,
kind or description, including, without limiting the generality of the
foregoing, any business venture engaged in the same type of business as the
Casino, even if such other business is competitive with that of the Casino, and
the development, ownership, financing and management of casino and other gaming
operations of any kind whatsoever; provided, however, that neither Manager nor
Owner nor any Affiliate of Manager or Owner that is controlled by Manager's
ultimate parent or Owner's ultimate parent, as the case may be, may be
associated with the development, ownership, financing or management of casino
and other gaming operations in Orleans, Plaquemines, St. Charles, St. Tammany,
Jefferson, or St. Bernard Parishes, Louisiana, except for the Casino. Further,
Owner and Manager agree that except as otherwise agreed in writing by Owner and
Manager:
(a) neither Owner nor Manager nor any Affiliate of Manager or Owner
shall have the right in and to such other business venture or the income or
profits derived therefrom by any other party;
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(b) neither Owner nor Manager, nor any of the owners of Owner or
Affiliates of Manager, nor any of relatives or Affiliates of any of the
foregoing, need disclose, to any other, any business venture in which they may
have an interest or any other business opportunity presented to them even if
such opportunity is of a character which, if presented, could be taken and each
shall have the right to take for its own account or to recommend to others any
such particular investment opportunity or business venture; and
(c) as a natural part of the consideration for the execution of this
Agreement by Manager, Owner hereby waives, relinquishes and renounces any right
or claim of participation in any other business venture of Manager or its
Affiliates.
ARTICLE 27.
CONFLICTS BETWEEN AGREEMENTS, JURISDICTION AND
THIRD PARTY BENEFICIARIES
27.01. Conflicts Between Agreements. Notwithstanding anything to the
contrary contained in this Agreement, as to any conflict between the terms and
provisions of the Authorized Lease and the obligations and responsibilities of
Owner or Manager under this Agreement, to the extent legally permissible, the
terms and provisions of the Authorized Lease shall control. Any consent or
approval of the Management Agreement by Landlord or the City of New Orleans
shall not be construed as a waiver of the provisions of the Authorized Lease,
nor shall such consent or approval require any additional actions or impose any
additional duties or obligations on Landlord or the City of New Orleans.
27.02. Jurisdiction. The parties hereto consent and agree to the
jurisdiction of the State of Louisiana and the courts thereof and the United
States District Court for the Southern District of New York, for the purpose of
any suit, action or other proceeding arising out of or relating to this
Agreement, and hereby agree not to assert by way of motion, as a defense or
otherwise, that such action is improper, or that the subject matter thereof may
not be enforced in or by such courts.
27.03. Third Party Beneficiaries. As to the provisions of Articles
7.07, 7.08, 7.09, 7.12, 8.01, and 10.01, Landlord, the City of New Orleans and
the LGCB are intended third party beneficiaries to this Agreement to the extent
that their interests under the Authorized Lease and the Casino Operating
Contract,
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respectively, are affected as are any of their respective successors in interest
to the Authorized Lease and the Casino Operating Contract, respectively.
Manager's obligations to Landlord, the City of New Orleans, and the LGCB
hereunder shall survive the termination of this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement effective as of the day and year first above written.
WITNESSES: OWNER:
JAZZ CASINO COMPANY, L.L.C., a
Louisiana limited liability company
/s/ S. Jay Novatney By: /s/ Fred W. Burford
- --------------------------- ---------------------------------
S. Jay Novatney
Name: Fred W. Burford
-------------------------------
/s/ Joey Lynn Hertz Title: President
- --------------------------- ------------------------------
Joey Lynn Hertz
MANAGER:
HARRAH'S NEW ORLEANS
MANAGEMENT COMPANY, a
Nevada corporation
/s/ Vicki J. Homberg By: /s/ George W. Loveland II
- --------------------------- ---------------------------------
Vicki J. Homberg
Name: George W. Loveland II
-------------------------------
/s/ W. Paul Koerny Title: Asst Sec
- --------------------------- ------------------------------
W. Paul Koerny
S-1
<PAGE>
Exhibit 10.07
SECOND FLOOR NON-GAMING
SUBLEASE
SUBLESSOR:
Jazz Casino Company, L.L.C., a Louisiana limited liability company
SUBLESSEE:
JCC Development Company, L.L.C., a Louisiana limited liability company
October 29, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
- ------- ----
<S> <C>
1. Premises..............................................................................2
2. Term..................................................................................2
3. Rent..................................................................................3
4. Use...................................................................................9
5. Sublessor's Termination Right........................................................12
6. Master Lease and Possession..........................................................15
7. Management and Leasing By Sublessee..................................................15
8. Assignments and Mortgages............................................................16
9. Events of Default and Remedies.......................................................16
10. Effectiveness........................................................................17
11. Amendments and Modifications.........................................................17
12. Option To Extend Master Lease........................................................18
13. No Brokers...........................................................................18
14. Notices..............................................................................18
15. Successors and Assigns...............................................................19
16. Time of the Essence..................................................................19
</TABLE>
<PAGE>
<TABLE>
<S> <C>
17. Governing Law........................................................................19
17.1 Venue and Personal Jurisdiction..............................................20
18. Captions.............................................................................20
19. Interpretation of Words..............................................................20
20. Counterparts.........................................................................20
21. Severability.........................................................................20
22. Third Party Beneficiaries............................................................20
23. Master Plan..........................................................................20
</TABLE>
TABLE OF EXHIBITS
Exhibit
- -------
A. Master Lease
B. Floor Plan
2
<PAGE>
SECOND FLOOR NON-GAMING
SUBLEASE
THIS SECOND FLOOR NON-GAMING SUBLEASE (this "Sublease"), dated
as of October 29, 1998, is made by and between Jazz Casino Company, L.L.C., a
Louisiana limited liability company ("Sublessor"), and JCC Development Company,
L.L.C., a Louisiana limited liability company ("Sublessee").
RECITALS
A. Rivergate Development Corporation ("Landlord") is the
lessee of certain real property and the improvements thereon (the "Rivergate
Site") from the City of New Orleans (the "City") by virtue of that certain
Amended and Restated Lease Agreement dated as of March 15, 1994, as amended by
that certain First Amendment to Amended and Restated Lease Agreement dated as of
the date hereof, as the same may be amended, modified, restated or supplemented
from time to time.
B. Sublessor is the lessee of the Rivergate Site by virtue of
that certain Amended and Restated Lease Agreement dated as of the date hereof,
as the same may be amended, modified, restated or supplemented from time to time
(the "Master Lease"), by and among Sublessor, Landlord, and the City, as
intervenor, wherein Landlord is named as the original lessor, a copy of which is
attached hereto as Exhibit "A" and by this reference incorporated herein.
Capitalized terms not defined herein shall have the meanings ascribed to such
terms in the Master Lease.
C. Sublessor is constructing a casino building on the
Rivergate Site demised by the Master Lease in accordance with the terms of that
certain Amended and Restated General Development Agreement (the "GDA") by and
among Landlord, Sublessor and the City dated as of the date hereof (the
"Casino").
D. Sublessor is completing the shell construction of the
second floor of the Casino building consisting of approximately one hundred
thirty thousand (130,000) square feet of net rentable area, as outlined on the
floor plan attached hereto as Exhibit "B" and by this reference incorporated
herein (the "Premises"), upon the approval of the proposed master plan.
<PAGE>
E. Sublessor desires to lease to Sublessee, and Sublessee
desires to lease from Sublessor the Premises in accordance with the terms and
conditions set forth in this Sublease.
F. Sublessor, Sublessee and Landlord desire to develop a
proposed master plan for the development of the Premises in accordance with the
terms and conditions set forth in this Sublease.
G. Sublessee intends to enter into one or more subleases of
all or part of the Premises pursuant to non-gaming tenant leases and concession
agreements for non-gaming uses providing for the payment of rent at no less than
the fair rental value within the Greater New Orleans Standard Metropolitan
Statistical Area, as defined by the United States Department of Commerce, United
States Census Department, in the 1990 census, in accordance with the provisions
of the Master Plan (as defined herein) ("Space Leases").
NOW THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. PREMISES. Subject to Section 5 hereof, Sublessor hereby
subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the
Premises for the Term (as defined herein), at the rental and upon all of the
other terms and conditions set forth herein.
2. TERM. The term of this Sublease shall commence on the
occurrence of the Substantial Completion (as defined in the GDA) of the Second
Floor Shell Construction - Phase II (as defined in the GDA) and end on the
earlier of the date of expiration of the term of the Master Lease as such term
may be extended in accordance with the provisions of the Master Lease, unless
sooner terminated pursuant to the Master Lease or any provision hereof or upon
the effective date of a notice of termination from Landlord pursuant to Section
4.13(c) of the Master Lease (the "Term").
2
<PAGE>
3. RENT
3.1. Pursuant to Sections 3.2 through 3.5 of this
Sublease, Sublessee shall pay for each Fiscal Year of the Term (a) directly to
Landlord as rent for the Premises fifty percent (50%) of Net Operating Income
(as defined herein) for such Fiscal Year, and (b) directly to Sublessor as rent
for the Premises fifty percent (50%) of Net Operating Income for such Fiscal
Year.
3.2. As used herein, "Net Operating Income" shall
mean the total Included Revenues (as defined herein) less the total Costs and
Expense Items (as defined herein). For purposes hereof, the following terms have
the following meanings:
(a) Included Revenues. Subject to such
revisions as may be necessary to conform with the Master Plan, including
reaching agreement on listing any additional types of revenue or making
revisions to the following listing which may be appropriate in this definition,
"Included Revenues" shall mean for each year during which rent under Section 3.1
of this Sublease is payable:
(i) all rental payments from any
lessees or concessionaires received
by Sublessee during such annual
period pursuant to any and all
Space Leases entered into by
Sublessee in accordance with the
terms of this Sublease and the
Master Plan, but excluding each
refundable security deposit paid to
Sublessee with respect to any Space
Leases applicable to such annual
period (except to the extent
Sublessee is entitled to keep any
such security deposit (and any
interest thereon to the extent a
separate interest bearing account
is maintained for any such security
deposit) and apply such funds to
any expenses which are Costs and
Expense Items);
(ii) the proceeds received by Sublessee
of any business interruption,
increased cost of operations, use,
occupancy or similar insurance
policies during such annual period;
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<PAGE>
(iii) any condemnation awards received by
Sublessee for temporary (i.e.
condemnations of twelve (12) months
or less) and permanent takings
applicable to such annual period;
(iv) any lease termination payments
received by Sublessee applicable to
such annual period;
(v) any dispute settlement payments
received by Sublessee applicable to
such annual period;
(vi) any reimbursement payments received
by Sublessee in such annual period
from any third party with respect
to any expenditures for any Costs
and Expense Items paid or incurred
by Sublessee; and
(vii) all other revenues, payments,
reimbursements, and income of any
nature received by Sublessee during
such annual period or applicable to
such annual period and derived
directly or indirectly from the
Premises or from the use or
operation thereof.
(b) Costs and Expense Items. Subject to such
revisions as may be necessary to conform with the Master Plan, including
reaching agreement on any additional types of costs and expense or revisions to
the following listing which may be appropriate, "Costs and Expense Items" shall
mean for each year during which rent under Section 3.1 of this Sublease is
payable, without duplication, to the extent such Costs and Expense Items that
are reasonable, have actually been paid and have not been directly paid by any
tenant under a Space Lease:
(i) the amortized portion of any Second
Floor Shell Construction - Phase II
(as defined in the GDA)
construction costs for the Premises
incurred by Sublessee not to exceed
Two Million Five Hundred Thousand
Dollars ($2,500,000) applicable to
such annual period, which shall be
consistent with the Master Plan and
shall be the
4
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incremental costs necessary to make
the Premises suitable for
non-gaming tenants and to attract
such tenants, such costs to be
amortized on a straight line basis
over a cost recovery period of ten
(10) years;
(ii) the cost of compensation of all
employees of Sublessee and all
administrative overhead incurred
during such annual period in
connection with the performance of
this Sublease and all Space Leases,
including costs incurred pursuant
to Section 4.4 hereof, the cost of
replacement of operating supplies
and operating equipment in the
ordinary course of Premises
operations;
(iii) the cost of advertising with regard
to the Premises incurred in such
annual period;
(iv) the cost of utilities and energy for
the Premises incurred in such annual
period;
(v) the fees for any and all licenses
and permits required for the
operation of the Premises applicable
to such annual period;
(vi) all expenditures made by Sublessee
applicable to such annual period for
maintenance and repairs to keep the
Premises in good condition and
repair;
(vii) uninsured liabilities relating to
injury to persons or property
incurred by Sublessee in such annual
period in connection with the
operation of the Premises;
(viii) such other costs incurred by
Sublessee in such annual period in
connection with the operation of the
Premises as are treated as operating
costs under generally accepted
accounting principles
5
<PAGE>
and which Sublessee may elect to
treat as operating costs under this
Sublease;
(ix) all costs, expenses and fees in such
annual period paid to any leasing
manager hired by Sublessee to lease
the Premises;
(x) all leasing commissions applicable
to such annual period;
(xi) all costs, expenses and fees in such
annual period paid to any property
manager hired by Sublessee to manage
the Premises;
(xii) renovation and construction
expenditures following completion of
the Second Floor Shell Construction
- Phase II (as defined in the GDA)
applicable to such annual period
incurred with respect to the
Premises amortized on a straight
line basis over a cost recovery
period of ten (10) years;
(xiii) the amortized portion of such other
costs or expenses which are normally
treated as capital expenditures
under generally accepted accounting
principles applicable to such annual
period, amortized over a cost
recovery period of ten (10) years;
(xiv) audit, legal and other professional
fees or other third party general or
administrative costs applicable to
such annual period;
(xv) insurance premiums applicable to
such annual period;
(xvi) costs of leasing any furnishings and
equipment or other goods
incorporated into or used in
connection with managing and
operating the
6
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Premises (whether pursuant to
operating or capital leases) in such
annual period;
(xvii) a pro rata portion of real estate
taxes, insurance, utilities, costs
of maintaining common facilities of
the Casino building attributable to
the Premises and applicable to such
annual period;
(xviii) expenses related to the collection
of proceeds of property insurance
paid in connection with any damage
to the Premises (other than proceeds
received by Sublessee);
(xix) expenses related to the collection
of condemnation awards for temporary
takings;
(xx) all taxes and similar charges
required by law to be collected from
patrons or guests or as part of the
sales price for goods, services or
entertainment which must be remitted
to governmental authorities for such
annual period; provided, however,
nothing in this clause (xx) shall
relieve any party of its obligations
to pay any applicable taxes or
similar charges required by law;
(xxi) all ad valorem taxes, water and
sewer use charges or assessments,
stand pipe charges and assessments,
or other charges or assessments
imposed upon the real and personal
property comprising the Premises and
payable by Sublessee applicable to
such annual period;
(xxii) any or all charges or assessments
imposed by governmental or
quasi-governmental authority or by
any other entity empowered by law to
assess charges against the Premises
or the activities conducted thereat,
with or without lien rights for the
enforcement thereof, applicable to
such annual period;
7
<PAGE>
(xxiii) any returned checks; and
(xxiv) any principal or interest expense
applicable to such period; provided
that Landlord shall have the right
to consent to any financing related
to the Premises, such consent not to
be unreasonably withheld or
financially conditioned.
3.3. Ninety (90) days before the end of each Fiscal
Year, Sublessee shall submit to Sublessor, subject to Sublessor's approval, an
annual budget for the operation of the Premises, which will include projected
Included Revenues, Costs and Expenses Items and resulting Net Operating Income.
Such budget shall be made available to Landlord and Landlord shall be permitted
to review and make notes from such budget; provided that Landlord shall keep the
information contained in such budget confidential in accordance with Section
14.4 of the Master Lease and shall not photocopy or take possession of such
budget. During each annual period, monthly payments will be made to the Landlord
and the Sublessor based on 1/12th of eighty percent (80%) of the estimated
annual Net Operating Income of the Premises and divided evenly between Landlord
and Sublessor.
3.4. Before the ninetieth (90th) day after the end of
each Fiscal Year, Sublessee shall submit to Landlord and Sublessor a statement
(the "Annual Statement") showing the Net Operating Income. If the payments
already made to both Landlord and Sublessor during that Fiscal Year were less
than the annual Net Operating Income, then Sublessee shall pay directly without
interest to the Landlord and Sublessor fifty percent (50%) of such Net Operating
Income that is in excess of the payments made to Landlord and Sublessor during
that Fiscal Year. Such payments will be delivered together with the Annual
Statement. If the payments made to both the Landlord and Sublessor during that
Fiscal Year were more than the Net Operating Income, the difference shall be
credited without interest and set off at fifty percent (50%) each against
successive payments of rentals to Landlord and Sublessor, respectively, after
delivery of the Annual Statement. Sublessor shall examine, audit, inspect and
transcribe any and all books and records of Sublessee used in the preparation of
the Annual Statement, upon reasonable written notice to Sublessee and during
normal business hours, and shall have the right to make such information
available to Landlord in
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accordance with Section 4.13(d) of the Master Lease; provided, however,
Sublessor shall not have the right to examine, audit, inspect or transcribe any
books and records or information that Sublessee is required by law not to
disclose.
3.5. All rent and additional charges coming due under
this Sublease shall be paid to Sublessor and Landlord, respectively, except as
otherwise expressly provided to the contrary in this Sublease, without notice or
demand and without abatement, deduction, reduction or setoff (except in
accordance with Section 3.4 hereof) at Sublessor's and Landlord's respective
addresses set forth in Section 14 hereof, or at such other place as Sublessor or
Landlord, as the case may be, may designate by prior written notice to
Sublessee. If the scheduled date for a payment is not a Business Day, the
payment shall be due and payable on the next succeeding Business Day. All rent
and additional charges shall be paid or caused to be paid by Sublessee in lawful
money of the United States of America by corporate check or any other method of
payment acceptable to Sublessor, Landlord and Sublessee.
4. USE
4.1. Sublessor, Sublessee and Landlord shall appoint
their respective representatives for the development of a proposed master plan
and such representatives shall hold their first meeting to discuss the
development of a proposed master plan no later than thirty (30) days following
the Plan Effective Date. The proposed master plan (i) will establish leasing
guidelines for the Space Leases regarding rent, termination rights and
termination fees, tenant improvements and concessions, permissible uses,
brokerage fees, an initial capital improvement budget and an initial operating
budget for the first year of operations, (ii) will include finalized definitions
of Included Revenues and Costs and Expenses Items, (iii) may propose areas of
further investigation and study for uses or planning for the Premises, (iv) may
include such other matters as agreed by Sublessor, Sublessee and Landlord, and
(v) shall be subject to proposed revisions, amendment, or modification by any
party hereto as circumstances change and discussions among the representatives
proceed. The representatives of Sublessor and Sublessee agree to submit an
initial draft of a proposed master plan to the representatives of Landlord no
later than ninety (90) days following the Plan Effective Date. The proposed
master plan shall be submitted by Sublessor and Sublessee to the City Council
for action no later than one hundred twenty (120) days after the opening of the
Casino, and the proposed master plan shall be acted
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upon by the City Council no later than ninety (90) days following such
submission of the proposed master plan to the City Council. The proposed master
plan shall be approved by Landlord no later than thirty (30) days following City
Council approval of the proposed master plan. The proposed master plan as
approved by the City Council and the Landlord is herein referred to as the
"Master Plan." Sublessee hereby acknowledges and agrees that Sublessee's
performance of this Sublease shall be subject to and limited by the terms of the
Master Plan. The failure of Landlord, Sublessor and Sublessee to agree upon or
to timely submit to the City Council a proposed master plan or the City Council
to approve the proposed master plan shall not be a breach or default under this
Sublease by Sublessor or Sublessee.
4.2. The Premises shall be used and occupied only for
non-gaming uses of the type to be described in the Master Plan, and for any use
related or incidental thereto, and for no other purpose. Sublessee may occupy
and use the Support Facilities Premises and the Improvements thereon for
parking, support, employee training, offices and any other use now or hereafter
permitted by the zoning laws and the ordinances of the City. Except as otherwise
provided in the Sublease, Sublessee shall not use the Premises for any other
purpose without Sublessor's and Landlord's prior written consent.
4.3. Sublessee shall not occupy, improve, use or
suffer or permit the use, improvement or occupancy of, the Premises or any part
thereof, in any unlawful manner or for any illegal purpose or in violation of
the terms and conditions of this Sublease or the Master Plan and/or of any
certificate of occupancy or other similar certificate, permit or approval
applicable to the Premises or any part thereof. Sublessee shall not use, improve
or occupy or permit the use, improvement or occupancy of the Premises or any
part thereof in violation of the zoning and planning resolutions and laws of any
government agency applicable to the Premises.
4.4. Sublessee, at all times during the Term and at
Sublessee's sole expense, shall promptly comply with and conform to:
(a) all requirements of any national or
local board of Fire Underwriters, or any other body performing similar functions
to the extent applicable to the Premises;
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(b) all requirements of the policies of
insurance affecting the Premises or any part thereof;
(c) all gaming laws and regulations
applicable to Sublessee and all requirements of the Master Lease applicable to
the Premises; and
(d) all state and local codes, such as:
buildings codes, electrical codes and other similar statutes ordinances or
regulations applicable to the Premises.
4.5. Except for uses permitted within the Premises by
the Master Lease, Sublessee shall not subsidize Persons that will compete with
the businesses located in the Parish of Orleans, such as hotels or other
commercial enterprises. Furthermore, Sublessee shall not operate taxis,
limousines or other forms of ground transportation in the metropolitan New
Orleans area. The foregoing prohibitions shall not restrict any Space Lease
tenant's ability to operate in accordance with the Master Plan, or Sublessee's
ability to operate shuttle bus service for employees of the Premises and shuttle
bus service for patrons of the Premises to and from the Casino building and
their hotels, except in areas where the operation of buses is prohibited by City
traffic ordinances of general application in effect as of the date hereof.
Notwithstanding anything in this Sublease to the contrary, no facilities, the
principal business purpose of which is a restaurant, shall be permitted on the
Premises.
4.6. Neither Landlord nor Sublessor shall have any
liability to Sublessee upon a termination of the Master Lease.
4.7. Sublessee and Sublessor do hereby agree to
defend, hold harmless and indemnify Landlord and the City from any liability,
claim, damages and causes of action whatsoever arising under, or in any way
related to, this Sublease and any Space Leases entered into hereunder.
4.8. Except as otherwise permitted by the Master
Plan, transactions relating to the Premises and involving Sublessor and/or
Sublessee and an Affiliate shall be on commercially reasonable terms and for
arm's length consideration. Sublessor and Sublessee, as the case may be, agree
to provide Landlord written notification of any Affiliate transactions. For
purposes of this Sublease, "Affiliate" shall mean any person or entity
Controlling, Controlled by or
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under common Control with Sublessor or Sublessee. As used in the preceding
sentence, "Control" and its correlatives shall mean, with respect to any person
or entity, the direct or indirect ownership of more than fifty percent (50%) of
the beneficial interest or voting power of such person or entity, or the
ability, by contract or otherwise, to elect a majority of the directors of a
corporation or otherwise to select, or have the power to remove and select, a
majority of those persons or entities exercising governing authority over such
person or entity.
5. SUBLESSOR'S TERMINATION RIGHT
5.1. Notwithstanding any provision of this Sublease
to the contrary, Sublessor shall have the right to terminate this Sublease as to
all or any portion of the Premises for purposes of converting the Premises or
such portion thereof into a Gaming Space (as defined in the Master Lease),
subject to the approval of the Louisiana Gaming Control Board, or any successor
entity. If Sublessor desires to so terminate this Sublease as to all or any
portion of the Premises, Sublessor shall deliver to Sublessee a written notice
(the "Conversion Notice") setting forth the size and location of such portion of
the Premises to be so converted into a Gaming Space (the "Designated Gaming
Space") and the date upon which such termination shall occur (the "Conversion
Date"), such termination to occur not less than thirty (30) days following
Sublessee's receipt of such Conversion Notice with respect to any portion of the
Premises not then subject to a Space Lease, or with respect to any portion of
the Premises then subject to a Space Lease, at such later time as may be
specified in such Space Lease. In the event Sublessor elects to terminate this
Sublease with respect to any such Designated Gaming Space, Sublessor agrees that
Sublessor shall pay directly to the tenant of any such terminated Space Lease
that is not relocated within the Premises any termination fee required pursuant
to the terms of any such terminated Space Lease; provided that such termination
fee is consistent with the Master Plan or has been approved by Sublessor and
Landlord; provided, further, that any such termination fee shall not be deemed a
Costs and Expense Item under Section 3.2(b) of this Sublease.
5.2. Upon the Conversion Date, the Designated Gaming
Space shall be excluded from the Premises and shall thereafter be subject to the
terms of the Master Lease as applied to the first floor of the Casino. If the
Designated Gaming Space constitutes all of the Premises, this Sublease shall
terminate; provided, however, Sublessor shall pay all termination fees required
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pursuant to any Space Leases that have been terminated as a result of such
Conversion Notice. Sublessor shall pay all costs of relocating any Space Lease
tenant to any other portion of the Premises that is acceptable to such Space
Lease tenant and Sublessee. Sublessor hereby indemnifies and holds harmless
Sublessee and Landlord, to the extent applicable, with respect to all costs,
losses or damages incurred or suffered by Sublessee or Landlord, to the extent
applicable, arising in connection with Sublessee terminating any existing Space
Lease at the instruction of Sublessor or relocating any Space Lease tenant
pursuant to a Conversion Notice.
5.3. In addition to the rent to be paid to Landlord
by Sublessor pursuant to the Master Lease with respect to the Designated Gaming
Space, Sublessor shall pay to Landlord an amount equal to the Landlord Second
Floor Shortfall (as defined herein) each year, payable in equal monthly
installments, until the earlier of (a) the date each Space Lease terminated
pursuant to Section 5.1 hereof would have terminated if such Space Lease had not
been so terminated, or (b) if such Designated Gaming Space was subject to a
Proposed Space Lease that was not consummated solely as a result of Sublessor's
election to terminate this Sublease as to the Designated Gaming Space, five (5)
years following the Conversion Date; provided, however, Sublessor shall have no
obligation to pay any Landlord Second Floor Shortfall to Landlord with respect
to any Designated Gaming Space that was not subject to a Space Lease or a
Proposed Space Lease at the time of Sublessor's election to terminate this
Sublease as to such Designated Gaming Space or in the event the tenant of any
Space Lease covering such Designated Gaming Space has been relocated within the
Premises at the same effective rental rate or other space is available within
the Premises for a Proposed Space Lease which has been made available to such
tenant pursuant to the terms of its Space Lease.
5.4. For purposes of this Sublease:
(a) "Proposed Space Lease" shall mean a
proposed Space Lease for vacant unused space at the Premises which (i) is
evidenced by a commercially viable written proposal from a prospective
creditworthy tenant, (ii) is not subject to any financing or other conditions,
(iii) meets all leasing guidelines set forth in the Master Plan, including,
among other things, rent, termination rights and termination fees, brokerage
fees, tenant improvement costs and use, (iv) has been recommended by Sublessee's
listing broker for the Premises, and (v) is for a
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term to commence within not more than ninety (90) days after the Conversion
Date.
(b) The annual "Landlord Second Floor
Shortfall" for any Designated Gaming Space shall mean the amount, if any, by
which the Landlord Second Floor Rental (as defined herein) with respect to the
Designated Gaming Space exceeds the Landlord Gaming Rental (as defined herein)
with respect to the Designated Gaming Space.
(c) "Landlord Second Floor Rental" for any
Designated Gaming Space shall mean fifty percent (50%) of the difference between
the Computed Annual Average Designated Gaming Space Rental (as defined herein)
and the Computed Annual Average Designated Gaming Space Costs and Expenses (as
defined herein).
(d) "Computed Annual Average Designated
Gaming Space Rental" shall mean the (i) average annual rental during the two (2)
years preceding the Conversion Date if the Designated Gaming Space was leased
for said two (2) years, (ii) the average annual rental for the Designated Gaming
Space based on the total months such Designated Gaming Space was leased prior to
the Conversion Date if such Designated Gaming Space was leased for less than two
(2) years prior to the Conversion Date, or (iii) the projected annual average
rent for the first two (2) years of any Proposed Space Lease.
(e) "Computed Annual Average Designated
Gaming Space Costs and Expenses" shall mean (i) the average (per square foot)
annual Costs and Expenses Items for the portions of the Premises actually leased
during the preceding two (2) years multiplied by (ii) the number of square feet
comprising the Designated Gaming Space.
(f) "Landlord Gaming Rental" for any
Designated Gaming Space shall mean (i) the average annual Gross Gaming Payments
for the two (2) years preceding the Conversion Date (or such lesser period of
time after the Opening Date) calculated on a per square foot basis multiplied by
(ii) the number of square feet comprising the Designated Gaming Space.
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6. MASTER LEASE AND POSSESSION
6.1. This Sublease is and shall be at all times
subject and subordinate to the Master Lease.
6.2. Sublessor binds itself to maintain Sublessee in
actual possession of the Premises, and to the extent of its own acts or
omissions the remainder of the Casino building, during the Term. Should
Sublessee be disturbed by any Person (other than a Leasehold Mortgagee) alleging
an interest or right to the Premises or should Sublessee be cited to appear
before a court of justice to answer the complaint of any Person claiming the
whole or any part of the Premises, Sublessee shall notify Sublessor of such
occurrences and the circumstances of same and Sublessor shall have the
obligation, at Sublessor's sole cost and expense, to defend Sublessee in any
such proceedings unless Sublessee is partially or wholly responsible for the
disturbance of possession. Sublessor further binds itself to enforce the
provisions of Section 6.2 of the Master Lease.
7. MANAGEMENT AND LEASING BY SUBLESSEE
7.1. Sublessee in its sole discretion may hire a
leasing agent and/or project manager to conduct the leasing and operation of the
Premises in accordance with the terms of the Master Plan based on criteria set
forth in the Master Plan. So long as (i) all leasing of the Premises shall be
consistent with the terms of the leasing parameters set forth in the Master Plan
and (ii) Sublessee shall have notified Landlord in writing prior to entering
into any Space Lease, Sublessee shall not be required to obtain any consent of
Sublessor or Landlord with respect to any Space Lease.
7.2. In any instance where Sublessor has retained the
right to approve or consent to any action of Sublessee, or Sublessee's property
manager or leasing agent, Sublessor shall negotiate in good faith and without
unreasonable delay, reasonable terms and conditions for Sublessor's approval or
consent.
7.3. Sublessee shall submit to Landlord and Sublessor
on or before July 15 of each Fiscal Year a proposed cash flow and operating
budget for the Premises for the following Fiscal Year.
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8. ASSIGNMENTS AND MORTGAGES
8.1. The obligations of Sublessee may not be assigned
or transferred without the prior written consent of Sublessor and Landlord, such
consent not to be financially conditioned or unreasonably withheld or delayed;
provided that Landlord or the City Council may, for any reason, refuse to
consent to or financially condition any assignment, sale or transfer of such
obligations to an entity (including any subsidiary or affiliate thereof) that
has previously operated or is currently operating a licensed gaming
establishment (including a riverboat) within Orleans Parish. The inability of
any such assignee or transferee to perform its financial obligations under this
Sublease shall be a reasonable basis for Landlord to withhold its consent to any
such assignment or transfer. Any such assignment or transfer is also subject to
the receipt of any required approval of any applicable judicial or governmental
entities or as otherwise required by law.
8.2. Sublessee may not pledge, mortgage or otherwise
encumber this Sublease or the leasehold interest created hereby, or the
Premises, in whole or in part other than (i) in connection with the Construction
Credit Facility, the New Bond Documents and the HET/JCC Agreement (as such terms
are defined in the Master Lease) or (ii) in connection with any financing
related to the Premises consented to by Landlord pursuant to Section
3.2(b)(xxiv) hereof; provided, however, any such mortgage shall provide that all
rights granted therein shall be subordinate and subject to Sublessee's
obligation to pay rent to Landlord pursuant to Section 3.1 hereof.
9. EVENTS OF DEFAULT AND REMEDIES
9.1. The occurrence of any of the following shall
constitute a material default and breach of this Sublease by Sublessee (an
"Event of Default"):
(a) if Sublessee fails to pay the rent
provided in Section 3 hereof within fifteen (15) Business Days after the date of
Sublessee's receipt of written notice of non-payment thereof from Sublessor or
Landlord; or
(b) if Sublessee shall make a general
assignment for the benefit of creditors; or shall admit in writing its inability
to pay its debts as they become due; or shall file a petition in bankruptcy; or
shall be adjudged bankrupt or insolvent; or shall file a petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief
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under any present or future statute, law or regulation; or shall file an answer
admitting or not contesting the material allegations of a petition filed against
it in any such proceeding; or shall seek or consent to or acquiesce in the
appointment of a trustee, liquidator of Sublessee or a material part of its
properties; or shall voluntarily liquidate or dissolve; or
(c) if Sublessee shall sell, assign, pledge,
mortgage, or transfer this Sublease or the leasehold interest created hereby, or
the Premises, in whole or in part, except as specifically authorized in this
Sublease; or
(d) if Sublessee shall cease to operate as
required herein or if Sublessee vacates or abandons the Premises, except as
necessary or appropriate as a result of governmental order, destruction,
condemnation, alteration or repairs; or
(e) if Sublessee shall fail to perform or
comply with any material covenant, term, representation, warranty, or condition
of this Sublease not specifically addressed in this Section 9.1.
9.2. Upon an Event of Default, Sublessor and
Landlord, to the extent applicable, shall have all rights and remedies available
under Louisiana law, subject to any limitation thereon imposed by the Master
Lease.
10. EFFECTIVENESS. This Sublease shall be effective
immediately upon execution and delivery by the parties hereto and the occurrence
of the Plan Effective Date.
11. AMENDMENTS AND MODIFICATIONS. All modifications or
amendments to this Sublease must be in writing and signed by all the parties
hereto and subject to the prior written consent of Landlord and the City
Council; provided that Landlord or the City Council may, for any reason, refuse
to consent to or financially condition any such amendments or modifications
which effect an assignment, sale or transfer of this Sublease to any entity
(including any subsidiary or affiliate thereof) that has previously operated or
is currently operating a licensed gaming establishment (including a riverboat)
within Orleans Parish.
12. OPTION TO EXTEND MASTER LEASE. Sublessor has a right to
extend the term of the Master Lease, which only Sublessor (and not Sublessee)
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may exercise. Such a right to extend the term of the Master Lease, if any, is
not transferred from Sublessor to Sublessee by this Sublease, and any attempt by
Sublessee to give notice of an election to extend the term of the Master Lease
shall be null and void.
13. NO BROKERS. Sublessee represents and warrants that it has
had no dealings with any broker concerning this Sublease, and that it knows of
no person who is or might be entitled to a commission, finder's fee or other
such payment in connection herewith. Sublessee hereby agrees to indemnify and
hold Landlord and Sublessor harmless from and against all losses, liabilities
and expenses, including reasonable attorneys' fees, that Sublessor or Landlord
may incur should such representation and warranty prove incorrect.
14. NOTICES. Any notice required or permitted to be given
hereunder shall be in writing and shall be deemed effective either upon personal
delivery or three (3) days after deposit thereof in the United States mail,
registered or certified, return receipt requested, addressed (a) if to
Sublessee:
512 South Peters
New Orleans, Louisiana 70130
Attention: President
Fax: (504) 533-6156
Phone: (504) 533-6000
(b) if to Sublessor, at the place from time to time established for the giving
of notices to Sublessor under the Master Lease, and (c) if to Landlord, at the
place from time to time established for the giving of notices to Landlord under
the Master Lease. Any party may specify a different address for notice purposes
in the manner aforesaid. A copy of all notices given by either Sublessor or
Sublessee to the other hereunder shall concurrently be given to Landlord and to
any other party hereafter designated by notice from Landlord to Sublessor and
Sublessee.
15. SUCCESSORS AND ASSIGNS. All the covenants, conditions and
provisions of this Sublease shall be binding upon and inure to the benefit of
the parties hereto and Landlord, to the extent applicable, and their respective
heirs, personal representatives, successors and assigns, subject at all times,
however, to all agreements and restrictions contained in the Master Lease and in
this Sublease
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respecting assignments, sublettings and other transfers of rights and sharings
of the Premises.
16. TIME OF THE ESSENCE. Time is of the essence in the
exercise and performance of this Sublease.
17. GOVERNING LAW. This Sublease shall be governed and
construed in accordance with the internal substantive laws of the State of
Louisiana regardless of the laws which might otherwise govern under Louisiana's
or other applicable concepts of conflicts of law.
17.1. Venue and Personal Jurisdiction
(a) Each party to this Sublease hereby
submits to the jurisdiction of the State of Louisiana and the courts thereof and
to the jurisdiction of Civil District Court for the Parish of Orleans, State of
Louisiana for the purposes of any suit, action or other proceeding arising out
of or relating to this Sublease, and hereby agrees not to assert by way of a
motion as a defense or otherwise that such action is brought in an inconvenient
forum or that the venue of such action is improper or that the subject matter
thereof may not be enforced in or by such courts.
(b) If at any time during the term of this
Sublease, any party to this Sublease is not a resident of the State of Louisiana
or has no officer, director, employee, or agent thereof available for service of
process as a resident of the State of Louisiana, or if any permitted assignee
thereof shall be a foreign corporation, partnership or other entity or shall
have no officer, director, employee, or agent available for service of process
in the State of Louisiana, any such party to this Sublease or its assignee
hereby designates the Secretary of State, State of Louisiana, its agent for the
service of process in any court action between such party and Landlord or
arising out of or relating to this Sublease and such service shall be made as
provided by the laws of the State of Louisiana for service upon a nonresident;
provided, however, that at the time of service on the Secretary of State, a copy
of such service shall be delivered to Sublessor and Sublessee in the manner
provided in Section 14 hereof.
18. CAPTIONS. The headings on the sections herein are for
convenience only; they form no part of this Sublease and shall not affect its
interpretation.
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19. INTERPRETATION OF WORDS. A masculine pronoun wherever used
herein shall be construed to include the feminine or neuter where appropriate.
The singular form wherever used herein shall be construed to include the plural
where appropriate.
20. COUNTERPARTS. This Sublease may be executed in any number
of counterparts, which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
21. SEVERABILITY. If any provision of this Sublease, or the
application of such provision to any person, entity or circumstance, shall be
held invalid, the remainder of this Sublease, or the application of such
provision to persons, entities or circumstances other than those to which it is
held invalid, shall not be affected thereby; provided that the parties shall
attempt to reformulate such invalid provision to give effect to such portions
thereof as may be valid without defeating the intent of such provision.
22. THIRD PARTY BENEFICIARIES. Landlord and the City shall be
third party beneficiaries of, but not parties to, this Sublease. Except as set
forth in this Section 22, there shall be no other third party beneficiaries of
this Sublease.
23. MASTER PLAN. To the extent of any inconsistencies between
this Sublease and the Master Plan, the provisions of the Master Plan shall
control.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Sublessor and Sublessee have executed this
Sublease as of the date first above written.
WITNESSES: SUBLESSOR:
JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company
/s/ S. Jay Novatney By: /s/ Fred W. Burford
- --------------------- ----------------------------
Name: Fred W. Burford
----------------------------
Title: President
- --------------------- ----------------------------
SUBLESSEE:
JCC DEVELOPMENT COMPANY, L.L.C.,
a Louisiana limited liability company
/s/ S. Jay Novatney By: /s/ Fred W. Burford
- --------------------- ----------------------------
Name: Fred W. Burford
----------------------------
Title: President
- --------------------- ----------------------------
ACKNOWLEDGED BY AND CONSENTED TO
BY LANDLORD:
RIVERGATE DEVELOPMENT CORPORATION,
a Louisiana public-benefit corporation
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
S-1
<PAGE>
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this
Sublease as of the date first above written.
WITNESSES: SUBLESSOR:
JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company
By:
- --------------------- ----------------------------
Name:
- --------------------- ----------------------------
Title:
----------------------------
SUBLESSEE:
JCC DEVELOPMENT COMPANY, L.L.C.,
a Louisiana limited liability company
By:
- --------------------- ----------------------------
Name:
- --------------------- ----------------------------
Title:
----------------------------
ACKNOWLEDGED BY AND CONSENTED TO
BY LANDLORD:
RIVERGATE DEVELOPMENT CORPORATION,
a Louisiana public-benefit corporation
By: /s/ Helen S. Kohlman
----------------------------
Name: Helen S. Kohlman
----------------------------
Title: Vice-President
----------------------------
S-1
<PAGE>
A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 26th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Fred W. Burford, appearing in his capacity as the President of
JAZZ CASINO COMPANY, L.L.C.,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said limited liability company with full authority and that the said
instrument is the free act and deed of the said limited liability company and
was executed for the uses, purposes and benefits therein expressed.
WITNESSES:
/s/ S. Jay Novatney /s/ Fred W. Burford
- --------------------------- ------------------------------
- ---------------------------
/s/ Daniel E. Davillier
-----------------------------------------
NOTARY PUBLIC
DANIEL E. DAVILLIER
NOTARY PUBLIC
State of Louisiana
My Commission is issued for Life.
<PAGE>
A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 26th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Fred W. Burford, appearing in his capacity as the President of
JCC DEVELOPMENT COMPANY, L.L.C.,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said limited liability company with full authority and that the said
instrument is the free act and deed of the said limited liability company and
was executed for the uses, purposes and benefits therein expressed.
WITNESSES:
/s/ S. Jay Novatney /s/ Fred W. Burford
- --------------------------- ------------------------------
- ---------------------------
/s/ Daniel E. Davillier
-----------------------------------------
NOTARY PUBLIC
DANIEL E. DAVILLIER
NOTARY PUBLIC
State of Louisiana
My Commission is issued for Life.
<PAGE>
A C K N O W L E D G M E N T
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 26th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Helen S. Kohlman, appearing in her capacity as the
Vice-President of RIVERGATE DEVELOPMENT CORPORATION,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that she executed the same on
behalf of said corporation with full authority and that the said instrument is
the free act and deed of the said corporation and was executed for the uses,
purposes and benefits therein expressed.
WITNESSES:
/s/ Gwendolyn M. Johnson /s/ Helen S. Kohlman
- --------------------------- ------------------------------
/s/ Yolanda Johnson
- ---------------------------
/s/ Illegible
-----------------------------------------
NOTARY PUBLIC
<PAGE>
EXHIBIT "A"
MASTER LEASE
[Attach a copy of the Master Lease]
A-1
<PAGE>
EXHIBIT "B"
FLOOR PLAN
[Attach a copy of the Second Floor Floor Plan]
B-1
<PAGE>
Exhibit 10.08
CITY/RDC COMPLETION GUARANTEE
THIS CITY/RDC COMPLETION GUARANTEE is entered into as of
October 29, 1998 (this "Completion Guarantee"), by HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation ("HET"), and HARRAH'S OPERATING COMPANY, INC., a Delaware
corporation ("HOC," and together with HET, the "Completion Guarantors," and each
a "Completion Guarantor") in favor of the RIVERGATE DEVELOPMENT CORPORATION, a
Louisiana public benefit corporation (the "RDC"), and the CITY OF NEW ORLEANS
(the "City" and together with the RDC, "Landlord").
RECITALS
A. A plan of reorganization (the "Plan") of Harrah's Jazz
Company, a Louisiana general partnership ("HJC"), has been consummated in
connection with the voluntary petition for an Order of Relief under Chapter 11
of Title 11 of the United States Bankruptcy Code filed in the United States
Bankruptcy Court for the District of Delaware and transferred to the United
States Bankruptcy Court for the Eastern District of Louisiana, now identified as
BK No. 95-14545.
B. That certain Amended and Restated Lease Agreement entered
into pursuant to the Plan between the RDC, as landlord, Jazz Casino Company,
L.L.C., a Louisiana limited liability company (the "Company"), as tenant, and
the City, as intervenor (the "Lease") and that certain Amended and Restated
General Development Agreement (the "GDA") entered into pursuant to the Plan
between the Landlord and the Company and the City, as intervenor, set forth the
conditions, covenants, obligations, requirements and terms pursuant to which the
Company has the authority to develop and operate the Casino.
C. The Company has obtained a performance bond (the
"Performance Bond") from Reliance Insurance Company and United States Fidelity
and Guaranty Company (the "Surety") for the benefit of the City and the RDC, the
New Indenture Trustee (as defined in the Plan) as trustee for the holders of the
New Bonds (as defined in the Plan) and the holders of the New Contingent Bonds
(as defined in the Plan), Bankers Trust Company (the "Administrative Agent") as
administrative agent for certain lenders (the "Banks"), and the Louisiana Gaming
Control Board (the "LGCB") for completion of the Phase I and II Construction (as
defined in the GDA) in accordance with Section 2.13(a) of the
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GDA excluding the Minimum FF&E (as defined in the GDA) (the "Performance Bond
Construction").
D. The Completion Guarantors indirectly own a substantial
interest in the parent of the Company and will obtain substantial economic and
other benefits as a result of the successful completion and opening of the
Casino.
E. As used in this Completion Guarantee, all capitalized terms
used herein but not defined herein shall be used herein as defined in the Lease.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Completion Guarantors, the receipt and sufficiency of
which are hereby acknowledged, the Completion Guarantors hereby make the
following representations and warranties to the Landlord, and hereby covenant
and agree for the benefit of the Landlord as follows:
1. Obligations Guaranteed
1.1. The Completion Guarantors hereby irrevocably,
unconditionally, and in solido with each other, the Company and the Surety,
guarantee:
(a) the full and complete payment and performance of all
obligations (the "Completion Obligations") of the Company diligently to commence
and complete the construction of and timely and fully to pay for all costs and
expenses of completion of the Phase I and II Construction in accordance with
Section 2.13(a) of the GDA whether incurred before or after the Effective Date
(as defined in the Plan) and whether due before or after the completion of the
Phase I and II Construction or otherwise payable by the Company to any person
for the costs and expenses of such completion, including:
(i) the payment of any and all costs of completing
the Phase I and II Construction and the Components (including all support
facilities and improvements appurtenant or related to each), all as set forth in
the GDA, including without limitation all labor, materials, supplies and
equipment related thereto, to be paid and satisfied when due including, without
limitation, all cost overruns not paid by the Company;
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(ii) the payment, satisfaction or discharge of liens
arising from injuries or damages to persons or property in connection with the
Phase I and II Construction and all liens, charges and claims, other than
Permitted Liens (which shall mean the liens, charges, claims and other
encumbrances described on Exhibit G to the Lease) arising from the furnishing of
labor, materials, supplies or equipment for the Phase I and II Construction and
the Components, as the case may be, that are or may be imposed upon or asserted
against the Development, or any portion thereof; and
(iii) the defense and indemnification of the Landlord
against all liens arising from injuries or damages to persons or property in
connection with the Phase I and II Construction and all liens, charges and
claims, other than Permitted Liens, arising from the furnishing of labor,
materials, supplies or equipment for the Phase I and II Construction and the
Components, as the case may be; and
(b) so long as any necessary regulatory approvals from the
LGCB, the State Police and any other State regulatory authorities have been
received, the opening of the Casino for business as a casino gaming operation
within twelve (12) months after the Effective Date, or if such approvals have
not been received, that the Casino is in a condition to receive customers in the
ordinary course of business; and
(c) the full and complete payment and performance of all
obligations (the "Carry Obligations") of the Company to pay on a timely basis
all amounts incurred by or otherwise payable by the Company to any person and
due before or after the Effective Date until and through the completion of the
Phase I and II Construction to be funded, paid and satisfied until and through
the completion of the Phase I and II Construction, including without limitation,
any rent or other amounts due under Article IV of the Lease, liquidated damages
or other amounts payable to the Landlord under the Lease or the GDA (including
but not limited to JCC Development's obligation, if any, prior to the completion
of Phase I and II Construction, to pay rent directly to Landlord under the
Second Floor Sublease), and all project costs (other than any costs which are
included as a part of the Completion Obligations), including without limitation
the payment of interest and scheduled principal payments (excluding principal on
the New Bonds and the New Contingent Bonds), taxes (prior to delinquency), all
allowed priority and administrative tax claims due by HJC under the Plan,
amounts owing to the LGCB under the Casino Operating Contract, amounts owing to
the Landlord under the Lease, assessments, utilities, insurance and maintenance
expenses,
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amounts owing from injuries or damages to person or property, or amounts due
pursuant to contracts or agreements; provided that the Completion Guarantors in
no event guarantee payment of the Minimum Payment under and as defined in the
Casino Operating Contract pursuant to this Completion Guarantee.
1.2. In addition to Section 1.1(c) above, the Carry
Obligations shall also include, without limitation:
(a) the obligation of the Company upon the completion of the
Phase I and II Construction to have available for working capital at least Five
Million Dollars ($5,000,000) of cash in the House Bank (as defined in the Casino
Management Agreement) and at least Twenty Five Million Dollars ($25,000,000) of
availability for immediate drawdown(s) under the Revolving Loans pursuant to and
as defined in the Construction Credit Facility, subject to the terms thereof,
reduced by (i) the amount of a letter of credit subfacility not to exceed Two
Million Dollars ($2,000,000), and (ii) a drawing of Ten Million Dollars
($10,000,000) of the Revolving Loans to fund the Minimum Balance (as defined in
the Casino Management Agreement) on or before the completion of Phase I and II
Construction; and
(b) the obligation of the Company to repay the Revolving Loans
upon an event of default under the Revolving Loans together with any and all
amounts of fees, interest, letter of credit fees and other amounts due in
respect of the Revolving Loans prior to the completion of the Phase I and II
Construction.
This provision may require the Completion Guarantors to contribute working
capital directly to the Company and/or to pay down amounts outstanding under the
Revolving Loans.
1.3. The Completion Obligations, the Carry Obligations and the
Preservation Obligations are collectively referred to herein as the
"Obligations."
1.4. The Completion Guarantors, in solido with each other, the
Company, and the Surety agree to perform and comply with their Obligations,
whether or not the Company is liable therefor individually or jointly or in
solido with others, and whether or not recovery against the Company is or may
become barred by any statute of limitations or prescriptive or preemptive period
or is or may become unenforceable or discharged, whether in whole or in part,
for any reason other than payment or performance thereof in full. The Completion
Guarantors agree that this Completion Guarantee is a guarantee of payment and
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performance and not of collection, and that each of their obligations under this
Completion Guarantee shall be primary, absolute and unconditional, irrespective
of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability, or
any future amendment of, or change in, this Completion Guarantee, or any other
agreement, document or instrument to which the Landlord, the Company and/or the
Completion Guarantors is or are or may become a party;
(b) the absence of any action to enforce this Completion
Guarantee or any other document or the waiver or consent by the Landlord with
respect to any of the provisions thereof;
(c) any release or discharge of either the Surety, the other
Completion Guarantor, the Company or any other party of any Obligations; or
(d) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor;
it being agreed by each Completion Guarantor that its obligations under this
Completion Guarantee shall not be discharged except as set forth in Section 12.3
hereof. Each Completion Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations.
1.5. Each Completion Guarantor expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel the Landlord to proceed in respect of the
Obligations against the Company, the Surety or any other party or against any
security for the payment and performance of the Obligations before proceeding
against, or as a condition to proceeding against, any Completion Guarantor. Each
Completion Guarantor agrees that any notice or directive given at any time to
the Landlord which is inconsistent with the waiver in the immediately preceding
sentence shall be null and void and may be ignored by the Landlord, and, in
addition, may not be pleaded or introduced as evidence in any litigation
relating to this Completion Guarantee for the reason that such pleading or
introduction would be at variance with the written terms of this Completion
Guarantee, unless the Landlord has specifically agreed otherwise in writing.
1.6. The Completion Obligations shall not include any of the
costs which are included as a part of the Carry Obligations.
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1.7. Each Completion Guarantor acknowledges that it has
received copies of and is familiar with the Lease and the GDA, which are
incorporated herein by reference.
1.8. Except as expressly provided in this Completion
Guarantee, in no event shall the Completion Guarantors, as a result of this
Completion Guarantee, incur, directly or indirectly, any obligation, contingent
or otherwise, under the Lease and/or the GDA ("incur" meaning to create, incur,
assume, guarantee or otherwise become liable for).
2. Default Procedures
2.1. If for any reason whatsoever the Company:
(a) fails or neglects, even if the Company is not at fault and
whether intentional or unintentional, timely (as extended by Force Majeure (as
defined in the GDA)) to commence construction within the time set forth in
Section 2.13(a) of the GDA and diligently and expeditiously continue
construction, and complete the Phase I and II Construction or any Component
respectively, within the time period and in the manner specified in the GDA free
of liens arising from the furnishing of labor, materials, supplies, furnishings
or equipment for the Phase I and II Construction, other than Permitted Liens; or
(b) otherwise fails in any other manner to prosecute with
diligence and continuity the Completion Obligations; or
(c) fails timely to pay any of the Carry Obligations; or
(d) shall have filed against it a petition for relief under
any bankruptcy law, or any petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under
any present or future statute, law or regulation shall be filed against the
Company, and so long as the Completion Guarantors are not otherwise in
default under this Completion Guarantee, in any such event the Company shall
fail to remedy such default to the Landlord's satisfaction within sixty (60)
days after the Company's receipt of a written notice of default with respect
thereto from the Landlord; or
(e) shall be adjudged bankrupt or insolvent, the Company shall
make a general assignment for the benefit of creditors, or the Company shall
admit in writing its inability to pay its debts as they become due, or the
Company shall file a petition for relief under any bankruptcy law, or any
petition seeking any
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reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any present or future statute, law or
regulation shall be filed by the Company, or the Company shall file an answer
admitting or not contesting the material allegations of a petition filed
against it in any such proceeding, or the Company shall seek or consent to or
acquiesce in the appointment of a trustee, liquidator of the Company or a
material part of its properties, or the Company shall voluntarily liquidate
or dissolve;
then in any such event or at any time thereafter, the Landlord may give written
notice to the Completion Guarantors, the Company and the Surety of the
occurrence of such event; provided, that if any of the Completion Guarantors,
the Company or the Surety is the subject of any bankruptcy case, any inability
of the Landlord to give notice to such party as a result of the effect of the
bankruptcy case shall not affect the validity or effectiveness of the notice to
the other parties which are not the subject of any bankruptcy case.
2.2. Immediately upon receipt of such notice, the Completion
Guarantors shall take all necessary steps to maintain insurance coverage and
secure the Development to prevent damage or deterioration to the Development and
unauthorized entry or access to the Development (the "Preservation
Obligations"). If after notice and five (5) Business Days opportunity to cure
after such notice, the Completion Guarantors shall fail to perform the
Preservation Obligations, such failure shall be a "Preservation Obligation
Default".
2.3. Commencing on the date on which the Landlord gives any
such notice to the Completion Guarantors pursuant to Section 2.1 hereof, the
Completion Guarantors, at their sole cost, shall be obligated to cure the
default or defaults alleged to exist in such notice within the applicable cure
period set forth in Section 2.4 hereof. If the alleged default is a failure to
pay one or more Carry Obligations, the Completion Guarantors shall pay the Carry
Obligations then due and thereafter shall pay the Carry Obligations when and as
due. If the alleged default is a failure to perform one or more Completion
Obligations, the Completion Guarantors shall immediately commence to perform the
Completion Obligations and thereafter continue diligently and expeditiously
until the Completion Obligations are fully performed.
2.4. Subject to Section 2.5 hereof, if (i) after notice and
five (5) Business Days opportunity to cure after such notice, the Completion
Guarantors shall fail timely to pay the Carry Obligations (a "Carry
Obligation Default"), or (ii) after notice and thirty (30) days opportunity
to cure after such notice, the
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Completion Guarantors shall fail to commence performing the Completion
Obligations and diligently thereafter continue to perform the Completion
Obligations through the date of Completion (as defined in the GDA) (a
"Completion Obligation Default"), or (iii) a Preservation Obligation Default
shall occur, then in addition to all other rights and remedies that may be
available to the Landlord under the terms of this Completion Guarantee, or
the Lease or the GDA, at law or in equity, the Landlord or its agent, in its
sole discretion, may proceed as follows:
(a) Landlord, at its option, may elect to require specific
performance by the Completion Guarantors of any and/or all of the Completion
Obligations after a Completion Obligation Default, the Carry Obligations after a
Carry Obligation Default and/or the Preservation Obligations after a
Preservation Obligation Default.
(b) After any default by the Company in its obligations timely
to commence and complete the Performance Bond Construction or the Preservation
Obligations, the Landlord, at its option, shall have the right, but shall have
no obligation, to undertake to require the Surety to perform the Performance
Bond Construction or the Preservation Obligations, as the case may be, pursuant
to the Performance Bond. The Landlord's election to require the Surety to
perform the Performance Bond Construction or the Preservation Obligations shall
not release, diminish or extinguish the liability of the Company or either
Completion Guarantor therefor to the extent the Surety fails to perform such
Performance Bond Construction or the Preservation Obligations. The Completion
Guarantors shall remain obligated to perform the Carry Obligations
notwithstanding any such election and notwithstanding the Surety's performance
of the Performance Bond Construction or the Preservation Obligations.
(c) In addition to the Landlord's right to require specific
performance by the Completion Guarantors of any and/or all of the Completion
Obligations after a Completion Obligation Default, the Carry Obligations after a
Carry Obligation Default, and/or the Preservation Obligations after a
Preservation Obligation Default, and whether or not the Landlord shall have
called on the Surety pursuant to the Performance Bond, (i) the Landlord shall
have the right to recover from the Completion Guarantors all unreimbursed costs
and expenses, including but not limited to attorneys' fees, incurred by the
Landlord in protecting, preserving, enforcing or defending its interests in this
Completion Guarantee, (ii) after a Carry Obligation Default, the Completion
Guarantors shall be liable for the joint benefit of the Landlord, the LGCB, the
Administrative Agent, and the New
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Indenture Trustee as their interests may appear for any interest or delinquency
costs of the Company arising from such Carry Obligation Default; provided that
the Completion Guarantors shall not be liable for duplicate payments of the same
charge with respect to any such interest or delinquency costs of the Company
regardless of whether multiple demands are made by any or all of the RDC, the
City, the LGCB, the Administrative Agent, or the New Indenture Trustee, (iii)
after a Completion Obligation Default, the Completion Guarantors shall be liable
for the joint benefit of the Landlord, the LGCB, the Administrative Agent, and
the New Indenture Trustee as their interests may appear for damages to pay for
the costs of performance of the Completion Obligations arising from such
Completion Obligation Default or such other damages as may be available at law
or in equity; provided that, in no event shall the Completion Guarantors be
liable for duplicate payments in respect of damages nor for more than one
performance of the Completion Obligations regardless of whether multiple demands
are made by any or all of the RDC, the City, the New Indenture Trustee, the
Administrative Agent, or the LGCB, and (iv) after a Preservation Obligation
Default, the Completion Guarantors shall be liable for the joint benefit of the
Landlord, the LGCB, the Administrative Agent, and the New Indenture Trustee as
their interests may appear for damages to pay for the costs of performance of
the Preservation Obligations arising from such Preservation Obligation Default;
provided that, in no event shall the Completion Guarantors be liable for
duplicate payments in respect of damages nor for more than one performance of
the Completion Obligations regardless of whether multiple demands are made by
any or all of the RDC, the City, the New Indenture Trustee, the Administrative
Agent, or the LGCB.
(d) With respect to the Obligations, each Completion Guarantor
specifically agrees that this Completion Guarantee continues whether the Company
is lessee under the Lease.
(e) With respect to the Carry Obligations, each Completion
Guarantor specifically agrees that this Completion Guarantee is intended as a
contract to guarantee payment on a timely basis of all amounts included as Carry
Obligations pursuant to Sections 1.1(c) and 1.2 hereof.
(f) No delay or failure by the Landlord to exercise any remedy
against the Completion Guarantors will be construed as a waiver of that right or
remedy.
2.5. The remedies set forth in Sections 2.4 and 7 hereof are
not intended to be exclusive of any remedies that the Landlord may have against
the
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Company under the Lease or the GDA or other documents or agreements referenced
therein or related thereto. The Completion Guarantors recognize that the choice
of remedies by the Landlord will necessarily and properly be a matter of the
Landlord's business judgment, which the passage of time and events may or may
not prove to have been the best choice to maximize recovery by the Landlord at
the lowest cost to the Company or the Completion Guarantors. Nevertheless, the
choice of alternatives by the Landlord shall not be subject to question or
challenge by the Completion Guarantors hereunder, nor shall any such choice be
asserted as a defense, set-off or basis for any claim of failure to mitigate
damages in any action or proceeding arising from this Completion Guarantee.
3. Alteration of Obligations.In such manner, upon such terms and at
such times as the Landlord deems best, and without notice to either Completion
Guarantor, the Landlord may in accordance with the Lease and the GDA alter,
compromise, accelerate, extend or change the time or manner for the payment or
performance of any of the Lease Obligations (which shall mean any obligations of
the Company under the Lease and GDA or any related documents of the Landlord
executed by the Company concurrently therewith), release the Company as to all
or any portion of the Lease Obligations, release, substitute or add any one or
more guarantors, accept additional or substitute security therefor, or release
or subordinate any security therefor. No exercise or non-exercise of any right
hereby given to the Landlord, no dealing by the Landlord with the Completion
Guarantors or any other guarantor or any other person, and no change, impairment
or release of all or any portion of the Lease Obligations or suspension of any
right or remedy of the Landlord against any person, including without limitation
the Company or any other such guarantor or other person, shall in any way affect
any of the Obligations or any security furnished by the Completion Guarantors or
give the Completion Guarantors any recourse against the Landlord. If the
Landlord has exculpated or hereafter exculpates the Company from personal
liability in whole or in part, said exculpation shall not affect the
Obligations. Each Completion Guarantor further acknowledges that any such
exculpation that has been given or that is hereafter given to the Company has
been given or is given in reliance upon the covenants of the Completion
Guarantors contained herein.
4. Waiver
4.1. The Completion Guarantors, in solido with each other,
represent, warrant and agree that, as of the date of this Completion Guarantee,
their obligations under this Completion Guarantee are not subject to any
recoupment, counterclaims, offsets or defenses against the Landlord or the
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Company of any kind. The Completion Guarantors further in solido with each other
agree that their obligations under this Completion Guarantee shall not be
subject to any counterclaims, offsets or defenses against the Landlord or
against the Company which may arise in the future. Each Completion Guarantor
hereby expressly waives and relinquishes all rights, defenses and remedies
accorded by applicable law to sureties or guarantors and agrees not to assert or
take advantage of any such rights, defenses or remedies, including without
limitation:
(a) any right to require the Landlord to proceed against the
Company, the Surety, or any other person or to proceed against or exhaust any
security held by the Landlord at any time or to pursue any other remedy in the
power of the Landlord before proceeding against either or both of the Completion
Guarantors, including but not limited to any defense of failure to join or
non-joinder of the Company or any other person whatsoever in any litigation
instituted by the Landlord against either or both of the Completion Guarantors;
(b) the defense of the statute of limitations, prescription,
and preemption in any action hereunder or in any action for the collection or
performance of any of the Obligations;
(c) any defense that may arise by reason of the discharge in
bankruptcy, incapacity, lack of authority, death or disability of any other
person or the failure of the Landlord to file or enforce a claim against the
estate (in administration, bankruptcy or any other proceeding) of any other
person;
(d) diligence, demand, presentment, protest and notice of any
kind (whether, for non-payment or protest or of acceptance, maturity, extension
of time, change in nature or form of the Lease Obligations, acceptance of
further security, release of further security, composition or agreement arrived
at as to the amount of, or the terms of, the Lease Obligations, notice of
adverse change in the Company's financial condition or any other fact which
might materially increase the risk to the Completion Guarantors), including
without limitation notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of the Company, the Landlord, any endorser or creditor of the Company or either
Completion Guarantor or on the part of any other person under this or any other
instrument in connection with any obligation or evidence of indebtedness held by
the Landlord in connection with any of the Lease Obligations;
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(e) any defense based upon an election of remedies by the
Landlord which destroys or otherwise impairs the subrogation rights of the
Completion Guarantors, the right of the Completion Guarantors to proceed against
the Company for reimbursement, or both, or any defense that the Landlord's
claims against the Completion Guarantors are barred or diminished or premature
to the extent that the Landlord has or may have remedies available against the
Company;
(f) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(g) any duty on the part of the Landlord to disclose to the
Completion Guarantors any facts the Landlord may now or hereafter know about the
Company, regardless of whether the Landlord has reason to believe that any such
facts materially increase the risk beyond that which the Completion Guarantors
intend to assume, or has reason to believe that such facts are unknown to either
Completion Guarantor, or has a reasonable opportunity to communicate such facts
to either Completion Guarantor, since each Completion Guarantor acknowledges
that it is fully responsible for being and keeping informed of the financial
condition of the Company and of all circumstances bearing on the risk of
non-payment of any of the Lease Obligations;
(h) waiver or estoppel or any alleged lack of reasonable or
justifiable reliance on the part of the Landlord as to the Completion
Guarantors' representations;
(i) lack, failure or insufficiency of consideration;
(j) any alleged failure of the Landlord to mitigate injuries,
losses or damages or any plea that the Landlord has any duty to mitigate
injuries, losses, or damages prior to seeking recovery under this Completion
Guarantee; and
(k) any defense that the Landlord's claims hereunder are or
may be barred because an adequate remedy at law exists.
4.2. Each Completion Guarantor agrees to forbear from exercise
of any rights of subrogation, indemnity, or contribution against each other, the
Company, the Surety or any other person who may be liable for satisfaction of
the Completion Obligations or the Carry Obligations until such Obligations have
been fully satisfied as to the Landlord.
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4.3. In the event of the commencement of a bankruptcy case by
or against any Completion Guarantor,
(a) each Completion Guarantor agrees to waive the automatic
stay under the Bankruptcy Code and further agrees to the entry of an immediate
order from the Bankruptcy Court, on the Landlord's ex parte motion, granting to
the Landlord a modification of the automatic stay (and/or recognition that the
automatic stay is not applicable) allowing it to fully enforce the provisions of
this Completion Guarantee, the Completion Guarantors hereby agreeing that in
such case, "cause", as defined by the Bankruptcy Code, would exist for the
immediate entry by the Bankruptcy Court of such an order modifying the automatic
stay.
(b) whether or not the Company shall have defaulted in its
obligations to complete the Phase I and II Construction, the Landlord shall have
an allowable claim against such Completion Guarantor in an amount equal to the
then estimated amount necessary to pay for the Completion of the Phase I and II
Construction, and the Preservation Obligations and any Carry Obligations through
the then estimated date of completion of the Phase I and II Construction. Any
amounts paid on such claim shall be paid for the joint benefit of the Landlord,
the LGCB, the Administrative Agent, and the New Indenture Trustee as their
interests may appear and shall be used solely to complete, and pay any costs in
connection with the Completion Obligations, the Preservation Obligations, and
any Carry Obligations prior to such completion of, the Phase I and II
Construction. Upon completion of the Phase I and II Construction and the payment
of all costs, liens and claims related thereto, any unused portion of such
amounts paid in respect of any claim under this Section 4.3(b) shall be promptly
reimbursed to such Completion Guarantor. The Company shall be obligated to
promptly reimburse such Completion Guarantor for any such amounts paid by and
not previously reimbursed to such Completion Guarantor under this Section
4.3(b).
5. Subordination. All existing and future indebtedness of the Company
to either Completion Guarantor is hereby subordinated in accordance with this
Section 5 to all of the Lease Obligations. Without the prior written consent of
the Landlord, during any period in which there is a payment default under the
Lease or the GDA such subordinated indebtedness shall not be paid or withdrawn
in whole or in part, nor shall either Completion Guarantor accept any payment of
or on account of any such indebtedness or as a withdrawal of capital while this
Completion Guarantee is in effect. Any such payment by the Company in violation
of this Completion Guarantee shall be received by the Completion Guarantors in
trust for the Landlord, and the Completion Guarantors shall cause
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<PAGE>
the same to be paid to the Landlord immediately upon demand by the Landlord on
account of the Lease Obligations.
6. Bankruptcy
6.1. So long as any Obligations are owed to the Landlord, no
Completion Guarantor shall, without the prior written consent of the Landlord
commence, or join with any other person in commencing, any bankruptcy,
reorganization or insolvency proceeding against the Company. Subject to Section
12 hereof, the Obligations shall not be altered, limited or affected by any
proceeding, voluntary or involuntary, involving the bankruptcy, reorganization,
insolvency, receivership, liquidation or arrangement of the Company, or by any
defense which the Company may have by reason of any order, decree or decision of
any court or administrative body resulting from any such proceeding.
6.2. So long as any Obligations are owed to the Landlord,
(a) each Completion Guarantor shall file, in any bankruptcy or
other proceeding in which the filing of claims is required or permitted by law,
all claims which such Completion Guarantor may have against the Company relating
to any indebtedness of the Company to such Completion Guarantor, and hereby
assigns to the Landlord all rights of such Completion Guarantor thereunder as
security for performance of the Obligations jointly with such assignment to the
LGCB under that certain LGCB Completion Guarantee between the Completion
Guarantors and the LGCB of even date herewith (the "LGCB Completion Guarantee"),
to the Administrative Agent under that certain Bank Completion Guarantee between
the Completion Guarantors and the Administrative Agent of even date herewith
(the "Bank Completion Guarantee"), and to the New Indenture Trustee under that
certain Notes Completion Guarantee between the Completion Guarantors and the New
Indenture Trustee of even date herewith (the "Notes Completion Guarantee").
(b) if either Completion Guarantor does not file any such
claim, the Landlord, as attorney-in-fact for such Completion Guarantor, is
hereby authorized to do so in the name of such Completion Guarantor jointly with
such authorization to the LGCB under the LGCB Completion Guarantee, to the
Administrative Agent under the Bank Completion Guarantee, and to the New
Indenture Trustee under the Notes Completion Guarantee, or, in the Landlord's,
the LGCB's, the Administrative Agent's, and the New Indenture Trustee's joint
discretion, to assign the claim to a joint nominee and to cause proofs of claim
to
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<PAGE>
be filed in the name of such joint nominee as security for performance of the
Obligations. The foregoing power of attorney is coupled with an interest and
cannot be revoked.
(c) the Landlord, jointly with the LGCB under the LGCB
Completion Guarantee, the Administrative Agent under the Bank Completion
Guarantee and the New Indenture Trustee under the Notes Completion Guarantee, or
a joint nominee, as the case may be, shall have the right to accept or reject
any plan proposed in any such proceeding and to take any other action which a
party filing a claim is entitled to take. Any exercise or non-exercise of any
such right (i) by the Landlord under this Section 6.2(c), (ii) by LGCB under
Section 6.2(c) of the LGCB Completion Guarantee, (iii) by the Administrative
Agent under Section 6.2(c) of the Bank Completion Guarantee, and (iv) by the New
Indenture Trustee under Section 6.2(c) of the Notes Completion Guarantee, shall
not impair or diminish the Completion Guarantors' obligations under this
Completion Guarantee. In all such cases, whether in administration, bankruptcy
or otherwise, the person authorized to pay such a claim shall pay the same to
the Landlord, the LGCB under the LGCB Completion Guarantee, the Administrative
Agent under the Bank Completion Guarantee and the New Indenture Trustee under
the Notes Completion Guarantee, as their interests may appear, as security for
performance of the Obligations, and, to the full extent necessary for that
purpose, each Completion Guarantor hereby assigns to the Landlord jointly with
such assignment to the LGCB under the LGCB Completion Guarantee, to the
Administrative Agent under the Bank Completion Guarantee and to the New
Indenture Trustee under the Notes Completion Guarantee all of such Completion
Guarantor's rights to all such payments or distributions to which such
Completion Guarantor would otherwise be entitled.
6.3. This Completion Guarantee shall remain in full force and
effect and continue to be effective should any petition be filed by or against
the Company or any Completion Guarantor for liquidation or reorganization,
should the Company or any Completion Guarantor become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's or any Completion
Guarantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount or
must otherwise be restored or returned by the Landlord, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance
15
<PAGE>
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
6.4. In the event that the Company is allowed any extension of
time in connection with any proceeding, voluntary or involuntary, involving the
bankruptcy, reorganization, insolvency, receivership, liquidation or arrangement
of the Company, to cure any default relating to the Phase I and II Construction,
such extension shall not extend the time by which the Completion Guarantors are
required to cause the completion of the Phase I and II Construction or otherwise
perform their obligations under this Agreement in accordance with the provisions
of this Agreement.
7. Interest, Costs and Attorneys' Fees
7.1. If the Completion Guarantors fail to pay all or any
portion of any monetary amounts due as a part of the Obligations upon notice or
demand by the Landlord, the amount of such monetary portion of the Obligations
and all other sums payable by the Completion Guarantors to the Landlord
hereunder shall bear interest from the date of such notice or demand, as the
case may be, at the legal rate for judgments under Louisiana law.
7.2. If, at any time following a default by the Company in the
performance of the Obligations which default entitles the Landlord to require
performance hereunder (whether or not notice is actually given pursuant to
Section 2.1), the Landlord refers this Completion Guarantee to an attorney to
enforce, construe, or defend any provision hereof, or as a consequence of any
default hereunder by the Completion Guarantors, the Landlord shall employ
counsel for advice or representation or shall incur legal or other costs and
expenses, with or without the filing of any legal action or proceeding, in
connection with:
(a) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by the Landlord, the Company, the Completion
Guarantors or any other person) in any way relating to the enforcement of rights
or remedies under this Completion Guarantee;
(b) any attempt to enforce any rights of the Landlord
hereunder against the Completion Guarantors or any other person;
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<PAGE>
(c) any attempt to defend any provision hereof; or
(d) the Performance Bond;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in any way or respect arising
in connection with or relating to any of the events or actions described herein
shall be payable, on demand, by the Completion Guarantors to the Landlord or the
Completion Guarantors shall cause the Company to make such payment, and if not
so paid, shall be additional Obligations under this Completion Guarantee;
provided that upon any engagement of counsel (i) following a default by the
Company in the performance of the Obligations and (ii) prior to the date on
which the Landlord gives written notice pursuant to Section 2.1 (the "Notice
Date"), the Landlord shall make demand on the Company for any expenses of such
counsel incurred prior to the Notice Date and such expenses shall only become an
Obligation under this Completion Guarantee if the Company shall fail timely to
pay such expenses.
The reference to "attorneys' fees" in this Section 7.2 and in all other places
in this Completion Guarantee shall include without limitation such reasonable
amounts as may then be charged for costs and expenses of legal services
furnished by attorneys retained or employed by the Landlord. Such attorneys'
fees shall include, without limitation, those incurred in connection with any
bankruptcy, reorganization, insolvency, receivership, liquidation, arrangement,
lawsuits in state or federal court, or other similar proceedings involving
either Completion Guarantor which in any way affect the exercise by the Landlord
of its rights and remedies hereunder.
8. Cumulative Rights. All rights, powers and remedies of the Landlord
hereunder and under any other agreement now or at any time hereafter in force
between the Landlord and the Completion Guarantors, including without limitation
any other guarantee executed by either Completion Guarantor relating to any
indebtedness of the Company, shall be cumulative and not alternative, and such
rights, powers and remedies shall be in addition to all rights, powers and
remedies given to the Landlord by law and shall not be deemed in any way to
extinguish or diminish Landlord's rights and remedies. This Completion Guarantee
is in addition to and independent of the guarantee of any guarantor of any Lease
Obligations or other indebtedness of the Company.
17
<PAGE>
9. Independent Obligations. The Obligations are independent of the
Lease Obligations, and, in the event of any default hereunder, a separate action
or actions may be brought and prosecuted against either Completion Guarantor,
whether or not the Company is joined therein or a separate action or actions are
brought against the Company. The Landlord's rights hereunder shall not be
exhausted by its exercise of any of its rights or remedies or by any such action
or by any number of successive actions unless and until all Obligations have
been satisfied and fully performed.
10. Application of Payments or Recoveries. Subject to the applicable
provisions of this Completion Guarantee and the terms of the Lease and the GDA,
with or without notice to either Completion Guarantor, the Landlord, in its sole
discretion, at any time and from time to time, and in such manner and upon such
terms as the Landlord deems fit, may apply any or all payments or recoveries
from the Company or from any other guarantor or endorser under any other
instrument, in such manner and order of priority as the Landlord may determine,
to any of the Lease Obligations, whether or not such indebtedness is due at the
time of such application.
11. Financial Statements. The Completion Guarantors hereby represent
and warrant that the information pertaining to the Completion Guarantors set
forth in their most recent filings with the Securities and Exchange Commission
is true and correct in all material respects, and fairly presents the financial
condition of the Completion Guarantors as of the respective dates indicated
therein and for the periods covered thereby, and that no material adverse change
has occurred in the financial condition or prospects of the Completion
Guarantors since the date of the latest information provided therein.
12. Suspension of or Excuse From Performance
12.1. Notwithstanding anything to the contrary in this
Completion Guarantee, if, at any time, there shall occur a Force Majeure (as
defined in the GDA) with respect to the Completion Obligations, then the
Completion Obligations (but not the Carry Obligations) shall be suspended (the
"Suspension") until such time as such Force Majeure ends. During the period
following any date of Suspension and until the end of such Suspension, the
Completion Guarantors shall each use their best efforts to remove such Force
Majeure.
12.2. The Completion Guarantors hereby agree that any
proceeding under any Chapter of the Bankruptcy Code, in receivership, or any
other
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<PAGE>
insolvency proceeding, whether voluntary or involuntary, by or against the
Company and/or any Completion Guarantor or any surety under any bond shall not
be considered, nor constitute Force Majeure nor otherwise excuse or suspend
performance of the Obligations. The Completion Guarantors further agree that (i)
any increase in the costs to complete (including equipping) the Casino, whether
or not such increase in costs was anticipated and/or contemplated in the
Approved Program Plans, GDA and/or otherwise, (ii) the financial condition or
financial inability of the Company and/or any Completion Guarantor to complete
(including equipping) the Casino, (iii) any other adverse financial projections,
financial forecasts, financial events or financial conditions, or (iv) any
failure to obtain funding or financing, shall not be considered, nor constitute
Force Majeure.
12.3. The Obligations shall terminate upon the occurrence of
any of the following: (i) the termination of the Lease or the GDA by the
Company, RDC or the City other than as a result of (a) the fault of or a breach
or default by the Company or any Completion Guarantor or (b) the voluntary
termination of the Lease or the GDA by the Company, (ii) Casino Gaming
Operations shall no longer be permitted to be conducted at the Casino or shall
be modified, restricted or limited in a manner that materially diminishes the
benefits afforded to Company or the gaming activities permitted to be conducted
at the Casino pursuant to the Act by reason of a change of law or the enactment
of a new law after the Effective Date (as defined in the Plan) or by reason of
the Company's rights under the Casino Operating Contract having been terminated
in any material respect, other than as a result of the fault of or a breach or
default by the Company or any Completion Guarantor, subject to Section 12.4
hereof, (iii) only as to the Carry Obligations but not as to the Completion
Obligations or the Preservation Obligations, a Force Majeure shall have
continued for more than one (1) year from the first to occur of a receipt of a
notice from Landlord to the Completion Guarantors pursuant to Section 2.1 hereof
or a similar notice to the Completion Guarantors from the LGCB, the
Administrative Agent or the New Indenture Trustee (provided that the Completion
Guarantors shall have complied with the notice requirements of the last sentence
of Section 14 hereof in respect of any notices received under Section 2.1
hereof) notwithstanding the Completion Guarantors' actual and continuous best
efforts to remove such Force Majeure; provided, however, that the Completion
Guarantors shall remain liable for all Carry Obligations that actually came due
through the expiration of such one (1) year period to the extent not satisfied
by the Company, and, provided further, that the Completion Guarantors shall have
used their best efforts to remove such Force Majeure within said one (1) year
period, or (iv) as to the Carry Obligations, as of
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<PAGE>
and upon the completion of the Phase I and Phase II Construction in accordance
with Section 2.13(a) of the GDA and as to the Completion Obligations, upon the
Completion Obligation Termination Date.
12.4. Upon the occurrence of any of the events described in
Section 12.3(ii) hereof prior to the occurrence of the completion of the Phase I
and II Construction, the Completion Guarantors shall nevertheless be obligated
to complete the Poydras Street Support Facility Premises, the Poydras Tunnel
Area, exterior site and street work, and any improvements required to be made to
the Leased Premises so that it may be used for any Highest and Best Use as
required by Section 4.20 of the Lease.
12.5. Delays caused by the failure of the Company, its
contractor(s), architect(s), consultants or subcontractors to furnish in a
timely manner approved working or shop drawings, materials, fixtures, equipment,
appliances or other fittings or to perform their work in a timely manner shall
not constitute a basis of extension of time, except to the extent caused by an
event of Force Majeure that would allow an extension of time under this
Completion Guarantee and the GDA.
12.6. The Completion Guarantors shall have a concurrent right
with the Company to give notice to the City and the RDC of any Force Majeure as
provided in Section 12 of the GDA.
12.7. Other than as set forth in this Completion Guarantee and
without waiver of the terms and conditions of this Completion Guarantee,
including, without limitation, terms and conditions of this Section 12, or the
terms and conditions of the definition of "Force Majeure" set forth in the GDA,
the Company and the Completion Guarantors waive their rights pursuant to
Articles 1873-1878 and 3506(15) of the Louisiana Civil Code, and, without
limitation, any right to claim excuse from performance or delay of performance
due to impossibility of performance of the Completion Obligations, irresistible
force or a fortuitous event.
13. Completion Obligation Termination Date and Satisfaction of Claims
and Liens
13.1. Notwithstanding the completion of Phase I and II
Construction, the Completion Guarantors shall continue to be obligated for
payment or making satisfactory provisions for payment as they become due of all
costs of completing the Phase I and II Construction and for all materialmen's
claims, mechanics' liens
20
<PAGE>
or other claims, liens or claims for liens arising from the furnishing of labor,
materials, supplies or equipment for the Phase I and II Construction. The date
after the Opening Date on which all such payments or satisfactory provisions for
all such payments have been made, all lien periods with respect to the Phase I
and II Construction have expired and no liens or privileges arising from the
furnishing of labor, materials, supplies or equipment for the Phase I and II
Construction affecting or purporting to affect the Leased Premises remain of
record in Orleans Parish is herein referred to as the "Completion Obligation
Termination Date".
13.2. For purposes of this Completion Guarantee, in respect of
any Completion Obligations or Carry Obligations not satisfied as of the
completion of the Phase I and II Construction in accordance with Section 2.13(a)
of the GDA, satisfactory provision for payment of claims, liens and claims for
liens shall be deemed to have been made if (a) in respect of any liens or claims
for liens but not non-lien claims, a bond has been established in accordance
with the terms of LSA R.S. 9:4801 et seq., (b) in respect of non-lien claims but
not liens or claims for liens, an escrow, letter of credit or trust account for
payment has been established in an amount at least equal to one hundred five
percent (105%) of the total of such outstanding non-lien claims with or by an
independent third party, (c) in respect of any non-lien claims, the total of
such outstanding non-lien claims has been guaranteed under a payment guarantee
from a party other than either Completion Guarantor (or any affiliate thereof)
rated as an investment grade credit by a nationally recognized credit rating
agency, or (d) other provision has been made satisfactory to Landlord.
14. Notices. Whenever the Completion Guarantors or the Landlord shall
desire to give or serve any notice, demand, request or other communication with
respect to this Completion Guarantee, each such notice shall be in writing and
shall be effective only if the same is delivered by personal service, by
overnight courier service, or mailed by certified mail, postage prepaid, return
receipt requested, addressed as follows:
(a) if to either Completion Guarantor:
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Attn: General Counsel
21
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(b) if to the Company:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Attn: President
(c) if to the Surety:
Reliance Insurance Company
Four Penn Center Plaza, 17th Floor
Philadelphia, Pennsylvania 19103
Attn: Claims Department
and
United States Fidelity and Guaranty Company
6225 Smith Avenue
Baltimore, Maryland 21203
Attn: Claims Department
(d) if to the Landlord, as provided in the Lease;
or at such other address as shall have been furnished in writing by any person
described above to the party required to give notice hereunder.
Any such notice shall be deemed to have been given when
delivered by hand or four (4) business days after mailing. Any of the Completion
Guarantors, the Company, the Surety or the Landlord may change its address by
giving the others written notice of the new address as herein provided.
Any notice given or received by any Completion Guarantor to or
from the LGCB under the LGCB Completion Guarantee, to or from the Administrative
Agent under the Bank Completion Guarantee or to or from the New Indenture
Trustee under the Notes Completion Guarantee shall be immediately forwarded by
such Completion Guarantor to the Landlord at the address set forth above.
15. Successors and Assigns. This Completion Guarantee shall inure to
the benefit of the Landlord, its successors and assigns, including the assignees
of any Obligations, and shall bind the heirs, executors, administrators,
personal
22
<PAGE>
representatives, successors and assigns of each Completion Guarantor. This
Completion Guarantee may be assigned by the Landlord, in its sole discretion,
with respect to all or any portion of the Obligations, and when so assigned
Completion Guarantors shall be liable to the assignees under this Completion
Guarantee without in any manner affecting the liability of the Completion
Guarantors with respect to any Obligations retained by the Landlord. Neither
Completion Guarantor may assign or transfer any of its rights, obligations or
interest hereunder without the prior written consent of the Landlord.
16. Miscellaneous Provisions
16.1. THIS COMPLETION GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF LOUISIANA. EACH
COMPLETION GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF LOUISIANA AND CONSENTS TO SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY
LOUISIANA LAW IN ANY ACTION BROUGHT UNDER OR ARISING FROM THIS COMPLETION
GUARANTEE.
16.2. This Completion Guarantee shall constitute the entire
agreement of the Completion Guarantors with Landlord with respect to the subject
matter hereof, and no representation, understanding, promise or condition
concerning the subject matter hereof shall be binding upon Landlord unless
expressed herein.
16.3. Should any term, covenant, condition or provision of
this Completion Guarantee be determined to be illegal or unenforceable, it is
the intent of the parties that all other terms, covenants, conditions and
provisions hereof shall nevertheless remain in full force and effect.
16.4. Time is of the essence to this Completion Guarantee and
each of its provisions.
16.5. When the context and construction so require, all words
used in the singular herein shall be deemed to include the plural, the masculine
shall include the feminine and neuter, and vice versa.
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<PAGE>
16.6. The word "person" as used herein shall include any
individual, company, firm, association, partnership, limited liability company,
joint venture, corporation, trust or other legal entity of any kind whatsoever.
16.7. No provision of this Completion Guarantee or right
granted to the Landlord hereunder can be waived in whole or in part, nor can
either Completion Guarantor be released from such Obligations, except by a
writing duly executed by an authorized officer of the Landlord. No provision of
this Completion Guarantee or any of the Obligations may be amended without the
prior written consent of the Completion Guarantors and the Landlord and the
consent of any additional beneficiaries hereof shall not be required.
16.8. The Landlord need not inquire into the power of the
Company or the authority of their officers, shareholders or agents acting or
purporting to act on their behalf.
16.9. The headings of this Completion Guarantee are inserted
for convenience only and shall have no effect upon the construction or
interpretation thereof.
16.10. This Completion Guarantee shall be for the sole benefit
of the Landlord, its successors and assigns. The provisions of this Completion
Guarantee shall not inure to the benefit of any other person, including, without
limitation, the Company.
16.11. Notwithstanding the foregoing, in the event that the
Completion Guarantors, or either of them, shall enter into the Notes Completion
Guarantee, the Bank Completion Guarantee or the LGCB Completion Guarantee, or
any supplemental agreement with respect thereto and such Notes Completion
Guarantee, Bank Completion Guarantee, or LGCB Completion Guarantee or amendment
or supplement thereto or the obligations created thereby provides rights or
remedies to the New Indenture Trustee, the Administrative Agent or the LGCB that
are more favorable in any respect than the rights and remedies granted to the
Landlord hereunder (as this Completion Guarantee may from time to time be
amended), the Landlord shall be deemed to have available to it, at its option,
the benefit of the more favorable rights and remedies implemented by such Notes
Completion Guarantee, Bank Completion Guarantee, or LGCB Completion Guarantee or
amendment or supplemental agreement and shall not under any circumstances be
deemed to have agreed to or become subject to any alterations in the Notes
Completion Guarantee, the Bank Completion Guarantee or the LGCB
24
<PAGE>
Completion Guarantee, or any provisions of a supplemental agreement among the
Completion Guarantors, the New Indenture Trustee, the Administrative Agent,
and/or the LGCB, that are less favorable than the rights and remedies granted to
the Landlord hereunder.
17. Obligations of Surety. Notwithstanding anything to the contrary in
Sections 1.1 or 1.4 or any other provision hereof, nothing herein shall expand,
enlarge or otherwise modify the obligations of the Surety pursuant to the
Performance Bond.
18. Effectiveness. This Completion Guarantee shall be effective as of
the date this Completion Guarantee is executed and delivered by the parties
hereto and the Effective Date (as defined in the Plan) has occurred.
[SIGNATURE PAGE FOLLOWS]
25
<PAGE>
IN WITNESS WHEREOF, the undersigned have each executed this
Completion Guarantee as of the date first above written.
COMPLETION GUARANTORS:
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ Stephen H. Brammell
---------------------------
Name: Stephen H. Brammell
---------------------------
Title: Vice President
---------------------------
HARRAH'S OPERATING COMPANY,
INC., a Delaware corporation
By: /s/ Stephen H. Brammell
---------------------------
Name: Stephen H. Brammell
---------------------------
Title: Vice President
---------------------------
Accepted and Agreed:
RIVERGATE DEVELOPMENT CORPORATION
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
THE CITY OF NEW ORLEANS
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
SIGNATURE PAGE TO CITY/RDC COMPLETION GUARANTEE
<PAGE>
IN WITNESS WHEREOF, the undersigned have each executed this
Completion Guarantee as of the date first above written.
COMPLETION GUARANTORS:
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
HARRAH'S OPERATING COMPANY,
INC., a Delaware corporation
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Accepted and Agreed:
RIVERGATE DEVELOPMENT CORPORATION
By: /s/ Helen S. Kohlman
--------------------------
Name: Helen S. Kohlman
--------------------------
Title: Vice-President
--------------------------
THE CITY OF NEW ORLEANS
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
SIGNATURE PAGE TO CITY/RDC COMPLETION GUARANTEE
<PAGE>
IN WITNESS WHEREOF, the undersigned have each executed this
Completion Guarantee as of the date first above written.
COMPLETION GUARANTORS:
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
HARRAH'S OPERATING COMPANY,
INC., a Delaware corporation
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Accepted and Agreed:
RIVERGATE DEVELOPMENT CORPORATION
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
THE CITY OF NEW ORLEANS
By: /s/ Marc H. Morial
--------------------------
Name: Marc H. Morial
--------------------------
Title: Mayor
--------------------------
SIGNATURE PAGE TO CITY/RDC COMPLETION GUARANTEE
<PAGE>
Exhibit 10.09
LGCB COMPLETION GUARANTEE
THIS LGCB COMPLETION GUARANTEE is entered into as of October
30, 1998 (this "Completion Guarantee"), by HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation ("HET"), and HARRAH'S OPERATING COMPANY, INC., a Delaware
corporation ("HOC," and together with HET, the "Completion Guarantors," and each
a "Completion Guarantor") in favor of the LOUISIANA GAMING CONTROL BOARD (the
"LGCB").
RECITALS
A. A plan of reorganization (the "Plan") of Harrah's Jazz
Company, a Louisiana general partnership ("HJC"), has been confirmed in
connection with the voluntary petition for an Order of Relief under Chapter 11
of Title 11 of the United States Bankruptcy Code (the "Bankruptcy Code") filed
in the United States Bankruptcy Court on November 22, 1995 and now identified as
BK No. 95-14545 in the Eastern District of Louisiana.
B. That certain Casino Operating Contract between Jazz Casino
Company, L.L.C., (the "Company"), and the LGCB dated as of October 30, 1998 (the
"COC") sets forth the conditions, covenants, obligations, requirements and terms
pursuant to which the Company has the authority to conduct gaming operations at
the Casino.
C. The Company has obtained a performance bond (the
"Performance Bond") from Reliance Insurance Company and United States Fidelity
and Guaranty Company (the "Surety") for the benefit of the LGCB, the City of New
Orleans (the "City") and the Rivergate Development Corporation (the "RDC"),
Bankers Trust Company (the "Administrative Agent") as agent for certain lenders
(the "Banks"), and the New Indenture Trustee (as defined in the Plan) as trustee
for the holders of the New Bonds (as defined in the Plan) and the holders of the
New Contingent Bonds (as defined in the Plan) for the completion of Phase I and
II Construction (as defined herein) excluding the FF&E (as defined herein) (the
"Performance Bond Construction").
D. The Completion Guarantors own a substantial beneficial
interest in the parent of the Company and will obtain substantial economic and
other benefits as a result of the successful completion and opening of the
Casino.
E. As used in this Completion Guarantee, all capitalized terms
used herein but not defined herein shall be used herein as defined in the COC.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Completion Guarantors, the receipt and sufficiency of
which are hereby acknowledged, the Completion Guarantors hereby make the
following representations and warranties to the LGCB, and hereby covenant and
agree for the benefit of the LGCB as follows:
<PAGE>
1. Obligations Guaranteed
1.1. The Completion Guarantors hereby irrevocably,
unconditionally, and in solido with each other and the Company, guarantee:
(a) the full and complete payment and performance of all
obligations (the "Completion Obligations") of the Company diligently to commence
and complete construction of and timely to pay for all costs of completion of
the Casino whether incurred before or after the Plan Effective Date and whether
due before or after the Termination of Construction Date (as defined herein) or
otherwise payable by the Company to any person for the costs and expenses of
such completion, and, subject to receipt of any necessary regulatory approvals,
to open the Casino, including:
(i) the completion of construction (as extended by
Force Majeure (as defined herein)) in accordance with the Approved Program Plans
of the Phase I and II Construction, on or before twelve (12) months after the
Plan Effective Date,
(ii) equipping the Casino with the FF&E so that
the Casino is ready to open to the public for business as a casino gaming
operation on or before twelve (12) months after the Plan Effective Date,
(iii) opening the Casino for business as a casino
gaming operation on or before twelve (12) months after the Plan Effective Date
so long as any necessary regulatory approvals from the LGCB, the State Police or
any other State regulatory authorities have been received, provided that timely
receipt of any such approvals has been diligently pursued by or on behalf of the
Company in accordance with the Rules and Regulations for such approvals, and
(iv) causing the Termination of Construction Date
to timely occur, including, without limitation:
(A) the payment of any and all costs of
completing the Phase I and II Construction, including acquiring and
installing the FF&E, including without limitation all labor, materials,
supplies and equipment related thereto, to be paid and satisfied when
due including, without limitation, all cost overruns not paid by the
Company;
(B) the payment, satisfaction or discharge
of liens, if any, arising from injuries or damages to persons or
property in connection with the Phase I and II Construction including
the FF&E and all liens, charges and claims, other than liens set forth
on Exhibit A attached hereto and by this reference incorporated herein
("Permitted Liens"), arising from the furnishing of labor, materials,
supplies or equipment for the Phase I and II Construction including the
FF&E, that are or may be imposed upon or asserted against the Casino or
any portion thereof; and
(C) the defense and indemnification of the
LGCB against all such liens, if any, arising from injuries or damages
to persons or property in
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connection with the Phase I and II Construction including the FF&E and
all such liens, charges and claims, other than Permitted Liens, arising
from the furnishing of labor, materials, supplies or equipment for the
Phase I and II Construction, including the FF&E; and
(b) the full and complete payment and performance of all
obligations (the "Carry Obligations") of the Company to pay on a timely basis
all amounts due from or incurred by or otherwise payable by the Company to any
Person, and all project costs (other than any costs which are included as a part
of the Completion Obligations) due before or after the Plan Effective Date until
and through the Termination of Construction Date to be funded, paid and/or
satisfied until and through the Termination of Construction Date, including
without limitation the payment of interest and scheduled principal payments
(excluding principal on the New Bonds and the New Contingent Bonds), taxes
(prior to delinquency), amounts owing to Rivergate Development under the Lease
(as defined herein), amounts owing to the LGCB under the COC, amounts due to
allowed general unsecured creditors as provided in Section 9.32- "Payment to
Unsecured Creditors" of the COC, assessments, utilities, insurance and
maintenance expenses, amounts owing from injuries or damages to person or
property, amounts owing for claims which arise on or prior to the Termination of
Construction Date, or amounts due pursuant to contracts and agreements; provided
that the Completion Guarantors in no event guarantee the Minimum Payment
Shortfall.
1.2. The Carry Obligations shall include, without limitation:
(a) the obligation of the Company upon the Termination
of Construction Date to have available for working capital at least Five Million
Dollars ($5,000,000) of cash in the House Bank (as defined in the Management
Agreement) and at least Twenty Five Million Dollars ($25,000,000) of
availability for immediate drawdown(s) under the Revolving Loans (as defined in
that certain Credit Agreement entered into by the Company pursuant to the Plan,
the "Credit Agreement"), subject to the terms thereof, reduced by (i) the amount
of Letters of Credit (as defined in the Credit Agreement) not to exceed Two
Million Dollars ($2,000,000), and (ii) a drawing of Ten Million Dollars
($10,000,000) of the Revolving Loan to fund the Minimum Balance (as defined in
the Management Agreement) on or before the Termination of Construction Date; and
(b) the obligation of the Company to repay the Revolving
Loan together with any and all amounts of fees, interest, letter of credit fees
and other amounts due in respect of the Revolving Loan prior to the Termination
of Construction Date.
This provision may require the Completion Guarantors to contribute working
capital directly to the Company and/or to pay down amounts outstanding under the
Revolving Loan.
1.3. The Completion Obligations, the Carry Obligations and the
Preservation Obligations are collectively referred to herein as the
"Obligations."
1.4. The Completion Guarantors, in solido with each other and
the Company, agree to perform and comply with their Obligations, whether or not
the Company is liable therefor individually or jointly or in solido with others,
and whether or not recovery against the
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Company is or may become barred by any statute of limitations or prescriptive or
preemptive period or is or may become unenforceable or discharged, whether in
whole or in part, for any reason other than payment or performance thereof in
full. The Completion Guarantors agree that this Completion Guarantee is a
guarantee of payment and performance and not of collection, and that each of
their obligations under this Completion Guarantee shall be primary, absolute and
unconditional, irrespective of, and unaffected by:
(a) the absence of any action to enforce this Completion
Guarantee or any other document or the waiver or consent by the LGCB with
respect to any of the provisions thereof;
(b) any release or discharge of any one or more of the
Surety, the other Completion Guarantor, the Company or any other party of any
Obligations; or
(c) any other action or circumstances which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor;
it being agreed by each Completion Guarantor that its obligations under this
Completion Guarantee shall not be discharged except as set forth in Section 12.3
hereof. Each Completion Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations.
1.5. Each Completion Guarantor expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel the LGCB to proceed in respect of the
Obligations against the Company or any other party or against any security for
the payment and performance of the Obligations before proceeding against, or as
a condition to proceeding against, any Completion Guarantor and without limiting
the above, each Completion Guarantor waives all pleas of division and of
discussion. Each Completion Guarantor agrees that any notice or directive given
at any time to the LGCB which is inconsistent with the waiver in the immediately
preceding sentence shall be null and void and may be ignored by the LGCB, and in
addition, may not be pleaded or introduced as evidence in any litigation
relating to this Completion Guarantee for the reason that such pleading or
introduction would be at variance with the written terms of this Completion
Guarantee, unless the LGCB has specifically agreed otherwise in writing.
1.6. The Completion Obligations shall not include any of the
costs which are included as a part of the Carry Obligations.
1.7. Each Completion Guarantor acknowledges that it has
received copies of and is familiar with the COC, which is incorporated herein by
reference.
1.8. Except as expressly provided in this Completion
Guarantee, in no event shall the Completion Guarantors, as a result of this
Completion Guarantee, incur, directly or indirectly, any obligation, contingent
or otherwise, under the COC ("incur" meaning to create, incur, assume, guarantee
or otherwise become liable for).
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2. Procedures for Completion
2.1. If for any reason whatsoever:
(a) the Company fails or neglects timely (as extended by
Force Majeure) to commence construction and diligently and expeditiously
continue construction, and complete the Phase I and II Construction including
the FF&E, free of liens arising from the furnishing of labor, materials,
supplies or equipment for the Phase I and II Construction including the FF&E in
accordance with the COC, other than Permitted Liens; or
(b) the Company otherwise fails to satisfy and fulfill
the Completion Obligations in a timely manner in accordance with the time
periods set forth in Section 1.1(a)(i) hereof; or
(c) the Company fails timely to pay any of the Carry
Obligations; or
(d) the Company shall have filed against it a petition
for relief under any bankruptcy law, or any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future statute, law or regulation shall be filed
against the Company, and said petition is not dismissed within sixty (60) days
after the filing of said petition; or
(e) the Company shall be adjudged bankrupt or insolvent,
the Company shall make a general assignment for the benefit of creditors, or the
Company shall admit in writing its inability to pay its debts as they become
due, or the Company shall file a petition for relief under any bankruptcy law,
or any petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future statute, law or regulation shall be filed by the Company, or the Company
shall file an answer admitting or not contesting the material allegations of a
petition filed against it in any such proceeding, or the Company shall seek or
consent to or acquiesce in the appointment of a trustee, liquidator of the
Company or a material part of its properties, or the Company shall voluntarily
liquidate or dissolve;
then in any such event or at any time thereafter, the LGCB may give written
notice to the Completion Guarantors, the Company and the Surety of the
occurrence of such event; provided, that if any of the Completion Guarantors,
the Company or the Surety is the subject of any bankruptcy case, any inability
of the LGCB to give notice to such party as a result of the effect of the
bankruptcy case shall not affect the validity or effectiveness of the notice to
the other parties which are not the subject of any bankruptcy case.
2.2. Immediately upon receipt of such notice (pursuant to
Section 2.1 hereof), the Completion Guarantors shall take all necessary steps to
maintain insurance coverage and secure the Casino Premises to prevent damage or
deterioration to the Casino Premises and unauthorized entry or access to the
Casino Premises (the "Preservation Obligations"). If after notice and five (5)
Business Days opportunity to cure after such notice, the Completion Guarantors
shall fail to perform the Preservation Obligations, such failure shall be a
"Preservation Obligation Default". Commencing on the date on which the LGCB
gives any such
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notice to the Completion Guarantors pursuant to Section 2.1 hereof, the
Completion Guarantors, at their sole cost, (i) with respect to a Carry
Obligation Default shall pay the Carry Obligations when and as due and (ii) with
respect to a Completion Obligation Default shall immediately commence to perform
the Completion Obligations and thereafter continue diligently and expeditiously
until the Completion Obligations are fully performed.
2.3. Subject to Section 2.4 hereof, if after notice and five
(5) Business Days opportunity to cure after such notice, the Completion
Guarantors shall fail timely to pay the Carry Obligations (a "Carry Obligation
Default"), after notice and thirty (30) days opportunity to cure after such
notice, the Completion Guarantors shall fail to commence performing the
Completion Obligations and diligently thereafter continue to perform the
Completion Obligations through the Termination of Construction Date (a
"Completion Obligation Default"), or a Preservation Obligation Default shall
occur, then in addition to all other rights and remedies that may be available
to the LGCB under the terms of this Completion Guarantee or the COC, at law or
in equity, the LGCB or its agent, in its sole discretion, may proceed as
follows:
(a) The LGCB, at its option, may elect to require
specific performance by the Completion Guarantors of any and/or all of the
Completion Obligations after a Completion Obligation Default, the Carry
Obligations after a Carry Obligation Default and/or the Preservation Obligations
after a Preservation Obligation Default.
(b) After any default by the Company in its obligations
timely to commence and complete the Performance Bond Construction or the
Preservation Obligations, the LGCB, at its option, shall have the right, but
shall have no obligation, to undertake to require the Surety to perform the
Performance Bond Construction or the Preservation Obligations, as the case may
be, pursuant to the Performance Bond. The LGCB's election to require the Surety
to perform the Performance Bond Construction or the Preservation Obligations
shall not release, diminish or extinguish the liability of the Company or either
Completion Guarantor therefor to the extent the Surety fails to timely perform
such Performance Bond Construction or the Preservation Obligations. The
Completion Guarantors shall remain obligated to perform the Carry Obligations
notwithstanding any such election and notwithstanding the Surety's timely
performance of the Performance Bond Construction or the Preservation
Obligations.
(c) In addition to the LGCB's right to require specific
performance by the Completion Guarantors of any and/or all of the Completion
Obligations after a Completion Obligation Default, the Carry Obligations after a
Carry Obligation Default, and/or the Preservation Obligations after a
Preservation Obligation Default, and whether or not the LGCB shall have called
on the Surety pursuant to the Performance Bond, (i) the LGCB shall have the
right to recover from the Completion Guarantors all unreimbursed costs and
expenses, including but not limited to attorneys' fees, incurred by the LGCB in
protecting, preserving, enforcing or defending its interests in or under this
Completion Guarantee, (ii) after a Carry Obligation Default, the Completion
Guarantors shall be liable for the solidary benefit of the LGCB, the New
Indenture Trustee, the Administrative Agent, the City and the RDC as their
interests may appear for any interest or delinquency costs of the Company
arising from such Carry Obligation Default; provided that the Completion
Guarantors shall not be liable for duplicate payments of the same charge with
respect to any such interest or delinquency costs of the Company regardless of
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whether multiple demands are made by any or all of the RDC, the City, the LGCB,
the Administrative Agent or the New Indenture Trustee, (iii) after a Completion
Obligation Default, the Completion Guarantors shall be liable for the solidary
benefit of the LGCB, the City and the RDC, the Administrative Agent, and the New
Indenture Trustee as their interests may appear for damages to pay for the costs
of performance of the Completion Obligations arising from such Completion
Obligation Default or such other damages as may be available at law or in
equity; provided that, in no event shall the Completion Guarantors be liable for
duplicate payments in respect of such damages nor for more than one performance
of the Completion Obligations regardless of whether multiple demands are made by
any or all of the RDC, the City, the Administrative Agent, the New Indenture
Trustee or the LGCB, and (iv) after a Preservation Obligation Default, the
Completion Guarantors shall be liable for the solidary benefit of the LGCB, the
City and the RDC, the Administrative Agent and the New Indenture Trustee as
their interests may appear for damages to pay for the costs of performance of
the Preservation Obligations arising from such Preservation Obligation Default;
provided that, in no event shall the Completion Guarantors be liable for
duplicate payments in respect of damages nor for more than one performance of
the Preservation Obligations regardless of whether multiple demands are made by
any or all of the RDC, the City, the Administrative Agent, the New Indenture
Trustee or the LGCB.
(d) With respect to the Completion Obligations, each
Completion Guarantor specifically agrees that this Completion Guarantee is
intended as a contract to guarantee timely and full completion of the Phase I
and II Construction including the acquisition and installation of the FF&E on
the property subject to the Lease and continues whether or not the Company is
lessee thereunder.
(e) With respect to the Carry Obligations, each
Completion Guarantor specifically agrees that this Completion Guarantee is
intended as a contract to guarantee payment on a timely basis of all amounts
included as Carry Obligations pursuant to Section 1.1(b) hereof.
(f) No delay or failure by the LGCB to exercise any
remedy against the Completion Guarantors will be construed as a waiver of that
right or remedy.
2.4. The remedies set forth in Sections 2.3 and 7 hereof are
not intended to be exclusive of any remedies that the LGCB may have against the
Company under the COC or other documents or agreements referenced therein or
related thereto. The Completion Guarantors recognize that the choice of remedies
by the LGCB will necessarily and properly be a matter of the LGCB's business
judgment, which the passage of time and events may or may not prove to have been
the best choice to maximize recovery by the LGCB at the lowest cost to the
Company or the Completion Guarantors. Nevertheless, the choice of alternatives
by the LGCB shall not be subject to question or challenge by the Completion
Guarantors hereunder, nor shall any such choice be asserted as a defense,
set-off or basis for any claim of failure to mitigate damages in any action or
proceeding arising from this Completion Guarantee.
3. Alteration of Obligations. In such manner, upon such terms and at
such times as the LGCB deems best, and without notice to either Completion
Guarantor, the LGCB may in accordance with the COC alter, compromise,
accelerate, extend or change the time or manner for
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the payment or performance of any of the COC Obligations (which shall mean any
obligations of the Company under the COC), release the Company, as to all or any
portion of the COC Obligations, release, substitute or add any one or more
guarantors, accept additional or substitute security therefor, or release or
subordinate any security therefor. No exercise or non-exercise of any right
hereby given to the LGCB, no dealing by the LGCB with the Completion Guarantors
or any other guarantor or any other person, and no change, impairment or release
of all or any portion of the COC Obligations, or suspension of any right or
remedy of the LGCB against any person, including without limitation the Company
or any other such guarantor or other person, shall in any way affect any of the
Obligations or any security furnished by the Completion Guarantors or give the
Completion Guarantors any recourse against the LGCB. If the LGCB has exculpated
or hereafter exculpates the Company from personal liability in whole or in part,
said exculpation shall not affect the Obligations. Each Completion Guarantor
further acknowledges that any such exculpation that has been given or that is
hereafter given to the Company has been given or is given in reliance upon the
covenants of the Completion Guarantors contained herein.
4. Waiver
4.1. The Completion Guarantors, in solido with each other,
represent, warrant and agree that, as of the date of this Completion Guarantee,
their obligations under this Completion Guarantee are not subject to any
recoupment, counterclaims, offsets or defenses against the LGCB or the Company
of any kind. The Completion Guarantors further in solido with each other agree
that their obligations under this Completion Guarantee shall not be subject to
any counterclaims, offsets or defenses against the LGCB or against the Company
of any kind which may arise in the future. Each Completion Guarantor hereby
expressly waives and relinquishes all rights, defenses and remedies accorded by
applicable law to sureties or guarantors and agrees not to assert or take
advantage of any such rights, defenses or remedies, including without
limitation:
(a) any right to require the LGCB to proceed against the
Company or any other person or to proceed against or exhaust any security held
by the LGCB at any time or to pursue any other remedy in the power of the LGCB
before proceeding against either or both of the Completion Guarantors, including
but not limited to any defense of failure to join or non-joinder of the Company
or any other person whatsoever in any litigation instituted by the LGCB against
either or both of the Completion Guarantors;
(b) the defense of the statute of limitations,
prescription, and preemption in any action hereunder or in any action for the
collection or performance of any of the Obligations;
(c) any defense that may arise by reason of the
discharge in bankruptcy, incapacity, lack of authority, death or disability of
any other person or the failure of the LGCB to file or enforce a claim against
the estate (in administration, bankruptcy or any other proceeding) of any other
person;
(d) diligence, demand, presentment, protest and notice
of any kind (whether, for non-payment or protest or of acceptance, maturity,
extension of time, change in nature or form of the Obligations, acceptance of
further security, release of further security,
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composition or agreement arrived at as to the amount of, or the terms of, the
Obligations, notice of adverse change in the Company's financial condition or
any other fact which might materially increase the risk to the Completion
Guarantors), including without limitation notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of the Company, the LGCB, any endorser or creditor of
the Company or either Completion Guarantor or on the part of any other person
under this or any other instrument in connection with any obligation or evidence
of indebtedness held by the LGCB in connection with any of the COC Obligations;
(e) any defense based upon an election of remedies by
the LGCB which destroys or otherwise impairs the subrogation rights of the
Completion Guarantors, the right of the Completion Guarantors to proceed against
the Company for reimbursement, or both, or any defense that the LGCB's claims
against the Completion Guarantors are barred or diminished or premature to the
extent that the LGCB has or may have remedies available against the Company;
(f) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal;
(g) any duty on the part of the LGCB to disclose to the
Completion Guarantors any facts the LGCB may now or hereafter know about the
Company, regardless of whether the LGCB has reason to believe that any such
facts materially increase the risk beyond that which the Completion Guarantors
intend to assume, or has reason to believe that such facts are unknown to either
Completion Guarantor, or has a reasonable opportunity to communicate such facts
to either Completion Guarantor, since each Completion Guarantor acknowledges
that it is fully responsible for being and keeping informed of the financial
condition of the Company and of all circumstances bearing on the risk of
non-payment of any of the COC Obligations;
(h) waiver or estoppel or any alleged lack of reasonable
or justifiable reliance on the part of the LGCB as to the Completion Guarantors'
representations;
(i) lack, failure or insufficiency of consideration;
(j) any alleged failure of the LGCB to mitigate
injuries, losses or damages or any plea that the LGCB has any duty to mitigate
injuries, losses, or damages prior to seeking recovery under this Completion
Guarantee; and
(k) any defense that the LGCB's claims hereunder are or
may be barred because an adequate remedy at law exists.
4.2. Each Completion Guarantor agrees to forbear from exercise
of any rights of subrogation, indemnity, or contribution against each other, the
Company, the Surety or any other person who may be liable for satisfaction of
the Completion Obligations or the Carry Obligations until such Obligations have
been fully satisfied as to the LGCB.
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4.3. In the event of the commencement of a bankruptcy case by
or against any Completion Guarantor,
(a) each Completion Guarantor agrees to waive the
automatic stay under the Bankruptcy Code and further agrees to the entry of an
immediate order from the Bankruptcy Court, on the LGCB's ex parte motion
granting to the LGCB a modification of the automatic stay (and/or recognition
that the automatic stay is not applicable) allowing it to fully enforce the
provisions of this Completion Guarantee, the Completion Guarantors hereby
agreeing that in such case, "cause", as defined by the Bankruptcy Code, would
exist for the immediate entry by the Bankruptcy Court of such an order modifying
the automatic stay.
(b) whether or not the Company shall have defaulted in
its obligations to complete the Phase I and II Construction, the LGCB shall have
an allowable claim against such Completion Guarantor in an amount equal to the
then estimated amount necessary to pay for the Completion of the Phase I and II
Construction, and the Preservation Obligations and any Carry Obligations through
the then estimated date of completion of the Phase I and II Construction. Any
amounts paid on such claim shall be paid for the solidary benefit of the LGCB,
the City and the RDC, the Administrative Agent, and the New Indenture Trustee as
their interests may appear and shall be used solely to complete, and pay any
costs in connection with the Completion Obligations, the Preservation
Obligations, and any Carry Obligations prior to such completion of, the Phase I
and II Construction. Upon completion of the Phase I and II Construction and the
payment of all costs, liens and claims related thereto, any unused portion of
such amounts paid in respect of any claim under this Section 4.3(b) shall be
promptly reimbursed to such Completion Guarantor. The Company shall be obligated
to promptly reimburse such Completion Guarantor for any such amounts paid by and
not previously reimbursed to such Completion Guarantor under this Section
4.3(b).
5. Subordination. All existing and future indebtedness of the Company
to either Completion Guarantor is hereby subordinated in accordance with this
Section 5 to all of the COC Obligations. During any period in which there is a
payment default under the COC, without the prior written consent of the LGCB,
such subordinated indebtedness shall not be paid or withdrawn in whole or in
part, nor shall either Completion Guarantor accept any payment of or on account
of any such indebtedness or as a withdrawal of capital while this Completion
Guarantee is in effect.
6. Bankruptcy
6.1. So long as any Obligations are owed to the LGCB, no
Completion Guarantor shall, without the prior written consent of the LGCB
commence, or join with any other person in commencing, any bankruptcy,
reorganization or insolvency proceeding against the Company. Subject to Section
12 hereof, the Obligations shall not be altered, limited or affected by any
proceeding, voluntary or involuntary, involving the bankruptcy, reorganization,
insolvency, receivership, liquidation or arrangement of the Company, or by any
defense which the Company may have by reason of any order, decree or decision of
any court or administrative body resulting from any such proceeding.
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6.2. So long as any Obligations are owed to the LGCB,
(a) each Completion Guarantor shall file, in any
bankruptcy or other proceeding in which the filing of claims is required or
permitted by law, all claims which such Completion Guarantor may have against
the Company relating to any indebtedness of the Company to such Completion
Guarantor, and hereby assigns to the LGCB all rights of such Completion
Guarantor thereunder as security for performance of the Obligations jointly with
such assignment to the City and the RDC under that certain City/RDC Completion
Guarantee between the Completion Guarantors, the City and the RDC of even date
herewith (the "City/RDC Completion Guarantee"), to the Administrative Agent
under that certain Bank Completion Guarantee between the Completion Guarantors
and the Administrative Agent of even date herewith (the "Bank Completion
Guarantee"), and to the New Indenture Trustee under that certain Notes
Completion Guarantee between the Completion Guarantors and the New Indenture
Trustee of even date herewith (the "Notes Completion Guarantee").
(b) if either Completion Guarantor does not file any
such claim, the LGCB, as attorney-in-fact for such Completion Guarantor, is
hereby authorized to do so in the name of such Completion Guarantor jointly with
such authorization to the City and the RDC under the City/RDC Completion
Guarantee, to the Administrative Agent under the Bank Completion Guarantee and
to the New Indenture Trustee under the Notes Completion Guarantee, or, in the
LGCB's, the City's and RDC's, the Administrative Agent's, and New Indenture
Trustee's joint discretion, to assign the claim to a joint nominee and to cause
proofs of claim to be filed in the name of such joint nominee as security for
performance of the Obligations. The foregoing power of attorney is coupled with
an interest and cannot be revoked.
(c) the LGCB, jointly with the City and RDC under the
City/RDC Completion Guarantee, the Administrative Agent under the Bank
Completion Guarantee and the New Indenture Trustee under the Notes Completion
Guarantee, or a joint nominee, as the case may be, shall have the right to
accept or reject any plan proposed in any such proceeding and to take any other
action which a party filing a claim is entitled to take. Any exercise or
non-exercise of any such right (i) by the LGCB under this Section 6.2(c), (ii)
by the New Indenture Trustee under the Section 6.2(c) of the Notes Completion
Guarantee, (iii) by the Administrative Agent under Section 6.2(c) of the Bank
Completion Guarantee, and (iv) by the City and the RDC under Section 6.2(c) of
the City/RDC Completion Guarantee, shall not impair or diminish the Completion
Guarantors' obligations under this Completion Guarantee. In all such cases,
whether in administration, bankruptcy or otherwise, the person authorized to pay
such a claim shall pay the same to the LGCB, the City and RDC under the City/RDC
Completion Guarantee, the Administrative Agent under the Bank Completion
Guarantee, and the New Indenture Trustee under the Notes Completion Guarantee,
as their interests may appear, as security for performance of the Obligations,
and, to the full extent necessary for that purpose, each Completion Guarantor
hereby assigns to the LGCB jointly with such assignment to the City and the RDC
under the City/RDC Completion Guarantee, to the Administrative Agent under the
Bank Completion Guarantee and to the New Indenture Trustee under the Notes
Completion Guarantee all of such Completion Guarantor's rights to all such
payments or distributions to which such Completion Guarantor would otherwise be
entitled.
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6.3. This Completion Guarantee shall remain in full force and
effect and continue to be effective should any petition be filed by or against
the Company or any Completion Guarantor for liquidation or reorganization,
should the Company or any Completion Guarantor become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's or any Completion
Guarantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount or
must otherwise be restored or returned by the LGCB, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
6.4. In the event that the Company is allowed any extension of
time in connection with any proceeding, voluntary or involuntary, involving the
bankruptcy, reorganization, insolvency, receivership, liquidation or arrangement
of the Company, to cure any default relating to the Phase I and II Construction,
such extension shall not extend the time by which the Completion Guarantors are
required to cause the completion of the Phase I and II Construction or otherwise
perform their obligations under this Agreement in accordance with the provisions
of this Agreement.
7. Interest, Costs and Attorneys' Fees
7.1. If the Completion Guarantors fail to pay all or any
portion of any monetary amounts due as a part of the Obligations upon notice or
demand by the LGCB, the amount of such monetary portion of the Obligations and
all other sums payable by the Completion Guarantors to the LGCB hereunder shall
bear interest from the date of such notice or demand, as the case may be, at the
legal rate for judgments under Louisiana law.
7.2. If, at any time following a default by the Company in the
performance of the Completion Obligations or the Carry Obligations which default
entitles the LGCB to require performance hereunder (whether or not notice is
actually given pursuant to Section 2.1), the LGCB refers this Completion
Guarantee to an attorney to enforce, construe, or defend any provision hereof,
or as a consequence of any default hereunder by the Completion Guarantors, the
LGCB shall employ counsel for advice or representation or shall incur legal or
other costs and expenses, with or without the filing of any legal action or
proceeding, in connection with:
(a) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by the LGCB, the Company, the Completion
Guarantors or any other person) in any way relating to the enforcement of rights
or remedies under this Completion Guarantee;
(b) any attempt to enforce any rights of the LGCB
hereunder against the Completion Guarantors or any other person;
(c) any attempt to defend any provision hereof; or
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(d) the Performance Bond;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in any way or respect arising
in connection with or relating to any of the events or actions described herein
shall be payable, on demand, by the Completion Guarantors to the LGCB or the
Completion Guarantors shall cause the Company to make such payment, and if not
so paid, shall be additional Obligations under this Completion Guarantee;
provided that upon any engagement of counsel (i) following a default by the
Company in the performance of the Completion Obligations or the Carry
Obligations and (ii) prior to the date on which the LGCB gives written notice
pursuant to Section 2.1 (the "Notice Date"), the LGCB shall make demand on the
Company for any expenses of such counsel incurred prior to the Notice Date and
such expenses shall only become an Obligation under this Completion Guarantee if
the Company shall fail timely to pay such expenses.
The reference to "attorneys' fees" in this Section 7.2 and in all other places
in this Completion Guarantee shall also include, without limitation, such
reasonable amounts as may then be charged for legal services furnished by
attorneys retained or employed by the LGCB. Such attorneys' fees, costs and
expenses shall include, without limitation, those incurred in connection with
any bankruptcy, reorganization, insolvency, receivership, liquidation,
arrangement, lawsuits in state or federal court, or other similar proceedings
involving either Completion Guarantor which in any way affect the exercise by
the LGCB of its rights and remedies hereunder.
8. Cumulative Rights. All rights, powers and remedies of the LGCB
hereunder and under any other agreement now or at any time hereafter in force
between the LGCB and the Completion Guarantors, including without limitation any
other guarantee executed by either Completion Guarantor relating to any
indebtedness of the Company, shall be cumulative and not alternative, and such
rights, powers and remedies shall be in addition to all rights, powers and
remedies given to the LGCB by law and shall not be deemed in any way to
extinguish or diminish the LGCB's rights and remedies. This Completion Guarantee
is in addition to and independent of the guarantee of any guarantor of any COC
Obligations or other indebtedness of the Company.
9. Independent Obligations. The Obligations are independent of the COC
Obligations, and, in the event of any default hereunder, a separate action or
actions may be brought and prosecuted against either Completion Guarantor,
whether or not the Company is joined therein or a separate action or actions are
brought against the Company. The LGCB's rights hereunder shall not be exhausted
by its exercise of any of its rights or remedies or by any such action or by any
number of successive actions unless and until all Obligations have been
satisfied and fully performed.
10. Application of Payments or Recoveries. Subject to the applicable
provisions of this Completion Guarantee and the terms of the COC, with or
without notice to either Completion Guarantor, the LGCB, in its sole discretion,
at any time and from time to time, and in such manner and upon such terms as the
LGCB deems fit, may (a) apply any or all payments or recoveries from the Company
or from any other guarantor or endorser under any other
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instrument, in such manner and order of priority as the LGCB may determine, to
any of the COC Obligations, whether or not such indebtedness is due at the time
of such application, and (b) refund to the Completion Guarantors any payment
received by the LGCB upon any Obligations, and, if such refund is made, payment
of the amount refunded shall be fully guaranteed hereby.
11. Financial Statements. The Completion Guarantors hereby represent
and warrant that the information pertaining to the Completion Guarantors set
forth in their most recent filings with the Securities and Exchange Commission
is true and correct in all material respects, and fairly presents the financial
condition of the Completion Guarantors as of the respective dates indicated
therein and for the periods covered thereby, and that no material adverse change
has occurred in the financial condition or prospects of the Completion
Guarantors since the date of the latest information provided therein.
12. Suspension of or Excuse From Performance
12.1. Notwithstanding anything to the contrary in this
Completion Guarantee, if, at any time, there shall occur a Force Majeure with
respect to the Completion Obligations, then the Completion Obligations (but not
the Carry Obligations) shall (except as provided below in this section) be
suspended (the "Suspension") until such time as such Force Majeure ends;
provided however, in no event shall the Suspension (for Force Majeure) extend
beyond eighteen (18) months from the earlier of the date upon which the Company
or any Completion Guarantor knew or reasonably should have known of the
occurrence of the Force Majeure, unless performance of the Completion
Obligations (in accordance with the terms of this Completion Guarantee) are
rendered impossible during such eighteen (18) month period because of such Force
Majeure pursuant to subsections (ii) through (vii) of the definition of Force
Majeure or Force Majeure due to a national or general strike, lockout or labor
dispute, and in such event the Suspension shall continue until such time as such
performance is no longer impossible. During the period following any date of
Suspension and until the end of such Suspension, the Completion Guarantors shall
each use their best efforts to remove such Force Majeure.
12.2. The Completion Guarantors hereby agree that any
proceeding under any chapter of the Bankruptcy Code, in receivership, or any
other insolvency proceeding, whether voluntary or involuntary, by or against the
Company and/or any Completion Guarantor shall not be considered, nor constitute
Force Majeure. The Completion Guarantors further agree that (i) any increase in
the costs to complete (including equipping) the Casino, whether or not such
increase in costs was anticipated and/or contemplated in the Approved Program
Plans, GDA and/or otherwise, (ii) the financial condition or financial inability
of the Company and/or any Completion Guarantor to complete (including equipping)
the Casino, (iii) any other adverse financial projections, financial forecasts,
financial events or financial conditions, or (iv) any failure to obtain funding
or financing, shall not be considered, nor constitute, Force Majeure.
12.3. The Obligations shall terminate upon the occurrence of
any of the following: (i) the termination of the Lease or the GDA other than as
a result of (a) the fault of or a breach or default by the Company or any
Completion Guarantor or (b)the voluntary termination of the Lease or the GDA by
the Company, (ii) Casino gaming operations shall no longer be permitted to be
conducted at the Casino or shall be modified, restricted, or limited in a manner
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that materially diminishes the benefits afforded to the Company or the gaming
activities permitted to be conducted at the Casino pursuant to the Act (as
defined herein) by reason of a change of law or the enactment of a new law after
the Plan Effective Date or by reason of the Company's rights under the Casino
Operating Contract having been terminated in any material respect, other than as
a result of the fault of or a breach or default by the Company or any Completion
Guarantor, subject to Section 12.4 hereof, (iii) only as to the Carry
Obligations, but not as to the Completion Obligations, a Force Majeure shall
have continued for more than one (1) year from the first to occur of a receipt
of a notice from the LGCB to the Completion Guarantors pursuant to Section 2.1
hereof or a similar notice to the Completion Guarantors from the New Indenture
Trustee, the Administrative Agent, the City or the RDC (provided that the
Completion Guarantors shall have complied with the notice requirements of the
last sentence of Section 15 hereof in respect of any notices received under
Section 2.1 hereof), notwithstanding the Completion Guarantors' actual and
continuous best efforts to remove such Force Majeure; provided, however, that
the Completion Guarantors shall remain liable for all Carry Obligations that
actually came due through the expiration of such one (1) year period to the
extent not satisfied by the Company, and, provided further, that the Completion
Guarantors shall have used their best efforts to remove such Force Majeure
within said one (1) year period, or (iv) as to the Carry Obligations, as of and
upon the occurrence of the Termination of Construction Date and as to the
Completion Obligations, upon the Completion Obligation Termination Date.
12.4. Upon the occurrence of any of the events described in
Section 12.3(ii) hereof prior to the occurrence of the Termination of
Construction Date, the Completion Guarantors shall nevertheless be obligated to
complete the Poydras Street Support Facility and the Poydras Tunnel Area (each
as defined in the GDA), exterior site and street work, and any improvements
required to be made to the Leased Premises (as defined in the Lease) so that it
may be used for any Highest and Best Use (as defined in the Lease) as required
by Section 4.20 of the Lease.
12.5. Delays caused by the failure of the Company, its
contractor(s), architect(s), consultants or subcontractors to furnish in a
timely manner approved working or shop drawings, materials, fixtures, equipment,
appliances or other fittings or to perform their work in a timely manner shall
not constitute a basis of extension of time, except to the extent caused by an
event of Force Majeure that would allow an extension of time pursuant to this
Agreement.
12.6. The Completion Guarantors and/or the Company shall give
Notice as provided in the Casino Operating Contract to the LGCB of any Force
Majeure within ten (10) days of the date upon which a Force Majeure event has
occurred, provided the remedy for a failure timely to give such Notice shall be
to cause the Suspension otherwise resulting from such Force Majeure to be waived
for any period of time from the occurrence of the Force Majeure until ten (10)
days prior to the furnishing of such Notice (of Force Majeure).
12.7. Other than as set forth in this Agreement and without
waiver of the terms and conditions of this Agreement, including, without
limitation, terms and conditions of the definition of Force Majeure and of this
Section 12, the Company and the Completion Guarantors waive their rights
pursuant to Articles 1873-1878 of the Louisiana Civil Code including, without
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limitation, any right to claim excuse from performance or delay of performance
due to impossibility of performance of the Completion Obligations or a
fortuitous event.
13. Definitions. As used in this Completion Guarantee, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Act" shall mean the Louisiana Economic Development and Gaming
Corporation Act as set forth in LSA R.S. 27:201 et seq., adopted by the
Legislature of the State of Louisiana as No. 384, Acts 1992 as amended, and
regulations adopted thereunder, amendments and reenactment of LSA R.S.
36:801.1(A) and enactment of LSA R.S. 27:1 et seq., adopted by the Legislature
of the State of Louisiana as Act 7, First Extraordinary Session, 1996, and
regulations adopted thereunder; the Local Option Gaming election as set forth in
LSA R.S. 18:1300.21, adopted by the Legislature of the State of Louisiana as Act
57, First Extraordinary Session 1996, and the act adopted by the Legislature of
the State of Louisiana as Act 98, First Extraordinary Session, 1996.
"Casino - Phase I" shall mean the first phase of development
and construction of the Casino, consisting of a minimum of one hundred thousand
(100,000) square feet of net gaming space, approximately fifteen thousand
(15,000) square feet of multi-function, special event, food service and meeting
room space on the first floor of the Casino, the Poydras Tunnel Area, a two
hundred fifty (250) seat buffet on the first floor of the Casino and parking
facilities.
"FF&E" shall mean at least one hundred (100) gaming tables and
two thousand (2,000) slot machines, and such other furnishings, fixtures and
equipment to be used in the operation of the Casino.
"Force Majeure" shall mean any of the following events or
circumstances, but only to the extent they are not caused or fomented by the
Company, the Completion Guarantors or any affiliates of the Company or either
Completion Guarantor and they delay the performance of the Completion
Obligations beyond the reasonable control of the Company and of the Completion
Guarantors:
(i) strikes, lockouts, labor disputes, inability to procure
materials (for which there is no suitable substitute or alternative that can be
timely obtained on reasonable commercial terms), failure of power;
(ii) material and adverse changes in Governmental Requirements
applicable to the construction of the Casino first effective after the Plan
Effective Date and after the submission to and approval by the LGCB of the
design thereof, and any material and adverse changes after the Plan Effective
Date in any orders (applicable to the Competion Obligations, the Casino Premises
or the Casino Property) of any federal, state, parish or municipal governmental
authority, including all executive, legislative, judicial and administrative
bodies thereof having jurisdiction over a party, the Casino Premises, or the
Casino Property (however, not including stop work orders due to a building,
safety or other code violation);
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(iii) material and adverse changes in Governmental
Requirements first effective after the Plan Effective Date;
(iv) the breach by the LGCB of the COC (not caused or fomented
by the Company, the Completion Guarantors, or any affiliates of the Company or
of either Completion Guarantor) or other action of the LGCB (not caused or
fomented by the Company, the Completion Guarantors, or any affiliates of either
Completion Guarantor), including, as to the required opening of the Casino-Phase
I, the delay in the issuance of required suitability findings and/or approvals
required to open Casino - Phase I for reasons not under the control of, or which
could not have been avoided by the exercise of due care of, the Company, the
Completion Guarantors or any affiliate of the Company or either Completion
Guarantor;
(v) acts of God, tornadoes, hurricanes, floods, sinkholes,
fires and other casualties, landslides, earthquakes, epidemics, quarantine,
pestilence, and abnormal inclement weather;
(vi) acts of public enemy, acts of war, terrorism, effects of
nuclear radiation, blockades, insurrections, riots, civil disturbances,
governmental preemption in connection with a national emergency, or national or
international calamity; and
(vii) any judgment, directive, ruling or order that is entered
by any judicial, regulatory or administrative body which substantially restrains
or substantially interferes with the performance of the Completion Obligations.
"GDA" shall mean the Amended and Restated General Development
Agreement entered into between the Rivergate Development Corporation, Jazz
Casino Corporation and the City pursuant to the Plan.
"Lease" shall mean the Amended and Restated Lease Agreement
entered into between the Rivergate Development Corporation, as landlord, the
Company, as tenant, and the City, as intervenor, pursuant to the Plan.
"Phase I and II Construction" shall have the meaning set forth
in the GDA and shall be in conformity with the Construction Documents (as
defined in the COC).
"Second Floor Shell Construction - Phase II" shall mean the
second phase of development and construction of the Casino on the second floor
of the Casino, which shall consist of shell construction of the second floor
non-gaming space to the stage where it is ready for tenant improvement and build
out for non-gaming entertainment purposes; provided that the build out of the
tenant improvements and the occupancy and opening for business of such second
floor non-gaming development shall not be a part of this phase and may occur
after completion of Casino - Phase I and completion of such tenant improvements
is not part of the Obligations.
"Termination of Construction Date" shall mean that date by
which all of the following have occurred:
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(i) a temporary certificate of occupancy has been issued for
Casino - Phase I by the building department and other relevant agencies;
(ii) all required permits with respect to the Phase I and II
Construction have been received by the Company;
(iii) a notice of completion has been duly recorded with
respect to the Phase I and II Construction;
(iv) an officers' certificate of the Completion Guarantors has
been delivered to the LGCB certifying that the Termination of Construction Date
has occurred;
(v) the Casino is equipped with the FF&E and ready to open for
business as a casino gaming operation;
(vi) a certificate has been delivered by the general
contractor and the project architect to the LGCB for the Phase I and II
Construction certifying that the Phase I and II Construction has been
substantially completed in accordance with the plans and specifications therefor
and all applicable building laws, ordinances and regulations; and
(vii) Casino - Phase I has opened for business as a casino
gaming operation so long as any necessary regulatory approvals from the LGCB or
any other State regulatory authorities have been received, or, if such approvals
have not been received, even though timely receipt of any such approvals has
been diligently pursued by or on behalf of the Company in accordance with the
Rules and Regulations for such approvals, Casino Phase I is in a condition to
receive customers in the ordinary course of business.
14. Completion Obligation Termination Date
14.1. Notwithstanding the occurrence of the Termination of
Construction Date, the Completion Guarantors shall continue to be obligated for
payment or making satisfactory provisions for payment as they become due of all
costs of completing the Phase I and II Construction including the acquisition
and installation of the FF&E and for all materialmen's claims, mechanics' liens
or other claims, liens or claims for liens arising from the furnishing of labor,
materials, supplies or equipment for the Phase I and II Construction, including
the FF&E. The date after the Actual Opening Date on which all such payments or
satisfactory provisions for all such payments have been made, all lien periods
with respect to the Phase I and II Construction have expired and no liens or
privileges arising from the furnishing of labor, materials, supplies or
equipment for the Phase I and II Construction affecting or purporting to affect
the Premises remain of record in Orleans Parish is herein referred to as the
"Completion Obligation Termination Date".
14.2. For purposes of this Completion Guarantee, in respect of
any Completion Obligations or Carry Obligations not satisfied as of the
Termination of Construction Date, satisfactory provision for payment of claims,
liens and claims for liens shall be deemed to have been made if (a) in respect
of any liens or claims for liens but not non-lien claims, a bond has been
established in accordance with the terms of LSA R.S. 9:4801 et seq., (b) in
respect of non-lien
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claims (but not liens or claims for liens), an escrow, letter of credit or trust
account for payment has been established in an amount at least equal to one
hundred five percent (105%) of the total of such outstanding non-lien claims
with or by an independent third party, (c) in respect of any non-lien claims,
the total of such outstanding non-lien claims has been guaranteed under a
payment guarantee from a party other than either Completion Guarantor (or any
affiliate thereof) rated as an investment grade credit by a nationally
recognized credit rating agency, or (d) other provision has been made
satisfactory to the LGCB.
15. Notices. Whenever the Completion Guarantors or the LGCB shall
desire to give or serve any notice, demand, request or other communication with
respect to this Completion Guarantee, each such notice shall be in writing and
shall be effective only if the same is delivered by personal service, overnight
courier service, or mailed by certified mail, postage prepaid, return receipt
requested, addressed as follows:
(a) if to either Completion Guarantor:
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Fax: (901) 537-3039
Attn: General Counsel
(b) if to the Company:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Fax: (504) 533-6100
Attn: General Counsel
(c) if to the Surety:
Reliance Insurance Company
Four Penn Center Plaza, 17th Floor
Philadelphia, Pennsylvania 19103
Attn: Claims Department
and
United States Fidelity and Guaranty Company
6225 Smith Avenue
Baltimore, Maryland 21203
Attn: Claims Department
(d) if to the LGCB, as provided in the COC;
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or at such other address as shall have been furnished in writing by any person
described above to the party required to give notice hereunder.
Any such notice shall be deemed to have been received upon
delivery. Any of the Completion Guarantors, the Company, the Surety or the LGCB
may change its address by giving the others written notice of the new address as
herein provided.
Any notice given or received by any Completion Guarantor to or
from the City or the RDC under the City/RDC Completion Guarantee, to or from the
Administrative Agent under the Bank Completion Guarantee or to or from the New
Indenture Trustee under the Notes Completion Guarantee shall be immediately
forwarded by such Completion Guarantor to the LGCB at the address set forth
above.
16. Successors and Assigns. This Completion Guarantee shall inure to
the benefit of the LGCB its successors and assigns including the assignees of
any Obligations, and shall bind the heirs, executors, administrators, personal
representatives, successors and assigns of each Completion Guarantor. This
Completion Guarantee may be assigned by the LGCB, in its sole discretion, with
respect to all or any portion of the Obligations, and when so assigned the
Completion Guarantors shall be liable to the assignees under this Completion
Guarantee without in any manner affecting the liability of the Completion
Guarantors with respect to any Obligations retained by the LGCB. Neither
Completion Guarantor may assign or transfer any of its rights, obligations or
interest hereunder without the prior written consent of the LGCB.
17. Miscellaneous Provisions
17.1. THIS COMPLETION GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF LOUISIANA AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF LOUISIANA
(AND WITHOUT APPLYING ANY PROVISIONS RELATED TO CONFLICTS OF LAWS). EACH
COMPLETION GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF THE COURTS OF THE
STATE OF LOUISIANA AND CONSENTS TO SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY
LOUISIANA LAW IN ANY ACTION BROUGHT UNDER OR ARISING FROM THIS COMPLETION
GUARANTEE. WITH RESPECT TO ANY ACTION BROUGHT IN THE 19TH JUDICIAL DISTRICT
COURT IN AND FOR EAST BATON ROUGE PARISH, EACH COMPLETION GUARANTOR AGREES NOT
TO ASSERT BY WAY OF MOTION OR DEFENSE OR OTHERWISE THAT SUCH ACTION IS BROUGHT
IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH ACTION IS IMPROPER.
17.2. This Completion Guarantee shall constitute the entire
agreement of the Completion Guarantors with the LGCB with respect to the subject
matter hereof, and no representation, understanding, promise or condition
concerning the subject matter hereof shall be binding upon the LGCB unless
expressed herein.
17.3. Should any term, covenant, condition or provision of
this Completion Guarantee be determined to be illegal or unenforceable, it is
the intent of the parties that all other
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terms, covenants, conditions and provisions hereof shall nevertheless remain in
full force and effect.
17.4. Time is of the essence to this Completion Guarantee and
each of its provisions.
17.5. When the context and construction so require, all words
used in the singular herein shall be deemed to include the plural, the masculine
shall include the feminine and neuter, and vice versa.
17.6. The word "person" as used herein shall include any
individual, company, firm, association, partnership, limited liability company,
joint venture, corporation, trust or other legal entity of any kind whatsoever.
17.7. No provision of this Completion Guarantee or right
granted to the LGCB hereunder can be waived in whole or in part, nor can either
Completion Guarantor be released from such Obligations, except by a writing duly
executed by an authorized officer of the LGCB. No provision of this Completion
Guarantee or any of the Obligations may be amended without the prior written
consent of the Completion Guarantors and the LGCB and the consent of any
additional beneficiaries hereof, if any, shall not be required.
17.8. The LGCB need not inquire into the power of the Company
or the authority of their officers, shareholders or agents acting or purporting
to act on their behalf.
17.9. The headings of this Completion Guarantee are inserted
for convenience only and shall have no effect upon the construction or
interpretation thereof.
17.10. This Completion Guarantee shall be for the sole benefit
of the LGCB, its successors and assigns. The provisions of this Completion
Guarantee shall not inure to the benefit of any other person, including, without
limitation, the Company.
17.11. Notwithstanding the foregoing, in the event that the
Completion Guarantors, or either of them, shall enter into the Notes Completion
Guarantee, the Bank Completion Guarantee or the City/RDC Completion Guarantee,
or any supplemental agreement with respect thereto and such Notes Completion
Guarantee, Bank Completion Guarantee, or City/RDC Completion Guarantee or
amendment or supplement thereto or the obligations created thereby provides
rights or remedies to the New Indenture Trustee, the Administrative Agent, the
City or the RDC that are more favorable in any respect than the rights and
remedies granted to the LGCB hereunder (as this Completion Guarantee may from
time to time be amended), the LGCB shall be deemed to have available to it, at
its option, the benefit of the more favorable rights and remedies implemented by
such Notes Completion Guarantee, Bank Completion Guarantee, or City/RDC
Completion Guarantee or amendment or supplemental agreement and shall not under
any circumstances be deemed to have agreed to or become subject to any
alterations in the Notes Completion Guarantee, the Bank Completion Guarantee or
the City/RDC Completion Guarantee, or any provisions of a supplemental agreement
among the Completion Guarantors, the New Indenture Trustee, the Administrative
Agent, the City and/or the RDC, that are less favorable than the rights and
remedies granted to the LGCB hereunder.
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18. Effectiveness. This Completion Guarantee shall be effective upon
the occurrence of the Plan Effective Date. If such Plan Effective Date shall not
occur, this Completion Guarantee shall be null and void and of no force or
effect.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have each executed this
Completion Guarantee as of the date first above written.
COMPLETION GUARANTORS:
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ George W. Loveland II
------------------------------
Name: George W. Loveland II
------------------------------
Title: Vice President
-----------------------------
HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation
By: /s/ George W. Loveland II
--------------------------------
Name: George W. Loveland II
------------------------------
Title: Vice President
-----------------------------
Accepted and agreed:
LOUISIANA GAMING CONTROL BOARD
By: /s/ Hilary J. Crain
------------------------------
Name: Hilary J. Crain
----------------------------
Title: Chairman
---------------------------
S-1
[Signature Page to LGCB Completion Guarantee]
<PAGE>
Exhibit A
Permitted Liens
1. Ad valorem real estate taxes and special assessments for 1995
and all subsequent years, which are not yet due and payable.
2. Reservation of servitudes in favor of the Sewerage and Water
Board of the City of New Orleans (the "Delta Street S&WB
Servitude") and in favor of New Orleans Public Service, Inc.
(the "Delta Street NOPSI Servitude"), contained in Ordinance
No. 15,799 M.C.S. (Calendar No. 18,425) of the City of New
Orleans, registered April 27, 1993, under N.A. No. 93-18030,
as Conveyance Office Instrument No. 68196, and in Act of
Revocation of Dedication by the City of New Orleans dated
April 26, 1993, filed April 27, 1993, under Notarial Archives
No. 93-18031, as Conveyance Office Instrument No. 68195, as
shown on the survey of Gandolfo, Kuhn & Associates, Drawing
No.
E60-3, last dated October 25, 1994.
3. Terms and Conditions of the GDA.
4. Reservation of a servitude in favor of New Orleans Public
Service, Inc., contained in the sale from City of New Orleans
to Morgan's Louisiana and Texas Railroad and Steamship
Company, dated February 3, 1932, filed February 6, 1932, in
Conveyance Office Book 466, folio 476, as shown on the survey
of Gandolfo, Kuhn & Associates, Drawing No. E60-3, last dated
October 25, 1994.
5. Apparent servitudes for 10" sewer line, 24" drain line and 20"
water line, in the southeast corner of the land (outside of
former Delta Street) as shown on the survey of Gandolfo, Kuhn
& Associates, Drawing No. E60-3, last dated October 25, 1994.
6. Encroachment of adjoining buildings onto Parcel II of Tract IX
of Rivergate Sites, as shown on the survey L-15, by Gandolfo,
Kuhn & Associates, last dated October 25, 1994.
7. Encroachments as evidenced by the following: concrete, brick
pedestrian passageway and brick walk as shown on survey L-17-2
last dated August 16, 1994 by Gandolfo, Kuhn & Associates, but
only to the extent that the encroachment is outside the
Encroachment Area.
8. Encroachment upon Poydras Street by the granite columns and
cornice appurtenant to Parcel II of Tract IX of Rivergate
Sites, as shown on the plat of survey by Gandolfo, Kuhn &
Associates, Drawing No. L-15, last dated October 25, 1994.
9. Terms and conditions of the Lease.
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Exhibit 10.10
AMENDED AND RESTATED SUBORDINATED
COMPLETION LOAN AGREEMENT
THIS AMENDED AND RESTATED COMPLETION LOAN AGREEMENT is entered
into on this 30th day of October, 1998, by and among JAZZ CASINO COMPANY,
L.L.C., a Louisiana limited liability company (the "Company"), HARRAH'S
OPERATING COMPANY, INC., a Delaware corporation, and HARRAH'S ENTERTAINMENT,
INC., a Delaware corporation.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted, and the United States Bankruptcy Court
for the Eastern District of Louisiana has confirmed, the Plan (as defined
herein).
C. As contemplated by the Plan, the Company has succeeded to
all the rights and obligations of HJC under that certain Completion Loan
Agreement dated as of October 12, 1994, as amended by that certain First
Amendment to the Completion Loan Agreement dated as of November 8, 1994, by and
among HJC, HOCI (formerly known as Embassy Suites, Inc.), HET (formerly known as
The Promus Companies Incorporated), Harrah's New Orleans Investment Company, a
Nevada corporation, New Orleans/Louisiana Development Corporation, a Louisiana
corporation, Grand Palais Casino, Inc., a Delaware corporation and Grand Palais
Management Company, L.L.C., a Delaware limited liability company (the "Prior
Completion Loan Agreement").
D. The Plan requires the amendment and restatement of the
Prior Completion Loan Agreement in its entirety in accordance with the terms
hereof.
E. The parties hereto desire to amend and restate the Prior
Completion Loan Agreement on the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. Each of the following terms when used herein
shall have the following defined meanings:
Affiliate. "Affiliate" shall mean as to any Person the
affiliates of whom are relevant for purposes of any provisions of this
Agreement, (i) any corporation, partnership, limited liability company,
unincorporated association, joint venture, trust or individual controlled by,
under
<PAGE>
common control with, or which controls, directly or indirectly, such Person, and
(ii) a trust of which the Person, or a direct or indirect shareholder of such
Person, is a trustee, or which has as its principal beneficiaries such Person,
or any direct or indirect shareholder of such Person, or members of the
immediate family of such direct or indirect shareholder or other Person. For
purposes hereof, shares or other ownership interests held by a trust shall be
deemed to be owned pro-rata by the beneficiaries of such trust.
Agreement. "Agreement" shall mean this Amended and Restated
Completion Loan Agreement.
Assignment of Contracts. "Assignment of Contracts" shall mean
that certain Assignment of Contracts and Ancillary Rights of even date herewith
attached hereto as Exhibit A and by this reference incorporated herein.
Available Cash Flow. "Available Cash Flow" shall mean Cash
Flow remaining after payment or reserve, as the case may be, of all outstanding
cash principal and interest (including, without limitation, Contingent Payments
(as defined in the Indentures)), owing in respect of the New Bonds and the New
Contingent Bonds, the Subordinated Credit Facility, the Convertible Junior
Subordinated Debentures, and all amounts due and payable in respect of the Bank
Debt.
Available Funds. "Available Funds" shall mean the amount of
funds available to pay amounts required for completion of the Casino
representing proceeds available to the Company from or under any and all equity
contributions actually made to the Company, the Term Loans, the Subordinated
Credit Facility, and the Convertible Junior Subordinated Debentures.
Available Proceeds of Major Capital Events. "Available
Proceeds of Major Capital Events" shall mean Proceeds of Major Capital Events
remaining after payment or reserve, as the case may be, of all outstanding
principal and interest (including, without limitation, Contingent Payments (as
defined in the Indentures)) owing in respect of the New Bonds and the New
Contingent Bonds, the Subordinated Credit Facility, the Convertible Junior
Subordinated Debentures, and all amounts due and payable in respect of the Bank
Debt.
Bank Debt. "Bank Debt" shall mean the loans and letters of
credit to be obtained by JCC on and after the effective date of the Plan
pursuant to the Credit Agreement which shall include (a) term loans not to
exceed Two Hundred Eleven Million Five Hundred Thousand Dollars ($211,500,000)
in aggregate principal amount (the "Term Loans") and (b) a working capital
facility (including revolving loans, swingline loans and letters of credit) in
the amount of Twenty Five Million Dollars ($25,000,000) (the "Revolving Loan")
and shall have such other terms and conditions as shall be set forth in the Bank
Debt Documents.
Bank Debt Documents. "Bank Debt Documents" shall mean,
collectively, the Credit Agreement, all guarantees and all other loan, security
and other documents governing the terms and conditions of, or relating to, the
Bank Debt.
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Business Day. "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in New York, New York are authorized or obligated by law or executive order to
close.
Cash Flow. "Cash Flow" means all cash received by the Company
from all sources (except Major Capital Events) remaining after payment of
current expenses, liabilities, debts or obligations of the Company, including,
without limitation, any payments due under the Lease or the Casino Operating
Contract.
Casino. "Casino" shall mean the development and construction
of the Casino consisting of a minimum of one hundred thousand (100,000) square
feet of net gaming space, approximately fifteen thousand (15,000) square feet of
multi-function, special event, food service and meeting room space on the first
floor of the Casino, the Poydras tunnel area, a two hundred fifty (250) seat
buffet on the first floor of the Casino and parking facilities and the Second
Floor Shell Construction.
Casino Operating Contract. "Casino Operating Contract" shall
mean that certain Casino Operating Contract between HJC and the LGCB dated as of
July 15, 1994, as such contract may be modified pursuant to the Plan or from
time to time by the parties thereto.
City. "City" shall mean the City of New Orleans.
Company. "Company" has the meaning set forth in the preamble
to this Agreement.
Completion Budget. "Completion Budget" shall mean,
collectively and separately, all costs of acquiring, designing, leasing,
renovating, constructing, financing, equipping, furnishing, licensing and
opening the Casino pursuant to one or more budgets for the Casino as approved by
the Company in accordance with its Articles of Organization and Operating
Agreement (as they may from time to time be modified).
Completion Guarantees. "Completion Guarantees" has the meaning
set forth in Section 2(a) hereof.
Completion Guarantor Subordination Agreements. "Completion
Guarantor Subordination Agreements" shall mean that certain Completion
Guarantor Subordination Agreement entered into by and among HET, HOCI and
Norwest Bank Minnesota, N.A. pursuant to the Indentures, that certain
Completion Guarantor Subordination Agreement (Lenders) entered into by and
among HET, HOCI and Bankers Trust Company pursuant to the Credit Agreement,
and that certain Completion Guarantor Subordination Agreement entered into by
and among HET, HOCI, and Norwest Bank Minnesota, N.A. pursuant to the
indenture for the Convertible Junior Subordinated Debentures.
Completion Loan. "Completion Loan" has the meaning set forth
in Section 2(b) hereof.
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<PAGE>
Completion Loan Documents. "Completion Loan Documents" shall
mean this Agreement, the Assignment of Contracts, the Consent, the Entry
Agreement, and any other documents executed and delivered by the parties hereto
in connection with this Agreement.
Completion Loan Payment Date. "Completion Loan Payment Date"
has the meaning set forth in Section 6(a) hereof.
Completion Loan Payment Obligations. "Completion Loan Payment
Obligations" shall mean any Completion Loan and any interest thereon.
Consent. "Consent" shall mean that certain Consent and
Attornment Agreement, of even date herewith attached as Exhibit B hereto and by
this reference incorporated herein.
Construction Lien Indemnity Agreement. "Construction Lien
Indemnity Agreement" shall mean that certain Amended and Restated Construction
Lien Indemnity Agreement to be entered into by and among the Company, HOCI and
First American Title Insurance Company.
Convertible Junior Subordinated Debentures. "Convertible
Junior Subordinated Debentures" shall mean the Convertible Junior Subordinated
Debentures due 2009 of the Company to be issued under the Plan in the aggregate
principal amount of approximately Twenty Seven Million Dollars ($27,000,000).
Credit Agreement. "Credit Agreement" shall mean that certain
Credit Agreement to be entered into by and among the Company, JCC Holding
Company, as guarantor, Bankers Trust Company, as administrative agent, and
certain lenders, pursuant to the Plan, as such agreement may be amended
(including any amendment and restatement thereof), supplemented or modified from
time to time, including any agreements extending the maturity of, refinancing,
replacing or otherwise restructuring (including by way of adding subsidiaries of
the Company as additional borrowers or guarantors thereunder) all or a portion
of the indebtedness under such agreement or any successor or replacement
agreement, and whether by the same or any other agent, lender or group of
lenders.
Debt. "Debt" shall mean: (i) all obligations for borrowed
money; (ii) all obligations evidenced by bonds, debentures, notes or similar
instruments; (iii) all obligations to pay the deferred purchase price of
property or services, except trade accounts payable in the ordinary course of
business; (iv) all obligations as lessee that are capitalized in accordance with
generally accepted accounting principles; (v) all obligations to repay any bank
or other Person in respect of amounts paid or available to be drawn under a
letter of credit, banker's acceptance, surety, performance or appeal bond or
similar instrument (each such obligation to be valued at the face amount of such
instrument); and (vi) all obligations secured by a Lien or guaranteed by the
Company.
Default. "Default" shall have the meaning set forth in Section
8(a) hereof.
Default Rate. "Default Rate" shall mean the Interest Rate plus
two percent (2%), but in no event greater than the maximum rate permitted by
applicable law.
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<PAGE>
Entry Agreement. "Entry Agreement" shall mean that certain
Amended and Restated Entry Agreement among the Guarantors, the Company, the RDC
and the City, a copy of which is attached hereto as Exhibit C and by this
reference incorporated herein.
GAAP. "GAAP" shall mean United States generally accepted
accounting principles as in effect on the date hereof.
General Development Agreement. "General Development Agreement"
shall mean that certain Amended General Development Agreement by and among the
RDC, City and Harrah's Jazz Company dated March 15, 1994, as assumed by the
Company, and as further amended pursuant to the Plan.
Guarantors. "Guarantors" shall mean HOCI or HET or both.
HET. "HET" shall mean Harrah's Entertainment, Inc., a Delaware
corporation, and its successors and assigns.
HJC. "HJC" shall have the meaning set forth in Recital A to
this Agreement.
HOCI. "HOCI" shall mean Harrah's Operating Company, Inc., a
Delaware corporation, and its successors and assigns.
Holder. "Holder" shall have the meaning set forth in
Section 16 hereof.
Indemnified Parties. "Indemnified Parties" shall mean HET and
HOCI, and their officers, directors, corporate representatives, employees,
lawyers and agents thereof.
Indentures. "Indentures" shall mean those certain Indentures
entered into pursuant to the Plan, pursuant to which the Company has issued the
New Bonds and the New Contingent Bonds, collectively, as such Indentures may be
amended (including any amendment and restatement thereof) supplemented or
modified from time to time, including any agreements extending the maturity of,
refinancing, replacing or otherwise restructuring (including by way of adding
subsidiaries of the Company as additional guarantors thereunder) all or a
portion of the indebtedness under such Indentures or any successor or
replacement indenture.
Interest Rate. "Interest Rate" shall mean a rate equal to the
lower of (i) eight percent (8%) per annum, or (ii) the maximum rate permitted by
applicable law.
Lease. "Lease" shall mean that certain lease by and between
Celebration Park Casino, Inc., the RDC, and the City, as intervenor, dated as of
April 27, 1993, as amended by that certain Amended Lease Agreement by and
between the Company, the RDC and the City, as intervenor, dated as of March 15,
1994, as further amended pursuant to the Plan.
Lenders. "Lenders" shall mean the lenders of the Bank Debt.
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LGCB. "LGCB" shall mean the Louisiana Gaming Control Board, or
any successor entity.
Lien. "Lien" shall mean, with respect to any asset of the
Company, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
Major Capital Event. "Major Capital Event" shall mean any
borrowings or equity or debt financings (except short term borrowings in the
ordinary course of business and any exercise of the HET Warrant (as defined in
the Plan)) by the Company or otherwise relating to the Project (excluding any
Debt incurred pursuant to this Agreement, the Subordinated Credit Facility, the
Credit Agreement, the Convertible Junior Subordinated Debenture Documents (as
defined in the Plan) or the Indentures), any sale of all or a substantial
portion of the Company's assets (excluding dispositions of personal property and
equipment in the ordinary course of business), any insured casualty loss or any
condemnation or other involuntary conversion with respect to a substantial
portion of the Company's assets (including losses covered by title insurance),
or any revocation or breach by the LGCB under the Casino Operating Contract.
Management Agreement. "Management Agreement" shall mean that
certain Second Amended and Restated Management Agreement entered into by and
between the Manager and the Company pursuant to the Plan.
Manager. "Manager" shall mean Harrah's New Orleans Management
Company, a Nevada corporation, and its successors and assigns.
Maturity. "Maturity" has the meaning set forth in Section 3
hereof. New Bonds.
"New Bonds" shall mean the Senior Subordinated Notes due
2009 with Contingent Interest of the Company to be issued under the Plan in
the aggregate non-contingent principal amount, as of the date hereof, of One
Hundred Eighty Seven Million Five Hundred Thousand Dollars ($187,500,000), as
such instruments may be modified in accordance with the terms of the
Indentures.
New Contingent Bonds. "New Contingent Bonds" shall mean the
Senior Subordinated Contingent Notes due 2009 of the Company to be issued under
the Plan, as such instruments may be modified in accordance with the terms of
the Indentures.
Non-Qualified Person. "Non-Qualified Person" shall mean any
Person that would, if associated with the Company or the Company's Affiliates or
with either Guarantor, in the judgment of the Guarantors or any licensing
authority, impair or cause the denial, suspension or revocation of any gaming
registration, permit, license, right or entitlement or alcoholic beverage
registration, permit, license, right or entitlement held or applied for by the
Company, the Guarantors, or any Affiliate of the Guarantors or the Company.
Obligations. "Obligations" shall mean all principal and
interest in respect of any Completion Loan and all other obligations pursuant to
this Agreement and any interest thereon, all whether incurred or accrued before
or after maturity or acceleration thereof.
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Performance Bond. "Performance Bond" shall mean that certain
Performance Bond entered into by and between the Company as the principal and
Reliance Insurance Company and United States Fidelity and Guaranty Company, as
the surety, pursuant to the Plan.
Performance Bond Indemnity Agreement. "Performance Bond
Indemnity Agreement" shall mean that certain Performance Bond Indemnity
Agreement entered into by and between HOCI, Reliance Insurance Company and
United States Fidelity and Guaranty Company, pursuant to the plan, in respect of
the Performance Bond.
Person. "Person" shall mean any individual, partnership,
limited liability company, corporation, unincorporated association, joint
venture, trust or other entity.
Phase I and II Construction. "Phase I and II Construction"
shall have the meaning given in the General Development Agreement.
Plan. "Plan" shall mean that certain plan of reorganization of
HJC confirmed by the United States Bankruptcy Court for the Eastern District of
Louisiana for that certain case captioned In re Harrah's Jazz Company, Case No.
95-14545, as modified.
Prior Debt. "Prior Debt" shall mean all amounts owing in
respect of the Bank Debt, the New Bonds and the New Contingent Bonds and any
modifications, renewals, replacements or Refinancings of the Bank Debt, the New
Bonds and the New Contingent Bonds permitted pursuant to Section 7(a) hereof.
Proceeds of Major Capital Event. "Proceeds of Major Capital
Event" shall mean the net proceeds of any Major Capital Event after deducting
any closing costs or expenses arising in connection with the Major Capital
Event, Debt repaid or required to be repaid in connection with such Major
Capital Event out of such proceeds, including, without limitation, pursuant to
Section 5 of the Indentures and the Mortgages (as defined in the Indentures),
and any amounts reinvested in the Project or held in any escrow or other
restricted accounts for investment in the Project, including without limitation,
the deduction of any Contingent Payments under and as defined in the Indentures.
Project. "Project" shall mean any business conducted at or
with respect to the Casino and such additional movable and immovable property as
the Company may determine to lease or acquire, that is either located thereat or
used in connection with or relates to the business of the Company and the Casino
Operating Contract.
RDC. "RDC" shall mean the Rivergate Development Corporation, a
Louisiana public benefit corporation.
Refinance. "Refinance" shall have the meaning set forth in
Section 7(a)(i) hereof.
Refinanceable Debt. "Refinanceable Debt" shall have the
meaning set forth in Section 7(a)(i) hereof.
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Refinancing. "Refinancing" shall have the meaning set forth in
Section 7(a)(i) hereof.
Refinancing Indebtedness. "Refinancing Indebtedness" shall
have the meaning set forth in Section 7(a)(i) hereof.
Restricted Payments Covenants. "Restricted Payments Covenants"
shall have the meaning set forth in Section 3 hereof.
Revolving Loan. "Revolving Loan" has the meaning set forth in
the definition for "Bank Debt" herein.
Second Floor Shell Construction. "Second Floor Shell
Construction" shall mean the shell construction of the second floor non-gaming
space to the stage where it is ready for tenant improvement and build out for
non-gaming entertainment purposes; provided that the build out of the tenant
improvements and the occupancy and opening for business of such second floor
non-gaming development shall not be a part of this phase and may occur after
completion of the Casino and completion of such tenant improvements is not part
of the Obligations.
Subordinated Credit Facility. "Subordinated Credit Facility"
shall mean that certain Subordinated Loan Agreement entered into by and among
the Company, HET and HOCI, pursuant to Section 6.2(i) of the Plan, pursuant to
which HET and HOCI shall loan to the Company an original principal amount not to
exceed Twenty Two Million Five Hundred Thousand Dollars ($22,500,000).
Substitute Holder. "Substitute Holder" has the meaning set
forth in Section 16 hereof.
Term Loans. "Term Loans" has the meaning set forth in the
definition for "Bank Debt" herein.
2. Completion Guarantees and Completion Loan
(a) COMPLETION GUARANTEES. The Guarantors have been
requested to enter into Completion Guarantees (collectively, the "Completion
Guarantees," and individually, a "Completion Guarantee") for the purposes of (i)
the New Bonds and the New Contingent Bonds, (ii) the General Development
Agreement, (iii) the Casino Operating Contract, and (iv) the Credit Agreement.
(b) COMPLETION LOANS. The parties hereto agree that
any amounts (i) expended by the Guarantors pursuant to any of the Completion
Guarantees or the Completion Loan Documents, which are not also expenditures
under the Construction Lien Indemnity Agreement, or (ii) expended by the
Guarantors pursuant to the Performance Bond Indemnity Agreement, in any event
from any source, whether from their own funds or borrowings of a Guarantor,
shall be a loan (each a "Completion Loan" and collectively, the "Completion
Loans") from the Guarantors to the Company.
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(c) Advance of Available Funds
(i) The parties hereto hereby agree that at
such time that there is a demand, call, notice or requirement for performance of
any Completion Guarantee, without any further action by the parties hereto the
Guarantors shall be entitled to control the disbursement and use of all
Available Funds and to apply such Available Funds to any and all costs required
to complete the Casino. Without limiting the generality of the foregoing
provision, at such time that there is a demand, call, notice or requirement for
the Guarantors to expend any amounts in respect of any Completion Guarantee, the
Guarantors shall be entitled to take any action to obtain the Available Funds
without any further action or consent by the Company, including, without
limitation, drawing and using any portion of the Terms Loans, the Subordinated
Credit Facility, or the Convertible Junior Subordinated Debentures up to the
total amount available thereunder, or taking any other action which the
Guarantors reasonably determine to be necessary or helpful to obtain Available
Funds to be applied to the cost to complete the Casino subject to the obligation
to provide certain minimum cash and working capital availability as described in
the Completion Guarantees.
(ii) Subject to the terms of the Bank Debt
Documents, the parties hereto hereby agree that the Guarantors shall be entitled
to draw on the Revolving Loan to fund the costs to be funded from the Project
Account (as defined in the Credit Agreement). The Guarantors hereby agree as of
the completion of Phase I and II Construction that they shall directly pay to
the Lenders to reduce the outstanding amount of such Revolving Loan an amount
equal to any amounts drawn on the Revolving Loan to fund any such costs to be
funded from the Project Account (as defined in the Credit Agreement). On each
such date, the Guarantors shall also reimburse the Company for all interest paid
by the Company with respect to any such amounts drawn to fund the costs to be
funded from the Project Account (as defined in the Credit Agreement) under the
Revolving Loan. The parties hereto hereby agree that any amounts paid by the
Guarantors to pay down the Revolving Loan, including any interest reimbursed to
the Company pursuant to this Section 2(c)(ii) accrued at up to a maximum rate of
eight percent (8%) per annum, shall be a Completion Loan under this Agreement.
Any interest repaid pursuant to this Section 2(c)(ii) which is attributable to
an interest rate greater than eight percent (8%) per annum shall not be a
Completion Loan under this Agreement. Nothing herein shall limit the obligations
of the Guarantors under the Completion Guarantees with respect to available
working capital at the Casino.
(iii) The Company hereby instructs the
Lenders to follow all instructions of the Guarantors with respect to the
disbursement, withdrawal, management, or control, or notices in respect, of all
or any portion of the Term Loans, the Subordinated Credit Facility, or the
Convertible Junior Subordinated Debentures, effective upon receipt by the
Lenders of notice from the Guarantors that there has been a demand, call, notice
or requirement for performance of any Completion Guarantee until such time that
all obligations of the Guarantors in respect of the Completion Guarantees have
been fully satisfied.
(iv) Subject to Section 2(c)(ii) hereof, the
Company hereby instructs the Lenders to follow all instructions of the
Guarantors with respect to the disbursement,
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<PAGE>
withdrawal, management or control of the Revolving Loan to the extent that
additional funds are required to fund the costs to be funded from the Project
Account (as defined in the Credit Agreement).
(d) Concurrently herewith:
(i) the Company shall execute and deliver to
HET and HOCI an Assignment of Contracts and Ancillary Rights in the form of
Exhibit A hereto; and
(ii) each of the following parties shall
execute and deliver a Consent and Attornment Agreement in the form of Exhibit B
hereto: (A) Centex Landis Construction Co., Inc. ("Centex") with respect to that
certain Construction Agreement dated October 10, 1994 between Centex and the
Company, as assignee of HJC, as amended on November 25, 1996, and as further
amended on October 26, 1998 (B) Broadmoor with respect to that certain
Construction Agreement dated October 10, 1994 between Broadmoor and the Company,
as assignee of HJC, as amended by a settlement on October 15, 1996 and as
further amended on October 21, 1998, (C) Perez Ernst Farnet/Modus, Inc.,
Architects and Planners ("Perez Ernst"), with respect to that certain Design
Agreement dated January 15, 1995 (and effective November 15, 1994) between Perez
Ernst and the Company, as assignee of HJC, and (D) Foxcor/Pearson PMG, LLC
("Foxcor"), with respect to that certain Program Management Agreement Concerning
Phase II and III between Foxcor and the Company, as assignee of HJC; and
(iii) the RDC, the City, HET and HOCI shall
execute and deliver the Entry Agreement in the form of Exhibit C hereto.
3. TERM OF OBLIGATIONS. All Completion Loans shall be due and
payable in full on the date (the "Maturity") which is six (6) months following
the maturity of the New Bonds and the New Contingent Bonds.
4. INTEREST RATE. Except as otherwise provided in Section 9(b)
hereof, the outstanding principal amount of each Completion Loan shall bear
interest at the Interest Rate from the date incurred until repayment in full.
5. ENTRY AGREEMENT. The rights of entry pursuant to the Entry
Agreement and the rights of the Guarantors pursuant to Section 14(b) hereof may
be exercised by the Guarantors at any time or from time to time following the
date of this Agreement; provided that the Guarantors shall be liable to the
Company for actual damages resulting from their willful misconduct or gross
negligence in the exercise of such rights of entry. If such rights are exercised
as a result of (i) any demand, call, notice or requirement for performance under
any Completion Guarantee, or (ii) the Guarantors having determined in good faith
that the cost of completing the Casino will materially exceed the Completion
Budget or there will be a delay in the timely completion or opening of the
Casino, the Guarantors' liability to the Company for actual damages arising from
the exercise of their rights of entry pursuant to the Entry Agreement or their
rights pursuant to Section 14(b) hereof shall be limited to actual damages of
the Company for any claim of wrongful entry by the Guarantors, not to exceed Two
Million Dollars ($2,000,000) unless such damages result from the
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Guarantors' willful misconduct or gross negligence. Such good faith
determination by the Guarantors pursuant to clause (ii) of this Section 5 may be
based on, among other things, the occurrence of any of the following:
(a) a thirty (30) day delay in the construction
schedule with respect to the Casino which is reasonably believed by the
Guarantors to have a materially adverse impact on the Completion Budget or the
timely completion of the Casino;
(b) a cost overrun of more than Ten Million Dollars
($10,000,000) in the aggregate in any one or more line items of a construction
budget for the Casino approved by the Company prior to a notice to proceed as
given by the Company pursuant to the construction contracts for the Casino;
(c) a notice of default sent to the Company by any
contractor that has not been cured or withdrawn within ten (10) Business Days of
such notice;
(d) the filing of a Lien by any contractor that is
not released and satisfied by the Company or not diligently and continuously
defended by the Company, and, immediately upon the loss of any such defense, is
not released and satisfied by the Company;
(e) the filing of any litigation that materially
jeopardizes the timely completion of the Casino and does not suspend or
terminate the obligations of the Guarantors under the Completion Guarantees
during the pendency of such litigation;
(f) a Default;
(g) the receipt of a notice of default under the
Casino Operating Contract, the General Development Agreement or the Lease,
relating to the construction obligations of the Company; or
(h) the failure of the Company timely to file or
pursue any necessary regulatory approvals from the LGCB or any other state
regulatory authorities necessary for opening the Casino.
6. Repayment of Completion Loan Payment Obligations
(a) APPLICATION OF AVAILABLE CASH FLOW AND AVAILABLE
PROCEEDS OF MAJOR CAPITAL EVENTS. Subject to the provisions of this Agreement
and the Completion Guarantor Subordination Agreements, all outstanding
Completion Loan Payment Obligations shall be paid in arrears on a quarterly
basis on the first (1st) Business Day following the last day of each March,
June, September, and December (each a "Completion Loan Payment Date") from, and
only to the extent of, one hundred percent (100%) of Available Cash Flow for the
month immediately preceding the applicable Completion Loan Payment Date. Subject
to the provisions of this Agreement and the Completion Guarantor Subordination
Agreements, upon the occurrence of a Major Capital Event other then the exercise
of the HET Warrant by the Company, all Completion
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<PAGE>
Loan Payment Obligations then outstanding shall be reduced by application of one
hundred percent (100%) of the Available Proceeds of Major Capital Event of such
Major Capital Event.
(b) DEFERRAL PERIODS. During any period in which (i)
payment of the Completion Loan Payment Obligations is prohibited under the terms
of the Credit Agreement or (ii) the Company has paid Fixed Interest in Secondary
Securities (each term as defined in the Indentures) on the New Bonds pursuant to
Section 2.2(e) of the Indentures, the Company shall not be permitted to make any
payment in respect of the Completion Loan Payment Obligations; provided,
however, that interest shall continue to accrue at the Interest Rate on the
Completion Loan Payment Obligations during any period in which the Company is
not permitted to make payments pursuant to this Section 6(b) and such interest
shall be added to the principal amount of the Completion Loan Payment
Obligations.
(c) SUBORDINATION. All payments with respect to the
Obligations (whether to be made to HET, HOCI or any of their successors and
assigns) shall be subject to the terms of (and subordinated in accordance with)
the Completion Guarantor Subordination Agreements.
(d) RIGHT TO RECEIVE AUDIT REPORTS. So long as any
Completion Guarantee or any Obligation is outstanding, at the request of the
Guarantors:
(i) The Company shall prepare and deliver to
the Guarantors, on or before the twentieth (20th) day of each month, a statement
of all income and expenses in connection with the operation of the Casino on a
line item basis for the prior month, which statement shall include a calculation
of Available Cash Flow for the prior month and otherwise be in form satisfactory
to the Guarantors.
(ii) The Company shall deliver to the
Guarantors, on or before March 1 of each year a copy of its audited financial
statement for the preceding calendar year. In the event such audited financial
statement shows that Available Cash Flow for the preceding calendar year was
different from the amount reported by the Company on a monthly basis, the amount
of such difference shall be promptly applied to, or credited against, the
Completion Loan Payment Obligations, as applicable.
(iii) The Company shall maintain accurate
and complete books and records evidencing calculations of Available Cash Flow.
The Guarantors shall have the right at any time upon reasonable notice to
conduct an audit of the books and records of the Company upon which the
Company's calculations of Available Cash Flow are based.
7. Covenants and Restrictions
(a) Covenants
(i) The Company may incur any Debt or Lien
issued in exchange for, or the proceeds from the issuance and sale of which are
used substantially concurrently to repay, redeem, defease, refund, refinance,
discharge or otherwise retire for value, in whole or in part (a "Refinancing",
or as appropriate, to "Refinance") the Bank Debt, the New Bonds, or the New
12
<PAGE>
Contingent Bonds ("Refinanceable Debt") in a principal amount not to exceed
(after deduction of reasonable and customary fees and expenses incurred in
connection with the Refinancing) the lesser of (i) the principal amount of the
Refinanceable Debt so Refinanced, and (ii) if such Refinanceable Debt being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing
plus, in either case, the lesser of the amount of premium actually paid at such
time to Refinance the Refinanceable Debt and the stated amount of any premium
required to be paid in connection with such a Refinancing pursuant to the terms
of the Refinanceable Debt being Refinanced ("Refinancing Indebtedness".
(ii) Except with respect to the New Bonds,
the New Contingent Bonds, the Bank Debt, the Subordinated Credit Facility, any
lien arising in respect of the State Guarantor First Mortgage (as defined in the
Management Agreement) and any Refinancing Indebtedness pursuant to Section
7(a)(i) hereof, any Debt or Lien incurred, modified, renewed or replaced by the
Company shall be permitted only to the extent permitted by the Indentures as in
effect on the Plan Consummation Date.
(iii) The Company shall use all Available
Funds for the construction and development of the Casino.
(b) RESTRICTED ACTS. Except as permitted by the
Indentures, the Company shall not:
(i) declare or make or become irrevocably
committed to make any redemption, acquisition or other manner of return of the
capital invested in the Company by a shareholder;
(ii) consolidate or merge with or into any
other entity;
(iii) dissolve the Company; or
(iv) sell, lease or otherwise transfer or
dispose of, directly or indirectly, all or any substantial part of the property
of the Company.
(c) MAINTENANCE OF SEPARATE ACCOUNTS, BOOKS AND
RECORDS. The Company and the Guarantors agree that:
(i) separate accounts, books and records
shall be maintained with respect to (A) funds generated by, and available for,
the operation of the Casino, including, without limitation, amounts drawn under
the Revolving Loan, and (B) funds available to fund the costs of construction of
the Casino, including, without limitation, any amounts necessary to fund any
items to be funded from the Project Account (as defined in the Credit Agreement)
and drawn under any or all of the Term Loans, the Revolving Loan (prior to the
Termination of Construction Date (as defined in the Completion Guarantees) and
subject to Section 2(c)(ii) hereof), the Convertible Junior Subordinated
Debentures and the Subordinated Credit Facility. No funds held in respect of the
operation of the Casino shall be commingled with any funds held to fund the
costs of construction of the Casino; and
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<PAGE>
(ii) within forty-five (45) days following
the Termination of Construction Date, the Company shall have its accountants
audit its books and records maintained pursuant to Section 7(c)(i) hereof and
all amounts expended to construct the Casino. If such audit determines that the
amounts in the aggregate expended for the items to be funded from the Project
Account (as defined in the Credit Agreement) through the Termination of
Construction Date were in excess of the costs to be funded from the Project
Account (as defined in the Credit Agreement), the Guarantors shall reimburse to
the Company within fifteen (15) days following the date of issuance of such
audit an amount equal to the difference between the costs to be funded from the
Project Account (as defined in the Credit Agreement) and the actual amount
expended for the items to be funded from the Project Account (as defined in the
Credit Agreement) as determined by the audit. Any amounts so reimbursed to the
Company by the Guarantors shall be a Completion Loan under this Agreement.
(d) TERMINATION OF COVENANTS. All covenants set forth
in this Section 7 shall terminate only upon the satisfaction in full of all of
the Obligations, and the satisfaction and release of all of the Completion
Guarantees.
8. Default
(a) EVENTS OF DEFAULT. It shall be a default (a
"Default") under this Agreement, if any one or more of the following events
occur:
(i) failure of the Company to make payment
of any principal or interest on any Completion Loan or any costs and expenses
pursuant to Section 20(m) hereof within ten (10) Business Days following notice
to the Company that such payments are due and payable in accordance with the
terms of this Agreement and the Completion Guarantor Subordination Agreements;
(ii) a breach by the Company of any other
material obligation pursuant to any of the Completion Loan Documents following
notice of such breach to the Company and failure of the Company to cure such
breach within a period of thirty (30) days following such notice;
(iii) acceleration of any of the Prior Debt
with an aggregate principal amount in excess of $50,000,000 following notice to
the Company of such acceleration and failure of the Company to cure such
acceleration within a period of thirty (30) days following such notice, other
than any such acceleration resulting from the failure of the Guarantors to
perform the Completion Guarantees;
(iv) commencement of any case or proceeding
seeking liquidation, reorganization or other relief with respect to the Company
or its Debt under any bankruptcy, insolvency, or other similar law now or
hereafter in effect, or, seeking the appointment of a trustee, receiver,
liquidator, custodian or similar official of the Company or the property of the
Company, which, in the case of an involuntary proceeding only, is not dismissed
within ninety (90) days after its commencement, or if the Company shall consent
to any such relief or to the appointment of or
14
<PAGE>
taking possession by any such official in any involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of its creditors, or shall take any corporate action to authorize any of
the foregoing;
(v) the liquidation, sale or dissolution of
the Company; or
(vi) the termination of the Management
Agreement or removal of the Manager as the manager of the Casino (other than as
a result of a voluntary termination by the Manager or a default by the Manager
thereunder or the termination of the Management Agreement by the Company prior
to the occurrence of a Flip Event (as defined in the Restated Certificate of
Incorporation of JCC Holding Company as of the date hereof) or after the
occurrence of a Cure Event (as defined in the Restated Certificate of
Incorporation of JCC Holding Company as of the date hereof) in respect of any
uncured Flip Events;
provided that notwithstanding the occurrence of a Default, HET and HOCI (and
their successors and assigns) shall forbear from exercising (and shall not be
permitted to exercise) any remedies hereunder if any Prior Debt is then
outstanding.
(b) ACTS OR OMISSIONS OF HET AND MANAGER. No act or
omission of HET or any subsidiary of HET as a shareholder of the Manager or of
the Company's sole member, JCC Holding Company, and no damage caused by the
Guarantors in the exercise of rights granted by the Entry Agreement or pursuant
to Section 14(b) hereof shall in any way delay, postpone, restrain or otherwise
interfere with the exercise by the Guarantors of any of their remedies hereunder
or under the other Completion Loan Documents; provided, however, that nothing
contained herein shall limit the liability of the Manager under the Management
Agreement or the Guarantors under Section 5 hereof.
9. Remedies
(a) Upon the occurrence and during the continuance of
a Default, the Guarantors shall have the right immediately to declare due and
owing any or all of the Obligations with notice to the Company, but without
demand to the Company; provided that so long as any Prior Debt is outstanding,
HET and HOCI may not declare the Obligations immediately due and owing until
such outstanding Prior Debt has also been declared immediately due and owing.
Except as otherwise limited by the terms of this Agreement or the Completion
Guarantor Subordination Agreements, the Guarantors shall have all other rights
and remedies available at law or equity, under this Agreement or under any other
agreements entered into by the Guarantors or any of their Affiliates, and each
such agreement and rights and remedies may be enforced separately and
independently.
(b) Interest on any Obligations not paid when due
hereunder shall accrue at the Default Rate, provided that no interest or other
payments pursuant to this Agreement shall be due or payable (and the Default
Rate shall not apply) so long as JCC is prohibited from making payments by the
terms of this Agreement or the Completion Guarantor Subordination Agreements.
15
<PAGE>
10. OBLIGATIONS ABSOLUTE. All Obligations, unless otherwise
specifically provided herein, are unconditional, irrevocable and continuing
until paid and performed in full, and shall be paid and performed in strict
accordance with the terms of this Agreement under all circumstances, including
without limitation, the following:
(a) any lack of validity or enforceability of any of
the Completion Guarantees;
(b) other than with respect to liquidated, final
non-appealable judgments against the Guarantors for damages payable under
Section 5 hereof, the existence of any claim, set-off, defense or other right
that the Company or any party hereto may have at any time against any
Guarantor, or any Affiliate of any Guarantor, or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; and
(c) any forgery, fraud, misrepresentation or
insufficiency or breach of representation or warranty, in any respect, of any
Person, other than forgery or fraud of either Guarantor in connection with this
Agreement.
11. PURCHASE OF BANK NOTES. The Company recognizes that the
Guarantors may succeed to the rights and remedies of the Lenders at any time
before foreclosure with respect to the Bank Debt, and all documents related
thereto and security therefor, including without limitation the Credit
Agreement, mortgage and other security agreements, instruments and documents
encumbering the Casino or evidencing or securing payment of the Bank Debt (and
any rights or property used in connection therewith relating thereto or arising
therefrom, and the proceeds thereof).
12. RIGHTS OF THE GUARANTORS. Subject to the terms and
conditions of this Agreement, the Guarantors may, at any time and from time to
time, without consent of the Company, and without incurring responsibility to
the Company, and without impairing or releasing the obligations of the Company,
exercise or refrain from exercising any rights against the Company or any other
collateral or guarantee which may secure the Obligations or otherwise act or
refrain from acting (or consent to any such action or inaction).
13. COMPLETION GUARANTEE PROTECTIONS. Recognizing that the
Guarantors will be assuming significant risk in issuing the Completion
Guarantees, the Company agrees that,
(a) the general contract for construction of the
Casino and related contract documents referred to herein shall be in a form
approved in writing by the Guarantors, and
(b) the Guarantors, on behalf of the Company, may
take any actions necessary to cause the opening of the Casino to occur in
accordance with the terms of the Completion Guarantees, including, without
limitation, to pursue any necessary regulatory approvals from the LGCB or any
other state regulatory authorities necessary for opening the Casino.
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<PAGE>
14. Waivers; Modifications
(a) WAIVERS GENERALLY. No failure or delay on the
part of the Guarantors to insist on strict performance in exercising any
privilege, right or remedy shall operate as a waiver thereof or a waiver of any
term, provision or condition hereof, nor shall any single or partial exercise of
any privilege, right or remedy preclude any other or further exercise thereof or
the exercise of any other privilege, right or remedy.
(b) NO CONTINUING WAIVERS. A waiver in one or more
instances of any of the terms, covenants, conditions or provisions hereof shall
apply to the particular instance or instances and at the particular time or
times only, and no such waiver shall be deemed a continuing waiver, but all of
the terms, covenants, conditions and other provisions of this Agreement shall
survive and continue to remain in full force and effect; and no waiver shall be
effective unless in writing, dated and signed by the Guarantors.
(c) MODIFICATIONS. No change, amendment,
modification, cancellation or discharge hereof, or any part hereof, shall be
valid unless in writing, dated and signed by the party against whom such change,
amendment, modification, cancellation or discharge is sought to be charged.
15. LENDER REDEMPTION. If the holder of a Completion Loan (the
"Holder") is required to qualify or be found suitable under any applicable
gaming law, regulation, rule or order and does not so qualify or otherwise does
not meet the suitability standards pursuant to any applicable gaming law,
regulation, rule or order, the Holder shall and hereby agrees to sell the
Completion Loan to a suitable holder or holders (the "Substitute Holder") that
assume(s) and accept(s) the rights and obligations of the Holder hereunder and
under the Completion Guarantor Subordination Agreements. If the Holder fails to
sell the Completion Loan to a Substitute Holder within thirty (30) days of being
determined unsuitable or unqualified, or such lesser period of time as specified
by any applicable gaming law, regulation, rule or order, the Company may
designate a Substitute Holder within an additional thirty (30) day period, or
such lesser period of time as specified by any applicable gaming law,
regulation, rule or order, or may at its election upon written notice to the
Holder, subject to all restrictions of any applicable gaming law, regulation,
rule or order, immediately redeem the Holder's Completion Loan by payment of all
principal, interest and other amounts due with respect to such Completion Loan.
To the extent and for so long as required by any applicable gaming law,
regulation, rule or order, the Holder agrees that upon the Holder being
determined unsuitable or unqualified, the redemption of the Holder's Completion
Loan and all payments to and rights of such Holder shall be subject to all
restrictions of any applicable gaming law, regulation, rule or order.
16. NO RIGHT OF OFFSET. Other than with respect to liquidated,
final non-appealable judgments against the Guarantors for damages payable under
Section 5 hereof, no offset or claim that the Company or any shareholder of the
Company now or may in the future have against the Guarantors, any of their
Affiliates or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction, shall relieve the
Company from paying any amounts owing hereunder.
17
<PAGE>
17. INDEMNIFICATION. The Company hereby indemnifies and agrees
to defend the Indemnified Parties and to hold each of them harmless from any
cost, expense, liability, loss, or damage, including, without limitation,
reasonable attorneys' fees, incurred by any of them as a result of their
exercise of any rights or remedies under any of the Completion Loan Documents,
and from any and all claims and demands whatsoever that may be asserted against
the Indemnified Parties, or any of them, by reason of any alleged obligations or
undertakings on their part to perform the Entry Agreement or any of the
contracts or other property assigned to the Guarantors pursuant to the
Assignment of Contracts or exercise their rights pursuant to Section 13(b)
hereof; provided that the Guarantors shall not be indemnified for their bad
faith or willful misconduct or any damages for which the Guarantors are
determined by a liquidated, final non-appealable judgment to be liable pursuant
to Section 5 hereof.
18. GAMING REGULATIONS. This Agreement and any remedies
contemplated hereby, are and shall remain subject to the Louisiana Economic
Development and Gaming Corporation Act, La.R.S. 27:1 et seq., La.R.S. 27:201 et
seq. and the rules and regulations thereunder (collectively, as may be amended
from time to time the "Louisiana Gaming Regulations"), and the exercise of
remedies hereunder will be subject to the Louisiana Gaming Regulations.
19. Miscellaneous.
(a) ENTIRE AGREEMENT. This Agreement represents the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof, and all prior agreements, understandings, representations
and warranties in regard to the subject matter hereof, including, without
limitation, the Prior Completion Loan Agreement, are and have been merged herein
and are superseded hereby.
(b) GOVERNING LAW. This Agreement and the rights of
the parties hereunder shall be governed by and interpreted in accordance with
the internal laws of the State of New York without application of conflict of
laws principles.
(c) NOTICES. The address of the Company, the
Guarantors, the Trustee, and the Administrative Agent under and as defined in
the Credit Agreement shall for all purposes be as set forth below unless
otherwise changed by the applicable party hereto by notice to the others as
provided herein.
Company: Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Fax: (504) 533-6100
Attn: President
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<PAGE>
HOCI and HET: Harrah's Operating Company, Inc.
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Fax: (901) 537-3037
Attn: General Counsel
with a copy to the Corporate Secretary at
the same address
Trustee: Norwest Bank Minnesota, N.A.
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Phone: (612) 667-3777
Fax: (612) 667-9825
Attn: Lon LeClair - Corporate Trust
Department
Administrative Agent: Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, NY 10006
Phone: (212) 250-4169
Fax: (212) 250-5115
Attn: Mary Kay Coyle
All notices or other communications required or permitted to be given pursuant
to the provisions of this Agreement shall be in writing and shall be considered
as properly given if mailed by certified United States mail, postage prepaid,
with return receipt requested, by overnight courier service, or by facsimile
transmission with reception confirmed. Notices hereunder in any manner shall be
effective only if and when received by the addressee. Certified mail receipt or
express courier receipt at the above addresses shall establish receipt for
purposes of notices under this Agreement. Either the Company, the Trustee, the
Administrative Agent or the Guarantors may from time to time, by notice in
writing served upon the others as aforesaid, designate a different mailing
address or facsimile number to which, or a different person to whose attention,
all such notices or demands are thereafter to be sent.
(d) SUCCESSORS AND ASSIGNS. Other than the
Guarantors, no party hereto shall assign its rights or obligations under this
Agreement without the prior written consent of the remaining parties hereto; and
none of HET, HOCI or any of their successors and assigns shall assign any of its
rights or obligations under this Agreement unless the respective assignee agrees
in writing to be bound by the terms of the Completion Guaranator Subordination
Agreements. Subject to the foregoing, this Agreement (which shall at all times
be subject to the terms of the Completion
19
<PAGE>
Guarantor Subordination Agreements) shall be binding upon and inure to the
benefit of the parties hereto, their successors, assigns, heirs, legal
representatives, executors and administrators.
(e) GRAMMATICAL CHANGES. Whenever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, the feminine or the neuter gender shall include the masculine,
feminine and neuter gender as the circumstances require.
(f) CAPTIONS. Captions contained in this Agreement
are inserted only as a matter of convenience and in no way define, limit or
extend the scope or intent of this Agreement or any provision hereof.
(g) SEVERABILITY. If any provision of this Agreement,
or the application of such provision to any Person or circumstance, shall be
held invalid, the remainder of this Agreement, or the application of such
provision to Persons or circumstances other than those to which it is held
invalid, shall not be affected thereby; provided that the parties hereto shall
attempt to reformulate such invalid provision to give effect to such portions
thereof as may be valid without defeating the intent of such provision and the
economic burdens and benefits of this Agreement are not impaired.
(h) COUNTERPARTS. This Agreement, or any amendment
hereto, may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same instrument,
notwithstanding that all of the parties hereto are not signatories to the
original or the same counterpart. In addition, this Agreement, or any amendment
hereto, may contain more than one counterpart of the signature pages, and this
Agreement, or any amendment hereto, may be executed by the affixing of the
signatures of each of the parties hereto to one of such counterpart signature
pages; all of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.
(i) NO THIRD PARTY RIGHTS. This Agreement is for the
sole and exclusive benefit of the parties hereto designated herein and no other
Person shall under any circumstances be deemed to be a beneficiary of any of the
rights, remedies, terms and provisions of this Agreement.
(j) VOLUNTARY AGREEMENT. Each party hereto has
entered into this Agreement freely and voluntarily, without coercion, duress,
distress, or undue influence by any other Persons or their respective
shareholders, directors, officers, partners, agents or employees.
(k) ADVICE FROM COUNSEL. Each party hereto
understands that this Agreement may affect legal rights. Each party hereto
represents to the other that it has received legal advice from counsel of its
choice in connection with the negotiation and execution of this Agreement and is
satisfied with its legal counsel and the advice received from it.
(l) JUDICIAL INTERPRETATION. Should any provision of
this Agreement require judicial interpretation or construction, there shall be
no presumption that the terms hereof shall be more strictly construed or
interpreted against any party hereto by reason of the rule of
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<PAGE>
construction that a document is to be construed more strictly against the party
who prepared the same.
(m) ATTORNEYS' FEES. If any party hereto brings any
judicial action or proceeding to enforce its rights under this Agreement, the
prevailing party shall be entitled, in addition to any other remedy, to recover
from the others, regardless of whether such action or proceeding is prosecuted
to judgment, all costs and expenses, including without limitation reasonable
attorneys' fees, incurred therein by the prevailing party.
(n) PERMITTED ACTIONS. Each of the parties hereto
acknowledges and agrees that the Guarantors may take any separate action or
actions to the extent permitted under this Agreement as it shall determine in
its sole discretion to be in its own best interest.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement effective as of the day and year first above written.
JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company,
By /s/ Frederick W. Burford
----------------------------------------
Name: Frederick W. Burford
-------------------------------------
Title: President
------------------------------------
HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation
By /s/ George W. Loveland II
----------------------------------------
Name: George W. Loveland II
-------------------------------------
Title: V. P.
------------------------------------
HARRAH'S ENTERTAINMENT, INC., a Delaware
corporation
By /s/ George W. Loveland II
----------------------------------------
Name: George W. Loveland II
-------------------------------------
Title: V. P.
------------------------------------
AS TO THE PROVISIONS OF
SECTIONS 2(c)(iii) and (iv) ONLY:
Agreed and accepted Oct 30, 1998
by: -------
BANKERS TRUST COMPANY, as
Administrative Agent for Lenders
By: /s/ Gregory P. Sheerin
-----------------------------
Name: Gregory P. Sheerin
---------------------------
Title: VICE PRESIDENT
--------------------------
SIGNATURE PAGE
TO
COMPLETION LOAN AGREEMENT
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT OF CONTRACTS AND ANCILLARY RIGHTS
A-1
<PAGE>
EXHIBIT B
FORMS OF CONSENT AND ATTORNMENT AGREEMENT
B-1
<PAGE>
EXHIBIT C
ENTRY AGREEMENT
C-1
<PAGE>
Exhibit 10.11
AMENDED AND RESTATED
CONSTRUCTION LIEN INDEMNITY OBLIGATION AGREEMENT
THIS AMENDED AND RESTATED CONSTRUCTION LIEN INDEMNITY
OBLIGATION AGREEMENT (the "Agreement") is entered into on this 30th day of
October, 1998, by and between JAZZ CASINO COMPANY, L.L.C., a Louisiana limited
liability company (the "Company") and HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation ("HOCI").
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted, and the United States Bankruptcy Court
for the Eastern District of Louisiana has confirmed, the Plan (as defined
herein).
C. As contemplated by the Plan, the Company has succeeded to
all the rights and obligations of HJC under that certain Construction Lien
Indemnity Obligation Agreement dated as of October 12, 1994, as amended by that
certain First Amendment to the Construction Lien Indemnity Obligation Agreement
dated as of November 8, 1994, by and among HJC, HOCI (formerly known as Embassy
Suites, Inc.), Harrah's New Orleans Investment Company, a Nevada corporation,
New Orleans/Louisiana Development Corporation, a Louisiana corporation, Grand
Palais Casino, Inc., a Delaware corporation and Grand Palais Management Company,
L.L.C., a Delaware limited liability company (the "Prior Construction Lien
Indemnity Obligation Agreement").
D. The Plan requires the amendment and restatement of the
Prior Construction Lien Indemnity Obligation Agreement in its entirety in
accordance with the terms hereof.
E. The parties desire to amend and restate the Prior
Construction Lien Indemnity Obligation Agreement on the terms and conditions set
forth herein.
F. The Company and HOCI desire to set forth in this Agreement
their understandings regarding certain obligations between the parties with
respect to that certain Construction Lien Indemnity Agreement (the "Construction
Lien Indemnity Agreement") indemnifying the Company's title insurers regarding
mechanic's liens claiming priority to (i) the Term Loans (as defined herein),
(ii) the Revolving Loan (as defined herein), (iii) the Senior Subordinated Notes
due 2009 with Contingent Payments issued by the Company pursuant to that certain
Indenture entered into pursuant to the Plan, and (iv) the Senior Subordinated
Contingent
<PAGE>
Notes due 2009 issued by the Company pursuant to that certain Indenture entered
into pursuant to the Plan (the "Indenture").
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. Capitalized terms shall have the meaning
ascribed herein. Each of the following terms when used herein shall have the
following defined meanings:
Affiliate. "Affiliate" shall mean as to any Person the
affiliates of whom are relevant for purposes of any provisions of this
Agreement, (i) any corporation, partnership, limited liability company,
unincorporated association, joint venture, trust or individual controlled by,
under common control with, or which controls, directly or indirectly, such
Person, and (ii) a trust of which the Person, or a direct or indirect
shareholder of such Person, is a trustee, or which has as its principal
beneficiaries such Person, or any direct or indirect shareholder of such Person,
or members of the immediate family of such direct or indirect shareholder or
other Person. For purposes hereof, shares or other ownership interests held by a
trust shall be deemed to be owned pro-rata by the beneficiaries of such trust.
Completion Guarantor Subordination Agreements. "Completion
Guarantor Subordination Agreements" shall mean that certain Completion Guarantor
Subordination Agreement entered into by and among HET, HOCI and Norwest Bank
Minnesota, N.A. pursuant to the Indentures, that certain Completion Guarantor
Subordination Agreement entered into by and among HET, HOCI and Bankers Trust
Company pursuant to the Credit Agreement, and that certain Completion Guarantor
Subordination Agreement entered into by and among HET, HOCI, and Norwest Bank
Minnesota, N.A. pursuant to the indenture for the Convertible Junior
Subordinated Debentures.
Credit Agreement. "Credit Agreement" shall mean that certain
Credit Agreement to be entered into by and among the Company, JCC Holding
Company, Bankers Trust Company, as lender and administrative agent, and certain
other lenders pursuant to the Plan, and all other loan and security documents
governing the terms of the Term Loans and the Revolving Loan.
Person. "Person" shall mean any individual, partnership,
limited liability company, corporation, unincorporated association, joint
venture, trust or other entity.
Plan. "Plan" shall mean that certain plan of reorganization of
HJC confirmed by the United States Bankruptcy Court for the Eastern District of
Louisiana for that certain case captioned IN RE HARRAH'S JAZZ COMPANY, Case No.
95-14545.
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Revolving Loan. "Revolving Loan" shall mean the revolving
credit facility to be obtained by the Company on the effective date of the Plan
which shall not exceed Twenty Five Million Dollars ($25,000,000) in aggregate
principal amount, including a subfacility of up to Ten Million Dollars
($10,000,000) to be available for letters of credit, and which shall have the
terms and conditions set forth in the Credit Agreement.
Subordinated Loan Agreement. "Subordinated Loan Agreement"
shall mean that certain Subordinated Loan Agreement to be entered into by the
Company, HOCI and Harrah's Entertainment, Inc., providing for a loan to the
Company in an amount not to exceed Twenty Two Million Five Hundred Thousand
Dollars ($22,500,000).
Term Loans. "Term Loans" shall mean the A Term Loans and the B
Term Loans as defined in, and to be obtained pursuant to, the Credit Agreement
by the Company on the effective date of the Plan which shall not exceed Two
Hundred Eleven Million Five Hundred Thousand Dollars ($211,500,000) in aggregate
principal amount and shall have such other terms and conditions as shall be set
forth in the Credit Agreement.
2. Construction Lien Indemnity Obligation
(a) The Company and HOCI have been required to
deliver the Construction Lien Indemnity Agreement. Any amounts funded by HOCI
pursuant to the Construction Lien Indemnity Agreement shall thereupon be an
obligation of the Company to HOCI payable upon demand by HOCI (each a
"Construction Lien Indemnity Obligation" and collectively, the "Construction
Lien Indemnity Obligations").
(b) All payments with respect to the Construction
Lien Indemnity Obligations (whether to be made to HOCI or any of its successors
and assigns) shall be subject to the terms of (and subordinated in accordance
with) the Completion Guarantor Subordination Agreements.
3. Interest Rate. Each Construction Lien Indemnity Obligation
shall bear interest from the date incurred until repayment in full at a rate
(the "Interest Rate") equal to the lower of (i) eight percent (8%) per annum and
(ii) the maximum rate permitted by applicable law.
4. Deferral. During any period in which (i) payment of the
Construction Lien Indemnity Obligations is prohibited under the terms of the
Credit Agreement or (ii) the Company has paid Fixed Interest in Secondary
Securities (each term as defined in the Indenture) on the New Bonds pursuant to
Section 2.2(e) of the Indenture, the Company shall not be permitted to make any
payment in respect of the Construction Lien Indemnity Obligations; provided
however, that interest shall continue to accrue at the Interest Rate on the
Construction Lien Indemnity Obligations during any period in which the Company
is not permitted to make payments pursuant to this Section 4 and such interest
shall be added to the principal amount of the Construction Lien Indemnity
Obligations.
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5. Obligations Absolute. Subject to the terms and provisions
of this Agreement and the Completion Guarantor Subordination Agreements, all
obligations under this Agreement, unless otherwise specifically provided herein,
are unconditional, irrevocable and continuing until paid and performed in full,
and shall be paid and performed in strict accordance with the terms of this
Agreement under all circumstances, including without limitation, the following:
(a) any lack of validity or enforceability of the
Construction Lien Indemnity Agreement;
(b) any forgery, fraud, misrepresentation or
insufficiency or breach of representation or warranty, in any respect, of any
Person, other than forgery or fraud of HOCI in connection with this Agreement.
6. Waivers; Modifications
(a) No failure or delay on the part of HOCI to insist
on strict performance in exercising any privilege, right or remedy shall operate
as a waiver thereof or a waiver of any term, provision or condition hereof, nor
shall any single or partial exercise of any privilege, right or remedy preclude
any other or further exercise thereof or the exercise of any other privilege,
right or remedy.
(b) A waiver in one or more instances of any of the
terms, covenants, conditions or provisions hereof shall apply to the particular
instance or instances and at the particular time or times only, and no such
waiver shall be deemed a continuing waiver, but all of the terms, covenants,
conditions and other provisions of this agreement shall survive and continue to
remain in full force and effect; and no waiver shall be effective unless in
writing, dated and signed by HOCI.
(c) No change, amendment, modification, cancellation
or discharge hereof, or any part hereof, shall be valid unless in writing, dated
and signed by the party against whom such change, amendment, modification,
cancellation or discharge is sought to be charged.
7. No Right of Offset. Other than with respect to liquidated,
final non-appealable judgments against HOCI, no offset or claim that the Company
or any of its Affiliates now or may in the future have against HOCI, or any
Affiliate of HOCI or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction,
shall relieve the Company from paying any amounts owing hereunder.
8. Miscellaneous
(a) Entire Agreement. This Agreement represents the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof, and all prior agreements, understandings, representations
and warranties in regard to the subject matter hereof are and have been merged
herein and are superseded hereby.
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(b) Governing Law. This Agreement and the rights of
the parties hereunder shall be governed by and interpreted in accordance with
the internal laws of the State of New York without application of conflict of
laws principles.
(c) Notices. The address of the Company and HOCI
shall for all purposes be as set forth below unless otherwise changed by the
applicable party hereto by notice to the other as provided herein.
Company: Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Fax: (504) 533-6100
Attn: President
HOCI: Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8600
Fax: (901) 762-8914
Attn: General Counsel
with a copy to Corporate Counsel at the
same address
All notices or other communications required or permitted to
be given pursuant to the provisions of this Agreement shall be in writing and
shall be considered as properly given if mailed by certified United States mail,
postage prepaid, with return receipt requested, by overnight courier service, or
by facsimile transmission with reception confirmed. Notices hereunder in any
manner shall be effective only if and when received by the addressee. Certified
mail receipt or express courier receipt at the above addresses shall establish
receipt for purposes of notices under this Agreement. Either party may from time
to time, by notice in writing served upon the other as aforesaid, designate a
different mailing address to which, or a different person to whose attention,
all such notices or demands are thereafter to be addressed.
(d) Successors and Assigns. No party shall assign its
rights and obligations under this Agreement without the prior written consent of
the parties hereto, except that HOCI may assign all or any portion of its right
to receive funds pursuant to this Agreement if the assignee agrees in writing to
be bound by the terms of the Completion Guarantor Subordination Agreements.
Subject to the foregoing, this Agreement (which shall at all times be subject to
the terms of the Completion Guarantor Subordination Agreements) shall be binding
upon and inure to the benefit of the parties hereto, their successors, assigns,
heirs, legal representatives, executors and administrators.
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<PAGE>
(e) Grammatical Changes. Whenever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, the feminine or the neuter gender shall include the masculine,
feminine and neuter gender as the circumstances require.
(f) Captions. Captions contained in this Agreement
are inserted only as a matter of convenience and in no way define, limit or
extend the scope or intent of this Agreement or any provision hereof.
(g) Severability. If any provision of this Agreement,
or the application of such provision to any Person or circumstance, shall be
held invalid, the remainder of this Agreement, or the application of such
provision to Persons or circumstances other than those to which it is held
invalid, shall not be affected thereby; provided that the parties shall attempt
to reformulate such invalid provision to give effect to such portions thereof as
may be valid without defeating the intent of such provision and the economic
burdens and benefits of this Agreement are not impaired.
(h) Counterparts. This Agreement, or any amendment
hereto, may be executed in multiple counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same instrument,
notwithstanding that all of the parties hereto are not signatories to the
original or the same counterpart. In addition, this Agreement, or any amendment
hereto, may contain more than one counterpart of the signature pages, and this
Agreement, or any amendment hereto, may be executed by the affixing of the
signatures of each of the parties hereto to one of such counterpart signature
pages; all of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.
(i) No Third Party Rights. This Agreement is for the
sole and exclusive benefit of the parties hereto designated herein and no other
Person shall under any circumstances be deemed to be a beneficiary of any of the
rights, remedies, terms and provisions of this Agreement.
(j) Voluntary Agreement. Each party hereto has
entered into this Agreement freely and voluntarily, without coercion, duress,
distress, or undue influence by any other Persons or their respective
shareholders, directors, officers, partners, agents or employees.
(k) Advice From Counsel. Each party hereto
understands that this Agreement may affect legal rights. Each party hereto
represents to the other that it has received legal advice from counsel of its
choice in connection with the negotiation and execution of this Agreement and is
satisfied with its legal counsel and the advice received from it.
(l) Judicial Interpretation. Should any provision of
this Agreement require judicial interpretation or construction, there shall be
no presumption that the terms hereof shall be more strictly construed or
interpreted against any party hereto by reason of the rule of
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construction that a document is to be construed more strictly against the party
hereto who prepared the same.
(m) Attorneys' Fees. If any party hereto brings any
judicial action or proceeding to enforce its rights under this Agreement, the
prevailing party shall be entitled, in addition to any other remedy, to recover
from the others, regardless of whether such action or proceeding is prosecuted
to judgment, all costs and expenses, including without limitation reasonable
attorneys' fees, incurred therein by the prevailing party.
(n) Waiver. Each of the parties hereto acknowledges
and agrees that any shareholder of the Company or any Affiliate of such
shareholder may take any separate action or actions as it shall determine in its
sole discretion to be in its own best interest with respect to the Company under
this Agreement notwithstanding the fact such party may have other roles with
respect to the Company under other agreements. Such shareholder or Affiliate of
such shareholder shall not be deemed to have acted in bad faith or breached any
fiduciary or other duty to the Company for so acting in its best interest under
this Agreement. Each party hereto hereby expressly waives (i) any claim of bad
faith or breach of fiduciary duty for any such action or actions which any party
hereto or its Affiliates may take in its own best interest under this Agreement,
and (ii) any defenses to enforcement of this Agreement or any exercise of any
rights or remedies under this Agreement based on any such claims of bad faith or
breach of fiduciary or other duty to the Company under any other agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement effective as of the day and year first above written.
JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company,
By /s/ Frederick W. Burford
-------------------------------------------
Name: Frederick W. Burford
----------------------------------------
Title: President
---------------------------------------
HARRAH'S OPERATING COMPANY, INC.,
a Delaware corporation
By /s/ George W. Loveland II
-------------------------------------------
Name: George W. Loveland II
----------------------------------------
Title: V.P.
---------------------------------------
[SIGNATURE PAGE TO
AMENDED AND RESTATED CLIOA]
<PAGE>
Exhibit 10.12
BANK COMPLETION GUARANTEE
THIS BANK COMPLETION GUARANTEE is entered into as of October
29, 1998 (this "Completion Guarantee"), by HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation ("HET"), and HARRAH'S OPERATING COMPANY, INC., a Delaware
corporation ("HOC," and together with HET, the "Completion Guarantors," and each
a "Completion Guarantor") in favor of Bankers Trust Company, as Administrative
Agent (together with its successors, the "Administrative Agent"), for the
benefit of the lenders (the "Banks") from time to time party to that certain
Credit Agreement entered into pursuant to the Plan (as amended, modified,
supplemented, restated (including, any amendments and restatements thereof),
extended, renewed, refinanced or replaced from time to time, the "Credit
Agreement") with the Administrative Agent, the Banks, and Jazz Casino Company,
L.L.C., a Louisiana limited liability company, (the "Company").
RECITALS
A. A plan of reorganization (the "Plan") of Harrah's Jazz
Company, a Louisiana general partnership ("HJC"), has been consummated as of the
date hereof in connection with the voluntary petition for an Order of Relief
under Chapter 11 of Title 11 of the United States Bankruptcy Code (the
"Bankruptcy Code") filed in the United States Bankruptcy Court on November 22,
1995 and now identified as BK No. 95-14545 in the Eastern District of Louisiana.
B. The Company, JCC Holding Company, a Delaware corporation,
the Banks, and the Administrative Agent have entered into the Credit Agreement
as of the date hereof, providing for the making of loans and the issuance of and
participation in letters of credit as contemplated therein.
C. The Company has obtained a performance bond (the
"Performance Bond") from Reliance Insurance Company and United States Fidelity
and Guaranty Company (the "Surety") for the benefit of the Administrative Agent
and the Banks, the New Indenture Trustee (as defined in the Plan) as trustee for
the holders of the New Bonds (as defined in the Plan) and the holders of the New
Contingent Bonds (as defined in the Plan), the City of New Orleans (the "City")
and the Rivergate Development Corporation (the "RDC"), and the Louisiana Gaming
Control Board (the "LGCB") for the completion of Phase I and II Construction
excluding the Minimum FF&E (as defined in the GDA) (the "Performance Bond
Construction").
D. The Completion Guarantors indirectly own a substantial
beneficial interest in the parent of the Company and will obtain substantial
economic and other benefits as a result of the successful completion and opening
of the Casino.
E. All capitalized terms used herein but not defined herein
shall be used herein as defined in the Credit Agreement.
<PAGE>
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Completion Guarantors, the receipt and sufficiency of
which are hereby acknowledged, the Completion Guarantors hereby make the
following representations and warranties to the Administrative Agent, for the
benefit of the Banks, and hereby covenant and agree for the benefit of the Banks
as follows:
1. Obligations Guaranteed
1.1. The Completion Guarantors hereby irrevocably and
unconditionally, jointly and severally, guarantee:
(a) the full and complete payment and performance of
all obligations (the "Completion Obligations") of the Company diligently to
commence and complete construction of and timely to pay for all costs and
expenses of completion of the Casino whether incurred before or after the Plan
Effective Date and whether due before or after the Termination of Construction
Date or otherwise payable by the Company to any person for the costs and
expenses of such completion, and, subject to receipt of any necessary regulatory
approvals, to open the Casino, including:
(i) the completion of construction (as
extended by Force Majeure) in accordance with the Plans and Specifications of
the Phase I and II Construction, on or before twelve (12) months after the Plan
Effective Date,
(ii) equipping the Casino so that the Casino
is ready to open to the public for business as a casino gaming operation on or
before twelve (12) months after the Plan Effective Date,
(iii) so long as any necessary regulatory
approvals from the LGCB, the State Police or any other State of Louisiana
regulatory authorities have been received, the opening of the Casino for
business as a casino gaming operation on or before twelve (12) months after the
Plan Effective Date, or if such approvals have not been received, that the
Casino is in a condition to receive customers in the ordinary course of
business, and
(iv) causing the Termination of Construction
Date to occur, including, without limitation:
(A) the payment of any and all costs
of completing the Phase I and II Construction, including without
limitation all labor, materials, supplies, Minimum FF&E (as defined in
the GDA) and equipment related thereto, to be paid and satisfied when
due and all cost overruns not paid by the Company;
(B) the payment, satisfaction or
discharge of liens arising from injuries or damages to persons or
property in connection with the Phase I and II Construction and all
liens, charges and claims, other than those set forth as exceptions to
the Mortgage Policies (as defined in the Credit Agreement) ("Permitted
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<PAGE>
Liens"), arising from the furnishing of labor, materials, supplies or
equipment for the Phase I and II Construction, that are or may be
imposed upon or asserted against the Casino or any portion thereof; and
(C) the defense and indemnification
of the Administrative Agent and the Banks against all such liens
arising from injuries or damages to persons or property in connection
with the Phase I and II Construction and all such liens, charges and
claims, other than Permitted Liens, arising from the furnishing of
labor, materials, supplies or equipment for the Phase I and II
Construction; and
(b) the full and complete payment and performance of
all obligations (the "Carry Obligations") of the Company to pay on a timely
basis all amounts due from or incurred by or otherwise payable by the Company to
any Person and due before or after the Plan Effective Date until and through the
Termination of Construction Date, including without limitation the payment of
fees, interest, letter of credit and scheduled principal payments and other
amounts (excluding principal on the New Bonds and the New Contingent Bonds) in
respect of all indebtedness of the Company, taxes (prior to delinquency),
amounts owing to the RDC under the Lease, amounts owing to the LGCB under the
Casino Operating Contract, assessments, utilities, insurance and maintenance
expenses, amounts owing from injuries or damages to person or property or
amounts due pursuant to contracts or agreements; provided that the Completion
Guarantors in no event guarantee payment of any Minimum Payment under and as
defined in the Casino Operating Contract.
1.2. In addition to Section 1.1(b) hereof, the Carry
Obligations shall include, without limitation:
(a) the obligation of the Company upon the
Termination of Construction Date to have available for working capital at least
Five Million Dollars ($5,000,000) of cash in the House Bank (as defined in the
Management Agreement) and at least Twenty Five Million Dollars ($25,000,000) of
availability for immediate drawdown(s) under the Revolving Loans, subject to the
terms thereof, reduced by (i) the amount of Letters of Credit not to exceed Two
Million Dollars ($2,000,000), and (ii) a drawing of Ten Million Dollars
($10,000,000) of the Revolving Loans to fund the Minimum Balance (as defined in
the Management Agreement) on or before the Termination of Construction Date; and
(b) the obligation of the Company to repay the
Revolving Loans together with any and all amounts of fees, interest, letter of
credit fees and other amounts due in respect of the Revolving Loans due upon an
event of default under the Credit Agreement prior to the Termination of
Construction Date.
This provision may require the Completion Guarantors to contribute working
capital directly to the Company and/or to pay down amounts outstanding under the
Revolving Loan.
1.3. The Completion Obligations, the Carry Obligations and the
Preservation Obligations are collectively referred to herein as the
"Obligations."
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1.4. The Completion Guarantors, jointly and severally, agree
to perform and comply with their Obligations, whether or not the Company is
liable therefor individually or jointly or severally with others, and whether or
not recovery against the Company is or may become barred by any statute of
limitations or prescriptive or preemptive period or is or may become
unenforceable or discharged, whether in whole or in part, for any reason other
than payment or performance thereof in full. The Completion Guarantors agree
that this Completion Guarantee is a guarantee of payment and performance and not
of collection, and that each of their obligations under this Completion
Guarantee shall be primary, absolute and unconditional, irrespective of, and
unaffected by:
(a) the genuineness, validity, regularity,
enforceability or any future amendment of, or change in this Completion
Guarantee, the Credit Agreement or any other agreement, document or instrument
to which the Administrative Agent, the Banks, the Company and/or the Completion
Guarantors is or are or may become a party;
(b) the absence of any action to enforce this
Completion Guarantee or any other document or the waiver or consent by the
Administrative Agent with respect to any of the provisions thereof;
(c) any release or discharge of any one or more of
the Surety, the other Completion Guarantor, the Company or any other party of
any Obligations; or
(d) any other action or circumstances which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor;
it being agreed by each Completion Guarantor that its obligations under this
Completion Guarantee shall not be discharged except as set forth in Section 12.3
hereof. Each Completion Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations.
1.5. Each Completion Guarantor expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel the Administrative Agent to proceed in
respect of the Obligations against the Company, the Surety or any other party or
against any security for the payment and performance of the Obligations before
proceeding against, or as a condition to proceeding against, any Completion
Guarantor. Each Completion Guarantor agrees that any notice or directive given
at any time to the Administrative Agent which is inconsistent with the waiver in
the immediately preceding sentence shall be null and void and may be ignored by
the Administrative Agent, and in addition, may not be pleaded or introduced as
evidence in any litigation relating to this Completion Guarantee for the reason
that such pleading or introduction would be at variance with the written terms
of this Completion Guarantee, unless the Administrative Agent has specifically
agreed otherwise in writing.
1.6. The Completion Obligations shall not include any of the
costs which are expressly included as a part of the Carry Obligations.
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1.7. Each Completion Guarantor acknowledges that it has
received copies of and is familiar with the Credit Agreement and the Shared
Security Documents (as defined in that certain Intercreditor Agreement among
HET, HOCI, Bankers Trust Company, Norwest Bank Minnesota, National Association,
as trustee, and the other parties named therein).
1.8. Except as expressly provided in this Completion Guarantee
(in particular in Sections 1.1(b) and 1.2 hereof), in no event shall the
Completion Guarantors, as a result of this Completion Guarantee, incur, directly
or indirectly, any obligation, contingent or otherwise, under the Credit
Agreement or for the payment of the principal amount of the notes contemplated
by the Credit Agreement except to the extent said notes are paid as a result of
a foreclosure and any Completion Guarantors' funds were used to improve the
Casino ("incur" meaning to create, incur, assume, guarantee or otherwise become
liable for).
2. Default Procedures
2.1. If for any reason whatsoever the Company:
(a) fails or neglects, even though the Company is not
at fault and whether intentional or unintentional, timely (as extended by Force
Majeure) to commence construction and diligently and expeditiously continue
construction, and complete the Phase I and II Construction within the time
period and in the manner specified in the GDA free of liens arising from the
furnishing of labor, materials, supplies, furnishings or equipment for the Phase
I and II Construction, other than Permitted Liens; or
(b) otherwise fails to satisfy and fulfill the
Completion Obligations in a timely manner in accordance with the time periods
set forth in Section 1.1(a)(i) hereof; or
(c) fails timely to pay any of the Carry Obligations;
or
(d) shall have filed against it a petition for relief
under any bankruptcy law, or any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future statute, law or regulation shall be filed
against the Company, and so long as the Completion Guarantors are not otherwise
in default under this Completion Guarantee, in any such event the Company shall
fail to remedy such default to the Administrative Agent's satisfaction within
sixty (60) days after the Company's receipt of a written notice of default with
respect thereto from the Administrative Agent; or
(e) shall be adjudged bankrupt or insolvent, the
Company shall make a general assignment for the benefit of creditors, or the
Company shall admit in writing its inability to pay its debts as they become
due, or the Company shall file a petition for relief under any bankruptcy law,
or any petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future statute, law or regulation shall be filed by the Company, or the Company
shall file an answer admitting or not contesting the material allegations of a
petition filed against it in any such proceeding, or the Company shall seek or
consent to or acquiesce in the appointment of a trustee, liquidator of the
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Company or a material part of its properties, or the Company shall voluntarily
liquidate or dissolve;
then in any such event or at any time thereafter, the Administrative Agent may
give written notice to the Completion Guarantors, the Company and the Surety of
the occurrence of such event; provided, that if any of the Completion
Guarantors, the Company or the Surety is the subject of any bankruptcy case, any
inability of the Administrative Agent to give notice to such party as a result
of the effect of the bankruptcy case shall not affect the validity or
effectiveness of the notice to the other parties which are not the subject of
any bankruptcy case.
2.2. Immediately upon receipt of such notice, the Completion
Guarantors shall take all necessary steps to maintain insurance coverage and
secure the Casino premises to prevent damage or deterioration to the Casino
premises and unauthorized entry or access to the Casino premises (the
"Preservation Obligations"). If after notice and five (5) Business Days
opportunity to cure after such notice, the Completion Guarantors shall fail to
perform the Preservation Obligations, such failure shall be a "Preservation
Obligation Default."
2.3. Commencing on the date on which the Administrative Agent
gives any such notice to the Completion Guarantors pursuant to Section 2.1
hereof, the Completion Guarantors, at their sole cost, (i) with respect to a
Carry Obligation Default shall pay the Carry Obligations when and as due and
(ii) with respect to a Completion Obligation Default shall immediately commence
to perform the Completion Obligations and thereafter continue diligently and
expeditiously until the Completion Obligations are fully performed.
2.4. Subject to Section 2.5 hereof, if after notice and five
(5) Business Days opportunity to cure after such notice, the Completion
Guarantors shall fail timely to pay the Carry Obligations (a "Carry Obligation
Default"), after notice and thirty (30) days opportunity to cure after such
notice, the Completion Guarantors shall fail to commence performing the
Completion Obligations and diligently thereafter continue to perform the
Completion Obligations through the Termination of Construction Date (a
"Completion Obligation Default"), or a Preservation Obligation Default shall
occur, then in addition to all other rights and remedies that may be available
to the Administrative Agent under the terms of this Completion Guarantee, or the
Credit Agreement and/or the Shared Security Documents, at law or in equity, the
Administrative Agent or its agent, in its sole discretion, may proceed as
follows:
(a) The Administrative Agent, at its option, may
elect to require specific performance by the Completion Guarantors of any and/or
all of the Completion Obligations after a Completion Obligation Default, the
Carry Obligations after a Carry Obligation Default or the Preservation
Obligations after a Preservation Obligation Default.
(b) After any default by the Company in its
obligations timely to commence and complete the Performance Bond Construction or
the Preservation Obligations, the Administrative Agent, at its option, shall
have the right, but shall have no obligation, to undertake to require the Surety
to perform the Performance Bond Construction or the Preservation Obligations, as
the case may be, pursuant to the Performance Bond, exercisable whether or not
the Administrative Agent elects to proceed judicially or nonjudicially to
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foreclose on all or any portion of the Collateral. The Administrative Agent's
election to require the Surety to perform the Performance Bond Construction or
the Preservation Obligations shall not release, diminish or extinguish the
liability of the Company or either Completion Guarantor therefor to the extent
the Surety fails to perform such Performance Bond Construction or the
Preservation Obligations. The Completion Guarantors shall remain obligated to
perform the Carry Obligations notwithstanding any such election and
notwithstanding the Surety's performance of the Performance Bond Construction or
the Preservation Obligations.
(c) The Administrative Agent, at its option, shall
have the right, but shall have no obligation, to proceed judicially or
nonjudicially to foreclose on all or any portion of the Collateral, exercisable
whether or not the Administrative Agent elects to require the Completion
Guarantors to perform any or all of the Completion Obligations after a
Completion Obligation Default, Carry Obligations after a Carry Obligation
Default or the Preservation Obligations after a Preservation Obligation Default.
(d) In addition to the Administrative Agent's right
to require specific performance by the Completion Guarantors of any and/or all
of the Completion Obligations after a Completion Obligation Default, the Carry
Obligations after a Carry Obligation Default and/or the Preservation Obligations
after a Preservation Obligation Default, and whether or not the Administrative
Agent elects to proceed judicially or nonjudicially to foreclose on all or any
portion of the Collateral, and whether or not the Administrative Agent shall
have called on the Surety pursuant to the Performance Bond, (i) the
Administrative Agent shall have the right to recover from the Completion
Guarantors all unreimbursed costs and expenses, including but not limited to
attorneys' fees, incurred by the Administrative Agent in protecting, preserving,
enforcing or defending its interests in this Completion Guarantee, (ii) after a
Carry Obligation Default, the Completion Guarantors shall be liable for the
joint benefit of the Administrative Agent, the trustee under the New Bonds
Indenture (the "Trustee"), the LGCB, the City and the RDC as their interests may
appear for any interest or delinquency costs of the Company arising from such
Carry Obligation Default; provided that the Completion Guarantors shall not be
liable for duplicate payments of the same charge with respect to any such
interest or delinquency costs of the Company regardless of whether multiple
demands are made by any or all of the RDC, the City, the LGCB, the Trustee, or
the Administrative Agent, (iii) after a Completion Obligation Default, the
Completion Guarantors shall be liable for the joint benefit of the
Administrative Agent, the Trustee, the City and the RDC, and the LGCB as their
interests may appear for damages to pay for the costs of performance of the
Completion Obligations arising from such Completion Obligation Default or such
other damages as may be available at law or in equity; provided that, in no
event shall the Completion Guarantors be liable for duplicate payments in
respect of such damages nor for more than one performance of the Completion
Obligations regardless of whether multiple demands are made by any or all of the
RDC, the City, the LGCB, the Administrative Agent or the Trustee, and (iv) after
a Preservation Obligation Default, the Completion Guarantors shall be liable for
the joint benefit of the Administrative Agent, the Trustee, the City and the
RDC, and the LGCB as their interests may appear for damages to pay for the costs
of performance of the Preservation Obligations arising from such Preservation
Obligation Default; provided that, in no event shall the Completion Guarantors
be liable for duplicate payments in respect of such damages nor for more than
one performance of the
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Preservation Obligations regardless of whether multiple demands are made by any
or all of the RDC, the City, the LGCB, the Administrative Agent or the Trustee.
(e) With respect to the Completion Obligations, each
Completion Guarantor specifically agrees that this Completion Guarantee
continues whether the Company, the Administrative Agent (or any other
administrative agent or designee of the Banks) or the Collateral Agent (or any
other agent, representative or designee of the Secured Creditors) is lessee
under the Lease.
(f) With respect to the Carry Obligations, each
Completion Guarantor specifically agrees that this Completion Guarantee is
intended as a contract to guarantee payment unconditionally and irrevocably on a
timely basis of all amounts included as Carry Obligations pursuant to Sections
1.1(b) and 1.2 hereof.
(g) No delay or failure by the Administrative Agent
to exercise any remedy against the Completion Guarantors will be construed as a
waiver of that right or remedy.
2.5. The remedies set forth in Sections 2.4 and 7 hereof are
not intended to be exclusive of any remedies that the Administrative Agent may
have against the Company under the Credit Agreement or other documents or
agreements referenced therein or related thereto. The Completion Guarantors
recognize that the choice of remedies by the Administrative Agent will
necessarily and properly be a matter of the Administrative Agent's business
judgment, which the passage of time and events may or may not prove to have been
the best choice to maximize recovery by the Administrative Agent at the lowest
cost to the Company or the Completion Guarantors. Nevertheless, the choice of
alternatives by the Administrative Agent shall not be subject to question or
challenge by the Completion Guarantors hereunder, nor shall any such choice be
asserted as a defense, set-off or basis for any claim of failure to mitigate
damages in any action or proceeding arising from this Completion Guarantee.
3. Alteration of Obligations. In such manner, upon such terms and at
such times as the Administrative Agent deems best, and without notice to either
Completion Guarantor, the Administrative Agent or the Banks may, in accordance
with the Credit Agreement, alter, compromise, accelerate, extend or change the
time or manner for the payment or performance of any of the Credit Documents
Obligations, release the Company, by acceptance of a deed in lieu of foreclosure
or otherwise, as to all or any portion of the Credit Documents Obligations,
release, substitute or add any one or more guarantors, accept additional or
substitute security therefor, or release or subordinate any security therefor.
No exercise or non-exercise of any right hereby given to the Administrative
Agent, no dealing by the Administrative Agent, with the Completion Guarantors or
any other guarantor, or any other person, and no change, impairment or release
of all or any portion of the Credit Documents Obligations or suspension of any
right or remedy of the Administrative Agent against any person, including
without limitation the Company or any other such guarantor, or other person,
shall in any way affect any of the Obligations or any security furnished by the
Completion Guarantors or give the Completion Guarantors any recourse against the
Administrative Agent. If the Administrative Agent has exculpated or hereafter
exculpates the Company from personal liability in whole or in part, or has
agreed or hereafter agrees to look solely to the Collateral or any other
property for
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the satisfaction of the Company's obligations under the Credit Agreement or the
Shared Security Documents, said exculpation and agreement shall not affect the
Obligations. Each Completion Guarantor further acknowledges that any such
exculpation or agreement that has been given or that is hereafter given to the
Company has been given or is given in reliance upon the covenants of the
Completion Guarantors contained herein.
4. Waiver
4.1. The Completion Guarantors represent, warrant and jointly
and severally agree that, as of the date of this Completion Guarantee, their
obligations under this Completion Guarantee are not subject to any recoupment,
counterclaims, offsets or defenses against the Administrative Agent or the
Company of any kind. The Completion Guarantors further jointly and severally
agree that their obligations under this Completion Guarantee shall not be
subject to any counterclaims, offsets or defenses against the Administrative
Agent or against the Company of any kind which may arise in the future. Each
Completion Guarantor hereby expressly waives and relinquishes all rights,
defenses and remedies accorded by applicable law to sureties or guarantors and
agrees not to assert or take advantage of any such rights, defenses or remedies,
including without limitation:
(a) any right to require the Administrative Agent to
proceed against the Company, the Surety or any other person or to proceed
against or exhaust any security held by the Administrative Agent at any time or
to pursue any other remedy in the power of the Administrative Agent before
proceeding against either or both of the Completion Guarantors, including but
not limited to any defense of failure to join or non-joinder of the Company or
any other person whatsoever in any litigation instituted by the Administrative
Agent against either or both of the Completion Guarantors;
(b) the defense of the statute of limitations,
prescription, and preemption in any action hereunder or in any action for the
collection or performance of any of the Obligations;
(c) any defense that may arise by reason of the
discharge in bankruptcy, incapacity, lack of authority, death or disability of
any other person or the failure of the Administrative Agent to file or enforce a
claim against the estate (in administration, bankruptcy or any other proceeding)
of any other person;
(d) diligence, demand, presentment, protest and
notice of any kind (whether, for non-payment or protest or of acceptance,
maturity, extension of time, change in nature or form of the Obligations,
acceptance of further security, release of further security, composition or
agreement arrived at as to the amount of, or the terms of, the Obligations,
notice of adverse change in the Company's financial condition or any other fact
which might materially increase the risk to the Completion Guarantors),
including without limitation notice of the existence, creation or incurring of
any new or additional indebtedness or obligation or of any action or non-action
on the part of the Company, the Administrative Agent any endorser or creditor of
the Company or either Completion Guarantor or on the part of any other person
under this or any other instrument in connection with any obligation or evidence
of indebtedness
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held by the Administrative Agent as collateral or in connection with any of the
Credit Documents Obligations;
(e) any defense based upon an election of remedies by
the Administrative Agent, including, without limitation, an election to proceed
by nonjudicial rather than judicial foreclosure, which destroys or otherwise
impairs the subrogation rights of the Completion Guarantors, the right of the
Completion Guarantors to proceed against the Company for reimbursement, or both,
or any defense that the Administrative Agent's claims against the Completion
Guarantors are barred or diminished or premature to the extent that the
Administrative Agent has or may have remedies available against the Company;
(f) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal;
(g) any duty on the part of the Administrative Agent
to disclose to the Completion Guarantors any facts the Administrative Agent may
now or hereafter know about the Company, regardless of whether the
Administrative Agent has reason to believe that any such facts materially
increase the risk beyond that which the Completion Guarantors intend to assume,
or has reason to believe that such facts are unknown to either Completion
Guarantor, or has a reasonable opportunity to communicate such facts to either
Completion Guarantor, since each Completion Guarantor acknowledges that it is
fully responsible for being and keeping informed of the financial condition of
the Company and of all circumstances bearing on the risk of non-payment of any
of the Credit Documents Obligations;
(h) any defense arising because of the election of
the Administrative Agent in any proceeding instituted under the Bankruptcy Code,
of the application of Section 1111(b)(2) of the Bankruptcy Code;
(i) any defense based upon any borrowing or grant of
a security interest under Section 364 of the Bankruptcy Code;
(j) waiver or estoppel or any alleged lack of
reasonable or justifiable reliance on the part of the Administrative Agent as to
the Completion Guarantors' representations;
(k) lack, failure or insufficiency of consideration;
(l) any alleged failure of the Administrative Agent
to mitigate injuries, losses or damages or any plea that the Administrative
Agent has any duty to mitigate injuries, losses, or damages prior to seeking
recovery under this Completion Guarantee; and
(m) any defense that the Administrative Agent's
claims hereunder are or may be barred because an adequate remedy at law exists.
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4.2. Each Completion Guarantor agrees to forbear from
exercise of any rights of subrogation, indemnity, or contribution against
each other, the Company, the Surety or any other person who may be liable for
satisfaction of the Completion Obligations or the Carry Obligations until
such Obligations have been fully satisfied as to the Administrative Agent.
4.3. In the event of the commencement of a bankruptcy case by
or against any Completion Guarantor,
(a) each Completion Guarantor agrees to waive the
automatic stay under the Bankruptcy Code and further agrees to the entry of an
immediate order from the Bankruptcy Court, on the Administrative Agent's ex
parte motion granting to the Administrative Agent a modification of the
automatic stay (and/or recognition that the automatic stay is not applicable)
allowing it to fully enforce the provisions of this Completion Guarantee, the
Completion Guarantors hereby agreeing that in such case, "cause," as defined by
the Bankruptcy Code, would exist for the immediate entry by the Bankruptcy Court
of such an order modifying the automatic stay; and
(b) whether or not the Company shall have defaulted
in its obligations to complete the Phase I and II Construction, the
Administrative Agent shall have an allowable claim against such Completion
Guarantor in an amount equal to the then estimated amount necessary to pay for
the completion of the Phase I and II Construction, and the Preservation
Obligations and any Carry Obligations through the then estimated date of
completion of the Phase I and II Construction. Any amounts paid on such claim
shall be paid for the joint benefit of the Administrative Agent, the Trustee,
the City and the RDC, and the LGCB, as their interests may appear, and shall be
used solely to complete, and pay any costs in connection with the Completion
Obligations, the Preservation Obligations, and any Carry Obligations prior to
such completion of, the Phase I and II Construction. Upon completion of the
Phase I and II Construction and the payment of all costs, liens and claims
related thereto, any unused portion of such amounts paid in respect of any claim
under this Section 4.3 (b) shall be promptly reimbursed to such Completion
Guarantor. The Company shall be obligated to promptly reimburse such Completion
Guarantor for any such amounts paid by and not previously reimbursed to such
Completion Guarantor under this Section 4.3(b).
5. Subordination. All existing and future indebtedness of the Company
to either Completion Guarantor is hereby subordinated in accordance with this
Section 5 to all of the Credit Documents Obligations. Without limiting the
foregoing, during any time in which there is a payment default under the Credit
Agreement, without the prior written consent of the Administrative Agent, such
subordinated indebtedness shall not be paid or withdrawn in whole or in part,
nor shall either Completion Guarantor accept any payment of or on account of any
such indebtedness or as a withdrawal of capital while this Completion Guarantee
is in effect.
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6. Bankruptcy
6.1. So long as any Obligations are owed to the
Administrative Agent, no Completion Guarantor shall, without the prior
written consent of the Administrative Agent commence, or join with any other
person in commencing, any bankruptcy, reorganization or insolvency proceeding
against the Company. Subject to Section 12 hereof, the Obligations shall not
be altered, limited or affected by any proceeding, voluntary or involuntary,
involving the bankruptcy, reorganization, insolvency, receivership,
liquidation or arrangement of the Company, or by any defense which the
Company may have by reason of any order, decree or decision of any court or
administrative body resulting from any such proceeding.
6.2. So long as any Obligations are owed to the Administrative
Agent,
(a) each Completion Guarantor shall file, in any
bankruptcy or other proceeding in which the filing of claims is required or
permitted by law, all claims which such Completion Guarantor may have against
the Company relating to any indebtedness of the Company to such Completion
Guarantor, and hereby assigns to the Administrative Agent all rights of such
Completion Guarantor thereunder as security for performance of the Obligations
jointly with such assignment to the LGCB under that certain LGCB Completion
Guarantee between the Completion Guarantors and the LGCB of even date herewith
(the "LGCB Completion Guarantee"), to the Trustee under that certain Notes
Completion Guarantee between the Completion Guarantors and the Trustee of even
date herewith (the "Notes Completion Guarantee") and to the City and the RDC
under that certain City/RDC Completion Guarantee between the Completion
Guarantors, the City and the RDC of even date herewith (the "City/RDC Completion
Guarantee").
(b) if either Completion Guarantor does not file any
such claim, the Administrative Agent, as attorney-in-fact for such Completion
Guarantor, is hereby authorized to do so in the name of such Completion
Guarantor jointly with such authorization to the LGCB under the LGCB Completion
Guarantee, to the Trustee under the Notes Completion Guarantee and to the City
and the RDC under the City/RDC Completion Guarantee, or, in the Administrative
Agent's, the Trustee's, the LGCB's, the City's, and the RDC's joint discretion,
to assign the claim to a joint nominee and to cause proofs of claim to be filed
in the name of such joint nominee as security for performance of the
Obligations. The foregoing power of attorney is coupled with an interest and
cannot be revoked.
(c) the Administrative Agent, jointly with the LGCB
under the LGCB Completion Guarantee, the Trustee under the Notes Completion
Guarantee and the City and the RDC under the City/RDC Completion Guarantee, or a
joint nominee, as the case may be, shall have the right to accept or reject any
plan proposed in any such proceeding and to take any other action which a party
filing a claim is entitled to take. Any exercise or non-exercise of any such
right (i) by the Administrative Agent under this Section 6.2(c), (ii) by the
LGCB under the Section 6.2(c) of the LGCB Completion Guarantee, (iii) by the
Trustee under Section 6.2(c) of the Notes Completion Guarantee, and (iv) by the
City and the RDC under Section 6.2(c) of the City/RDC Completion Guarantee,
shall not impair or diminish the Completion Guarantors' obligations under this
Completion Guarantee. In all such cases, whether in administration, bankruptcy
or otherwise, the person authorized to pay such a claim shall pay the same to
the Administrative Agent, the Trustee under the Notes Completion Guarantee, the
LGCB under the LGCB Completion Guarantee, and the City and the RDC under the
City/RDC Completion Guarantee, as their interests may appear, as security for
performance of the Obligations, and, to the full extent necessary for that
purpose, each Completion Guarantor hereby assigns to the Administrative Agent
jointly with such assignment to the LGCB under the LGCB Completion Guarantee, to
the Trustee under the Notes Completion Guarantee and to the City and the RDC
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under the City/RDC Completion Guarantee all of such Completion Guarantor's
rights to all such payments or distributions to which such Completion Guarantor
would otherwise be entitled.
6.3. This Completion Guarantee shall remain in full force and
effect and continue to be effective should any petition be filed by or against
the Company or any Completion Guarantor for liquidation or reorganization,
should the Company or any Completion Guarantor become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's or any Completion
Guarantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount or
must otherwise be restored or returned by the Administrative Agent, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Obligations shall
be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
6.4. In the event that the Company is allowed any extension of
time in connection with any proceeding, voluntary or involuntary, involving the
bankruptcy, reorganization, insolvency, receivership, liquidation or arrangement
of the Company, to cure any default relating to the Phase I and II Construction,
such extension shall not extend the time by which the Completion Guarantors are
required to cause the completion of the Phase I and II Construction in
accordance with the provisions of this Agreement.
7. Interest, Costs and Attorneys' Fees
7.1. If the Completion Guarantors fail to pay all or any
portion of any monetary amounts due as a part of the Obligations upon notice or
demand by the Administrative Agent, the amount of such monetary portion of the
Obligations and all other sums payable by the Completion Guarantors to the
Administrative Agent hereunder shall bear interest from the date of such notice
or demand, as the case may be, at four percent (4%) over the prime rate of
interest charged by Citibank, N.A. at its offices in New York, New York, to
borrowers on ninety (90) day unsecured commercial loans, as the same may be
changed from time to time.
7.2. If, at any time following a default by the Company in the
performance of the Completion Obligations, the Carry Obligations or the
Preservation Obligations which default entitles the Administrative Agent to
require performance hereunder (whether or not notice is actually given pursuant
to Section 2.1), the Administrative Agent refers this Completion Guarantee to an
attorney to enforce, construe, or defend any provision hereof, or as a
consequence of any default hereunder by the Completion Guarantors, the
Administrative Agent shall employ counsel for advice or representation or shall
incur legal or other costs and expenses, with or without the filing of any legal
action or proceeding, in connection with:
(a) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by the Administrative Agent, the
Company, the Completion Guarantors or any
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other person) in any way relating to the enforcement of rights or remedies under
this Completion Guarantee;
(b) any attempt to enforce any rights of the
Administrative Agent hereunder against the Completion Guarantors or any other
person;
(c) any attempt to defend any provision hereof; or
(d) the Performance Bond;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in any way or respect arising
in connection with or relating to any of the events or actions described herein
shall be payable, on demand, by the Completion Guarantors to the Administrative
Agent or the Completion Guarantors shall cause the Company to make such payment,
and if not so paid, shall be additional Obligations under this Completion
Guarantee; provided that upon any engagement of counsel (i) following a default
by the Company in the performance of the Obligations and (ii) prior to the date
on which the Administrative Agent gives written notice pursuant to Section 2.1
(the "Notice Date"), the Administrative Agent shall make demand on the Company
for any expenses of such counsel incurred prior to the Notice Date and such
expenses shall only become an Obligation under this Completion Guarantee if the
Company shall fail timely to pay such expenses.
The reference to "attorneys' fees" in this Section 7.2 and in all other places
in this Completion Guarantee shall also include, without limitation, such
reasonable amounts as may then be charged for costs and expenses of legal
services furnished by attorneys retained or employed by the Administrative
Agent. Such attorneys' fees shall include, without limitation, those incurred in
connection with any bankruptcy, reorganization, insolvency, receivership,
liquidation, arrangement, lawsuits in state or federal court, or other similar
proceedings involving either Completion Guarantor which in any way affect the
exercise by the Administrative Agent of its rights and remedies hereunder.
8. Cumulative Rights. All rights, powers and remedies of the
Administrative Agent hereunder and under any other agreement now or at any time
hereafter in force between the Administrative Agent and the Completion
Guarantors, including without limitation any other guarantee executed by either
Completion Guarantor relating to any indebtedness of the Company, shall be
cumulative and not alternative, and such rights, powers and remedies shall be in
addition to all rights, powers and remedies given to the Administrative Agent
and the Banks by law and shall not be deemed in any way to extinguish or
diminish the Administrative Agent's rights and remedies. This Completion
Guarantee is in addition to and independent of the guarantee of any guarantor of
any Credit Documents Obligations or other indebtedness of the Company.
9. Independent Obligations. The Obligations are independent of the
Credit Documents Obligations, and, in the event of any default hereunder, a
separate action or actions may be brought and prosecuted against either
Completion Guarantor, whether or not the
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Company is joined therein or a separate action or actions are brought against
the Company. The Administrative Agent's rights hereunder shall not be exhausted
by its exercise of any of its rights or remedies or by any such action or by any
number of successive actions unless and until all Obligations have been
satisfied and fully performed.
10. Application of Payments or Recoveries. Subject to the applicable
provisions of this Completion Guarantee and the terms of the Credit Agreement
and the Shared Security Documents, with or without notice to either Completion
Guarantor, the Administrative Agent, in its sole discretion, at any time and
from time to time, and in such manner and upon such terms as the Administrative
Agent deems fit, may apply any or all payments or recoveries from the Company or
from any other guarantor or endorser under any other instrument or realized from
any security, in such manner and order of priority as the Administrative Agent
may determine, to any of the Credit Documents Obligations, whether or not such
indebtedness is secured or is due at the time of such application.
11. Financial Statements. The Completion Guarantors hereby represent
and warrant that the information pertaining to the Completion Guarantors set
forth in their most recent filings with the Securities and Exchange Commission
is true and correct in all material respects, and fairly presents the financial
condition of the Completion Guarantors as of the respective dates indicated
therein and for the periods covered thereby, and that no material adverse change
has occurred in the financial condition or prospects of the Completion
Guarantors since the date of the latest information provided therein.
12. Suspension of or Excuse From Performance
12.1. Notwithstanding anything to the contrary in this
Completion Guarantee, if, at any time, there shall occur a Force Majeure with
respect to the Completion Obligations, then the Completion Obligations (but not
the Carry Obligations) shall (except as provided below in this Section) be
suspended (the "Suspension") until such time as such Force Majeure ends;
provided, however, in no event shall the Suspension (for Force Majeure) extend
beyond eighteen (18) months from the earlier of the date upon which the Company
or any Completion Guarantor knew or should have known of the occurrence of the
Force Majeure, unless performance of the Completion Obligations (in accordance
with the terms of this Completion Guarantee) are rendered impossible during such
eighteen (18) month period because of such Force Majeure pursuant to subsections
(ii) through (vii) of the definition of Force Majeure or Force Majeure due to a
national or general strike, lockout or labor dispute, and in such event the
Suspension shall continue until such time as such performance is no longer
impossible. During the period following any date of Suspension and until the end
of such Suspension, the Completion Guarantors shall each use their best efforts
to remove such Force Majeure.
12.2. The Completion Guarantors hereby agree that any
proceeding under any chapter of the Bankruptcy Code, in receivership, or any
other insolvency proceeding, whether voluntary or involuntary, by or against the
Company and/or any Completion Guarantor, shall not be considered, nor constitute
Force Majeure. The Completion Guarantors further agree that (i) any increase in
the costs to complete (including equipping) the Casino, whether or not such
increase in costs was anticipated and/or contemplated in the Approved Program
Plans, GDA
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and/or otherwise, (ii) the financial condition or financial inability of the
Company and/or any Completion Guarantor to complete (including equipping) the
Casino, (iii) any other adverse financial projections, financial forecasts,
financial events or financial conditions, or (iv) any failure to obtain funding
or financing, shall not be considered, nor constitute Force Majeure.
12.3. The Obligations shall terminate upon the occurrence of
any of the following: (i) the termination of the Lease or the GDA other than as
a result of (a) the fault of or a breach or default by the Company or any
Completion Guarantor or (b) the voluntary termination of the Lease or the GDA by
the Company, (ii) Casino gaming operations shall no longer be permitted to be
conducted at the Casino or shall be modified, restricted, or limited in a manner
that materially diminishes the benefits afforded to the Company or the gaming
activities permitted to be conducted at the Casino pursuant to the Act by reason
of a change of law or the enactment of a new law after the Plan Effective Date
or by reason of the Company's rights under the Casino Operating Contract having
been terminated in any material respect, other than as a result of the fault of
or a breach by the Company or any Completion Guarantor, subject to Section 12.4
hereof, (iii) only as to the Carry Obligations but not as to the Completion
Obligations or the Preservation Obligations, a Force Majeure shall have
continued for more than one (1) year from the first to occur of a receipt of a
notice from the Administrative Agent to the Completion Guarantors pursuant to
Section 2.1 hereof or a similar notice to the Completion Guarantors from the
LGCB, the Trustee, the City or the RDC (provided that the Completion Guarantors
shall have complied with the notice requirements of the last sentence of Section
15 hereof in respect of any notices received under Section 2.1 hereof),
notwithstanding the Completion Guarantors' actual and continuous best efforts to
remove such Force Majeure; provided, however, that the Completion Guarantors
shall remain liable for all Carry Obligations that actually came due through the
expiration of such one (1) year period to the extent not satisfied by the
Company, and, provided further, that the Completion Guarantors shall have used
their best efforts to remove such Force Majeure within said one (1) year period,
or (iv) as to the Carry Obligations, as of and upon the occurrence of the
Termination of Construction Date and as to the Completion Obligations and the
Preservation Obligations, upon the occurrence of the Completion Obligation
Termination Date.
12.4. Upon the occurrence of any of the events described in
Section 12.3(ii) hereof prior to the occurrence of the Termination of
Construction Date, the Completion Guarantors shall nevertheless be obligated to
complete the Poydras Street Support Facility and the Poydras Tunnel Area (each
as defined in the GDA), exterior site and street work, and any improvements
required to be made to the Leased Premises (as defined in the Lease) so that it
may be used for any Highest and Best Use (as defined in the Lease) as required
by Section 4.20 of the Lease.
12.5. Delays caused by the failure of the Company, its
contractor(s), architect(s), consultants or subcontractors to furnish in a
timely manner approved working or shop drawings, materials, fixtures, equipment,
appliances or other fittings or to perform their work in a timely manner shall
not constitute a basis of extension of time, except to the extent caused by an
event of Force Majeure that would allow an extension of time pursuant to this
Agreement.
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12.6. The Completion Guarantors and/or the Company shall give
Notice as provided in the Casino Operating Contract to the LGCB of any Force
Majeure within ten (10) days of the date upon which a Force Majeure event has
occurred, provided the remedy for a failure timely to give such Notice shall be
to cause the Suspension otherwise resulting from such Force Majeure to be waived
for any period of time from the occurrence of the Force Majeure until ten (10)
days prior to the furnishing of such Notice (of Force Majeure).
12.7. Other than as set forth in this Agreement and without
waiver of the terms and conditions of this Agreement, including, without
limitation, terms and conditions of the definition of Force Majeure and of this
Section 12, the Company and the Completion Guarantors waive their rights
pursuant to Articles 1873-1878 of the Louisiana Civil Code including, without
limitation, any right to claim excuse from performance or delay of performance
due to impossibility of performance of the Completion Obligations or a
fortuitous event.
13. Definitions. As used in this Completion Guarantee, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Act" shall mean the Louisiana Economic Development and Gaming
Corporation Act as set forth in LSA R.S. 27:201 et seq., adopted by the
Legislature of the State of Louisiana as No. 384, Acts 1992 as amended, and
regulations adopted thereunder, amendments and reenactment of LSA R.S.
36:801.1(A) and enactment of LSA R.S. 27:1 et seq., adopted by the Legislature
of the State of Louisiana as Act 7, First Extraordinary Session, 1996, and
regulations adopted thereunder; the Local Option Gaming election as set forth in
LSA R.S. 18:1300.21, adopted by the Legislature of the State of Louisiana as Act
57, First Extraordinary Session 1996, and the act adopted by the Legislature of
the State of Louisiana as Act 98, First Extraordinary Session, 1996.
"Casino - Phase I" shall mean the first phase of development
and construction of the Casino, consisting of a minimum of one hundred thousand
(100,000) square feet of net gaming space, approximately fifteen thousand
(15,000) square feet of multi-function, special event, food service and meeting
room space on the first floor of the Casino, the Poydras Tunnel Area, a two
hundred fifty (250) seat buffet on the first floor of the Casino and parking
facilities.
"Credit Documents Obligations" shall mean all obligations of
the Company under the Credit Agreement, the Shared Security Documents or any
related documents for the benefit of the Administrative Agent or the Banks
executed by the Company.
"Force Majeure" shall mean any of the following events or
circumstances, but only to the extent they are not caused or fomented by the
Company, the Completion Guarantors, or any affiliates of the Company or either
Completion Guarantor and they delay the performance of the Completion
Obligations beyond the reasonable control of the Company and of the Completion
Guarantors:
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(i) strikes, lockouts, labor disputes, inability to procure
materials (for which there is no suitable substitute or alternative that can be
timely obtained on reasonable commercial terms), failure of power;
(ii) material and adverse changes in Governmental Requirements
applicable to the construction of the Casino first effective after the Plan
Effective Date and after the submission to and approval by the LGCB of the
design thereof, and any material and adverse changes after the Plan Effective
Date in any orders (applicable to the Competion Obligations, the Casino Premises
or the Casino Property) of any federal, state, parish or municipal governmental
authority, including all executive, legislative, judicial and administrative
bodies thereof having jurisdiction over a party, the Casino Premises, or the
Casino Property (however, not including stop work orders due to a building,
safety or other code violation);
(iii) material and adverse changes in Governmental
Requirements first effective after the Plan Effective Date;
(iv) the breach by the LGCB of the Casino Operating Contract
(not caused or fomented by the Company, the Completion Guarantors, or any
affiliates of the Company or either Completion Guarantor) or other action of the
LGCB (not caused or fomented by the Company, the Completion Guarantors, or any
affiliates of the Company or of either Completion Guarantor), including, as to
the required opening of the Casino-Phase I, the delay in the issuance of
required suitability findings and/or approvals required to open Casino - Phase I
for reasons not under the control of, or which could not have been avoided by
the exercise of due care of, the Company, the Completion Guarantors or any
affiliate of the Company or either Completion Guarantor;
(v) acts of God, tornadoes, hurricanes, floods, sinkholes,
fires and other casualties, landslides, earthquakes, epidemics, quarantine,
pestilence, and abnormal inclement weather;
(vi) acts of public enemy, acts of war, terrorism, effects of
nuclear radiation, blockades, insurrections, riots, civil disturbances,
governmental preemption in connection with a national emergency, or national or
international calamity; and
(vii) any judgment, directive, ruling or order that is entered
by any judicial, regulatory or administrative body which substantially restrains
or substantially interferes with the performance of the Completion Obligations.
"GDA" shall mean the Amended and Restated General Development
Agreement entered into between the Rivergate Development Corporation, the
Company and the City pursuant to the Plan without giving effect to any
amendments, modifications or termination without the written consent of the
Required Banks.
"Lease" shall mean the Amended and Restated Lease Agreement
entered into between the Rivergate Development Corporation, as landlord, the
Company, as tenant, and the City, as intervenor, pursuant to the Plan without
giving effect to any amendments, modifications or termination without the
written consent of the Required Banks.
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"Phase I and II Construction" shall have the meaning set forth
in the GDA.
"Second Floor Shell Construction - Phase II" shall mean the
second phase of development and construction of the Casino on the second floor
of the Casino, which shall consist of shell construction of the second floor
non-gaming space to the stage where it is ready for tenant improvement and build
out for non-gaming entertainment purposes; provided that the build out of the
tenant improvements and the occupancy and opening for business of such second
floor non-gaming development shall not be a part of this phase and may occur
after completion of Casino - Phase I and completion of such tenant improvements
is not part of the Obligations.
"Termination of Construction Date" shall mean that date by
which:
(i) a temporary certificate of occupancy has been issued for
Casino - Phase I by the building department and other relevant agencies;
(ii) all required permits with respect to the Phase I and II
Construction have been obtained by the Company;
(iii) a notice of completion has been duly recorded with
respect to the Phase I and II Construction;
(iv) an officers' certificate of the Completion Guarantors has
been delivered to the Administrative Agent certifying that the Termination of
Construction Date has occurred;
(v) the Casino is equipped and ready to open for business as a
casino gaming operation;
(vi) a certificate has been delivered by the general
contractor and the project architect to the Administrative Agent for Phase I and
II Construction certifying that Phase I and II Construction has been
substantially completed in accordance with the plans and specifications therefor
and all applicable building laws, ordinances and regulations; and
(vii) Casino - Phase I has opened for business as a casino
gaming operation so long as any necessary regulatory approval from the LGCB or
any other State of Louisiana regulatory authorities have been received or if
such approvals have not been received, even though timely receipt of any such
approvals has been diligently pursued by or on behalf of the Company, Casino -
Phase I is in a condition to receive customers in the ordinary course of
business.
14. Completion Obligation Termination Date
14.1. Notwithstanding the occurrence of the Termination of
Construction Date, the Completion Guarantors shall continue to be obligated for
payment or making satisfactory provisions for payment as they come due of all
costs of completing the Phase I and II Construction and for all materialmen's
claims, mechanics' liens or other claims, liens or claims for liens arising from
the furnishing of labor, materials, supplies, other equipment for the Phase I
and II Construction or Minimum FF&E. The date on which all such payments or
satisfactory
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provisions for all such payments have been made, all lien periods with respect
to the Phase I and II Construction have expired and no liens or privileges
arising from the furnishing of labor, materials, supplies or equipment for the
Phase I and II Construction affecting or purporting to affect the Leased
Premises remain of record in Orleans Parish is herein referred to as the
"Completion Obligation Termination Date".
14.2. For purposes of this Completion Guarantee, in respect of
any Completion Obligations or Carry Obligations not satisfied as of the
Termination of Construction Date, satisfactory provision for payment of claims,
liens and claims for liens shall be deemed to have been made if (a) in respect
of any liens or claims for liens but not non-lien claims, a bond has been
established in accordance with the terms of LSA R.S. 9:4801 et seq., (b) in
respect of any non-lien claims but not liens or claims for liens, an escrow,
letter of credit or trust account for payment has been established in an amount
at least equal to one hundred five percent (105%) of the total of such
outstanding claims, liens and claims for liens with or by an independent third
party, (c) in respect of any non-lien claims, the total of such outstanding
non-lien claims has been guaranteed under a payment guarantee from a party other
than either Completion Guarantor (or any affiliate thereof) rated as an
investment grade credit by a nationally recognized credit rating agency, or (d)
other provision has been made satisfactory to the Administrative Agent.
15. Notices. Whenever the Completion Guarantors or the Administrative
Agent shall desire to give or serve any notice, demand, request or other
communication with respect to this Completion Guarantee, each such notice shall
be in writing and shall be effective only if the same is delivered by personal
service, overnight courier service, or mailed by certified mail, postage
prepaid, return receipt requested, addressed as follows:
(a) if to either Completion Guarantor:
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Fax: (901) 537-3039
Attn: General Counsel
with a copy to the Corporate Secretary at
the same address
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(b) if to the Company:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Fax: (504) 533-6100
Attn: President
(c) if to the Surety:
Reliance Insurance Company
Four Penn Center Plaza, 17th Floor
Philadelphia, Pennsylvania 19103
Attn: Claims Department
and
United States Fidelity and Guaranty Company
6225 Smith Avenue
Baltimore, Maryland 21203
Attn: Claims Department
(d) if to the Administrative Agent, as provided
in the Credit Agreement;
or at such other address as shall have been furnished in writing by any person
described above to the party required to give notice hereunder.
Any such notice delivered personally shall be deemed to have
been received upon delivery. Any of the Completion Guarantors, the Company, the
Surety or the Administrative Agent may change its address by giving the others
written notice of the new address as herein provided.
Any notice given or received by any Completion Guarantor to or
from the City or the RDC under the City/RDC Completion Guarantee, to or from the
Trustee under the Notes Completion Guarantee or to or from the LGCB under the
LGCB Completion Guarantee shall be immediately forwarded by such Completion
Guarantor to the Administrative Agent at the address set forth above.
16. Successors and Assigns. This Completion Guarantee shall inure to
the benefit of the Administrative Agent, the Banks and their respective
successors and assigns including any entities which become Banks after the date
of execution of the Credit Agreement, and shall bind
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the heirs, executors, administrators, personal representatives, successors and
assigns of each Completion Guarantor. This Completion Guarantee may be assigned
by the Administrative Agent, in its sole discretion, with respect to all or any
portion of the Obligations, and when so assigned the Completion Guarantors shall
be liable to the assignees under this Completion Guarantee without in any manner
affecting the liability of the Completion Guarantors with respect to any
Obligations retained by the Administrative Agent. Neither Completion Guarantor
may assign or transfer any of its rights, obligations or interest hereunder
without the prior written consent of the Required Banks (or all Banks to the
extent required by Section 16.12 of the Credit Agreement).
17. Miscellaneous Provisions
17.1. THIS COMPLETION GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK. EACH
COMPLETION GUARANTOR HEREBY SUBMITS TO PERSONAL JURISDICTION AND WAIVES
OBJECTION AS TO VENUE IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. SERVICE OF
PROCESS ON THE COMPLETION GUARANTORS IN ANY ACTION ARISING OUT OF OR RELATING TO
THIS COMPLETION GUARANTEE SHALL BE EFFECTIVE IF MAILED TO THE COMPLETION
GUARANTORS IN ACCORDANCE WITH SECTION 15 HEREOF. NOTHING HEREIN SHALL PRECLUDE
THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION.
17.2. This Completion Guarantee shall constitute the entire
agreement of the Completion Guarantors with the Administrative Agent with
respect to the subject matter hereof, and no representation, understanding,
promise or condition concerning the subject matter hereof shall be binding upon
the Administrative Agent unless expressed herein.
17.3. Should any term, covenant, condition or provision of
this Completion Guarantee be determined to be illegal or unenforceable, it is
the intent of the parties that all other terms, covenants, conditions and
provisions hereof shall nevertheless remain in full force and effect.
17.4. Time is of the essence to this Completion Guarantee and
each of its provisions.
17.5. When the context and construction so require, all words
used in the singular herein shall be deemed to include the plural, the masculine
shall include the feminine and neuter, and vice versa.
17.6. The word "person" as used herein shall include any
individual, company, firm, association, partnership, limited liability company,
joint venture, corporation, trust or other legal entity of any kind whatsoever.
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17.7. No provision of this Completion Guarantee or right
granted to the Administrative Agent hereunder can be waived in whole or in part,
nor can either Completion Guarantor be released from such Obligations, except by
a writing duly executed by an authorized officer of the Administrative Agent
with the prior written consent of the Required Banks (or all Banks if required
by Section 16.12 of the Credit Agreement). No provision of this Completion
Guarantee or any of the Obligations may be amended without the prior written
consent of the Completion Guarantors and the Administrative Agent with the prior
written consent of the Required Banks (or all Banks if required by Section 16.12
of the Credit Agreement) and the consent of any additional beneficiaries hereof
shall not be required.
17.8. The Administrative Agent need not inquire into the power
of the Company or the authority of their officers, shareholders or agents acting
or purporting to act on their behalf.
17.9. The headings of this Completion Guarantee are inserted
for convenience only and shall have no effect upon the construction or
interpretation thereof.
17.10. This Completion Guarantee shall be for the sole benefit
of the Administrative Agent, the Banks, and their respective successors and
assigns. The provisions of this Completion Guarantee shall not inure to the
benefit of any other person, including, without limitation, the Company.
17.11. Notwithstanding the foregoing, in the event that the
Completion Guarantors, or either of them, shall enter into the LGCB Completion
Guarantee, the Notes Completion Guarantee or the City/RDC Completion Guarantee,
or any supplemental agreement with respect thereto and such LGCB Completion
Guarantee, Notes Completion Guarantee or the City/RDC Completion Guarantee or
amendment or supplement thereto or the obligations created thereby provides
rights or remedies to the LGCB, the Trustee, the City or the RDC that are more
favorable in any respect than the rights and remedies granted to the
Administrative Agent hereunder (as this Completion Guarantee may from time to
time be amended), the Administrative Agent shall be deemed to have available to
it, at its option, the benefit of the more favorable rights and remedies
implemented by such LGCB Completion Guarantee, Notes Completion Guarantee, or
City/RDC Guarantee or amendment or supplemental agreement and shall not under
any circumstances be deemed to have agreed to or become subject to any
alterations in the LGCB Completion Guarantee, the Notes Completion Guarantee or
the City/RDC Completion Guarantee, or any provisions of a supplemental agreement
among the Completion Guarantors, the LGCB, the Trustee, the City and/or the RDC,
that are less favorable than the rights and remedies granted to the
Administrative Agent hereunder.
18. Obligations of Surety. Notwithstanding anything to the contrary in
this Completion Guarantee, nothing herein shall expand or enlarge or otherwise
modify the obligations of the Surety pursuant to the Performance Bond.
19. Effectiveness. This Completion Guarantee shall be effective upon
the occurrence of the Plan Effective Date. If such Plan Effective Date shall not
occur, this Completion Guarantee shall be null and void and of no force or
effect.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have each executed this
Completion Guarantee as of the date first above written.
COMPLETION GUARANTORS:
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ Stephen H. Brammell
-----------------------------------------
Name: Stephen H. Brammell
---------------------------------------
Title: Vice President
--------------------------------------
HARRAH'S OPERATING COMPANY, INC.,
a Delaware corporation
By: /s/ Stephen H. Brammell
-----------------------------------------
Name: Stephen H. Brammell
---------------------------------------
Title: Vice President
--------------------------------------
Accepted and Agreed:
BANKERS TRUST COMPANY, as
Administrative Agent
By: /s/ Mary Kay Coyle
---------------------------------
Name: Mary Kay Coyle
-------------------------------
Title: Managing Director
------------------------------
SIGNATURE PAGE TO
BANK COMPLETION GUARANTEE
<PAGE>
Exhibit 10.13
COMPLETION GUARANTOR SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
COMPLETION GUARANTOR SUBORDINATION AGREEMENT (as amended,
modified or supplemented from time to time, this "Agreement"), dated as of
October 30, 1998, among HARRAH'S ENTERTAINMENT, INC., a Delaware corporation
("HET"), HARRAH'S OPERATING COMPANY, INC., a Delaware corporation ("HOCI" and,
together with HET, the "Completion Guarantors" and each a "Completion
Guarantor"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
(together with any successor, the "Trustee") under the Indentures (as defined
below). Except as otherwise defined herein, terms used herein and defined in the
Indentures referred to below are used herein as so defined.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted and the Bankruptcy Court has confirmed a
plan of reorganization (the "Plan") in connection with that certain voluntary
petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy
Code.
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith, pursuant to the Plan, the
Company, JCC Holding Company, a Delaware corporation ("JCC Holding"), JCC
Development, L.L.C., FP Development, L.L.C., CP Development, L.L.C. and the
Trustee, as trustee, have entered into (i) that certain indenture, pursuant to
which the Company has issued $187,500,000 principal amount of its Senior
Subordinated Notes due 2009 with Contingent Payments (as may be amended,
modified, renewed, restated, supplemented or refinanced from time to time, the
"New Bonds"), and (ii) that certain indenture (and together with the indenture
for the New Bonds, as each may be modified from time to time, the "Indentures")
pursuant to which the Company has issued its Senior Subordinated Contingent
Notes due 2009 (as may be amended, modified, renewed, restated, supplemented or
refinanced from time to time, the "New Contingent Bonds" and, together with the
New Bonds, the "Senior Subordinated Notes" and, together with the Indentures,
the Collateral Documents (as defined in the Indentures) and all other documents
and agreements relating thereto, being hereinafter called the "Senior
Subordinated Notes Documents").
E. Contemporaneously herewith the Company, JCC Holding, as
guarantor, the lenders (the "Lenders") from time to time party thereto, and
Bankers Trust Company, as Administrative Agent (together with any successor
agent, the "Administrative Agent"), have
<PAGE>
entered into that certain Credit Agreement (the "Credit Agreement"), pursuant to
the Plan, providing for a senior secured term loan in the amount of Sixty
Million Dollars ($60,000,000), a secured term loan in the amount of One Hundred
Fifty-One Million Five Hundred Thousand Dollars ($151,500,000), and a revolving
loan facility including Swingline Loans and Letters of Credit (each as defined
in the Credit Agreement) drawn under such revolving loan facility in an amount
not to exceed Twenty Five Million Dollars ($25,000,000) at any time outstanding.
F. Pursuant to the Plan, the Completion Guarantors (a) have
entered into (i) that certain Notes Completion Guarantee in favor of the Trustee
(as amended, modified or supplemented from time to time, the "Notes Completion
Guarantee"), (ii) that certain LGCB Completion Guarantee in favor of the
Louisiana Gaming Control Board (the "LGCB") (as amended, modified or
supplemented from time to time, the "LGCB Completion Guarantee"), (iii) that
certain Bank Completion Guarantee in favor of the Administrative Agent (as
amended, modified or supplemented from time to time, the "Bank Completion
Guarantee"), and (iv) that certain City/RDC Completion Guarantee in favor of
Rivergate Development Corporation ("RDC") and the City of New Orleans (the
"City") (as amended, modified or supplemented from time to time, the "City/RDC
Completion Guarantee"), and (b) may in the future enter into one or more
completion or other guarantees in support of the obligations of the Company
(with all completion and other guarantees described in this paragraph being
herein collectively called the "Completion Guarantees").
G. Any amounts advanced or paid pursuant to the Completion
Guarantees (such amounts are referred to herein as "Completion Guarantee
Payments") will be loans (together with all other amounts owing to the
Completion Guarantors under the Completion Loan Agreement (as defined below),
the "Completion Loans") from the Completion Guarantors to the Company under that
certain Amended and Restated Completion Loan Agreement entered into by and among
the Company, HET and HOCI pursuant to the Plan (as amended, modified or
supplemented from time to time and together with the exhibits thereto, the
"Completion Loan Agreement").
H. Pursuant to that certain Amended and Restated Construction
Lien Indemnity Obligation Agreement entered into by and between the Company and
HOCI pursuant to the Plan (as amended, modified or supplemented from time to
time, the "Construction Lien Indemnity Obligation Agreement"), the Company has
agreed to pay to HOCI any amounts advanced (the "Construction Lien Indemnity
Advances") by HOCI under that certain Amended and Restated Construction Lien
Indemnity Agreement entered into by and among the Company, HOCI and First
American Title Insurance Company pursuant to the Plan (the "Construction Lien
Indemnity Agreement").
I. The Trustee desires that the Completion Guarantors enter
into this Agreement in respect of all Completion Loans, all Construction Lien
Indemnity Advances and any other amounts whatsoever at any time owing by the
Company to either or both Completion Guarantors, together with all principal,
interest, fees, indemnities and other amounts owing with respect thereto, are
herein called the "Subordinated Obligations."
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J. In furtherance of the purposes of the Completion Loan
Agreement, (i) the Company has assigned to the Completion Guarantors certain of
the Company's rights under certain contracts and other agreements to which the
Company is a party, certain lien payment bonds, performance bonds and plans and
specifications and to certain permits, consents, licenses, authorizations and
approvals relating to such contracts and agreements (the "Assigned Interests"),
and (ii) the City and RDC have granted the Completion Guarantors certain rights
of use (the "Rights of Use") in respect of the real property comprising the
Casino premises pursuant to an Entry Agreement (as defined in the Completion
Loan Agreement) entered into by and among the City, RDC, HET and HOCI pursuant
to the Plan.
K. Pursuant to the Security Agreement, the Company has granted
to the Collateral Agent for the benefit of the Senior Subordinated Noteholders
(as defined below) of the Senior Subordinated Notes a perfected lien on, and
security interest in, the Assigned Interests.
L. The Collateral Agent (for the benefit of the Senior
Subordinated Noteholders) is the holder of that certain Act of Mortgage and
Collateral Assignment (as renewed, amended, modified, replaced, restated,
supplemented, or extended from time to time, the "Mortgage") executed by the
Company pursuant to the Plan in respect of inter alia, the Company's leasehold
estate in certain real property comprising the Casino premises and also subject
to the Rights of Use.
M. As a condition to the issuance of the Senior Subordinated
Notes, the parties hereto (including the Completion Guarantors) are required to
execute and deliver this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. SUBORDINATION
1.1. Definitions. For purposes of this Agreement, the term "Senior
Subordinated Noteholders" shall mean the Holders (as defined in the Indentures)
from time to time of the Senior Subordinated Notes, and the term "Senior
Subordinated Notes Obligations" shall mean (a) the principal of, and premiums,
if any, and interest (including Contingent Payments) on the New Bonds and the
Contingent Payments due and payable in accordance with the terms of the New
Contingent Bonds and (b) all other Obligations (as defined in the Indentures) of
the Company under the Indentures to the Senior Subordinated Noteholders.
1.2. Subordination of Liabilities
(a) Each Completion Guarantor, for itself, its successors and
assigns, covenants and agrees that the payment of the Subordinated Obligations
is hereby expressly subordinated, to the extent and in the manner hereinafter
set forth, to the prior payment in full in cash of all Senior Subordinated Notes
Obligations. The provisions of this Section 1 shall
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<PAGE>
constitute a continuing offer to all Persons who, in reliance upon such
provisions, become or continue to remain Senior Subordinated Noteholders and
such provisions are made for the benefit of the Senior Subordinated Noteholders
and such Senior Subordinated Noteholders are hereby made obligees hereunder the
same as if their names were written herein as such, and they and/or each of them
may proceed to enforce such provisions.
(b) In the event of any payment default under Sections 7.1(1)
and (2) of the Indentures, any acceleration of the Senior Subordinated Notes or
declaration of an Event of Default under Section 7.2 of the Indentures, or the
bankruptcy of the Company, any payments by the Company or any representative of
the Company shall be applied in the following order, subject to the rights of
the LGCB under the Casino Operating Contract, the RDC under the Lease, and any
other creditor, as their interests may appear: (i) reimbursement of all
management expenses incurred in accordance with the Management Agreement; (ii)
amounts as set forth in Section 11 of that certain Intercreditor Agreement among
HET, HOCI, Bankers Trust Company, Norwest Bank Minnesota, National Association,
as trustee, and the other parties named therein (as amended from time to time);
(iii) any credit enhancement fee due and payable to HET or an Affiliate of HET
pursuant to that certain Credit Enhancement Fee Agreement entered into by and
among the Company and HOCI pursuant to the Plan; (iv) Base Fee and Termination
Fee pursuant to and as defined in the Management Agreement; (v) interest due on
the Convertible Junior Subordinated Debentures (as defined in the Plan); (vi)
principal due on the Convertible Junior Subordinated Debentures; (vii) interest
due on any amounts advanced under the Subordinated Credit Facility, the
Indemnity Agreement and the Completion Loan Agreement (each as defined in the
Indentures) on a pari passu basis; (viii) principal due on the Subordinated
Credit Facility, the Indemnity Agreement and the Completion Loan agreement on a
pari passu basis; and (ix) Incentive Fee pursuant to and as defined in the
Management Agreement; provided that the amounts described in clauses (iii) and
(iv) above shall be senior to any Contingent Payments on the New Bonds and the
New Contingent Bonds.
1.3. Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances
(a) Until all Senior Subordinated Notes Obligations shall have
been paid in full in cash, no payment or distribution of any kind or character
(whether in cash, property, securities or otherwise) shall be made in respect of
any Subordinated Obligations other than any payments expressly permitted to be
made or not restricted under Section 5.3 of the Indentures.
(b) In the event that (i) the Company or any of its
Subsidiaries shall make any payment to any Completion Guarantor on account of
the Subordinated Obligations which is not permitted by subsection (a) of this
Section 1.3, or (ii) any Completion Guarantor receives any payment or
distribution from any enforcement or other action against the Collateral, such
payment shall be held by any such Completion Guarantor in trust for the benefit
of the Senior Subordinated Noteholders, and shall be paid forthwith over and
delivered to the Trustee, for application to the payment of all Senior
Subordinated Notes Obligations remaining unpaid to the extent necessary to pay
all Senior Subordinated Notes Obligations in full in cash in accordance with the
terms of the Senior Subordinated Notes Documents after giving effect to any
concurrent
4
<PAGE>
payment or distribution to or for the Senior Subordinated Noteholders.
1.4. Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company (including any assets constituting Collateral (as defined
in the Indentures)) upon dissolution, winding up, liquidation or reorganization
of the Company (whether in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or otherwise):
(a) the Senior Subordinated Noteholders shall first be
entitled to receive payment in full in cash of all Senior Subordinated Notes
Obligations (including, without limitation, post-petition interest at the rate
provided in the Senior Subordinated Notes Documents whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before any Completion Guarantor is entitled to receive
any payment of any kind or character with respect to any Subordinated
Obligations, other than any payments permitted under Section 5.3 of the
Indentures;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise to
which any Completion Guarantor would be entitled except for the provisions of
this Section 1.4, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or other trustee or agent, directly to the
Senior Subordinated Noteholders or to the Trustee to the extent necessary to
make payment in full in cash of all Senior Subordinated Notes Obligations
remaining unpaid, after giving effect to any concurrent payment or distribution
to the Senior Subordinated Noteholders; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 1.4, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property, securities or
otherwise, shall be received by any Completion Guarantor on account of
Subordinated Obligations before all Senior Subordinated Notes Obligations are
paid in full in cash, which payment or distribution is not permitted by
preceding subsections (a) and (b) of this Section 1.4, such payment or
distribution shall be received and held in trust for and shall be paid over to
the Senior Subordinated Noteholders or to the Trustee for application to the
payment of such Senior Subordinated Notes Obligations until all Senior
Subordinated Notes Obligations shall have been paid in full in cash, after
giving effect to any concurrent payment or distribution to the Senior
Subordinated Noteholders.
1.5. Effect of Subordination on Obligations Pursuant to Completion Loan
Agreement and Construction Lien Indemnity Agreement. Each Completion Guarantor
hereby agrees for the benefit of the Company and the Senior Subordinated
Noteholders that, to the extent and so long as any payment of Subordinated
Obligations is not permitted to be made pursuant to the provisions of this
Section 1, then, and notwithstanding anything to the contrary contained in the
Completion Loan Agreement or the Construction Lien Indemnity Agreement, the
respective Subordinated Obligations shall not be payable by the Company until
they are permitted to be paid in accordance with the terms of this Section 1. To
the extent that any such Subordinated Obligations are not payable by the Company
pursuant to this Section 1, the Completion
5
<PAGE>
Guarantors shall forbear from exercising any right to accelerate the Company's
obligations under the Completion Loan Agreement or the Construction Lien
Indemnity Obligation Agreement as a result thereof so long as the Indentures or
this Agreement shall continue to prohibit the Company from making such payments.
Without limiting the foregoing, no action shall be taken by any Completion
Guarantor to enforce the payment of any Subordinated Obligations by the Company
until all Senior Subordinated Notes Obligations shall have been paid in full in
cash.
1.6. Subrogation. After all Senior Subordinated Notes Obligations have
been paid in full in cash, each Completion Guarantor shall have and be entitled
to all rights of subrogation otherwise provided by law in respect of any payment
it may make or be obligated to make under this Agreement with respect to the
claims of the Senior Subordinated Noteholders against the Company or any other
guarantor of the Senior Subordinated Notes Obligations.
1.7. Subordination Rights Not Impaired by Acts or Omissions of Company
or Holders of Senior Indebtedness. No right of any Senior Subordinated
Noteholder or the Trustee to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act by any such Senior
Subordinated Noteholder, or by any noncompliance by the Company with the terms
and provisions of the Completion Loan Agreement or the Construction Lien
Indemnity Agreement regardless of any knowledge thereof which any such Senior
Subordinated Noteholder may have or be otherwise charged with. The Senior
Subordinated Noteholders or the Trustee may, without in any way affecting the
obligations of any Completion Guarantor with respect hereto, at any time or from
time to time and in their absolute discretion, change the manner, place or terms
of payment of, change or extend the time of payment of, or renew or alter, any
Senior Subordinated Notes Obligations or amend, modify or supplement any of the
Senior Subordinated Notes Documents or exercise or refrain from exercising any
other of their rights under the Senior Subordinated Notes Documents including,
without limitation, the waiver of default thereunder and the release of any
collateral securing the Senior Subordinated Notes Obligations, all without
notice to or assent from any Completion Guarantor.
2. OTHER RESTRICTED PAYMENTS; SUBORDINATED RIGHTS
2.1. In addition to the provisions of the preceding Section 1, until
all Senior Subordinated Notes Obligations have been repaid in full in cash, the
Completion Guarantors shall not, and shall not permit any of their Subsidiaries
to, receive any Restricted Payment in violation of the provisions of the
Indentures (including, without limitation, Section 5.3 thereof).
2.2. In the event that, notwithstanding the provisions of the preceding
Section 2.1 of this Section 2, the Completion Guarantors or any of their
Subsidiaries shall receive any payment not permitted to be received by them
pursuant to said Section 2.1, such payment shall be held by such Completion
Guarantor or its respective Subsidiary in trust for the benefit of the Senior
Subordinated Noteholders, and shall be paid forthwith and delivered (with the
Completion Guarantors hereby agreeing to pay such amount over), to the Trustee
for application to the payment of all Senior Subordinated Notes Obligations
remaining unpaid to the extent necessary to pay all Senior Subordinated Notes
Obligations in full in cash after giving effect to any
6
<PAGE>
concurrent payment or distribution to the Senior Subordinated Noteholders.
2.3. Each Completion Guarantor, for itself, its successors and assigns,
covenants and agrees that (i) its rights as assignee of the Assigned Interests
are subject to the prior security interest granted in such Assigned Interests
under the Shared Security Documents to the Senior Subordinated Noteholders and
(ii) its rights under the Rights of Use are subject in all respects to the
Shared Security Documents. The priorities set forth herein with respect to the
Assigned Interests and the Rights of Use are applicable irrespective of (a) the
time, order or method of attachment or perfection or recording thereof or of any
financing statements or (b) whether or not the Collateral Agent, the Trustee or
any Senior Subordinated Noteholder has a perfected security interest in the
Assigned Interests.
2.4. Until all Senior Subordinated Notes Obligations shall have been
paid in full in cash no Completion Guarantor shall take any action whatsoever
(including any remedial action) to exercise or enforce its rights and remedies
in respect of any Assigned Interests or the Rights of Use, provided that in
order to satisfy its obligations under any Completion Guarantee and so long as
the Completion Guarantors are not in default under the Notes Completion
Guarantee, the Completion Guarantors may exercise any of their rights in respect
of the Assigned Interests and the Rights of Use in order to cause the completion
of the Casino (it being understood and agreed that the exercise by the
Completion Guarantors of such rights shall continue to be subject to the
subordination provisions of this Agreement).
3. AMENDMENT. No modification, amendment, waiver or release of any
provision of this Agreement or of any right, obligation, claim or cause of
action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Trustee and each Completion
Guarantor.
4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PRINCIPLES.
5. THIRD PARTY BENEFICIARIES. This Agreement is entered into for the
benefit of the Senior Subordinated Noteholders, and may not be amended or
modified in any respect, or terminated, without the consent of the Trustee or
that percentage of the Senior Subordinated Noteholders required to amend the
Indentures pursuant to the terms of the Indentures. The provisions of this
Agreement are continuing provisions and all Senior Subordinated Notes
Obligations to which they apply shall conclusively be presumed to have been
created in reliance thereon. Except to the extent provided in Section 1.5
hereof, this Agreement is not entered into for the benefit of the Company, and
the Company shall not be a third party beneficiary of this Agreement. Except as
otherwise expressly set forth herein, no provision of this Agreement shall be
deemed to modify, or release the Company from, any of its obligations pursuant
to the Completion Loan Agreement or the Construction Lien Indemnity Obligation
Agreement or to grant the Company any additional rights under the Completion
Loan Agreement or the Construction Lien Indemnity Obligation Agreement.
7
<PAGE>
6. TERMINATION. This Agreement shall terminate on the first to occur of
(i) the termination of the Indentures and satisfaction of all obligations to the
Senior Subordinated Noteholders thereunder or (ii) the termination of the Notes
Completion Guarantee and satisfaction of all obligations to HET, HOCI and the
Trustee thereunder and the obligations of the Completion Guarantors under this
Agreement (so long as, in the case of both clauses (i) and (ii) above, the
satisfaction of said obligations does not violate the terms of this Agreement).
7. COMPLETION LOAN AGREEMENT
7.1. Notwithstanding anything to the contrary contained in the
Completion Loan Agreement, the Completion Guarantors hereby waive all rights to
take any action in respect of a default by the Company under Section 9 of the
Completion Loan Agreement, during any period in which the payment of the
Subordinated Obligations is prohibited under the terms of this Agreement.
7.2. Notwithstanding anything to the contrary contained in the
Completion Loan Agreement, the Completion Guarantors subordinate to the Lien
granted by the Company to the Senior Subordinated Noteholders all rights granted
or purported to be granted by the Company to the Completion Guarantors pursuant
to the Completion Loan Agreement in any policies of insurance for or revenues
from the Casino (collectively, the "Assigned Proceeds").
7.3. Each Completion Guarantor, for itself, its successors and assigns,
covenants and agrees that its rights as assignee of the Assigned Proceeds are
subject to the prior security interest granted in such Assigned Proceeds under
the Shared Security Documents to the Senior Subordinated Noteholders. The
priorities set forth herein with respect to the Assigned Proceeds are applicable
irrespective of (i) the time, order or method of attachment or perfection or
recording thereof or of any financing statements or (ii) whether or not the
Collateral Agent, the Trustee or any Holder has a valid or perfected security
interest in the Collateral (as defined in the Indentures), including the
Assigned Proceeds.
7.4. Until all Senior Subordinated Notes Obligations shall have been
paid in full in cash, no Completion Guarantor shall take any action whatsoever
(including any remedial action) to exercise or enforce its rights and remedies
in respect of any Assigned Proceeds, provided that in order to satisfy its
obligations under any Completion Guarantee and so long as the Completion
Guarantors are not in default under the Notes Completion Guarantee, the
Completion Guarantors may exercise any of their rights in respect of the
Assigned Proceeds in order to cause the completion of the Casino (it being
understood and agreed that the exercise by the Completion Guarantors of such
rights shall continue to be subject to the subordination provisions of this
Agreement).
7.5. The subordination and other provisions of this Agreement apply
only to the Subordinated Obligations and shall have no effect on the rights of
HET and HOCI pursuant to the HET/JCC Agreement (as defined in the Indentures).
8. NOTICES. Except as otherwise specified herein, all notices,
requests, demands
8
<PAGE>
or other communications to or upon the respective parties hereto shall be deemed
to have been duly given or made when delivered to the party to which notice,
request, demand or other communication is required or permitted to be given or
made under this Agreement, addressed as follows:
(a) if to HET or HOCI, at:
Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
with a copy to the Corporate Secretary at the same address
(b) if to the Company, at:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: President
(c) if to the Trustee, at:
Norwest Bank Minnesota, National Association
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
9
<PAGE>
IN WITNESS WHEREOF, the Trustee and each Completion Guarantor
have caused this Agreement to be duly executed and delivered as of the date
first written above.
HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation
By: /s/ George W. Loveland, II
----------------------------------
Name: George W. Loveland, II
--------------------------------
Title: Vice President
-------------------------------
HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation
By: /s/ George W. Loveland II
----------------------------------
Name: George W. Loveland II
--------------------------------
Title: Vice President
-------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Raymond S. Haverstock
----------------------------------
Name: Raymond S. Haverstock
--------------------------------
Title: Vice President
-------------------------------
Acknowledged and agreed to by:
JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company
By: /s/ Frederick W. Burford
-----------------------------------
Name: Frederick W. Burford
---------------------------------
Title: President
--------------------------------
SIGNATURE PAGE TO
COMPLETION GUARANTOR SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared George W. Loveland II , who
acknowledged himself to be Authorized Representative of Harrah's Entertainment,
Inc., a Delaware corporation, and that he, as such officer, being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
COMPLETION GUARANTOR SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before me, a
Notary Public, duly commissioned and authorized in and for the State and County
aforesaid, personally came and appeared Raymond S. Haverstock, who acknowledged
himself to be Vice President of Norwest Bank Minnesota, National Association,
and that he, as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the company
by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Ann K. Mallari
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
COMPLETION GUARANTOR SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared George W. Loveland, who
acknowledged himself to be Authorized Representative of Harrah's Operating
Company, Inc., a Delaware corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
COMPLETION GUARANTOR SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Frederick W. Burford, who
acknowledged himself to be President of Jazz Casino Company, L.L.C., a
Louisiana limited liability company, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer on
behalf of such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Daniel E. Davillier
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
COMPLETION GUARANTOR SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
Exhibit 10.14
MANAGER SUBORDINATION AGREEMENT
(Landlord)
THIS MANAGER SUBORDINATION AGREEMENT (Landlord) (as amended,
modified or supplemented from time to time, this "Agreement") dated as of
October 29, 1998, is entered into by and among the RIVERGATE DEVELOPMENT
CORPORATION, a Louisiana public benefit corporation (the "RDC"), the CITY OF NEW
ORLEANS (the "City" and, together with the RDC, "Landlord") and HARRAH'S NEW
ORLEANS MANAGEMENT COMPANY, a Nevada corporation (the "Manager"). All
capitalized terms used and not otherwise defined herein shall have the meaning
assigned to such terms in the Lease (as defined herein).
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted a Third Amended Joint Plan of
Reorganization, as modified (the "Plan"), in connection with that certain
voluntary petition for relief under Chapter 11 of the United States Bankruptcy
Code and such Plan has been confirmed by the United States Bankruptcy Court for
the Eastern District of Louisiana.
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. The Manager has entered into that certain Second Amended
and Restated Management Agreement (as so amended and restated, and as the same
may be further amended, modified, replaced, restated, supplemented, renewed, or
extended from time to time, the "Management Agreement") with the Company,
pursuant to which the Manager will manage the Casino.
E. Contemporaneously herewith the Company, the RDC, and the
City have entered into that certain Amended and Restated Lease Agreement (the
"Lease").
F. The Landlord has requested that the Manager execute and
deliver this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
<PAGE>
1. CONSENT TO LEASE. Manager acknowledges that the Landlord
has, under the Lease, (i) an interest in the Improvements and a potential right
to lease Tenant's Property pursuant to Section 5.3 of the Lease, (ii) certain
rights to moveable and immovable property under Sections 5 and 7 of the Lease
and (iii) certain rights with respect to the House Bank and the Capital
Replacement Fund under Sections 5, 7 and 19 of the Lease.
2. SUBORDINATION. The Manager hereby covenants and agrees that
the payment of any Base Fees, Incentive Fees and Termination Fees (each as
defined in the Management Agreement) owing by the Company to the Manager or an
Affiliate of Manager is hereby expressly subordinated to the prior payment in
full in cash of all Rent and Additional Charges under the Lease.
3. TRANSITION.
3.1. Transition Period and Transaction Period Commencement
Date. The "Transition Period" shall be that period of time during which
Transition Actions (as defined in Section 3.2 hereof) are to be taken. The
Transition Period shall begin on the date (the "Transition Period Commencement
Date") on which (i) the Landlord or its receiver or conservator is placed in
ownership, possession or control of the Casino or (ii) an Event of Default has
occurred pursuant to Section 21.l(n) of the Lease and all cure periods in favor
of Leasehold Mortgagees under Section 23.4 of the Lease have expired and, with
respect to either (i) or (ii) above, either (a) the Manager terminates or
breaches the Management Agreement by failing to comply with Section 17.02(a) of
the Management Agreement, (b) there is an inability to use the System Marks at
the Development for any reason, or (c) Manager terminates the use at the Casino
of the Proprietary Systems (as defined in the Management Agreement) at a time at
which there is not available for use at the Casino a replacement for such
systems from a third party; provided, however, the Transition Period
Commencement Date shall not occur during any period in which Landlord's right to
take ownership, possession or control of the Casino is delayed as a result of
any forbearance by Landlord pursuant to Section 8 hereof. Notwithstanding
anything herein to the contrary, the Transition Period shall terminate no later
than forty-five (45) days after the Transition Period Commencement Date.
3.2. Transition Actions. For purposes of this Agreement,
"Transition Actions" are:
(a) Manager shall remove Manager's Property from the
Casino and replace (except as set forth in Section 3.2(b) hereof) with items of
like kind and quality, any tangible Manager's Property which is essential to the
operations of the Casino and would not customarily be supplied by a new manager,
including, in the case of the appointment of a receiver or conservator, the
supplying of such items by such receiver or conservator.
(b) Manager shall remove Confidential and Proprietary
Information (as defined in Section 12.02(c) of the Casino Management Agreement)
from the Casino.
(c) Manager shall remove any System Marks from the
Improvements and Tenant's Property. In the event that System Marks are removed
by Manager from the
<PAGE>
Improvements or Tenant Property and such act results in destruction of such
Improvements or Tenant's Property or material damage to such Improvements or
Tenant's Property which is not or cannot be repaired by Manager, then Manager
shall replace such Improvements or Tenant's Property with property of like kind
and quality, as the case may be.
3.3. Manager's Property Not Removed. If a Transition Period
has commenced and expired pursuant to Section 3.1 hereof or Manager has
surrendered possession of the Casino and Manager fails to remove any of
Manager's Property from the Casino, Landlord shall deliver to Manager written
notice of Landlord's demand that Manager remove any such Manager's Property and
shall give Manager fifteen (15) days to remove the property identified in such
notice and Landlord and Tenant shall provide Manager access to the Casino for
such purpose. If Manager then fails to remove the Manager's Property identified
in the notice or any remaining Manager's Property, Landlord shall have the right
to remove such property and to dispose of the same without incurring liability
to Manager, and Landlord may claim ownership to such property and use such
property as its own regardless of any Marks or System Marks; provided that
Landlord shall have no right to claim any ownership or, except as otherwise
provided in this Agreement, other rights with respect to any such Marks or
System Marks.
3.4. Transition Cooperation. If (i) Landlord gives to the
Company a notice of termination pursuant to Section 21.3 of the Lease or (ii)
Manager gives to the Company notice of termination pursuant to Section 17.02(a)
of the Management Agreement, Manager shall cooperate with the Landlord and any
successor manager to effect an orderly transition of the management of the
Casino without interruption of operations. Such transition cooperation shall be
furnished for a term not to exceed forty-five (45) days from the first to occur
of either the Landlord's notice of termination under the Lease or the Manager's
notice of termination under the Management Agreement; except that in no event
will the obligations under this Section 3.4 arise or continue to run if: (a)
Manager is not being paid on a current basis all amounts due to it under the
Management Agreement (excluding any amounts due prior to the date on which
Landlord or its receiver or conservator assume control of the Casino); or (b)
the Company, Landlord or Landlord's receiver or conservator is not paying on a
current basis the Company's other obligations with respect to the operation of
the Casino; or (c) Manager's performance of any transition cooperation would
require it to incur any out-of-pocket expenses or to take such action without
being compensated or at material risk of not being compensated.
3.5. Limitation on Rights of Landlord. This Manager
Subordination Agreement grants rights to Landlord only as specifically stated
herein. Nothing herein shall be construed to limit or modify the rights of
Manager to remove Manager's Property from the Casino which should be exercised
in good faith with a minimum of disruption to the Casino operations.
3.6. Limitation on Rights Against Landlord. The Manager's
right to receive or set off any monies or obligations owed or accruing or to be
performed by the Company shall not be enforceable against the Landlord (or its
nominee or designee), and the Landlord (or its nominee or designee) shall have
no obligation to remedy any act or omission of the Company or any default or
event of default on the part of the Company accruing, occurring or existing
under
<PAGE>
the Management Agreement. Notwithstanding anything contained in this Manager
Subordination Agreement or any rights granted Manager hereunder, Manager shall
not be a third-party beneficiary to the Lease.
3.7. Remedies. The remedies available to the Landlord for the
enforcement of the provisions of this Section 3 shall include, without
limitation, the right of specific performance and the right to obtain an
injunction without posting a bond therefor; provided, however, that nothing
shall limit the Landlord's right to pursue any legal remedy for a breach of this
Agreement.
4. AMENDMENT. No modification, amendment, waiver or release of
any provision of this Agreement or of any right, obligation, claim or cause of
action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Manager and the Landlord.
5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Louisiana as
applied to contracts made and performed entirely within the State of Louisiana
(without applying any provisions related to conflicts of laws). The Manager
hereby consents to the jurisdiction of the courts of the State of Louisiana and
consents to service of process by any means authorized by Louisiana law in any
action brought under or arising from this Agreement.
6. THIRD PARTY BENEFICIARIES. This Agreement is entered into
for the benefit of the Landlord and may not be amended or modified in any
respect, or terminated, without the consent of the Landlord. The provisions of
this Agreement are continuing provisions and all obligations to which they apply
shall conclusively be presumed to have been created in reliance thereon. Except
as otherwise expressly set forth herein, no provision of this Agreement shall be
deemed to modify, or release the Company from, any of the Management Agreement
obligations (except to the extent payment thereof is deferred or prohibited
pursuant to the Management Agreement or this Agreement), including, without
limitation, the obligation to pay the Termination Fee under the Management
Agreement or to grant the Company any additional rights under the Management
Agreement.
7. TERMINATION. This Agreement shall terminate on the first to
occur of (i) the termination of the Management Agreement and either (a)
completion of any Transition Actions required by this Agreement or (b)
completion of any transition obligations of the Manager under the Management
Agreement, whichever are applicable to the circumstances, and, with respect to
either (a) or (b), completion of the transition to a new manager as contemplated
in the Lease or (ii) the expiration of the Transition Period and satisfaction of
any of Manager's obligations pursuant to Sections 3.3 and 3.4 hereof.
8. MANAGEMENT AGREEMENT. Nothing in this Agreement shall
obligate Manager to breach or default under any of its obligations to the
Company under the Management Agreement or any agreement in favor of a Leasehold
Mortgagee. In the event of any conflict between this Agreement on the one hand
and either the Casino Management Agreement or any agreements including Leasehold
Mortgagees as parties on the other hand, the
<PAGE>
Landlord shall forbear as to any rights or remedies under this Agreement which
are in conflict with the rights and remedies of any Leasehold Mortgagees or of
the Tenant so long as such parties have a right to cure or a right to a new
lease pursuant to the terms of the Lease.
9. NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to the Manager, at
Harrah's New Orleans Management Company
512 South Peters Street
New Orleans, LA 70130
Attention: General Counsel
(b) (b) if to the Landlord, as provided in the Lease,
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the Manager and the Landlord have caused
this Agreement to be duly executed and delivered as of the date first written
above.
Witnesses: HARRAH'S NEW ORLEANS
MANAGEMENT COMPANY,
a Nevada corporation
/s/ Lori Wood By: /s/ G.W. Loveland II
- --------------------------- -------------------------------
/s/ Sandra Mears Name: George W. Loveland II
- --------------------------- -------------------------------
Title: Asst. Sec'y
-------------------------------
THE CITY OF NEW ORLEANS
By:
- --------------------------- -------------------------------
Name:
-------------------------------
Title:
- --------------------------- -------------------------------
RIVERGATE DEVELOPMENT CORPORATION
By:
- --------------------------- -------------------------------
Name:
-------------------------------
Title:
- --------------------------- -------------------------------
Acknowledged and accepted:
JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company Witnesses:
By:
-------------------------------- ----------------------------------
Name:
--------------------------------
Title:
------------------------------- ----------------------------------
<PAGE>
IN WITNESS WHEREOF, the Manager and the Landlord have caused
this Agreement to be duly executed and delivered as of the date first written
above.
Witnesses: HARRAH'S NEW ORLEANS
MANAGEMENT COMPANY,
a Nevada corporation
By:
- --------------------------- -------------------------------
Name:
- --------------------------- -------------------------------
Title:
-------------------------------
THE CITY OF NEW ORLEANS
/s/ Gwendolyn M. Johnson By: /s/ Marc H. Morial
- --------------------------- -------------------------------
/s/ Yolanda Johnson Name: Marc H. Morial
- --------------------------- -------------------------------
Title: Mayor
-------------------------------
RIVERGATE DEVELOPMENT CORPORATION
By:
- --------------------------- -------------------------------
Name:
- --------------------------- -------------------------------
Title:
-------------------------------
Acknowledged and accepted:
JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company Witnesses:
By:
---------------------------------- ----------------------------------
Name:
--------------------------------
Title: President
------------------------------- ----------------------------------
<PAGE>
IN WITNESS WHEREOF, the Manager and the Landlord have caused
this Agreement to be duly executed and delivered as of the date first written
above.
Witnesses: HARRAH'S NEW ORLEANS
MANAGEMENT COMPANY,
a Nevada corporation
By:
- --------------------------- -------------------------------
Name:
- --------------------------- -------------------------------
Title:
-------------------------------
THE CITY OF NEW ORLEANS
By:
- --------------------------- -------------------------------
Name:
- --------------------------- -------------------------------
Title: Mayor
-------------------------------
RIVERGATE DEVELOPMENT CORPORATION
/s/ Gwendolyn M. Johnson By: /s/ Helen S. Kohlman
- --------------------------- -------------------------------
/s/ Yolanda Johnson Name: Helen S. Kohlman
- --------------------------- -------------------------------
Title:
-------------------------------
Acknowledged and accepted:
JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company Witnesses:
By:
---------------------------------- ----------------------------------
Name:
--------------------------------
Title: President
------------------------------- ----------------------------------
<PAGE>
IN WITNESS WHEREOF, the Manager and the Landlord have caused
this Agreement to be duly executed and delivered as of the date first written
above.
Witnesses: HARRAH'S NEW ORLEANS
MANAGEMENT COMPANY,
a Nevada corporation
By:
- --------------------------- -------------------------------
Name:
- --------------------------- -------------------------------
Title:
-------------------------------
THE CITY OF NEW ORLEANS
By:
- --------------------------- -------------------------------
Name:
- --------------------------- -------------------------------
Title:
-------------------------------
RIVERGATE DEVELOPMENT CORPORATION
By:
- --------------------------- -------------------------------
Name:
- --------------------------- -------------------------------
Title:
-------------------------------
Acknowledged and accepted:
JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company Witnesses:
By: /s/ Frederick W. Burford /s/ Joey Lynn Hertz
---------------------------------- ----------------------------------
Name: Frederick W. Burford
--------------------------------
Title: President [illegible]
------------------------------- ----------------------------------
<PAGE>
Harrah's Las Vegas, Inc., a Nevada corporation, represents
that it is the owner of the System Marks (as defined in the Management
Agreement) and has licensed Manager's use of the System Marks pursuant to the
Management Agreement. Harrah's Las Vegas, Inc. acknowledges and consents to the
provisions of Section 3 of the foregoing Manager Subordination Agreement
(Landlord), and to the extent inconsistent with the terms of any license
agreement between Harrah's Las Vegas, Inc. and Manager, the terms of this
Agreement shall control. Harrah's Las Vegas, Inc. agrees to cooperate in good
faith in the implementation of the intent of this Agreement.
HARRAH'S LAS VEGAS, INC.
By: /s/ Jane E. Tyler
----------------------------------
Name: Jane E. Tyler
--------------------------------
Title: Asst. Secretary
-------------------------------
<PAGE>
ACKNOWLEDGMENT
STATE OF New York
COUNTY OF New York
BE IT KNOWN, that on this 28th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and County aforesaid,
PERSONALLY CAME AND APPEARED:
George W. Loveland, II, appearing in his capacity as Authorized
Representative of HARRAH'S NEW ORLEANS MANAGEMENT COMPANY, a Nevada
corporation,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said corporation with full authority and that the said instrument is
the free act and deed of the said corporation and was executed for the uses,
purposes and benefits therein expressed.
WITNESSES:
/s/ W. Paul Keeney /s/ G. W. Loveland II
- -------------------------------- -----------------------------
/s/ Vicki J. Gamberg
- --------------------------------
/s/ Jorge Jacob Jose
----------------------------
NOTARY PUBLIC
JORGE JACOB JOSE
Notary Public, State of New York
No. 01j05069330
Qualified in New York County
Commission Expires Nov. 25, 1998
<PAGE>
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 29th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Marc H. Morial, appearing in his capacity as Mayor of
THE CITY OF NEW ORLEANS,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said corporation with full authority and that the said instrument is
the free act and deed of the said corporation and was executed for the uses,
purposes and benefits therein expressed.
WITNESSES:
- ----------
/s/ Gwendolyn M. Johnson /s/ Marc H. Morial
- -------------------------------- --------------------------------
/s/ Yolanda Johnson
- --------------------------------
[illegible]
-------------------------------
NOTARY PUBLIC
<PAGE>
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 29th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Helen S. Kohlman, appearing in his capacity as the President of
RIVERGATE DEVELOPMENT CORPORATION,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that she executed the same on
behalf of said corporation with full authority and that the said instrument is
the free act and deed of the said corporation and was executed for the uses,
purposes and benefits therein expressed.
WITNESSES:
/s/ Gwendolyn M. Johnson /s/ Helen S. Kohlman
- ----------------------------------- ----------------------------
/s/ Yolanda Johnson
- -----------------------------------
--------------------------------
NOTARY PUBLIC
<PAGE>
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN, that on this 26th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and Parish aforesaid,
PERSONALLY CAME AND APPEARED:
Frederick W. Burford, appearing in his capacity as the Authorized
Representative of JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company.
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said limited liability company with full authority and that the said
instrument is the free act and deed of the said limited liability company and
was executed for the uses, purposes and benefits therein expressed.
WITNESSES:
/s/ Joey Lynn Hertz /s/ Frederick W. Burford
- ------------------------------ ------------------------------------
[illegible]
- ------------------------------
/s/ Daniel E. Davillier
---------------------------------
NOTARY PUBLIC
DANIEL E. DAVILLIER
NOTARY PUBLIC
State of Louisiana
My Commission Is Issued for Life.
<PAGE>
ACKNOWLEDGMENT
STATE OF Tennessee
COUNTY OF Shelby
BE IT KNOWN, that on this 27th day of October, 1998,
BEFORE ME, the undersigned authority, duly commissioned,
qualified and sworn within and for the State and County aforesaid,
PERSONALLY CAME AND APPEARED:
Jane E. Tyler, appearing in his capacity as the Authorized
Representative of HARRAH'S LAS VEGAS, INC., a Nevada corporation,
to me personally known to be the identical person whose name is subscribed to
the foregoing instrument; who declared and acknowledged to me, Notary, in the
presence of the undersigned competent witnesses, that he executed the same on
behalf of said corporation with full authority and that the said instrument is
the free act and deed of the said corporation and was executed for the uses,
purposes and benefits therein expressed.
WITNESSES:
Lisa R. Wallace /s/ Jane E. Tyler
- ------------------------------ -----------------------------------
Juanita M. Francis
- ------------------------------
Brenda M. Costa
--------------------------------
NOTARY PUBLIC
My Commission Expires Jan. 17, 2001
<PAGE>
Exhibit 10.15
MANAGER SUBORDINATION AGREEMENT
(Lenders)
THIS MANAGER SUBORDINATION AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of October 29, 1998,
between HARRAH'S NEW ORLEANS MANAGEMENT COMPANY, a Nevada corporation (the
"Manager") and BANKERS TRUST COMPANY, as Administrative Agent for the Lenders,
each as defined below. Except as otherwise defined herein, terms used herein and
defined in the Credit Agreement referred to below are used herein as so defined.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted and the Bankruptcy Court has confirmed a
plan of reorganization (the "Plan") in connection with that certain voluntary
petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy
Code.
C. As contemplated by the Plan, the Jazz Casino Company,
L.L.C., a Louisiana limited liability company (the "Company") has succeeded to
all the rights and obligations of HJC.
D. Contemporaneously herewith, the Company, JCC Holding
Company, a Delaware corporation, as guarantor ("JCC Holding"), the lenders (the
"Lenders") from time to time party thereto, and Bankers Trust Company, as
Administrative Agent (together with any successor agent, the "Administrative
Agent"), have entered into a Credit Agreement pursuant to the Plan providing for
senior secured term loans in the amount of Sixty Million Dollars ($60,000,000)
(the "A Term Loans"), secured term loans in the amount of One Hundred Fifty-One
Million Five Hundred Thousand Dollars ($151,500,000) (the "B Term Loans"), and a
secured revolving loan facility including Revolving Loans, Swingline Loans and
Letters of Credit drawn under such revolving loan facility in an amount not to
exceed Twenty Five Million Dollars ($25,000,000) at any time outstanding
(collectively the "Revolving Loans," and together with the A Term Loans and the
B Term Loans, the "Bank Loans"), as contemplated therein (as used herein, the
term "Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced,
restated, supplemented or refinanced from time to time, and including any
agreement extending the maturity of, or refinancing or restructuring (including,
but not limited to, the inclusion of additional borrowers or guarantors
thereunder or any increase in the amount borrowed) all or any portion of, the
indebtedness under such agreement or any successor agreements, whether or not
with the same agent, trustee, representative, lenders or holders; provided that,
with respect to any agreement providing for the refinancing or replacement of
indebtedness under the Credit Agreement, such agreement shall only be treated
as, or as part of, the Credit Agreement
<PAGE>
hereunder if (i) either (A) all obligations under the Credit Agreement being
refinanced or replaced shall be paid in full at the time of such refinancing or
replacement, and all commitments and letters of credit issued pursuant to the
refinanced or replaced Credit Agreement shall have terminated in accordance with
their terms or (B) the Required Banks shall have consented in writing to the
refinancing or replacement indebtedness being treated as indebtedness pursuant
to the Credit Agreement, (ii) the refinancing or replacement indebtedness shall
be permitted to be incurred under the Credit Agreement being refinanced or
replaced (if such Credit Agreement is to remain outstanding), and the other
Credit Documents then in effect and (iii) a notice to the effect that the
refinancing or replacement indebtedness shall be treated as issued under the
Credit Agreement shall be delivered by the Company to the Administrative Agent
and the Manager).
E. Contemporaneously herewith, pursuant to the Plan, the
Company, JCC Holding, JCC Development, L.L.C., FP Development, L.L.C., CP
Development, L.L.C. and the Trustee, as trustee, have entered into (i) that
certain Indenture, pursuant to which the Company has issued $187,500,000
principal amount of its Senior Subordinated Notes due 2009 with Contingent
Payments (the "New Bonds") and (ii) that certain Indenture (and together with
the Indenture for the New Bonds, the "Indenture") pursuant to which the Company
has issued its Senior Subordinated Contingent Notes due 2009 (the "New
Contingent Bonds").
F. The Company may at any time and from time to time enter
into one or more interest rate protection agreements (including, without
limitation, interest rate hedges, swaps, caps, floors, collars, and similar
agreements, collectively, the "Interest Rate Protection Agreements") with one or
more Lenders, or any Affiliate thereof (any such Lender or Lenders or any
Affiliate of any such Lender or Lenders (even if any such Lenders subsequently
cease to be a Lender under the Credit Agreement for any reason) so long as any
such Lender or Affiliate thereof participates in the extension of such Interest
Rate Protection Agreement and their subsequent assigns, if any, collectively,
the "Other Creditors," and together with the Administrative Agent and the
Lenders, the "Senior Creditors").
G. As security, inter alia, for the full and prompt payment
when due (whether at the stated maturity, by acceleration, or otherwise) of (a)
the principal of, and premium, if any, and interest on the Bank Loans and (b)
all other Obligations and Indebtedness of the Company to the holders of the
Senior Indebtedness (as defined herein) and/or to the Administrative Agent or
the Collateral Agent (the "Collateral Agent"), under the Intercreditor
Agreement, whether now existing or hereafter arising, the Company is pledging,
delivering, and granting certain security interests to the Collateral Agent.
H. The Collateral Agent is the holder of that certain Act of
Mortgage and Collateral Assignment by Jazz Casino Company, L.L.C. (as renewed,
amended, modified, replaced, restated, supplemented, or extended from time to
time, the "Mortgage") entered into pursuant to the Plan, which encumbers, among
other properties, the Company's leasehold estate in the Casino and which is to
be recorded in the Office of the Recorder of Mortgages for Orleans Parish,
Louisiana.
2
<PAGE>
I. The Manager and the Company have entered into that certain
Second Amended and Restated Management Agreement pursuant to the Plan (as
amended, modified, extended, renewed, replaced, restated, or supplemented from
time to time, the "Management Agreement"), pursuant to which the Manager will
manage the Casino.
J. Pursuant to the Security Agreement entered into pursuant to
the Credit Agreement the Company has pledged and assigned to the Collateral
Agent all of the Company's right, title and interest in, to and under the
Management Agreement.
K. The Credit Agreement provides that the Company may enter
into the Management Agreement and, subject to the provisions of Sections
9.03(iv), 9.06(a)(iv) and 9.06(b) of the Credit Agreement, may pay certain
amounts payable to the Manager under the Management Agreement so long as this
Agreement has been executed and delivered by the parties hereto (with all
Management Fees, interest, indemnities, other amounts, claims, demands,
liabilities, causes of action and other obligations owing or arising under, or
with respect to, the Management Agreement or otherwise arising or owing by the
Company to the Manager, being herein called the "Subordinated Obligations,"
including, without limitation, the Base Fee, the Incentive Fee, the Termination
Fee (each as defined in the Management Agreement) and the right to receive or
collect, to the extent provided in the Management Agreement and permitted by the
Indenture and the Credit Agreement, any or all (i) proceeds of condemnation
awards, (ii) compensation for revocation of the Casino Operating Contract, (iii)
proceeds of the Company's title insurance, property or hazard insurance, or
other insurance proceeds, (iv) fair market value or other proceeds of the
Company's assets, (v) damages or compensation, however described, paid by the
State of Louisiana, the Louisiana Gaming Control Board (the "LGCB"), or any
other government entity in connection with prohibition of use for gaming
purposes of the Casino, and (vi) any and all other payments and proceeds,
whether the same are denominated under the Management Agreement as part of the
Termination Fee or otherwise); provided, however, that Subordinated Obligations
shall not include System Fees, Travel Fees and Accounting Fees (each as defined
in the Management Agreement), tax and insurance fees as described in Article
9.03 of the Management Agreement, and other similar fees and reimbursable
expenses of the Manager, in each case to the extent that the foregoing fees and
expenses do not constitute compensation to the Manager for managing the Casino
(the "Unsubordinated Obligations").
L. The Administrative Agent has requested that the Manager
grant to the Administrative Agent and the Collateral Agent, their nominees,
successors and assigns, certain rights under the Management Agreement.
3
<PAGE>
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. COLLATERAL DOCUMENTS
1.1. Consent to Assignment. The Company hereby notifies the
Manager of, and the Manager hereby acknowledges and consents to, the pledge and
assignment by the Company to the Collateral Agent pursuant to the Security
Agreement, of all right, title and interest of the Company in, to and under (but
not its obligations, liabilities or duties with respect to) the Management
Agreement.
1.2. Collateral Agent. The rights granted by this Agreement
and by the Manager Subordination Agreement (Senior Subordinated Notes) dated as
of the date hereof among the Company, the Manager, and Norwest Bank Minnesota,
National Association, in its capacity as Trustee (the "Manager Subordination
Agreement (Senior Subordinated Notes)"), to the Collateral Agent are granted to
the Collateral Agent for the joint benefit of the Senior Subordinated
Noteholders (as defined in the Manager Subordination Agreement (Senior
Subordinated Notes)) and the Lenders, and the Collateral Agent shall act for the
joint benefit of the Senior Subordinated Noteholders and the Lenders pursuant to
the Intercreditor Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1. Company Representations. The Company hereby represents
and warrants that (i) the Management Agreement is in full force and effect and
has not been amended or modified, (ii) the Management Agreement is the only
agreement entered into by the Company with respect to the management of the
Casino, (iii) there is no default by the Company under the Management Agreement,
(iv) except for the assignment described in Section 1 hereof, the Company has
not assigned, transferred, pledged, or hypothecated the Company's interest in
the Management Agreement, and (v) the Company knows of no default by the Manager
under the Management Agreement.
2.2. Manager Representations. The Manager hereby represents
and warrants that (i) the Management Agreement is in full force and effect and
has not been amended or modified, (ii) the Management Agreement is the only
agreement entered into by the Manager with respect to the management of the
Casino, (iii) there is no default by the Manager under the Management Agreement,
(iv) the Manager has not assigned, transferred, pledged or hypothecated the
Manager's interest in the Management Agreement, (v) the Manager knows of no
default by the Company under the Management Agreement, and (vi) there are no
sums currently due or owing to the Manager under the Management Agreement.
4
<PAGE>
3. SUBORDINATION
3.1. Subordination of Liabilities, Management Fees and
Other Amounts
(a) The Manager, for itself, its successors and assigns,
covenants and agrees that (i) the payment of the Subordinated Obligations is
hereby expressly subordinated, to the extent and in the manner hereinafter set
forth, to the prior payment in full in cash of all Senior Indebtedness (as
defined in Section 3.7 hereof) and (ii) the Management Agreement is hereby
expressly subordinated in all respects to the Mortgage in the manner and to the
extent set forth herein; provided that nothing herein shall require the Manager
to relinquish or return any Base Fees, Incentive Fees or Termination Fees paid
to the Manager pursuant to the Management Agreement (other than as set forth in
the Management Agreement) so long as such payments, at the time when paid, were
permitted to be paid to the Manager in accordance with the requirements of this
Section 3. The provisions of this Section 3 shall constitute a continuing offer
to all Persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made for the
benefit of the holders of Senior Indebtedness, and such holders are hereby made
obligees hereunder the same as if their names were written herein as such, and
they and/or each of them may proceed to enforce such provisions.
(b) In the event of any payment default under Section 10.01 of
the Credit Agreement, any acceleration of the Senior Indebtedness under Section
10 of the Credit Agreement, or the bankruptcy of the Company, any accrued but
unpaid Base Fees, Incentive Fees or Termination Fees (including any Management
Fees deferred pursuant to Article 9.01(c) of the Management Agreement (the
"Deferred Management Fees")) existing at such time or accruing thereafter shall
be subordinated to payments on the Senior Indebtedness with payments to be
applied in the following order, subject to the rights of the LGCB under the
Casino Operating Contract, the City of New Orleans or the Rivergate Development
Corporation under the Casino Lease, and any other creditor, as their interests
may appear: (i) reimbursement of all management expenses incurred in accordance
with the Management Agreement; (ii) amounts as set forth in Section 11 of that
certain Intercreditor Agreement among HET, HOCI, Bankers Trust Company, Norwest
Bank Minnesota, National Association, as trustee, and the other parties named
therein (as amended from time to time); (iii) any credit enhancement fee due and
payable to HET or an Affiliate of HET pursuant to that certain Credit
Enhancement Fee Agreement entered into by and among the Company and HOCI
pursuant to the Plan; (iv) Base Fee and Termination Fee pursuant to and as
defined in the Management Agreement; (v) interest due on the Convertible Junior
Subordinated Debentures (as defined in the Plan); (vi) principal due on the
Convertible Junior Subordinated Debentures; (vii) interest due on any amounts
advanced under the Subordinated Loan Agreement (the "Subordinated Loan"), the
Construction Lien Indemnity Advances and any Completion Loans on a pari passu
basis; (viii) principal due on the Subordinated Loan, the Construction Lien
Indemnity Advances and any Completion Loans on a pari passu basis; and (ix)
Incentive Fee pursuant to and as defined in the Management Agreement.
5
<PAGE>
3.2. Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances
(a) Upon the maturity of any Senior Indebtedness (including
interest thereon or fees or any other amounts owing in respect thereof), whether
at stated maturity, by acceleration or otherwise, all Senior Indebtedness, to
the extent due and owing, shall first be paid in full in cash, before any
payment of any kind or character, whether in cash, property, securities or
otherwise, is made on account of the Subordinated Obligations.
(b) Until all Senior Indebtedness shall have been paid in full
in cash and all commitments in respect of such Senior Indebtedness have been
terminated, no payment or distribution of any kind or character (whether in
cash, property, securities or otherwise) shall be made in respect of any
Subordinated Obligations other than any payments permitted under the Credit
Agreement (including, without limitation, Sections 9.03(iv), 9.06(a)(iv) and
9.06(b) thereof).
(c) In the event that the Company shall make any payment on
account of the Subordinated Obligations which is not permitted by said
subsection (a) or (b), such payment shall be held by the Manager in trust for
the benefit of, and shall be paid forthwith over and delivered to, the holders
of Senior Indebtedness or their representative or the Administrative Agent, as
their respective interests may appear, for application pro rata to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay all
Senior Indebtedness in full in cash in accordance with the terms of such Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness.
3.3. Subordination to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization of Company. Upon any distribution
of assets of the Company upon dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full in cash of all Senior Indebtedness
(including, without limitation, post-petition interest at the rate provided in
the documentation with respect to the Senior Indebtedness, whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before the Manager is entitled to receive any payment of
any kind or character with respect to any Subordinated Obligations;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise to
which the Manager would be entitled except for the provisions of this Section
3.3, shall be paid by the liquidating trustee or agent or other person making
such payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the holders of Senior
Indebtedness or their representative or representatives, or to the
Administrative Agent, to the extent necessary to make payment in full in cash of
all Senior Indebtedness remaining unpaid,
6
<PAGE>
after giving effect to any concurrent payment or distribution to the holders of
such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 3.3, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property, securities or
otherwise, shall be received by the Manager on account of Subordinated
Obligations before all Senior Indebtedness is paid in full in cash, which
payment or distribution is not permitted by the preceding subsections (a) and
(b) of this Section 3.3, such payment or distribution shall be received and held
in trust for and shall be paid over to the holders of the Senior Indebtedness
remaining unpaid or unprovided for or their representative or representatives,
or to the Administrative Agent, for application to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in full in
cash, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
3.4. Effect of Subordination on Obligations Pursuant to
Management Agreement. The Manager hereby agrees for the benefit of the Company
and the Senior Creditors that, to the extent and for so long as any payment of
Subordinated Obligations is not permitted to be made pursuant to the provisions
of this Section 3 or the Credit Agreement, such payment shall not be payable by
the Company or any of its Subsidiaries until it is permitted to be paid in
accordance with the terms of this Section 3 and the Credit Agreement. To the
extent that any such Subordinated Obligations are not payable by the Company or
any of its Subsidiaries pursuant to this Section 3, the Manager shall forbear
from exercising any right to terminate, or withhold performance of any of its
obligations under, the Management Agreement as a result thereof so long as the
Credit Agreement or this Agreement shall continue to prohibit the Company from
making such payments.
3.5. Subrogation. After all Senior Indebtedness has been paid
in full in cash and all commitments in respect of such Senior Indebtedness have
been terminated, the Manager shall have and be entitled to all rights of
subrogation otherwise provided by law in respect of any payment it may make or
be obligated to make under this Agreement with respect to the claims of the
Senior Creditors against the Company or any other guarantor of the Senior
Indebtedness.
3.6. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act by any such
holder, or by any noncompliance by the Company with the terms and provisions of
the Management Agreement, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the Manager
with respect hereto, at any time or from time to time and in their absolute
discretion, change the manner, place or terms of payment of, change or extend
the time of payment of, or renew or alter, any Senior Indebtedness or amend,
modify or supplement any agreement or instrument governing or evidencing such
Senior Indebtedness or any other document referred to therein, or exercise or
refrain from exercising any other of their rights under the Senior Indebtedness
including, without limitation, the waiver of
7
<PAGE>
default thereunder and the release of any collateral securing such Senior
Indebtedness, all without notice to or assent from the Manager (except as
described in the following sentence). The Company will not agree to any
modification to the Credit Agreement which would directly reduce the amount of
the Management Fee which the Company is permitted to pay pursuant to Sections
9.03(iv), 9.06(a)(iv) and 9.06(b) of the Credit Agreement (as in effect on the
date hereof), without the prior written consent of the Manager; provided that
amendments or modifications to the Credit Agreement which make it more likely
(including without limitation by making covenants or defaults more stringent)
that a Default or Event of Default would exist which prohibits payment on the
basis provided in said Sections 9.03(iv), 9.06(a)(iv) and 9.06(b) of the Credit
Agreement shall be permitted to be made without any consent on the part of the
Manager. Notwithstanding anything to the contrary contained in this Agreement,
if the consent of the Manager is required for an amendment to the Credit
Agreement as provided in the immediately preceding sentence but is not obtained,
then the only effect of such failure shall be that, for purposes of this
Agreement, effect shall not be given to the respective amendment to the extent
same so reduces the amounts permitted to be paid to the Manager pursuant to
Sections 9.03(iv), 9.06(a)(iv) and 9.06(b) of the Credit Agreement for purposes
of making determinations pursuant to this Agreement.
3.7. Senior Indebtedness. The term "Senior Indebtedness" shall
mean all Obligations of the Company (i) under the Credit Agreement and the other
Credit Documents and (ii) in respect of any Interest Rate Protection Agreements.
As used herein, the term "Obligation" shall mean any principal, interest,
premium, penalties, fees, expenses, indemnities and other liabilities and
obligations payable under the documentation governing any Senior Indebtedness
(including interest accruing after the commencement of any bankruptcy,
insolvency, receivership or similar proceeding, at the rate provided for in the
documents governing such Senior Indebtedness) whether or not such interest is an
allowed claim against the debtor in any such proceeding).
4. FORECLOSURE
4.1. Termination After Succession Date. As of the date (the
"Succession Date") that (i) the Collateral Agent, or any nominee or designee of
the Collateral Agent or the Senior Creditors, takes possession of or acquires a
leasehold interest in the Casino or succeeds to the interests of the Company
under the Management Agreement by operation of the Security Agreement or
otherwise or (ii) a receiver or keeper (a "Receiver") of the Casino is appointed
pursuant to the Mortgage, and at any time during a period ending on the date
that is one hundred eighty (180) days after the Succession Date (the "Lender
Termination Date"), the Collateral Agent (or its nominee or designee) shall have
the right to terminate the Management Agreement upon at least one hundred twenty
(120) days' prior written notice to the Manager (which notice must be given on
or prior to the Lender Termination Date, although the one hundred twenty (120)
day period may extend beyond such date) and whether or not any default then
exists on the part of the Manager under the Management Agreement.
4.2. Termination After Manager Default. In addition to the
termination right set forth in Section 4.1 above, on any date following the
occurrence of (i) the Succession Date
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<PAGE>
and (ii) the filing of any foreclosure proceeding by the Collateral Agent, or
any nominee or designee of the Collateral Agent or the Senior Creditors, with
respect to the Casino, and at any time thereafter during the pendency of such
foreclosure (whether or not a Lender Termination Date has occurred), the
Collateral Agent (or its nominee or designee) shall have the right to terminate
the Management Agreement by written notice to the Manager to be effective as of
the date set forth in such notice and without any other action on the part of
the Collateral Agent (or its nominee or designee) if an Event of Default (under
and as defined in the Management Agreement) has occurred by the Manager, the
applicable cure periods have expired, and the Company has the right to terminate
the Management Agreement pursuant to Article 17.02(a) thereof; provided that the
effective date of any such termination shall not occur prior to forty five (45)
days after the date of such notice unless (a) a successor manager has been
obtained to manage the Casino and maintain continuous and uninterrupted
operations of the Casino or (b) the Manager fails to perform its obligations in
accordance with Section 4.5 hereof during said period.
4.3. Termination On Manager Disqualification or Appointment of
Receiver or New Manager. In addition to the termination rights set forth in
Sections 4.1 and 4.2 hereof, on any date following the occurrence of the
Succession Date and prior to the Lender Termination Date, (i) if at any time the
Manager ceases to be authorized to act as such under applicable Gaming
Regulations, or (ii) if a casino management company other than the Manager is
appointed to become Receiver, or (iii) if a casino management company other than
the Manager is appointed to become the manager of the Casino as a result of any
order, decree, judgment or ruling of the LGCB or any court of competent
jurisdiction, the Collateral Agent (or its nominee or designee) shall have the
right to terminate the Management Agreement by written notice to the Manager to
be effective on the date set forth in such notice; provided that the effective
date of any such termination shall not occur prior to forty five (45) days after
the date of such notice unless (a) a successor manager has been obtained to
manage the Casino and maintain continuous and uninterrupted operations of the
Casino or (b) the Manager fails to perform its obligations in accordance with
Section 4.5 hereof during said period.
4.4. Notice and Petition. The Collateral Agent (or its nominee
or designee) agrees to give notice to the Manager of any foreclosure petition
filed by the Collateral Agent (or its nominee or designee) with a copy of such
foreclosure petition within two (2) Business Days of the filing of such
petition, although any failure or delay in giving any such notice shall have no
effect on the rights or obligations of the parties to this Agreement. The
Collateral Agent (or its nominee or designee) shall include in such petition a
request that such Receiver continue operations by Manager pursuant to the
Management Agreement for forty five (45) days after the appointment of such
Receiver unless a successor manager has been obtained to manage the Casino and
maintain continuous and uninterrupted operations of the Casino.
4.5. Manager Cooperation During Transition. In the event of
any termination of Manager pursuant to Section 4 hereof, the Manager agrees to
cooperate with the Collateral Agent, the Receiver and any successor manager
during any transition period pursuant to Section 4 hereof of forty five (45)
days or any shorter period selected by the Collateral Agent pursuant to Section
4 hereof to effect an orderly transition of the management of the Casino without
interruption of operations, including, without limitation, providing to, and
allowing access by the
9
<PAGE>
Collateral Agent, Receiver and/or successor manager to, all of the books and
records of the Casino to allow and enable the Collateral Agent, Receiver and/or
successor manager to fully operate and manage the Casino, and, at the request of
the Collateral Agent, allow and authorize the removal of signs and any Harrah's
brand identified furniture, fixtures, equipment, signs or other movable property
which is used or useful for Casino operations at the Casino, transfers of books
and records, changes of computer systems, and other transfers, replacements and
changes necessary for continuous and uninterrupted operations of the Casino
throughout the transition to a successor manager; provided, that in respect of
any provision of or access to books and records, the Manager may exclude any
Confidential and Proprietary Information (as defined in the Management
Agreement), including without limitation, the Proprietary Systems (as defined in
the Management Agreement).
4.6. Termination Fee. If at the time of the giving of any
notice pursuant to Section 4 above, no default exists on the part of the Manager
under the Management Agreement, the Manager shall be entitled to payment from
the Company of the Termination Fee on the terms set forth in the Management
Agreement, provided that (i) such payment shall remain subject to Section 3
hereof, and (ii) non-payment of such Termination Fee shall have no effect on the
effectiveness of any termination of the Management Agreement under Section 4
hereof. In no event shall the Collateral Agent, the Senior Creditors or any of
their nominees or designees be obligated for any losses or damages of the
Company or the Manager as a result of a termination of the Management Agreement
pursuant to Section 4 above, or have any liability for any amounts payable
pursuant to said Management Agreement as a result of the termination thereof;
provided, however, (a) the Company shall remain liable to the Manager, subject
to the subordination provisions of this Agreement, in respect of the
Subordinated Obligations and Unsubordinated Obligations, and (b) while the
Manager's claims against the Company and any bank accounts, cash or other assets
of the Company for Subordinated Obligations or Unsubordinated Obligations are
subject and subordinate to the security interests of the Collateral Agent
pursuant to the Mortgage and as provided in Section 3 hereof, such claims shall
not be limited or impaired as a result of any termination of the Management
Agreement pursuant to Section 4 hereof except to the extent of the subordination
pursuant to Section 3 hereof.
4.7. Court Filings. Prior to the delivery of any notice of
termination pursuant to Section 4 hereof, the Collateral Agent or its nominee or
designee may indicate in any filing or petition with the LGCB or any court or
otherwise its intention to (a) name any Person other than the Manager as a
Receiver with respect to the Casino or (b) terminate the Management Agreement,
and the Manager acknowledges that (i) no such filing or petition shall
constitute a notice of termination unless expressly designated as such by the
Collateral Agent or its nominee or designee to the Manager, and (ii) the Manager
shall have no rights to terminate the Management Agreement or withhold
performance of any of its obligations thereunder as a result of any such filing
or petition.
4.8. Replacement Agreement. Following the occurrence of a
Succession Date, for so long as the Management Agreement has not been terminated
pursuant to Section 4.1, 4.2 or 4.3 hereof, then on the day following the Lender
Termination Date or such earlier date as the Collateral Agent (or its nominee or
designee) may elect, the Management Agreement shall be
10
<PAGE>
continued, or be replaced by a substantially identical management agreement (in
each case, the "Replacement Agreement"), as a direct agreement between the
Manager and the Collateral Agent (or its nominee or designee), although no
Termination Fee shall be payable pursuant thereto. Thereafter such Replacement
Agreement will, subject to the terms of this Agreement (which shall remain fully
applicable to such Replacement Agreement) and the terms thereof, be recognized
as a direct management agreement between the Manager and the Collateral Agent
(or its nominee or designee), except that, subject to Section 5.2 hereof, the
Collateral Agent (or its nominee or designee) shall not (i) be liable for any
previous act or omission of the Company under the Management Agreement accruing,
occurring or existing prior to the Succession Date, (ii) be subject to any
offset which shall have accrued to the Manager against the Company prior to the
Succession Date, (iii) be bound by any previous modification of the Management
Agreement, unless such modification shall have been expressly approved in
writing by the Collateral Agent, (iv) be required in any circumstance to pay any
Termination Fee, or (v) have any obligation for any other amounts which accrue
or become due under the Management Agreement prior to the Succession Date.
Neither the Collateral Agent (nor its nominee or designee) nor any other Senior
Creditor shall have any personal liability to the Manager for any obligations of
the Company under the Management Agreement (or of the equivalent of such Company
under any Replacement Agreement). Nothing contained in this Agreement shall
limit or impair the rights of the Collateral Agent or its nominees, its
successors or assigns, or any other parties to the Management Agreement or
Replacement Agreement to terminate the Management Agreement or Replacement
Agreement in accordance with the terms thereof or pursuant to Section 4 hereof
or pursuant to any other provision of this Agreement. Upon the effectiveness of
the Replacement Agreement, the Manager shall have no further obligations to the
Company pursuant to the Management Agreement; provided that the Manager and the
Company shall remain liable to each other (subject to the subordination
provisions of this Agreement) for obligations or liabilities arising prior to
the effectiveness of the Replacement Agreement.
4.9. Limitation on Rights Against Collateral Agent. Subject to
Section 5.2 hereof, after the Succession Date, the Manager's right to receive or
set off any monies or obligations owed or accrued or to be performed by the
Company prior to the Succession Date shall not be enforceable against the
Collateral Agent (or its nominee or designee), and the Collateral Agent (or its
nominee or designee) shall have no obligation to remedy any act or omission of
the Company or any default or event of default on the part of the Company
accruing, occurring or existing under the Management Agreement prior to the
Succession Date.
4.10. Manager's Rights. No default under the Mortgage and no
proceeding to foreclose on the Casino will disturb the Manager's rights under
the Management Agreement, and the Management Agreement will not be affected or
cut off thereby (except to the extent otherwise provided in this Section 4);
provided that (i) the Manager complies with this Agreement, (ii) the Manager at
all times remains authorized to act as such pursuant to applicable Gaming
Regulations, and (iii) there does not exist on the part of the Manager a default
under the Management Agreement; provided further, that notwithstanding the
recording of the Mortgage prior to recording that certain Memorandum of
Management Agreement attached to the Management Agreement as Exhibit "E" in the
Parish of Orleans, the right and obligations of the
11
<PAGE>
Manager under the Management Agreement upon a foreclosure by the Collateral
Agent shall be as set forth in this Agreement.
4.11. Assignment or Delegation By Collateral Agent. The
Collateral Agent may, upon written notice to the Manager, assign, delegate or
otherwise transfer its rights under this Section 4 and any Replacement Agreement
to (i) any affiliate of the Collateral Agent or the Administrative Agent, or any
financial institution that would qualify as a successor Collateral Agent under
the Intercreditor Agreement, (ii) subject to the consent of the Manager not to
be unreasonably withheld, any nationally-recognized firm of accountants,
management consultants or investment advisors (provided that such firm is not
otherwise engaged in the gaming business), or (iii) any Person designated as a
Receiver by the Collateral Agent or as a keeper in any foreclosure proceeding.
In the event of any such transfer, such transferee shall have the rights of the
Collateral Agent under this Section 4 (except to the extent any of such rights
are expressly retained by the Collateral Agent in connection with such
transfer). The Manager, the Administrative Agent, the Company and the Collateral
Agent hereby acknowledge and agree that the authority of the Receiver to succeed
to the rights of the Collateral Agent hereunder is subject to applicable Gaming
Regulations from time to time in effect, and that in the event of any conflict
between this Agreement and applicable Gaming Regulations that affects the rights
and powers of the Receiver, the applicable Gaming Regulations shall control.
4.12. Transfer of Interest in Replacement Agreement. In
addition to the rights described in Section 4.11 above, following the Succession
Date, the Collateral Agent (or its nominee or designee) may sell, transfer,
assign or otherwise convey its right, title and interest in the Replacement
Agreement to any Person upon one hundred twenty (120) days' prior written notice
to the Manager. The Manager may elect, within sixty (60) days of receipt of such
notice, to terminate the Replacement Agreement (in which case no Termination Fee
will be payable), or to continue the Replacement Agreement as a direct agreement
between the Manager and such transferee (subject to the terms of this Agreement)
on the terms of the Management Agreement in effect immediately prior to the
Succession Date, in which case the right of the Manager to receive the
Termination Fee on a prospective basis (but not as a result of any prior
defaults) will be restored (subject to the terms of this Agreement). After the
Collateral Agent (or its nominee or designee) has acquired a leasehold interest
in the Casino, the Collateral Agent (or its nominee or designee) may in
connection with a sale or transfer of such leasehold interest, upon one hundred
twenty (120) days' prior written notice to the Manager, elect to terminate the
Replacement Agreement, in which case the Replacement Agreement shall terminate
concurrently with the effectiveness of such sale or transfer (but not sooner
than one hundred twenty (120) days after the respective notice was given to the
Manager), with no payment of any Termination Fee owing by the Collateral Agent
(or its nominee or designee) in connection therewith. In addition, the
Collateral Agent (or its nominee or designee) shall have the right to terminate
the Replacement Agreement (i) on the same basis as set forth in Section 4.1
hereof, or (ii) in the event that the Casino is sold to a third party at a
foreclosure sale.
12
<PAGE>
5. CURE PERIOD
5.1. Notice and Cure. The Manager hereby agrees that from and
after the date hereof, within five (5) days after the Manager becomes aware of
the existence of any event, act or omission by the Company under the Management
Agreement which would give the Manager the right, either immediately or after
the giving of notice or the lapse of a period of time, or both, to terminate the
Management Agreement, the Manager shall give written notice of such event, act
or omission to the Administrative Agent and the Collateral Agent. Furthermore,
the Manager hereby agrees that it shall give to each of the Administrative Agent
and the Collateral Agent at least forty five (45) Business Days' prior written
notice of any proposed termination by the Manager of the Management Agreement
which notice shall specify the basis for the termination and any defaults then
existing pursuant to the Management Agreement. During the forty five (45)
Business Day period referenced in the immediately preceding sentence (the "Cure
Period"), the Company, the Administrative Agent, the Collateral Agent and/or the
Senior Creditors may remedy the defaults specified in the notice delivered
pursuant to the preceding sentence and, if all such defaults are cured during
the Cure Period, the termination shall not take effect. Furthermore, if such
default is capable of being cured and the Collateral Agent or the Administrative
Agent notifies the Manager that it (or the Senior Creditors or their or its
designee or nominee) is proceeding to remedy the defaults, but that the remedy
will take longer than the Cure Period, the termination will be delayed for so
long as the Collateral Agent or the Administrative Agent or the Senior Creditors
or their or its nominee or designee is proceeding diligently to cure the default
and such termination shall not occur if the defaults are cured. In the event
that a default under the Management Agreement cannot be cured without obtaining
the legal right to possession of the Casino, the Collateral Agent (or the Senior
Creditors or their or its designee or nominee) agrees to cooperate with the
Company and the Manager to the extent reasonably feasible to enable the Company
and the Manager to cure such default and, upon request of the Collateral Agent
(or its nominee or designee), the Manager agrees to cooperate with the
Collateral Agent (or its nominee or designee) to the extent reasonably feasible
to enable the Collateral Agent (or its nominee or designee) to cure such
default.
5.2. Manager's Obligations to Continue Performance. It is the
intention of the Manager and the Senior Creditors that the Senior Creditors
shall not be obligated to remedy or cure any existing default of the Company
under the Management Agreement accruing, occurring or existing prior to the
Succession Date and that the Manager shall continue performance under the
Management Agreement for the benefit of the Senior Creditors or their or its
nominee, so long as the Senior Creditors or their or its nominee, after the
Succession Date, (i) pay or cause to be paid all payments due to the Manager
arising under the Management Agreement after the Succession Date, (ii) perform
or cause to be performed all non-monetary obligations of the Company arising
under the Management Agreement after the Succession Date, and (iii) cure any
continuing non-monetary defaults under the Management Agreement that are capable
of being cured by the Senior Creditors, whether such defaults first arose before
the Succession Date. The Manager shall look solely to the Company (and not to
the Senior Creditors or their or its nominee, agent in possession or successors
or assigns) for payment of any fees, costs, expenses, and other sums that shall
have become due and payable or that shall have accrued under the Management
Agreement prior to the Succession Date.
13
<PAGE>
5.3. No Waiver By Manager. Except as otherwise expressly set
forth in this Agreement, including, without limitation, in Sections 3.4 and 6.2
hereof, the Manager shall not be deemed to have waived any of its rights to
declare a default by the Company under the Management Agreement or to terminate
the Management Agreement prior to the Succession Date after the expiration of
all applicable cure periods. Any failure by the Manager to provide notice to the
Administrative Agent or the Collateral Agent pursuant to Section 5.1 hereof
shall not be deemed to be a waiver by the Manager of any such default under the
Management Agreement as against the Company or to create any liability of the
Manager to the Administrative Agent or the Collateral Agent.
6. AGREEMENTS OF MANAGER. The Manager covenants and agrees
that on and after the date hereof and until all Senior Indebtedness shall have
been paid in full in cash and all commitments in respect of such Senior
Indebtedness have been terminated:
6.1. Assignment by Manager. Other than as permitted in Article
21.01 of the Management Agreement, the Manager will not assign, pledge, encumber
or hypothecate any right, title or interest of the Manager in, to or under (i)
the Management Agreement, or (ii) any of the Manager's rights, fees (earned or
unearned), interest in insurance, condemnation awards, indemnities, or other
proceeds under or of the Management Agreement, in either case without the prior
written consent of the Administrative Agent, which consent may be withheld for
any reason whatsoever.
6.2. Termination of Management Agreement. The Manager will not
exercise its rights and remedies under the Management Agreement (i) with respect
to any default under Article 17.01(d) thereof, (ii) with respect to any default
under Article 17.01(c) thereof, at any time prior to the occurrence of a Flip
Event (as defined in the Restated Certificate of Incorporation of JCC Holding as
of the date hereof), or after the occurrence of a Cure Event (as defined in the
Restated Certificate of Incorporation of JCC Holding as of the date hereof) in
respect of any uncured Flip Events, or (iii) arising as a result of any
suspension of construction or renovation, as the case may be, of the Casino for
any period of time beyond the Completion Deadline (as defined in the Management
Agreement), or any failure to fulfill the Completion Deadline.
7. FURTHER ASSURANCES. Upon request by either party hereto,
the Company and the Manager will, by instrument in writing, recognize each other
as the Manager and as the Company, respectively, under the Management Agreement,
subject to and as affected and modified by this Agreement for the balance of the
term and any renewals thereof.
8. CAPITAL REPLACEMENT FUND. To the extent that any conflict
exists between any requirement or provision of the Management Agreement
pertaining to the Capital Replacement Fund and any requirement or provision of
the Casino Lease regarding the Capital Replacement Fund, the Manager
acknowledges that compliance with the terms of the Casino Lease will be deemed
compliance with the Management Agreement for this purpose. For purposes of this
Agreement, such a conflict shall be deemed to exist when (i) compliance with any
requirement or provision of the Casino Lease would result in a default or breach
of the
14
<PAGE>
Management Agreement or (ii) compliance with any requirement or provision
of the Management Agreement would result in a default or breach of the
Casino Lease.
9. SATISFACTION OF MANAGEMENT AGREEMENT. The Manager agrees
that this Agreement, together with the Manager Subordination Agreement (Senior
Subordinated Notes), satisfies the conditions or requirements under Article 4.03
of the Management Agreement and that the Mortgage and Security Agreement
collectively constitute and are an Authorized Mortgage (as defined in the
Management Agreement).
10. AMENDMENT. No modification, amendment, waiver or release
of any provision of this Agreement or of any right, obligation, claim or cause
of action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Manager and the Administrative Agent
(with the consent of the Required Banks).
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICTS OF LAW PRINCIPLES.
12. TERMINATION. This Agreement shall terminate on the first
to occur of (i) the termination of the Credit Agreement and satisfaction of all
obligations to the Administrative Agent and the Lenders thereunder or (ii) the
termination of the Management Agreement and satisfaction of all obligations to
the Company and the Manager under the Management Agreement and the obligations
of the Manager under this Agreement (so long as, in the case of both clauses (i)
and (ii) above, the satisfaction of said obligations does not violate the terms
of this Agreement).
13. THIRD PARTY BENEFICIARIES. This Agreement is entered into
for the benefit of the holders from time to time of the Senior Indebtedness, and
may not be amended or modified in any respect, or terminated, without the
consent of the Administrative Agent (with the consent of the Required Banks).
The provisions of this Agreement are continuing provisions and all Senior
Indebtedness to which they apply shall conclusively be presumed to have been
created in reliance thereon. Except to the extent provided in Section 3.4
hereof, this Agreement is not entered into for the benefit of the Company, and
the Company shall not be a third party beneficiary of this Agreement. Except as
otherwise expressly set forth herein (including by reference to the Credit
Agreement), no provision of this Agreement shall be deemed to modify or release
the Company from any of the Subordinated Obligations (except to the extent
payment thereof is deferred or prohibited pursuant to the Credit Agreement or
this Agreement), including, without limitation, the obligation to pay the
Termination Fee under the Management Agreement or to grant the Company any
additional rights against the Manager under the Management Agreement.
14. NOTICES. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered to
the party to which notice, request, demand or
15
<PAGE>
other communication is required or permitted to be given or made under this
Agreement, addressed as follows:
(a) if to the Manager, at:
Harrah's New Orleans Management Company
512 South Peters Street
New Orleans, Louisiana 70130
Attention: General Counsel
(b) if to the Company, at:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: President
(c) if to the Administrative Agent, at:
Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, NY 10006
Attention: Mary Kay Coyle
(d) if to the Collateral Agent, at:
Norwest Bank Minnesota, N.A.
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Lon LeClair - Corporate Trust Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
16
<PAGE>
IN WITNESS WHEREOF, the Manager and the Administrative Agent
have caused this Agreement to be duly executed and delivered as of the date
first written above.
WITNESSES: HARRAH'S NEW ORLEANS MANAGEMENT
COMPANY, a Nevada corporation
/s/ Vicki J. Gromberg By: /s/ George W. Loveland, II
- ---------------------------------- -----------------------------------
/s/ W. Paul Koenig Name: George W. Loveland, II
- ---------------------------------- ---------------------------------
Title: Vice President
--------------------------------
BANKERS TRUST COMPANY, as
Administrative Agent for the Lenders
/s/ illegible By: /s/ Mary Kay Coyle
- ---------------------------------- -----------------------------------
/s/ illegible Name: Mary Kay Coyle
- ---------------------------------- ---------------------------------
Title: Managing Director
--------------------------------
Acknowledged and agreed by:
JAZZ CASINO COMPANY, L.L.C., WITNESSES:
a Louisiana limited liability company
By: /s/ Frederick W. Burford /s/ Jay Novatney
----------------------------------- ---------------------------------
Name: Frederick W. Burford
---------------------------------
Title: President /s/ Vince Lazar
-------------------------------- ---------------------------------
THE BANK OF NEW YORK
By: /s/ R. Randall Deen /s/ Daniel E. Davillier
----------------------------------- ---------------------------------
Name: R. Randall Deen /s/ S. Jay Novatney
--------------------------------- ---------------------------------
Title: Agent
--------------------------------
SIGNATURE PAGE TO
MANAGER SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
STATE OF New York
---------------
COUNTY OF New York
---------------
BE IT KNOWN that on the 28th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared George W. Loveland II, who
acknowledged himself to be Authorized Representative of Harrah's New Orleans
Management Company, a Nevada corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
STATE OF New York
-------------
COUNTY OF New York
-------------
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Frederick W. Burford, who
acknowledged himself to be President of Bankers Trust Company, a National
Banking Association, and that he, as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Daniel E. Davillier
--------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
STATE OF New York
-------------
COUNTY OF New York
-------------
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Frederick W. Burford, who
acknowledged himself to be President of Jazz Casino Company, L.L.C., a
Louisiana limited liability company, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer on behalf of such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Daniel E. Davillier
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
Exhibit 10.16
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
MANAGER SUBORDINATION AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of October 29, 1998,
between HARRAH'S NEW ORLEANS MANAGEMENT COMPANY, a Nevada corporation (the
"Manager"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION., in its capacity
as Trustee (the "Trustee") under the Indentures (as defined below). Except as
otherwise defined herein, terms used herein and defined in the Indentures
referred to below are used herein as so defined.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted and the Bankruptcy Court has confirmed a
plan of reorganization (the "Plan") in connection with that certain voluntary
petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy
Code.
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith, pursuant to the Plan, the
Company, JCC Holding Company, a Delaware corporation ("JCC Holding"), JCC
Development, L.L.C., CP Development, L.L.C., FP Development, L.L.C. and the
Trustee, as trustee, have entered into (i) that certain indenture, pursuant to
which the Company has issued $187,500,000 principal amount of its Senior
Subordinated Notes due 2009 with Contingent Payments (as may be amended,
modified, extended, renewed, restated, supplemented or refinanced from time to
time, the "New Bonds"), and (ii) that certain indenture (and together with the
indenture for the New Bonds, as each may be modified from time to time, the
"Indentures") pursuant to which the Company has issued its Senior Subordinated
Contingent Notes due 2009 (as may be amended, modified, extended, renewed,
restated, supplemented or refinanced from time to time, the "New Contingent
Bonds" and, together with the New Bonds, the "Senior Subordinated Notes" and,
together with the Indentures, the Collateral Documents (as defined in the
Indentures) and all other documents and agreements relating thereto, being
hereinafter called the "Senior Subordinated Notes Documents").
E. Contemporaneously herewith, the Company, JCC Holding
Company, a Delaware corporation, as guarantor, the lenders (the "Lenders") from
time to time party thereto, and Bankers Trust Company, as Administrative Agent
(together with any successor agent, the "Administrative Agent"), have entered
into that certain Credit Agreement (the "Credit Agreement") pursuant to the Plan
providing for senior secured term loans in the amount of Sixty
<PAGE>
Million Dollars ($60,000,000), secured term loans in the amount of One Hundred
Fifty-One Million Five Hundred Thousand Dollars ($151,500,000), and a revolving
loan facility including Swingline Loans and Letters of Credit (each as defined
in the Credit Agreement) drawn under such revolving loan facility in an amount
not to exceed Twenty Five Million Dollars ($25,000,000) at any time outstanding.
F. As security, inter alia, for the full and prompt payment
when due (whether at the stated maturity, by acceleration, or otherwise) of (a)
the principal of, and premium, if any, and interest (including Contingent
Payments) on the New Bonds and the Contingent Payments due and payable in
accordance with the terms of the New Contingent Bonds and (b) all other
Obligations of the Company under the Indentures to the Holders of the New Bonds
and Holders of the New Contingent Bonds (each as defined in the Indentures) of
the Senior Subordinated Notes (collectively, the "Senior Subordinated
Noteholders") and/or to the Trustee or the Collateral Agent (the "Collateral
Agent" and, together with the Senior Subordinated Noteholders and the Trustee,
the "Senior Subordinated Notes Creditors") under the Intercreditor Agreement (as
defined in the Indentures), whether now existing or hereafter arising (all such
obligations and liabilities set forth in clauses (a) and (b) above being herein
collectively called the "Senior Subordinated Notes Obligations"), the Company is
pledging, delivering, and granting certain security interests to the Collateral
Agent.
G. The Collateral Agent is the holder of those certain Shared
Security Documents (as defined in that certain Intercreditor Agreement among
HET, HOCI, Bankers Trust Company, Norwest Bank Minnesota, National Association,
as trustee, and the other parties named therein (the "Intercreditor
Agreement")), which encumber, among other properties, the Company's leasehold
estate in the Casino and which is to be recorded in the Office of the Recorder
of Mortgages for Orleans Parish, Louisiana.
H. The Manager and the Company have entered into that certain
Second Amended and Restated Management Agreement pursuant to the Plan, (as
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, the "Management Agreement") with the Company, pursuant to which
the Manager will manage the Casino.
I. Pursuant to the Security Agreement entered into pursuant to
the Credit Agreement and the Indentures (the "Security Agreement"), the Company
has pledged and assigned to the Collateral Agent all of the Company's right,
title, and interest in, to, and under the Management Agreement.
J. The Indentures provides that the Company may enter into the
Management Agreement and, subject to certain restrictions set forth in the
Indentures and referred to below, may pay certain amounts payable to the Manager
under the Management Agreement so long as this Agreement has been executed and
delivered by the parties hereto (with all Management Fees, interest,
indemnities, other amounts, claims, demands, liabilities, causes of action and
other obligations owing or arising under, or with respect to, the Management
Agreement or otherwise arising or owing by the Company to the Manager, being
herein called the "Subordinated Obligations," including, without limitation, the
Base Fee, the Incentive Fee
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and the Termination Fee (each as defined in the Management Agreement), together
with the right to receive or collect, to the extent provided in the Management
Agreement and permitted by the Indentures and the Credit Agreement, any or all
(i) proceeds of condemnation awards, (ii) compensation for revocation of the
Casino Operating Contract, (iii) proceeds of the Company's title insurance,
property or hazard insurance, or other insurance proceeds, (iv) proceeds of the
Company's assets, (v) damages or compensation, however described, paid by the
State of Louisiana, the Louisiana Gaming Control Board (the "LGCB"), or any
other government entity in connection with prohibition of use for gaming
purposes of the Casino, and (vi) any and all other payments and proceeds,
whether the same are denominated under the Management Agreement as part of the
Termination Fee or otherwise; provided, however, that Subordinated Obligations
shall not include System Fees, Travel Fees and Accounting Fees (each as defined
in the Management Agreement), tax, insurance and other fees as described in
Article 9.03 of the Management Agreement, and other similar fees and
reimbursable expenses of the Manager, in each case to the extent that the
foregoing fees and expenses do not constitute compensation to the Manager for
managing the Casino (the "Unsubordinated Obligations").
K. The Trustee has requested that the Manager grant to the
Trustee and the Collateral Agent, their nominees, successors and assigns,
certain rights under the Management Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. COLLATERAL DOCUMENTS
1.1 Consent to Assignment. The Company hereby notifies the
Manager of, and the Manager hereby acknowledges and consents to, the pledge and
assignment by the Company to the Collateral Agent pursuant to the Security
Agreement, of all right, title and interest of the Company in, to and under (but
not its obligations, liabilities or duties with respect to) the Management
Agreement.
1.2 Collateral Agent. The rights granted by this Agreement and
by the Manager Subordination Agreement (Lenders) dated as of the date hereof
among the Company, the Manager and Bankers Trust Company as Administrative Agent
(the "Manager Subordination Agreement (Lenders)"), to the Collateral Agent are
granted to the Collateral Agent for the joint benefit of the Senior Subordinated
Noteholders and the Lenders (as defined in the Manager Subordination Agreement
(Lenders)) and the Collateral Agent shall act for the joint benefit of the
Senior Subordinated Noteholders and the Lenders pursuant to the Intercreditor
Agreement.
2. REPRESENTATIONS AND WARRANTIES
2.1 Company Representations. The Company hereby represents and
warrants that (i) the Management Agreement is in full force and effect and has
not been amended or modified, (ii) the Management Agreement is the only
agreement entered into by the Company
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with respect to the management of the Casino, (iii) there is no default by the
Company under the Management Agreement, (iv) except for the assignment described
in Section 1 hereof, the Company has not assigned, transferred, pledged, or
hypothecated the Company's interest in the Management Agreement, and (v) the
Company knows of no default by the Manager under the Management Agreement.
2.2 Manager Representations. The Manager hereby represents and
warrants that (i) the Management Agreement is in full force and effect and has
not been amended or modified, (ii) the Management Agreement is the only
agreement entered into by the Manager with respect to the management of the
Casino, (iii) there is no default by the Manager under the Management Agreement,
(iv) the Manager has not assigned, transferred, pledged or hypothecated the
Manager's interest in the Management Agreement, (v) the Manager knows of no
default by the Company under the Management Agreement, and (vi) there are no
sums currently due or owing to the Manager under the Management Agreement.
3. SUBORDINATION
3.1 Subordination of Liabilities, Management Fees and Other
Amounts
(a) The Manager, for itself, its successors and assigns,
covenants and agrees that (i) the payment of the Subordinated Obligations is
hereby expressly subordinated, to the extent and in the manner hereinafter set
forth, to the prior payment in full in cash of all Senior Subordinated Notes
Obligations, and (ii) the Management Agreement is hereby expressly subordinated
in all respects to the Shared Security Documents (as defined in the
Intercreditor Agreement) in the manner and to the extent set forth herein;
provided that nothing herein shall require the Manager to relinquish or return
any Base Fees, Incentive Fees or Termination Fees paid to the Manager pursuant
to the Management Agreement (other than as set forth in the Management
Agreement) so long as such payments, at the time paid, were permitted to be paid
to the Manager in accordance with this Section 3. The provisions of this Section
3 shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become or continue to remain Senior Subordinated Noteholders, and
such provisions are made for the benefit of the Senior Subordinated Noteholders
and such Senior Subordinated Noteholders are hereby made obligees hereunder the
same as if their names were written herein as such, and they and/or each of
them, may proceed to enforce such provisions.
(b) In the event of any payment default under Sections 7.1(1)
and (2) of the Indentures, any acceleration or declaration of an Event of
Default of the Senior Subordinated Notes under Section 7.2 of the Indentures, or
the bankruptcy of the Company, any accrued but unpaid Base Fees, Incentive Fees
or Termination Fees (including any Management Fees (as defined in the
Indentures) deferred pursuant to Article 9.01(c) of the Management Agreement
(the "Deferred Management Fees")) and any other Subordinated Obligations
existing at such time or accruing thereafter shall be subordinated to the Senior
Subordinated Notes Obligations with payments to be applied in the following
order, subject to the rights of the LGCB under the Casino Operating Contract (as
defined in the Indentures), the City of New Orleans or Rivergate Development
Corporation under the Ground Lease (as defined in the Indentures), and any other
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creditor, as their interests may appear: (i) reimbursement of all management
expenses incurred in accordance with the Management Agreement; (ii) amounts as
set forth in Section 11 of the Intercreditor Agreement; (iii) any credit
enhancement fee due and payable to HET or an Affiliate of HET pursuant to that
certain Credit Enhancement Fee Agreement entered into by and among the Company
and HOCI pursuant to the Plan; (iv) Base Fee and Termination Fee pursuant to and
as defined in the Management Agreement; (v) interest due on the Convertible
Junior Subordinated Debentures (as defined in the Plan); (vi) principal due on
the Convertible Junior Subordinated Debentures; (vii) interest due on any
amounts advanced under the Subordinated Credit Facility, the Indemnity Agreement
and the Completion Loan Agreement (each as defined in the Indentures) on a pari
passu basis; (viii) principal due on the Subordinated Credit Facility, the
Indemnity Agreement and the Completion Loan agreement on a pari passu basis; and
(ix) Incentive Fee pursuant to and as defined in the Management Agreement;
provided that the amounts described in clauses (iii) and (iv) above shall be
senior to any Contingent Payments on the New Bonds and the New Contingent Bonds.
3.2 Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances
(a) Upon any Senior Subordinated Notes Obligations becoming
due and remaining unpaid (including interest thereon or fees or any other
amounts owing in respect thereof), whether at stated maturity, by acceleration
or otherwise, all Senior Subordinated Notes Obligations, to the extent due and
owing, shall first be paid in full in cash, before any payment of any kind or
character, whether in cash, property, securities or otherwise, is made on
account of the Subordinated Obligations.
(b) Until all Senior Subordinated Notes Obligations have been
repaid in full, no payment or distribution of any kind or character (whether in
cash, property, securities or otherwise) shall be made in respect of any
Subordinated Obligations, other than as any such payment may be permitted under
Section 5.19 of the Indentures.
(c) In the event that the Company shall make any payment on
account of the Subordinated Obligations which is not permitted by subsection (a)
or (b) of this Section 3.2, such payment shall be held by the Manager in trust
for the benefit of, and shall be paid forthwith over and delivered to the
Trustee for application to the payment of the Senior Subordinated Notes
Obligations remaining unpaid to the extent necessary to pay the Senior
Subordinated Notes Obligations in full in cash in accordance with the terms of
the Senior Subordinated Notes Documents, after giving effect to any concurrent
payment or distribution to or for the Senior Subordinated Noteholders.
3.3 Subordination to Prior Payment of All Senior Subordinated
Notes Obligations on Dissolution, Liquidation or Reorganization of Company. Upon
any distribution of assets of the Company upon dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or otherwise):
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(a) the Senior Subordinated Noteholders shall first be
entitled to receive payment in full in cash of all Senior Subordinated Notes
Obligations (including, without limitation, post-petition interest at the rate
provided in the Senior Subordinated Notes Documents whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before the Manager is entitled to receive any payment of
any kind or character with respect to any Subordinated Obligations, except that
Manager shall be entitled to receive Base Management Fees prior to the payment
of any Make-Whole Amount as provided in the Indentures;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise, to
which the Manager would be entitled except for the provisions of this Section
3.3, shall be paid by the liquidating trustee or agent or other person making
such payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the Senior
Subordinated Noteholders or their representative or representatives, or to the
Trustee, to the extent necessary to make payment in full in cash of all Senior
Subordinated Notes Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution to the Senior Subordinated Noteholders; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 3.3, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property, securities or
otherwise, shall be received by the Manager on account of Subordinated
Obligations before all Senior Subordinated Notes Obligations are paid in full in
cash, which payment or distribution is not permitted by the preceding subsection
(a) of this Section 3.3, such payment or distribution shall be received and held
in trust for and shall be paid over to the Senior Subordinated Noteholders or
their representative or representatives, or to the Trustee, for application to
the payment of all Senior Subordinated Notes Obligations remaining unpaid or
unprovided for until all such Senior Subordinated Notes Obligations shall have
been paid in full in cash, after giving effect to any concurrent payment or
distribution to the Senior Subordinated Noteholders.
3.4 Effect of Subordination on Obligations Pursuant to
Management Agreement. The Manager hereby agrees for the benefit of the Company
and the Senior Subordinated Notes Creditors that, to the extent and for so long
as any payment of Subordinated Obligations is not permitted to be made pursuant
to the provisions of this Section 3 or the Indentures, such payment shall not be
made or be payable by the Company or any of its Subsidiaries (as defined in the
Indentures) until it is permitted to be paid in accordance with the terms of
this Section 3 and the Indentures. To the extent that any such Subordinated
Obligations are not payable by the Company or any of its Subsidiaries pursuant
to this Section 3, the Manager shall forbear from exercising any right to
terminate, or withhold performance of any of its obligations under, the
Management Agreement as a result thereof so long as the Indentures or this
Agreement shall continue to prohibit the Company from making such payments.
3.5 Subrogation. After the Senior Subordinated Notes
Obligations have been paid in full in cash, the Manager shall have and be
entitled to all rights of subrogation otherwise
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provided by law in respect of any payment it may make or be obligated to make
under this Agreement with respect to the claims of the Senior Subordinated Notes
Creditors against the Company or any other guarantor of the Senior Subordinated
Notes Obligations.
3.6 Subordination Rights Not Impaired by Acts or Omissions of
Company or Senior Subordinated Notes Creditors. No right of any present or
future Senior Subordinated Notes Creditors to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act by any
such Senior Subordinated Notes Creditors, or by any noncompliance by the Company
with the terms and provisions of the Management Agreement, regardless of any
knowledge thereof which any such Senior Subordinated Notes Creditor may have or
be otherwise charged with. The Senior Subordinated Notes Creditors may, without
in any way affecting the obligations of the Manager with respect hereto, at any
time or from time to time and in their absolute discretion, change the manner,
place or terms of payment of, change or extend the time of payment of, or renew
or alter, any Senior Subordinated Notes Obligations or amend, modify or
supplement any agreement or instrument governing or evidencing such Senior
Subordinated Notes Obligations or any other document referred to therein, or
exercise or refrain from exercising any other of their rights under the Senior
Subordinated Notes Obligations including, without limitation, the waiver of
default thereunder and the release of any collateral securing such Senior
Subordinated Notes Obligations, all without notice to or assent from the Manager
(except as described in the following sentence). The Company will not agree to
any modification to the Senior Subordinated Notes Documents which would directly
reduce the amount of the Management Fee which the Company is permitted to pay to
the Manager under Section 5.19 of the Indentures, without the prior written
consent of the Manager. Notwithstanding anything to the contrary contained in
this Agreement, if the consent of the Manager is required for an amendment to
the Indentures as provided in the immediately preceding sentence but is not
obtained, then the only effect of such failure shall be that, for purposes of
this Agreement, effect shall not be given to the respective amendment to the
extent same so reduces the amount of the Management Fee which the Company is
permitted to pay to the Manager under the Indentures for purposes of making
determinations pursuant to this Agreement.
4. FORECLOSURE
4.1 Termination After Succession Date. As of the date (the
"Succession Date") that (i) the Collateral Agent, or any nominee or designee of
the Collateral Agent or the Senior Subordinated Notes Creditors, takes
possession of or acquires a leasehold interest in the Casino, or succeeds to the
interests of the Company under the Management Agreement by operation of the
Security Agreement or otherwise or (ii) a receiver or keeper (a "Receiver") of
the Casino is appointed pursuant to the Shared Security Documents, and at any
time during a period ending on the date that is one hundred eighty (180) days
after the Succession Date (the "Lender Termination Date"), the Collateral Agent
(or its nominee or designee) shall have the right to terminate the Management
Agreement upon at least one hundred twenty (120) days' prior written notice to
the Manager (which notice must be given on or prior to the Lender Termination
Date, although the one hundred twenty (120) day period may extend beyond such
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date) whether or not any default then exists on the part of the Manager under
the Management Agreement.
4.2 Termination After Manager Default. In addition to the
termination right set forth in Section 4.1 hereof, on any date following the
occurrence of (i) the Succession Date and (ii) the filing of any foreclosure
proceeding by the Collateral Agent, or any nominee or designee of the Collateral
Agent or the Senior Subordinated Notes Creditors, with respect to the Casino,
and at any time thereafter during the pendency of such foreclosure (whether or
not a Lender Termination Date has occurred), the Collateral Agent (or its
nominee or designee) shall have the right to terminate the Management Agreement
by written notice to the Manager to be effective as of the date set forth in
such notice and without any other action on the part of the Collateral Agent (or
its nominee or designee) if an Event of Default (under and as defined in the
Management Agreement) has occurred by the Manager, the applicable cure periods
have expired, and the Company has the right to terminate the Management
Agreement pursuant to Article 17.02(a) thereof; provided that the effective date
of any such termination shall not occur prior to forty five (45) days after the
date of such notice unless (a) a successor manager has been obtained to manage
the Casino and maintain continuous and uninterrupted operations of the Casino or
(b) the Manager fails to perform its obligations in accordance with Section 4.5
hereof during said period.
4.3 Termination On Manager Disqualification or Appointment of
Receiver or New Manager. In addition to the termination rights set forth in
Sections 4.1 and 4.2 hereof, on any date following the occurrence of the
Succession Date and prior to the Lender Termination Date, (i) if at any time the
Manager ceases to be authorized to act as such under applicable Gaming
Regulations (as defined in the Indentures), or (ii) if a casino management
company other than the Manager is appointed to become receiver, or (iii) if a
casino management company other than the Manager is appointed to become the
manager of the Casino as a result of any order, decree, judgment or ruling of
the LGCB or any court of competent jurisdiction, the Collateral Agent (or its
nominee or designee) shall have the right to terminate the Management Agreement
by written notice to the Manager to be effective on the date set forth in such
notice; provided that the effective date of any such termination shall not occur
prior to forty five (45) days after the date of such notice unless (a) a
successor manager has been obtained to manage the Casino and maintain continuous
and uninterrupted operations of the Casino or (b) the Manager fails to perform
its obligations in accordance with Section 4.5 hereof during said period.
4.4 Notice and Petition. The Collateral Agent (or its nominee
or designee) agrees to give notice to the Manager of any foreclosure petition
filed by the Collateral Agent (or its nominee or designee) with a copy of such
foreclosure petition within two (2) Business Days (as defined in the Indentures)
of the filing of such petition. The Collateral Agent (or its nominee or
designee) shall include in such petition a request that such Receiver continue
operations by Manager pursuant to the Management Agreement for forty five (45)
days after the appointment of such Receiver unless a successor manager has been
obtained to manage the Casino and maintain continuous and uninterrupted
operations of the Casino.
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4.5 Manager Cooperation During Transition. In the event of any
termination of Manager pursuant to Section 4 hereof, the Manager agrees to
cooperate with the Collateral Agent, the Receiver and any successor manager
during any transition period pursuant to Section 4 hereof of forty five (45)
days or any shorter period selected by the Collateral Agent pursuant to Section
4 hereof to effect an orderly transition of the management of the Casino without
interruption of operations, including, without limitation, providing to, and
allowing access by the Collateral Agent, Receiver and/or successor manager to,
all of the books and records of the Casino to allow and enable the Collateral
Agent, Receiver and/or successor manager to fully operate and manage the Casino,
and, at the request of the Collateral Agent, allow and authorize the removal of
signs and any Harrah's brand identified furniture, fixtures, equipment, signs or
other movable property which is used or useful for Casino operations at the
Casino, transfers of books and records, changes of computer systems, and other
transfers, replacements and changes necessary for continuous and uninterrupted
operations of the Casino throughout the transition to a successor manager;
provided, that in respect of any provision of or access to books and records,
the Manager may exclude any Confidential and Proprietary Information (as defined
in the Management Agreement), including without limitation, the Proprietary
Systems (as defined in the Management Agreement).
4.6 Termination Fee. If at the time of the giving of any
notice pursuant to Section 4 hereof, no default exists on the part of the
Manager under the Management Agreement, the Manager shall be entitled to payment
from the Company of the Termination Fee on the terms set forth in the Management
Agreement; provided that (i) such payment shall remain subject to Section 3
hereof, and (ii) non-payment of such Termination Fee shall have no effect on the
effectiveness of any termination of the Management Agreement under Section 4
hereof. In no event shall the Senior Subordinated Notes Creditors or any of
their nominees or designees be obligated for any losses or damages of the
Company or the Manager as a result of a termination of the Management Agreement
pursuant to Section 4 hereof, or have any liability for any amounts payable
pursuant to said Management Agreement as a result of the termination thereof;
provided, however, (a) the Company shall remain liable to the Manager, subject
to the subordination provisions of this Agreement, in respect of the
Subordinated Obligations and Unsubordinated Obligations, and (b) while the
Manager's claims against the Company for Subordinated Obligations or
Unsubordinated Obligations are subject and subordinate to the security interests
of the Collateral Agent pursuant to the Shared Security Documents and as
provided in Section 3 hereof, such claims shall not be limited or impaired as a
result of any termination of the Management Agreement pursuant to Section 4
hereof except to the extent of the subordination pursuant to Section 3 hereof.
4.7 Court Filings. Prior to the delivery of any notice of
termination pursuant to Section 4 hereof, the Collateral Agent (or its nominee
or designee) may indicate in any filing or petition with the LGCB or any court
or otherwise its intention to (a) name any Person other than the Manager as a
receiver with respect to the Casino or (b) terminate the Management Agreement,
and the Manager acknowledges that (i) no such filing or petition shall
constitute a notice of termination unless expressly designated as such by the
Collateral Agent (or its nominee or designee) to the Manager, and (ii) the
Manager shall have no rights to terminate the
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Management Agreement or withhold performance of any of its obligations
thereunder as a result of any such filing or petition.
4.8 Replacement Agreement. Following the occurrence of a
Succession Date, for so long as the Management Agreement has not been terminated
pursuant to Section 4.1, 4.2 or 4.3 hereof, then on the day following the Lender
Termination Date or such earlier date as the Collateral Agent (or its nominee or
designee) may elect, the Management Agreement shall be continued, or be replaced
by a substantially identical management agreement (in each case, the
"Replacement Agreement"), as a direct agreement between the Manager and the
Collateral Agent (or its nominee or designee), although no Termination Fee shall
be payable pursuant thereto. Thereafter such Replacement Agreement will, subject
to the terms of this Agreement (which shall remain fully applicable to such
Replacement Agreement) and the terms thereof, be recognized as a direct
management agreement between the Manager and the Collateral Agent (or its
nominee or designee), except that, subject to Section 5.2 hereof and unless
otherwise agreed by the Manager and the other party thereto, the Collateral
Agent (or its nominee or designee) shall not (i) be liable for any previous act
or omission of the Company under the Management Agreement accruing, occurring or
existing prior to the Succession Date, (ii) be subject to any offset of amounts
owed to the Manager by the Company prior to the Succession Date, (iii) be bound
by any previous modification of the Management Agreement, unless such
modification shall have been expressly approved in writing by the Collateral
Agent, (iv) be required in any circumstance to pay any Termination Fee, or (v)
have any obligation for any other amounts which accrue or become due under the
Management Agreement prior to the Succession Date. Neither the Collateral Agent
(nor its nominee or designee) nor any other Senior Subordinated Notes Creditor
shall have any personal liability to the Manager for any obligations of the
Company under the Management Agreement (or of the equivalent of such Company
under any Replacement Agreement). Nothing contained in this Agreement shall
limit or impair the rights of the Collateral Agent or its nominees, its
successors or assigns, or any other parties to the Management Agreement or
Replacement Agreement to terminate the Management Agreement or Replacement
Agreement in accordance with the terms thereof or pursuant to Section 4 hereof
or pursuant to any other provision of this Agreement. Upon the effectiveness of
the Replacement Agreement, the Manager shall have no further obligations to the
Company pursuant to the Management Agreement; provided that the Manager and the
Company shall remain liable to each other (subject to the subordination
provisions of this Agreement) for obligations or liabilities arising prior to
the effectiveness of the Replacement Agreement.
4.9 Limitation on Rights Against Collateral Agent. Subject to
Section 5.2 hereof, after the Succession Date, the Manager's right to receive or
set off any monies or obligations owed or accrued or to be performed by the
Company prior to the Succession Date shall not be enforceable against the
Collateral Agent (or its nominee or designee), and the Collateral Agent (or its
nominee or designee) shall have no obligation to remedy any act or omission of
the Company or any default or event of default on the part of the Company
accruing, occurring or existing under the Management Agreement prior to the
Succession Date.
4.10 Manager's Rights. No default under the Shared Security
Documents and no proceeding to foreclose on the Casino will disturb the
Manager's rights under the
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Management Agreement, and the Management Agreement will not be affected or cut
off thereby (except to the extent otherwise provided in Section 3 hereof and
this Section 4); provided that (i) the Manager complies with this Agreement,
(ii) the Manager at all times remains authorized to act as such pursuant to
applicable Gaming Regulations, and (iii) there does not exist on the part of the
Manager a default under the Management Agreement; provided further, that
notwithstanding the recording of the Shared Security Documents prior to
recording that certain Memorandum of Management Agreement attached to the
Management Agreement as Exhibit "E" in the Parish of Orleans, the right and
obligations of the Manager under the Management Agreement upon a foreclosure by
the Collateral Agent shall be as set forth in this Agreement.
4.11 Assignment or Delegation By Collateral Agent. The
Collateral Agent may, upon written notice to the Manager, assign, delegate or
otherwise transfer its rights under this Section 4 and any Replacement Agreement
to (i) any affiliate of the Collateral Agent or the Trustee, or any financial
institution that would qualify as a successor Collateral Agent under the
Intercreditor Agreement, (ii) subject to the consent of the Manager not to be
unreasonably withheld, any nationally-recognized firm of accountants, management
consultants or investment advisors (provided that such firm is not otherwise
engaged in the gaming business), or (iii) any Person designated as a Receiver by
the Collateral Agent or as a keeper in any foreclosure proceeding. In the event
of any such transfer, such transferee shall have the rights of the Collateral
Agent under this Section 4 (except to the extent any of such rights are
expressly retained by the Collateral Agent in connection with such transfer).
The Manager, the Trustee, the Company and the Collateral Agent hereby
acknowledge and agree that the authority of the receiver to succeed to the
rights of the Collateral Agent hereunder is subject to applicable Gaming
Regulations from time to time in effect, and that in the event of any conflict
between this Agreement and applicable Gaming Regulations that affects the rights
and powers of the receiver, the applicable Gaming Regulations shall control.
4.12 Transfer of Interest in Replacement Agreement. In
addition to the rights described in Section 4.11 hereof, following the
Succession Date, the Collateral Agent (or its nominee or designee) may sell,
transfer, assign or otherwise convey its right, title and interest in the
Replacement Agreement to any Person upon one hundred twenty (120) days' prior
written notice to the Manager. The Manager may elect, within sixty (60) days of
receipt of such notice, to terminate the Replacement Agreement (in which case no
Termination Fee will be payable), or to continue the Replacement Agreement as a
direct agreement between the Manager and such transferee (subject to the terms
of this Agreement) on the terms of the Management Agreement in effect
immediately prior to the Succession Date, in which case the right of the Manager
to receive the Termination Fee on a prospective basis (but not as a result of
any prior defaults) will be restored (subject to the terms of this Agreement).
After the Collateral Agent (or its nominee or designee) has acquired a leasehold
interest in the Casino, the Collateral Agent (or its nominee or designee) may in
connection with a sale or transfer of such leasehold interest, upon one hundred
twenty (120) days' prior written notice to the Manager, elect to terminate the
Replacement Agreement, in which case the Replacement Agreement shall terminate
concurrently with the effectiveness of such sale or transfer (but not sooner
than one hundred twenty (120) days after the respective notice was given to the
Manager), with no payment of any Termination Fee owing by the Company or the
Collateral Agent (or its nominee or designee) in connection
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<PAGE>
therewith. In addition, the Collateral Agent (or its nominee or designee) shall
have the right to terminate the Replacement Agreement (i) on the same basis as
set forth in Section 4.1 hereof, or (ii) in the event that the Casino is sold to
a third party at a foreclosure sale.
5. CURE PERIOD
5.1 Notice and Cure. The Manager hereby agrees that from and
after the date hereof, within five (5) days after the Manager becomes aware of
the existence of any event, act or omission by the Company under the Management
Agreement which would give the Manager the right, either immediately or after
the giving of notice or the lapse of a period of time, or both, to terminate the
Management Agreement, the Manager shall give written notice of such event, act
or omission to the Trustee and the Collateral Agent. Furthermore, the Manager
hereby agrees that it shall give to each of the Trustee and the Collateral Agent
at least forty five (45) Business Days' prior written notice of any proposed
termination by the Manager of the Management Agreement, which notice shall
specify the basis for the termination and any defaults then existing pursuant to
the Management Agreement. During the forty five (45) Business Day period
referenced in the immediately preceding sentence (the "Cure Period"), the
Company, the Trustee, and/or any Senior Subordinated Notes Creditors may remedy
the defaults specified in the notice delivered pursuant to the preceding
sentence and, if all such defaults are cured during the Cure Period, the
termination shall not take effect. Furthermore, if such default is capable of
being cured and the Trustee notifies the Manager that it (or any Senior
Subordinated Notes Creditors or their or its designee or nominee) is proceeding
to remedy the defaults, but that the remedy will take longer than the Cure
Period, the termination will be delayed for so long as the Trustee (or any
Senior Subordinated Notes Creditors or their or its nominee or designee) is
proceeding to cure the default and such termination shall not occur if the
defaults are cured. In the event that a default under the Management Agreement
cannot be cured without obtaining the legal right to possession of the Casino,
the Trustee (or any Senior Subordinated Notes Creditors or their or its designee
or nominee) agrees to cooperate with the Company and the Manager to the extent
reasonably feasible to enable the Company and the Manager to cure such default
and, upon request of the Trustee (or its nominee or designee), the Manager
agrees to cooperate with the Trustee (or any Senior Subordinated Notes Creditor
or their or its nominee or designee) to the extent reasonably feasible to enable
the Trustee (or any Senior Subordinated Notes Creditor or their or its nominee
or designee) to cure such default.
5.2 Manager's Obligations to Continue Performance. It is the
intention of the Manager and the Senior Subordinated Notes Creditors that the
Senior Subordinated Notes Creditors shall not be obligated to remedy or cure any
existing default of the Company under the Management Agreement accruing,
occurring or existing prior to the Succession Date and that the Manager shall
continue performance under the Management Agreement for the benefit of the
Senior Subordinated Notes Creditors or their or its designee or nominee, so long
as the Senior Subordinated Notes Creditors or their or its designee or nominee,
after the Succession Date, (i) pay or cause to be paid all payments due to the
Manager arising under the Management Agreement after the Succession Date, (ii)
perform or cause to be performed all non-monetary obligations of the Company
arising under the Management Agreement after the Succession Date, and (iii) cure
any continuing non-monetary defaults under the Management Agreement that are
12
<PAGE>
reasonably capable of being cured by the Senior Subordinated Notes Creditors,
whether such defaults first arose before the Succession Date. The Manager shall
look solely to the Company (and not to the Senior Subordinated Notes Creditors
or their or its designee or nominee, agent in possession or successors or
assigns) for payment of any fees, costs, expenses, and other sums that shall
have become due and payable or that shall have accrued under the Management
Agreement prior to the Succession Date.
5.3 No Waiver By Manager. Except as otherwise expressly set
forth in this Agreement, including without limitation the limitation on the
Manager's rights as set forth in Sections 3.4 and 6.2 hereof, the Manager shall
not be deemed to have waived any of its rights to declare a default by the
Company under the Management Agreement or to terminate the Management Agreement
prior to the Succession Date after the expiration of all applicable cure
periods. Any failure by the Manager to provide notice to the Trustee or the
Collateral Agent pursuant to Section 5.1 hereof shall not be deemed to be a
waiver by the Manager of any such default under the Management Agreement as
against the Company or to create any liability of the Manager to the Trustee or
the Collateral Agent.
6. AGREEMENTS OF MANAGER. The Manager covenants and agrees
that on and after the date hereof and until the Lender Termination Date occurs:
6.1 Assignment by Manager. Other than as permitted in Article
21.01 of the Management Agreement, the Manager will not assign, pledge, encumber
or hypothecate any right, title or interest of the Manager in, to or under (i)
the Management Agreement or (ii) any of the Manager's rights, fees (earned or
unearned), interest in insurance, condemnation awards, indemnities, or other
proceeds under or of the Management Agreement, in either case without the prior
written consent of the Trustee, which consent may be withheld for any reason
whatsoever.
6.2 Termination. The Manager will not exercise its rights and
remedies under the Management Agreement (i) with respect to any default under
Article 17.01(d) thereof, (ii) with respect to any default under Article
17.01(c) thereof, (iii) with respect to any failure to complete reconstruction
of the Casino under Article 16.02(b) thereof, at any time prior to the
occurrence of a Flip Event (as defined in the Restated Certificate of
Incorporation of JCC Holding as of the date hereof) or after the occurrence of a
Cure Event (as defined in the Restated Certificate of Incorporation of JCC
Holding as of the date hereof) in respect of any uncured Flip Events, or (iii)
arising as a result of any suspension of construction or renovation, as the case
may be, of the Casino for any period of time beyond the Completion Deadline (as
defined in the Management Agreement), or any failure to fulfill the Completion
Deadline.
7. FURTHER ASSURANCES. Upon request by any party hereto, the
Company and the Manager will, by instrument in writing, recognize and attorn to
each other as the Manager and as the Company, respectively, under the Management
Agreement, subject to and as affected and modified by this Agreement for the
balance of the term and any renewals thereof.
13
<PAGE>
8. CAPITAL REPLACEMENT FUND. To the extent that any conflict
exists between any requirement or provision of the Management Agreement
pertaining to the Capital Replacement Fund (as defined in the Management
Agreement) and any requirement or provision of the Ground Lease regarding the
Capital Replacement Fund, the Manager acknowledges that compliance with the
terms of the Ground Lease will be deemed compliance with the Management
Agreement for this purpose. For purposes of this Agreement, such a conflict
shall be deemed to exist when (i) compliance with any requirement or provision
of the Ground Lease would result in a default or breach of the Management
Agreement or (ii) compliance with any requirement or provision of the Management
Agreement would result in a default or breach of the Ground Lease.
9. SATISFACTION OF MANAGEMENT AGREEMENT. The Manager agrees
that this Agreement, together with the Manager Subordination Agreement
(Lenders), satisfies the conditions or requirements under Article 4.03 of the
Management Agreement and that the Shared Security Documents constitute and are
an Authorized Mortgage (as defined in the Management Agreement).
10. AMENDMENT. No modification, amendment, waiver or release
of any provision of this Agreement or of any right, obligation, claim or cause
of action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Manager and the Trustee.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICTS OF LAW PRINCIPLES.
12. TERMINATION. This Agreement shall terminate on the first
to occur of (i) the termination of the Indentures and satisfaction of all
obligations to the Senior Subordinated Noteholders thereunder or (ii) the
termination of the Management Agreement and satisfaction of all obligations of
the Company and the Manager under the Management Agreement and all obligations
of the Manager under this Agreement (so long as, in the case of both clauses (i)
and (ii) above, the satisfaction of said obligations does not violate the terms
of this Agreement).
13. THIRD PARTY BENEFICIARIES. This Agreement is entered into
for the benefit of the Senior Subordinated Noteholders and may not be amended or
modified in any respect, or terminated, without the consent of the Trustee or
that percentage of the Senior Subordinated Noteholders required to amend the
Indentures pursuant to the terms of the Indentures. The provisions of this
Agreement are continuing provisions and all Senior Subordinated Notes
Obligations to which they apply shall conclusively be presumed to have been
created in reliance thereon. Except to the extent provided in Section 3.4
hereof, this Agreement is not entered into for the benefit of the Company, and
the Company shall not be a third party beneficiary of this Agreement. Except as
otherwise expressly set forth herein (including by reference to the Indentures),
no provision of this Agreement shall be deemed to modify, or release the Company
from, any of the Subordinated Obligations (except to the extent payment thereof
is deferred or prohibited pursuant to the Indentures or this Agreement),
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<PAGE>
including, without limitation, the obligation to pay the Termination Fee under
the Management Agreement or to grant the Company any additional rights against
the Manager under the Management Agreement.
14. NOTICES. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered to
the party to which notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to the Manager, at:
Harrah's New Orleans Management Company
512 South Peters Street
New Orleans, Louisiana 70130
Attention: General Counsel
(b) if to the Collateral Agent, at:
Norwest Bank Minnesota, N.A.
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Lon LeClair - Corporate Trust Department
(c) if to the Company, at:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: President
(d) if to the Trustee at:
Norwest Bank Minnesota, National Association
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
15
<PAGE>
IN WITNESS WHEREOF, the Company, the Manager and the Trustee
have caused this Agreement to be duly executed and delivered as of the date
first written above.
WITNESSES: HARRAH'S NEW ORLEANS MANAGEMENT
COMPANY, a Nevada corporation
/s/ Vicki J. Gromberg By: /s/ George W. Loveland, II
- --------------------------- --------------------------------
Name: George W. Loveland, II
------------------------------
/s/ Linda B. Jankovic Title: Vice President
- --------------------------- -----------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
/s/ Vicki J. Gromberg By: /s/ Raymond S. Haverstock
- --------------------------- --------------------------------
Name: Raymond S. Haverstock
------------------------------
/s/ Linda B. Jankovic Title: Vice President
- --------------------------- -----------------------------
Acknowledged and agreed by:
JAZZ CASINO COMPANY, L.L.C., a WITNESSES:
Louisiana limited liability company
By: /s/ Frederick W. Burford /s/ S. Jay Novatney
---------------------------------- ------------------------------
Name: Frederick W. Burford
--------------------------------
Title: President /s/ Vince Lazar
------------------------------- ------------------------------
THE BANK OF NEW YORK
By: /s/ R. Randall Deen /s/ illegible
---------------------------------- ------------------------------
Name: R. Randall Deen
--------------------------------
Title: Agent /s/ illegible
------------------------------- ------------------------------
SIGNATURE PAGE TO
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
<PAGE>
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared George W. Loveland II, who
acknowledged himself to be Authorized Representative of Harrah's New Orleans
Management Company, a Nevada corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
<PAGE>
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Raymond S. Haverstock, who
acknowledged himself to be Vice President of Norwest Bank Minnesota, National
Association, and that he, as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Ann K. Mallari
------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
<PAGE>
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Frederick W. Burford, who
acknowledged himself to be President of Jazz Casino Company, L.L.C., a
Louisiana limited liability company, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer on behalf such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Daniel E. Davillier
------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
MANAGER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
<PAGE>
Exhibit 10.17
HET SUBORDINATED LENDER SUBORDINATION AGREEMENT
(Lenders)
HET SUBORDINATED LENDER SUBORDINATION AGREEMENT (as amended,
modified or supplemented from time to time, this "Agreement"), dated as of
October 29, 1998, among HARRAH'S ENTERTAINMENT, INC., a Delaware corporation
("HET"), HARRAH'S OPERATING COMPANY, INC., a Delaware corporation ("HOCI") and
BANKERS TRUST COMPANY, as Administrative Agent (the "Administrative Agent")
under the Credit Agreement (as defined below). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement referred to below
are used herein as so defined.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted, and the United States Bankruptcy Court
for the Eastern District of Louisiana has confirmed, a plan of reorganization
(the "Plan").
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith, pursuant to the Plan, the
Company, JCC Holding Company, a Delaware corporation ("JCC Holding"), JCC
Development, L.L.C., FP Development, L.L.C., CP Development, L.L.C. and the
Trustee, as trustee, have entered into (i) that certain Indenture, pursuant to
which the Company has issued Senior Subordinated Notes due 2009 with Contingent
Payments (as may be amended, modified, extended, renewed, supplemented or
refinanced from time to time, the "New Bonds") and (ii) that certain Indenture
(and together with the indenture for the New Bonds, as each may be amended from
time to time, the "Indenture"), pursuant to which the Company has issued the
Senior Subordinated Contingent Notes due 2009 (as may be amended, modified,
extended, renewed, supplemented or refinanced from time to time, the "New
Contingent Bonds").
E. HET, HOCI and the Company have entered into that certain
Subordinated Loan Agreement, pursuant to the Plan (as amended, modified or
supplemented from time to time, the "Subordinated Loan Agreement").
F. Contemporaneously herewith the Company, JCC Holding, as
guarantor, the Administrative Agent, and certain lenders (the "Lenders") have
entered into that certain Credit Agreement pursuant to the Plan, providing for
(i) a senior secured term loan in the amount of Sixty Million Dollars
($60,000,000), (ii) a secured term loan in the amount of One Hundred
<PAGE>
Fifty-One Million Five Hundred Thousand Dollars ($151,500,000), and (iii) a
revolving loan facility including Revolving Loans, Swingline Loans and Letters
of Credit drawn under such revolving loan facility in an amount not to exceed
Twenty Five Million Dollars at any time outstanding ($25,000,000).
G. The Administrative Agent desires that HET and HOCI enter
into this Agreement in respect of the Subordinated Loan Agreement, which
together with all principal, interest, fees, indemnities and other amounts owing
with respect thereto or with respect to any related promissory notes or other
related documents, are herein called the "Subordinated Obligations."
H. As a condition to the Credit Agreement, the parties hereto
(including HET and HOCI) are required to execute and deliver this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. SUBORDINATION
1.1. Definitions. For purposes of this Agreement, the term "Senior
Indebtedness" shall mean all Obligations of the Company (i) under the Credit
Agreement, and the other Credit Documents, and (ii) of the Company in respect of
any Interest Rate Protection Agreements. As used herein, the term "Obligations"
shall mean all principal, interest, premium, penalties, fees, expenses,
indemnities and other liabilities and obligations payable under the
documentation governing any Senior Indebtedness (including interest accruing
after the commencement of any bankruptcy, insolvency, receivership or similar
proceeding, at the rate provided for in the documents governing such Senior
Indebtedness, whether or not such interest is an allowed claim against the
debtor in any such proceeding).
1.2. Subordination of Liabilities
(a) Each of HET and HOCI, for itself, its successors and assigns,
covenants and agrees that the payment of the Subordinated Obligations is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
to the prior payment in full in cash of all Senior Indebtedness. The provisions
of this Section 1 shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become Lenders or continue to be Lenders and such
provisions are made for the benefit of the Lenders and such Lenders are hereby
made obligees hereunder the same as if their names were written herein as such,
and they and/or each of them may proceed to enforce such provisions.
(b) In the event of any payment default under Section 10.01 of the
Credit Agreement, any acceleration of the Senior Indebtedness under Section 10
of the Credit Agreement, or the bankruptcy of the Company, any payments by the
Company or any representative of the Company, subject to the rights of the LGCB
under the Casino Operating Contract, the RDC
2
<PAGE>
under the Lease, and any other creditor, as their interests may appear, shall be
applied in the following order: (i) reimbursement of all management expenses
incurred in accordance with the Management Agreement; (ii) amounts as set forth
in Section 11 of that certain Intercreditor Agreement among HET, HOCI, Bankers
Trust Company, Norwest Bank Minnesota, National Association, as trustee, and the
other parties named therein (as amended from time to time); (iii) any credit
enhancement fee due and payable to HET or an Affiliate of HET pursuant to that
certain Credit Enhancement Fee Agreement entered into by and among the Company
and HOCI pursuant to the Plan; (iv) Base Fee and Termination Fee pursuant to and
as defined in the Management Agreement; (v) interest due on the Convertible
Junior Subordinated Debentures (as defined in the Plan); (vi) principal due on
the Convertible Junior Subordinated Debentures; (vii) interest due on any
amounts advanced under the Subordinated Loan Agreement (the "Subordinated
Loan"), the Construction Lien Indemnity Advances and any Completion Loans on a
pari passu basis; (viii) principal due on the Subordinated Loan, the
Construction Lien Indemnity Advances and any Completion Loans on a pari passu
basis; and (ix) Incentive Fee pursuant to and as defined in the Management
Agreement.
1.3. Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances
(a) Until all Senior Indebtedness shall have been paid in full in cash,
no payment or distribution of any kind or character (whether in cash, property,
securities or otherwise) shall be made in respect of any Subordinated
Obligations other than any payments expressly permitted to be made under Section
9.03 of the Credit Agreement.
(b) In the event that (i) the Company or any of its Subsidiaries shall
make any payment to HET or HOCI on account of the Subordinated Obligations,
which payment is not permitted by said subsection (a), or (ii) HET or HOCI
receives any payment or distribution from any enforcement or other action
against the Collateral, such payment shall be held by HET or HOCI, as the case
may be, in trust for the benefit of the Lenders, and shall be paid forthwith
over and delivered to the Administrative Agent, for application to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay the
Senior Indebtedness in full in cash in accordance with the terms of the Senior
Indebtedness after giving effect to any concurrent payment or distribution to or
for the Lenders.
1.4. Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company upon dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):
(a) the Lenders shall first be entitled to receive payment in full in
cash of all Senior Indebtedness (including, without limitation, post-petition
interest at the rate provided in the documentation with respect to the Senior
Indebtedness whether or not such post-petition interest is an allowed claim
against the debtor in any bankruptcy or similar proceeding) before HET and HOCI
are entitled to receive any payment of any kind or character with respect to any
3
<PAGE>
Subordinated Obligations, other than any payments permitted under the Credit
Documents;
(b) any payment or distributions of assets of the Company of any kind
or character, whether in cash, property, securities or otherwise to which HET
and HOCI would be entitled but for the provisions of this Section 1.4, shall be
paid by the liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or other trustee or agent, directly to the Lenders or to the Administrative
Agent to the extent necessary to make payment in full in cash of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution to the Lenders; and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 1.4, any payment or distribution of assets of the Company of any kind or
character, whether in cash, property, securities or otherwise, shall be received
by HET or HOCI on account of Subordinated Obligations before all Senior
Indebtedness is paid in full in cash, which payment or distribution is not
permitted by preceding subsections (a) and (b) of this Section 1.4, such payment
or distribution shall be received and held in trust for and shall be paid over
to the Lenders or to the Administrative Agent for application to the payment of
such Senior Indebtedness until all Senior Indebtedness shall have been paid in
full in cash, after giving effect to any concurrent payment or distribution to
the Lenders.
1.5. Effect of Subordination on Obligations Pursuant to Subordinated
Loan Agreement. HET and HOCI hereby agree for the benefit of the Company and the
Lenders that to the extent that any payment of Subordinated Obligations is not
permitted to be made pursuant to the provisions of this Section 1, then, and
notwithstanding anything to the contrary contained in the Subordinated Loan
Agreement, the respective Subordinated Obligations shall not be payable by the
Company until they are permitted to be paid in accordance with the terms of this
Section 1. To the extent that any such Subordinated Obligations are not payable
by the Company, pursuant to this Section 1, HET and HOCI shall forbear from
exercising any right to accelerate the Company's obligations under the
Subordinated Loan Agreement as a result thereof so long as the Credit Agreement
or this Agreement shall continue to prohibit the Company from making such
payments. Without limiting the foregoing, no action shall be taken by HET or
HOCI to enforce the payment of any Subordinated Obligations until all Senior
Indebtedness shall have been paid in full in cash.
1.6. Subrogation. After all Senior Indebtedness have been paid in full
in cash, HET and HOCI shall have and be entitled to all rights of subrogation
otherwise provided by law in respect of any payment it may make or be obligated
to make under this Agreement with respect to the claims of the Lenders against
the Company or any other guarantor of the Senior Indebtedness.
1.7. Subordination Rights not Impaired by Acts or Omissions of Company
or Lenders. No right of any Lender or the Administrative Agent to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act by any such Lender, or by any noncompliance by the
4
<PAGE>
Company with the terms and provisions of the Subordinated Loan Agreement
regardless of any knowledge thereof which any such Lender may have or be
otherwise charged with. The Lenders the Administrative Agent may, without in any
way affecting the obligations of HET and HOCI with respect hereto, at any time
or from time to time and in their absolute discretion, change the manner, place
or terms of payment of, change or extend the time of payment of, or renew or
alter, any Senior Indebtedness or amend, modify or supplement any agreement or
instrument governing or evidencing such Senior Indebtedness or exercise or
refrain from exercising any other of their rights under the Senior Indebtedness
including, without limitation, the waiver of default thereunder and the release
of any collateral securing the Senior Indebtedness, all without notice to or
assent from HET and HOCI.
2. OTHER RESTRICTED PAYMENTS; SUBORDINATED RIGHTS
(a) In addition to the provisions of preceding Section 1, until all
Senior Indebtedness have been repaid in full in cash, HET and HOCI shall not,
and shall not permit any of their Subsidiaries to, receive any Restricted
Payment in violation of the provisions of the Credit Agreement (including,
without limitation, Section 9.03(ix) thereof).
(b) In the event that, notwithstanding the provisions of the preceding
subsection (a) of this Section 2, HET or HOCI or any of their Subsidiaries shall
receive any payment not permitted to be received by them pursuant to said
subsection (a), such payment shall be held by HET or HOCI or its Subsidiary in
trust for the benefit of the Lenders, and shall be paid forthwith and delivered
(with HET hereby agreeing to pay such amount over), to the Administrative Agent
for application to the payment of all Senior Indebtedness remaining unpaid to
the extent necessary to pay all Senior Indebtedness in full in cash after giving
effect to any concurrent payment or distribution to the Lenders.
3. AMENDMENT. No modification, amendment, waiver or release of any
provision of this Agreement or of any right, obligation, claim or cause of
action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Administrative Agent (with the
consent of the Required Banks), HET and HOCI.
4. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without reference to its
conflicts of law principles.
5. THIRD PARTY BENEFICIARIES. This Agreement is entered into for the
benefit of the Lenders, and may not be amended or modified in any respect, or
terminated, without the consent of the Administrative Agent (with the consent of
the Required Banks). The provisions of this Agreement are continuing provisions
and all Senior Indebtedness to which they apply shall conclusively be presumed
to have been created in reliance thereon. Except to the extent provided in
Section 1.5 hereof, this Agreement is not entered into for the benefit of the
Company, and the Company shall not be a third party beneficiary of this
Agreement. Except as otherwise expressly set forth herein, no provision of this
Agreement shall be deemed to modify, or release the Company from, any of its
obligations pursuant to the Subordinated Loan
5
<PAGE>
Agreement or to grant the Company any additional rights under such agreement.
6. TERMINATION. This Agreement shall terminate on the first to occur of
(i) the termination of the Credit Agreement and satisfaction of all obligations
to the Administrative Agent and the Lenders thereunder or (ii) the termination
of the Subordinated Loan Agreement and satisfaction of all obligations to HET,
HOCI, and the Company thereunder and the obligations of HET and HOCI under this
Agreement (so long as, in the case of both clauses (i) and (ii) above, the
satisfaction of said obligations does not violate the terms of this Agreement).
7. SUBORDINATED LOAN AGREEMENT
(a) Notwithstanding anything to the contrary contained in the
Subordinated Loan Agreement, HET and HOCI hereby agree to forbear from taking
any action in respect of a default by the Company under Section 8 of the
Subordinated Loan Agreement, at any time prior to the occurrence of a Flip Event
(as defined in the Restated Certificate of Incorporation of JCC Holding as of
the date hereof) or after the occurrence of a Cure Event (as defined in the
Restated Certificate of Incorporation of JCC Holding as of the date hereof) in
respect of any uncured Flip Events, and thereafter such covenants shall be
deemed modified to the extent necessary such that they are no more onerous on
the Company than the covenants contained in the Indenture as in effect on the
date hereof.
(b) Notwithstanding anything to the contrary contained in the
Subordinated Loan Agreement, HET and HOCI subordinate to the Lien granted by the
Company to the Lenders all rights granted or purported to be granted by the
Company to HET and HOCI pursuant to the Subordinated Loan Agreement in any
policies of insurance for or revenues from the Casino (collectively, the
"Assigned Proceeds").
(c) Each of HET and HOCI, for itself, its successors and assigns,
covenants and agrees that its rights as assignee of the Assigned Proceeds are
subject to the prior security interest granted in such Assigned Proceeds under
the Security Documents to the Lenders. The priorities set forth herein with
respect to the Assigned Proceeds are applicable irrespective of (i) the time,
order or method of attachment or perfection or recording thereof or of any
financing statements or (ii) whether or not the Collateral Agent, the
Administrative Agent or any Lender has a valid or perfected security interest in
the Assigned Proceeds.
(d) Until all Senior Indebtedness shall have been paid in full in cash,
HET and HOCI shall not take any action whatsoever (including any remedial
action) to exercise or enforce their rights and remedies in respect of any
Assigned Proceeds, provided that in order to satisfy its obligations under any
Guaranty and so long as HET and HOCI are not in default under the Bank
Completion Guaranty, HET and HOCI may exercise any of their rights in respect of
the Assigned Proceeds in order to cause the successful completion of the Casino
(it being understood and agreed that the exercise by HET and HOCI of such rights
shall continue to be subject to the subordination provisions of this Agreement).
(e) The subordination and other provisions of this Agreement apply only
to the
6
<PAGE>
Subordinated Obligations and shall have no effect on the rights of HET and
HOCI pursuant to the HET/JCC Agreement.
8. NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to HET or HOCI at: Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
with a copy to the Corporate
Secretary at the same address
(b) if to the Company, at: Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: President
(c) if to the Administrative Agent, at: Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Mary Kay Coyle
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
7
<PAGE>
IN WITNESS WHEREOF, the Administrative Agent, HOCI and HET
have caused this Agreement to be duly executed and delivered as of the date
first written above.
WITNESSES: HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
/s/ Vicki J. Gromberg By: /s/ George W. Loveland, II
- --------------------------- -----------------------------------
Name: George W. Loveland, II
---------------------------------
/s/ W. Paul Koenig Title: Vice President
- --------------------------- -----------------------------------
HARRAH'S OPERATING COMPANY, INC.,
a Delaware corporation
/s/ Vicki J. Gromberg By: /s/ George W. Loveland, II
- --------------------------- -----------------------------------
Name: George W. Loveland, II
---------------------------------
/s/ W. Paul Koenig Title: Vice President
- --------------------------- --------------------------------
BANKERS TRUST COMPANY,
as Administrative Agent
/s/ A. Moskal By: /s/ Mary Kay Coyle
- --------------------------- -----------------------------------
Name: Mary Kay Coyle
---------------------------------
/s/ Rob Friedrich Title: Managing Director
- --------------------------- --------------------------------
Acknowledged and agreed by:
JAZZ CASINO COMPANY, L.L.C., WITNESSES:
a Louisiana limited liability
company
By: /s/ Frederick W. Burford /s/ S. Jay Novatney
------------------------------ ---------------------------------
Name: Frederick W. Burford
----------------------------
Title: President /s/illegible
--------------------------- ---------------------------------
SIGNATURE PAGE TO
HET SUBORDINATED LENDER
SUBORDINATION AGREEMENT (Lenders)
<PAGE>
STATE OF New York
COUNTY OF New York
BE IT KNOWN that on the 28th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared George W. Loveland II, who
acknowledged himself to be Authorized Representative of Harrah's
Entertainment, Inc., a Delaware corporation, and that he, as such officer,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
HET SUBORDINATED LENDER
SUBORDINATION AGREEMENT (Lenders)
<PAGE>
STATE OF New York
COUNTY OF New York
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Mary Kay Coyle, who
acknowledged himself to be Managing Director of Bankers Trust Company and
that he, as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
company by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
HET SUBORDINATED LENDER
SUBORDINATION AGREEMENT (Lenders)
<PAGE>
STATE OF New York
COUNTY OF New York
BE IT KNOWN that on the 28th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared George W. Loveland II, who
acknowledged himself to be Authorized Representative of Harrah's Operating
Company, Inc., a Delaware corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
HET SUBORDINATED LENDER
SUBORDINATION AGREEMENT (Lenders)
<PAGE>
STATE OF Louisiana
PARISH OF Orleans
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Frederick W. Burford, who
acknowledged himself to be President of Jazz Casino Company, L.L.C., a
Louisiana limited liability company, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer on
behalf of such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Daniel E. Davillier
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
HET SUBORDINATED LENDER
SUBORDINATION AGREEMENT (Lenders)
<PAGE>
Exhibit 10.18
MANAGEMENT FEE REIMBURSEMENT AGREEMENT GUARANTEE
THIS MANAGEMENT FEE REIMBURSEMENT AGREEMENT GUARANTEE (this
"Agreement") is entered into this 29th day of October, 1998, by and among
HARRAH'S ENTERTAINMENT, INC., a Delaware corporation ("HET"), HARRAH'S OPERATING
COMPANY, INC., a Delaware corporation ("HOCI"), and JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability company (the "Company").
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which is now pending in the United
States Bankruptcy Court for the Eastern District of Louisiana (the "Bankruptcy
Court"), Case No. 95-14545.
B. HJC and certain other parties have submitted, and the
Bankruptcy Court has confirmed, the Plan (as defined herein).
C. As contemplated by the Plan, the Company has succeeded to
all the rights and obligations of HJC under that certain Amended and Restated
Management Agreement between HJC and Harrah's New Orleans Management Company
(the "Manager") dated as of March 14, 1994 and the Company and the Manager have
entered into a Second Amended and Restated Management Agreement (the "Management
Agreement").
D. Article 9.01(c)(ii) of the Management Agreement requires
the parties to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Guaranteed Reimbursement Obligations. HET and HOCI hereby
irrevocably and unconditionally, jointly and severally, guarantee the full and
complete payment and performance when due of the Manager's obligation to repay
to the Company any deferred Management Fees which Manager is required to refund
to Owner pursuant to Article 9.01(c)(ii) or 9.01(a) of the Management Agreement
(the "Guaranteed Reimbursement Obligations").
2. Further Assurances
2.1. Continuing Obligations. HET and HOCI, jointly and
severally, agree to perform and comply with their obligations under this
Agreement (the "Guarantor Obligations"),
<PAGE>
whether or not the Manager is liable therefor individually or jointly or
severally with others, and whether or not recovery against the Manager is or may
become barred by any statute of limitations or prescriptive or preemptive period
or is or may become unenforceable or discharged, whether in whole or in part,
for any reason other than payment or performance thereof in full. HET and HOCI
agree that this Agreement is a guarantee of payment and not of collection, and
that their obligations under this Agreement shall be primary, absolute and
unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in this Agreement, or any other agreement,
document or instrument to which the Company, the Manager and/or HET and HOCI is
or are or may become a party;
(b) the absence of any action to enforce this Agreement or any
other document or the waiver or consent by the Company with respect to any of
the provisions thereof; or
(c) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being agreed by each of HET and HOCI that its obligations under this
Agreement shall not be discharged except as set forth herein. Each of HET and
HOCI shall be regarded, and shall be in the same position, as principal with
respect to the repayment obligations of the Manager under Articles 9.01(c)(ii)
and 9.01(a) of the Management Agreement (the "Manager Obligations", and together
with the Guaranteed Reimbursement Obligations, the "Obligations").
2.2. Waiver of Right to Compel. Each of HET and HOCI expressly
waives all rights it may have now or in the future under any statute, or at
common law, or at law or in equity, or otherwise, to compel the Company to
proceed in respect of the Obligations against the Manager or any other party or
against any security for the payment and performance of the Obligations before
proceeding against, or as a condition to proceeding against, HET or HOCI. Each
of HET and HOCI agrees that any notice or directive given at any time to the
Company which is inconsistent with the waiver in the immediately preceding
sentence shall be null and void and may be ignored by the Company, and in
addition, may not be pleaded or introduced as evidence in any litigation
relating to this Agreement for the reason that such pleading or introduction
would be at variance with the written terms of this Agreement, unless the
Company has specifically agreed otherwise in writing.
2.3. Remedies Not Exclusive. The remedies expressly set forth
herein are not intended to be exclusive of any remedies that the Company may
have against the Manager under other documents or agreements. Each of HET and
HOCI recognize that the choice of remedies by the Company will necessarily and
properly be a matter of the Company's business judgment, which the passage of
time and events may or may not prove to have been the best choice to maximize
recovery at the lowest cost to the Manager, HET or HOCI. Nevertheless, the
choice of alternatives by the Company shall not be subject to question or
challenge by HET or HOCI hereunder, nor shall any such choice be asserted as a
defense, set-off or basis for any claim of failure to mitigate damages in any
action or proceeding arising from this Agreement.
2
<PAGE>
2.4. Alteration of Obligations. In such manner, upon such
terms and at such times as the Company deems best, and without notice to HET or
HOCI, the Company may (i) alter, compromise, accelerate, extend or change the
time or manner for the payment or performance of any of the Manager Obligations,
(ii) release the Manager as to all or any portion of the Manager Obligations,
(iii) release, substitute or add any one or more guarantors or endorsers, (iv)
accept security or substitute security therefor, or (v) release or subordinate
any security therefor. No exercise or non-exercise of any right hereby given to
the Company, no dealing by the Company with HET, HOCI or any other guarantor, or
any other person, and no change, impairment or release of all or any portion of
the Manager Obligations or suspension of any right or remedy of the Company
against any person, including without limitation the Manager or any guarantor,
endorser or other person, shall in any way affect any of the Guarantor
Obligations or any security furnished by HET or HOCI or give HET or HOCI any
recourse against the Company. If the Company has exculpated or hereafter
exculpates the Manager from personal liability in whole or in part, said
exculpation and agreement shall not affect the Guarantor Obligations. Each of
HET and HOCI further acknowledges that any such exculpation or agreement that
has been given or that is hereafter given to the Manager has been given or is
given in reliance upon the covenants of HET or HOCI contained herein.
2.5. Waiver
(a) HET and HOCI represent, warrant and jointly and severally
agree that, as of the date of this Agreement, their obligations under this
Agreement are not subject to any recoupment, counterclaims, offsets or defenses
against the Company or the Manager of any kind. HET and HOCI further jointly and
severally agree that their obligations under this Agreement shall not be subject
to any counterclaims, offsets or defenses against the Company or the Manager of
any kind which may arise in the future. Each of HET and HOCI hereby expressly
waives and relinquishes all rights, defenses and remedies accorded by applicable
law to sureties or guarantors and agrees not to assert or take advantage of any
such rights, defenses or remedies, including without limitation:
(i) any right to require the Company to proceed
against the Manager or any other person or to proceed against or exhaust any
security held by the Company at any time or to pursue any other remedy in the
power of the Company before proceeding against HET or HOCI, including but not
limited to any defense of failure to join or non-joinder of the Manager or any
other person whatsoever in any litigation instituted by the Company against
either or both of HET and HOCI;
(ii) the defense of the statute of limitations,
prescription, and preemption in any action hereunder or in any action for the
collection or performance of any of the Guarantor Obligations;
(iii) any defense that may arise by reason of the
discharge in bankruptcy, incapacity, lack of authority, death or disability of
any other person or the failure of the Company to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other person;
3
<PAGE>
(iv) diligence, demand, presentment, protest and
notice of any kind (whether, for non-payment or protest or of acceptance,
maturity, extension of time, change in nature or form of the Guarantor
Obligations, acceptance of security, release of security, composition or
agreement arrived at as to the amount of, or the terms of, the Guarantor
Obligations, notice of adverse change in the Manager's financial condition or
any other fact which might materially increase the risk to HET and HOCI),
including without limitation notice of the existence, creation or incurring of
any new or additional indebtedness or obligation or of any action or non-action
on the part of the Company, the Manager, any endorser or creditor of the
Manager, HET or HOCI or on the part of any other person under this or any other
instrument in connection with any obligation or evidence of indebtedness held by
the Company as collateral or in connection with any of the Obligations;
(v) any defense based upon an election of remedies by
the Company, which destroys or otherwise impairs the subrogation rights of HET
or HOCI, the right of HET and HOCI to proceed against the Manager for
reimbursement, or both, or any defense that the Company's claims against HET and
HOCI are barred or diminished or premature to the extent that the Company has or
may have remedies available against the Manager;
(vi) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal;
(vii) any duty on the part of the Company to disclose
to HET and HOCI any facts the Company may now or hereafter know about the
Manager, regardless of whether the Company has reason to believe that any such
facts materially increase the risk beyond that which HET and HOCI intend to
assume, or has reason to believe that such facts are unknown to either HET or
HOCI, or has a reasonable opportunity to communicate such facts to either HET or
HOCI, since each of HET and HOCI acknowledges that it is fully responsible for
being and keeping informed of the financial condition of the Manager and of all
circumstances bearing on the risk of non-payment of any of the Manager
Obligations;
(viii) any defense arising because of the election of
the Company in any proceeding instituted under the United States Bankruptcy Code
(the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the
Bankruptcy Code;
(ix) any defense based upon any borrowing or grant of
a security interest under Section 364 of the Bankruptcy Code;
(x) waiver or estoppel or any alleged lack of
reasonable or justifiable reliance on the part of the Company as to HET's and
HOCI's representations;
(xi) lack, failure or insufficiency of consideration;
(xii) any alleged failure of the Company to mitigate
injuries, losses or damages or any plea that the Company has any duty to
mitigate injuries, losses, or damages prior to seeking recovery under this
Agreement; and
4
<PAGE>
(xiii) any defense that the Company's claims
hereunder are or may be barred because an adequate remedy at law exists.
(b) Each of HET and HOCI agrees to forbear from exercise of
any rights of subrogation, indemnity, or contribution against the Manager or any
other person who may be liable for satisfaction of the Manager Obligations until
such Manager Obligations have been fully satisfied as to the Company.
(c) In the event of the commencement of a bankruptcy case by
or against any of HET or HOCI, each of HET and HOCI agrees to waive the
automatic stay under the Bankruptcy Code and further agrees to the entry of an
immediate order from the Bankruptcy Court, on the Company's ex parte motion
granting to the Company a modification of the automatic stay (and/or recognition
that the automatic stay is not applicable) allowing the Company to fully enforce
the provisions of this Agreement, HET and HOCI hereby agreeing that in such
case, "cause", as defined by the Bankruptcy Code, would exist for the immediate
entry by the Bankruptcy Court of such an order modifying the automatic stay.
2.6. Bankruptcy. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
the Manager, HET or HOCI for liquidation or reorganization, should the Manager,
HET or HOCI become insolvent or make an assignment for the benefit of creditors
or should a receiver or trustee be appointed for all or any significant part of
the Manager's, HET's or HOCI's assets, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount or must otherwise be restored or returned by the Company,
whether as a "voidable preference", "fraudulent conveyance", or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
2.7. Interest. If HET and HOCI fail to pay all or any portion
of any monetary amounts due as a part of the Guarantor Obligations upon notice
or demand by the Company, the amount of such monetary portion of the Guarantor
Obligations and all other sums payable by HET and HOCI to the Company hereunder
shall bear interest from the date of such notice or demand, as the case may be,
at two percent (2%) over the prime rate of interest charged by Citibank, N.A. at
its offices in New York, New York, to borrowers on ninety (90) day unsecured
commercial loans, as the same may be changed from time to time.
2.8. Attorneys' Fees. If (i) at any time following a default
by the Manager in the performance of the Manager Obligations, which default
entitles the Company to require performance hereunder, the Company refers this
Agreement to an attorney to enforce, construe, or defend any provision hereof,
or (ii) as a consequence of any default hereunder by HET or HOCI, the Company
shall employ counsel for advice or representation or shall incur legal or other
costs and expenses, with or without the filing of any legal action or
proceeding, in connection with:
5
<PAGE>
(a) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by the Company, the Manager, HET or HOCI or any other
person) in any way relating to the enforcement of rights or remedies under this
Agreement;
(b) any attempt to enforce any rights of the Company hereunder
against HET or HOCI or any other person; or
(c) any attempt to defend any provision hereof;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in any way or respect arising
in connection with or relating to any of the events or actions described herein
shall be payable, on demand, by HET and HOCI to the Company, as the case may be,
or HET or HOCI shall cause the Manager to make such payment, and if not so paid,
shall be additional Guarantor Obligations under this Agreement; provided that
upon any engagement of counsel (i) following a default by the Manager in the
performance of the Manager Obligations and (ii) prior to the date on which the
Company gives written notice pursuant to Section 3 hereof (the "Notice Date"),
the Company shall make demand on the Manager for any expenses of such counsel
incurred prior to the Notice Date and such expenses shall only become Guarantor
Obligations under this Agreement if the Manager shall fail timely to pay such
expenses.
The reference to "attorneys' fees" in this Section 2.8 and in all other places
in this Agreement shall also include, without limitation, such reasonable
amounts as may then be charged for legal services furnished by attorneys
retained or employed by the Company. Such attorneys' fees, costs and expenses
shall include, without limitation, those incurred in connection with any
bankruptcy, reorganization, insolvency, receivership, liquidation, arrangement,
lawsuits in state or federal court, or other similar proceedings involving HET
or HOCI which in any way affect the exercise by the Company of its rights and
remedies hereunder.
2.9. Cumulative Rights. All rights, powers and remedies of the
Company hereunder and under any other agreement now or at any time hereafter in
force between the Company and HET and/or HOCI, including without limitation any
other guarantee executed by either HET or HOCI relating to any obligations of
the Manager, shall be cumulative and not alternative, and such rights, powers
and remedies shall be in addition to all rights, powers and remedies given to
the Company by law and shall not be deemed in any way to extinguish or diminish
the Company's rights and remedies. This Agreement is in addition to and
independent of the guarantee by any guarantor of any other obligations or
indebtedness of the Manager.
2.10. Independent Obligations. The Manager Obligations are
independent of any other obligations of the Manager, and, in the event of any
default hereunder, a separate action or actions may be brought and prosecuted
against HET and/or HOCI, whether or not the Manager is joined therein or a
separate action or actions are brought against the Manager. The Company's rights
hereunder shall not be exhausted by either's exercise of any of its rights or
6
<PAGE>
remedies or by any such action or by any number of successive actions unless and
until all Guarantor Obligations have been satisfied and fully performed.
3. Notices. Whenever any party hereto shall desire to give or serve any
notice, demand, request or other communication with respect to this Agreement,
each such notice shall be in writing and shall be effective only if the same is
delivered by personal service, overnight courier service, or mailed by certified
mail, postage prepaid, return receipt requested, addressed as follows:
(a) if to HET or HOCI:
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: General Counsel
with a copy to the Corporate Secretary at the same address
(b) if to the Company:
c/o Jazz Casino Company, L.L.C.
512 South Peters
New Orleans, Louisiana 70130
Attn: President
or at such other address as shall have been furnished in writing by any person
described above to the party required to give notice hereunder.
Any such notice delivered personally shall be deemed to have
been received upon delivery. Any party hereto may change its address by giving
the other parties hereto written notice of the new address as herein provided.
4. Miscellaneous
4.1. Governing Law. This Agreement and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
internal laws of the State of New York without application of conflict of laws
principles.
4.2. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, their successors, assigns,
heirs, legal representatives, executors and administrators.
4.3. Grammatical Changes. Whenever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and
7
<PAGE>
pronouns stated in either the masculine, the feminine or the neuter gender shall
include the masculine, feminine and neuter gender as the circumstances require.
4.4. Captions. Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision hereof.
4.5. Severability. If any provision of this Agreement, or the
application of such provision to any entity, person or circumstance, shall be
held invalid, the remainder of this Agreement, or the application of such
provision to any entity, persons or circumstances other than those to which it
is held invalid, shall not be affected thereby; provided that the parties shall
attempt to reformulate such invalid provision to give effect to such portions
thereof as may be valid without defeating the intent of such provision and the
economic burdens and benefits of this Agreement are not impaired.
4.6. Counterparts. This Agreement, or any amendment hereto,
may be executed in multiple counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same instrument,
notwithstanding that all of the parties hereto are not signatories to the
original or the same counterpart. In addition, this Agreement, or any amendment
hereto, may contain more than one counterpart of the signature pages, and this
Agreement, or any amendment hereto, may be executed by the affixing of the
signatures of each of the parties hereto to one of such counterpart signature
pages; all of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.
4.7. No Third Party Rights. This Agreement is for the sole and
exclusive benefit of the parties hereto designated herein. No other entity or
person (including any creditors of the parties hereto) shall under any
circumstances be deemed to be a beneficiary of any of the rights, remedies,
terms and provisions of this Agreement.
4.8. Voluntary Agreement. Each party hereto has entered into
this Agreement freely and voluntarily, without coercion, duress, distress, or
undue influence by any other entity or persons or their respective shareholders,
directors, officers, partners, agents or employees.
4.9. Advice From Counsel. Each party hereto understands that
this Agreement may affect legal rights. Each party hereto represents to the
other that it has received legal advice from counsel of its choice in connection
with the negotiation and execution of this Agreement and is satisfied with its
legal counsel and the advice received from it.
4.10. Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation or construction, there shall be no
presumption that the terms hereof shall be more strictly construed or
interpreted against any party hereto by reason of the rule of construction that
a document is to be construed more strictly against the party who prepared the
same.
8
<PAGE>
4.11. Attorneys' Fees. If any party hereto brings any judicial
action or proceeding to enforce its rights under this Agreement, the prevailing
party shall be entitled, in addition to any other remedy, to recover from the
others, regardless of whether such action or proceeding is prosecuted to
judgment, all costs and expenses, including without limitation reasonable
attorneys' fees, incurred therein by the prevailing party.
9
<PAGE>
SIGNATURE PAGE TO
MANAGEMENT FEE REIMBURSEMENT
AGREEMENT GUARANTEE
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement effective as of the day and year first above written.
HARRAH'S OPERATING COMPANY, INC.,
a Delaware corporation
By: /s/ Stephen H. Brammell
------------------------------------
Name: Stephen H. Brammell
----------------------------------
Title: V.P.
---------------------------------
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ Stephen H. Brammell
------------------------------------
Name: Stephen H. Brammell
----------------------------------
Title: V.P.
---------------------------------
JAZZ CASINO COMPANY, L.L.C., a
Louisiana limited liability company,
By: /s/ Frederick W. Burford
------------------------------------
Name: Frederick W. Burford
----------------------------------
Title: President
----------------------------------
Harrah's New Orleans Management Company
agrees to repay to HET and HOCI, as the
case may be, any amounts paid by HET
and/or HOCI to the Company pursuant to
this Management Fee Reimbursement
Agreement Guarantee.
HARRAH'S NEW ORLEANS MANAGEMENT COMPANY,
a Nevada corporation
By: /s/ Stephen H. Brammell
----------------------------------------
Name: Stephen H. Brammell
--------------------------------------
Title: Authorized Representative
-------------------------------------
<PAGE>
Exhibit 10.19
PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS:
That we, Jazz Casino Company, L.L.C, (the "Principal"), as
Principal, and Reliance Insurance Company, a Pennsylvania corporation, and
United States Fidelity and Guaranty Company, a Maryland corporation (each a
"Surety", and collectively, the "Sureties"), as Sureties, are held and firmly
bound, in solido with each other, unto the City of New Orleans (the "City") and
the Rivergate Development Corporation, a Louisiana public benefit corporation
(the "RDC"), the Louisiana Gaming Control Board (the "LGCB"), Norwest Bank
Minnesota, national association, as trustee for the holders of the Senior
Subordinated Notes due 2009 with Contingent Payments and the holders of the
Senior Subordinated Contingent Notes due 2009 (the "Trustee"), and Bankers Trust
Company (the "Administrative Agent") as administrative agent for certain lenders
(the "Banks") (each an "Obligee" and collectively, the "Obligees") in the
amounts set forth in Section 2(b) hereof, for payment of which sums under the
terms of this Performance Bond (this "Bond") we bind ourselves, our heirs,
personal representatives, successors, and assigns, jointly and severally (and in
the case of the Sureties, in solido with each other), on the terms and
conditions set forth below.
WHEREAS, the Principal, the RDC, and the City have entered into
that certain Amended and Restated General Development Agreement of even date
herewith (the "GDA"), the terms of which are fully incorporated herein by
reference, with respect to, among other things, the Phase I and II Construction
(as defined in the GDA).
WHEREAS, Harrah's Entertainment, Inc., a Delaware corporation,
and Harrah's Operating Company, Inc., a Delaware corporation (collectively, the
"Completion Guarantors"), have entered into that certain City/RDC Completion
Guarantee of even date herewith in favor of the City and the RDC, that certain
LGCB Completion Guarantee of even date herewith in favor of the LGCB, that
certain Notes Completion Guarantee of even date herewith in favor of the
Trustee, and that certain Bank Completion Guarantee of even date herewith in
favor of the Administrative Agent (each a "Completion Guarantee" and
collectively, the "Completion Guarantees"), the terms of which Completion
Guarantees are fully incorporated herein by reference.
<PAGE>
NOW, THEREFORE, the condition of this Bond is as follows:
1. Obligations of Sureties. If (i) the Principal defaults under
Section 2.13(a) of the GDA with regard to the commencement or completion of all
or any portion of the Phase I and II Construction excluding the Principal's
obligations in respect of the Minimum FF&E (as defined in the GDA), and (ii)
such Obligee provides notice to the Sureties at the address set forth in Section
4 hereof of the foregoing, then the Sureties shall thereupon (A) take all steps
necessary to secure the Development (as defined in the GDA) to prevent damage or
deterioration to the Development and unauthorized access or entry to the
Development, and (B) diligently, expeditiously and continuously prosecute or
cause to be prosecuted to completion the Phase I and II Construction (excluding
the Minimum FF&E) or such portion thereof as shall be the subject of such demand
in accordance with Section 2.13(a) of the GDA (the "Performance Bond
Construction"), subject to the terms set forth in Section 2 hereof.
2. Terms and Conditions. The obligations of the Sureties under
this Bond shall be subject to the following terms and conditions: a. Subject to
Section 2.e. hereof, the Sureties' obligations under this Bond to each Obligee
shall terminate (i) upon the completion of the Performance Bond Construction or
(ii) as to each Obligee, upon the termination of the Completion Obligations of
the Completion Guarantors with respect to each such Obligee, respectively,
pursuant to Section 12.3 of the respective Completion Guarantee in favor of such
Obligee.
b. The Sureties under this Bond shall in no event be liable to
the Obligees or be required to expend funds in prosecuting or causing to be
prosecuted to completion the Performance Bond Construction together with
reimbursement of any fees or costs pursuant to Section 10.a. hereof in an
aggregate amount under this Bond in excess of One Hundred Nineteen Million
Dollars ($119,000,000).
c. Any performance by the Sureties in satisfaction of their
obligations in accordance with the terms of this Bond (without modification or
compromise of the terms of this Bond) which is made pursuant to the demand of
one Obligee shall constitute performance in satisfaction of all obligations that
may be owed to all Obligees.
2
<PAGE>
d. If the Principal timely prosecutes or causes to be
prosecuted to completion all of the Performance Bond Construction, then this
Bond shall be null and void and of no further effect. If the Principal timely
prosecutes or causes to be prosecuted to completion any portion of the
Performance Bond Construction, then this Bond shall be null and void and of no
further effect with respect to such portion of the Performance Bond
Construction, provided however that this Bond shall remain in effect with
respect to such portion of the Performance Bond Construction which has not been
completed, subject to the aggregate cost limit set forth in Section 2.b. hereof.
The Surety shall have no obligations under this Bond with respect to
installation of any of the Minimum FF&E or any other FF&E (as defined in the
GDA).
e. Except as to any matter as to which written notice shall
have been made pursuant to Section 1 hereof prior thereto, the obligations of
the Sureties hereunder shall expire on the second anniversary of the date of
this Bond, as extended by any period of Force Majeure (as defined in the GDA),
regardless of the status of the completion of the Performance Bond Construction
or any portion thereof.
3. Successors and Assigns. This Bond may not be assigned by any
party hereto without the consent of the other parties hereto. This Bond shall be
binding upon the parties hereto and their respective permitted successors and
assigns.
4. Notices. All notices or other communications required or
permitted to be given or delivered pursuant to this Bond shall be in writing and
shall be considered as properly given if transmitted by Certified United States
mail, postage prepaid, with return receipt requested, overnight courier service,
or personal delivery. Any party hereto may from time to time, by notice in
writing served upon the other parties hereto pursuant to this Section designate
a different address or person to whose attention notices shall be given. Notices
hereunder shall be deemed given upon receipt. The address of the parties hereto
for notices are:
Sureties: Reliance Insurance Company
Three Parkway, 10th Floor
Philadelphia, Pennsylvania 19103
Attention: Claims Department
3
<PAGE>
United States Fidelity and Guaranty Company
6225 Smith Avenue
Baltimore, Maryland 21203
Attention: Claims Department
Principal: Jazz Casino Company, L.L.C.
512 South Peters
New Orleans, LA 70130
Attention: President
with copies to Harrah's Entertainment, Inc.
Completion Guarantor: 1023 Cherry Road
Memphis, TN 38117-5423
Attention: General Counsel
City and the RDC: as provided in the City/RDC Completion
Guaranty
Trustee: as provided in the Notes Completion
Guarantee
LGCB: as provided in the LGCB Completion
Guarantee
Administrative Agent: as provided in the Bank Completion
Guarantee
5. Copies of Notices. Any notice received by the Sureties from
any of the Obligees shall be immediately forwarded by the Sureties to each of
the other Obligees and to the Principal and Completion Guarantors at the
addresses set forth above.
6. Modification of GDA. Any obligations of the Sureties to
complete the Performance Bond Construction pursuant to Section 2.a. hereof shall
be in accordance with Section 2.13(a) of the GDA as in effect on the execution
date hereof or as otherwise set forth pursuant to any amendment, modification,
supplement, extension, renewal or restatement of the GDA executed by all parties
4
<PAGE>
to the GDA as to which the Sureties have been notified by any Obligee. The
failure of Obligees to notify the Sureties of any amendment, modification,
supplement, extension, renewal or restatement of the GDA shall not be a default
under this Bond; provided that the Sureties shall have no obligations in respect
of any amendment, modification, supplement, extension, renewal or restatement of
the GDA as to which they have not been notified.
7. No Other Parties Benefited. No other parties other than those
named in this Bond shall have any rights hereunder.
8. Time for Filing Suit. Any suit under this Bond must be
instituted before the expiration of two (2) years from the date of a notice to
the Sureties pursuant to Section 1 hereof.
9. Definitions. As used in this Bond, the following terms shall
have the following meanings, such meanings to be equally applicable to both the
singular and plural forms of the terms defined:
"Act" shall mean the Louisiana Economic Development and Gaming
Corporation Act as set forth in LSA R.S. 4:601 et seq., adopted by the
Legislature of the State of Louisiana as No. 384, Acts 1992, as amended, and
regulations adopted thereunder, amendments and reenactment of LSA R.S.
36:801.1(A) and enactment of LSA R.S. 27:1 et seq., adopted by the Legislature
of the State of Louisiana as Act 7, First Extraordinary Session, 1996, and
regulations adopted thereunder; the Local Option Gaming election as set forth in
LSA R.S. 18:1300.21, adopted by the Legislature of the State of Louisiana as Act
57, First Extraordinary Session 1996, and the act adopted by the Legislature of
the State of Louisiana as Act 98, First Extraordinary Session, 1996.
"Casino Operating Contract" shall mean that certain Amended and
Restated Casino Operating Contract by and between the Principal and the LGCB
entered into pursuant to the Plan (as defined in the GDA).
10. Fees and Costs
a. Following any default by the Principal under Section
2.13(a) of the GDA, the Sureties shall reimburse the reasonable attorneys' fees
and costs of the Obligees to enforce any rights in respect of the breach of
Section 2.13(a) of the GDA.
5
<PAGE>
b. The Sureties shall reimburse the reasonable attorney's fees
and costs of the Obligees to enforce this Bond as a result of any default by the
Sureties in the performance of this Bond.
11. Submission to Jurisdiction
a. Each party to this Bond hereby submits to the jurisdiction
of the State of Louisiana and the courts thereof, for the purposes of any suit,
action of other proceeding arising out of or relating to this Bond and hereby
agrees not to assert by way of motion as a defense or otherwise that such action
is brought in an inconvenient forum or that the venue of such action is improper
or that the subject matter thereof may not be enforced in or by such courts.
b. If at any time during the term of this Bond, any party
hereto is not a resident of the State of Louisiana or has no officer, director,
employee, or agent thereof available for service of process as a resident of the
State of Louisiana, or if any permitted assignee thereof shall be a foreign
corporation, partnership or other entity or shall have no officer, director
employee, or agent available for service of process in the State of Louisiana,
any such party or its assignee hereby designates the Secretary of State, State
of Louisiana, its agent for the service of process in any court action arising
out of or relating to this Bond and such service shall be made as provided by
the laws of the State of Louisiana for service upon a non-resident; provided,
however, that at the time of service on the Secretary of State, copy of such
service shall be delivered to such party in the manner provided in Section 4
hereof. 12. Governing Law. This Bond shall be governed and construed in
accordance with the internal substantive laws of the State of Louisiana
regardless of the laws which might otherwise govern under Louisiana's or other
applicable concepts of conflicts of law.
[SIGNATURE PAGES FOLLOW]
6
<PAGE>
Signed and sealed the 29th day of October, 1998.
PRINCIPAL: JAZZ CASINO COMPANY, L.L.C., a
Louisiana limited liability company
By: /s/ Frederick W. Burford
---------------------------------
Name: Frederick W. Burford
---------------------------------
Title: President
---------------------------------
SURETIES: RELIANCE INSURANCE COMPANY
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
UNITED STATES FIDELITY AND
GUARANTY COMPANY
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
S-1
<PAGE>
Signed and sealed the 29th day of October, 1998.
PRINCIPAL: JAZZ CASINO COMPANY, L.L.C., a
Louisiana limited liability company
By: /s/
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
SURETIES: RELIANCE INSURANCE COMPANY
By: /s/ E. J. Pennisi, Jr.
---------------------------------
Name: E. J. Pennisi, Jr.
---------------------------------
Title: Attorney In Fact
---------------------------------
UNITED STATES FIDELITY AND
GUARANTY COMPANY
By: /s/ E. J. Pennisi, Jr.
---------------------------------
Name: E. J. Pennisi, Jr.
---------------------------------
Title: Attorney In Fact
---------------------------------
Countersignature:
/s/ Wayne C. Solis
---------------------------------
Wayne C. Solis, LA Resident Agent
J&H Marsh & McLennan of Louisiana, Inc.
601 Poydras St., Suite 1850
New Orleans, LA 70130
License No. 107761
S-1
<PAGE>
Accepted and agreed:
OBLIGEES:
TRUSTEE
By: /s/ Raymond Haverstock
---------------------------------------
Name: Raymond Haverstock
---------------------------------------
Title: Vice President
---------------------------------------
LOUISIANA GAMING CONTROL BOARD
By: /s/ Hillary J. Crain
---------------------------------------
Name: Hillary J. Crain
---------------------------------------
Title: Chairman
---------------------------------------
CITY OF NEW ORLEANS
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
RIVERGATE DEVELOPMENT CORPORATION
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
S-2
<PAGE>
Accepted and agreed:
OBLIGEES:
TRUSTEE
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
LOUISIANA GAMING CONTROL BOARD
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
CITY OF NEW ORLEANS
By: /s/ Marc H. Morial
---------------------------------------
Name: Marc H. Morial
---------------------------------------
Title: Mayor
---------------------------------------
RIVERGATE DEVELOPMENT CORPORATION
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
S-2
<PAGE>
Accepted and agreed:
OBLIGEES:
TRUSTEE
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
LOUISIANA GAMING CONTROL BOARD
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
CITY OF NEW ORLEANS
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
RIVERGATE DEVELOPMENT CORPORATION
By: /s/ Helen S. Kohlman
---------------------------------------
Name: Helen S. Kohlman
---------------------------------------
Title: Vice-President
---------------------------------------
S-2
<PAGE>
ADMINISTRATIVE AGENT:
By: /s/ Gregory P. Shefrin
---------------------------------------
Name: Gregory P. Shefrin
---------------------------------------
Title: Vice President
---------------------------------------
S-3
<PAGE>
Exhibit 10.20
Form of
JCC HOLDING COMPANY
1998 LONG-TERM INCENTIVE PLAN
ARTICLE I
PURPOSE
1.1 GENERAL. The purpose of the JCC Holding Company 1998 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value, of
JCC Holding Company (the "Company"), by linking the personal interests of its
employees, officers, consultants and directors to those of Company stockholders
and by providing such persons with an incentive for outstanding performance. The
Plan is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of employees, officers, consultants
and directors upon whose judgment, interest, and special effort the successful
conduct of the Company's operation is largely dependent. Accordingly, the Plan
permits the grant of incentive awards from time to time to selected employees,
officers, consultants and directors; provided, however, to the extent necessary
to preserve the employee benefits plan exemption under applicable state blue sky
laws, no non-employee director or consultant of the Company will be eligible to
receive Awards under the Plan until such time, if any, as the Stock shall be
traded on a national securities exchange or on the Nasdaq National Market.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan shall be effective as of the date upon
which it shall be approved by the Board. However, the Plan shall be submitted to
the stockholders of the Company for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under the Plan may be
exercised prior to approval of the Plan by the stockholders and if the
stockholders fail to approve the Plan within 12 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the stockholders
having approved the Plan.
ARTICLE 3
DEFINITIONS
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section
<PAGE>
1.1 unless a clearly different meaning is required by the context.
The following words and phrases shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit Award, Dividend Equivalent
Award, or Other Stock-Based Award, or any other right or interest
relating to Stock or cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract,
or other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means and includes each of the
following:
(1) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the 1934 Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of 25%
or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
subsection (1), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by a
Person who is on the Effective Date the beneficial owner of
25% or more of the Outstanding Company Voting Securities, (ii)
any acquisition directly from the Company, (iii) any
acquisition by the Company, (iv) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company, or (v) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i), (ii) and (iii)
of subsection (3) of this definition; or
(2) Individuals who, as of the Effective Date,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination
for election by the Company's stockholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
2
<PAGE>
(3) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals
and entities who were the beneficial owners of the Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election
of directors of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Voting
Securities, and (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 25% or more of the
combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed prior to the Business Combination, and (iii)
at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(4) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee" means the committee of the Board described in
Article 4.
(g) "Company" means JCC Holding Company, a Delaware
corporation.
(h) "Covered Employee" means a covered employee as defined in
Code Section 162(m)(3), provided that no employee shall be a Covered
Employee until the deduction limitation of Code Section 162(m) are
applicable to the Company and any reliance period under Code Section
162(m) has expired, as described in Section 16.15 hereof.
(i) "Disability" shall mean any illness or other physical or
mental condition of a Participant that renders the Participant
incapable of performing his
3
<PAGE>
customary and usual duties for the Company, or any medically
determinable illness or other physical or mental condition resulting
from a bodily injury, disease or mental disorder which, in the judgment
of the Committee, is permanent and continuous in nature. The Committee
may require such medical or other evidence as it deems necessary to
judge the nature and permanency of the Participant's condition.
(j) "Dividend Equivalent" means a right granted to a
Participant under Article 11.
(k) "Effective Date" has the meaning assigned such term in
Section 2.1.
(l) "Fair Market Value", on any date, means (i) if the Stock
is listed on a securities exchange or is traded over the Nasdaq
National Market, the closing sales price on such exchange or over such
system on such date or, in the absence of reported sales on such date,
the closing sales price on the immediately preceding date on which
sales were reported, or (ii) if the Stock is not listed on a securities
exchange or traded over the Nasdaq National Market, the mean between
the bid and offered prices as quoted by Nasdaq for such date, provided
that if it is determined that the fair market value is not properly
reflected by such Nasdaq quotations, Fair Market Value will be
determined by such other method as the Committee determines in good
faith to be reasonable.
(m) "Incentive Stock Option" means an Option that is intended
to meet the requirements of Section 422 of the Code or any successor
provision thereto.
(n) "Non-Qualified Stock Option" means an Option that is not
an Incentive Stock Option.
(o) "Option" means a right granted to a Participant under
Article 7 of the Plan to purchase Stock at a specified price during
specified time periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(p) "Other Stock-Based Award" means a right, granted to a
Participant under Article 12, that relates to or is valued by reference
to Stock or other Awards relating to Stock.
(q) "Parent" means a corporation which owns or beneficially
owns a majority of the outstanding voting stock or voting power of the
Company. For Incentive Stock Options, the term shall have the same
meaning as set forth in Code Section 424(e).
(r) "Participant" means a person who, as an employee, officer,
consultant or director of the Company or any Subsidiary, has been
granted an Award under the Plan.
4
<PAGE>
(s) "Performance Unit" means a right granted to a Participant
under Article 9, to receive cash, Stock, or other Awards, the payment
of which is contingent upon achieving certain performance goals
established by the Committee.
(t) "Plan" means the JCC Holding Company 1998 Long-Term
Incentive Plan, as amended from time to time.
(u) "Restricted Stock Award" means Stock granted to a
Participant under Article 10 that is subject to certain restrictions
and to risk of forfeiture.
(v) "Stock" means the $0.01 par value Class A Common Stock of
the Company, and after the Transition Date, the $0.01 par value
Unclassified Common Stock of the Company, and such other securities of
the Company as may be substituted for Stock pursuant to Article 14.
(w) "Stock Appreciation Right" or "SAR" means a right granted
to a Participant under Article 8 to receive a payment equal to the
difference between the Fair Market Value of a share of Stock as of the
date of exercise of the SAR over the grant price of the SAR, all as
determined pursuant to Article 8.
(x) "Subsidiary" means any corporation, limited liability
company, partnership or other entity of which a majority of the
outstanding voting stock or voting power is beneficially owned directly
or indirectly by the Company. For Incentive Stock Options, the term
shall have the meaning set forth in Code Section 424(f).
(y) "Transition Date" has the meaning set forth in the
Restated Certificate of Incorporation of the Company.
(z) "1933 Act" means the Securities Act of 1933, as amended
from time to time.
(aa) "1934 Act" means the Securities Exchange Act of 1934, as
amended from time to time.
ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. The Committee shall consist of two or more members of the Board. It
is intended that the directors appointed to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under the
1934 Act) and "outside
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directors" (within the meaning of Code Section 162(m) and the regulations
thereunder) to the extent that Rule 16b-3 and, if necessary for relief from the
limitation under Code Section 162(m) and such relief is sought by the Company,
Code Section 162(m), respectively, are applicable. However, the mere fact that a
Committee member shall fail to qualify under either of the foregoing
requirements shall not invalidate any Award made by the Committee which Award is
otherwise validly made under the Plan. The members of the Committee shall be
appointed by, and may be changed at any time and from time to time in the
discretion of, the Board. During any time that the Board is acting as
administrator of the Plan, it shall have all the powers of the Committee
hereunder, and any reference herein to the Committee (other than in this Section
4.1) shall include the Board.
4.2 ACTION BY THE COMMITTEE. For purposes of administering the Plan,
the following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Parent or Subsidiary, the Company's independent certified public accountants, or
any executive compensation consultant or other professional retained by the
Company to assist in the administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to
each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted
under the Plan, including but not limited to, the exercise price, grant
price, or purchase price, any restrictions or limitations on the Award,
any schedule for lapse of forfeiture restrictions or restrictions on
the exercisability of an Award, and accelerations or waivers thereof,
based in each case on such considerations as the Committee in its sole
discretion determines;
(e) Accelerate the vesting or lapse of restrictions of any
outstanding Award, based in each case on such considerations as the
Committee in its sole discretion determines;
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(f) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an
Award may be paid in, cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(h) Decide all other matters that must be determined in
connection with an Award;
(i) Establish, adopt or revise any rules and regulations as it
may deem necessary or advisable to administer the Plan;
(j) Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or
advisable to administer the Plan; and
(k) Amend the Plan or any Award Agreement as provided herein.
4.4. DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment as provided in Section
14.1, the aggregate number of shares of Stock reserved and available for Awards
or which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Unit
Award) shall be 750,000, of which not more than [10%] may be granted as Awards
of Restricted Stock or unrestricted Stock Awards.
5.2. LAPSED AWARDS. To the extent that an Award is canceled,
terminates, expires or lapses for any reason, any shares of Stock subject to the
Award will again be available for the grant of an Award under the Plan and
shares subject to SARs or other Awards settled in cash will be available for the
grant of an Award under the Plan.
5.3. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
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5.4. LIMITATION ON AWARDS. Notwithstanding any provision in the Plan to
the contrary, the maximum number of shares of Stock with respect to one or more
Options and/or SARs that may be granted during any one calendar year under the
Plan to any one Covered Employee shall be _____________. The maximum fair market
value (measured as of the date of grant) of any Awards other than Options and
SARs that may be received by a Covered Employee (less any consideration paid by
the Participant for such Award) during any one calendar year under the Plan
shall be $____________.
ARTICLE 6
ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are
employees, officers, consultants or directors of the Company or a Parent or
Subsidiary; provided, however, that to the extent necessary to preserve the
employee benefits plan exemption under applicable state blue sky laws, no
non-employee director or consultant of the Company will be eligible to receive
Awards under the Plan until such time, if any, as the Company's common stock
shall be traded on a national securities exchange or on the Nasdaq National
Market.
ARTICLE 7
STOCK OPTIONS
7.1. GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock
under an Option shall be determined by the Committee, provided that the
exercise price for any Option shall not be less than the Fair Market
Value as of the date of the grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part. The Committee also shall determine the performance or
other conditions, if any, that must be satisfied before all or part of
an Option may be exercised. The Committee may waive any exercise
provisions at any time in whole or in part based upon factors as the
Committee may determine in its sole discretion so that the Option
becomes exerciseable at an earlier date.
(c) PAYMENT. The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock, or other property
(including "cashless exercise" arrangements), and the methods by which
shares of Stock shall be delivered or deemed to be delivered to
Participants; provided that if shares of Stock surrendered in payment
of the exercise price were themselves acquired
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otherwise than on the open market, such shares shall have been held by
the Participant for at least six months.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a
written Award Agreement between the Company and the Participant. The
Award Agreement shall include such provisions, not inconsistent with
the Plan, as may be specified by the Committee.
(e) ADDITIONAL OPTIONS UPON EXERCISE. The Committee may, in
its sole discretion, provide in an Award Agreement, or in an amendment
thereto, for the automatic grant of a new Option to any Participant who
delivers shares of Stock as full or partial payment of the exercise
price of the original Option. Any new Option granted in such a case (i)
shall be for the same number of shares of Stock as the Participant
delivered in exercising the original Option, (ii) shall have an
exercise price of 100% of the Fair Market Value of the surrendered
shares of Stock on the date of exercise of the original Option (the
grant date for the new Option), and (iii) shall have a term equal to
the unexpired term of the original Option.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of Stock
shall be set by the Committee, provided that the exercise price for any
Incentive Stock Option shall not be less than the Fair Market Value as
of the date of the grant.
(b) EXERCISE. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse
under the earliest of the following circumstances; provided, however,
that the Committee may, prior to the lapse of the Incentive Stock
Option under the circumstances described in paragraphs (3), (4) and (5)
below, provide in writing that the Option will extend until a later
date, but if Option is exercised after the dates specified in
paragraphs (3), (4) and (5) below, it will automatically become a
Non-Qualified Stock Option:
(1) The Incentive Stock Option shall lapse as of the
option expiration date set forth in the Award Agreement.
(2) The Incentive Stock Option shall lapse ten years
after it is granted, unless an earlier time is set in the
Award Agreement.
(3) If the Participant terminates employment for any
reason other than as provided in paragraph (4) or (5) below,
the Incentive Stock
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Option shall lapse, unless it is previously exercised, three
months after the Participant's termination of employment;
provided, however, that if the Participant's employment is
terminated by the Company for cause or by the Participant
without the consent of the Company, the Incentive Stock Option
shall (to the extent not previously exercised) lapse
immediately.
(4) If the Participant terminates employment by
reason of his Disability, the Incentive Stock Option shall
lapse, unless it is previously exercised, one year after the
Participant's termination of employment.
(5) If the Participant dies while employed, or during
the three-month period described in paragraph (3) or during
the one-year period described in paragraph (4) and before the
Option otherwise lapses, the Option shall lapse one year after
the Participant's death. Upon the Participant's death, any
exercisable Incentive Stock Options may be exercised by the
Participant's beneficiary, determined in accordance with
Section 13.6.
Unless the exercisability of the Incentive Stock Option is
accelerated as provided in Article 13, if a Participant exercises an
Option after termination of employment, the Option may be exercised
only with respect to the shares that were otherwise vested on the
Participant's termination of employment.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market
Value (determined as of the time an Award is made) of all shares of
Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000.00.
(e) TEN PERCENT OWNERS. No Incentive Stock Option shall be
granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary unless
the exercise price per share of such Option is at least 110% of the
Fair Market Value per share of Stock at the date of grant and the
Option expires no later than five years after the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an
Incentive Stock Option may be made pursuant to the Plan after the day
immediately prior to the tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant or, in
the case of the Participant's Disability, by the Participant's guardian
or legal representative.
(h) DIRECTORS. The Committee may not grant an Incentive Stock
Option to a non-employee director. The Committee may grant an Incentive
Stock
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Option to a director who is also an employee of the Company or Parent
or Subsidiary but only in that individual's position as an employee and
not as a director.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock
Appreciation Right, the Participant to whom it is granted has the right
to receive the excess, if any, of:
(1) The Fair Market Value of one share of Stock on
the date of exercise; over
(2) The grant price of the Stock Appreciation Right
as determined by the Committee, which shall not be less than
the Fair Market Value of one share of Stock on the date of
grant.
(b) OTHER TERMS. All awards of Stock Appreciation Rights shall
be evidenced by an Award Agreement. The terms, methods of exercise,
methods of settlement, form of consideration payable in settlement, and
any other terms and conditions of any Stock Appreciation Right shall be
determined by the Committee at the time of the grant of the Award and
shall be reflected in the Award Agreement.
ARTICLE 9
PERFORMANCE UNITS
9.1. GRANT OF PERFORMANCE UNITS. The Committee is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.
9.2. RIGHT TO PAYMENT. A grant of Performance Units gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Performance Units are granted, in
whole or in part, as the Committee shall establish at grant or thereafter. The
Committee shall set performance goals and other terms or conditions to payment
of the Performance Units in its discretion which, depending on the extent to
which they are met, will determine the number and value of Performance Units
that will be paid to the Participant.
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9.3. OTHER TERMS. Performance Units may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the Committee at
the time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Company; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.
ARTICLE 11 DIVIDEND EQUIVALENTS
11.1 GRANT OF DIVIDEND EQUIVALENTS. The Committee is authorized to
grant Dividend Equivalents to Participants subject to such terms and conditions
as may be selected by the Committee. Dividend Equivalents shall entitle the
Participant to receive payments equal to dividends with respect to all or a
portion of the number of shares of Stock subject to an Award, as determined by
the Committee. The Committee may provide that Dividend Equivalents be paid or
distributed when accrued or be deemed to have been reinvested in additional
shares of Stock, or otherwise reinvested.
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ARTICLE 12
OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.
ARTICLE 13
PROVISIONS APPLICABLE TO AWARDS
13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
13.2. EXCHANGE PROVISIONS. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to Section 14.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made.
13.3. TERM OF AWARD. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).
13.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and
any applicable law or Award Agreement, payments or transfers to be made by the
Company or a Parent or Subsidiary on the grant or exercise of an Award may be
made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
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13.5. LIMITS ON TRANSFER. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or a Parent or Subsidiary, or
shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Company or a Parent or Subsidiary. No unexercised
or restricted Award shall be assignable or transferable by a Participant other
than by will or the laws of descent and distribution or, except in the case of
an Incentive Stock Option, pursuant to a domestic relations order that would
satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award
under the Plan; provided, however, that the Committee may (but need not) permit
other transfers where the Committee concludes that such transferability (i) does
not result in accelerated taxation, (ii) does not cause any Option intended to
be an incentive stock option to fail to be described in Code Section 422(b), and
(iii) is otherwise appropriate and desirable, taking into account any factors
deemed relevant, including without limitation, any state or federal tax or
securities laws or regulations applicable to transferable Awards.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
13.7. STOCK CERTIFICATES. All Stock certificates delivered under the
Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock.
13.8 ACCELERATION UPON DEATH OR DISABILITY. Notwithstanding any other
provision in the Plan or any Participant's Award Agreement to the contrary, upon
the Participant's death or Disability during his employment or service as a
consultant or director, all outstanding Options, Stock Appreciation Rights, and
other Awards in the nature of rights that may be exercised shall become fully
exercisable and all restrictions on outstanding Awards shall lapse. Any Option
or Stock Appreciation Rights Awards shall thereafter continue or lapse in
accordance with the other provisions of the Plan and the Award Agreement. To the
extent that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess Options shall be deemed to be
Non-Qualified Stock Options.
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13.9. ACCELERATION UPON A CHANGE IN CONTROL. Except as otherwise
provided in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse; provided, however that such
acceleration will not occur if, in the opinion of the Company's accountants,
such acceleration would preclude the use of "pooling of interest" accounting
treatment for a Change in Control transaction that (a) would otherwise qualify
for such accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.10. ACCELERATION UPON CERTAIN EVENTS NOT CONSTITUTING A CHANGE IN
CONTROL. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Company of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of the 1934 Act, the
Committee may in its sole discretion declare all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised to be fully exercisable, and/or all restrictions on all outstanding
Awards to have lapsed, in each case, as of such date as the Committee may, in
its sole discretion, declare, which may be on or before the consummation of such
transaction or event. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
13.11. ACCELERATION FOR ANY OTHER REASON. Regardless of whether an
event has occurred as described in Section 13.9 or 13.10 above, the Committee
may in its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully or partially exercisable,
and/or that all or a part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case, as of such date as the Committee
may, in its sole discretion, declare. The Committee may discriminate among
Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 13.11.
13.12 EFFECT OF ACCELERATION. If an Award is accelerated under Section
13.9 or 13.10, the Committee may, in its sole discretion, provide (i) that the
Award will expire after a designated period of time after such acceleration to
the extent not then exercised, (ii) that the Award will be settled in cash
rather than Stock, (iii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iv) any combination of the foregoing.
The Committee's determination need not be uniform and
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may be different for different Participants whether or not such Participants are
similarly situated.
13.13. PERFORMANCE GOALS. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Company or a Parent or Subsidiary of a specified
target return, or target growth in return, on equity or assets, (b) the
Company's, Parent's or Subsidiary's stock price, (c) the achievement by an
individual or a business unit of the Company, Parent or Subsidiary of a
specified target, or target growth in, revenues, net income or earnings per
share, (d) the achievement of objectively determinable goals with respect to
service or product delivery, service or product quality, customer satisfaction,
meeting budgets and/or retention of employees or (e) any combination of the
goals set forth in (a) through (d) above. If an Award is made on such basis, the
Committee shall establish goals prior to the beginning of the period for which
such performance goal relates (or such later date as may be permitted under Code
Section 162(m) or the regulations thereunder) and the Committee may for any
reason reduce (but not increase) any Award, notwithstanding the achievement of a
specified goal. Any payment of an Award granted with performance goals shall be
conditioned on the written certification of the Committee in each case that the
performance goals and any other material conditions were satisfied.
13.14. TERMINATION OF EMPLOYMENT. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Company to one of its Parents or Subsidiaries, transfers from a Parent
or Subsidiary to the Company, or transfers from one Parent or Subsidiary to
another Parent or Subsidiary.
ARTICLE 14
CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is declared upon the
Stock, the shares of Stock then subject to each Award shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Stock shall be changed into or exchanged for a different number or
class of shares of stock or securities of the Company or of another corporation,
whether through reorganization, recapitalization, reclassification, share
exchange, stock split-up, combination of shares, merger or consolidation, there
shall be substituted for each such share of Stock then subject to each Award the
number and class of shares into which each outstanding share of Stock shall be
so exchanged, all without any change in the aggregate purchase price for the
shares then subject to each Award, or, subject to Section 15.2, there shall be
made such other equitable adjustment as the Committee shall approve.
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ARTICLE 15
AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the
Committee may, at any time and from time to time, amend, modify or terminate the
Plan without stockholder approval; provided, however, that the Board or
Committee may condition any amendment or modification on the approval of
stockholders of the Company if such approval is necessary or deemed advisable
with respect to tax, securities or other applicable laws, policies or
regulations.
15.2 AWARDS PREVIOUSLY GRANTED. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that, subject to the terms of the
applicable Award Agreement, such amendment, modification or termination shall
not, without the Participant's consent, reduce or diminish the value of such
Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment or termination. No termination,
amendment, or modification of the Plan shall adversely affect any Award
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 16
GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS. No Participant or eligible participant shall
have any claim to be granted any Award under the Plan, and neither the Company
nor the Committee is obligated to treat Participants or eligible participants
uniformly.
16.2. NO SHAREHOLDER RIGHTS. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
16.3. WITHHOLDING. The Company or any Parent or Subsidiary shall have
the authority and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require that any
such withholding requirement be satisfied, in whole or in part, by withholding
shares of Stock having a Fair Market Value on the date of withholding equal to
the amount required to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes.
16.4. NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Parent or Subsidiary to terminate any Participant's employment or status as
an officer,
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director or consultant at any time, nor confer upon any Participant any right to
continue as an employee, officer, director or consultant of the Company or any
Parent or Subsidiary.
l6.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award Agreement shall give the Participant any rights that
are greater than those of a general creditor of the Company or any Parent or
Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable under applicable law,
each member of the Committee shall be indemnified and held harmless by the
Company from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
16.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall
be taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the Company
or any Parent or Subsidiary unless provided otherwise in such other plan.
16.8. EXPENSES. The expenses of administering the Plan shall be borne
by the Company and its Parents or Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
16.10. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
16.11. FRACTIONAL SHARES. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
16.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company
to make payment of awards in Stock or otherwise shall be subject to all
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applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the 1933 Act, or any state securities act, any of the shares of
Stock paid under the Plan. The shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, and the Company
may restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
16.13. GOVERNING LAW. To the extent not governed by federal law, the
Plan and all Award Agreements shall be construed in accordance with and governed
by the laws of the State of Delaware.
16.14 ADDITIONAL PROVISIONS. Each Award Agreement may contain such
other terms and conditions as the Committee may determine; provided that such
other terms and conditions are not inconsistent with the provisions of this
Plan.
16.15 CODE SECTION 162(m). The deduction limits of Code Section 162(m)
and the regulation thereunder do not apply to the Company until such time, if
any, as any class of the Company's common equity securities is registered under
Section 12 of the 1934 Act or the Company otherwise meets the definition of a
"publicly held corporation" under Treasury Regulation 1.162-27(c) or any
successor provision. Upon becoming a publicly held corporation, the deduction
limits of Code Section 162(m) and the regulations thereunder shall not apply to
compensation payable under this Plan until the expiration of the reliance period
described in Treasury Regulation 1.162-27(f) or any successor regulation.
The foregoing is hereby acknowledged as being the JCC Holding Company
1998 Long-Term Incentive Plan as adopted by the Board of Directors of the
Company on October __, 1998.
JCC HOLDING COMPANY
By: /s/ Fred W. Burford
---------------------------
Fred W. Burford
Its: President
---------------------------
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Exhibit 10.21
COMPLETION GUARANTOR SUBORDINATION AGREEMENT
(Lenders)
COMPLETION GUARANTOR SUBORDINATION AGREEMENT (as amended,
modified or supplemented from time to time, this "Agreement"), dated as of
October 29, 1998, among HARRAH'S ENTERTAINMENT, INC., a Delaware corporation
("HET"), HARRAH'S OPERATING COMPANY, INC., a Delaware corporation ("HOCI" and,
together with HET, the "Completion Guarantors" and each a "Completion
Guarantor") and BANKERS TRUST COMPANY, as Administrative Agent for the Lenders,
each as defined below. Except as otherwise defined herein, terms used herein and
defined in the Credit Agreement referred to below are used herein as so defined.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted and the Bankruptcy Court has confirmed a
plan of reorganization (the "Plan") in connection with that certain voluntary
petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy
Code.
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith the Company, JCC Holding
Company, a Delaware corporation, as guarantor, the lenders (the "Lenders") from
time to time party thereto, and Bankers Trust Company, as Administrative Agent
(together with any successor agent, the "Administrative Agent"), have entered
into a Credit Agreement, pursuant to the Plan, providing for a senior secured
term loan in the amount of Sixty Million Dollars ($60,000,000), a secured term
loan in the amount of One Hundred Fifty-One Million Five Hundred Thousand
Dollars ($151,500,000), and a secured revolving loan facility including
Revolving Loans, Swingline Loans and Letters of Credit (each as defined in the
Credit Agreement) drawn under such revolving loan facility in an amount not to
exceed Twenty Five Million Dollars ($25,000,000) at any time outstanding as
contemplated therein (as used herein, the term "Credit Agreement" means the
Credit Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced, restated, supplemented or refinanced from
time to time, and including any agreement extending the maturity of, or
refinancing or restructuring (including, but not limited to, the inclusion of
additional borrowers or guarantors thereunder or any increase in the amount
borrowed) all or any portion of, the indebtedness under such agreement or any
successor agreements, whether or not with the same agent, trustee,
representative, lenders or holders; provided that, with respect to any agreement
providing for the refinancing or replacement of indebtedness under the Credit
Agreement, such agreement shall
<PAGE>
only be treated as, or as part of, the Credit Agreement hereunder if (i) either
(A) all obligations under the Credit Agreement being refinanced or replaced
shall be paid in full at the time of such refinancing or replacement, and all
commitments and letters of credit issued pursuant to the refinanced or replaced
Credit Agreement shall have terminated in accordance with their terms or (B) the
Required Banks shall have consented in writing to the refinancing or replacement
indebtedness being treated as indebtedness pursuant to the Credit Agreement,
(ii) the refinancing or replacement indebtedness shall be permitted to be
incurred under the Credit Agreement being refinanced or replaced (if such Credit
Agreement is to remain outstanding), and the other Credit Documents then in
effect and (iii) a notice to the effect that the refinancing or replacement
indebtedness shall be treated as issued under the Credit Agreement shall be
delivered by the Company to the Administrative Agent and each Completion
Guarantor).
E. Contemporaneously herewith, pursuant to the Plan, the
Company, JCC Holding Company, JCC Development, L.L.C., FP Development, L.L.C.,
CP Development, L.L.C. and the Trustee, as trustee, have entered into (i) that
certain Indenture pursuant to which the Company has issued $187,500,000
principal amount of its Senior Subordinated Notes due 2009 with Contingent
Payments (as may be amended, modified, extended, renewed, supplemented or
refinanced from time to time, the "New Bonds") and (ii) that certain Indenture
(and together with the indenture for the New Bonds, each as may be amended from
time to time, the "Indenture") pursuant to which the Company has issued the
Senior Subordinated Contingent Notes due 2009 (as may be amended, modified,
extended, renewed, supplemented or refinanced from time to time, the "New
Contingent Bonds").
F. The Company may at any time and from time to time enter
into one or more interest rate protection agreements (including, without
limitation, interest rate hedges, swaps, caps, floors, collars, and similar
agreements, collectively, the "Interest Rate Protection Agreements") with one or
more Lenders, or any Affiliate thereof (any such Lender or Lenders or any
Affiliate of any such Lender or Lenders (even if any such Lenders subsequently
cease to be a Lender under the Credit Agreement for any reason) so long as any
such Lender or Affiliate thereof participates in the extension of such Interest
Rate Protection Agreement and their subsequent assigns, if any, collectively,
the "Other Creditors," and together with the Administrative Agent and the
Lenders, the "Senior Creditors").
G. Pursuant to the Plan, the Completion Guarantors (x) have
entered into (i) a Bank Completion Guarantee in favor of the Administrative
Agent (as amended, modified or supplemented from time to time, the "Bank
Completion Guarantee"), (ii) a Completion Guarantee in favor of the Trustee (as
amended, modified or supplemented from time to time, the "Notes Completion
Guarantee"), (iii) a Completion Guarantee in favor of the LGCB (the "LGCB
Completion Guarantee") and (iv) a Completion Guarantee in favor of Rivergate
Development Corporation and the City of New Orleans (as amended, modified or
supplemented from time to time, the "City/RDC Completion Guarantee"), and (y)
may in the future enter into one or more completion or other guarantees in
support of the obligations of the Company (with all completion and other
guarantees described in this paragraph being herein collectively called the
"Completion Guarantees").
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H. Any amounts advanced or paid pursuant to the Completion
Guarantees (such amounts are referred to herein as "Completion Guarantee
Payments") will be loans (together with all other amounts owing to the
Completion Guarantors under the Completion Loan Agreement (as defined below),
the "Completion Loans") from the Completion Guarantors to the Company under an
Amended and Restated Completion Loan Agreement entered into by and among the
Company and the Completion Guarantors pursuant to the Plan (as amended, modified
or supplemented from time to time and together with the exhibits thereto, the
"Completion Loan Agreement").
I. Pursuant to that certain Amended and Restated Construction
Lien Indemnity Obligation Agreement entered into by and between the Company and
HOCI pursuant to the Plan (as amended, modified or supplemented from time to
time, the "Construction Lien Indemnity Obligation Agreement"), the Company has
agreed to pay to HOCI any amounts advanced (the "Construction Lien Indemnity
Advances") by HOCI under that certain Construction Lien Indemnity Agreement
entered into by and among the Company, HOCI and First American Title Insurance
Company pursuant to the Plan (the "Construction Lien Indemnity Agreement").
J. All Completion Loans, all Construction Lien Indemnity
Advances and any other amounts whatsoever at any time owing by the Company to
either or both Completion Guarantors, together with all principal, interest,
fees, indemnities and other amounts owing with respect thereto, are herein
called the "Subordinated Obligations").
K. In furtherance of the purposes of the Completion Loan
Agreement, (i) the Company has assigned to the Completion Guarantors certain of
the Company's rights under certain contracts and other agreements to which the
Company is a party, certain lien payment bonds, performance bonds and plans and
specifications and to certain permits, consents, licenses, authorizations and
approvals relating to such contracts and agreements (the "Assigned Interests"),
and (ii) the City and the RDC have granted the Completion Guarantors certain
rights of use (the "Rights of Use") in respect of the real property comprising
the Project pursuant to an Entry Agreement entered into by and among the City,
the RDC, HET and HOCI pursuant to the Plan.
L. Pursuant to the Security Agreement, the Company has granted
to the Collateral Agent for the benefit of the Secured Creditors (as defined in
the Security Agreement) a perfected lien on, and security interest in, the
Assigned Interests.
M. The Collateral Agent (for the benefit of the Secured
Creditors) is the holder of that certain Act of Mortgage and Collateral
Assignment by Jazz Casino Company, L.L.C. (as renewed, amended, modified,
replaced, restated, supplemented, or extended from time to time, the "Mortgage")
executed by the Company pursuant to the Plan in respect of inter alia, the
Company's leasehold estate in certain real property comprising the Project and
also subject to the Rights of Use.
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N. As a condition to the extensions of credit by the Senior
Creditors, the parties hereto (including the Completion Guarantors) are required
to execute and deliver this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. SUBORDINATION
1.1. Subordination of Liabilities
(a) Each Completion Guarantor, for itself, its successors and
assigns, covenants and agrees that the payment of the Subordinated Obligations
is hereby expressly subordinated, to the extent and in the manner hereinafter
set forth, to the prior payment in full in cash of all Senior Indebtedness (as
defined in Section 1.7 hereof). The provisions of this Section 1 shall
constitute a continuing offer to all Persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are hereby made obligees hereunder the same as if their names
were written herein as such, and they and/or each of them may proceed to enforce
such provisions.
(b) In the event of any payment default under Section 10.01 of
the Credit Agreement, any acceleration of the Senior Indebtedness under Section
10 of the Credit Agreement, or the bankruptcy of the Company, any payments by
the Company or any representative of the Company shall be applied in the
following order, subject to the rights of the LGCB under the Casino Operating
Contract, the RDC under the Lease, and any other creditor, as their interests
may appear: (i) reimbursement of all management expenses incurred in accordance
with the Management Agreement; (ii) amounts as set forth in Section 11 of that
certain Intercreditor Agreement among HET, HOCI, Bankers Trust Company, Norwest
Bank Minnesota, National Association, as trustee, and the other parties named
therein (as amended from time to time); (iii) any credit enhancement fee due and
payable to HET or an Affiliate of HET pursuant to that certain Credit
Enhancement Fee Agreement entered into by and among the Company and HOCI
pursuant to the Plan; (iv) Base Fee and Termination Fee pursuant to and as
defined in the Management Agreement; (v) interest due on the Convertible Junior
Subordinated Debentures (as defined in the Plan); (vi) principal due on the
Convertible Junior Subordinated Debentures; (vii) interest due on any amounts
advanced under the Subordinated Loan Agreement (the "Subordinated Loan"), the
Construction Lien Indemnity Advances and any Completion Loans on a pari passu
basis; (viii) principal due on the Subordinated Loan, the Construction Lien
Indemnity Advances and any Completion Loans on a pari passu basis; and (ix)
Incentive Fee pursuant to and as defined in the Management Agreement.
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1.2. Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances
(a) Until all Senior Indebtedness shall have been paid in full
in cash and all commitments in respect of such Senior Indebtedness have been
terminated, no payment or distribution of any kind or character (whether in
cash, property, securities or otherwise) shall be made in respect of any
Subordinated Obligations, other than any payments expressly permitted to be made
pursuant to Section 8.17(c) of the Credit Agreement.
(b) In the event that, notwithstanding the provisions of the
preceding subsection (a) of this Section 1.2, (i) the Company or any of its
Subsidiaries shall make any payment to any Completion Guarantor on account of
the Subordinated Obligations which is not permitted by said subsection (a) or
(ii) any Completion Guarantor receives any payment or distribution from any
enforcement or other action against the Collateral, such payment shall be held
by any such Completion Guarantor in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior Indebtedness or their
representative or the Administrative Agent, as their respective interests may
appear, for application pro rata to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness in full
in cash in accordance with the terms of such Senior Indebtedness, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
1.3. Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company (including any assets constituting Collateral) upon
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise):
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full in cash of all Senior Indebtedness
(including, without limitation, post-petition interest at the rate provided in
the documentation with respect to the Senior Indebtedness, whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before any Completion Guarantor is entitled to receive
any payment of any kind or character with respect to any Subordinated
Obligations;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise to
which any Completion Guarantor would be entitled except for the provisions of
this Section 1.3, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or other trustee or agent, directly to the
holders of Senior Indebtedness or their representative or representatives, or to
the Administrative Agent, to the extent necessary to make payment in full in
cash of all Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness;
and
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(c) in the event that any payment or distribution of assets of
the Company of any kind or character, whether in cash, property, securities or
otherwise, shall be received by any Completion Guarantor on account of
Subordinated Obligations before all Senior Indebtedness is paid in full in cash,
which payment or distribution is not permitted by preceding subsections (a) and
(b) of this Section 1.3, such payment or distribution shall be received and held
in trust for and shall be paid over to the holders of the Senior Indebtedness
remaining unpaid or unprovided for or their representative or representatives,
or to the Administrative Agent, for application to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in full in
cash, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
1.4. Effect of Subordination on Obligations Pursuant to Completion Loan
Agreement and Construction Lien Indemnity Agreement. Each Completion Guarantor
hereby agrees for the benefit of the Company and the Senior Creditors that, to
the extent and for so long as any payment of Subordinated Obligations is not
permitted to be made pursuant to the provisions of this Section 1, then, and
notwithstanding anything to the contrary contained in the Completion Loan
Agreement or the Construction Lien Indemnity Agreement, the respective
Subordinated Obligations shall not be payable by the Company until they are
permitted to be paid in accordance with the terms of this Section 1. To the
extent that any such Subordinated Obligations are not payable by the Company
pursuant to this Section 1, the Completion Guarantors shall forbear from
exercising any right to accelerate the Company's obligations under the
Completion Loan Agreement or the Construction Lien Indemnity Obligation
Agreement as a result thereof so long as the Credit Agreement or this Agreement
shall continue to prohibit the Company from making such payments. Without
limiting the foregoing, no action shall be taken by any Completion Guarantor to
enforce the payment of any Subordinated Obligations by the Company until all
Senior Indebtedness shall have been paid in full in cash and all commitments in
respect of such Senior Indebtedness have been terminated.
1.5. Subrogation. After all Senior Indebtedness has been paid in full
in cash and all commitments in respect of such Senior Indebtedness have been
terminated, each Completion Guarantor shall have and be entitled to all rights
of subrogation otherwise provided by law in respect of any payment it may make
or be obligated to make under this Agreement with respect to the claims of the
Senior Creditors against the Company or any other guarantor of the Senior
Indebtedness.
1.6. Subordination Rights Not Impaired by Acts or Omissions of Company
or Holders of Senior Indebtedness. No right of any present or future holders of
any Senior Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act by any such holder, or by
any noncompliance by the Company with the terms and provisions of the Completion
Loan Agreement or the Construction Lien Indemnity Agreement, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
The holders of the Senior Indebtedness may, without in any way affecting the
obligations of any Completion Guarantor with respect hereto, at any time or from
time to time and in their absolute discretion, change the manner, place or terms
of payment of, change or extend the time of payment of, or
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<PAGE>
renew or alter, any Senior Indebtedness or amend, modify or supplement any
agreement or instrument governing or evidencing such Senior Indebtedness or any
other document referred to therein, or exercise or refrain from exercising any
other of their rights under the Senior Indebtedness including, without
limitation, the waiver of default thereunder and the release of any collateral
securing such Senior Indebtedness, all without notice to or assent from any
Completion Guarantor.
1.7. Senior Indebtedness. The term "Senior Indebtedness" shall mean all
Obligations of the Company (i) under the Credit Agreement and the other Credit
Documents and (ii) in respect of any Interest Rate Protection Agreements. As
used herein, the term "Obligations" shall mean all principal, interest, premium,
penalties, fees, expenses, indemnities and other liabilities and obligations
payable under the documentation governing any Senior Indebtedness (including
interest accruing after the commencement of any bankruptcy, insolvency,
receivership or similar proceeding, at the rate provided for in the documents
governing such Senior Indebtedness, whether or not such interest is an allowed
claim against the debtor in any such proceeding).
2. OTHER RESTRICTED PAYMENTS; SUBORDINATED RIGHTS
2.1. In addition to the provisions of preceding Section 1, until all
commitments under the Credit Agreement have terminated and all amounts owing
thereunder have been repaid in full in cash, the Completion Guarantors shall
not, and shall not permit any of their Subsidiaries to, receive any Restricted
Payment in violation of the provisions of the Credit Agreement (including,
without limitation, Sections 9.03 and 9.06 thereof).
2.2. In the event that, notwithstanding the provisions of the preceding
subsection (a) of this Section 2, the Completion Guarantors or any of their
Subsidiaries shall receive any payment not permitted to be received by them
pursuant to said subsection (a), such payment shall be held by such Completion
Guarantor or its respective Subsidiary in trust for the benefit of, and shall be
paid forthwith and delivered (with the Completion Guarantors hereby agreeing to
pay such amount over), to the holders of Senior Indebtedness or their
representative or the Administrative Agent, as their respective interests may
appear, for application pro rata to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness in full
in cash in accordance with the terms of such Senior Indebtedness, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
2.3. Each Completion Guarantor, for itself, its successors and assigns,
covenants and agrees that (i) its rights as assignee of the Assigned Interests
are subject to the prior security interest granted in such Assigned Interests
under the Security Documents to the Secured Creditors and (ii) its rights under
the Rights of Use are subject in all respects to the Mortgage. The priorities
set forth herein with respect to the Assigned Interests and the Rights of Use
are applicable irrespective of (a) the time, order or method of attachment or
perfection or recording thereof or of any financing statements or (b) whether or
not the Collateral Agent, the Administrative Agent or any Senior Creditor has a
perfected security interest in the Assigned Interests.
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2.4. Until all Senior Indebtedness shall have been paid in full in cash
and all commitments in respect of such Senior Indebtedness have been terminated,
no Completion Guarantor shall take any action whatsoever (including any remedial
action) to exercise or enforce its rights and remedies in respect of any
Assigned Interests or the Rights of Use, provided that in order to satisfy its
obligations under any Completion Guarantee and so long as the Completion
Guarantors are not in default under the Bank Completion Guarantee, the
Completion Guarantors may exercise any of their rights in respect of the
Assigned Interests and the Rights of Use in order to cause the completion of the
Casino (it being understood and agreed that the exercise by the Completion
Guarantors of such rights shall continue to be subject to the subordination
provisions of this Agreement).
3. AMENDMENT. No modification, amendment, waiver or release of any
provision of this Agreement or of any right, obligation, claim or cause of
action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Completion Guarantors and the
Administrative Agent (with the consent of the Required Banks).
4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PRINCIPLES.
5. THIRD PARTY BENEFICIARIES. This Agreement is entered into for the
benefit of the holders from time to time of the Senior Indebtedness, and may not
be amended or modified in any respect, or terminated, without the consent of the
Administrative Agent (with the consent of the Required Banks). The provisions of
this Agreement are continuing provisions and all Senior Indebtedness to which
they apply shall conclusively be presumed to have been created in reliance
thereon. Except to the extent provided in Section 1.4, this Agreement is not
entered into for the benefit of the Company, and the Company shall not be a
third party beneficiary of this Agreement. Except as otherwise expressly set
forth herein, no provision of this Agreement shall be deemed to modify, or
release the Company from, any of its obligations pursuant to the Completion Loan
Agreement or the Construction Lien Indemnity Obligation Agreement, or to grant
the Company any additional rights under the Completion Loan Agreement or the
Construction Lien Indemnity Obligation Agreement.
6. TERMINATION. This Agreement shall terminate on the first to occur of
(i) the termination of the Credit Agreement and satisfaction of all obligations
to the Administrative Agent and the Lenders thereunder or (ii) the termination
of the Bank Completion Guarantee and satisfaction of all obligations to HET,
HOCI and the Administrative Agent thereunder and the obligations of the
Completion Guarantors under this Agreement (so long as, in the case of both
clauses (i) and (ii) above, the satisfaction of said obligations does not
violate the terms of this Agreement).
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7. COMPLETION LOAN AGREEMENT
7.1. Notwithstanding anything to the contrary contained in the
Completion Loan Agreement, the Completion Guarantors hereby waive all rights
to take any action in respect of a default by the Company under Section 9 of
the Completion Loan Agreement, at any time prior to the occurrence of a Flip
Event (as defined in the Restated Certificate of Incorporation of JCC Holding
as of the date hereof), or after the occurrence of a Cure Event (as defined
in the Restated Certificate of Incorporation of JCC Holding as of the date
hereof) in respect of any uncured Flip Events, and during such periods such
covenants shall be deemed modified to the extent necessary such that they are
no more onerous on the Company than the covenants contained in the Indenture
as in effect on the date hereof.
7.2. Notwithstanding anything to the contrary contained in the
Completion Loan Agreement, the Completion Guarantors subordinate to the Lien
granted by the Company to Secured Creditors all rights granted or purported to
be granted by the Company to the Completion Guarantors pursuant to the
Completion Loan Agreement in any policies of insurance for or revenues from the
Casino (collectively, the "Assigned Proceeds").
7.3. Each Completion Guarantor, for itself, its successors and assigns,
covenants and agrees that its rights as assignee of the Assigned Proceeds are
subject to the prior security interest granted in such Assigned Proceeds under
the Security Documents to the Secured Creditors. The priorities set forth herein
with respect to the Assigned Proceeds are applicable irrespective of (i) the
time, order or method of attachment or perfection or recording thereof or of any
financing statements or (ii) whether or not the Collateral Agent, the
Administrative Agent or any Senior Creditor has a valid or perfected security
interest in the Assigned Proceeds.
7.4. Until all Senior Indebtedness shall have been paid in full in cash
and all commitments in respect of such Senior Indebtedness have been terminated,
no Completion Guarantor shall take any action whatsoever (including any remedial
action) to exercise or enforce its rights and remedies in respect of any
Assigned Proceeds, provided that in order to satisfy its obligations under any
Completion Guarantee and so long as the Completion Guarantors are not in default
under the Bank Completion Guarantee, the Completion Guarantors may exercise any
of their rights in respect of the Assigned Proceeds in order to cause the
completion of the Casino (it being understood and agreed that the exercise by
the Completion Guarantors of such rights shall continue to be subject to the
subordination provisions of this Agreement).
7.5. The subordination and other provisions of this Agreement apply
only to the Subordinated Obligations and shall have no effect on the rights of
HET and HOCI pursuant to the HET/JCC Agreement.
8. NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
9
<PAGE>
(a) if to HET or HOCI at: Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
with a copy to the Corporate
Secretary at the same address
(b) if to the Company, at: Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: President
(c) if to the Administrative Agent, at: Bankers Trust Company
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Mary Kay Coyle
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
10
<PAGE>
IN WITNESS WHEREOF, the Administrative Agent and each
Completion Guarantor have caused this Agreement to be duly executed and
delivered as of the date first written above.
WITNESSES: HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
/s/ Vicki J. Gromberg By: /s/ George W. Loveland, II
- ---------------------------- --------------------------------------
Name: George W. Loveland, II
------------------------------------
/s/ J. Hansen Title: Vice President
- ---------------------------- -----------------------------------
HARRAH'S OPERATING COMPANY, INC.,
a Delaware Corporation
/s/ Vicki J. Gromberg By: /s/ George W. Loveland, II
- ---------------------------- -------------------------------------
Name: George W. Loveland, II
------------------------------------
/s/ J. Hansen Title: Vice President
- ---------------------------- -----------------------------------
BANKERS TRUST COMPANY,
as Administrative Agent
for the Lenders
/s/ A. Moskal By: /s/ Mary Kay Coyle
- ---------------------------- --------------------------------------
Name: Mary Kay Coyle
------------------------------------
/s/ Rob Friedrich Title: Managing Director
- ---------------------------- -----------------------------------
Acknowledged and agreed by: WITNESSES:
JAZZ CASINO COMPANY, L.L.C.,
a Louisiana limited liability
company
By: /s/ Frederick W. Burford
-----------------------------
Name: Frederick W. Burford
---------------------------
Title: President
--------------------------
/s/ S. Jay Novatney
----------------------------
/s/ illegible
----------------------------
SIGNATURE PAGE TO
COMPLETION GUARANTEE SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
STATE OF New York
-----------------
COUNTY OF New York
-----------------
BE IT KNOWN that on the 28th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared George W. Loveland II, who
acknowledged himself to be Authorized Representative of Harrah's Entertainment,
Inc., a Delaware corporation, and that he, as such officer, being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
COMPLETION GUARANTEE SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
STATE OF New York
-----------------
COUNTY OF New York
-----------------
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Mary Kay Coyle, who
acknowledged himself to be Managing Director of Bankers Trust Company, a
National Banking Association, and that he, as such officer, being authorized
to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the company by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
COMPLETION GUARANTEE SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
STATE OF New York
-----------------
COUNTY OF New York
----------------
BE IT KNOWN that on the 28th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared George W. Loveland II, who
acknowledged himself to be Authorized Representative of Harrah's Operating
Company, Inc., a Delaware corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
COMPLETION GUARANTEE SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
STATE OF Louisiana
----------------
PARISH OF Orleans
---------------
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Frederick W. Burford, who
acknowledged himself to be President of Jazz Casino Company, L.L.C., a
Louisiana limited liability company, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer on
behalf of such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Daniel E. Davillier
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
COMPLETION GUARANTEE SUBORDINATION
AGREEMENT (Lenders)
<PAGE>
Exhibit 10.22
COMPLETION GUARANTOR SUBORDINATION AGREEMENT
(Convertible Junior Subordinated Debentures)
COMPLETION GUARANTOR SUBORDINATION AGREEMENT (as amended,
modified or supplemented from time to time, this "Agreement"), dated as of
October 30, 1998, among HARRAH'S ENTERTAINMENT, INC., a Delaware corporation
("HET"), HARRAH'S OPERATING COMPANY, INC., a Delaware corporation ("HOCI" and,
together with HET, the "Completion Guarantors" and each a "Completion
Guarantor"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
(together with any successor, the "Trustee") under the Indenture (as defined
below). Except as otherwise defined herein, terms used herein and defined in the
Indenture referred to below are used herein as so defined.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case
No. 95-14545.
B. HJC has submitted and the Bankruptcy Court has confirmed a
plan of reorganization (the "Plan") in connection with that certain voluntary
petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy
Code.
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith, pursuant to the Plan, the
Company and JCC Holding Company, a Delaware corporation ("JCC Holding"), and the
Trustee, have entered into that certain indenture (as from time to time amended,
modified, or supplemented, the "Indenture"), pursuant to which the Company has
issued $27,287,500 principal amount of its 8% Convertible Junior Subordinated
Debentures (the "Securities").
E. Pursuant to the Plan, the Completion Guarantors (a) have
entered into (i) that certain Notes Completion Guarantee in favor of the Trustee
as Trustee with respect to the New Bonds and New Contingent Bonds (each as
defined in the Plan) (as amended, modified or supplemented from time to time,
the "Notes Completion Guarantee"), (ii) that certain LGCB Completion Guarantee
in favor of the Louisiana Gaming Control Board (the "LGCB") (as amended,
modified or supplemented from time to time, the "LGCB Completion Guarantee"),
(iii) that certain Bank Completion Guarantee in favor of the Administrative
Agent (as amended, modified or supplemented from time to time, the "Bank
Completion Guarantee"), and (iv) that certain City/RDC Completion Guarantee in
favor of Rivergate Development Corporation ("RDC") and the City of New Orleans
(the "City") (as amended, modified or supplemented from time to time, the
"City/RDC Completion Guarantee"), and (b) may in the future enter into one or
more completion or other guarantees in support of the obligations of the Company
(with all
<PAGE>
completion and other guarantees described in this paragraph being herein
collectively called the "Completion Guarantees").
F. Contemporaneously herewith the Company, JCC Holding, as
guarantor, Bankers Trust Company, as the Administrative Agent, and certain
lenders have entered into that certain Credit Agreement (the "Credit Agreement")
pursuant to the Plan providing for (i) a senior secured term loan in the amount
of Sixty Million Dollars ($60,000,000) [(the "A Term Loan")], (ii) a secured
term loan in the amount of One Hundred Fifty-One Million Dollars ($151,000,000)
[(the "B Term Loan")], and (iii) a revolving loan facility including Swingline
Loans and Letters of Credit (each as defined in the Credit Agreement) drawn
under such revolving loan facility in an amount not to exceed Twenty Five
Million Dollars ($25,000,000) [at any time outstanding].
G. Any amounts advanced or paid pursuant to the Completion
Guarantees (such amounts are referred to herein as "Completion Guarantee
Payments") will be loans (together with all other amounts owing to the
Completion Guarantors under the Completion Loan Agreement (as defined below),
the "Completion Loans") from the Completion Guarantors to the Company under that
certain Amended and Restated Completion Loan Agreement entered into by and among
the Company, HET and HOCI pursuant to the Plan (as amended, modified or
supplemented from time to time and together with the exhibits thereto, the
"Completion Loan Agreement").
H. The Trustee desires that the Completion Guarantors enter
into this Agreement in respect of all Completion Loans and any other amounts
whatsoever at any time owing by the Company to either or both Completion
Guarantors in respect of the Completion Guarantees, together with all principal,
interest, fees, indemnities and other amounts owing with respect thereto, are
herein called the "Subordinated Obligations."
I. As a condition to the issuance of the Securities, the
parties hereto (including the Completion Guarantors) are required to execute and
deliver this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. SUBORDINATION
1.1. Definitions. For purposes of this Agreement, the term
"Subordinated Debenture Noteholders" shall mean the Holders (as defined in the
Indenture) from time to time of the Securities, and the term "Subordinated
Debenture Notes Obligations" shall mean (a) the principal of, and premiums, if
any, and interest (including, without limitation, post-petition interest at the
rate provided in the Indenture whether or not such post-petition interest is an
allowed claim against the debtor in any bankruptcy or similar proceeding) and
(b) all other Obligations (as defined in the Indenture) of the Company under the
Indenture and the Securities to the Subordinated Debenture Noteholders and the
Trustee.
2
<PAGE>
1.2. Subordination of Liabilities
(a) Each Completion Guarantor, for itself, its successors and
assigns, covenants and agrees that the payment of the Subordinated Obligations
is hereby expressly subordinated, to the extent and in the manner hereinafter
set forth, to the prior payment in full in cash of all Subordinated Debenture
Notes Obligations. The provisions of this Section 1 shall constitute a
continuing offer to all Persons who, in reliance upon such provisions, become or
continue to remain Subordinated Debenture Noteholders and such provisions are
made for the benefit of the Subordinated Debenture Noteholders and such
Subordinated Debenture Noteholders are hereby made obligees hereunder the same
as if their names were written herein as such, and they and/or each of them may
proceed to enforce such provisions.
(b) In the event of any payment default under Sections 6.01(1)
and (2) of the Indenture, any acceleration of the Securities or declaration of
an Event of Default under Section 6.02 of the Indentures, or the bankruptcy of
the Company, any payments by the Company or any representative of the Company
shall be applied in the following order, subject to the rights of the LGCB under
that certain Amended and Renegotiated Casino Operating Contract entered into by
and among the State of Louisiana by and through the Louisiana Gaming Control
Board, Harrah's Jazz Company and the Company (the "Casino Operating Contract"),
the RDC under that certain Amended and Restated Lease Agreement among RDC, the
Company and the City (the "Lease"): (i) reimbursement of all management expenses
incurred in accordance with that certain Second Amended and Restated Management
Agreement by and between the Company and Harrah's New Orleans Management Company
(the "Management Agreement"); (ii) amounts as set forth in Section 11 of that
certain Intercreditor Agreement among HET, HOCI, Bankers Trust Company, Trustee,
as trustee, pursuant to the indentures for each of the Senior Subordinated Notes
due 2009 with Contingent Payments and the Senior Subordinated Contingent Notes
due 2009 and the other parties named therein; (iii) any credit enhancement fee
due and payable to HET or an Affiliate of HET pursuant to that certain Credit
Enhancement Fee Agreement entered into by and among the Company and HOCI
pursuant to the Plan; (iv) Base Fee and Termination Fee pursuant to and as
defined in the Management Agreement; (v) interest in respect of the Convertible
Junior Subordinated Debentures; (vi) principal due in respect of the Securities;
(vii) interest due on any amounts advanced under the Subordinated Credit
Facility, the Indemnity Agreement and the Completion Loan Agreement (each as
defined in the Indentures) on a pari passu basis; (viii) principal due on the
Subordinated Credit Facility, the Indemnity Agreement and the Completion Loan
Agreement on a pari passu basis; and (ix) Incentive Fee pursuant to and as
defined in the Management Agreement; provided that the amounts described in
clauses (iii) and (iv) above shall be senior to any Contingent Payments (as
defined in the Plan) on the New Bonds and the New Contingent Bonds.
1.3. Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances.
(a) Until all Subordinated Debenture Notes Obligations shall
have been paid in full in cash, no payment or distribution of any kind or
character (whether in cash, property, securities or otherwise) shall be made in
respect of any Subordinated Obligations, except that for
3
<PAGE>
any period that cash interest is being paid pursuant to the Indenture, cash
interest may be paid on the Subordinated Obligations for such period.
(b) In the event that, notwithstanding the provisions of the
preceding subsection (a) of this Section 1.3, (i) the Company or any of its
Subsidiaries shall make any payment or distribution to any Completion Guarantor
on account of the Subordinated Obligations which is not permitted by said
subsection (a) or (ii) any Completion Guarantor receives any payment or
distribution from any enforcement or other action in respect of the Company or
any of its Subsidiaries, such payment or other distribution, shall be held by
any such Completion Guarantor in trust for the benefit of, and shall be paid
forthwith over and delivered to, the Trustee, for application pro rata to the
Subordinated Debenture Notes Obligations remaining unpaid to the extent
necessary to pay all Subordinated Debenture Notes Obligations in full in cash in
accordance with the terms of the Subordinated Debenture Notes Obligations, after
giving effect to any concurrent payment or distribution to or for the
Subordinated Debenture Noteholders.
1.4. Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company upon dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):
(a) the Subordinated Debenture Noteholders shall first be
entitled to receive payment in full in cash of all Subordinated Debenture Notes
Obligations (including, without limitation, post-petition interest at the rate
provided in the Subordinated Debenture Notes Documents whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before any Completion Guarantor is entitled to receive
any payment of any kind or character with respect to any Subordinated
Obligations;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise to
which any Completion Guarantor would be entitled except the provisions of this
Section 1.3, shall be paid by the liquidating trustee or agent or other person
making such payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee or other trustee or agent, directly to the Subordinated
Debenture Noteholders or to the Trustee to the extent necessary to make payment
in full in cash of all Subordinated Debenture Notes Obligations remaining
unpaid, after giving effect to any concurrent payment or distribution to the
Subordinated Debenture Noteholders; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 1.3, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property, securities or
otherwise, shall be received by any Completion Guarantor on account of
Subordinated Obligations before all Subordinated Debenture Notes Obligations are
paid in full in cash, which payment or distribution is not permitted by
preceding subsections (a) and (b) of this Section 1.3, subject to any rights of
any senior indebtedness or obligations, such payment or distribution shall be
received and held in trust for and shall be paid over to the
4
<PAGE>
Subordinated Debenture Noteholders or to the Trustee for application to the
payment of such Subordinated Debenture Notes Obligations until all Subordinated
Debenture Notes Obligations shall have been paid in full in cash, after giving
effect to any concurrent payment or distribution to the Subordinated Debenture
Noteholders.
1.5. Effect of Subordination on Obligations Pursuant to Completion Loan
Agreement. Each Completion Guarantor hereby agrees for the benefit of the
Company, the Trustee and Subordinated Debenture Noteholders that, to the extent
and for so long as any payment or distribution in respect of Subordinated
Obligations is not permitted to be made pursuant to the provisions of this
Agreement, then, and notwithstanding anything to the contrary contained in the
Completion Loan Agreement or any other agreement, the Subordinated Obligations
shall not be payable by the Company until they are permitted to be paid in
accordance with the terms of this Agreement. To the extent that any such
Subordinated Obligations are not payable by the Company pursuant to this
Agreement, the Completion Guarantors shall forbear exercising any right to
accelerate the Company's obligations under the Completion Loan Agreement as a
result thereof so long as this Agreement shall continue to prohibit the Company
from making any such payments or distributions. Without limiting the foregoing,
no action shall be taken by any Completion Guarantor to enforce the payment of
any Subordinated Obligations by the Company until all Subordinated Debenture
Notes Obligations shall have been paid in full in cash.
1.6. Subrogation. After all Subordinated Debenture Notes Obligations
have been paid in full in cash, each Completion Guarantor shall have and be
entitled to all rights of subrogation otherwise provided by law in respect of
any payment it may make or be obligated to make under this Agreement with
respect to the claims of the Subordinated Debenture Noteholders against the
Company or any other guarantor of the Subordinated Debenture Notes Obligations.
1.7. Subordination Rights Not Impaired by Acts or Omissions of Company
or Holders of Senior Indebtedness. No right of any Subordinated Debenture
Noteholder or the Trustee to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act by any such Subordinated
Debenture Noteholder, or by any noncompliance by the Company with the terms and
provisions of the Completion Loan Agreement regardless of any knowledge thereof
which any such Subordinated Debenture Noteholder may have or be otherwise
charged with. The Subordinated Debenture Noteholders may, without in any way
affecting the obligations of any Completion Guarantor with respect hereto, at
any time and from time to time and in their absolute discretion, change the
manner, place or terms of payment of, change or extend the time of payment of,
or renew or alter, any Subordinated Debenture Notes Obligations or amend, modify
or supplement any agreement or instrument governing or evidencing such
Subordinated Debenture Notes Obligations or any other document referred to
therein, or exercise or refrain from exercising any other of their rights under
the Subordinated Debenture Notes Obligations, including, without limitation, the
waiver of default thereunder and the release of any collateral securing such
Subordinated Debenture Notes Obligations, all without notice to or assent from
any Completion Guarantor.
5
<PAGE>
2. AMENDMENT. No modification, amendment, waiver or release of any
provision of this Agreement or of any right, obligation, claim or cause of
action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Trustee (with the consent of
Subordinated Debenture Noteholders holding 66-2/3% in principal amount of the
Subordinated Debenture Notes Obligations) and each Completion Guarantor.
3. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PRINCIPLES.
4. THIRD PARTY BENEFICIARIES. This Agreement is entered into for the
benefit of the Subordinated Debenture Noteholders, and may not be amended or
modified in any respect, or terminated, without the consent of the Trustee as
directed by Subordinated Debenture Noteholders holding 66-2/3% in principal
amount of the Subordinated Debenture Notes Obligations. The provisions of this
Agreement are continuing provisions and all Subordinated Debenture Notes
Obligations to which they apply shall conclusively be presumed to have been
created in reliance thereon. This Agreement is not entered into for the benefit
of the Company, and the Company shall not be a third party beneficiary of this
Agreement. No provision of this Agreement shall be deemed to modify, or release
the Company from, any of its obligations pursuant to the Completion Loan
Agreement or to grant the Company any additional rights under the Completion
Loan Agreement. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and the Subordinated Debenture Noteholders, and the
respective successors and assigns of the foregoing.
5. TERMINATION. This Agreement shall terminate on the first to occur of
(i) the termination of the Indenture and satisfaction of all obligations to the
Subordinated Debenture Noteholders thereunder or (ii) the termination of the
Completion Guarantees and the Completion Loan Agreement and satisfaction of all
obligations to HET, HOCI and the Trustee thereunder and the obligations of the
Completion Guarantors under this Agreement (so long as the satisfaction of said
obligations does not violate the terms of this Agreement).
6. COMPLETION LOAN AGREEMENT
6.1. Notwithstanding anything to the contrary contained in the
Completion Loan Agreement, the Completion Guarantors hereby waive all rights to
take any action in respect of a default by the Company under Section 9 of the
Completion Loan Agreement, during any period in which the payment of the
Subordinated Obligations is prohibited under the terms of this Agreement.
6.2. The subordination and other provisions of this Agreement apply
only to the Subordinated Obligations and shall have no effect on the rights of
HET and HOCI pursuant to the HET/JCC Agreement (as defined in the Indenture).
6
<PAGE>
7. NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to HET or HOCI, at:
Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
with a copy to the Corporate Secretary at the same address
(b) if to the Company, at:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: President
(c) if to the Trustee, at:
Norwest Bank Minnesota, National Association
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
7
<PAGE>
IN WITNESS WHEREOF, the Trustee and each Completion Guarantor
have caused this Agreement to be duly executed and delivered as of the date
first written above.
HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation
By: /s/ Stephen H. Brammell
---------------------------------------------
Name: Stephen H. Brammell
---------------------------------------------
Title: Vice President and Assistant Secretary
---------------------------------------------
HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation
By: /s/ Stephen H. Brammell
---------------------------------------------
Name: Stephen H. Brammell
---------------------------------------------
Title: Vice President and Assistant Secretary
---------------------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Raymond S. Haverstock
---------------------------------------------
Name: Raymond S. Haverstock
---------------------------------------------
Title: Vice President
---------------------------------------------
Acknowledged and agreed to by:
JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company
By: /s/ L. Camille Fowler
------------------------------------------------------
Name: L. Camille Fowler
------------------------------------------------------
Title: Vice President-Finance, Secretary and Treasurer
------------------------------------------------------
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Stephen H. Brammell, who
acknowledged himself to be Authorized Representative of Harrah's Entertainment,
Inc., a Delaware corporation, and that he, as such officer, being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Raymond S. Haverstock, who
acknowledged himself to be Vice President of Norwest Bank Minnesota, National
Association, and that he, as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained by signing the name
of the company by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Ann K. Mallari
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Stephen H. Brammell, who
acknowledged himself to be Authorized Representative of Harrah's Operating
Company, Inc., a Delaware corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared L. Camille Fowler, who
acknowledged himself to be Vice President-Finance, Secretary and Treasurer
of Jazz Casino Company, L.L.C., aLouisiana limited liability company, and that
he, as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such officer on behalf of such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
<PAGE>
Exhibit 10.23
HET SUBORDINATED LENDER SUBORDINATION AGREEMENT
(Senior Subordinated Notes)
HET SUBORDINATED LENDER SUBORDINATION AGREEMENT (as amended,
modified or supplemented from time to time, this "Agreement"), dated as of
October 30, 1998, among HARRAH'S ENTERTAINMENT, INC., a Delaware corporation
("HET"), HARRAH'S OPERATING COMPANY, INC., a Delaware corporation ("HOCI") and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee (together with any
successor, the "Trustee") under the Indentures (as defined below). Except as
otherwise defined herein, terms used herein and defined in the Indentures
referred to below are used herein as so defined.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted, and the United States Bankruptcy Court
for the Eastern District of Louisiana has confirmed, a plan of reorganization
(the "Plan").
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith, pursuant to the Plan, the
Company, JCC Holding Company, a Delaware corporation ("JCC Holding"), JCC
Development, L.L.C., CP Development, L.L.C., FP Development, L.L.C. and the
Trustee, as trustee, have entered into (i) that certain indenture, pursuant to
which the Company has issued Senior Subordinated Notes due 2009 with Contingent
Payments (as may be amended, modified, extended, renewed, supplemented or
refinanced from time to time, the "New Bonds") and (ii) that certain indenture
(and together with the indenture for the New Bonds, as each may be amended from
time to time, the "Indentures") pursuant to which the Company has issued Senior
Subordinated Contingent Notes due 2009 (as may be amended, modified, extended,
renewed, supplemented or refinanced from time to time, the "New Contingent
Bonds" and, together with the New Bonds, the "Senior Subordinated Notes" and,
together with the Indentures, the Collateral Documents (as defined in the
Indentures) and all other documents and agreements relating thereto, being
hereinafter called the "Senior Subordinated Notes Documents").
E. HET, HOCI and the Company have entered into that certain
Subordinated Credit Facility (as defined in the Indentures) pursuant to the
Plan.
F. Contemporaneously herewith the Company, JCC Holding, as
guarantor, Bankers Trust Company, as the Administrative Agent, and certain
lenders have entered into that
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certain Credit Agreement (the "Credit Agreement") pursuant to the Plan providing
for (i) a senior secured term loan in the amount of Sixty Million Dollars
($60,000,000), (ii) a secured term loan in the amount of One Hundred Fifty-One
Million Dollars ($151,000,000),and (iii) a revolving loan facility including
Swingline Loans and Letters of Credit (each as defined in the Credit Agreement)
drawn under such revolving loan facility in an amount not to exceed Twenty Five
Million Dollars ($25,000,000) at any time outstanding.
G. The Trustee desires that HET and HOCI enter into this
Agreement in respect of the Subordinated Credit Facility, which together with
all principal, interest, fees, indemnities and other amounts owing with respect
thereto or with respect to any related promissory notes or other related
documents, are herein called the "Subordinated Obligations."
H. Pursuant to the Security Agreement, the Company has granted
to the Collateral Agent for the benefit of the Senior Subordinated Noteholders
(as defined herein) of the Senior Subordinated Notes a perfected lien on, and
security interest in, the Assigned Interests.
I. The Collateral Agent (for the benefit of the Senior
Subordinated Noteholders) is the holder of that certain Act of Mortgage and
Collateral Assignment (as renewed, amended, modified, replaced, restated,
supplemented, or extended from time to time, the "Mortgage") executed by the
Company pursuant to the Plan in respect of inter alia, the Company's leasehold
estate in certain real property comprising the Casino premises and also subject
to the rights of use granted to HET and HOCI by the City and RDC (the "Rights of
Use").
J. As a condition to the issuance of the Senior Subordinated
Notes, the parties hereto (including HET and HOCI) are required to execute and
deliver this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. SUBORDINATION
1.1. Definitions. For purposes of this Agreement, the term "Senior
Subordinated Noteholders" shall mean the Holders (as defined in the Indentures)
from time to time of the Senior Subordinated Notes, and the term "Senior
Subordinated Notes Obligations" shall mean (a) the principal of, and premiums,
if any, and interest (including Contingent Payments) on the New Bonds and the
Contingent Payments due and payable in accordance with the terms of the New
Contingent Bonds and (b) all other Obligations (as defined in the Indentures) of
the Company under the Indenture to the Senior Subordinated Noteholders.
1.2. Subordination of Liabilities
(a) Each of HET and HOCI, for itself, its successors and
assigns, covenants and agrees that the payment of the Subordinated Obligations
is hereby expressly subordinated, to
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the extent and in the manner hereinafter set forth, to the prior payment in full
in cash of all Senior Subordinated Notes Obligations. The provisions of this
Section 1 shall constitute a continuing offer to all Persons who, in reliance
upon such provisions, become or continue to remain Senior Subordinated
Noteholders and such provisions are made for the benefit of the Senior
Subordinated Noteholders and such Senior Subordinated Noteholders are hereby
made obligees hereunder the same as if their names were written herein as such,
and they and/or each of them may proceed to enforce such provisions.
(b) In the event of any payment default under Sections 7.1(1)
and (2) of the Indentures, any acceleration of the Senior Subordinated Notes or
declaration of an Event of Default under Section 7.2 of the Indentures, or the
bankruptcy of the Company, any payments by the Company or any representative of
the Company, subject to the rights of the LGCB under the Casino Operating
Contract, the RDC under the Lease, and any other creditor, as their interests
may appear, shall be applied in the following order: (i) reimbursement of all
management expenses incurred in accordance with the Management Agreement; (ii)
amounts as set forth in Section 11 of that certain Intercreditor Agreement among
HET, HOCI, Bankers Trust Company, Norwest Bank Minnesota, National Association,
as trustee, and the other parties named therein (as may be amended from time to
time); (iii) any credit enhancement fee due and payable to HET or an Affiliate
of HET pursuant to that certain Credit Enhancement Fee Agreement entered into by
and among the Company and HOCI pursuant to the Plan; (iv) Base Fee and
Termination Fee pursuant to and as defined in the Management Agreement; (v)
interest due on the Convertible Junior Subordinated Debentures (as defined in
the Plan); (vi) principal due on the Convertible Junior Subordinated Debentures;
(vii) interest due on any amounts advanced under the Subordinated Credit
Facility, the Indemnity Agreement and the Completion Loan Agreement (each as
defined in the Indentures) on a pari passu basis; (viii) principal due on the
Subordinated Credit Facility, the Indemnity Agreement and the Completion Loan
agreement on a pari passu basis; and (ix) Incentive Fee pursuant to and as
defined in the Management Agreement; provided that the amounts described in
clauses (iii) and (iv) above shall be senior to any Contingent Payments on the
New Bonds and the New Contingent Bonds.
1.3. Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances
(a) Until all Senior Subordinated Notes Obligations shall have
been paid in full in cash, no payment or distribution of any kind or character
(whether in cash, property, securities or otherwise) shall be made in respect of
any Subordinated Obligations other than any payments permitted or not restricted
under Section 5.3 of the Indentures.
(b) In the event that (i) the Company or any of its
Subsidiaries shall make any payment to HET or HOCI on account of the
Subordinated Obligations, which payment is not permitted by subsection (a) of
this Section 1.3, or (ii) HET or HOCI receives any payment or distribution from
any enforcement or other action against the Collateral, such payment shall be
held by HET or HOCI, as the case may be, in trust for the benefit of the Senior
Subordinated Noteholders, and shall be paid forthwith over and delivered to the
Trustee, for application to the payment of all Senior Subordinated Notes
Obligations remaining unpaid to the extent necessary
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to pay the Senior Subordinated Notes Obligations in full in cash in accordance
with the terms of the Senior Subordinated Notes Documents after giving effect to
any concurrent payment or distribution to or for the Senior Subordinated
Noteholders.
1.4. Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company (including any assets constituting Collateral (as defined
in the Indentures)) upon dissolution, winding up, liquidation or reorganization
of the Company (whether in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or otherwise):
(a) the Senior Subordinated Noteholders shall first be
entitled to receive payment in full in cash of all Senior Subordinated Notes
Obligations (including, without limitation, post-petition interest at the rate
provided in the Senior Subordinated Notes Documents whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before HET and HOCI are entitled to receive any payment
of any kind or character with respect to any Subordinated Obligations, other
than any payments permitted or not restricted under Section 5.3 of the
Indentures;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise to
which HET and HOCI would be entitled but for the provisions of this Section 1.4,
shall be paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the Senior
Subordinated Noteholders or to the Trustee to the extent necessary to make
payment in full in cash of all Senior Subordinated Notes Obligations remaining
unpaid, after giving effect to any concurrent payment or distribution to the
Senior Subordinated Noteholders; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 1.4, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property, securities or
otherwise, shall be received by HET or HOCI on account of Subordinated
Obligations before all Senior Subordinated Notes Obligations are paid in full in
cash, which payment or distribution is not permitted by preceding subsections
(a) and (b) of this Section 1.4, such payment or distribution shall be received
and held in trust for and shall be paid over to the Senior Subordinated
Noteholders or to the Trustee for application to the payment of such Senior
Subordinated Notes Obligations until all Senior Subordinated Notes Obligations
shall have been paid in full in cash, after giving effect to any concurrent
payment or distribution to the Senior Subordinated Noteholders.
1.5. Effect of Subordination on Obligations Pursuant to Subordinated
Credit Facility. HET and HOCI hereby agree for the benefit of the Company and
the Senior Subordinated Noteholders that to the extent that any payment of
Subordinated Obligations is not permitted to be made pursuant to the provisions
of this Section 1, then, and notwithstanding anything to the contrary contained
in the Subordinated Credit Facility, the respective Subordinated Obligations
shall not be payable by the Company until they are permitted to be paid in
accordance with the terms of this Section 1. To the extent that any such
Subordinated Obligations are not payable by
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the Company pursuant to this Section 1, HET and HOCI shall forbear from
exercising any right to accelerate the Company's obligations under the
Subordinated Credit Facility as a result thereof so long as the Indentures or
this Agreement shall continue to prohibit the Company from making such payments.
Without limiting the foregoing, no action shall be taken by HET or HOCI to
enforce the payment of any Subordinated Obligations until all Senior
Subordinated Notes Obligations shall have been paid in full in cash.
1.6. Subrogation. After all Senior Subordinated Notes Obligations have
been paid in full in cash, HET and HOCI shall have and be entitled to all rights
of subrogation otherwise provided by law in respect of any payment it may make
or be obligated to make under this Agreement with respect to the claims of the
Senior Subordinated Noteholders against the Company or any other guarantor of
the Senior Subordinated Notes Obligations.
1.7. Subordination Rights not Impaired by Acts or Omissions of Company
or Holders of Senior Indebtedness. No right of any Senior Subordinated
Noteholder or the Trustee to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act by any such Senior
Subordinated Noteholder, or by any noncompliance by the Company with the terms
and provisions of the Subordinated Credit Facility regardless of any knowledge
thereof which any such Senior Subordinated Noteholder may have or be otherwise
charged with. The Senior Subordinated Noteholders or the Trustee may, without in
any way affecting the obligations of HET and HOCI with respect hereto, at any
time or from time to time and in their absolute discretion, change the manner,
place or terms of payment of, change or extend the time of payment of, or renew
or alter, any Senior Subordinated Notes Obligations or amend, modify or
supplement any of the Senior Subordinated Notes Documents or exercise or refrain
from exercising any other of their rights under the Senior Subordinated Notes
Documents including, without limitation, the waiver of default thereunder and
the release of any collateral securing the Senior Subordinated Notes
Obligations, all without notice to or assent from HET and HOCI.
2. OTHER RESTRICTED PAYMENTS; SUBORDINATED RIGHTS
2.1. In addition to the provisions of preceding Section 1, until all
Senior Subordinated Notes Obligations have been repaid in full in cash, HET and
HOCI shall not, and shall not permit any of their Subsidiaries to, receive any
Restricted Payment in violation of the provisions of the Indentures (including,
without limitation, Section 5.3 thereof).
2.2. In the event that, notwithstanding the provisions of the preceding
subsection (a) of this Section 2, HET or HOCI or any of their Subsidiaries shall
receive any payment not permitted to be received by them pursuant to said
subsection (a), such payment shall be held by HET or HOCI or its Subsidiary in
trust for the benefit of the Senior Subordinated Noteholders, and shall be paid
forthwith and delivered (with HET hereby agreeing to pay such amount over), to
the Trustee for application to the payment of all Senior Subordinated Notes
Obligations remaining unpaid to the extent necessary to pay all Senior
Subordinated Notes Obligations in full in cash after giving effect to any
concurrent payment or distribution to the Senior Subordinated Noteholders.
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2.3. Each of HET and HOCI, for itself, its successors and assigns,
covenants and agrees that (i) its rights as assignee of the Assigned Interests
are subject to the prior security interest granted in such Assigned Interests
under the Security Agreement to the Senior Subordinated Noteholders and (ii) its
rights under the Rights of Use are subject in all respects to the Mortgage. The
priorities set forth herein with respect to the Assigned Interests and the
Rights of Use are applicable irrespective of (a) the time, order or method of
attachment or perfection or recording thereof or of any financing statements or
(b) whether or not the Collateral Agent, the Trustee or any Holder has a
perfected security interest in the Assigned Interests.
2.4. Until all Senior Subordinated Notes Obligations shall have been
paid in full in cash neither HET nor HOCI shall take any action whatsoever
(including any remedial action) to exercise or enforce its rights and remedies
in respect of any Assigned Interests or the Rights of Use, provided that in
order to satisfy its obligations under any Completion Guarantee and so long as
HET and HOCI are not in default under the Notes Completion Guarantee, HET and
HOCI may exercise any of their rights in respect of the Assigned Interests and
the Rights of Use in order to cause the completion of the Casino (it being
understood and agreed that the exercise by HET and HOCI of such rights shall
continue to be subject to the subordination provisions of this Agreement).
3. AMENDMENT. No modification, amendment, waiver or release of any
provision of this Agreement or of any right, obligation, claim or cause of
action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Trustee, HET and HOCI.
4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PRINCIPLES.
5. THIRD PARTY BENEFICIARIES. This Agreement is entered into for the
benefit of the Senior Subordinated Noteholders, and may not be amended or
modified in any respect, or terminated, without the consent of the Trustee or
that percentage of the Senior Subordinated Noteholders required to amend the
Indentures pursuant to the terms of the Indentures. The provisions of this
Agreement are continuing provisions and all Senior Subordinated Notes
Obligations to which they apply shall conclusively be presumed to have been
created in reliance thereon. Except to the extent provided in Section 1.5
hereof, this Agreement is not entered into for the benefit of the Company, and
the Company shall not be a third party beneficiary of this Agreement. Except as
otherwise expressly set forth herein, no provision of this Agreement shall be
deemed to modify, or release the Company from, any of its obligations pursuant
to the Subordinated Credit Facility or to grant the Company any additional
rights under such agreement.
6. TERMINATION. This Agreement shall terminate on the first to occur of
(i) the termination of the Indentures and satisfaction of all obligations to the
Senior Subordinated Noteholders thereunder or (ii) the termination of the
Subordinated Credit Facility and satisfaction of all obligations to HET, HOCI
and the Company thereunder and the obligations of HET and
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HOCI under this Agreement (so long as, in the case of both clauses (i) and (ii)
above, the satisfaction of said obligations does not violate the terms of this
Agreement).
7. SUBORDINATED CREDIT FACILITY
7.1. Notwithstanding anything to the contrary contained in the
Subordinated Credit Facility, HET and HOCI hereby agree to forbear from taking
any action in respect of a default by the Company under Section 8 of the
Subordinated Credit Facility during any period in which payment of the
Subordinated Obligations is prohibited by the terms of this Agreement.
7.2. Notwithstanding anything to the contrary contained in the
Subordinated Credit Facility, HET and HOCI subordinate to the Lien granted by
the Company to the Senior Subordinated Noteholders all rights granted or
purported to be granted by the Company to HET and HOCI pursuant to the
Subordinated Credit Facility in any policies of insurance for or revenues from
the Casino (collectively, the "Assigned Proceeds").
7.3. Each of HET and HOCI, for itself, its successors and assigns,
covenants and agrees that its rights as assignee of the Assigned Proceeds are
subject to the prior security interest granted in such Assigned Proceeds under
the Security Agreement to the Senior Subordinated Noteholders. The priorities
set forth herein with respect to the Assigned Proceeds are applicable
irrespective of (i) the time, order or method of attachment or perfection or
recording thereof or of any financing statements or (ii) whether or not the
Collateral Agent, the Trustee or any Senior Subordinated Noteholder has a valid
or perfected security interest in the Collateral (as defined in the Indentures)
including the Assigned Proceeds.
7.4. Until all Senior Subordinated Notes Obligations shall have been
paid in full in cash, HET and HOCI shall not take any action whatsoever
(including any remedial action) to exercise or enforce their rights and remedies
in respect of any Assigned Proceeds, provided that in order to satisfy its
obligations under any Completion Guarantees (as defined in the Indentures) and
so long as HET and HOCI are not in default under the Notes Completion Guarantee,
HET and HOCI may exercise any of their rights in respect of the Assigned
Proceeds in order to cause the successful completion of the Casino (it being
understood and agreed that the exercise by HET and HOCI of such rights shall
continue to be subject to the subordination provisions of this Agreement).
7.5. The subordination and other provisions of this Agreement apply
only to the Subordinated Obligations and shall have no effect on the rights of
HET and HOCI pursuant to the HET/JCC Agreement (as defined in the Indentures).
8. NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
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(a) if to HET or HOCI, at: Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
(b) if to the Company, at: Jazz Casino Company, L.L.C.
512 S. Peters Street
New Orleans, Louisiana 70130
Attention: President
(c) if to the Trustee, at: Norwest Bank Minnesota, National Association
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
[Signature page follows]
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IN WITNESS WHEREOF, the Trustee, HOCI and HET have caused this
Agreement to be duly executed and delivered as of the date first written above.
WITNESSES: HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation
/s/ Vicki J. Gromberg By: /s/ George W. Loveland, II
- ---------------------------- ---------------------------------
Name: George W. Loveland, II
-------------------------------
/s/ Linda B. Jankovic Title: Vice President
- ---------------------------- ------------------------------
HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation
/s/ Vicki J. Gromberg By: /s/ George W. Loveland, II
- ---------------------------- ---------------------------------
Name: George W. Loveland, II
-------------------------------
/s/ Linda B. Jankovic Title: Vice President
- ---------------------------- ------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
/s/ Vicki J. Gromberg By: /s/ Raymond S. Haverstock
- ---------------------------- ---------------------------------
Name: Raymond S. Haverstock
-------------------------------
/s/ Linda B. Jankovic Title: Vice President
- ---------------------------- ------------------------------
Acknowledged and agreed by:
JAZZ CASINO COMPANY, L.L.C., a Louisiana WITNESSES:
limited liability company
By: /s/ Frederick W. Burford /s/ S. Jay Novatney
--------------------------------- ---------------------------------
Name: Frederick W. Burford
------------------------------
Title: President /s/ Vince Lazar
----------------------------- ---------------------------------
SIGNATURE PAGE TO
HET SUBORDINATED LENDER SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
STATE OF New York
PARISH/COUNTY OF New York
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared George W. Loveland II, who
acknowledged himself to be Authorized Representative of Harrah's
Entertainment, Inc., a Delaware corporation, and that he, as such officer,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
HET SUBORDINATED LENDER SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
STATE OF New York
PARISH/COUNTY OF New York
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Raymond S. Haverstock, who
acknowledged himself to be Vice President of Norwest Bank Minnesota, National
Association., and that he, as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by
signing the name of the company by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Ann K. Mallari
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
HET SUBORDINATED LENDER SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
STATE OF New York
PARISH/COUNTY OF New York
BE IT KNOWN that on the 29th day of October 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared George W. Loveland, who
acknowledged himself to be Authorized Representative of Harrah's Operating
Company, Inc., a Delaware corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
HET SUBORDINATED LENDER SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
STATE OF Louisiana
PARISH/COUNTY OF Orleans
BE IT KNOWN that on the ____ day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Frederick W. Burford, who
acknowledged himself to be President of Jazz Casino Company, L.L.C., a
Louisiana limited liability company, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of the corporation by himself as such
officer on behalf of such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Daniel E. Davillier
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
ACKNOWLEDGMENT TO
HET SUBORDINATED LENDER SUBORDINATION
AGREEMENT (Senior Subordinated Notes)
<PAGE>
Exhibit 10.24
HET SUBORDINATED LENDER SUBORDINATION AGREEMENT
(Convertible Junior Subordinated Debenture)
THIS HET SUBORDINATED LENDER SUBORDINATION AGREEMENT (as
amended, modified or supplemented from time to time, this "Agreement"), dated as
of October 30, 1998, is entered into by and among HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation ("HET"), HARRAH'S OPERATING COMPANY, INC., a Delaware
corporation ("HOCI") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Trustee (together with any successor, the "Trustee") under the Indenture (as
defined below). Except as otherwise defined herein, terms used herein and
defined in the Indenture referred to below are used herein as so defined.
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted, and the United States Bankruptcy Court
for the Eastern District of Louisiana has confirmed, a plan of reorganization
(the "Plan").
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith, pursuant to the Plan, the
Company, JCC Holding Company, a Delaware corporation ("JCC Holding"), and the
Trustee, have entered into that certain indenture (the "Indenture"), pursuant to
which the Company has issued $27,287,500 principal amount of its 8% Convertible
Junior Subordinated Debentures (the "Securities").
E. HET, HOCI and the Company have entered into that certain
Subordinated Loan Agreement pursuant to the Plan (as amended from time to time
the "Subordinated Credit Facility").
F. The Trustee desires that HET and HOCI enter into this
Agreement in respect of the Subordinated Credit Facility, which together with
all principal, interest, fees, indemnities and other amounts owing with respect
thereto or with respect to any related promissory notes or other related
documents, are herein called the "Subordinated Obligations".
G. As a condition to the issuance of the Securities, the
parties hereto (including HET and HOCI) are required to execute and deliver this
Agreement.
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AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
1. SUBORDINATION
1.1. Definitions. For purposes of this Agreement, the term
"Subordinated Debenture Noteholders" shall mean the Holders (as defined in the
Indenture) from time to time of the Securities, and the term "Subordinated
Debenture Notes Obligations" shall mean (a) the principal of, and premiums, if
any, and interest (including, without limitation, post-petition interest at the
rate provided in the Indenture whether or not such post-petition interest is an
allowed claim against the debtor in any bankruptcy or similar proceeding) and
(b) all other Obligations (as defined in the Indenture) of the Company under the
Indenture and the Securities to the Subordinated Debenture Noteholders and the
Trustee.
1.2. Subordination of Liabilities. Each of HET and HOCI, for itself,
its successors and assigns, covenants and agrees that upon, and only upon, the
event of a dissolution, winding up, liquidation or reorganization of the
Company, the payment of the Subordinated Obligations is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment in full in cash of all Subordinated Debenture Notes Obligations.
The provisions of this Section 1 shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become or continue to remain
Subordinated Debenture Noteholders and such provisions are made for the benefit
of the Subordinated Debenture Noteholders and such Subordinated Debenture
Noteholders are hereby made obligees hereunder the same as if their names were
written herein as such, and they and/or each of them may proceed to enforce such
provisions.
1.3. Company Not to Make Payments with Respect to Subordinated
Obligations in Certain Circumstances.
(a) Upon, and only upon, the event of a dissolution, winding
up, liquidation or reorganization of the Company, no payment or distribution of
any kind or character (whether in cash, property, securities or otherwise) shall
be made in respect of any Subordinated Obligations until all Subordinated
Debenture Notes Obligations shall have been paid in full in cash, except that
for any period that cash interest is being paid pursuant to the Indenture, cash
interest may be paid on the Subordinated Obligations for such period.
(b) In the event that, notwithstanding the provisions of the
preceding subsection (a) of this Section 1.3, (i) the Company or any of its
Subsidiaries shall make any payment to HET or HOCI on account of the
Subordinated Obligations, which payment is not permitted by said subsection (a),
or (ii) HET or HOCI receives any payment or distribution from any enforcement or
other action in respect of the Company or any of its Subsidiaries, which payment
is not permitted by said subsection (a), such payment or other distribution
shall be held by HET or HOCI, as the case may be, subject to the prior rights of
any obligations that are senior in lien priority to the Securities, in trust for
the benefit of, and shall be paid forthwith over and delivered to the Trustee,
for application pro rata to the payment of all Subordinated Debenture
2
<PAGE>
Notes Obligations remaining unpaid to the extent necessary to pay the
Subordinated Debenture Notes Obligations in full in cash in accordance with the
terms of the Subordinated Debenture Notes Obligations, after giving effect to
any concurrent payment or distribution to or for the Subordinated Debenture
Noteholders.
1.4. Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company upon dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):
(a) the Subordinated Debenture Noteholders shall first be
entitled to receive payment in full in cash of all Subordinated Debenture Notes
Obligations (including, without limitation, post-petition interest at the rate
provided in the Subordinated Debenture Notes Documents whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before HET and HOCI are entitled to receive any payment
of any kind or character with respect to any Subordinated Obligations, other
than any payments permitted under the Indenture;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property, securities or otherwise to
which HET and HOCI would be entitled but for the provisions of this Section 1.4,
shall be paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the Subordinated
Debenture Noteholders or to the Trustee to the extent necessary to make payment
in full in cash of all Subordinated Debenture Notes Obligations remaining
unpaid, after giving effect to any concurrent payment or distribution to the
Subordinated Debenture Noteholders; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 1.4, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property, securities or
otherwise, shall be received by HET or HOCI on account of Subordinated
Obligations before all Subordinated Debenture Notes Obligations are paid in full
in cash, which payment or distribution is not permitted by preceding subsections
(a) and (b) of this Section 1.4, subject to any rights of any senior
indebtedness or obligations, such payment or distribution shall be received and
held in trust for and shall be paid over to the Subordinated Debenture
Noteholders or to the Trustee for application to the payment of such
Subordinated Debenture Notes Obligations until all Subordinated Debenture Notes
Obligations shall have been paid in full in cash, after giving effect to any
concurrent payment or distribution to the Subordinated Debenture Noteholders.
1.5. Effect of Subordination on Obligations Pursuant to Subordinated
Credit Facility. HET and HOCI hereby agree for the benefit of the Company, the
Trustee, and the Subordinated Debenture Noteholders that to the extent that and
for so long as any payment or distribution in respect of Subordinated
Obligations is not permitted to be made pursuant to the provisions of this
Agreement, then, and notwithstanding anything to the contrary contained in the
Subordinated Credit Facility or any other agreement, the Subordinated
Obligations shall not be payable by the
3
<PAGE>
Company until they are permitted to be paid in accordance with the terms of this
Agreement. To the extent that any such Subordinated Obligations are not payable
by the Company pursuant to this Agreement, HET and HOCI shall forbear from
exercising any right to accelerate the Company's obligations under the
Subordinated Credit Facility as a result thereof so long as the Indenture or
this Agreement shall continue to prohibit the Company from making any such
payments or distributions. Without limiting the foregoing, no action shall be
taken by HET or HOCI to enforce the payment of any Subordinated Obligations by
the Company until all Subordinated Debenture Notes Obligations shall have been
paid in full in cash.
1.6. Subrogation. After all Subordinated Debenture Notes Obligations
have been paid in full in cash, HET and HOCI shall have and be entitled to all
rights of subrogation otherwise provided by law in respect of any payment it may
make or be obligated to make under this Agreement with respect to the claims of
the Subordinated Debenture Noteholders against the Company or any other
guarantor of the Subordinated Debenture Notes Obligations.
1.7. Subordination Rights Not Impaired by Acts or Omissions of Company
or Holders of Senior Indebtedness. No right of any Subordinated Debenture
Noteholder or the Trustee to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act by any such Subordinated
Debenture Noteholder, or by any noncompliance by the Company with the terms and
provisions of the Subordinated Credit Facility regardless of any knowledge
thereof which any such Subordinated Debenture Noteholder may have or be
otherwise charged with. The Subordinated Debenture Noteholders or the Trustee
may, without in any way affecting the obligations of HET and HOCI with respect
hereto, at any time or from time to time and in their absolute discretion,
change the manner, place or terms of payment of, change or extend the time of
payment of, or renew or alter, any Subordinated Debenture Notes Obligations or
amend, modify or supplement any of the Subordinated Debenture Notes Documents or
exercise or refrain from exercising any other of their rights under the
Subordinated Debenture Notes Obligations including, without limitation, the
waiver of default thereunder and the release of any collateral securing the
Subordinated Debenture Notes Obligations, all without notice to or assent from
HET and/or HOCI.
2. AMENDMENT. No modification, amendment, waiver or release of any
provision of this Agreement or of any right, obligation, claim or cause of
action arising hereunder shall be valid or binding for any purpose whatsoever
unless in writing and duly executed by the Trustee (with the consent of
Subordinated Debenture Noteholders holding 66-2/3% in principal amount of the
Subordinated Debenture Notes Obligations), HET and HOCI.
3. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PRINCIPLES.
4. THIRD PARTY BENEFICIARIES. This Agreement is entered into for the
benefit of Subordinated Debenture Noteholders, and may not be amended or
modified in any respect, or terminated, without the consent of the Trustee as
directed by Subordinated Debenture Noteholders holding 66-2/3% in principal
amount of the Subordinated Debenture Notes
4
<PAGE>
Obligations. The provisions of this Agreement are continuing provisions and all
Subordinated Debenture Notes Obligations to which they apply shall conclusively
be presumed to have been created in reliance thereon. Except to the extent
provided in Section 1.5 hereof, this Agreement is not entered into for the
benefit of the Company, and the Company shall not be a third party beneficiary
of this Agreement. Except as otherwise expressly set forth herein, no provision
of this Agreement shall be deemed to modify, or release the Company from, any of
its obligations pursuant to the Subordinated Credit Facility or to grant the
Company any additional rights under the Subordinated Credit Facility. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and the Subordinated Debenture Noteholders, and the respective successors and
assigns of the foregoing.
5. TERMINATION. This Agreement shall terminate on the first to occur of
(i) the termination of the Indenture and satisfaction of all obligations to the
Subordinated Debenture Noteholders thereunder or (ii) the termination of the
Subordinated Credit Facility and satisfaction of all obligations to HET, HOCI
and the Trustee thereunder and the obligations of HET and HOCI under this
Agreement (so long as the satisfaction of said obligations does not violate the
terms of this Agreement).
6. SUBORDINATED CREDIT FACILITY
(a) Notwithstanding anything to the contrary contained in the
Subordinated Credit Facility, HET and HOCI hereby agree to forbear from taking
any action in respect of a default by the Company under Section 8 of the
Subordinated Credit Facility, during any period in which the payment of the
Subordinated Obligations is prohibited under the terms of this Agreement.
(b) The subordination and other provisions of this Agreement
apply only to the Subordinated Obligations and shall have no effect on the
rights of HET and HOCI pursuant to the HET/JCC Agreement (as defined in the
Indenture).
7. NOTICES. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to HET or HOCI, at:
Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
with a copy to the Corporate Secretary at the same address
5
<PAGE>
(b) if to the Company, at:
Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Attention: President
with a copy to the Corporate Secretary at the same address
(c) if to the Trustee, at:
Norwest Bank Minnesota, National Association
Norwest Center
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Mimi Traynor - Corporate Trust
Department
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
6
<PAGE>
IN WITNESS WHEREOF, the Trustee, HOCI and HET have caused this
Agreement to be duly executed and delivered as of the date first written above.
HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation
By: /s/ Stephen H. Brammell
---------------------------------------------
Name: Stephen H. Brammell
-------------------------------------------
Title: Vice President and Assistant Secretary
------------------------------------------
HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation
By: /s/ Stephen H. Brammell
---------------------------------------------
Name: Stephen H. Brammell
-------------------------------------------
Title: Vice President and Assistant Secretary
------------------------------------------
NORWEST BANK MINNESOTA, N.A., as
Trustee
By: /s/ Raymond S. Haverstock
---------------------------------------------
Name: Raymond S. Haverstock
-------------------------------------------
Title: Vice President
------------------------------------------
Acknowledged and agreed to by:
JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company
By: /s/ L. Camille Fowler
-----------------------------------------------------
Name: L. Camille Fowler
---------------------------------------------------
Title: Vice President-Finance, Secretary and Treasurer
-------------------------------------------------
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Stephen H. Brammell, who
acknowledged himself to be Authorized Representative of Harrah's Entertainment,
Inc., a Delaware corporation, and that he, as such officer, being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
SIGNATURE PAGE TO
SUBORDINATED LENDER
SUBORDINATION AGREEMENT
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared Raymond S. Haverstock, who
acknowledged himself to be Vice President of Norwest Bank Minnesota, National
Association, and that he, as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by
signing the name of the company by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Ann K. Mallari
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
SIGNATURE PAGE TO
SUBORDINATED LENDER
SUBORDINATION AGREEMENT
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before me,
a Notary Public, duly commissioned and authorized in and for the State and
County aforesaid, personally came and appeared Stephen H. Brammell, who
acknowledged himself to be Authorized Representative of Harrah's Operating
Company, Inc., a Delaware corporation, and that he, as such officer, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
SIGNATURE PAGE TO
SUBORDINATED LENDER
SUBORDINATION AGREEMENT
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
BE IT KNOWN that on the 29th day of October, 1998, before
me, a Notary Public, duly commissioned and authorized in and for the State
and County aforesaid, personally came and appeared L. Camille Fowler, who
acknowledged himself to be Vice President-Finance, Secretary and Treasurer of
Jazz Casino Company, L.L.C., a Louisiana limited liability company, and that
he, as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained by signing the name of the
corporation by himself as such officer on behalf of such company.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jorge Jacob Jose
------------------------------------
Notary Public
[Notarial Seal]
My Commission expires:
SIGNATURE PAGE TO
SUBORDINATED LENDER
SUBORDINATION AGREEMENT
<PAGE>
Exhibit 10.25
CREDIT ENHANCEMENT FEE
AGREEMENT
(Jazz Casino Company, L.L.C.)
THIS CREDIT ENHANCEMENT FEE AGREEMENT (this "Agreement") is
entered into on this 29th day of October, 1998, by and between JAZZ CASINO
COMPANY, L.L.C., a Louisiana limited liability company (the "Company") and
HARRAH'S OPERATING COMPANY, INC., a Delaware corporation ("HOCI").
RECITALS
A. Harrah's Jazz Company, a Louisiana general partnership ("HJC"),
filed a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code on November 22, 1995, which case is now pending in the United
States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted, and the United States Bankruptcy Court for the
Eastern District of Louisiana has confirmed, the Third Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code, As Modified Through
September 3, 1998, as the same may be amended or modified from time to time (the
"Plan").
C. As contemplated by the Plan, the Company has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith the Company, JCC Holding Company, Bankers
Trust Company and certain Banks have entered into that certain Credit Agreement
pursuant to the Plan (the "Credit Agreement").
E. As an inducement for HOCI and its parent company, Harrah's
Entertainment, Inc. ("HET"), to guarantee the repayment of Tranche A-2 Term
Loans, Tranche B-2 Term Loans and the Revolving Loans, HOCI shall receive a
credit enhancement fee as set forth herein (the "Credit Enhancement Fee").
F. The parties desire to enter this Agreement regarding the Credit
Enhancement Fee.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. HOCI and HET Guarantees. HOCI and HET have been requested to, and
have, guaranteed the repayment of the Tranche A-2 Term Loans, Tranche B-2 Term
Loans and Revolving Loans pursuant to the HET/HOC Guaranty and Loan Purchase
Agreement.
<PAGE>
2. Credit Enhancement Fee
(a) Payment of Fee. In consideration of the guarantees
described in Section 1 hereof, the Company hereby agrees to pay to HOCI a Credit
Enhancement Fee equal to three-fourths of one percent (.75%) of the daily
average outstanding principal amount of Loans and/or Stated Amounts of Letters
of Credit outstanding from time to time pursuant to Tranche A-2 Term Loans,
Tranche B-2 Term Loans (in the case of Tranche B-2 Term Loans, only to the
extent of the outstanding principal amount thereof from time to time in excess
of $10 million) and the Revolving Loans for each Fee Period (as defined herein);
provided, however, (i) that no Credit Enhancement Fee shall accrue or be due and
payable with respect to the Revolving Loans until the date HOCI's guarantee of
the Carry Obligations, as defined in and arising under the Completion
Guarantees, has terminated; and (ii) for any time period in which the HET
Applicable Margin is greater than seventy five basis points (0.75%) per annum,
the Credit Enhancement Fee paid by the Company shall decrease by one basis point
(.01%) for each such one basis point (.01%) increase in the HET Applicable
Margin (in excess of seventy five basis points (0.75%)) until the Credit
Enhancement Fee is reduced to zero (0). "Fee Period," as used herein, shall mean
the three (3) month period ending on the last day of the month of each March,
June, September and December. Subject to the payment priorities set forth in
Section 3 below, the Credit Enhancement Fee shall be due and payable in arrears
on the first business day following each Fee Period (each a "Payment Date").
(b) Failure to Pay Fee. Any failure of the Company to pay when
due any portion of the Credit Enhancement Fee will have no effect on any
guarantee issued by HET and/or HOCI, as referenced in Section 1 hereof or
otherwise.
3. Subordination
(a) Payments Senior to the Credit Enhancement Fee. Payment of
the Credit Enhancement Fee is hereby expressly subordinated to the prior payment
in full by the Company of (i) amounts owed to the Minimum Payment Guarantor
pursuant to the Minimum Payment Guaranty Documents; (ii) amounts owed to the
Rivergate Development Corporation pursuant to that certain Canal Street Casino
Lease entered into pursuant to the Plan; (iii) amounts owed to the Louisiana
Gaming Control Board pursuant to that certain Casino Operating Contract entered
into pursuant to the Plan; (iv) reimbursable management expenses incurred in
accordance with the Management Agreement; (v) interest and principal due on the
Tranche A Term Loans, Tranche B Term Loans, Revolving Loans, Swingline Loans and
Letters of Credit; (vi) interest on the New Bonds (as such term is defined in
the Plan) pursuant to the New Bond Indenture; and (vii) principal amounts of the
New Bonds.
(b) Payments Junior to the Credit Enhancement Fee. Payment of
the Credit Enhancement Fee shall be senior to the Company's obligation to pay
(i) the Base Fee pursuant to and as defined in the Management Agreement; (ii)
Contingent Payments on the New Bonds and the New Contingent Bonds pursuant to
and as defined in the New Bond Indenture; (iii) interest due on the Convertible
Junior Subordinated Debentures; (iv) principal due on the Convertible Junior
Subordinated Debentures; (v) interest due on any amounts advanced under
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<PAGE>
that certain Subordinated Loan Agreement entered into pursuant to the Plan (the
"Subordinated Loan"), the advances by HOCI (the "Construction Lien Indemnity
Advances") pursuant to the Construction Lien Indemnity Obligation Agreement, and
any Completion Loans ("Completion Loans") pursuant to and as defined in the
Completion Guarantor Loan Agreement; (vi) principal due on the Subordinated
Loan, the Construction Lien Indemnity Advances and any Completion Loans; and
(vii) Incentive Fee pursuant to and as defined in the Management Agreement;
provided, however, that the Company must defer payment of Credit Enhancement
Fees during or with respect to any period in which the Company is in default
with respect to principal or interest payments on the New Bonds.
(c) Deferral. During any period in which the Company has
negative cash flow and after it has (i) paid Fixed Interest in Secondary
Securities (each term as defined in the New Bond Indenture) on the New Bonds for
such period pursuant to Section 2.2(e) of the New Bond Indenture, (ii) deferred
or disgorged the payment of Management Fees (as defined in the Management
Agreement) for such period to the Manager pursuant to Section 9.01(c) of the
Management Agreement, (iii) deferred the payment of the Minimum Payment
Guarantee Fees for such period pursuant to Section 2(b) of the HET/JCC
Agreement, (iv) deferred the payment of principal on the bank debt for such
period pursuant to Section 4.02(b) of the Credit Agreement, (v) paid interest on
the Convertible Junior Subordinated Debentures for such period in Secondary
Securities (as defined in the Convertible Junior Subordinated Debenture
Indenture) pursuant to Section 2.02 of the Convertible Junior Subordinated
Debenture Indenture, and (vi) deferred payment of the Subordinated Loan Payment
Obligations (as defined in the Subordinated Credit Facility) for such period
pursuant to Section 5 of the Subordinated Credit Facility, the Company may elect
to defer payment of the Credit Enhancement Fee to the extent of negative cash
flow.
(d) Repayment of Deferred Credit Enhancement Fees. Any Credit
Enhancement Fees deferred pursuant to Section 3(c) hereof shall be due and
payable out of the Company's cash flow on the next Payment Date (the "Deferred
Payment Date") after payment of any principal payments with respect to the
Tranche A Term Loan and Tranche B Term Loan which have been deferred pursuant to
Section 4.02(b)(iv)(A) and (B) or (ii) of the Credit Agreement; provided that no
deferred Credit Enhancement Fee shall be repaid until any default with respect
to principal or interest payments on the New Bonds has been cured.
4. Interest Rate
(a) Rate on Deferred Fees. If any portion of the Credit
Enhancement Fee is deferred pursuant to Section 3(c) hereof, such portion of the
Credit Enhancement Fee shall bear interest at a rate equal to eight percent (8%)
per annum from the Payment Date until the Deferred Payment Date.
(b) Default Rate. If any portion of the Credit Enhancement Fee
is deferred pursuant to Section 3(c) hereof but not paid on the Deferred Payment
Date, such portion of the Credit Enhancement Fee shall bear interest from the
Deferred Payment Date until paid in full at a rate equal to the lesser of (i)
the highest legal limit and (ii) two percent (2%) over the
3
<PAGE>
prime rate of interest charged by Citibank, N.A. at its offices in New York, New
York, to borrowers on ninety (90) day unsecured commercial loans.
5. Term and Termination. This Agreement shall terminate on the first
date after the date hereof upon which all Tranche A-2 Term Loans, Tranche B-2
Term Loans, Revolving Loans and Swingline Loans have been repaid in full, all
Letters of Credit have terminated and all Unpaid Drawings with respect thereto
have been repaid in full, and all Commitments under the Credit Agreement shall
have terminated, in each case so long as all Credit Enhancement Fees payable in
accordance with the terms hereof have in fact been paid.
6. No Right of Offset. Other than with respect to liquidated, final
non-appealable judgments against HOCI, no offset or claim that the Company or
any of its Affiliates now or may in the future have against HOCI, or any
Affiliate of HOCI or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction,
shall relieve the Company from paying any amounts owing hereunder.
7. Miscellaneous
(a) Entire Agreement. This Agreement represents the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and all prior agreements, understandings, representations and
warranties in regard to the subject matter hereof are and have been merged
herein and are superseded hereby.
(b) Governing Law. This Agreement and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
internal laws of the State of New York without application of conflict of laws
principles.
(c) Notices. The address of the Company and HOCI shall for all
purposes be as set forth below unless otherwise changed by the applicable party
hereto by notice to the other as provided herein.
Company: Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Attention: President
4
<PAGE>
HOCI: Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8600
Attention: General Counsel
with a copy to the Corporate
Secretary at the same address
All notices or other communications required or permitted to
be given pursuant to the provisions of this Agreement shall be in writing and
shall be considered as properly given if mailed by certified United States mail,
postage prepaid, with return receipt requested, by overnight courier service, or
by facsimile transmission with reception confirmed. Notices hereunder in any
manner shall be effective only if and when received by the addressee. Certified
mail receipt or express courier receipt at the above addresses shall establish
receipt for purposes of notices under this Agreement. Either party may from time
to time, by notice in writing served upon the other as aforesaid, designate a
different mailing address to which, or a different person to whose attention,
all such notices or demands are thereafter to be addressed.
(d) Successors and Assigns. No party shall assign its rights
and obligations under this Agreement without the prior written consent of the
parties hereto, except that HOCI may assign all or any portion of its right to
receive funds pursuant to this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their successors, assigns, heirs, legal representatives, executors and
administrators.
(e) Grammatical Changes. Whenever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter
gender as the circumstances require.
(f) Captions. Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision hereof.
(g) Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby; provided that the parties shall attempt to reformulate
such invalid provision to give effect to such portions thereof as may be valid
without defeating the intent of such provision and the economic burdens and
benefits of this Agreement are not impaired.
(h) Counterparts. This Agreement, or any amendment hereto, may
be executed in multiple counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same instrument, notwithstanding
that all of the parties hereto are not signatories to the original or the same
counterpart. In addition, this Agreement, or any amendment hereto, may contain
more than one counterpart of the signature pages, and this Agreement, or any
amendment hereto, may be executed by the affixing of the signatures of each of
the parties hereto to one of such counterpart signature pages; all of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
5
<PAGE>
(i) No Third Party Rights. This Agreement is for the sole and
exclusive benefit of the parties hereto designated herein and no other Person
(including any creditors of the parties hereto) shall under any circumstances be
deemed to be a beneficiary of any of the rights, remedies, terms and provisions
of this Agreement.
(j) Voluntary Agreement. Each party hereto has entered into
this Agreement freely and voluntarily, without coercion, duress, distress, or
undue influence by any other Persons or their respective shareholders,
directors, officers, partners, agents or employees.
(k) Advice From Counsel. Each party hereto understands that
this Agreement may affect legal rights. Each party hereto represents to the
other that it has received legal advice from counsel of its choice in connection
with the negotiation and execution of this Agreement and is satisfied with its
legal counsel and the advice received from it.
(l) Judicial Interpretation. Should any provision of this
Agreement require judicial interpretation or construction, there shall be no
presumption that the terms hereof shall be more strictly construed or
interpreted against any party hereto by reason of the rule of construction that
a document is to be construed more strictly against the party hereto who
prepared the same.
(m) Attorneys' Fees. If any party hereto brings any judicial
action or proceeding to enforce its rights under this Agreement, the prevailing
party shall be entitled, in addition to any other remedy, to recover from the
others, regardless of whether such action or proceeding is prosecuted to
judgment, all costs and expenses, including without limitation reasonable
attorneys' fees, incurred therein by the prevailing party.
(n) Permitted Actions. Each of the parties hereto acknowledges
and agrees that HOCI may take any separate action or actions to the extent
permitted under this Agreement as it shall determine in its sole discretion to
be in its own best interest.
(o) Definitions. Unless defined herein, capitalized terms
shall have the meanings set forth in the Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement effective as of the day and year first above written.
JAZZ CASINO COMPANY, L.L.C., a Louisiana
limited liability company,
By: /s/ Frederick W. Burford
-------------------------------------
Name: Frederick W. Burford
-----------------------------------
Title: President
----------------------------------
HARRAH'S OPERATING COMPANY, INC.,
a Delaware corporation
By: /s/ George W. Loveland II
-------------------------------------
Name: George W. Loveland II
-----------------------------------
Title: V.P.
----------------------------------
SIGNATURE PAGE TO
CREDIT ENHANCEMENT FEE
AGREEMENT (JCC)
<PAGE>
Exhibit 10.26
HET/JCC AGREEMENT
THIS HET/JCC AGREEMENT (the "Agreement") is made and entered into this
30th day of October, 1998, by and among JAZZ CASINO COMPANY, L.L.C., ("JCC"),
HARRAH'S ENTERTAINMENT, INC., a Delaware corporation ("HET") and HARRAH'S
OPERATING COMPANY, INC., a Delaware corporation ("HOCI").
RECITALS
A. JCC and the State of Louisiana (the "State") by and through the
Louisiana Gaming Control Board have entered into that certain Casino Operating
Contract of even date herewith (the "Casino Operating Contract").
B. Pursuant to the Casino Operating Contract, JCC agrees to pay a
certain Minimum Payment (as defined in the Casino Operating Contract) to the
Louisiana Gaming Control Board (the "LGCB").
C. The State and the LGCB desire that JCC cause to be provided a
Minimum Payment Guaranty (as defined in the Casino Operating Contract) to the
LGCB for each year for the Term (as defined in the Casino Operating Contract) of
the Casino Operating Contract.
D. As a condition to the effectiveness of the Plan (as defined in the
Casino Operating Contract), HET and HOCI (the "Guarantors") have agreed for a
limited period of time to provide a Minimum Payment Guaranty to the LGCB on the
terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
1. Minimum Payment Guaranty
(a) Obligation. For a period ending no later than March 31,
2004 and subject to earlier non-renewal as specified in Section 1(b) hereof or
early termination pursuant to Section 6(a) and (b) hereof, the Guarantors shall
provide a guaranty to the LGCB in the form attached hereto as Exhibit A and
incorporated herein by this reference for the first three hundred sixty five
(365) days including and after the Casino Opening
<PAGE>
Date and in the form attached hereto as Exhibit B and incorporated herein by
this reference for the Fiscal Years beginning April 1, 1999, 2000, 2001, 2002,
and 2003 (collectively, the "Guaranty"). On the Plan Effective Date (as defined
in the Casino Operating Contract), the Guarantors shall provide to the LGCB a
Guaranty for the three hundred sixty-five (365) days including and after the
opening of the Casino (as defined in the Casino Operating Contract) to be
effective only upon the opening of the Casino.
(b) Non-Renewal. The Guaranty shall automatically expire and not
renew (subject to Section 1(d) hereof) and shall not be drawn upon for any of
the Fiscal Years beginning April 1, 2000, 2001, 2002, or 2003 if any of the
following events have occurred and shall be continuing or uncured as of the day
prior to the first day of any such Fiscal Year:
(i) there has been a JCC Bankruptcy Event (as hereinafter
defined) or a cessation of Casino operations;
(ii) there are any then past due and unpaid Guaranty Fees
(as hereinafter defined), other than fees deferred in
accordance with the terms of this Agreement;
(iii) there has been a Minimum Payment Default;
(iv) subject to Section 1(c) hereof, in the case of a
renewal of the Guaranty for the Fiscal Year beginning
April 1, 2000, the Casino (as defined in the Casino
Operating Contract) has failed to generate positive
EBITDA for the period of operations ending January
31, 2000; provided that there shall be no EBITDA test
for the period of operations ending January 31, 2000
if such period of operations commenced after August
1, 1999;
(v) subject to Section 1(d) hereof, in the case of a
renewal of the Guaranty for the Fiscal Years
beginning April 1, 2001, 2002, and 2003, the Casino
has failed to generate EBITDA as of the twelve (12)
month period ending November 30 of the prior calendar
year in an amount equal to Fifteen Million Dollars
($15,000,000) as of the twelve (12) month period
ending November 30, 2000, Twenty Million Dollars
($20,000,000) as of the twelve (12) month period
ending November 30, 2001, and Twenty Five Million
Dollars ($25,000,000) as of the twelve (12) month
period ending November 30, 2002;
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(vi) HET, Harrah's New Orleans Management Company
("HNOMC") or any of their respective affiliates is
found unsuitable to own, operate, act as a lender to,
or otherwise in respect of the Casino by the State;
(vii) HNOMC has been removed as manager of the Casino;
(viii) The Casino Operating Contract has been terminated;
(ix) JCC has breached any of its covenants under Section 5
hereof; or
(x) An Excusable Temporary Cessation of Operations has
occurred and is continuing.
(c) Renewal for Fiscal Year Beginning April 1, 2000 in the Event of an
Excusable Temporary Cessation of Operations. Notwithstanding the provisions of
Section 1(b)(iv) hereof, the Guaranty shall automatically renew if the Casino's
failure to generate positive EBITDA for the period of operations ending January
31, 2000 is solely the result of an Excusable Temporary Cessation of Operations
and but for the Excusable Temporary Cessation of Operations the EBITDA test of
Section 1(b)(iv) hereof would have been met for the period of operations ending
January 31, 2000. To determine whether the Casino would have generated positive
EBITDA in the absence of an Excusable Temporary Cessation of Operations for the
period of operations ending January 31, 2000, it shall be assumed that the
Casino would have generated EBITDA for each day of any period of time the Casino
was closed due to an Excusable Temporary Cessation of Operations in an amount
equal to the average daily EBITDA generated during the thirty (30) days prior to
such period of time the Casino was closed due to an Excusable Temporary
Cessation of Operations.
(d) Renewal for Fiscal Years Beginning April 1, 2001, 2002, and 2003 in
the Event of an Excusable Temporary Cessation of Operations. Notwithstanding the
provisions of Section 1(b)(v) hereof, for the Fiscal Years beginning April 1,
2001, 2002, or 2003 the Guaranty shall automatically renew if the Casino's
failure to generate EBITDA for the twelve (12) month period ending November 30
of the prior calendar year equal to Fifteen Million Dollars ($15,000,000) as of
the twelve (12) month period ending November 30, 2000, Twenty Million Dollars
($20,000,000) as of the twelve (12) month period ending November 30, 2001, and
Twenty Five Million Dollars ($25,000,000) as of the twelve (12) month period
ending November 30, 2002 is solely the result of an Excusable Temporary
Cessation of Operations; provided that (i) such Fifteen Million Dollars
($15,000,000), Twenty Million Dollars ($20,000,000) and Twenty Five Million
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<PAGE>
Dollars ($25,000,000) EBITDA tests, respectively, shall be reduced pro rata for
any period of time the Casino was closed due to an Excusable Temporary Cessation
of Operations during the applicable twelve (12) month period and (ii) the
Guaranty shall automatically expire and not renew if any such reduced EBITDA
tests are not met. For example, if during the twelve (12) month period ending
November 30, 2000 the Casino was closed due to an Excusable Temporary Cessation
of Operations for four (4) months, the EBITDA test for such period would be
reduced from Fifteen Million Dollars ($15,000,000) to Ten Million Dollars
($10,000,000) calculated as follows:
$15 million X Months Casino was open during Fiscal Year (8)
---------------------------------------------
total number of months in Fiscal Year (12).
and in such example the Guaranty would expire and not renew unless the Casino
generated EBITDA of at least Ten Million Dollars ($10,000,000) for the
applicable twelve month period.
(e) Definitions.
(i) For purposes of Section A.4(b)(iv) and (v) hereof, "EBITDA"
shall mean operating income determined according to generally
accepted accounting principles plus depreciation and
amortization determined according to generally accepted
accounting principles, but in determining operating income any
extraordinary non-cash items such as the write down of assets
shall be excluded.
(ii) For purposes of Section A.4(b)(i) hereof, "JCC Bankruptcy
Event" shall mean the commencement of any case or proceeding
seeking liquidation, reorganization or other relief with
respect to JCC or its debt under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
similar official of JCC or the property of JCC, which, in the
case of an involuntary proceeding only, is not dismissed
within thirty (30) days after its commencement, or if JCC
shall consent to any such relief or to the appointment of or
taking possession by any such official in any involuntary case
or other proceeding commenced against it, or shall make a
general assignment for the benefit of its creditors, or shall
take any corporate action to authorize any of the foregoing or
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<PAGE>
if JCC is unable to demonstrate its continuing
ability to pay in full amounts due in the ordinary
course of Casino Operations, including its Debt (as
defined in the Casino Operating Contract) and
obligations as they become due according to their
terms.
(d) Notices. The Guarantors shall give JCC ninety (90) days
notice of any non-renewal pursuant to Section 1(b)(ii) or (v) hereof; provided,
however, unless such notice is given to JCC pursuant to Section 1(b)(ii) or (v)
hereof prior to ninety (90) days before the start of the ensuing Fiscal Year,
the Guarantors shall have no right of non-renewal pursuant to Section 1(b)(ii)
or (v) hereof for such ensuing Fiscal Year. The Guarantors shall give JCC thirty
(30) days notice of any non-renewal pursuant to Section 1(b)(iv) hereof;
provided, however, unless such notice is given to JCC pursuant to Section
1(b)(iv) hereof prior to thirty (30) days before the start of the ensuing Fiscal
Year, the Guarantors shall have no right of non-renewal pursuant to Section
1(b)(iv) hereof for such ensuing Fiscal Year. No notice shall be required for
any non-renewal pursuant to Sections 1(b)(i), (iii), (vi), (vii), (viii), (ix)
and (x) hereof.
2. Fees
(a) Annual Fees. For the Fiscal Years beginning on April 1,
1999 and 2000, JCC shall pay a fee to the Guarantors of Six Million Dollars
($6,000,000) per annum. For the Fiscal Years beginning on April 1, 2001, 2002,
and 2003, JCC shall pay a fee to the Guarantors of Five Million Dollars
($5,000,000) per annum. The fees for any Full Fiscal Years shall be payable
quarterly in advance. The Guarantors shall receive a pro rata fee for any
partial Fiscal Year ending March 31, 1999 or for the Fiscal Year ending March
31, 2000 if it is a partial Fiscal Year (i.e. a Fiscal Year in which the Casino
opens after April 1). For any partial Fiscal Year, JCC shall pay any fees
attributable to any partial quarter of such partial Fiscal Year at the beginning
of such partial quarter and shall pay any fees attributable to any full quarter
of such partial Fiscal Year at the beginning of such full quarter.
(b) Deferral. The Guarantors agree to defer receipt of the
Guaranty Fees if and to the extent required by the Credit Agreement (as defined
in the Casino Operating Contract) or Indentures (as defined in the Casino
Operating Contract).
3. Demand Loan. Any amount drawn by the LGCB pursuant to the Guaranty
or advanced by the Guarantors pursuant to Section 4(c) hereof shall be a demand
obligation of JCC to the Guarantors and shall be due immediately upon the date
of payment by the Guarantors to the LGCB of such drawn funds or the date such
funds are advanced by the Guarantors pursuant to Section 4(c) hereof (a "Demand
Loan").
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<PAGE>
Demand Loans shall bear interest at the same rate of interest as on the Tranche
A-3 Loan (as defined in the Plan). Such interest shall be due on the amount of
the outstanding Demand Loan from the date of any payment by the Guarantors
pursuant to the Guaranty to the LGCB or the date such funds are advanced by the
Guarantors pursuant to Section 4(c) hereof through the date of repayment or
satisfaction of the Demand Loan.
4. Collateral and Security Interest.
(a) Mortgage and Security Documents. To secure repayment of
any Demand Loan, Termination Fee (as hereinafter defined) and/or unpaid Guaranty
Fee to the Guarantors hereunder, JCC has concurrently herewith provided the
Guarantors with certain mortgage and security documents (collectively, the
"Mortgage and Security Documents").
(b) Expiration of Agreement. Upon (i) the expiration of this
Agreement pursuant to Section 6(c) hereof, (ii) any non-renewal pursuant to
Section 1(b) and 1(d) hereof, or (iii) early termination pursuant to Section 6
hereof, the Guarantors' rights under the Mortgage and Security Documents shall
terminate except with respect to any Demand Loan then outstanding, any
Termination Fee or Guaranty Fee then unpaid or other obligations to the
Guarantors under this Agreement. Upon the satisfaction in full of all Demand
Loans and all other fees and obligations to the Guarantors hereunder, the
Guarantors, upon request from JCC, agree to assign their rights under the
Mortgage and Security Documents to any substitute or successor provider of a
Minimum Payment Guaranty.
(c) Preservation Obligations of JCC
(i) JCC shall timely pay (A) all expenses and costs
required to comply with Section 9.20 - "Insurance
Coverages" of the Casino Operating Contract; (B)
all expenses and costs required to comply with
Section 9.25 - "Maintenance of Casino" of the
Casino Operating Contract; (C) all Impositions (as
defined in the Casino Operating Contract) required
to comply with Section 9.31 - "Payment of
Impositions" of the Casino Operating Contract; and
(D) all rent and other payments due under the
Casino Lease (as defined in the Casino Operating
Contract) required to comply with Section 9.5(b) -
"Performance and Payment of Operating Expense
Obligations" of the Casino Operating Contract
(collectively, the "Preservation Costs").
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<PAGE>
(ii) If JCC fails to pay any of the Preservation Costs
within thirty (30) days of the due date thereof,
then after notice and five (5) days opportunity to
cure, the Guarantors may thereafter pay such
Preservation Costs and any amounts advanced shall
be a Demand Loan and additional obligations
secured by the Mortgage and Security Documents.
(iii) JCC shall continuously maintain business
interruption insurance in accordance with the
Casino Lease (as defined in the Casino Operating
Contract), the Casino Operating Contract, the
Casino Management Agreement (as defined in the
Casino Operating Contract), and any additional
requirements of the Guarantors as may be required
to assure that JCC maintains sufficient insurance
so that JCC is covered for any business
interruption that may result in a suspension of
Casino Operations (as defined in the Casino
Operating Contract). If JCC fails to obtain and
maintain such insurance, the Guarantors may upon
notice and five (5) days opportunity to cure,
obtain such insurance on behalf of JCC and the
cost of any such insurance incurred by the
Guarantors shall be a Demand Loan and an
additional Obligation secured by the Mortgage and
Security Documents.
5. Covenants of JCC. So long as a Guaranty hereunder remains in effect,
a Demand Loan remains outstanding, any Termination Fee or Guaranty Fee remains
unpaid or any other obligation of JCC to the Guarantors hereunder remains
unsatisfied, from and after the occurrence of any Extraordinary Flip Event (as
defined in the Certificate of Incorporation of JCC Holding Company), and until
such Extraordinary Flip Event has been cured or waived, JCC agrees:
(a) Restrictions on Debt and Liens. Except as permitted by the
Indentures for the New Bonds (as defined in the Plan), any debt, including,
without limitation, all obligations for borrowed money or obligations evidenced
by bonds, debentures, notes or similar instruments, or any lien or encumbrance
of any kind incurred, modified, renewed or replaced by JCC shall be permitted
only with the prior written consent of the Guarantors.
(b) Restricted Acts. JCC shall not without the prior written
consent of the Guarantors:
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<PAGE>
(i) declare or make or become irrevocably committed to
make any redemption, acquisition or other manner
of return of the capital invested in JCC by a
shareholder;
(ii) consolidate, merge with or into any other entity;
(iii) dissolve JCC; or
(iv) sell, lease or otherwise transfer or dispose of,
directly or indirectly, all or any substantial
part of the property of JCC.
(c) Litigation. Without the prior written consent of the
Guarantors, JCC shall not institute any legal action against the LGCB or the
State affirmatively seeking an award of damages related to the Casino Operating
Contract or assert that JCC has continuous rights to operate the Casino after a
termination of the Casino Operating Contract as a result of JCC ceasing Gaming
Operations or failing timely to provide the LGCB a Minimum Payment Guaranty.
6. Termination of Guaranty
(a) JCC Right To Terminate Guaranty. Notwithstanding Section
1(a) hereof, JCC may elect to terminate this Agreement and the Guarantors'
obligation to provide a Guaranty prior to any of the Fiscal Years beginning
April 1, 2001, 2002, or 2003 by providing notice of its intent to terminate to
the Guarantors within ninety (90) days prior to the first day of such Fiscal
Year. In the case of the Fiscal Year beginning April 1, 2001, such termination
shall only be permitted upon the payment of a termination fee of One Million
Dollars ($1,000,000) (the "Termination Fee") concurrently with the notice of
termination. If JCC shall elect to terminate this Agreement ninety (90) days
prior to either the Fiscal Year beginning April 1, 2002 or the Fiscal Year
beginning April 1, 2003, no Termination Fee shall be due. JCC may not elect to
terminate this Agreement for the Fiscal Years beginning April 1, 1999 or April
1, 2000.
(b) Restriction on Termination. JCC is prohibited from
terminating this Agreement unless (i) JCC has obtained and provided to the LGCB
a replacement guaranty or letter of credit which meets the requirements of the
Casino Operating Contract for the Fiscal Year immediately following the last
Fiscal Year for which a Guaranty was provided by the Guarantors, (ii) the Casino
Operating Contract no longer requires JCC to provide a guaranty or letter of
credit, or (iii) the LGCB waives the requirement that JCC provide a guaranty or
letter of credit.
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<PAGE>
(c) Expiration of Guaranty. If this Agreement has not previously
been terminated by JCC pursuant to Section 6(a) hereof, or has not previously
terminated as a result of a non-renewal pursuant to Section 1(b) hereof, this
Agreement shall terminate and the obligation of the Guarantors to provide a
Minimum Payment Guaranty shall expire on March 31, 2004.
7. Governing Law. This Agreement shall be governed and construed in
accordance with the internal substantive laws of the State of New York
regardless of the laws which might otherwise govern under New York's or other
applicable concepts of conflicts of law.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9. Severability. If any one or more of the provisions contained in
this Agreement or in any other instrument referred to herein, shall for any
reason be held invalid, illegal, or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or such instrument.
10. Conflict. If there is any conflict or inconsistency between this
Agreement and the provisions of any exhibit attached hereto, the provisions of
this Agreement shall control.
11. Entire Agreement. This Agreement (including the exhibits attached
hereto), as written, contains all of the terms and conditions agreed among JCC
and the Guarantors relating to the matters covered by this Agreement, it being
agreed that all understandings and agreements heretofore and among such parties
or any of them relating to the matters covered by this Agreement are merged in
this Agreement which alone fully and completely expresses their agreement and
understanding.
12. Captions. The headings on the sections in this Agreement are for
convenience only and form no part of this Agreement and shall not affect
its interpretation.
13. Notices. All notices or other communications required or permitted
to be given or delivered pursuant to this Agreement shall be in writing and
shall be considered as properly given if mailed by Certified United States mail,
postage prepaid, with return receipt requested, overnight courier service or
facsimile transmission with receipt confirmed. Any party hereto may from time to
time, by notice in writing served upon the
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other parties hereto pursuant to this Section 13 designate a different address
or person to whose attention notices shall be given. Notices hereunder shall be
deemed given upon receipt. The addresses of the parties hereto for notices are:
JCC: Jazz Casino Company, L.L.C.
512 South Peters
New Orleans, LA 70130
Attn: Chief Financial Officer
HET and HOCI: Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
Attn: General Counsel
14. Advice From Counsel. The parties hereto understand that this
Agreement may affect legal rights. The parties hereto represent that they have
received legal advice from counsel of their choice in connection with the
negotiation and execution of this Agreement and are satisfied with their legal
counsel and the advice received.
15. Access to Documents. Each party hereto acknowledges that it (i) has
been given the opportunity to review all information and documents with respect
to the subject matter of this Agreement; (ii) has made an independent
investigation in making its decision to enter into this Agreement; and (iii) is
not relying on any statements or representations by any other party hereto in
entering into this Agreement other than as expressly set forth in this
Agreement.
16. Successors and Assigns. This Agreement shall be binding upon the
parties hereto and each of their respective successors and assigns and inure to
the benefit of the parties hereto and each of their respective successors and
assigns.
17. Amendments. Any amendment to this Agreement may only be made and
shall only be effective upon written approval of all parties hereto.
18. Further Document Modifications. The parties hereto agree to
negotiate in good faith such modifications to agreements as may be necessary or
appropriate to effect the purpose and intent of this Agreement.
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<PAGE>
19. Waiver and Release
(a) No Assurances
(i) The Guarantors have entered into this Agreement as
a condition to the effectiveness of the Plan. As a
prerequisite to maintaining the effectiveness of
the Casino Operating Contract, the Casino
Operating Contract requires that JCC annually
provide to the LGCB a Minimum Payment Guaranty, as
that term is defined in the Casino Operating
Contract. In entering into this Agreement, the
Guarantors have no obligation to provide the
Minimum Payment Guaranty for the entire term of
the Casino Operating Contract, but rather have
agreed only to provide it for the period and on
terms and conditions specified herein. The
Guarantors have expressly informed JCC that they
have not agreed to renew the Agreement beyond
March 31, 2004, or in any prior year where the
Guarantors' obligation to furnish the Guaranty
does not renew by the express terms of Section
1(b) hereof. The Guarantors have informed JCC that
any decision they make concerning whether to renew
the Guaranty or this Agreement will be made in
their sole discretion, acting only in their best
interests. JCC hereby acknowledges that (A) the
Guarantors are not obligated to and have not given
any assurances to JCC that they will renew this
Agreement beyond March 31, 2004, or renew the
Guaranty for any earlier Fiscal Year in which the
Guarantors' obligation to furnish the Guaranty
does not renew under the express terms of Section
1(b) hereof, (B) the Guarantors have the right to
make any such renewal decision by considering only
their best interests, and (C) the Guarantors need
not consider the interests of any other parties in
making any such renewal decision, notwithstanding
that the Guarantors are involved in a number of
capacities in respect of JCC.
(ii) JCC hereby agrees that by entering into this
Agreement or providing a Guaranty or otherwise,
the Guarantors are not now, and in the past have
not, made any assurances or guarantees concerning
the financial results of the Casino, nor are or
have the Guarantors made any assurances or
guarantees that the Casino will be financially
successful or will perform as projected in the
projections and/or feasibility studies included in
the Plan and the Disclosure Statement distributed
in connection with the Plan confirmation process.
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<PAGE>
(iii) JCC hereby agrees and acknowledges that any future
representation, warranty, assurance or other
guaranty by the Guarantors or any of their
subsidiaries or other affiliates to JCC concerning
the renewal of the Guaranty or this Agreement, the
operation of the Casino, the financial results of
the Casino, or any other matter concerning the
Casino or the Plan shall only be effective if set
forth in writing and properly executed by the
party to be charged.
(b) Releases
(i) JCC hereby releases and waives and agrees not to
bring any Claims against the Guarantors, whether a
known Claim or an Unknown Claim, that may arise in
any way, in whole or in part, out of (A) the
Guarantors' decision either to renew or not renew
the Guaranty or this Agreement, (B) the Guarantors
acting in their own best interests in connection
with the execution, renewal or failure to renew
the Guaranty or this Agreement, and/or (C) any
alleged assurance or guarantee by the Guarantors
concerning the operation of the Casino, the
financial results of the Casino or any other
matter concerning the Casino or the Plan, unless
such Claim is based on a writing (but in any event
cannot be based on this Agreement or the Guaranty)
properly executed by the party against whom such a
claim is being made.
(ii) JCC also hereby specifically waives any rights it
might have under Louisiana Civil Code Article 3083
and all other applicable or similar law to this
same or similar effect as the matters described in
Section 19(b)(i) hereof, including but not limited
to, any purported right to challenge the validity
or seek rescission of, or to vitiate, the releases
set forth above in Section 19(b)(i) hereof on the
ground that any information was kept concealed
from it and agrees that no remedy shall be
available for any such alleged non-disclosure, and
that the right to rescind the above release on any
such ground is hereby expressly waived.
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(c) Definitions. For the purposes of Sections 19(b)(i) and
(ii) hereof:
(i) "Claim" or "Claims" shall mean any action or
actions, cause or causes of action, in law or
equity, suits, debts, liens, liabilities, claims,
demands, damages, punitive damages, losses, costs
or expenses, and/or reasonable attorneys' fees of
any nature whatsoever.
(ii) "Guarantor" shall include HET, HOCI, Harrah's New
Orleans Investment Company, Harrah's Crescent City
Investment Company, Harrah's New Orleans
Management Company, their successors and assigns,
and all direct or indirect subsidiaries, and each
of their parents, subsidiaries, officers,
directors, corporate representatives, employees,
agents, lawyers and accountants and all persons
acting or claiming through, under or in concert
with any of them.
(iii) "Unknown Claim" or "Unknown Claims" means any and
all Claims, including without limitation, any
Claim which any of the parties hereto does not
know or even suspect to exist in his, her, or its
favor at the time of the giving of the releases
and waivers set forth in Section 19(b)(i) and (ii)
hereof which, if known by him, her or it might
have affected his, her or its decision regarding
the releases and waivers. Each of the parties
acknowledges that he, she or it might hereafter
discover facts in addition to or different from
those which he, she, or its now knows or believes
to be true with respect to the matters herein
released and waived, but each shall be deemed to
have fully, finally and forever released any and
all Claims.
20. No Third Party Beneficiaries. There are no third party
beneficiaries to this Agreement. JCC hereby acknowledges that the Guaranty
provides that there shall be no third party beneficiaries thereof. JCC also
agrees that it shall not claim or assert it is a third party beneficiary or
possesses any derivative claims under the Guaranty.
21. Disclosure. JCC hereby acknowledges that the Guarantors have
informed them (i) not to infer or assume that the Guarantors will renew the
Guaranty or this Agreement; (ii) that the Guarantors will consider only their
own best interests in determining whether to renew the Guaranty or this
Agreement; (iii) that the Guarantors are involved in a number of different
capacities in connection with the reorganization of Harrah's Jazz Company, the
governance of JCC and JCC Holding Company, and the operation of the Casino; and
(iv) that there can be no assurance that the Casino will
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perform as set forth in the projections and/or feasibility study set forth in
the Plan and Disclosure Statement circulated therewith.
22. Amendment of Obligations. The Guaranty hereunder is provided on the
express condition that JCC shall not amend or modify the Casino Operating
Contract in any way to increase the obligations under the Guaranty or adversely
affect the Guarantors without the prior written agreement of the Guarantors, and
any such amendment or modification shall have no force or effect in respect of
the Guarantors or the Guaranty.
23. Independent Agreement. This Agreement is independent of and shall
survive any cancellation or termination of the Casino Operating Contract.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
JAZZ CASINO COMPANY, L.L.C., a
Louisiana limited liability company
By: /s/ Fred W. Burford
---------------------------------
Name: Fred Burford
-------------------------------
Title: President
------------------------------
S-1
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HARRAH'S ENTERTAINMENT, INC., a
Delaware corporation
By: /s/ G.W. Loveland II
---------------------------------
Name: George W. Loveland, II
-------------------------------
Title: V.P.
------------------------------
HARRAH'S OPERATING COMPANY, INC., a
Delaware corporation
By: /s/ G.W. Loveland II
---------------------------------
Name: G.W. Loveland II
-------------------------------
Title: V.P.
------------------------------
S-2
<PAGE>
Exhibits
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Form of Initial Unconditional Guaranty Agreement Exhibit A
Form of Unconditional Guaranty Agreement Exhibit B
for Fiscal Year Ending March 31, ____
E-1
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Exhibit A
INITIAL UNCONDITIONAL
MINIMUM PAYMENT GUARANTY AGREEMENT
THIS INITIAL UNCONDITIONAL MINIMUM PAYMENT GUARANTY AGREEMENT (the
"Guaranty") is for the first 365 days (or 366 days if a Fiscal Leap Year is
involved) from and including the Casino Opening Date and is entered into as
of October 30, 1998, by HARRAH'S ENTERTAINMENT, INC., a Delaware corporation,
and HARRAH'S OPERATING COMPANY, INC., a Delaware corporation (each a
"Guarantor" and collectively the "Guarantors") in favor of the STATE OF
LOUISIANA by and through the LOUISIANA GAMING CONTROL BOARD (the "LGCB").
RECITALS
A. That certain Casino Operating Contract (the "COC") between Jazz
Casino Company, L.L.C., a Louisiana limited liability company (the
"Company"), and the LGCB, dated as of October 30, 1998, sets forth the
conditions, covenants, obligations, requirements and terms pursuant to which
the Company has the authority to conduct gaming operations at the Casino.
B. As used in this Guaranty, all capitalized terms used herein but not
defined herein shall be used herein as defined in the COC.
C. The Company has caused this Guaranty to be provided to the LGCB for
the first 365 days (or 366 days if a Fiscal Leap Year is involved) from and
including the Casino Opening Date] (the "Covered Fiscal Year"), as required
by the COC, and also to provide for certain payments if there is a default by
the Guarantors of the Completion Obligations (as Completion Guarantors) under
the LGCB Completion Guaranty, attached as Exhibit "B" to the COC.
D. Harrah's Entertainment, Inc. and Harrah's Operating Company, Inc.
have separately provided a Completion Guaranty to the Louisiana Gaming
Control Board which guarantees, among other things, the construction,
equipping and opening of the Casino for business and the payment and
performance of certain other indebtedness and obligations, all on the terms
more particularly set forth in the LGCB Completion Guaranty, attached as
Exhibit B to the COC.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantors, the receipt and sufficiency of which are hereby
acknowledged, the Guarantors hereby solidarily make the following
representations and warranties to the LGCB, and hereby solidarily covenant
and agree for the benefit of the LGCB as follows:
<PAGE>
1. Obligations Guaranteed and Method of Drawing.
1.1 The Guarantors hereby irrevocably, unconditionally, and in solido
with each other and with the Company, guarantee for the Covered Fiscal Year:
(a) the full, complete and timely payment and performance of all of
the Minimum Payment obligations of the Company to the LGCB under and in
accordance with the provisions of the COC; and
(b) the full, complete and timely payment to the LGCB of all of the
Daily Payments, Required Payments and Minimum Payment in accordance with the
provisions of the COC.
1.2 If there is any delay in timely paying to the LGCB any and/or all of
the Daily Payments, Required Payments and/or Minimum Payment as and when
required under the COC for the Covered Fiscal Year, the Guarantors shall also
pay to the LGCB interest on such payments due at the Default Interest Rate
(as provided in Section 6.7 of the COC) from the date each payment was due,
until paid to the LGCB.
1.3 In no event shall the aggregate total of Daily Payments, Required
Payments and the Minimum Payment to the LGCB under this Guaranty for the
Covered Fiscal Year exceed ONE HUNDRED MILLION DOLLARS ($100,000,000.00),
plus, and in addition thereto, any interest and attorneys' fees applicable to
the Guaranty Obligation provided for in the COC or in this Guaranty.
1.4 If the LGCB has not been timely paid any one or more of the required
Daily Payments for the Covered Fiscal Year, then (a) the LGCB may make
drawings under this Guaranty by providing written notice to the Guarantors
that one or more of the required Daily Payments have not been timely paid and
the principal amount of such Daily Payments then due (the "Notice of
Drawing"), and (b) the Guarantors shall pay to the LGCB all required but
unpaid Daily Payments, plus interest at the Default Interest Rate, upon
receipt of the Notice of Drawing. Guarantors shall make payment by wire or
other electronic transfer as provided in the Notice of Drawing, on or before
the time the Daily Payments are due under Section 6.5 - "Daily Deposits" of
the COC.
1.5 The Guarantors shall not be obligated to make any Daily Payments due
for any day which is twenty (20) days or more prior to the LGCB giving the
Notice of Drawing; provided however, that any payments which are suspended
pursuant to Section 6.3(a) of the COC shall not be due and payable until the
period of the suspension has expired.
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1.6 Once a Minimum Payment Default has occurred and a Notice of Drawing
has been provided to the Guarantors, the Guarantors shall be obligated
without any further notice by the LGCB to pay, and will pay, to the LGCB any
required Daily Payments for the Covered Fiscal Year on a daily basis for the
remainder of the Covered Fiscal Year (in which a Minimum Payment Default
occurs) to the extent such Daily Payments have not been timely paid.
1.7 If there is a default by Guarantors, in the performance of their
obligations under Section 1.1.(a)(iii) of the LGCB Completion Guarantee, and
the Casino is not opened for business as a casino gaming operation as
provided, and within the time allowed, in the Completion Guarantee,
Guarantors hereby irrevocably, unconditionally and in solido with each other
agree to pay and do hereby guarantee payment to the LGCB under this Guaranty
of a sum equal to the Minimum Payment, namely ONE HUNDRED MILLION AND NO/100
DOLLARS ($100,000,000.00). The $100,000,000.00 sum shall be payable in equal
daily installments for one year (hereinafter, each daily installment will be
a "Scheduled Installment"). It is further agreed that the date the Casino
would have opened if the Guarantors had timely performed their obligation to
open the Casino within the time allowed in the Completion Guaranty will
hereinafter be called the "Scheduled Date." Each Scheduled Installment shall
be payable daily in an amount equal to the Daily Payment, as provided in
Section 6.3 of the COC, the Casino Opening Date had occurred, beginning on
the first day after the Scheduled Date, and such Scheduled Installments will
continue to be paid on each day thereafter for one year. If any Scheduled
Installment is not timely paid when due, as set forth above, interest at the
Default Interest Rate will accrue on the amount of each unpaid Scheduled
Installment from the date each such Scheduled Installment is due until paid
in full. In addition, it is agreed that in no event shall Guarantors'
liability for payments under this Guaranty exceed ONE HUNDRED MILLION and
NO/100 DOLLARS ($100,000,000.00), plus interest and attorney fees, as
provided herein, and any payments actually made to and received by the LGCB
under this paragraph 1.7 for failure to open the Casino by the Scheduled
Date, shall be credited (to the extent of any payments received) against any
damages that the LGCB may be entitled to collect under the Completion
Guarantee for failure to open the Casino by the Scheduled Date.
1.8 Notwithstanding anything contained herein to the contrary, if the
Minimum Payment Default occurs in the First Fiscal Year or if no Minimum
Payment Guaranty is timely furnished for the second Fiscal Year, each
Guarantor in solido with the other Guarantor and the Company shall be
obligated to pay, and will pay, to the LGCB any unpaid Daily Payments, plus,
if applicable, interest at the Default Interest Rate, until the Day prior to
the first (year) anniversary of the Casino Opening Date, it being
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agreed that the Guaranty for the First Fiscal Year guarantees payment of (and
obligates the Guarantors in solido with the Company to pay) three hundred
sixty-five (365) days (366 days if a Fiscal Leap Year is involved) of Daily
Payments, including any such Daily Payments that become due during the second
Fiscal Year. It is agreed that if the Minimum Payment amount for any partial
First Fiscal Year has been paid and the Minimum Payment Guaranty has been
timely furnished for the next Full Fiscal Year, this Guaranty will be
satisfied and Guarantors shall have no further liability under this Guaranty.
1.9 All of the obligations undertaken hereinabove by the Guarantors in
this Section 1 and any amounts which may be due under Section 6.2 are
hereinafter collectively referred to as the "Guaranty Obligation."
1.10 Notwithstanding the suspension, under the provisions of Section
6.3(a) of the COC, of the payment of any of the amounts included within the
Guaranty Obligation, it is agreed that the Guaranty Obligation covers all
payments which would have been due and payable during the Covered Fiscal Year
except for the fact that such payments were suspended pursuant to Section
6.3(a) of the COC. Any such suspended payments shall be paid in the manner
and within the time provided in the COC, together with Late Payment Interest
from the time the suspended payments become due under the COC, and the
Guarantors guarantee the payment thereof, even after the expiration of the
Covered Fiscal Year.
2. GUARANTORS' ADDITIONAL AGREEMENTS.
2.1 The Guarantors, in solido with each other and the Company, agree to
perform and comply with their Guaranty Obligation, whether or not the Company
is liable therefor individually or jointly or in solido with others, and
whether or not recovery against the Company is or may become barred by any
statute of limitations or prescriptive or preemptive period or is or may
become unenforceable or discharged, whether in whole or in part, for any
reason other than payment thereof in full. The Guarantors agree that this
Guaranty is a guaranty of payment and not of collection, and that their
obligation under this Guaranty shall be primary, absolute and unconditional,
irrespective of, and unaffected by:
(a) the absence of any action to enforce this Guaranty or any other
document or the waiver or consent by the LGCB with respect to any of the
provisions thereof;
(b) any release or discharge of the other Guarantor, the Company or
any other party of the Guaranty Obligation; or
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<PAGE>
(c) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Guarantor shall be regarded, and shall be in the same position, as
principal debtor with respect to the Guaranty Obligation.
2.2 Each Guarantor expressly waives all rights it may have now or in the
future under any statute, or at common law, or at law or in equity, or
otherwise, to compel the LGCB to proceed in respect of the Guaranty
Obligation against the Company or any other party or against any security for
the payment of the Guaranty Obligation before proceeding against, or as a
condition to proceeding against, any Guarantor; and without limiting the
above, each Guarantor waives all pleas of division and discussion. Each
Guarantor agrees that any notice or directive given at any time to the LGCB
which is inconsistent with the waiver in the immediately preceding sentence
shall be null and void and may be ignored by the LGCB, and in addition, may
not be pleaded or introduced as evidence in any litigation relating to this
Guaranty for the reason that such pleading or introduction would be at
variance with the written terms of this Guaranty, unless the LGCB has
specifically agreed otherwise in writing.
2.3 Each Guarantor acknowledges that it has received a copy of and is
familiar with the COC, which to the extent of the Guaranty Obligation is
incorporated herein by reference.
2.4 Except as expressly provided for in this Guaranty, in no event shall
the Guarantors, as a result of this Guaranty, incur, directly or indirectly,
any obligation, contingent or otherwise, under the COC ("incur" meaning to
create, incur, assume, guaranty or otherwise become liable for).
3. Alternation of the Guaranty Obligation.
3.1 No exercise or non-exercise of any right hereby given to the LGCB,
no dealing by the LGCB with the Guarantors or any other guarantor or any
other person, and no change, impairment or release of all or any portion of
the Company's COC obligations, or suspension of any right or remedy of the
LGCB against any person, including without limitation the Company or any other
such guarantor or other person, shall in any way affect any part of the
Guaranty Obligation or any security furnished by the Guarantors or give the
Guarantors any recourse against the LGCB.
3.2 This Guaranty is provided on the express condition that, should the
LGCB and the Company amend or modify the COC so as to increase the Guaranty
Obligation or adversely affect the Guarantors
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<PAGE>
without the prior written agreement of the Guarantors, any such amendment or
modification entered into without the prior written agreement of the
Guarantors shall not increase the Guaranty Obligation or adversely affect the
Guarantors.
4. Waiver.
4.1 The Guarantors, in solido with each other, represent, warrant and
agree that, as of the date of this Guaranty, the Guaranty Obligation is not
subject to any recoupment, counterclaims, offsets or defenses against the
LGCB or the Company of any kind. The Guarantors further in solido with each
other agree that the Guaranty Obligation shall not be subject to any
recoupment, counterclaims, offsets or defenses against the LGCB or against
the Company of any kind which may arise in the future. Each Guarantor hereby
expressly waives and relinquishes all rights, defenses and remedies accorded
by applicable law to sureties or guarantors and agrees not to assert or take
advantage of any such rights, defenses or remedies, including without
limitation:
(a) any right to require the LGCB to proceed against the Company or
any other person or to proceed against or exhaust any security held by the
LGCB at any time or to pursue any other remedy in the power of the LGCB
before proceeding against either or both of the Guarantors, including but not
limited to any defense of failure to join or non-joinder of the Company or
any other person whatsoever in any litigation instituted by the LGCB against
either or both of the Guarantors;
(b) the defense of any statute of limitation, prescription and
peremption in any action hereunder or in any action for the collection of any
of the Guaranty Obligation;
(c) any defense that may arise by reason of the discharge in
bankruptcy, incapacity, lack of authority, death or disability of any other
person (including the Company) or the failure of the LGCB to file or enforce
a claim against the estate (in administration, bankruptcy or any other
proceeding) of any other person (including the Company);
(d) diligence, demand, presentment, protest and notice of any kind
other than notices expressly required in this Guaranty (whether for nonpayment
or protest or of acceptance, maturity, extension of time, change in nature or
form of the Company's obligations under the COC, acceptance of further
security, release of further security, composition or agreement arrived at as
to the amount of, or the terms of, the Company's obligations under the COC,
notice of adverse change in the Company's financial condition or any other
fact which might materially increase the risk to the Guarantors), including
without limitation notice of the existence,
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<PAGE>
creation or incurring of any new or additional indebtedness or obligation or
of any action or non-action on the part of the Company, the LGCB, any
endorser or creditor of the Company or either Guarantor or on the part of any
other person under this or any other instrument in connection with any
obligation or evidence of indebtedness held by the LGCB in connection with
any of the obligations of the Company under the COC;
(e) any defense based upon an election of remedies by the LGCB
which destroys or otherwise impairs the subrogation rights of the Guarantors,
the right of the Guarantors to proceed against the Company for reimbursement,
or both, or any defense that the LGCB's claims against the Guarantors are
barred or diminished or premature to the extent that the LGCB has or may have
remedies available against the Company;
(f) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor
in other respects more burdensome than that of the principal;
(g) any duty on the part of the LGCB to disclose to the Guarantors
any facts the LGCB may now or hereafter know about the Company, regardless of
whether the LGCB has reason to believe that any such facts materially
increase the risk beyond that which the Guarantors intend to assume, or has
reason to believe that such facts are unknown to either Guarantor, or has a
reasonable opportunity to communicate such facts to either Guarantor, since
each Guarantor acknowledges that it is fully responsible for being and
keeping informed of the financial condition of the Company and of all
circumstances bearing on the risk of nonpayment of any of the obligations of
the Company under the COC;
(h) waiver or estoppel or any alleged lack of reasonable or
justifiable reliance on the part of the LGCB as to the Guarantors'
representations;
(i) lack, failure or insufficiency of consideration;
(j) subject to the notice requirements of Sections 1.4 and 1.5
hereof, any alleged failure of the LGCB to mitigate injuries, losses or
damages or any plea that the LGCB has any duty to mitigate injuries, losses,
or damages prior to seeking recovery under this Guaranty; and
(k) any defense that the LGCB's claims hereunder are or may be
barred because any adequate remedy at law exists.
4.2 Following any default by either Guarantor under this Guaranty, each
Guarantor agrees to forbear from exercise of any
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rights of subrogation, indemnity, or contribution against each other, the
Company or any other person who may be liable for satisfaction of the
Guaranty Obligation until the Guaranty Obligation has been fully satisfied as
to the LGCB.
5. Bankruptcy.
5.1 In the event of the commencement of a bankruptcy case by or against
any Guarantor, each Guarantor agrees to waive the automatic stay under the
Bankruptcy Code and further agrees to the entry of an immediate order from
the Bankruptcy Court, on the LGCB's ex parte motion granting to the LGCB a
modification of the automatic stay (and/or recognition that the automatic
stay is not applicable) allowing it to fully enforce the provisions of this
Guaranty, the Guarantors hereby agreeing that in such case, "cause," as
defined by the Bankruptcy Code, would exist for the immediate entry by the
Bankruptcy Court of such an order modifying the automatic stay.
5.2 The Guaranty Obligation shall not be altered, limited or affected
by any proceeding, voluntary or involuntary, involving the bankruptcy,
reorganization, insolvency, receivership, liquidation or arrangement of the
Company, or by any defense which the Company may have by reason of any order,
decree or decision of any court or administrative body resulting from any
such proceeding.
5.3 This Guaranty shall remain in full force and effect and continue to
be effective should any petition be filed by or against the Company or any
Guarantor for liquidation or reorganization, should the Company or any
Guarantor become insolvent or make an assignment for the benefit of creditors
or should a receiver or trustee be appointed for all or any significant part
of the Company's or any Guarantor's assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment of the
Guaranty Obligation, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount or must otherwise be restored or returned by
the LGCB, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment had not been made. In the event that
any payment, or any part thereof, is rescinded, reduced, restored or returned
only by such amount paid and not so rescinded, reduced, restored or returned.
6. Interest, Costs and Attorneys' Fees.
6.1 If the Guarantors fail to timely pay all or any portion of the
Guaranty Obligation in accordance with the provisions of Section 1 of this
Guaranty, such amount shall bear interest as
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provided in Section 1.2 and/or in Section 1.7 of this Guaranty, as applicable.
6.2 If the LGCB refers this Guaranty to an attorney to enforce,
construe, or defend any provision hereof, or as a consequence of any default
hereunder by the Guarantors in connection with:
(a) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the LGCB, the Company, the Guarantors or any other
person) in any way relating to the enforcement of rights or remedies under
this Guaranty;
(b) any attempt to enforce any rights of the LGCB hereunder against
the Guarantors or any other person; or
(c) any attempt to defend any provision hereof;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or
respect arising in connection with or relating to any of the events or
actions described herein shall be payable, on demand, by the Guarantors to
the LGCB or the Guarantors shall cause the Company to make such payment, and
if not so paid, shall be a part of the Guaranty Obligation. The reference to
"attorneys' fees" in this Section 6.2 and in all other places in this
Guaranty shall also include, without limitation, such reasonable amounts as
may then be charged for legal services furnished by attorneys retained or
employed by the State or the LGCB. Such attorneys' fees, costs and expenses
shall include, without limitation, those incurred in connection with any
bankruptcy, reorganization, insolvency, receivership, liquidation,
arrangement, lawsuits in state or federal court, or other similar proceedings
involving either Guarantor which in any way affect the exercise by the LGCB
of its rights and remedies hereunder.
7. CUMULATIVE RIGHTS.
All rights, powers and remedies of the LGCB hereunder and under any
other written agreement now or at any time hereafter in force between the
LGCB and the Guarantors, including without limitation any other guaranty
executed by either Guarantor relating to any indebtedness of the Company,
shall be cumulative and not alternative, and such rights, powers and remedies
shall be in addition to all rights, powers and remedies given to the LGCB by
law and shall not be deemed in any way to extinguish or diminish the LGCB's
rights and remedies. This Guaranty is in addition to and independent of the
guaranty of any guarantor of any other
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obligations of the Company under the COC or other indebtedness of the Company.
8. Application of Payments and Recoveries.
After a Minimum Payment Default has occurred, as to any payments
received directly from a Guarantor, the LGCB shall apply such payments to
amounts due under the Guaranty Obligation. Any other payments or recoveries
received by the LGCB after a Minimum Payment Default shall be applied, as
directed by the LGCB at its sole option, (a) first, to amounts due for any
Additional Charges, and (b) second, to any Daily Payments, Required Payments,
or Minimum Payment due for any Fiscal Year other than the Fiscal Year in
which the Minimum Payment Default has occurred (collectively, the "Other
Fiscal Year Payments"). Only when such Additional Charges and all Other
Fiscal Year Payments are paid current will any payments or recoveries be
applied to the Guaranty Obligation under this Guaranty Agreement; provided,
however, Daily Payments, Required Payments or Minimum Payments paid by the
Company during a Covered Fiscal Year shall be applied to the Minimum Payment
for that Covered Fiscal Year.
9. Independent Obligations.
The Guaranty obligation is independent of the obligations of the Company
under the COC, and, in the event of any default hereunder, a separate action
or actions may be brought and prosecuted against either Guarantor, whether or
not the Company is joined therein or a separate action or actions are brought
against the Company. The LGCB's rights hereunder shall not be exhausted by
its exercise of any of its rights or remedies or by any such action or by any
number of successive actions unless and until all Guaranty Obligations have
been satisfied and fully performed.
10. Financial Statements.
The Guarantors hereby represent and warrant that the information
pertaining to the Guarantors set forth in their most recent filings with the
Securities and Exchange Commission is true and correct in all material
respects, and fairly presents the financial condition of the Guarantors as of
the respective dates indicated therein and for the periods covered thereby,
and that no material adverse change has occurred in the financial condition
or prospects of the Guarantors since the date of the latest information
provided therein.
11. Notices.
Whenever the Guarantors or the LGCB shall desire to give or serve any
notice, demand, request or other communication with
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respect to this Guaranty, each such notice shall be in writing and shall be
effective only if the same is delivered by personal service, overnight
courier service, or mailed by certified mail, postage prepaid, return
receipt requested, addressed as follows:
(a) if to either Guarantor
(or both Guarantors):
HET and Harrah's Operating
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
(b) if to the LGCB, as provided in the COC;
or at such other address as shall have been furnished in writing by any
person described above to the party required to give notice hereunder. Any
such notice shall be deemed to have been received upon delivery. Any of the
Guarantors or the LGCB may change its address by giving the others written
notice of the new address as herein provided.
12. Successors and Assigns.
This Guaranty shall inure to the benefit of the LGCB, its successors and
assigns, and shall bind the successors and assigns of each Guarantor. Neither
Guarantor may assign or transfer any of its rights, obligations or interest
hereunder without the prior written consent of the LGCB.
13. Miscellaneous Provisions.
13.1 This Guaranty shall be governed, interpreted and enforced in
accordance with Louisiana law.
Each Guarantor hereby submits to the jurisdiction of the State and the
courts thereof and to the jurisidiction of the Nineteenth Judicial District
Court in and for East Baton Rouge Parish ("19th JDC") for purposes of any
suit, action or other proceeding arising out of or relating to this Guaranty
and agrees not to assert by way of motion as a defense or otherwise that
such suit, action or other proceeding is brought in an inconvenient forum or
that the venue of such suit, action or other proceeding is improper or that
the subject matter thereof may not be enforced in or by such court or assert
that any suit or action filed in the 19th JDC may be removed to the Federal
Court, and each Guarantor agrees that the 19th JDC shall have the exclusive
jurisdiction for purposes of any suit, action or other proceeding brought
by either of them relating to or arising out of this Guaranty.
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If at any time during the Term, either Guarantor is not a resident of
the State and has not formally designated or does not continuously maintain
an agent for service of process in Louisiana or has not notified LGCB of the
full name and current street address in Louisiana of such agent for service
of process, such Guarantor hereby designates the Secretary of State of
Louisiana as its agent for service of process in any suit, action or
proceeding involving the LGCB or the State or arising out of or relating to
this Guaranty, and such service shall be made as provided by Louisiana law
for service on an insurance company through the Secretary of State.
13.2 This Guaranty shall constitute the entire agreement of the
Guarantors with the LGCB with respect to the subject matter hereof, and no
representation, understanding, promise or condition concerning the subject
matter hereof shall be binding upon the LGCB or the Guarantors unless
expressed herein.
13.3 Should any term, covenant, condition or provisions of this
Guaranty be determined to be illegal or unenforceable, it is the intent of the
parties that all other terms, covenants, conditions and provisions hereof
shall nevertheless remain in full force and effect.
13.4 Time is of the essence to this Guaranty and each of its provisions.
13.5 When the context and construction so require, all words used in the
singular herein shall be deemed to include the plural, the masculine shall
include the feminine and neuter, and vice versa.
13.6 The word "person" as used herein shall include any individual,
company, firm, association, partnership, limited liability company, joint
venture, corporation, trust or other legal entity of any kind whatsoever.
13.7 No provision of this Guaranty or right granted to the LGCB
hereunder can be waived in whole or in part, nor can either Guarantor be
release from the Guaranty Obligation, except by an express and specific
writing to that effect duly executed by an authorized officer of the LGCB. No
provision of this Guaranty may be amended without the prior written consent
of the Guarantors and the LGCB and the consent of any additional
beneficiaries hereof, if any, shall not be required.
13.8 The LGCB need not inquire into the power of the Guarantors or the
authority of their officers, shareholders or agents acting or purporting to
act on their behalf.
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13.9 The headings of this Guaranty are inserted for convenience only and
shall have no effect upon the construction or interpretation thereof.
13.10 All of the representations, warranties, agreements, obligations and
covenants of each Guarantor are in solido with the other Guarantor. This
Guaranty shall be for the sold benefit of the State of Louisiana acting by
and through the LGCB, its successors and assigns. The provisions of this
Guaranty shall not inure to the benefit of any other person, including,
without limitation, the Company.
13.11 This Guaranty shall be effective upon execution.
IN WITNESS HEREOF, the undersigned have executed this Guaranty as of the
30th day of October, 1998.
GUARANTORS:
HARRAH'S ENTERTAINMENT, INC.
By: /s/ G. W. Loveland II
------------------------------------
Duly Authorized Officer
HARRAH'S OPERATING COMPANY, INC.
By: /s/ G. W. Loveland II
------------------------------------
Duly Authorized Officer
Approved and consented to:
JAZZ CASINO COMPANY, L.L.C.
By: --------------------------------
Duly Authorized Officer
Accepted and agreed to:
LOUISIANA GAMING CONTROL BOARD
By: /s/ Hillary J. Crain
---------------------------------
Name: Hillary J. Crain
-------------------------------
Title: Chairman
-------------------------------
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13.9 The headings of this Guaranty are inserted for convenience only and
shall have no effect upon the construction or interpretation thereof.
13.10 All of the representations, warranties, agreements, obligations and
covenants of each Guarantor are in solido with the other Guarantor. This
Guaranty shall be for the sole benefit of the State of Louisiana acting by
and through the LGCB, its successors and assigns. The provisions of this
Guaranty shall not inure to the benefit of any other person, including,
without limitation, the Company.
13.11 This Guaranty shall be effective upon execution.
IN WITNESS HEREOF, the undersigned have executed this Guaranty as of the
30th day of October, 1998.
GUARANTORS:
HARRAH'S ENTERTAINMENT, INC.
By: ________________________________
Duly Authorized Officer
HARRAH'S OPERATING COMPANY, INC.
By: ________________________________
Duly Authorized Officer
Approved and consented to:
JAZZ CASINO COMPANY, L.L.C.
By: /s/ Frederick W. Burford
-----------------------------
Duly Authorized Officer
Accepted and agreed to:
LOUISIANA GAMING CONTROL BOARD
By: _____________________________
Name: ___________________________
Title: __________________________
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<PAGE>
Exhibit B
FORM OF
UNCONDITIONAL MINIMUM PAYMENT GUARANTY AGREEMENT
FOR FISCAL YEAR ENDING MARCH 31, ______
THIS UNCONDITIONAL MINIMUM PAYMENT GUARANTY AGREEMENT for Fiscal Year
ending March 31, ____ (the "Guaranty") is entered into as of
________________, ________, by __________________________________ a
___________________________ and _________________________________ a
___________________________________ (each a "Guarantor" and collectively the
"Guarantors") in favor of the STATE OF LOUISIANA by and through the LOUISIANA
GAMING CONTROL BOARD (the "LGCB").
RECITALS
--------
A. That certain Casino Operating Contract (the "COC") between Jazz
Casino Company, L.L.C., a Louisiana limited liability company (the
"Company"), and the LGCB, dated as of ______________________, 1998, sets
forth the conditions, covenants, obligations, requirements and terms
pursuant to which the Company has the authority to conduct gaming operations
at the Casino.
B. As used in this Guaranty, all capitalized terms used herein but not
defined herein shall be used herein as defined in the COC.
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C. The Company has caused this Guaranty to be provided to the LGCB
for Fiscal Year ending March 31, _____ (the "Covered Fiscal Year"), as
required by the COC.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Guarantors, the receipt and sufficiency of which are hereby
acknowledged, the Guarantors hereby solidarily make the following
representations and warranties to the LGCB, and hereby solidarily covenant
and agree for the benefit of the LGCB as follows:
1. Obligations Guaranteed and Method of Drawing.
1.1 The Guarantors hereby irrevocably, unconditionally, and in solido
with each other and with the Company, guarantee for the Covered Fiscal Year:
(a) the full, complete and timely payment and performance of all of
the Minimum Payment obligations of the Company to the LGCB under and in
accordance with the provisions of the COC; and
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<PAGE>
(b) the full, complete and timely payment to the LGCB of all of the
Daily Payments, Required Payments and Minimum Payment in accordance with the
provisions of the COC.
1.2 If there is any delay in timely paying to the LGCB any and/or all of
the Daily Payments, Required Payments and/or Minimum Payment as and when
required under the COC for the Covered Fiscal Year, the Guarantors shall also
pay to the LGCB interest on such payments due at the Default Interest Rate
(as provided in Section 6.7 of the COC) from the date each payment was due,
until paid to the LGCB.
1.3 In no event shall the aggregate total of Daily Payments, Required
Payments and the Minimum Payment to the LGCB under this Guaranty for the
Covered Fiscal Year exceed ONE HUNDRED MILLION DOLLARS ($100,000,000.00),
plus, and in addition thereto, any interest and attorneys' fees applicable to
the Guaranty Obligation provided for in the COC or in this Guaranty.
1.4 If the LGCB has not been timely paid any one or more of the required
Daily Payments for the Covered Fiscal Year, then (a) the LGCB may make
drawings under this Guaranty by providing written notice to the Guarantors
that one or more of the required Daily
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Payments have not been timely paid and the principal amount of such Daily
Payments then due (the "Notice of Drawing"), and (b) the Guarantors shall pay
to the LGCB all required but unpaid Daily Payments, plus interest at the
Default Interest Rate, upon receipt of the Notice of Drawing. Guarantors
shall make payment by wire or other electronic transfer as provided in the
Notice of Drawing, on or before the time the Daily Payments are due under
Section 6.5 -- "Daily Deposits" of the COC.
1.5 The Guarantors shall not be obligated to make any Daily Payments due
for any day which is twenty (20) days or more prior to the LGCB giving the
Notice of Drawing; provided however, that any payments which are suspended
pursuant to Section 6.3(a) of the COC shall not be due and payable until the
period of the suspension has expired.
1.6 Once a Minimum Payment Default has occurred and a Notice of Drawing
has been provided to the Guarantors, the Guarantors shall be obligated
without any further notice by the LGCB to pay, and will pay, to the LGCB any
required Daily Payments for the Covered Fiscal Year on a daily basis for the
remainder of the Covered Fiscal Year (in which a Minimum Payment Default
occurs) to the extent such Daily Payments have not been timely paid.
4
<PAGE>
1.7 In no event shall the Guarantors be liable to the LGCB under this
Guaranty for any amount in excess of the difference between the Minimum
Payment for the Covered Fiscal Year and the total of the Louisiana Gross
Gaming Revenue Share Payments which have been paid to the LGCB for said
Fiscal Year or liable for any Daily Payments due for and in any Fiscal Year
following the Covered Fiscal Year.
1.8 All of the obligations undertaken hereinabove by the Guarantors
in this Section 1 and any amounts which may be due under Section 6.2 are
hereinafter collectively referred to as the "Guaranty Obligation."
1.9 Notwithstanding the suspension, under the provisions of Section
6.3(a) of the COC, of the payment of any of the amounts included within the
Guaranty Obligation, it is agreed that the Guaranty Obligation covers all
payments which would have been due and payable during the Covered Fiscal Year
except for the fact that such payments were suspended pursuant to Section
6.3(a) of the COC. Any such suspended payments shall be paid in the manner
and within the time provided in the COC, together with Late Payment Interest
from the time the suspended payments become due under the COC, and
5
<PAGE>
the Guarantors guarantee the payment thereof, even after the expiration of
the Covered Fiscal Year.
2. Guarantors' Additional Agreements
2.1 The Guarantors, in solido with each other and the Company, agree to
perform and comply with their Guaranty Obligation, whether or not the Company
is liable therefor individually or jointly or in solido with others, and
whether or not recovery against the Company is or may become barred by any
statute of limitations or prescriptive or preemptive period or is or may
become enforceable or discharged, whether in whole or in part, for any reason
other than payment thereof in full. The Guarantors agree that this Guaranty
is a guaranty of payment and not of collection, and that their obligation
under this Guaranty shall be primary, absolute and unconditional,
irrespective of, and unaffected by:
(a) the absence of any action to enforce this Guaranty or any other
document or the waiver or consent by the LGCB with respect to any of the
provisions thereof;
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<PAGE>
(b) any release or discharge of the other Guarantor, the
Company or any other party of the Guaranty Obligation; or
(c) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Guarantor shall be regarded, and shall be in the same position, as
principal debtor with respect to the Guaranty Obligation.
2.2 Each Guarantor expressly waives all rights it may have now or in
the future under any statute, or at common law, or at law or in equity, or
otherwise, to compel the LGCB to proceed in respect of the Guaranty
Obligation against the Company or any other party or against any security for
the payment of the Guaranty Obligation before proceeding against, or as a
condition to proceeding against, any Guarantor; and without limiting the
above, each Guarantor waives all pleas of division and discussion. Each
Guarantor agrees that any notice or directive given at any time to the LGCB
which is inconsistent with the waiver in the immediately preceding sentence
shall be null and void and may be ignored by the LGCB, and in addition, may
not be pleaded or introduced as evidence
7
<PAGE>
in any litigation relating to this Guaranty for the reason that such pleading
or introduction would be at variance with the written terms of this Guaranty,
unless the LGCB has specifically agreed otherwise in writing.
2.3 Each Guarantor acknowledges that it has received a copy of and is
familiar with the COC, which to the extent of the Guaranty Obligation is
incorporated herein by reference.
2.4 Except as expressly provided for in this Guaranty, in no event
shall the Guarantors, as a result of this Guaranty, incur, directly or
indirectly, any obligation, contingent or otherwise, under the COC ("incur"
meaning to create, incur, assume, guaranty or otherwise become liable for).
3. Alteration of the Guaranty Obligation.
3.1 No exercise or non-exercise of any right hereby given to the LGCB,
no dealing by the LGCB with the Guarantors or any other guarantor or any
other person, and no change, impairment or release of all or any portion of
the Company's COC obligations, or suspension of any right or remedy of the
LGCB against any person, including without limitation the Company or any
other such
8
<PAGE>
guarantor or other person, shall in any way affect any part of the Guaranty
Obligation or any security furnished by the Guarantors or give the Guarantors
any recourse against the LCGB.
3.2 This Guaranty is provided on the express condition that, should the
LGCB and the Company amend or modify the COC so as to increase the Guaranty
Obligation or adversely affect the Guarantors without the prior written
agreement of the Guarantors, any such amendment or modification entered into
without the prior written agreement of the Guarantors shall not increase the
Guaranty Obligation or adversely affect the Guarantors.
4. Waiver.
4.1 The Guarantors, in solido with each other, represent, warrant and
agree that, as of the date of this Guaranty, the Guaranty Obligation is not
subject to any recoupment, counterclaims, offsets or defenses against the
LGCB or the Company of any kind. The Guarantors further in solido with each
other agree that the Guaranty Obligation shall not be subject to any
recoupment, counterclaims, offsets or defenses against the LGCB or against
the Company of any kind which may arise in the future. Each Guarantor hereby
expressly waives and relinquishes all rights.
9
<PAGE>
defenses and remedies accorded by applicable law to sureties or guarantors
and agrees not to assert or take advantage of any such rights, defenses or
remedies, including without limitation:
(a) any right to require the LGCB to proceed against the Company or
any other person or to proceed against or exhaust any security held by the
LGCB at any time or to pursue any other remedy in the power of the LGCB
before proceeding against either or both of the Guarantors, including but
not limited to any defense of failure to join or non-joinder of the Company or
any other person whatsoever in any litigation instituted by the LGCB against
either or both of the Guarantors;
(b) the defense of any statute of limitation, prescription and
preemption in any action hereunder or in any action for the collection of any
of the Guaranty Obligation;
(c) any defense that may arise by reason of the discharge in
bankruptcy, incapacity, lack of authority, death or disability of any other
person (including the Company) or the failure of the LGCB to file or enforce
a claim against the estate (in administration, bankruptcy or any other
proceeding) of any other person (including the Company);
10
<PAGE>
(d) diligence, demand, presentment, protest and notice of any kind
other than notices expressly required in this Guaranty (whether for
nonpayment of protest or of acceptance, maturity, extension of time, change
in nature or form of the Company's obligations under the COC, acceptance of
further security, release of further security, composition or agreement
arrived at as to the amount of, or the terms of, the Company's obligations
under the COC, notice of adverse change in the Company's financial condition
or any other fact which might materially increase the risk to the
Guarantors), including without limitation notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any
action or non-action on the part of the Company, the LGCB, any endorser or
creditor of the Company or either Guarantor or on the part of any other
person under this or any other instrument in connection with any obligation
or evidence of indebtedness held by the LGCB in connection with any of the
obligations of the Company under the COC;
(e) any defense based upon an election of remedies by the LGCB which
destroys or otherwise impairs the subrogation rights of the Guarantors, the
right of the Guarantors to proceed against the Company for reimbursement, or
both, or any defense that the LGCB's claims against the Guarantors are barred
or diminished or
11
<PAGE>
premature to the extent that the LGCB has or may have remedies available
against the Company;
(f) any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal;
(g) any duty on the part of the LGCB to disclose to the Guarantors any
facts the LGCB may now or hereafter know about the Company, regardless of
whether the LGCB has reason to believe that any such facts materially
increase the risk beyond that which the Guarantors intend to assume, or has
reason to believe that such facts are unknown to either Guarantor, or has a
reasonable opportunity to communicate such facts to either Guarantor, since
each Guarantor acknowledges that it is fully responsible for being and
keeping informed of the financial condition of the Company and of all
circumstances bearing on the risk of nonpayment of any of the obligations of
the Company under the COC;
(h) waiver or estoppel or any alleged lack of reasonable or justifiable
reliance on the part of the LGCB as to the Guarantors' representations;
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<PAGE>
(i) lack, failure or insufficiency of consideration;
(j) subject to the notice requirements of Sections 1.4 and 1.5
hereof, any alleged failure of the LGCB to mitigate injuries, losses or
damages or any plea that the LGCB has any duty to mitigate injuries, losses,
or damages prior to seeking recovery under this Guaranty; and
(k) any defense that the LGCB's claims hereunder are or may be
barred because any adequate remedy at law exists.
4.2 Following any default by either Guarantor under this Guaranty,
each Guarantor agrees to forbear from exercise of any rights of subrogation,
indemnity, or contribution against each other, the Company or any other
person who may be liable for satisfaction of the Guaranty Obligation until
the Guaranty Obligation has been fully satisfied as to the LGCB.
5. BANKRUPTCY.
5.1 In the event of the commencement of a bankruptcy case by or
against any Guarantor, each Guarantor agrees to waive the automatic stay
under the Bankruptcy Code and further agrees to the
13
<PAGE>
entry of an immediate order from the Bankruptcy Court, on the LGCB's ex parte
motion granting to the LGCB a modification of the automatic stay (and/or
recognition that the automatic stay is not applicable) allowing it to fully
enforce the provisions of this Guaranty, the Guarantors hereby agreeing that
in such case, "cause," as defined by the Bankruptcy Code, would exist for the
immediate entry by the Bankruptcy Court of such an order modifying the
automatic stay.
5.2 The Guaranty Obligation shall not be altered, limited or affected by
any proceeding, voluntary or involuntary, involving the bankruptcy,
reorganization, insolvency, receivership, liquidation or arrangement of the
Company, or by any defense which the Company may have by reason of any order,
decree or decision of any court or administrative body resulting from any
such proceeding.
5.3 This Guaranty shall remain in full force and effect and continue to
be effective should any petition be filed by or against the Company or any
Guarantor for liquidation or reorganization, should the Company or any
Guarantor become insolvent or make an assignment for the benefit of creditors
or should a receiver or trustee be appointed for all or any significant part
of the Company's or any Guarantor's assets, and shall continue to be
14
<PAGE>
effective or be reinstated, as the case may be, if at any time payment of the
Guaranty Obligation, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount or must otherwise be restored or returned by
the LGCB, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment had not been made. In the event that
any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Guaranty Obligation shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.
6. Interest, Costs and Attorneys' Fees.
6.1 If the Guarantors fail to timely pay all or any portion of the
Guaranty Obligation in accordance with the provisions of Section 1 of this
Guaranty, such amount shall bear interest as provided in Section 1.2 of this
Guaranty.
6.2 If the LGCB refers this Guaranty to an attorney to enforce,
construe, or defend any provision hereof, or as a consequence of any default
hereunder by the Guarantors in connection with:
15
<PAGE>
(a) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the LGCB, the Company, the Guarantors or any other
person) in any way relating to the enforcement of rights or remedies under
this Guaranty;
(b) any attempt to enforce any rights of the LGCB hereunder against the
Guarantors or any other person; or
(c) any attempt to defend any provision hereof;
then, and in any such event, the attorneys' fees arising from such services,
including those of any appellate proceedings, and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or
respect arising in connection with or relating to any of the events or
actions described herein shall be payable, on demand, by the Guarantors to
the LGCB or the Guarantors shall cause the Company to make such payment, and
if not so paid, shall be a part of the Guaranty Obligation. The reference to
"attorneys' fees" in this Section 6.2 and in all other places in this
Guaranty shall also include, without limitation, such reasonable amounts as
may then be charged for legal services furnished by attorneys retained or
employed by the State or the LGCB. Such attorneys' fees, costs and expenses
shall include,
16
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without limitation, those incurred in connection with any bankruptcy,
reorganization, insolvency, receivership, liquidation, arrangement, lawsuits
in state or federal court, or other similar proceedings involving either
Guarantor which in any way affect the exercise by the LGCB of its rights and
remedies hereunder.
7. Cumulative Rights.
All rights, powers and remedies of the LGCB hereunder and under any
other written agreement now or at any time hereafter in force between the
LGCB and the Guarantors, including without limitation any other guaranty
executed by either Guarantor relating to any indebtedness of the Company,
shall be cumulative and not alternative, and such rights, powers and remedies
shall be in addition to all rights, powers and remedies given to the LGCB by
law and shall not be deemed in any way to extinguish or diminish the LGCB's
rights and remedies. This Guaranty is in addition to and independent of the
guaranty of any guarantor of any other obligations of the Company under the
COC or other indebtedness of the Company.
8. Application of Payments and Recoveries.
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After a Minimum Payment Default has occurred, as to any payments received
directly from a Guarantor, the LGCB shall apply such payments to amounts due
under the Guaranty Obligation. Any other payments or recoveries received by
the LGCB after a Minimum Payment Default shall be applied, as directed by the
LGCB at its sole option, (a) first, to amounts due for any Additional
Charges, and (b) second, to any Daily Payments, Required Payments, or Minimum
Payment due for any Fiscal Year other than the Fiscal Year in which the
Minimum Payment Default has occurred (collectively, the "Other Fiscal Year
Payments"). Only when such Additional Charges and all Other Fiscal Year
Payments are paid current will any payments or recoveries be applied to the
Guaranty Obligation under this Guaranty Agreement; provided, however, Daily
Payments, Required Payments or Minimum Payments paid by the Company during a
Covered Fiscal Year shall be applied to the Minimum Payment for that Covered
Fiscal Year.
9. Independent Obligations.
The Guaranty obligation is independent of the obligations of the Company
under the COC, and, in the event of any default hereunder, a separate action
or actions may be brought and prosecuted against either Guarantor, whether or
not the Company is
18
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joined therein or a separate action or actions are brought against the
Company. The LGCB's rights hereunder shall not be exhausted by its exercise
of any of its rights or remedies or by any such action or by any number of
successive actions unless and until all Guaranty Obligations have been
satisfied and fully performed.
10. Financial Statements.
The Guarantors hereby represent and warranty that the information
pertaining to the Guarantors set forth in their most recent filings with the
Securities and Exchange Commission is true and correct in all material
respects, and fairly presents the financial condition of the Guarantors as of
the respective dates indicated therein and for the periods covered thereby,
and that no material adverse change has occurred in the financial condition
or prospects of the Guarantors since the date of the latest information
provided therein.
11. Notices.
Whenever the Guarantors or the LGCB shall desire to give or serve any
notice, demand, request or other communication with respect to this Guaranty,
each such notice shall be in writing and
19
<PAGE>
shall be effective only if the same is delivered by personal service,
overnight courier service, or mailed by certified mail, postage prepaid,
return receipt requested, addressed as follows:
(a) if to either Guarantor
(or both Guarantors):
(b) if to the LGCB, as provided in the COC;
or at such other address as shall have been furnished in writing by any
person described above to the party required to give notice hereunder. Any
such notice shall be deemed to have been received upon delivery. Any of the
Guarantors or the LGCB may change its address by giving the others written
notice of the new address as herein provided.
12. Successors and Assigns.
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This Guaranty shall inure to the benefit of the LGCB, its successors
and assigns, and shall bind the successors and assigns of each Guarantor.
Neither Guarantor may assign or transfer any of its rights, obligations or
interest hereunder without the prior written consent of the LGCB.
13. Miscellaneous Provisions.
13.1 This Guaranty shall be governed, interpreted and enforced in
accordance with Louisiana law.
Each Guarantor hereby submits to the jurisdiction of the State and the
courts thereof and to the jurisdiction of the Nineteenth Judicial District
Court in and for East Baton Rouge Parish ("19th JDC") for purposes of any
suit, action or other proceeding arising out of or relating to this Guaranty
and agrees not to assert by way of motion as a defense or otherwise that such
suit, action or other proceeding is brought in an inconvenient forum or that
the venue of such suit, action or other proceeding is improper or that the
subject matter thereof may no be enforced in or by such court or assert that
any suit or action filed in the 19th JDC may be removed to the Federal Court,
and each Guarantor agrees that the 19th JDC shall have the exclusive
jurisdiction for purposes of any suit,
21
<PAGE>
action or other proceeding brought by either of them relating to or arising
out of this Guaranty.
If at any time during the Term, either Guarantor is not a resident of
the State and has not formally designated or does not continuously maintain
an agent for service of process in Louisiana or has not notified LGCB of the
full name and current street address in Louisiana of such agent for service
of process, such Guarantor hereby designates the Secretary of State of
Louisiana as its agent for service of process in any suit, action or
proceeding involving the LGCB or the State or arising out of or relating to
this Guaranty, and such service shall be made as provided by Louisiana law
for service on an insurance company through the Secretary of State.
13.2 This Guaranty shall constitute the entire agreement of the
Guarantors with the LGCB with respect to the subject matter hereof, and no
representation, understanding, promise or condition concerning the subject
matter hereof shall be binding upon the LGCB or the Guarantors unless
expressed herein.
13.3 Should any term, covenant, condition or provision of this Guaranty
be determined to be illegal or unenforceable, it is the
22
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intent of the parties that all other terms, covenants, conditions and
provisions hereof shall nevertheless remain in full force and effect.
13.4 Time is of the essence to this Guaranty and each of its provisions.
13.5 When the context and construction so require, all words used in
the singular herein shall be deemed to include the plural, the masculine
shall include the feminine and neuter, and vice versa.
13.6 The word "person" as used herein shall include any individual,
company, firm, association, partnership, limited liability company, joint
venture, corporation, trust or other legal entity of any kind whatsoever.
13.7 No provision of this Guaranty or right granted to the LGCB
hereunder can be waived in whole or in part, nor can either Guarantor be
released from the Guaranty Obligation, except by an express and specific
writing to that effect duly executed by an authorized officer of the LGCB. No
provision of this Guaranty may be amended without the prior written consent
of the Guarantors and
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the LGCB and the consent of any additional beneficiaries hereof, if any,
shall not be required.
13.8 The LGCB need not inquire into the power of the Guarantors or the
authority of their officers, shareholders or agents acting or purporting to
act on their behalf.
13.9 The headings of this Guaranty are inserted for convenience only
and shall have no effect upon the construction or interpretation thereof.
13.10 All the representations, warranties, agreements, obligations and
covenants of each Guarantor are in solido with the other Guarantor. This
Guaranty shall be for the sole benefit of the State of Louisiana acting by
and through the LGCB, its successors and assigns. The provisions of this
Guaranty shall not inure to the benefit of any other person, including,
without limitation, the Company.
13.11 This Guaranty shall be effective upon execution.
IN WITNESS HEREOF, the undersigned have executed this Guaranty as of
the ____ day of ____________, 199_.
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GUARANTORS:
----------------------------------
By:
------------------------------
Duly Authorized Officer
----------------------------------
By:
------------------------------
Duly Authorized Officer
Approved and consented to:
JAZZ CASINO COMPANY, L.L.C.
By:
-------------------------------
Duly Authorized Officer
25
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Accepted and agreed to:
LOUISIANA GAMING CONTROL BOARD
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
26
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Exhibit 10.27
GUARANTY AND LOAN PURCHASE AGREEMENT
GUARANTY AND LOAN PURCHASE AGREEMENT, dated as of October 29,
1998 (as amended, modified or supplemented from time to time, this "Guaranty"),
made by each of the undersigned (each a "Guarantor" and, collectively, the
"Guarantors"). Except as otherwise defined herein, capitalized terms used herein
and defined in the Credit Agreement (as defined below) shall be used herein as
therein defined.
W I T N E S S E T H :
WHEREAS, JCC Holding Company ("JCC Holding"), Jazz Casino
Company, L.L.C. (the "Borrower"), various lenders from time to time party
thereto (the "Banks"), and Bankers Trust Company, as Administrative Agent
(together with any successor agent, the "Administrative Agent"), have entered
into a Credit Agreement, dated as of October 29, 1998, providing for the making
of Loans and the issuance of, and participation in, Letters of Credit as
contemplated therein (as used herein, the term "Credit Agreement" means the
Credit Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced or supplemented from time to time, and
including any agreement extending the maturity of, or restructuring all or any
portion of, the Indebtedness under such agreement or any successor agreement)
(the Banks and the Administrative Agent are herein called the "Creditors");
WHEREAS, the proceeds of the Loans will be used, in part, to
finance the construction of the Casino and to provide for the Borrower's working
capital and general corporate requirements;
WHEREAS, the Guarantors own a substantial beneficial interest
in the parent of the Borrower and will obtain substantial economic and other
benefits as a result of the completion and operation of the Casino;
WHEREAS, it is a condition precedent to the making of Loans
and the issuance of Letters of Credit under the Credit Agreement that each
Guarantor shall have executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the
incurrence of Loans and the issuance of Letters of Credit under the Credit
Agreement and, accordingly, desires to execute this Guaranty in order to satisfy
the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to the Creditors and hereby covenants and agrees with each
Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: to the Creditors the entire payment when due
(whether at the stated maturity, by acceleration or otherwise) of (w) all
principal of, and interest (including any interest payable on such interest) on,
all Tranche A-2 Term Loans, Tranche B-2 Term Loans, Revolving Loans and
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Swingline Loans, (x) all Unpaid Drawings and all interest (including interest
payable on interest) thereon, (y) all regularly accruing fees payable with
respect to the foregoing outstandings or related Commitments (which includes the
Fees payable pursuant to Sections 3.01(a), (b), (c) and (d)) and (z) all
increased cost payments, tax payments, indemnification obligations and other
amounts payable pursuant to the Credit Agreement or the other Credit Documents
(as defined in the Credit Agreement), in each case to the extent (and only to
the extent) relating to the Tranche A-2 Term Loans, Tranche B-2 Term Loans,
Revolving Loans, Swingline Loans, Letters of Credit or the Commitments relating
thereto (all such principal, unpaid drawings, interest, fees and other amounts
described above in this Section 1 being collectively herein called the
"Guaranteed Obligations"). Each Guarantor understands, agrees and confirms that
the Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against such Guarantor without proceeding against any other
Guarantor, the Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations to the Creditors whether or not due or payable by the
Borrower upon the occurrence in respect of the Borrower of any of the events
specified in Section 10.06 of the Credit Agreement, and unconditionally and
irrevocably, jointly and severally, promises to pay such Guaranteed Obligations
to the Creditors, or order, on demand, in lawful money of the United States.
This Guaranty shall constitute a guaranty of payment, and not of collection.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
of the Borrower whether executed by such Guarantor, any other Guarantor, any
other guarantor of the Guaranteed Obligations or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by any
circumstance or occurrence whatsoever, including, without limitation: (a) any
direction as to application of payment by the Borrower or by any other party,
(b) any other continuing or other guaranty, undertaking or maximum liability of
a guarantor or of any other party as to the Guaranteed Obligations, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower, (e) any payment made to any Creditor on the indebtedness which any
Creditor repays the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding, (f) any action or
inaction by the Creditors as contemplated in Section 6 hereof, or (g) any
invalidity, irregularity or unenforceability of all or part of the Guaranteed
Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent
of the obligations of any other Guarantor, any other guarantor of the Guaranteed
Obligations or the Borrower, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any such other guarantor or the Borrower and whether or not any
other Guarantor, any such other guarantor of the Guaranteed Obligations or the
Borrower be joined in any such action or actions. Each Guarantor expressly
acknowledges and agrees that any payment by the Borrower or other circumstance
which operates to toll any
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statute of limitations as to the Borrower shall operate to toll the statute of
limitations as to each Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by the Administrative Agent or any other Creditor against, and any other notice
to, any party liable thereon (including such Guarantor, any other Guarantor or
any other guarantor of the Guaranteed Obligations or the Borrower).
6. Any Creditor may at any time and from time to time without
the consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of the Borrower to
creditors of the Borrower other than the Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower to the Creditors
regardless of what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under any of the Credit Documents or any of the instruments or
agreements referred to therein, or
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otherwise amend, modify or supplement any of the Credit Documents or
any of such other instruments or agreements; and/or
(h) act or fail to act in any manner which may deprive such
Guarantor of its right to subrogation against the Borrower to recover
full indemnity for any payments made pursuant to this Guaranty.
[Notwithstanding anything to the contrary contained above, to
the extent any modification or amendment to the Credit Agreement or related
Credit Documents, in accordance with the express terms of Section 16.12 of the
Credit Agreement, requires the consent of the Guarantors hereunder, then, for
purposes of this Guaranty, if such consent from any Guarantor is not obtained,
such modifications to the Credit Agreement shall be given no effect (as to such
Guarantor) for purposes of this Guaranty. Except to the extent expressly
provided in the immediately preceding sentence, any such amendment or waiver
which in contravention of the provisions of Section 16.12 of the Credit
Agreement is made without the consent of one or more Guarantors (in
circumstances where such consent is required) shall not otherwise release,
discharge or affect such Guarantor's obligations hereunder.]
7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall (nor
shall the Guarantors' failure to acknowledge any Notice of Borrowing) affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full in cash of the
Guaranteed Obligations.
8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Creditor in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly specified are cumulative and not exclusive of any
rights or remedies which any Creditor would otherwise have. No notice to or
demand on any Guarantor in any case shall entitle such Guarantor to any other
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for any Creditor to
inquire into the capacity or powers of the Borrower or the officers, directors,
partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
9. Any indebtedness or other liabilities of the Borrower now
or hereafter held by or owing to any Guarantor (other than in connection with
the Minimum Payment Guaranty) is hereby subordinated to the indebtedness and
other liabilities of the Borrower to the Creditors, and such indebtedness and
other liabilities of the Borrower to any Guarantor, if the Administrative Agent,
after an Event of Default has occurred, so requests, shall be collected,
enforced and received by such Guarantor as trustee for the Creditors and be paid
over to the Creditors on account of the indebtedness and other liabilities of
the Borrower to the Creditors, but without
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affecting or impairing in any manner the liability of such Guarantor under the
other provisions of this Guaranty. Prior to the transfer by any Guarantor of any
note or negotiable instrument evidencing any indebtedness or other liabilities
(other than in connection with the Minimum Payment Guaranty) of the Borrower to
such Guarantor, such Guarantor shall mark such note or negotiable instrument
with a legend that the same is subject to this subordination. Without limiting
the generality of the foregoing, each Guarantor hereby agrees with the Creditors
that it will not exercise any right of subrogation which it may at any time
otherwise have as a result of this Guaranty (whether contractual, under Section
509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have
been irrevocably paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require the Creditors
to: (i) proceed against the Borrower, any other Guarantor, any other guarantor
of the Guaranteed Obligations or any other party; (ii) proceed against or
exhaust any security held from the Borrower, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any other party; or (iii) pursue any
other remedy in the Creditors' power whatsoever. Each Guarantor waives any
defense based on or arising out of any defense of the Borrower, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any other party
other than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of the
Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations
or any other party, or the unenforceability of the Guaranteed Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
the Borrower other than payment in full of the Guaranteed Obligations. The
Creditors may, at their election, foreclose on any security held by the
Administrative Agent, the Collateral Agent or the other Creditors by one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy the Creditors may have against the
Borrower or any other party, or any security, without affecting or impairing in
any way the liability of any Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid in full. Each Guarantor waives any defense
arising out of any such election by the Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against the Borrower or any other party
or any security.
(b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that the Creditors shall have no duty
to advise any Guarantor of information known to them regarding such
circumstances or risks.
11. The Creditors agree that this Guaranty may be enforced
only by the action of the Administrative Agent or Collateral Agent acting upon
the instructions of the Majority Tranche A-2, B-2 and Revolving Banks and that
no other Creditors shall have any right individually to
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seek to enforce or to enforce this Guaranty, it being understood and agreed that
such rights and remedies may be exercised by the Administrative Agent or
Collateral Agent, as the case may be, for the benefit of the Creditors upon the
terms of this Guaranty.
12. In order to induce the Banks to enter into the Credit
Agreement and to make the Revolving Loans, Swingline Loans, Tranche A-2 Term
Loans and Tranche B-2 Term Loans and issue or participate in Letters of Credit
as provided therein, each Guarantor makes the following representations,
warranties and agreements to and for the benefit of the Creditors, all of which
shall survive the execution and delivery of this Guaranty and the Revolving
Notes, Swingline Note, Tranche A-2 Term Notes and Tranche B-2 Term Notes and the
making of the Revolving Loans, Swingline Loans, Tranche A-2 Term Loans and
Tranche B-2 Term Loans, with the occurrence of the Initial Borrowing Date and
the incurrence of each Revolving Loan, Swingline Loan, Tranche A-2 Term Loan and
Tranche B-2 Term Loan, or the issuance of each Letter of Credit, on or after the
Initial Borrowing Date being deemed to constitute a representation and warranty
that the matters specified in this Section 12 are true and correct on and as of
the Initial Borrowing Date and on the date of each such Credit Event (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).
(a) Corporate Status. Each Guarantor and each of its
Subsidiaries (i) is a duly organized and validly existing corporation,
limited liability company or partnership, as the case may be, in good
standing under the laws of the jurisdiction of its organization, (ii)
has the power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to
engage and (iii) is duly qualified and is authorized to do business and
is in good standing in each jurisdiction where the ownership, leasing
or operation of its property or the conduct of its business requires
such qualifications except for failures to be so qualified which,
individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
HET and its Subsidiaries taken as a whole.
(b) Power and Authority. Each Guarantor has the power
and authority to execute, deliver and perform the terms and
provisions of this Guaranty and each other Document to which it is a
party and has taken all necessary action to authorize the execution,
delivery and performance by it of this Guaranty and each such other
Document. Each Guarantor has duly executed and delivered this Guaranty
and each other Document to which it is a party, and this Guaranty and
each such other Document constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, except to the
extent that the enforceability hereof or thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at
law).
(c) No Violation. Neither the execution, delivery or
performance by any Guarantor of this Guaranty or any other Document to
which it is a party, nor compliance
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by it with the terms and provisions hereof or thereof, (i) will
contravene any provision of any law, statute, rule or regulation or any
order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict with or result in any breach of any
of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or
assets of any Guarantor or any of its Subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or
loan agreement, or any other material agreement, contract or
instrument, to which any Guarantor or any of its Subsidiaries is a
party or by which it or any of its property or assets is bound or to
which it may be subject or (iii) will violate any provision of the
certificate of incorporation, partnership agreement, by-laws or
equivalent organizational or charter documents of any Guarantor or any
of its Subsidiaries.
(d) Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made prior to the
Initial Borrowing Date), or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (i) the execution,
delivery and performance of this Guaranty or any other Document to
which any Guarantor is a party or (ii) the legality, validity, binding
effect or enforceability of this Guaranty or any such other Document.
(e) Financial Statements; Financial Condition; Undisclosed
Liabilities; Financial Projections. (i) The statements of financial
condition of HET and its Subsidiaries at December 31, 1997, and the
related statements of income and cash flow and changes in shareholders'
equity of HET and its Subsidiaries for the fiscal year ended on such
date, copies of which were furnished to the Banks prior to the Initial
Borrowing Date, present fairly the financial condition of HET and its
Subsidiaries at the date of such statements of financial condition and
the results of the operations of HET and its Subsidiaries for such
fiscal year. All such financial statements have been prepared in
accordance with generally accepted accounting principles and practices
consistently applied. Since December 31, 1997, there has been no
material adverse change in the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of HET and
its Subsidiaries taken as a whole.
(ii) On and as of the Initial Borrowing Date, after giving effect
to all Indebtedness (including the Revolving Loans, Swingline Loans,
Tranche A-2 Term Loans and Tranche B-2 Term Loans) being guaranteed by
the Guarantors hereunder, (a) the sum of the assets, at a fair
valuation, of HET and its Subsidiaries taken as a whole will exceed
their respective debts; (b) HET and its Subsidiaries taken as a whole
have not incurred, nor do they intend to incur or believe that they
will incur, debts beyond their ability to pay such debts as such debts
mature; and (c) HET and its Subsidiaries taken as a whole will have
sufficient capital with which to conduct its respective business. For
purposes of this Section 12(e)(ii), "debt" means any liability on a
claim, and "claim" means (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured or (y) right to an equitable remedy for breach of
performance if such breach
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gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured.
(iii) Except as fully disclosed in the financial statements
delivered pursuant to Section 12(e)(i), there were as of the Initial
Borrowing Date no liabilities or obligations with respect to HET or any
of its Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) which, either
individually or in aggregate, would be material to HET and its
Subsidiaries taken as a whole. As of the Initial Borrowing Date, no
Guarantor knows of any basis for the assertion against HET or any of
its Subsidiaries of any liability or obligation of any nature
whatsoever that is not fully disclosed in the financial statements
delivered pursuant to Section 12(e)(i) which, either individually or in
the aggregate, is material to HET and its Subsidiaries taken as a
whole.
(f) Litigation. There are no actions, suits or proceedings
pending or, to the best knowledge of any Guarantor, threatened (i) with
respect to this Guaranty or any other Document to which any Guarantor
is a party, (ii) with respect to any material Indebtedness of any
Guarantor or any of its Subsidiaries or (iii) except as set forth on
Schedule I hereto, that could reasonably be expected to materially and
adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of HET and
its Subsidiaries taken as a whole.
(g) True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of any Guarantor in
writing to the Administrative Agent or any Bank for purposes of or in
connection with this Guaranty, the other Documents or any transaction
contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of
any Guarantor in writing to the Administrative Agent or any Bank will
be, true and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by omitting
to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was provided.
(h) Tax Returns and Payments. Each of HET and its Subsidiaries
and each Person for whose tax HET or any of its Subsidiaries could be
liable has filed or caused to be filed with the appropriate taxing
authority, all Federal and all other material returns, statements,
forms and reports for all taxes (the "Returns") required to be filed by
it and has paid or caused to be paid (i) all material taxes due for the
periods covered thereby and (ii) all taxes pursuant to any assessment
received by HET, any of its Subsidiaries or any such Person, excluding,
in each case, any such taxes that have been contested in good faith and
for which adequate reserves have been established in accordance with
generally accepted accounting principles. Except as disclosed on
Schedule II hereto, as of the Initial Borrowing Date, there is no
action, suit, proceeding, investigation, audit, or claim now pending
or, to the knowledge of HET or any of its Subsidiaries, threatened by
any governmental or taxing authority regarding any material taxes
relating to HET or any of
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its Subsidiaries. Except as disclosed on Schedule II hereto, as of the
Initial Borrowing Date, neither HET nor any of its Subsidiaries has
entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of any material taxes
of HET or any of its Subsidiaries.
(i) Compliance with ERISA. Each Plan (as defined in the HET
Credit Agreement) is in substantial compliance with ERISA (as defined
in the HET Credit Agreement) and the Code; no Reportable Event (as
defined in the HET Credit Agreement) has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability (as defined in the HET Credit Agreement); no
Plan has an accumulated or waived funding deficiency, has permitted
decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412
of the Code; neither HET nor any Subsidiary of HET nor any ERISA
Affiliate (as defined in the HET Credit Agreement) has incurred any
material liability to or on account of a Plan pursuant to Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to
incur any liability under any of the foregoing Sections with respect to
any Plan; no proceedings have been instituted by the PBGC (as defined
in the HET Credit Agreement) to terminate or appoint a trustee to
administer any Plan; no condition exists which presents a material risk
to HET or any Subsidiary of HET or any ERISA Affiliate of incurring a
liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code; no lien imposed under the Code or
ERISA on the assets of HET or any Subsidiary of HET or any ERISA
Affiliate exists or is likely to arise on account of any Plan; and HET
and its Subsidiaries may cease contributions to or terminate any
employee benefit plan maintained by any of them without incurring any
material liability to any person interested therein other than accrued
benefits; it being understood that any representation or warranty made
in this Section 12(i) with respect to any multiemployer plan (labor
union) is to the best knowledge of each Guarantor.
(j) Properties. HET and each of its Subsidiaries have good
title to all material properties owned by them, free and clear of all
Liens, other than Liens permitted by Section 9.01 of the HET Credit
Agreement (which Section is incorporated herein by reference).
(k) Compliance with Statutes, etc. Each of HET and each of its
Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of
its business and the ownership of its property (including applicable
statutes, regulations, orders and restrictions relating to
environmental standards and controls), except such noncompliances as
could not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
HET and its Subsidiaries taken as a whole.
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(l) Investment Company Act. Neither HET nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act
of 1940, as amended.
(m) Public Utility Holding Company Act. Neither HET nor any of
its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
(n) Environmental Matters. (i) HET and each of its
Subsidiaries have complied with, and on the date of each Borrowing are
in compliance with, all applicable Environmental Laws (as defined in
the HET Credit Agreement) and the requirements of any permits issued
under such Environmental Laws. There are no pending or, to the best
knowledge of any Guarantor after due inquiry, past or threatened
Environmental Claims (as defined in the HET Credit Agreement) against
HET or any of its Subsidiaries or any real property owned or operated
by HET or any of its Subsidiaries that individually or in the aggregate
could reasonably be expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of HET and its Subsidiaries taken
as a whole. There are no facts, circumstances, conditions or
occurrences on any real property owned or operated by HET or any of its
Subsidiaries or, to the best knowledge of any Guarantor after due
inquiry, on any property adjoining or in the vicinity of any such real
property that, to the best knowledge of any Guarantor after due
inquiry, could reasonably be expected (x) to form the basis of an
Environmental Claim against HET or any of its Subsidiaries or any such
real property that individually or in the aggregate could reasonably be
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of HET and its Subsidiaries taken as a whole, or (y) to cause
any such real property to be subject to any restrictions on the
ownership, occupancy, use or transferability of such real property by
HET or any of its Subsidiaries under any applicable Environmental Law.
(ii) Hazardous Materials (as defined in the HET Credit Agreement)
have not at any time been generated, used, treated or stored on, or
transported to or from, any real property owned or operated by HET or
any of its Subsidiaries where such generation, use, treatment or
storage has violated or could reasonably be expected to violate any
Environmental Law. Hazardous Materials have not at any time been
Released (as defined in the HET Credit Agreement) on or from any real
property owned or operated by HET or any of its Subsidiaries where such
Release has violated or could reasonably be expected to violate any
applicable Environmental Law. There are not now any underground storage
tanks located on any real property owned or operated by HET or any of
its Subsidiaries which are not in compliance with all Environmental
Laws.
(iii) Notwithstanding anything to the contrary in this Section
12(n), the representations made in this Section 12(n) shall only be
untrue if the aggregate effect of all failures and noncompliances of
the types described above could reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of HET and
its Subsidiaries taken as a whole.
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<PAGE>
(o) Labor Relations. Neither HET nor any of its Subsidiaries
is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on HET and its Subsidiaries
taken as a whole. There is (i) no unfair labor practice complaint
pending against HET or any of its Subsidiaries or, to the best
knowledge of any Guarantor, threatened against any of them, before the
National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement
is so pending against HET or any of its Subsidiaries or, to the best
knowledge of any Guarantor, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against HET or any
of its Subsidiaries or, to the best knowledge of any Guarantor,
threatened against HET or any of its Subsidiaries and (iii) to the best
knowledge of any Guarantor, no union representation question existing
with respect to the employees of HET or any of its Subsidiaries, except
(with respect to any matter specified in clause (i), (ii) or (iii)
above, either individually or in the aggregate) such as could not
reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of HET and its Subsidiaries taken
as a whole.
(p) Patents, Licenses, Franchises and Formulas. Each of HET
and each of its Subsidiaries owns all the patents, trademarks, permits,
service marks, trade names, copyrights, licenses, franchises and
formulas, or rights with respect to the foregoing, and has obtained
assignments of all leases and other rights of whatever nature,
necessary for the present conduct of its business, without any known
conflict with the rights of others which, or the failure to obtain
which, as the case may be, either individually or in the aggregate,
could reasonably be expected to result in a material adverse effect on
the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of HET and its Subsidiaries taken
as a whole.
(q) Existing Indebtedness. Schedule III hereto sets forth a
true and complete list of all Indebtedness of HET and its Subsidiaries
as of the Initial Borrowing Date, in each case showing the respective
borrower thereof. The subordination provisions of the Subordinated Debt
(as defined in the HET Credit Agreement), if any is outstanding on the
respective Borrowing Date, are enforceable against the respective
borrower or guarantor thereunder, as the case may be, and the holders
of such Subordinated Debt and all obligations of the Guarantors
hereunder are within the definition of "Senior Debt," "Guarantor Senior
Debt," "Designated Senior Debt" and "Designated Senior Debt of the
Guarantor" included in such subordination provisions, as the case may
be.
13. Each Guarantor covenants and agrees that on and after the
Effective Date and until the Total Revolving Loan Commitment, the Total
Tranche A-2 Term Loan Commitment and the Total Tranche B-2 Term Loan
Commitment have terminated, no Revolving Note, Swingline Note, Tranche
A-2 Term Note or Tranche B-2 Term Note remains outstanding and all
Guaranteed Obligations are indefeasibly paid in full:
(a) Incorporation by Reference. Each Guarantor will comply
with each of the covenants contained in Sections 8.01 through 8.10,
8.13 and 8.14 of the HET Credit Agreement and Sections 9.01 through
9.15 of the HET Credit Agreement, which
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<PAGE>
Sections, together with all definitions in the HET Credit Agreement
applicable to such Sections, are hereby incorporated by reference as if
set forth herein in their entirety, provided that:
(i) all references to "Parent" therein shall
mean and be a reference to "HET" herein;
(ii) all references to "the Company" therein shall
mean and be a reference to "HOC" herein;
(iii) all references to the "Borrower" or
"Borrowers" therein shall mean and be a reference to "HOC"
herein or any "Subsidiary Borrower" (as defined in the HET
Credit Agreement), as the case may be;
(iv) all references to "this Agreement," "herein,"
"hereunder" and words of similar import therein shall mean and
be a reference to this "Guaranty";
(v) all references to "Parent and the Borrowers"
therein shall mean and be a reference to "HET, HOC and the
Subsidiary Borrowers" herein;
(vi) all references to "Parent or any Borrower"
therein shall mean and be a reference to "HET, HOC or any
Subsidiary Borrower" herein;
(vii) all references to the "Administrative Agent"
therein shall mean and be a reference to the "Administrative
Agent" herein;
(viii) all references to any "Bank" or the "Banks"
therein shall mean and be a reference to any "Creditor" or the
"Creditors" herein;
(ix) all references to the "Required Banks" therein
shall mean and be a reference to the "Required Banks" herein;
(x) all references to a "Default" therein shall
mean and be a reference to a "Guarantor Default"
herein and as defined below;
(xi) all references to an "Event of Default"
therein shall mean and be a reference to a "Guarantor Event of
Default" herein and as defined below; and
(xii) if, and for so long as, the HET Credit
Agreement remains in effect, any provision of Section 9.02 or
9.05 of the HET Credit Agreement as incorporated herein by
reference which would give rise to a violation of Section 9.11
of the HET Credit Agreement shall be deemed modified to the
extent (but only to the extent) that the incorporation by
reference of such Sections herein would not give rise to such
a violation.
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As used herein, the term "Guarantor Default" shall mean any
event, act or condition which with notice or lapse of time, or both, would
constitute a Guarantor Event of Default.
14. As used herein, the term "Guarantor Event of Default"
shall mean the occurrence of any of the following specified events:
(a) Representations, etc. Any representation, warranty or
statement made by any Guarantor herein or in any certificate delivered
pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
(b) Covenants. Any Guarantor shall (i) default in the due
performance or observance by it of any term, covenant or agreement
contained in Section 8.01(e)(i), 8.08 or 9 of the HET Credit Agreement
as such Sections are incorporated herein by reference or (ii) default
in the due performance or observance by it of any other term, covenant
or agreement contained in the HET Credit Agreement as incorporated
herein by reference and such default shall continue unremedied for a
period of 30 days after written notice to such Guarantor by the
Administrative Agent or any Creditor; or
(c) Default Under Other Agreements. (i) HET or any Subsidiary
of HET shall (x) default in any payment of any Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created or (y) default in the observance or
performance of any agreement or condition relating to any Indebtedness
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or
to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause (determined without
regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (ii) any Indebtedness of
HET or any Subsidiary of HET shall be declared to be due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof, provided that it
shall not be a Guarantor Default or a Guarantor Event of Default under
this Section 14(c) unless the aggregate principal amount of all
Indebtedness as described in preceding clauses (i) and (ii) is at least
$25,000,000; or
(d) Bankruptcy, etc. HET or any Subsidiary of HET shall
commence a voluntary case concerning itself under the Bankruptcy Code;
or an involuntary case is commenced against HET or any Subsidiary of
HET, and the petition is not controverted within 10 days, or is not
dismissed within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of HET or any
Subsidiary of HET, or HET or any Subsidiary of HET commences any other
proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to
HET or any Subsidiary of HET, or there is commenced against HET or any
Subsidiary of HET any such proceeding which remains undismissed for a
period of 60 days, or HET or any
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<PAGE>
Subsidiary of HET is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered;
or HET or any Subsidiary of HET suffers any appointment of any
custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or HET or
any Subsidiary of HET makes a general assignment for the benefit of
creditors; or any corporate action is taken by HET or any Subsidiary of
HET for the purpose of effecting any of the foregoing; or
(e) ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver
of such standard or extension of any amortization period is sought or
granted under Section 412 of the Code, any Plan shall have had a
trustee appointed by the PBGC to administer such Plan, any Plan is,
shall have been or is likely to be terminated or to be the subject of
termination proceedings under ERISA, any Plan shall have an Unfunded
Current Liability, HET or any Subsidiary of HET or any ERISA Affiliate
has incurred or is likely to incur a liability to or on account of a
Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the
Code, or HET or any Subsidiary of HET has incurred or is likely to
incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) which provide benefits to
retired employees (other than as required by Section 601 of ERISA) or
employee pension benefit plans (as defined in Section 3(2) of ERISA);
(b) there shall result from any such event or events the imposition of
a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) which lien, security
interest or liability, in the opinion of the Required Banks, could
reasonably be expected to have a material adverse effect upon the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of HET and its Subsidiaries taken
as a whole; or
(f) Judgments. One or more judgments or decrees shall be
entered against HET or any Subsidiary of HET involving in the aggregate
for HET and its Subsidiaries a liability (not paid or fully covered by
a reputable insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged
or stayed or bonded pending appeal for any period of 30 consecutive
days, and the aggregate amount of all such judgments exceeds
$10,000,000; or
(g) Gaming Authority. Any Gaming Authority having jurisdiction
over HET or any Subsidiary of HET or the Casino (as defined in the HET
Credit Agreement) shall determine that HET or any Subsidiary of HET
that is required to be qualified under the applicable Gaming
Regulations does not qualify, or that the qualification or license of
any of them with respect to HET or any Subsidiary of HET or the Casino
should be revoked, not renewed or suspended for more than 30 days, or
any such Gaming Authority shall have appointed a conservator,
supervisor or trustee to oversee any of the operations of any of them;
or
14
<PAGE>
(h) Guarantor Changes of Control. Any Guarantor Change of
Control (which, for purposes of this Guaranty, shall mean any "Change
of Control" as defined in the HET Credit Agreement) shall have
occurred.
15. (a) HET and HOC shall have the option at any time
after the one year anniversary of the Initial Borrowing Date or at any time
following a Default or an Event of Default to (x) purchase the Guaranteed
Obligations and the related Commitments of all Banks, on a joint and several
basis, pursuant to the Credit Agreement by paying the Banks in cash an amount
equal to all outstanding principal, interest and other amounts owing in respect
of the Guaranteed Obligations and related Commitments and (y) pay to the
Administrative Agent and the Banks in cash any amounts then owed to them, on a
joint and several basis, pursuant to the terms of this Guaranty. Until any
repayment and purchase as described in the immediately preceding sentence is
actually effected, the Guarantors shall be liable to perform all obligations
under this Guaranty strictly in accordance with the terms hereof.
(b) Upon the occurrence and during the continuance of any
Event of Default or any Guarantor Event of Default, the Majority Tranche A-2,
B-2 and Revolving Banks shall have the right to require HET and HOC to (x)
purchase (and in which case HET and HOC shall purchase) the outstanding
Guaranteed Obligations and related Commitments of all Banks, on a joint and
several basis, pursuant to the Credit Agreement by paying the Banks within three
Business Days of such demand by the Majority Tranche A-2, B-2 and Revolving
Banks in cash an amount equal to all principal, interest and other amounts owing
in respect of the Guaranteed Obligations and related Commitments and (y) pay to
the Administrative Agent and the Banks in cash any amounts then owed to them, on
a joint and several basis, pursuant to the terms of this Guaranty. In addition,
upon the occurrence and during the continuance of a Guarantor Event of Default,
the Majority Tranche A-2, B-2 and Revolving Banks shall have the right to
require HET and HOC to (x) pay within three Business Days of such demand by the
Majority Tranche A-2, B-2 and Revolving Banks to the Collateral Agent such
additional amount of cash, to be held as security by the Collateral Agent for
the Borrower's reimbursement obligations in respect of Letters of Credit then
outstanding, as is equal to the Stated Amount of all Letters of Credit then
outstanding and (y) immediately fund within three Business Days of such demand
by the Majority Tranche A-2, B-2 and Revolving Banks all outstanding Swingline
Loans with Mandatory Borrowings pursuant to their Revolving Loan Commitments.
Notwithstanding anything to the contrary contained herein, if an Event of
Default specified in Section 10.06 of the Credit Agreement or a Guarantor Event
of Default specified in Section 14(d) hereof shall occur, the result which would
occur upon the demand of the Majority Tranche A-2, B-2 and Revolving Banks as
specified in the immediately preceding two sentences shall occur automatically
without the demand of the Required Banks; provided that the amounts payable by
HET and HOC under this Section 15(b) shall be calculated without giving effect
to any reductions to such amounts (except to the extent such reductions resulted
from the payment thereof in cash), whether such reductions resulted from any
event of the type described in Section 10.06 of the Credit Agreement or
otherwise. Until any repayment and repurchase described in the immediately
preceding sentences is actually effected, the Guarantors shall be liable to
perform all obligations under this Guaranty strictly in accordance with the
terms hereof.
15
<PAGE>
16. It is understood and agreed by the parties hereto that
payments made pursuant to this Guaranty shall not be subject to the
subordination or lien priority provisions set forth in Sections 13, 14 and 15 of
the Credit Agreement.
17. (a) If HET and/or HOC purchase Guaranteed Obligations in
accordance with preceding Section 15, then HET and HOC shall have the rights
provided pursuant to the Credit Agreement in respect of the Guaranteed
Obligations so purchased. Such purchased Guaranteed Obligations, in accordance
with the terms of the Credit Agreement, shall be subject to the subordination
and lien priority provisions (in accordance with the terms thereof) set forth in
Sections 13, 14 and 15 of the Credit Agreement. Furthermore, HET and HOC
acknowledge the limitation on voting rights provided in the last sentence of the
definition of "Required Banks" contained in the Credit Agreement.
(b) If HET and/or HOC make any other payments pursuant to this
Guaranty in respect of the Guaranteed Obligations, HET and/or HOC, as the case
may be, shall be subrogated to the rights of the holders of the respective
Guaranteed Obligations so paid; provided that, except to the extent otherwise
provided in the immediately succeeding sentence, no payments may be made in
respect of such subrogation claims until all Guaranteed Obligations have been
indefeasibly paid in full. Notwithstanding anything to the contrary contained in
the immediately preceding sentence, to the extent HET and/or HOC have made
payments in respect of Guaranteed Obligations, the respective such Guarantors
shall be subrogated to the rights of the holders of such Guaranteed Obligations
and thereby entitled to receive payments or distributions of proceeds of
Collateral pursuant to, and in accordance with the terms of, the Security
Documents and the Intercreditor Agreement; provided that all such payments or
distributions (i) shall be subject, first, to the express subordination
provisions contained in the Credit Agreement and (ii) to the extent not required
to be applied pursuant to said subordination provisions, shall be turned over
and applied to the repayment of Guaranteed Obligations until such time, if any,
as all Guaranteed Obligations have been indefeasibly paid in full.
18. The Guarantors hereby jointly and severally agree to pay
all out-of- pocket costs and expenses of the Administrative Agent in connection
with any amendment, waiver or consent relating hereto and of the Administrative
Agent and each of the other Creditors in connection with any enforcement of this
Guaranty (including in each case, without limitation, the fees and disbursements
of counsel employed by the Administrative Agent and each other Creditor).
19. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and their
successors and assigns.
20. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of
each Guarantor directly affected thereby and with the written consent of the
Required Banks and the Majority Tranche A-2, Tranche B-2 and Revolving Banks
(and, to the extent required by Section 16.12 of the Credit Agreement, with the
written consent of each Bank (other than Banks holding solely Tranche A-1 Term
Loans, Tranche A-3 Term Loans and/or Tranche B-1 Term Loans).
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<PAGE>
21. Each Guarantor acknowledges that an executed (or
conformed) copy of each of the Credit Documents has been made available to its
principal executive officers and such officers are familiar with the contents
thereof.
22. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Secured Creditor Law) and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default
(such term to mean and include any "Event of Default" as defined in the Credit
Agreement), each Creditor is hereby authorized at any time or from time to time,
without notice to any Guarantor or to any other Person, any such notice being
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other indebtedness at any time held or owing by
such Creditor to or for the credit or the account of such Guarantor, against and
on account of the obligations and liabilities of such Guarantor to such Creditor
under this Guaranty, irrespective of whether or not such Creditor shall have
made any demand hereunder and although said obligations, liabilities, deposits
or claims, or any of them, shall be contingent or unmatured. Each Creditor
acknowledges and agrees that the provisions of this Section 22 are subject to
the sharing provisions set forth in Section 16.06(b) of the Credit Agreement.
23. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the Credit
Agreement and (ii) in the case of any Guarantor, at its address set forth
opposite its signature below; or in any case at such other address as any of the
Persons listed above may hereafter notify the others in writing.
24. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
25. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Guaranty, each Guarantor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of
17
<PAGE>
the aforesaid courts. Each Guarantor hereby further irrevocably waives any claim
that any such courts lack jurisdiction over such Guarantor, and agrees not to
plead or claim, in any legal action or proceeding with respect to this Guaranty
brought in any of the aforesaid courts, that any such court lacks jurisdiction
over such Guarantor. Each Guarantor hereby further irrevocably waives any claim
that any such courts lack jurisdiction over such Guarantor, and agrees not to
plead or claim, in any legal action or proceeding with respect to this Guaranty
brought in any of the aforesaid courts, that any such court lacks jurisdiction
over such Guarantor. Each Guarantor hereby irrevocably designates, appoints and
empowers CT Corporation System, with offices on a date hereof at 1633 Broadway,
New York, New York 10019 as its designee, appointee and agent to receive, accept
and acknowledge for and on its behalf, and in respect of its property, service
of any and all legal process, summons, notices and documents which may be served
in any such action or proceeding. If for any reason such designee, appointee and
agent shall cease to be available to act as such, each Guarantor agrees to
designate a new designee, appointee and agent in New York City on the terms and
for the purposes of this provision satisfactory to the Administrative Agent.
Each Guarantor further irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such
Guarantor at its address set forth opposite its signature below, such service to
become effective 30 days after such mailing. Each Guarantor hereby irrevocably
waives any objection to such service of process and further irrevocably waives
and agrees not to plead or claim in any action or proceeding commenced under
this Guaranty that service of process was in any way invalid or ineffective.
Nothing herein shall affect the right of any of the Creditors to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) EACH GUARANTOR AND EACH CREDITOR (BY ITS ACCEPTANCE OF THE
BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
26. It is the desire and intent of each Guarantor and the
Creditors that this Guaranty shall be enforced against each Guarantor to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If, however, and to the extent
that, the obligations of any Guarantor under this Guaranty shall be adjudicated
to be invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to fraudulent
conveyances or transfers), then the amount of the Guaranteed Obligations of such
Guarantor shall be deemed to be reduced and such Guarantor shall pay the maximum
amount of the Guaranteed Obligations which would be permissible under applicable
law.
18
<PAGE>
27. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantors and the
Agent.
28. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense and on the same basis as payments
are made by the Borrower under Sections 4.03 and 4.04 of the Credit Agreement.
* * * *
19
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
ADDRESSES
- ---------
1023 Cherry Road HARRAH'S ENTERTAINMENT, INC.,
Memphis, TN 38117 as a Guarantor
Tel: (901) 762-8600
Fax: (901) 762-8777
Attn: General Counsel By /s/G. W. Loveland, II
--------------------------
Title: Vice President
1023 Cherry Road HARRAH'S OPERATING COMPANY, INC.,
Memphis, TN 38117 as a Guarantor
Tel: (901) 762-8600
Fax: (901) 762-8777
Attn: General Counsel By /s/G. W. Loveland, II
--------------------------
Title: Vice President
Acknowledged and Agreed to:
BANKERS TRUST COMPANY, as Administrative Agent
By /s/Mary Kay Coyle
--------------------------------
Title: Managing Director
<PAGE>
EXHIBIT 10.28
UNITED STATES OF AMERICA * SOME OR ALL OF THE SECURED
* INDEBTEDNESS (AS DEFINED HEREIN
STATE OF NEW YORK * BEAR INTEREST AT VARIABLE
* RATES.
COUNTY OF NEW YORK * ACT OF MORTGAGE
* AND
STATE OF LOUISIANA * COLLATERAL ASSIGNMENT
* BY
PARISH OF ORLEANS * JAZZ CASINO COMPANY, L.L.C.
* IN FAVOR OF
* THE BANK OF NEW YORK,
* AS COLLATERAL AGENT
* FOR THE PRESENT AND FUTURE
* HOLDERS
* OF THE SECURED INDEBTEDNESS
* * * * * * *
BE IT KNOWN, that on this 29th day of October, 1998, effective as of
the Plan Effective Date (as defined below);
BEFORE ME, the undersigned, Notary Public in and for the State of
Louisiana, Parish of Orleans, and in the presence of the undersigned competent
witnesses;
PERSONALLY CAME AND APPEARED:
JAZZ CASINO COMPANY, L.L.C., a Louisiana limited liability company
(TIN: 72-1429291), whose registered office in the State of Louisiana is located
at 512 South Peters, New Orleans, Louisiana 70130, and whose mailing address is
512 South Peters, New Orleans, Louisiana 70130, appearing herein by and through
L. Camille Fowler, a duly authorized officer thereof pursuant to a resolution
of its sole member, JCC Holding Company, a Delaware corporation, a certified
extract of which is attached hereto ("Mortgagor"); and
AND BE IT KNOWN, that on this 29th day of October, 1998, effective
as of the Plan Effective Date (as defined below);
BEFORE ME, the second undersigned, Notary Public in and for the
State of Louisiana, Parish of Orleans, and in the presence of the undersigned
competent witnesses;
PERSONALLY CAME AND APPEARED:
THE BANK OF NEW YORK (TIN:13-5160382), not in its individual
capacity but solely as Collateral Agent for the present and future holders of
the Secured Indebtedness (as defined below), whose mailing address is 10161
Centurion Parkway, Jacksonville, Florida 32256, appearing herein by and
through a duly authorized representative thereof ("Mortgagee");
<PAGE>
AND MORTGAGOR AND MORTGAGEE DECLARED THAT:
Definitions: The following terms shall have the following meanings when
used herein. Capitalized terms used but not otherwise defined herein shall have
the respective meanings set forth in the Intercreditor Agreement.
"Administrative Agent" means Bankers Trust Company, in its capacity as
Administrative Agent for the Banks and other lenders under and from time to time
signatory to the Credit Agreement (together with any successor Administrative
Agent).
"Advances" means all advances made by Mortgagee for the
protection of the interests of Mortgagee in the Property and the
rights and privileges of Mortgagee hereunder, including any advances identified
as "Advances" under this Mortgage, and shall include all interest payable with
respect thereto as set forth in this Mortgage. Advances under this Mortgage
shall include protective advances that may be made, to the extent permitted by
the Intercreditor Agreement, by any Secured Creditor under any Shared Security
Document or any separate security agreements executed pursuant to any Shared
Security Document, and affecting any portion of the Property.
"Assigned Leases" shall have the meaning assigned in Granting Clause
(g)(vi) hereof.
"Bankruptcy Code" means the United States Bankruptcy Code,
11 U.S.C. ss. 101 et seq.
"Banks" shall have the meaning set forth in the
Intercreditor Agreement.
"Casino Ground Lease" means that certain Lease Agreement by and
between Landlord, as lessor, and Celebration Park Casino, Inc. (n/k/a Grand
Palais Casino, Inc.), as lessee, dated as of April 27, 1993, recorded on
April 27, 1993 in the conveyance records of the Parish of Orleans at Notarial
Archives No. 93-018036 as Conveyance Office Instrument No. 68200, as assigned
to HJC by Assignment and Assumption of Sublease, dated as of March 15, 1994,
filed March 16, 1994 under Notarial Archives No. 94- 13862, as Conveyance
Instrument No. 83931, and as amended by Amended Lease Agreement, dated as of
March 15, 1994, recorded on March 16, 1994 in the conveyance records of the
Parish of Orleans at Notarial Archives No. 94-13887 as Conveyance Office
Instrument No. 83942, as amended by Amendment to Lease Agreement, dated as of
October 5, 1994, recorded on October 6, 1994 in the conveyance records of the
Parish of Orleans at Notarial Archives No. 94- 46778 as Conveyance Office
Instrument No. 94519, and as amended and restated in that certain Amended and
Restated Lease Agreement among Landlord, Mortgagor and the City of New
Orleans, as intervenor, dated October 29, 1998 and recorded in the conveyance
records of the Parish of Orleans at Notarial Archives No. 98-50458 as
Conveyance Office Instrument No. 168130, as the same may be assigned,
amended, modified, restated or supplemented from time to time, constituting a
sublease of the Casino Premises in connection with a ground lease created by
the City Lease.
"Casino Operating Contract" means that certain Amended and
Renegotiated Casino Operating Contract among HJC, Mortgagor and the State of
Louisiana by and through the LGCB, dated October 29, 1998, as the same may be
amended, modified, restated or supplemented from time to time.
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"Casino Premises" shall have the meaning assigned in
Granting Clause (a) hereof.
"City Lease" means that certain Lease Agreement by and between the
City of New Orleans, as lessor, and Landlord, as lessee, dated April 27, 1993
and recorded on April 27, 1993 in the conveyance records of the Parish of
Orleans under Notarial Archives No. 93-18035 as Conveyance Office Instrument
No. 68199, as amended and restated by that certain Amended and Restated Lease
Agreement, dated March 15, 1994 and recorded on March 16, 1994 in the
conveyance records of the Parish of Orleans under Notarial Archives No.
94-13885 as Conveyance Office Instrument No. 83940, and as further amended by
that certain First Amendment to Amended and Restated Lease Agreement, dated
October 29, 1998 and recorded in the conveyance records of the Parish of
Orleans under Notarial Archives No. ________ as Conveyance Office Instrument
No. _________, as the same may be assigned, amended, modified, restated or
supplemented from time to time.
"Condemnation Proceeds" shall have the meaning assigned in Granting
Clause (g)(v) hereof.
"Credit Agreement" means that certain Credit Agreement among Mortgagor,
JCC Holding Company, the various banks party thereto from time to time and the
Administrative Agent, dated as of the Plan Effective Date, as the same may be
amended, modified, restated, supplemented or extended from time to time.
"Credit Documents" shall have the meaning set forth in the
Intercreditor Agreement.
"Event of Default" means (i) any "Event of Default" under, and as
defined in, the Intercreditor Agreement, or (ii) any default under, or breach of
any provision of, this Mortgage after the expiration of any cure period
expressly provided herein (or if no cure period is specified, after notice by
Mortgagee to Mortgagor and, in the case of a non-monetary default, thirty (30)
days opportunity to cure).
"Excluded Collateral" means (i) the House Bank (as defined in the
Management Agreement); (ii) the Louisiana Gross Gaming Revenue Share Payments,
including the State's Interest in Daily Collections (as such terms are defined
in the Casino Operating Contract); and (iii) the Casino Operating Contract.
"Franchise Agreement" means that certain Franchise Agreement by the
City of New Orleans in favor of Grand Palais Casino, Inc. (formerly Celebration
Park Casino, Inc.), dated April 27, 1993 and recorded on April 27, 1993 in the
conveyance records of the Parish of Orleans under Notarial Archives No. 93-
18038 as Conveyance Office Instrument No. 68202, as assigned by that certain
Assignment and Assumption of General Development Agreement and of Franchise
Agreement, dated March 15, 1994 and recorded on March 16, 1994 in the conveyance
records of the Parish of Orleans under Notarial Archives No. 94-13863 as
Conveyance Office Instrument No. 83932, as further assigned, amended and
restated by that certain Assigned, Amended and Restated Franchise Agreement by
and between the City of New Orleans, Grand Palais Casino, Inc. and HJC, dated
March 15, 1994 and recorded on March 16, 1994 in the conveyance records of the
Parish of Orleans under Notarial Archives No. 94-13864 as
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Conveyance Office Instrument No. 83933, as the same may be amended, modified,
restated or supplemented from time to time.
"Franchise Area" shall have the meaning assigned in
Granting Clause (c) hereof.
"HET" means Harrah's Entertainment, Inc., a Delaware
corporation.
"HET/JCC Agreement" means that certain HET/JCC Agreement, dated as of
the Plan Effective Date, by and among Mortgagor, HET and HOCI or any successor
agreement thereto or any substitute agreement therefor providing for the
furnishing of the Minimum Payment Guaranty, as the same (or any successor or
substitute) may be amended, modified, restated or supplemented from time to
time.
"HJC" means Harrah's Jazz Company, a Louisiana general
partnership.
"HOCI" means Harrah's Operating Company, Inc., a Delaware
corporation.
"Holders" means individually, collectively and interchangeably the
present and the future holders of the Secured Indebtedness.
"Improvements" shall have the meaning assigned in Granting
Clause (d) hereof.
"Incorporeal Rights" shall have the meaning assigned in
Granting Clause (g) hereof.
"Indentures" means, collectively, (i) that certain Indenture pursuant
to which Mortgagor has issued Senior Subordinated Notes due 2009 with Contingent
Payments, entered into by Mortgagor, JCC Holding Company and the Trustee, dated
as of the Plan Effective Date, and (ii) that certain Indenture pursuant to which
Mortgagor has issued Senior Subordinated Contingent Notes due 2009 entered into
by Mortgagor, JCC Holding Company and the Trustee, dated as of the Plan
Effective Date, as such agreements may be amended, modified, restated or
supplemented from time to time.
"Insurance Proceeds" shall have the meaning assigned in Granting Clause
(g)(ii) hereof.
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated October 29, 1998, among Mortgagee, the Minimum Payment
Guarantors, Administrative Agent and the Trustee, as the same may be amended,
modified, restated or supplemented from time to time.
"Land" shall have the meaning assigned in Granting Clause
(d) hereof.
"Landlord" means Rivergate Development Corporation, a
Louisiana public benefit corporation.
"LGCB" means, collectively, the Louisiana Gaming Control
Board, its successors and assigns.
"Louisiana Gaming Regulations" means the Louisiana Economic Development
and
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Gaming Corporation Act, La. R.S. 27:201 et seq. and the rules and regulations
thereunder and the Louisiana Gaming Control Law, La. R.S. 27:1 et seq., and the
rules and regulations thereunder, collectively, as such statutes and regulations
may be amended from time to time.
"Management Agreement" means that certain Second Amended and
Restated Management Agreement by and between Mortgagor and Harrah's New
Orleans Management Company, a Nevada corporation, dated October 29, 1998, as
the same may be amended, modified, restated or supplemented from time to time.
"Minimum Payment Guarantors" means HET and HOCI or any successor or
substitute guarantor providing a Minimum Payment Guaranty in accordance with the
requirements of the Casino Operating Contract.
"Minimum Payment Guaranty" shall have the meaning set
forth in the Intercreditor Agreement.
"Minimum Payment Guaranty Documents" shall have the meaning set forth
in the Intercreditor Agreement.
"Mortgage" means this Act of Mortgage and Collateral Assignment, as
amended, modified, restated or supplemented from time to time.
"Mortgagor" shall have the meaning set forth in the appearance clause
of this Mortgage.
"Mortgagee" shall have the meaning set forth in the appearance clause
of this Mortgage.
"New Bonds" means, collectively, the Senior Subordinated Notes due 2009
with Contingent Payments and the Senior Subordinated Contingent Notes due 2009
issued pursuant to the Indentures.
"Ordinary Course Leases" means leases or subleases granted to other
persons or entities by Mortgagor in the ordinary course of business which do not
materially interfere with the conduct of the business of Mortgagor or any of its
subsidiaries, or do not materially detract from the nature of the related assets
of Mortgagor or any of its subsidiaries.
"Permitted Exceptions" shall have the meaning assigned in Section 1 of
this Mortgage.
"Plan" means the Third Amended Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code, as modified through September 3, 1998, as
confirmed by order of the United States Bankruptcy Court for the Eastern
District of Louisiana on October 13, 1998 in the following proceedings: In re
Harrah's Jazz Company, No. 95-14545 TMB, In re Harrah's Jazz Finance Corp., No.
95-14544 TMB, and In re Harrah's New Orleans Investment Company, No. 95-14871
TMB, as the same may be amended, modified or supplemented from time to time.
"Plan Effective Date" means the "Effective Date" under and as defined
in the Plan.
"Property" shall have the meaning assigned at the end of the Granting
Clauses of this Mortgage.
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"Railroad Lease" means that certain Amended and Restated Lease, dated
as of November 18, 1993, by and between Grand Palais Casino, Inc., a Delaware
corporation, and The Alabama Great Southern Railroad Company, as evidenced by
that certain Memorandum of Lease, dated November 19, 1993 and recorded on
December 15, 1993 in the conveyance records of the Parish of Orleans at Notarial
Archives No. 93-53509 as Conveyance Office Instrument No. 79741, as assigned by
Assignment and Assumption of Lease, dated March 15, 1994 and recorded on March
16, 1994 in the conveyance records of the Parish of Orleans at Notarial Archives
No. 94-13865 as Conveyance Office Instrument No. 83934, as amended by
Supplemental Agreement, dated August 25, 1994 and recorded on November 9, 1994
in the conveyance records of the Parish of Orleans at Notarial Archives No.
94-52041 as Conveyance Office Instrument No. 96047, as the same may be assigned,
amended, modified, restated or supplemented from time to time.
"Railroad Leased Premises" shall have the meaning assigned in Granting
Clause (b) hereof.
"Rents" shall have the meaning assigned in Granting Clause (g)(vi)
hereof.
"Rights and Privileges" shall have the meaning assigned in Granting
Clause (f) hereof.
"Second Floor Sublease" means that certain Second Floor Non-Gaming
Sublease between Mortgagor and JCC Development Company, L.L.C., a Louisiana
limited liability company, dated October 29, 1998, as the same may be
assigned, amended, modified, restated or supplemented from time to time.
"Secured Creditors" means, collectively, (i) the Minimum Payment
Guarantors, (ii) the Administrative Agent and the Banks and other lenders under
and from time to time signatory to the Credit Agreement, (iii) the Trustee and
the holders from time to time of the New Bonds, and (iv) if one or more Banks or
other lenders (or any affiliate thereof) under and from time to time signatory
to the Credit Agreement enter into one or more interest rate protection
agreements, including, without limitation, interest rate hedges, swaps, caps,
floors, collars and similar agreements with, or guaranteed by Mortgagor, any
such Bank or lender (or any affiliate thereof) (even if such bank or lender
ceases to be a party to the Credit Agreement) so long as such Bank or lender (or
any affiliate thereof) participates in the extension of such interest rate
protection agreements and their subsequent assigns, if any.
"Secured Indebtedness" means individually, collectively and
interchangeably, (i) all Protective Advances (as defined in the Intercreditor
Agreement), (ii) all present and future indebtedness, obligations, including,
without limitation, the Minimum Payment Obligations (as defined in the
Intercreditor Agreement), and liabilities owed by Mortgagor to the Minimum
Payment Guarantors under the Minimum Payment Guaranty Documents, including,
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without limitation, the HET/JCC Agreement, (iii) all present and future
indebtedness, obligations, including, without limitation, the New Bond
Obligations (as defined in the Intercreditor Agreement), and liabilities owed by
Mortgagor to any and all present and future holders of the New Bonds under the
Indentures, (iv) all present and future indebtedness, obligations, including,
without limitation, the Credit Agreement Obligations (as defined in the
Intercreditor Agreement), and liabilities owed by Mortgagor to the Banks under
the Credit Documents, including, without limitation, the Credit Agreement, (v)
all Other Obligations (as defined in the Intercreditor Agreement), (vi) all
other Obligations (as defined in the Intercreditor Agreement), and (vii) any
sums owed by Mortgagor under this Mortgage, including any Advances, or any one
or more of the foregoing, and any and all promissory notes, bonds, loan
agreements, indentures and other instruments or documents evidencing such
present and/or future indebtedness, obligations and liabilities, including any
amendments thereto, extensions, renewals and refinancings thereof, and
replacements, substitutions and consolidations thereof, whether such obligations
are committed or purely discretionary, and whether absolute or contingent,
liquidated or unliquidated, voluntary or involuntary, determined, due or to
become due, and whether now existing or hereafter arising, whether Mortgagor is
obligated alone or with others on a "solidary" or "joint and several" basis, as
a principal obligor or as a surety, guarantor, or endorser, all up to a maximum
secured amount that may be outstanding at any time and from time to time of U.S.
$10,000,000,000.00, including, but not limited to, all Advances. NOTWITHSTANDING
ANY OTHER PROVISION OF THIS MORTGAGE, THE MAXIMUM AMOUNT OF THE SECURED
INDEBTEDNESS SECURED HEREBY SHALL BE LIMITED TO U.S. $10,000,000,000.00.
"Shared Security Documents" shall have the meaning assigned in the
Intercreditor Agreement.
"Taxes" means any taxes, assessments, forced contributions, and other
governmental charges in the nature thereof, general and special, ordinary and
extraordinary, of every nature and kind whatsoever which may be levied, assessed
or imposed upon the Property, whether any or all of such Taxes be levied
directly or indirectly, including, to the extent applicable, "in lieu" taxes.
"Trustee" means Norwest Bank Minnesota, National Association, as
Trustee under the Indentures (together with any successor Trustee).
"Uniform Commercial Code" means the Louisiana Civil Code Articles 3278
et seq., La. R.S. ss.9:4401, La. R.S. ss.9:5386 and 5388 and La. R.S.
ss.10:9-101 et seq., as such statutes may be amended from time to time.
GRANTING CLAUSES.
To secure the full and prompt payment and performance of the Secured
Indebtedness, up to a maximum secured amount that may be outstanding at any time
and from time to time of U.S. $10,000,000,000.00, MORTGAGOR HEREBY MORTGAGES,
AFFECTS, AND HYPOTHECATES, IN FAVOR OF MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS
FOR THE BENEFIT OF THE HOLDERS all of Mortgagor's estate, right, title and
interest, whether now owned or hereafter acquired, whether as owner, lessor,
lessee, or otherwise, and whether vested or contingent, and including all of
Mortgagor's rights to perform all obligations under and to receive the benefits
of any leases, in and to all of the following described land (immovable
property) and interests in land (immovable property), leases, leasehold
interests, estates, servitudes, rights, buildings, other constructions,
improvements, property, fixtures, component parts, machinery and equipment to
the full extent that such property is susceptible of mortgage under
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the Louisiana Civil Code, Louisiana Revised Statutes, and other provisions of
Louisiana law; grants a continuing security interest in favor of Mortgagee and
its successors and assigns, as secured party for the benefit of the Holders, in
all property and rights described below, whether now owned or hereafter
acquired, that are susceptible of a security interest under the Uniform
Commercial Code or any other provision of Louisiana law; and does further
affect, hypothecate, collaterally assign and pledge unto and in favor of
Mortgagee and its successors and assigns, as collateral assignee for the benefit
of the Holders, all present and future leases and rents, as well as all other
property and rights described below, whether now owned or hereinafter acquired,
that are susceptible of collateral assignment under the Uniform Commercial Code
or any other provision of Louisiana law:
(a) the Casino Ground Lease, including, without limitation, all of
Mortgagor's present and future right, title and interest, as
such may be amended from time to time, in, to and under the
Casino Ground Lease, and any other lease and sublease
agreements and amendments thereof, affecting certain immovable
property in the Parish of Orleans more particularly described
on Exhibit "1" hereto annexed, together with Mortgagor's
right, title, and interest in the buildings and other
constructions and improvements on the leased premises and the
component parts thereof (which leased premises are referred to
herein as the "Casino Premises");
(b) the Railroad Lease, including, without limitation, Mortgagor's
present and future right, title and interest, as such may be
amended from time to time, in, to and under the Railroad
Lease, and any other lease and sublease agreements and
amendments thereof, affecting certain immovable property in
the Parish of Orleans more particularly described on Exhibit
"2" hereto annexed, together with Mortgagor's right, title,
and interest (if any) in the buildings and other constructions
and improvements on the leased premises and the component
parts thereof (which leased premises are referred to herein as
the "Railroad Leased Premises"); provided, however,
notwithstanding anything set forth in this Mortgage or in the
Railroad Lease to the contrary (including, without limitation,
paragraph 40 of Exhibit "A" to the Railroad Lease), the
Railroad Lease may be terminated, released, canceled,
surrendered, modified, assigned or subleased (provided same
will not have a material adverse effect on the business,
operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Mortgagor and its
subsidiaries taken as a whole) and Mortgagor may exercise any
rights under the Railroad Lease to release property from the
Railroad Lease, in each case without the consent of Mortgagee;
(c) All of Mortgagor's present and future right, title and
interest in, to, and under the Franchise Agreement, affecting
certain immovable property in the Parish of Orleans more
particularly described on Exhibit "3" hereto annexed (the
"Franchise Area"), together with Mortgagor's right, title, and
interest (if any) in the building and other constructions and
improvements in the Franchise Area and the component parts
thereof; provided, however, notwithstanding anything set forth
in this Mortgage, the Franchise Agreement and any and
all rights of
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Mortgagor in and to the Franchise Area may be
terminated, released, canceled, surrendered or modified
(provided same will not have a material adverse effect on
Mortgagor's casino operations at the Casino Premises);
(d) TOGETHER with all of the buildings, other constructions,
structures, improvements, fixtures, additions, enlargements,
extensions, modifications or repairs of every kind and
description, now or hereafter erected or placed on any of the
Land (as defined below), or thereunto belonging or
appertaining, which may from time to time be owned or leased
by Mortgagor, or which may be used or useable in connection
with any present or future use or operations of the Land,
whether now owned or hereinafter acquired by Mortgagor,
including all parking areas, roads, driveways, walks, fences,
walls, beams, recreation facilities, drainage facilities,
lighting facilities and other site improvements, all water,
sanitary and storm sewer, drainage, electricity, steam, gas,
telephone and other utility equipment and facilities, all
plumbing, lighting, heating, ventilating, air-conditioning,
refrigerating, incinerating, compacting, fire protection and
sprinkler, surveillance and security, vacuum cleaning, public
address and communications equipment and systems, all kitchen
and laundry appliances, screens, awnings, floor coverings,
partitions, elevators, escalators, motors, machinery, pipes,
fittings and other types of equipment and personal property of
every kind and description now or hereafter located on the
Land or attached to the Improvements (as defined below) which
by the nature of their location thereon or attachment thereto
are deemed real or immovable property under applicable law;
and including all materials intended for the construction,
reconstruction, repair, replacement, alteration, addition or
improvement of or to such buildings, equipment, fixtures,
component parts, structures and improvements, all of which
materials shall be deemed to be part of the Property
immediately upon delivery thereof on the Land to be part of
the Improvements immediately upon their incorporation therein,
together with all replacements thereof, substitutions
therefor, additions thereto, and any other component parts of
any and all such Land (all of the land described in and
subject to this Mortgage, including the Casino Premises and
the Railroad Leased Premises, whether owned in fee or full
ownership by Mortgagor or affected by leases in
which Mortgagor has an interest, is collectively referred to
as the "Land," and all of the buildings, other constructions,
structures, improvements and component parts of the Land are
collectively referred to as the "Improvements");
(e) TOGETHER with Mortgagor's rights in and to any supplement,
modification, amendment, novation, reconduction, restatement,
or replacement of any of the leases affecting the Land;
(f) TOGETHER with all of the rights, way, privileges, servitudes
(including those servitudes arising pursuant to Section 4.18
of the Casino Ground Lease), easements, tenements,
hereditaments, appurtenances and advantages belonging to or in
anywise appertaining to any of the Property or any part
thereof (collectively,
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the "Rights and Privileges"), including, without
limitation, the Rights and Privileges, if any, of Mortgagor
in and to the land lying in the streets, roads or avenues,
open or proposed, in front of or adjoining the Land, and in
to any alleys or passages, rights of ingress or egress,
riparian rights, air rights, development rights, and all
other Rights and Privileges, whatsoever, in any way
belonging, relating or appertaining to any of the Property,
or any part thereof, whether now owned or hereafter acquired
by Mortgagor; and
(g) TOGETHER with the following rights and privileges (the
"Incorporeal Rights"):
(i) Any and all of Mortgagor's present and future
right, title and interest in and to the proceeds
of the sale, transfer, financing, refinancing or
conveyance or conversion into cash or liquidated
claims, whether voluntary or involuntary, of all
or any of the Property, including all title
insurance proceeds under any title insurance
policy now or hereafter held by Mortgagor, all
rights, dividends and other claims of any kind
whatsoever (including damage, secured, unsecured,
priority and bankruptcy claims) relating to the
Property, the rights of Mortgagor to receive such
sale proceeds directly from the purchaser or
purchasers, and further to enforce any rights that
Mortgagor may have to collect such sale proceeds,
including without limitation, Mortgagor's right to
commence appropriate collection actions against
the purchaser or purchasers thereof;
(ii) Any and all of Mortgagor's present and future
rights, title and interest in and to the unearned
insurance premiums and proceeds of insurance
affecting all or any part of the Property,
including the right to receive such unearned
insurance premiums and insurance proceeds directly
from the insurer and, whether applicable, to
enforce any rights that Mortgagor may have to
collect such amounts ("Insurance Proceeds");
(iii) Mortgagor's claims and rights to the payment of
damages arising from any rejection of the Casino
Ground Lease by the lessor of the Casino Ground Lease
under the Bankruptcy Code;
(iv) Any and all escrow payments paid to Mortgagor
pursuant to any loan documents executed in connection
with the Secured Indebtedness;
(v) Any and all of Mortgagor's present and future
rights, title and interest in and to the proceeds
of any award or claim for direct or consequential
damages relating to any condemnation,
expropriation, conveyance, or other taking of all
or any part of the Property by any governmental
authority, including, without limitation, any
awards resulting from a change or grade of streets
and awards for severance damages, and further
including the right to receive such condemnation
proceeds directly from such a governmental
authority and, where applicable, to enforce any
rights that Mortgagor may have to collect such
condemnation proceeds as
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provided herein ("Condemnation Proceeds");
(vi) Any and all present and future leases, subleases
or other occupancy agreements affecting the
Property, whether or not of record, for the use or
occupancy of all or any part of the Property,
together with all amendments, supplements,
consolidations, replacements, restatements,
extensions, renewals and other modifications of
any thereof, and together with all guarantees of
any of the obligations of the tenants under any of
said leases (the "Assigned Leases"), and all
rents, fruits, income, and profits therefrom
(collectively, the "Rents"), including without
limitation, any and all rents, income, profits,
bonuses, revenues, royalties, cash or security
deposits, advances, rentals and other payments,
and further including Mortgagor's rights to
enforce all Assigned Leases and to receive and
enforce any rights that Mortgagor might have to
collect Rent. Such Assigned Leases include,
without limitation, Mortgagor's interest as
sublessor in the Second Floor Sublease;
(vii) Any and all of Mortgagor's present and future rights,
title and interest and other claims or demands that
Mortgagor now has or may hereafter acquire against
anyone with respect to any damage to all or any part
of the Improvements, including without limitation,
damages arising or resulting from any defect in or
with respect to the design
or construction of all or any portion of the
Improvements, or arising from any default under any
construction, architectural or engineering contract
or agreement relating to the Improvements; and
(viii) Any and all present and future options to sell or to
lease the Property, or any interests therein.
(h) All of Mortgagor's rights, title and interest, presently or in
the future, in and to the Land and any other real or immovable
property described in this Mortgage, whether as owner, lessee,
sublessee or otherwise.
All of the foregoing property and rights described in these Granting Clauses,
individually, collectively and interchangeably, including, without limitation,
any and all of Mortgagor's present and future property and rights subject to
this Mortgage, are referred to herein as the "Property." Notwithstanding the
foregoing, the Property shall not include any of the Excluded Collateral.
MORTGAGE PROVISIONS.
Mortgagor hereby declares, acknowledges, covenants and agrees as
follows:
1. Permitted Exceptions. This Mortgage is made and accepted
subject to the exceptions set forth on Exhibit "4" hereto annexed and as
otherwise agreed to by Mortgagee in writing (collectively, the "Permitted
Exceptions").
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2. Acknowledgment of Collateral Agent. Mortgagor declares and
acknowledges that the original Mortgagee is contemplated to be Mortgagee in
its capacity as Collateral Agent under the Intercreditor Agreement. Mortgagee
declares that the taxpayer identification number of Mortgagee is accurately
set forth in the appearance clause to this Mortgage. Mortgagor further
declares and acknowledges that the Secured Indebtedness may be transferred or
negotiated one or more times and that the Holders shall include any and all
holder or holders of the Secured Indebtedness from time to time.
3. Future Advances. This Mortgage has been executed by
Mortgagor pursuant to Louisiana Civil Code Article 3298 and other
applicable laws, including the Uniform Commercial Code, for the
purpose of securing the Secured Indebtedness that may now be existing and/or
that may arise in the future as provided herein, with the preferences and
priorities provided under applicable Louisiana law.
4. Maximum Amount. In accordance with the requirements of
applicable law, including Louisiana Civil Code Article 3288 and La. R.S.
Sections 9:4401, Mortgagor acknowledges, notwithstanding any other provision
of this Mortgage or any other document to the contrary, the maximum amount of
Secured Indebtedness secured hereby that may be outstanding at any time and
from time to time shall be U.S. $10,000,000,000.00.
5. Term. This Mortgage will remain in effect until all of the
Secured Indebtedness is fully paid in cash and satisfied and there is no
agreement or commitment to advance any additional indebtedness or other
obligations under any of (i) the Minimum Payment Guaranty Documents, including,
without limitation, the HET/JCC Agreement, (ii) the Indentures, (iii) the Credit
Documents, including, without limitation, the Credit Agreement, or (iv) the
Shared Security Documents, including this Mortgage. At such time, upon written
request from Mortgagor, Mortgagee shall execute and deliver to Mortgagor a
written cancellation instrument.
6. Recordation and Filing. Mortgagor authorizes Mortgagee to file
multiple originals, or photocopies, carbon copies, or facsimile copies of this
Mortgage and appropriate financing statements with the appropriate filing
officer in the State of Louisiana pursuant to the provisions of the Uniform
Commercial Code. Mortgagor's employer identification number is accurately set
out on the first page of this Mortgage. Mortgagor will not change its employer
identification number or its name, identity or corporate structure or address so
that any financing statement filed in connection herewith may become seriously
misleading unless and until it notifies Mortgagee in writing and executes all
new appropriate financing statements or other such documents as Mortgagee may
reasonably require, with Mortgagor being required to pay the cost of such
documentation and the filing thereof as provided above.
7. Representations and Warranties. Mortgagor hereby represents
and warrants to Mortgagee that: (a) pursuant to the Casino Ground Lease,
Mortgagor has a valid and enforceable leasehold interest in and to the Casino
Premises and has or will have valid and merchantable title to the Improvements
constructed or to be constructed thereon so long as such Casino Ground Lease is
in full force and effect, subject to the Permitted Exceptions; (b) pursuant to
the Railroad Lease, Mortgagor has a valid and enforceable leasehold interest in
and to the Railroad Leased
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Premises, subject to the Permitted Exceptions; (c) none of the Property has
heretofore been alienated by Mortgagor, and there are no liens or encumbrances
against the Property other than the Permitted Exceptions; (d) there are no
defenses or offsets to this Mortgage or the Secured Indebtedness; (e) Mortgagor
has full power and authority to encumber the Property in the manner and form set
forth in this Mortgage; (f) all consents and approvals to this Mortgage under
the Plan have been obtained; (g) the Assigned Leases have not been assigned by
Mortgagor or, to the knowledge of Mortgagor, any tenant, thereunder; (h) to the
knowledge of Mortgagor, as of the date hereof, the Assigned Leases are in full
force and effect and there is no material default under any Assigned Lease and
there is existing no condition which with the giving of notice or passage of
time or both would cause a material default thereunder; and (i) the execution,
delivery and performance of this Mortgage do not require any consent under, and
will not contravene any provision of or cause a default under, any of the Casino
Ground Lease, the Railroad Lease, the Franchise Agreement or the Assigned
Leases. Mortgagor represents and warrants that this Mortgage is and will remain
a valid and enforceable first mortgage on, security interest in and collateral
assignment of the Property pursuant to and in accordance with the terms hereof,
subject only to the Permitted Exceptions, and Mortgagor will preserve title to
the Property and will forever warrant and defend such title and the validity and
priority of the lien of this Mortgage against the claims of all persons.
8. Lien. This Mortgage is intended to encumber, effect, and
constitute a lien on the Casino Ground Lease, the Railroad Lease, the Franchise
Agreement, the Land and the Improvements and all of Mortgagor's interest therein
and all of the other Property, regardless of whether Mortgagor's interest
therein is that of lessee, sublessee, owner, or otherwise, and regardless of
whether the nature of such interest changes from time to time from lessee to
sublessee to owner or vice-versa in any combinations, and in any such event the
lien of this Mortgage shall automatically extend to and cover any and all
interest of Mortgagor in the Land and the Improvements without the need of any
amendment, supplement, notice, or action of any kind by Mortgagee. To the extent
that this Mortgage is a mortgage in Mortgagor's interest in the Land and
Improvements as lessor, this Mortgage will cover and include all of Mortgagor's
rights to perform the obligations of the lessor under any Assigned Lease as well
as all of Mortgagor's right to receive the benefits accruing to the lessor under
any Assigned Lease.
9. Assignment of Leases and Rents. This Mortgage includes the
collateral assignment, as security for the Secured Indebtedness up to the
maximum secured amount that may be outstanding at any time and from time to time
of $10,000,000,000.00, of all Assigned Leases and all Rents, and further
includes Mortgagor's rights to enforce all Assigned Leases and to receive and
enforce any and all rights that Mortgagor might have to collect Rents.
10. Remedies. Subject to Section 35 of this Mortgage, upon the
occurrence and during the continuance of any Event of Default, Mortgagor shall
forthwith upon demand of Mortgagee surrender to Mortgagee possession of the
Property, and Mortgagee shall be entitled to take actual possession of the
Property or any part thereof personally or by its agents or attorneys, and
Mortgagee in its discretion may, in addition to any other rights at law or in
equity, with or without force and with or without process of law, enter upon and
take and maintain possession of all or any part of the Property together with
all documents, books, records, papers and accounts
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of Mortgagor relating thereto, and may as attorney-in-fact or agent of
Mortgagor, or in its own name as Mortgagee and under the powers herein granted:
(a) hold, operate, manage or control the Property and
conduct the business, if any, thereof, either
personally or by its agents, and with full power to use
such measures, legal or equitable, as in its discretion
it deems proper or necessary to enforce the payment or
security of the income, rents, fruits, issues and
profits of the Mortgaged Property, including actions
for the recovery of Rents, and direct collection of
Rents and other payments from tenants in accordance
with the provisions of La. R.S. Sections 9:4401, Mortgagor
hereby granting Mortgagee full power and authority to
exercise each and every one of the rights, privileges
and powers herein granted at any and all times
hereafter, without notice to Mortgagor;
(b) cancel or terminate any sublease for any cause or on any
ground which would entitle Mortgagor to cancel the same;
(c) enforce any term and provision of any sublease,
including actions in specific performance;
(d) elect to cancel any sublease made subsequent to this Mortgage
or subordinated to the lien hereof unless this Mortgage has
specifically been made subordinate to such sublease, but in no
event including termination of the Second Floor Sublease other
than in accordance with the terms thereof;
(e) extend or modify any then existing subleases in
accordance with the terms thereof and make new
subleases, which extensions, modifications or new
subleases may provide for terms to expire, or for
options to lessees to extend or renew terms to expire,
beyond the final maturity date of the Secured
Indebtedness and the issuance of a deed or deeds to a
purchaser or purchasers at a foreclosure sale, it being
understood and agreed that any such subleases, and the
options or other such provisions to be contained
therein, shall be binding upon Mortgagor and all
persons whose interests in the Property are subject to
the lien hereof and shall be binding also upon the
purchaser or purchasers at any foreclosure sale; and/or
(f) subject to the rights of Landlord pursuant to the Casino
Ground Lease, withdraw any monies on deposit with any
financial institution in the name of or on behalf of
Mortgagor.
11. Performance of Lease Obligations; Indemnification. In the
event that Mortgagee or any third party acquires Mortgagor's interest in either
the Casino Ground Lease or the Improvements on the Casino Premises pursuant to
this Mortgage (whether by foreclosure, other enforcement proceeding or
otherwise), Mortgagee or such third party, as the case may be, shall perform or
cause to be performed all of Mortgagor's obligations under the Casino Ground
Lease as and to the extent required thereunder; provided, however, Mortgagee or
such third party, as the case may be, shall remain so obligated only for as long
as Mortgagee or such third party, as the case may be, retains an ownership
interest in the Casino Ground Lease and/or the
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Improvements on the Casino Premises. Except as provided in the immediately
preceding sentence, Mortgagee shall not be obligated to perform or discharge,
nor does it hereby undertake to perform or discharge, any obligation, duty or
liability under the Casino Ground Lease, the Railroad Lease, the Second Floor
Sublease or any Assigned Lease. Mortgagor shall and does hereby agree to
indemnify and to hold Mortgagee harmless of and from all liability, loss or
damage which Mortgagee might incur under said leases or under or by reason of
the assignment of any subleases, and of and from any and all claims or demands
whatsoever which may be asserted against Mortgagee by reason of any alleged
obligations or undertakings to perform or discharge any of the terms, covenants
or agreements contained in said leases, including without limitation any claims
arising out of Mortgagee's negligence or strict liability, but excluding any
such claims arising out of Mortgagee's gross negligence or willful misconduct.
Should Mortgagee incur any such liability, loss or damage under any of said
leases, or under or by reason of the assignment thereof, or in the defense of
any claims or demands, the amount thereof, including costs, expenses and
reasonable attorneys' fees and costs, including reasonable attorneys' fees and
costs on appeal, shall be secured hereby and Mortgagor shall reimburse Mortgagee
therefor immediately upon demand, together with interest at the rate provided in
Section 18 of this Mortgage to the date of reimbursement.
12. Payment and Performance of Secured Indebtedness. Mortgagor
shall pay the Secured Indebtedness when due in accordance with the terms of the
Minimum Payment Guaranty Documents, including, without limitation, the HET/JCC
Agreement, the Indentures and the Credit Documents, including, without
limitation, the Credit Agreement, as applicable, and shall perform and observe
each of Mortgagor's covenants, agreements and obligations hereunder and on the
Secured Indebtedness in accordance with their respective terms.
13. Maintaining Condition of the Land and Improvements. Mortgagor
shall not directly or indirectly commit or suffer any waste or stripping of the
Property, and Mortgagor shall keep the Improvements protected and in good order,
repair and condition at all times, and in connection therewith, Mortgagor shall
make all repairs, renewals and replacements, structural and non-
structural, exterior and interior, ordinary and extraordinary and foreseen and
unforeseen to the Improvements. From and after the occurrence of an Event of
Default, Mortgagee, as provided under the Intercreditor Agreement, shall have
the right, but shall not be obligated, to take such actions as Mortgagee may
deem necessary to correct or remedy such failure, and any amounts expended or
advanced in connection therewith shall be Advances hereunder and part of the
Secured Indebtedness. In such event, Mortgagee and any person designated by
Mortgagee shall have, and is hereby granted, the right to enter upon the
Property at reasonable times and from time to time for the purpose of taking any
such action.
14. Inspections. Mortgagor hereby authorizes Mortgagee, its
agents, representatives or workmen, to enter (a) without prior notice if an
Event of Default has occurred and is continuing or (b) at any reasonable time
during normal business hours after reasonable advance notice to Mortgagor
(except that with respect to any emergency, Mortgagee, its agents,
representatives or workmen may enter during such time of emergency), upon or in
the Land and the Improvements for the purpose of inspecting the same and for the
purpose of exercising any right, power or remedy which Mortgagee is authorized
to exercise under the terms of this
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Mortgage; provided, however, that no such entry upon or in the Land or the
Improvements shall be construed to be possession of the Land or the Improvements
or to be a cure of any Event of Default or waiver of any Event of Default.
15. Payment of Taxes and Insurance
(a) If Mortgagor fails to pay or discharge or cause to be paid or
discharged any Taxes within thirty (30) days after the same
became due (and unless (i) Mortgagor is contesting such Taxes
in good faith by appropriate proceedings, (ii) Mortgagor has
established or is maintaining adequate reserve for such Taxes
in accordance with generally accepted accounting principles as
in effect from time to time, or (iii) the failure to pay or
discharge such Taxes will not result in a forfeiture of any
portion of the Property which would have a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects
of Mortgagor and its subsidiaries taken as a whole or be
grounds for declaring a termination of the Casino Ground Lease
or any Assigned Lease (other than Ordinary Course Leases)),
Mortgagee, as provided in Section 4 of the Intercreditor
Agreement, shall be authorized (but shall not be obligated) to
pay such Taxes, with full subrogation to all rights of the
taxing authorities by reason of such payment, and any amounts
so paid by Mortgagee shall be Advances hereunder and part of
the Secured Indebtedness.
(b) If Mortgagor, following written notice from Mortgagee
to Mortgagor and thirty (30) days opportunity to cure, fails
to obtain or maintain any insurance required under the
provisions of the Shared Security Documents, as applicable, or
any other documents executed in connection with any of the
Secured Indebtedness, Mortgagee, as provided in Section 4 of
the Intercreditor Agreement and this Mortgage, shall be
authorized (but shall not be obligated) to pay such amounts,
including premiums with respect to insurance which protects
Mortgagee's interest only and any amounts so paid by Mortgagee
shall be included within the Advances hereunder and part of
the Secured Indebtedness.
16. Default in Compliance with Law. If Mortgagor shall fail to
comply with any laws, rules and regulations, including, but not limited to, the
Louisiana Gaming Regulations, of all governmental bodies and agencies having
jurisdiction over or authority with respect to the Property (except such
instances of compliance as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on all or any portion
of the Property) and such noncompliance continues for thirty (30) days (or any
shorter period for compliance to the extent required by applicable law)
following written notice thereof by Mortgagee, Mortgagee, at Mortgagee's option,
may (but shall not obligated to) take reasonable steps to comply with such law,
rule or regulation and pay the cost thereof, and any amounts expended or
advanced in connection therewith shall constitute Advances and form part of the
Secured Indebtedness.
17. Franchise Agreement. Mortgagor represents and warrants that no
Franchise Improvements (as defined in the Franchise Agreement) have been
constructed on the Franchise
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Area as permitted by the Franchise Agreement. Mortgagor agrees, to the extent
Mortgagor constructs any Franchise Improvements on the Franchise Area and, as a
result thereof, incurs any obligations with respect to and under the Franchise
Agreement, to comply with all of its obligations under, and all of the terms,
covenants and conditions of, the Franchise Agreement; provided that no Event of
Default shall be deemed to have occurred under this Mortgage as a result of any
noncompliance with this Section 17 unless such noncompliance continues for
thirty (30) days after written notice thereof from Mortgagee to Mortgagor. From
and after the occurrence of such Event of Default, Mortgagee shall have the
right (but shall be under no obligation) to take such actions as Mortgagee may
deem necessary to correct or remedy such failure, and any amounts expended or
advanced in connection therewith shall be included as Advances. In such event,
Mortgagee and any person designated by Mortgagee shall have, and is hereby
granted, the right to enter upon the Franchise Area at reasonable times and from
time to time for the purpose of taking any such action.
18. Reimbursement for Advances. Within thirty (30) days
following written demand therefor by Mortgagee to Mortgagor, Mortgagor shall
reimburse Mortgagee or any Secured Creditor (to the extent permitted by the
applicable Shared Security Documents and the Intercreditor Agreement) for any
amount(s) paid or advanced by Mortgagee or such Secured Creditor (i) for Taxes
pursuant to Section 15(a) of this Mortgage, (ii) for insurance pursuant to
Section 15(b) of this Mortgage, (iii) for the cost of keeping the Property in
good order, repair and condition pursuant to Section 13 of this Mortgage, (iv)
to comply with applicable laws, rules or regulations pursuant to Section 16 of
this Mortgage, or (v) for any other purposes set forth herein or permitted
hereby or by the Shared Security Documents and the Intercreditor Agreement, or
otherwise reasonably necessary in connection therewith (including, without
limitation, Advances for the preservation of the lien of this Mortgage). All
such amounts shall constitute Advances hereunder, and such amounts, together
with the interest accrued thereon as hereinafter provided, shall form part of
the Secured Indebtedness and shall be fully secured hereby. Mortgagor shall pay
interest on any Advances at a rate applicable to overdue loan principal pursuant
to Section 1.08(c) of the Credit Agreement from the date(s) of such Advances
until Mortgagor reimburses Mortgagee therefor.
19. Mortgagee's Option to Act Hereunder. None of the provisions of
this Mortgage shall be construed as making it obligatory upon Mortgagee to pay
Taxes or to comply with laws or regulations affecting the Property or to do any
other act with regard to the Property or as causing Mortgagee to become liable
for loss, damage or injury which may result from the nonpayment of Taxes or to
do any other act.
20. Notice of Proceeding Affecting the Property
(a) Mortgagor shall promptly notify Mortgagee of any knowledge
that Mortgagor has or obtains of the commencement of any legal
proceedings (including for condemnation or taking) which could
have a material adverse effect on the Property or any part
thereof or the operation of the casino project thereon, and
Mortgagor shall immediately, upon service thereof on or by
Mortgagor, deliver to Mortgagee a true copy of each petition,
summons, complaint, notice, and all other
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pleadings or papers, served in connection with any such
legal proceeding, and Mortgagee may take such action as may
be necessary to preserve Mortgagee's rights and interests
affected thereby. Mortgagor shall, at its expense,
diligently prosecute and/or defend (as the case may be) all
such proceedings and shall, upon the request of Mortgagee,
deliver to Mortgagee copies of all papers served in
connection therewith, provided that no settlement or
compromise of any such proceeding shall be made by Mortgagor
without Mortgagee's prior written consent if such settlement
or compromise could reasonably be expected to have a
material adverse effect on the Property taken as a whole.
(b) Notwithstanding any provisions of this Mortgage relating to
defaults hereunder, it shall not be a default under this
Mortgage if (i) any Condemnation Proceeds or Insurance
Proceeds are unavailable to Mortgagee because (A) the Landlord
has priority in such proceeds under the Casino Ground Lease,
(B) such proceeds have been applied to the restoration or
repair of the Casino Premises as required by the applicable
terms of Articles XII and XV, as the case may be, of the
Casino Ground Lease, or (C) such proceeds have been applied in
accordance with Section 11 of the Intercreditor Agreement, or
(ii) said proceeds are used for such other use as Mortgagee
may approve in writing.
21. Additional Documents to Maintain Lien. Mortgagor shall keep
valid and, except for the Permitted Exceptions, unimpaired the lien and
privilege hereby created or to be created and to that end shall execute at any
future time all further instruments as may be necessary or desirable or that may
be reasonably required by Mortgagee to make and keep valid the lien and
privilege of the Mortgage on the Property and each and every part thereof, and
to maintain the priority of the lien and privilege of the Mortgage on the
Property.
22. Authentic Evidence. In the event any proceedings are
taken hereunder by way of executory or other process, any and all
declarations of facts made by authentic act before a notary
public and in the presence of two witnesses by a person or
persons declaring that such facts lie within his, her or their
knowledge shall constitute authentic evidence of such facts for
the purposes of such executory or other process and also for
purposes of La. R.S. 9:3504(D)(6) and La. R.S. 10:9-508, where
applicable.
23. Acceleration; Enforcement; Confession of Judgment
(a) Upon an Event of Default, Mortgagee shall have the right to
accelerate the maturity and demand immediate payment of all
Secured Indebtedness. It shall be lawful for Mortgagee (and
Mortgagor does hereby authorize Mortgagee without notice or
putting Mortgagor in default, a putting in default being
hereby expressly waived), to cause all or singular the
Property to be seized and sold under executory or other legal
process, issued by any court of competent jurisdiction,
without appraisement, and to the highest bidder for cash or on
such terms as Mortgagee may direct; and Mortgagor consents
that the Property may be sold, either as a whole or in such
lots or parcels as Mortgagee may direct in any such
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proceedings. Mortgagor hereby expressly waives: (a) the
benefit of appraisement, as provided in Articles 2332, 2336,
2723 and 2724, Louisiana Code of Civil Procedure, and all
other laws conferring the same; (b) the demand and three (3)
days delay accorded by Articles 2639 and 2721, Louisiana Code
of Civil Procedure; (c) the three (3) days delay provided by
Articles 2331 and 2722, Louisiana Code of Civil Procedure; and
(d) the benefit of the other provisions of Articles 2331, 2722
and 2723, Louisiana Code of Civil Procedure, and any other
Articles not specifically mentioned above which would prevent
the immediate seizure and sale of any or all of the Property,
and Mortgagor expressly agrees to the immediate seizure of the
Property in the event of suit hereon.
(b) Mortgagor does hereby name, constitute, and appoint Mortgagee
and Mortgagee's agents as Mortgagor's true and lawful agent
and attorney-in-fact with full power of substitution and with
power for Mortgagee in its name and capacity or in the name
and capacity of Mortgagor to carry out and enforce following
an Event of Default any or all of the Incorporeal Rights
collaterally assigned and pledged or otherwise encumbered
under this Mortgage and at Mortgagee's sole discretion to file
any claim or to take any other action or proceedings and to
make any settlement of claims, either in its own name or in
the name of Mortgagor or otherwise, that Mortgagee may deem
necessary or desirable in order to collect and enforce the
payment and performance of the obligations owed to Mortgagor
under the Incorporeal Rights. Upon receipt of a written notice
from Mortgagee that an Event of Default exists, the parties to
the Incorporeal Rights are hereby expressly and irrevocably
authorized and directed to pay any and all amounts and perform
any duties, liabilities, or obligations due to Mortgagor
pursuant to any of the Incorporeal Rights to and for Mortgagee
or such nominee as Mortgagee may designate in such notice. The
power of attorney granted to Mortgagee and its agents is
coupled with an interest and may not be revoked by Mortgagor
as long as this Mortgage remains in effect. Mortgagor
specifically declares that nothing in this Mortgage shall
operate (i) to place any responsibility for the control, care,
management, or repair of the Property upon Mortgagee or for
the carrying out of any of the terms or conditions of any
present or future lease that may affect the Property, or (ii)
to make Mortgagee responsible or liable for (A) any waste
committed on the Property by any lessee or by any other party,
(B) the dangerous or defective condition of the Property,
including but not limited to liability as described in
Louisiana Civil Code Articles 2315 through 2324, or (C) any
negligence in the management, upkeep, repair, or control of
the Property that may result in loss, injury, or death to
any lessee or other party. If the Property is transferred by
virtue of any judicial foreclosure proceeding, the Property
may, in Mortgagee's sole discretion, be transferred free and
clear of, and unencumbered by, any and all subordinate leases,
assignments, and contracts. Upon request by Mortgagee
following an Event of Default, Mortgagor will immediately
notify individual obligors and debtors under the Incorporeal
Rights, advising such obligors and debtors of the fact that
their respective agreements and/or obligations have been
collaterally assigned and pledged to Mortgagee. In the event
that
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Mortgagor should fail to provide such notices for any
reason upon request by Mortgagee, Mortgagor agrees that
Mortgagee may forward appropriate notices to such obligors and
debtors, either in Mortgagee's name or the name of Mortgagor.
(c) Should one or more Events of Defaults occur or exist,
Mortgagee shall have the additional right, at its sole option,
to separately sell the aforesaid Incorporeal Rights, or any
part or parts thereof, at private or public sale, at such
price or prices as Mortgagee may deem best, either for cash or
for any other compensation, or on credit, or for future
delivery, without the assumption of any credit risk. The sale
of the aforesaid Incorporeal Rights may be without
appraisement, the benefit of which is also expressly waived by
Mortgagor. Mortgagee may exercise any other remedies with
regard to Mortgagor's rights as may be authorized under the
Uniform Commercial Code or under the applicable laws of any
other applicable state. The sale, lease or other disposition
of the Incorporeal Rights after default may be for cash,
credit, or any combination thereof. Mortgagee may purchase all
or any part of such Incorporeal Rights at public sale (or if
permitted by law, at private sale) and in lieu of actual
payment of any such purchase price, may set-off the amount of
such price against the then outstanding balance of the Secured
Indebtedness.
(d) To the full extent permitted by applicable law, Mortgagor
hereby waives and releases Mortgagee and each Secured Creditor
of and from any and all liability and penalties for failure of
Mortgagee to comply with any statutory or other requirement
imposed upon Mortgagee relating to notices of sale, holding of
sale, or reporting of any sale. Mortgagee shall have the right
to postpone or adjourn any sale or other disposition of the
Incorporeal Rights at any time without giving of notice of any
such postponed or adjourned dates. In the event Mortgagee
seeks to take possession of any or all of the Incorporeal
Rights by court process, or otherwise, Mortgagor hereby
irrevocably waives any bonds and surety or security relating
thereto required by any statute, court rule or otherwise as an
incident to such possession. Mortgagor further waives any
demand for possession prior to the commencement of any suit or
action and waives the right to trial by jury with respect
thereto, and any other action in which Mortgagee is a party.
(e) Pursuant to La. R.S. 27:275 et seq., Mortgagee is hereby
authorized and empowered to file a petition to foreclose this
Mortgage in which the LGCB is named a nominal defendant and in
which Mortgagee requests the appointment of a receiver as
contemplated by and in accordance with the provisions of the
cited statutes and applicable Louisiana Gaming Regulations.
The filing of a verified petition by Mortgagee with respect to
the Secured Indebtedness together with a certified copy of
this Mortgage shall constitute prima facie proof of
Mortgagor's default on the Secured Indebtedness and
Mortgagee's right to enforce the lien of this Mortgage in
executory or ordinary proceedings, at Mortgagee's option, and
to the appointment of a receiver pursuant to applicable law
and regulations.
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(f) Nothing herein shall prevent Mortgagee from pursuing any other
remedies available to Mortgagee at law or in equity, including
but not limited to, specific performance, appointment of a
receiver and right of entry and possession.
(g) For purposes of foreclosure under Louisiana executory process
procedures, Mortgagor acknowledges the Secured Indebtedness
and confesses judgment in favor of Mortgagee in the full
amount of the Secured Indebtedness, in principal, interest,
costs, expenses, and reasonable attorneys' fees.
24. Appointment of Keeper. If the Property or any part thereof is
seized as an incident to an action for the recognition or the enforcement of
this Mortgage by executory process, ordinary process, sequestration, writ of
fiere facias, or otherwise, and to the extent that the receiver of the Property
is not appointed pursuant to La. R.S. 27:275 et seq., Mortgagor and Mortgagee
hereby agree that the court issuing any such order shall, if petitioned for by
Mortgagee, direct the sheriff to appoint as a keeper of the Property Mortgagee
or any agent designated by Mortgagee, or any person or entity named by Mortgagee
at the time such seizure is requested, or any time thereafter. This designation
is made pursuant to La. R.S. 9:5136 through 5140.2, inclusive, as the same may
be amended, and Mortgagee shall be entitled to all the rights and benefits
afforded thereunder including reasonable compensation, which compensation shall
be secured by this Mortgage.
25. Partial Invalidity. If for any reason any of the provisions of
this Mortgage shall be judicially declared invalid or unenforceable, such
declaration shall not affect the validity or enforceability of the other
provisions hereof.
26. Covenants to Abide by Leases. Subject to the terms of this
Mortgage, including, without limitation Granting Clause (b) hereof, with respect
to each of (a) the Casino Ground Lease, (b) the Railroad Lease, and (c) any and
all other leases now or hereafter mortgaged or required to be mortgaged
hereunder or pursuant to a supplement to or amendment of this Mortgage (other
than Ordinary Course Leases), as of the date such lease becomes subject to the
lien of this Mortgage, Mortgagor does specially covenant as follows:
(a) Mortgagor shall pay, by no later than the end of any
applicable cure periods granted to Mortgagor under such lease
with respect to such payment, all rents, additional rents and
other sums required to be paid by Mortgagor, as tenant under
and pursuant to the provisions of such lease;
(b) Mortgagor shall at all times promptly and faithfully keep and
perform, or cause to be kept and performed, by no later than
the end of any applicable cure periods granted to Mortgagor
under such lease with respect to such performance, all the
covenants and conditions contained in such lease by the tenant
under such lease to be kept and performed and in all respects
conform to and comply with the terms and conditions of such
lease, by no later than the end of any applicable cure periods
granted to Mortgagor under such lease with respect to such
performance, to the end that all things shall be done which
are necessary to keep unimpaired the rights of Mortgagor, as
tenant, under such lease, and Mortgagor further covenants
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that it shall not do or permit anything which will impair or
tend to impair the security of this Mortgage or will be
grounds for declaring a termination of such lease;
(c) Mortgagor shall not, without the prior written consent of
Mortgagee, modify, extend or in any way alter the terms of
such lease or cancel or surrender such lease, or waive,
execute, condone or in any way release or discharge the
landlord thereunder of or from the obligations covenants,
conditions and agreements by said landlord to be done and
performed, which, in any case, (i) would have a material
adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects
of Mortgagor and its subsidiaries taken as a whole, or (ii)
with respect to the Casino Ground Lease, would have a material
adverse effect on Mortgagee's rights thereunder, including,
without limitation, the provisions of Article XXIII thereof;
(d) Mortgagor shall promptly give Mortgagee notice of any default
under such lease or of the receipt by Mortgagor of any notice
of default from the landlord thereunder, shall furnish to
Mortgagee any and all information which it may request
concerning the performance by Mortgagee of the covenants of
such lease, and shall permit Mortgagee or its representative
at all reasonable times to make investigation or examination
concerning the performance by Mortgagor of the covenants of
such lease. To the extent it is within Mortgagor's control to
do so, Mortgagor shall deliver to Mortgagee a copy of such
lease certified by Mortgagor as a true and complete copy
thereof, an estoppel certificate from the landlord under such
lease within twenty (20) days after request by Mortgagee and
in such form and content as shall be satisfactory to
Mortgagee, as well as any and all documentary evidence
received by it showing compliance by Mortgagor with the
provisions of such lease. Mortgagor shall also promptly
deliver to Mortgagee an exact copy of any material notice,
communication, plan, specification or other instrument or
document received or given by it in any way relating to or
affecting such lease;
(e) If Mortgagor shall default in the performance or observation
of any term, covenant or condition of such lease on the part
of Mortgagor as tenant thereunder, to be performed or
observed, then, without limiting the generality of the other
provisions of this Mortgage, and without waiving or releasing
Mortgagor from any of its obligations hereunder, Mortgagee
shall, to the extent permitted by such lease, have the right,
but shall be under no obligation, after the expiration of all
applicable cure periods granted to Mortgagor under such lease,
to pay such sum or to perform such term, covenant, or
condition as may be in default, to pay any sums and to perform
any act or take any action as may be appropriate to cause all
of the terms, covenants and conditions of such lease on the
part of Mortgagor, as tenant thereunder, to be performed or
observed to be promptly performed or observed on behalf of
Mortgagor, to the end that the rights of Mortgagor in, to and
under such lease shall be kept unimpaired and free from
default; provided that, to
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<PAGE>
the extent Mortgagee is not entitled under such lease
to cure rights on a consecutive basis to those granted to
Mortgagor, Mortgagee may exercise its rights under this
paragraph at any time within the five (5) day period prior
to the expiration of such cure period upon written notice
from Mortgagee to Mortgagor. If Mortgagee shall make any
payment or perform any act or take action in accordance with
the preceding sentence, Mortgagee will notify
Mortgagor of the making of any such payment, the performance
of any such act, or the taking of any such action. In any such
event, Mortgagee and any person designated by Mortgagee shall
have and are hereby granted, the right to enter upon the
leased premises at any time and from time to time for the
purpose of taking any such action. If the landlord under such
lease shall deliver to Mortgagee a copy of any notice of
default sent by said landlord to Mortgagor as tenant under
such lease, such notice shall constitute full protection to
Mortgagee for any action taken or omitted to be taken by
Mortgagee, in good faith, in reliance thereon;
(f) Mortgagor shall exercise each individual option, if any, to
extend or renew the term of such lease, and Mortgagor hereby
expressly authorizes and appoints Mortgagee as its
attorney-in-fact to exercise, either jointly or individually,
any such option in the name and upon behalf of Mortgagor,
which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest;
(g) In the event of any failure by Mortgagor to perform any
covenant to be observed and performed under such lease, the
performance by Mortgagee on behalf of Mortgagor of such lease
covenant shall not remove or waive, as between Mortgagor and
Mortgagee, the corresponding breach of any covenant by
Mortgagor hereunder, and any amount so advanced by Mortgagee
or any costs incurred in connection therewith, shall be paid
by Mortgagor to Mortgagee with interest thereon at the rate
set forth in Section 18 of this Mortgage within thirty (30)
days after written demand by Mortgagee to Mortgagor therefor
and shall also be Advances forming part of the Secured
Indebtedness and shall be fully secured hereby;
(h) Mortgagor covenants and agrees that, if Mortgagor is permitted
by Mortgagee to acquire the lessor's interest under such
lease, or any other estate, title or interest in the premises
covered by such lease, all of Mortgagor's interest in such
premises shall be considered as mortgaged, hypothecated,
collaterally assigned and pledged to Mortgagee and the lien
hereof shall encumber all of such interest with the same force
and effect as though specifically herein mortgaged,
hypothecated, collaterally assigned and pledged, without the
need for any further mortgage, assignment, amendment,
supplement, or other writing. Notwithstanding the foregoing,
if Mortgagee so requests following Mortgagor's acquisition of
the lessor's interest or any other estate, title, or interest
in the leased premises, Mortgagor shall promptly execute and
deliver all further instruments, writings, and other
assurances as Mortgagee may request to confirm the
foregoing;
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<PAGE>
(i) In the event such lease is rejected or disaffirmed by the
landlord thereunder (or by any receiver, trustee, keeper,
custodian or other party who succeeds to the rights of such
landlord) pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar law, Mortgagor covenants
that it will not elect to treat such lease as terminated under
11 U.S.C. Section 365(h) or any similar or successor law or
right and hereby assigns to Mortgagee the sole and exclusive
right to make or to refrain from making any such election, and
Mortgagor agrees that any such election, if made by Mortgagor,
shall be void and of no force or effect;
(j) If the landlord under such lease (or any receiver, keeper,
trustee, custodian or other party who succeeds to the rights
of landlord) rejects or disaffirms such lease pursuant to any
bankruptcy, insolvency, reorganization, moratorium or similar
law and Mortgagee elects to have Mortgagor remain in
possession under any legal right Mortgagor may have to occupy
the premises leased pursuant to such lease, (i) Mortgagor
shall remain in such possession and shall perform all acts
necessary for Mortgagor to retain its legal rights and to
remain in such possession for the unexpired term of such lease
(including all renewals thereof), whether such acts are
required under the then existing terms and provisions of such
lease or otherwise, and (ii) all of the terms and provisions
of this Mortgage and the lien created hereby shall remain in
full force and effect and shall be extended automatically to
such possession, occupancy and interest of Mortgagor; and
(k) Mortgagor immediately upon obtaining knowledge of a breach by
the landlord under such lease (or by any receiver, keeper,
trustee, custodian or other party who succeeds to the rights
of such landlord) or any inability of such landlord (or any
such receiver, trustee, custodian or other party) to perform
the terms and provisions of such lease (including by reason of
a rejection or disaffirmance of such lease pursuant to any
bankruptcy, insolvency, reorganization, moratorium or similar
law), will notify Mortgagee of any such breach or inability.
Mortgagor shall, at its expense, diligently commence and
prosecute any proceedings as may be necessary or advisable
against such landlord in connection with such breach and
shall, upon the request of Mortgagee, deliver to Mortgagee
copies of all papers served in connection therewith; provided
that no settlement or compromise of any such proceeding shall
be made by Mortgagor without Mortgagee's prior written consent
if such settlement or compromise could have a
material adverse effect on the Property.
27. Covenant to Abide by Second Floor Sublease. Mortgagor shall
duly and punctually perform and observe in all material respects all of its
obligations as sublessor under the Second Floor Sublease (subject to all
applicable cure periods set forth therein).
28. Power of Decision. Wherever pursuant to this Mortgage
Mortgagee exercises any right given to it to approve, disapprove or consent, or
any arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of
24
<PAGE>
Mortgagee and shall be final and conclusive.
29. Binding Effect. The covenants herein contained shall bind, and
the benefits and advantages shall inure to, the respective successors and/or
assigns of Mortgagor and Mortgagee.
30. Amendments, Consents and Waivers in Writing and Related
Matters
(a) No amendment or waiver of any provision of this Mortgage, nor
any consent by Mortgagee hereunder (including but not limited
to any consent to any departure by Mortgagee therefrom), shall
in any event be effective unless the same shall be in writing
and signed by Mortgagee and, with respect to an amendment, by
all of the parties thereto, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
(b) The provisions of this Mortgage shall be construed as a whole
according to their common meaning, not strictly for or against
any party and consistent with the provisions herein contained,
in order to achieve the objectives and purposes of this
document. Each party and its counsel have reviewed and revised
this Mortgage. Each party agrees that the normal rule of
construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in
the interpretation of this Mortgage.
(c) Any failure of Mortgagee to insist upon the strict performance
by Mortgagor of any of the terms and provisions hereof shall
not be deemed to be a waiver of any of the terms and
provisions hereof, and Mortgagee, notwithstanding any such
failure, shall have the right thereafter to insist upon the
strict performance by Mortgagor of any and all of the terms
and provisions of this Mortgage to be performed by Mortgagor.
Neither Mortgagor nor any person now or hereafter obligated
for the payment of the whole or any part of the sums now or
hereafter secured by this Mortgage shall be relieved of such
obligation by reason of the failure of Mortgagee to comply
with any request of Mortgagor, or of any other person so
obligated, to take action to foreclose or otherwise enforce
any of the provisions of this Mortgage or any obligations
secured by this Mortgage, or by reason of the release,
regardless of consideration, of the whole or any part of the
security held for the indebtedness secured by this Mortgage,
or by reason of any agreement or stipulation between any
subsequent owner or owners of the Property and Mortgagee
extending the time of payment or modifying the terms of the
indebtedness secured hereby or this Mortgage without first
having obtained the consent of Mortgagor or such other person,
and in the latter event, Mortgagor and all such other persons
shall continue to be liable to make such payment according to
the terms of any such agreement of extension or modification
unless expressly released and discharged in writing by
Mortgagee.
(d) Regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien or
encumbrance on the Property, Mortgagee may release the
obligation of anyone at any time liable for any of the Secured
25
<PAGE>
Indebtedness secured by this Mortgage or any part of the
security held for such Secured Indebtedness and grant or agree
to such extensions, indulgences and modifications in relation
to the Secured Indebtedness as Mortgagee may determine,
without the consent of the holder of any such subordinate lien
or encumbrance and without any obligation to give notice of
any kind thereto and without, as to the security or the
remainder thereof, in any way impairing or affecting the lien
hereof or the priority thereof over any subordinate lien or
encumbrance. Any subsequent encumbrances of the Property are
hereby, by virtue of this Section 30(d), specifically given
notice of the foregoing reservation of rights.
(e) Mortgagee may resort for the payment of the Secured
Indebtedness to any other security therefor held by Mortgagee
in such order and manner as Mortgagee may elect.
31. Notices. Except as otherwise expressly provided herein, all
notices or other communications required or permitted to be given or delivered
pursuant to this Mortgage shall be in writing and shall be given by hand
delivery, certified United States mail, prepaid, with return receipt requested,
overnight courier service or facsimile transmission with receipt confirmed. Any
party hereto may from time to time, by notice in writing served upon the other
parties hereto pursuant to this Section 31
designate a different address or person to whose attention notices shall be
given. Notices hereunder shall be deemed given upon receipt. The addresses of
the parties hereto for notices are:
Mortgagor: Jazz Casino Company, L.L.C.
512 S. Peters
New Orleans, LA 70130
Attention: President
Mortgagee: The Bank of New York, as Collateral Agent
10161 Centurion Parkway
Jacksonville, Florida 32256
Attention: Trust Department
32. Gaming Restrictions. This Mortgage and the exercise of
the remedies hereunder are and shall remain subject to Louisiana
Gaming Regulations.
33. Remedies Cumulative. Each right, power, and remedy of
Mortgagee provided for herein and now or hereafter existing at law, in equity,
by statute, pursuant to any other loan document or otherwise shall be
cumulative, and the exercise by Mortgagee of any one or more of said rights,
powers, or remedies shall not preclude the simultaneous or later exercise by
Mortgagee of any or all of such other rights, powers, or remedies. Nothing in
this Mortgage shall be deemed to limit or modify any security interests or
rights or remedies under any other documents executed in connection with any of
the Secured Indebtedness, including the Security Agreement of even date herewith
by Mortgagor in favor of Mortgagee for the benefit of the
26
<PAGE>
Holders.
34. Reinscription of Mortgage
(a) Mortgagor shall reinscribe this Mortgage prior to the date on
which the lien of this Mortgage may prescribe by any
applicable prescriptive period.
(b) During the term of this Mortgage, Mortgagor shall cause this
Mortgage to be reinscribed in the manner provided by law in
the records of the Recorder of Mortgages for the Parish of
Orleans at least forty-five (45) days prior to the tenth
(10th) anniversary of the date of this Mortgage and within the
reinscription or continuation period provided in La. R.S.
Section 9:4401 and Louisiana Civil Code Article 3328, as the
same may be amended from time to time.
(c) The parties to this Mortgage hereby waive the production of
mortgage, conveyance, tax, assignment of accounts receivable
and other certificates and relieve and release the Notary
before whom this Mortgage was passed from all responsibilities
and liabilities in connection therewith.
35. Mortgage Subject to Intercreditor Agreement. Notwithstanding
any other provision of this Mortgage or any document or instrument executed by
Mortgagor, this Mortgage and all liens and security interests and rights granted
herein, and the priority thereof, are expressly subject to the provisions of the
Intercreditor Agreement which are incorporated herein by reference and made
applicable hereto. In addition, Mortgagee is the Collateral Agent, as defined in
and pursuant to the terms of the Intercreditor Agreement, and, notwithstanding
anything herein to the contrary, the rights, powers, remedies and obligations of
Mortgagee hereunder shall be subject to the provisions of the Intercreditor
Agreement. Any exercise or waiver by Mortgagee of any of its rights, powers or
remedies hereunder or any other act by Mortgagee hereunder shall be conclusive
evidence of Mortgagee's authority pursuant to the Intercreditor Agreement
against all persons other than the Secured Creditors. Nothing in this Mortgage
shall limit or waive any rights granted to Mortgagee as a "Leasehold Mortgagee"
or the "First Leasehold Mortgagee," as the case may be, under and as defined in
the Casino Ground Lease.
36. GOVERNING LAW. THIS MORTGAGE SHALL BE DEEMED TO BE A NEW YORK
CONTRACT AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (EXCLUDING MATTERS OF CONFLICT OF LAWS), EXCEPT THAT
MATTERS OF TITLE TO THE PROPERTY AND THE CREATION, PERFECTION, PRIORITY AND (TO
THE EXTENT REQUIRED) FORECLOSURE OF ANY MORTGAGES OR OTHER LIENS ON, AND
SECURITY INTERESTS IN, ANY PROPERTY AND MATTERS RELATING TO THE LOUISIANA GAMING
REGULATIONS SHALL BE GOVERNED BY AND CONSTRUED
27
<PAGE>
IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA.
37. Indemnification. Mortgagor shall indemnify and defend the
Mortgagee and its directors, officers, employees, agents and representatives
(each an "Indemnified Party") from and against all liabilities (including any
environmental liabilities), obligations, claims, losses, damages, penalties,
suits, actions, proceedings, judgments, costs and expenses (including reasonable
attorneys' fees and expenses) (collectively, "Liabilities"), imposed upon,
incurred by or asserted against any Indemnified Party in connection with the
Property or this Mortgage, except to the extent caused by the gross negligence
or willful misconduct of such Indemnified Party. In the event any suit, action
or proceeding (including any investigation or proceeding initiated or conducted
by any governmental authority or agency) is brought against any Indemnified
Party in connection with any Liability, such Indemnified Party shall promptly
notify Mortgagor and Mortgagor shall promptly retain counsel in connection
therewith, which counsel shall be reasonably acceptable to such Indemnified
Party, and shall pay the fees and expenses of such counsel related to such suit,
action or proceeding. The obligations of Mortgagor under this Section 37 shall
survive the release or termination of this Mortgage or the foreclosure or
transfer in lieu of foreclosure of the Property to the extent any Liability
relates to any action or event occurring prior to such release, termination,
foreclosure or transfer.
[Signature page follows]
<PAGE>
Exhibit "1"
Casino Premises
A CERTAIN PORTION OF GROUND, together with all the buildings and improvements
thereon, and all of the rights, ways, privileges, servitudes and advantages
thereunto belonging or in anywise appertaining, situated in the First
Municipal District of the City of New Orleans bounded by Canal, South Peters,
and Poydras Streets, and Convention Center Boulevard shown as Square RS on a
survey plat by the office of Gandolfo, Kuhn & Associates, dated October 20,
1998, Drawing No. T-182-3, being more particularly described as follows:
Begin at Point A, being the southeast intersection of South Peters and Canal
Streets, measure thence along the east or river side line of South Peters
Street South 1 degree 39 minutes 1 second East, a distance of 727.65 feet to
the northerly line of Poydras Street and Point B; thence along said line of
Poydras Street South 76 degrees 14 minutes 24 seconds East, a distance of
540.52 feet to the westerly or land side line of Convention Center Boulevard
and Point C, also being the easterly line of former Delta Street; thence
North 2 degrees 24 minutes 29 seconds West, a distance of 455.48 feet to the
southerly line of Canal Street and Point K; thence along said line of Canal
Street, North 52 degrees 44 minutes 2 seconds West, a distance of 661.98 feet
to Point A and the Point of Beginning and containing 7.016 acres.
Together with the existing tunnel portions in the following described
subsurface areas:
Canal Street Portion:
THAT PORTION OF CANAL STREET which lies between two horizontal planes, the
lower plane lying and being at an elevation of -5 feet Cairo Datum and the
upper plane lying and being as an elevation of 30 feet Cairo Datum
(approximate street grade), both as referenced to United States Coast and
Geodetic survey Benchmark B-96 1991, NGS Published Value having an elevation
of 28.72 feet Cairo Datum which property forms a portion of the Canal Street
right of way, First Municipal District, City of New Orleans, Orleans Parish,
Louisiana, the horizontal boundaries of which are more fully described as
follows:
Commencing at Point K, being the intersection of the easterly line of former
Delta Street and the southerly line of Canal Street, and also being the
northeast corner of Square RS, measure thence along the southerly line of
Canal Street North 52 degrees 44 minutes 02 seconds West, a distance of 87.04
feet to the Point of Beginning. From the Point of Beginning, measure thence
along the southerly line of Canal Street North 52 degrees 44 minutes 02
seconds West, a distance of 129.11 feet to the westerly line of the former
I-310 Tunnel; thence along said line along a curve to the right having a
radius of 1689.02 feet, a distance of 78.94 feet to the northerly line of
said Tunnel; thence along said line South 85 degrees 05 minutes 17 seconds
East, a distance of 104 feet to the easterly line of the former I-310 Tunnel;
thence along said line along a curve to the left having a radius of 1585.02
feet, a distance of 148.4 feet to the Point of beginning, and containing
11,774 square feet, as shown on a survey plat by Gandolfo, Kuhn & Associates,
dated October 20, 1998, Drawing No. T-182.3.
<PAGE>
Poydras Street portion:
THAT PORTION OF POYDRAS STREET which lies between two horizontal planes, the
lower plane lying and being at an elevation of -5 feet Cairo Datum and the
upper plane lying and being at an elevation 30 feet Cairo Datum (approximate
street grade), both as referenced to United States Coast and Geodetic Survey
Benchmark B-96 1991. NGS Published Value having an elevation of 28.72 feet
Cairo Datum, which property forms a portion of the Poydras Street right of
way, First Municipal District, City of New Orleans, Orleans Parish,
Louisiana, the horizontal boundaries of which are more fully described as
follows:
Commencing as Point B, being the intersection of the northerly line of
Poydras Street and the easterly line of S. Peters Street and also being the
southwest corner of Square RS, measure thence along the northerly line of
Poydras Street South 76 degrees 14 minutes 20 seconds East, a distance of
361.51 feet to the Point of Beginning.
From the Point of Beginning, measure thence along the northerly line of
Poydras Street, South 76 degrees 14 minutes 24 seconds East, a distance of
108.29 feet to the easterly line of the former I-310 Tunnel; thence along
said line South 2 degrees 24 minutes 52 seconds East, a distance of 31.08
feet to the southerly line of said Tunnel; thence along said line South 87
degrees 35 minutes 08 seconds West a distance of 104 feet to the westerly
line of the former I-310 Tunnel; thence along said line North 2 degrees 24
minutes 52 seconds West, a distance of 61.24 feet to the Point of Beginning,
and containing 4,801 square feet, as shown on a survey plot by Gandolfo, Kuhn
& Associates, dated October 20, 1998, Drawing No. T-182-3.
<PAGE>
LAFAYETTE SUBSURFACE AREA
THAT PORTION OF LAFAYETTE STREET which lies between two horizontal planes,
the lower plane lying and being at an elevation of -205 feet Cairo Datum
(approximately bottom of pile tip) and the upper plane lying and being at an
elevation of 30 feet Cairo Datum (approximately street grade), both as
referenced to United States Coast and Geodetic Survey Benchmark B-96 1991.
NGS Published Value, having an elevation of 28.72 feet Cairo Datum, which
property forms a portion of the Lafayette Street right of way, First Municipal
District, City of New Orleans, Orleans Parish, Louisiana, the horizontal
boundaries of which are more fully described as follows:
Begin at the southwest corner of Square 4 being the northeast intersection of
Lafayette and Fulton Streets, thence along the lower line of Lafayette Street
South 75 degrees 59 minutes 17 seconds East, a distance of 117 feet 9 inches
5 eighths to a point on the westerly line of Convention Center Boulevard
(former South Front Street) which lies 2 inches 1 eighth from the southeast
corner of Square 4; thence along the westerly line of Convention Center
Boulevard, South 2 degrees 19 minutes 52 seconds East, a distance of 46 feet
10 inches 6 eighths to the upper line of Lafayette Street and Northeast
corner of Square 5; thence along the upper line of Lafayette Street North 75
degrees 59 minutes 17 seconds West, a distance of 118 feet 1 inch 1 eighth to
the easterly line of Fulton Street; thence along the easterly line of Fulton
Street North 2 degrees 0 minutes 19 seconds West, a distance of 46 feet 9
inches 7 eighths to the Point of Beginning, and containing 5,308 square feet
all in accord with a survey plat by Gandolfo, Kuhn & Associates, dated
October 20, 1998; Drawing No. T-182-3.
<PAGE>
POYDRAS STREET SUPPORT FACILITY PREMISES
SQUARE 16. LOT F:
A CERTAIN LOT OF GROUND, together with all the buildings and improvements
thereon, and all of the rights, ways, privileges, servitudes and advantages
thereunto belong or in anywise appertaining situated in the First District of
the City of New Orleans, Orleans Parish, Louisiana, in Square 16, bounded by
Poydras, Fulton, South Peters and Lafayette Streets, which said lot is
designated as lot F on a plan of resubdivision by Stephen L. Gremillion of
Engineering Technology, Inc., dated June 28, 1982 approved by the City
Planning Commission under Subdivision Docket No. 96/82, registered as a
Declaration of Title Change under Entry No. 466470 in Conveyance Office Book
731, folio 237, records of Orleans Parish, and according to the survey by
John J. Avery, Jr., L.S., dated August 24, 1990, and according to survey by
Gandolfo, Kuhn & Associates, Drawing No. I-132-3, dated October 20, 1998,
said Lot F is more fully described and measures as follows:
Beginning at the intersection of the southerly line of Poydras Street with
the westerly line of Fulton Street; thence along said line of Fulton Street,
South 2 degrees 0 minutes 19 seconds East, 92 feet 5 inches 4 eighths to the
southerly line of Lot F; thence along said line, North 76 degrees 7 minutes
30 seconds West, 46 feet 6 inches 5 eighths to the westerly line of Lot F;
thence along said line, North 1 degree 50 minutes 45 seconds West, 92 feet 3
inches 4 eights to the southerly line of Poydras Street, thence along said
line South 76 degrees 14 minutes 24 seconds East, 46 feet 3 inches 0 eighths
to the westerly line of Fulton Street and the Point of Beginning and
containing 4,125 square feet.
SQUARE 4. LOT 1:
A CERTAIN PARCEL OF LAND, together with all the buildings and improvements
thereon, and all of the rights, ways, privileges, servitudes and advantages
thereunto belong or in anywise appertaining, situated in the First District
of the City of New Orleans, in Square 4, Orleans Parish, Louisiana, bounded
by Convention Center Boulevard (formerly South Front Street), Lafayette,
Fulton and Poydras Streets, which said parcel is designated as Lot 1 and is
the only lot of and comprises the whole of said Square 4, on plan of
resubdivision of Stephen L. Gremillion of Engineering Technology, Inc., dated
June 28, 1982, approved by the City Planning Commission under Subdivision
Docket no. 96/82, registered as a Declaration of Title Change under Entry No.
466470 in Conveyance Office Book 781, folio 237, records of Orleans parish,
and according to a survey by John J. Avery, Jr., L.S., dated August 24, 1990,
and according to survey plat by Grandolfo, Kuhn & Associates, Drawing No.
T-182-3, dated October 20, 1998, said Lot I is described as follows:
Beginning at the intersection of the upper line of Poydras Street with the
westerly line of Convention Center Boulevard; thence along said line of
Convention Center Boulevard, South 2 degrees 23 minutes 18 seconds East 371
feet 1 inch 0 1/2 eighths to the lower line of Lafayette Street; thence
<PAGE>
along said line. North 75 degrees 59 minutes 17 seconds West 117 feet 7
inches 5 eighths to the East line of Fulton Street, thence along said line
North 2 degrees 0 minutes 19 seconds West, 369 feet 10 inches 1 eighth to the
upper line of Poydras Street, thence along said line, South 76 degrees 14
minutes 24 seconds East 114 feet 10 inches 6 eighths to the westerly line of
Convention Center Boulevard and the Point of Beginning and containing 41,385
square feet.
SQUARE 5. LOT G:
A CERTAIN LOT OF GROUND, together with all the buildings and improvements
thereon, and all of the rights, ways, privileges, servitudes and advantages
thereunto belong or in anywise appertaining, situated in the First Municipal
District, City of New Orleans in Square 5, Orleans Parish, Louisiana, bounded
by Convention Center Boulevard, Girod, Fulton, and Lafayette Streets,
designated as Lot G on a survey plat by the office of Gandolfo, Kuhn and
Associates dated October 20, 1998, Drawing No. T-182-3 and is more
particularly described as follows:
Beginning at the southeast corner of Square 5 being the intersection of
westerly line of Convention Center Blvd. with the northerly line of Girod St;
thence along the northerly line of Girod St. North 76 degrees, 00 minutes, 54
seconds West, 120 feet 2 inches 6 eighths to the easterly line of Fulton St;
thence along said easterly line; North 02 degrees 00 minutes 19 seconds West
363 feet, 6 inches, 2 eighths to the southerly line of Lafayette St; thence
along said southerly line South 75 degrees 59 minutes 17 seconds East, 118
feet, 1 inch, 1 eighth to the westerly line of Convention Center Blvd.;
thence along said line, South 02 degrees 19 minutes 52 seconds East, 364
feet, 0 inches, 6 eighths to the northerly line of Girod St. at the point of
beginning and containing 41,630 square feet.
<PAGE>
POYDRAS TUNNEL AREA
THAT PORTION OF POYDRAS STREET which lies between two horizontal planes, the
lower plane lying and being at an elevation of -205 feet Cairo Datum
(approximate bottom of pile tip), and the upper plane lying and being at an
elevation of 30 feet Cairo Datum (approximate street grade), both as
referenced to United States Coast and Geodetic Survey Benchmark B-96 1991,
NGS Published Value, having an elevation of 28.72 feet Cairo Datum, which
property forms a portion of the Poydras Street right of way, First Municipal
District, City of new Orleans, Orleans Parish, Louisiana, the horizontal
boundaries of which are more fully described as follows:
Beginning at the northeast corner of Square 4, being the intersection of the
west line of Convention Center Boulevard with the south line of Poydras
Street, 134 feet wide; thence go along the North line of Square 4, North 76
degrees 14 minutes 24 seconds West, 114 feet 10 inches 6 eighths to the
Northwest corner of Square 4, and the East line of Fulton Street thence
along the projection of said line, North 2 degrees 0 minutes 19 seconds West,
139 feet 4 inches 1 eighth to the North line of Poydras Street, thence along
said line South 76 degrees 14 minutes 24 seconds East, 180 feet to a point;
thence go South 25 degrees 14 minutes 37 seconds West, 136 feet 10 inches 1
eighth to the point of beginning and containing 19,772 square feet, all as
shown on a survey plat by Gandolfo, Kuhn & Associates, dated October 20,
1998, Drawing No. T-182-3.
<PAGE>
PEDESTRIAN BRIDGE AREAS
A. Fulton Street Air Rights Area:
THAT PORTION OF FULTON STREET (60 feet wide) which lies above the horizontal
plane which is at an elevation of 40 feet Cairo Datum (approximately 10 feet
above street grade) as referenced to United States Coast and Geodetic Survey
Benchmark B-96 1991, NGS Published Value having an elevation of 28.72 feet
Cairo Datum, which property forms a portion of the Fulton Street right of
way, First Municipal District, City of New Orleans, Orleans Parish,
Louisiana, the horizontal boundaries of which are more fully described as
follows:
Begin at the northeast corner of Square 16 being the point of intersection of
the westerly line of Fulton Street with the upper line of Poydras Street,
thence along the upper line of Poydras Street South 76 degrees 14 minutes 24
seconds East, a distance of 62 feet 4 inches 1 eighth to the easterly line of
Fulton Street; thence along the easterly line of Fulton Street South 2
degrees 0 minutes 19 seconds East, a distance of 207 feet 8 inches 5 eighths
to a point; thence North 75 degrees 59 minutes 17 seconds West, a distance of
62 feet 5 inches to the westerly line of Fulton Street; thence along the
westerly line of Fulton Street North 2 degrees 0 minutes 19 seconds West, a
distance of 207 feet 5 inches 1 eighth to the Point of Beginning and
containing 12,455 square feet, all in accord with a survey plat by Gandolfo,
Kuhn & Associates, dated October 20, 1998, Drawing No. T-182-3.
B. Lafayette Street Air Rights Area:
THAT PORTION OF LAFAYETTE STREET (45 feet wide) which lies above the
horizontal plane which is at an elevation of 40 feet Cairo Datum
(approximately 10 feet above street grade) as referenced to United States
Coast and Geodetic Survey Benchmark B-96 1991, NGS Published Value, having an
elevation of 28.72 feet Cairo Datum, which property forms a portion of the
Lafayette Street right of way, First Municipal District, City of New Orleans,
Orleans Parish, Louisiana, the horizontal boundaries of which are more fully
described as follows:
Begin at the southwest corner of Square 4 being the northeast intersection of
Lafayette and Fulton Streets, thence along the lower line of Lafayette Street
South 75 degrees 59 minutes 17 seconds East, a distance of 117 feet 9 inches
5 eighths to a point on the westerly line of Convention Center Boulevard
(former South Front Street) which lies 2 inches 1 eighth from the southeast
corner of Square 4; thence along the westerly line of Convention Center
Boulevard South 2 degrees 19 minutes 52 seconds East, a distance of 46 feet
10 inches 6 eighths to the upper line of Lafayette Street and the Northeast
corner of Square 5; thence along the upper line of Lafayette Street North 75
degrees 59 minutes 17 seconds West, a distance of 118 feet 1 inch 1 eighth to
the easterly line of Fulton Street; thence along the easterly line of Fulton
Street North 2 degrees 0 minutes 19 seconds West, a distance of 46 feet 9
inches 7 eighths to the Point of Beginning and containing 5,308 square
<PAGE>
feet, all in accord with a survey plat by Gandolfo, Kuhn and Associates dated
October 20, 1998. Drawing No T-182-3.
C. Poydras Street Air Rights Area:
THAT PORTION OF POYDRAS STREET which lies above the horizontal plane which is
at an elevation of 40 feet Cairo Datum (approximately 10' above street grade)
as referenced to United States Coast and Geodetic Survey Benchmark B-96 1991,
NGS Published Value, having an elevation of 28.72 feet Cairo Datum, which
property forms a portion of the Poydras Street right of way, First Municipal
District, City of New Orleans, Orleans Parish, Louisiana, the horizontal
boundaries of which are more fully described as follows:
Beginning at the northeast corner of Square 4, being the intersection of the
west line of Convention Center boulevard with the south line of Poydras
Street, 134 feet wide; thence go along the North line of Square 4, North 76
degrees 14 minutes 24 seconds West, 114 feet 10 inches 6 eighths to the
Northwest corner of Square 4, and the East line of Fulton Street; thence
along the projection of said line, North 2 degrees 0 minutes 19 seconds West,
139 feet 4 inches 1 eighth to the North line of Poydras Street; thence along
said line South 76 degrees 14 minutes 24 seconds East, 180 feet to a point;
thence go South 25 degrees 14 minutes 37 seconds West, 136 feet 10 inches 1
eighth to the point of beginning and containing 19,772 square feet, all as
shown on a survey plat by Gandolfo, Kuhn & Associates dated October 20,
1998. Drawing No T-182-3.
<PAGE>
ENCROACHMENT AREA
A. Those sidewalks and rights of way adjacent to and portions of Poydras
Street, Convention Center Boulevard, Lafayette Street, and Fulton Street
located within ten (10) feet from the lot lines of Square 4, First Municipal
District, City of New Orleans, Orleans Parish, Louisiana upon which
foundations, canopies, roof overhangs, columns, decorative paving, fountains,
landscaping, streetscaping, lighting, directional signage, underground
utilities and other encroachments are or will be constructed in connection
with the Improvements located or to be located upon said Square 4. Reference
is made to a survey plat by Gandolfo, Kuhn & Associates, dated October 20,
1998, Drawing No. T-182-3.
B. Those sidewalks and right of ways adjacent to and portions of Lafayette
Street, Fulton Street, Convention Center Boulevard and Girod Street located
within ten (10) feet from the lot lines of Square 5, First Municipal District,
City of New Orleans, Orleans Parish, Louisiana upon which foundations,
canopies, roof overhangs, columns, decorative paving, fountains, landscaping,
streetscaping, lighting, directional signage, underground utilities and other
encroachments are or will be constructed in connection with the Improvements
located or to be located upon said Square 5. Reference is made to a survey
plat by Gandolfo, Kuhn & Associates, dated October 20, 1998, Drawing No.
T-182-3.
C. Those sidewalks and right of ways adjacent to and portions of Poydras
Street, Convention Center Boulevard, South Peters Street, and Canal Street
located within fifteen (15) feet from the lot lines of Square RS, First
Municipal District, City of New Orleans, Orleans Parish, Louisiana, upon
which foundations, canopies, roof overhangs, columns, decorative paving,
fountains, landscaping, streetscaping, lighting, directional signage,
underground utilities and other encroachments are or will be constructed with
the Improvements located or to be located upon said Square RS. Reference is
made to a survey plat by Gandolfo, Kuhn & Associates, dated October 20, 1998,
Drawing No. T-182-3.
<PAGE>
Exhibit "2"
EMPLOYEE AND BUS PARKING SUPPORT FACILITY PREMISES
Tract 1:
THREE CERTAIN LOTS OF GROUND, situated in the Second Municipal District of the
City of New Orleans, Parish of Orleans, State of Louisiana, designated as Lot
N.O.T.C.-1. situated in Square 119-A. Lot N.O.T.C.-2, situated in Square
162-A, and Lot N.O.T.C.-3, situated in Square 183-A, shown on a plan of
resubdivision per Declaration of Title Change by Subdivision approved October
16, 1978, filed October 25, 1978, in Conveyance Office Book 756, folio 391.
According to said resubdivision, said lots are described as follows:
Square 119-A is bounded by St. Louis, Marais, Toulouse and Treme Streets, the
Orleans-Basin Connection and Basin Street. Lot N.O.T.C.-1 begins at the
northwest intersection of Basin and St. Louis Streets; thence along the
northerly edge of St. Louis Street North 53 degrees 8 minutes West, 651.84
feet to Marais Street thence along the easterly edge of Marais Street, North
37 degrees 13 minutes 40 seconds East 319.48 feet to Toulouse Street; thence
along the southerly edge of Toulouse Street South 53 degrees 3 minutes 55
seconds East 310.02 feet to Treme Street; thence along the easterly edge of
Treme Street North 37 degrees 14 minutes East, 162.41 feet to the
Orleans-Basin Connection; thence along the southerly and westerly edges of
the Orleans-Basin Connection and Basin Street the following courses and
distances:
South 36 degrees 46 minutes 20 seconds East, 143.09 feet; thence along the
arc of a curve to the right having a radius of 282 feet an are length of
364.25 feet; thence South 37 degrees 14 minutes West, 168.82 feet, back to
the point beginning of Lot N.O.T.C.-1.
Square 162-A is bounded by St. Louis, North Villere, Marais, Toulouse and
Treme Streets, Lafitte Avenue and the Orleans-Basin Connection. Lot N.O.T.C.-2
begins at the northwest intersection of St. Louis and Marais Street; thence
along the northerly edge of St. Louis Street North 53 degrees 8 minutes West,
256.45 feet to North Villere Street; thence along the easterly edge of North
Villere Street North 37 degrees 13 minutes 30 seconds East, 265.77 feet to
the southerly boundary of Lot C.N.O.-1; thence along the southerly boundary
of Lot C.N.O.-1 South 52 degrees 46 minutes 20 seconds East, 256.46 feet to
Marais Street; thence along the western edge of Marais Street South 37
degrees 13 minutes 40 seconds West, 264.16 feet, back to the point of
beginning of Lot N.O.T.C.-2.
Square 183-A is bounded by St. Louis Street, North Claiborne Avenue, Lafitte
Avenue and North Villere Street. Lot N.O.T.C.-3 begins at the northwest
intersection of St. Louis and North Villere Streets; thence along the
northern edge of St. Louis Street North 53 degrees 8 minutes West, 565.94 feet
to North Claiborne Avenue; thence along the easterly edge of North Claiborne
Avenue North 37 degrees 13 minutes 50 seconds East, 320.58 feet to the
southerly edge of Lot C.N.O.-2;
<PAGE>
thence along the southerly edge of Lot C.N.O.-2 South 53 degrees 3 minutes 55
seconds East, 565.90 feet to North Village Street; thence along the western
edge of North Village Street South 37 degrees 13 minutes 30 seconds West,
319.91 feet, back to the point of beginning of Lot N.O.T.C.-3.
Said tract as above described is reflected on a survey plat by Gandolfo, Kuhn
& Associates, dated October 20, 1998, Drawing No. T-182-7.
Tract 2:
THAT CERTAIN PIECE OF GROUND, situated in the Second Municipal District of
the City of New Orleans, Parish of Orleans, State of Louisiana, comprised of
portions of Square 212, 221, and 241, and portions of closed North Derbigny
Street and North Roman Street, in the area bounded by North Claiborne Avenue,
St. Louis, North Prieur and Lafitte Streets, more fully described as follows:
Begin at the northwest intersection of North Claiborne Avenue and St. Louis
Street and go along the northerly edge of St. Louis Street 958 feet 3 inches
6 lines to the North Prieur Street; thence at an interior angle of 90 degrees
2 minutes 20 seconds along the easterly edge of North Prieur Street; a
distance of 196 feet 0 inches 5 lines; thence at an interior angle of 94
degrees 44 minutes 10 seconds, a distance of 961 feet 7 inches 1 line, to
North Claiborne Avenue; thence at an interior angle of 85 degrees 15 minutes
50 seconds, along the westerly edge of North Claiborne Avenue, a distance of
276 feet 1 inch 2 lines back to the point of beginning.
Said tract as above described are reflected on a survey plat by Gandolfo,
Kuhn & Associates, dated October 20, 1998, Drawing No. T-182-6.
<PAGE>
Exhibit "3"
Franchise Area
The Franchise Area (the "Franchise Area") is located on a portion of the
Canal Street right-of-way adjacent to the Rivergate Convention Center
property, generally located between South Peters Street and Convention Center
Boulevard and more particularly described as follows:
That portion of the following immovable property which forms a part of the
Canal Street right of way, situated in the First Municipal District, City of
New Orleans, and more fully described as follows:
Commencing at point A, being the intersection of the easterly or river side
line of South Peters Street and the southerly or upper side line of Canal
Street having a width of 170.52 feet and also being the northeasterly corner
of proposed lot RS, the Point of Beginning. From the Point of Beginning,
measure thence along the southerly or upper side line of Canal Street N 52
degrees 44 minutes 02 seconds W, a distance of 113.12 feet to the easterly
curb in Tchoupitoulas Street at point L; thence along the projection of said
curb and along the curb of the proposed neutral ground N 24 degrees 30
minutes 37 seconds E, a distance of 175 feet to a point on the northerly or
lower side line of Canal Street at point M; thence along said line S 52
degrees 44 minutes 02 seconds E, a distance of 827.07 feet to point D; thence
measure S 37 degrees 15 minutes 58 seconds W, distance of 170.52 feet to
point N on the southerly or upper side line of Canal Street; thence along
said line N 52 degrees 44 minutes 02 seconds W, a distance of 675.27 feet to
point A and the Point of Beginning, containing 3.1619 Acres, all in accord
with a map of Proposed Grand Palais Casino by Gandolfo, Kuhn and Associates,
last dated April 7, 1993.
<PAGE>
Exhibit "4"
Permitted Exceptions
1. Reservation of servitudes in favor of the Sewerage and Water Board of
the City of New Orleans (the "Delta Street S&WB Servitude") and in favor
of New Orleans Public Service, Inc. (the "Delta Street NOPSI
Servitude"), contained in Ordinance No. 15,799 M.C.S. (Calendar No.
18,425) of the City of New Orleans, registered April 27, 1993, under
N.A. No. 93-18030, as Conveyance Office Instrument No. 68169, and in Act
of Revocation of Dedication by The City of New Orleans dated April 26,
1993, filed April 27, 1993, under Notarial Archives No. 93-18031, as
Conveyance Office Instrument No. 68195, as shown on the survey of
Gandolfo, Kuhn & Associates, Drawing No. T-182-3, last dated October 20,
1998.
2. Terms and Conditions of General Development Agreement, dated April 27,
1993, filed April 27, 1993, recorded under Notarial Archives No.
93-18037, and Conveyance Instrument No. 86201, as assigned and assumed
by Assignment and Assumption of General Development Agreement and of
Franchise Agreement, dated March 15, 1994, filed March 16, 1994, as
Notarial Archives No. 94-13863, Conveyance Office Instrument No. 83932,
and amended March 15, 1994, recorded March 16, 1994, under Notarial
Archives No. 94-13889, and Conveyance Office Instrument No. 93843 and as
amended and restated by that certain Amended and Restated General
Development Agreement dated as of October 30, 1998 by and among
Rivergate Development Corporation, Jazz Casino Company, L.L.C. and City
of New Orleans.
3. Reservation of a servitude in favor of New Orleans Public Service, Inc.,
contained in the sale from City of New Orleans to Morgan's Louisiana and
Texas' Railroad and Steamship Company, dated February 3, 1932, filed
February 6, 1932, in Conveyance Office Book 466, folio 476, as shown on
the survey of Gandolfo, Kuhn & Associates, Drawing No. T-182-3, last
dated October 20, 1998.
4. Apparent servitudes for 10 inch sewer line, 24 inch drain line and 20
inch water line, in the southeast corner of the land (outside of former
Delta Street) as shown on the survey by Gandolfo, Kuhn & Associates,
Drawing No. T-182-3, last dated October 20, 1998.
5. Reservation of a sewerage servitude by City of New Orleans for the
benefit of the Sewerage and Water Board, contained in the Act of
Exchange and Agreement between the City of New Orleans and New Orleans
Terminal Company, dated October 16, 1978, filed October 18, 1978, under
N.A. No. 306106, in Conveyance Officer Book 758-C, folio 580 as shown
on survey T-182-7, last dated October 20, 1998 by Gandolfo, Kuhn &
Associates.
<PAGE>
6. Rights, reservations and servitudes are contained in the Judgment in
favor of the Sewerage and Water Board of the City of New Orleans,
rendered in proceedings No. 146-170, CDC, Parish of Orleans, dated
September 5, 1924, recorded in Conveyance Office Book 505, folio 406, as
shown on survey T-182-7 dated October 20, 1998 by Gandolfo, Kuhn &
Associates, Civil Engineers.
7. Driveway encroachment from Parcel 7 onto Basin Street right-of-way, as
shown on survey T-182-7, by Gandolfo, Kuhn & Associates, last dated
October 20, 1998.
8. Encroachment of adjoining buildings onto Tract 1 of Parcel 3, as shown
on survey T-182-3, by Gandolfo, Kuhn & Associates, last dated October
20, 1998.
9. Encroachments as evidenced by the following: concrete, brick pedestrian
passageway and brick walk as shown on survey T-182-3 last dated October
20, 1998 by Gandolfo, Kuhn & Associates.
10. Encroachment upon Poydras Street by the granite columns and cornice
appurtenant to Tract 1 of Parcel 3, as shown on the plat of survey by
Gandolfo, Kuhn & Associates, Drawing No. T-182-3, last dated October 20,
1998.
11. Terms and Conditions of Franchise Agreement by and between the City of
New Orleans and Celebration Park Casino, Inc., dated April 17, 1993,
filed April 27, 1993, as Notarial Archives No. 18038. Conveyance Office
Instrument No. 68202, as assigned and assumed by Assignment and
Assumption of General Development Agreement and of Franchise Agreement,
dated March 15, 1994, filed March 16, 1994, as Notarial Archives No.
94-13863, Conveyance Office Instrument No. 83932, and as assigned in
Assigned, Amended and Restated Franchise Agreement by the City of New
Orleans to Harrah's Jazz Company with Grand Palais Casino, Inc., dated
March 15, 1994, filed March 16, 1994, under Notarial Archives No.
94-13864, Conveyance Office Instrument No. 83933.
12. Terms and Conditions of Approved Zoning Plans:
a. Filed December 29, 1994 as Notarial Archives No. 94-59464,
Conveyance Office Instrument No. 98386.
b. Filed April 21, 1995 as Notarial Archives No. 95-17369, Conveyance
Office Instrument No. 103509.
c. Filed December 29, 1994 as Notarial Archives No. 94-59466,
Conveyance Office Instrument No. 98388.
<PAGE>
13. Terms and Conditions of the Lease Agreement by and between City of New
Orleans, as lessor, and Rivergate Development Corporation, as lessee,
dated April 27, 1993 filed April 27, 1993, under Notarial Archives No.
93-18035, as Conveyance Instrument No. 68199, as amended by Amended and
Restated Lease Agreement dated March 15, 1994, filed March 16, 1994,
under Notarial Archives No. 94-13885, Conveyance Office Instrument No.
83940, as amended.
14. Terms and Conditions of Lease by and between The Alabama Great Southern
Railroad Company, as lessor, and Grand Palais Casino, Inc., as lessee,
as evidenced by Memorandum of Lease, dated November 19, 1993, filed
December 15, 1993, under Notarial Archives No. 93-53509, as Conveyance
Office Instrument No. 79741, in Conveyance Office Book 908, folio 101,
as assigned by Assignment and Assumption of Lease, dated March 15, 1994,
filed March 16, 1994, under Notarial Archives No. 94-13865, as
Conveyance Office Instrument No. 83934, as amended by Supplemental
Agreement executed August 25, 1994, filed November 9, 1994, under
Notarial Archives No. 94-52041, as Conveyance Office Instrument No.
96047.
15. Restrictions affecting the property formerly known as the Carondelet
Canal and Walk, as contained in U.S. Statutes at large, 9th Congress,
Chapter XXXVI, Vol. 2, page 440, March 3, 1807: "and shall not dispose
of, for the purpose of building thereon, any lot within sixty feet of
the space reserved for a canal, which shall forever remain open as a
public highway."
16. Construction Agreement between Harrah's Jazz Company and Centex Landis
Construction Co., Inc., dated October 10, 1994, filed November 16, 1994,
as Mortgage Office Instrument No. 292089, under Notarial Archives No.
94-52926, as amended.
17. Construction Agreement between Harrah's Jazz Company and Broadmoor,
dated October 10, 1994, filed November 16, 1994, as Mortgage Office
Instrument No. 292119, under Notarial Archives No. 94-52928; as amended.
18. Design Agreement between Harrah's Jazz Company and Perez Ernst
Farnet/Modus, Inc., dated June 16, 1995, filed November 22, 1995, as
Mortgage Office Instrument No. 340292, under Notarial Archives No.
95-51534 and as amended.
19. Notice of Contract between Centex Landis Construction Co., Inc.,
contractor, and Harrah's Jazz Company, debtor, and Debtor in Possession
in the United States Bankruptcy Court for the Eastern District of
Louisiana, filed August 19, 1996, as Mortgage Office Instrument No.
378571, under Notarial Archives No. 96-40165.
<PAGE>
THUS DONE AND PASSED, on the day, month and year first written above,
in the State and Parish aforesaid, by the undersigned Mortgagor and Mortgagee in
the presence of the undersigned Notary and the undersigned competent witnesses,
who hereunto sign their names with Mortgagor and Mortgagee after reading of the
whole.
WITNESSES TO ALL SIGNATURES: JAZZ CASINO COMPANY, L.L.C., a
Louisiana limited liability
company
/s/ Meredith A. Berlin By: /s/ L. Camille Fowler
- ----------------------------- ------------------------------
/s/ R. Marshall Grodner Name: L. Camille Fowler
- ----------------------------- ----------------------------
Title:
---------------------------
/s/ Jorge Jacob Jose
---------------------------------------
NOTARY PUBLIC
My commission expires:
<PAGE>
THUS DONE AND PASSED, on the day, month and year first written above,
in the State and Parish aforesaid, by the undersigned Mortgagor and Mortgagee in
the presence of the undersigned Notary and the undersigned competent witnesses,
who hereunto sign their names with Mortgagor and Mortgagee after reading of the
whole.
WITNESSES TO ALL SIGNATURES:
/s/ Marie A. Moore
- -----------------------------
/s/ Marion W. Weinstock
- -----------------------------
THE BANK OF NEW YORK, not in its
individual capacity, but solely
as Collateral Agent
By: /s/ R. Randall Deen
-----------------------------
Name: /s/ R. Randall Dean
-----------------------------
Title: Agent
---------------------------
/s/ Daniel E. Davllier
---------------------------------------
NOTARY PUBLIC
My commission expires:
<PAGE>
RECEIPT FOR FILING
WILLIAM L. PRATT
Custodian of Notarial Records
for the Parish of Orleans, State of Louisiana
ROOM B-4 CIVIL COURTS BUILDING
421 LOYOLA AVE., NEW ORLEANS, LA 70112
TELEPHONE: 568-8577
Filed by: Phelps Dunbar, L.L.P.
----------------------------------------------------
Notary Public who passed act:
--------------------------------
Instrument filed: Act of Mortgage and Collateral Assignment
--------------------------------------------
by Jazz Casino Company, L.L.C. to the Bank of New York
- --------------------------------------------------------------
- --------------------------------------------------------------
<TABLE>
<S> <C>
Registered in Recorded in the Mortgage Office
Conveyance Office Instrument # 488183
-----------------------------------------------
Instrument# Book , Folio
---------------------- ------------------------
Book , Folio New Orleans, Louisiana
------------------ --------------------
New Orleans, Louisiana Date: 10-30-98
-------------------------------------------------
Date: Time: 2:02
--------------------------------------------- -------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.29
UNITED STATES OF AMERICA * SOME OR ALL OF THE SECURED
* OBLIGATIONS (AS DEFINED HEREIN)
* BEAR INTEREST AT VARIABLE
* RATES.
STATE OF NEW YORK *
* ACT OF MORTGAGE
COUNTY OF NEW YORK * AND
* COLLATERAL ASSIGNMENT
* BY
STATE OF LOUISIANA * CP DEVELOPMENT, L.L.C.
* IN FAVOR OF
* THE BANK OF NEW YORK,
* AS COLLATERAL AGENT
PARISH OF ORLEANS * FOR THE PRESENT AND FUTURE
* HOLDERS
* OF THE SECURED OBLIGATIONS
* * * * * * *
BE IT KNOWN, that on this 29th day of October, 1998, effective
as of the Plan Effective Date (as defined below);
BEFORE ME, the undersigned, Notary Public in and for the State of
Louisiana, Parish of Orleans, and in the presence of the undersigned competent
witnesses;
PERSONALLY CAME AND APPEARED:
CP DEVELOPMENT, L.L.C., a Louisiana limited liability company (TIN:
62-1650470), whose registered office in the State of Louisiana is located at
512 South Peters, New Orleans, Louisiana 70130, and whose mailing address is
512 South Peters, New Orleans, Louisiana 70130, appearing herein by and
through L. Camille Fowler, a duly authorized officer thereof pursuant to a
resolution of its sole member, JCC Holding Company, a Delaware corporation, a
certified extract of which is attached hereto ("Mortgagor"); and
AND BE IT KNOWN, that on this 29th day of October 1998, effective as
of the Plan Effective Date (as defined below);
BEFORE ME, the second undersigned Notary Public in and for the State
of Louisiana, Parish of Orleans, and in the presence of the undersigned
PERSONALLY CAME AND APPEARED:
THE BANK OF NEW YORK, a national banking association (TIN:13-5160382),
not in its individual capacity but solely as Collateral Agent for the present
and future holders of the Secured Obligations (as defined below), whose mailing
address is 10161 Centurion Parkway, Jacksonville, Florida 32256, appearing
herein by and through a duly authorized representative ("Mortgagee");
MORTGAGOR AND MORTGAGEE DECLARED THAT:
Definitions: The following terms shall have the following meanings when
used herein. Capitalized terms used but not otherwise defined herein shall have
the respective meanings set forth in the Intercreditor Agreement.
"Administrative Agent" means Bankers Trust Company, in its capacity as
Administrative Agent for the Banks and other lenders under and from time to time
signatory to the Credit Agreement (together with any successor Administrative
Agent).
"Advances" means all advances made by Mortgagee for the protection of
the interests of Mortgagee in the Property and the rights and privileges of
Mortgagee hereunder, including any
<PAGE>
advances identified as "Advances" under this Mortgage, and shall include all
interest payable with respect thereto as set forth in this Mortgage. Advances
under this Mortgage shall include protective advances that may be made, to the
extent permitted by the Intercreditor Agreement, by any Secured Creditor under
any Shared Security Document or any separate security agreements executed
pursuant to any Shared Security Document and affecting any portion of the
Property.
"Affiliate" means with respect to any Person, any other Person (i)
directly or indirectly controlling (including, but not limited to, all
directors, officers and partners of such Person), controlled by, or under direct
or indirect common control with, such Person, or (ii) except for purposes of
determining Affiliates of HET, that directly or indirectly owns more than 5% of
any class of the voting securities or capital stock of or equity interests in
such Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Assigned Leases" shall have the meaning assigned in Granting Clause
(e)(iv) hereof.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq.
"Banks" shall have the meaning set forth in the Intercreditor
Agreement.
"Casino Operating Contract" means that certain Amended and
Renegotiated Casino Operating Contract among HJC, JCC and the State of
Louisiana by and through the LGCB, dated October 29, 1998 as the same may be
amended, modified, restated or supplemented from time to time.
"Condemnation Proceeds" shall have the meaning assigned in Granting
Clause (g)(iii) hereof.
"Credit Agreement" means that certain Credit Agreement among JCC,
JCC Holding Company, the various banks party thereto from time to time and
the Administrative Agent, dated October 29, 1998 as the same may be amended,
modified, restated, supplemented or extended from time to time.
"Credit Documents" shall have the meaning set forth in the
Intercreditor Agreement.
"Event of Default" means (i) any "Event of Default" under, and as
defined in, the Intercreditor Agreement, or (ii) any default under, or breach of
any provision of, this Mortgage after the expiration of any cure period
expressly provided herein (or if no cure period is specified, after notice by
Mortgagee to Mortgagor and, in the case of a non-monetary default, thirty (30)
days opportunity to cure).
"Financing Transfer" means the mortgage, granting of a lien or security
interest or other hypothecation of all or a portion of the Property by the
Mortgagor to a Transferee in connection with any financing or refinancing by
Mortgagor.
"HET" means Harrah's Entertainment, Inc., a Delaware corporation.
2
<PAGE>
"HET/JCC Agreement" means that certain HET/JCC Agreement dated
October 29, 1998 by and among JCC, HET and HOCI or any successor agreement
thereto or any substitute agreement therefor providing for the furnishing of
the Minimum Payment Guaranty, as the same (or any successor or substitute)
may be amended, modified, restated or supplemented from time to time.
"HJC" means Harrah's Jazz Company, a Louisiana general partnership.
"HOCI" means Harrah's Operating Company, Inc., a Delaware corporation.
"Holders" means individually, collectively and interchangeably the
present and the future holders of the Secured Obligations.
"Improvements" shall have the meaning assigned in Granting Clause (b)
hereof.
"Incorporeal Rights" shall have the meaning assigned in Granting Clause
(e) hereof.
"Indentures" means, collectively, (i) that certain Indenture pursuant
to which JCC has issued Senior Subordinated Notes due 2009 with Contingent
Payments, entered into by JCC, JCC Holding Company and the Trustee, dated as of
the Plan Effective Date, and (ii) that certain Indenture pursuant to which JCC
has issued Senior Subordinated Contingent Notes due 2009 entered into by JCC,
JCC Holding Company and the Trustee, dated as of the Plan Effective Date, as
such agreements may be amended, modified, restated or supplemented from time to
time.
"Insurance Proceeds" shall have the meaning assigned in Granting Clause
(e)(ii) hereof.
"Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of October 29, 1998, among JCC, the Minimum Payment Guarantors,
Administrative Agent and the Trustee, as the same may be amended, modified,
restated or supplemented from time to time.
"JCC" means Jazz Casino Company, L.L.C., a Louisiana limited liability
company.
"Land" shall have the meaning assigned in Granting Clause (b).
"Landlord" means Rivergate Development Corporation, a Louisiana public
benefit corporation.
"LGCB" means, collectively, the Louisiana Gaming Control Board, its
successors and assigns.
"Louisiana Gaming Regulations" means the Louisiana Economic Development
and Gaming Corporation Act, La. R.S. 27:201 et seq. and the rules and
regulations thereunder and the Louisiana Gaming Control Law, La. R.S. 27:1 et
seq., and the rules and regulations thereunder, collectively, as such statutes
and regulations may be amended from time to time.
"Minimum Payment Guarantors" means HET and HOCI or any successor or
substitute guarantor providing a Minimum Payment Guaranty in accordance with the
requirements of the
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Casino Operating Contract.
"Minimum Payment Guaranty" shall have the meaning set forth in the
Intercreditor Agreement.
"Minimum Payment Guaranty Documents" shall have the meaning set forth
in the Intercreditor Agreement.
"Mortgage" means this Act of Mortgage and Collateral Assignment, as
amended, modified, restated or supplemented from time to time.
"Mortgagor" shall have the meaning set forth in the appearance clause
of this Mortgage.
"Mortgagee" shall have the meaning set forth in the appearance clause
of this Mortgage.
"New Bonds" means, collectively, the Senior Subordinated Notes due 2009
with Contingent Payments and the Senior Subordinated Contingent Notes due 2009
issued pursuant to the Indentures.
"Ordinary Course Leases" means leases or subleases granted to other
persons or entities by Mortgagor in the ordinary course of business which do not
materially interfere with the conduct of the business of Mortgagor or any of its
subsidiaries, or do not materially detract from the nature of the related assets
of Mortgagor or any of its subsidiaries.
"Permitted Exceptions" shall have the meaning assigned in Section 1 of
this Mortgage.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan Effective Date" means the "Effective Date" under and as defined
in the Third Amended Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code, as modified through September 3, 1998, as confirmed by order of
the United States Bankruptcy Court for the Eastern District of Louisiana on
October 19, 1998 in the following proceedings: In re Harrah's Jazz Company, No.
95-14545 TMB, In re Harrah's Jazz Finance Corp., No. 95-14544 TMB, and In re
Harrah's New Orleans Investment Company, No. 95-14871 TMB, as the same may be
amended, modified or supplemented from time to time.
"Premises" means the immovable property in the Parish of Orleans more
particularly described on Exhibit "1" hereto annexed.
"Property" shall have the meaning assigned at the end of the Granting
Clauses of this Mortgage.
"Rents" shall have the meaning assigned in Granting Clause (e)(iv)
hereof.
"Rights and Privileges" shall have the meaning assigned in Granting
Clause (d) hereof.
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"Secured Creditors" means, collectively, (i) the Minimum Payment
Guarantors, (ii) the Administrative Agent and the Banks and other lenders under
and from time to time signatory to the Credit Agreement, (iii) the Trustee and
the holders from time to time of the New Bonds, and (iv) if one or more Banks or
other lenders (or any affiliate thereof) under and from time to time signatory
to the Credit Agreement enter into one or more interest rate protection
agreements, including, without limitation, interest rate hedges, swaps, caps,
floors, collars and similar agreements with, or guaranteed by Mortgagor, any
such Bank or lender (or any affiliate thereof) (even if such bank or lender
ceases to be a party to the Credit Agreement) so long as such Bank or lender (or
any affiliate thereof) participates in the extension of such interest rate
protection agreements and their subsequent assigns, if any.
"Secured Obligations" means individually, collectively and
interchangeably, (i) all Protective Advances (as defined in the Intercreditor
Agreement), (ii) all present and future indebtedness, obligations, including,
without limitation, the Minimum Payment Obligations (as defined in the
Intercreditor Agreement), and liabilities owed by JCC to the Minimum Payment
Guarantors under the Minimum Payment Guaranty Documents, including, without
limitation, the HET/JCC Agreement, (iii) all present and future indebtedness,
obligations, including, without limitation, the New Bond Obligations (as defined
in the Intercreditor Agreement), and liabilities owed by JCC to any and all
present and future holders of the New Bonds under the Indentures, (iv) all
present and future indebtedness, obligations, including, without limitation, the
Credit Agreement Obligations (as defined in the Intercreditor Agreement), and
liabilities owed by JCC to the Banks under the Credit Documents, including,
without limitation, the Credit Agreement, and (v) all Other Obligations (as
defined in the Intercreditor Agreement), (vi) all other Obligations (as defined
in the Intercreditor Agreement), (vii) all obligations of Mortgagor, as
guarantor or otherwise, to the Secured Creditors with respect to any of the
foregoing Secured Obligations, and (viii) all sums owed by Mortgagor under this
Mortgage, including any Advances, or any one or more of the foregoing, and any
and all promissory notes, bonds, loan agreements, indentures and other
instruments or documents evidencing such present and/or future indebtedness,
obligations and liabilities, including any amendments thereto, extensions,
renewals and refinancings thereof, and replacements, substitutions and
consolidations thereof, whether such obligations are committed or purely
discretionary, and whether absolute or contingent, liquidated or unliquidated,
voluntary or involuntary, determined, due or to become due, and whether now
existing or hereafter arising, whether JCC or Mortgagor is obligated alone or
with others on a "solidary" or "joint and several" basis, as a principal obligor
or as a surety, guarantor, or endorser, all up to a maximum secured amount that
may be outstanding at any time and from time to time of U.S. $10,000,000,000.00,
including, but not limited to, all Advances. NOTWITHSTANDING ANY OTHER PROVISION
OF THIS MORTGAGE, THE MAXIMUM AMOUNT OF THE SECURED OBLIGATIONS SECURED HEREBY
SHALL BE LIMITED TO U.S. $10,000,000,000.00.
"Shared Security Documents" shall have the meaning assigned that term
in the Intercreditor Agreement.
"Significant Transaction" shall have the meaning assigned that term in
the Certificate of Incorporation of JCC Holding Company, a Delaware corporation
and sole member of Mortgagor.
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"Taxes" means any taxes, assessments, forced contributions, and other
governmental charges in the nature thereof, general and special, ordinary and
extraordinary, of every nature and kind whatsoever which may be levied, assessed
or imposed upon the Property and payable by Mortgagor, whether any or all of
such Taxes be levied directly or indirectly, including, to the extent
applicable, "in lieu" taxes.
"Transfer" means the sale, exchange, lease or other disposition of all
or a portion of the Property by the Mortgagor to a Transferee.
"Transferee" means any Person to whom a Transfer or a Financing
Transfer is made.
"Trustee" means Norwest Bank Minnesota, National Association, as
Trustee under the Indentures (together with any successor Trustee).
"Uniform Commercial Code" means the Louisiana Civil Code Articles 3278
et seq., La. R.S. Section 9:4401, La. R.S. Section 9:5386 and 5388 and La. R.S.
Section 10:9-101 et seq., as such statutes may be amended from time to time.
GRANTING CLAUSES.
To secure the full and prompt payment and performance of the Secured
Obligations, up to a maximum secured amount that may be outstanding at any time
and from time to time of U.S. $10,000,000,000.00, MORTGAGOR HEREBY MORTGAGES,
AFFECTS, AND HYPOTHECATES, IN FAVOR OF MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS
FOR THE BENEFIT OF THE HOLDERS all of Mortgagor's estate, right, title and
interest, whether now owned or hereafter acquired, whether as owner, lessor,
lessee, or otherwise, and whether vested or contingent, and including all of
Mortgagor's rights to perform all obligations under and to receive the benefits
of any leases, in and to all of the following described land (immovable
property) and interests in land (immovable property), leases, leasehold
interests, estates, servitudes, rights, buildings, other constructions,
improvements, property, fixtures, component parts, machinery and equipment to
the full extent that such property is susceptible of mortgage under the
Louisiana Civil Code, Louisiana Revised Statutes, and other provisions of
Louisiana law; grants a continuing security interest in favor of Mortgagee and
its successors and assigns, as secured party for the benefit of the Holders, in
all property and rights described below, whether now owned or hereafter
acquired, that are susceptible of a security interest under the Uniform
Commercial Code or any other provision of Louisiana law; and does further
affect, hypothecate, collaterally assign and pledge unto and in favor of
Mortgagee and its successors and assigns, as collateral assignee for the benefit
of the Holders, all present and future leases and rents, as well as all other
property and rights described below, whether now owned or hereinafter acquired,
that are susceptible of collateral assignment under the Uniform Commercial Code
or any other provision of Louisiana law:
(a) all of Mortgagor's present and future right, title and
interest, presently or in the future, in and to the Premises,
together with Mortgagor's right, title, and interest in all
constructions and improvements on the Premises and the
component parts thereof;
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(b) TOGETHER with all buildings, other constructions, structures,
improvements, fixtures, additions, enlargements, extensions,
modifications or repairs of every kind and description, now or
hereafter erected or placed on the Premises, or thereunto
belonging or appertaining, which may from time to time be
owned or leased by Mortgagor, or which may be used or useable
in connection with any present or future use or operations of
the Premises, whether now owned or hereinafter acquired by
Mortgagor, including all parking areas, roads, driveways,
walks, fences, walls, beams, recreation facilities, drainage
facilities, lighting facilities and other site improvements,
all water, sanitary and storm sewer, drainage, electricity,
steam, gas, telephone and other utility equipment and
facilities, all plumbing, lighting, heating, ventilating,
air-conditioning, refrigerating, incinerating, compacting,
fire protection and sprinkler, surveillance and security,
vacuum cleaning, public address and communications equipment
and systems, all kitchen and laundry appliances, screens,
awnings, floor coverings, partitions, elevators, escalators,
motors, machinery, pipes, fittings and other types of
equipment and personal property of every kind and description
now or hereafter located on the Premises or attached to the
Improvements (as defined below) which by the nature of their
location thereon or attachment thereto are deemed real or
immovable property under applicable law; and including all
materials intended for the construction, reconstruction,
repair, replacement, alteration, addition or improvement of or
to such buildings, equipment, fixtures, component parts,
structures and improvements, all of which materials shall be
deemed to be part of the Property immediately upon delivery
thereof on the Premises to be part of the Improvements
immediately upon their incorporation therein, together with
all replacements thereof, substitutions therefor, additions
thereto, and any other component parts of any and all such
Property (all of the land described in and subject to this
Mortgage, including the Premises, whether owned in fee or full
ownership by Mortgagor or affected by leases in which
Mortgagor has an interest, is collectively referred to as the
"Land," and all of the buildings, other constructions,
structures, improvements and component parts of the Land are
collectively referred to as the "Improvements");
(c) TOGETHER with Mortgagor's rights in and to any supplement,
modification, amendment, novation, reconduction, restatement,
or replacement of any of the leases affecting the Premises;
(d) TOGETHER with all of the rights, way, privileges, servitudes,
easements, tenements, hereditaments, appurtenances and
advantages belonging to or in anywise appertaining to any of
the Property or any part thereof (collectively, the "Rights
and Privileges"), including, without limitation, the Rights
and Privileges, if any, of Mortgagor in and to the land lying
in the streets, roads or avenues, open or proposed, in front
of or adjoining the Land, and in and to any alleys or
passages, rights of ingress or egress, riparian rights, air
rights, development rights, and all other Rights and
Privileges, whatsoever, in any way belonging, relating or
appertaining to any of the Property, or any part thereof,
whether now owned or hereafter acquired by Mortgagor; and
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(e) TOGETHER with the following rights and privileges (the
"Incorporeal Rights"):
(i) Any and all of Mortgagor's present and future right,
title and interest in and to the proceeds of the
sale, transfer, financing, refinancing or conveyance
or conversion into cash or liquidated claims, whether
voluntary or involuntary, of all or any of the
Property, including all title insurance proceeds
under any title insurance policy now or hereafter
held by Mortgagor, all rights, dividends and other
claims of any kind whatsoever (including damage,
secured, unsecured, priority and bankruptcy claims)
relating to the Property, the rights of Mortgagor to
receive such sale proceeds directly from the
purchaser or purchasers, and further to enforce any
rights that Mortgagor may have to collect such sale
proceeds, including without limitation, Mortgagor's
right to commence appropriate collection actions
against the purchaser or purchasers thereof;
(ii) Any and all of Mortgagor's present and future rights,
title and interest in and to the unearned insurance
premiums and proceeds of insurance affecting all or
any part of the Property, including the right to
receive such unearned insurance premiums and
insurance proceeds directly from the insurer and,
whether applicable, to enforce any rights that
Mortgagor may have to collect such amounts
("Insurance Proceeds");
(iii) Any and all of Mortgagor's present and future right,
title and interest in and to the proceeds of any
award or claim for direct or consequential damages
relating to any condemnation, expropriation,
conveyance, or other taking of all or any part of the
Property by any governmental authority, including,
without limitation, awards for severance damages, and
further including the right to receive such
condemnation proceeds directly from such a
governmental authority and, where applicable, to
enforce any rights that Mortgagor may have to collect
such condemnation proceeds as provided herein
("Condemnation Proceeds");
(iv) Any and all present and future leases, subleases or
other occupancy agreements affecting the Property,
whether or not of record, for the use or occupancy of
all or any part of the Property, together with all
amendments, supplements, consolidations,
replacements, restatements, extensions, renewals and
other modifications of any thereof, and together with
all guarantees of any of the obligations of the
tenants under any of said leases (the "Assigned
Leases"), and all rents, fruits, income, and profits
therefrom (collectively, the "Rents"), including
without limitation, any and all rents, income,
profits, bonuses, revenues, royalties, cash or
security deposits, advances, rentals and other
payments, and further including Mortgagor's rights to
enforce all Assigned Leases and to receive and
enforce any rights that Mortgagor might have to
collect Rent;
(v) Any and all of Mortgagor's present and future right,
title and interest and
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other claims or demands that Mortgagor now has or may
hereafter acquire against anyone with respect to any
damage to all or any part of the Improvements,
including without limitation, damages arising or
resulting from any defect in or with respect to the
design or construction of all or any portion of the
Improvements, or arising from any default under any
construction, architectural or engineering contract
or agreement relating to the Improvements;
(vi) Any and all escrow payments paid to Mortgagor
pursuant to any documents executed in connection with
the Secured Obligations; and
(vii) Any and all present and future options to sell or to
lease the Property, or any interests therein.
(f) All of Mortgagor's right, title and interest, presently or in
the future in and to the Land and any other real or immovable
property described in this Mortgage, whether as owner, lessee,
sublessee or otherwise.
All of the foregoing property and rights described in these Granting Clauses,
individually, collectively and interchangeably, including, without limitation,
any and all of Mortgagor's present and future property and rights subject to
this Mortgage, are referred to herein as the "Property."
MORTGAGE PROVISIONS.
Mortgagor hereby declares, acknowledges, covenants and agrees as
follows:
1. Permitted Exceptions. This Mortgage is made and accepted subject to
the exceptions set forth on Exhibit "2" hereto annexed and as otherwise agreed
to by Mortgagee in writing (collectively, the "Permitted Exceptions").
2. Acknowledgment of Collateral Agent. Mortgagor declares and
acknowledges that the original Mortgagee is contemplated to be Mortgagee in its
capacity as Collateral Agent under the Intercreditor Agreement. Mortgagee
declares that the taxpayer identification number of Mortgagee is accurately set
forth in the appearance clause to this Mortgage. Mortgagor further declares and
acknowledges that the Secured Obligations may be transferred or negotiated one
more times and that the Holders shall include any and all holder or holders of
the Secured Obligations from time to time.
3. Future Advances. This Mortgage has been executed by Mortgagor
pursuant to Louisiana Civil Code Article 3298 and other applicable laws,
including the Uniform Commercial Code, for the purpose of securing the Secured
Obligations that may now be existing and/or that may arise in the future as
provided herein, with the preferences and priorities provided under applicable
Louisiana law.
4. Maximum Amount. In accordance with the requirements of applicable
law, including Louisiana Civil Code Article 3288 and La. R.S. Section 9:4401,
Mortgagor acknowledges,
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notwithstanding any other provision of this Mortgage or any other document to
the contrary, the maximum amount of Secured Obligations secured hereby that may
be outstanding at any time and from time to time shall be U.S.
$10,000,000,000.00.
5. Term. This Mortgage will remain in effect until all of the Secured
Obligations are fully satisfied and there is no agreement or commitment to
advance any additional indebtedness or other obligations under any of (i) the
Minimum Payment Guaranty Documents, including, without limitation, the HET/JCC
Agreement, (ii) the Indentures, (iii) the Credit Documents, including, without
limitation, the Credit Agreement, or (iv) the Shared Security Documents,
including this Mortgage. At such time, upon written request from Mortgagor,
Mortgagee shall execute and deliver to Mortgagor a written cancellation
instrument.
6. Recordation and Filing. Mortgagor authorizes Mortgagee to file
multiple originals, or photocopies, carbon copies, or facsimile copies of this
Mortgage and appropriate financing statements with the appropriate filing
officer in the State of Louisiana pursuant to the provisions of the Uniform
Commercial Code. Mortgagor's employer identification number is accurately set
out on the first page of this Mortgage. Mortgagor will not change its employer
identification number or its name, identity or corporate structure or address so
that any financing statement filed in connection herewith may become seriously
misleading unless and until it notifies Mortgagee in writing and executes all
new appropriate financing statements or other such documents as Mortgagee may
reasonably require, with Mortgagor being required to pay the cost of such
documentation and the filing thereof as provided above.
7. Representations and Warranties. Mortgagor hereby represents and
warrants to Mortgagee that: (a) Mortgagor has a valid and enforceable fee
interest in and to the Premises, subject to the Permitted Exceptions; (b) none
of the Property has heretofore been alienated by Mortgagor, and there are no
liens or encumbrances against the Property other than the Permitted Exceptions;
(c) there are no defenses or offsets to this Mortgage or to Mortgagor's
obligations under the Shared Security Documents; (d) Mortgagor has full power
and authority to encumber the Property in the manner and form set forth in this
Mortgage; (e) all consents and approvals to this Mortgage have been obtained;
(f) the Assigned Leases have not been assigned by Mortgagor or, to the knowledge
of Mortgagor, any tenant thereunder; (g) to the knowledge of Mortgagor, as of
the date hereof, the Assigned Leases are in full force and effect and there is
no material default under any Assigned Lease and there is existing no condition
which with the giving of notice or passage of time or both would cause a
material default thereunder; and (h) the execution, delivery and performance of
this Mortgage do not require any consent under, and will not contravene any
provision of or cause a default under, any of the Assigned Leases. Mortgagor
represents and warrants that this Mortgage is and will remain a valid and
enforceable first mortgage on, security interest in and collateral assignment of
the Property pursuant to and in accordance with the terms hereof, subject only
to the Permitted Exceptions, and Mortgagor will preserve title to the Property
and will forever warrant and defend such title and the validity and priority of
the lien of this Mortgage against the claims of all persons.
8. Lien. This Mortgage is intended to encumber, effect, and constitute
a lien on all of the Land, including the Premises, the Improvements and all of
Mortgagor's interest therein and all of the other Property, regardless of
whether Mortgagor's interest therein is that of lessee,
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sublessee, owner orotherwise, and regardless of whether the nature of such
interest changes from time to time from lessee to sublessee to owner or
vice-versa in any combinations, and in any such event the lien of this Mortgage
shall automatically extend to and cover any and all interest of Mortgagor in the
Property without the need of any amendment, supplement, notice, or action of any
kind by Mortgagee. To the extent that this Mortgage is a mortgage in Mortgagor's
interest in the Land or the Improvements as lessor, this Mortgage will cover and
include all of Mortgagor's rights to perform the obligations of the lessor under
any Assigned Lease as well as all of Mortgagor's right to receive the benefits
accruing to the lessor under any Assigned Lease.
9. Assignment of Leases and Rents. This Mortgage includes the
collateral assignment, as security for the Secured Obligations up to the maximum
secured amount that may be outstanding at any time and from time to time of
$10,000,000,000.00, of all Assigned Leases and all Rents, and further includes
Mortgagor's rights to enforce all Assigned Leases and to receive and enforce any
and all rights that Mortgagor might have to collect Rents.
10. Remedies. Subject to Section 33 of this Mortgage, upon the
occurrence and during the continuance of any Event of Default, Mortgagor shall
forthwith upon demand of Mortgagee surrender to Mortgagee possession of the
Property, and Mortgagee shall be entitled to take actual possession of the
Property or any part thereof personally or by its agents or attorneys, and
Mortgagee in its discretion may, in addition to any other rights at law or in
equity, with or without force and with or without process of law, enter upon and
take and maintain possession of all or any part of the Property together with
all documents, books, records, papers and accounts of Mortgagor relating
thereto, and may as attorney-in-fact or agent of Mortgagor, or in its own name
as Mortgagee and under the powers herein granted:
(a) hold, operate, manage or control the Property and conduct the
business, if any, thereof, either personally or by its agents,
and with full power to use such measures, legal or equitable,
as in its discretion it deems proper or necessary to enforce
the payment or security of the income, rents, fruits, issues
and profits of the Mortgaged Property, including actions for
the recovery of Rents, and direct collection of Rents and
other payments from tenants in accordance with the provisions
of La. R.S. Section 9:4401, Mortgagor hereby granting
Mortgagee full power and authority to exercise each and every
one of the rights, privileges and powers herein granted at any
and all times hereafter, without notice to Mortgagor;
(b) cancel or terminate any sublease for any cause or on any
ground which would entitle Mortgagor to cancel the same;
(c) enforce any term and provision of any sublease, including
actions in specific performance;
(d) elect to cancel any sublease made subsequent to this Mortgage
or subordinated to the lien hereof unless this Mortgage has
specifically been made subordinate to such sublease;
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(e) extend or modify any then existing subleases in accordance with
the terms thereof and make new subleases, which extensions,
modifications or new subleases may provide for terms to expire,
or for options to lessees to extend or renew terms to expire,
beyond the final maturity date of the Secured Obligations and the
issuance of a deed or deeds to a purchaser or purchasers at a
foreclosure sale, it being understood and agreed that any such
subleases, and the options or other such provisions to be
contained therein, shall be binding upon Mortgagor and all
persons whose interests in the Property are subject to the lien
hereof and shall be binding also upon the purchaser or purchasers
at any foreclosure sale; and/or
(f) withdraw any monies on deposit with any financial institution in
the name of or on behalf of Mortgagor.
11. Performance of Lease Obligations; Indemnification. Mortgagee shall
not be obligated to perform or discharge, nor does it hereby undertake to
perform or discharge, any obligation, duty or liability under any Assigned
Lease. Mortgagor shall and does hereby agree to indemnify and to hold Mortgagee
harmless of and from all liability, loss or damage which Mortgagee might incur
under said leases or under or by reason of the assignment of any subleases, and
of and from any and all claims or demands whatsoever which may be asserted
against Mortgagee by reason of any alleged obligations or undertakings to
perform or discharge any of the terms, covenants or agreements contained in said
leases, including without limitation any claims arising out of Mortgagee's
negligence or strict liability, but excluding any such claims arising out of
Mortgagee's gross negligence or willful misconduct. Should Mortgagee incur any
such liability, loss or damage under any of said leases, or under or by reason
of the assignment thereof, or in the defense of any claims or demands, the
amount thereof, including costs, expenses and reasonable attorneys' fees and
costs, including reasonable attorneys' fees and costs on appeal, shall be
secured hereby and Mortgagor shall reimburse Mortgagee therefor immediately upon
demand, together with interest at the rate provided in Section 17 of this
Mortgage to the date of reimbursement.
12. Payment and Performance of Secured Obligations. Mortgagor shall
satisfy the Secured Obligations when due in accordance with the terms of the
Minimum Payment Guaranty Documents, including, without limitation, the HET/JCC
Agreement, the Indentures and the Credit Documents, including, without
limitation, the Credit Agreement, as applicable, and shall perform and observe
each of Mortgagor's covenants, agreements and obligations hereunder and
thereunder with respect to the Secured Obligations in accordance with their
respective terms.
13. Maintenance; Waste. Mortgagor shall not directly or indirectly
commit or suffer any waste or stripping of the Property, and Mortgagor shall
keep the Improvements protected and in good order, repair and condition at all
times, and in connection therewith, Mortgagor shall make or shall cause to be
made all repairs, renewals and replacements, structural and non-structural,
exterior and interior, ordinary and extraordinary and foreseen and unforeseen to
the Improvements. From and after the occurrence of an Event of Default,
Mortgagee, as provided under the Intercreditor Agreement, shall have the right,
but shall not be obligated, to take such actions as Mortgagee may deem necessary
to correct or remedy such failure, and any amounts expended or advanced in
connection therewith shall be Advances hereunder and part of the
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Secured Obligations. In such event, Mortgagee and any person designated by
Mortgagee shall have, and is hereby granted, the right to enter upon the
Property at reasonable times and from time to time for the purpose of taking any
such action.
14. Inspections. Mortgagor hereby authorizes Mortgagee, its agents,
representatives or workmen, to enter (a) without prior notice if an Event of
Default has occurred and is continuing or (b) at any reasonable time during
normal business hours after reasonable advance notice to Mortgagor (except that
with respect to any emergency, Mortgagee, its agents, representatives or workmen
may enter during such time of emergency), upon or in the Land and the
Improvements for the purpose of inspecting the same and for the purpose of
exercising any right, power or remedy which Mortgagee is authorized to exercise
under the terms of this Mortgage; provided, however, that no such entry upon or
in the Land or the Improvements shall be construed to be possession of the Land
or the Improvements or to be a cure of any Event of Default or waiver of any
Event of Default.
15. Payment of Taxes and Insurance
(a) If Mortgagor fails to pay or discharge or cause to be paid or
discharged any Taxes within thirty (30) days after the same
became due (and unless (i) Mortgagor is contesting such Taxes
in good faith by appropriate proceedings, (ii) Mortgagor has
established or is maintaining adequate reserve for such Taxes
in accordance with generally accepted accounting principles as
in effect from time to time, or (iii) the failure to pay or
discharge such Taxes will not result in a forfeiture of any
portion of the Property which would have a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects
of Mortgagor with respect to the Premises or be grounds for
declaring a termination of any Assigned Lease (other than
Ordinary Course Leases)), Mortgagee, as provided in Section 4
of the Intercreditor Agreement, shall be authorized (but shall
not be obligated) to pay such Taxes, with full subrogation to
all rights of the taxing authorities by reason of such
payment, and any amounts so paid by Mortgagee shall be
Advances hereunder and part of the Secured Obligations.
(b) If Mortgagor, following written notice from Mortgagee to
Mortgagor and thirty (30) days opportunity to cure, fails to
obtain or maintain any insurance required to be maintained by
Mortgagor under the provisions of the Shared Security
Documents, as applicable, or any other documents executed in
connection with any of the Secured Obligations, Mortgagee, as
provided in Section 4 of the Intercreditor Agreement and this
Mortgage, shall be authorized (but shall not be obligated) to
pay such amounts, including premiums with respect to insurance
which protects Mortgagee's interest only and any amounts so
paid by Mortgagee shall be included within the Advances
hereunder and part of the Secured Obligations.
16. Default in Compliance with Law. If Mortgagor shall fail to comply
with any laws, rules and regulations (including, but not limited to, the
Louisiana Gaming Regulations, to
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the extent applicable to Mortgagor) of all governmental bodies and agencies
having jurisdiction over or authority with respect to the Property (except such
instances of compliance as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Mortgagor with respect to the Premises) and such noncompliance
continues for thirty (30) days (or any shorter period for compliance to the
extent required by applicable law) following written notice thereof by
Mortgagee, Mortgagee, at Mortgagee's option, may (but shall not obligated to)
take reasonable steps to comply with such law, rule or regulation and pay the
cost thereof, and any amounts expended or advanced in connection therewith shall
constitute Advances and form part of the Secured Obligations.
17. Reimbursement for Advances. Within thirty (30) days following
written demand therefor by Mortgagee to Mortgagor, Mortgagor shall reimburse
Mortgagee or any Secured Creditor (to the extent permitted by the applicable
Shared Security Documents and the Intercreditor Agreement) for any amount(s)
paid or advanced by Mortgagee or such Secured Creditor (i) for Taxes pursuant to
Section 15(a) of this Mortgage, (ii) for insurance pursuant to Section 15(b) of
this Mortgage, (iii) for the cost of keeping the Property in good order, repair
and condition pursuant to Section 13 of this Mortgage, (iv) to comply with
applicable laws, rules or regulations pursuant to Section 16 of this Mortgage,
or (v) for any other purposes set forth herein or permitted hereby or by the
Shared Security Documents and the Intercreditor Agreement, or otherwise
reasonably necessary in connection therewith (including, without limitation,
Advances for the preservation of the lien of this Mortgage). All such amounts
shall constitute Advances hereunder, and such amounts, together with the
interest accrued thereon as hereinafter provided, shall form part of the Secured
Obligations and shall be fully secured hereby. Mortgagor shall pay interest on
any Advances at a rate applicable to overdue loan principal pursuant to Section
1.08(c) of the Credit Agreement from the date(s) of such Advances until
Mortgagor reimburses Mortgagee therefor.
18. Mortgagee's Option to Act Hereunder. None of the provisions of this
Mortgage shall be construed as making it obligatory upon Mortgagee to pay Taxes
or to comply with laws or regulations affecting the Property or to do any other
act with regard to the Property or as causing Mortgagee to become liable for
loss, damage or injury which may result from the nonpayment of Taxes or to do
any other act.
19. Notice of Proceeding Affecting the Property
(a) Mortgagor shall promptly notify Mortgagee of any knowledge
that Mortgagor has or obtains of the commencement of any legal
proceedings (including for condemnation or taking) which could
have a material adverse effect on the Property or the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Mortgagor with
respect to the Premises, and Mortgagor shall immediately, upon
service thereof on or by Mortgagor, deliver to Mortgagee a
true copy of each petition, summons, complaint, notice, and
all other pleadings or papers, served in connection with any
such legal proceeding, and Mortgagee may take such action as
may be necessary to preserve Mortgagee's rights and interests
affected thereby. Mortgagor shall, at its expense,
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diligently prosecute and/or defend (as the case may
be) all such proceedings and shall, upon the request of
Mortgagee, deliver to Mortgagee copies of all papers served in
connection therewith, provided that no settlement or
compromise of any such proceeding shall be made by Mortgagor
without Mortgagee's prior written consent if such settlement
or compromise could reasonably be expected to have a material
adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects
of Mortgagor with respect to the Premises.
(b) Notwithstanding any provisions of this Mortgage relating to
defaults hereunder, it shall not be a default under this
Mortgage if any Condemnation Proceeds or Insurance Proceeds
are unavailable to Mortgagee because (i) such proceeds have
been applied to the restoration or repair of the Property, or
(ii) such proceeds have been applied in accordance with
Section 11 of the Intercreditor Agreement, or (iii) said
proceeds are used for such other use as Mortgagee may approve
in writing.
20. Additional Documents to Maintain Lien. Mortgagor shall keep valid
and, except for the Permitted Exceptions, unimpaired the lien and privilege
hereby created or to be created and to that end shall execute at any future time
all further instruments as may be necessary or desirable or that may be
reasonably required by Mortgagee to make and keep valid the lien and privilege
of the Mortgage on the Property and each and every part thereof, and to maintain
the priority of the lien and privilege of the Mortgage on the Property.
21. Authentic Evidence. In the event any proceedings are taken
hereunder by way of executory or other process, any and all declarations of
facts made by authentic act before a notary public and in the presence of two
witnesses by a person or persons declaring that such facts lie within his, her
or their knowledge shall constitute authentic evidence of such facts for the
purposes of such executory or other process and also for purposes of La. R.S.
9:3504(D)(6) and La. R.S. 10:9-508, where applicable.
22. Acceleration; Enforcement; Confession of Judgment
(a) Upon an Event of Default, Mortgagee shall have the right to
accelerate the maturity and demand immediate payment of all
Secured Obligations. It shall be lawful for Mortgagee (and
Mortgagor does hereby authorize Mortgagee without notice or
putting Mortgagor in default, a putting in default being
hereby expressly waived), to cause all or singular the
Property to be seized and sold under executory or other legal
process, issued by any court of competent jurisdiction,
without appraisement, and to the highest bidder for cash or on
such terms as Mortgagee may direct; and Mortgagor consents
that the Property may be sold, either as a whole or in such
lots or parcels as Mortgagee may direct in any such
proceedings. Mortgagor hereby expressly waives: (a) the
benefit of appraisement, as provided in Articles 2332, 2336,
2723 and 2724, Louisiana Code of Civil Procedure, and all
other laws conferring the same; (b) the demand and three (3)
days delay accorded by Articles 2639 and 2721, Louisiana Code
of Civil Procedure; (c) the three (3) days delay provided by
Articles 2331 and 2722,
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Louisiana Code of Civil Procedure; and (d) the benefit of the
other provisions of Articles 2331, 2722 and 2723, Louisiana
Code of Civil Procedure, and any other Articles not
specifically mentioned above which would prevent the immediate
seizure and sale of any or all of the Property, and Mortgagor
expressly agrees to the immediate seizure of the Property in
the event of suit hereon.
(b) Mortgagor does hereby name, constitute, and appoint Mortgagee
and Mortgagee's agents as Mortgagor's true and lawful agent
and attorney-in-fact with full power of substitution and with
power for Mortgagee in its name and capacity or in the name
and capacity of Mortgagor to carry out and enforce following
an Event of Default, any or all of the Incorporeal Rights
collaterally assigned and pledged or otherwise encumbered
under this Mortgage and at Mortgagee's sole discretion to file
any claim or to take any other action or proceedings and to
make any settlement of claims, either in its own name or in
the name of Mortgagor or otherwise, that Mortgagee may deem
necessary or desirable in order to collect and enforce the
payment and performance of the obligations owed to Mortgagor
under the Incorporeal Rights. Upon receipt of a written notice
from Mortgagee that an Event of Default exists, the parties to
the Incorporeal Rights are hereby expressly and irrevocably
authorized and directed to pay any and all amounts and perform
any duties, liabilities, or obligations due to Mortgagor
pursuant to any of the Incorporeal Rights to and for Mortgagee
or such nominee as Mortgagee may designate in such notice. The
power of attorney granted to Mortgagee and its agents is
coupled with an interest and may not be revoked by Mortgagor
as long as this Mortgage remains in effect. Mortgagor
specifically declares that nothing in this Mortgage shall
operate (i) to place any responsibility for the control, care,
management, or repair of the Property upon Mortgagee or for
the carrying out of any of the terms or conditions of any
present or future lease that may affect the Property, or (ii)
to make Mortgagee responsible or liable for (A) any waste
committed on the Property by any lessee or by any other party,
(B) the dangerous or defective condition of the Property,
including but not limited to liability as described in
Louisiana Civil Code Articles 2315 through 2324, or (C) any
negligence in the management, upkeep, repair, or control of
the Property that may result in loss, injury, or death to any
lessee or other party. If the Property is transferred by
virtue of any judicial foreclosure proceeding, the Property
may, in Mortgagee's sole discretion, be transferred free and
clear of, and unencumbered by, any and all subordinate leases,
assignments, and contracts. Upon request by Mortgagee
following an Event of Default, Mortgagor will immediately
notify individual obligors and debtors under the Incorporeal
Rights, advising such obligors and debtors of the fact that
their respective agreements and/or obligations have been
collaterally assigned and pledged to Mortgagee. In the event
that Mortgagor should fail to provide such notices for any
reason upon request by Mortgagee, Mortgagor agrees that
Mortgagee may forward appropriate notices to such obligors and
debtors, either in Mortgagee's name or the name of Mortgagor.
(c) Should one or more Events of Default occur or exist, Mortgagee
shall have the additional right, at its sole option, to
separately sell the aforesaid Incorporeal
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Rights, or any part or parts thereof, at private or public
sale, at such price or prices as Mortgagee may deem best,
either for cash or for any other compensation, or on credit,
or for future delivery, without the assumption of any credit
risk. The sale of the aforesaid Incorporeal Rights may be
without appraisement, the benefit of which is also expressly
waived by Mortgagor. Mortgagee may exercise any other remedies
with regard to Mortgagor's rights as may be authorized under
the Uniform Commercial Code or under the applicable laws of
any other applicable state. The sale, lease or other
disposition of the Incorporeal Rights after default may be for
cash, credit, or any combination thereof. Mortgagee may
purchase all or any part of such Incorporeal Rights at public
sale (or if permitted by law, at private sale) and in lieu of
actual payment of any such purchase price, may set-off the
amount of such price against the then outstanding Secured
Obligations.
(d) To the full extent permitted by applicable law, Mortgagor
hereby waives and releases Mortgagee and each Secured Creditor
of and from any and all liability and penalties for failure of
Mortgagee to comply with any statutory or other requirement
imposed upon Mortgagee relating to notices of sale, holding of
sale, or reporting of any sale. Mortgagee shall have the right
to postpone or adjourn any sale or other disposition of the
Incorporeal Rights at any time without giving of notice of any
such postponed or adjourned dates. In the event Mortgagee
seeks to take possession of any or all of the Incorporeal
Rights by court process, or otherwise, Mortgagor hereby
irrevocably waives any bonds and surety or security relating
thereto required by any statute, court rule or otherwise as an
incident to such possession. Mortgagor further waives any
demand for possession prior to the commencement of any suit or
action and waives the right to trial by jury with respect
thereto, and any other action in which Mortgagee is a party.
(e) Nothing herein shall prevent Mortgagee from pursuing any other
remedies available to Mortgagee at law or in equity, including
but not limited to, specific performance, appointment of a
receiver and right of entry and possession.
(f) For purposes of foreclosure under Louisiana executory process
procedures, Mortgagor acknowledges the Secured Obligations and
confesses judgment in favor of Mortgagee in the full amount of
the Secured Obligations, in principal, interest, costs,
expenses, and reasonable attorneys' fees.
23. Appointment of Keeper. If the Property or any part thereof is
seized as an incident to an action for the recognition or the enforcement of
this Mortgage by executory process, ordinary process, sequestration, writ of
fiere facias, or otherwise, and to the extent that the receiver of the Property
is not appointed pursuant to La. R.S. 27:275 et seq., Mortgagor and Mortgagee
hereby agree that the court issuing any such order shall, if petitioned for by
Mortgagee, direct the sheriff to appoint as a keeper of the Property Mortgagee
or any agent designated by Mortgagee, or any person or entity named by Mortgagee
at the time such seizure is requested, or any time thereafter. This designation
is made pursuant to La. R.S. 9:5136 through 5140.2, inclusive, as the same may
be amended, and Mortgagee shall be entitled to all the rights and benefits
afforded thereunder including reasonable compensation, which compensation shall
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be secured by this Mortgage.
24. Partial Invalidity. If for any reason any of the provisions of this
Mortgage shall be judicially declared invalid or unenforceable, such declaration
shall not affect the validity or enforceability of the other provisions hereof.
25. Covenants to Abide by Leases. Subject to the terms of this
Mortgage, with respect to all leases now or hereafter mortgaged or required to
be mortgaged hereunder or pursuant to a supplement to or amendment of this
Mortgage (other than Ordinary Course Leases), as of the date such lease becomes
subject to the lien of this Mortgage, Mortgagor does specially covenant as
follows:
(a) Mortgagor shall pay, by no later than the end of any
applicable cure periods granted to Mortgagor under such lease
(with respect to such payment), all rents, additional rents
and other sums required to be paid by Mortgagor under and
pursuant to the provisions of such lease;
(b) Mortgagor shall at all times promptly and faithfully keep and
perform, or cause to be kept and performed, by no later than
the end of any applicable cure periods granted to Mortgagor
under such lease (with respect to such performance), all the
covenants and conditions contained in such lease to be kept
and performed and in all respects conform to and comply with
the terms and conditions of such lease, by no later than the
end of any applicable cure periods granted to Mortgagor
thereunder (with respect to such performance), to the end that
all things shall be done which are necessary to keep
unimpaired the rights of Mortgagor, as tenant under such
lease, and Mortgagor further covenants that it shall not do or
permit anything which will impair or tend to impair the
security of this Mortgage or will be grounds for declaring a
termination of such lease;
(c) Mortgagor shall not, without the prior written consent of
Mortgagee, modify, extend or in any way alter the terms of
such lease or cancel or surrender such lease, or waive,
execute, condone or in any way release or discharge the lessor
thereunder of or from the obligations covenants, conditions
and agreements by said lessor to be done and performed, which,
in any case, would have a material adverse effect on the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Mortgagor with
respect to the Premises;
(d) Mortgagor shall promptly give Mortgagee notice of any default
under such lease or of the receipt by Mortgagor of any notice
of default from the lessor thereunder, shall furnish to
Mortgagee any and all information which it may request
concerning the performance by Mortgagee of the covenants of
such lease, and shall permit Mortgagee or its representative
at all reasonable times to make investigation or examination
concerning the performance by Mortgagor of the covenants of
such lease. To the extent it is within Mortgagor's control to
do so, Mortgagor shall deliver to Mortgagee a copy of such
lease certified by Mortgagor as a true and complete copy
thereof, an estoppel certificate from the lessor under
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such lease within twenty (20) days after request by Mortgagee
and in such form and content as shall be satisfactory to
Mortgagee, as well as any and all documentary evidence
received by it showing compliance by Mortgagor with the
provisions of such lease. Mortgagor shall also promptly
deliver to Mortgagee an exact copy of any material notice,
communication, plan, specification or other instrument or
document received or given by it in any way relating to or
affecting such lease;
(e) If Mortgagor shall default in the performance or observation
of any term, covenant or condition of such lease on the part
of Mortgagor as tenant thereunder, to be performed or
observed, then, without limiting the generality of the other
provisions of this Mortgage, and without waiving or releasing
Mortgagor from any of its obligations hereunder, Mortgagee
shall, to the extent permitted by such lease, have the right,
but shall be under no obligation, after the expiration of all
applicable cure periods granted to Mortgagor under such lease
to pay such sum or to perform such term, covenant, or
condition as may be in default, to pay any sums and to perform
any act or take any action as may be appropriate to cause all
of the terms, covenants and conditions of such lease on the
part of Mortgagor to be performed or observed to be promptly
performed or observed on behalf of Mortgagor, to the end that
the rights of Mortgagor in, to and under such lease shall be
kept unimpaired and free from default; provided that, to the
extent Mortgagee is not entitled under such lease to cure
rights on a consecutive basis to those granted to Mortgagor,
Mortgagee may exercise its rights under this paragraph at any
time within the five (5) day period prior to the expiration of
such cure period upon written notice from Mortgagee to
Mortgagor. If Mortgagee shall make any payment or perform any
act or take action in accordance with the preceding sentence,
Mortgagee will notify Mortgagor of the making of any such
payment, the performance of any such act, or the taking of any
such action. In any such event, Mortgagee and any person
designated by Mortgagee shall have and are hereby granted, the
right to enter upon the Land at any time and from time to time
for the purpose of taking any such action. If the lessor under
such lease shall deliver to Mortgagee a copy of any notice of
default sent by said lessor to Mortgagor under such lease,
such notice shall constitute full protection to Mortgagee for
any action taken or omitted to be taken by Mortgagee, in good
faith, in reliance thereon;
(f) Mortgagor shall exercise each individual option, if any, to
extend or renew the term of such lease, and Mortgagor hereby
expressly authorizes and appoints Mortgagee as its
attorney-in-fact to exercise, either jointly or individually,
any such option in the name and upon behalf of Mortgagor,
which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest;
(g) In the event of any failure by Mortgagor to perform any
covenant to be observed and performed under such lease, the
performance by Mortgagee on behalf of Mortgagor of such
covenant shall not remove or waive, as between Mortgagor and
Mortgagee, the corresponding breach of any covenant by
Mortgagor hereunder,
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and any amount so advanced by Mortgagee or any costs incurred
in connection therewith, shall be paid by Mortgagor to
Mortgagee with interest thereon at the rate set forth in
Section 17 of this Mortgage within thirty (30) days after
written demand by Mortgagee to Mortgagor therefor and shall
also be Advances forming part of the Secured Obligations and
shall be fully secured hereby;
(h) Mortgagor covenants and agrees that, if Mortgagor is permitted
by Mortgagee to acquire the lessor's interest under such
lease, or any other estate, title or interest in the premises
covered by such lease, all of Mortgagor's interest in such
premises shall be considered as mortgaged, hypothecated,
collaterally assigned and pledged to Mortgagee and the lien
hereof shall encumber all of such interest with the same force
and effect as though specifically herein mortgaged,
hypothecated, collaterally assigned and pledged, without the
need for any further mortgage, assignment, amendment,
supplement, or other writing. Notwithstanding the foregoing,
if Mortgagee so requests following Mortgagor's acquisition of
the lessor's interest or any other estate, title, or interest
in the leased premises, Mortgagor shall promptly execute and
deliver all further instruments, writings, and other
assurances as Mortgagee may request to confirm the foregoing;
(i) In the event such lease is rejected or disaffirmed by the
lessor thereunder (or by any receiver, trustee, keeper,
custodian or other party who succeeds to the rights of such
landlord) pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar law, Mortgagor covenants
that it will not elect to treat such lease or sublease as
terminated under 11 U.S.C. Section 365(h) or any similar or
successor law or right and hereby assigns to Mortgagee the
sole and exclusive right to make or to refrain from making any
such election, and Mortgagor agrees that any such election, if
made by Mortgagor, shall be void and of no force or effect;
(j) If the lessor under such lease (or any receiver, keeper,
trustee, custodian or other party who succeeds to the rights
of such lessor) rejects or disaffirms such lease pursuant to
any bankruptcy, insolvency, reorganization, moratorium or
similar law and Mortgagee elects to have Mortgagor remain in
possession under any legal right Mortgagor may have to occupy
the premises leased pursuant to such lease, (i) Mortgagor
shall remain in such possession and shall perform all acts
necessary for Mortgagor to retain its legal rights and to
remain in such possession for the unexpired term of such lease
(including all renewals thereof), whether such acts are
required under the then existing terms and provisions of such
lease or otherwise, and (ii) all of the terms and provisions
of this Mortgage and the lien created hereby shall remain in
full force and effect and shall be extended automatically to
such possession, occupancy and interest of Mortgagor; and
(k) Mortgagor immediately upon obtaining knowledge of a breach by
the lessor under such lease (or by any receiver, keeper,
trustee, custodian or other party who succeeds to the rights
of such lessor) or any inability of such lessor (or any such
receiver, trustee, custodian or other party) to perform the
terms and provisions of
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such lease (including by reason of a rejection or
disaffirmance of such lease pursuant to any bankruptcy,
insolvency, reorganization, moratorium or similar law), will
notify Mortgagee of any such breach or inability. Mortgagor
shall, at its expense, diligently commence and prosecute any
proceedings as may be necessary or advisable against such
lessor in connection with such breach and shall, upon the
request of Mortgagee, deliver to Mortgagee copies of all
papers served in connection therewith; provided that no
settlement or compromise of any such proceeding shall be made
by Mortgagor without Mortgagee's prior written consent if such
settlement or compromise could have a material adverse effect
on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Mortgagor
with respect to the Premises.
26. Power of Decision. Wherever Mortgagee exercises any right pursuant
to this Mortgage to approve, disapprove or consent, or any arrangement or term
is to be satisfactory to Mortgagee, the decision of Mortgagee to approve or
disapprove or to decide that arrangements or terms are satisfactory or not
satisfactory shall be in the sole discretion of Mortgagee and shall be final and
conclusive.
27. Binding Effect. The covenants herein contained shall bind, and the
benefits and advantages shall inure to, the respective successors and/or assigns
of Mortgagor and Mortgagee.
28. Amendments, Consents and Waivers in Writing and Related Matters
(a) No amendment or waiver of any provision of this Mortgage, nor
any consent by Mortgagee hereunder (including but not limited
to any consent to any departure by Mortgagee therefrom), shall
in any event be effective unless the same shall be in writing
and signed by Mortgagee and, with respect to an amendment, by
all of the parties thereto, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
(b) The provisions of this Mortgage shall be construed as a whole
according to their common meaning, not strictly for or against
any party and consistent with the provisions herein contained,
in order to achieve the objectives and purposes of this
document. Each party and its counsel have reviewed and revised
this Mortgage. Each party agrees that the normal rule of
construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in
the interpretation of this Mortgage.
(c) Any failure of Mortgagee to insist upon the strict performance
by Mortgagor of any of the terms and provisions hereof shall
not be deemed to be a waiver of any of the terms and
provisions hereof, and Mortgagee, notwithstanding any such
failure, shall have the right thereafter to insist upon the
strict performance by Mortgagor of any and all of the terms
and provisions of this Mortgage to be performed by Mortgagor.
Neither Mortgagor nor any person now or hereafter obligated
for the payment of the whole or any part of the sums now or
hereafter secured by this Mortgage shall be relieved of such
obligation by reason of the
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failure of Mortgagee to comply with any request of Mortgagor,
or of any other person so obligated, to take action to
foreclose or otherwise enforce any of the provisions of this
Mortgage or any obligations secured by this Mortgage, or by
reason of the release, regardless of consideration, of the
whole or any part of the security held for the indebtedness
secured by this Mortgage, or by reason of any agreement or
stipulation between any subsequent owner or owners of the
Property and Mortgagee extending the time of payment or
modifying the terms of the indebtedness secured hereby or this
Mortgage without first having obtained the consent of
Mortgagor or such other person, and in the latter event,
Mortgagor and all such other persons shall continue to be
liable to make such payment according to the terms of any such
agreement of extension or modification unless expressly
released and discharged in writing by Mortgagee.
(d) Regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien or
encumbrance on the Property, Mortgagee may release the
obligation of anyone at any time liable for any of the Secured
Obligations secured by this Mortgage or any part of the
security held for such Secured Obligations and grant or agree
to such extensions, indulgences and modifications in relation
to the Secured Obligations as Mortgagee may determine, without
the consent of the holder of any such subordinate lien or
encumbrance and without any obligation to give notice of any
kind thereto and without, as to the security or the remainder
thereof, in any way impairing or affecting the lien hereof or
the priority thereof over any subordinate lien or encumbrance.
Any subsequent encumbrances of the Property are hereby, by
virtue of this Section 28(d), specifically given notice of the
foregoing reservation of rights.
(e) Mortgagee may resort for the payment and/or satisfaction of
the Secured Obligations to any other security therefor held by
Mortgagee in such order and manner as Mortgagee may elect.
29. Notices. Except as otherwise expressly provided herein, all
notices or other communications required or permitted to be given or delivered
pursuant to this Mortgage shall be in writing and shall be given by hand
delivery, certified United States mail, prepaid, with return receipt requested,
overnight courier service or facsimile transmission with receipt confirmed. Any
party hereto may from time to time, by notice in writing served upon the other
parties hereto pursuant to this Section 29 designate a different address or
person to whose attention notices shall be given. Notices hereunder shall be
deemed given upon receipt. The addresses of the parties hereto for notices are:
Mortgagor: CP Development Company, L.L.C.
c/o JCC Holding Company
512 S. Peters
New Orleans, LA 70130
Attention: President
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Mortgagee: The Bank of New York, as Collateral Agent
10161 Centurion Parkway
Jacksonville, Florida 32256
Attention: Vice President
30. Remedies Cumulative. Each right, power, and remedy of Mortgagee
provided for herein and now or hereafter existing at law, in equity, by statute,
pursuant to any other loan document or otherwise shall be cumulative, and the
exercise by Mortgagee of any one or more of said rights, powers, or remedies
shall not preclude the simultaneous or later exercise by Mortgagee of any or all
of such other rights, powers, or remedies. Nothing in this Mortgage shall be
deemed to limit or modify any security interests or rights or remedies under any
other documents executed in connection with any of the Secured Obligations.
31. Reinscription of Mortgage
(a) Mortgagor shall reinscribe this Mortgage prior to the date on
which the lien of this Mortgage may prescribe by any
applicable prescriptive period.
(b) During the term of this Mortgage, Mortgagor shall cause this
Mortgage to be reinscribed in the manner provided by law in
the records of the Recorder of Mortgages for the Parish of
Orleans at least forty-five (45) days prior to the tenth
(10th) anniversary of the date of this Mortgage and within the
reinscription or continuation period provided in La. R.S.
Section 9:4401 and Louisiana Civil Code Article 3328, as the
same may be amended from time to time.
(c) The parties to this Mortgage hereby waive the production of
mortgage, conveyance, tax, assignment of accounts receivable
and other certificates and relieve and release the Notary
before whom this Mortgage was passed from all responsibilities
and liabilities in connection therewith.
32. Transfers and Financing Transfers; Release of Property.
(a) Mortgagor at any time may effectuate a Transfer or a Financing
Transfer if such Transfer or Financing Transfer has been
approved as a Significant Transaction by the Board of
Directors of JCC Holding Company, subject to any consent
required under the Credit Agreement.
(b) With respect to a Transfer pursuant to Section 32(a) of this
Mortgage, Mortgagee shall release the Property subject to the
Transfer from this Mortgage if either of the following
conditions are satisfied:
(i) Mortgagor provides substitute collateral acceptable
to the Secured Creditors in the form of one or more
letters of credit, securities, guaranties or other
collateral. The Secured Creditors shall not
unreasonably withhold or delay the acceptance of
substitute collateral. In no event shall the Secured
Creditors require substitute collateral having a
value in excess of the value of the Property to be
released.
23
<PAGE>
(ii) Mortgagor grants Mortgagee a first priority pledge
and security interest in Mortgagor's ownership
interest (including any rights to income and profits)
in the Transferee.
(c) With respect to a Financing Transfer pursuant to Section 32(a)
of this Mortgage:
(i) Mortgagee shall release such Property from this
Mortgage, provided that (A) the Transferee is not
an Affiliate of the Mortgagor or the Minimum
Payment Guarantors, (B) the financing or
refinancing related to such Financing Transfer is
neither participated in nor guaranteed or credit
supported by the Mininum Payment Guarantors or any
Affiliate thereof, (C) a consent to such release
has been obtained by each of the Administrative
Agent and the Minimum Payment Guarantors, (D) the
amount of any financing or refinancing related to
such Financing Transfer is necessary for
development of the Property being released and is
in excess of $10,000,000 and (E) any lien in favor
of Mortgagee, as collateral agent under the
Intercreditor Agreement on the limited liability
company interests of Mortgagor pursuant to any
other Shared Security Document shall remain in
full force and effect.
(ii) in any case in which the lien on this Mortgage is
not released pursuant to Section 32(c)(i) of this
Mortgage, Mortgagee shall Subordinate this
Mortgage to the obligations secured by the
documents evidencing such Financing Transfer and,
in such event, Mortgagee shall execute and deliver
any subordination or any other document or
instrument reasonably requested by Mortgagor to
effectuate such subordination and to take any
further action necessary to evidence or effectuate
such subordination.
33. Intercreditor Agreement. Notwithstanding any other provision of
this Mortgage or any document or instrument executed by Mortgagor, this Mortgage
and all liens and security interests and rights granted herein, and the priority
thereof, are expressly subject to the provisions of the Intercreditor Agreement
which are incorporated herein by reference and made applicable hereto. In
addition, Mortgagee is the Collateral Agent, as defined in and pursuant to the
terms of the Intercreditor Agreement, and, notwithstanding anything herein to
the contrary, the rights, powers, remedies and obligations of Mortgagee
hereunder shall be subject to the provisions of the Intercreditor Agreement. Any
exercise or waiver by Mortgagee of any of its rights, powers or remedies
hereunder or any other act by Mortgagee hereunder shall be conclusive evidence
of Mortgagee's authority pursuant to the Intercreditor Agreement against all
persons other than the Secured Creditors.
34. GOVERNING LAW. THIS MORTGAGE SHALL BE DEEMED TO BE A NEW YORK
CONTRACT AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (EXCLUDING MATTERS OF CONFLICT OF LAWS), EXCEPT THAT
MATTERS OF TITLE TO THE PROPERTY AND THE CREATION, PERFECTION, PRIORITY AND (TO
THE EXTENT REQUIRED) FORECLOSURE OF ANY MORTGAGES OR OTHER LIENS ON, AND
SECURITY INTERESTS IN, ANY PROPERTY AND MATTERS RELATING TO THE LOUISIANA GAMING
REGULATIONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA.
24
<PAGE>
35. Indemnification. Mortgagor shall indemnify and defend the Mortgagee
and its directors, officers, employees, agents and representatives (each an
"Indemnified Party") from and against all liabilities (including any
environmental liabilities), obligations, claims, losses, damages, penalties,
suits, actions, proceedings, judgments, costs and expenses (including reasonable
attorneys' fees and expenses) (collectively, "Liabilities"), imposed upon,
incurred by or asserted against any Indemnified Party in connection with the
Property or this Mortgage, except to the extent caused by the gross negligence
or willful misconduct of such Indemnified Party. In the event any suit, action
or proceeding (including any investigation or proceeding initiated or conducted
by any governmental authority or agency) is brought against any Indemnified
Party in connection with any Liability, such Indemnified Party shall promptly
notify Mortgagor and Mortgagor shall promptly retain counsel in connection
therewith, which counsel shall be reasonably acceptable to such Indemnified
Party, and shall pay the fees and expenses of such counsel related to such suit,
action or proceeding. The obligations of Mortgagor under this Section 35 shall
survive the release or termination of this Mortgage or the foreclosure or
transfer in lieu of foreclosure of the Property to the extent any Liability
relates to any action or event occurring prior to such release, termination,
foreclosure or transfer.
[Signature page follows]
25
<PAGE>
THUS DONE AND PASSED, on the day, month and year first written above,
in the State and Parish aforesaid, by the undersigned Mortgagor and Mortgagee in
the presence of the undersigned Notary and the undersigned competent witnesses,
who hereunto sign their names with Mortgagor and Mortgagee after reading of the
whole.
WITNESSES TO ALL SIGNATURES: CP DEVELOPMENT, L.L.C., a
Louisiana limited liability company
/s/ Meredith A. Berlin By: /s/ Camille Fowler
- --------------------------- --------------------------------------
Name: L. Camille Fowler
--------------------------------------
/s/ R. Marshall Grodner
- --------------------------- Title: Vice President/Secretary
--------------------------------------
/s/ Jorge Jacob Jose
---------------------------------------
NOTARY PUBLIC
My commission expires: Nov. 25, 1998
SIGNATURE PAGE TO ACT OF MORTGAGE
AND COLLATERAL ASSIGNMENT
<PAGE>
Exhibit "1"
-----------
Legal Description
-----------------
A CERTAIN PIECE OR PORTION OF GROUND, situated in the Second District, City
of New Orleans, designated as Lot 3CP (Canal Place) on a plan of resubdivision
by the office of Gandolfo, Kuhn, Luecke & Associates, dated March 15, 1982
(Dwg. No. E-170-12), approved by the City Planning Commission on July 8,
1982, registered as Declaration of Title Change under Conveyance Office Book
783, folio 63, and more particularly described as follows in accord with a
survey plat by Gandolfo, Kuhn & Associate (Dwg. No. T-182-5), dated October
20, 1998, as follows:
Commence at the intersection of the northerly line of Canal Street and the
easterly line of North Peters Street, said point being designated by the
letter B; thence along the northerly line of Canal Street South 52 degrees
44 minutes 02 seconds East, 398.18 feet to the division line between Lots 2CP
and 3CP and being the point of beginning; thence along said division line
North 37 degrees 15 minutes 58 seconds East, 169.50 feet; thence along said
division line South 52 degrees 44 minutes 02 seconds East, 129.37 feet to the
division line between Lots 3CP and S-1; thence along said division line South
8 degrees 17 minutes 09 seconds West, 193.76 feet to the northerly line of
Canal Street, thence along said line, North 52 degrees 44 minutes 02 seconds
West, 223.25 feet to the point of beginning.
27
<PAGE>
Exhibit "2"
-----------
Permitted Exceptions
--------------------
1. Servitudes created by Act of Destination of the owner on Lot 3CP, dated
December 11, 1984, filed December 13, 1984, under Notarial Archives No.
5814254, Conveyance Office Book 798E, folio 150, and as shown on survey
T-182-5, last dated October 20, 1998, by Gandolfo, Kuhn & Associates.
2. The restrictions on the use and development of Lot 3CP, resulting from
its inclusion in a Central Business Planned Community District (CBPCD)
approved by City Planning Commision, Docket No. 51/80, evidenced by the
recordation of Approved Plans registered at Conveyance Office Book 769,
folio 664, and approved by the New Orleans City Council under Ordinance
No. 8046 MCS, Calendar No., 9715, adopted on March 19, 1981, as
subsequently amended by Ordinance No. 8437 MCS, Calendar No. 10150,
adopted on December 17, 1981 and Ordinance No. 10413 MCS, Calendar No.
12376, adopted on March 21, 1985 and Ordinance No. 12167 MCS, Calendar
No. 14418, adopted December 17, 1987.
3. Encroachments onto Lot 3CP by improvements appurtenant to Lot 2CP, as
shown on survey T-182-5, last dated October 20, 1998, by Gandolfo, Kuhn &
Associates.
4. Apparent servitude of passage as evidenced by the brick wall and concrete
walk appurtenant to the land, as shown on survey T-182-5, last dated
October 20, 1998, by Gandolfo, Kuhn & Associates.
5. Encroachments upon Lot 2CP by concrete walk appurtenant to the land, as
shown on survey T-182-5, last dated October 20, 1998, by Gandolfo, Kuhn &
Associates
6. Encroachments upon Lot S-1 by on the concrete for the parking attendant
booth appurtenant to Lot 3CP, as shown on the survey T-182-5, last dated
October 20, 1998, by Gandolfo, Kuhn & Associates.
28
<PAGE>
RECEIPT FOR FILING
WILLIAM L. PRATT
Custodian of Notarial Records
for the Parish of Orleans, State of Louisiana
Room B-4 Civil Courts Building
421 Loyola Ave., New Orleans, LA 70112
TELEPHONE: 568-8577
Filed by: Phelps Dunbar, L.L.P.
---------------------
Notary public who passed act:
----------------------------------------------
Instrument filed: Act of Mortgage and Collateral Assignment by CP
- ----------------------------------------------------------------------------
Development, L.L.C. to The Bank of New York
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Registered in Recorded in the Mortgage Office
Conveyance Office Instrument # 488184
-----------------------------------
Instrument # Book Folio
----------------, --------------------
Book Folio New Orleans, Louisiana
----------------, --------------------
New Orleans, Louisiana Date: 10-30-98
-------------------------
Date: Time: 2:07
------------------ ---------------------------
<PAGE>
Exhibit 10.30
SOME OR ALL OF THE SECURED OBLIGATIONS
(AS DEFINED HEREIN) BEAR INTEREST AT
VARIABLE RATES.
UNITED STATES OF AMERICA * ACT OF MORTGAGE
* AND
STATE OF NEW YORK * COLLATERAL ASSIGNMENT
* BY
COUNTY OF NEW YORK * FP DEVELOPMENT, L.L.C.
* IN FAVOR OF
STATE OF LOUISIANA * THE BANK OF NEW YORK,
* AS COLLATERAL AGENT
PARISH OF ORLEANS * FOR THE PRESENT AND FUTURE
* HOLDERS
* OF THE SECURED OBLIGATIONS
* * * * * * *
BE IT KNOWN, that on this 29th day of October 1998, effective
as of the Plan Effective Date (as defined below);
BEFORE ME, the undersigned, Notary Public in and for the State of
Louisiana, Parish of Orleans, and in the presence of the undersigned competent
witnesses;
PERSONALLY CAME AND APPEARED:
FP DEVELOPMENT, L.L.C., a Louisiana limited liability company
(TIN:62-1650470), whose registered office in the State of Louisiana is
located at 512 South Peters, New Orleans, Louisiana 70130, and whose mailing
address is 512 South Peters, New Orleans, Louisiana 70130, appearing herein
by and through L. Camille Fowler, a duly authorized officer thereof pursuant
to a resolution of its sole member, JCC Holding Company, a Delaware
corporation, a certified extract of which is attached hereto ("Mortgagor");
and
AND BE IT KNOWN, that on this 29th day of October 1998, effective as
of the Plan Effective Date (as defined below),
BEFORE ME, the second undersigned, Notary Public in and for the
State of Louisiana, Parish of Orleans, and in the presence of the undersigned
competent witness;
PERSONALLY CAME AND APPEARED:
THE BANK OF NEW YORK, a national banking association (TIN:13-5160382),
not in its individual capacity but solely as Collateral Agent for the present
and future holders of the Secured Obligations (as defined below), whose mailing
address is 10161 Centurion Parkway, Jacksonville, Florida 32256, appearing
herein by and through a duly authorized representative ("Mortgagee");
MORTGAGOR AND MORTGAGEE DECLARED THAT:
Definitions: The following terms shall have the following meanings when
used herein. Capitalized terms used but not otherwise defined herein shall have
the respective meanings set forth in the Intercreditor Agreement.
"Administrative Agent" means Bankers Trust Company, in its capacity as
Administrative Agent for the Banks and other lenders under and from time to time
signatory to the Credit Agreement (together with any successor Administrative
Agent).
"Advances" means all advances made by Mortgagee for the protection of
the interests of Mortgagee in the Property and the rights and privileges of
Mortgagee hereunder, including any
<PAGE>
advances identified as "Advances" under this Mortgage, and shall include all
interest payable with respect thereto as set forth in this Mortgage. Advances
under this Mortgage shall include protective advances that may be made, to the
extent permitted by the Intercreditor Agreement, by any Secured Creditor under
any Shared Security Document or any separate security agreements executed
pursuant to any Shared Security Document and affecting any portion of the
Property.
"Affiliate" means with respect to any Person, any other Person (i)
directly or indirectly controlling (including, but not limited to, all
directors, officers and partners of such Person), controlled by, or under direct
or indirect common control with, such Person, or (ii) except for purposes of
determining Affiliates of HET, that directly or indirectly owns more than 5% of
any class of the voting securities or capital stock of or equity interests in
such Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Assigned Leases" shall have the meaning assigned in Granting Clause
(e)(iv) hereof.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq.
"Banks" shall have the meaning set forth in the Intercreditor
Agreement.
"Casino Operating Contract" means that certain Amended and
Renegotiated Casino Operating Contract among HJC, JCC and the State of
Louisiana by and through the LGCB, dated October 29, 1998, as the same may be
amended, modified, restated or supplemented from time to time.
"Condemnation Proceeds" shall have the meaning assigned in Granting
Clause (g)(iii) hereof.
"Credit Agreement" means that certain Credit Agreement among JCC,
JCC Holding Company, the various banks party thereto from time to time and
the Administrative Agent, dated October 29, 1998, as the same may be amended,
modified, restated, supplemented or extended from time to time.
"Credit Documents" shall have the meaning set forth in the
Intercreditor Agreement.
"Event of Default" means (i) any "Event of Default" under, and as
defined in, the Intercreditor Agreement, or (ii) any default under, or breach of
any provision of, this Mortgage after the expiration of any cure period
expressly provided herein (or if no cure period is specified, after notice by
Mortgagee to Mortgagor and, in the case of a non-monetary default, thirty (30)
days opportunity to cure).
"Financing Transfer" means the mortgage, granting of a lien or security
interest or other hypothecation of all or a portion of the Property by the
Mortgagor to a Transferee in connection with any financing or refinancing by
Mortgagor.
"HET" means Harrah's Entertainment, Inc., a Delaware corporation.
2
<PAGE>
"HET/JCC Agreement" means that certain HET/JCC Agreement dated
October 29, 1998, by and among JCC, HET and HOCI or any successor agreement
thereto or any substitute agreement therefor providing for the furnishing of
the Minimum Payment Guaranty, as the same (or any successor or substitute)
may be amended, modified, restated or supplemented from time to time.
"HJC" means Harrah's Jazz Company, a Louisiana general partnership.
"HOCI" means Harrah's Operating Company, Inc., a Delaware corporation.
"Holders" means individually, collectively and interchangeably the
present and the future holders of the Secured Obligations.
"Improvements" shall have the meaning assigned in Granting Clause (b)
hereof.
"Incorporeal Rights" shall have the meaning assigned in Granting Clause
(e) hereof.
"Indentures" means, collectively, (i) that certain Indenture pursuant
to which JCC has issued Senior Subordinated Notes due 2009 with Contingent
Payments, entered into by JCC, JCC Holding Company and the Trustee, dated as of
the Plan Effective Date, and (ii) that certain Indenture pursuant to which JCC
has issued Senior Subordinated Contingent Notes due 2009 entered into by JCC,
JCC Holding Company and the Trustee, dated as of the Plan Effective Date, as
such agreements may be amended, modified, restated or supplemented from time to
time.
"Insurance Proceeds" shall have the meaning assigned in Granting Clause
(e)(ii) hereof.
"Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of the Plan Effective Date, among JCC, the Minimum Payment Guarantors,
Administrative Agent and the Trustee, as the same may be amended, modified,
restated or supplemented from time to time.
"JCC" means Jazz Casino Company, L.L.C., a Louisiana limited liability
company.
"Land" shall have the meaning assigned in Granting Clause (b).
"Landlord" means Rivergate Development Corporation, a Louisiana public
benefit corporation.
"LGCB" means, collectively, the Louisiana Gaming Control Board, its
successors and assigns.
"Louisiana Gaming Regulations" means the Louisiana Economic Development
and Gaming Corporation Act, La. R.S. 27:201 et seq. and the rules and
regulations thereunder and the Louisiana Gaming Control Law, La. R.S. 27:1 et
seq., and the rules and regulations thereunder, collectively, as such statutes
and regulations may be amended from time to time.
"Minimum Payment Guarantors" means HET and HOCI or any successor or
substitute guarantor providing a Minimum Payment Guaranty in accordance with the
requirements of the
3
<PAGE>
Casino Operating Contract.
"Minimum Payment Guaranty" shall have the meaning set forth in the
Intercreditor Agreement.
"Minimum Payment Guaranty Documents" shall have the meaning set forth
in the Intercreditor Agreement.
"Mortgage" means this Act of Mortgage and Collateral Assignment, as
amended, modified, restated or supplemented from time to time.
"Mortgagor" shall have the meaning set forth in the appearance clause
of this Mortgage.
"Mortgagee" shall have the meaning set forth in the appearance clause
of this Mortgage.
"New Bonds" means, collectively, the Senior Subordinated Notes due 2009
with Contingent Payments and the Senior Subordinated Contingent Notes due 2009
issued pursuant to the Indentures.
"Ordinary Course Leases" means leases or subleases granted to other
persons or entities by Mortgagor in the ordinary course of business which do not
materially interfere with the conduct of the business of Mortgagor or any of its
subsidiaries, or do not materially detract from the nature of the related assets
of Mortgagor or any of its subsidiaries.
"Permitted Exceptions" shall have the meaning assigned in Section 1 of
this Mortgage.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan Effective Date" means the "Effective Date" under and as defined
in the Third Amended Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code, as modified through September 3, 1998, as confirmed by order of
the United States Bankruptcy Court for the Eastern District of Louisiana on
October 13, 1998 in the following proceedings: In re Harrah's Jazz Company, No.
95-14545 TMB, In re Harrah's Jazz Finance Corp., No. 95-14544 TMB, and In re
Harrah's New Orleans Investment Company, No. 95-14871 TMB, as the same may be
amended, modified or supplemented from time to time.
"Premises" means the immovable property in the Parish of Orleans more
particularly described on Exhibit "1" hereto annexed.
"Property" shall have the meaning assigned at the end of the Granting
Clauses of this Mortgage.
"Rents" shall have the meaning assigned in Granting Clause (e)(iv)
hereof.
"Rights and Privileges" shall have the meaning assigned in Granting
Clause (d) hereof.
4
<PAGE>
"Secured Creditors" means, collectively, (i) the Minimum Payment
Guarantors, (ii) the Administrative Agent and the Banks and other lenders under
and from time to time signatory to the Credit Agreement, (iii) the Trustee and
the holders from time to time of the New Bonds, and (iv) if one or more Banks or
other lenders (or any affiliate thereof) under and from time to time signatory
to the Credit Agreement enter into one or more interest rate protection
agreements, including, without limitation, interest rate hedges, swaps, caps,
floors, collars and similar agreements with, or guaranteed by Mortgagor, any
such Bank or lender (or any affiliate thereof) (even if such bank or lender
ceases to be a party to the Credit Agreement) so long as such Bank or lender (or
any affiliate thereof) participates in the extension of such interest rate
protection agreements and their subsequent assigns, if any.
"Secured Obligations" means individually, collectively and
interchangeably, (i) all Protective Advances (as defined in the Intercreditor
Agreement), (ii) all present and future indebtedness, obligations, including,
without limitation, the Minimum Payment Obligations (as defined in the
Intercreditor Agreement), and liabilities owed by JCC to the Minimum Payment
Guarantors under the Minimum Payment Guaranty Documents, including, without
limitation, the HET/JCC Agreement, (iii) all present and future indebtedness,
obligations, including, without limitation, the New Bond Obligations (as defined
in the Intercreditor Agreement), and liabilities owed by JCC to any and all
present and future holders of the New Bonds under the Indentures, (iv) all
present and future indebtedness, obligations, including, without limitation, the
Credit Agreement Obligations (as defined in the Intercreditor Agreement), and
liabilities owed by JCC to the Banks under the Credit Documents, including,
without limitation, the Credit Agreement, and (v) all Other Obligations (as
defined in the Intercreditor Agreement), (vi) all other Obligations (as defined
in the Intercreditor Agreement), (vii) all obligations of Mortgagor, as
guarantor or otherwise, to the Secured Creditors with respect to any of the
foregoing Secured Obligations, and (viii) all sums owed by Mortgagor under this
Mortgage, including any Advances, or any one or more of the foregoing, and any
and all promissory notes, bonds, loan agreements, indentures and other
instruments or documents evidencing such present and/or future indebtedness,
obligations and liabilities, including any amendments thereto, extensions,
renewals and refinancings thereof, and replacements, substitutions and
consolidations thereof, whether such obligations are committed or purely
discretionary, and whether absolute or contingent, liquidated or unliquidated,
voluntary or involuntary, determined, due or to become due, and whether now
existing or hereafter arising, whether JCC or Mortgagor is obligated alone or
with others on a "solidary" or "joint and several" basis, as a principal obligor
or as a surety, guarantor, or endorser, all up to a maximum secured amount that
may be outstanding at any time and from time to time of U.S. $10,000,000,000.00,
including, but not limited to, all Advances. NOTWITHSTANDING ANY OTHER PROVISION
OF THIS MORTGAGE, THE MAXIMUM AMOUNT OF THE SECURED OBLIGATIONS SECURED HEREBY
SHALL BE LIMITED TO U.S. $10,000,000,000.00.
"Shared Security Documents" shall have the meaning assigned that term
in the Intercreditor Agreement.
"Significant Transaction" shall have the meaning assigned that term in
the Certificate of Incorporation of JCC Holding Company, a Delaware corporation
and sole member of Mortgagor.
5
<PAGE>
"Taxes" means any taxes, assessments, forced contributions, and other
governmental charges in the nature thereof, general and special, ordinary and
extraordinary, of every nature and kind whatsoever which may be levied, assessed
or imposed upon the Property and payable by Mortgagor, whether any or all of
such Taxes be levied directly or indirectly, including, to the extent
applicable, "in lieu" taxes.
"Transfer" means the sale, exchange, lease or other disposition of all
or a portion of the Property by the Mortgagor to a Transferee.
"Transferee" means any Person to whom a Transfer or a Financing
Transfer is made.
"Trustee" means Norwest Bank Minnesota, National Association, as
Trustee under the Indentures (together with any successor Trustee).
"Uniform Commercial Code" means the Louisiana Civil Code Articles 3278
et seq., La. R.S. Section 9:4401, La. R.S. Sections 9:5386 and 5388 and La. R.S.
Section 10:9-101 et seq., as such statutes may be amended from time to time.
GRANTING CLAUSES.
To secure the full and prompt payment and performance of the Secured
Obligations, up to a maximum secured amount that may be outstanding at any time
and from time to time of U.S. $10,000,000,000.00, MORTGAGOR HEREBY MORTGAGES,
AFFECTS, AND HYPOTHECATES, IN FAVOR OF MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS
FOR THE BENEFIT OF THE HOLDERS all of Mortgagor's estate, right, title and
interest, whether now owned or hereafter acquired, whether as owner, lessor,
lessee, or otherwise, and whether vested or contingent, and including all of
Mortgagor's rights to perform all obligations under and to receive the benefits
of any leases, in and to all of the following described land (immovable
property) and interests in land (immovable property), leases, leasehold
interests, estates, servitudes, rights, buildings, other constructions,
improvements, property, fixtures, component parts, machinery and equipment to
the full extent that such property is susceptible of mortgage under the
Louisiana Civil Code, Louisiana Revised Statutes, and other provisions of
Louisiana law; grants a continuing security interest in favor of Mortgagee and
its successors and assigns, as secured party for the benefit of the Holders, in
all property and rights described below, whether now owned or hereafter
acquired, that are susceptible of a security interest under the Uniform
Commercial Code or any other provision of Louisiana law; and does further
affect, hypothecate, collaterally assign and pledge unto and in favor of
Mortgagee and its successors and assigns, as collateral assignee for the benefit
of the Holders, all present and future leases and rents, as well as all other
property and rights described below, whether now owned or hereinafter acquired,
that are susceptible of collateral assignment under the Uniform Commercial Code
or any other provision of Louisiana law:
(a) all of Mortgagor's present and future right, title and
interest, presently or in the future, in and to the Premises,
together with Mortgagor's right, title, and interest in all
constructions and improvements on the Premises and the
component parts thereof;
6
<PAGE>
(b) TOGETHER with all buildings, other constructions, structures,
improvements, fixtures, additions, enlargements, extensions,
modifications or repairs of every kind and description, now or
hereafter erected or placed on the Premises, or thereunto
belonging or appertaining, which may from time to time be
owned or leased by Mortgagor, or which may be used or useable
in connection with any present or future use or operations of
the Premises, whether now owned or hereinafter acquired by
Mortgagor, including all parking areas, roads, driveways,
walks, fences, walls, beams, recreation facilities, drainage
facilities, lighting facilities and other site improvements,
all water, sanitary and storm sewer, drainage, electricity,
steam, gas, telephone and other utility equipment and
facilities, all plumbing, lighting, heating, ventilating,
air-conditioning, refrigerating, incinerating, compacting,
fire protection and sprinkler, surveillance and security,
vacuum cleaning, public address and communications equipment
and systems, all kitchen and laundry appliances, screens,
awnings, floor coverings, partitions, elevators, escalators,
motors, machinery, pipes, fittings and other types of
equipment and personal property of every kind and description
now or hereafter located on the Premises or attached to the
Improvements (as defined below) which by the nature of their
location thereon or attachment thereto are deemed real or
immovable property under applicable law; and including all
materials intended for the construction, reconstruction,
repair, replacement, alteration, addition or improvement of or
to such buildings, equipment, fixtures, component parts,
structures and improvements, all of which materials shall be
deemed to be part of the Property immediately upon delivery
thereof on the Premises to be part of the Improvements
immediately upon their incorporation therein, together with
all replacements thereof, substitutions therefor, additions
thereto, and any other component parts of any and all such
Property (all of the land described in and subject to this
Mortgage, including the Premises, whether owned in fee or full
ownership by Mortgagor or affected by leases in which
Mortgagor has an interest, is collectively referred to as the
"Land," and all of the buildings, other constructions,
structures, improvements and component parts of the Land are
collectively referred to as the "Improvements");
(c) TOGETHER with Mortgagor's rights in and to any supplement,
modification, amendment, novation, reconduction, restatement,
or replacement of any of the leases affecting the Premises;
(d) TOGETHER with all of the rights, way, privileges, servitudes,
easements, tenements, hereditaments, appurtenances and
advantages belonging to or in anywise appertaining to any of
the Property or any part thereof (collectively, the "Rights
and Privileges"), including, without limitation, the Rights
and Privileges, if any, of Mortgagor in and to the land lying
in the streets, roads or avenues, open or proposed, in front
of or adjoining the Land, and in and to any alleys or
passages, rights of ingress or egress, riparian rights, air
rights, development rights, and all other Rights and
Privileges, whatsoever, in any way belonging, relating or
appertaining to any of the Property, or any part thereof,
whether now owned or hereafter acquired by Mortgagor; and
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(e) TOGETHER with the following rights and privileges (the
"Incorporeal Rights"):
(i) Any and all of Mortgagor's present and future right,
title and interest in and to the proceeds of the
sale, transfer, financing, refinancing or conveyance
or conversion into cash or liquidated claims, whether
voluntary or involuntary, of all or any of the
Property, including all title insurance proceeds
under any title insurance policy now or hereafter
held by Mortgagor, all rights, dividends and other
claims of any kind whatsoever (including damage,
secured, unsecured, priority and bankruptcy claims)
relating to the Property, the rights of Mortgagor to
receive such sale proceeds directly from the
purchaser or purchasers, and further to enforce any
rights that Mortgagor may have to collect such sale
proceeds, including without limitation, Mortgagor's
right to commence appropriate collection actions
against the purchaser or purchasers thereof;
(ii) Any and all of Mortgagor's present and future rights,
title and interest in and to the unearned insurance
premiums and proceeds of insurance affecting all or
any part of the Property, including the right to
receive such unearned insurance premiums and
insurance proceeds directly from the insurer and,
whether applicable, to enforce any rights that
Mortgagor may have to collect such amounts
("Insurance Proceeds");
(iii) Any and all of Mortgagor's present and future right,
title and interest in and to the proceeds of any
award or claim for direct or consequential damages
relating to any condemnation, expropriation,
conveyance, or other taking of all or any part of the
Property by any governmental authority, including,
without limitation, awards for severance damages, and
further including the right to receive such
condemnation proceeds directly from such a
governmental authority and, where applicable, to
enforce any rights that Mortgagor may have to collect
such condemnation proceeds as provided herein
("Condemnation Proceeds");
(iv) Any and all present and future leases, subleases or
other occupancy agreements affecting the Property,
whether or not of record, for the use or occupancy of
all or any part of the Property, together with all
amendments, supplements, consolidations,
replacements, restatements, extensions, renewals and
other modifications of any thereof, and together with
all guarantees of any of the obligations of the
tenants under any of said leases (the "Assigned
Leases"), and all rents, fruits, income, and profits
therefrom (collectively, the "Rents"), including
without limitation, any and all rents, income,
profits, bonuses, revenues, royalties, cash or
security deposits, advances, rentals and other
payments, and further including Mortgagor's rights to
enforce all Assigned Leases and to receive and
enforce any rights that Mortgagor might have to
collect Rent;
(v) Any and all of Mortgagor's present and future right,
title and interest and
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other claims or demands that Mortgagor now
has or may hereafter acquire against anyone with
respect to any damage to all or any part of the
Improvements, including without limitation, damages
arising or resulting from any defect in or with
respect to the design or construction of all or any
portion of the Improvements, or arising from any
default under any construction, architectural or
engineering contract or agreement relating to the
Improvements;
(vi) Any and all escrow payments paid to Mortgagor
pursuant to any documents executed in connection with
the Secured Obligations; and
(vii) Any and all present and future options to sell or to
lease the Property, or any interests therein.
(f) All of Mortgagor's right, title and interest, presently or in
the future in and to the Land and any other real or immovable
property described in this Mortgage, whether as owner, lessee,
sublessee or otherwise.
All of the foregoing property and rights described in these Granting Clauses,
individually, collectively and interchangeably, including, without limitation,
any and all of Mortgagor's present and future property and rights subject to
this Mortgage, are referred to herein as the "Property."
MORTGAGE PROVISIONS.
Mortgagor hereby declares, acknowledges, covenants and agrees as
follows:
1. Permitted Exceptions. This Mortgage is made and accepted subject to
the exceptions set forth on Exhibit "2" hereto annexed and as otherwise agreed
to by Mortgagee in writing (collectively, the "Permitted Exceptions").
2. Acknowledgment of Collateral Agent. Mortgagor declares and
acknowledges that the original Mortgagee is contemplated to be Mortgagee in its
capacity as Collateral Agent under the Intercreditor Agreement. Mortgagee
declares that the taxpayer identification number of Mortgagee is accurately set
forth in the appearance clause to this Mortgage. Mortgagor further declares and
acknowledges that the Secured Obligations may be transferred or negotiated one
more times and that the Holders shall include any and all holder or holders of
the Secured Obligations from time to time.
3. Future Advances. This Mortgage has been executed by Mortgagor
pursuant to Louisiana Civil Code Article 3298 and other applicable laws,
including the Uniform Commercial Code, for the purpose of securing the Secured
Obligations that may now be existing and/or that may arise in the future as
provided herein, with the preferences and priorities provided under applicable
Louisiana law.
4. Maximum Amount. In accordance with the requirements of applicable
law, including Louisiana Civil Code Article 3288 and La. R.S. Section 9:4401,
Mortgagor acknowledges,
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notwithstanding any other provision of this Mortgage or any other document to
the contrary, the maximum amount of Secured Obligations secured hereby that may
be outstanding at any time and from time to time shall be U.S.
$10,000,000,000.00.
5. Term. This Mortgage will remain in effect until all of the Secured
Obligations are fully satisfied and there is no agreement or commitment to
advance any additional indebtedness or other obligations under any of (i) the
Minimum Payment Guaranty Documents, including, without limitation, the HET/JCC
Agreement, (ii) the Indentures, (iii) the Credit Documents, including, without
limitation, the Credit Agreement, or (iv) the Shared Security Documents,
including this Mortgage. At such time, upon written request from Mortgagor,
Mortgagee shall execute and deliver to Mortgagor a written cancellation
instrument.
6. Recordation and Filing. Mortgagor authorizes Mortgagee to file
multiple originals, or photocopies, carbon copies, or facsimile copies of this
Mortgage and appropriate financing statements with the appropriate filing
officer in the State of Louisiana pursuant to the provisions of the Uniform
Commercial Code. Mortgagor's employer identification number is accurately set
out on the first page of this Mortgage. Mortgagor will not change its employer
identification number or its name, identity or corporate structure or address so
that any financing statement filed in connection herewith may become seriously
misleading unless and until it notifies Mortgagee in writing and executes all
new appropriate financing statements or other such documents as Mortgagee may
reasonably require, with Mortgagor being required to pay the cost of such
documentation and the filing thereof as provided above.
7. Representations and Warranties. Mortgagor hereby represents and
warrants to Mortgagee that: (a) Mortgagor has a valid and enforceable fee
interest in and to the Premises, subject to the Permitted Exceptions; (b) none
of the Property has heretofore been alienated by Mortgagor, and there are no
liens or encumbrances against the Property other than the Permitted Exceptions;
(c) there are no defenses or offsets to this Mortgage or to Mortgagor's
obligations under the Shared Security Documents; (d) Mortgagor has full power
and authority to encumber the Property in the manner and form set forth in this
Mortgage; (e) all consents and approvals to this Mortgage have been obtained;
(f) the Assigned Leases have not been assigned by Mortgagor or, to the knowledge
of Mortgagor, any tenant thereunder; (g) to the knowledge of Mortgagor, as of
the date hereof, the Assigned Leases are in full force and effect and there is
no material default under any Assigned Lease and there is existing no condition
which with the giving of notice or passage of time or both would cause a
material default thereunder; and (h) the execution, delivery and performance of
this Mortgage do not require any consent under, and will not contravene any
provision of or cause a default under, any of the Assigned Leases. Mortgagor
represents and warrants that this Mortgage is and will remain a valid and
enforceable first mortgage on, security interest in and collateral assignment of
the Property pursuant to and in accordance with the terms hereof, subject only
to the Permitted Exceptions, and Mortgagor will preserve title to the Property
and will forever warrant and defend such title and the validity and priority of
the lien of this Mortgage against the claims of all persons.
8. Lien. This Mortgage is intended to encumber, effect, and constitute
a lien on all of the Land, including the Premises, the Improvements and all of
Mortgagor's interest therein and all of the other Property, regardless of
whether Mortgagor's interest therein is that of lessee,
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sublessee, owner or otherwise, and regardless of whether the nature of such
interest changes from time to time from lessee to sublessee to owner or
vice-versa in any combinations, and in any such event the lien of this Mortgage
shall automatically extend to and cover any and all interest of Mortgagor in the
Property without the need of any amendment, supplement, notice, or action of any
kind by Mortgagee. To the extent that this Mortgage is a mortgage in Mortgagor's
interest in the Land or the Improvements as lessor, this Mortgage will cover and
include all of Mortgagor's rights to perform the obligations of the lessor under
any Assigned Lease as well as all of Mortgagor's right to receive the benefits
accruing to the lessor under any Assigned Lease.
9. Assignment of Leases and Rents. This Mortgage includes the
collateral assignment, as security for the Secured Obligations up to the maximum
secured amount that may be outstanding at any time and from time to time of
$10,000,000,000.00, of all Assigned Leases and all Rents, and further includes
Mortgagor's rights to enforce all Assigned Leases and to receive and enforce any
and all rights that Mortgagor might have to collect Rents.
10. Remedies. Subject to Section 33 of this Mortgage, upon the
occurrence and during the continuance of any Event of Default, Mortgagor shall
forthwith upon demand of Mortgagee surrender to Mortgagee possession of the
Property, and Mortgagee shall be entitled to take actual possession of the
Property or any part thereof personally or by its agents or attorneys, and
Mortgagee in its discretion may, in addition to any other rights at law or in
equity, with or without force and with or without process of law, enter upon and
take and maintain possession of all or any part of the Property together with
all documents, books, records, papers and accounts of Mortgagor relating
thereto, and may as attorney-in-fact or agent of Mortgagor, or in its own name
as Mortgagee and under the powers herein granted:
(a) hold, operate, manage or control the Property and conduct the
business, if any, thereof, either personally or by its agents,
and with full power to use such measures, legal or equitable,
as in its discretion it deems proper or necessary to enforce
the payment or security of the income, rents, fruits, issues
and profits of the Mortgaged Property, including actions for
the recovery of Rents, and direct collection of Rents and
other payments from tenants in accordance with the provisions
of La. R.S. Section 9:4401, Mortgagor hereby granting
Mortgagee full power and authority to exercise each and every
one of the rights, privileges and powers herein granted at any
and all times hereafter, without notice to Mortgagor;
(b) cancel or terminate any sublease for any cause or on any
ground which would entitle Mortgagor to cancel the same;
(c) enforce any term and provision of any sublease, including
actions in specific performance;
(d) elect to cancel any sublease made subsequent to this Mortgage
or subordinated to the lien hereof unless this Mortgage has
specifically been made subordinate to such sublease;
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(e) extend or modify any then existing subleases in accordance
with the terms thereof and make new subleases, which
extensions, modifications or new subleases may provide for
terms to expire, or for options to lessees to extend or renew
terms to expire, beyond the final maturity date of the Secured
Obligations and the issuance of a deed or deeds to a purchaser
or purchasers at a foreclosure sale, it being understood and
agreed that any such subleases, and the options or other such
provisions to be contained therein, shall be binding upon
Mortgagor and all persons whose interests in the Property are
subject to the lien hereof and shall be binding also upon the
purchaser or purchasers at any foreclosure sale; and/or
(f) withdraw any monies on deposit with any financial institution
in the name of or on behalf of Mortgagor.
11. Performance of Lease Obligations; Indemnification. Mortgagee shall
not be obligated to perform or discharge, nor does it hereby undertake to
perform or discharge, any obligation, duty or liability under any Assigned
Lease. Mortgagor shall and does hereby agree to indemnify and to hold Mortgagee
harmless of and from all liability, loss or damage which Mortgagee might incur
under said leases or under or by reason of the assignment of any subleases, and
of and from any and all claims or demands whatsoever which may be asserted
against Mortgagee by reason of any alleged obligations or undertakings to
perform or discharge any of the terms, covenants or agreements contained in said
leases, including without limitation any claims arising out of Mortgagee's
negligence or strict liability, but excluding any such claims arising out of
Mortgagee's gross negligence or willful misconduct. Should Mortgagee incur any
such liability, loss or damage under any of said leases, or under or by reason
of the assignment thereof, or in the defense of any claims or demands, the
amount thereof, including costs, expenses and reasonable attorneys' fees and
costs, including reasonable attorneys' fees and costs on appeal, shall be
secured hereby and Mortgagor shall reimburse Mortgagee therefor immediately upon
demand, together with interest at the rate provided in Section 17 of this
Mortgage to the date of reimbursement.
12. Payment and Performance of Secured Obligations. Mortgagor shall
satisfy the Secured Obligations when due in accordance with the terms of the
Minimum Payment Guaranty Documents, including, without limitation, the HET/JCC
Agreement, the Indentures and the Credit Documents, including, without
limitation, the Credit Agreement, as applicable, and shall perform and observe
each of Mortgagor's covenants, agreements and obligations hereunder and
thereunder with respect to the Secured Obligations in accordance with their
respective terms.
13. Maintenance; Waste. Mortgagor shall not directly or indirectly
commit or suffer any waste or stripping of the Property, and Mortgagor shall
keep the Improvements protected and in good order, repair and condition at all
times, and in connection therewith, Mortgagor shall make or shall cause to be
made all repairs, renewals and replacements, structural and non-structural,
exterior and interior, ordinary and extraordinary and foreseen and unforeseen to
the Improvements. From and after the occurrence of an Event of Default,
Mortgagee, as provided under the Intercreditor Agreement, shall have the right,
but shall not be obligated, to take such actions as Mortgagee may deem necessary
to correct or remedy such failure, and any amounts expended or advanced in
connection therewith shall be Advances hereunder and part of the
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Secured Obligations. In such event, Mortgagee and any person designated by
Mortgagee shall have, and is hereby granted, the right to enter upon the
Property at reasonable times and from time to time for the purpose of taking any
such action.
14. Inspections. Mortgagor hereby authorizes Mortgagee, its agents,
representatives or workmen, to enter (a) without prior notice if an Event of
Default has occurred and is continuing or (b) at any reasonable time during
normal business hours after reasonable advance notice to Mortgagor (except that
with respect to any emergency, Mortgagee, its agents, representatives or workmen
may enter during such time of emergency), upon or in the Land and the
Improvements for the purpose of inspecting the same and for the purpose of
exercising any right, power or remedy which Mortgagee is authorized to exercise
under the terms of this Mortgage; provided, however, that no such entry upon or
in the Land or the Improvements shall be construed to be possession of the Land
or the Improvements or to be a cure of any Event of Default or waiver of any
Event of Default.
15. Payment of Taxes and Insurance
(a) If Mortgagor fails to pay or discharge or cause to be paid or
discharged any Taxes within thirty (30) days after the same
became due (and unless (i) Mortgagor is contesting such Taxes
in good faith by appropriate proceedings, (ii) Mortgagor has
established or is maintaining adequate reserve for such Taxes
in accordance with generally accepted accounting principles as
in effect from time to time, or (iii) the failure to pay or
discharge such Taxes will not result in a forfeiture of any
portion of the Property which would have a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects
of Mortgagor with respect to the Premises or be grounds for
declaring a termination of any Assigned Lease (other than
Ordinary Course Leases)), Mortgagee, as provided in Section 4
of the Intercreditor Agreement, shall be authorized (but shall
not be obligated) to pay such Taxes, with full subrogation to
all rights of the taxing authorities by reason of such
payment, and any amounts so paid by Mortgagee shall be
Advances hereunder and part of the Secured Obligations.
(b) If Mortgagor, following written notice from Mortgagee to
Mortgagor and thirty (30) days opportunity to cure, fails to
obtain or maintain any insurance required to be maintained by
Mortgagor under the provisions of the Shared Security
Documents, as applicable, or any other documents executed in
connection with any of the Secured Obligations, Mortgagee, as
provided in Section 4 of the Intercreditor Agreement and this
Mortgage, shall be authorized (but shall not be obligated) to
pay such amounts, including premiums with respect to insurance
which protects Mortgagee's interest only and any amounts so
paid by Mortgagee shall be included within the Advances
hereunder and part of the Secured Obligations.
16. Default in Compliance with Law. If Mortgagor shall fail to comply
with any laws, rules and regulations (including, but not limited to, the
Louisiana Gaming Regulations, to
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the extent applicable to Mortgagor) of all governmental bodies and agencies
having jurisdiction over or authority with respect to the Property (except such
instances of compliance as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of Mortgagor with respect to the Premises) and such noncompliance
continues for thirty (30) days (or any shorter period for compliance to the
extent required by applicable law) following written notice thereof by
Mortgagee, Mortgagee, at Mortgagee's option, may (but shall not obligated to)
take reasonable steps to comply with such law, rule or regulation and pay the
cost thereof, and any amounts expended or advanced in connection therewith shall
constitute Advances and form part of the Secured Obligations.
17. Reimbursement for Advances. Within thirty (30) days following
written demand therefor by Mortgagee to Mortgagor, Mortgagor shall reimburse
Mortgagee or any Secured Creditor (to the extent permitted by the applicable
Shared Security Documents and the Intercreditor Agreement) for any amount(s)
paid or advanced by Mortgagee or such Secured Creditor (i) for Taxes pursuant to
Section 15(a) of this Mortgage, (ii) for insurance pursuant to Section 15(b) of
this Mortgage, (iii) for the cost of keeping the Property in good order, repair
and condition pursuant to Section 13 of this Mortgage, (iv) to comply with
applicable laws, rules or regulations pursuant to Section 16 of this Mortgage,
or (v) for any other purposes set forth herein or permitted hereby or by the
Shared Security Documents and the Intercreditor Agreement, or otherwise
reasonably necessary in connection therewith (including, without limitation,
Advances for the preservation of the lien of this Mortgage). All such amounts
shall constitute Advances hereunder, and such amounts, together with the
interest accrued thereon as hereinafter provided, shall form part of the Secured
Obligations and shall be fully secured hereby. Mortgagor shall pay interest on
any Advances at a rate applicable to overdue loan principal pursuant to Section
1.08(c) of the Credit Agreement from the date(s) of such Advances until
Mortgagor reimburses Mortgagee therefor.
18. Mortgagee's Option to Act Hereunder. None of the provisions of this
Mortgage shall be construed as making it obligatory upon Mortgagee to pay Taxes
or to comply with laws or regulations affecting the Property or to do any other
act with regard to the Property or as causing Mortgagee to become liable for
loss, damage or injury which may result from the nonpayment of Taxes or to do
any other act.
19. Notice of Proceeding Affecting the Property
(a) Mortgagor shall promptly notify Mortgagee of any knowledge
that Mortgagor has or obtains of the commencement of any legal
proceedings (including for condemnation or taking) which could
have a material adverse effect on the Property or the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Mortgagor with
respect to the Premises, and Mortgagor shall immediately, upon
service thereof on or by Mortgagor, deliver to Mortgagee a
true copy of each petition, summons, complaint, notice, and
all other pleadings or papers, served in connection with any
such legal proceeding, and Mortgagee may take such action as
may be necessary to preserve Mortgagee's rights and interests
affected thereby. Mortgagor shall, at its expense,
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diligently prosecute and/or defend (as the case may be) all
such proceedings and shall, upon the request of Mortgagee,
deliver to Mortgagee copies of all papers served in connection
therewith, provided that no settlement or compromise of any
such proceeding shall be made by Mortgagor without Mortgagee's
prior written consent if such settlement or compromise could
reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Mortgagor
with respect to the Premises.
(b) Notwithstanding any provisions of this Mortgage relating to
defaults hereunder, it shall not be a default under this
Mortgage if any Condemnation Proceeds or Insurance Proceeds
are unavailable to Mortgagee because (i) such proceeds have
been applied to the restoration or repair of the Property, or
(ii) such proceeds have been applied in accordance with
Section 11 of the Intercreditor Agreement, or (iii) said
proceeds are used for such other use as Mortgagee may approve
in writing.
20. Additional Documents to Maintain Lien. Mortgagor shall keep valid
and, except for the Permitted Exceptions, unimpaired the lien and privilege
hereby created or to be created and to that end shall execute at any future time
all further instruments as may be necessary or desirable or that may be
reasonably required by Mortgagee to make and keep valid the lien and privilege
of the Mortgage on the Property and each and every part thereof, and to maintain
the priority of the lien and privilege of the Mortgage on the Property.
21. Authentic Evidence. In the event any proceedings are taken
hereunder by way of executory or other process, any and all declarations of
facts made by authentic act before a notary public and in the presence of two
witnesses by a person or persons declaring that such facts lie within his, her
or their knowledge shall constitute authentic evidence of such facts for the
purposes of such executory or other process and also for purposes of La. R.S.
9:3504(D)(6) and La. R.S. 10:9-508, where applicable.
22. Acceleration; Enforcement; Confession of Judgment
(a) Upon an Event of Default, Mortgagee shall have the right to
accelerate the maturity and demand immediate payment of all
Secured Obligations. It shall be lawful for Mortgagee (and
Mortgagor does hereby authorize Mortgagee without notice or
putting Mortgagor in default, a putting in default being
hereby expressly waived), to cause all or singular the
Property to be seized and sold under executory or other legal
process, issued by any court of competent jurisdiction,
without appraisement, and to the highest bidder for cash or on
such terms as Mortgagee may direct; and Mortgagor consents
that the Property may be sold, either as a whole or in such
lots or parcels as Mortgagee may direct in any such
proceedings. Mortgagor hereby expressly waives: (a) the
benefit of appraisement, as provided in Articles 2332, 2336,
2723 and 2724, Louisiana Code of Civil Procedure, and all
other laws conferring the same; (b) the demand and three (3)
days delay accorded by Articles 2639 and 2721, Louisiana Code
of Civil Procedure; (c) the three (3) days delay provided by
Articles 2331 and 2722,
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Louisiana Code of Civil Procedure; and (d) the benefit of the
other provisions of Articles 2331, 2722 and 2723, Louisiana
Code of Civil Procedure, and any other Articles not
specifically mentioned above which would prevent the immediate
seizure and sale of any or all of the Property, and Mortgagor
expressly agrees to the immediate seizure of the Property in
the event of suit hereon.
(b) Mortgagor does hereby name, constitute, and appoint Mortgagee
and Mortgagee's agents as Mortgagor's true and lawful agent
and attorney-in-fact with full power of substitution and with
power for Mortgagee in its name and capacity or in the name
and capacity of Mortgagor to carry out and enforce following
an Event of Default, any or all of the Incorporeal Rights
collaterally assigned and pledged or otherwise encumbered
under this Mortgage and at Mortgagee's sole discretion to file
any claim or to take any other action or proceedings and to
make any settlement of claims, either in its own name or in
the name of Mortgagor or otherwise, that Mortgagee may deem
necessary or desirable in order to collect and enforce the
payment and performance of the obligations owed to Mortgagor
under the Incorporeal Rights. Upon receipt of a written notice
from Mortgagee that an Event of Default exists, the parties to
the Incorporeal Rights are hereby expressly and irrevocably
authorized and directed to pay any and all amounts and perform
any duties, liabilities, or obligations due to Mortgagor
pursuant to any of the Incorporeal Rights to and for Mortgagee
or such nominee as Mortgagee may designate in such notice. The
power of attorney granted to Mortgagee and its agents is
coupled with an interest and may not be revoked by Mortgagor
as long as this Mortgage remains in effect. Mortgagor
specifically declares that nothing in this Mortgage shall
operate (i) to place any responsibility for the control, care,
management, or repair of the Property upon Mortgagee or for
the carrying out of any of the terms or conditions of any
present or future lease that may affect the Property, or (ii)
to make Mortgagee responsible or liable for (A) any waste
committed on the Property by any lessee or by any other party,
(B) the dangerous or defective condition of the Property,
including but not limited to liability as described in
Louisiana Civil Code Articles 2315 through 2324, or (C) any
negligence in the management, upkeep, repair, or control of
the Property that may result in loss, injury, or death to any
lessee or other party. If the Property is transferred by
virtue of any judicial foreclosure proceeding, the Property
may, in Mortgagee's sole discretion, be transferred free and
clear of, and unencumbered by, any and all subordinate leases,
assignments, and contracts. Upon request by Mortgagee
following an Event of Default, Mortgagor will immediately
notify individual obligors and debtors under the Incorporeal
Rights, advising such obligors and debtors of the fact that
their respective agreements and/or obligations have been
collaterally assigned and pledged to Mortgagee. In the event
that Mortgagor should fail to provide such notices for any
reason upon request by Mortgagee, Mortgagor agrees that
Mortgagee may forward appropriate notices to such obligors and
debtors, either in Mortgagee's name or the name of Mortgagor.
(c) Should one or more Events of Default occur or exist, Mortgagee
shall have the additional right, at its sole option, to
separately sell the aforesaid Incorporeal
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Rights, or any part or parts thereof, at private or public
sale, at such price or prices as Mortgagee may deem best,
either for cash or for any other compensation, or on credit,
or for future delivery, without the assumption of any credit
risk. The sale of the aforesaid Incorporeal Rights may be
without appraisement, the benefit of which is also expressly
waived by Mortgagor. Mortgagee may exercise any other remedies
with regard to Mortgagor's rights as may be authorized under
the Uniform Commercial Code or under the applicable laws of
any other applicable state. The sale, lease or other
disposition of the Incorporeal Rights after default may be for
cash, credit, or any combination thereof. Mortgagee may
purchase all or any part of such Incorporeal Rights at public
sale (or if permitted by law, at private sale) and in lieu of
actual payment of any such purchase price, may set-off the
amount of such price against the then outstanding Secured
Obligations.
(d) To the full extent permitted by applicable law, Mortgagor
hereby waives and releases Mortgagee and each Secured Creditor
of and from any and all liability and penalties for failure of
Mortgagee to comply with any statutory or other requirement
imposed upon Mortgagee relating to notices of sale, holding of
sale, or reporting of any sale. Mortgagee shall have the right
to postpone or adjourn any sale or other disposition of the
Incorporeal Rights at any time without giving of notice of any
such postponed or adjourned dates. In the event Mortgagee
seeks to take possession of any or all of the Incorporeal
Rights by court process, or otherwise, Mortgagor hereby
irrevocably waives any bonds and surety or security relating
thereto required by any statute, court rule or otherwise as an
incident to such possession. Mortgagor further waives any
demand for possession prior to the commencement of any suit or
action and waives the right to trial by jury with respect
thereto, and any other action in which Mortgagee is a party.
(e) Nothing herein shall prevent Mortgagee from pursuing any other
remedies available to Mortgagee at law or in equity, including
but not limited to, specific performance, appointment of a
receiver and right of entry and possession.
(f) For purposes of foreclosure under Louisiana executory process
procedures, Mortgagor acknowledges the Secured Obligations and
confesses judgment in favor of Mortgagee in the full amount of
the Secured Obligations, in principal, interest, costs,
expenses, and reasonable attorneys' fees.
23. Appointment of Keeper. If the Property or any part thereof is
seized as an incident to an action for the recognition or the enforcement of
this Mortgage by executory process, ordinary process, sequestration, writ of
fiere facias, or otherwise, and to the extent that the receiver of the Property
is not appointed pursuant to La. R.S. 27:275 et seq., Mortgagor and Mortgagee
hereby agree that the court issuing any such order shall, if petitioned for by
Mortgagee, direct the sheriff to appoint as a keeper of the Property Mortgagee
or any agent designated by Mortgagee, or any person or entity named by Mortgagee
at the time such seizure is requested, or any time thereafter. This designation
is made pursuant to La. R.S. 9:5136 through 5140.2, inclusive, as the same may
be amended, and Mortgagee shall be entitled to all the rights and benefits
afforded thereunder including reasonable compensation, which compensation shall
17
<PAGE>
be secured by this Mortgage.
24. Partial Invalidity. If for any reason any of the provisions of this
Mortgage shall be judicially declared invalid or unenforceable, such declaration
shall not affect the validity or enforceability of the other provisions hereof.
25. Covenants to Abide by Leases. Subject to the terms of this
Mortgage, with respect to all leases now or hereafter mortgaged or required to
be mortgaged hereunder or pursuant to a supplement to or amendment of this
Mortgage (other than Ordinary Course Leases), as of the date such lease becomes
subject to the lien of this Mortgage, Mortgagor does specially covenant as
follows:
(a) Mortgagor shall pay, by no later than the end of any
applicable cure periods granted to Mortgagor under such lease
(with respect to such payment), all rents, additional rents
and other sums required to be paid by Mortgagor under and
pursuant to the provisions of such lease;
(b) Mortgagor shall at all times promptly and faithfully keep and
perform, or cause to be kept and performed, by no later than
the end of any applicable cure periods granted to Mortgagor
under such lease (with respect to such performance), all the
covenants and conditions contained in such lease to be kept
and performed and in all respects conform to and comply with
the terms and conditions of such lease, by no later than the
end of any applicable cure periods granted to Mortgagor
thereunder (with respect to such performance), to the end that
all things shall be done which are necessary to keep
unimpaired the rights of Mortgagor, as tenant under such
lease, and Mortgagor further covenants that it shall not do or
permit anything which will impair or tend to impair the
security of this Mortgage or will be grounds for declaring a
termination of such lease;
(c) Mortgagor shall not, without the prior written consent of
Mortgagee, modify, extend or in any way alter the terms of
such lease or cancel or surrender such lease, or waive,
execute, condone or in any way release or discharge the lessor
thereunder of or from the obligations covenants, conditions
and agreements by said lessor to be done and performed, which,
in any case, would have a material adverse effect on the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Mortgagor with
respect to the Premises;
(d) Mortgagor shall promptly give Mortgagee notice of any default
under such lease or of the receipt by Mortgagor of any notice
of default from the lessor thereunder, shall furnish to
Mortgagee any and all information which it may request
concerning the performance by Mortgagee of the covenants of
such lease, and shall permit Mortgagee or its representative
at all reasonable times to make investigation or examination
concerning the performance by Mortgagor of the covenants of
such lease. To the extent it is within Mortgagor's control to
do so, Mortgagor shall deliver to Mortgagee a copy of such
lease certified by Mortgagor as a true and complete copy
thereof, an estoppel certificate from the lessor under
18
<PAGE>
such lease within twenty (20) days after request by Mortgagee
and in such form and content as shall be satisfactory to
Mortgagee, as well as any and all documentary evidence
received by it showing compliance by Mortgagor with the
provisions of such lease. Mortgagor shall also promptly
deliver to Mortgagee an exact copy of any material notice,
communication, plan, specification or other instrument or
document received or given by it in any way relating to or
affecting such lease;
(e) If Mortgagor shall default in the performance or observation
of any term, covenant or condition of such lease on the part
of Mortgagor as tenant thereunder, to be performed or
observed, then, without limiting the generality of the other
provisions of this Mortgage, and without waiving or releasing
Mortgagor from any of its obligations hereunder, Mortgagee
shall, to the extent permitted by such lease, have the right,
but shall be under no obligation, after the expiration of all
applicable cure periods granted to Mortgagor under such lease
to pay such sum or to perform such term, covenant, or
condition as may be in default, to pay any sums and to perform
any act or take any action as may be appropriate to cause all
of the terms, covenants and conditions of such lease on the
part of Mortgagor to be performed or observed to be promptly
performed or observed on behalf of Mortgagor, to the end that
the rights of Mortgagor in, to and under such lease shall be
kept unimpaired and free from default; provided that, to the
extent Mortgagee is not entitled under such lease to cure
rights on a consecutive basis to those granted to Mortgagor,
Mortgagee may exercise its rights under this paragraph at any
time within the five (5) day period prior to the expiration of
such cure period upon written notice from Mortgagee to
Mortgagor. If Mortgagee shall make any payment or perform any
act or take action in accordance with the preceding sentence,
Mortgagee will notify Mortgagor of the making of any such
payment, the performance of any such act, or the taking of any
such action. In any such event, Mortgagee and any person
designated by Mortgagee shall have and are hereby granted, the
right to enter upon the Land at any time and from time to time
for the purpose of taking any such action. If the lessor under
such lease shall deliver to Mortgagee a copy of any notice of
default sent by said lessor to Mortgagor under such lease,
such notice shall constitute full protection to Mortgagee for
any action taken or omitted to be taken by Mortgagee, in good
faith, in reliance thereon;
(f) Mortgagor shall exercise each individual option, if any, to
extend or renew the term of such lease, and Mortgagor hereby
expressly authorizes and appoints Mortgagee as its
attorney-in-fact to exercise, either jointly or individually,
any such option in the name and upon behalf of Mortgagor,
which power of attorney shall be irrevocable and shall be
deemed to be coupled with an interest;
(g) In the event of any failure by Mortgagor to perform any
covenant to be observed and performed under such lease, the
performance by Mortgagee on behalf of Mortgagor of such
covenant shall not remove or waive, as between Mortgagor and
Mortgagee, the corresponding breach of any covenant by
Mortgagor hereunder,
19
<PAGE>
and any amount so advanced by Mortgagee or any costs incurred
in connection therewith, shall be paid by Mortgagor to
Mortgagee with interest thereon at the rate set forth in
Section 17 of this Mortgage within thirty (30) days after
written demand by Mortgagee to Mortgagor therefor and shall
also be Advances forming part of the Secured Obligations and
shall be fully secured hereby;
(h) Mortgagor covenants and agrees that, if Mortgagor is permitted
by Mortgagee to acquire the lessor's interest under such
lease, or any other estate, title or interest in the premises
covered by such lease, all of Mortgagor's interest in such
premises shall be considered as mortgaged, hypothecated,
collaterally assigned and pledged to Mortgagee and the lien
hereof shall encumber all of such interest with the same force
and effect as though specifically herein mortgaged,
hypothecated, collaterally assigned and pledged, without the
need for any further mortgage, assignment, amendment,
supplement, or other writing. Notwithstanding the foregoing,
if Mortgagee so requests following Mortgagor's acquisition of
the lessor's interest or any other estate, title, or interest
in the leased premises, Mortgagor shall promptly execute and
deliver all further instruments, writings, and other
assurances as Mortgagee may request to confirm the foregoing;
(i) In the event such lease is rejected or disaffirmed by the
lessor thereunder (or by any receiver, trustee, keeper,
custodian or other party who succeeds to the rights of such
landlord) pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar law, Mortgagor covenants
that it will not elect to treat such lease or sublease as
terminated under 11 U.S.C. Section 365(h) or any similar or
successor law or right and hereby assigns to Mortgagee the
sole and exclusive right to make or to refrain from making any
such election, and Mortgagor agrees that any such election, if
made by Mortgagor, shall be void and of no force or effect;
(j) If the lessor under such lease (or any receiver, keeper,
trustee, custodian or other party who succeeds to the rights
of such lessor) rejects or disaffirms such lease pursuant to
any bankruptcy, insolvency, reorganization, moratorium or
similar law and Mortgagee elects to have Mortgagor remain in
possession under any legal right Mortgagor may have to occupy
the premises leased pursuant to such lease, (i) Mortgagor
shall remain in such possession and shall perform all acts
necessary for Mortgagor to retain its legal rights and to
remain in such possession for the unexpired term of such lease
(including all renewals thereof), whether such acts are
required under the then existing terms and provisions of such
lease or otherwise, and (ii) all of the terms and provisions
of this Mortgage and the lien created hereby shall remain in
full force and effect and shall be extended automatically to
such possession, occupancy and interest of Mortgagor; and
(k) Mortgagor immediately upon obtaining knowledge of a breach by
the lessor under such lease (or by any receiver, keeper,
trustee, custodian or other party who succeeds to the rights
of such lessor) or any inability of such lessor (or any such
receiver, trustee, custodian or other party) to perform the
terms and provisions of
20
<PAGE>
such lease (including by reason of a rejection or
disaffirmance of such lease pursuant to any bankruptcy,
insolvency, reorganization, moratorium or similar law), will
notify Mortgagee of any such breach or inability. Mortgagor
shall, at its expense, diligently commence and prosecute any
proceedings as may be necessary or advisable against such
lessor in connection with such breach and shall, upon the
request of Mortgagee, deliver to Mortgagee copies of all
papers served in connection therewith; provided that no
settlement or compromise of any such proceeding shall be made
by Mortgagor without Mortgagee's prior written consent if such
settlement or compromise could have a material adverse effect
on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Mortgagor
with respect to the Premises.
26. Power of Decision. Wherever Mortgagee exercises any right pursuant
to this Mortgage to approve, disapprove or consent, or any arrangement or term
is to be satisfactory to Mortgagee, the decision of Mortgagee to approve or
disapprove or to decide that arrangements or terms are satisfactory or not
satisfactory shall be in the sole discretion of Mortgagee and shall be final and
conclusive.
27. Binding Effect. The covenants herein contained shall bind, and the
benefits and advantages shall inure to, the respective successors and/or assigns
of Mortgagor and Mortgagee.
28. Amendments, Consents and Waivers in Writing and Related Matters
(a) No amendment or waiver of any provision of this Mortgage, nor
any consent by Mortgagee hereunder (including but not limited
to any consent to any departure by Mortgagee therefrom), shall
in any event be effective unless the same shall be in writing
and signed by Mortgagee and, with respect to an amendment, by
all of the parties thereto, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
(b) The provisions of this Mortgage shall be construed as a whole
according to their common meaning, not strictly for or against
any party and consistent with the provisions herein contained,
in order to achieve the objectives and purposes of this
document. Each party and its counsel have reviewed and revised
this Mortgage. Each party agrees that the normal rule of
construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in
the interpretation of this Mortgage.
(c) Any failure of Mortgagee to insist upon the strict performance
by Mortgagor of any of the terms and provisions hereof shall
not be deemed to be a waiver of any of the terms and
provisions hereof, and Mortgagee, notwithstanding any such
failure, shall have the right thereafter to insist upon the
strict performance by Mortgagor of any and all of the terms
and provisions of this Mortgage to be performed by Mortgagor.
Neither Mortgagor nor any person now or hereafter obligated
for the payment of the whole or any part of the sums now or
hereafter secured by this Mortgage shall be relieved of such
obligation by reason of the
21
<PAGE>
failure of Mortgagee to comply with any request of Mortgagor,
or of any other person so obligated, to take action to
foreclose or otherwise enforce any of the provisions of this
Mortgage or any obligations secured by this Mortgage, or by
reason of the release, regardless of consideration, of the
whole or any part of the security held for the indebtedness
secured by this Mortgage, or by reason of any agreement or
stipulation between any subsequent owner or owners of the
Property and Mortgagee extending the time of payment or
modifying the terms of the indebtedness secured hereby or this
Mortgage without first having obtained the consent of
Mortgagor or such other person, and in the latter event,
Mortgagor and all such other persons shall continue to be
liable to make such payment according to the terms of any such
agreement of extension or modification unless expressly
released and discharged in writing by Mortgagee.
(d) Regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien or
encumbrance on the Property, Mortgagee may release the
obligation of anyone at any time liable for any of the Secured
Obligations secured by this Mortgage or any part of the
security held for such Secured Obligations and grant or agree
to such extensions, indulgences and modifications in relation
to the Secured Obligations as Mortgagee may determine, without
the consent of the holder of any such subordinate lien or
encumbrance and without any obligation to give notice of any
kind thereto and without, as to the security or the remainder
thereof, in any way impairing or affecting the lien hereof or
the priority thereof over any subordinate lien or encumbrance.
Any subsequent encumbrances of the Property are hereby, by
virtue of this Section 28(d), specifically given notice of the
foregoing reservation of rights.
(e) Mortgagee may resort for the payment and/or satisfaction of
the Secured Obligations to any other security therefor held by
Mortgagee in such order and manner as Mortgagee may elect.
29. Notices. Except as otherwise expressly provided herein, all notices
or other communications required or permitted to be given or delivered pursuant
to this Mortgage shall be in writing and shall be given by hand delivery,
certified United States mail, prepaid, with return receipt requested, overnight
courier service or facsimile transmission with receipt confirmed. Any party
hereto may from time to time, by notice in writing served upon the other parties
hereto pursuant to this Section 29 designate a different address or person to
whose attention notices shall be given. Notices hereunder shall be deemed given
upon receipt. The addresses of the parties hereto for notices are:
Mortgagor: FP Development Company, L.L.C.
c/o JCC Holding Company
512 S. Peters
New Orleans, LA 70130
Attention: President
22
<PAGE>
Mortgagee: The Bank of New York, as Collateral Agent
10161 Centurion Parkway
Jacksonville, Florida 32256
Attention: Vice President
30. Remedies Cumulative. Each right, power, and remedy of Mortgagee
provided for herein and now or hereafter existing at law, in equity, by statute,
pursuant to any other loan document or otherwise shall be cumulative, and the
exercise by Mortgagee of any one or more of said rights, powers, or remedies
shall not preclude the simultaneous or later exercise by Mortgagee of any or all
of such other rights, powers, or remedies. Nothing in this Mortgage shall be
deemed to limit or modify any security interests or rights or remedies under any
other documents executed in connection with any of the Secured Obligations.
31. Reinscription of Mortgage
(a) Mortgagor shall reinscribe this Mortgage prior to the date on
which the lien of this Mortgage may prescribe by any
applicable prescriptive period.
(b) During the term of this Mortgage, Mortgagor shall cause this
Mortgage to be reinscribed in the manner provided by law in
the records of the Recorder of Mortgages for the Parish of
Orleans at least forty-five (45) days prior to the tenth
(10th) anniversary of the date of this Mortgage and within the
reinscription or continuation period provided in La. R.S.
Section 9:4401 and Louisiana Civil Code Article 3328, as the
same may be amended from time to time.
(c) The parties to this Mortgage hereby waive the production of
mortgage, conveyance, tax, assignment of accounts receivable
and other certificates and relieve and release the Notary
before whom this Mortgage was passed from all responsibilities
and liabilities in connection therewith.
32. Transfers and Financing Transfers; Release of Property.
(a) Mortgagor at any time may effectuate a Transfer or a Financing
Transfer if such Transfer or Financing Transfer has been
approved as a Significant Transaction by the Board of
Directors of JCC Holding Company, subject to any consent
required under the Credit Agreement.
(b) With respect to a Transfer pursuant to Section 32(a) of this
Mortgage, Mortgagee shall release the Property subject to the
Transfer from this Mortgage if either of the following
conditions are satisfied:
(i) Mortgagor provides substitute collateral acceptable
to the Secured Creditors in the form of one or more
letters of credit, securities, guaranties or other
collateral. The Secured Creditors shall not
unreasonably withhold or delay the acceptance of
substitute collateral. In no event shall the Secured
Creditors require substitute collateral having a
value in excess of the value of the Property to be
released.
23
<PAGE>
(ii) Mortgagor grants Mortgagee a first priority pledge
and security interest in Mortgagor's ownership
interest (including any rights to income and profits)
in the Transferee.
(c) With respect to a Financing Transfer pursuant to Section 32(a)
of this Mortgage:
(i) Mortgage shall release such Property from this
Mortgage, provided that (A) the Transferee is not
an Affiliate of the Mortgagor or the Minimum
Payment Guarantors, (B) the financing or
refinancing related to such Financing Transfer is
neither participated in nor guaranteed or credit
supported by the Minimum Payment Guarantors or any
Affiliate thereof, (C) a consent to such release
has been obtained by each of the Administrative
Agent and the Minimum Payment Guarantors, (D) the
amount of any financing or refinancing related to
such Financing Transfer is necessary for the
development of the Property being released and is
in excess of $10,000,000, and (E) any lien in
favor of Morgagee, as collateral agent under the
Intercreditor Agreement, on the limited liability
company interests of Mortgagor pursuant to any
other Shared Security Document shall remain in
full force and effect.
(ii) in any case in which the lien on this Mortgage is
not released pursuant to Section 32(c)(i) of this
Mortgage, Mortgagee shall subordinate this
Mortgage to the obligations secured by the
documents evidencing such Financing Transfer and,
in such event, Mortgagee shall execute and deliver
any subordination or any other document or
instrument reasonably requested by Mortgagor to
effectuate such subordination and to take any
further action necessary to evidence or effectuate
such subordination.
33. Intercreditor Agreement. Notwithstanding any other provision of
this Mortgage or any document or instrument executed by Mortgagor, this Mortgage
and all liens and security interests and rights granted herein, and the priority
thereof, are expressly subject to the provisions of the Intercreditor Agreement
which are incorporated herein by reference and made applicable hereto. In
addition, Mortgagee is the Collateral Agent, as defined in and pursuant to the
terms of the Intercreditor Agreement, and, notwithstanding anything herein to
the contrary, the rights, powers, remedies and obligations of Mortgagee
hereunder shall be subject to the provisions of the Intercreditor Agreement. Any
exercise or waiver by Mortgagee of any of its rights, powers or remedies
hereunder or any other act by Mortgagee hereunder shall be conclusive evidence
of Mortgagee's authority pursuant to the Intercreditor Agreement against all
persons other than the Secured Creditors.
34. GOVERNING LAW. THIS MORTGAGE SHALL BE DEEMED TO BE A NEW YORK
CONTRACT AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (EXCLUDING MATTERS OF CONFLICT OF LAWS), EXCEPT THAT
MATTERS OF TITLE TO THE PROPERTY AND THE CREATION, PERFECTION, PRIORITY AND (TO
THE EXTENT REQUIRED) FORECLOSURE OF ANY MORTGAGES OR OTHER LIENS ON, AND
SECURITY INTERESTS IN, ANY PROPERTY AND MATTERS RELATING TO THE LOUISIANA GAMING
REGULATIONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA.
24
<PAGE>
35. Indemnification. Mortgagor shall indemnify and defend the Mortgagee
and its directors, officers, employees, agents and representatives (each an
"Indemnified Party") from and against all liabilities (including any
environmental liabilities), obligations, claims, losses, damages, penalties,
suits, actions, proceedings, judgments, costs and expenses (including reasonable
attorneys' fees and expenses) (collectively, "Liabilities"), imposed upon,
incurred by or asserted against any Indemnified Party in connection with the
Property or this Mortgage, except to the extent caused by the gross negligence
or willful misconduct of such Indemnified Party. In the event any suit, action
or proceeding (including any investigation or proceeding initiated or conducted
by any governmental authority or agency) is brought against any Indemnified
Party in connection with any Liability, such Indemnified Party shall promptly
notify Mortgagor and Mortgagor shall promptly retain counsel in connection
therewith, which counsel shall be reasonably acceptable to such Indemnified
Party, and shall pay the fees and expenses of such counsel related to such suit,
action or proceeding. The obligations of Mortgagor under this Section 35 shall
survive the release or termination of this Mortgage or the foreclosure or
transfer in lieu of foreclosure of the Property to the extent any Liability
relates to any action or event occurring prior to such release, termination,
foreclosure or transfer.
[Signature page follows]
25
<PAGE>
THUS DONE AND PASSED, on the day, month and year first written
above, in the State and Parish aforesaid, by the undersigned Mortgagee in the
presence of the undersigned Notary and the undersigned competent witnesses,
who hereunto sign their names with Mortgagee after reading of the whole.
WITNESSES TO ALL SIGNATURES:
/s/ Marie A. Moore
- --------------------------------
/s/ Marion W. Weinstock
- --------------------------------
THE BANK OF NEW YORK, not in its
individual capacity, but solely as
Collateral Agent
By: /s/ R. Randall Deen
----------------------------------
Name: R. Randall Deen
----------------------------------
Title: Agent
----------------------------------
/s/ Daniel E. Davillier
---------------------------------------
NOTARY PUBLIC
My commission expires:
SIGNATURE PAGE TO ACT OF MORTGAGE
AND COLLATERAL ASSIGNMENT
<PAGE>
THUS DONE AND PASSED, on the day, month and year first written above, in
the State and County aforesaid, by the undersigned Mortgagor in the presence
of the undersigned first Notary and the undersigned competent witnesses, who
hereunto sign their names with Mortgagor after reading of the whole.
WITNESS: FP DEVELOPMENT, L.L.C., a Louisiana
limited liability company
/s/ Meredith S. Berlin By: /s/ L. Camille Fowler
- -------------------------------- ------------------------------------
Name: L. Camille Fowler
-----------------------------------
/s/ R. Marshall Grodner Title: V.P./Secretary
- -------------------------------- ----------------------------------
/s/ Jorge Jacob Jose
----------------------------
Notary
<PAGE>
Exhibit "1"
Legal Description
<PAGE>
Exhibit "1"
Legal Description
A certain piece or portion of ground, situated in the Parish of Orleans, in
the First District of the City of New Orleans, Square 16, bounded by South
Peters Street, Fulton Street, Lafayette Street and Poydras Street, comprised
of Lots 3, 4, 5, H, A and 10 through 16 inclusive, as shown on a survey plat
by the office of Gandolfo, Kuhn and Associates, designed as Drawing No.
T-182-4, dated october 20, 1998 and is more particularly described as follows:
Begin at the intersection of the east line of South Peters Street, with the
upper line of Poydras Street; thence along said line of Poydras Street,
South 76 degrees 14 minutes 24 seconds East, 68 feet 11 inches 6 eighths to
the east line of Lot 3; thence along said line, South 1 degree 50 minutes
45 seconds East, 92 feet 3 inches 4 eighths to the lower line of Lot A;
thence along said line, South 76 degrees 7 minutes 30 seconds East, 46 feet
6 inches 5 eighths to the west line of Fulton Street; thence along said line,
South 2 degrees 00 minutes 19 seconds East, 277 feet 2 inches 3 eighths to
the lower line of Lafayette Street; thence along said line North 75 degrees
59 minutes 17 seconds West, 117 feet 8 inches 0 eighths to the east line of
South Peters Street; thence along said line, North 1 degree 39 minutes
49 seconds West, 368 feet 6 inches 0 eighths to the upper line of Poydras
Street and the Point of Beginning.
<PAGE>
Exhibit "2"
Permitted Exceptions
<PAGE>
Exhibit "2"
Permitted Exceptions
1. Encroachments as evidenced by the following: iron columns and sign, as
shown on survey T-182-4, last dated October 20, 1998, by Gandolfo, Kuhn
& Associates.
2. Encroachments as evidenced by the following: (i) steps, landings and
ramps on the Fulton Street side; and (ii) concrete sidewalk on the South
Peters Street side, all as shown on survey T-182-4, last dated October
20, 1998, by Gandolfo, Kuhn & Associates.
3. Rights and restrictions as contained in the Grant of Perpetual Real
Right dated December 30, 1982, filed January 5, 1983, as Instrument No.
479320 at Mortgage Office Book 2404, folio 762, as shown on survey
T-182-4, last dated October 20, 1998, by Gandolfo, Kuhn & Associates.
4. Encroachments as evidenced by 17" common wall on Lafayette Street sides,
as shown on survey T-182-4, last dated October 20, 1998, by Gandolfo,
Kuhn & Associates.
5. Encroachments as evidenced by canvas awning onto South Peters Street
right-of-way, as shown on survey T-182-4, last dated October 20, 1998,
by Gandolfo, Kuhn & Associates.
6. Encroachment upon street right-of-ways by the building appurtenant to
the land, wood awning, and canvas awning, as shown on survey T-182-4,
last dated October 20, 1998, by Gandolfo, Kuhn & Associates.
<PAGE>
RECEIPT FOR FILING
WILLIAM L. PRATT
Custodian of Notarial Records
for the Parish of Orleans, State of Louisiana
ROOM B-4 CIVIL COURTS BUILDING
421 LOYOLA AVE., NEW ORLEANS, LA 70112
TELEPHONE: 568-8577
Filed by: Phelps Dunbar, L.L.P.
----------------------------------------------------
Notary Public who passed act:
--------------------------------
Instrument filed: Act of Mortgage and Collateral Assignment
--------------------------------------------
by FP Development, L.L.C. to the Bank of New York
- --------------------------------------------------------------
- --------------------------------------------------------------
<TABLE>
<S> <C>
Registered in Recorded in the Mortgage Office
Conveyance Office Instrument # 488185
-----------------------------------------------
Instrument# Book , Folio
---------------------- ------------------------
Book , Folio New Orleans, Louisiana
------------------ --------------------
New Orleans, Louisiana Date: 10-30-98
-------------------------------------------------
Date: Time: 2:10
--------------------------------------------- -------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.31
SOME OR ALL OF THE SECURED
OBLIGATIONS (AS DEFINED HEREIN)
BEAR INTEREST AT VARIABLE RATES.
UNITED STATES OF AMERICA * ACT OF MORTGAGE
* AND
STATE OF NEW YORK * COLLATERAL ASSIGNMENT
* BY
COUNTY OF NEW YORK * JCC DEVELOPMENT COMPANY, L.L.C.
* IN FAVOR OF
STATE OF LOUISIANA * THE BANK OF NEW YORK,
* AS COLLATERAL AGENT
PARISH OF ORLEANS * FOR THE PRESENT AND FUTURE
* HOLDERS
* OF THE SECURED OBLIGATIONS
* * * * *
BE IT KNOWN, that on this 29th day of October, 1998, effective
as of the Plan Effective Date (as defined below);
BEFORE ME, the undersigned, Notary Public in and for the State of
New York, County of New York, and in the presence of the undersigned competent
witnesses;
PERSONALLY CAME AND APPEARED:
JCC DEVELOPMENT COMPANY, L.L.C., a Louisiana limited liability company
(TIN: 62-1650470), whose registered office in the State of Louisiana is located
at 512 South Peters, New Orleans, Louisiana 70130, and whose mailing address is
512 South Peters, New Orleans, Louisiana 70130, appearing herein by and through
L. Camille Fowler, a duly authorized officer thereof pursuant to a resolution of
its sole member, JCC Holding Company, a Delaware corporation, a certified
extract of which is attached hereto ("Mortgagor"); and
AND BE KNOWN, that on this 29th day of October, 1998, effective as
of the Plan Effective Date (as defined below);
BEFORE ME, the second undersigned, Notary Public in and for the
State of Louisiana, Parish of Orleans, and in the presence of the undersigned
competent witnesses;
PERSONALLY CAME AND APPEARED:
THE BANK OF NEW YORK, a national banking association (TIN:
13-5160382), not in its individual capacity but solely as Collateral Agent
for the present and future holders of the Secured Obligations (as defined
below), whose mailing address is 10161 Centurion Parkway, Jacksonville,
Florida 32256, appearing herein by and through a duly authorized
representative ("Mortgagee");
AND MORTGAGOR AND MORTGAGEE DECLARED THAT:
DEFINITIONS: The following terms shall have the following meanings when
used herein. Capitalized terms used but not otherwise defined herein shall have
the respective meanings set forth in the Intercreditor Agreement.
"ADMINISTRATIVE AGENT" means Bankers Trust Company, in its capacity as
Administrative Agent for the Banks and other lenders under and from time to time
signatory to the Credit Agreement (together with any successor Administrative
Agent).
"ADVANCES" means all advances made by Mortgagee for the protection of
the interests of Mortgagee in the Property and the rights and privileges of
Mortgagee hereunder, including any
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advances identified as "Advances" under this Mortgage, and shall include all
interest payable with respect thereto as set forth in this Mortgage. Advances
under this Mortgage shall include protective advances that may be made, to the
extent permitted by the Intercreditor Agreement, by any Secured Creditor under
any Shared Security Document or any separate security agreements executed
pursuant to any Shared Security Document and affecting any portion of the
Property.
"AFFILIATE" means with respect to any Person, any other Person (i)
directly or indirectly controlling (including, but not limited to, all
directors, officers and partners of such Person), controlled by, or under direct
or indirect common control with, such Person, or (ii) except for purposes of
determining Affiliates of HET, that directly or indirectly owns more than 5% of
any class of the voting securities or capital stock of or equity interests in
such Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"ASSIGNED LEASES" shall have the meaning assigned in Granting Clause
(e)(iv) hereof.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Section 101 et seq.
"BANKS" shall have the meaning set forth in the Intercreditor
Agreement.
"CASINO GROUND LEASE" means that certain Lease Agreement by and between
Landlord, as lessor, and Celebration Park Casino, Inc. (n/k/a Grand Palais
Casino, Inc.), as lessee, dated as of April 27, 1993, recorded on April 27, 1993
in the conveyance records of the Parish of Orleans at Notarial Archives No.
93-018036 as Conveyance Office Instrument No. 68200, as assigned to HJC by
Assignment and Assumption of Sublease, dated as of March 15, 1994, filed March
16, 1994 under Notarial Archives No. 94-13862, as Conveyance Instrument No.
83931, and as amended by Amended Lease Agreement, dated as of March 15, 1994,
recorded on March 16, 1994 in the conveyance records of the Parish of Orleans at
Notarial Archives No. 94-13887 as Conveyance Office Instrument No. 83942, as
amended by Amendment to Lease Agreement, dated as of October 5, 1994, recorded
on October 6, 1994 in the conveyance records of the Parish of Orleans at
Notarial Archives No. 94-46778 as Conveyance Office Instrument No. 94519, and as
amended and restated in that certain Amended and Restated Lease Agreement among
Landlord, Mortgagor and the City of New Orleans, as intervenor, dated as of
October 29, 1998 and recorded in the conveyance records of the Parish of Orleans
at Notarial Archives No. _______ as Conveyance Office Instrument No. ______, as
the same may be assigned, amended, modified, restated or supplemented from time
to time, constituting a sublease of the Casino Premises in connection with a
ground lease created by the City Lease.
"CASINO OPERATING CONTRACT" means that certain Amended and Renegotiated
Casino Operating Contract among HJC, JCC and the State of Louisiana by and
through the LGCB, dated October 29, 1998, as the same may be
amended, modified, restated or supplemented from time to time.
"CASINO PREMISES" means the immovable property in the Parish of Orleans
more particularly described on Exhibit "1" hereto annexed.
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"CONDEMNATION PROCEEDS" shall have the meaning assigned in Granting
Clause (g)(iii) hereof.
"CREDIT AGREEMENT" means that certain Credit Agreement among JCC, JCC
Holding Company, the various banks party thereto from time to time and the
Administrative Agent, dated October 29, 1998, as the same may be
amended, modified, restated, supplemented or extended from time to time.
"CREDIT DOCUMENTS" shall have the meaning set forth in the
Intercreditor Agreement.
"EVENT OF DEFAULT" means (i) any "Event of Default" under, and as
defined in, the Intercreditor Agreement, or (ii) any default under, or breach of
any provision of, this Mortgage after the expiration of any cure period
expressly provided herein (or if no cure period is specified, after notice by
Mortgagee to Mortgagor and, in the case of a non-monetary default, thirty (30)
days opportunity to cure).
"FINANCING TRANSFER" means the mortgage, granting of a lien or security
interest or other hypothecation of all or a portion of the Property by the
Mortgagor to a Transferee in connection with any financing or refinancing by
Mortgagor.
"HET" means Harrah's Entertainment, Inc., a Delaware corporation.
"HET/JCC AGREEMENT" means that certain HET/JCC Agreement dated
October 29, 1998, by and among JCC, HET and HOCI or any successor
agreement thereto or any substitute agreement therefor providing for the
furnishing of the Minimum Payment Guaranty, as the same (or any successor or
substitute) may be amended, modified, restated or supplemented from time to
time.
"HJC" means Harrah's Jazz Company, a Louisiana general partnership.
"HOCI" means Harrah's Operating Company, Inc., a Delaware corporation.
"HOLDERS" means individually, collectively and interchangeably the
present and the future holders of the Secured Obligations.
"IMPROVEMENTS" shall have the meaning assigned in Granting Clause (b)
hereof.
"INCORPOREAL RIGHTS" shall have the meaning assigned in Granting Clause
(e) hereof.
"INDENTURES" means, collectively, (i) that certain Indenture pursuant
to which JCC has issued Senior Subordinated Notes due 2009 with Contingent
Payments, entered into by JCC, JCC Holding Company and the Trustee, dated as of
the Plan Effective Date, and (ii) that certain Indenture pursuant to which JCC
has issued Senior Subordinated Contingent Notes due 2009 entered into by JCC,
JCC Holding Company and the Trustee, dated as of the Plan Effective Date, as
such agreements may be amended, modified, restated or supplemented from time to
time.
"INSURANCE PROCEEDS" shall have the meaning assigned in Granting Clause
(e)(ii) hereof.
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"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement,
dated as of October 29, 1998, among JCC, the Minimum Payment Guarantors,
Administrative Agent and the Trustee, as the same may be amended, modified,
restated or supplemented from time to time.
"JCC" means Jazz Casino Company, L.L.C., a Louisiana limited liability
company.
"LANDLORD" means Rivergate Development Corporation, a Louisiana public
benefit corporation.
"LGCB" means, collectively, the Louisiana Gaming Control Board, its
successors and assigns.
"LOUISIANA GAMING REGULATIONS" means the Louisiana Economic Development
and Gaming Corporation Act, La. R.S. 27:201 et seq. and the rules and
regulations thereunder and the Louisiana Gaming Control Law, La. R.S. 27:1 et
seq., and the rules and regulations thereunder, collectively, as such statutes
and regulations may be amended from time to time.
"MASTER PLAN" means the master plan developed pursuant to Section 4.1
of the Second Floor Sublease with respect to leasing guidelines and other
matters relating to the development and leasing of the Second Floor.
"MINIMUM PAYMENT GUARANTORS" means HET and HOCI or any successor or
substitute guarantor providing a Minimum Payment Guaranty in accordance with the
requirements of the Casino Operating Contract.
"MINIMUM PAYMENT GUARANTY" shall have the meaning set forth in the
Intercreditor Agreement.
"MINIMUM PAYMENT GUARANTY DOCUMENTS" shall have the meaning set forth
in the Intercreditor Agreement.
"MORTGAGE" means this Act of Mortgage and Collateral Assignment, as
amended, modified, restated or supplemented from time to time.
"MORTGAGOR" shall have the meaning set forth in the appearance clause
of this Mortgage.
"MORTGAGEE" shall have the meaning set forth in the appearance clause
of this Mortgage.
"NEW BONDS" means, collectively, the Senior Subordinated Notes due 2009
with Contingent Payments and the Senior Subordinated Contingent Notes due 2009
issued pursuant to the Indentures.
"ORDINARY COURSE LEASES" means leases or subleases granted to other
persons or entities by Mortgagor in the ordinary course of business which do not
materially interfere with the conduct of the business of Mortgagor or any of its
subsidiaries, or do not materially detract from the nature of the related assets
of Mortgagor or any of its subsidiaries.
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"PERMITTED EXCEPTIONS" shall have the meaning assigned in Section 2 of
this Mortgage.
"PERSON" means any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"PLAN EFFECTIVE DATE" means the "Effective Date" under and as defined
in the Third Amended Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code, as modified through September 3, 1998, as confirmed by order of
the United States Bankruptcy Court for the Eastern District of Louisiana on
October 13, 1998 in the following proceedings: In re Harrah's Jazz Company, No.
95-14545 TMB, In re Harrah's Jazz Finance Corp., No. 95-14544 TMB, and In re
Harrah's New Orleans Investment Company, No. 95-14871 TMB, as the same may be
amended, modified or supplemented from time to time.
"PROPERTY" shall have the meaning assigned at the end of the Granting
Clauses of this Mortgage.
"RENTS" shall have the meaning assigned in Granting Clause (e)(iv)
hereof.
"RIGHTS AND PRIVILEGES" shall have the meaning assigned in Granting
Clause (d) hereof.
"SECOND FLOOR" means the second floor of the casino building located on
the Casino Premises.
"SECOND FLOOR SUBLEASE" means that certain Second Floor Non-Gaming
Sublease between Mortgagor, as sublessee, and JCC, as sublessor, dated as of the
Plan Effective Date, as evidenced by that certain Memorandum of Sublease, dated
October 29, 1998, and recorded in the conveyance records of the Parish of
Orleans at Notarial Archives No. _________ as Conveyance Office Instrument No.
______, as the same may be assigned, amended, modified, restated or supplemented
from time to time.
"SECURED CREDITORS" means, collectively, (i) the Minimum Payment
Guarantors, (ii) the Administrative Agent and the Banks and other lenders under
and from time to time signatory to the Credit Agreement, (iii) the Trustee and
the holders from time to time of the New Bonds, and (iv) if one or more Banks or
other lenders (or any affiliate thereof) under and from time to time signatory
to the Credit Agreement enter into one or more interest rate protection
agreements, including, without limitation, interest rate hedges, swaps, caps,
floors, collars and similar agreements with, or guaranteed by Mortgagor, any
such Bank or lender (or any affiliate thereof) (even if such bank or lender
ceases to be a party to the Credit Agreement) so long as such Bank or lender (or
any affiliate thereof) participates in the extension of such interest rate
protection agreements and their subsequent assigns, if any.
"SECURED OBLIGATIONS" means individually, collectively and
interchangeably, (i) all Protective Advances (as defined in the Intercreditor
Agreement), (ii) all present and future indebtedness, obligations, including,
without limitation, the Minimum Payment Obligations (as defined in the
Intercreditor Agreement), and liabilities owed by JCC to the Minimum Payment
Guarantors under the Minimum Payment Guaranty Documents, including, without
limitation, the
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HET/JCC Agreement, (iii) all present and future indebtedness,
obligations, including, without limitation, the New Bond Obligations (as defined
in the Intercreditor Agreement), and liabilities owed by JCC to any and all
present and future holders of the New Bonds under the Indentures, (iv) all
present and future indebtedness, obligations, including, without limitation, the
Credit Agreement Obligations (as defined in the Intercreditor Agreement), and
liabilities owed by JCC to the Banks under the Credit Documents, including,
without limitation, the Credit Agreement, and (v) all Other Obligations (as
defined in the Intercreditor Agreement), (vi) all other Obligations (as defined
in the Intercreditor Agreement), (vii) all obligations of Mortgagor, as
guarantor or otherwise, to the Secured Creditors with respect to any of the
foregoing Secured Obligations, and (viii) all sums owed by Mortgagor under this
Mortgage, including any Advances, or any one or more of the foregoing, and any
and all promissory notes, bonds, loan agreements, indentures and other
instruments or documents evidencing such present and/or future indebtedness,
obligations and liabilities, including any amendments thereto, extensions,
renewals and refinancings thereof, and replacements, substitutions and
consolidations thereof, whether such obligations are committed or purely
discretionary, and whether absolute or contingent, liquidated or unliquidated,
voluntary or involuntary, determined, due or to become due, and whether now
existing or hereafter arising, whether JCC or Mortgagor is obligated alone or
with others on a "solidary" or "joint and several" basis, as a principal obligor
or as a surety, guarantor, or endorser, all up to a maximum secured amount that
may be outstanding at any time and from time to time of U.S. $10,000,000,000.00,
including, but not limited to, all Advances. NOTWITHSTANDING ANY OTHER PROVISION
OF THIS MORTGAGE, THE MAXIMUM AMOUNT OF THE SECURED OBLIGATIONS SECURED HEREBY
SHALL BE LIMITED TO U.S. $10,000,000,000.00.
"SHARED SECURITY DOCUMENTS" shall have the meaning assigned that term
in the Intercreditor Agreement.
"SIGNIFICANT TRANSACTION" shall have the meaning assigned that term in
the Certificate of Incorporation of JCC Holding Company, a Delaware corporation
and sole member of Mortgagor.
"TAXES" means any taxes, assessments, forced contributions, and other
governmental charges in the nature thereof, general and special, ordinary and
extraordinary, of every nature and kind whatsoever which may be levied, assessed
or imposed upon the Property and payable by Mortgagor, whether any or all of
such Taxes be levied directly or indirectly, including, to the extent
applicable, "in lieu" taxes.
"TRANSFER" means the sale, exchange, lease or other disposition of all
or a portion of the Property by the Mortgagor to a Transferee.
"TRANSFEREE" means any Person to whom a Transfer or a Financing
Transfer is made.
"TRUSTEE" means Norwest Bank Minnesota, National Association, as
Trustee under the Indentures (together with any successor Trustee).
"UNIFORM COMMERCIAL CODE" means the Louisiana Civil Code Articles 3278
et seq., La. R.S. Section 9:4401, La. R.S. Sections 9:5386 and 5388 and La. R.S.
Section 10:9-101 et seq., as such statutes may be
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amended from time to time.
GRANTING CLAUSES.
To secure the full and prompt payment and performance of the Secured
Obligations, up to a maximum secured amount that may be outstanding at any time
and from time to time of U.S. $10,000,000,000.00, MORTGAGOR HEREBY MORTGAGES,
AFFECTS, AND HYPOTHECATES, IN FAVOR OF MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS
FOR THE BENEFIT OF THE HOLDERS all of Mortgagor's estate, right, title and
interest, whether now owned or hereafter acquired, whether as owner, lessor,
lessee, or otherwise, and whether vested or contingent, and including all of
Mortgagor's rights to perform all obligations under and to receive the benefits
of any leases, in and to all of the following described land (immovable
property) and interests in land (immovable property), leases, leasehold
interests, estates, servitudes, rights, buildings, other constructions,
improvements, property, fixtures, component parts, machinery and equipment to
the full extent that such property is susceptible of mortgage under the
Louisiana Civil Code, Louisiana Revised Statutes, and other provisions of
Louisiana law; grants a continuing security interest in favor of Mortgagee and
its successors and assigns, as secured party for the benefit of the Holders, in
all property and rights described below, whether now owned or hereafter
acquired, that are susceptible of a security interest under the Uniform
Commercial Code or any other provision of Louisiana law; and does further
affect, hypothecate, collaterally assign and pledge unto and in favor of
Mortgagee and its successors and assigns, as collateral assignee for the benefit
of the Holders, all present and future leases and rents, as well as all other
property and rights described below, whether now owned or hereinafter acquired,
that are susceptible of collateral assignment under the Uniform Commercial Code
or any other provision of Louisiana law:
(a) the Second Floor Sublease, including, without limitation, all
of Mortgagor's present and future right, title and interest,
as such may be amended from time to time, as sublessee, in, to
and under the Second Floor Sublease, and any other lease and
sublease agreements and amendments thereof, affecting the
Second Floor, together with Mortgagor's right, title, and
interest in all constructions and improvements on the Second
Floor and the component parts thereof;
(b) TOGETHER with all constructions, structures, improvements,
fixtures, additions, enlargements, extensions, modifications
or repairs of every kind and description, now or hereafter
erected or placed on the Second Floor, or thereunto belonging
or appertaining, which may from time to time be owned or
leased by Mortgagor, or which may be used or useable in
connection with any present or future use or operations of the
Second Floor, whether now owned or hereinafter acquired by
Mortgagor, including all water, sanitary and storm sewer,
drainage, electricity, steam, gas, telephone and other utility
equipment and facilities, all plumbing, lighting, heating,
ventilating, air-conditioning, refrigerating, incinerating,
compacting, fire protection and sprinkler, surveillance and
security vacuum cleaning, public address and communications
equipment and systems, all kitchen and laundry appliances,
screens, awnings, floor coverings, partitions, elevators,
escalators, motors, machinery, pipes, fittings and other types
of equipment and
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personal property of every kind and description now or
hereafter located on the Second Floor which by the nature of
their location thereon or attachment thereto are deemed real
or immovable property under applicable law; and including all
materials intended for the construction, reconstruction,
repair, replacement, alteration, addition or improvement of or
to such buildings, equipment, fixtures, component parts,
structures and improvements, all of which materials shall be
deemed to be part of the Property immediately upon delivery
thereof to the Second Floor to be part of the Improvements
immediately upon their incorporation therein, together with
all replacements thereof, substitutions therefor, additions
thereto, and any other component parts of any and all such
Property (all of the constructions, structures, improvements
and component parts of the Second Floor are collectively
referred to as the "Improvements");
(c) TOGETHER with Mortgagor's rights in and to any supplement,
modification, amendment, novation, reconduction, restatement,
or replacement of any of the leases affecting the Second
Floor;
(d) TOGETHER with all of the rights, way, privileges, servitudes,
easements, tenements, hereditaments, appurtenances and
advantages belonging to or in anywise appertaining to the
Second Floor or any part thereof (collectively, the "Rights
and Privileges"), including, without limitation, the Rights
and Privileges, if any, of Mortgagor in and to the Casino
Premises, and in and to any alleys or passages, rights of
ingress or egress, riparian rights, air rights, development
rights, and all other Rights and Privileges, whatsoever, in
any way belonging, relating or appertaining to any of the
Property, or any part thereof, whether now owned or hereafter
acquired by Mortgagor; and
(e) TOGETHER with the following rights and privileges (the
"Incorporeal Rights"):
(i) Any and all of Mortgagor's present and future right,
title and interest in and to the proceeds of the
sale, transfer, financing, refinancing or conveyance
or conversion into cash or liquidated claims, whether
voluntary or involuntary, of all or any of the
Property, including all title insurance proceeds
under any title insurance policy now or hereafter
held by Mortgagor, all rights, dividends and other
claims of any kind whatsoever (including damage,
secured, unsecured, priority and bankruptcy claims)
relating to the Property, the rights of Mortgagor to
receive such sale proceeds directly from the
purchaser or purchasers, and further to enforce any
rights that Mortgagor may have to collect such sale
proceeds, including without limitation, Mortgagor's
right to commence appropriate collection actions
against the purchaser or purchasers thereof;
(ii) Any and all of Mortgagor's present and future rights,
title and interest in and to the unearned insurance
premiums and proceeds of insurance affecting all or
any part of the Property, including the right to
receive such unearned insurance premiums and
insurance proceeds directly from the
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insurer and, whether applicable, to enforce any
rights that Mortgagor may have to collect such
amounts ("Insurance Proceeds");
(iii) Any and all of Mortgagor's present and future right,
title and interest in and to the proceeds of any
award or claim for direct or consequential damages
relating to any condemnation, expropriation,
conveyance, or other taking of all or any part of the
Property by any governmental authority, including,
without limitation, awards for severance damages, and
further including the right to receive such
condemnation proceeds directly from such a
governmental authority and, where applicable, to
enforce any rights that Mortgagor may have to collect
such condemnation proceeds as provided herein
("Condemnation Proceeds");
(iv) Any and all present and future leases, subleases or
other occupancy agreements affecting the Property,
whether or not of record, for the use or occupancy of
all or any part of the Property, together with all
amendments, supplements, consolidations,
replacements, restatements, extensions, renewals and
other modifications of any thereof, and together with
all guarantees of any of the obligations of the
tenants under any of said leases (the "Assigned
Leases"), and all rents, fruits, income, and profits
therefrom (collectively, the "Rents"), including
without limitation, any and all rents, income,
profits, bonuses, revenues, royalties, cash or
security deposits, advances, rentals and other
payments, and further including Mortgagor's rights to
enforce all Assigned Leases and to receive and
enforce any rights that Mortgagor might have to
collect Rent;
(v) Any and all of Mortgagor's present and future right,
title and interest and other claims or demands that
Mortgagor now has or may hereafter acquire against
anyone with respect to any damage to all or any part
of the Improvements, including without limitation,
damages arising or resulting from any defect in or
with respect to the design or construction of all or
any portion of the Improvements, or arising from any
default under any construction, architectural or
engineering contract or agreement relating to the
Improvements;
(vi) Any and all escrow payments paid to Mortgagor
pursuant to any documents executed in connection with
the Secured Obligations; and
(vii) Any and all present and future options to sell or to
lease the Property, or any interests therein.
(f) All of Mortgagor's right, title and interest, presently or in
the future, in and to any land and any other real or immovable
property described in this Mortgage, whether as owner, lessee,
sublessee or otherwise.
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All of the foregoing property and rights described in these Granting Clauses,
individually, collectively and interchangeably, including, without limitation,
any and all of Mortgagor's present and future property and rights subject to
this Mortgage, are referred to herein as the "Property."
MORTGAGE PROVISIONS.
Mortgagor hereby declares, acknowledges, covenants and agrees as
follows:
1. SUBORDINATION. Mortgagee, for itself and on behalf of the Holders,
hereby acknowledges that this Mortgage and the mortgage, lien, security interest
and collateral assignment granted by Mortgagor hereunder shall be subject to the
terms of the Second Floor Sublease and the provisions of the Master Plan. All
rights granted Mortgagee on behalf of the Holders in and to the Second Floor and
the Second Floor Sublease pursuant to this Mortgage and the exercise by
Mortgagee of any remedies as provided in this Mortgage shall be subject and
subordinate to Landlord's rights in the Second Floor as set forth in the Second
Floor Sublease and the Master Plan, including, without limitation, the right of
Landlord in and to rent payable pursuant to Section 3.1 of the Second Floor
Sublease.
2. PERMITTED EXCEPTIONS. This Mortgage is made and accepted subject to
the exceptions set forth on Exhibit "2" hereto annexed and as otherwise agreed
to by Mortgagee in writing (collectively, the "Permitted Exceptions").
3. ACKNOWLEDGMENT OF COLLATERAL AGENT. Mortgagor declares and
acknowledges that the original Mortgagee is contemplated to be Mortgagee in its
capacity as Collateral Agent under the Intercreditor Agreement. Mortgagee
declares that the taxpayer identification number of Mortgagee is accurately set
forth in the appearance clause to this Mortgage. Mortgagor further declares and
acknowledges that the Secured Obligations may be transferred or negotiated one
more times and that the Holders shall include any and all holder or holders of
the Secured Obligations from time to time.
4. FUTURE ADVANCES. This Mortgage has been executed by Mortgagor
pursuant to Louisiana Civil Code Article 3298 and other applicable laws,
including the Uniform Commercial Code, for the purpose of securing the Secured
Obligations that may now be existing and/or that may arise in the future as
provided herein, with the preferences and priorities provided under applicable
Louisiana law.
5. MAXIMUM AMOUNT. In accordance with the requirements of applicable
law, including Louisiana Civil Code Article 3288 and La. R.S. Section 9:4401,
Mortgagor acknowledges, notwithstanding any other provision of this Mortgage or
any other document to the contrary, the maximum amount of Secured Obligations
secured hereby that may be outstanding at any time and from time to time shall
be U.S. $10,000,000,000.00.
6. TERM. This Mortgage will remain in effect until all of the Secured
Obligations are fully satisfied and there is no agreement or commitment to
advance any additional indebtedness or other obligations under any of (i) the
Minimum Payment Guaranty Documents, including,
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without limitation, the HET/JCC Agreement, (ii) the Indentures, (iii) the Credit
Documents, including, without limitation, the Credit Agreement, or (iv) the
Shared Security Documents, including this Mortgage. At such time, upon written
request from Mortgagor, Mortgagee shall execute and deliver to Mortgagor a
written cancellation instrument.
7. RECORDATION AND FILING. Mortgagor authorizes Mortgagee to file
multiple originals, or photocopies, carbon copies, or facsimile copies of this
Mortgage and appropriate financing statements with the appropriate filing
officer in the State of Louisiana pursuant to the provisions of the Uniform
Commercial Code. Mortgagor's employer identification number is accurately set
out on the first page of this Mortgage. Mortgagor will not change its employer
identification number or its name, identity or corporate structure or address so
that any financing statement filed in connection herewith may become seriously
misleading unless and until it notifies Mortgagee in writing and executes all
new appropriate financing statements or other such documents as Mortgagee may
reasonably require, with Mortgagor being required to pay the cost of such
documentation and the filing thereof as provided above.
8. REPRESENTATIONS AND WARRANTIES. Mortgagor hereby represents and
warrants to Mortgagee that: (a) Mortgagor has a valid and enforceable leasehold
interest in and to the Second Floor, subject to the Permitted Exceptions; (b)
none of the Property has heretofore been alienated by Mortgagor, and there are
no liens or encumbrances against the Property other than the Permitted
Exceptions; (c) there are no defenses or offsets to this Mortgage or to
Mortgagor's obligations under the Shared Security Documents; (d) Mortgagor has
full power and authority to encumber the Property in the manner and form set
forth in this Mortgage; (e) all consents and approvals to this Mortgage under
the Second Floor Sublease have been obtained; (f) the Assigned Leases have not
been assigned by Mortgagor or, to the knowledge of Mortgagor, any tenant
thereunder; (g) to the knowledge of Mortgagor, as of the date hereof, the
Assigned Leases are in full force and effect and there is no material default
under any Assigned Lease and there is existing no condition which with the
giving of notice or passage of time or both would cause a material default
thereunder; and (h) the execution, delivery and performance of this Mortgage do
not require any consent under, and will not contravene any provision of or cause
a default under, any of the Second Floor Sublease, the Master Plan or the
Assigned Leases. Mortgagor represents and warrants that this Mortgage is and
will remain a valid and enforceable first mortgage on, security interest in and
collateral assignment of the Property pursuant to and in accordance with the
terms hereof, subject only to the Permitted Exceptions, and Mortgagor will
preserve title to the Property and will forever warrant and defend such title
and the validity and priority of the lien of this Mortgage against the claims of
all persons.
9. LIEN. This Mortgage is intended to encumber, effect, and constitute
a lien on the Second Floor Sublease, Improvements and all of Mortgagor's
interest therein and all of the other Property, regardless of whether
Mortgagor's interest therein is that of lessee, sublessee, owner or otherwise,
and regardless of whether the nature of such interest changes from time to time
from lessee to sublessee to owner or vice-versa in any combinations, and in any
such event the lien of this Mortgage shall automatically extend to and cover any
and all interest of Mortgagor in the Property without the need of any amendment,
supplement, notice, or action of any kind by Mortgagee. To the extent that this
Mortgage is a mortgage in Mortgagor's interest in the Second Floor or the
Improvements as lessor, this Mortgage will cover and include all of Mortgagor's
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rights to perform the obligations of the lessor under any Assigned Lease as well
as all of Mortgagor's right to receive the benefits accruing to the lessor under
any Assigned Lease.
10. ASSIGNMENT OF LEASES AND RENTS. This Mortgage includes the
collateral assignment, as security for the Secured Obligations up to the maximum
secured amount that may be outstanding at any time and from time to time of
$10,000,000,000.00, of all Assigned Leases and all Rents (subject to Section 1
hereof), and further includes Mortgagor's rights to enforce all Assigned Leases
and to receive and enforce any and all rights that Mortgagor might have to
collect Rents (subject to Section 1 hereof).
11. REMEDIES. Subject to Sections 1 and 35 of this Mortgage, upon the
occurrence and during the continuance of any Event of Default, Mortgagor shall
forthwith upon demand of Mortgagee surrender to Mortgagee possession of the
Second Floor and the Property, and Mortgagee shall be entitled to take actual
possession of the Property or any part thereof personally or by its agents or
attorneys, and Mortgagee in its discretion may, in addition to any other rights
at law or in equity, with or without force and with or without process of law,
enter upon and take and maintain possession of all or any part of the Property
together with all documents, books, records, papers and accounts of Mortgagor
relating thereto, and may as attorney-in-fact or agent of Mortgagor, or in its
own name as Mortgagee and under the powers herein granted:
(a) hold, operate, manage or control the Property and conduct the
business, if any, thereof, either personally or by its agents,
and with full power to use such measures, legal or equitable,
as in its discretion it deems proper or necessary to enforce
the payment or security of the income, rents, fruits, issues
and profits of the Mortgaged Property, including actions for
the recovery of Rents, and direct collection of Rents and
other payments from tenants in accordance with the provisions
of La. R.S. Section 9:4401, Mortgagor hereby granting
Mortgagee full power and authority to exercise each and every
one of the rights, privileges and powers herein granted at any
and all times hereafter, without notice to Mortgagor;
(b) cancel or terminate any sublease for any cause or on any
ground which would entitle Mortgagor to cancel the same;
(c) enforce any term and provision of any sublease, including
actions in specific performance;
(d) elect to cancel any sublease made subsequent to this Mortgage
or subordinated to the lien hereof unless this Mortgage has
specifically been made subordinate to such sublease, but in no
event including termination of the Second Floor Sublease other
than in accordance with the terms thereof;
(e) extend or modify any then existing subleases in accordance
with the terms thereof and make new subleases, which
extensions, modifications or new subleases may provide for
terms to expire, or for options to lessees to extend or renew
terms to expire, beyond the final maturity date of the Secured
Obligations and the issuance
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of a deed or deeds to a purchaser or purchasers at a
foreclosure sale, it being understood and agreed that any such
subleases, and the options or other such provisions to be
contained therein, shall be binding upon Mortgagor and all
persons whose interests in the Property are subject to the
lien hereof and shall be binding also upon the purchaser or
purchasers at any foreclosure sale; and/or
(f) withdraw any monies on deposit with any financial institution
in the name of or on behalf of Mortgagor.
12. PERFORMANCE OF LEASE OBLIGATIONS; Indemnification. In the event
that Mortgagee or any third party acquires Mortgagor's interest in the Second
Floor Sublease pursuant to this Mortgage (whether by foreclosure, other
enforcement proceeding or otherwise), Mortgagee or such third party, as the case
may be, shall perform or cause to be performed all of Mortgagor's obligations
under the Second Floor Sublease as and to the extent required thereunder;
provided, however, Mortgagee or such third party, as the case may be, shall
remain so obligated only for as long as Mortgagee or such third party, as the
case may be, retains an interest in the Second Floor Sublease. Except as
provided in the immediately preceding sentence, Mortgagee shall not be obligated
to perform or discharge, nor does it hereby undertake to perform or discharge,
any obligation, duty or liability under any Assigned Lease. Mortgagor shall and
does hereby agree to indemnify and to hold Mortgagee harmless of and from all
liability, loss or damage which Mortgagee might incur under said leases or under
or by reason of the assignment of any subleases, and of and from any and all
claims or demands whatsoever which may be asserted against Mortgagee by reason
of any alleged obligations or undertakings to perform or discharge any of the
terms, covenants or agreements contained in said leases, including without
limitation any claims arising out of Mortgagee's negligence or strict liability,
but excluding any such claims arising out of Mortgagee's gross negligence or
willful misconduct. Should Mortgagee incur any such liability, loss or damage
under any of said leases, or under or by reason of the assignment thereof, or in
the defense of any claims or demands, the amount thereof, including costs,
expenses and reasonable attorneys' fees and costs, including reasonable
attorneys' fees and costs on appeal, shall be secured hereby and Mortgagor shall
reimburse Mortgagee therefor immediately upon demand, together with interest at
the rate provided in Section 18 of this Mortgage to the date of reimbursement.
13. PAYMENT AND PERFORMANCE OF SECURED OBLIGATIONS. Mortgagor shall
satisfy the Secured Obligations when due in accordance with the terms of the
Minimum Payment Guaranty Documents, including, without limitation, the HET/JCC
Agreement, the Indentures and the Credit Documents, including, without
limitation, the Credit Agreement, as applicable, and shall perform and observe
each of Mortgagor's covenants, agreements and obligations hereunder and
thereunder with respect to the Secured Obligations in accordance with their
respective terms.
14. MAINTENANCE; WASTE. Mortgagor shall not directly or indirectly
commit or suffer any waste or stripping of the Property, and Mortgagor shall
keep the Improvements protected and in good order, repair and condition at all
times, and in connection therewith, Mortgagor shall make or shall cause to be
made all repairs, renewals and replacements, structural and non-structural,
exterior and interior, ordinary and extraordinary and foreseen and unforeseen to
the Improvements. From and after the occurrence of an Event of Default,
Mortgagee, as provided
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under the Intercreditor Agreement, shall have the right, but shall not be
obligated, to take such actions as Mortgagee may deem necessary to correct or
remedy such failure, and any amounts expended or advanced in connection
therewith shall be Advances hereunder and part of the Secured Obligations. In
such event, Mortgagee and any person designated by Mortgagee shall have, and is
hereby granted, the right to enter upon the Property at reasonable times and
from time to time for the purpose of taking any such action.
15. Inspections. Mortgagor hereby authorizes Mortgagee, its agents,
representatives or workmen, to enter the Second Floor (a) without prior notice
if an Event of Default has occurred and is continuing or (b) at any reasonable
time during normal business hours after reasonable advance notice to Mortgagor
(except that with respect to any emergency, Mortgagee, its agents,
representatives or workmen may enter during such time of emergency) for the
purpose of inspecting the same and for the purpose of exercising any right,
power or remedy which Mortgagee is authorized to exercise under the terms of
this Mortgage; provided, however, that no such entry upon or in the Second Floor
shall be construed to be possession of the Second Floor or to be a cure of any
Event of Default or waiver of any Event of Default.
16. Payment of Taxes and Insurance
(a) If Mortgagor fails to pay or discharge or cause to be paid or
discharged any Taxes payable by Mortgagor within thirty (30)
days after the same became due (and unless (i) Mortgagor is
contesting such Taxes in good faith by appropriate
proceedings and Mortgagor has established or is maintaining
adequate reserve for such Taxes in accordance with generally
accepted accounting principles as in effect from time to time,
or (ii) the failure to pay or discharge such Taxes will not
result in a forfeiture of any portion of the Property which
would have a material adverse effect on the operation of the
Second Floor or be grounds for declaring a termination of the
Second Floor Sublease or any Assigned Lease (other than
Ordinary Course Leases)), Mortgagee, as provided in Section 4
of the Intercreditor Agreement, shall be authorized (but shall
not be obligated) to pay such Taxes, with full subrogation to
all rights of the taxing authorities by reason of such
payment, and any amounts so paid by Mortgagee shall be
Advances hereunder and part of the Secured Obligations.
(b) If Mortgagor, following written notice from Mortgagee to
Mortgagor and thirty (30) days opportunity to cure, fails to
obtain or maintain any insurance required to be maintained by
Mortgagor under the provisions of the Shared Security
Documents, as applicable, or any other documents executed in
connection with any of the Secured Obligations, Mortgagee, as
provided in Section 4 of the Intercreditor Agreement and this
Mortgage, shall be authorized (but shall not be obligated) to
pay such amounts, including premiums with respect to insurance
which protects Mortgagee's interest only and any amounts so
paid by Mortgagee shall be included within the Advances
hereunder and part of the Secured Obligations.
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17. DEFAULT IN COMPLIANCE WITH LAW. If Mortgagor shall fail to
comply with any laws, rules and regulations, including, but not limited to,
the Louisiana Gaming Regulations, of all governmental bodies and agencies
having jurisdiction over or authority with respect to the Property (except
such instances of compliance as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the operation of
the Second Floor) and such noncompliance continues for thirty (30) days (or
any shorter period for compliance to the extent required by applicable law)
following written notice thereof by Mortgagee, Mortgagee, at Mortgagee's
option, may (but shall not obligated to) take reasonable steps to comply with
such law, rule or regulation and pay the cost thereof, and any amounts
expended or advanced in connection therewith shall constitute Advances and
form part of the Secured Obligations.
18. REIMBURSEMENT FOR ADVANCES. Within thirty (30) days following
written demand therefor by Mortgagee to Mortgagor, Mortgagor shall reimburse
Mortgagee or any Secured Creditor (to the extent permitted by the applicable
Shared Security Documents and the Intercreditor Agreement) for any amount(s)
paid or advanced by Mortgagee or such Secured Creditor (i) for Taxes pursuant to
Section 16(a) of this Mortgage, (ii) for insurance pursuant to Section 16(b) of
this Mortgage, (iii) for the cost of keeping the Property in good order, repair
and condition pursuant to Section 14 of this Mortgage, (iv) to comply with
applicable laws, rules or regulations pursuant to Section 17 of this Mortgage,
or (v) for any other purposes set forth herein or permitted hereby or by the
Shared Security Documents and the Intercreditor Agreement, or otherwise
reasonably necessary in connection therewith (including, without limitation,
Advances for the preservation of the lien of this Mortgage). All such amounts
shall constitute Advances hereunder, and such amounts, together with the
interest accrued thereon as hereinafter provided, shall form part of the Secured
Obligations and shall be fully secured hereby. Mortgagor shall pay interest on
any Advances at a rate applicable to overdue loan principal pursuant to Section
1.08(c) of the Credit Agreement from the date(s) of such Advances until
Mortgagor reimburses Mortgagee therefor.
19. MORTGAGEE'S OPTION TO ACT HEREUNDER. None of the provisions of this
Mortgage shall be construed as making it obligatory upon Mortgagee to pay Taxes
or to comply with laws or regulations affecting the Property or to do any other
act with regard to the Property or as causing Mortgagee to become liable for
loss, damage or injury which may result from the nonpayment of Taxes or to do
any other act.
20. NOTICE OF PROCEEDING AFFECTING THE PROPERTY
(a) Mortgagor shall promptly notify Mortgagee of any knowledge
that Mortgagor has or obtains of the commencement of any legal
proceedings (including for condemnation or taking) which could
have a material adverse effect on the Second Floor or the
operation of the Second Floor, and Mortgagor shall
immediately, upon service thereof on or by Mortgagor, deliver
to Mortgagee a true copy of each petition, summons, complaint,
notice, and all other pleadings or papers, served in
connection with any such legal proceeding, and Mortgagee may
take such action as may be necessary to preserve Mortgagee's
rights and interests affected thereby. Mortgagor shall, at its
expense, diligently prosecute and/or defend (as the case may
be) all such proceedings and shall, upon the request of
Mortgagee, deliver to Mortgagee copies of all papers served in
connection
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therewith, provided that no settlement or compromise of any
such proceeding shall be made by Mortgagor without Mortgagee's
prior written consent if such settlement or compromise could
reasonably be expected to have a material adverse effect on
the Second Floor (as part of the Casino Premises) or the
operation of the Second Floor. Mortgagee and Mortgagor
acknowledge that the provisions of this Section 20(a) shall
apply only to the extent such legal proceedings relate solely
to the Second Floor or its operation or to Mortgagor's
interest therein, and not to the Casino Premises generally,
and to the extent any obligations pursuant to this Section
20(a) are not otherwise required to be performed by JCC or any
other entity pursuant to the terms of any document (other than
this Mortgage) which secures the Secured Obligations.
(b) Notwithstanding any provisions of this Mortgage relating to
defaults hereunder, it shall not be a default under this
Mortgage if (i) any Condemnation Proceeds or Insurance
Proceeds are unavailable to Mortgagee because (A) the Landlord
has received or otherwise has priority in such proceeds under
the Casino Ground Lease, (B) such proceeds have been applied
to the restoration or repair of the Casino Premises as
required by the applicable terms of Articles XII and XV, as
the case may be, of the Casino Ground Lease, or (C) such
proceeds have been applied in accordance with Section 11 of
the Intercreditor Agreement, or (ii) said proceeds are used
for such other use as Mortgagee may approve in writing.
21. ADDITIONAL DOCUMENTS TO MAINTAIN LIEN. Mortgagor shall keep valid
and, except for the Permitted Exceptions, unimpaired the lien and privilege
hereby created or to be created and to that end shall execute at any future time
all further instruments as may be necessary or desirable or that may be
reasonably required by Mortgagee to make and keep valid the lien and privilege
of the Mortgage on the Property and each and every part thereof, and to maintain
the priority of the lien and privilege of the Mortgage on the Property.
22. AUTHENTIC EVIDENCE. In the event any proceedings are taken
hereunder by way of executory or other process, any and all declarations of
facts made by authentic act before a notary public and in the presence of two
witnesses by a person or persons declaring that such facts lie within his, her
or their knowledge shall constitute authentic evidence of such facts for the
purposes of such executory or other process and also for purposes of La. R.S.
9:3504(D)(6) and La. R.S. 10:9-508, where applicable.
23. ACCELERATION; ENFORCEMENT; CONFESSION OF JUDGMENT
(a) Upon an Event of Default, Mortgagee shall have the right to
accelerate the maturity and demand immediate payment of all
Secured Obligations. It shall be lawful for Mortgagee (and
Mortgagor does hereby authorize Mortgagee without notice or
putting Mortgagor in default, a putting in default being
hereby expressly waived), to cause all or singular the
Property to be seized and sold under executory or other legal
process, issued by any court of competent jurisdiction,
without appraisement, and to the highest bidder for cash or on
such terms as Mortgagee may direct; and Mortgagor consents
that the Property may be sold,
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either as a whole or in such lots or parcels as Mortgagee may
direct in any such proceedings. Mortgagor hereby expressly
waives: (a) the benefit of appraisement, as provided in
Articles 2332, 2336, 2723 and 2724, Louisiana Code of Civil
Procedure, and all other laws conferring the same; (b) the
demand and three (3) days delay accorded by Articles 2639 and
2721, Louisiana Code of Civil Procedure; (c) the three (3)
days delay provided by Articles 2331 and 2722, Louisiana Code
of Civil Procedure; and (d) the benefit of the other
provisions of Articles 2331, 2722 and 2723, Louisiana Code of
Civil Procedure, and any other Articles not specifically
mentioned above which would prevent the immediate seizure and
sale of any or all of the Property, and Mortgagor expressly
agrees to the immediate seizure of the Property in the event
of suit hereon.
(b) Mortgagor does hereby name, constitute, and appoint Mortgagee
and Mortgagee's agents as Mortgagor's true and lawful agent
and attorney-in-fact with full power of substitution and with
power for Mortgagee in its name and capacity or in the name
and capacity of Mortgagor to carry out and enforce following
an Event of Default, any or all of the Incorporeal Rights
collaterally assigned and pledged or otherwise encumbered
under this Mortgage and at Mortgagee's sole discretion to file
any claim or to take any other action or proceedings and to
make any settlement of claims, either in its own name or in
the name of Mortgagor or otherwise, that Mortgagee may deem
necessary or desirable in order to collect and enforce the
payment and performance of the obligations owed to Mortgagor
under the Incorporeal Rights. Upon receipt of a written notice
from Mortgagee that an Event of Default exists, the parties to
the Incorporeal Rights are hereby expressly and irrevocably
authorized and directed to pay any and all amounts and perform
any duties, liabilities, or obligations due to Mortgagor
pursuant to any of the Incorporeal Rights to and for Mortgagee
or such nominee as Mortgagee may designate in such notice. The
power of attorney granted to Mortgagee and its agents is
coupled with an interest and may not be revoked by Mortgagor
as long as this Mortgage remains in effect. Mortgagor
specifically declares that nothing in this Mortgage shall
operate (i) to place any responsibility for the control, care,
management, or repair of the Property upon Mortgagee or for
the carrying out of any of the terms or conditions of any
present or future lease that may affect the Property, or (ii)
to make Mortgagee responsible or liable for (A) any waste
committed on the Property by any lessee or by any other party,
(B) the dangerous or defective condition of the Property,
including but not limited to liability as described in
Louisiana Civil Code Articles 2315 through 2324, or (C) any
negligence in the management, upkeep, repair, or control of
the Property that may result in loss, injury, or death to any
lessee or other party. If the Property is transferred by
virtue of any judicial foreclosure proceeding, the Property
may, in Mortgagee's sole discretion, be transferred free and
clear of, and unencumbered by, any and all subordinate leases,
assignments, and contracts. Upon request by Mortgagee
following an Event of Default, Mortgagor will immediately
notify individual obligors and debtors under the Incorporeal
Rights, advising such obligors and debtors of the fact that
their respective agreements and/or obligations
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have been collaterally assigned and pledged to Mortgagee. In
the event that Mortgagor should fail to provide such notices
for any reason upon request by Mortgagee, Mortgagor agrees
that Mortgagee may forward appropriate notices to such
obligors and debtors, either in Mortgagee's name or the name
of Mortgagor.
(c) Should one or more Events of Default occur or exist, Mortgagee
shall have the additional right, at its sole option, to
separately sell the aforesaid Incorporeal Rights, or any part
or parts thereof, at private or public sale, at such price or
prices as Mortgagee may deem best, either for cash or for any
other compensation, or on credit, or for future delivery,
without the assumption of any credit risk. The sale of the
aforesaid Incorporeal Rights may be without appraisement, the
benefit of which is also expressly waived by Mortgagor.
Mortgagee may exercise any other remedies with regard to
Mortgagor's rights as may be authorized under the Uniform
Commercial Code or under the applicable laws of any other
applicable state. The sale, lease or other disposition of the
Incorporeal Rights after default may be for cash, credit, or
any combination thereof. Mortgagee may purchase all or any
part of such Incorporeal Rights at public sale (or if
permitted by law, at private sale) and in lieu of actual
payment of any such purchase price, may set-off the amount of
such price against the then outstanding Secured Obligations.
(d) To the full extent permitted by applicable law, Mortgagor
hereby waives and releases Mortgagee and each Secured Creditor
of and from any and all liability and penalties for failure of
Mortgagee to comply with any statutory or other requirement
imposed upon Mortgagee relating to notices of sale, holding of
sale, or reporting of any sale. Mortgagee shall have the right
to postpone or adjourn any sale or other disposition of the
Incorporeal Rights at any time without giving of notice of any
such postponed or adjourned dates. In the event Mortgagee
seeks to take possession of any or all of the Incorporeal
Rights by court process, or otherwise, Mortgagor hereby
irrevocably waives any bonds and surety or security relating
thereto required by any statute, court rule or otherwise as an
incident to such possession. Mortgagor further waives any
demand for possession prior to the commencement of any suit or
action and waives the right to trial by jury with respect
thereto, and any other action in which Mortgagee is a party.
(e) Pursuant to La. R.S. 27:275 et seq., Mortgagee is hereby
authorized and empowered to file a petition to foreclose this
Mortgage in which LGCB is named a nominal defendant and in
which Mortgagee requests the appointment of a receiver as
contemplated by and in accordance with the provisions of the
cited statutes and applicable Louisiana Gaming Regulations.
The filing of a verified petition by Mortgagee with respect to
the Secured Obligations together with a certified copy of this
Mortgage shall constitute prima facie proof of Mortgagor's
default on the Secured Obligations and Mortgagee's right to
enforce the lien of this Mortgage in executory or ordinary
proceedings, at Mortgagee's option, and to the appointment of
a receiver pursuant to applicable law and regulations.
(f) Nothing herein shall prevent Mortgagee from pursuing any other
remedies
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available to Mortgagee at law or in equity, including but not
limited to, specific performance, appointment of a receiver
and right of entry and possession.
(g) For purposes of foreclosure under Louisiana executory process
procedures, Mortgagor acknowledges the Secured Obligations and
confesses judgment in favor of Mortgagee in the full amount of
the Secured Obligations, in principal, interest, costs,
expenses, and reasonable attorneys' fees.
24. APPOINTMENT OF KEEPER. If the Property or any part thereof is
seized as an incident to an action for the recognition or the enforcement of
this Mortgage by executory process, ordinary process, sequestration, writ of
fiere facias, or otherwise, and to the extent that the receiver of the Property
is not appointed pursuant to La. R.S. 27:275 et seq., Mortgagor and Mortgagee
hereby agree that the court issuing any such order shall, if petitioned for by
Mortgagee, direct the sheriff to appoint as a keeper of the Property Mortgagee
or any agent designated by Mortgagee, or any person or entity named by Mortgagee
at the time such seizure is requested, or any time thereafter. This designation
is made pursuant to La. R.S. 9:5136 through 5140.2, inclusive, as the same may
be amended, and Mortgagee shall be entitled to all the rights and benefits
afforded thereunder including reasonable compensation, which compensation shall
be secured by this Mortgage.
25. PARTIAL INVALIDITY. If for any reason any of the provisions of this
Mortgage shall be judicially declared invalid or unenforceable, such declaration
shall not affect the validity or enforceability of the other provisions hereof.
26. COVENANTS TO ABIDE BY LEASES. Subject to the terms of this
Mortgage, with respect to the Second Floor Sublease and any and all other leases
now or hereafter mortgaged or required to be mortgaged hereunder or pursuant to
a supplement to or amendment of this Mortgage (other than Ordinary Course
Leases), as of the date such lease becomes subject to the lien of this Mortgage,
Mortgagor does specially covenant as follows:
(a) Mortgagor shall pay, by no later than the end of any
applicable cure periods granted to Mortgagor under the Second
Floor Sublease or any such lease (with respect to such
payment), all rents, additional rents and other sums required
to be paid by Mortgagor under and pursuant to the provisions
of the Second Floor Sublease or any such lease;
(b) Mortgagor shall at all times promptly and faithfully keep and
perform, or cause to be kept and performed, by no later than
the end of any applicable cure periods granted to Mortgagor
under the Second Floor Sublease or any such lease (with
respect to such performance), all the covenants and conditions
contained in the Second Floor Sublease or such lease to be
kept and performed and in all respects conform to and comply
with the terms and conditions of the Second Floor Sublease or
such lease, by no later than the end of any applicable cure
periods granted to Mortgagor thereunder (with respect to such
performance), to the end that all things shall be done which
are necessary to keep unimpaired the rights of Mortgagor, as
sublessee under the Second Floor Sublease or as tenant under
any
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lease, and Mortgagor further covenants that it shall not do or
permit anything which will impair or tend to impair the
security of this Mortgage or will be grounds for declaring a
termination of the Second Floor Sublease or any lease;
(c) Mortgagor shall not, without the prior written consent of
Mortgagee, modify, extend or in any way alter the terms of the
Second Floor Sublease or any lease or cancel or surrender the
Second Floor Sublease or any lease, or waive, execute, condone
or in any way release or discharge the lessor thereunder of or
from the obligations covenants, conditions and agreements by
said lessor to be done and performed, which, in any case,
would have a material adverse effect Mortgagor's interest in
the Second Floor Sublease or any such lease pursuant to this
Mortgage;
(d) Mortgagor shall promptly give Mortgagee notice of any default
under the Second Floor Sublease or any lease or of the receipt
by Mortgagor of any notice of default from the lessor
thereunder, shall furnish to Mortgagee any and all information
which it may request concerning the performance by Mortgagee
of the covenants of the Second Floor Sublease or any lease,
and shall permit Mortgagee or its representative at all
reasonable times to make investigation or examination
concerning the performance by Mortgagor of the covenants of
the Second Floor Sublease or any lease. To the extent it is
within Mortgagor's control to do so, Mortgagor shall deliver
to Mortgagee a copy of the Second Floor Sublease or any lease
certified by Mortgagor as a true and complete copy thereof, an
estoppel certificate from the lessor under such lease within
twenty (20) days after request by Mortgagee and in such form
and content as shall be satisfactory to Mortgagee, as well as
any and all documentary evidence received by it showing
compliance by Mortgagor with the provisions of the Second
Floor Sublease or any lease. Mortgagor shall also promptly
deliver to Mortgagee an exact copy of any material notice,
communication, plan, specification or other instrument or
document received or given by it in any way relating to or
affecting the Second Floor Sublease or any lease;
(e) If Mortgagor shall default in the performance or observation
of any term, covenant or condition of the Second Floor
Sublease or any lease on the part of Mortgagor as tenant
thereunder, to be performed or observed, then, without
limiting the generality of the other provisions of this
Mortgage, and without waiving or releasing Mortgagor from any
of its obligations hereunder, Mortgagee shall, to the extent
permitted by the Second Floor Sublease or such lease, have the
right, but shall be under no obligation, after the expiration
of all applicable cure periods granted to Mortgagor under the
Second Floor Sublease or any lease to pay such sum or to
perform such term, covenant, or condition as may be in
default, to pay any sums and to perform any act or take any
action as may be appropriate to cause all of the terms,
covenants and conditions of the Second Floor Sublease or any
lease on the part of Mortgagor to be performed or observed to
be promptly performed or observed on behalf of Mortgagor, to
the end that the rights of Mortgagor in, to and under the
Second Floor Sublease or any lease shall be kept unimpaired
and free from default; provided that, to the extent Mortgagee
is not
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entitled under the Second Floor Sublease or such lease to cure
rights on a consecutive basis to those granted to Mortgagor,
Mortgagee may exercise its rights under this paragraph at any
time within the five (5) day period prior to the expiration of
such cure period upon written notice from Mortgagee to
Mortgagor. If Mortgagee shall make any payment or perform any
act or take action in accordance with the preceding sentence,
Mortgagee will notify Mortgagor of the making of any such
payment, the performance of any such act, or the taking of any
such action. In any such event, Mortgagee and any person
designated by Mortgagee shall have and are hereby granted, the
right to enter upon the Second Floor at any time and from time
to time for the purpose of taking any such action. If the
lessor under the Second Floor Sublease or any lease shall
deliver to Mortgagee a copy of any notice of default sent by
said lessor to Mortgagor under the Second Floor Sublease or
any lease, such notice shall constitute full protection to
Mortgagee for any action taken or omitted to be taken by
Mortgagee, in good faith, in reliance thereon;
(f) Mortgagor shall exercise each individual option, if any, to
extend or renew the term of the Second Floor Sublease or any
lease, and Mortgagor hereby expressly authorizes and appoints
Mortgagee as its attorney-in-fact to exercise, either jointly
or individually, any such option in the name and upon behalf
of Mortgagor, which power of attorney shall be irrevocable and
shall be deemed to be coupled with an interest;
(g) In the event of any failure by Mortgagor to perform any
covenant to be observed and performed under the Second Floor
Sublease or any lease, the performance by Mortgagee on behalf
of Mortgagor of such covenant shall not remove or waive, as
between Mortgagor and Mortgagee, the corresponding breach of
any covenant by Mortgagor hereunder, and any amount so
advanced by Mortgagee or any costs incurred in connection
therewith, shall be paid by Mortgagor to Mortgagee with
interest thereon at the rate set forth in Section 18 of this
Mortgage within thirty (30) days after written demand by
Mortgagee to Mortgagor therefor and shall also be Advances
forming part of the Secured Obligations and shall be fully
secured hereby;
(h) Mortgagor covenants and agrees that, if Mortgagor is permitted
by Mortgagee to acquire the lessor's interest under the Second
Floor Sublease or any lease, or any other estate, title or
interest in the premises covered by such lease, all of
Mortgagor's interest in such premises shall be considered as
mortgaged, hypothecated, collaterally assigned and pledged to
Mortgagee and the lien hereof shall encumber all of such
interest with the same force and effect as though specifically
herein mortgaged, hypothecated, collaterally assigned and
pledged, without the need for any further mortgage,
assignment, amendment, supplement, or other writing.
Notwithstanding the foregoing, if Mortgagee so requests
following Mortgagor's acquisition of the lessor's interest or
any other estate, title, or interest in the leased premises,
Mortgagor shall promptly execute and deliver all further
instruments, writings, and other assurances as Mortgagee may
request to confirm the foregoing;
21
<PAGE>
(i) In the event such lease is rejected or disaffirmed by the
lessor thereunder (or by any receiver, trustee, keeper,
custodian or other party who succeeds to the rights of such
landlord) pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar law, Mortgagor covenants
that it will not elect to treat such lease or sublease as
terminated under 11 U.S.C. Section 365(h) or any similar or
successor law or right and hereby assigns to Mortgagee the
sole and exclusive right to make or to refrain from making any
such election, and Mortgagor agrees that any such election, if
made by Mortgagor, shall be void and of no force or effect;
(j) If the lessor under the Second Floor Sublease or any lease (or
any receiver, keeper, trustee, custodian or other party who
succeeds to the rights of such lessor) rejects or disaffirms
the Second Floor Sublease or any lease, as the case may be,
pursuant to any bankruptcy, insolvency, reorganization,
moratorium or similar law and Mortgagee elects to have
Mortgagor remain in possession under any legal right Mortgagor
may have to occupy the premises leased pursuant to the Second
Floor Sublease or any lease, (i) Mortgagor shall remain in
such possession and shall perform all acts necessary for
Mortgagor to retain its legal rights and to remain in such
possession for the unexpired term of such lease (including all
renewals thereof), whether such acts are required under the
then existing terms and provisions of such lease or otherwise,
and (ii) all of the terms and provisions of this Mortgage and
the lien created hereby shall remain in full force and effect
and shall be extended automatically to such possession,
occupancy and interest of Mortgagor; and
(k) Mortgagor immediately upon obtaining knowledge of a breach by
the lessor under the Second Floor Sublease or any lease (or by
any receiver, keeper, trustee, custodian or other party who
succeeds to the rights of such lessor) or any inability of
such lessor (or any such receiver, trustee, custodian or other
party) to perform the terms and provisions of the Second Floor
Sublease or any lease (including by reason of a rejection or
disaffirmance of the Second Floor Sublease or any lease, as
the case may be, pursuant to any bankruptcy, insolvency,
reorganization, moratorium or similar law), will notify
Mortgagee of any such breach or inability. Mortgagor shall, at
its expense, diligently commence and prosecute any proceedings
as may be necessary or advisable against such lessor in
connection with such breach and shall, upon the request of
Mortgagee, deliver to Mortgagee copies of all papers served in
connection therewith; provided that no settlement or
compromise of any such proceeding shall be made by Mortgagor
without Mortgagee's prior written consent if such settlement
or compromise could have a material adverse effect on
Mortgager's interest in the Second Floor Sublease or any
such lease pursuant to this Mortgage.
27. Power of Decision. Wherever Mortgagee exercises any right pursuant
to this Mortgage to approve, disapprove or consent, or any arrangement or term
is to be satisfactory to Mortgagee, the decision of Mortgagee to approve or
disapprove or to decide that arrangements or
22
<PAGE>
terms are satisfactory or not satisfactory shall be in the sole discretion of
Mortgagee and shall be final and conclusive.
28. Binding Effect. The covenants herein contained shall bind, and the
benefits and advantages shall inure to, the respective successors and/or assigns
of Mortgagor and Mortgagee.
29. AMENDMENTS, CONSENTS AND WAIVERS IN WRITING AND RELATED MATTERS
(a) No amendment or waiver of any provision of this Mortgage, nor
any consent by Mortgagee hereunder (including but not limited
to any consent to any departure by Mortgagee therefrom), shall
in any event be effective unless the same shall be in writing
and signed by Mortgagee and, with respect to an amendment, by
all of the parties thereto, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
(b) The provisions of this Mortgage shall be construed as a whole
according to their common meaning, not strictly for or against
any party and consistent with the provisions herein contained,
in order to achieve the objectives and purposes of this
document. Each party and its counsel have reviewed and revised
this Mortgage. Each party agrees that the normal rule of
construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in
the interpretation of this Mortgage.
(c) Any failure of Mortgagee to insist upon the strict performance
by Mortgagor of any of the terms and provisions hereof shall
not be deemed to be a waiver of any of the terms and
provisions hereof, and Mortgagee, notwithstanding any such
failure, shall have the right thereafter to insist upon the
strict performance by Mortgagor of any and all of the terms
and provisions of this Mortgage to be performed by Mortgagor.
Neither Mortgagor nor any person now or hereafter obligated
for the payment of the whole or any part of the sums now or
hereafter secured by this Mortgage shall be relieved of such
obligation by reason of the failure of Mortgagee to comply
with any request of Mortgagor, or of any other person so
obligated, to take action to foreclose or otherwise enforce
any of the provisions of this Mortgage or any obligations
secured by this Mortgage, or by reason of the release,
regardless of consideration, of the whole or any part of the
security held for the indebtedness secured by this Mortgage,
or by reason of any agreement or stipulation between any
subsequent owner or owners of the Property and Mortgagee
extending the time of payment or modifying the terms of the
indebtedness secured hereby or this Mortgage without first
having obtained the consent of Mortgagor or such other person,
and in the latter event, Mortgagor and all such other persons
shall continue to be liable to make such payment according to
the terms of any such agreement of extension or modification
unless expressly released and discharged in writing by
Mortgagee.
(d) Regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien or
encumbrance on the Property, Mortgagee
23
<PAGE>
may release the obligation of anyone at any time liable for
any of the Secured Obligations secured by this Mortgage or any
part of the security held for such Secured Obligations and
grant or agree to such extensions, indulgences and
modifications in relation to the Secured Obligations as
Mortgagee may determine, without the consent of the holder of
any such subordinate lien or encumbrance and without any
obligation to give notice of any kind thereto and without, as
to the security or the remainder thereof, in any way impairing
or affecting the lien hereof or the priority thereof over any
subordinate lien or encumbrance. Any subsequent encumbrances
of the Property are hereby, by virtue of this Section 29(d),
specifically given notice of the foregoing reservation of
rights.
(e) Mortgagee may resort for the payment and/or satisfaction of
the Secured Obligations to any other security therefor held by
Mortgagee in such order and manner as Mortgagee may elect.
30. NOTICES. Except as otherwise expressly provided herein, all notices
or other communications required or permitted to be given or delivered pursuant
to this Mortgage shall be in writing and shall be given by hand delivery,
certified United States mail, prepaid, with return receipt requested, overnight
courier service or facsimile transmission with receipt confirmed. Any party
hereto may from time to time, by notice in writing served upon the other parties
hereto pursuant to this Section 30 designate a different address or person to
whose attention notices shall be given. Notices hereunder shall be deemed given
upon receipt. The addresses of the parties hereto for notices are:
Mortgagor: JCC Development Company, L.L.C.
c/o JCC Holding Company
512 S. Peters
New Orleans, LA 70130
Attention: President
Mortgagee: The Bank of New York, as Collateral Agent
10161 Centurion Parkway
Jacksonville, Florida 32256
Attention: Trust Department
31. GAMING RESTRICTIONS. This Mortgage and the exercise of the remedies
hereunder are and shall remain subject to the Louisiana Gaming Regulations.
32. REMEDIES CUMULATIVE. Each right, power, and remedy of Mortgagee
provided for herein and now or hereafter existing at law, in equity, by statute,
pursuant to any other loan document or otherwise shall be cumulative, and the
exercise by Mortgagee of any one or more of said rights, powers, or remedies
shall not preclude the simultaneous or later exercise by Mortgagee of any or all
of such other rights, powers, or remedies. Nothing in this Mortgage shall be
deemed to limit or modify any security interests or rights or remedies under any
other documents executed in connection with any of the Secured Obligations.
24
<PAGE>
33. Reinscription of Mortgage
(a) Mortgagor shall reinscribe this Mortgage prior to the date on
which the lien of this Mortgage may prescribe by any
applicable prescriptive period.
(b) During the term of this Mortgage, Mortgagor shall cause this
Mortgage to be reinscribed in the manner provided by law in
the records of the Recorder of Mortgages for the Parish of
Orleans at least forty-five (45) days prior to the tenth
(10th) anniversary of the date of this Mortgage and within the
reinscription or continuation period provided in La. R.S.
Section 9:4401 and Louisiana Civil Code Article 3328, as the
same may be amended from time to time.
(c) The parties to this Mortgage hereby waive the production of
mortgage, conveyance, tax, assignment of accounts receivable
and other certificates and relieve and release the Notary
before whom this Mortgage was passed from all responsibilities
and liabilities in connection therewith.
34. Transfers and Financing Transfers; Release of Property.
(a) Mortgagor at any time may effectuate a Transfer or a Financing
Transfer if such Transfer or Financing Transfer has been
approved as a Significant Transaction by the Board of
Directors of JCC Holding Company, subject to any consent
required under the Credit Agreement.
(b) With respect to a Transfer pursuant to Section 34(a) of this
Mortgage, Mortgagee shall release the Property subject to the
Transfer from this Mortgage if either of the following
conditions are satisfied:
(i) Mortgagor provides substitute collateral acceptable
to the Secured Creditors in the form of one or more
letters of credit, securities, guaranties or other
collateral. The Secured Creditors shall not
unreasonably withhold or delay the acceptance of
substitute collateral. In no event shall the Secured
Creditors require substitute collateral having a
value in excess of the value of the Property to be
released.
(ii) Mortgagor grants Mortgagee a first priority pledge
and security interest in Mortgagor's ownership
interest (including any rights to income and profits)
in the Transferee.
(c) With respect to a Financing Transfer pursuant to Section 34(a)
of this Mortgage, Mortgage shall subordinate this Mortgage
to the obligations secured by the documents evidencing such
Financing Transfer and, in such event, Mortgagee shall
execute and deliver any subordination or any other document
or instrument reasonably requested by Mortgagor to
effectuate such subordination and to take any further
action necessary to evidence or effectuate such
subordination.
25
<PAGE>
35. INTERCREDITOR AGREEMENT. Notwithstanding any other provision of
this Mortgage or any document or instrument executed by Mortgagor (other than
the Second Floor Sublease), this Mortgage and all liens and security
interests and rights granted herein, and the priority thereof, are expressly
subject to the provisions of the Intercreditor Agreement which are
incorporated herein by reference and made applicable hereto. In addition,
Mortgagee is the Collateral Agent, as defined in and pursuant to the terms of
the Intercreditor Agreement, and, notwithstanding anything herein to the
contrary, the rights, powers, remedies and obligations of Mortgagee hereunder
shall be subject to the provisions of the Intercreditor Agreement. Any
exercise or waiver by Mortgagee of any of its rights, powers or remedies
hereunder or any other act by Mortgagee hereunder shall be conclusive
evidence of Mortgagee's authority pursuant to the Intercreditor Agreement
against all persons other than the Secured Creditors. Nothing in this
Mortgage shall limit or waive any rights granted to Mortgagee as a "Leasehold
Mortgagee" or the "First Leasehold Mortgagee," as the case may be, under and
as defined in the Casino Ground Lease.
36. GOVERNING LAW. THIS MORTGAGE SHALL BE DEEMED TO BE A NEW YORK
CONTRACT AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK (EXCLUDING MATTERS OF CONFLICT OF LAWS), EXCEPT THAT
MATTERS OF TITLE TO THE PROPERTY AND THE CREATION, PERFECTION, PRIORITY AND (TO
THE EXTENT REQUIRED) FORECLOSURE OF ANY MORTGAGES OR OTHER LIENS ON, AND
SECURITY INTERESTS IN, ANY PROPERTY AND MATTERS RELATING TO THE LOUISIANA GAMING
REGULATIONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA.
37. INDEMNIFICATION. Mortgagor shall indemnify and defend the Mortgagee
and its directors, officers, employees, agents and representatives (each an
"Indemnified Party") from and against all liabilities (including any
environmental liabilities), obligations, claims, losses, damages, penalties,
suits, actions, proceedings, judgments, costs and expenses (including reasonable
attorneys' fees and expenses) (collectively, "Liabilities"), imposed upon,
incurred by or asserted against any Indemnified Party in connection with the
Property or this Mortgage, except to the extent caused by the gross negligence
or willful misconduct of such Indemnified Party. In the event any suit, action
or proceeding (including any investigation or proceeding
26
<PAGE>
initiated or conducted by any governmental authority or agency) is brought
against any Indemnified Party in connection with any Liability, such Indemnified
Party shall promptly notify Mortgagor and Mortgagor shall promptly retain
counsel in connection therewith, which counsel shall be reasonably acceptable to
such Indemnified Party, and shall pay the fees and expenses of such counsel
related to such suit, action or proceeding. The obligations of Mortgagor under
this Section 37 shall survive the release or termination of this Mortgage or the
foreclosure or transfer in lieu of foreclosure of the Property to the extent any
Liability relates to any action or event occurring prior to such release,
termination, foreclosure or transfer.
[Signature page follows]
27
<PAGE>
THUS DONE AND PASSED, on the day, month and year first written above,
in the State and Parish aforesaid, by the undersigned Mortgagor and Mortgagee in
the presence of the undersigned Notary and the undersigned competent witnesses,
who hereunto sign their names with Mortgagor and Mortgagee after reading of the
whole.
WITNESSES TO ALL SIGNATURES: JCC DEVELOPMENT COMPANY, L.L.C., a Louisiana
limited liability company
/s/ Meredith A. Berlin By: /s/ L. Camille Fowler
- ---------------------------- ----------------------------
Meredith A. Berlin
Name: L. Camille Fowler
----------------------------
/s/ R. Marshall Grodner Title: Vice President/Secretary
- ---------------------------- ----------------------------
R. Marshall Grodner
THE BANK OF NEW YORK, a national banking
association, not in its individual capacity,
but solely as Collateral Agent
By: /s/ R. Randall Deen
----------------------------
Name: R. Randall Deen
----------------------------
Title: Agent
----------------------------
/s/ Jorge Jacob Jose
---------------------------------------
NOTARY PUBLIC
My commission expires:
SIGNATURE PAGE TO ACT OF MORTGAGE
AND COLLATERAL ASSIGNMENT
<PAGE>
EXHIBIT 1
CASINO PREMISES
A CERTAIN PORTION OF GROUND, together with all the buildings and improvements
thereon, and all of the rights, ways, privileges, servitudes and advantages
thereunto belonging or in anywise appertaining, situated in the First
Municipal district of the City of New Orleans bounded by Canal, South Peters,
and Poydras Streets, and Convention Center Boulevard shown as Square RS on a
survey plat by the office of Gandolfo, Kuhn & Associates dated October 20,
1998. Drawing No. T-182-3, being more particularly described as follows:
Begin at point A being the southeast intersection of South Peters and Canal
Streets, measure thence along the east or river side line of South Peters
Street South 1 degree 39 minutes 1 second East, a distance of 727.65 feet to
the northerly line of Poydras Street and Point B; thence along said line of
Poydras Street South 76 degrees 14 minutes 24 seconds East, a distance of
540.52 feet to the westerly or land side line of Convention Center Boulevard
and Point C, also being the easterly line of former Delta Street; thence
North 2 degrees 24 minutes 29 seconds West, a distance of 455.48 feet to the
southerly line of Canal Street and Point K thence along said line of Canal
Street, North 52 degrees 44 minutes 2 seconds West, a distance of 661.98 feet
to Point A and the Point of Beginning and containing 7.016 acres.
Together with the existing tunnel portions in the following described
subsurface areas:
Canal Street Portion:
THAT PORTION OF CANAL STREET which lies between two horizontal planes, the
lower plane lying and being at an elevation of-5 feet Cairo Datum and the
upper plane lying and being at an elevation of 30 feet Cairo Datum
(approximate street grade), both as referenced to United States Coast and
Geodetic Survey Benchmark B-96 1991, NGS Published Value having an elevation
of 28.72 feet Cairo Datum, which property forms a portion of the Canal Street
right of way, First Municipal District, City of New Orleans, Orleans Parish,
Louisiana, the horizontal boundaries of which are more fully described as
follows:
Commencing at Point K, being the intersection of the easterly line of former
Delta Street and the southerly line of Canal Street and also being the
northeast corner of Square RS, measure thence along the southerly line of
Canal Street North 52 degrees 44 minutes 02 seconds West, a distance of 87.04
feet to the Point of Beginning. From the Point of Beginning, measure thence
along the southerly line of Canal Street North 52 degrees 44 minutes 02
seconds West, a distance of 129.11 feet to the westerly line of the former
I-310 Tunnel; thence along said line along a curve to the right having a
radius of 1689.02 feet, a distance of 78.94 feet to the northerly line of
said Tunnel; thence along said line South 85 degrees 05 minutes 17 seconds
East, a distance of 104 feet to the easterly line of the former I-310 Tunnel;
thence along said line along a curve to the left having a radius of 1585.02
feet, a distance of 148.4 feet to the Point of beginning, and containing
11.774 square feet, a shown on a survey plat by Gandolfo, Kuhn & Associates,
dated October 20, 1998. Drawing No. T-182-3.
<PAGE>
POYDRAS STREET PORTION:
THAT PORTION OF POYDRAS STREET which lies between two horizontal planes, the
lower plane lying and being at an elevation of -5 feet Cairo Datum and the
upper plane lying and being at an elevation 50 feet Cairo Daniem (approximate
street grade), both as referenced to United States Coast and Geodetic Survey
Benchmark B-96 1991. NGS Published Value having an elevation of 28.72 feet
Cairo Datum, which property forms a portion of the Poydras Street right of
way, First Municipal District, City of New Orleans, Orleans Parish, Louisiana,
the horizontal boundaries of which are more fully described as follows:
Commencing as Point B, being the intersection of the northerly line of Poydras
Street and the easterly line of S. Peters Street, and also being the
southwest corner of Square RS, measure thence along the northerly line of
Poydras Street South 76 degrees 14 minutes 24 seconds East, distance of 361.51
feet to the Point of Beginning.
From the Point of Beginning, measure thence along the northerly line of
Poydras Street, South 76 degrees 14 minutes 24 seconds East, a distance of
108.29 feet to the easterly line of the former I-310 Tunnel; thence along
said line South 2 degrees 24 minutes 52 seconds East, a distance of 51.08 feet
to the southerly line of said Tunnel; thence along said line South 87 degrees
35 minutes 08 seconds West, a distance of 104 feet to the westerly line of the
former I-310 Tunnel; thence along said line North 2 degrees 24 minutes 52
seconds West, a distance of 61.24 feet to the Point of Beginning, and
containing 4,801 square feet, as shown on a survey plat by Gandolfo, Kuhn &
Associates, dated October 20, 1998, Drawing No. T-182.3.
<PAGE>
Exhibit "2"
PERMITTED EXCEPTIONS
1. Reservation of servitudes in favor of the Sewerage and Water Board of the
City of New Orleans (the "Delta Street S&WB Servitude") and in favor of
New Orleans Public Service, Inc. (the "Delta Street NOPSI Servitude"),
contained in Ordinance No. 15,799 M.C.S. (Calendar No. 18,425) of the City
of New Orleans, registered April 27, 1993, under N.A. No. 93-18030, as
Conveyance Office Instrument No. 68169, and in Act of Revocation of
Dedication by The City of New Orleans dated April 26, 1993, filed April 27,
1993, under Notarial Archives No. 93-18031, as Conveyance Office
Instrument No. 68195, as shown on the survey of Gandolfo, Kuhn & Associates,
Drawing No. T-182-3, last dated October 20, 1998.
2. Terms and Conditions of General Development Agreement, dated April 27,
1993, filed April 27, 1993, recorded under Notarial Archives No. 93-18037,
and Conveyance Instrument No. 68201, as assigned and assumed by Assignment
and Assumption of General Development Agreement and of Franchise
Agreement, dated March 15, 1994, filed March 16, 1994, as Notarial
Archives No. 94-13863, and Conveyance Office Instrument No. 83932, and
amended March 15, 1994, recorded March 16, 1994, under Notarial Archives
No. 94-13889, and Conveyance Office Instrument No. 83943 and as amended
and restated by that certain Amended and Restated General Development
Agreement dated as of October 30, 1998 by and among Rivergate Development
Corporation, Jazz Casino Company, L.L.C. and City of New Orleans.
3. Reservation of a servitude in favor of New Orleans Public Service, Inc.,
contained in the sale from City of New Orleans to Morgan's Louisiana and
Texas Railroad and Steamship Company, dated February 3, 1932, filed
February 6, 1932, in Conveyance Office Book 466, folio 476, as shown on
the survey of Gandolfo, Kuhn & Associates, drawing No. T-182-3, last dated
October 20, 1998.
4. Apparent servitudes for 10" sewer line, 24" drain line and 20" water line,
in the southeast corner of the land (outside of former Delta Street) as
shown on the survey by Gandolfo, Kuhn & Associates, Drawing No. T-182-3,
last dated October 20, 1998.
5. Reservation of a sewage servitude by City of New Orleans for the
benefit of the Sewerage and Water Board, contained in the Act of Exchange
and Agreement between the City of New Orleans and New Orleans Terminal
Company, dated October 16, 1978, filed October 18, 1978, under N.A.
No. 306106, in Conveyance Office Book 758-C, folio 580 as shown on survey
T-182-7, last dated October 20, 1998 by Gandolfo, Kuhn & Associates.
<PAGE>
6. Rights, reservations and servitudes as contained in the Judgement in
favor of the Sewerage and Water Board of the City of New Orleans, rendered
in proceedings No. 146-170, CDC, Parish of Orleans, dated September 5,
1924, recorded in Conveyance Office Book 505, folio 406, as shown on survey
T-182-7 last dated October 20, 1998 by Gandolfo, Kuhn & Associates, Civil
Engineers.
7. Driveway encroachment from Parcel 7 onto Basin Street right-of-way, as
shown on survey T-182-7, by Gandolfo, Kuhn & Associates, last dated
October 20, 1998.
8. Encroachment of adjoining buildings onto Tract 1 of parcel 3, as shown on
survey T-182-3, by Gandolfo, Kuhn & Associates, last dated October 20,
1998.
9. Encroachments as evidenced by the following: concrete, brick pedestrian
passageway and brick walk as shown on survey T-182-3 last dated October
20, 1998 by Gandolfo, Kuhn & Associates.
10. Encroachment upon Poydras Street by the granite columns and cornice
appurtenant to Tract 1 of Parcel 3, as shown on the plat of survey by
Gandolfo, Kuhn & Associates, Drawing No. T-182-3, last dated
October 20, 1998.
11. Terms and Conditions of Franchise Agreement by and between the City of
New Orleans and Celebration Park Casino, Inc., dated April 17, 1993,
filed April 27, 1993, as Notarial Archives No. 18038, Conveyance Office
Instrument No. 68202, as assigned and assumed by Assignment and
Assumption of General Development Agreement and of Franchise Agreement,
dated March 15, 1994, filed March 16, 1994, as Notarial Archives
No. 94-13863, Conveyance office Instrument No. 83932, and as assigned in
Assigned, Amended and Restated Franchise Agreement by the City of New
Orleans to Harrah's Jazz Company with Grand Palais Casino, Inc., dated
March 15, 1994, filed March 16, 1994, under Notarial Archives
No. 94-13864, Conveyance Office Instrument No. 83933.
12. Terms and Conditions of Approved Zoning Plans:
a. Filed December 29, 1994 as Notarial Archives No. 94-59464,
Conveyance Office Instrument No. 98386.
b. Filed April 21, 1995 as Notarial Archives No. 95-17369, Conveyance
Office Instrument No. 103509.
c. Filed December 29, 1994 as Notarial Archives No. 94-59466,
Conveyance Office Instrument No. 98388.
<PAGE>
13. Terms and Conditions of the Lease Agreement by and between City of New
Orleans, as lessor, and Rivergate Development Corporation, as lessee,
dated April 27, 1993 filed April 27, 1993, under Notarial Archives
No. 98-18035, as Conveyance Instrument No. 68199, as amended by Amended
and Restated Lease Agreement dated March 15, 1994, filed March 16, 1994,
under Notarial Archives No. 94-13885. Conveyance Office Instrument
No. 83940, as amended.
14. Terms and Conditions of Lease by and between The Alabama Great Southern
Railroad Company, as lessor, and Grand Palais Casino, Inc., as lessee,
as evidenced by Memorandum of Lease, dated November 19, 1993, filed
December 15, 1993, under Notarial Archives No. 93-53509, as Conveyance
Office Instrument No. 79741, in Conveyance Office Book 908, folio 101,
as assigned by Assignment and Assumption of Lease, dated March 15, 1994,
filed March 16, 1994, under Notarial Archives No. 94-13865, as
Conveyance Office Instrument No. 83934, as amended by Supplemental
Agreement executed August 25, 1994, filed November 9, 1994, under
Notarial Archives No. 94-52041, as Conveyance Office Instrument No.
96047.
15. Restrictions affecting the property formerly known as the Carondelet
Canal and Walk, as contained in U.S. Statutes at large, 9th Congress,
Chapter XXXVI, Vol. 2, page 440, March 3, 1807: "and shall not dispose
of, for the purpose of building thereon, any lot within sixty feet of
the space reserved for a canal, which shall forever remain open as a
public highway."
16. Construction Agreement between Harrah's Jazz Company and Centex Landis
Construction Co., Inc., dated October 10, 1994, filed November 16, 1994,
as Mortgage Office Instrument No. 292089, under Notarial Archives No.
94-52926, as amended.
17. Construction Agreement between Harrah's Jazz Company and Broadmoor,
dated October 10, 1994, filed November 16, 1994, as Mortgage Office
Instrument No. 292119, under Notarial Archives No. 94-52928; as amended.
18. Design Agreement between Harrah's Jazz Company and Perez Ernst
Farner/Modus, Inc., dated June 16, 1995, filed November 22, 1995, as
Mortgage Office Instrument No. 340292, under Notarial Archives No.
95-51534 and as amended.
19. Notice of Contract between Centex Landis Construction Co., Inc.,
contractor, and Harrah's Jazz Company, debtor, and Debtor in Possession
in the United States Bankruptcy Court for the Eastern District of
Louisiana, filed August 19, 1996, as Mortgage Office Instrument No.
378571, under Notarial Archives No. 96-40165.
<PAGE>
THUS DONE AND PASSED, on the day, month and year second written above, in
the State and Parish aforesaid, by the undersigned Mortgagee in the presence
of the undersigned second Notary and the undersigned competent witnesses, who
hereunto sign their names with Mortgagee after reading of the whole.
THE BANK OF NEW YORK, not in its
individual capacity, but solely as
Collateral agent
/s/ Marie A. Moon By: /s/ R. Randall Deen
- ---------------------------- ----------------------
Name: /s/ R. Randall Deen
--------------------
/s/ Marion W. Weinstock Title: Agent
- ---------------------------- -------------------
/s/ David A. Davillier
------------------------------
Notary
DANIEL E. DAVILLIER
NOTARY PUBLIC
State of Lousiana
My Commission is issued for Life
<PAGE>
THUS DONE AND PASSED, on the day, month and year second written above,
in the State and Parish aforesaid, by the undersigned Mortgagee in the
presence of the undersigned second Notary and the undersigned competent
witnesses, who hereunto sign their names with Mortgagee after reading of the
whole.
THE BANK OF NEW YORK, not in its
individual capacity, but solely as
Collateral Agent
/s/ Maria A. Moore By: /s/ R. Randall Deen
- ----------------------------- ------------------------------
Name: R. Randall Deen
----------------------------
/s/ Marcus W. Weinstock Title: Agent
- ----------------------------- ---------------------------
/s/ Daniel E. Davillier
----------------------------
Notary
DANIEL E. DAVILLIER
NOTARY PUBLIC
State of Louisiana
My Commission is issued for Life
<PAGE>
Schedule I doc II
RECEIPT FOR FILING
WILLIAM L. PRATT
Custodian of Notarial Records
for the Parish of Orleans, State of Louisiana
ROOM B-4 CIVIL COURTS BUILDING
421 LOYOLA AVE., NEW ORLEANS, LA 70112
TELEPHONE: 568-8577
Filed by: Phelps Dunbar, L.L.P
----------------------------------------------------
Notary Public who passed act:
--------------------------------
Instrument filed: Act of Mortgage and Collateral Assignment
--------------------------------------------
by JCC Development Company, L.L.C. to
- --------------------------------------------------------------
The Bank of New York
- --------------------------------------------------------------
<TABLE>
<S> <C>
Registered in Recorded in the Mortgage Office
Conveyance Office Instrument # 488186
-----------------------------------------------
Instrument# Book , Folio
---------------------- ------------------------
Book , Folio New Orleans, Louisiana
------------------ --------------------
New Orleans, Louisiana Date: 10-30-98
-------------------------------------------------
Date: Time: 2:10
--------------------------------------------- -------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.32
CREDIT ENHANCEMENT FEE AGREEMENT
(Bank Credit Agreement)
THIS CREDIT ENHANCEMENT FEE AGREEMENT (this "Agreement") is
entered into on this 29th day of October, 1998, by and among BANKERS TRUST
COMPANY as Administrative Agent for the Banks as defined below, each Bank party
to the Credit Agreement defined below as of the date thereof (other than any
Bank which has no Tranche A-2 Term Loans, Tranche B-2 Term Loans or Revolving
Loan Commitment), HARRAH'S OPERATING COMPANY, INC., a Delaware corporation
("HOC") and HARRAH'S ENTERTAINMENT, INC., a Delaware corporation ("HET").
Capitalized terms used herein and not defined shall have the meanings set forth
in the Credit Agreement.
R e c i t a l s:
A. Harrah's Jazz Company, a Louisiana general partnership
("HJC"), filed a voluntary petition for relief under Chapter 11 of the United
States Bankruptcy Code on November 22, 1995, which case is now pending in the
United States Bankruptcy Court for the Eastern District of Louisiana, Case No.
95-14545.
B. HJC has submitted, and the United States Bankruptcy Court
for the Eastern District of Louisiana has confirmed, a plan of reorganization
(the "Plan").
C. As contemplated by the Plan, Jazz Casino Company, L.L.C., a
Louisiana limited liability company (the "Company"), has succeeded to all the
rights and obligations of HJC.
D. Contemporaneously herewith JCC Holding Company, a Delaware
corporation, as guarantor, the Company, the Administrative Agent and certain
financial institutions (the "Banks") have entered into the Credit Agreement,
dated as of October 29, 1998 (the "Credit Agreement"), providing for (i) senior
secured Tranche A-1 term loans in the aggregate principal amount of Ten Million
Dollars ($10,000,000) (the "Tranche A-1 Term Loans"), (ii) senior secured
Tranche A-2 term loans in the aggregate principal amount of up to Twenty Million
Dollars ($20,000,000) (the "Tranche A-2 Term Loans"), (iii) senior secured
Tranche A-3 term loans in the aggregate principal amount of Thirty Million
Dollars ($30,000,000) (the "Tranche A-3 Term Loans"), (iv) secured term loans in
the amount of Thirty Million Dollars ($30,000,000) (the "Tranche B-1 Term
Loans"), (v) secured Tranche B-2 term loans in the amount of up to One Hundred
Twenty-One Million Five Hundred Thousand Dollars ($121,500,000) (the "Tranche
B-2 Term Loans") and (vi) a revolving credit facility in the amount of Twenty
Five Million Dollars ($25,000,000) (the "Revolving Credit Facility").
E. As an inducement for HET and HOC to enter into the HET/HOC
Guaranty and Loan Purchase Agreement, HOC shall receive (and retain for its own
account or distribute
<PAGE>
portions of same to HET, all as may be agreed between HOC and HET) a credit
support fee as set forth herein (the "Credit Support Fee").
F. The parties hereto desire to enter this Agreement regarding
the Credit Support Fee.
A g r e e m e n t:
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Guarantee. Each of HOC and HET has been requested to, and
has, entered into the HET/HOC Guaranty and Loan Purchase Agreement providing for
the guarantee and purchase of certain debts of the Company, including (i) the
Tranche A-2 Term Loans, (ii) the Tranche B-2 Term Loans and (iii) the Revolving
Credit Facility (collectively, the "Guaranteed Borrowings").
2. Credit Support Fee. (a) In consideration of the obligations
of HOC and HET set forth in the HET/HOC Guaranty and Loan Purchase Agreement,
each Bank hereby severally agrees to pay to HOC a Credit Support Fee equal to
the remainder (if positive) of (i) interest and Letter of Credit Fees actually
paid to the Administrative Agent for the benefit of such Bank in respect of
Tranche A-2 Term Loans, Tranche B-2 Term Loans (in the case of Tranche B-2 Term
Loans, only in respect of the aggregate outstanding principal amount thereof
from time to time in excess of $10,000,000), Revolving Loans, Swingline Loans
and Letters of Credit, as the case may be, for any period, minus (ii) the amount
of such interest and Letter of Credit Fees for such period calculated as if (x)
in the case of Base Rate Loans, the rate of interest applicable thereto were the
Base Rate plus the HET Base Rate Applicable Margin (as defined below), each as
in effect from time to time during such period, (y) in the case of Eurodollar
Loans, the rate of interest applicable thereto were the Eurodollar Rate plus the
HET Eurodollar Applicable Margin (as defined below) in effect from time to time
during such period and (z) in the case of Letter of Credit Fees, such fees
accrued at a rate per annum equal to the HET Eurodollar Applicable Margin in
effect from time to time during such period; provided, however, that no Credit
Support Fee shall accrue or be due and payable (i) with respect to the Revolving
Credit Facility (including Revolving Loans, Swingline Loans and Letters of
Credit issued thereunder), until the Carry Obligation Termination Date or (ii)
at any time during which HOC or HET is in default of any of its obligations
under the HET/HOC Guaranty and Loan Purchase Agreement or any Guarantor Event of
Default under, and as defined in, the HET/HOC Guaranty and Loan Purchase
Agreement is then in existence; provided further, that in no event shall the
amount of any Credit Support Fee paid by the Banks to HOC hereunder exceed 2.0%
per annum (which 2.0% per annum amount shall be reduced, (1) with respect to
Base Rate Loans, from time to time to the extent that the remainder of (x) the
rate of interest actually applicable to such loans less (y) the sum of the Base
Rate plus the HET Base Rate Applicable Margin as from time to time in effect, is
less than 2% and (2) in all other cases, for any period during which the HET
Eurodollar Applicable Margin exceeds 1.5%, by a percentage per annum equal to
such excess), unless the
2
<PAGE>
increase in such Credit Support Fee is directly attributable to a decrease in
the HET Eurodollar Applicable Margin to a rate per annum which is less than 1/2
of 1.0%. As used herein (x) "HET Eurodollar Applicable Margin" shall mean the
HET Applicable Margin (as defined in the Credit Agreement) from time to time in
effect; provided that if the HET Credit Agreement is at any time, or from time
to time, after the Effective Date amended, amended and restated or replaced with
a successor (or successive successor) credit or loan agreements, which in the
case of any such amended, amended and restated or successor agreement provides
for a higher "Applicable Margin" (or other spread, however defined or
designated) above the Eurodollar Rate (or other similar reference rate) than the
HET Applicable Margin, such higher "Applicable Margin" (or other spread) shall
instead be deemed to constitute the HET Eurodollar Applicable Margin for so long
as same remains in effect (and after any termination thereof unless replaced
with a similar credit facility), and (y) "HET Base Rate Applicable Margin" shall
mean, at any time, the greatest of (i) the HET Eurodollar Applicable Margin then
in effect less 1%, (ii) at any time when the HET Credit Agreement has been
amended, amended and restated or replaced with a successor (or successive
successor) credit or loan agreements which in any case provide for a borrowing
spread (however defined or designated) for base rate or prime rate loans
(however defined or designated) in excess of 0%, such borrowing spread and (iii)
0%.
(b) The Credit Support Fee shall be calculated without taking
into account (i) any amounts paid or payable to the Banks under Section 1.08(c)
or the proviso in Section 2.05(a) of the Credit Agreement (or any successor
provisions), (ii) any amounts paid or payable to the Banks in respect of Tranche
A-2 Term Loans, Tranche B-2 Term Loans, Revolving Loans, Swingline Loans or
Letters of Credit pursuant to any of Sections 1.10, 1.11, 2.06 or 4.04 of the
Credit Agreement or any other provision providing for payments of increased
costs or indemnifications with respect to Tranche A-2 Term Loans, Tranche B-2
Term Loans, Revolving Loans, Swingline Loans or Letters of Credit, as the case
may be, or (iii) any fees (including Facing Fees) paid or payable to the
Administrative Agent, the Issuing Bank or any Bank, other than Letter of Credit
Fees under Section 3.01(c)of the Credit Agreement (or any successor provision).
(c) Notwithstanding Section 2(a) above, payment of the Credit
Support Fee shall be expressly junior and subordinate in right of payment on the
terms, and to the extent, set forth in Sections 13 and 15 of the Credit
Agreement. Each of HOC and HET confirms that it has reviewed such Sections 13
and 15 and agrees to be bound thereby.
(d) Each Bank authorizes the Administrative Agent to pay the
portion of the Credit Support Fee allocable to such Bank directly to HOC as
provided in Section 1.08(f) of the Credit Agreement.
(e) Notwithstanding Section 2(d) above, the Administrative
Agent is under no obligation to HOC, HET, the Company, any Bank or any other
Person to make the payments described in Section 2(d). Payment to HOC of the
Credit Support Fee is solely the obligation (on a several basis) of the Banks
and HOC agrees that in the event of any non-payment of the Credit Support Fee
HOC's sole recourse shall be against the respective Bank and any such
non-payment
3
<PAGE>
shall have no effect on the obligation of HET or HOC under the HET/HOC Guaranty
and Loan Purchase Agreement.
(f) Notwithstanding anything to the contrary contained above,
to the extent (x) Revolving Loans, Swingline Loans and Letters of Credit are at
any time outstanding prior to the Carry Obligation Termination Date and/or (y)
Tranche B-2 Term Loans are outstanding from time to time (with the principal
amount used for purposes of this clause (y) to be limited to the lesser of the
actual aggregate principal amount of Tranche B-2 Term Loans from time to time
outstanding or $10 million); in each case bearing interest or Letter of Credit
Fees, as applicable, at rates per annum less than the rates specified in the
first clause (ii) of Section 2(a) of this Agreement (determined without regard
to the provisos thereto), then HOC and HET hereby jointly and severally agree
that, from Credit Support Fees and fees received or to be received from them
hereunder and under the Credit Enhancement Fee Agreement (JCC) (in each case, as
and when received), HET and HOC shall pay to the respective Banks amounts equal
to the difference between the amount of interest and/or Letter of Credit Fees
received by them and the respective amounts such Bank would have received had
such amounts borne interest or Letter of Credit Fees, as the case may be, at the
rates specified in the first clause (ii) of Section 2(a) of this Agreement
(determined without regard to the provisos thereto). Any amounts payable
pursuant to this clause (f) shall be paid to, or withheld from fees otherwise
payable to HET and HOC hereunder by (but with no obligation on the part of the
Administrative Agent to withhold such amounts), the Administrative Agent and
paid by it to the Banks entitled thereto; provided that if there are
insufficient funds to pay all such amounts, any amount distributed pursuant to
this sentence shall be paid to the Banks on a ratable basis (based on the
relative amounts owed to the various Banks pursuant to this clause on the date
of the respective distribution) as determined in good faith by the
Administrative Agent.
3. Interest Rate. If not paid within three Business Days after
the due date thereof (which due date shall be (x) in the case of amounts to be
paid to HOC hereunder, the date of the actual receipt by the Administrative
Agent or the respective Bank of interest or Letter of Credit Fees under the
Credit Agreement, in each case to the extent constituting Credit Support Fees in
accordance with the provisions of Section 2 hereof and (y) in the case of
amounts owing to the Banks pursuant to Section 2(f) hereof, the respective date
or dates upon which the amounts to be paid to the Banks are received by HET or
HOC under this Agreement or the Credit Enhancement Fee Agreement (JCC)), unpaid
amounts of the Credit Support Fee, or fees payable pursuant to Section 2(f), as
the case may be, shall bear interest from such due date until paid in full at
the Base Rate (as defined in the HET Credit Agreement) as in effect from time to
time.
4. Amendments to Credit Documents. Each of HET and HOC
acknowledges and agrees that the Credit Agreement and related Credit Documents
may be amended in accordance with the respective terms thereof, whether or not
such amendment has the effect of reducing or delaying the amount of Credit
Support Fees payable hereunder.
5. Term and Termination. This Agreement shall terminate on the
first date after the date hereof upon which (A) (x) all Tranche A-2 Term Loans,
Tranche B-2 Term Loans,
4
<PAGE>
Revolving Loans and Swingline Loans have been repaid in full, all Letters of
Credit have terminated and all Unpaid Drawings with respect thereto have been
repaid in full, and all Commitments under the Credit Agreement shall have
terminated, in each case so long as all Credit Support Fees payable in
accordance with the terms hereof have in fact been paid or (y) such earlier
date upon which all Guaranteed Obligations, under, and as defined in, the
HET/HOC Guaranty and Loan Purchase Agreement have been purchased in
accordance with the requirements of Section 15 thereof and (B) all amounts
actually owing to the Banks pursuant to Section 2(e) have been paid.
6. Miscellaneous
(a) Entire Agreement. This Agreement and, to the extent
specified, the Credit Agreement represent the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof, and all prior
agreements, understandings, representations and warranties in regard to the
subject matter hereof are and have been merged herein and are superseded hereby.
(b) Governing Law. This Agreement and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of New York.
(c) Notices. The address of the Administrative Agent, each
Bank and HOC shall for all purposes be as provided with respect to the Credit
Agreement or the HET/HOC Guaranty and Loan Purchase Agreement, as the case may
be, unless otherwise changed by the applicable party hereto by notice to the
others as provided herein.
All notices or other communications required or permitted to
be given pursuant to the provisions of this Agreement shall be in writing and
shall be considered as properly given if mailed by certified United States mail,
postage prepaid, with return receipt requested, by overnight courier service, or
by facsimile transmission with reception confirmed. Notices hereunder in any
manner shall be effective only if and when received by the addressee. Certified
mail receipt or express courier receipt at the above addresses shall establish
receipt for purposes of notices under this Agreement. Either party may from time
to time, by notice in writing served upon the other as aforesaid, designate a
different mailing address to which, or a different person to whose attention,
all such notices or demands are thereafter to be addressed.
(d) Successors and Assigns. HOC shall not assign its rights
and obligations under this Agreement without the prior written consent of the
other parties hereto, except that HOC may assign all or any portion of its right
to receive funds pursuant to this Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their successors, assigns, heirs, legal representatives, executors and
administrators. Without limiting the generality of the foregoing, to the extent
any Bank assigns any of its Tranche A-2 Term Loans, Tranche B-2 Term Loans or
Revolving Loan Commitment pursuant to Section 16.04 of the Credit Agreement,
such Bank shall be released from any further liability under this Agreement in
respect of the assigned Loans and Commitment from and after the date of such
5
<PAGE>
assignment, and the assignee of such Loans and Commitment shall succeed to the
obligations of the released Bank in respect thereof under this Agreement.
(e) Grammatical Changes. Whenever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter
gender as the circumstances require.
(f) Captions. Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision hereof.
(g) Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby; provided that the parties shall attempt to reformulate
such invalid provision to give effect to such portions thereof as may be valid
without defeating the intent of such provision and the economic burdens and
benefits of this Agreement are not impaired.
(h) Counterparts. This Agreement, or any amendment hereto, may
be executed in multiple counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same instrument, notwithstanding
that all of the parties hereto are not signatories to the original or the same
counterpart. In addition, this Agreement, or any amendment hereto, may contain
more than one counterpart of the signature pages, and this Agreement, or any
amendment hereto, may be executed by the affixing of the signatures of each of
the parties hereto to one of such counterpart signature pages; all of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
(i) No Third Party Rights. This Agreement is for the sole and
exclusive benefit of the parties hereto designated herein and no other Person
(including any creditors of the parties hereto) shall under any circumstances be
deemed to be a beneficiary of any of the rights, remedies, terms and provisions
of this Agreement.
(j) Attorney's Fees. If any party hereto brings any
judicial action or proceeding to enforce its rights under this Agreement, the
prevailing party shall be entitled, in addition to any other remedy, to
recover from the others, in any proceeding prosecuted to judgment, all costs
and expenses, including without limitation reasonable attorneys' fees,
incurred therein by the prevailing party.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement effective as of the day and year first above written.
BANKERS TRUST COMPANY, Individually and
as Administrative Agent
By /s/ Gregory P. Shefrin
---------------------------------
Name: Gregory P. Shefrin
Title: Vice President
HARRAH'S OPERATING COMPANY,
INC., a Delaware corporation
By /s/ George W. Loveland II
---------------------------------
Name: George W. Loveland II
Title: V. P.
HARRAH'S ENTERTAINMENT, INC.
By /s/ George W. Loveland II
---------------------------------
Name: George W. Loveland II
Title: V. P.
<PAGE>
MORGAN STANLEY PRIME INCOME TRUST
By /S/Sheila A. Finnerty
-----------------------------
Name: Sheila A. Finnerty
Title: Vice President
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/Jeffery W. Maillet
------------------------------
Name: Jeffery W. Maillet
Title: Senior Vice President &
Director
<PAGE>
Exhibit 10.33
SECURITY AGREEMENT
among
JCC HOLDING COMPANY,
JAZZ CASINO COMPANY, L.L.C.,
CERTAIN OF THEIR SUBSIDIARIES
and
THE BANK OF NEW YORK,
as Collateral Agent
Dated as October 29, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
ARTICLE I
SECURITY INTERESTS.........................................................................................4
1.1. Grant of Security Interests..........................................................................4
1.2. Power of Attorney....................................................................................5
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS..........................................................5
2.1. Necessary Filings....................................................................................5
2.2. No Liens.............................................................................................5
2.3. Other Financing Statements...........................................................................6
2.4. Chief Executive Office; Records......................................................................6
2.5. Location of Inventory and Equipment..................................................................6
2.6. Pledged Accounts.....................................................................................7
2.7. Trade Names; Change of Name..........................................................................7
2.8. Recourse.............................................................................................8
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES; CONTRACT RIGHTS.................................................8
3.1. Maintenance of Records...............................................................................8
3.2. Direction to Account Debtors; Contracting Parties; etc...............................................8
3.3. Modification of Terms; etc...........................................................................9
3.4. Collection...........................................................................................9
3.5. The Assignors Remain Liable..........................................................................9
3.6. Further Actions.....................................................................................10
ARTICLE IV
SPECIAL PROVISIONS CONCERNING MARKS.......................................................................10
4.1. Additional Representations and Warranties...........................................................10
4.2. Licenses and Assignments............................................................................10
4.3. Infringements.......................................................................................10
4.4. Preservation of Marks...............................................................................10
4.5. Maintenance of Registration.........................................................................11
4.6. Future Registered Marks.............................................................................11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS....................................................................................11
5.1. Additional Representations and Warranties...........................................................11
5.2. Licenses and Assignments............................................................................11
5.3. Infringements.......................................................................................12
5.4. Maintenance of Patents..............................................................................12
5.5. Prosecution of Patent Application...................................................................12
5.6. Other Patents and Copyrights........................................................................12
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL......................................................................12
6.1. Protection of Collateral Agents Security............................................................12
6.2. Warehouse Receipts Non-negotiable...................................................................13
6.3. Further Actions; Louisiana Matters..................................................................13
6.4. Financing Statements................................................................................14
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT..............................................................14
7.1. Remedies; Obtaining the Collateral Upon Default.....................................................14
7.2. Remedies; Disposition of the Collateral.............................................................16
7.3. Waiver of Claims....................................................................................16
7.4. Application of Proceeds.............................................................................17
7.5. Remedies Cumulative.................................................................................17
7.6. Discontinuance of Proceedings.......................................................................18
ARTICLE VIII
INDEMNITY.................................................................................................18
8.1. Indemnity...........................................................................................18
8.2. Indemnity Obligations Secured by Collateral; Survival...............................................19
ARTICLE IX
DEFINITIONS...............................................................................................20
ARTICLE X
MISCELLANEOUS.............................................................................................28
10.1. Notices............................................................................................28
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
10.2. Waiver; Amendment..................................................................................28
10.3. Obligations Absolute...............................................................................29
10.4. Successors and Assigns.............................................................................29
10.5. Headings...........................................................................................29
10.6. Severability.......................................................................................29
10.7. GOVERNING LAW......................................................................................29
10.8. Assignors Duties...................................................................................29
10.9. Termination; Release...............................................................................30
10.10. Counterparts.......................................................................................30
10.11. The Collateral Agent...............................................................................30
10.12. Gaming Regulations.................................................................................30
10.13. Additional Assignors...............................................................................31
10.14. Intercreditor Agreement...........................................................................31
10.15. No Third Party Beneficiaries......................................................................31
ANNEX A Schedule of Permitted Filings
ANNEX B Schedule of Chief Executive Offices/Record Locations
ANNEX C Schedule of Inventory and Equipment Locations
ANNEX D Form of Consent of Depositary Bank
ANNEX E Schedule of Pledged Accounts
ANNEX F Schedule of Trade, Fictitious and Other Names
ANNEX G Schedule of Marks
ANNEX H Schedule of License Agreements and Assignments
ANNEX I Schedule of Patents and Applications
ANNEX J Schedule of Copyrights and Applications
ANNEX K Assignment of Security Interest in United States Trademarks and Patents
ANNEX L Assignment of Security Interest in United States Copyrights
</TABLE>
(iii)
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of October 29, 1998, among each
of the undersigned (each an "Assignor" and, together with any other entity that
becomes a party hereto pursuant to Section 10.13 hereof, the "Assignors") The
Bank of New York, as Collateral Agent (the "Collateral Agent") for the benefit
of (v) Harrah's Entertainment, Inc., a Delaware corporation ("HET"), and
Harrah's Operating Company, Inc., a Delaware corporation ("HOC"), under the
HET/JCC Agreement or any successor or substitute Minimum Payment Guarantor under
any other Minimum Payment Guarantor Documents referred to below (the "Minimum
Payment Guarantors"), (w) the Banks (as defined below) and the Administrative
Agent (as defined below) under, and any other lenders from time to time party
to, the Credit Agreement hereinafter referred to (such Banks, the Administrative
Agent and other lenders, if any, are hereinafter called the "Bank Creditors"),
(x) the holders from time to time of the Senior Subordinated Notes hereinafter
referred to (such holders of the Senior Subordinated Notes hereinafter called
the "Senior Subordinated Note Holders") and the Senior Subordinated Note Trustee
referred to below (the Senior Subordinated Note Holders, and together with the
Senior Subordinated Note Trustee in its capacity as such, are hereinafter called
the "Senior Subordinated Note Creditors"), (y) the holders from time to time of
the Senior Subordinated Contingent Notes hereinafter referred to (such holders
of the Senior Subordinated Contingent Notes hereinafter are called the "Senior
Subordinated Contingent Note Holders") and the Senior Subordinated Contingent
Note Trustee referred to below (the Senior Subordinated Contingent Note Holders,
and together with the Senior Subordinated Contingent Note Trustee, in its
capacity as such, are hereinafter called the "Senior Subordinated Contingent
Note Creditors") and (z) if one or more Banks (or any Affiliate thereof) enter
into one or more interest rate protection agreements (including, without
limitation, interest rate hedges, swaps, caps, floors, collars and similar
agreements, collectively, the "Interest Rate Protection Agreements") with, or
guaranteed by, Jazz Casino Company, L.L.C., a Louisiana limited liability
company ("JCC"), any such Bank or Banks or any Affiliate of such Bank or Banks
(even if any such Bank subsequently ceases to be a Bank under the Credit
Agreement for any reason) so long as any such Bank or Affiliate thereof
participates in the extension of such Interest Rate Protection Agreements and
their subsequent assigns, if any (collectively, the "Other Creditors" and,
together with the Minimum Payment Guarantors, the Bank Creditors, the Senior
Subordinated Note Creditors and the Senior Subordinated Contingent Note
Creditors, are hereinafter called the "Secured Creditors"). Except as otherwise
defined herein, terms used herein and defined in the Intercreditor Agreement (as
in effect on the date hereof and without giving effect to any termination
thereof) shall be used herein as so defined and to the extent not defined herein
or in the Intercreditor Agreement, such terms shall be used herein as defined in
the Credit Agreement.
<PAGE>
W I T N E S S E T H :
WHEREAS, HET and HOC have jointly and severally provided the
initial Minimum Payment Guaranty (and HET and HOC and/or one or more other
Minimum Payment Guarantors may hereafter provide one or more substitute or
replacement Minimum Payment Guaranties) and in connection therewith JCC, HET and
HOC have entered into that certain HET/JCC Agreement dated October 29, 1998 (as
amended, modified or supplemented from time to time, the "HET/JCC Agreement");
WHEREAS, JCC Holding Company ("JCC Holding"), JCC, the lenders
(the "Banks") from time to time party thereto, and Bankers Trust Company, as
Administrative Agent (together with any successor agent, the "Administrative
Agent"), have entered into a Credit Agreement, dated as of October 29, 1998,
providing for the making of certain loans and the issuance of, and participation
in, letters of credit as contemplated therein (as used herein, the term "Credit
Agreement" means the Credit Agreement described above in this paragraph, as the
same may be amended, modified, extended, renewed, replaced, restated,
supplemented or refinanced from time to time, and including any agreement
extending the maturity of, or refinancing or restructuring (including, but not
limited to, the inclusion of additional borrowers or guarantors thereunder or
any increase in the amount borrowed) all or any portion of, the indebtedness
under such agreement or any successor agreements, whether or not with the same
agent, trustee, representative, lenders or holders; provided that, with respect
to any agreement providing for the refinancing or replacement of indebtedness
under the Credit Agreement, such agreement shall only be treated as, or as part
of, the Credit Agreement hereunder if (i) either (A) all obligations under the
Credit Agreement being refinanced or replaced shall be paid in full at the time
of such refinancing or replacement, and all commitments and letters of credit
issued pursuant to the refinanced or replaced Credit Agreement shall have
terminated in accordance with their terms or (B) the Required Banks shall have
consented in writing to the refinancing or replacement indebtedness being
treated as indebtedness pursuant to the Credit Agreement, (ii) the refinancing
or replacement indebtedness shall be permitted to be incurred under the Credit
Agreement being refinanced or replaced (if such Credit Agreement is to remain
outstanding) and the other Credit Documents then in effect, under the Senior
Subordinated Note Documents referred to below (if the Senior Subordinated Notes
referred to below remain outstanding) and under the Senior Subordinated
Contingent Note Documents referred to below (if the Senior Subordinated
Contingent Notes referred to below remain outstanding) and (iii) a notice to the
effect that the refinancing or replacement indebtedness shall be treated as
issued under the Credit Agreement shall be delivered by JCC to the Collateral
Agent);
WHEREAS, JCC has issued $187,500,000 in aggregate principal
amount of its Senior Subordinated Notes with Contingent Payments due 2009 (the
"Senior Subordinated Notes") pursuant to an Indenture, dated as of October 30,
1998, among JCC, as issuer, JCC Holding, as guarantor, and Norwest Bank
Minnesota, National Association, as trustee (in such capacity, together with any
successor trustee, the "Senior Subordinated Note Trustee") (as amended, modified
or supplemented from time to time, the "Senior Subordinated Note Indenture"
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and, together with the Senior Subordinated Notes and all other documents and
agreements relating thereto are herein called the "Senior Subordinated Note
Documents");
WHEREAS, JCC has issued its Senior Subordinated Contingent
Notes due 2009 (the "Senior Subordinated Contingent Notes") pursuant to an
Indenture, dated as of October 30, 1998, among the Assignor, as issuer, JCC
Holding, as guarantor, and Norwest Bank Minnesota, National Association, as
trustee (in such capacity, together with any successor trustee, the "Senior
Subordinated Contingent Note Trustee") (as amended, modified or supplemented
from time to time, the "Senior Subordinated Contingent Note Indenture" and,
together with the Senior Subordinated Contingent Notes and all other documents
and agreements relating thereto are herein called the "Senior Subordinated
Contingent Note Documents");
WHEREAS, JCC may at any time and from time to time enter into,
or guarantee obligations of its Subsidiaries under, one or more Interest Rate
Protection Agreements with one or more Other Creditors;
WHEREAS, pursuant to (1) the JCC Holding Guaranty, JCC Holding
has guaranteed to the Bank Creditors and the Other Creditors the payment when
due of all obligations and liabilities of JCC under or with respect to (x) the
Credit Documents and (y) the Interest Rate Protection Agreements and (2) the
Subsidiaries Guaranty, each Pledgor (other than JCC Holding and JCC) has jointly
and severally guaranteed to the Bank Creditors and the Other Creditors the
payment when due of all obligations and liabilities of JCC under or with respect
to (x) the Credit Documents and (y) the Interest Rate Protection Agreements;
WHEREAS, pursuant to Article XII of the Senior Subordinated
Note Indenture, JCC Holding and each other Pledgor (other than JCC) have jointly
and severally guaranteed (the "Senior Subordinated Note Guaranty") to the Senior
Subordinated Note Creditors the payment when due of all obligations and
liabilities of JCC under or with respect to the Senior Subordinated Note
Documents;
WHEREAS, pursuant to Article XII of the Senior Subordinated
Contingent Note Indenture, JCC Holding and each other Pledgor (other than JCC)
have jointly and severally guaranteed (the "Senior Subordinated Contingent Note
Guaranty") to the Senior Subordinated Contingent Note Creditors the payment when
due of all obligations and liabilities of JCC under or with respect to the
Senior Subordinated Contingent Note Documents;
WHEREAS, the Secured Creditors and the Collateral Agent have
entered into that certain Intercreditor Agreement dated October 29, 1998 (the
"Intercreditor Agreement") setting forth the respective rights of the Secured
Creditors in the Collateral referred to in this Agreement, the Pledge Agreement
and the Mortgages;
WHEREAS, it is a condition precedent to each of the
above-described extensions of credit to JCC that the Assignors shall have
executed and delivered to the Collateral Agent this Agreement; and
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WHEREAS, each Assignor desires to enter into this Agreement in
order to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the extensions of credit
to be made to JCC and other benefits accruing to each Assignor, the receipt and
sufficiency of which are hereby acknowledged, each Assignor hereby make the
following representations and warranties to the Collateral Agent for the benefit
of the Secured Creditors and hereby covenants and agrees with the Collateral
Agent for the benefit of the Secured Creditors as follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the
prompt and complete payment and performance when due of all of the Obligations,
each Assignor does hereby assign and transfer unto the Collateral Agent, and
does hereby grant to the Collateral Agent for the benefit of the Secured
Creditors, upon the terms and subject to the conditions of this Agreement and
further subject to the provisions of the Intercreditor Agreement, a continuing
security interest (subject to Liens to the extent permitted under the terms of
all Secured Debt Documents from time to time in effect) in, all of the right,
title and interest of such Assignor in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) each and every
Receivable, (ii) all Contracts, together with all Contract Rights arising
thereunder (in each case except to the extent constituting Excluded Collateral),
(iii) all Inventory, (iv) the Cash Collateral Account established with the
Collateral Agent for such Assignor and all monies, securities, investments and
instruments deposited or required to be deposited in such Cash Collateral
Account, (v) all present and future bank accounts of such Assignor including,
without limitation, any demand, time savings, passbook, certificates of deposit,
or like accounts maintained by such Assignor with any bank, savings and loan
association, credit union or other organization, all money, cash and checks,
drafts, notes, bills, bills of exchange, securities, investments, bonds or other
instruments, writings or property of such Assignor from time to time received,
receivable or otherwise distributed in respect thereof, in renewal or extension
thereof, or in exchange therefor, whether or not deposited in any such deposit
account (collectively, in each case, except to the extent constituting Excluded
Collateral, the "Pledged Accounts"), (vi) all Equipment, (vii) all Fixtures,
(viii) all Marks, together with the registrations and right to all renewals
thereof, and the goodwill of the business of such Assignor symbolized by the
Marks, and all licenses of rights associated therewith, (ix) all Patents and
Copyrights, and all reissues, renewals or extensions thereof, (x) all computer
programs of such Assignor and all intellectual property rights therein and all
other proprietary information of such Assignor, including, but not limited to,
trade secrets, (xi) all other Goods, General Intangibles, Permits (other than
the Casino Operating Contract), Chattel Paper, Investment Property and
Documents, (xii) all Proceeds and products of any and all of the foregoing and
(xiii) all other personal property of any Assignor of any nature whatsoever,
including, without limitation, all accounts, bank accounts, deposits, credit
balances, contract rights, inventory, general intangibles, goods, equipment,
instruments, chattel paper, machinery,
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furniture, furnishings, fixtures, tools, supplies, appliances, plans and
drawings and all property from time to time described in any financing statement
(UCC-1) signed by any Assignor naming the Collateral Agent as secured party for
the benefit of the Secured Creditors (all of the above, collectively, the
"Collateral"). Notwithstanding the foregoing, the term "Collateral" shall not
include any Excluded Collateral.
(b) The security interests of the Collateral Agent under this
Agreement extend to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise), in the Collateral Agent's
discretion, to take any action and to execute any instrument or document which
the Collateral Agent may reasonably deem necessary or advisable to accomplish
the purposes of this Agreement, which appointment as attorney is coupled with an
interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants to the
Collateral Agent, for the benefit of the Secured Creditors, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by such Assignor to the Collateral Agent hereby in
respect of the Collateral have been accomplished and the security interest
granted to the Collateral Agent pursuant to this Agreement in and to the
Collateral constitutes a perfected security interest therein prior to the rights
of all other Persons therein and subject to no other Liens (except that the
Collateral may be subject to the security interests evidenced by the financing
statements disclosed on Annex A hereto (the "Permitted Filings") and to other
Liens permitted under all the Secured Debt Documents from time to time in
effect) and is entitled to all the rights, priorities and benefits afforded by
the Uniform Commercial Code or other relevant law as enacted in any relevant
jurisdiction to perfected security interests.
2.2. No Liens. Such Assignor is, and as to Collateral acquired
by it from time to time after the date hereof such Assignor will be, the owner
of all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Liens created hereby, Liens
permitted under all the Secured Debt Documents from time to time in effect and
Liens evidenced by the Permitted Filings), and such Assignor shall defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to the Collateral Agent.
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2.3. Other Financing Statements. As of the date hereof, there
is no financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) on file or of record in any relevant
jurisdiction covering or purporting to cover any interest of any kind in the
Collateral except as disclosed in Annex A hereto and so long as the Termination
Date has not occurred, unless otherwise permitted under the terms of all the
Secured Debt Documents from time to time in effect, such Assignor will not
execute or authorize to be filed in any public office any financing statement
(or similar statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby by the Assignor.
2.4. Chief Executive Office; Records. The chief executive
office of each Assignor is located, as of the date hereof, at the address or
addresses indicated on Annex B for such Assignor. Such Assignor will not move
its chief executive office except to such new location as such Assignor may
establish in accordance with the last sentence of this Section 2.4. The
originals of all documents evidencing all Receivables and Contract Rights of
such Assignor and the only original books of account and records of such
Assignor relating thereto are, and will continue to be, kept at such chief
executive office, at such other locations shown on Annex B hereto or at such new
locations as such Assignor may establish in accordance with the last sentence of
this Section 2.4. No Assignor shall establish new locations for such offices
until (i) it shall have given to the Collateral Agent not less than 30 days'
prior written notice of its intention so to do, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, (ii) with respect to such new location,
it shall have taken all action to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby at all times
fully perfected and in full force and effect and (iii) it shall have furnished
an opinion of counsel acceptable to the Collateral Agent to the effect that all
financing or continuation statements and amendments or supplements thereto have
been filed in the appropriate filing office or offices (and shall have
previously furnished any such forms or statements to the Collateral Agent for
execution), and all other actions (including, without limitation, the payment of
all filing fees and taxes, if any, payable in connection with such filings) have
been taken, in order to perfect (and maintain the perfection and priority of)
the security interests granted hereby.
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations for such Assignor shown on Annex C hereto. Each Assignor agrees that
all Inventory and all Equipment now held or subsequently acquired by it shall be
kept at (or shall be in transport to) any one of the locations for such Assignor
shown on Annex C hereto, or such new location as such Assignor may establish in
accordance with the last sentence of this Section 2.5. Any Assignor may
establish a new location for Inventory and Equipment only if (i) it shall have
given to the Collateral Agent not less than 30 days' prior written notice of its
intention so to do, clearly describing such new location and providing such
other information in connection therewith as the Collateral Agent may reasonably
request, (ii) with respect to such new location, as promptly as practicable and
in no event later than 30 days after the establishment thereof, it shall have
taken all action to maintain the security interests of the Collateral Agent in
the Collateral intended to be granted hereby at all
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times fully perfected and in full force and effect and (iii) it shall have
furnished an opinion of counsel acceptable to the Collateral Agent to the effect
that all financing or continuation statements and amendments or supplements
thereto have been filed in the appropriate filing office or offices, and all
other actions (including, without limitation, the payment of all filing fees and
taxes, if any, payable in connection with such filings) have been taken, in
order to perfect (and maintain the perfection and priority of) the security
interests granted hereby.
2.6. Pledged Accounts. (a) The Pledged Accounts are, and will
continue to be, maintained at, and controlled and directed from, the respective
offices of those institutions set forth on Annex E hereto (such institutions,
the "Pledged Account Banks"). Concurrently with the establishment of any Pledged
Account, each Assignor will cause the applicable Pledged Account Bank to execute
and deliver to the Collateral Agent a consent substantially in the form of Annex
D hereto. No Assignor shall establish any additional Pledged Account until (i)
it shall have given to the Collateral Agent prior written notice of intention so
to do, clearly describing such new account and providing such other information
in connection therewith as Collateral Agent may reasonably request and (ii) with
respect to such new account, it shall have taken all action to maintain the
security interest of the Collateral Agent in such Collateral intended to be
granted hereby at all times fully perfected and in full force and effect,
including by having any bank or other institution which maintains such account
to execute and deliver to the Collateral Agent a consent substantially in the
form Annex D hereto.
(b) Upon the occurrence and during the continuance of any
Event of Default, and upon notice by the Collateral Agent to each Assignor
(although no such notice shall be required to be so given in the case of an
Event of Default of the types described in Section 10.06 of the Credit Agreement
or paragraph (5) or (6) of Section 7.1 of each of the Senior Subordinated Note
Indenture and the Senior Subordinated Contingent Note Indenture), the Assignors
shall no longer have the right to withdraw funds from any Pledged Account, and,
subject to the terms of the Intercreditor Agreement and the rights of the
landlord under the Casino Lease to certain of the funds in the Pledged Accounts
pursuant to Sections 5.3(e), 7.1(c) and 19.8(d) of the Casino Lease, the
Collateral Agent shall have the sole right to make withdrawals from the Pledged
Accounts, provided that (subject to the rights of the Collateral Agent under
Section 7.1(d) to withdraw such funds) (x) the Assignors may continue to
withdraw funds from the Pledged Accounts (to the extent that such funds have not
been withdrawn as permitted by Section 7.1 of this Agreement) to make payments
and pay operating expenses required under the terms of the Casino Lease and the
Casino Operating Contract and the Collateral Agent may rely on a certificate of
the Assignor as to such amounts and (y) the Manager may continue to withdraw
funds from the accounts referred to in Section 8.03 of the Management Agreement
to pay operating expenses of the Casino pursuant to the Annual Plan (under and
as defined in the Management Agreement) then in effect. All Collateral held in
the Pledged Accounts shall be held therein in accordance with the terms of this
Agreement.
2.7. Trade Names; Change of Name. No Assignor has or operates
in any jurisdiction under, or in the preceding 12 months has had or has operated
in any jurisdiction under, any trade names, fictitious names or other names
(including, without limitation, any names
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of divisions or operations) except its legal name and such other trade,
fictitious or other names as are listed on Annex F hereto. No Assignor shall
change its legal name or assume or operate in any jurisdiction under any trade,
fictitious or other name except those names listed on Annex F hereto and new
names (including, without limitation, any names of divisions or operations)
established in accordance with the last sentence of this Section 2.7. No
Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Collateral Agent
not less than 30 days' prior written notice of its intention so to do, clearly
describing such new name and the jurisdictions in which such new name shall be
used and providing such other information in connection therewith as the
Collateral Agent may reasonably request, (ii) with respect to such new name, it
shall have taken all action to maintain the security interests of the Collateral
Agent in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect and (iii) at the request of the
Collateral Agent, it shall have furnished an opinion of counsel acceptable to
the Collateral Agent to the effect that all financing or continuation statements
and amendments or supplements thereto have been filed in the appropriate filing
office or offices, and all other actions (including, without limitation, the
payment of all filing fees and taxes, if any, payable in connection with such
filings) have been taken, in order to perfect (and maintain the perfection and
priority of) the security interest granted hereby.
2.8. Recourse. This Agreement is made with full recourse to
each Assignor and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in the
Secured Debt Documents and otherwise in writing in connection herewith or
therewith. No Assignor shall assert against the Collateral Agent any claim or
defense which such Assignor may have against any seller of the Collateral or any
part thereof or against any person with respect to the Collateral or any part
thereof.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS
3.1. Maintenance of Records. Each Assignor will keep and
maintain at its own cost and expense records of its Receivables and Contracts in
accordance with good business practice, and such Assignor will make the same
available on its premises to the Collateral Agent for inspection, at such
Assignor's own cost and expense, at any and all reasonable times upon demand.
Upon the occurrence and during the continuance of an Event of Default, and if
the Collateral Agent (acting on the instructions of the Required Secured
Creditors under the Intercreditor Agreement) so directs, each Assignor shall
legend, in form and manner reasonably satisfactory to the Collateral Agent, the
Receivables and the Contracts, as well as books, records and documents of such
Assignor evidencing or pertaining to such Receivables and Contracts with an
appropriate reference to the fact that such Receivables and Contracts have been
assigned to the Collateral Agent and that the Collateral Agent has a security
interest therein.
3.2. Direction to Account Debtors; Contracting Parties; etc.
Upon the occurrence and during the continuance of an Event of Default, and if
the Collateral Agent so directs any
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Assignor, such Assignor agrees (x) to cause all payments on account of the
Receivables and Contracts to be made directly to the Cash Collateral Account,
(y) that the Collateral Agent may, at its option, directly notify the obligors
with respect to any Receivables and/or under any Contracts to make payments with
respect thereto as provided in the preceding clause (x) and (z) that the
Collateral Agent may enforce collection of any such Receivables and Contracts
and may adjust, settle or compromise the amount of payment thereof, in the same
manner and to the same extent that such Assignor might have done. Without notice
to or assent by any Assignor, the Collateral Agent may apply any or all amounts
then in, or thereafter deposited in, the Cash Collateral Account in the manner
provided in Section 7.4 of this Agreement. The costs and expenses (including
reasonable attorneys' fees) of collection, whether incurred by any Assignor or
the Collateral Agent, shall be borne by the relevant Assignor.
3.3. Modification of Terms; etc. No Assignor shall rescind or
cancel any indebtedness evidenced by any Receivable or under any Contract, or
modify any term relating to such indebtedness or make any adjustment with
respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable or Contract, or interest therein, without the prior written consent
of the Collateral Agent, except as permitted by Section 3.4. Each Assignor will
duly fulfill all obligations on its part to be fulfilled under or in connection
with the Receivables and Contracts and will do nothing to impair the rights of
the Collateral Agent in the Receivables or Contracts.
3.4. Collection. Each Assignor shall endeavor to cause to be
collected from the account debtor named in each of its Receivables or obligor
under any Contract, as and when due (including, without limitation, amounts
which are delinquent, such amounts to be collected in accordance with generally
accepted lawful collection procedures) any and all amounts owing under or on
account of such Receivable or Contract, and apply forthwith upon receipt thereof
all such amounts as are so collected to the outstanding balance of such
Receivable or under such Contract, except that, prior to the occurrence of an
Event of Default, any Assignor may allow in the ordinary course of business as
adjustments to amounts owing under its Receivables and Contracts (i) an
extension or renewal of the time or times of payment, or settlement for less
than the total unpaid balance, which the Assignor finds appropriate in
accordance with sound business judgment and (ii) a refund or credit due as a
result of returned or damaged merchandise or improperly performed services. The
costs and expenses (including, without limitation, attorneys' fees) of
collection, whether incurred by any Assignor or the Collateral Agent, shall be
borne by such Assignor.
3.5. The Assignors Remain Liable. Notwithstanding anything to
the contrary contained herein, (x) each Assignor shall remain liable under the
Contracts to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (y) the exercise by the Collateral Agent of any of the rights
hereunder shall not release any Assignor from any of its duties or obligations
under the Contracts and (z) the Collateral Agent and the Secured Creditors shall
not have any obligation or liability under the Contracts by reason of this
Agreement, nor shall the Collateral Agent or any Secured
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Creditor be obligated to perform any of the obligations or duties of any
Assignor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
3.6. Further Actions. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts and other property or rights
covered by the security interest hereby granted, as may be required to maintain
the perfection and priority of the security interests granted hereby, and to
carry out its obligations and covenants hereunder, or as the Collateral Agent
may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING MARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants to the Collateral Agent, for the benefit of the Secured
Creditors, that it is the true and lawful exclusive owner of the Marks listed in
Annex G hereto and that said listed Marks include all the United States federal
registrations or applications registered in the United States Patent and
Trademark Office. The Assignor represents and warrants that it owns or is
licensed to use or is not prohibited from using all Marks that it uses. Each
Assignor further warrants that it is aware of no third party claim that any
aspect of such Assignor's present or contemplated business operations infringes
or will infringe any Mark. Each Assignor represents and warrants that it is the
owner of record of all United States registrations and applications listed in
Annex G hereto and that said registrations are valid, subsisting, have not been
cancelled and that such Assignor is not aware of any third-party claim that any
of said registrations is invalid or unenforceable.
4.2. Licenses and Assignments. Other than the license
agreements listed on Annex H hereto and any extensions or renewals thereof, each
Assignor hereby agrees not to divest itself of any right under any Mark that
such Assignor is required to maintain under Section 4.5 hereof absent prior
written approval of the Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon
learning thereof, to notify the Collateral Agent in writing of the name and
address of, and to furnish such pertinent information that may be available with
respect to, any party who such Assignor believes is infringing or otherwise
violating any of such Assignor's rights in and to any Mark, or with respect to
any party claiming that such Assignor's use of any Mark violates in any material
respect any property right of that party. Each Assignor further agrees, unless
otherwise agreed by the Collateral Agent, diligently to prosecute any Person
infringing any material Mark.
4.4. Preservation of Marks. Each Assignor agrees to use those
Marks that such Assignor is required to maintain under Section 4.5 hereof in
interstate commerce during the time
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in which this Agreement is in effect, sufficiently to preserve such Marks as
trademarks or service marks registered under the laws of the United States.
4.5. Maintenance of Registration. Each Assignor shall, at
its own expense, diligently process all documents required by the Trademark
Act of 1946, 15 U.S.C. Sections 1051 et seq. to maintain trademark
registration, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office
for all of its registered Marks pursuant to 15 U.S.C. Sections 1058(a), 1059
and 1065, and shall pay all fees and disbursements in connection therewith
and shall not abandon any such filing of affidavit of use or any such
application of renewal prior to the exhaustion of all administrative and
judicial remedies without prior written consent of the Collateral Agent;
provided, that no Assignor shall be obligated to maintain any Mark in the
event that such Assignor determines, in its reasonable business judgment,
that the maintenance of such Mark is no longer necessary or desirable in the
conduct of its business. Each Assignor agrees to notify the Collateral Agent
three (3) months prior to the date on which the affidavits of use or the
applications for renewal registration are due with respect to any registered
Mark that the affidavits of use or the renewal is being processed or being
abandoned, as the case may be.
4.6. Future Registered Marks. If any Mark registration
issues hereafter to any Assignor as a result of any application now or
hereafter pending before the United States Patent and Trademark Office,
within thirty (30) days of receipt of such certificate such Assignor shall
deliver a copy of such certificate, and a grant of security in such mark to
the Collateral Agent, confirming the grant thereof hereunder.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants to the Collateral Agent, for the benefit of the Secured
Creditors, that it is the true and lawful exclusive owner of all rights in the
Patents listed in Annex I hereto and in the Copyrights listed in Annex J hereto,
that said Patents include all the United States patents and applications for
United States patents that such Assignor now owns and that said Copyrights
constitute all the United States copyrights registered with the United States
Copyright Office and applications for United States copyrights that such
Assignor now owns. Each Assignor represents and warrants that it owns or is
licensed to practice under all Patents and Copyrights that it now uses or
practices under. Each Assignor further warrants that it is aware of no third
party claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any Patent or any Copyright.
5.2. Licenses and Assignments. Other than the license
agreements listed on Annex H hereto and any extensions or renewals thereof, each
Assignor hereby agrees not to
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divest itself of any right under any significant Patent or significant Copyright
absent prior written approval of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon
learning thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement or other
violation of such Assignor's rights in any Patent or Copyright, or with respect
to any claim that practice of any Patent or use of any Copyright violates any
property right of a third party. Each Assignor further agrees, absent direction
of the Collateral Agent to the contrary, diligently to prosecute any Person
infringing any Patent or Copyright.
5.4. Maintenance of Patents. At its own expense, each Assignor
shall make timely payment of all post-issuance fees required pursuant to 35
U.S.C. Section 41 to maintain in force rights under each significant Patent.
5.5. Prosecution of Patent Application. At its own expense,
each Assignor shall diligently prosecute all applications for Patents listed in
Annex G hereto and shall not abandon any such application prior to exhaustion of
all administrative and judicial remedies, absent written consent of the
Collateral Agent, unless such Assignor determines, in its reasonable discretion,
that prosecuting such application is no longer necessary or desirable in the
conduct of its business.
5.6. Other Patents and Copyrights. Within 30 days of
acquisition of a Patent or Copyright, or of filing of an application for a
Patent or Copyright, the relevant Assignor shall deliver to the Collateral Agent
a copy of said Patent or Copyright or such application, as the case may be, with
a grant of security as to such Patent or Copyright, as the case may be,
confirming the grant thereof hereunder.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. (a) Each
Assignor will do nothing to impair the rights of the Collateral Agent in the
Collateral. Each Assignor will at all times keep its Inventory and Equipment
insured in favor of the Collateral Agent, at such Assignor's own expense to the
extent and in the manner provided in the Secured Debt Documents from time to
time in effect. Each Assignor assumes all liability and responsibility in
connection with the Collateral acquired by it and the liability of such Assignor
to pay the Obligations shall in no way be affected or diminished by reason of
the fact that such Collateral may be lost, destroyed, stolen, damaged or for any
reason whatsoever unavailable to such Assignor.
(b) Each Assignor shall furnish to the Collateral Agent from
time to time, without notice or demand by the Collateral Agent, (i) not later
than 10 Business Days prior to the expiration date of each insurance policy
maintained pursuant to this Section 6.1, a binding commitment (issued by the
insurer or an insurance agent for the insurer authorized to issue such
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certificate who shall certify its authority) evidencing the issuance of a
replacement policy or the extension of such existing policy and that such new or
extended insurance policy is in full force and effect and (ii) evidence
satisfactory to the Collateral Agent of payment of the premium therefor within
30 days of any request by the Collateral Agent and (iii) within 30 days of any
request by the Collateral Agent, a certificate as to the coverage of any such
new or extended insurance policy required to be maintained hereunder (issued by
the insurer or an insurance agent for the insurer authorized to issue such
certificate who shall certify its authority) to the effect that such insurance
policy is in force and effect.
6.2. Warehouse Receipts Non-negotiable. Each Assignor agrees
that if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued with respect to any of its Inventory, such warehouse receipt or receipt
in the nature thereof shall not be "negotiable" (as such term is used in Section
7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction
or under other relevant law).
6.3. Further Actions; Louisiana Matters. (a) Each Assignor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such lists, descriptions and
designations of its Collateral, warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, are
reasonably appropriate or advisable to perfect, preserve or protect the security
interest of the Collateral Agent in the Collateral.
(b) Notwithstanding anything contained in this Agreement to
the contrary, this Agreement shall be governed by Chapters 8 and 9 of the
Louisiana Commercial Laws, Louisiana R.S. 10:8-101 et seq. and 10:9-101 et seq.
(collectively, the "Louisiana UCC") to the extent that any security interest in
any of the Collateral located in the State of Louisiana, and any remedies
hereunder with respect thereto, are required to be governed by, and interpreted
in accordance with, the laws of the State of Louisiana.
(c) If an Event of Default shall occur and be continuing, the
Collateral Agent shall have all remedies available to a secured party under the
Louisiana UCC in addition to the other remedies provided elsewhere in this
Agreement. For purposes of executory process under the laws of the State of
Louisiana, each Assignor hereby acknowledges the Obligations and confesses
judgment in favor of the Collateral Agent for the benefit of the Secured
Creditors, for the full amount of the Obligations, including, without
limitation, principal, interest, attorneys' fees, court costs, and all other
fees, expenses and charges.
(d) Each Assignor hereby expressly waives, to the fullest
extent permitted by Louisiana law, the benefit of appraisement provided for in
Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure and
all other laws of the State of Louisiana conferring such benefits and the demand
and three days' delay accorded by Articles 2639 and 2721 of the Louisiana Code
of Civil Procedure.
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(e) Pursuant to Louisiana R.S. 27:275 et seq., the Collateral
Agent is hereby authorized and empowered to file a petition to foreclose the
liens created hereby in which the Louisiana Gaming Control Board is named a
nominal defendant and the Assignors request the appointment of a receiver as
contemplated by and in accordance with the provisions of the cited statutes. The
filing of a verified petition by the Collateral Agent shall constitute prima
facie proof of the Collateral Agent's right to enforce the liens created hereby
in executory or ordinary proceedings, at the Collateral Agent's option, and to
appointment of a receiver pursuant to the cited statutes.
(f) In the event the Collateral or any part thereof is seized
as an incident to an action for the recognition or the enforcement of this
Agreement by executory process, ordinary process, sequestration, writ of fieri
facias, or otherwise, the Assignors and the Collateral Agent hereby agree that
the court issuing any such order shall, if petitioned for by the Collateral
Agent, direct the Sheriff to appoint as a keeper of the Collateral, the
Collateral Agent or any agent designated by the Collateral Agent or any person
named by the Collateral Agent at the time such seizure is effected. This
designation is made pursuant to La. R.S. 9:5136 through 5140.2, inclusive, as
the same may be amended, and the Collateral Agent shall be entitled to all the
rights and benefits afforded thereunder, including reasonable compensation,
which compensation shall be secured by this Agreement, and which reasonable
compensation shall not exceed one-tenth of one percent (0.1%) of the amount due
or sued for or claimed or sought to be protected, preserved or enforced in the
proceeding for the recognition of the liens created hereby.
6.4. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, as are necessary or
desirable to establish and maintain a valid, enforceable and perfected security
interest in the Collateral as provided herein and the other rights and security
contemplated hereby all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law. Each
Assignor will pay any applicable filing fees, recordation taxes and related
expenses. Each Assignor authorizes the Collateral Agent to file any such
financing statements without the signature of such Assignor where permitted by
law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, subject to any mandatory requirements
of applicable law then in effect and further subject to the terms of the
Intercreditor Agreement, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and may
also:
(a) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has
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possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon such Assignor's premises where
any of the Collateral is located and remove the same and use in
connection with such removal any and all services, supplies, aids and
other facilities of such Assignor; and
(b) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables and the Contracts and, as contemplated by such terms, any
policy of insurance or any payment or performance bond) constituting
the Collateral to make any payment required by the terms of such
agreement, instrument or other obligation directly to the Collateral
Agent and may exercise any and all rights and remedies of such Assignor
in respect of such Collateral; and
(c) withdraw all monies, securities and instruments in the
Cash Collateral Account for application to the Obligations in
accordance with Section 7.4 hereof; and
(d) withdraw all monies, securities and instruments in the
Reserve Fund (subject to the rights of the landlord under the Casino
Lease pursuant to Sections 5.3(e), 7.1(c) and 19.8(d) of the Casino
Lease) and the other Pledged Accounts for application to the
Obligations in accordance with Section 7.4 hereof, and in connection
therewith, deliver to the Reserve Fund Bank and the Pledged Account
Banks the notice referred to in the form of consent attached hereto as
Annex D; and
(e) sell, assign or otherwise liquidate, or direct such
Assignor to sell, assign or otherwise liquidate, any or all of the
Collateral or any part thereof, and take possession of the proceeds of
any such sale or liquidation; and
(f) take possession of the Collateral or any part thereof, by
directing such Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense forthwith
cause the same to be moved to the place or places so designated by the
Collateral Agent and there delivered to the Collateral Agent; and
(g) effect an absolute assignment of all of such Assignor's
right, title and interest in and to each Mark (and the goodwill of the
business of such Assignor associated therewith), Patent and Copyright;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Collateral Agent acting upon the instructions of the Required Secured
Creditors (as defined in the Intercreditor Agreement) and that no Secured
Creditor, except as otherwise provided in the Intercreditor Agreement, shall
have any right individually to seek to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed
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that such rights and remedies may be exercised by the Collateral Agent for the
benefit of the Secured Creditors upon the terms of this Agreement and the
Intercreditor Agreement.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair which the Collateral Agent
shall determine to be commercially reasonable. Any such disposition which shall
be a private sale or other private proceedings permitted by such requirements
shall be made upon not less than 10 days' written notice to the relevant
Assignor specifying the time at which such disposition is to be made and the
intended sale price or other consideration therefor, and shall be subject, for
the 10 days after the giving of such notice, to the right of the relevant
Assignor or any nominee of such Assignor to acquire the Collateral involved at a
price or for such other consideration at least equal to the intended sale price
or other consideration so specified. Any such disposition which shall be a
public sale permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time and place of
such sale and, in the absence of applicable requirements of law, shall be by
public auction (which may, at the Collateral Agent's option, be subject to
reserve), after publication of notice of such auction not less than 10 days
prior thereto in two newspapers in general circulation in the City of New York.
The Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. To the extent permitted by any such
requirement of law, the Collateral Agent and the Secured Creditors may bid for
and become the purchaser of the Collateral or any item thereof, offered for sale
in accordance with this Section without accountability to the relevant Assignor.
If, under mandatory requirements of applicable law, the Collateral Agent shall
be required to make disposition of the Collateral within a period of time which
does not permit the giving of notice to any Assignor as hereinabove specified,
the Collateral Agent need give such Assignor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of
applicable law. Each Assignor agrees to do or cause to be done all such other
acts and things as may be reasonably necessary to make such sale or sales of all
or any portion of the Collateral valid and binding and in compliance with any
and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales, all at
such Assignor's expense.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL
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AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and, except as otherwise provided in this Agreement, such
Assignor hereby further waives, to the extent permitted by law:
(a) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(b) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(c) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and each
Assignor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
7.4. Application of Proceeds. All moneys collected by the
Collateral Agent upon any sale or other disposition of the Collateral, together
with all other moneys received by the Collateral Agent hereunder, shall be
applied in the manner provided in Section 11 of the Intercreditor Agreement.
7.5. Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this Agreement, the
other Secured Debt Documents or now or hereafter existing at law or in equity,
or by statute and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time or
simultaneously and as often and in such order as may be deemed expedient by the
Collateral Agent. All such rights, powers and remedies shall be cumulative and
the exercise or the beginning of exercise of one shall not be deemed a waiver of
the right to exercise of any other or others. No delay or omission of the
Collateral Agent in the exercise of any such right, power or remedy, renewal or
extension of any of the Obligations and no course of dealing between any
Assignor and the Collateral Agent or any holder of any of the Obligations shall
impair any such right, power or
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remedy or shall be construed to be a waiver of any Default or Event of Default
or an acquiescence therein. No notice to or demand on any Assignor in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Collateral
Agent to any other or further action in any circumstances without notice or
demand. In the event that the Collateral Agent shall bring any suit to enforce
any of its rights hereunder and shall be entitled to judgment, then in such suit
the Collateral Agent may recover reasonable expenses, including attorneys' fees,
and the amounts thereof shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor agrees to indemnify,
reimburse and hold the Collateral Agent, each Secured Creditor and their
respective successors, assigns, employees, agents and servants (hereinafter in
this Section 8.1 referred to individually as "Indemnitee," and collectively as
"Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 8.1 the foregoing are collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement or any other document executed in connection herewith or in any other
way connected with the administration of the transactions contemplated hereby or
the enforcement of any of the terms of, or the preservation of any rights under
any thereof, or in any way relating to or arising out of (a) the manufacture,
ownership, ordering, purchase, delivery, control, acceptance, lease, financing,
possession, operation, condition, sale, return or other disposition, or use of
the Collateral (including, without limitation, latent or other defects, whether
or not discoverable), any contract claim or, to the maximum extent permitted
under applicable law, the violation of the laws of any country, state or other
governmental body or unit, or any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage) or (b) the actual or alleged presence of hazardous materials in the air,
surface water or groundwater or on the surface or subsurface of any real
property owned, leased or at any time operated by such Assignor or any of its
Subsidiaries, the release, generation, storage, transporta-
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tion, handling or disposal of hazardous materials at any location, whether or
not owned or operated by such Assignor or any of their Subsidiaries, the
non-compliance of any real property with foreign, federal, state and local laws,
regulations, and ordinances (including applicable permits thereunder) applicable
to any real property, or any environmental claim relating in any way to such
Assignor or any of its Subsidiaries, their operations, or any real property
owned, leased or at any time operated by such Assignor or any of its
Subsidiaries, including, in each case, without limitation, the reasonable fees
and disbursements of counsel and other consultants incurred in connection with
any such investigation, litigation or other proceeding; provided that no
Indemnitee shall be indemnified pursuant to this Section 8.1(a) for expenses to
the extent caused by the gross negligence or willful misconduct of such
Indemnitee. Each Assignor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, such Assignor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify the relevant Assignor of any such assertion of which such
Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof,
each Assignor, jointly and severally, agrees to pay, or reimburse the Collateral
Agent for any and all fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b)
hereof, each Assignor, jointly and severally, agrees to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by any Assignor in this Agreement or in any writing
contemplated by or made or delivered pursuant to or in connection with this
Agreement.
(d) If and to the extent that the obligations of any Assignor
under this Section 8.1 are unenforceable for any reason, any Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, all of the Senior Subordinated Notes
issued under the Senior Subordinated Note Indenture and all of the Senior
Subordinated Contingent Notes issued under the Senior Subordinated Contingent
Note Indenture, the termination of all Interest Rate
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Protection Agreements and all obligations under the HET/JCC Agreement or any
other Minimum Payment Guaranty Documents and the payment of all other
Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified.
Such definitions shall be equally applicable to the singular and plural forms of
the terms defined.
"Administrative Agent" shall have the meaning provided in the
Recitals to this Agreement.
"Agreement" shall mean this Security Agreement as the same may
be modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first
paragraph of this Agreement.
"Bank Creditors" shall have the meaning provided in the first
paragraph of this Agreement.
"Banks" shall have the meaning provided in the Recitals to
this Agreement.
"Cash Collateral Account" shall mean a non-interest bearing
cash collateral account maintained with the Collateral Agent for the benefit of
the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in the Intercreditor
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a)
of this Agreement.
"Collateral Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Component Parts" shall mean those things or goods which after
they are incorporated or permanently attached into a tract of land, a building
or other construction become an integral part of it, and/or those things or
goods which after they are permanently attached to a building or other
construction cannot be removed without substantial damage to themselves or to
the immovable property to which they are attached.
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"Contract Rights" shall mean all rights of any Assignor
(including, without limitation, all rights to payment) under each Contract.
"Contracts" shall mean (i) the General Development Agreement,
(ii) the Management Agreement, (iii) the Construction Contracts, (iv) all other
construction contracts and sub-contracts relating thereto and payment and
performance bonds related thereto, (v) all architectural, engineering,
maintenance, management, leasing and service documents and franchise contracts
relating to the Project, or (vi) all other contracts between any Assignor and
one or more additional parties (including, without limitation any Interest Rate
Protection Agreement). Notwithstanding the foregoing, the definition of
"Contracts" shall not include the Casino Operating Contract.
"Copyrights" shall mean any United States copyright which any
Assignor now or hereafter has registered with the United States Copyright
Office, as well as any application for a United States copyright registration
now or hereafter made with the United States Copyright Office by any Assignor.
"Credit Agreement" shall have the meaning provided in the
Recitals to this Agreement.
"Default" shall mean any event which, with notice or lapse of
time, or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor and, in any event,
shall include, but shall not be limited to, all machinery, equipment (including,
without limitation, all gaming equipment, gaming devices, appliances, chattels,
furnishings, furniture, fixtures, accessories, apparatus, building or
construction materials and supplies, china, glassware, silverware, pots, pans,
linens, stoves, refrigerators, freezers and other restaurant, bar, food service
or kitchen appliances and equipment), furnishings, movable trade fixtures and
vehicles now or hereafter owned by any Assignor and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and
as defined in, the Intercreditor Agreement or any other default hereunder not
constituting an Event of Default enumerated above in this definition after
notice and 30 days' opportunity to cure, and shall in any event, include,
without limitation, any payment default on any of the Obligations after the
expiration of any applicable grace period.
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"Excluded Collateral" shall mean (i) the Casino Operating
Contract, (ii) the House Bank, and (iii) the Louisiana Gross Gaming Revenue
Share Payments, including the States' Interest in Daily Collections, each as
defined in the Casino Operating Contract.
"Fixtures" shall mean those things which after placement on
any real estate or immovable property, become Component Parts of the respective
land, buildings and other constructions, and which are used in the conduct of
business on such land or in such building or other constructions.
"General Intangibles" shall have the meaning provided in the
Uniform Commercial Code as in effect on the date hereof in the State of New York
and shall in any event include, without limitation, any and all of the relevant
Assignor's present and future contract rights, instruments, documents and
general intangibles necessary for use in connection with the operation of the
Casino or the ownership of any Collateral, whether now existing or hereinafter
created, or otherwise owned or acquired by such Assignor, and all liens,
security interests, guaranties, remedies, privileges and other rights pertaining
to such general intangibles, and all of the relevant Assignor's claims, rights,
powers, privileges, authority, options, security interests, liens and remedies
under any partnership or limited liability company agreement to which such
Assignor is a party or with respect to any partnership or limited liability
company of which such Assignor is a partner or member, respectively, and all
inventions, processes, production methods, proprietary information and
knowledge, and all licenses or other agreements granted to such Assignor with
respect to the foregoing; all information, customer lists, identification of
suppliers, data, plans, blueprints, specifications, designs, drawings, recorded
knowledge, surveys, engineering reports, test reports, manuals, materials
standards, processing standards, performance standards, catalogs, books,
records, computer and automatic machinery software and programs and the like
pertaining to operations by or the business of such Assignor; all field repair
data, sales data and other information relating to sales or service of products
manufactured or sold by such Assignor; all present and future Permits (other
than the Casino Operating Contract) of governmental agencies held by such
Assignor pertaining to its operations or business, except for licenses that
cannot be transferred or encumbered by such Assignor without causing a default
thereunder or termination thereof, including, without limitation, liquor and
gaming licenses of such type; all rights of such Assignor to receive return of
deposits and trust payments; all rights of such Assignor to payment under
letters of credit and similar agreements; all tax refunds (including, without
limitation, all foreign, federal, state and local income tax and property tax
refunds) owed to such Assignor; all causes of action, rights, claims and
warranties of such Assignor; all rights of such Assignor as lessor or lessee
under any lease or rental agreement; all rights of such Assignor under any
insurance, surety or similar contract or arrangement; all written guaranties and
express or implied warranties regarding the Collateral and any part or parts
thereof; and all goodwill.
"Goods" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"HET/JCC Agreement" shall have the meaning provided in the
Recitals to this Agreement.
22
<PAGE>
"House Bank" shall have the meaning provided in the Management
Agreement.
"Indemnitee" shall have the meaning provided in Section 8.1 of
this Agreement.
"Intercreditor Agreement" shall have the meaning provided in
the Recitals to this Agreement.
"Inventory" shall mean merchandise, inventory, goods and other
assets (including, without limitation, gaming equipment and gaming devices to
the extent not included in the definition of "Equipment" and food and food
products), and all additions, substitutions and replacements thereof, wherever
located, together with all goods, supplies, incidentals, packaging materials,
labels, materials and any other items used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production -- from raw
materials through work-in-process to finished goods -- and all products and
proceeds of whatever sort and wherever located and any portion thereof which may
be returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor's customers, and shall specifically include all "inventory" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York, now or hereafter owned by any Assignor.
"Investment Property" shall mean any "investment property" as
such term is defined in the Uniform Commercial Code as in effect on the date
hereof in the State of New York.
"JCC" shall have the meaning provided in the first paragraph
of this Agreement.
"JCC Holding" shall have the meaning provided in the Recitals
to this Agreement.
"Marks" shall mean any trademarks and service marks now held
or hereafter acquired by any Assignor, which are registered in the United States
Patent and Trademark Office or in any similar office or agency of the United
States or any state thereof or any political subdivision thereof and any
application for such trademarks and service marks, as well as any unregistered
marks used by any Assignor in the United States and trade dress including logos,
designs, trade names, company names, business names, fictitious business names
and other business identifiers in connection with which any of these registered
or unregistered marks are used in the United States.
"Minimum Payment Guarantors" shall have the meaning provided
in the first paragraph of this Agreement.
"Minimum Payment Guaranty" shall have the meaning assigned
that term in the Intercreditor Agreement.
"Minimum Payment Guaranty Documents" shall have the meaning
assigned that term in the Intercreditor Agreement.
23
<PAGE>
"Obligations" shall mean (i) the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of (x) the
principal of and interest on all Protective Advances (as defined in the
Intercreditor Agreement) made in accordance with the requirements of Section
4(e) of the Intercreditor Agreement and (y) all other obligations and
indebtedness (including, without limitation, indemnities, fees, expenses,
enforcement costs (including reasonable attorneys' fees) and interest on such
obligations and indebtedness), of each Credit Party to the Secured Creditors,
whether now existing or hereafter incurred, to the extent relating to Protective
Advances made in accordance with Section 4(e) of the Intercreditor Agreement and
the due performance and compliance by each Credit Party with all the terms,
conditions and agreements relating to such Protective Advances; (ii) the full
and prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations and indebtedness (including, without limitation,
indemnities, fees, expenses, enforcement costs (including reasonable attorneys'
fees) and interest on such obligations and indebtedness) of such Assignor to the
Minimum Payment Guarantors now existing or hereafter incurred under, arising out
of, or in connection with any Minimum Payment Guaranty Document (in each case,
to the extent such obligations and indebtedness relate to the Minimum Payment
Guaranty) to which it is a party (including, without limitation, all such
obligations and indebtedness under the HET/JCC Agreement) and the due
performance and compliance by such Assignor with all of the terms, conditions
and agreements contained in each such Minimum Payment Guaranty Document; (iii)
the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations and indebtedness (including,
without limitation, the principal of and interest on the notes issued, and Loans
made, under the Credit Agreement, all reimbursement obligations and unpaid
drawings with respect to letters of credit issued under the Credit Agreement,
and all indemnities, fees, expenses, enforcement costs (including reasonable
attorneys' fees) and interest on such obligations and indebtedness) of each
Assignor to the Bank Creditors now existing or hereafter incurred under, arising
out of, or in connection with any Credit Document (including, without
limitation, all such obligations and indebtedness under the Credit Agreement,
the JCC Holding Guaranty and the Subsidiaries Guaranty) to which such Assignor
is a party and the due performance and compliance by each Assignor with all of
the terms, conditions and agreements contained in the Credit Agreement and the
other Credit Documents; (iv) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, the principal of, premium, if any,
and interest on, the Senior Subordinated Notes, and all indemnities, fees,
expenses, enforcement costs (including reasonable attorneys' fees) and interest
on such obligations and indebtedness) of each Assignor to the Senior
Subordinated Note Creditors now existing or hereafter incurred under, arising
out of or in connection with the Senior Subordinated Notes, the other Senior
Subordinated Note Documents and the Security Documents (including, without
limitation, all such obligations and indebtedness under the Senior Subordinated
Note Guaranty) to which such Assignor is a party and the due performance and
compliance by each Assignor with all of the terms, conditions and agreements
contained therein; (v) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, the principal of, premium, if any,
and interest on, the Senior Subordinated Contingent Notes, and all indemnities,
fees, expenses, enforcement costs (including reasonable attorneys' fees) and
interest on such obligations and
24
<PAGE>
indebtedness) of each Assignor to the Senior Subordinated Contingent Note
Creditors now existing or hereafter incurred under, arising out of or in
connection with the Senior Subordinated Contingent Notes, the other Senior
Subordinated Contingent Note Documents and the Security Documents (including,
without limitation, all obligations and indebtedness under the Senior
Subordinated Contingent Note Guaranty) to which such Assignor is a party and the
due performance and compliance by each Assignor with all of the terms,
conditions and agreements contained therein; (vi) the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of all
obligations and liabilities owing by each Assignor to the Other Creditors under,
or with respect to, any Interest Rate Protection Agreement, whether such
Interest Rate Protection Agreement is now in existence or hereafter arising
(including, without limitation, all such obligations and indebtedness under the
JCC Holding Guaranty and the Subsidiaries Guaranty), and the due performance and
compliance by such Assignor with all of the terms, conditions and agreements
contained therein; (vii) any and all sums advanced by the Collateral Agent in
order to preserve the Collateral or preserve its security interest in the
Collateral, and any and all amounts (but without any interest thereon) owing by
the Borrower to the Minimum Payment Guarantors to reimburse the Minimum Payment
Guarantors for amounts paid by the Minimum Payment Guarantors to the Collateral
Agent pursuant to the indemnity provisions contained in Section 6(c) and (d) of
the Intercreditor Agreement; (viii) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
any Assignor referred to in clauses (i), (ii), (iii), (iv), (v) and (vi), after
an Event of Default shall have occurred and be continuing, the reasonable
expenses of the Collateral Agent in re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (ix) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement. It is acknowledged and agreed that the
"Obligations" shall include extensions of credit described above, whether
outstanding on the date of this Agreement or extended from time to time after
the date of this Agreement.
"Other Creditors" shall have the meaning provided in the first
paragraph of this Agreement.
"Patents" shall mean any United States patent to which any
Assignor now or hereafter has title and any divisions or continuations thereof,
as well as any application for a United States patent now or hereafter made by
any Assignor.
"Permits" shall mean any and all actions, approvals,
certificates, consents, waivers, exemptions, variances, franchises, orders,
permits, authorizations, rights or licenses of or from any governmental
authority or agency, including, without limitation the Casino Operating
Contract.
"Permitted Filings" shall have the meaning provided in Section
2.1 of this Agreement.
"Pledged Account Bank" shall have the meaning provided in
Section 2.6(a) of this Agreement.
25
<PAGE>
"Pledged Accounts" shall have the meaning provided in Section
1.1(a) of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform
Commercial Code as in effect in the State of New York on the date hereof or
under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to the Collateral Agent or any Assignor from time to time with respect
to any of the Collateral, (ii) any and all payments (in any form whatsoever)
made or due and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or hereafter owned by any Assignor and, in any event, shall
include, but shall not be limited to, all of such Assignor's rights to payment
for goods sold or leased or services performed by such Assignor, whether now in
existence or arising from time to time hereafter, including, without limitation,
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (i) all
security pledged, assigned, hypothecated or granted to or held by such Assignor
to secure the foregoing, (ii) all of such Assignor's right, title and interest
in and to any goods, the sale of which gave rise thereto, (iii) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (iv) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith, (v) all books, records, ledger cards,
and invoices relating thereto, (vi) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(vii) all credit information, reports and memoranda relating thereto, (viii) all
claims, rights, powers or privileges and remedies of any Assignor relating
thereto or arising in connection therewith, including, without limitation, all
rights of such Assignor to make determinations, to exercise any election
(including, but not limited to, election of remedies) or option or to give or
receive any notice, consent, waiver or approval, together with full power and
authority to demand, receive, enforce, collect or give receipt for any of the
foregoing, to enforce or execute any checks, or other instruments or orders, to
file any claims and to take any action which in the reasonable discretion of the
Collateral Agent may be necessary or advisable in connection with any of the
foregoing, and (ix) all other writings related in any way to the foregoing.
"Reserve Fund" shall have the meaning provided in the Credit
Agreement.
"Secured Creditors" shall have the meaning provided in the
first paragraph of this Agreement.
"Secured Debt Documents" shall mean and include each of this
Agreement, the Credit Agreement, the other Credit Documents, the Senior
Subordinated Note Documents, the
26
<PAGE>
Senior Subordinated Contingent Note Documents, the HET/JCC Agreement and the
other Minimum Payment Guaranty Documents, all Interest Rate Protection
Agreements from time to time in effect and all Shared Security Documents.
"Senior Subordinated Contingent Note Creditors" shall have the
meaning provided in the first paragraph of this Agreement.
"Senior Subordinated Contingent Note Holders" shall have the
meaning provided in the first paragraph of this Agreement.
"Senior Subordinated Note Creditors" shall have the meaning
provided in the first paragraph of this Agreement.
"Senior Subordinated Note Holders" shall have the meaning
provided in the first paragraph of this Agreement.
"Senior Subordinated Contingent Note Documents" shall have the
meaning provided in the Recitals to this Agreement.
"Senior Subordinated Contingent Note Indenture" shall have the
meaning provided in the Recitals to this Agreement.
"Senior Subordinated Contingent Notes" shall have the meaning
provided in the Recitals to this Agreement.
"Senior Subordinated Contingent Note Trustee" shall have the
meaning provided in the Recitals to this Agreement.
"Senior Subordinated Note Documents" shall have the meaning
provided in the Recitals to this Agreement.
"Senior Subordinated Note Indenture" shall have the meaning
provided in the Recitals to this Agreement.
"Senior Subordinated Notes" shall have the meaning provided in
the Recitals to this Agreement.
"Senior Subordinated Note Trustee" shall have the meaning
provided in the Recitals to this Agreement.
"Termination Date" shall have the meaning provided in Section
10.9 of this Agreement.
27
<PAGE>
ARTICLE X
MISCELLANEOUS
10.1. Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been duly given or made when delivered to
the party to which such notice, request, demand or other communication is
required or permitted to be given or made under this Agreement, addressed as
follows:
(a) if to any Assignor, at the address set forth opposite
its signature below;
(b) if to the Collateral Agent:
Attention:
(c) if to any Minimum Payment Guarantor, at the address set
forth in the Intercreditor Agreement.
(d) if to any Bank Creditor, either (x) to the Administrative
Agent, at the address of the Administrative Agent specified in the
Credit Agreement or (y) at such address as such Bank Creditor shall
have specified in the Credit Agreement;
(e) if to any Senior Subordinated Note Creditor, to the Senior
Subordinated Note Trustee at the address set forth in the Intercreditor
Agreement;
(f) if to any Senior Subordinated Contingent Note Creditor, to
the Senior Subordinated Contingent Note Trustee at the address set
forth in the Intercreditor Agreement;
(g) if to any Other Creditor, either (x) to the representative
for the Other Creditors, at such address as such representative may
have provided to each Assignor and the Collateral Agent from time to
time, or (y) directly to the Other Creditors at such address as the
Other Creditors shall have specified in writing to each Assignor and
the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder or, as to any
Secured Creditor, as may otherwise be specified in the applicable Secured Debt
Document.
10.2. Waiver; Amendment. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever except in accordance with the terms of Section 16 of the
Intercreditor Agreement.
28
<PAGE>
10.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, the Intercreditor Agreement or
any other Secured Debt Document except as specifically set forth in a waiver
granted pursuant to Section 10.2 hereof; (c) any amendment to or modification of
any Secured Debt Document or any security for any of the Obligations; whether or
not any Assignor shall have notice or knowledge of any of the foregoing; or (d)
any defect or any invalidity of this Agreement as same applies to any Assignor.
10.4. Successors and Assigns. This Agreement shall be binding
upon each Assignor and its successors and assigns and shall inure to the benefit
of the Collateral Agent and each Secured Creditor and their respective
successors and assigns, provided that no Assignor may transfer or assign any or
all of its rights or obligations hereunder except pursuant to an amendment to
the terms of this Agreement effected in accordance with the requirements of
Section 10.2 hereof. All agreements, statements, representations and warranties
made by each Assignor herein or in any certificate or other instrument delivered
by such Assignor or on its behalf under this Agreement shall be considered to
have been relied upon by the Secured Creditors and shall survive the execution
and delivery of this Agreement and the other Secured Debt Documents regardless
of any investigation made by the Secured Creditors or on their behalf.
10.5. Headings. The headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
10.6. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.7. GOVERNING LAW. EXCEPT AS MAY BE REQUIRED PURSUANT TO
SECTIONS 6.3(b) THROUGH 6.3(f) HEREOF, THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.8. Assignors' Duties. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that each Assignor shall
remain liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Collateral Agent shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Collateral Agent be required or
obligated in any manner to perform or fulfill any of the obligations of any
Assignor under or with respect to any Collateral.
29
<PAGE>
10.9. Termination; Release. (a) After the Termination Date,
this Agreement and the security interests created hereby shall terminate
(provided that all indemnities set forth herein including, without limitation,
in Article VIII hereof, shall survive any such termination) and the Collateral
Agent, at the request and expense of the respective Assignor, will execute and
deliver to such Assignor a proper instrument or instruments (including Uniform
Commercial Code termination statements on form UCC-3) acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to such Assignor (without recourse and without any representation or
warranty) such of the Collateral of such Assignor as may be in the possession of
the Collateral Agent and as has not theretofore been sold or otherwise applied
or released pursuant to this Agreement. As used in this Agreement, "Termination
Date" shall mean the date upon which no obligations remain pursuant to the
HET/JCC Agreement or any other Minimum Payment Guaranty Documents and all
Minimum Payment Guaranties have been terminated, the total commitments under the
Credit Agreement have been terminated, all Interest Rate Protection Agreements
and Minimum Payment Guaranties have been terminated, no Note under the Credit
Agreement is outstanding (and all Loans thereunder have been repaid in full),
all letters of credit issued under the Credit Agreement have been terminated, no
Senior Subordinated Notes or Senior Subordinated Contingent Notes are
outstanding and all Obligations then owing have been paid in full.
(b) The Collateral Agent shall release any or all of the
Collateral in accordance with the terms of Section 17 of the Intercreditor
Agreement. Furthermore, one or more Assignors (other than JCC Holding and JCC)
may be released from time to time as Assignors hereunder in accordance with the
terms of Section 17 of the Intercreditor Agreement.
10.10. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with JCC and the
Collateral Agent.
10.11. The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement and the Intercreditor Agreement all items of the
Collateral at any time received under this Agreement. It is expressly understood
and agreed that the obligations of the Collateral Agent as holder of the
Collateral and interest therein and with respect to the disposition thereof, and
otherwise under this Agreement, are only those expressly set forth in this
Agreement and the Intercreditor Agreement.
10.12. Gaming Regulations. This Agreement and the security
interests granted hereby and any remedies contemplated hereby, are and shall
remain subject to the Louisiana Economic Development and Gaming Corporation Act,
La. R.S. 27:1 et seq., La. R.S. 27:201 et seq. and the rules and regulations
thereunder, as amended from time to time (collectively, the "Louisiana Gaming
Regulations"), and the exercise of remedies hereunder will be subject to the
Louisiana Gaming Regulations.
30
<PAGE>
10.13. Additional Assignors. It is understood and agreed that
any Subsidiary of JCC Holding that is required to execute a counterpart of this
Agreement after the date hereof pursuant to any Secured Debt Document shall
automatically become an Assignor hereunder by executing a counterpart hereof and
by delivering the same to the Collateral Agent.
10.14. Intercreditor Agreement. Notwithstanding any other
provision of this Agreement or any document or instrument executed by any
Assignor, this Agreement and all liens and security interests and rights granted
herein, and the priority thereof, are expressly subject to the provisions of the
Intercreditor Agreement which are incorporated herein by reference and made
applicable hereto. In addition, the Collateral Agent is the collateral agent
under and pursuant to the terms of the Intercreditor Agreement, and,
notwithstanding anything herein to the contrary, the rights, powers, remedies
and obligations of the Collateral Agent hereunder shall be subject to the
provisions of the Intercreditor Agreement. Any exercise or waiver by the
Collateral Agent of any of its rights, powers or remedies hereunder or any other
act by the Collateral Agent hereunder shall be conclusive evidence of the
Collateral Agent's authority pursuant to the Intercreditor Agreement against all
persons other than the Secured Creditors.
10.15. No Third Party Beneficiaries. This Agreement is entered
into solely for the benefit of the parties hereto and their respective
successors and assigns and for the benefit of the Secured Creditors from time to
time and their respective successors and assigns and, except for the Secured
Creditors and their successors and assigns, there shall be no third party
beneficiaries hereof, nor shall any Person other than the parties hereto and
their respective successors and assigns, and the Secured Creditors and their
respective successors and assigns, be entitled to enforce the provisions hereof
or have any claims against any party hereto (or any Secured Creditor) or their
successors and assigns arising from, or under, this agreement.
31
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers, as the
case may be, as of the date first above written.
JCC HOLDING COMPANY,
as Assignor
By /s/ L. Camille Fowler
------------------------------
Title: Vice President & Secretary
JAZZ CASINO COMPANY, L.L.C.,
as Assignor
By /s/ L. Camille Fowler
------------------------------
Title: Vice President & Secretary
CP DEVELOPMENT, L.L.C.,
as Assignor
By: /s/ L. Camille Fowler
------------------------------
Title: Vice President & Secretary
FP DEVELOPMENT, L.L.C.,
as Assignor
By: /s/ L. Camille Fowler
------------------------------
Title: Vice President & Secretary
<PAGE>
JCC DEVELOPMENT COMPANY, L.L.C.,
as Assignor
By: /s/ L. Camille Fowler
------------------------------
Title: Vice President & Secretary
<PAGE>
THE BANK OF NEW YORK,
as Collateral Agent
By: /s/ R. Randall Deen
-----------------------------
Title: Agent
<PAGE>
ANNEX A
to
Security Agreement
SCHEDULE OF PERMITTED LIENS
<PAGE>
ANNEX B
to
Security Agreement
SCHEDULE OF CHIEF EXECUTIVE OFFICE AND RECORD LOCATIONS
<TABLE>
<CAPTION>
Name of Assignor Location Address
---------------- -------- -------
<S> <C> <C>
</TABLE>
<PAGE>
ANNEX C
to
Security Agreement
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
<TABLE>
<CAPTION>
NAME OF ASSIGNOR LOCATION ADDRESS FUNCTION
- ---------------- -------- ------- --------
<S> <C> <C> <C>
</TABLE>
<PAGE>
ANNEX D
FORM OF CONSENT OF DEPOSITARY BANK
------------, ----
[Name and Address of Pledged Account Bank]
re Security Agreement
- ----------------------
Ladies and Gentlemen:
This will confirm the arrangements regarding the account of
[name of Assignor] (the "Assignor"), Account Number ______, which is currently
maintained with you (the "Account").
Pursuant to a Security Agreement, dated as of _________ ___,
1998, as amended from time to time (the "Agreement"), between the Assignor,
various other Assignors and , as Collateral Agent (the "Collateral Agent"), the
Assignor has granted to the Collateral Agent a security interest in all cash,
securities, certificates, checks, drafts, investments and instruments from time
to time deposited in the Account.
All monies, securities, certificates, checks, drafts,
investments and instruments in the Account will become subject to the security
interest under the Agreement and subject to the terms of this letter arrangement
as soon as deposited therein. The Account shall not be subject to deduction,
setoff, banker's lien, or any other right in favor of any person other than the
Collateral Agent. The undersigned hereby waives any contractual or statutory
security interest and/or right of offset the undersigned has in the Account and
acknowledges receipt of the Security Agreement. The undersigned further agrees
to mark its records to reflect the security interest in favor of the Collateral
Agent in accordance with the Security Agreement and confirms that its records
indicate that no other party has been granted a security interest in the Account
The undersigned further agrees not to acknowledge or accept any other parties'
security interest in the Account or to enter into any other agreement granting
or acknowledging any other parties' control over or right to make entitlement
orders with respect to the Account.
Pursuant to the Agreement, the Assignor also has granted the
Collateral Agent an irrevocable power of attorney to give the notice referred to
in the immediately succeeding sentence. Until you have received written notice
from an officer of the Collateral Agent stating that an Event of Default as
defined in the Agreement has occurred, the Assignor shall be entitled to make
withdrawals from the Account and to invest the funds therein. Upon your receipt
of such
<PAGE>
ANNEX D
Page 2
a written notice from an officer of the Collateral Agent directing you to do so,
at the end of each business day until further written notice only from an
officer of the Collateral Agent, each day's deposit to the Account are to be
sent by wire and intact to the account designated below or to such other account
designated in writing by an officer of the Collateral Agent:
The Bank of New York
ABA# 021000018
GLA# 111-565
Collateral Account 154992
This new arrangement will start upon your agreement to the
foregoing. This agreement cannot be amended or terminated without at least
thirty (30) days prior written notice to the Collateral Agent.
Very truly yours,
--------------------
By______________________
Title:
ACCEPTED this ____ day of
- ----------------, ----:
[name of Assignor],
as Assignor
By______________________
Title:
[NAME OF PLEDGED ACCOUNT BANK]
By__________________________
Title:
<PAGE>
ANNEX D
Page 3
ANNEX A
PLEDGED ACCOUNTS
<TABLE>
<CAPTION>
Name of Assignor Name of Institution ADDRESS Account Number
- ---------------- ------------------- ------- --------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
ANNEX E
PLEDGED ACCOUNTS
<TABLE>
<CAPTION>
Name of Assignor Name of Institution ADDRESS Account Number
- ---------------- ------------------- ------- --------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
ANNEX F
to
Security Agreement
SCHEDULE OF TRADE, FICTITIOUS AND OTHER NAMES
---------------------------------------------
<PAGE>
ANNEX G
to
Security Agreement
I. SCHEDULE OF U.S. TRADEMARK REGISTRATIONS
<TABLE>
<CAPTION>
NAME OF REGISTERED REGISTRATION REGISTRATION
ASSIGNOR MARK NO. DATE
-------- ---- --- ----
<S> <C> <C> <C>
</TABLE>
II. SCHEDULE OF PENDING APPLICATIONS FOR U.S. TRADEMARK
REGISTRATIONS ON THE BASIS OF USE IN COMMERCE
UNDER 17 USC Section 1051(a)
III. SCHEDULE OF PENDING APPLICATION FOR U.S. TRADEMARK
REGISTRATION ON THE BASIS OF INTENT TO USE THE
MARK IN COMMERCE UNDER 17 USC Section 1051(b)
<TABLE>
<CAPTION>
NAME OF
ASSIGNOR MARK SERIAL NO.
-------- ---- ----------
<S> <C> <C>
</TABLE>
<PAGE>
ANNEX H
to
Security Agreement
SCHEDULE OF LICENSE AGREEMENTS AND ASSIGNMENTS
<TABLE>
<CAPTION>
NAME OF PARTIES AND
ASSIGNOR DESCRIPTION SUBJECT REMARKS
-------- ----------- ------- -------
<S> <C> <C> <C>
</TABLE>
<PAGE>
ANNEX I
to
Security Agreement
SCHEDULE OF PATENTS AND APPLICATIONS
<TABLE>
<CAPTION>
Name of Assignor Patent Number Date Issued Title
- ---------------- ------------- ----------- -----
<S> <C> <C> <C>
</TABLE>
<PAGE>
ANNEX I
Page 2
<TABLE>
<CAPTION>
Application Serial No. Date Filed
- ---------------------- ----------
<S> <C>
</TABLE>
<PAGE>
ANNEX J
to
Security Agreement
SCHEDULE OF COPYRIGHTS AND APPLICATIONS
---------------------------------------
<PAGE>
ANNEX K
to
Security Agreement
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
---------------------------------------
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency
of which are hereby acknowledged, [Assignor], a ___________
[corporation/partnership/limited liability company] (the "Assignor") with
principal offices at _____________, hereby assigns and grants to The Bank of New
York, as Collateral Agent, with principal offices at 10161 Centurion Prkwy.,
Jacksonville, FL 32256 (the "Assignee"), a security interest in (i) all of the
Assignor's right, title and interest in and to the United States trademarks,
trademark registrations and trademark applications (the "Marks") set forth on
Schedule A attached hereto, (ii) all of the Assignor's right, title and interest
in and to the United States patents (the "Patents") set forth on Schedule B
attached, in each case together with (iii) all Proceeds (as such term is defined
in the Security Agreement referred to below) and products of the Marks and
Patents, (iv) the goodwill of the businesses symbolized by the Marks and (v) all
causes of action arising prior to or after the date hereof for infringement of
any of the Marks and Patents or unfair competition regarding the same.
THIS ASSIGNMENT is made to secure the full and prompt
performance and payment of all the Obligations, as such term is defined in the
Security Agreement among the Assignor, the other assignors from time to time
party thereto and the Assignee, dated as of October 29, 1998 (as amended from
time to time, the "Security Agreement"). Upon the occurrence of the Termination
Date (as defined in the Security Agreement), the Assignee shall,
<PAGE>
ANNEX K
Page 2
upon such satisfaction, execute, acknowledge, and deliver to the Assignor an
instrument in writing releasing the security interest in the Marks and Patents
acquired under this Assignment.
This Assignment has been granted in conjunction with the
security interest granted to the Assignee under the Security Agreement. The
rights and remedies of the Assignee with respect to the security interest
granted herein are without prejudice to, and are in addition to those set forth
in the Security Agreement, all terms and provisions of which are incorporated
herein by reference. In the event that any provisions of this Assignment are
deemed to conflict with the Security Agreement, the provisions of the Security
Agreement shall govern.
<PAGE>
ANNEX K
Page 3
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the ____ day of ____________, 199_.
[ASSIGNOR], as Assignor
By_____________________________
Title:
THE BANK OF NEW YORK
as Collateral Agent, Assignee
By_____________________________
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On this ____ day of __________, 199_ before me personally came
_________________ who, being by me duly sworn, did state as follows: that he is
_______________ of [Assignor], that he is authorized to execute the foregoing
Assignment on behalf of said corporation and that he did so by authority of the
Board of Directors of said corporation.
-------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On this ____ day of ___________, 199_, before me personally
came _____________________ who, being by me duly sworn, did state as follows:
that he is __________________ of The Bank of New York, that he is authorized to
execute the foregoing Assignment on behalf of said corporation and that he did
so by authority of the Board of Directors of said corporation.
----------------------------
Notary Public
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
MARK REG. NO. REG. DATE
---- -------- ---------
<S> <C> <C>
</TABLE>
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
PATENT PATENT NO. ISSUE DATE
- ------ ---------- ----------
<S> <C> <C>
</TABLE>
<PAGE>
ANNEX L
to
Security Agreement
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, [Assignor], a ____________
[corporation/partnership/limited liability company] (the "Assignor"), having its
chief executive office at ________________, is the owner of all right, title and
interest in and to the United States copyrights and associated United States
copyright registrations and applications for registration set forth in Schedule
A attached hereto;
WHEREAS, The Bank of New York, as Collateral Agent, having its
principal offices at 10161 Centurion Prkwy., Jacksonville, FL 32256 (the
"Assignee"), desires to acquire a security interest in, and lien on, said
copyrights and copyright registrations and applications therefor and the
goodwill of the business symbolized by said copyrights; and
WHEREAS, the Assignor is willing to assign to the Assignee,
and to grant to the Assignee a security interest in and lien upon the copyrights
and copyright registrations and applications therefor described above;
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, and subject to the terms and conditions
of the Security Agreement, dated as of October 29, 1998, among the Assignor, the
other assignors from time to time party thereto and the Assignee (as amended
from time to time, the "Security Agreement"), the Assignor hereby assigns to the
Assignee, and grants to the Assignee a security interest in and a lien upon, the
copyrights and copyright registrations and applications therefor set forth in
Schedule A attached hereto and the goodwill of the business symbolized by said
copyrights.
This Assignment has been granted in conjunction with the
security interest granted to the Assignee under the Security Agreement. The
rights and remedies of the Assignee with respect to the security interest
granted herein are without prejudice to, and are in addition to those set forth
in the Security Agreement, all terms and provisions of which are incorporated
herein by reference. In the event that any provisions of this Assignment are
deemed to conflict with the Security Agreement, the provisions of the Security
Agreement shall govern.
<PAGE>
Executed at New York, New York, the __ day of _________, 199_.
[ASSIGNOR], as Assignor
By__________________________
Name:
Title:
THE BANK OF NEW YORK,
as Assignee
By__________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On this __ day of ___________, 199_ before me personally came
_______________, who being duly sworn, did depose and say that he is
___________________ of [Assignor], that he is authorized to execute the
foregoing Assignment on behalf of said corporation and that he did so by
authority of the Board of Directors of said corporation.
-------------------------
Notary Public
<PAGE>
SCHEDULE A
U.S. COPYRIGHTS
<TABLE>
<CAPTION>
REGISTRATION PUBLICATION
NUMBERS DATE COPYRIGHT TITLE
------- ---- ---------------
<S> <C> <C>
</TABLE>
<PAGE>
Exhibit 10.34
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT (as amended, modified or supplemented from
time to time, this "Agreement"), dated as of October 29, 1998, among each of the
undersigned pledgors (each a "Pledgor" and, collectively, the "Pledgors"), The
Bank of New York, in its individual capacity acting in respect of any Collateral
(as defined below) credited on the books of a Clearing Corporation (as defined
below) as Securities Intermediary (as defined below) with respect to each
Pledgor (the "Custodian"), and The Bank of New York, not in its individual
capacity but solely as Collateral Agent (the "Pledgee") for the benefit of (v)
Harrah's Entertainment, Inc., a Delaware Corporation ("HET"), and Harrah's
Operating Company, Inc., a Delaware Corporation ("HOC"), under the HET/JCC
Agreement or any successor or substitute Minimum Payment Guarantor under any
other Minimum Payment Guarantor Documents referred to below, (w) the Banks (as
defined below) and the Administrative Agent (as defined below) under, and any
other lenders from time to time party to, the Credit Agreement hereinafter
referred to (such Banks, the Administrative Agent and other lenders, if any, are
hereinafter called the "Bank Creditors"), (x) the holders from time to time of
the Senior Subordinated Notes hereinafter referred to (such holders of the
Senior Subordinated Notes are hereinafter called the "Senior Subordinated Note
Holders") and the Senior Subordinated Note Trustee referred to below (the Senior
Subordinated Note Holders, and together with the Senior Subordinated Note
Trustee, in its capacity as such, are hereinafter called the "Senior
Subordinated Note Creditors"), (y) the holders from time to time of the Senior
Subordinated Contingent Notes hereinafter referred to (such holders of the
Senior Subordinated Contingent Notes are hereinafter called the "Senior
Subordinated Contingent Note Holders") and the Senior Subordinated Contingent
Note Trustee referred to below (the Senior Subordinated Contingent Note Holders,
and together with the Senior Subordinated Contingent Note Trustee, in its
capacity as such, are hereinafter called the "Senior Subordinated Contingent
Note Creditors") and (z) if one or more Banks (or any Affiliate thereof) enter
into one or more interest rate protection agreements (including, without
limitation, interest rate hedges, swaps, caps, floors, collars and similar
agreements, collectively, the "Interest Rate Protection Agreements") with, or
guaranteed by, Jazz Casino Company, L.L.C., a Louisiana limited liability
company ("JCC"), any such Bank or Banks or any Affiliate of such Bank or Banks
(even if any such Bank subsequently ceases to be a Bank under the Credit
Agreement for any reason) so long as any such Bank or Affiliate thereof
participates in the extension of such Interest Rate Protection Agreements and
their subsequent assigns, if any (collectively, the "Other Creditors" and,
together with the Minimum Payment Guarantors, the Bank Creditors, the Senior
Subordinated Note Creditors and the Senior Subordinated Contingent Note
Creditors, are hereinafter called the "Secured Creditors"). Except as otherwise
defined herein, terms used herein and defined in the Intercreditor Agreement (as
in effect on the date hereof and without giving effect to any termination
thereof) shall be used herein as so defined and to the extent not defined herein
or in the Intercreditor Agreement, such terms shall be used herein as defined in
the Credit Agreement.
<PAGE>
W I T N E S S E T H :
WHEREAS, HET and HOC have jointly and severally provided the
initial Minimum Payment Guaranty (and HET and HOC and/or one or more other
Minimum Payment Guarantors may hereafter provide one or more substitute or
replacement Minimum Payment Guaranties) and in connection therewith JCC, HET and
HOC have entered into that certain HET/JCC Agreement dated October 29, 1998 (as
amended, modified or supplemented from time to time, the "HET/JCC Agreement");
WHEREAS, JCC Holding Company ("JCC Holding"), JCC, the lenders
(the "Banks") from time to time party thereto, and Bankers Trust Company, as
Administrative Agent (together with any successor agent, the "Administrative
Agent"), have entered into a Credit Agreement, dated as of October 29, 1998,
providing for the making of certain loans and the issuance of, and participation
in, letters of credit as contemplated therein (as used herein, the term "Credit
Agreement" means the Credit Agreement described above in this paragraph, as the
same may be amended, modified, extended, renewed, replaced, restated,
supplemented or refinanced from time to time, and including any agreement
extending the maturity of, or refinancing or restructuring (including, but not
limited to, the inclusion of additional borrowers or guarantors thereunder or
any increase in the amount borrowed) all or any portion of, the indebtedness
under such agreement or any successor agreements, whether or not with the same
agent, trustee, representative, lenders or holders; provided that, with respect
to any agreement providing for the refinancing or replacement of indebtedness
under the Credit Agreement, such agreement shall only be treated as, or as part
of, the Credit Agreement hereunder if (i) either (A) all obligations under the
Credit Agreement being refinanced or replaced shall be paid in full at the time
of such refinancing or replacement, and all commitments and letters of credit
issued pursuant to the refinanced or replaced Credit Agreement shall have
terminated in accordance with their terms or (B) the Required Banks shall have
consented in writing to the refinancing or replacement indebtedness being
treated as indebtedness pursuant to the Credit Agreement, (ii) the refinancing
or replacement indebtedness shall be permitted to be incurred under the Credit
Agreement being refinanced or replaced (if such Credit Agreement is to remain
outstanding) and the other Credit Documents then in effect, under the Senior
Subordinated Note Documents referred to below (if the Senior Subordinated Notes
referred to below remain outstanding) and under the Senior Subordinated
Contingent Note Documents referred to below (if the Senior Subordinated
Contingent Notes referred to below remain outstanding) and (iii) a notice to the
effect that the refinancing or replacement indebtedness shall be treated as
issued under the Credit Agreement shall be delivered by JCC to the Collateral
Agent);
WHEREAS, JCC has issued $187,500,000 in aggregate principal
amount of its Senior Subordinated Notes with Contingent Payments due 2009 (the
"Senior Subordinated Notes") pursuant to an Indenture, dated as of October 30,
1998, among JCC, as issuer, JCC Holding, as guarantor, and Norwest Bank
Minnesota, National Association, as trustee (in such capacity, together with any
successor trustee, "the Senior Subordinated Note Trustee") (as amended, modified
or supplemented from time to time, the "Senior Subordinated Note Indenture"
2
<PAGE>
and, together with the Senior Subordinated Notes and all other documents and
agreements relating thereto are herein called the "Senior Subordinated Note
Documents");
WHEREAS, JCC has issued its Senior Subordinated Contingent
Notes due 2009 (the "Senior Subordinated Contingent Notes") pursuant to an
Indenture, dated as of October 30, 1998, among JCC, as issuer, JCC Holding, as
guarantor, and Norwest Bank Minnesota, National Association, as trustee (in such
capacity, together with any successor trustee the "Senior Subordinated
Contingent Note Trustee") (as amended, modified or supplemented from time to
time, the "Senior Subordinated Contingent Note Indenture" and, together with the
Senior Subordinated Contingent Notes and all other documents and agreements
relating thereto are herein called the "Senior Subordinated Contingent Note
Documents");
WHEREAS, JCC may at any time and from time to time enter into,
or guarantee obligations of its Subsidiaries under, one or more Interest Rate
Protection Agreements with one or more Other Creditors;
WHEREAS, pursuant to (1) the JCC Holding Guaranty, as defined
in the Credit Agreement, JCC Holding has guaranteed to the Bank Creditors and
the Other Creditors the payment when due of all obligations and liabilities of
JCC under or with respect to (x) the Credit Documents and (y) the Interest Rate
Protection Agreements and (2) the Subsidiaries Guaranty, each Pledgor (other
than JCC Holding and JCC) has jointly and severally guaranteed to the Bank
Creditors and the Other Creditors the payment when due of all obligations and
liabilities of JCC under or with respect to (x) the Credit Documents and (y) the
Interest Rate Protection Agreements;
WHEREAS, pursuant to Article XII of the Senior Subordinated
Note Indenture, JCC Holding and each other Pledgor (other than JCC) have jointly
and severally guaranteed (the "Senior Subordinated Note Guaranty") to the Senior
Subordinated Note Creditors the payment when due of all obligations and
liabilities of JCC under or with respect to the Senior Subordinated Note
Documents;
WHEREAS, pursuant to Article XII of the Senior Subordinated
Contingent Note Indenture, JCC Holding and each other Pledgor (other than JCC)
have jointly and severally guaranteed (the "Senior Subordinated Contingent Note
Guaranty") to the Senior Subordinated Contingent Note Creditors the payment when
due of all obligations and liabilities of JCC under or with respect to the
Senior Subordinated Contingent Note Documents;
WHEREAS, it is a condition precedent to each of the
above-described extensions of credit to JCC that each Pledgor shall have
executed and delivered to the Pledgee this Agreement; and
WHEREAS, the Secured Creditors and the Pledgee have entered
into that certain Intercreditor Agreement dated October 29, 1998 (the
"Intercreditor Agreement") setting forth the respective rights of the Secured
Creditors in the Collateral referred to in this Agreement, the
3
<PAGE>
Security Agreement (as defined in the Intercreditor Agreement) and the Mortgages
(as defined in the Intercreditor Agreement);
WHEREAS, each Pledgor desires to enter into this Agreement in
order to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the above-described
extensions of credit to be made to JCC and the other benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
for the benefit of the Secured Creditors and hereby covenants and agrees with
the Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by
each Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of (x) the principal of
and interest on all Protective Advances (as defined in the
Intercreditor Agreement) made in accordance with the requirements of
Section 4(e) of the Intercreditor Agreement and (y) all other
obligations and indebtedness (including, without limitation,
indemnities, fees and expenses, enforcement costs (including reasonable
attorneys' fees) and interest on such obligations and indebtedness), of
each Pledgor to the Secured Creditors, whether now existing or
hereafter incurred, to the extent relating to Protective Advances made
in accordance with Section 4(e) of the Intercreditor Agreement and the
due performance and compliance by each Pledgor with all the terms,
conditions and agreements relating to such Protective Advances (all
such principal, interest, obligations and liabilities described in this
clause (i) being herein collectively called the "Protective Advance
Obligations");
(ii) the full and prompt payment when due (whether at the date
of maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, indemnities, fees,
expenses, enforcement costs (including reasonable attorneys' fees) and
interest on such obligations and indebtedness) of such Pledgor to the
Minimum Payment Guarantors now existing or hereafter incurred under,
arising out of, or in connection with any Minimum Payment Guaranty
Document (in each case, to the extent such obligations and indebtedness
relate to any Minimum Payment Guaranty) to which it is a party
(including, without limitation, all such obligations and indebtedness
under the HET/JCC Agreement) and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements contained
in each such Minimum Payment Guaranty Document (all such principal,
interest, obligations and liabilities described in this clause (ii)
being herein collectively called the "Minimum Payment Obligations");
(iii)the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, indemnities, fees,
expenses, enforcement costs (including reasonable attorneys' fees) and
interest on such obligations and indebtedness) of such Pledgor to the
Bank
4
<PAGE>
Creditors now existing or hereafter incurred under, arising out of, or
in connection with any Credit Document to which it is a party
(including, without limitation, all such obligations and indebtedness
under the Credit Agreement, the JCC Holding Guaranty and the
Subsidiaries Guaranty) and the due performance and compliance by such
Pledgor with all of the terms, conditions and agreements contained in
each such Credit Document (all such principal, interest, obligations
and liabilities described in this clause (iii) being herein
collectively called the "Credit Document Obligations");
(iv) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, indemnities, fees,
expenses, enforcement costs (including reasonable attorneys' fees) and
interest on such obligations and indebtedness) of such Pledgor to the
Senior Subordinated Note Creditors, arising out of, or in connection
with the Senior Subordinated Notes and the Senior Subordinated Note
Documents (including, without limitation, all such obligations and
indebtedness under the Senior Subordinated Note Guaranty) and the due
performance and compliance by such Pledgor with all of the terms,
conditions and agreements contained therein (all such principal,
interest, obligations and liabilities described in this clause (iv)
being herein collectively called the "Senior Subordinated Note
Obligations");
(v) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
indebtedness (including, without limitation, indemnities, fees,
expenses, enforcement costs (including reasonable attorneys' fees) and
interest on such obligations and indebtedness) of such Pledgor to the
Senior Subordinated Contingent Note Creditors, arising out of, or in
connection with the Senior Subordinated Contingent Notes and the Senior
Subordinated Contingent Note Documents (including, without limitation,
all such obligations and indebtedness under the Senior Subordinated
Contingent Note Guaranty) and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements contained
therein (all such principal, interest, obligations and liabilities
described in this clause (v) being herein collectively called the
"Senior Subordinated Contingent Note Obligations");
(vi) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations and
liabilities owing by such Pledgor to the Other Creditors under, or with
respect to, any Interest Rate Protection Agreement, whether such
Interest Rate Protection Agreement is now in existence or hereafter
arising (including, without limitation, all such obligations and
indebtedness under the JCC Holding Guaranty and the Subsidiaries
Guaranty), and the due performance and compliance by such Pledgor with
all of the terms, conditions and agreements contained therein (all such
obligations and liabilities described in this clause (vi) being herein
collectively called the "Other Obligations");
(vii)any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral, and any and all amounts (but
without any interest thereon) owing by the Borrower to the
5
<PAGE>
Minimum Payment Guarantors to reimburse the Minimum Payment Guarantors
for amounts paid by the Minimum Payment Guarantors to the Collateral
Agent pursuant to the indemnity provisions contained in Section 6(c)
and (d) of the Intercreditor Agreement;
(viii) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of such
Pledgor referred to in clauses (i) through (vi) above, after an Event
of Default (as hereinafter defined) shall have occurred and be
continuing, the reasonable expenses of the Pledgee in retaking,
holding, preparing for sale or lease, selling or otherwise disposing of
or realizing on the Collateral, or of any exercise by the Pledgee of
its rights hereunder, together with reasonable attorneys' fees and
court costs; and
(ix) all amounts paid by any Indemnitee (as hereinafter
defined) as to which such Indemnitee has the right to reimbursement
under Section 11 hereof;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (ix) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit described above, whether outstanding on the date of
this Agreement or extended from time to time after the date of this Agreement.
As used herein the term "Event of Default" shall mean any "Event of Default"
under, and as defined in, the Intercreditor Agreement, or any other default
hereunder after notice from the Pledgee and 30 days opportunity to cure, as the
case may be, and shall in any event include any payment default on the
Obligations after the expiration of any applicable grace period.
2. DEFINITIONS; ANNEXES. (a) Unless otherwise defined herein,
all capitalized terms used herein and defined in the Credit Agreement shall be
used herein as therein defined. Reference to singular terms shall include the
plural and vice versa.
The following capitalized terms used herein shall have the
definitions specified below:
"Administrative Agent" has the meaning set forth in the
Recitals hereto.
"Adverse Claim" has the meaning given such term in Section
8-102(a)(1) of the UCC.
"Agreement" has the meaning set forth in the first paragraph
hereof.
"Bank Creditors" has the meaning set forth in the first
paragraph hereof.
"Banks" has the meaning set forth in the Recitals hereto.
"Certificated Security" has the meaning given such term in
Section 8-102(a)(4) of the UCC.
6
<PAGE>
"Clearing Corporation" has the meaning given such term in
Section 8-102(a)(5) of the UCC.
"Collateral" has the meaning set forth in Section 3.1 hereof.
"Collateral Accounts" means any and all accounts established
and maintained by the Pledgee or the Securities Intermediary in the name of any
Pledgor, including, without limitation, the Securities Intermediary Account, to
which Collateral may be credited.
"Credit Agreement" has the meaning set forth in the Recitals
hereto.
"Credit Document Obligations" has the meaning set forth in
Section 1 hereof.
"Custodian" has the meaning set forth in the first paragraph
hereof.
"Custodian Account" means any account established and
maintained by the Custodian in the name of any Pledgor to which Collateral also
credited on the books of a Clearing Corporation may be credited.
"Domestic Corporation" has the meaning set forth in the
definition of "Stock."
"Entitlement Order" has the meaning given such term in Section
8-102(a)(8) of the UCC.
"Event of Default" has the meaning set forth in Section 1
hereof.
"Excluded Collateral" means (i) the Casino Operating Contract;
(ii) the House Bank; and (iii) the Louisiana Gross Gaming Revenue Share
Payments, including the State's Interest in Daily Collections (as such terms are
defined in the Casino Operating Contract).
"Financial Asset" has the meaning given such term in Section
8-102(a)(9) of the UCC.
"Foreign Corporation" has the meaning set forth in the
definition of "Stock."
"Gaming Patron Indebtedness" means all patron gaming
indebtedness owed to any Pledgor, including without limitation any marker,
patron promissory note or other evidence of patron gaming indebtedness.
"HET/JCC Agreement" has the meaning set forth in the Recitals
hereto.
"Indemnitees" has the meaning set forth in Section 11 hereof.
"Instrument" has the meaning given such term in Section
9-105(1)(i) of the UCC.
"Intercreditor Agreement" has the meaning set forth in the
Recitals hereto.
7
<PAGE>
"Interest Rate Protection Agreements" has the meaning set
forth in the first paragraph hereof.
"Investment Property" has the meaning given such term in
Section 9-115(1)(f) of the UCC.
"JCC" has the meaning set forth in the first paragraph hereof.
"JCC Holding" has the meaning set forth in the Recitals
hereto.
"Limited Liability Company Assets" means all assets, whether
tangible or intangible and whether real, personal or mixed (including, without
limitation, all limited liability company capital and interest in other limited
liability companies), at any time owned or represented by any Limited Liability
Company Interest.
"Limited Liability Company Interests" means the entire limited
liability company membership interest at any time owned by any Pledgor in any
limited liability company.
"Louisiana UCC" shall have the meaning provided in Section
7(b).
"Minimum Payment Guarantors" shall mean and include HET, HOC
and any substitute or successor Minimum Payment Guarantor from time to time
party to, and as defined in, the Intercreditor Agreement.
"Minimum Payment Guaranty" shall have the meaning assigned
that term in the Intercreditor Agreement.
"Minimum Payment Guaranty Documents" shall have the meaning
assigned that term in the Intercreditor Agreement.
"Minimum Payment Obligations" has the meaning provided in
Section 1 hereof.
"Notes" mean all promissory notes between or among JCC Holding
and its Subsidiaries and all other promissory notes from time to time issued to,
or held by, any Pledgor.
"Notice of Adverse Claim" has the meaning given such term in
Section 8-105 of the UCC.
"Obligations" has the meaning set forth in Section 1 hereof.
"Other Creditors" has the meaning set forth in the first
paragraph hereof.
"Other Obligations" has the meaning set forth in Section 1
hereof.
"Participant" has the meaning set forth in Section 3.2(a)
hereof.
8
<PAGE>
"Partnership Assets" means all assets, whether tangible or
intangible and whether real, personal or mixed (including, without limitation,
all partnership capital and interest in other partnerships), at any time owned
or represented by any Partnership Interest.
"Partnership Interest" means the entire general partnership
interest or limited partnership interest at any time owned by any Pledgor in any
general partnership or limited partnership.
"Pledged Instruments" has the meaning set forth in Section 3.5
hereof.
"Pledged Notes" has the meaning set forth in Section 3.5
hereof.
"Pledgee" has the meaning set forth in the first paragraph
hereof.
"Pledgor" has the meaning set forth in the first paragraph
hereof.
"Proceeds" has the meaning given such term in Section 9-306(l)
of the UCC.
"Protective Advance Obligations" has the meaning set forth in
Section 1.
"Secured Creditors" has the meaning set forth in the first
paragraph hereof.
"Secured Debt Documents" means each of this Agreement, the
Credit Agreement, any other Credit Document, any Interest Rate Protection
Agreement, any Senior Subordinated Note Document, any Senior Subordinated
Contingent Note Document, any Minimum Payment Guaranty Document or any Shared
Security Document (as defined in the Intercreditor Agreement.
"Securities Account" has the meaning given such term in
Section 8-501(a) of the UCC.
"Securities Act" means the Securities Act of 1933, as amended,
as in effect from time to time.
"Securities Intermediary" has the meaning given such term in
Section 8-102(a)(14) of the UCC.
"Security" has the meaning given such term in Section
8-102(a)(15) of the UCC and shall in any event include all Stock and Notes.
"Security Entitlement" has the meaning given such term in
Section 8-102(a)(17) of the UCC.
"Senior Subordinated Contingent Note Creditors" has the
meaning set forth in the first paragraph hereof.
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"Senior Subordinated Contingent Note Documents" has the
meaning set forth in the Recitals hereto.
"Senior Subordinated Contingent Note Guaranty" has the meaning
set forth in the Recitals hereto.
"Senior Subordinated Contingent Note Indenture" has the
meaning set forth in the Recitals hereto.
"Senior Subordinated Contingent Note Obligations" has the
meaning set forth in Section 1 hereof.
"Senior Subordinated Contingent Note Trustee" has the meaning
set forth in the Recitals hereto.
"Senior Subordinated Contingent Notes" has the meaning set
forth in the Recitals hereto.
"Senior Subordinated Note Creditors" has the meaning set forth
in the first paragraph hereof.
"Senior Subordinated Note Documents" has the meaning set forth
in the Recitals hereto.
"Senior Subordinated Note Guaranty" has the meaning set forth
in the Recitals hereto.
"Senior Subordinated Note Holders" has the meaning set forth
in the first paragraph hereof.
"Senior Subordinated Note Indenture" has the meaning set forth
in the Recitals hereto.
"Senior Subordinated Note Obligations" has the meaning set
forth in Section 1 hereof.
"Senior Subordinated Note Trustee" has the meaning set forth
in the Recitals hereto.
"Senior Subordinated Notes" has the meaning set forth in the
Recitals hereto.
"Stock" means (x) with respect to corporations incorporated
under the laws of the United States or any State or territory thereof (each a
"Domestic Corporation"), all of the issued and outstanding shares of capital
stock at any time owned by any Pledgor of any Domestic Corporation and (y) with
respect to corporations not Domestic Corporations (each a "Foreign
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Corporation"), all of the issued and outstanding shares of capital stock at any
time owned by any Pledgor of any Foreign Corporation.
"Termination Date" has the meaning set forth in Section 17
hereof.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York from time to time; provided that all references herein to
specific sections or subsections of the UCC are references to such sections or
subsections, as the case may be, of the Uniform Commercial Code as in effect in
the State of New York on the date hereof.
"Uncertificated Security" has the meaning given such term in
Section 8-102(a)(18) of the UCC.
3. PLEDGE AND GRANT OF SECURITY INTEREST, ETC.
3.1. Pledge. To secure the Obligations now or hereafter owed
or to be performed by such Pledgor, each Pledgor does hereby grant, pledge and
assign to the Pledgee for the benefit of the Secured Creditors, and does hereby
create a continuing security interest (subject to those Liens permitted to exist
with respect to the Collateral pursuant to the terms of all Secured Debt
Documents then in effect) in favor of the Pledgee for the benefit of the Secured
Creditors in, all of the right, title and interest (but none of the Pledgor's
obligations) in and to the following, whether now existing or hereafter from
time to time acquired (collectively, but in each case except to the extent
constituting Excluded Collateral, the "Collateral"), upon the terms and subject
to the conditions of this Agreement, and further subject to the provisions of
the Intercreditor Agreement:
(a) each of the Collateral Accounts, including any
and all assets of whatever type or kind deposited by such
Pledgor in a Collateral Account, whether now owned or
hereafter acquired, existing or arising, including, without
limitation, all Financial Assets, Investment Property, moneys,
checks, drafts, Instruments, Securities or interests therein
of any type or nature deposited or required by or any Secured
Debt Document to be deposited in such Collateral Account, and
all investments and all certificates and other Instruments
(including depository receipts, if any) from time to time
representing or evidencing the same, and all dividends,
interest, distributions, cash and other property from time to
time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the foregoing;
(b) all Securities (including, without limitation,
all Stock and all Notes) of such Pledgor from time to time;
(c) all Limited Liability Company Interests
of such Pledgor from time to time and all of its right, title
and interest in each limited liability company to which each
such interest relates, whether now existing or hereafter
acquired, including, without limitation:
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(A) all the capital thereof and its interest in all
profits, losses, Limited Liability Company Assets and other
distributions to which such Pledgor shall at any time be
entitled in respect of such Limited Liability Company
Interests;
(B) all other payments due or to become due to such
Pledgor in respect of Limited Liability Company Interests,
whether under any limited liability company or operating
agreement or otherwise, whether as contractual obligations,
damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if
any, under any limited liability company agreement or
operating agreement, or at law or otherwise in respect of such
Limited Liability Company Interests;
(D) all present and future claims, if any, of such
Pledgor against any such limited liability company for moneys
loaned or advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any limited
liability company agreement or operating agreement or at law
to exercise and enforce every right, power, remedy, authority,
option and privilege of such Pledgor relating to such Limited
Liability Company Interests, including any power to terminate,
cancel or modify any limited liability company agreement or
operating agreement, to execute any instruments and to take
any and all other action on behalf of and in the name of any
of such Pledgor in respect of such Limited Liability Company
Interests and any such limited liability company, to make
determinations, to exercise any election and (including, but
not limited to, election of remedies) or option or to give or
receive any notice, consent, amendment, waiver or approval,
together with full power and authority to demand, receive,
enforce, collect or receipt for any of the foregoing or for
any Limited Liability Company Asset, to enforce or execute any
checks, or other instruments or orders, to file any claims and
to take any action in connection with any of the foregoing
(with all of the foregoing rights only to be exercisable upon
the occurrence and during the continuation of an Event of
Default); and
(F) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all thereof;
(d) all Partnership Interests of such Pledgor from time to
time and all of its right, title and interest in each partnership to which each
such interest relates, whether now existing or hereafter acquired, including,
without limitation:
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(A) all the capital thereof and its interest in all
profits, losses, Partnership Assets and other distributions to
which such Pledgor shall at any time be entitled in respect of
such Partnership Interests;
(B) all other payments due or to become due to such
Pledgor in respect of Partnership Interests, whether under any
partnership agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges,
authority, options, security interests, liens and remedies, if
any, under any partnership agreement or operating agreement,
or at law or otherwise in respect of such Partnership
Interests;
(D) all present and future claims, if any, of such
Pledgor against any such partnership for moneys loaned or
advanced, for services rendered or otherwise;
(E) all of such Pledgor's rights under any
partnership agreement or operating agreement or at law to
exercise and enforce every right, power, remedy, authority,
option and privilege of such Pledgor relating to such
Partnership Interests, including any power to terminate,
cancel or modify any partnership agreement or operating
agreement, to execute any instruments and to take any and all
other action on behalf of and in the name of any of such
Pledgor in respect of such Partnership Interests and any such
partnership, to make determinations, to exercise any election
and (including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, amendment,
waiver or approval, together with full power and authority to
demand, receive, enforce, collect or receipt for any of the
foregoing or for any Partnership Asset, to enforce or execute
any checks, or other instruments or orders, to file any claims
and to take any action in connection with any of the foregoing
(with all of the foregoing rights only to be exercisable upon
the occurrence and during the continuation of an Event of
Default); and
(F) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
other property and all cash, securities, interest, dividends,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all thereof;
(e) all Instruments and Notes of such Pledgor from time to
time;
(f) all Security Entitlements of such Pledgor from time to
time in any and all of the foregoing;
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(g) all Financial Assets and Investment Property of such
Pledgor from time to time;
(h) all Gaming Patron Indebtedness and any marker, patron
promissory note or other evidence thereof; and
(i) all Proceeds of any and all of the foregoing.
3.2. Procedures. (a) To the extent that any Pledgor at any
time or from time to time owns, acquires or obtains any right, title or interest
in any Collateral, such Collateral shall automatically (and without the taking
of any action by the respective Pledgor) be pledged pursuant to Section 3.1 of
this Agreement and, in addition thereto, such Pledgor shall (to the extent
provided below) take the following actions as set forth below (as promptly as
practicable and, in any event, within 10 days after it obtains such Collateral)
for the benefit of the Pledgee and the Secured Creditors:
(i) with respect to a Certificated Security
(other than a Certificated Security credited on the books of a Clearing
Corporation), the respective Pledgor shall physically deliver such
Certificated Security to the Pledgee, indorsed to the Pledgee or
indorsed in blank by an effective indorsement;
(ii) with respect to an Uncertificated Security (other than an
Uncertificated Security credited on the books of a Clearing
Corporation), the respective Pledgor shall cause the issuer of such
Uncertificated Security to duly authorize and execute,
and deliver to the Pledgee, an agreement for the benefit of the Pledgee
and the Secured Creditors substantially in the form of Annex G hereto
(appropriately completed to the satisfaction of the Pledgee and with
such modifications, if any, as shall be satisfactory to the Pledgee)
pursuant to which such issuer agrees to comply with any and all
instructions originated by the Pledgee without further consent by the
registered owner and not to comply with instructions regarding such
Uncertificated Security (and any Partnership Interests and Limited
Liability Company Interests issued by such issuer) originated by any
other Person other than a court of competent jurisdiction;
(iii) with respect to an Instrument, Certificated Security,
Uncertificated Security, Partnership Interest or
Limited Liability Company Interest credited on the books of a Clearing
Corporation (including a Federal Reserve Bank, Participants Trust
Company or The Depository Trust Company), (1) compliance with the
applicable rules of such Clearing Corporation, (2) the crediting by
such Clearing Corporation of such Instrument, Security, Partnership
Interest or Limited Liability Company Interest, as the case may be, to
a Securities Account maintained by such Clearing Corporation in the
name of the Custodian, or, if the Custodian is not a participant in
such Clearing Corporation, the crediting by such Clearing Corporation
of such Instrument, Security, Partnership Interest or Limited Liability
Company Interest, as the case may be, to a Securities Account
maintained by such Clearing Corporation in the name of another
Securities Intermediary who is a participant in such Clearing
Corporation (the "Participant") and the crediting by
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the Participant of such Instrument, Security, Partnership Interest or
Limited Liability Company Interest, as the case may be, to a Securities
Account maintained by the Participant in the name of the Custodian and
(3) the Custodian crediting such Security, Instrument, Partnership
Interest or Limited Liability Company Interest, as the case may be, to
the Custodian Account;
(iv) with respect to a Partnership Interest or a Limited
Liability Company Interest (other than a Partnership Interest or
Limited Liability Interest credited on the books of a Clearing
Corporation), (1) if such Partnership Interest or Limited Liability
Company Interest is represented by a certificate, the procedure set
forth in Section 3.2(a)(i), and (2) whether or not such Partnership
Interest or Limited Liability Company Interest is represented by a
certificate, the procedure set forth in Section 3.2(a)(ii);
(v) with respect to an Instrument (other than an Instrument
credited on the books of a Clearing Corporation) or any Note, physical
delivery of such Instrument or Note to the Pledgee, indorsed to the
Pledgee or indorsed in blank; and
(vi) with respect to cash, (i) establishment by the Custodian
of a Collateral Account in the name of such Pledgor over which the
Pledgee shall have exclusive and absolute control and dominion (and no
withdrawals or transfers may be made therefrom by any Person except
with the prior written consent of the Pledgee) and (ii) deposit of such
cash in such Collateral Account (it being expressly understood and
agreed that this Agreement shall be deemed to constitute an
indispensable instrument with respect to such Collateral Account held
exclusively by the Pledgee for the benefit of the Secured Creditors).
(b) In addition to the actions required to be taken pursuant
to the preceding Section 3.2(a), each Pledgor shall take the following
additional actions with respect to the Collateral:
(i) with respect to all Collateral of such Pledgor whereby or
with respect to which the Pledgee may obtain "control" thereof within
the meaning of Section 8-106 of the UCC (or under any provision of the
UCC as same may be amended or supplemented from time to time, or under
the laws of any relevant State other than the State of New York), the
respective Pledgor shall take all actions as may be requested from time
to time by the Pledgee so that "control" of such Collateral is obtained
and at all times held by the Pledgee; and
(ii) each Pledgor shall from time to time cause appropriate
financing statements (on form UCC-1 or other appropriate form) under
the Uniform Commercial Code as in effect in the various relevant
States, on a form covering all Collateral hereunder (with the form of
such financing statements to be satisfactory to the Pledgee), to be
filed in the relevant filing offices so that at all times the Pledgee
has a security interest in all Investment Property and other Collateral
which is perfected by the filing of such financing statements (in each
case to the maximum extent perfection by filing may be obtained under
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the laws of the relevant States, including, without limitation, Section
9-115(4)(b) of the UCC).
(c) In addition to the actions otherwise required to be taken
above, and notwithstanding anything to the contrary contained elsewhere in this
Agreement, with respect to each Wholly-Owned Subsidiary of JCC Holding (other
than the Borrower and JCC Development), JCC Holding shall take all action as may
be required so that all equity interests therein are certificated, with the
actions described in Section 3.2(a)(i) being taken with respect thereto.
(d) Notwithstanding anything to contrary contained above or in
any of the other Shared Security Documents (as defined in the Intercreditor
Agreement), unless and until an Event of Default has occurred and is continuing,
no Pledgor shall be required to deliver any Gaming Patron Indebtedness or any
evidence thereof to the Pledgee, and shall be required to take no other actions
to perfect security interests therein other than the filing of appropriate
financing statements on Form UCC-1 (or the appropriate equivalent in the
relevant jurisdiction); it being understood and agreed by the Pledgee and the
Secured Creditors that the filing of such financing statements may not (under
applicable Louisiana law) be sufficient to perfect the security interests in the
Gaming Patron Indebtedness. Upon the occurrence and during the continuance of
any Event of Default, each Pledgor covenants and agrees to take such actions
with respect to the Gaming Patron Indebtedness from time to time held by them as
may be requested by the Pledgee or the Required Secured Creditors to perfect or
protect the Pledgee's security interests therein, including without limitation
(i) delivering all markers, patron promissory notes or other evidences of patron
gaming indebtedness to the Pledgee, (ii) stamping all evidences of Gaming Patron
Indebtedness with a legend meeting the requirements of Louisiana Revised
Statutes 9:4330-4334 denoting the assignment, pledge and security interests
granted herein on all then existing Gaming Patron Indebtedness and all Gaming
Patron Indebtedness acquired in the future (and indicating that such Gaming
Patron Indebtedness is subject to the security interests created pursuant to
this Agreement) or (iii) taking such other actions as may be requested by the
Pledgee or the Required Secured Creditors to perfect and protect the security
interests granted pursuant to this Agreement in all Gaming Patron Indebtedness.
It is understood and agreed by the parties hereto (and the Secured Creditors)
that, except for the actions required to be taken as provided above, no Pledgor
shall have any obligation to perfect the Pledgee's security interest in Gaming
Patron Indebtedness. To induce the Secured Creditors to agree to the foregoing,
each Pledgor hereby covenants and agrees for the benefit of the Secured
Creditors that it shall not assign, collaterally assign, pledge, grant a
security interest in or otherwise encumber in any way (other than pursuant to
the Shared Security Documents ) any present or future Gaming Patron
Indebtedness.
3.3. Subsequently Acquired Collateral. If any Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Collateral at
any time or from time to time after the date hereof, such Collateral shall
automatically (and without any further action being required to be taken) be
subject to the pledge and security interests created pursuant to Section 3.1
and, furthermore, the Pledgor will promptly thereafter take (or cause to be
taken) all action with respect to such Collateral in accordance with the
procedures set forth in Section 3.2, and will promptly thereafter deliver to the
Pledgee (i) a certificate executed by a principal executive officer
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of such Pledgor describing such Collateral and certifying that the same has been
duly pledged in favor of the Pledgee (for the benefit of the Secured Creditors)
hereunder and (ii) supplements to Annexes A through E hereto as are necessary to
cause such annexes to be complete and accurate at such time.
3.4. Transfer Taxes. Each pledge of Collateral under Section
3.1 or Section 3.3 shall be accompanied by any transfer tax stamps required in
connection with the pledge of such Collateral.
3.5. Definitions of Pledged Notes and Pledged Instruments. All
Notes at any time pledged or required to be pledged hereunder are hereinafter
called the "Pledged Notes", and all Instruments at any time pledged or required
to be pledged hereunder are hereinafter called "Pledged Instruments."
3.6. Certain Representations and Warranties Regarding the
Collateral. Each Pledgor represents and warrants to the Pledgee and the Secured
Creditors that on the date hereof (i) each Subsidiary of such Pledgor, and the
direct ownership thereof, is listed in Annex A hereto; (ii) the Stock held by
such Pledgor consists of the number and type of shares of the stock of the
corporations as described in Annex A hereto; (iii) such Stock constitutes that
percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Annex A hereto; (iv) the Notes held by such
Pledgor consist of the promissory notes described in Annex B hereto where such
Pledgor is listed as the lender; (v) the Limited Liability Company Interests
held by such Pledgor consist of the number and type of interests of the Persons
described in Annex C hereto; (vi) each such Limited Liability Company Interest
constitutes that percentage of the issued and outstanding equity interest of the
issuing Person as set forth in Annex C hereto; (vii) the Partnership Interests
held by such Pledgor consist of the number and type of interests of the Persons
described in Annex D hereto; (viii) each such Partnership Interest constitutes
that percentage or portion of the entire partnership interest of the Partnership
as set forth in Annex D hereto; (ix) the Instruments held by such Pledgor are
set forth in Annex E hereto; (x) the reference to Section 3.2(a) set forth with
respect to each item of Collateral described in Annexes A through E hereto is
the procedure followed by such Pledgor to perfect the security interest in such
Collateral; and (xi) on the date hereof, such Pledgor owns no other Securities,
Limited Liability Company Interests, Partnership Interests or Instruments.
4. APPOINTMENT OF SUB-AGENTS; INDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents (including, but not
limited to, the Custodian) for the purpose of retaining physical possession of
the Collateral, which may be held (in the discretion of the Pledgee) in the name
of the relevant Pledgor, indorsed or assigned in blank or in favor of the
Pledgee or any nominee or nominees of the Pledgee or a sub-agent (including, but
not limited to, the Custodian) appointed by the Pledgee. The Pledgee shall
promptly notify the Pledgor of any such sub-agent appointed by the Pledgee,
although the failure to give such notice shall not affect the validity of such
appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default, each Pledgor
shall be entitled to
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exercise any and all voting and other rights pertaining to the Collateral and to
give consents, waivers or ratifications in respect thereof, provided that no
vote shall be cast or any consent, waiver or ratification given or any action
taken which would violate or be inconsistent with any of the terms of this
Agreement, any Secured Debt Documents or any other instrument or agreement
referred to herein or therein, or which would have the effect of impairing the
position or interests of the Pledgee or any Secured Creditor. All such rights of
each Pledgor to vote and to give consents, waivers and ratifications shall cease
in case an Event of Default has occurred and is continuing, and Section 7 hereof
shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there
shall have occurred and be continuing an Event of Default, all cash dividends,
cash distributions, cash Proceeds and other cash payments payable in respect of
Collateral shall be paid to the respective Pledgor; provided, that all cash
dividends payable in respect of the Pledged Stock which are determined by the
Pledgee to represent in whole or in part an extraordinary, liquidating or other
distribution in return of capital shall be paid, to the extent so determined to
represent an extraordinary, liquidating or other distribution in return of
capital, to the Pledgee and retained by it as part of the Collateral, provided
further, that such dividends or other distributions shall be applied by the
Pledgee to the repayment of all Obligations then due and payable and, to the
extent in excess thereof shall, if no Default or Event of Default has occurred
and is then continuing, be released to the Pledgor. The Pledgee shall be
entitled to receive directly, and to retain as part of the Collateral:
(i) all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other
securities or property (other than cash) paid or distributed by way of
dividend or otherwise, as the case may be, in respect of the
Collateral;
(ii) all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other
securities or property (other than cash) paid or distributed in respect
of the Collateral by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement;
(iii)all other or additional stock, notes, limited liability
company interests, partnership interests, instruments or other
securities or property (other than cash) which may be paid in respect
of the Collateral by reason of any consolidation, merger, exchange of
stock, conveyance of assets, liquidation or similar corporate
reorganization; and
(iv) any other property or assets (other than cash) which
would constitute Collateral in accordance with the definition thereof
contained therein.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive Proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. All dividends, distributions, Proceeds or
other payments which are received by any Pledgor contrary to the provisions of
this Section 6 and Section 7 hereof shall be received in trust for the benefit
of the Pledgee, shall be segregated from other property or funds of such Pledgor
and shall be
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promptly paid over to the Pledgee as Collateral in the same form as
so received (with any necessary indorsement).
7. REMEDIES IN CASE OF EVENTS OF DEFAULT. (a) If there shall
have occurred and be continuing an Event of Default, then and in every such
case, the Pledgee shall be entitled to (i) exercise all of the rights, powers
and remedies (whether vested in it by this Agreement, any Secured Debt Document
or by law) for the protection and enforcement of its rights in respect of the
Collateral, (ii) exercise all the rights and remedies of a secured party under
the Uniform Commercial Code and (iii) without limitation, exercise the following
rights, which each Pledgor hereby agrees to be commercially reasonable:
(1) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 6 hereof to the Pledgor;
(2) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(3) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other action to collect upon
any Pledged Note (including, without limitation, to make any demand for
payment thereon);
(4) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise
act with respect thereto as though it were the outright owner thereof
(each Pledgor hereby irrevocably constituting and appointing the
Pledgee the proxy and attorney-in-fact of such Pledgor for such
purpose, with full power of substitution);
(5) at any time and from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by each Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine, provided that at least 10 days' written prior notice of the
time and place of any such sale shall be given to such Pledgor. The
Pledgee shall not be obligated to make any such sale of Collateral
regardless of whether any such notice of sale has theretofore been
given. Each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if
any, of marshalling the Collateral and any other security for the
Obligations or otherwise. At any such sale, unless prohibited by
applicable law, the Pledgee on behalf of the Secured Creditors may bid
for and purchase all or any part of the Collateral so sold free from
any such right or equity of redemption. Neither the Pledgee nor any
other Secured Creditor shall be liable for failure to collect or
realize upon any or
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all of the Collateral or for any delay in so doing nor shall any of
them be under any obligation to take any action whatsoever with regard
thereto; and
(6) to set-off any and all Collateral against any and all
Obligations, and to withdraw any and all cash and other Collateral from
any and all Collateral Accounts and to apply such cash and other
Collateral to the payment of any and all Obligations, in the manner
provided by Section 11 of the Intercreditor Agreement.
(b) Notwithstanding anything contained in this Agreement to
the contrary, this Agreement shall be governed by Chapters 8 and 9 of the
Louisiana Commercial Laws, Louisiana R.S. 10:8-101 et seq. and 10:9-101 et seq.
(collectively, the "Louisiana UCC") to the extent that any security interest in
any of the Collateral located in the State of Louisiana, and any remedies
hereunder with respect thereto, are required to be governed by, and interpreted
in accordance with, the laws of the State of Louisiana.
(c) If an Event of Default shall occur and be continuing, the
Pledgee shall have all remedies available to a secured party under the Louisiana
UCC in addition to the other remedies provided elsewhere in this Agreement,
including, without limitation, the right to elect to assume the Limited
Liability Company Interests or Partnership Interests of any Pledgor upon notice
to such Pledgor to the extent provided by applicable law and the documents
creating such interests. For purposes of executory process under the laws of the
State of Louisiana, each Pledgor hereby acknowledges the Obligations and
confesses judgment in favor of the Pledgee for the benefit of the Secured
Creditors, for the full amount of the Obligations, including, without
limitation, principal, interest, attorneys' fees, court costs, and all other
fees, expenses and charges.
(d) Each Pledgor hereby expressly waives, to the fullest
extent permitted by Louisiana law, the benefit of appraisement provided for in
Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure and
all other laws of the State of Louisiana conferring such benefits and the demand
and three days' delay accorded by Articles 2639 and 2721 of the Louisiana Code
of Civil Procedure.
(e) Pursuant to Louisiana R.S. 27:275 et seq., the Collateral
Agent is hereby authorized and empowered to file a petition to foreclose the
liens created hereby in which the Louisiana Gaming Control Board is named a
nominal defendant and the Pledgors request the appointment of a receiver as
contemplated by and in accordance with the provisions of the cited statutes. The
filing of a verified petition by the Pledgee shall constitute prima facie proof
of the Pledgee's right to enforce the liens created hereby in executory or
ordinary proceedings, at the Pledgee's option, and to appointment of a receiver
pursuant to the cited statutes.
(f) In the event the Collateral or any part thereof is seized
as an incident to an action for the recognition or the enforcement of this
Agreement by executory process, ordinary process, sequestration, writ of fieri
facias, or otherwise, the Pledgors and the Pledgee hereby agree that the court
issuing any such order shall, if petitioned for by the Pledgee, direct the
Sheriff to appoint as a keeper of the Collateral, the Pledgee or any agent
designated by the Pledgee or any person named by the Pledgee at the time such
seizure is effected. This designation is made
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pursuant to La. R.S. 9:5136 through 5140.2, inclusive, as the same may be
amended, and the Pledgee shall be entitled to all the rights and benefits
afforded thereunder, including reasonable compensation, which compensation shall
be secured by this Agreement, and which reasonable compensation shall not exceed
$10,000 per annum.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and
remedy of the Pledgee provided for in this Agreement or in the other Secured
Debt Documents, or now or hereafter existing at law or in equity or by statute
shall be cumulative and concurrent and shall be in addition to every other such
right, power or remedy. The exercise or beginning of the exercise by the Pledgee
or any Secured Creditor of any one or more of the rights, powers or remedies
provided for in this Agreement or in the other Secured Debt Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any Secured Creditor to exercise any such right,
power or remedy shall operate as a waiver thereof. No notice to or demand on any
Pledgor in any case shall entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Pledgee or any Secured Creditor to any other or further action in any
circumstances without notice or demand. The Secured Creditors agree that this
Agreement may be enforced only by the action of the Pledgee, acting upon the
instructions of the Required Secured Creditors (as defined in the Intercreditor
Agreement and that no Secured Creditor, unless otherwise provided in the
Intercreditor Agreement shall have any right individually to seek to enforce or
to enforce this Agreement or to realize upon the security to be granted hereby,
it being understood and agreed that such rights and remedies may be exercised by
the Pledgee for the benefit of the Secured Creditors upon the terms of this
Agreement and the Intercreditor Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral, together with all
other moneys received by the Pledgee hereunder, shall be applied to the payment
of the Obligations in the manner provided by Section 11 of the Intercreditor
Agreement.
(b) It is understood and agreed that each Pledgor shall remain
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral hereunder and the aggregate amount of its Obligations; provided that,
unless otherwise provided in this Agreement or by any Secured Debt Document or
other document or instrument to which such Pledgor is a party executed in
connection herewith or therewith, no Pledgor shall be liable for the Obligations
owed to any Secured Creditor by any other Pledgor.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral
by the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
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11. INDEMNITY. Each Pledgor jointly and severally agrees to
indemnify and hold harmless the Pledgee, the Custodian and each Secured Creditor
and their respective successors, assigns, employees, agents and servants
(individually an "Indemnitee," and collectively the "Indemnitees") from and
against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever kind or nature, and to
reimburse each Indemnitee for all costs and expenses, including reasonable
attorneys' fees, growing out of or resulting from this Agreement or the exercise
by any Indemnitee of any right or remedy granted to it hereunder or under the
other Secured Debt Documents, but excluding any such claims, demands, losses,
judgments, liabilities, costs and expenses to the extent incurred by reason of
the gross negligence or willful misconduct of such Indemnitee. In no event shall
any Indemnitee be liable for any matter or thing in connection with this
Agreement other than to account for and apply moneys actually received by it in
accordance with the terms hereof and of the Intercreditor Agreement. If and to
the extent that the obligations of any Pledgor under this Section 11 are
unenforceable for any reason, such Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. a)" \* MERGEFORMAT
(a) Each Pledgor agrees that it will execute and, at its own expense, file and
refile under the Uniform Commercial Code or other applicable law such financing
statements, continuation statements and other documents in such offices as such
Pledgor (or the Pledgee (acting on its own or as provided in the Intercreditor
Agreement)) may deem necessary or appropriate and wherever required by law in
order to perfect and preserve the Pledgee's security interest in the Collateral
and hereby authorizes the Pledgee to file financing statements and amendments
thereto relative to all or any part of the Collateral without the signature of
such Pledgor where permitted by law, and agrees to do such further acts and
things and to execute and deliver to the Pledgee such additional conveyances,
assignments, agreements and instruments as the Pledgee may reasonably require or
deem advisable to carry into effect the purposes of this Agreement or to further
assure and confirm unto the Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee as such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default, in the Pledgee's discretion
to take any action and to execute any instrument which the Pledgee may
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement.
13. TRANSFER BY THE PLEDGORS. No Pledgor will sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except as may
be permitted in accordance with the terms of the Secured Debt Documents).
14. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
Each Pledgor represents, warrants and covenants to the Pledgee and the Secured
Creditors (and is deemed to represent, warrant and covenant each time any
Collateral is pledged hereunder) that: (i) it is the legal, record and
beneficial owner of, and has good and marketable
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title to, all the Collateral, subject to no Lien (except the Lien created by
this Agreement and other Liens to the extent permitted to be in existence
pursuant to the terms of all Secured Debt Documents from time to time in effect)
and no Adverse Claim; (ii) it has full power, authority and legal right to
pledge all Collateral pledged by it pursuant to this Agreement; (iii) this
Agreement has been duly authorized, executed and delivered by such Pledgor and
constitutes a legal, valid and binding obligation of such Pledgor enforceable in
accordance with its terms except to the extent that the enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law);
(iv) except to the extent already obtained or made (and other than pursuant to
the Gaming Regulations in the case of any exercise of remedies hereunder), no
consent of any other party (including, without limitation, any stockholder,
partner, member or creditor of such Pledgor or any of its Subsidiaries) and no
consent, license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required to be obtained by such Pledgor in connection with the
execution, delivery or performance of this Agreement, the validity or
enforceability of this Agreement, the perfection or enforceability of the
Pledgee's security interest in the Collateral or except for compliance with or
as may be required by applicable securities laws, or the exercise by the Pledgee
of any of its rights or remedies provided herein; (v) the execution, delivery
and performance of this Agreement by such Pledgor will not violate any provision
of any applicable law or regulation or of any order, judgment, writ, award or
decree of any court, arbitrator or governmental authority, domestic or foreign,
applicable to such Pledgor, or of the certificate of incorporation, operating
agreement, limited liability company agreement or by-laws (or equivalent
organizational documents) of such Pledgor or of any securities issued by such
Pledgor or any of its Subsidiaries, or of any mortgage, indenture, lease, deed
of trust, loan agreement, credit agreement or other material agreement,
contract, or instrument to which such Pledgor or any of its Subsidiaries is a
party or which purports to be binding upon such Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in the
creation or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the assets of such Pledgor or any of its Subsidiaries
except as contemplated by this Agreement and the Secured Debt Documents; (vi)
all of the Collateral consisting of Securities, Limited Liability Company
Interests, Partnership Interests or Instruments has been duly and validly
issued, is fully paid and non-assessable and is subject to no options to
purchase or similar rights; (vii) each of the Pledged Notes, to the extent
issued by JCC Holding or any of its Subsidiaries, constitutes, or when executed
by the obligor thereof will constitute, the legal, valid and binding obligation
of such obligor, enforceable in accordance with its terms; (viii) this Agreement
creates, as security for the Obligations, a valid and enforceable perfected
first priority security interest in all of the Collateral, and the Proceeds
thereof, in favor of the Pledgee for the benefit of the Secured Creditors,
subject to no Lien (other than Permitted Liens) or to any agreement made by a
Pledgor purporting to grant to any third party a Lien on the property or assets
of the Pledgor which would include any Collateral and such security interest is
entitled to all the rights, priorities and benefits afforded by the UCC or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests; and (ix) "control" (as defined in Section 8-106 of the UCC) has been
obtained by the Pledgee with respect to all Collateral of a type with respect to
which such "control" may be obtained pursuant to Section 8-106 of the UCC. Each
Pledgor
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covenants and agrees that (i) it will defend the Pledgee's right, title and
security interest in and to the Collateral, and the Proceeds thereof, against
the claims and demands of all Persons whomsoever, (ii) it will have like title
to and right to pledge any other property at any time hereafter pledged to the
Pledgee as Collateral hereunder and will likewise defend the right thereto and
security interest therein of the Pledgee and the other Secured Creditors, (iii)
except as permitted pursuant to the Secured Debt Documents, it will not sell or
otherwise dispose of, grant any option with respect to, any Collateral and (iv)
it will not create, incur, assume or suffer to exist any Lien on any portion of
the Collateral (except the Lien created by this Agreement and other Liens to the
extent same are permitted pursuant to the terms of all Secured Debt Documents
then in effect).
15. CHIEF EXECUTIVE OFFICE; RECORDS. The chief executive
office of each Pledgor is located at the address specified in Annex F hereto.
Each Pledgor will not move its chief executive office except to such new
location as such Pledgor may establish in accordance with the last sentence of
this Section 15. The originals of all documents in the possession of such
Pledgor evidencing all Collateral, including but not limited to all Limited
Liability Company Interests and Partnership Interests, and the only original
books of account and records of the Pledgor relating thereto are, and will
continue to be, kept at such chief executive office at the location specified in
Annex F hereto, or at such new locations as the Pledgor may establish in
accordance with the last sentence of this Section 15. All Limited Liability
Company Interests and Partnership Interests are, and will continue to be,
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from, such chief executive office location
specified in Annex F hereto, or such new locations as the Pledgor may establish
in accordance with the last sentence of this Section 15. No Pledgor shall
establish a new location for such offices until (i) it shall have given to the
Collateral Agent not less than 45 days' prior written notice of its intention so
to do, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may reasonably request and (ii)
with respect to such new location, it shall have taken all action, satisfactory
to the Collateral Agent, to maintain the security interest of the Collateral
Agent in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect. Promptly after establishing a new
location for such offices in accordance with the immediately preceding sentence,
the respective Pledgor shall deliver to the Pledgee a supplement to Annex F
hereto so as to cause such Annex F hereto to be complete and accurate.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. To the maximum extent
permitted by law, the obligations of each Pledgor under this Agreement shall be
absolute and unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever, including,
without limitation: (i) any renewal, extension, amendment or modification of or
addition or supplement to or deletion from any Secured Debt Document or any
other instrument or agreement referred to therein, or any assignment or transfer
of any thereof; (ii) any waiver, consent, extension, indulgence or other action
or inaction under or in respect of any such agreement or instrument (including,
without limitation, this Agreement) or any exercise or non-exercise of any
right, remedy, power or privilege under or in respect of this Agreement or
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the Secured Debt Documents; (iii) any furnishing of any additional security to
the Pledgee or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee; (iv) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity, irregularity or unenforceability, in whole or in part, of any such
instrument or agreement or any term thereof or any Obligation or any security
therefor; or (v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to any
Pledgor or any Subsidiary of any Pledgor, or any action taken with respect to
this Agreement by any trustee or receiver, or by any court, in any such
proceeding, whether or not such Pledgor shall have notice or knowledge of any of
the foregoing.
17. TERMINATION; RELEASE. (a) After the Termination Date, this
Agreement and the security interests created hereby shall terminate (provided
that all indemnities set forth herein including, without limitation, in Section
11 hereof shall survive any such termination), and the Pledgee, at the request
and expense of any Pledgor, will execute and deliver to such Pledgor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on Form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Pledgor (without
recourse and without any representation or warranty) such of the Collateral as
has not theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee or any of
its sub-agents hereunder and, with respect to any Collateral consisting of an
Uncertificated Security (other than an Uncertificated Security credited on the
books of a Clearing Corporation), a Partnership Interest or a Limited Liability
Company Interest, a termination of the agreement relating thereto executed and
delivered by the issuer of such Uncertificated Security pursuant to Section
3.2(a)(ii) or by the respective partnership or limited liability company
pursuant to Section 3(a)(iv). As used in this Agreement, "Termination Date"
shall mean the date upon which no obligations remain pursuant to the HEC/JCC
Agreement or any other Minimum Payment Guaranty Documents and all Minimum
Payment Guaranties have been terminated, the total commitments under the Credit
Agreement have terminated, all Interest Rate Protection Agreements have been
terminated, no Note under the Credit Agreement is outstanding (and all Loans
have been repaid in full), all Letters of Credit have been terminated, no Senior
Subordinated Notes or Senior Subordinated Contingent Notes are outstanding and
all other Obligations (excluding normal continuing indemnity obligations which
survive in accordance with their terms, so long as no amounts are then due and
payable in respect thereof) have been indefeasibly paid in full.
(b) Notwithstanding anything to the contrary contained above,
upon the presentment of satisfactory evidence to the Pledgee in its sole
discretion that all obligations evidenced by any Pledged Note or Pledged
Instrument have been repaid in full and that any payments received by the
Pledgor are permitted to be received by the Pledgor pursuant to Section 6
hereof, the Pledgee shall, upon the request and at the expense of the respective
Pledgor, duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such Pledged Note or Pledged Instrument
if same is then in possession of the Pledgee and has not been sold or otherwise
applied or released pursuant to this Agreement.
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(c) The Pledgee shall release any or all of the Collateral
hereunder in accordance with the terms of Section 17 of the Intercreditor
Agreement. Furthermore, one or more Pledgors (other than JCC Holding and JCC)
may be released from time to time as Pledgors hereunder in accordance with the
terms of Section 17 of the Intercreditor Agreement.
(d) The Pledgee shall have no liability whatsoever to any
other Secured Creditor as the result of any release of Collateral by it in
accordance with this Section 17.
18. NOTICES, ETC. All notices and communications hereunder
shall be sent or delivered by mail, telex, telecopy or overnight courier service
and all such notices and communications shall, when mailed, telexed, telecopied
or sent by overnight courier, be effective when deposited in the mails or
delivered to the overnight courier, prepaid and properly addressed for delivery
on such or the next Business Day, or sent by telex or telecopier, except that
notices and communications to the Pledgee shall not be effective until received
by the Pledgee. All notices and other communications shall be in writing and
addressed as follows:
(a) if to any Pledgor:
c/o Jazz Casino Company, L.L.C.
512 S. Peters
New Orleans, Louisiana 70130
Attention: President
Telephone No.: (504) 533-6000
(b) if to the Pledgee:
The Bank of New York
10161 Centurion Prkwy.
Jacksonville, FL
Attention: Vice President
Telephone No.: 1-800-705-0384
(c) if to the Custodian:
The Bank of New York
10161 Centurion Prkwy.
Jacksonville, FL
Attention: Vice President
Telephone No.: 1-800-705-0384
(d) if to any Minimum Payment Guarantor, at:
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
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Attention: General Counsel
Telephone No.: (901) 762-8600
(e) if to any Bank Creditor (other than the
Pledgee), either (x) to the Administrative Agent, at the address of the
Administrative Agent specified in the Credit Agreement or (y) at such
address as such Bank Creditor shall have specified in the Credit
Agreement;
(f) if to any Senior Subordinated Note Creditor, to the Senior
Subordinated Note Trustee at such address as Senior Subordinated Note
Trustee shall have specified in the Intercreditor Agreement;
(g) if to any Senior Subordinated Contingent Note Creditor, to
the Senior Subordinated Contingent Note Trustee at such address as the
Senior Subordinated Contingent Note Trustee shall have specified in the
Intercreditor Agreement;
(h) if to any Other Creditor, either (x) to the representative
for the Other Creditors, at such address as such representative may
have provided to the Pledgors and the Pledgee from time to time or (y)
directly to the Other Creditors at such address as the Other Creditors
shall have specified in writing to the Pledgors and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder or, as to any
Secured Creditor, as may otherwise be specified in the applicable Secured Debt
Document.
19. THE PLEDGEE AND THE CUSTODIAN. Each of the Pledgee and, in
the case of Collateral credited on the books of a Clearing Corporation, the
Custodian, will hold, directly or indirectly in accordance with this Agreement,
all items of the Collateral at any time received by it under this Agreement. It
is expressly understood and agreed that the obligations of the Pledgee and the
Custodian with respect to the Collateral, interests therein and the disposition
thereof, and otherwise under this Agreement, are only those expressly set forth
in the UCC, this Agreement and the Intercreditor Agreement.
20. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
CUSTODIAN. The Custodian shall be deemed to represent and warrant to, and agree
with the Pledgee, for the benefit of the Secured Creditors, that each time any
Certificated Security, Uncertificated Security, Instrument, Partnership Interest
or Limited Liability Company Interest credited on the books of a Clearing
Corporation (including, without limitation, any Security Entitlement therein) is
credited to the Custodian Account that:
(i) such Financial Asset has been credited to the Custodian
Account;
(ii) the Custodian is a Securities Intermediary and is acting
in that capacity with respect to the respective Pledgor;
(iii)the Custodian Account is a Securities Account;
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(iv) the Custodian will maintain the Custodian Account in the
name of the Pledgor, subject to the control of the Pledgee, during the
term of this Agreement;
(v) the Custodian will treat such Instrument,
Security, Partnership Interest, Limited Liability Company Interest and
Security Entitlement credited to the Custodian Account as a Financial
Asset;
(vi) the Custodian has not and will not identify any of the
Collateral credited to the Custodian Account as belonging to any Person
other than the Pledgor or the Pledgee, for the
benefit of the Secured Creditors;
(vii) the Custodian shall at all times comply strictly with
any and all Entitlement Orders relating to the Custodian Account or any
and all of the Collateral originated by the Pledgee without the further
consent by the Pledgor or any other Person. The Custodian shall not
accept or comply with any Entitlement Order relating to any such
Collateral originated by any Person other than the Pledgee (or its
successor or assignee) or any court of competent jurisdiction;
(viii) the Custodian has not entered into any agreement (other
than this Agreement) with any Person under which the Custodian would be
obligated to comply with any Entitlement Order with respect to the
Custodian Account or any Collateral consisting of a Certificated
Security, Uncertificated Security, Instrument, Limited Liability
Company Interest or Partnership Interest credited to the Custodian
Account or which purports to limit or condition the obligation of the
Custodian to comply with any Entitlement Order originated by the
Pledgee relating to the Custodian Account or any such Collateral, and
agrees not to enter into any such agreement without the prior written
consent of the Pledgee; and
(ix) the Custodian shall promptly notify the Pledgee if at any
time the Custodian has any Notice of Adverse Claim with respect to the
Custodian Account or any Collateral consisting of a Certificated
Security, Uncertificated Security, Instrument, Limited Liability
Company Interest or Partnership Interest credited to the Custodian
Account.
Notwithstanding anything to the contrary contained above, the
Custodian shall have no liability pursuant to this Agreement or otherwise
(including, without limitation, for any inaccuracy of, or failure of the
Custodian to comply with, the foregoing representations, warranties and
agreements) in each case in the absence of gross negligence or willful
misconduct by the Custodian.
21. WAIVER; AMENDMENT. Except as contemplated by Section 24,
none of the terms and conditions of this Agreement may be changed, waived,
modified or varied in any manner whatsoever except in accordance with the terms
of Section 16 of the Intercreditor Agreement.
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22. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns; provided that no
Pledgor may assign any of its rights or obligations hereunder except pursuant to
an amendment executed in accordance with the requirements of Section 21. The
headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto.
23. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of the Pledgors contained herein, in the other
Secured Debt Documents and otherwise in writing in connection herewith or
therewith.
24. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of JCC Holding that is required to execute a counterpart of this
Agreement after the date hereof pursuant to any Secured Debt Document shall
automatically become a Pledgor hereunder by executing a counterpart hereof and
delivering the same to the Pledgee and, upon such execution and delivery, each
such Subsidiary shall be deemed to make each of the representations, warranties
and agreements of a Pledgor under this Agreement and this Agreement shall
constitute the valid and binding obligation of such Subsidiary enforceable
against such Subsidiary in accordance with its terms.
25. PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER.
(a) Nothing herein shall be construed to make the Pledgee (all references to the
Pledgee in this Section 25 shall apply equally to the Custodian) or any other
Secured Creditor liable as a member of any limited liability company or
partnership and neither the Pledgee nor any other Secured Creditor by virtue of
this Agreement or otherwise (except as referred to in the following sentence)
shall have any of the duties, obligations or liabilities of a member of any
limited liability company or partnership. The parties hereto expressly agree
that, unless the Pledgee shall become the absolute owner of Collateral
consisting of a Limited Liability Company Interest or Pledged Partnership
Interest pursuant hereto, this Agreement shall not be construed as creating a
partnership or joint venture among the Pledgee, any other Secured Creditor
and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a)
of this Section 25, the Pledgee, by accepting this Agreement, did not intend to
become a member of any limited liability company or partnership or otherwise be
deemed to be a co-venturer with respect to any Pledgor or any limited liability
company or partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and the
Secured Creditors shall assume none of the duties, obligations or liabilities of
a member of any limited liability company or partnership or any Pledgor except
as provided in the last sentence of paragraph (a) of this Section 25.
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(c) The Pledgee and the other Secured Creditors shall not be
obligated to perform or discharge any obligation of any Pledgor as a result of
the pledge hereby effected.
(d) The acceptance by the Pledgee of this Agreement, with all
the rights, powers, privileges and authority so created, shall not at any time
or in any event obligate the Pledgee or any other Secured Creditor to appear in
or defend any action or proceeding relating to the Collateral to which it is not
a party, or to take any action hereunder or thereunder, or to expend any money
or incur any expenses or perform or discharge any obligation, duty or liability
under the Collateral.
26. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, THE
ESTABLISHMENT AND MAINTENANCE OF THE COLLATERAL ACCOUNTS AND ALL INTERESTS,
DUTIES AND OBLIGATIONS RELATING THERETO) AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS
OTHERWISE REQUIRED PURSUANT TO SECTIONS 7(b) THROUGH 7(f), BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. REGARDLESS
OF ANY PROVISION IN ANY OTHER AGREEMENT, THE STATE OF NEW YORK SHALL BE DEEMED
TO BE THE JURISDICTION OF THE CUSTODIAN WITHIN THE MEANING OF SECTION 8-110(e)
OF THE UCC. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS. EACH PLEDGOR HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK JURISDICTION OVER SUCH PLEDGOR, AND AGREES NOT TO PLEAD OR
CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
SECURED DEBT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH
COURT LACKS JURISDICTION OVER SUCH PLEDGOR. EACH PLEDGOR FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO ANY SUCH PLEDGOR AT ITS ADDRESS SET FORTH IN
SECTION 18, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH
PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER SECURED DEBT DOCUMENT THAT
SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE PLEDGEE UNDER THIS AGREEMENT OR
30
<PAGE>
ANY OTHER SECURED CREDITOR TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY
OTHER JURISDICTION.
(b) EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH, DIRECTLY OR
INDIRECTLY, THIS AGREEMENT, ANY OTHER SECURED DEBT DOCUMENT, ANY COLLATERAL
ACCOUNT OR ANY OF THE COLLATERAL BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a)
ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO, DIRECTLY OR INDIRECTLY, THIS AGREEMENT (INCLUDING
ANY COLLATERAL ACCOUNT OR ANY OF THE COLLATERAL), ANY OTHER SECURED DEBT
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
27. GAMING STATUTES. This Agreement, and the pledge and
security interests granted hereby and any remedies contemplated hereby, are and
shall remain subject to the Louisiana Economic Development and Gaming
Corporation Act, La. R.S. 27:1 et seq., La. R.S. 27:201 et seq. and the rules
and regulations thereunder, as amended from time to time (collectively, the
"Louisiana Gaming Regulations"), and the exercise of remedies hereunder will be
subject to the Louisiana Gaming Regulations.
28. INTERCREDITOR AGREEMENT. Notwithstanding any other
provision of this Agreement or any document or instrument executed by any
Pledgor, this Agreement and all liens and security interests and rights granted
herein, and the priority thereof, are expressly subject to the provisions of the
Intercreditor Agreement which are incorporated herein by reference and made
applicable hereto. In addition, the Pledgee is the Collateral Agent, as defined
in and pursuant to the terms of the Intercreditor Agreement, and notwithstanding
anything herein to the contrary, the rights, powers, remedies and obligations of
the Pledgee hereunder shall be subject to the provisions of the Intercreditor
Agreement. Any exercise or waiver by the Pledgee of any of its rights, powers or
remedies hereunder or any other act by the Pledgee hereunder shall be conclusive
evidence of the Pledgee's authority pursuant to the Intercreditor Agreement
against all persons other than the Secured Creditors.
29. NO THIRD PARTY BENEFICIARIES. This Agreement is entered
into solely for the benefit of the parties hereto and their respective
successors and assigns and for the benefit of the Secured Creditors from time to
time and their respective successors and assigns and, except
31
<PAGE>
for the Secured Creditors and their successors and assigns, there shall be no
third party beneficiaries hereof, nor shall any Person other than the parties
hereto and their respective successors and assigns, and the Secured Creditors
and their respective successors and assigns, be entitled to enforce the
provisions hereof or have any claims against any party hereto (or any Secured
Creditor) or their successors and assigns arising from, or under, this
Agreement.
* * *
32
<PAGE>
IN WITNESS WHEREOF, each Pledgor, the Custodian and the
Pledgee have caused this Agreement to be executed by their duly elected officers
duly authorized as of the date first above written.
JCC HOLDING COMPANY,
as a Pledgor
By /s/ L. Camille Fowler
---------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
JAZZ CASINO COMPANY, L.L.C.,
as a Pledgor
By /s/ L. Camille Fowler
---------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
CP DEVELOPMENT, L.L.C.,
as a Pledgor
By /s/ L. Camille Fowler
---------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
FP DEVELOPMENT, L.L.C.,
as a Pledgor
By /s/ L. Camille Fowler
---------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
<PAGE>
JCC DEVELOPMENT COMPANY,
L.L.C., as a Pledgor
By /s/ L. Camille Fowler
---------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
THE BANK OF NEW YORK.
not in its individual capacity but solely as
Collateral Agent and Pledgee
By /s/ R. Randall Deen
---------------------------
Name: R. Randall Deen
Title: Agent
THE BANK OF NEW YORK,
in its individual capacity as Custodian
By /s/ R. Randall Deen
---------------------------
Name: R. Randall Deen
Title: Agent
<PAGE>
ANNEX B
TO
PLEDGE AGREEMENT
LIST OF STOCK
<TABLE>
<CAPTION>
Sub-clause of Section 3.2(a) of
Pledge Agreement Pursuant to Which
Required Procedures Will Be Taken
Name of Pledgor Description of Stock
<S> <C> <C>
None.
</TABLE>
<PAGE>
ANNEX B
TO
PLEDGE AGREEMENT
LIST OF NOTES
<TABLE>
<CAPTION>
Sub-clause of Section 3.2(a) of
Pledge Agreement Pursuant to Which
Name of Pledgor Description of Notes Required Procedures Will Be Taken
<S> <C> <C>
None.
</TABLE>
<PAGE>
ANNEX C
TO
PLEDGE AGREEMENT
LIST OF LIMITED LIABILITY COMPANY INTERESTS
<TABLE>
<CAPTION>
Description of Sub-clause of Section 3.2(a) of
Limited Liability Pledge Agreement Pursuant to Which
Name of Pledgor Company Interests Required Procedures Will Be Taken
<S> <C> <C>
JCC Holding Company o Ownership of 100% of membership 3.2(a)(ii)
interests in JCC
o Ownership of 100% of membership
interests in JCC Development 3.2(a)(ii)
Company, L.L.C.
o Ownership of 100% of membership
interests in FP Development,
L.L.C.
3.2(a)(i)
o Ownership of 100% of membership
interests in CP Development,
L.L.C.
3.2(a)(i)
</TABLE>
<PAGE>
ANNEX D
TO
PLEDGE AGREEMENT
LIST OF PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Sub-clause of Section 3.2(a) of
Description of Pledge Agreement Pursuant to Which
Name of Pledgor Partnership Interests Required Procedures Will Be Taken
<S> <C> <C>
None.
</TABLE>
<PAGE>
ANNEX E
TO
PLEDGE AGREEMENT
LIST OF INSTRUMENTS
<TABLE>
<CAPTION>
Sub-clause of Section 3.2(a) of
Pledge Agreement Pursuant to Which
Name of Pledgor Description of Instruments Required Procedures Will Be Taken
<S> <C> <C>
None.
</TABLE>
<PAGE>
ANNEX F
TO
PLEDGE AGREEMENT
LIST OF CHIEF EXECUTIVE OFFICES
I. JCC Holding Company
512 South Peters
New Orleans, Louisiana 70130
II. Jazz Casino Company, L.L.C.
512 South Peters
New Orleans, Louisiana 70130
III. CP Development, L.L.C.
512 South Peters
New Orleans, Louisiana 70130
IV. FP Development, L.L.C.
512 South Peters
New Orleans, Louisiana 70130
V. JCC Development Company, L.L.C.
512 South Peters
New Orleans, Louisiana 70130
<PAGE>
ANNEX G
TO
PLEDGE AGREEMENT
Form of Agreement Regarding Uncertificated Securities, Limited Liability
Company Interests and Partnership Interests
THIS AGREEMENT (as amended, modified or supplemented from time
to time, this "Agreement"), dated as of October 29, 1998, among each of the
undersigned pledgors (each a "Pledgor" and, collectively, the "Pledgors"), The
Bank of New York, not in its individual capacity but solely as Collateral Agent
(the "Pledgee"), and The Bank of New York, as the issuer of the Uncertificated
Securities, Limited Liability Company Interests and/or Partnership Interests
(each as defined below) (the "Issuer").
W I T N E S S E T H :
WHEREAS, each Pledgor, the Pledgee, and The Bank of New York,
in its individual capacity as Custodian, have entered into the Pledge Agreement,
dated as of October 29, 1998 (as amended, amended and restated, modified or
supplemented from time to time, the "Pledge Agreement"), under which, among
other things, in order to secure the payment of the Obligations (as defined in
the Pledge Agreement), each Pledgor will pledge to the Pledgee for the benefit
of the Secured Creditors (as defined in the Pledge Agreement), and grant a
security interest in favor of the Pledgee for the benefit of the Secured
Creditors in, all of the right, title and interest of such Pledgor in and to any
and all (1) "uncertificated securities" (as defined in Section 8-102(a)(18) of
the Uniform Commercial Code, as adopted in the State of New York)
("Uncertificated Securities"), (2) Partnership Interests (as defined in the
Pledge Agreement) and (3) Limited Liability Company Interests (as defined in the
Pledge Agreement), in each case issued from time to time by the Issuer, whether
now existing or hereafter from time to time acquired by such Pledgor (with all
of such Uncertificated Securities, Partnership Interests and Limited Liability
Company Interests being herein collectively called the "Issuer Pledged
Interests"); and
WHEREAS, each Pledgor desires the Issuer to enter into this
Agreement in order to perfect the security interest of the Pledgee under the
Pledge Agreement in the Issuer Pledged Interests, to vest in the Pledgee control
of the Issuer Pledge Interests and to provide for the rights of the parties
under this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Each Pledgor hereby irrevocably authorizes and directs the
Issuer, and the Issuer hereby agrees, to comply with any and all instructions
and orders originated by the Pledgee (and its successors and assigns) in
accordance with the terms of the Pledge Agreement regarding any and all of the
Issuer Pledged Interests without the further consent by the registered owner
(including the respective Pledgor), and not to comply with any instructions or
orders regarding
<PAGE>
any or all of the Issuer Pledged Interests originated by any person or entity
other than the Pledgee (and its successors and assigns) or a court of competent
jurisdiction.
2. The Issuer hereby certifies that (i) no notice of any
security interest, lien or other encumbrance or claim affecting the Issuer
Pledged Interests (other than the security interest of the Pledgee) has been
received by it, and (ii) the security interest of the Pledgee in the Issuer
Pledged Interests has been registered in the books and records of the Issuer.
The Issuer hereby waives any contractual or statutory security interest and/or
right of offset it has in the Issuer Pledged Interests and does further
acknowledge receipt of the Pledge Agreement. The undersigned further agrees not
to acknowledge or accept any other parties' security interest in the Issuer
Pledged Interests or to enter into any other agreement granting or acknowledging
any other parties' control over or right to make entitlement orders with respect
to the Issuer Pledged Interests.
3. The Issuer hereby represents and warrants that (i) the
pledge by the Pledgors of, and the granting by the Pledgors of a security
interest in, the Issuer Pledged Interests to the Pledgee, for the benefit of the
Secured Creditors, does not violate the charter, by-laws, partnership agreement,
membership agreement or any other agreement governing the Issuer or the Issuer
Pledged Interests, and (ii) the Issuer Pledged Interests are fully paid and
nonassessable.
4. Until the Pledgee shall have delivered written notice to
the Issuer that all of the Obligations have been paid in full and this Agreement
is terminated, the Issuer will send any and all redemptions, distributions,
interest or other payments in respect of the Issuer Pledged Interests from the
Issuer for the account of the respective Pledgor only by wire transfers to the
applicable address set forth on Annex I hereto.
5. Except as expressly provided otherwise in Sections 4 and 5,
all notices, instructions, orders and communications hereunder shall be sent or
delivered by mail, telex, telecopy or overnight courier service and all such
notices and communications shall, when mailed, telexed, telecopied or sent by
overnight courier, be effective when deposited in the mails or delivered to the
overnight courier, prepaid and properly addressed for delivery on such or the
next Business Day, or sent by telex or telecopier, except that notices and
communications to the Pledgee shall not be effective until received by the
Pledgee. All notices and other communications shall be in writing and addressed
as follows:
(a) if to any Pledgor:
c/o Jazz Casino Company, L.L.C.
512 S. Peters
New Orleans, Louisiana 70130
Attention: President
Telephone No.: 504-533-6000
<PAGE>
(b) if to the Pledgee:
The Bank of New York
10161 Centurion Parkway
Jacksonville, FL
Attention: Vice President
Telephone No.: 1-800-705-0384
(c) if to the Issuer:
c/o Jazz Casino Company, L.L.C.
512 S. Peters
New Orleans, Louisiana
Attention: President
Telephone No.: 504-533-6000
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, "Business Day" means any day other than a Saturday, Sunday, or other
day in which banks in New York are authorized to remain closed.
6. This Agreement shall be binding upon the successors and
assigns of each Pledgor and the Issuer and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which shall constitute one instrument. In the event that any provision of
this Agreement shall prove to be invalid or unenforceable, such provision shall
be deemed to be severable from the other provisions of this Agreement which
shall remain binding on all parties hereto. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever except in writing signed by the Pledgee, the Issuer and any Pledgor
which at such time owns any Issuer Pledged Interests.
7. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
principles of conflict of laws.
<PAGE>
Annex G
Page 4
IN WITNESS WHEREOF, each Pledgor, the Pledgee and the Issuer
have caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
JCC HOLDING COMPANY,
as a Pledgor
By /s/ L. Camille Fowler
------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
JAZZ CASINO COMPANY, L.L.C.,
as a Pledgor
By /s/ L. Camille Fowler
------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
CP DEVELOPMENT, L.L.C,
as a Pledgor
By /s/ L. Camille Fowler
------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
FP DEVELOPMENT, L.L.C,,
as a Pledgor
By /s/ L. Camille Fowler
------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
<PAGE>
Annex G
Page 5
JCC DEVELOPMENT COMPANY, L.L.C.,
as a Pledgor
By /s/ L. Camille Fowler
------------------------
Name: L. Camille Fowler
Title: V. P. and Secretary
<PAGE>
Exhibit 10.35
SUBSIDIARIES GUARANTY
---------------------
GUARANTY, dated as of October 29, 1998 (as amended, modified
or supplemented from time to time, this "Guaranty"), made by each of the
undersigned guarantors (each, a "Guarantor" and, together with any other entity
that becomes a party hereto pursuant to Section 26 hereof, the "Guarantors"), to
BANKERS TRUST COMPANY, as Administrative Agent, for the benefit of the Creditors
(as defined below). Except as otherwise defined herein, capitalized terms used
herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H :
---------------------
WHEREAS, JCC Holding Company ("JCC Holding"), Jazz Casino
Company, L.L.C., a Louisiana limited liability company ("JCC"), the lenders (the
"Banks") from time to time party thereto, and Bankers Trust Company, as
Administrative Agent (together with any successor agent, the "Administrative
Agent"), have entered into a Credit Agreement, dated as of October 29, 1998 (as
amended, (including without limitation by way of amendments and restatements
thereof), modified or supplemented from time to time, the "Credit Agreement"),
providing for the making of Loans to the Borrower and the issuance of, and
participation in, Letters of Credit for the account of the Borrower, all as
contemplated therein (the Banks and the Administrative Agent are herein called
the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the Credit Agreement for
any reason, together with such Bank's or affiliate's successors and assigns, if
any, collectively, the "Other Creditors," and together with the Bank Creditors,
the "Creditors");
WHEREAS, each Guarantor is a Subsidiary of JCC Holding;
WHEREAS, it is a condition to the making of Loans and issuing
of Letters of Credit under the Credit Agreement that each Guarantor shall have
executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the
incurrence of Loans by the Borrower under the Credit Agreement and the entering
into of Interest Rate Protection Agreements and, accordingly, desires to execute
this Guaranty in order to satisfy the conditions described in the preceding
paragraph and to induce the Banks to make Loans and issue Letters of Credit to
the Borrower and the Other Creditors to enter into Interest Rate Protection
Agreements or Other Hedging Agreements with the Borrower;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each
<PAGE>
Guarantor hereby makes the following representations and warranties to the
Creditors and hereby covenants and agrees with each Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: (i) to the Bank Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the Notes issued by, and the Loans made
to, the Borrower under the Credit Agreement and all reimbursement obligations
and Unpaid Drawings with respect to Letters of Credit and (y) all other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing
by the Borrower to the Bank Creditors under the Credit Agreement (including,
without limitation, indemnities, Fees and interest thereon) and the other Credit
Documents to which the Borrower is a party, whether now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement or any
such other Credit Document and the due performance and compliance with the terms
of the Credit Documents by the Borrower (all such principal, interest,
liabilities and obligations under this clause (i), except to the extent
consisting of obligations or liabilities with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein collectively
called the "Credit Document Obligations"); and (ii) to each Other Creditor the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due) and liabilities owing by the Borrower to one or more Other Creditors under
any Interest Rate Protection Agreements, whether now in existence or hereafter
arising, and the due performance and compliance by the Borrower with all terms,
conditions and agreements contained therein (all such obligations and
liabilities being herein collectively called the "Other Obligations," and
together with the Credit Document Obligations are herein collectively called the
"Guaranteed Obligations"). Each Guarantor understands, agrees and confirms that
this Guaranty is a guarantee of payment and not of collection, and that the
Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against such Guarantor without proceeding against any other
Guarantor, the Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations.
2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations of the Borrower to the Creditors whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of
the events specified in Section 10.06 of the Credit Agreement, and
unconditionally and irrevocably, jointly and severally, promises to pay such
Guaranteed Obligations to the Creditors, or order, on demand, in lawful money of
the United States.
3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
of the Borrower whether executed by such Guarantor, any other Guarantor, any
other guarantor or by any other party, and the liability of each Guarantor
hereunder shall not be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations of the Borrower, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination or increase, decrease or change in
2
<PAGE>
personnel by the Borrower, (e) any payment made to any Creditor on the
Guaranteed Obligations which any Creditor repays the Borrower pursuant to court
order in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding, (f)
any action or inaction by the Creditors as contemplated in Section 6 hereof, or
(g) any invalidity, irregularity or unenforceability of all or part of the
Guaranteed Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent
of the obligations of any other Guarantor, any other guarantor or the Borrower,
and a separate action or actions may be brought and prosecuted against each
Guarantor whether or not action is brought against any other Guarantor, any
other guarantor or the Borrower and whether or not any other Guarantor, any
other guarantor of the Borrower or the Borrower be joined in any such action or
actions. Each Guarantor waives, to the fullest extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof. Any payment by the Borrower or other circumstance which
operates to toll any statute of limitations as to the Borrower shall operate to
toll the statute of limitations as to each Guarantor.
5. Each Guarantor hereby waives (to the fullest extent
permitted by applicable law) notice of acceptance of this Guaranty and notice of
any liability to which it may apply, and waives promptness, diligence,
presentment, demand of payment, protest, notice of dishonor or nonpayment of any
such liabilities, suit or taking of other action by the Administrative Agent or
any other Creditor against, and any other notice to, any party liable thereon
(including such Guarantor or any other guarantor or the Borrower).
6. Any Creditor may (except as shall be required by applicable
statute and cannot be waived) at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate or
alter, any of the Guaranteed Obligations, any security therefor, or any
liability incurred directly or indirectly in respect thereof, and the
guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
3
<PAGE>
(d) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of the Borrower to
creditors of the Borrower;
(e) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrower to the Creditors
regardless of what liabilities of the Borrower remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements, the
Credit Documents or any of the instruments or agreements referred to
therein, or otherwise amend, modify or supplement any of the Interest
Rate Protection Agreements the Credit Documents or any of such other
instruments or agreements;
(g) act or fail to act in any manner referred to in this
Guaranty which may deprive such Guarantor of its right to subrogation
against the Borrower to recover full indemnity for any payments made
pursuant to this Guaranty; and/or
(h) release or substitute any one or more endorsers,
guarantors, the Borrower or other obligors.
7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full of the Guaranteed
Obligations.
8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Creditor in exercising any right, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly specified are cumulative and not exclusive of any
rights or remedies which any Creditor would otherwise have. No notice to or
demand on any Guarantor in any case shall entitle such Guarantor to any other
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for any Creditor to
inquire into the capacity or powers of the Borrower or any of its Subsidiaries
or the officers, directors, partners or agents acting or purporting to act on
its behalf, and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
4
<PAGE>
9. Any indebtedness of the Borrower now or hereafter held by
any Guarantor is hereby subordinated to the indebtedness of the Borrower to the
Creditors; and such indebtedness of the Borrower to any Guarantor, if the
Administrative Agent, after an Event of Default has occurred and is continuing,
so requests, shall be collected, enforced and received by such Guarantor as
trustee for the Creditors and be paid over to the Creditors on account of the
indebtedness of the Borrower to the Creditors, but without affecting or
impairing in any manner the liability of such Guarantor under the other
provisions of this Guaranty. Prior to the transfer by any Guarantor of any note
or negotiable instrument evidencing any indebtedness of the Borrower to such
Guarantor, such Guarantor shall mark such note or negotiable instrument with a
legend that the same is subject to this subordination. Without limiting the
generality of the foregoing, each Guarantor hereby agrees with the Creditors
that it will not exercise any right of subrogation which it may at any time
otherwise have as a result of this Guaranty (whether contractual, under Section
509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have
been irrevocably paid in full in cash.
10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute or law and cannot be waived) to require the
Creditors to: (i) proceed against the Borrower, any other Guarantor, any other
guarantor of the Borrower or any other party; (ii) proceed against or exhaust
any security held from the Borrower, any other Guarantor, any other guarantor of
the Borrower or any other party; or (iii) pursue any other remedy in the
Creditors' power whatsoever. Each Guarantor waives (to the fullest extent
permitted by applicable law) any defense based on or arising out of any defense
of the Borrower, any other Guarantor, any other guarantor of the Borrower or any
other party other than payment in full of the Guaranteed Obligations, including,
without limitation, any defense based on or arising out of the disability of the
Borrower, any other Guarantor, any other guarantor of the Borrower or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations. The Creditors may, at
their election, foreclose on any security held by the Administrative Agent, the
Collateral Agent or the other Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Creditors may have against the Borrower or any other party,
or any security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. Each Guarantor waives any defense arising out of any such election
by the Creditors, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of such Guarantor
against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that
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the Creditors shall have no duty to advise any Guarantor of information known to
them regarding such circumstances or risks.
11. By their acceptance hereof, the Creditors agree that this
Guaranty may be enforced only by the action of the Administrative Agent or the
Collateral Agent, in each case acting upon the instructions of the Required
Banks (or, after the date on which all Credit Document Obligations have been
paid in full, the holders of at least a majority of the outstanding Other
Obligations) and that no other Creditor shall have any right individually to
seek to enforce or to enforce this Guaranty or to realize upon the security to
be granted by the Security Documents, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent or the
Collateral Agent or the holders of at least a majority of the outstanding Other
Obligations, as the case may be, for the benefit of the Creditors upon the terms
of this Guaranty and the Security Documents.
12. In order to induce the Banks to make Loans and issue
Letters of Credit pursuant to the Credit Agreement, and in order to induce the
Other Creditors to execute, deliver and perform the Interest Rate Protection
Agreements each Guarantor represents, warrants and covenants that the following
are true, complete and correct in all material respects:
(a) Such Guarantor (i) is a duly organized and validly
existing corporation in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate power and
authority to own its property and assets and to transact the business
in which it is engaged and presently proposes to engage and (iii) is
duly qualified and is authorized to do business and is in good standing
in each jurisdiction where the conduct of its business requires such
qualification except for failures to be so qualified which,
individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
the Borrower or JCC Holding and its Subsidiaries taken as a whole (a
"Material Adverse Effect").
(b) Such Guarantor has the requisite power and authority to
execute, deliver and perform the terms and provisions of this Guaranty
and each other Credit Document to which it is a party and has taken all
necessary organizational action to authorize the execution, delivery
and performance by it of each such Credit Document. Such Guarantor has
duly executed and delivered this Guaranty and each other Credit
Document to which it is a party, and each such Credit Document
constitutes the legal, valid and binding obligation of such Guarantor
enforceable in accordance with its terms.
(c) Neither the execution, delivery or performance by such
Guarantor of this Guaranty or any other Credit Document to which it is
a party, nor compliance by it with the terms and provisions hereof and
thereof, (i) will contravene any provision of any applicable law,
statute, rule or regulation, or any applicable order, writ, injunction
or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or
impose) any Lien (except pursuant to the Security Documents) upon any
of the property or assets of such
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Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, credit agreement,
or any other material agreement or other instrument to which such
Guarantor or any of its Subsidiaries is a party or by which it or any
of its property or assets is bound or to which it may be subject or
(iii) will violate any provision of the certificate of incorporation
or by-laws (or equivalent organizational documents) of such Guarantor
or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as
have been obtained or made), or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, (i) the execution,
delivery and performance of this Guaranty or any other Credit Document
to which such Guarantor is a party or (ii) the legality, validity,
binding effect or enforceability of this Guaranty or any other Credit
Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings (private or
governmental) pending or threatened (i) with respect to any Credit
Documents to which such Guarantor is a party or (ii) with respect to
such Guarantor that could reasonably be expected to materially and
adversely affect (a) the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the
Borrower, the Borrower and its Subsidiaries taken as a whole or JCC
Holding and its Subsidiaries taken as a whole or (b) the rights or
remedies of the Creditors or on the ability of such Guarantor to
perform its respective obligations to the Creditors hereunder and under
the other Credit Documents to which it is a party.
13. Each Guarantor covenants and agrees that on and after the
date hereof and until the termination of the Total Commitment and all Interest
Rate Protection Agreements and when no Note or Letter of Credit remains
outstanding and all Guaranteed Obligations have been paid in full, such
Guarantor shall take, or will refrain from taking, as the case may be, all
actions that are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in Section 8 or 9 of the Credit
Agreement, and so that no Default or Event of Default, is caused by the actions
of such Guarantor or any of its Subsidiaries.
14. The Guarantors hereby jointly and severally agree to pay
all reasonable out-of-pocket costs and expenses of each Creditor in connection
with the enforcement of this Guaranty and any amendment, waiver or consent
relating hereto (including, without limitation, the reasonable fees and
disbursements of counsel (including in-house counsel) employed by any of the
Creditors).
15. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of
each Guarantor directly affected thereby and either (x) the Required Banks (or
to the extent required by Section 16.12 of the Credit Agreement, with the
written consent of each Bank) at all times prior to the time on which all Credit
Document Obligations have been paid in full or (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time on
which all Credit Document Obligations have been paid in full; provided, that any
change, waiver, modification or variance
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affecting the rights and benefits of a single Class (as defined below) of
Creditors (and not all Creditors in a like or similar manner) shall require the
written consent of the Requisite Creditors (as defined below) of such Class of
Creditors (it being understood that the addition or release of any Guarantor
hereunder shall not constitute a change, waiver, discharge or termination
affecting any Guarantor other than the Guarantor so added or released). For the
purpose of this Guaranty the term "Class" shall mean each class of Creditors,
i.e., whether (x) the Bank Creditors as holders of the Credit Document
Obligations or (y) the Other Creditors as the holders of the Other Obligations.
For the purpose of this Guaranty, the term "Requisite Creditors" of any Class
shall mean each of (x) with respect to the Credit Document Obligations, the
Required Banks (or to the extent required by Section 16.12 of the Credit
Agreement, each Bank) and (y) with respect to the Other Obligations, the holders
of at least a majority of all obligations outstanding from time to time under
the Interest Rate Protection Agreements.
16. Each Guarantor acknowledges that an executed (or
conformed) copy of each of the Credit Documents has been made available to its
principal executive officers and such officers are familiar with the contents
thereof.
17. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) and not by way of limitation of any such rights, upon
the occurrence and during the continuance of an Event of Default (such term to
mean and include any "Event of Default" as defined in the Credit Agreement or
any payment default under any Interest Rate Protection Agreement continuing
after any applicable grace period), each Creditor is hereby authorized at any
time or from time to time, without notice to any Guarantor or to any other
Person, any such notice being expressly waived, to set off and to appropriate
and apply any and all deposits (general or special) and any other indebtedness
at any time held or owing by such Creditor to or for the credit or the account
of such Guarantor, against and on account of the obligations and liabilities of
such Guarantor to such Creditor under this Guaranty, irrespective of whether or
not such Creditor shall have made any demand hereunder and although said
obligations, liabilities, deposits or claims, or any of them, shall be
contingent or unmatured. By its acceptance hereof, each Creditor acknowledges
and agrees that the provisions set forth in this Section 17 are subject to the
sharing provisions set forth in Section 16.06 of the Credit Agreement.
18. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party (i) in the case of any Bank Creditor, as provided in the Credit Agreement,
(ii) in the case of any Guarantor, at its address set forth opposite its
signature below and (iii) in the case of any Other Creditor, at such address as
such Other Creditor shall have specified in writing to the Guarantor; or in any
case at such other address as any of the Persons listed above may hereafter
notify the others in writing.
19. If a claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its
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property or (ii) any settlement or compromise of any such claim effected in good
faith by such payee with any such claimant (including the Borrower), then and in
such event each Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon such Guarantor, notwithstanding
any revocation hereof or other instrument evidencing any liability of the
Borrower, and such Guarantor shall be and remain liable to the aforesaid payees
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by any such payee.
20. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS GUARANTY OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH
GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION
SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK
10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE
FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL
LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL
CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH GUARANTOR AGREES TO DESIGNATE A NEW
DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES
OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT UNDER THIS GUARANTY.
EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH
GUARANTOR AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY CREDITOR OR THE
HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY GUARANTOR IN ANY
OTHER JURISDICTION.
(b) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IS MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
GUARANTY OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY
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SUCH COURT THATANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS GUARANTY HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERLCAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
21. In the event that all of the capital stock or limited
liability company membership interests of one or more Guarantors is sold or
otherwise disposed of (except to JCC Holding, the Borrower or any of their
Subsidiaries) or liquidated in compliance with the requirements of Section 9.02
of the Credit Agreement (or such sale or other disposition or liquidation has
been approved in writing by the Required Banks) and the proceeds of such sale,
disposition or liquidation are applied in accordance with the provisions of the
Credit Agreement, to the extent applicable, such Guarantor shall be released
from this Guaranty and this Guaranty shall, as to each such Guarantor or
Guarantors, terminate, and have no further force or effect (it being understood
and agreed that the sale of one or more Persons that own, directly or
indirectly, all of the capital stock or partnership interests of any Guarantor
shall be deemed to be a sale of such Guarantor for the purposes of this Section
21); provided that no Guarantor shall be released as otherwise provided above in
this Section 21 unless (x) the respective sale or disposition is permitted
pursuant to the terms of any other Secured Debt Documents (as defined in the
Pledge Agreement) then in effect and (y) concurrently with the release pursuant
to the provisions of this Section 21, the respective Guarantor is also released
from all obligations (including any guarantees) pursuant or with respect to all
other Secured Debt Agreements.
22. To the extent that any Guarantor shall be required
hereunder to pay a portion of the Guaranteed Obligations which shall exceed the
greater of (i) the amount of the economic benefit actually received by such
Guarantor from the incurrence of the Loans and the issuance of Letters of Credit
under the Credit Agreement and the entering into of Interest Rate Protection
Agreements and (ii) the amount which such Guarantor would otherwise have paid if
such Guarantor had paid the aggregate amount of the Guaranteed Obligations
(excluding the amount thereof repaid by the Borrower and the other Guarantors)
in the same proportion as such Guarantor's net worth at the date enforcement
hereunder is sought bears to the aggregate net worth of all the Guarantors at
the date enforcement hereunder is sought (the "Contribution Percentage"), then
such Guarantor shall have a right of contribution against each other Guarantor
who has made payments in respect of the Guaranteed Obligations to and including
the date enforcement hereunder is sought in an aggregate amount less than such
other Guarantor's Contribution Percentage of the aggregate payments made to and
including the date enforcement hereunder is sought by all Guarantors in respect
of the Guaranteed Obligations; provided, that no Guarantor may take any action
to enforce such right until the Guaranteed Obligations have been indefeasibly
paid in full and the Total Commitments and all Letters of Credit have been
terminated, it being expressly recognized and agreed by all parties hereto that
any Guarantor's right of contribution arising pursuant to this Section 22
against any other Guarantor shall be expressly junior and subordinate to such
other Guarantor's obligations and liabilities in respect of the Guaranteed
Obligations and any other obligations owing under this Guaranty. All parties
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hereto recognize and agree that, except for any right of contribution arising
pursuant to this Section 22, each Guarantor who makes any payment in respect of
the Guaranteed Obligations shall have no right of contribution or subrogation
against any other Guarantor in respect of such payment. Each of the Guarantors
recognizes and acknowledges that the rights to contribution arising hereunder
shall constitute an asset in favor of the party entitled to such contribution.
In this connection, each Guarantor has the right to waive its contribution right
against any Guarantor to the extent that after giving effect to such waiver such
Guarantor would remain solvent, in the determination of the Required Banks.
23. Each Guarantor hereby confirms that it is its intention
that this Guaranty not constitute a fraudulent transfer or conveyance for
purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act or any
similar Federal or state law. To effectuate the foregoing intention, each
Guarantor hereby irrevocably agrees that the Guaranteed Obligations guaranteed
by such Guarantor shall be limited to such amount as will, after giving effect
to such maximum amount and all other (contingent or otherwise) liabilities of
such Guarantor that are relevant under such laws (excluding any guarantees by
such Guarantor of the Senior Subordinated Notes and Senior Subordinated
Contingent Notes), and after giving effect to any rights to contribution
pursuant to any agreement providing for an equitable contribution among such
Guarantor and the other Guarantors, result in the Guaranteed Obligations of such
Guarantor in respect of such maximum amount not constituting a fraudulent
transfer or conveyance.
24. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
25. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense, and on the same basis as payments
are made by the Borrower under Sections 4.03 and 4.04 of the Credit Agreement.
26. It is understood and agreed that any Subsidiary of JCC
Holding that is required to execute a counterpart of this Guaranty after the
date hereof pursuant to the Credit Agreement shall automatically become a
Guarantor hereunder by executing a counterpart hereof and delivering the same to
the Administrative Agent and no consent of any other Guarantor or any other
Person shall be required in connection therewith.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
c/o JCC Holding Company CP DEVELOPMENT, L.L.C.,
512 S. Peters As a Guarantor
New Orleans, LA 70130
By /s/ L. Camille Fowler
-------------------------------------
Title: V. P./Secretary
FP DEVELOPMENT, L.L.C.,
As a Guarantor
By /s/ L. Camille Fowler
-------------------------------------
Title: V. P./Secretary
JCC DEVELOPMENT COMPANY, L.L.C.,
As a Guarantor
By /s/ L. Camille Fowler
-------------------------------------
Title: V. P./Secretary
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Administrative Agent
By /s/ Mary Kay Coyle
--------------------------------
Title: Managing Director
<PAGE>
ASSIGNMENT OF CONTRACTS AND ANCILLARY RIGHTS
THIS ASSIGNMENT OF CONTRACTS AND ANCILLARY RIGHTS (this
"Assignment") is made as of this 30th day of October, 1998 by JAZZ CASINO
COMPANY, L.L.C., a Louisiana limited liability company (the "Assignor") in favor
of HARRAH'S OPERATING COMPANY, INC., a Delaware corporation, and HARRAH'S
ENTERTAINMENT, INC., a Delaware corporation (together, the "Assignees").
RECITALS
A. The Assignees have agreed to guarantee performance by the Assignor
of certain obligations to construct a casino facility in the City of New
Orleans, which guarantees, together with any substitutions and replacements
thereof or modifications thereto, are hereinafter referred to as the "Completion
Guarantees".
B. The obligations of the Assignor to the Assignees in connection with
the Completion Guarantees (together with certain other obligations) are
evidenced by that certain Amended and Restated Completion Loan Agreement among
the Assignor and the Assignees, dated of even date herewith (the "Completion
Loan Agreement").
C. It is a condition precedent to the willingness of the Assignees to
agree to the Completion Guarantees that, among other things, the Assignor shall
have executed and delivered to the Assignees this Assignment.
AGREEMENT
NOW, THEREFORE, in consideration of willingness of the
Assignees to agree to the Completion Guarantees and the mutual premises and
agreements contained herein and described in the Completion Loan Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Assignor and the Assignees hereby agree that:
1. Assignment. For the purpose of performing demolition and
construction obligations of the Assignor under the General Development Agreement
(as defined in the Completion Loan Agreement) for the Casino (as defined in the
Completion Loan Agreement) and the Completion Guarantees, the Assignor hereby
assigns, sets over, transfers and delivers to the Assignees all of the
Assignor's right, title and interest in and to the following items of property
(collectively, the "Property"):
(a) any and all contracts and agreements executed by the
Assignor relating to the design, construction, development, financing,
equipping, or opening of the Casino described on Exhibit "I" attached hereto and
by this reference incorporated herein, collectively, as heretofore or hereafter
modified, amended or supplemented, the "Contracts"), including any and
<PAGE>
all rights to receive and demand payments or to receive and compel performance
under the Contracts and any rights to terminate the Contracts;
(b) any and all permits, consents, licenses and other
governmental or other authorizations or approvals now or hereafter issued
relating to the Contracts but specifically excluding the Casino Operating
Contract (as defined in the Completion Loan Agreement);
(c) all lien payment bonds and performance bonds for the
Casino and all proceeds thereof;
(d) all plans and specifications for the Casino;
(e) all policies of insurance for the Casino;
(f) all revenues from the Casino, excluding the Minimum
Payment and the State's Interest in Daily Collections (each as defined in the
Casino Operating Contract); and
(g) any and all causes of action, claims, rights or demands in
favor of the Assignor arising out of or based upon the Contracts or the Casino,
whether now existing or hereafter arising.
2. License Back. Notwithstanding the assignment contained in Section 1
hereof, the Assignees hereby grant to the Assignor a license of all of the
rights conveyed by the Assignor to the Assignees pursuant to Section 1 hereof,
specifically excepting the rights, other than in the ordinary course of
business, prior to the occurrence of a Flip Event (as defined in the Restated
Certificate of Incorporation of JCC Holding Company as of the date hereof) or
after the occurrence of a Cure Event (as defined in the Restated Certificate of
Incorporation of JCC Holding Company as of the date hereof) in respect of any
uncured Flip Events, to (a) waive or release any person or entity from the
observance or performance of any obligation to be performed under the terms of
any of the Contracts or other Property, (b) waive or release any person or
entity from liabilities arising out of the Contracts or other Property,
including, without limitation, liabilities based upon any warranty given in any
of the Contracts or other Property, or (c) terminate any of the Contracts or
other Property. Such license from the Assignees to the Assignor is based on the
Assignor's skills, experience, and expertise in casino development, is personal
to the Assignor and may not be assigned by the Assignor to any trustee or
successor of the Assignor.
3. Substitution in Contracts. The license conveyed by the Assignees to
the Assignor pursuant to Section 2 hereof shall be revocable as to any one or
more of the assigned Contracts by and at the option of the Assignees by the
giving of one or more notices to the Assignor (such event being hereinafter
referred to as a "Revocation Event"), and upon the giving of such notice, as to
any such Contracts to which notice has been given:
(a) the Assignees shall become the owner of the Property with
the full power and authority to exercise all rights, privileges and powers of
the Assignor under the Property;
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(b) the Assignees shall have the power in place of the
Assignor to receive all income and performance due under such Contracts and with
respect to the other Property, including, without limitation, the right to seek
payment or performance under any lien payment bonds, performance bonds, or both;
(c) the Assignees shall automatically become substituted and
subrogated in and to all of the rights, actions, liens, privileges, and causes
of action the Assignor has or enjoys or may have or enjoy under or with respect
to such Contracts and with respect to the other Property;
(d) the Assignees shall automatically have the right in place
of the Assignor to make any requests, give any notices, or take any actions with
respect to any disbursements of funds in respect of the Term Loans, the
Revolving Loan, the New Bonds and the New Contingent Bonds , the Subordinated
Loan, and the Convertible Junior Subordinated Debentures (each as defined in the
Completion Loan Agreement);
(e) the Assignees shall have the right in place of the
Assignor to pursue, receive and administer any proceeds thereof, settle or take
any action in respect of any construction related insurance and surety bond
claims;
(f) the Assignees shall have the right in place of the
Assignor to exercise any rights of termination in any of such Contracts; and
(g) the Assignees shall have the right in place of the
Assignor to pursue, receive and administer any proceeds thereof, settle or take
any action in respect of any condemnation claims relating to the Casino.
4. Notification of Contracting Parties; Performance In Favor of
Assignees. Following the occurrence of a Revocation Event, the Assignees may
notify the parties to the Contracts and other Property (other than the Assignor)
or any other third party obligor, defendant or other party which may owe payment
or performance to the Assignor under any judgment, settlement, claim, suit,
obligation, liability or other amount, whether or not reduced to judgment: (i)
of the existence of this Assignment; and (ii) that any payments or performance
due and owing to the Assignor by such parties, obligor, defendant or other party
relating to the Property should be made to the Assignees. Upon receipt of
written notice from the Assignees as aforesaid, the parties to the Contracts and
other Property (other than the Assignor) are hereby expressly and irrevocably
authorized and directed to pay any and all amounts and perform any duties,
liabilities or obligations due to the Assignor pursuant to any of the Contracts
or other Property, to and for the Assignees or such nominee as the Assignees may
designate in such notice. Each of the parties to the Contracts or other Property
shall have no duty to inquire or investigate as to whether the Assignees have
revoked the license or whether the Assignor is the rightful owner, and no such
party shall be liable to the Assignor or its successors and assigns for acting
on the Assignees' notification as provided in this Section 4.
5. Non-Liability of Assignees. Acceptance by the Assignees of this
Assignment shall not bind the Assignees, their respective agents, employees,
successors, or assigns to
3
<PAGE>
perform or carry out any of the obligations of the Assignor under any of the
Contracts or other Property and the Assignees do not assume any of the
liabilities in connection with or arising or growing out of the covenants and
agreements of the Assignor under any of the Contracts or other Property.
6. Representations, Warranties and Covenants. The Assignor hereby
represents, warrants, covenants and agrees as follows:
(a) The Assignor shall execute, whenever requested by the
Assignees, whatever statements, documents or instruments may be deemed necessary
or advisable by the Assignees to perfect or evidence this Assignment or the
revocation of the license. Any such statements, documents or instruments shall
be in such form and contain such information as the Assignees, in their sole
discretion, deems necessary or desirable in order to afford full and complete
evidence and notice of the assignment of the Property or the revocation of the
license, as the case may be.
(b) The Assignor is the sole owner of the Property, and,
except for liens in favor of the holder of the State Guarantor First Mortgage,
the lenders of the Term Loans and Revolving Loan, the trustee of the New Bonds
and New Contingent Bonds, the Assignees and any lenders who have subordinated
their lien and interest to the rights of the Assignees hereunder pursuant to a
subordination agreement satisfactory to the Assignees, it has not, and in the
future will not have, executed any other assignment or any collateral
assignment, security agreement or pledge or otherwise sold, collaterally
assigned or created a security interest in any of the Property (or any part
thereof), and it has not and shall not perform any act or execute any other
instruments that might prevent the Assignees from fully exercising its rights
under any of the terms, covenants and conditions of this Assignment.
(c) The Contracts and other Property are valid and enforceable
in accordance with their terms and have not been altered, modified, amended,
terminated, or renewed, nor have any of the terms and conditions thereof been
waived in any manner whatsoever, except as disclosed to the Assignees in
writing.
(d) To the best of its knowledge, there are no defaults now
existing under any of the Contracts or other Property and there exists no state
or facts which, with the giving of notice or lapse of time or both, would
constitute a default under any of the Contracts or other Property, and the
Assignor will fulfill, perform, and observe each and every material condition
and covenant of each of the Contracts and other Property to be fulfilled,
performed or observed by the Assignor. The Assignor will give prompt notice to
the Assignees of any notice or claim of default under any of the Contracts and
other Property given to the Assignor, or given by the Assignor, together with a
complete copy of the notice or claim of default and a written explanation of the
alleged basis therefore.
(e) Until any revocation of the license back to the Assignor,
the Assignor will, at its sole cost and expense, enforce the performance and
observance of each and every covenant and condition in each of the Contracts and
other Property to be performed or observed.
4
<PAGE>
(f) Both prior and subsequent to any revocation of the license
back to the Assignor, the Assignor, at its sole cost and expense, will appear in
and defend any litigation growing out of or in any manner connected with any of
the Contracts and other Property or with respect to any of the obligations and
liabilities of the Assignor thereunder.
7. No Waiver of Secured Obligations. The Assignor shall remain liable
to the Assignees for payment and performance of all obligations under the
Completion Loan Agreement and shall pay and perform the same immediately, to the
Assignees notwithstanding this Assignment by the Assignor to the Assignees.
8. Performance of Assignor's Obligations Under the Contracts and Other
Property. Upon any revocation of the license back to the Assignor, the Assignees
may, at their option, perform any term, condition or covenant of any of the
Contracts and other Property for and on behalf of the Assignor and may act on
behalf of the Assignor in seeking any consents, assignments, approvals or
modifications of the Casino Operating Contract from the LGCB, and any monies
expended in so doing any of the aforesaid shall be chargeable to the Assignor as
an amount advanced pursuant to the Completion Loan Agreement; however, the
Assignor agrees that this Assignment shall not obligate the Assignees, their
respective agents, employees, successors and assigns to perform of any of the
terms and conditions of any of the Contracts and other Property or to perform or
discharge of any obligations of the Assignor under any of the Contracts or other
Property.
9. Notices. Any notice or communication required or permitted to be
given hereunder shall be given in writing, sent by (a) personal delivery, (b)
expedited delivery service with proof of delivery, (c) registered or certified
United States mail, postage prepaid, or (d) telegram, telex, or facsimile
transmission addressed to the appropriate party as follows:
To Assignor: Jazz Casino Company, L.L.C.
512 South Peters Street
New Orleans, Louisiana 70130
Phone: (504) 533-6538
Fax: (504) 533-6100
Attn: President
To Assignees: Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Phone: (901) 762-8724
Fax: (901) 537-3039
Attention: General Counsel
with a copy to the Corporate Secretary
at the same address
5
<PAGE>
or to such other address or facsimile number or to the attention of such other
individual as hereafter shall be designated in writing by the applicable party
sent in accordance herewith. Any such notice or communication shall be deemed to
have been given either at the time of personal delivery or, in the case of
delivery service or mail, as of the date of first attempted delivery at the
address and in the manner provided herein, or in the case of telegram, telex or
facsimile, upon receipt.
10. No Waiver. Neither the Assignees' acceptance of partial or
delinquent payment nor any forbearance, failure or delay by the Assignees in
exercising any right, power or remedy hereunder shall be deemed a waiver of any
obligation of the Assignor or of any right, power or remedy of the Assignees or
preclude any other or further exercise thereof; and no single or partial
exercise of any right, power or remedy hereunder shall preclude any other or
further exercise thereof, or the exercise of any other right, power or remedy.
11. Severability. If any provision of this Assignment is rendered or
declared invalid, illegal or unenforceable by reason of any existing or
subsequently enacted legislation or by a judicial decision which shall have
become final or by lack of authorization or authority of the Assignees, all of
the remaining provisions shall remain in full force and effect.
12. Titles of Articles and Sections. All titles or headings to
articles, sections or other divisions of this Assignment are only for the
convenience of the parties and shall not be construed to have any effect or
meaning with respect to the content of such articles, sections or other
divisions, such content being controlling as to the agreement between the
parties hereto.
13. Choice of Law. This Assignment shall be governed by and construed
in accordance with the internal laws of the State of Louisiana.
14. Counterparts. This Assignment may be separately executed in any
number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Assignment.
15. No Third Party Rights. This Assignment is for the sole and
exclusive benefit of the parties hereto designated herein and no other person or
entity (including any creditors of the parties hereto) shall under any
circumstances be deemed to be a beneficiary of any of the rights, remedies,
terms and provisions of this Assignment.
16. Voluntary Agreement. Each party hereto has entered into this
Assignment freely and voluntarily, without coercion, duress, distress, or undue
influence by any other persons or their respective shareholders, directors,
officers, partners, agents or employees.
17. Advice From Counsel. Each party hereto understands that this
Assignment may affect legal rights. Each party hereto represents to the other
that it has received legal advice from counsel of its choice in connection with
the negotiation and execution of this Assignment and is satisfied with its legal
counsel and the advice received from it.
6
<PAGE>
18. Judicial Interpretation. Should any provision of this Assignment
require judicial interpretation or construction, there shall be no presumption
that the terms hereof shall be more strictly construed or interpreted against
any party hereto by reason of the rule of construction that a document is to be
construed more strictly against the party hereto who prepared the same.
19. Attorneys' Fees. If any party hereto brings any judicial action or
proceeding to enforce its rights under this Assignment, the prevailing party
shall be entitled, in addition to any other remedy, to recover from the others,
regardless of whether such action or proceeding is prosecuted to judgment, all
costs and expenses, including without limitation reasonable attorneys' fees,
incurred therein by the prevailing party.
20. Termination. This Assignment and the license conveyed hereby shall
terminate only upon the termination and release of the Completion Guarantees.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment to be executed on the day and year first above written.
Assignor: JAZZ CASINO COMPANY, L.L.C., a
Louisiana limited liability
company,
By: /s/ Frederick W. Burford
---------------------------------
Name: Frederick W. Burford
---------------------------------
Title: President
---------------------------------
Assignees: HARRAH'S OPERATING COMPANY, INC.,
a Delaware corporation
By: /s/ George W. Loveland, II
---------------------------------
Name: George W. Loveland, II
---------------------------------
Title: Vice President
---------------------------------
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ George W. Loveland, II
---------------------------------
Name: George W. Loveland, II
---------------------------------
Title: Vice President
---------------------------------
<PAGE>
ACKNOWLEDGMENT
STATE OF LOUISIANA
COUNTY/PARISH OF ORLEANS
BEFORE ME, the undersigned authority, on this day personally
appeared Fred W. Burford, known to me to be the person whose name is subscribed
to the foregoing instrument, and known to me to be the President of JAZZ CASINO
COMPANY, L.L.C., a Louisiana limited liability company, and acknowledged to me
that he executed said instrument for the purposes and consideration therein
expressed, in the capacity therein stated and as the act of said corporation.
Given under my hand and seal of office this 26th day of
October, 1998.
/s/ Frederick W. Burford
-----------------------------------
/s/ Daniel E. Davillier
------------------------------------------
NOTARY PUBLIC
My Commission Expires: Life
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BEFORE ME, the undersigned authority, on this day personally
appeared George W. Loveland, II, known to me to be the person whose name is
subscribed to the foregoing instrument, and known to me to be the
Vice President of HARRAH'S OPERATING COMPANY, INC., a Louisiana corporation,
and acknowledged to me that he executed said instrument for the purposes and
consideration therein expressed, in the capacity therein stated and as the act
of said corporation.
Given under my hand and seal of office this 29th day of
October, 1998.
-----------------------------------
/s/ Jorge Jacob Jose
------------------------------------------
NOTARY PUBLIC
My Commission Expires: November 25, 1998
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK
COUNTY/PARISH OF NEW YORK
BEFORE ME, the undersigned authority, on this day personally
appeared George W. Loveland, II, known to me to be the person whose name is
subscribed to the foregoing instrument, and known to me to be the
Vice-President of HARRAH'S ENTERTAINMENT, INC., a Louisiana corporation, and
acknowledged to me that he executed said instrument for the purposes and
consideration therein expressed, in the capacity therein stated and as the act
of said corporation.
Given under my hand and seal of office this 29th day of
October, 1998.
-----------------------------------
/s/ Jorge Jacob Jose
------------------------------------------
NOTARY PUBLIC
My Commission Expires: November 25, 1998
<PAGE>
EXHIBIT "I"
DESCRIPTION OF CONTRACTS
1. Construction Agreement dated October 10, 1994 between Harrah's Jazz
Company and Centex Landis Construction Co., Inc., as modified by that
certain Settlement Agreement dated November 25, 1996 between Harrah's
Jazz Company and Centex Landis Construction Co., Inc., and that certain
Amendment to Settlement Agreement dated October 30, 1998 between
Harrah's Jazz Company and Centex Landis Construction Co., Inc.
2. Close-In Agreement dated March 5, 1996 between Harrah's Jazz Company
and Centex Landis Construction Co., Inc.
3. Design and Construction Agreement dated October 10, 1994 between
Harrah's Jazz Company and Broadmoor, as modified by that certain
Settlement Agreement dated October 15, 1996 between Harrah's Jazz
Company and Broadmoor, and that certain Amendment to Settlement
Agreement dated October 21, 1998 between Harrah's Jazz Company and
Broadmoor.
4. Design Agreement dated January 16, 1995 (and effective November 15,
1994) between Harrah's Jazz Company and Perez Ernst Farnet/Modus, Inc.,
Architects and Planners, as modified by that certain Settlement
Agreement dated April 25, 1997 between Harrah's Jazz Company and Perez
Ernst Farnet/Modus, Inc., Architects and Planners.
5. Program Management Agreement between Harrah's Jazz Company and
Foxcor/Pearson PMG, LLC, dated June 1, 1998.
6. Agreement dated May 21, 1997 between Harrah's Jazz Company and H.C.
Designs, Inc.
<PAGE>
Exhibit 10.37
- --------------------------------------------------------------------------------
OPEN ACCESS PLANS
- --------------------------------------------------------------------------------
AMENDED AND RESTATED OPEN ACCESS PLANS
OF
JAZZ CASINO COMPANY, L.L.C.
SUBMITTED TO THE COUNCIL OF THE CITY OF NEW ORLEANS
ON
OCTOBER 15, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXECUTIVE SUMMARY.................................................................................................i
GLOSSARY........................................................................................................vii
I. GENERAL....................................................................................................1
A. OVERVIEW........................................................................................1
B. OPEN ACCESS OBJECTIVES..........................................................................2
C. RESPONSIBILITY..................................................................................3
D. ENFORCEMENT.....................................................................................3
E. NEWCORP.........................................................................................3
F. CONTRIBUTIONS TO PUBLIC SUPPORT EFFORTS.........................................................6
G. USE OF MBE/WBE/DBE FINANCIAL INSTITUTIONS.......................................................9
H. BUSINESS DEVELOPMENT ADVISORY COMMITTEE.........................................................9
I. MINORITY INDIVIDUALS AND WOMEN.................................................................10
J. GOAL REASSESSMENTS AND OVERALL REVIEWS AND REASSESSMENTS.......................................10
II. OPEN ACCESS PLAN FOR CONSTRUCTION OF THE CASINO.........................................................15
A. EMPLOYMENT COMPONENT FOR CONSTRUCTION OF THE CASINO
..............................................................................................15
1. Introduction..........................................................................15
2. Open Access Employment Objectives.....................................................15
3. Open Access and Non-discrimination....................................................17
<PAGE>
4. Program Implementation and Compliance-Oriented Efforts................................18
5. Reporting.............................................................................28
6. Responsibility........................................................................31
B. CONTRACTING COMPONENT FOR CONSTRUCTION OF THE CASINO
..............................................................................................31
1. Introduction..........................................................................31
2. Open Access Contracting Objectives....................................................31
3. Open Access and Non-Discrimination....................................................32
4. Memorandum of Understanding...........................................................32
5. Bidding Requirements..................................................................33
6. Program Implementation and Compliance-Oriented Efforts................................33
7. Compliance-Oriented Efforts Standards for Construction General Contractors and
Subcontractors........................................................................40
8. Reporting.............................................................................43
9. Certification.........................................................................47
10. Responsibility........................................................................47
III. OPEN ACCESS PLAN FOR OPERATION OF THE CASINO............................................................47
A. EMPLOYMENT COMPONENT FOR OPERATION OF THE CASINO
..............................................................................................48
1. Introduction..........................................................................48
2. Open Access Employment Objectives.....................................................48
3. Open Access and Non-Discrimination....................................................49
<PAGE>
4. Program Implementation and Compliance-Oriented Efforts................................50
5. Reporting.............................................................................64
6. Responsibility........................................................................67
B. CONTRACTING COMPONENT FOR OPERATION OF THE CASINO
..............................................................................................68
1. Introduction..........................................................................68
2. Open Access Contracting Objectives....................................................68
3. Open Access and Non-Discrimination....................................................69
4. Program Implementation and Compliance-Oriented Efforts................................70
5. Reporting.............................................................................75
6. Certification.........................................................................80
7. Responsibility........................................................................80
</TABLE>
<PAGE>
GLOSSARY
1. Amended and Restated Lease Agreement: means that certain Amended and
Restated Lease Agreement approved by the City Council on October 15, 1998, and
effective as of the effective date of HJC's Third Amended Joint Plan of
Reorganization, as modified, by and among the City, RDC and JCC to which the
Open Access Program is attached as Exhibit "C".
2. Business Development Advisory Committee: means the Business Development
Advisory Committee described in Part I, Subpart H of these Open Access Plans.
3. Casino Construction Advisory Committee: means the Casino Construction
Advisory Committee described in Part II, Subpart A.4.b.i. of these Open Access
Plans.
4. Casino Employment Advisory Committee: means the Casino Employment
Advisory Committee described in Part III, Subpart A.4.d.ii. of these Open Access
Plans.
5. City: means the City of New Orleans.
6. City Council: means the Council of the City of New Orleans.
7. Control: shall be determined by reference to factors such as the
following:
a. status as employees, officers or directors of the business;
b. control over the management of the business;
c. authorization to sign checks on the business' bank accounts;
d. participation in significant decisions affecting the business;
e. authority with respect to profit sharing, pension and stock
option plans; and
f. authority with respect to setting salaries and bonuses.
8. Disadvantaged Business Enterprise ("DBE"): means a business that is at
least fifty-one percent (51%) owned and controlled by one or more Disadvantaged
Individuals. An individual and/or business may also be considered disadvantaged,
regardless of race, gender or ethnicity, if
vi
<PAGE>
the social and/or economic circumstances of the business or individual warrant
such designation. JCC will use standards currently used by the Small Business
Administration to evaluate economic circumstances. Under these criteria,
consideration of an applicant who is not included in any of the groups cited in
the definition of Disadvantaged Individual in this glossary will be made on a
case-by-case basis. The applicant will have the responsibility of proving that
he/she warrants the designation as a disadvantaged business based on his/her
present economic and social circumstances.
9. Disadvantaged Individual: means an individual whose ability to compete
for jobs or compete in the free enterprise system is impaired because of
constraints on the following:
a. Lack of opportunity to join professional and business
organizations;
b. Lack of ability to raise capital and obtain credit or bonding
capacity;
c. Lack of educational opportunities; and
d. Lack of training, employment and promotion opportunities. An
individual and/or business may also be considered disadvantaged, regardless of
race, gender or ethnicity, if the social and/or economic circumstances of the
business or individual warrant such designation. JCC will use standards
currently used by the Small Business Administration to evaluate economic
circumstances. Under these criteria, consideration of an applicant who is not
included in any of the groups cited in this definition will be made on a
case-by-case basis. The applicant will have the responsibility of proving that
he/she warrants the designation as a disadvantaged individual or business based
on his/her present economic and social circumstances.
10. Effective Date: means the effective date of HJC's Third Amended Joint
Plan of Reorganization, as modified. 11. GDA: means that certain Amended and
Restated General Development Agreement by and among the City, RDC and JCC dated
of even date with the Amended and Restated Lease Agreement.
vii
<PAGE>
12. HJC: means Harrah's Jazz Company, a Louisiana general partnership.
13. HNOMC: means Harrah's New Orleans Management Company, a Nevada
corporation.
14. JCC: means Jazz Casino Company, L.L.C., a Louisiana limited liability
company and successor by operation of law to HJC.
15. Mayor: means the Mayor of the City of New Orleans.
16. Minority Business Enterprise ("MBE"): means a business that is at least
fifty-one percent (51%) owned and controlled by one or more Minority
Individuals.
17. Minority Individual: means an individual who is a member of one or more
of the following groups:
a. African Americans;
b. Hispanic Americans; and
c. Asian Americans.
18. NERA: means National Economic Research Associates, Inc.
19. NERA Study: means the Final Report prepared by NERA entitled
Discrimination in New Orleans: An Analysis of the Effects of Discrimination on
Minority and Female Employees and Business Owners which was completed on
September 13, 1994 and filed with the Council of the City of New Orleans.
20. Net Hiring for the Quarter: means, for any particular job category,
the figure which results from adding the new hires, plus the promotions and the
transfers into the job category or categories being considered during the
relevant quarter, and then subtracting (from that interim number) the layoffs,
demotions, terminations (both voluntary and involuntary) and transfers out of
the relevant job category during the quarter involved. This number can be
expressed as a percentage by comparing the net hiring figure for a particular
category of Open Access Participants (e.g., non-
viii
<PAGE>
minority women) for a particular job category (e.g., professionals) to the net
hiring figure for everyone in that category for the quarter involved (i.e., the
net hiring of women professionals compared to the net hiring of all
professionals during that quarter).
21. Open Access Participants: means MBEs, WBEs, DBEs, Minority Individuals,
Disadvantaged Individuals, Persons with Disabilities and women.
22. Open Access Participant firms: means MBEs, WBEs and DBEs.
23. Open Access Plans: means these Amended and Restated Open Access Plans
adopted by JCC.
24. Open Access Program: means the MBE/WBE/DBE program attached as Exhibit
"C" to and made a part of the Amended and Restated Lease Agreement.
25. Original Amended Lease Agreement: means that certain Amended and
Restated Lease Agreement by and among HJC, RDC and the City dated as of March
15, 1994.
26. Original Lease Agreement: means that certain Lease Agreement by and
among the City, RDC and Celebration Park Casino, Inc. dated April 27, 1993.
27. Original Open Access Program: means the MBE/WBE/DBE program attached as
Exhibit G to the Original Amended Lease Agreement.
28. Persons with Disabilities: shall be defined as that term is defined in
the Federal Americans with Disabilities Act.
29. RDC: means the Rivergate Development Corporation, a Louisiana public
benefit corporation.
30. Total Employment of Open Access Participants: means, for a particular
employment category at the end of a particular quarter, the percentage of each
category of Open Access Participants in the employment category involved on the
last two (2) payroll days of the quarter, averaged. Thus, the number of a
particular category of Open Access Participants (e.g., non-minority women)
employed
ix
<PAGE>
in a particular job category (e.g., professionals) on the last two (2) payroll
days of the last month of a quarter (e.g., March 15 and March 29 for the first
quarter) is compared to the total number of persons employed in that category on
those two (2) days, with the result expressed as a percentage (e.g., 60
non-minority women professionals out of 200 total professionals on March 15 and
66 non-minority women professionals out of a total of 210 professionals on March
29 would result in 30.73% non-minority women for the first quarter).
31. Women's Business Enterprise ("WBE"): means a business at least
fifty-one percent (51%) of which is owned and controlled by one or more women.
<PAGE>
<TABLE>
<CAPTION>
ADDENDA
<S> <C>
ADDENDUM A (NEWCORP BOARD OF DIRECTORS)
ADDENDUM B (CASINO CONSTRUCTION ADVISORY COMMITTEE)
ADDENDUM C (MEMORANDUM OF UNDERSTANDING)
ADDENDUM D (PROJECT AGREEMENT)
ADDENDUM E (CERTIFICATION PROCESS)
ADDENDUM F (TRAINING PLANS)
ADDENDUM G (SELECTION STANDARDS FOR TRAINING)
ADDENDUM H (FAMILY AND MEDICAL LEAVE POLICY)
ADDENDUM I (POLICY AGAINST SEXUAL HARASSMENT)
ADDENDUM J (NERA SUPPLEMENTAL MEMORANDUM)
ADDENDUM K (CASINO PRE-OPENING PURCHASES)
ADDENDUM L (CASINO ANNUAL OPERATING PURCHASES)
ADDENDUM M (LETTER REGARDING PREFABRICATION)
ADDENDUM N (CHILD CARE BENEFITS)
ADDENDUM O (CASINO EMPLOYMENT ADVISORY COMMITTEE)
</TABLE>
<PAGE>
I. GENERAL
A. OVERVIEW
These Open Access Plans have been adopted by JCC and they amend and
restate the Final Open Access Plans adopted by HJC, which were approved by the
City Council in December, 1994 (the "HJC Final Open Access Plans"). The HJC
Final Open Access Plans had been preceded by the Interim Open Access Plans
adopted by HJC , which were approved by the City Council on April 21, 1994 (the
"HJC Interim Open Access Plans"). JCC further adopts Addenda A through O to the
HJC Final Open Access Plans and assumes HJC's ongoing obligations pursuant to
those Addenda. Any references to HJC or Harrah's contained in the Addenda shall
be deemed to refer to JCC, where appropriate. These Open Access Plans are
designed to be read in conjunction with and to implement the Open Access Program
and are further designed to be subordinate to the Open Access Program.
These Open Access Plans pertain to the construction and operation of
the New Orleans land-based casino operated by JCC (the "Casino"), and are
designed to improve the quality of life of JCC's employees and the citizens of
the New Orleans metropolitan area. To further that commitment, these Open Access
Plans have established aggressive objectives to ensure that all population
groups in the metropolitan community share in the benefits of the construction
and operation of the Casino.
These Open Access Plans describe how JCC will use its experience,
resources, skills and creativity to implement a program to help ameliorate
chronic unemployment and underemployment of traditionally disadvantaged
individuals during the construction and operation of the Casino. They also
describe how JCC will diligently use its resources to increase the utilization
of traditionally disadvantaged businesses while constructing and operating the
Casino.
1
<PAGE>
These Open Access Plans set forth specific and result-oriented
procedures to which JCC is committed. The procedures reflect JCC's necessary and
reasonable efforts to ensure equal employment and business opportunity for all
population groups in the New Orleans metropolitan community.
HJC's actions were governed by (i) the HJC Interim Open Access Plans
from April 21, 1994 until the HJC Final Open Access Plans were adopted by HJC
and approved by the City Council in December 1994 and (ii) the HJC Final Open
Access Plans after the adoption of such plans by HJC and their approval by the
City Council in December 1994. JCC's actions will be governed by these Open
Access Plans, rather than the HJC Interim Open Access Plans or the HJC Final
Open Access Plans, and once these Open Access Plans are approved by the City
Council. Once such City Council approval has become effective, these Open Access
Plans will completely replace and supersede in their entirety both the HJC
Interim Open Access Plans and the HJC Final Open Access Plans. These Open Access
Plans do not amend or alter any rights or duties established by the Open Access
Program. In the event of any conflict between these Open Access Plans and the
Open Access Program, the provisions of the Open Access Program shall control.
B. OPEN ACCESS OBJECTIVES
These Open Access Plans reflect JCC's strategy for achieving the
following primary long-term open access objectives:
- To enhance participation of MBEs, WBEs and DBEs in the private
business sector by employing innovative methods that will strengthen
and expand the capability of these businesses to compete for contracts
of increasing size and complexity; and
- To create new employment opportunities and upgrade the job skills of
employees in the gaming industry, especially among traditionally
disadvantaged employee groups.
2
<PAGE>
C. RESPONSIBILITY
JCC assumes ultimate responsibility for the success of these Open
Access Plans. JCC will appoint a director with direct reporting responsibility
to the Chief Executive Officer of JCC. Such director will have responsibility
for coordinating the various components of these Open Access Plans with respect
to both JCC and HNOMC. JCC continues to take full responsibility for any aspects
of the implementation of these Open Access Plans that may be delegated to HNOMC.
Any references herein to the Open Access Program Officer (or Office) pertain to
that person (or that person's office) and those working under his/her
supervision.
D. ENFORCEMENT
The provisions for enforcement of these Open Access Plans by the City
are contained in Part IV of the Open Access Program.
E. NEWCORP JCC's goal is not only to increase contractual participation by
Open Access Participant firms for the Casino project, but also to provide an
ongoing development program that will strengthen and increase the number of
minority-owned and women-owned and operated firms over the long term.
Recognizing that this will require some innovative measures, HJC previously
created and provided initial capitalization of $500,000 for Newcorp, an open
access business development corporation whose purpose is to foster the
establishment, expansion and economic participation of Open Access
Participant firms. In addition, JCC will annually underwrite staffing costs,
office expenses and promotion of Newcorp for five (5) years commencing on the
Effective Date at a minimum of $250,000 per annum. The $250,000 payment for
the first year shall be paid in full on the Effective Date. The subsequent
annual payments of $250,000 shall be paid quarterly in equal installments of
$62,500 per quarter, in accordance with Part II, Subpart B of the Open
3
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Access Program. JCC's financial commitments with respect to Newcorp are in
addition to the contributions to public support efforts described below. As set
forth in Part IV, Subparts A and D of the Open Access Program, these quarterly
payments shall be reported in the quarterly reports provided the RDC, the Mayor
of the City of New Orleans (the "Mayor") and the City Council pursuant to Part
II, Subpart C; Part IV, Subpart F; and Part V, Subpart B of the Open Access
Program. All expenditures made by Newcorp will be audited by an independent
auditor on at least an annual basis to ensure that all such payments are proper
and in accordance with the corporate purpose of Newcorp.
The Newcorp Board of Directors is composed of nine (9) members as
follows:
- two (2) board members are from the City's disadvantaged business office
and/or the economic development office or similar office established by
the Mayor;
- one (1) board member is a designated representative of the City
Council;
- two (2) board members are representatives from the New Orleans
business community, each possessing a minimum of five (5) years
business experience, one (1) selected by the New Orleans Business
Council and one (1) selected by the Black Economic Development
Council;
- three (3) board members are selected by JCC, including one (1) selected
by HNOMC; o one (1) Board member from those agencies which serve
Persons with Disabilities, to be appointed by the other eight (8)
members of the Board of Directors.
The membership of the Newcorp Board of Directors may be changed from
time to time provided that the foregoing requirements are met. (See Addendum A
to these Open Access Plans for a list of the most recent Board of Directors of
Newcorp.)
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The primary responsibilities of Newcorp are to:
- Identify business opportunities and facilitate participation in the
gaming industry by Open Access Participants and persons interested in
starting businesses;
- Provide assistance through creation of a small business incubator,
offering support to Open Access Participants in the form of office
space, as well as management, site identification, accounting,
marketing and financing assistance;
- Assist Open Access Participants in receiving assistance from existing
city, state and federal agencies designed to help Open Access
Participants;
- Assist Open Access Participants in reaching joint venture and
subcontract agreements with majority contractors, particularly with
regard to issues involving control and scope of work;
- Assist Open Access Participants in making the most effective use of
existing loan and venture capital funds;
- Maintain and operate a room to facilitate the certification and bidding
processes;
- Assist, where appropriate, in the process of resolving job-related
technical and administrative problems;
- Make limited short-term working capital loans and grants to Open Access
Participants pursuant to written criteria developed and approved by the
Newcorp Board of Directors.
These services are intended to help develop the competence and
experience of Open Access Participants so that they can grow from a point of
relative dependency on technical assistance and resources provided by others to
one of greater independence.
F. CONTRIBUTIONS TO PUBLIC SUPPORT EFFORTS
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Pursuant to Part II, Introduction, paragraph 5; Part II, Subpart T; and
Part IV, Subparts A.1.d. and D of the Open Access Program, JCC will donate an
aggregate amount of $2,500,000 as contributions to public support efforts over
the course of five (5) years. These contributions shall be payable in five (5)
annual installments of $500,000 per year, the first of which shall be made as of
the opening date of the Casino, with additional $500,000 installments to be paid
on each of the first, second, third and fourth anniversary dates thereafter
(funded each year in quarterly installments to a separate account established
for that purpose as stated below). These annual contributions are in addition to
the initial capitalization of Newcorp and the $250,000 annual payments to
Newcorp described above. Such donations are designed to enhance existing
business development programs and other public support endeavors, and will be
made based on the following criteria:
- Potential recipients of such funds will be identified by: (i)
applications from potential recipients; (ii) recommendations
from public and private agencies and officials; (iii) JCC on its own
initiative; or (iv) otherwise as the circumstances may allow;
- JCC shall decide upon the recipients and the amounts of such funds,
keeping the RDC, the Mayor and the City Council advised on a quarterly
basis in the quarterly reports described in Part II, Subpart C; Part
IV, Subpart F; and Part V, Subpart B of the Open Access Program. This
will be accomplished by the President of HNOMC, as assisted by his or
her staff and as authorized by the member(s) of JCC. A form of
application will be prepared and distributed within sixty (60) days
after the Effective Date;
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- All grant applications must articulate specific goals to be achieved.
Preference will be given to applications for grants of $20,000 or less.
However, subsequent grants to the same entity are possible for larger
projects, provided the recipient has achieved the goals articulated in
the first grant. Applicants that anticipate applying for a series of
small grants may say so in their first application, and may describe
the overall project they hope to develop. However, as noted,
subsequent grants will only be made to an entity or individual if JCC's
monitoring determines that the first grant was used for the intended
purposes.
The intended focus of such contributions to public support efforts will
be on programs aimed at fostering emerging or new Open Access Participant firms
and the training and skills improvements that will allow Open Access
Participants to participate in and benefit from new and existing business
opportunities. This delineation of the intended uses of the funds is intended to
be illustrative, but not necessarily comprehensive, as it is not possible to
list all types of activities that fit within the terms "existing business
development programs and other public support endeavors." Undoubtedly the
creative individuals and organizations that engage in such activities both now
and in future years will advance a broad array of opportunities for
consideration. All contributions are subject to those statutes, regulations and
guidelines promulgated by the State and Federal governments and their
instrumentalities, which govern spending by JCC.
At the beginning of each quarter (commencing with the opening date
of the Casino), JCC shall pay twenty-five percent (25%) of the public
support efforts funds for the year (i.e. $125,000 of the yearly amount of
$500,000) into a separate account. On a monthly, or such other basis as
specified in approved grants, payments shall be made from that account to
approved grant recipients, pursuant to the process articulated above. Any of
these funds not disbursed during the
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quarter shall remain in the separate account, to be disbursed, along with the
funds to be added by JCC during the next quarter, to approved grant recipients
in accordance with the disbursal schedule specified in the approved grants. It
is the intent of this public support efforts funding process that, by the end of
the year, the entire $500,000 shall have been paid into the separate fund, with
as much of it disbursed to approved grant recipients as possible.
JCC shall include in each quarterly report to the RDC, the Mayor and
the City Council, in accordance with Part II, Subpart C; Part IV, Subpart F; and
Part V, Subpart B of the Open Access Program, a report showing the amount JCC
paid into the separate account during the quarter, the amount disbursed to
approved grant recipients under this public support efforts program during the
quarter, and the amount remaining in the separate account at the end of the
quarter. Said report shall also list the amount for each of these items on a
year-to-date basis.
If any moneys remain undisbursed in the separate account at the end of
the year, they, along with any interest in the account, shall be carried
forward, to be disbursed to approved grant recipients in subsequent quarters.
G. USE OF MBE/WBE/DBE FINANCIAL INSTITUTIONS
The Open Access Program Office will maintain an up-to-date listing of
local and regional financial institutions which are owned and controlled by
Minority Individuals, women or Persons with Disabilities. The listing will
reflect the latest knowledge available to JCC regarding the full range of
services provided by each firm listed, and will be maintained by JCC for its own
use and that of Open Access Participants and others seeking financial services.
The Open Access Program Officer will serve as JCC's primary staff to carry out
its policy of utilizing these financial institutions.
H. BUSINESS DEVELOPMENT ADVISORY COMMITTEE
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In addition to the Casino Construction Advisory Committee (see Part II,
Subpart A.4.b.i. hereof) and the Casino Employment Advisory Committee (see Part
III, Subpart A.4.d.ii. hereof) mentioned elsewhere in these Open Access Plans,
dealing, respectively, with the construction of the Casino and with employment
during its operation, JCC will appoint a Business Development Advisory Committee
to focus on business development issues. This Business Development Advisory
Committee shall, at all times, have at least five (5) members and will be
composed of business, community and university representatives, as well as
representatives of JCC. Some of the members of the Business Development Advisory
Committee may be members of other advisory committees, but the membership of the
advisory committees will not completely overlap. This Business Development
Advisory Committee will meet at least quarterly to consider steps being taken by
JCC and Newcorp to encourage business development among disadvantaged segments
of the New Orleans community, especially with regard to the procurement of
commodities and services in connection with the operation of the Casino and with
regard to supplies for the construction of the Casino.
I. MINORITY INDIVIDUALS AND WOMEN
Based on the information set forth in the NERA Study, the groups which
shall be treated as Minority Individuals for purposes of the goals set forth in
these Open Access Plans are African Americans, Asians and Hispanics. These Open
Access Plans also set goals for women and WBEs based upon the availability
percentages identified by NERA in the NERA Study.
J. GOAL REASSESSMENTS AND OVERALL REVIEWS AND REASSESSMENTS
1. Goal Reassessments. In accordance with Part V, Subpart I, paragraph
2 of the Open Access Program, JCC shall conduct periodic reassessments of the
goals regarding Open Access Participants contained in these Open Access Plans
throughout the term of the Amended and
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Restated Lease Agreement. The first of these periodic goal reassessments will be
conducted beginning in September 2000 (to be completed no later than March 31,
2001). Pursuant to Part V, Subpart I, paragraph 2 of the Open Access Program,
subsequent goal reassessments will take place every ten (10) years, beginning in
September of each year ending in a "0" and concluding no later than March of
each year ending in a "1".
The goal reassessments will be performed by an independent and
experienced consulting firm to be selected from those responding to widely
distributed Requests for Proposals drafted by a person (or company) chosen
jointly by JCC and the City Council, who may also serve as the jointly chosen
member of the selection and monitoring team (described in the next sentence).
Each selection of an independent and experienced consulting firm to perform the
reassessment will be made by a three (3) member committee composed of one
representative of JCC, one representative of the City Council and a third person
chosen jointly by JCC and the City Council. The three (3) member committee that
selects the consulting firm shall also serve as the monitoring team to oversee
that goal reassessment, in the same manner as the NERA Study was monitored, in
accordance with Part I, Subpart C and Part V, Subpart I, paragraph 4 of the Open
Access Program. For each goal reassessment, JCC shall pay the contractual
charges of the independent consulting firm that conducts each goal reassessment
and shall pay the fees and expenses of the monitoring team members, up to the
following maximum amounts:
(a) JCC shall pay no more than the equivalent of $250,000 "in 1994
dollars" to the independent consulting firm conducting the reassessment, unless
the three-member selection committee agrees that a qualified, experienced and
independent consulting firm cannot be hired to conduct an appropriate goal
reassessment for that amount.
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(b) JCC shall pay the fees and expenses of the City-chosen monitor up
to the larger of: (1) the equivalent of $25,000 "in 1994 dollars", or (2) 10% of
the amount paid to the independent consulting firm conducting that reassessment,
or (3) the amount JCC pays its monitor for that reassessment. JCC shall also pay
the fees and expenses of the jointly chosen monitor for each goal reassessment,
up to the maximum amount set in the prior sentence.
(c) JCC shall pay the reasonable fees and expenses of the City Council
consultants incurred in advising the Council concerning the goal reassessment
process. For each goal reassessment, JCC will pay the City Council's consultant
fees and expenses up to the larger of: (1) the equivalent of $125,000 "in 1994
dollars" or (2) 50% of the amount paid to the independent consulting firm
conducting that reassessment.
For purposes of paragraphs a. through c., above, the term "in 1994
dollars" means that the dollar limits listed in this paragraph shall be adjusted
to take account of inflation from January 1, 1994, to the date of payment. JCC's
obligations to reimburse the City for the monitors' and consultants' fees and
expenses, up to the above limits, shall be conditioned upon the monitors and
consultants sending to JCC, as well as to the City, copies of their invoices
showing hours worked by the persons involved and generally describing the type
of work done (but not including hourly billing sheets).
These reassessments of goals shall utilize methodology comparable to
that used in the NERA Study, in order to determine availability of Minority
Individuals and women for employment and availability of MBEs and WBEs for
contracting, and shall utilize JCC's best projections of its anticipated
employment and contracting needs, as well as then-current census and/or similar
demographic data. If a goal reassessment reveals changes in the availability of
Minority Individuals, women, MBEs and/or WBEs, JCC or the City may propose
adjustments of the
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employment and contracting goals contained in these Open Access Plans to reflect
those changes. Any amendments to these Open Access Plans resulting from a goal
reassessment must be submitted for approval by the City Council pursuant to the
City Council's rules for adoption of motions in accordance with Part V, Subpart
I, paragraph 4 of the Open Access Program.
2. Overall Reviews and Reassessments. Pursuant to Part V, Subpart I,
paragraph 1 of the Open Access Program, every ten (10) years, JCC will also
conduct an overall review and reassessment of these Open Access Plans, in the
form of an overall review and reassessment conducted by an independent and
experienced consulting firm. The first such overall review and reassessment
shall be commenced no later than September 30, 2005 and shall be completed no
later than June 30, 2006. Pursuant to Part V, Subpart I, paragraph 1 of the Open
Access Program, subsequent overall reviews and reassessments will take place
every ten (10) years commencing no later than September 30 each year ending in a
"5" and concluding no later than June 30 of each year ending in a "6". All such
overall reviews and reassessments will be of the scope and scale of the NERA
Study and will be based upon methodology comparable to that used by the NERA
Study, as modified to accommodate the then-controlling legal standards.
The independent and experienced consulting firm to be charged with the
conduct of any overall review and reassessment shall be selected and monitored
by the same method (widely circulated Requests for Proposals, three-member (3)
committee and monitoring team, etc.) described above for the selection of an
independent consulting firm for the goal reassessments. For each overall review
and reassessment, JCC shall pay the contractual charges of the independent
consulting firm that conducts each overall review and reassessment and shall pay
the fees and expenses of the monitoring team members, up to the following
maximum amounts:
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a. JCC shall pay no more than the equivalent of $600,000 "in 1994
dollars" to the independent consulting firm conducting the study, unless the
three (3) member selection committee agrees that a qualified, experienced and
independent consulting firm cannot be hired to conduct an appropriate overall
review and reassessment for that amount.
b. JCC will pay the fees and expenses of the City-chosen monitor up to
the larger of: (1) the equivalent of $60,000 "in 1994 dollars", or (2) 10% of
the amount paid to the independent consulting firm conducting that overall
review and reassessment, or (3) the amount JCC pays its monitor for that overall
review and reassessment. JCC will also pay the fees and expenses of the jointly
chosen monitor for each overall review and reassessment up to the maximum amount
set in the prior sentence.
c. JCC will also pay the reasonable fees and expenses of City Council
consultants incurred in advising the City Council on the overall review and
reassessment process and on any Open Access Program or Open Access Plan
amendments which may be proposed in light of that overall study. For each
overall review and reassessment, JCC will pay the City Council's consultant fees
and expenses up to the larger of: (1) the equivalent of $250,000 "in 1994
dollars" or (2) 41.67% of the amount paid to the independent consulting firm
conducting that overall review and reassessment.
For purposes of paragraphs a. through c., above, the term "in
1994 dollars," means that the dollar limits listed in this paragraph shall be
adjusted to take account of inflation from January 1, 1994 to the date of
payment. JCC's obligations to reimburse the City for the monitors' and
consultants' fees and expenses, up to the above limits, shall be conditioned
upon the monitors and consultants sending to JCC as well as to the City copies
of their invoices showing
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hours worked by the persons involved and generally describing the type of work
done (but not including hourly billing sheets).
Each overall review and reassessment shall be conducted on the same
terms as those described in Part I, Subpart J.1, above, including but not
limited to the selection of the independent and experienced consulting firm,
methodology, monitoring and payment scheme. If an overall review and
reassessment reveals changes in the availability of Minority Individuals, women,
MBEs and/or WBEs, JCC or the City may propose adjustments of the employment and
contracting goals contained in these Open Access Plans to reflect those changes.
Any amendments to these Open Access Plans resulting from an overall review and
reassessment must be submitted for approval by the City Council pursuant to the
City Council's rules for adoption of motions in accordance with Part V, Subpart
I, paragraph 4 of the Open Access Program.
II. OPEN ACCESS PLAN FOR CONSTRUCTION OF THE CASINO
JCC has developed this Open Access Plan for Construction of the Casino
as the mechanism for achieving JCC's Open Access objectives during the
construction of the Casino and any renovation to be carried out in connection
with the Casino. The Open Access Plan for Construction of the Casino contains
two (2) components, one directed at employment of women and Minority
Individuals, and the other directed at the award of prime contracts and
subcontracts (for construction work and any future renovation) to Open Access
Participant firms.
A. EMPLOYMENT COMPONENT FOR CONSTRUCTION OF THE CASINO
1. Introduction
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JCC will make all necessary and reasonable efforts to provide expanded
employment opportunities for Minority Individuals, women and Persons with
Disabilities, and to provide equal opportunity for all, during the construction
and any renovation associated with the Casino.
2. Open Access Employment Objectives
JCC will make all necessary and reasonable efforts, through the means
set forth below, to achieve levels of employment among those engaged in
construction and any renovation associated with the Casino commensurate with
their actual availability in the relevant labor market. The NERA Study has found
such actual availability to be as follows:
<TABLE>
<CAPTION>
Minority Individuals
--------------------
<S> <C>
Officials and Managers 12.0%
Professionals 19.2%
Craft Workers 43.7%
Apprentices & Laborers 48.7%
Non-minority Women
------------------
Officials and Managers 18.6%
Professionals 7.9%
Craft Workers 1.8%
Apprentices & Laborers 1.4%
</TABLE>
Following the method used by NERA in the NERA Study, JCC will
calculate the utilization of Minority Individuals and non-minority women by
their representation among the total number of individuals employed directly by
JCC plus those employed by any contractor or subcontractor on the construction
project during any given quarter. For Managers and Professionals, that
representation will be determined based upon the numbers of persons employed
primarily on the construction job site. Representation among Craft Workers and
Apprentices and Laborers will be determined based upon hours worked by Minority
Individuals and women on the job site compared with total hours worked by all
persons in these job categories on the job site. Because NERA's availability
analysis was based on the assumption that minority women would be counted
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as Minority Individuals rather than as women, JCC will count minority women in
that way. See NERA Study, Tables 8.2 to 8.4.
As suggested by the NERA Study, finding that potential availability of
Minority Individuals and MBEs greatly exceeds actual availability, JCC
anticipates that such actual availability will increase as a result of the
activities described in these Open Access Plans and other efforts to remove
discriminatory barriers. Accordingly, JCC anticipates significant incremental
increases in its hiring and contracting goals as a result of the goal
reassessments that will commence in September 2000 in accordance with Part I,
Subpart J.1 of these Open Access Plans and Part V, Subpart I, paragraph 2 of the
Open Access Program.
3. Open Access and Non-discrimination
JCC, its general contractors and its subcontractors will provide equal
employment opportunity and Open Access for all persons and will recruit and
administer hiring, working conditions, benefits and privileges of employment,
compensation, training, opportunities for advancement (including upgrades and
promotions), transfers and terminations of employment, all without
discrimination based upon race, color, religion, national origin, sex, age,
disability or sexual orientation.
The objective of this Open Access Plan for Construction of the Casino
is to ensure that all individuals receive equality of opportunity limited only
by each person's ability. This objective calls for a work environment free of
discrimination in employment because of race, color, religion, national origin,
sex, age, disability or sexual orientation. In order to achieve this goal, JCC
will engage in a process of continuous monitoring and reporting.
In addition, JCC, its general contractors and its subcontractors will
fully comply with all applicable local, state and federal laws and regulations
implementing equal employment
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opportunity objectives, not only by meeting the letter of the law, but by
carrying out the full spirit of equal opportunity and Open Access.
JCC considers the Open Access Plan for Construction of the Casino to be
an inclusive tool to facilitate the expansion of equal opportunity. The
numerical utilization objectives established by the Open Access Plan for
Construction of the Casino are not quotas but goals to be kept prominently in
mind in an effort to achieve a work force that fairly reflects the make up of
the available labor pool. JCC, its general contractors and its subcontractors
will ensure that all applicants and employees are treated without regard to
their race, color, religion, sex, national origin, age, disability or sexual
orientation.
4. Program Implementation and Compliance-Oriented Efforts
JCC will take the following specific actions to demonstrate its best
efforts to realize the purposes described above:
a. Outreach: JCC shall utilize the services of official public agencies
responsible for recruitment and placement of Orleans Parish residents. In its
recruiting processes and requests, JCC shall notify all JCC contractors and
subcontractors in writing of JCC's residency and Open Access Participant goals
(as that term is defined in the Glossary to the Open Access Program), and, if
possible, shall require contractors and subcontractors to adopt the same hiring
goals as JCC has adopted in its Amended and Restated Open Access Plan for
Construction Employment, for all projects conducted by JCC.
b. Management:
i. Casino Construction Advisory Committee. JCC has appointed and
will continue to maintain a Casino Construction Advisory Committee composed of
business, community and university representatives, as well as representatives
of JCC. Some of these Casino Construction
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Advisory Committee members may be members of other advisory committees that have
been or will be created under the Open Access Program, but the membership of the
advisory committees shall not completely overlap. This Advisory Committee shall
at all times have a minimum of five (5) members. (See Addendum B to these Open
Access Plans for a list of the initial members). This Advisory Committee will
meet at least quarterly to review progress in pursuing the objectives of the
Open Access Program with regard to both employment and contracting in connection
with the construction and any renovation of the Casino.
ii. Compliance Monitoring. JCC shall monitor its general
contractors, subcontractors and unions for compliance with the construction
employment provisions of the Open Access Program and these Open Access Plans.
JCC's monitoring will include at least quarterly review of a general
contractor's or subcontractor's success in meeting the employment goals for this
Open Access Plan for the Construction of the Casino, and, where those goals have
not been met, a review of the records of JCC's general contractors',
subcontractors', and unions' efforts to meet those goals.
iii. JCC's monitoring shall include the following actions:
- Desk audits to review material and information concerning the
general contractors', subcontractors' and unions' compliance;
- On-site reviews that include interviews, visits to the
construction site, and inspection of documents and/or
information not available at the desk audit that pertain to the
general contractors', subcontractors' and unions' compliance;
- Additional investigations by JCC that may be necessitated by a
lack of proper record keeping, failure of the general
contractor,
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subcontractor, or union to cooperate, visible evidence of
unsatisfactory performance, or other evidence as may indicate
the need for further investigation;
- Investigation of credible allegations that a union hiring hall
has refused to register or refused to refer a person who came
to the union hiring hall for registration.
iv. Regularly scheduled meetings among representatives of Mayor's
Office of Small and Emerging Business Development (or its successor), the RDC
and JCC will be held every month, unless more frequent meetings are needed, to
review the information described in Part II, Subparts A.4.d. and A.4.e.iii.,
below.
v. Meetings among representatives of the RDC, the City Council,
unions, general contractors and JCC will be scheduled every six (6) weeks.
c. Contractors and Subcontractors:
i. Memorandum of Understanding. JCC has entered into and will
maintain a Memorandum of Understanding with each general contractor, requiring
the contractor to comply with all obligations imposed by the Open Access Program
and these Open Access Plans. (See Addendum C to these Open Access Plans). JCC
has and will continue to communicate to each general contractor, and will ensure
that each general contractor includes a clause in each subcontract requiring
subcontractors to do the same things that the prime contractor must do under the
Memorandum of Understanding. Copies of such written communications shall be
maintained in the files of JCC. JCC will also communicate to each general
contractor and ensure that each general contractor includes a clause in each
subcontract requiring its subcontractors to do the following things:
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- Work Environment. Ensure and maintain a work environment free
of harassment, intimidation or coercion; ensure that all
foremen, superintendents and other on-site supervisory
personnel are aware of their obligations to maintain such a
working environment with specific attention to Minority
Individuals, women and Persons with Disabilities.
- Recruitment Sources. Establish and maintain a current list of
sources for the recruitment of Minority Individuals, women and
Persons with Disabilities, and provide written notification to
such recruitment sources and to community organizations when
the general contractor, subcontractor or their unions have
employment opportunities available and maintain a record of the
organizations' responses. As part of the overall Open Access
recruitment efforts in accordance with this paragraph, the
subcontractors will make special efforts to recruit
African-American men.
- Applicant Records. Maintain a current file of the names,
addresses and telephone numbers of each individual referred to
the general contractor or to any subcontractor by a union, a
recruitment source or community organization, or referred by
the general contractor or any subcontractor to the union,
including an indication of the individual's race, gender and,
if known, disability status, and a statement of what action was
taken with respect to each individual. If a Minority
Individual, woman or Person with a Disability was sent to the
union
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hiring hall for referral and was not referred back to the
general contractor or subcontractor by the union or, if
referred, was not employed by the general contractor or
subcontractor, this shall be documented in the file with the
reason(s) therefor, along with whatever additional actions the
general contractor or subcontractor may have taken.
- Notice to JCC. At the end of each calendar month, provide
written notification to JCC of the identity of any Minority
Individual, woman or Person with a Disability referred by the
contractor or subcontractor to the hiring hall who has not yet
been referred back to the general contractor or subcontractor
for employment. Also, each contractor and subcontractor shall
immediately notify JCC of any other information coming to its
attention indicating that the union referral process has
impeded the contractor's or subcontractor's efforts to meet its
obligations under the Open Access Plan for Construction of the
Casino. Upon receipt of such notification, JCC will make
appropriate inquiries of the relevant union to determine the
reasons for such non-referral.
- Policy Distribution. Disseminate the general contractor's
EEO/Open Access policy, by providing notice of the policy to
unions and requiring their cooperation in pursuing it; by
specific review of the EEO/Open Access policy with all
management personnel including all employees having any
responsibility for hiring, assignment,
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layoff, termination or other employment decisions, with on-site
supervisory personnel (including superintendents and general
foremen) prior to the initiation of construction work; by
distributing the policy to all employees who are Minority
Individuals, women and Persons with Disabilities; and by
posting and maintaining the EEO/Open Access policy on a
bulletin board accessible to all employees at the Casino
construction sites prior to the hiring of employees for the
project.
- Recruiting. Direct its recruitment efforts, both oral and
written, to minority, women's and disability-oriented community
organizations, to schools with primarily minority or women
students or students with disabilities and to minority, women's
and disability-oriented recruitment and training organizations
serving the general contractor's or subcontractor's employment
needs. JCC will require all general and subcontractors to make
reasonable efforts to inform potential employees that the union
may not require them to be members of the union in order to be
referred for employment, and that they can contact the general
contractor or JCC if they are prevented from registering for
referral at a union hiring hall.
- Employee Referral. Encourage all employees, including present
employees who are Minority Individuals, women and Persons with
Disabilities, to recruit other construction workers who are
Minority
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Individuals, women and Persons with Disabilities and inform JCC
concerning the availability of such persons.
- Employment Practices. Ensure that seniority practices, job
classifications, work assignments and other personnel practices
do not have a discriminatory effect by monitoring personnel and
employment-related activities. JCC will require the general
contractor and subcontractors to take care to ensure that no
selection criteria used include irrelevant or unnecessary
elements which have a negative effect upon recruitment and/or
hiring of Minority Individuals, Disadvantaged Individuals or
women.
- Facilities. Ensure that all facilities and activities are
maintained on a desegregated and gender-neutral basis except
that separate or single-user toilet and necessary changing
facilities shall be provided to assure privacy between the
sexes.
ii. In the event JCC believes that any contractor or subcontractor
is in violation of the Memorandum of Understanding with respect to hiring, based
upon the availability of Open Access Participants in the trades and occupations
used by that contractor or subcontractor, as measured by the disaggregated NERA
data set forth in the NERA Study, then JCC will pro-actively assist that
contractor or subcontractor to improve their performance.
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d. Projections of Hiring Needs:
i. JCC and its general contractors will identify the unions and
subcontractors that have not recruited minority and non-minority women craft
workers at the level of actual availability for the craft involved and will
pro-actively assist them in doing so.
ii. The general contractors and JCC will supply monthly and
quarterly projections for the particular number of persons needed, by craft and
trade, on anticipated dates, and this information will be regularly updated.
These projections will be produced by "manloading" the hours and trades on the
Primavera and other software.
- These projections will cover new construction, maintenance,
and renovations.
- JCC will widely distribute the projections to subcontractors,
potential subcontractors, vocational-technical schools and
other training programs, and potential employees via the
community outreach methods described in these Open Access Plans
and via the methods described in Part II, Subparts
A.4.e.vi.-ix., below.
iii. Both subcontractors and unions will supply to JCC specific
information regarding their performance. JCC will supply specific information
about recruitment and hourly employment, by craft, to the City and the RDC.
Also, JCC and the general contractors will inform the unions of the specific
effects of particular subcontractors keeping their supervisory personnel in
place.
iv. JCC and the general contractors will produce and report to the
City and the RDC the information identified in Part II, Subpart A.4.d.i.-iii.,
above, as follows: (a) monthly during the construction of the Casino-Phase I (as
defined in the Amended and Restated General
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Development Agreement); (b) for any employment category for which JCC has failed
to meet the goal during construction of the Casino-Phase I, monthly until JCC
has achieved the goal in that employment category for two (2) consecutive
quarters; and (c) after the Casino-Phase I is completed, quarterly, except that
if JCC fails to achieve the goal in any employment category in a quarter, the
reporting on the items specified in Part II, Subpart A.4.d.i.-iii., above, shall
be monthly until such time as JCC has achieved the goals in that employment
category for two (2) consecutive quarters, after which reporting will return to
quarterly (any subsequent failure to achieve the employment goals in such
category will similarly result in a change to monthly reporting, to revert to
quarterly as specified in this Subpart A.4.d.iv.). However, for any construction
or renovation projects undertaken after the opening of the Casino, the
information identified in Part II, Subpart A.4.d.i.-iii., above, shall be
reported to the City Council and the RDC on a monthly basis, unless the parties
agree otherwise by amending this provision.
e. Unions:
i. Union Compliance with Open Access Program. JCC will require any
union which is a signatory to the Project Agreement to adhere to the
requirements of the Open Access Program and these Open Access Plans. (See the
Project Agreement, attached as Addendum D to these Open Access Plans.) The
Project Agreement shall not foreclose any subcontractor without a collective
bargaining agreement from assigning supervisory personnel to perform work
otherwise covered under the Project Agreement if those supervisory employees (a)
have been employed by the subcontractor within the prior one hundred twenty
(120) days, and (b) have registered with the respective craft unions.
ii. Union Referrals. JCC shall specify that the union's opinion of
an applicant's qualifications, or lack thereof, shall not be a ground for
refusal to refer the applicant. In
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referring all applicants, the union may provide to the contractor a written
statement of whether it finds the applicant qualified or unqualified and if it
finds the applicant unqualified, it shall provide a full statement of the
reasons why. Each union shall also post a notice in a prominent location on the
wall of its hiring hall that states that it may not require union membership as
a condition of referral for employment. (See Addendum D).
iii. Union Reporting. JCC will require any union which is a
signatory to the Project Agreement to report to JCC at the end of each calendar
month on the names, race, gender and disabled status (if known) of: (a) all
persons, whether or not union members, who come to the hiring hall to register
for referral for work on the Casino, including the date when such request for
registration occurs and the disposition of that request; (b) all persons on the
list of names from which referrals for work on the Casino will be drawn, set
forth in order of priority for referral; and (c) all persons actually referred
by the union hiring hall for work on the Casino. JCC shall also require the
union to report at the end of each calendar month on the reasons for the union
failing to refer for employment any Minority Individuals, women or Persons with
Disabilities who have come to the hiring hall for registration or referral.
Copies of the written materials submitted to JCC by any union in connection with
the requirements of this Subpart A.4.e.iii. will be furnished to the RDC within
fourteen (14) days (or sooner if practical under the circumstances) after they
are received by JCC.
iv. Right to Work. When recruiting workers for the construction
projects, JCC will make reasonable efforts to inform them that the union may not
require them to be members of the union in order to be referred for employment,
and that they can contact JCC's compliance officer if they encounter
difficulties in their attempts to register with a union hiring hall.
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v. The Union Review Council, along with an RDC representative, will
meet weekly (in person or by conference call) to review any and all complaints
regarding the implementation of these Open Access Plans.
vi. JCC will designate persons who will function to monitor union
activity on a weekly basis.
vii. JCC and the unions will be pro-active and will work aggressively
with vocational-technical schools and other training programs to recruit members
of minority groups and non-minority women. The unions will designate specific
persons to perform these outreach functions.
viii. The general contractors, JCC and the unions will prepare
educational materials and make presentations to potential employees regarding
their obligations to the unions, to the employer and others.
ix. There will be additional outreach efforts by JCC and the unions
via the State Employment Service and the radio stations and newspapers that
service the African-American community and female audiences. These efforts will
include increased contacts with churches and religious organizations,
community-based organizations and minority trade groups.
5. Reporting
JCC will report to the RDC, the Mayor and the City Council within one
(1) month following the end of each calendar quarter (January-March, April-June,
July-September, October-December) concerning certain employment information
relating to the demolition, construction and any renovation of the Casino. These
reports shall set forth in detail the steps taken by JCC during the reporting
period to implement the provisions of the Open Access Plan for
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Construction of the Casino with regard to employment (including the relevant
portions of Part II, Subpart C; Part IV, Subpart F; and Part V, Subpart B of the
Open Access Program).
In addition, the report shall include the total number of individuals
employed by JCC, the general contractor or any subcontractor to work primarily
on-site on the construction and any renovation of the Casino during the previous
quarter. This employment shall further be broken down into the four (4)
occupational categories identified in the NERA Study, and presented in terms of
both the number of such employees and the number of hours worked by employees
classified as Minority Individuals and non-minority women, as compared to the
total number of employees and the total hours worked by all employees during the
relevant period, respectively. Because NERA's availability analysis was based on
the assumption that minority women would be counted as Minority Individuals and
not as women, JCC will count minority women in that way. Insofar as JCC receives
any information on the disabled status of individuals employed in the
construction of the Casino, it shall likewise report that information on a
quarterly basis.
The quarterly reports will also contain a tabulation, by union, of the
number of Minority Individuals, women and Persons with Disabilities who have
come to the union hiring hall to register during the quarter, showing those who
were and were not referred for work during the quarter.
In reporting on JCC's progress toward achieving its goals for the
quarter, JCC will compare its performance data against the goals as set forth in
this Open Access Plan for Construction of the Casino. JCC will also report on
the current make-up of the workforce (in terms of race and gender) on the last
two (2) payroll days of the quarter covered by the reports.
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JCC will include in the reports any explanatory or background
information which it believes will aid in understanding or interpreting the data
being reported, and information on any other relevant subjects as requested by
the Mayor and/or the City Council.
Notwithstanding the foregoing obligations for JCC's quarterly reports,
the RDC, the Mayor and the City Council acknowledge that, as an on-going matter,
periodic revisions and adjustments to JCC's reporting obligations will be
needed. On or before November 20, 1998, representatives of the RDC, the Mayor,
the City Council and JCC will meet, at a time and place that is mutually
acceptable to the parties, for the purpose of materially reducing the reporting
burden upon JCC of the Open Access Program and the Open Access Plans in a manner
that is consistent with the Mayor's and the City Council's needs to evaluate
fully JCC's performance under the Open Access Program and these Open Access
Plans. The representatives identified above will specifically discuss which
current reporting obligations (i) could be changed to information that JCC
maintains and makes available for inspection by the City and/or the RDC, and
(ii) could remain as or become ongoing reporting obligations. Before becoming
effective, any proposed revisions to JCC's reporting obligations emerging from
this or comparable meetings must be agreed to in writing by the RDC and the
Mayor and must obtain approval by the City Council according to the procedure
for adoption of Motions by the City Council.
6. Responsibility
JCC has assigned responsibility for successfully implementing the
employment component of the Open Access Plan for Construction of the Casino to
JCC's Open Access Program Office.
B. CONTRACTING COMPONENT FOR CONSTRUCTION OF THE CASINO
1. Introduction
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JCC is committed to providing expanded business opportunities for Open
Access Participant firms during the construction and any renovation of the
Casino.
2. Open Access Contracting Objectives
Based on the findings of the NERA Study concerning availability, JCC
will make all necessary and reasonable efforts to achieve the following
utilization levels for MBEs and non-minority WBEs, respectively, in the
construction of the Casino:
MBEs 19.1%
Non-minority WBEs 10.0%
As suggested by the NERA Study finding that potential availability of
Minority Individuals and MBEs greatly exceeds actual availability, JCC
anticipates that such actual availability will increase as a result of the
efforts of this Open Access Plan for Construction of the Casino and other
efforts to remove discriminatory barriers. Accordingly, JCC anticipates
significant incremental increases in its hiring and contracting goals as a
result of the reassessments of goals that will commence in September 2000 in
accordance with Part V, Subpart I of the Open Access Program. Thus, JCC has a
present perception that the appropriate goals with regard to contracts for any
new or additional construction or renovation at the Casino as of March 31, 2001
(when the first goal reassessment will be completed) may well be between 25-30%
for MBEs.
3. Open Access and Non-Discrimination
JCC will provide equal business opportunity and Open Access for all
construction general contractors and subcontractors.
JCC, its general contractors and its subcontractors will fully
comply with all applicable local, state and federal laws and regulations
implementing equal business opportunity
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objectives, not only by meeting the letter of the law, but also by carrying out
the full spirit of equal business opportunity and Open Access.
JCC considers the Open Access Plan for Construction of the Casino to
be an inclusive tool to facilitate the expansion of equal opportunity. The
numerical utilization objectives established by the Open Access Plan for
Construction of the Casino with regard to construction contracting on the
Casino are not quotas, but goals to be prominently kept in mind as reflective
of the actual availability of contractors in the marketplace. JCC, its
general contractors and its subcontractors will ensure that all bidders are
treated without regard to their race, color, religion, national origin, sex,
age, disability or sexual orientation.
4. Memorandum of Understanding
HJC previously entered into a Memorandum of Understanding ("MOU") with
each of its general contractors, in the form attached as Addendum C to these
Open Access Plans, which required each contractor to comply with all obligations
imposed by the Open Access Program or any Open Access Plan adopted under it. JCC
has assumed HJC's obligations under the MOU and will continue to enter into an
MOU with each of its general contractors in the same form and substance as that
required by HJC (for any general contractors who have not previously entered
into an MOU). The MOU will establish that all provisions of the Open Access
Program and of this Open Access Plan for Construction of the Casino are
incorporated into any contract which may be entered into for services related to
construction or any renovation of the Casino. The MOU further will impose
obligations on the general contractor to include a clause in all subcontracts
mandating subcontractor compliance with the requirements established by the Open
Access Program and these Open Access Plans. See Part II, Subpart A.4.c. hereof.
5. Bidding Requirements
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Prior to award, each bidder (whether it is a majority-owned,
woman-owned or minority-owned firm) must submit a description of the scope of
work and dollar value of any portions of the bid work that will be
subcontracted, together with the names and addresses of each subcontractor who
will perform it and a statement whether it and the proposed subcontractors are
MBEs or WBEs certified pursuant to Addendum E attached hereto. Where a
subcontract will be performed by a joint venture, the proposal shall include the
names, addresses, percentage of participation of each joint venture partner and
a statement whether each is an MBE or WBE certified pursuant to Addendum E,
attached hereto.
If a bidder's Open Access participation data do not reflect full
achievement of the Open Access contracting goals described above, the bid may be
considered provided it includes a detailed statement demonstrating compliance
with the "Compliance-Oriented Efforts Standards for Construction General
Contractors and Subcontractors" set forth in Part II, Subpart B.7., below.
6. Program Implementation and Compliance-Oriented Efforts
To achieve the objectives of the Open Access Program, JCC undertakes
to implement the following concrete steps:
a. Small Contracts. Where appropriate in light of the nature of work
to be performed and its relationship to other aspects of the project, JCC will
undertake to identify portions of the work which may be performed by Open Access
Participant firms and will, where economically feasible, break down contracts
into work or dollar units to facilitate participation by Open Access Participant
firms. JCC shall look for such opportunities where the total amount of a
particular type of work to be done is large enough that it can be profitably
shared by multiple contractors and/or subcontractors, and there is nothing
inherent in the work which requires it to be done by a single contractor and/or
subcontractor.
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b. Outreach:
i. Directory of Open Access Participants. JCC has developed
and will maintain a directory of certified, qualified Open Access Participant
firms.
ii. Community Resources. JCC shall use the services of
available minority and women's community organizations; minority and women's
contractors' groups; local, state and federal minority and women's business
assistance offices; disability rights organizations; and other organizations
that provide assistance in the recruitment and placement of Open Access
Participant firms.
iii. Advertisement for Recruitment. JCC shall advertise through
instrumentalities of the mass media which have a significant audience in the
minority community in an effort to recruit Open Access Participant firms for
certification and contracting.
iv. Joint Ventures. JCC shall encourage and facilitate the use
of joint ventures between Open Access Participant firms and other contractors,
as a means of expanding opportunities for minority, women, and disadvantaged
enterprises. JCC is looking for such opportunities where the resources and
abilities of particular Open Access Participant firms will be significantly
complemented by association with one or more majority contractors.
v. Technical Assistance. JCC shall make technical assistance
available to Open Access Participant firms in completing the application for
certification and in performance of the contract. The certification application
form will state that requests for assistance in applying for certification
should be directed to the Certification Officer in JCC's Open Access Program
Office. One-on-one consulting will be provided for pre-construction and on-site
assistance will be available in specific areas such as construction management,
contract administration, cost control, scheduling and staffing. Requests for
assistance with regard to contract performance should be directed to JCC's
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Open Access Program Office or to responsible personnel of the general
contractor, who shall make such requests known to JCC's Open Access Program
Office.
vi. Bonding Assistance. Subcontractors which are unable to
meet the bonding requirements will nonetheless have their bids considered by JCC
and its general contractors, subject to this Subpart 6.b.vi. Where an Open
Access Participant firm, based on all factors other than bonding capability,
appears to merit serious consideration for award of the contract, JCC and its
general contractors will discuss with the bidder its ability to arrange bonding.
Where they conclude that such a bidder is or may be deserving of the award of a
contract, but that the bidder is unable to arrange bonding, or where a bond can
be secured only at a price appreciably above the New Orleans average rate, JCC
and its general contractors will work to assist the bidder in satisfying the
bonding requirement. JCC believes and anticipates that, in most cases, bonding
difficulties can be overcome by a combination of waivers (on some contracts
under $200,000), assistance in arranging appropriately priced bonding and
arrangement of financial assistance in funding the difference between the market
average premium and that quoted to the applicant.
vii. Advertisement Regarding Subcontracting. Where appropriate,
JCC shall advertise in general circulation and trade association publications,
concerning subcontracting opportunities, and will allow subcontractors
reasonable time to respond.
viii. Written Notice Regarding Contracting and Subcontracting.
JCC shall take the necessary steps to provide written notice of contracting and
subcontracting opportunities in a manner reasonably expected to notify Open
Access Participants and will allow sufficient time under the circumstances for
them to respond effectively.
c. Bidding and Selection.
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i. Pre-Award Meetings. Where appropriate, JCC shall schedule
pre-award, pre-bid, pre-proposal and/or pre-quote meetings to inform Open Access
Participant firms of prime contracting and subcontracting opportunities, and to
address issues relating to the performance of those contracts.
ii. Notice. JCC has established and will continue to utilize
its procedures to notify qualified Open Access Participant firms of available
opportunities separate and apart from pre-award, pre-bid, pre-proposal and/or
pre-quote conferences. These procedures shall include when appropriate:
- Written notice by certified mail to Open Access Participant
firms listed in the directory of certified firms, at least
thirty (30) days before a pre-award, pre-bid, pre-proposal
or pre-quote conference;
- Advertisements in the media described in Subparts 6.b.iii.
and 6.b.vii., above, at least thirty (30) days prior to a
scheduled pre-award, pre-bid, pre-proposal or pre-quote
conference;
- JCC will follow up initial indications of interest by
contacting Open Access Participant firms to determine with
certainty whether they are interested in bidding;
- Advertising contracting and subcontracting opportunities
in trade association publications and publications targeted
specifically to minorities and women, at least thirty (30)
days prior to a scheduled pre-award, pre-bid, pre-proposal
or pre-quote conference;
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- Setting bid dates to give qualified Open Access Participant
firms adequate time to prepare bids, quotes and/or
proposals after pre-award, pre-bid, pre-proposal or
pre-quote conferences have been held.
iii Information. JCC shall provide interested Open Access
Participant firms with adequate information about the plans, specifications and
requirements of the contract or subcontract.
iv. Notice to Newcorp. JCC shall provide Newcorp with bid
specifications, plans and/or contract requirements, when appropriate, at least
thirty (30) days prior to the bid or response date.
v. Good Faith Negotiation. JCC will negotiate in good faith
with interested Open Access Participant firms and will not reject Open Access
Participant firms as unqualified without sound business reasons based on a
thorough investigation of their capabilities.
vi. Contact Records. JCC shall maintain the following records
for each Open Access Participant firm which submits a bid or is contacted by
JCC:
- Name, address, telephone number.
- Description of information JCC provided.
- A statement of whether JCC and the Open Access
Participant firm reached agreement, and if not, why not.
vii. Disqualification. If JCC rejects an Open Access
Participant firm as unqualified, JCC will maintain a written record of its
reason(s).
viii. Participation Records. JCC will maintain a written record
of each general contract and each subcontract, the dollar value of each general
contract or subcontract, and the certification status of each general contractor
and each subcontractor.
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ix. Changes in Contracts with Non-Open Access Participant
Firms. JCC shall strive to ensure that there are no changes to construction
contracts or subcontracts with majority-owned firms that deprive MBE or WBE
firms of a fair opportunity to participate in the bidding process for such
contracts or subcontracts. JCC will give notice to the RDC of any such change
and will investigate any complaints by MBE or WBE firms relating to any such
changes.
x. Notice of Changes in Contracts with Open Access Participant
Firms. JCC shall strive to ensure that there are no reductions in the price or
scope of work of a contract awarded to an MBE or WBE firm that is inconsistent
with the objectives of the Open Access Program, as stated in Part I, Subpart B
thereof. JCC will give notice to the RDC of any reductions in the price or scope
of work of MBE or WBE contracts. JCC will investigate any complaints by MBE or
WBE firms relating to reductions in the price or scope of work of their
respective contracts.
xi. Replacement of Contracts with Open Access Participant
Firms. JCC shall strive to ensure that majority-owned firms are not substituted
for contracted MBE or WBE firms in a manner that is inconsistent with the
objectives of the Open Access Program as stated in Part I, Subpart B thereof.
JCC will give notice to the RDC of any substitution of a majority-owned firm for
an MBE or WBE. JCC will investigate any complaints by MBE or WBE firms relating
to substituting majority-owned firms for them.
d. Contract Content and Administration.
i. Administration. JCC shall emphasize to contractors and
subcontractors the significance of Open Access goals.
ii. Bonding Assistance. JCC shall continue to administer its
bonding assistance program described in Part II, Subpart N of the Open Access
Program and in these Open Access Plans.
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iii. Prompt Payment Policy. JCC has adopted and shall continue
to implement and enforce a Prompt Payment Policy for all contractors and vendors
employed in constructing the Casino. JCC agrees to pay its general contractors
and vendors within ten (10) days of their submission of verifiable invoices for
services and/or goods. JCC requires that its prime contractors pay their
subcontractors and suppliers within five (5) days thereafter, and that
subcontractors pay their subcontractors and suppliers within five (5) days
thereafter. Any contractor, subcontractor, supplier or vendor who believes that
JCC has failed to comply with this prompt payment policy should report that to
JCC's Construction Accounting Manager or his or her successor.
iv. Assistance to Newcorp. JCC shall make reasonable efforts
to encourage and assist Newcorp's Board of Directors.
v. Certification. JCC shall arrange for the certification of
all potential contractors and subcontractors before a contract or subcontract is
executed, by reaching its decision on certification of an applicant no later
than fifteen (15) days after receipt of a completed certification application;
however, the parties recognize that it may sometimes be impractical, due to a
combination of factors, to do so. Under those circumstances, JCC shall strive to
complete the review of a certification application no later than fifteen (15)
days after the contract is executed or work commences, whichever comes first.
Any contractor that is not certified before the end of a given quarter shall not
be counted towards the achievement of JCC's MBE or WBE goals for that particular
quarter.
vi. Monitoring. At least quarterly, JCC will review reports
and perform desk and on-site audits of prime contractor, subcontractor and union
compliance with the construction contracting component of the Open Access Plan
for Construction of the Casino.
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7. Compliance-Oriented Efforts Standards for Construction General
Contractors and Subcontractors
In determining whether general contractors and subcontractors who
subcontract any portion of the work for which they are responsible (whether they
are majority-owned, women-owned or minority-owned) have made all necessary and
reasonable efforts to achieve the Open Access contracting objectives during
construction and any renovation of the Casino, JCC will consider a number of
factors. These factors shall be evaluated on the basis of each such contractor's
completion of a questionnaire, which will be filled out as often as JCC deems
appropriate, but no less than once each calendar quarter, whether the contractor
is majority-owned, woman-owned or minority-owned. The questionnaire shall
address the following issues (and such further inquiries as JCC shall find
appropriate):
a. Pre-award Meetings. Whether the general contractor or subcontractor
attended any pre-award meetings scheduled by JCC to inform Open Access
Participant firms of contracting and subcontracting opportunities and of issues
relating to the performance of these contracts;
b. Subcontractor Lists. Whether the general contractor or
subcontractor requested from JCC a list of Open Access Participant firms;
c. Small Contracts. Whether the general contractor or subcontractor
broke down contracts into dollar or work units to facilitate participation by
Open Access Participant firms, as consistent with the nature of the work to be
performed and its relationship to other aspects of the project. Such action is
appropriate where the total amount of a particular type of work to be done is
large enough that it can be profitably shared by multiple subcontractors and
there is nothing inherent in the work which requires it to be done by a single
subcontractor;
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d. Follow-Up. Whether the general contractor or subcontractor followed
up initial indications of interest by contacting Open Access Participant firms
to determine with certainty if they were interested in bidding;
e. Advertisement. Whether the general contractor or subcontractor
advertised in general circulation and trade association publications concerning
the subcontracting opportunities and allowed subcontractors reasonable time to
respond;
f. Good Faith Negotiations. Whether the general contractor or
subcontractor negotiated in good faith with interested Open Access Participant
firms and did not reject Open Access Participant firms as unqualified without
sound business reasons based on a thorough investigation of their capabilities;
g. Information. Whether the general contractor or subcontractor
provided interested Open Access Participant firms with adequate information
about the plans, specifications and requirements of the subcontract;
h. Written Notice. Whether the general contractor or subcontractor took
the necessary steps to provide written notice in a manner reasonably calculated
to inform Open Access Participant firms of the opportunities and allowed
sufficient time under the circumstances for them to participate effectively;
i. Community Resources. Whether the general contractor or subcontractor
used the services of available minority and women's community organizations,
minority and women's contractors' groups, local, state and federal minority and
women's business assistance offices, disability rights organizations and other
organizations that provide assistance in the recruitment and placement of Open
Access Participant firms, such as Newcorp;
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j. Contact Records. Whether the general contractor or subcontractor has
maintained the following records for each MBE and WBE which bids on any
subcontract:
- Name, address, telephone number.
- Description of information provided by the general contractor
or subcontractor.
- A statement of whether an agreement was reached and if not, why
not, including any reasons for concluding that the bidder was
unqualified to perform the job.
8. Reporting
JCC will report quarterly to the RDC, the Mayor and the City Council
with regard to its progress, with respect to contracting, in implementing the
Open Access Plan for Construction of the Casino in accordance with Part II,
Subpart C; Part IV, Subpart F; and Part V, Subpart B of the Open Access Program.
The first contracting report was filed by Harrah's Jazz Company on
October 31, 1994, and it covered all previous contracting in connection with the
temporary and permanent Casino projects. Subsequent reports will continue to be
filed no later than one (1) month after the close of each calendar quarter, with
reports due on January 31, April 30, July 31 and October 31, for the quarters
ending December 31, March 31, June 30 and September 30, respectively.
The quarterly report shall address the following:
- Efforts undertaken by JCC to publicize the contracting and
subcontracting opportunities provided by the construction of
the Casino.
- Efforts undertaken by JCC to identify Open Access Participant
firms and efforts undertaken to encourage their participation
in the construction of the Casino.
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- Efforts undertaken by JCC to remedy any inability of Open
Access Participant firms to perform construction contracts or
subcontracts or proposed construction contracts or
subcontracts.
- A summary of the progress being made toward achieving the
overall contracting objectives of the Open Access Plan for
Construction of the Casino.
- The extent to which joint ventures, made up in part of MBEs
and/or WBEs have been utilized by JCC in the construction of
the Casino.
- The contact person at each MBE and WBE contractor or
subcontractor working on the construction of the Casino.
- The type of service(s) provided by each MBE and WBE contractor
or subcontractor working on the construction of the Casino.
- The date any contract or subcontract was awarded to a MBE or
WBE working on the construction of the Casino.
- Discussion of the nature of any problems encountered by MBE
and WBE bidders whose bids were not accepted for work on
construction of the Casino.
- Recommendations to strengthen the contracting component of the
Open Access Plan for Construction of the Casino.
- Forecast of the construction contracts expected to be awarded,
including probable monetary amounts involved, the number and
type of contracts to be awarded and expected solicitation
dates, in connection with the construction of the Casino.
- The total number of contracts and total dollar volume of
contracts and subcontracts signed during the previous calendar
quarter and the total number of contracts, dollar
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volume and percentage of contracts and subcontracts awarded to
MBEs, WBEs and majority firms during that quarter.
- All funds paid to MBE and WBE contractors and subcontractors
on a cumulative basis, from the commencement of construction
of the Casino through the end of that quarter, for
construction work on the Casino, including change orders, and
the percentage those funds constitute of the total funds paid
during that period.
- All funds paid to MBE and WBE contractors and subcontractors
during the quarter for work on construction of the Casino,
including change orders, and the percentage those funds
constitute of the total funds paid for that period.
- In reporting on the three (3) preceding items, funds paid to
joint ventures made up in part of MBEs and/or WBEs should be
counted only to the extent of monies actually received or to
be received by the MBE and/or WBE, excluding any work
subcontracted to a non-Open Access Participant firm.
- The MBEs and WBEs that currently have contracts or
subcontracts or have had contracts or subcontracts during the
reporting period, the number of contracts or subcontracts
awarded to each individual MBE and WBE and the dollar volume
of each of these contracts.
- In the performance of its work on the Casino, an MBE or WBE
contractor or subcontractor may enter into second-tier
subcontracts consistent with standard industry practices.
However, if an MBE or WBE contractor or subcontractor
subcontracts a significantly greater portion of the work of
its contract or subcontract to a non-MBE or non-WBE than would
be expected on the basis of standard industry practices, then
that MBE or WBE subcontractor will not be viewed as performing
a
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commercially useful function and JCC may not count such
participation towards the MBE or WBE goals under these Open
Access Plans.
- MBE and WBE manufacturers, suppliers (subject to the
immediately following paragraph) and wholesalers will be
credited for the entire amount of purchase orders involved,
regardless of who does the installation; provided, however, if
the installation price paid to a non-MBE or non-WBE contractor
exceeds fifty percent (50%) of the purchase price, JCC will
receive MBE or WBE credit for the purchase price only. JCC
will not double count amounts paid for the purchase of
equipment, products or supplies from MBEs or WBEs and amounts
paid for installation by MBEs or WBEs.
- MBE and WBE suppliers will be given full credit for purchase
orders if such suppliers are bona fide business enterprises
which maintain inventory for sale to customers (i.e., they are
not brokers).
- A breakdown of firms that were certified, decertified and
recertified during the quarter and whether they are MBEs or
WBEs.
In reporting on JCC's progress toward achieving its goals for
the quarter, JCC will compare its performance data against the goals as set
forth in the Open Access Plan for Construction of the Casino. JCC's quarterly
contracting reports will also describe additional efforts to comply with the
relevant portions of Part IV, Subpart A of the Open Access Program.
JCC will include in the report any explanatory or background
information which it believes will aid in understanding or interpreting the data
being reported and information on any other relevant subjects as requested by
the Mayor and/or the City Council.
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Notwithstanding the foregoing obligations for JCC's quarterly reports,
the RDC, the Mayor and the City Council acknowledge that, as an on-going matter,
periodic revisions and adjustments to JCC's reporting obligations will be
needed. On or before November 20, 1998, representatives of the RDC, the Mayor,
the City Council and JCC will meet, at a time and place that is mutually
acceptable to the parties, for the purpose of materially reducing the reporting
burden upon JCC of the Open Access Program and the Open Access Plans in a manner
that is consistent with the Mayor's and the City Council's needs to evaluate
fully JCC's performance under the Open Access Program and these Open Access
Plans. The representatives identified above will specifically discuss which
current reporting obligations (i) could be changed to information that JCC
maintains and makes available for inspection by the City and/or the RDC, and
(ii) could remain as or become ongoing reporting obligations. Before becoming
effective, any proposed revisions to JCC's reporting obligations emerging from
this or comparable meetings must be agreed to in writing by the RDC and the
Mayor and must obtain approval by the City Council according to the procedure
for adoption of Motions by the City Council.
9. Certification
JCC's Certification Process and relevant forms are attached as Addendum
E hereto.
10. Responsibility
JCC has assigned primary responsibility to its Director of Design and
Construction for successful implementation of the construction contracting
component of the Open Access Plan for Construction of the Casino. In carrying
out that responsibility, JCC's Director of Design and Construction will have the
active guidance and assistance of the Director of Community Resources
Development for HNOMC.
III. OPEN ACCESS PLAN FOR OPERATION OF THE CASINO
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JCC has developed an Open Access Plan for Operation of the Casino as
the mechanism for achieving JCC's Open Access objectives during the operation of
the Casino. The Open Access Plan for Operation of the Casino contains two
components, one directed at employment of women and Minority Individuals, and
another directed at the purchasing of goods and services by the Casino from Open
Access Participant firms.
A. EMPLOYMENT COMPONENT FOR OPERATION OF THE CASINO
1. Introduction
JCC is committed to providing expanded employment opportunities for
Minority Individuals, women and Persons with Disabilities, and equal opportunity
for all, in connection with the operation of the Casino. This Open Access Plan
for Operation of the Casino shall apply to those persons actually working in the
Casino and also to those dealing with Casino operations who are employed in the
administrative offices of JCC and HNOMC. This Plan shall also apply to any
employees of the members of JCC who are substantially engaged in the operation
of the Casino.
2. Open Access Employment Objectives
JCC will make all necessary and reasonable efforts, through the means
set forth below, to achieve levels of employment among those engaged in
operation of the Casino at the level of their actual availability in the
relevant labor market. The NERA Study has found such actual availability to be
as follows:
<TABLE>
<CAPTION>
Minority Individuals
- --------------------
<S> <C>
Managers & Professionals 16.3%
Supervisors 26.3%
Technicians 32.5%
Support Occupations 56.0%
Cleaners, Operators, Laborers 84.0%
</TABLE>
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<TABLE>
<CAPTION>
Non-minority Women
- ------------------
<S> <C>
Managers & Professionals 34.5%
Supervisors 36.4%
Technicians 10.0%
Support Occupations 27.8%
Cleaners, Operators, Laborers 4.7%
</TABLE>
Following the method used by NERA in the NERA Study, JCC will calculate
the utilization of Minority Individuals and non-minority women by their numbers
and by the percentage they constitute of the total number of individuals
employed at the Casino during any given quarter. See Part IV, Subparts A and F
of the Open Access Program. Because NERA's availability analysis was based on
the assumption that minority women will be counted as Minority Individuals and
not as women, JCC will count minority women in that way.
As suggested by the NERA Study finding that potential availability of
Minority Individuals and MBEs greatly exceeds actual availability, JCC
anticipates that such actual availability will increase as a result of the
efforts of this Open Access Plan for Operation of the Casino and other efforts
to remove discriminatory barriers. Accordingly, JCC anticipates significant
incremental increases in its hiring and contracting goals as a result of the
reassessments of goals that will commence in September 2000 pursuant to Part V,
Subpart I the Open Access Program.
3. Open Access and Non-Discrimination
JCC will provide equal employment opportunity and Open Access for all
persons and will recruit and administer hiring, working conditions, benefits and
privileges of employment, compensation, training, opportunities for advancement
(including upgrades and promotions), transfers and terminations of employment,
without discrimination based on race, color, religion, national origin, sex,
age, disability or sexual orientation.
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The objective of this Open Access Plan for Operation of the Casino is
to ensure that all individuals receive equality of opportunity limited only by
each person's desires and abilities. This objective calls for a work environment
free of discrimination in employment based on race, color, religion, national
origin, sex, age, disability or sexual orientation. In order to achieve this
goal, JCC will engage in a process of continuous monitoring and reporting.
In addition, JCC will fully comply with all applicable local, state and
federal laws and regulations implementing equal employment opportunity
objectives, not only by meeting the letter of the law, but also by carrying out
the full spirit of equal opportunity and Open Access.
JCC considers this Open Access Plan for Operation of the Casino to be
an inclusive tool to facilitate the expansion of equal opportunity. The
numerical utilization objectives established by this Open Access Plan for
Operation of the Casino are not quotas, but goals to be prominently kept in mind
in an effort to achieve a work force that fairly reflects the make up of the
available labor pool. JCC will ensure that all applicants and employees are
treated without regard to their race, color, religion, sex, national origin,
age, disability or sexual orientation.
4. Program Implementation and Compliance-Oriented Efforts
JCC will take the following specific actions to demonstrate its best
efforts to realize the purposes described above:
a. Outreach:
i. JCC shall utilize the services of official public agencies
responsible for recruitment and placement of Orleans Parish residents, such as
the State Employment Service.
ii. JCC shall notify all JCC contractors and subcontractors in
writing of JCC's residency goals and Open Access goals and will request, and, if
possible, require that
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contractors and subcontractors adopt the same hiring goals as JCC has under this
Open Access Plan for Operations Employment.
iii. JCC shall continue to develop, implement and monitor
accredited training programs to train potential casino employees, emphasizing
training for Orleans Parish residents for purposes of meeting JCC's Open Access
Participant goals. The content of these training programs shall be made
available to the RDC for review, when requested within a reasonable time frame.
iv. JCC shall develop, implement, and monitor special efforts
to recruit African-American male participants to be trained in JCC's training
program. This includes working with the Opportunity Industrialization Center,
the National Council of Negro Women and the Urban League to assist in conducting
Life Skills Training for the disadvantaged. JCC will also seek the assistance of
several organizations in the recruitment of African-American men. Those
organizations include: the Coalition of 100 Black Men; the Zulu Social Aid &
Pleasure Club; the Dryades Street YMCA and the graduate chapters of several
Black fraternities (Alpha Phi Alpha, Kappa Alpha Psi, Omega Psi Phi and Phi Beta
Sigma).
v. JCC shall make special efforts to select applicants from
among Project Independence participants to be trained in JCC's training program.
vi. JCC shall not use irrelevant or unnecessary application
criteria which negatively impact recruitment of Minority Individuals,
Disadvantaged Individuals or women.
vii. Persons with Disabilities. JCC will continue relationships
with agencies that provide services to Persons with Disabilities for the purpose
of identifying job opportunities with the Casino for which Persons with
Disabilities are qualified or may become qualified with reasonable
accommodation. JCC will seek assistance from such organizations, as a
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recruiting source for potential employees and as a source of information about
potential employees with disabilities, and it will otherwise work to enhance
employment opportunities for Persons with Disabilities.
viii. Dissemination of Information on Employment Needs of the
Casino. JCC will widely distribute information on employment opportunities at
the Casino to institutions of higher learning, skills training centers,
religious organizations, community centers and organizations. JCC will make
follow-up contacts with each organization. JCC will also, as needed, use mass
media to advertise employment opportunities. It will advertise through a number
of newspapers and radio stations with substantial African-American audiences --
e.g., The Louisiana Weekly, The New Orleans Data News Weekly, The New Orleans
Tribune, WYLD, WBOK, B97 and WQUE (Q93). Likewise, JCC will use television
announcements with the same focus.
ix. Supervisory and Professional Recruitment. JCC's
recruitment effort for its supervisory and professional positions will include
colleges, universities, and alumni offices of schools which are likely to have
students or alumni who are women or minorities (e.g., historically black
colleges and all-female schools).
x. Independent Training Agencies. Beginning with the
construction of the Casino-Phase I (as defined in the GDA), JCC will conduct a
variety of activities aimed at assisting skills training centers, Open Access
Participant firms and others in establishing programs to train workers for jobs
existing at the Casino. JCC will describe the employment needs of the Casino and
provide direction and guidance in formulating appropriate training programs for
persons seeking employment there. JCC will also identify teachers and/or
employees who are willing to work in training programs.
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xi. Internships. In order to identify highly qualified
individuals interested in pursuing full-time careers with Harrah's, JCC will
institute an internship program for college and university students. This
program will utilize part-time employment to provide participants with exposure
and learning opportunities under the close supervision of an internship manager.
The internship program will utilize a learning plan tailored to each intern's
areas of activity and interests and each intern's performance will be evaluated.
The internship program will be consistent with age requirements of state
statutes and regulations relating to casino employment.
xii. Internship Recruitment. JCC will continue to recruit
interns from a number of local institutions of higher learning that have a
substantial enrollment of Minority Individuals and/or women.
xiii. Selection for Training. JCC has developed written criteria
for use in considering applicants for the internship and training programs,
which are attached to these Open Access Plans as Addendum G. JCC will submit any
revisions of these criteria to the City Council for approval. In pursuing these
internship and training programs, JCC shall utilize aggressive measures to
recruit prospective employees from communities with high unemployment rates,
which measures shall include visits to schools, community organizations,
businesses, employment agencies and places frequented by the chronically
unemployed. Applicants must meet any requirements imposed by the State of
Louisiana for the position involved.
xiv. Recruiting Sources. JCC has and will maintain regular
communications with major recruiting sources, including those focusing on
employment of Minority Individuals, women and persons with disabilities, as well
as community agencies, community leaders, churches and other religious
organizations with predominantly African-American membership, high schools,
vocational and technical schools, junior colleges and colleges with a
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substantial number of African-American and/or women students and the Louisiana
State Employment Service. JCC will encourage these sources to actively recruit
and refer Minority Individuals, women and Persons with Disabilities for all
positions for which the Casino hires.
xv. Employment Advertisements. Placement of advertisements for
employment include electronic (where appropriate) and newsprint media of special
interest to minority audiences. If groups of persons are pictured in employment
advertisements, members of both minority and non-minority groups, men and women
and Persons with Disabilities will be included. All employment advertisements
shall contain the phrase "An Equal Opportunity Employer. Applicants for
Employment will be Considered without regard to Race, Color, Religion, Sex,
Sexual Preference, National Origin or Physical Handicap."
xvi. General Advertisements. JCC's general advertising will
continue to feature both employees and non-employees. It shall also include
members of both minority and non-minority groups, men and women, as well as
Persons with Disabilities.
xvii. Review of Position Descriptions. JCC has reviewed all
position descriptions to ensure that they accurately reflect the duties
performed. JCC shall review all selection criteria on an ongoing basis to ensure
that they are job-related and non-discriminatory.
xviii. Availability of Position Descriptions. JCC shall make
position descriptions and selection criteria available to recruiting sources.
xix. Recruiting. JCC will continue to interface with placement
departments of vocational, trade and business schools as well as universities in
the New Orleans area to present job placement seminars at which applications
will be distributed. In particular, JCC shall recruit at local colleges and
secondary schools that have entirely or primarily women student enrollments or
women alumnae.
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xx. Job Fairs. JCC, independently or in conjunction with other
agencies and/or employers, shall continue to conduct job fairs aimed at
recruiting women in different areas of New Orleans where applications will be
distributed and collected. JCC shall designate persons to direct these
intensified outreach efforts.
xxi. Benefits Advertising. JCC will engage in an ongoing
substantive print media and television campaign emphasizing its Child Care,
Education Assistance and Home Ownership Programs. The publications selected will
be those likely to be read by women.
xxii. Encouragement of Contractors and Subcontractors. In the
event JCC believes that any contractor or subcontractor is in violation of the
goals with respect to hiring, based upon the availability of Open Access
Participants in the trades and occupations used by that contractor or
subcontractor (as measured by the disaggregated NERA data), then JCC will work
pro-actively to assist that contractor or subcontractor to improve its
performance.
b. Hiring:
i. Employment Application. JCC's employment application
does and will continue to set forth prominently words communicating JCC's
policy of equal opportunity employment.
ii. JCC shall not use irrelevant or unnecessary application
or hiring criteria which negatively impact the hiring of Minority
Individuals, Disadvantaged Individuals or women.
iii. All JCC and HNOMC officials and staff members involved
in the hiring process have been and will continue to be given training in
accomplishing equal opportunity employment. This training will include, but
not be limited to, cultural and sensitivity training and
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a complete explanation of the philosophy behind, purposes of, and operation of
the Open Access Program and these Open Access Plans.
c. On the Job:
i. Career Development. JCC will continue to pursue a
multi-faceted program of career development which can be expected to produce
substantial opportunities for Open Access Participants. At the heart of this
program is the annual performance appraisal given to each employee, during which
career development possibilities are discussed and the employee's performance
during the year is assessed. JCC will regularly utilize several specific types
of career development techniques, depending on the performance and inclinations
of individual employees, and upon the needs of the business for persons with
particular skills or abilities.
ii. Comprehensive Training Plan. JCC shall fully implement its
comprehensive written training plan, which is attached as Addendum F to these
Open Access Plans. The training plan addresses in detail the full range of
training made available to current and prospective employees. The training plan
will be revised periodically to meet the changing needs of the business. JCC
will notify the Mayor, the RDC and the City Council of any such revisions to the
training plan.
iii. Performance Enhancement Training and On-the-Job Training.
JCC, at its own expense, and during an employee's paid work time, shall make
available a variety of classroom and other training programs to enhance the
knowledge and skills of present employees with regard to the jobs that they
presently fill. Such training will be undertaken on a routine basis.
iv. Apprenticeships. JCC shall utilize apprenticeships in
order to provide accelerated cross-occupational training to persons in
occupational areas outside of those in which they presently work. These
apprenticeships will utilize a combination of classroom training, on-the-
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job training and mentoring, in order to develop job skills in occupations
which may be new for the employees involved. Typically, these apprenticeships
will be directed toward preparation for positions which are promotions (i.e.,
increases in responsibility and compensation) from the apprentice's current
position.
v. JCC shall utilize apprenticeship as a preferred method for
filling higher level positions in the Casino. During the pre-opening phase of
the Casino, JCC will utilize apprenticeship in the form of its Fast-Track
program, through which gaming employees are given appropriate training under the
guidance of a mentor and moved on an accelerated basis into gaming supervisory
positions. During the initial phase of operations, JCC's Dual Rate Supervisor
program will utilize apprenticeship in a different form. This program will allow
promising employees, working under the personal guidance of a Table Games
Manager, to begin performing supervisory duties on a part-time basis, while
continuing to perform their regular duties at other times. The content of the
referenced programs and any successor or related programs shall be made
available to the RDC for review when asked for on a reasonable time frame.
vi. JCC expects to utilize apprenticeships in filling
supervisory positions starting at the end of Casino-Phase I, and it believes
that such apprenticeships will offer a significant opportunity for advancement
for Open Access Participants. JCC likewise expects to make regular use of
apprenticeships to fill supervisory and other positions in the future.
vii. JCC will establish and maintain a lay-off policy that
operates evenhandedly.
vii. Policy Statements. JCC shall continue its practice of
providing all Casino employees with copies of the employee handbook, which
includes JCC's equal employment
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opportunity and Open Access policies. The policies shall continue to be included
in the Supervisor's Manual.
ix. Publications. JCC's equal employment opportunity and Open
Access policies shall continue to be featured periodically in the employee
newspaper. In addition, JCC's Open Access activities in the New Orleans
metropolitan community will be periodically presented to employees through
existing JCC news media, special bulletins and brochures.
x. New Employee Orientation. JCC's commitment to equal
employment opportunity shall be presented as a part of the orientation programs
for all new employees.
xi. Bulletin Boards. JCC's equal employment opportunity policy
and current and anticipated job openings shall be posted on appropriate bulletin
boards.
xii. Posters. The required equal employment opportunity posters
will be prominently displayed in conspicuous places in the Casino and in
employment and testing areas.
xiii. Job Posting. JCC shall continue its job posting plan,
which includes professional and supervisory vacancies up to the director
level. Under this plan, openings are posted and any employee may apply in
writing. Counseling is available to all employees concerning the enhancement
of their qualifications for desired opportunities.
xiv. Training for Advancement. JCC shall regularly monitor its
training programs to ensure Open Access Participants are given equal access to
all developmental training designed to enhance an employee's ability to assume
positions of greater responsibility.
xv. Tuition Refund Program. JCC shall continue to make
available a Tuition Refund Program for all full-time employees with one (1) year
of service. JCC will encourage minority employees, women employees and employees
with disabilities to participate in
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the Tuition Refund Program. At new employee orientation sessions, the program
shall be explained and employees will be encouraged to consider furthering their
education.
xvi. Facilities. All work areas, cafeterias, rest and
recreational areas and other facilities shall be maintained on a
non-discriminatory basis.
xvii. Employee Counseling. Counselors shall be available on
reasonable request to work with an employee concerning personal or work-related
problems.
xviii. Support of Community Programs. JCC has recognized its role
as a corporate citizen in the New Orleans metropolitan community, and it will
continue its leadership through programs designed to improve the socio-economic
status of disadvantaged persons and to eliminate discrimination in employment.
Among other actions, JCC shall:
- encourage employees to work with and serve on the
advisory boards of various community self-help
groups;
- encourage executives and managers to act as
advisers, members of boards of directors and fund
raisers and in various other capacities for
community organizations;
- participate in and, where practical, sponsor
seminars for the business community on equal
employment opportunity and Open Access for Minority
Individuals, women and Persons with Disabilities;
and
- encourage its employees to spend personal time to
aid in the solution of urban and community
problems.
xix. Accommodation to Physical and Mental Circumstances of
Persons with Disabilities. JCC shall make reasonable accommodation to the
physical and mental circumstances of qualified employees or applicants with
known disabilities, to the extent that it is
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made aware of the need for such accommodation and the accommodation does not
impose an undue hardship on JCC.
xx. Work Environment. JCC shall not tolerate the intimidation,
harassment or reprisal against minority or women employees or employees with
disabilities. Any employee who wishes to file a complaint concerning an alleged
violation of this policy may do so by submitting it in writing to the Human
Resources Department. (See Addendum I to these Open Access Plans).
xxi. Employee Assistance Program. JCC has put in place and will
continue to maintain an employee assistance program having two (2) components:
- Child Care and Child Development Program. JCC has
adopted HJC's Child Care Program and assumes HJC's
obligations under that program. The specific
provisions of the Child Care Program are set forth
at Addendum N of these Open Access Plans. All
references to "Harrah's" in the Child Care Program
shall be deemed to refer to JCC, where appropriate.
The Child Care Program shall be in operation by the
date any employees are hired to work in the Casino
operations or the date such employees begin their
training, whichever comes first.
- Home Ownership Program. JCC shall have in place a
home ownership program for employees with a
household income of $25,000 or less who have been
full-time employees for at least one (1) year from
their date of hiring (regardless of whether such
employees were hired before or after the Casino
opens). JCC will
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assist such employees by contributing $1,000 and
other financial assistance to the down payment on a
home for first time home buyers.
xxii. Youth Employment Program. JCC has undertaken and will
continue to undertake to identify employment opportunities for unemployed youth
in the New Orleans area, will coordinate with Newcorp to assist in starting
businesses in which the youth of New Orleans may play a role, and will work
closely with public and private concerns in providing training and assistance to
young residents of the New Orleans area.
xxiii. JCC will develop internships for women students, consistent
with the internship program described in Part III, Subpart 4.a.xi. of these Open
Access Plans, and such internships will be consistent with state-mandated age
requirements for casino employment.
d. Management:
i. JCC shall maintain documentation of applications by Open
Access Participants, including at a minimum:
- names, addresses, and telephone numbers of Open
Access Participant applicants who were contacted,
- description of information provided to those Open
Access Participants, and
- a statement of why they were not hired (if they
were not).
ii. Casino Employment Advisory Committee. JCC shall continue to
maintain a Casino Employment Advisory Committee to be composed of business,
community and university representatives with relevant expertise to serve along
with appropriate representatives of JCC. This Advisory Committee shall at all
times be composed of a minimum of five (5) members. (See Addendum O to these
Open Access Plans for an initial list of members). Some of these
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Advisory Committee members may be members of other advisory committees that have
been or will be created under these Open Access Plans, but the membership of the
advisory committees will not completely overlap. This Advisory Committee will
meet at least quarterly to review and assist with JCC's efforts in the
employment of Minority Individuals, women, and other Disadvantaged Individuals
in the operation of the Casino, and to identify Open Access concerns.
iii. Meetings. Meetings shall be held regularly in which JCC
management employees are advised of JCC's equal employment opportunity policy
and of the philosophy behind, purposes of, and operation of the Open Access
Program and these Open Access Plans. The agendas of these meetings include a
statement from the management committee of JCC and HNOMC's management expressing
JCC's and HNOMC's full endorsement of the Open Access Program and these Open
Access Plans.
iv. Staff Training. Management and other employees engaged in
employment, placement, training, transfer or promotion activities will continue
to receive additional training in the applicable local, state and federal equal
employment opportunity laws, and in the Open Access Program and these Open
Access Plans, as well as their individual responsibility in assisting JCC and
HNOMC to meet their equal opportunity and Open Access objectives. All JCC and
HNOMC employees engaged in making hiring and selection decisions will continue
to be trained to ensure non-discriminatory decision-making. Employment results
will continue to be reviewed to ensure non-discriminatory treatment.
v. Applicant Flow. JCC shall regularly review the ethnic and
gender composition of its applicant pool, as a means of self-evaluating its
outreach and related efforts, in order to ensure that sufficient numbers of Open
Access Participants are being recruited and are applying for employment with
JCC.
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vi. Monitoring. JCC shall maintain logs of personnel
transactions, including applications, hires, promotions, transfers and
terminations, and shall analyze the transactions at least quarterly to identify
problem areas and appropriate remedial actions. A summary of these analyses,
which are reviewed by management, shall be prepared by the Human Resources
Department on a quarterly basis and shall be made available to the RDC for
audit.
vii. Compliance with Federal, State and Local Discrimination
Statutes and Guidelines. JCC shall regularly review its recruitment and
advertising policies, its job policies and practices and wage, compensation and
benefit structure to ensure that its practices conform to the requirements of
Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of
1991; the Family and Medical Leave Act of 1993; the Americans with Disabilities
Act; the Pregnancy Discrimination Act of 1978; the Age Discrimination in
Employment Act, as amended; the Equal Pay Act; the Employee Retirement Income
Security Act of 1974, as amended; La.R.S. 23:1006 and 23:1008; and the City of
New Orleans Human Relations law. JCC shall maintain leave policies that are
non-discriminatory and JCC shall treat disability due to pregnancy similar to
any illness or injury. JCC shall also make reasonable accommodations for the
religious observances and practices of employees and prospective employees, as
required. (See Addenda H and I to these Open Access Plans.)
5. Reporting
JCC will report to the RDC, the Mayor and the City Council within one
(1) month following the end of each calendar quarter (January-March, April-June,
July-September, October-December) concerning certain employment information
relating to operation of the Casino in accordance with Part II, Subpart C; Part
IV, Subpart F; and Part V, Subpart B of the Open Access Program. JCC shall
submit quarterly reports concerning employment information relating to the
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operation of the Casino beginning with the report covering the period from July
through September 1999, which report is due on October 31, 1999. Prior to that
time, JCC shall report on its recruitment activities, if any, as they occur. In
the event the opening date for the Casino is scheduled to occur earlier than
twelve (12) months after the Effective Date, JCC shall begin reporting on its
operations employment activities at least three (3) months before the opening
date. These quarterly reports shall contain the following information:
a. Employees: The total number of employees as of the end of the
quarter broken into the five (5) occupational categories set forth in the NERA
Study. These figures are further broken down into regular full-time; regular
part-time; temporary and on-call, including the number in each category who are
minority men, minority women, non-minority men and non-minority women. JCC will
also report on the current make-up of the workforce as of the last two (2)
payroll days in the quarter covered by the report. See Part IV, Subpart A.3. of
the Open Access Program.
b. New Hires: The total number of persons hired during the quarter
for each of the categories specified above, including the number in each
category who are Minority Individuals and women.
c. Terminations: The total number of regular full-time and regular
part-time employees whose employment terminated during the quarter, including
the number in each category who are Minority Individuals and women and a
statement within each subcategory of the number terminated voluntarily and
involuntarily.
d. Other Employee Data: In addition to the employment data described
in items a. through c., above, each quarterly report shall report the Net Hiring
for the Quarter and Total Employment of Open Access Participants, as defined
herein and in Part IV, Subpart A of the Open
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Access Program. Further, the quarterly report will describe all of the
subfactors used to make these calculations.
e. Prospective Employee Training: The total number of prospective
employees who were trained during the quarter, including the number who are
Minority Individuals and women.
f. Accounting for Minority Women: Because NERA's availability
analysis was based on the assumption that minority women will be counted as
Minority Individuals rather than as women, JCC will count minority women in that
way.
g. Persons with Disabilities: Insofar as JCC becomes aware of the
disabled status of individuals employed, hired, terminated or trained during the
quarter, it shall report that information in a separate section of the report,
which will note that such information is necessarily partial and incomplete.
h. Residence: JCC will report on the percentage of its employees who
are residents of Orleans Parish and the percentage who are residents of
Louisiana.
In reporting on JCC's progress toward meeting its goals for the
quarter, JCC will compare its performance data against the goals as set forth in
this Open Access Plan for Operation of the Casino. JCC's quarterly employment
reports will also describe additional efforts to comply with the relevant
portions of Part IV, Subpart A of the Open Access Program.
JCC will include in the report any explanatory or background
information which it believes will aid in understanding or interpreting the data
being reported and information on any other relevant subjects as requested by
the Mayor and/or the City Council.
Commencing within twelve (12) months after opening the Casino, JCC will
submit an annual report, in writing, to the City Council on the success of the
Open Access Plan for Operation of the Casino regarding the employment component
for operation of the Casino in
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reducing unemployment, underemployment, chronic unemployment, under utilization
of traditionally disadvantaged groups and on the Open Access Program's impact on
the community.
Notwithstanding the foregoing obligations for JCC's quarterly reports,
the RDC, the Mayor and the City Council acknowledge that, as an on-going matter,
periodic revisions and adjustments to JCC's reporting obligations will be
needed. On or before November 20, 1998, representatives of the RDC, the Mayor,
the City Council and JCC will meet, at a time and place that is mutually
acceptable to the parties, for the purpose of materially reducing the reporting
burden upon JCC of the Open Access Program and the Open Access Plans in a manner
that is consistent with the Mayor's and the City Council's needs to evaluate
fully JCC's performance under the Open Access Program and these Open Access
Plans. The representatives identified above will specifically discuss which
current reporting obligations (i) could be changed to information that JCC
maintains and makes available for inspection by the City and/or the RDC, and
(ii) could remain as or become ongoing reporting obligations. Before becoming
effective, any proposed revisions to JCC's reporting obligations emerging from
this or comparable meetings must be agreed to in writing by the RDC and the
Mayor and must obtain approval by the City Council according to the procedure
for adoption of Motions by the City Council.
vi. Responsibility
The members of JCC have the overall responsibility for the success of
JCC's equal employment opportunity and Open Access policy. JCC shall require
HNOMC to comply with the provisions of the Open Access Program and these Open
Access Plans insofar as its contractual duties to JCC bear upon such activities.
JCC continues to take full responsibility for any aspects of the implementation
of these Open Access Plans that may be delegated to HNOMC.
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a. Vice President of Government Affairs and Community Relations.
JCC's Vice President of Government Affairs and Community Relations is
specifically delegated responsibility for administration of JCC's equal
employment policy and the employment components of the Open Access Plan for
Operation of the Casino. JCC's Vice President of Government Affairs and
Community Relations is responsible for assuring that appropriate action is taken
by all levels of management to achieve JCC's equal employment opportunity and
Open Access employment objectives. JCC's Vice President of Government Affairs
and Community Relations will be assisted by the staff of the Vice-President of
Human Resources for HNOMC, which will work under the direction of the JCC
Vice-President.
b. Section and Department Managers. Each JCC section officer,
department manager and supervisor is responsible for providing equal opportunity
and Open Access for their assigned employees in accordance with the Open Access
Plan for Operation of the Casino. In carrying out these responsibilities, all of
these officers and employees will have the active assistance and guidance of
JCC's Vice-President of Government Affairs and Community Relations.
B. CONTRACTING COMPONENT FOR OPERATION OF THE CASINO
1. Introduction
JCC is committed to providing expanded contracting opportunities for
Open Access Participant firms during the operation of the Casino.
2. Open Access Contracting Objectives
Based on the findings of the NERA Study concerning actual availability,
JCC will make all necessary and reasonable efforts to achieve the following
utilization levels for MBEs and non-minority WBEs, respectively, in the
operation of the Casino. These goals are applicable to all service and
commodities contracting by JCC and HJC, as defined and explained in the NERA
Study
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at page 136 and in the supplemental memorandum attached as Addendum J hereto.
(Lists of commodity and non-professional service purchases submitted to NERA as
the basis for developing these goals are attached hereto as Addenda K and L,
respectively.) The resulting goals are as follows:
Operations Contracting
<TABLE>
<CAPTION>
Non-minority
MBEs WBEs
---- ----
<S> <C> <C>
Professional Services 3.1% 10.3%
Commodities and Non-Professional Services 7.5% 14.7%
</TABLE>
As suggested by the NERA Study finding that potential availability of
Minority Individuals and MBEs greatly exceeds actual availability, JCC
anticipates that such actual availability will increase as a result of the
efforts of this Open Access Plan for Operation of the Casino and other efforts
to remove discriminatory barriers. Accordingly, JCC anticipates significant
incremental increases in its hiring and contracting goals as a result of the
reassessments of goals that will commence in September 2000 in accordance with
Part V, Subpart I of the Open Access Program. Thus, JCC has a present perception
that the appropriate contracting goals for operation of the Casino by March 31,
2001 will be higher than those set forth above, and that comparable percentage
increases in goals will be called for by subsequent goal reassessments.
3. Open Access and Non-Discrimination
JCC will provide equal business opportunity and Open Access for all
supply and service (professional and non-professional) contractors during the
operation of the Casino.
JCC will fully comply with all applicable local, state and federal laws
and regulations implementing equal business opportunity objectives, not only by
meeting the letter of the law, but by carrying out the full spirit of equal
business opportunity and Open Access.
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JCC considers the Open Access Plan for Operation of the Casino to be an
inclusive tool to facilitate the expansion of equal opportunity. The numerical
utilization objectives established by the Open Access Plan for Operation of the
Casino with regard to contracting in the operation of the Casino are not quotas
but goals to be prominently kept in mind as reflective of actual availability of
contractors in the marketplace. JCC will ensure that all contractors and vendors
are treated without regard to their race, color, religion, national origin, sex,
age, disability or sexual orientation.
4. Program Implementation and Compliance-Oriented Efforts
To achieve the objectives of the Open Access Program, JCC undertakes to
implement the following concrete steps:
a. Small Contracts. Where appropriate in light of the nature of work
to be performed and its relationship to other aspects of the project, JCC shall
identify portions of the work which may be performed by Open Access Participant
firms and will, where economically feasible, break down contracts into work or
dollar units to facilitate MBE, WBE and DBE participation. JCC shall look for
such opportunities where the total amount of a particular type of work to be
done is large enough that it can be profitably shared by multiple contractors
and/or subcontractors, and there is nothing inherent in the work which requires
it to be done by a single contractor and/or subcontractor.
b. Outreach:
i. JCC shall schedule pre-award, pre-bid, pre-proposal and/or
pre-quote meetings to advise Open Access Participant firms of contracting,
subcontracting and procurement opportunities.
ii. JCC has developed and will maintain a directory of
qualified, certified Open Access Participant firms.
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iii. JCC has established and will maintain procedures to notify
qualified Open Access Participant firms of available opportunities separate and
apart from pre-award, pre-bid, pre-proposal and/or pre-quote conferences,
including, when appropriate:
- Written notice by certified mail to Open Access
Participant firms listed in the directory of
certified firms, at least thirty (30) days before a
pre-award, pre-bid, pre-proposal or pre-quote
conference;
- Advertisements in targeted media at least thirty
(30) days prior to a scheduled pre-award, pre-bid,
pre-proposal or pre-quote conference;
- Following up initial indications of interest by
contacting Open Access Participant firms to
determine with certainty whether they are
interested in bidding;
- Advertising contracting and subcontracting
opportunities in trade association publications and
publications targeted specifically to minorities
and women, at least thirty (30) days prior to a
scheduled pre-award, pre-bid, pre-proposal or
pre-quote conference;
- Setting bid dates to give qualified Open Access
Participant firms adequate time to prepare bids,
quotes and/or proposals after pre-award, pre-bid,
pre-proposal or pre-quote conferences have been
held.
iv. Information. JCC shall provide Open Access Participant
firms with adequate information about the plans, specifications and/or
requirements of all contract opportunities.
v. When appropriate, JCC shall provide Newcorp with bid
specifications, plans and/or contract requirements, at least thirty (30) days
prior to the bid or response date.
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vi. Community Resources. JCC has and will continue to use the
services of available minority and women's community organizations; minority and
women's contractors' groups; local, state and federal minority and women's
business assistance offices; disability rights organizations; and other
organizations that provide assistance in the recruitment and placement of Open
Access Participant firms and in the recruitment of firms eligible for
certification as Open Access Participant firms.
vii. Preliminary Meetings. JCC shall hold preliminary meetings
to inform interested Open Access Participant firms of service and supply
contracting opportunities.
viii. Follow-Up. JCC shall follow up initial indications of
interest by contacting Open Access Participant firms to determine with certainty
whether they are interested in obtaining service or supply contracts.
ix. Advertisement. Where appropriate, JCC shall advertise in
general circulation and trade and professional association publications,
concerning service and supply contracting opportunities, and will allow
contractors reasonable time to respond.
x. Written Notice. JCC shall take the steps necessary, when
reasonable time constraints permit to provide written notice of service and
supply contracting opportunities to Open Access Participant firms, as well as
companies that have begun the certification process, and shall allow sufficient
time for them to participate effectively.
xi. Joint Ventures. JCC shall encourage and facilitate the use
of joint ventures between Open Access Participant contractors and other
contractors, as a means of expanding opportunities for Open Access Participant
firms. JCC will continue to look for such opportunities where the resources and
abilities of particular Open Access Participant firms will be significantly
complemented by association with one or more majority-owned contractors.
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c. Bidding and Selection.
i. Good Faith Negotiation. JCC shall negotiate in good faith
with interested Open Access Participant firms and will not reject an Open Access
Participant firm as unqualified without sound business reasons based on a
thorough investigation of its capabilities.
ii. Disqualification. If JCC rejects an Open Access Participant
firm as unqualified, JCC will maintain a written record of its reason(s).
iii. Participation Records. JCC shall maintain a written record
of each supply and service contract, the dollar value of each contract, and the
MBE or WBE status of each contractor or subcontractor.
iv. Changes in Contracts with Open Access Participant Firms.
JCC shall strive to ensure that there are no changes to commodity or service
contracts or subcontracts with majority-owned firms that deprive MBE or WBE
firms of a fair opportunity to participate in the bidding process for such
contracts or subcontracts. JCC will give notice to the RDC of any such change
and will investigate any complaints by MBE or WBE firms relating to any such
changes.
v. Notice of Changes in Contracts with Open Access Participant
Firms. JCC shall strive to ensure that there are no reductions in the price or
scope of work in a contract awarded to an MBE or WBE firm that are inconsistent
with the objectives of the Open Access Program, as stated in Part I, Subpart B
thereof. JCC will give notice to the RDC of any reductions in the price or scope
of work of MBE or WBE contracts. JCC will investigate any complaints by MBE or
WBE firms relating to reductions in the price or scope of work of their
respective contracts.
vi. Replacement of Contracts with Open Access Participants. JCC
shall strive to ensure that majority-owned firms are not substituted for
contracted MBE or WBE firms in a manner that is inconsistent with the objectives
of the Open Access Program, as stated in Part
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I, Subpart B thereof. JCC will give notice to the RDC of any substitution of a
majority-owned firm for an MBE or WBE. JCC will investigate any complaints by
MBE or WBE firms relating to substituting majority-owned firms for them.
d. Contract Content and Administration.
i. Bonding Assistance. JCC shall continue to administer its
bonding assistance program, described in Part II, Subpart N of the Open Access
Program and in these Open Access Plans.
ii. Prompt Payment Policy. JCC has adopted and shall continue
to implement and enforce a Prompt Payment Policy for all contractors and
vendors. Where a supply or service contractor with capitalization of less than
$300,000 can demonstrate to JCC an actual need for payment in less than thirty
(30) days for such supply or service contract, JCC will pay said contractor
within twenty (20) days of its submission of verifiable invoices for supplies or
services. Any supplier or service contractor who has such an understanding with
JCC and believes that JCC has failed to comply with its prompt payment
commitment should report that to JCC's Accounts Payable Manager.
iii. Contact Records. JCC maintains and will continue to
maintain the following records for each Open Access Participant firm that
submits a proposal or is contacted by JCC regarding service or supply contracts:
- Name, address, telephone number.
- Description of information JCC provided.
- A statement of whether JCC reached agreement with
the Open Access Participant firm, and if not, why
not.
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iv. Financing Assistance. JCC will enter into a relationship
with one or more financial institutions to provide consulting services and, when
possible, financial assistance to disadvantaged vendors and service providers.
5. Reporting
JCC will report quarterly to the RDC, the Mayor and the City Council
with regard to its progress implementing the contracting provisions of the Open
Access Plan for Operation of the Casino in accordance with Part II, Subpart C;
Part IV, Subpart F; and Part V, Subpart B of the Open Access Program.
Reports will be filed no later than one month after the close of each
calendar quarter, with reports due on January 31, April 30, July 31 and October
31, for the quarters ending December 31, March 31, June 30 and September 30,
respectively. The first report was filed on October 31, 1994, and covered all
previous contracting relating to the operation of the temporary casino. JCC
shall submit quarterly reports concerning contracting relating to the operation
of the Casino beginning with the report covering the period from July through
September 1999, which report is due on October 31, 1999. In the event the
opening date for the Casino is scheduled to occur earlier than twelve (12)
months after the Effective Date, JCC shall begin reporting on its operations
employment activities at least three (3) months before the opening date.
The quarterly reports shall address:
- Efforts undertaken by JCC to publicize the
provisions and opportunities of the Casino
operations procurement program.
- Efforts undertaken by JCC to identify Open Access
Participant firms and efforts undertaken to
encourage participation in the Casino operations
procurement program.
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- Efforts undertaken by JCC to remedy any inability
of Open Access Participant firms to perform
procurement contracts or proposed procurement
contracts.
- A summary of the progress being made toward the
Casino operations procurement program's objectives
and goals.
- The extent to which joint ventures, made up in part
of MBEs and/or WBEs, have been utilized by JCC in
operating the Casino.
- Name, address and phone number of each MBE and WBE
that has been contacted by JCC. o Name, address and
phone number of each MBE and WBE that responded to
requests from JCC.
- A list of all service and supply contracts awarded
to an MBE or WBE, including for each the date
awarded; the type of good(s) or service(s)
provided; name, address, phone number, contact
person and the racial or gender category of the MBE
or WBE.
- The number of service and supply contracts awarded
to each individual MBE and each individual WBE; and
the dollar value of each of those contracts during
the reporting period.
- Recommendations of JCC to strengthen its Open
Access Program.
- Forecast of the procurement contracts expected to
be awarded, including probable monetary amounts
involved, the number and type of contracts to be
awarded and expected solicitation dates.
- The total dollar volume of service and supply
contracts signed during the covered quarter for
operation of the Casino and the total dollar volume
and percentage of such contracts awarded to MBEs
and WBEs during that quarter.
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- All funds paid to MBE and WBE service and supply
contractors on a cumulative basis, the percentage
which those funds constitute of the total funds
paid as of the end of that quarter, and the
aggregate amount of funds paid to MBEs and WBEs as
of the end of that quarter.
- All funds paid to MBE and WBE service and supply
contractors on a month-to-month and quarterly basis
and the percentage which those funds constitute of
the total funds paid for that period.
- In reporting on the four (4) preceding items, funds
paid to joint ventures made up in part of MBEs
and/or WBEs shall be counted only to the extent of
monies actually received by the MBE and/or WBE,
excluding any work said MBE and/or WBE
subcontracted to a non-Open Access Participant
firm.
- In the performance of its work on the Casino, an
MBE or WBE contractor or subcontractor may enter
into second-tier subcontracts consistent with
standard industry practices. However, if an MBE or
WBE contractor or subcontractor subcontracts a
significantly greater portion of the work of its
contract or subcontract to a non-MBE or non-WBE
than would be expected on the basis of standard
industry practices, then that MBE or WBE
subcontractor will not be viewed as performing a
commercially useful function and JCC may not count
such participation towards the MBE or WBE goals
under these Open Access Plans.
- MBE and WBE manufacturers, suppliers (subject to
the immediately following paragraph) and
wholesalers will be credited for the entire amount
of purchase orders involved, regardless of who does
the installation; provided, however, if the
installation price paid to a non-MBE or non-WBE
contractor exceeds fifty percent
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(50%) of the purchase price, JCC will receive MBE
or WBE credit for the purchase price only. JCC will
not double count amounts paid for the purchase of
equipment, products or supplies from MBEs or WBEs
and amounts paid for installation by MBEs or WBEs.
- MBE and WBE suppliers will be given full credit for
purchase orders if such suppliers are bona fide
business enterprises which maintain inventory for
sale to customers (i.e., they are not brokers).
- A breakdown of the firms that were certified,
decertified and recertified during the quarter and
whether they are MBEs or WBEs. In reporting on its
progress toward achieving its goals for the
quarter, JCC will compare its performance data
against the goals as set forth in this Open Access
Plan for Operation of the Casino. Therefore, the
quarterly report, in addition to the data described
above, shall include all data needed to make the
calculations described in Part IV, Subparts A and F
of the Open Access Program as well as all figures
necessary to make those calculations. JCC's
quarterly contracting reports will also describe
additional efforts to comply with the relevant
portions of Part IV, Subpart A of the Open Access
Program.
JCC will include in the report any explanatory or background
information which it believes will aid in understanding or interpreting the data
being reported and information on any other relevant subjects as requested by
the Mayor and/or the City Council.
Commencing within twelve (12) months after the opening of the Casino,
JCC will submit an annual report, in writing, to the City Council on the success
of the Open Access Plan for Operation of the Casino regarding the contracting
component for operation of the Casino in reducing
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unemployment, underemployment, chronic unemployment, under utilization of
traditionally disadvantaged groups and on the Open Access Program's impact on
the community.
Notwithstanding the foregoing obligations for JCC's quarterly reports,
the RDC, the Mayor and the City Council acknowledge that, as an on-going matter,
periodic revisions and adjustments to JCC's reporting obligations will be
needed. On or before November 20, 1998, representatives of the RDC, the Mayor,
the City Council and JCC will meet, at a time and place that is mutually
acceptable to the parties, for the purpose of materially reducing the reporting
burden upon JCC of the Open Access Program and the Open Access Plans in a manner
that is consistent with the Mayor's and the City Council's needs to evaluate
fully JCC's performance under the Open Access Program and these Open Access
Plans. The representatives identified above will specifically discuss which
current reporting obligations (i) could be changed to information that JCC
maintains and makes available for inspection by the City and/or the RDC, and
(ii) could remain as or become ongoing reporting obligations. Before becoming
effective, any proposed revisions to JCC's reporting obligations emerging from
this or comparable meetings must be agreed to in writing by the RDC and the
Mayor and must obtain approval by the City Council according to the procedure
for adoption of Motions by the City Council.
6. Certification
HJC's Certification Process and relevant forms are attached hereto as
Addendum E. JCC hereby adopts such Certification Process.
7. Responsibility
The members of JCC have the overall responsibility for the success of
its efforts to provide expanded contractual opportunities for Open Access
Participant firms to provide goods and services for the operation of the Casino.
JCC shall require HNOMC to comply with the provisions
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of the Open Access Program and these Open Access Plans insofar as its
contractual duties to JCC bear upon such activities. JCC continues to take full
responsibility for any aspects of the implementation of these Open Access Plans
that may be delegated to HNOMC.
a. Administration of Goods and Services Contracting. JCC's Vice
President of Government Affairs and Community Relations is specifically
delegated responsibility for administration of the goods and services
contracting component of the Open Access Plan for the Operation of the Casino.
He or she shall be assisted by the Vice-President of Finance of HNOMC.
b. Implementation of Goods and Services Contracting. JCC's Vice
President of Government Affairs and Community Relations has been delegated the
responsibility to implement the goods and services contracting component of the
Open Access Plan for the Operation of the Casino. He or she shall be assisted by
the Director of Purchasing for HNOMC.
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AMENDED AND RESTATED OPEN ACCESS PLANS
of
JAZZ CASINO COMPANY, L.L.C.
Executive Summary
These Amended and Restated Open Access Plans (these "Open Access
Plans") have been adopted by Jazz Casino Company, L.L.C., a Louisiana limited
liability company ("JCC"). They amend and restate the Final Open Access Plans
adopted by Harrah's Jazz Company, a Louisiana general partnership ("HJC"), and
approved by the Council of the City of New Orleans (the "City Council") in
December 1994, which Final Open Access Plans had been preceded by the Interim
Open Access Plans adopted by HJC and approved by the City Council on April 21,
1994. In these Open Access Plans, JCC undertakes an extensive and specific
program to enhance economic opportunities for Open Access Participants in the
New Orleans area. These Open Access Plans contain provisions addressing the
construction and operation of the New Orleans land-based casino operated by JCC
(the "Casino") with respect to both employment and contracting. These Open
Access Plans are designed to be read in conjunction with and to implement the
Open Access Program (the "Open Access Program") attached as Exhibit "C" to the
Amended and Restated Lease Agreement, approved by the City Council on October
15, 1998 and effective as of the effective date (the "Effective Date") of HJC's
Third Amended Joint Plan of Reorganization, as modified (the "Amended and
Restated Lease Agreement"), by and among JCC, the City of New Orleans (the
"City") and the Rivergate Development Corporation (the "RDC") and are further
designed to be subordinate to the Open Access Program.
The long-term objectives of the Open Access Program and these Open
Access Plans are to enhance participation of MBEs, WBEs and DBEs in the private
business sector and to create new employment opportunities and upgrade job
skills among traditionally Disadvantaged Individuals. In order to assist in
pursuing these objectives, HJC formed an entity known as Newcorp and initially
capitalized Newcorp in an amount of $500,000. As provided in Part II, Subpart B
of the Open Access Program and in these Open Access Plans, JCC will provide
substantial funding to that entity for a period of five (5) years. Newcorp will
provide assistance to Open Access Participants through a broad range of
activities which are specified in these Open Access Plans. JCC hopes and
anticipates that its efforts will contribute to an increase in the actual
availability of MBEs, WBEs and DBEs, and of Minority Individuals, women and
Persons with Disabilities, qualified for work at various levels of the
workforce.
Open Access Plan For Construction of the Casino
A Casino Construction Advisory Committee has previously been appointed,
which Casino Construction Advisory Committee has previously met and will
continue to meet at least quarterly to review the progress in pursuing the
objectives of the Open Access Program and these Open Access Plans with regard to
both employment and contracting in connection with the construction of the
Casino and any future renovations thereof.
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A. Employment Component
In pursuit of its commitment to a non-discriminatory work force wherein
persons of various groups are represented approximately at the level of their
actual availability in the labor market, JCC adopts as construction employment
goals the actual availability numbers ascertained by National Economic Research
Associates (NERA) in its Final Disparity Study, filed in September 1994 with the
City Council (the "NERA Study"). Those goals are as follows for construction of
the Casino:
<TABLE>
<CAPTION>
Minority Individuals
- --------------------
<S> <C>
Officials and Managers 12.0%
Professionals 19.2%
Craft Workers 43.7%
Apprentices & Laborers 48.7%
Non-minority Women
- ------------------
Officials and Managers 18.6%
Professionals 7.9%
Craft Workers 1.8%
Apprentices & Laborers 1.4%
</TABLE>
These objectives will be utilized not as quotas, but as goals to be
kept prominently in mind in an effort to achieve a construction work force that
fairly reflects the make-up of the available labor pool. JCC, its general
contractors and its subcontractors will ensure that all applicants and employees
are treated without regard to their race, color, religion, sex, national origin,
age, disability or sexual orientation. JCC therefore hopes and expects to
increase its utilization of Minority Individuals, women and Persons with
Disabilities as their actual availability in the labor force increases.
HJC previously entered into a Memorandum of Understanding ("MOU") with
each of its general contractors in the form attached as Addendum C to these Open
Access Plans, which requires each contractor to comply with all obligations
imposed by the Open Access Program or any Open Access Plan adopted under it,
including the Open Access Plan for Construction of the Casino. JCC has assumed
HJC's obligations under the MOU and will continue to require each of its general
contractors to execute a Memorandum of Understanding in the same form and
substance as that required by HJC (to the extent any of JCC's general
contractors has not previously entered into an MOU). JCC will communicate
specifically with each general contractor concerning its duties to contribute to
the successful implementation of the Open Access Plan for Construction of the
Casino. These duties include oversight of subcontractors and of the project in
general so as to assure, among other objectives, maintenance of a
non-discriminatory work environment, effective communication with sources for
recruitment of Minority Individuals, women and Persons with Disabilities,
maintenance of application and hiring records, and reporting to JCC of any
alleged instances of employment discrimination. JCC will also monitor, by desk
audits and other means, the compliance by its general contractors and
subcontractors with the requirements of the Open Access Plan for Construction of
the Casino. On the Effective Date, JCC will succeed to HJC's rights under the
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Project Agreement with the unions that provide hiring hall services, attached
hereto as Addendum D. JCC shall require any union which is or may become a
signatory to the Project Agreement to report to JCC at the end of each calendar
month on specified information concerning persons seeking to register with the
union for job referral, those persons on the union referral list and those
persons actually referred for employment. The Open Access Plan for Construction
of the Casino also requires the unions to explain why any Minority Individuals,
women or Persons with Disabilities who have gone to a union hiring hall were not
referred.
JCC will file quarterly reports, with the RDC, the Mayor of the City of
New Orleans (the "Mayor") and the City Council, which shall include numerical
information on the total number of individuals employed to work in the
construction process during the previous quarter, the number and percentage of
persons so employed who were Minority Individuals and women and hours worked
- --all broken down into four (4) distinct employment categories as set forth in
the NERA Study. The report shall further include explanatory and background
information, including a description of the steps being taken by JCC and its
contractors to satisfy the requirements of the Open Access Plan for Construction
of the Casino, as well as other relevant information requested by the Mayor
and/or the City Council. In addition, JCC will file monthly reports on certain
topics, as specified in Part II, Subpart A.4.d.iv.
B. Contracting Component
JCC will strive to achieve the following utilization levels with regard
to MBEs and non-minority WBEs during the construction phase of the Casino:
<TABLE>
<S> <C>
MBEs 19.1%
Non-minority WBEs 10.0%
</TABLE>
The MOU executed by each general contractor requires that all
contractors comply with the provisions of the Open Access Program and these Open
Access Plans. Enterprises wishing to be considered for a particular contract
shall be required to submit information concerning the scope and dollar value of
work they will subcontract, and the identities and Open Access Participant
status (if any) of each intended subcontractor. A detailed certification process
(previously approved by the City Council) is already in place and will continue
to be used by JCC. (See Addendum E to these Open Access Plans.)
In implementing the Open Access Program and these Open Access Plans in
the context of construction, JCC will continue to take a number of specific
steps designed to increase awareness and opportunity in the MBE, WBE and DBE
communities with respect to opportunities to participate in the construction of
the Casino. These include, among other steps, a variety of specific efforts to
ensure effective communication with MBEs, WBEs and DBEs, including the holding
of pre-award meetings relating to contracting opportunities; breaking down
subcontracts into smaller dollar units; encouragement of joint ventures;
utilization of community resources for purposes of recruitment; and maintenance
and regular monitoring of information concerning utilization. JCC will increase
its utilization of MBEs, WBEs and DBEs as their actual availability increases.
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In addition, JCC will report quarterly on a range of specific items set
forth in the Open Access Program and in these Open Access Plans pertaining to
the contracting component of the Open Access Plan for Construction of the
Casino. JCC will also file monthly reports on certain topics, as specified in
Part II, Subpart A.4.d.iv.
Open Access Plan for Operation of the Casino
A. Employment Component
In pursuit of its commitment to a non-discriminatory work force wherein
persons from various groups are represented approximately at the level of their
actual availability in the labor market, JCC adopts as employment goals for the
operation of the Casino the following actual availability numbers ascertained by
NERA in the NERA Study:
<TABLE>
<CAPTION>
Minority Individuals
- --------------------
<S> <C>
Managers & Professionals 16.3%
Supervisors 26.3%
Technicians 32.5%
Support Occupations 56.0%
Cleaners, Operators, Laborers 84.0%
Non-minority Women
- ------------------
Managers & Professionals 34.5%
Supervisors 36.4%
Technicians 10.0%
Support Occupations 27.8%
Cleaners, Operators, Laborers 4.7%
</TABLE>
As with the Open Access Plan for Construction of the Casino, these
objectives will be utilized not as quotas, but as goals to be kept prominently
in mind in an effort to achieve an operations work force that fairly reflects
the make-up of the available labor pool. They are thus an inclusive tool in
JCC's efforts toward achieving a work force that fairly reflects the make-up of
the available labor pool. JCC will ensure that all applicants and employees are
treated without regard to their race, color, religion, sex, national origin,
age, disability or sexual orientation. JCC hopes and expects to increase its
utilization of Minority Individuals, women and Persons with Disabilities as
their actual availability in the labor force increases.
A Casino Employment Advisory Committee has previously been appointed,
which has been meeting and will continue to meet at least quarterly to review
the progress in pursuing the objectives of the Open Access Program and these
Open Access Plans with regard to employment in the operation of the Casino.
JCC will also undertake a range of specific outreach, training,
internship, apprenticeship and other compliance-oriented efforts and will ensure
that its employment policies comply with the letter and spirit of all existing
anti-discrimination laws in all respects. These efforts,
iv
<PAGE>
which are itemized in detail in the Open Access Plan for Operation of the
Casino, will be directed especially, but not exclusively, toward Minority
Individuals, women and Disadvantaged Individuals.
In addition, JCC will implement an Employee Assistance Program
addressing child care and child development, home ownership and youth
employment.
JCC will report quarterly the statistical information relating to its
total employment, new hires, terminations and training, and on its progress in
achieving the objectives of the Open Access Plan for Operation of the Casino.
B. Contracting Component
In contracting for commodities and professional services relating to
the operation of the Casino, JCC will strive to achieve the following goals,
based on actual availability as determined by the NERA Study:
Pre-Opening Phase
<TABLE>
<CAPTION>
Non-minority
MBEs WBEs
---- ----
<S> <C> <C>
Professional Services 1.9% 6.8%
Commodities and Non-Professional Services 3.4% 7.3%
</TABLE>
Annual Operating Phase
<TABLE>
<CAPTION>
Non-minority
MBEs WBEs
---- ----
<S> <C> <C>
Professional Services 3.1% 10.3%
Commodities and Non-Professional Services 7.5% 14.7%
</TABLE>
These percentage goals apply only to the services and commodities that
were included in the NERA Study (in areas in which minority-owned and
women-owned businesses are available). JCC will increase its utilization of
MBEs, WBEs and DBEs as their actual availability increases.
As in other aspects of the Open Access Program and these Open Access
Plans, JCC will provide equal business opportunities for all supply and service
contractors with regard to the operation of the Casino. In addition, JCC
undertakes to implement a number of specific steps designed to increase
awareness and opportunities in the MBE, WBE and DBE communities with respect to
opportunities for supply and service contracts with the Casino. Those steps are
specifically set forth in the Open Access Plan for Operation of the Casino and
include, among other compliance-oriented efforts, efforts to enhance
communication with MBEs, WBEs and DBEs; utilization of small contracts;
encouragement of joint ventures; utilization of community resources; and
maintenance and monitoring of utilization information.
In addition, JCC will report quarterly on a range of specific items
relating to the contracting component of the operation of the Casino.
v
<PAGE>
Exhibit 10.38
OPEN ACCESS PROGRAM
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
GLOSSARY ................................................................................................iv
PART I INTRODUCTION..............................................................................1
A. Overview..................................................................................2
B. Objectives................................................................................3
C. Comprehensive Studies.....................................................................3
D. Goals.....................................................................................5
PART II PROGRAM OUTLINE and PHASE
ONE-PLANNING AND DEVELOPMENT..............................................................6
Introduction ..........................................................................................7
A. Phase One - Planning and Development......................................................8
B. Newcorp...................................................................................8
C. Compliance and Reporting Procedures and Processes.........................................10
D. Outreach/Opportunity Conferences and Seminars.............................................11
E. Joint Ventures............................................................................12
F. Vendor Purchases..........................................................................12
G. Certification of Open Access Participants.................................................13
H. Certification of Open Access Businesses...................................................13
I. Creation of a Directory of Open Access Businesses in Orleans Parish
and the State of Louisiana................................................................14
J. Use of Open Access Financial Institutions.................................................15
K. Identification of Construction Needs of the Project.......................................15
L. Identification of Open Access Participants to Meet Construction
Needs of the Project......................................................................15
M. Technical Assistance to Open Access Participants and Assistance
to Prime Contractors......................................................................15
N. Bonding Assistance Program................................................................16
O. Memoranda of Understanding................................................................16
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
P. Means of Ensuring that Competitors Make Good Faith Efforts
to Meet Open Access Goals.................................................................17
Q. Contractor Demonstration of Good Faith Efforts............................................17
R. Compliance Agreements and Monitoring......................................................19
S. Prompt Payment Policy.....................................................................19
T. Contributions to Public Support Efforts...................................................19
PART III PHASE TWO - OPERATIONS....................................................................22
A. Overview..................................................................................23
B. Dissemination of Information on Employment Needs of the Project...........................23
C. Convening of Employment Conferences and Seminars..........................................23
D. Development of Cooperative Skills Training Program........................................23
E. Development of Internship, Apprenticeship, On-The-Job Training
and Career Development Programs...........................................................24
PART IV ADMINISTRATIVE REVIEW.....................................................................26
A. Definitions: Categories of Violation, Net Hiring, Total Employment .......................27
B. Waiver System.............................................................................28
C. Violations with Respect to Employment and Contracting Goals...............................29
D. Failure to Comply with Newcorp Funding and Public Support
Efforts Obligations.......................................................................29
E. Failure to Comply with Certification Process Requirements.................................29
F. Measures of Compliance....................................................................30
G. Requests for Review.......................................................................31
H. Response to Request for Review; Notice of Fine............................................32
I. Appeal of Fines...........................................................................32
J. Judicial Review...........................................................................33
K. Make-up of Shortfall......................................................................34
L. Indemnity Assignment......................................................................35
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
PART V MEANS OF EVALUATION AND RESOLUTION
PROVISIONS................................................................................36
A. Demonstration of Best Efforts.............................................................37
B. Record Keeping............................................................................39
C. Reporting Requirements....................................................................39
D. Reporting Mechanisms to Track the Hiring and Retention of
Members of Minority Groups, Women and Persons with Disabilities...........................40
E. Upgrading Job Skills......................................................................40
F. Contractual Clauses.......................................................................41
G. Defense of Litigation/Invalidity of Program...............................................41
H. Interpretation............................................................................43
I. Modification..............................................................................44
J. Conclusion................................................................................44
APPENDICES
APPENDIX A - LIST OF COMPLIANCE-ORIENTED EFFORTS FOR CONSTRUCTION CONTRACTING
APPENDIX B - LIST OF COMPLIANCE-ORIENTED EFFORTS FOR CONSTRUCTION EMPLOYMENT
APPENDIX C - LIST OF COMPLIANCE-ORIENTED EFFORTS FOR OPERATIONS CONTRACTING
APPENDIX D - LIST OF COMPLIANCE-ORIENTED EFFORTS FOR OPERATIONS EMPLOYMENT
</TABLE>
iii
<PAGE>
GLOSSARY
A. Minority Individual means an individual who is a member of one or more of the
following groups:
1. African Americans;
2. Hispanic Americans;
3. Asian Americans; and
4. Other minority groups identified by the interim or final Comprehensive
Studies prepared pursuant to Part I, Subpart C of this Open Access Program as
groups that have suffered past discrimination in employment or contracting.
B. Minority Business Enterprise ("MBE") means a business that is at least
fifty-one percent (51%) owned and controlled by one or more Minority
Individuals.
C. Women's Business Enterprise ("WBE") means a business that is at least
fifty-one percent (51%) of which is owned and controlled by one or more women.
D. Disadvantaged Individual means an individual whose ability to compete for
jobs or compete in the free enterprise system is impaired because of constraints
on the following:
1. Lack of opportunity to join professional and business organizations;
2. Lack of ability to raise capital and obtain credit or bonding capacity;
3. Lack of educational opportunities; and
4. Lack of training, employment and promotion opportunities.
E. Disadvantaged Business Enterprise ("DBE") means a business that is at least
fifty-one percent (51%) owned and controlled by one or more Disadvantaged
Individuals. An individual and/or business may also be considered disadvantaged,
regardless of race, gender or ethnicity, if the social and/or economic
circumstances of the business or individual warrant such designation.
Jazz Casino Company, L.L.C., a Louisiana limited liability company ("JCC"),
will use standards currently used by the Small Business Administration to
evaluate economic circumstances. No specific set of criteria, other than those
cited above, defines a disadvantaged individual or enterprise. Therefore,
consideration of an applicant who is not included in any of the groups cited
above will be made on a case by case basis. The applicant will have the
responsibility of proving that he/she warrants the designation as a
disadvantaged individual or business based on his/her present economic and
social circumstances.
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<PAGE>
F. Persons with Disabilities shall be defined as that term is defined in the
federal Americans with Disabilities Act.
G. For purposes of this glossary, "Control" shall be determined by reference to
factors such as the following:
1. status as employees, officers or directors of the business;
2. control over the management of the business;
3. authorization to sign checks on the business' bank accounts;
4. participation in significant decisions affecting the business;
5. authority with respect to profit sharing, pension, and stock option
plans; and
6. authority with respect to setting salaries and bonuses.
H. Open Access Program means this MBE/WBE/DBE program attached as Exhibit "C" to
and made a part of the Amended and Restated Lease Agreement.
I. Open Access Participants means MBEs, WBEs, DBEs, Minority Individuals,
Disadvantaged Individuals, Persons with Disabilities and women.
J. Original Amended Lease Agreement means that certain Amended and Restated
Lease Agreement by and among HJC, RDC and the City dated as of March 15, 1994.
K. Original Open Access Program means the MBE/WBE/DBE program attached as
Exhibit G to the Original Amended Lease Agreement.
L. HJC means Harrah's Jazz Company, a Louisiana general partnership.
M. JCC means Jazz Casino Company, L.L.C., a Louisiana limited liability company
and successor by operation of law to HJC.
N. Amended and Restated Lease Agreement means that certain Amended and Restated
Lease Agreement by and among the City, RDC and JCC to which this Open Access
Program is attached as Exhibit "C".
O. Original Lease Agreement means that certain Lease Agreement by and among the
City, RDC and Celebration Park Casino, Inc. dated April 27, 1993.
v
<PAGE>
PART I
INTRODUCTION
<PAGE>
A. Overview
JCC accepts as a corporate responsibility its obligation to improve the
quality of life of its employees and the citizens of its community. To this end,
JCC accepts responsibility for establishing aggressive, yet realistic, goals for
the participation of the entire New Orleans community in the benefits of the
casino.
JCC is committed to using its corporate resources, skills and creativity to
produce and implement a program that will help reduce unemployment,
under-employment, chronic unemployment and the underutilization of traditionally
disadvantaged businesses and individuals. HJC has worked and JCC has and will
continue to work cooperatively with the government and people of New Orleans to
develop the gaming industry in ways that address the crucial socio-economic
problems of the City. The opportunities of the more than $500 million project
will not only address the profit-making potential of the casino but will also
increase employment opportunities and expand contractual activities for Open
Access Participants. In order to develop new opportunities for historically
disadvantaged businesses and individuals, JCC adopts this Open Access Program.
Grand Palais Casino, Inc. ("GPCI") undertook an extensive analysis of
employment problems, disparities, and social and economic conditions in the City
of New Orleans. GPCI conducted this analysis in order to better understand the
business environment in New Orleans and to develop a program that will address
these problems. JCC is motivated to undertake this Open Access Program in part
by its awareness of these concerns. That awareness rests in part on a review of
the following disparity reports: Disparity in the City of New Orleans,
Louisiana, by Metro Consulting and Research Firm, Inc. dated May 29, 1992; State
of Louisiana Disparity Study Volume I and Volume II, dated April 1990, An
Analysis of Disparity and Possible Discrimination in the Construction Industry
and State Procurement System and Its Impact on Minority and Women-Owned Firms
Relative to the Public Works Arena, by a team of researchers at LSU (Baton
Rouge) and Southern University (Baton Rouge); Disparity in Contracting
Opportunities, commissioned by The Sewerage and Water Board of the City of New
Orleans from The Dillard Consortium, dated 1991; An Analysis of the Minority
Contractors Survey, by Silas Lee and Associates Consulting Company, dated August
1989; and Surveys on Minority and Female Owned Business, Women in Business:
Their Impact on the New Orleans Economy, City of New Orleans, dated March 1986.
These reports are incorporated herein by reference.
In addition, as discussed below, HJC undertook further comprehensive
studies of the social and economic conditions in New Orleans to refine further
the specific goals of this Program. HJC adopted Interim and Final Open Access
Plans which were each approved by the New Orleans City Council in 1994, as
described in Part I, Subpart C of this Open Access Program. JCC has amended and
restated the Final Open Access Plans of HJC and, subject to the approval of the
New Orleans City Council, will adopt and implement such Amended and Restated
Open Access Plans to provide for, among other things, the allocation of jobs and
contracts to MBEs, WBEs and DBEs ("Open Access Participant firms"). Upon
approval by the New Orleans City Council of JCC's Amended and Restated Open
Access Plans, said Open
2
<PAGE>
Access Plans shall amend and restate the Final Open Access Plans of HJC and
shall supersede and replace the Interim and Final Open Access Plans of HJC in
their entirety.
B. Objectives
JCC has adopted the following specific objectives to ensure the broadest
range of economic participation in the casino:
- - To enhance participation by MBEs, WBEs and DBEs in the private business
sector by focusing on innovative methods that will strengthen and expand
the capacity of these businesses to compete for contracts of increasing
size and complexity;
- - To create new employment opportunities and upgrade the job skills of the
employees in the gaming industry, especially those groups currently
under-represented in the work force - minority groups, women and persons
with disabilities; and
- - To promote maximum linkage between the public and private sector by
effectively coordinating, re-directing and supplementing existing
resources.
C. Comprehensive Studies
In addition to relying upon the above-referenced reports, HJC arranged for
the performance of comprehensive studies of past discrimination and the
continuing effects of such past discrimination in employment and contracting
practices in the City of New Orleans. These comprehensive studies analyzed
historical data of contracting and employment practices, public and private,
with respect to Open Access Participants and the present availability of Open
Access Participants for contracting and employment. These comprehensive studies
served to refine further the above-stated objectives.
These studies were performed, and HJC's Open Access Plans derived from such
studies were subsequently submitted to the New Orleans City Council and approved
by the New Orleans City Council pursuant to the following procedures and
guidelines:
1. After the Original Lease Agreement was executed, a consultant nominated
by GPCI, and approved by the President of the New Orleans City Council, prepared
requests for proposals ("RFPs"). The RFPs provided for interim reports, copies
of which HJC delivered to the committee described in paragraph 3 below for its
review and input. The RFP also provided that the study address the need for a
monitor.
2. The RFPs solicited proposals for two (2) studies as follows: one study
pertaining to the construction phase of the casino project (the "Construction
Phase Study") and the other study pertaining to the operation phase of the
casino project (the "Operation Phase Study"). Each study was paid for by HJC.
3. Pursuant to provisions of the Original Open Access Program, a committee
composed of the drafter of the RFPs, a representative of Grand Palais Casino,
Inc., and a
3
<PAGE>
representative of the New Orleans City Council reviewed the proposals submitted
in response to the RFPs described in paragraph 2, above. That committee selected
National Economic Research Associates, Inc. ("NERA") to conduct both studies.
4. The original studies described in paragraphs 5, 6 and 8 below were
monitored by a monitoring team composed of the three (3) persons listed in
paragraph 3, above, and any future studies and reassessments will also be
monitored by a monitoring team composed of (i) a representative of JCC, (ii) a
representative of the New Orleans City Council, and (iii) a third representative
jointly selected by JCC and the New Orleans City Council. The fees and expenses
of the original monitoring team were paid by HJC, and JCC will pay the fees and
expenses of any future monitoring teams.
5. Pursuant to an August 1993 letter of intent between GPCI and NERA and a
subsequent contract between HJC and NERA entered into in November 1993, NERA
prepared both interim and final studies pertaining to the operation and
construction phases of the casino project.
6. The interim studies were completed by NERA and provided simultaneously
to HJC and the New Orleans City Council. Promptly after submission of the
interim studies, HJC prepared interim Open Access Plans based upon the interim
studies and submitted the interim Open Access Plans to the New Orleans City
Council for approval. The interim plans were approved by the New Orleans City
Council within sixty (60) days after submission thereof.
7. The Open Access Program provided that HJC could not take possession of
the casino premises or commence any demolition or construction work thereon
until the New Orleans City Council approved HJC's Open Access Plans for the
construction phase of the casino.
8. The final Construction Phase and Operation Phase Studies were completed
on September 13, 1994 and were provided simultaneously to HJC and the New
Orleans City Council.
9. Promptly after submission of the final Construction Phase and Operation
Phase Studies, HJC submitted its final Open Access Plans for the construction
and operation phases of the casino project to the New Orleans City Council in
December 1994. The final Open Access Plans were designed to achieve the goals
for contracts and employment in the construction and operation phases of the
casino project, as defined in the Construction Phase Study and the Operation
Phase Study, respectively.
10. The New Orleans City Council approved the final Open Access Plans for
the construction and operation of the casino submitted by HJC within sixty (60)
days after submission thereof.
Any goals established under this Open Access Program are not intended as
rigid, inflexible quotas.
4
<PAGE>
D. Goals
While the goals under both the interim and final Open Access Plans of HJC
were determined on the basis of the NERA studies, prior to the approval of HJC's
interim and final Open Access Plans, HJC sought to achieve its Open Access
obligations on the basis of certain preliminary goals. Those preliminary goals
were replaced by the goals set forth in the NERA studies which were incorporated
into HJC's interim and final Open Access Plans.
Neither the preliminary goals nor the goals contained in HJC's interim and
final Open Access Plans allowed for double-counting of particular classes of
Open Access Participants.
5
<PAGE>
PART II
PROGRAM OUTLINE
and
PHASE ONE - PLANNING AND DEVELOPMENT
<PAGE>
Introduction
The implementation of this Open Access Program is divided into two (2)
phases: the planning and development phase and the operation phase. JCC will
retain a project director and select a support staff for the implementation of
the Open Access Program. The overall Open Access Program has two components: a
support, enhancement and participation program and an employee hiring, retention
and support program. The Open Access Program will have the greatest concentrated
impact during the planning and development phase. Initially the program will
consist of eight (8) major program components, each addressing a primary need of
businesses and the labor force. Each component is important, because of JCC's
holistic approach to developing the policy and program. JCC gives equal priority
to each component because each is critical to accomplishing JCC's goals. These
components are:
1. Creation and funding of a business development corporation known as
Newcorp ("Newcorp") that interfaces with and assists new and existing
businesses, owned and controlled by minorities, women and other disadvantaged
persons to effectuate contractual agreements in the planning and development and
operation phases of various industries, inclusive of gaming projects. Funding
for Newcorp includes an initial capitalization of $500,000 which has been
previously paid by HJC and annual minimum payments by JCC of $250,000 per year
for five (5) years as described in Part II, Subpart B of this Open Access
Program;
2. An Internship and Apprentice Program which ensures that minorities,
women, the disadvantaged and persons with disabilities are employed at each
level of operation;
3. Training Programs which offer formal skills for training in those areas
of work that are relevant to the development and operation of the casino
project;
4. A strong compliance and monitoring program, reporting to the President
of JCC;
5. An aggregate amount of $2,500,000 representing contributions to public
support efforts, to be payable in five (5) annual installments of $500,000 per
year, the first of which is to be made as of the opening date of the Casino,
with an additional $500,000 to be paid on each of the first, second, third and
fourth anniversary dates thereafter (funded each year in quarterly installments
to a separate account established for this purpose), to enhance existing
business development programs and public support endeavors based on criteria
developed by JCC and set forth in Part II, Subpart T of this Open Access
Program.
6. Memoranda of Understanding from majority firms and vendors stipulating
to their commitment to the Open Access Program, the Open Access Plans and Open
Access Participants;
7. An aggressive Outreach Program;
7
<PAGE>
8. Institution of internship and apprenticeship programs that will ensure
the hiring goals specified in the Open Access Plans, at all levels.
A. Phase One - Planning and Development
Phase One of the project involves the planning and construction of the
casino building and the related structures. JCC believes it is imperative to set
the tone for open access participation and hiring policies at this stage.
A commitment to working with the MBE/WBE/DBE community in Orleans Parish
was initiated by HJC through the assembly of an original team of project
consultants, mostly from the New Orleans area. JCC will undertake to reassemble
such team of project consultants or designate a new team of project consultants
in order to continue its commitment to working with the MBE/WBE/DBE community.
B. Newcorp
As a principal component of this initiative, HJC created and initially
capitalized Newcorp in order to foster the establishment, expansion, and
participation of Open Access Participant firms. In furtherance thereof, HJC
contributed $250,000 to Newcorp in the first year of its operations to promote
Newcorp and to pay for its expenses. JCC continues to believe that this
innovative effort will produce increased numbers of Open Access Participant
firms in the New Orleans community over the long term and will provide
significant benefits beyond the casino project.
JCC's goal is not only to increase contractual participation for the casino
project, but also to provide an ongoing development program that will strengthen
and increase the number of Open Access Participant firms over the long term.
Recognizing that this required some innovative measures, HJC previously created
and funded Newcorp, a business development corporation, which was initially
capitalized at $500,000. JCC will annually underwrite the cost of staffing,
office expenses and promotion of Newcorp for five (5) years at a minimum of
$250,000 per annum, the first annual payment of which shall be paid on the
effective date of the Third Amended Joint Plan of Reorganization, as modified,
of HJC and on the first, second, third and fourth anniversary dates of the
effective date of the Third Amended Joint Plan of Reorganization, as modified,
of HJC, to be paid in quarterly installments of $62,500 at the beginning of each
quarter for the specified years. These five (5) payments of at least $250,000
are in addition to and separate from the $500,000 per annum to be paid by JCC as
contributions to public support efforts, as provided for in paragraph 5 of the
Introduction to this Part II and in Part II, Subpart T hereof. All expenditures
made by Newcorp will be audited by an independent auditor on at least an annual
basis to ensure that all such payments are proper and in accordance with the
corporate purpose of Newcorp.
Newcorp will provide one-on-one counseling to Open Access Participants when
referrals to other sources for technical services and financing are indicated.
There will be cross-referrals
8
<PAGE>
between Newcorp and JCC's procurement department. JCC's procurement department,
in turn, will refer Open Access Participants in need of assistance to Newcorp.
The Newcorp board of directors will include unpaid representatives from
minority and women's business groups. The Newcorp Board of Directors will be
composed of nine (9) members. Two (2) board members will be from the city's
disadvantaged business office and/or the economic development office (or a
similar office established by the Mayor). One (1) will be a designated
representative of the New Orleans City Council. Two (2) board members will be
representatives from the New Orleans business community, each possessing a
minimum of five (5) years business experience, one (1) selected by the New
Orleans Business Council and one (1) selected by the Black Economic Development
Council. Two (2) board members will represent JCC. One (1) board member will
represent Harrah's New Orleans Management Company. The Board will appoint one
(1) additional member from those agencies which serve persons with disabilities.
JCC will determine whether Newcorp may be useful in other industries.
Additionally, opportunities may be available for funding of Newcorp by other
companies as well as by JCC.
Newcorp will provide the office space and support services for a small
business incubator. The incubator will serve to eliminate or reduce the
historical problems of new businesses: inadequate management, accounting and
marketing funds and under-capitalization; proper site location for businesses;
and problems associated with obtaining proper support services. By nurturing new
firms and providing assistance to existing businesses, the incubator concept
will increase their stability and provide an enhanced opportunity for
well-planned growth.
As part of the effort to increase contractual opportunities for Open Access
Participant firms, Newcorp will focus on the linkage of public and private
sector programs. There are already in existence a number of programs at the
city, state and federal level. These programs provide such services as planning,
managerial and technical advice and assistance, business planning assistance,
venture capital and loan programs (such as direct loans, loan guaranties, loan
participation and linked deposit loans). Aggressive linkage, coordination and
follow up efforts will be made by Newcorp to pair these resources with Open
Access Participants as needs indicate.
Because of detailed planning performed by HJC, Newcorp will be able to form
linkage and coordinate its services with both sectors. For example, HJC compiled
an initial list of business opportunities and contract work that will be
available for Open Access Participants. JCC will update this list periodically
as additional business opportunities are identified. This information will be
used to consult with potential vendors on what is available as well as what
requirements are needed. The updated information will be made available two (2)
to three (3) months in advance of any JCC procurement announcements and will be
presented twelve (12) to fifteen (15) times before business development
organizations, the public and interested groups.
The primary responsibilities of Newcorp are to:
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<PAGE>
- - Identify business opportunities and facilitate participation in the gaming
industry for Open Access Participants and persons interested in starting
businesses;
- - Provide assistance, i.e., technical assistance, business development,
short-term financing and space for Open Access Participants;
- - Provide project management assistance;
- - Assist Open Access Participants in making contacts with existing city,
state and federal agencies designed to help Open Access Participants;
- - Facilitate agreements with majority contractors, particularly analyzing
issues involving control and scope of work;
- - Assist Open Access Participants in making the most effective use of
existing loan and venture capital funds;
- - Maintain and operate a room to facilitate the bidding process;
- - Assist in the non-legal resolution of job-related technical and
administrative problems; and
- - Make limited short-term working capital loans and grants to Open Access
Participants to the extent permitted by applicable law.
These activities are designed to provide specific staff and business
development assistance to Open Access Participants on an as-needed basis. The
approach is one in which a general assessment of technical needs (as to both
staff and business skills) is made and technical assistance and/or resources are
provided to meet these needs. These services are intended to develop the level
of competence of Open Access Participants so that they grow from a point of
relative dependency to one of greater independence from outside assistance.
C. Compliance and Reporting Procedures and Processes
1. JCC agrees to report to the Mayor and New Orleans City Council, as set
forth in Part V, Subpart B, on the following subjects, as well as any other
relevant subjects as requested by the Mayor and/or New Orleans City Council:
a. Efforts undertaken by JCC to publicize the provisions and opportunities
of this Open Access Program;
b. Efforts undertaken by JCC to identify DBE entities and efforts
undertaken to encourage participation in this Open Access Program;
c. Efforts undertaken by JCC to remedy any inability of Open Access
Participants to perform contracts or proposed contracts;
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<PAGE>
d. A summary of the progress being made toward the Open Access Program 's
objectives and goals;
e. Names, addresses and phone numbers of all potential Open Access
Participants that have been contacted by JCC;
f. Names, addresses and phone numbers of all Open Access Participants that
responded to requests from JCC;
g. The contact person at each involved Open Access Participant;
h. Type of service to be provided by each retained Open Access Participant;
i. Total dollar value of services to be provided by each retained Open
Access Participant;
j. The date any contract is awarded to a retained Open Access Participant;
k. The date a contract is to be awarded to a retained Open Access
Participant;
l. Problems encountered in the process for any non-retained Open Access
Participants after bidding;
m. The racial and ethnic categories of involved MBE/DBE entities;
n. Recommendations of JCC to strengthen its Open Access Program;
o. Forecast of the contracts expected to be awarded, including probable
monetary amounts involved, the number and type of contracts to be awarded, and
expected solicitation dates;
p. All funds disbursed to retained Open Access Participant firms on a
year-to-date basis; and
q. All funds disbursed to retained Open Access Participant firms on a
month-to-month basis.
D. Outreach/Opportunity Conferences and Seminars
The most important task of an Outreach process is the creation of entry
points in the focus communities, including individuals, professional
associations and business development organizations that can assist in
strengthening ties between the project and the community. An Outreach process
operates on the premise that it must forge contacts with disadvantaged firms
which will serve as contractors and subcontractors in the casino project. Thus,
DBE purchasing councils, DBE contractors associations, and local economic and
development corporations are targeted. As of December 30, 1992, contact had been
made with fifteen organizations as a part of
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the first Outreach effort. As of March 11, 1993, Outreach meetings had been
conducted with nine organizations. Additional Outreach meetings took place
through January 1994.
Outreach will also be used as a tool to identify DBEs in the categories of
businesses in which DBEs have been historically under-represented and to
encourage them to become certified. An aggressive media advertising campaign and
promotional materials will be developed and directed to general and minority
markets.
Outreach efforts offer an excellent opportunity to explain not only the
objectives of JCC, but also the commitment which undergirds the objectives of
this Open Access Program, the evolution of this commitment and the importance of
the commitment and objectives to the revitalization of the City of New Orleans
and the Parish of Orleans. The communication links made here will be useful in
the planning of the opportunity conferences and seminars. As indicated, this
process started in late December 1992 and will continue throughout the life of
the casino project.
Conferences and seminars emphasizing the specific opportunities offered for
participation in the development and operation of economic ventures are an
effective means of directly meeting DBEs. The conferences and seminars will
establish the credibility of this Open Access Program, as well as provide a
learning and training environment. Project officials will attend the meetings.
Conferences and seminars will cover technical issues related to obtaining
information about the project, the bidding process, responding to invitations
for service and other activities related to involvement in the casino project,
as well as providing information on specific opportunities.
E. Joint Ventures
As a part of the overall Outreach efforts and particularly during the
series of opportunity and awareness conferences, the potential candidates for
joint venture arrangements will be made aware of the opportunities that exist.
JCC will help the development of joint ventures because joint ventures have been
under-utilized as a tool for raising the MBE/WBE/DBE participation level in the
construction area. They can also assist in the growth of Open Access Participant
firms by strengthening their experience, skills, financial resources and bonding
capacity.
JCC anticipates taking various steps to encourage the formation of joint
ventures, as found to be appropriate under the comprehensive studies prepared
pursuant to Part I above, and expects that the participation of joint ventures
will be recognized as counting toward the goals set forth in the Open Access
Plans, based upon the contract dollars actually received by Open Access
Participants for their portion of the work performed by the joint venture.
F. Vendor Purchases
To the extent consistent with the Comprehensive Studies prepared pursuant
to Part I, Subpart C, above, JCC shall have the option to create a bid
preference program or other program
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for vendor purchases from Open Access Participants if needed to attain the
objectives of this Open Access Program.
JCC shall continue HJC's efforts to prepare and maintain a comprehensive
list of Open Access Participants, detailing their capabilities and the services
and/or goods they offer. This undertaking will also profile the areas in which
Open Access Participants are most plentiful and available.
G. Certification of Open Access Participants
Certifications will be coordinated through the Open Access Program office.
The general eligibility requirements that a firm must meet for certification are
found in Subpart H of this Part II.
H. Certification of Open Access Businesses
JCC shall certify Open Access Businesses, i.e., MBEs, WBEs, DBEs and
businesses owned by persons with disabilities. The following companies shall be
eligible for certification: those having a current 8(a) certification from the
Small Business Administration or other certifying agencies, provided those
agencies have been approved by JCC and the New Orleans City Council for this
purpose. No site visit by JCC's Open Access Program office shall be required for
any Open Access Participant so certified. To ensure the integrity of the
certification process, however, the certifying agency will be required to
provide written documentation that a site visit to the Open Access Participant's
business was a prerequisite of the certification process. The New Orleans City
Council shall not unreasonably withhold its approval of any certifying agencies
for which approval is requested by JCC and shall give or withhold such approval
within fifteen (15) working days of any request for approval by JCC.
Businesses previously certified by approved agencies, upon proper
application, shall automatically be certified as DBEs. Such a business can also
be certified as a MBE upon verification that at least fifty-one percent (51%) of
the business is owned and controlled by one or more Minority Individuals, or can
be certified as a WBE upon verification that at least fifty-one percent (51%) of
the business is owned and controlled by one or more women. JCC shall maintain
records reflecting the bases upon which it has verified ownership and control of
such businesses, and these records shall be available for inspection by the
City.
HJC previously submitted details of its Certification Process to the New
Orleans City Council and the New Orleans City Council approved such
Certification Process. JCC has adopted the Certification Process developed by
HJC and approved by the New Orleans City Council. Any and all future revisions
to the Certification Process must be approved in writing by the New Orleans City
Council. Moreover, the New Orleans City Council will have the right to
investigate, review and verify documentation of certification and compliance
relative to future revisions of the Certification Process.
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The process by which other Open Access Businesses will be certified by
JCC's Open Access Program office includes:
1. Certification of status: verification that at least fifty-one percent
(51%) of the business is owned and controlled by one or more Minority
Individuals (MBE), or is owned and controlled by one or more women (WBE), or is
owned and controlled by a Disadvantaged Individual, or any combination of
Disadvantaged Individuals (DBE).
2. Certification of competence: establishment of the capability of an Open
Access Participant to perform work at a particular level.
JCC's Certification Process will include site visits and background checks
(as needed). The Certification Process developed by HJC was previously submitted
to and approved by the New Orleans City Council. That Certification Process
included certification procedures, decertification procedures, appeals
procedures, and recertification procedures, as well as the criteria, definitions
and compliance procedures used by HJC in certifying Open Access Participants.
JCC shall de-certify any Open Access Participant that: (i) may have been
certified prior to New Orleans City Council approval of the HJC certification
criteria; and (ii) does not satisfy the certification criteria approved by HJC
and the New Orleans City Council. A business that is decertified on this basis
shall have thirty (30) days to meet the new certification requirements set by
JCC and the New Orleans City Council. If recertified, the business can count
toward goals. If not, it can (at JCC's discretion) still perform the contract
but cannot count toward the goals.
3. If an individual requests that his or her firm be certified as a DBE,
JCC, as part of the certification process, will determine whether the individual
is socially and economically disadvantaged using criteria to be developed using
prevailing standards as a base. The owner of such a firm must demonstrate that
his or her disadvantaged status arose from individual circumstances, rather than
by virtue of membership in a group.
I. Creation of a Directory of Open Access Businesses in Orleans Parish and the
State of Louisiana
Throughout Phase One, HJC made contact with leaders in the focus
communities, and initiated outreach activities designed to attract Open Access
Participants. Such efforts helped generate a major portion of the names and
addresses of current Open Access Participants.
In addition to locating Open Access Participants through community entry
points and participation in seminars, existing lists containing the desired
information will be utilized. Information has been obtained from trade
associations and prime contractors. HJC compiled a comprehensive list of all
Open Access Participants in Orleans Parish and, in particular, Open Access
Participants that have successfully performed work on significant construction
projects. JCC will make use of and periodically update the list compiled by HJC.
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J. Use of Open Access Financial Institutions
The JCC Open Access Program office will maintain an up-to-date listing of
local and regional financial institutions which are owned and controlled by
Minority Individuals, women or Persons with Disabilities. The listing will
reflect the latest knowledge available to JCC as to the full range of services
provided by each firm listed. The JCC Open Access Program officer will serve as
JCC's primary staff to carry out its policy to utilize the services of these
financial institutions in accordance with the principles of the Open Access
Plans and the goals established under them.
K. Identification of Construction Needs of the Project
In order for disadvantaged businesses and individuals to take advantage of
the opportunities offered by JCC, they must be intimately aware of the specific
work to be performed in the casino project, the size of the work, employment
opportunities and qualifications required of businesses and individuals. One way
to outline the needs of the project in this phase is to divide the work into
categories, for example, surveying, excavation, plumbing, electrical, etc. Each
division would specify the schedule of work, duties to be performed, number of
workers needed, cost of work and skills required.
L. Identification of Open Access Participants to Meet Construction Needs of
the Project
HJC began, and JCC shall continue, the process of contacting Open Access
Participants and conveying to them its commitment to the City of New Orleans and
the disadvantaged and the objectives of this Open Access Program. This Open
Access Program is not designed to control who among the disadvantaged will
compete for contracts. Its overriding concern is to support the efforts of all
Open Access Participants willing to commit themselves to learning about the
casino project, preparing the packages to be submitted in bidding and working to
complete successfully all contracts awarded.
It is possible, however, to begin to recruit and identify those Open Access
Participants that appear to be ready or near ready to compete for contracts.
This effort will be coordinated through the Open Access Program office. Newcorp
will be intimately involved in this process, especially with those firms
requiring additional technical and financial assistance.
The outreach efforts and opportunities conferences will be used to identify
Open Access Participants for recruitment in the program.
M. Technical Assistance to Open Access Participants and Assistance to Prime
Contractors
Technical assistance will be provided to improve any weaknesses or problems
of Open Access Participants that can be identified during the course of the
application for certification or during the contract performance.
There is historical evidence of certain types of generic contracting
problems faced by Open Access Participants. Seminars will be conducted by
construction professionals on topics
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such as the following: bidding strategies, scheduling, project planning,
bonding, joint venture formation, estimating, change orders, accounting,
insurance and contract management.
An early intervention program will be established to troubleshoot potential
problems before they become unmanageable. One-on-one consulting will be provided
for preconstruction and on-site assistance in specific areas such as
construction management, contract administration, cost control, scheduling and
staffing.
During the construction phase of the project, the Open Access staff will
set up routine procedures to coordinate information with all parties in the
contracting process which includes the field operations office, Open Access
Participants and prime contractors. The procedures will include dissemination of
information on all aspects of the bidding process, the Open Access contract goal
criteria, reports and files that must be maintained and locating Open Access
Participants.
N. Bonding Assistance Program
This program has two parts: Waiver of bonds on contracts of $200,000 or
less; and arranging a bonding program through a company specializing in Open
Access bonds.
A bond waiver policy, bid preference policy, and a program of consultation
with and assistance to firms that are unable to obtain bonds will be instituted.
JCC will waive bonding requirements or will arrange bonding for contracts of
$200,000 or less when necessary to allow for maximum participation of Open
Access Participants. JCC will require general contractors to do the same with
respect to sub-contractors.
The bid preference policy is intended to level the competitive playing
field for Open Access Participants. A determination of the industry average of
performance bond premiums for the category of construction involved at the time
the bids are requested will be made. If the rates of bonding premiums quoted to
Open Access Participants are above the industry average, Open Access
Participants will be allowed to take advantage of the spread in their bid price.
Newcorp will take an active role in assisting Open Access Participants in
obtaining bonds by acting as a negotiator and technical advisor. JCC expects the
pool of bondable Open Access Participants to increase significantly with the
implementation of the new State of Louisiana surety bond program. Newcorp will
attempt to effect an arrangement favorable to Open Access Participants with
bonding companies associated with the State program.
O. Memoranda of Understanding
When JCC enters a contractual agreement with each prime contractor, it will
present the prime contractor with a memorandum of understanding ("MOU") for
signature in the same form and substance used by HJC and its contractors. The
MOU will restate the Open Access commitment and objectives of JCC, explain the
specific activities arising from them, and include guarantees that the
contractor understands and agrees to abide by the Open Access regulations
established by JCC. This is particularly important in verifying the performance
of prime
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contractors and Open Access Participants as indicated in their bids,
assessing whether the goals are being met, and testing the validity of reports
and timely payments. In those instances where contract selection is by other
than competitive bids, JCC will require the contractor to demonstrate its
understanding of this Open Access Program and the Open Access Plans. Also, the
contractor must show past and current experience in implementing comparable
programs and develop a plan to fully implement JCC's Open Access Program.
HJC reviewed three versions of legally binding instruments which include
pass through language and provide for coverage of contractors and vendors. HJC
submitted its selection to the New Orleans City Council. JCC will use the form
of MOU selected by HJC and submitted to the New Orleans City Council.
P. Means of Ensuring that Competitors Make Good Faith Efforts to Meet Open
Access Goals
Each solicitation will inform all bidders that Open Access participation
data must be submitted to JCC with their bids. Further, the award of the
contract will depend upon satisfaction of JCC's Open Access requirements.
Each bidder must submit with its bid, the names, scope of work and dollar
value for each proposed subcontractor and joint venturer that is an Open Access
Participant firm. If Open Access participation is less than the established
goals, the bidder must submit with its bid a detailed statement of its best
efforts to meet the Open Access goals.
Bidders which are Open Access Participant firms or joint venture bidders
must submit with their bids the name, address, and principal official of the
Open Access Participant firm and/or each Open Access Participant firm in the
joint venture. All bidders must submit with their bid (i) the name and principal
office of each Open Access Participant firm and/or the name and principal office
of each Open Access Participant included in the joint venture proposed for award
of a subcontract, and (ii) the dollar value and scope of work of each proposed
subcontract.
JCC will include instructions to bidders as a means to ensure that good
faith efforts are employed to meet Open Access goals.
Q. Contractor Demonstration of Good Faith Efforts
1. Examples of Good Faith Efforts
Before receiving an award of a contract with JCC and during the
contract period, the contractor must meet the Open Access goals or show that it
has made good faith efforts to do so. In determining whether the contractor has
made good faith efforts, JCC will consider the following:
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a. Whether the contractor attended any pre-bid meetings that may have been
scheduled by JCC to inform firms about subcontracting to Open Access Participant
firms and/or requesting lists of JCC certified Open Access Participant firms;
b. Whether the contractor where appropriate, broke down contracts into
economically feasible units to facilitate participation by Open Access
Participant firms;
c. Whether the contractor followed up initial solicitations of interest by
contacting Open Access Participant firms to determine with certainty whether the
Open Access Participant firms were interested in bidding;
d. Whether the contractor advertised in general circulation and trade
association publications, concerning the subcontracting opportunities, and
allowed the potential Open Access Participant subcontractors reasonable time to
respond;
e. Whether the contractor negotiated in good faith with interested Open
Access Participant firms and did not reject such Open Access Participant firms
as unqualified without sound reasons based on a thorough investigation of their
capabilities;
f. Whether the contractor provided interested Open Access Participant firms
with adequate information about the plans, specifications and requirements of
the contract;
g. Whether the contractor provided written notice to a reasonable number of
specific Open Access Participant firms and allowed sufficient time for the Open
Access Participant firms to participate effectively;
h. Whether the contractor used the services of available minority community
organizations, minority contractors' groups, local state and federal minority
business assistance offices, and other organizations that provide assistance in
the recruitment and placement of Open Access Participant firms;
i. Whether the contractor made efforts to negotiate with Open Access
Participant firms for specific sub-bids including at a minimum:
(i) Names, addresses and telephone numbers of Open Access Participant
firms that were contacted;
(ii) Description of information provided to those Open Access
Participant firms, and
(iii) A statement regarding why additional agreements with Open Access
Participant firms were not reached.
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2. If the contractor rejects an Open Access Participant firm as
unqualified, the contractor must be prepared to state his reason(s) in writing.
3. Record Keeping
All contractors shall establish and maintain records and submit regular
reports to JCC as required, which will identify and assess progress in achieving
the goals set forth in this Open Access Program.
R. Compliance Agreements and Monitoring
Each contractual agreement between JCC and a prime contractor will contain
clauses mandating compliance with the rules, regulations and procedures of this
Open Access Program. The same will be required of subcontractors and their
subcontractors. A copy of these compliance provisions will also be placed in the
MOU between JCC and the prime contractor and in all subcontracts.
In passing along the Open Access Program goals to all prime contractors and
subcontractors, maximum cooperation and a written commitment to the Open Access
Program will be established by placing responsibility with a highly placed
officer of the contracting firm.
JCC's Open Access Program office will serve as a contract compliance
department to review reports and to perform desk and on-site audits.
Monitoring will be conducted by the JCC Open Access Program office to
measure the progress under this Open Access Program and to make improvements as
necessary. On-going monitoring will be used to ensure that all contract terms,
including Open Access participation requirements and equal opportunity
requirements, are being implemented by contractors and subcontractors.
S. Prompt Payment Policy
JCC has adopted a prompt payment policy for all of its contractors and
vendors. JCC agrees to pay its general contractors and vendors within ten (10)
days of their submission of verifiable invoices for services and/or goods.
General contractors will be obligated to pay their subcontractors and suppliers
within five (5) days thereafter, and subcontractors will be obligated to pay
their subcontractors and suppliers within five (5) days thereafter. Experience
has shown that this policy alleviates many of the problems that Open Access
Participant firms and other small businesses encounter because of inadequate
cash flow and working capital.
T. Contributions to Public Support Efforts
In addition to the payments to be made to fund Newcorp pursuant to Part II,
Subpart B of this Open Access Program, JCC will also donate an aggregate amount
of $2,500,000 as contributions to public support efforts over the course of five
(5) years. These contributions shall be payable in five (5) annual installments
of $500,000 per year, the first of which shall be made
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as of the opening date of the Casino, with additional $500,000 installments to
be paid on each of the first, second, third and fourth anniversary dates
thereafter (funded each year in quarterly installments to a separate account
established for that purpose as stated below). Such donations are designed to
enhance existing business development programs and other public support
endeavors, which will be selected based on the following criteria:
- - Potential recipients of such funds will be identified by: (i) applications
from potential recipients; (ii) recommendations from public and private
agencies and officials; (iii) JCC on its own initiative; or (iv) otherwise
as the circumstances may allow;
- - JCC shall decide upon the recipients and the amounts of such funds, keeping
the RDC, the Mayor and the New Orleans City Council advised on a quarterly
basis in the quarterly reports described in Part II, Subpart C and Part V,
Subpart B of this Open Access Program. This will be accomplished by the
President of Harrah's New Orleans Management Company, as assisted by his or
her staff and as authorized by the member(s) of JCC. A form of application
will be prepared and distributed within sixty (60) days after the effective
date of the Plan of Reorganization of HJC;
- - All grant applications must articulate specific goals to be achieved.
Preference will be given to applications for grants of $20,000 or less.
However, subsequent grants to the same entity are possible for larger
projects, provided the recipient has achieved the goals articulated in the
first grant. Applicants that anticipate applying for a series of small
grants may say so in their first application, and may describe the overall
project they hope to develop. However, as noted, subsequent grants will
only be made to an entity or individual if JCC's monitoring determines that
the first grant was used for the intended purposes.
The intended focus of such contributions to public support efforts will be on
programs aimed at fostering emerging or new Open Access Participant firms and
the training and skills improvements that will allow Open Access Participants to
participate in and benefit from new and existing business opportunities. This
delineation of the intended uses of the funds is intended to be illustrative,
but not necessarily comprehensive, as it is not possible to list all types of
activities that fit within the terms "existing business development programs and
other public support endeavors." Undoubtedly the creative individuals and
organizations that engage in such activities both now and in future years will
advance a broad array of opportunities for consideration. All contributions are
subject to those statutes, regulations and guidelines promulgated by the State
and Federal governments and their instrumentalities, which govern spending by
JCC.
At the beginning of each quarter (commencing with the opening date of the
Casino), JCC shall pay twenty-five percent (25%) of the public support efforts
funds for the year (i.e. $125,000 of the yearly amount of $500,000) into a
separate account. On a monthly, or such other basis as specified in approved
grants, payments shall be made from that account to approved grant recipients,
pursuant to the process articulated above. Any of these funds not disbursed
during the quarter shall remain in the separate account, to be disbursed, along
with the funds to be added by JCC during the next quarter, to approved grant
recipients in accordance with the payment
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schedule specified in the approved grants. It is the intent of this public
support efforts funding process that, by the end of each year, all five hundred
thousand dollars ($500,000) shall have been paid into the separate fund, with as
much of it disbursed to approved grant recipients as possible.
JCC shall include in each quarterly report to the RDC, the Mayor, and the
New Orleans City Council (see Part II, Subpart C and Part V, Subpart B of this
Open Access Program) a report showing how much JCC paid into the separate
account during the quarter, the amount disbursed to approved grant recipients
under this public support efforts program during the quarter, and the amount
remaining in the separate account at the end of the quarter. Said report shall
also list the amount for each of these items on a year-to-date basis.
If any moneys remain undisbursed in the separate account at the end of the
year, they, along with any interest in the account, shall be carried forward, to
be disbursed to approved grant recipients in subsequent quarters.
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PART III
PHASE TWO - OPERATIONS
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PHASE TWO - OPERATIONS
A. Overview
The start up and continuous operation of the total project will occur in
this phase. JCC is committed to the belief that Phase Two will afford equal or
better opportunities for starting, incubating, and/or pairing Open Access
Participants in joint ventures as a means of increasing business opportunities
for Open Access Participant firms as well as providing unprecedented employment
opportunities for all sectors of the New Orleans community. Schedules of
commencement and completion dates were initially developed in April 1994 and
have been revised and updated by JCC.
The discussion in Part II of this Open Access Program regarding the methods
used to increase Open Access participation is equally applicable to this phase.
The role of Newcorp will become particularly vital in the operations phase
because of its commitment to new business growth. The other components of the
Open Access Program discussed earlier will also be continued.
The discussion in this Part III of this Open Access Program is focused on
employment opportunities. The economic revitalization which is expected to occur
as a result of this project should translate into an increased opportunity to
address the problems of deteriorating housing, quality child care, unemployment
and underemployment in Orleans Parish.
B. Dissemination of Information on Employment Needs of the Project
Information on the casino project's employment needs will be sent to
institutions of higher learning, skills training centers, community centers and
organizations, and specific follow-ups and conferences will be held with each. A
mass media campaign will also be used to advertise the employment opportunities.
C. Convening of Employment Conferences and Seminars
Employment conferences and seminars will be conducted by JCC which will be
of interest to skills training centers, DBEs interested in training workers and
institutions of higher learning. The objectives will be to present the
employment needs of the casino, along with how participants may offer to train
potential employees. DBEs, residents of Orleans Parish and persons with
disabilities will be strongly encouraged to consider the management and
administration of joint training programs.
D. Development of Cooperative Skills Training Program
JCC has committed itself to ensuring that a large percentage of the casino
project employment positions are filled by disadvantaged individuals. This
commitment should not only give hope to disadvantaged individuals, but also
generate entrepreneurial interest related to skills training.
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JCC will work with established skills training centers, vocational schools
and interested Open Access Participant firms to plan how these skills may be
offered to potential employees. JCC will also identify teachers and/or employees
who are willing to work in training programs. Additionally, Newcorp will
negotiate with the Orleans Private Industry Council, Inc., under its Saving Time
and Money Program to facilitate training of disadvantaged individuals and
placement of those who successfully complete training in order to have a
favorable impact upon the problems of unemployment and underemployment. This
will be an ongoing process.
E. Development of Internship, Apprenticeship, On-The-Job Training and Career
Development Programs
Apprenticeship is a process through which individuals can learn a skilled
trade while working. JCC will combine classroom training and on-the-job training
for a specified period. The minimum term of apprenticeship will vary depending
upon the particular occupation.
JCC will use both internships and training to help Open Access Participants
gain the skills and experience needed for higher level administrative and line
positions. Mounting evidence shows that women and minority applicants often lack
the specific work experience required for even entry level administrative and
line positions. However, such applicants may have other experience or informal
training that can satisfy some of the job requirements. Additional needed skills
can be gained through on-the-job training, supervised job responsibilities, and
use of timetables for acquiring needed skills. The combination of internships
and training will ensure that the initial Open Access Program employment goals
for higher level administrative and line positions will be met expeditiously.
HJC developed a selection plan which set forth the criteria to be used in
considering and selecting applicants for the internship and training program.
The selection plan was submitted to and approved by the New Orleans City
Council. The selection plan outlined aggressive measures to recruit applicants
from communities with high unemployment rates, including visiting schools,
community organizations, churches, businesses, employment agencies and places
frequented by the chronically unemployed. In particular, the selection plan
provided for special efforts to recruit African-American men for training and to
select applicants from Project Independence. Applicants under the selection plan
must meet minimum functional levels for desired occupations, and must meet any
requirements imposed by the State of Louisiana. JCC will employ the selection
plan developed by HJC and approved by the New Orleans City Council in its
consideration and selection of applicants until such time as a revised selection
plan may be submitted by JCC to, and approved by, the New Orleans City Council.
JCC will use Career Development techniques so that employment will be based
on merit, opportunities will be offered for advancement, and assurances are
provided for employer's resources, time, paid tuition, and professional guidance
in developing career paths. This program will be available to non-professional,
professional and management employees and will be designed to enhance horizontal
and vertical mobility. Preference for this program will be given to persons in
staff positions and non-professionals employed by JCC.
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Procedures for ensuring upward mobility in staff positions will
include:
- - Non-professional employees shall have first priority in the development of
career paths for select horizontal and vertical mobility;
- - Only permanent full-time employees who have been on the job for one year of
continuous service shall be eligible for career development funds;
- - Leave time with pay will be provided for training or career development
courses, seminars, etc., including courses provided by outside agencies.
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PART IV
ADMINISTRATIVE REVIEW
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A. Definitions: Categories of Violation, Net Hiring, Total Employment
1. The "Categories of Violation" are:
a. Failure to comply with the employment goals for each category of
Open Access Participants for each job category as set forth in
the NERA studies, described in Part I, Subpart C of this Exhibit,
and as adopted in the Open Access Plans;
b. Failure to comply with the contracting goals as set forth in the
Open Access Plans;
c. Failure to fund Newcorp in five (5) installments of $250,000.00
per year (to be paid in equal payments of $62,500.00 per quarter)
in accordance with Part II, Subpart B of this Open Access
Program;
d. Failure to donate at least $500,000.00 per year for public
support efforts for five (5) years beginning on the opening date
of the Casino, in accordance with the paragraph 5 of the
Introduction to Part II of this Open Access Program. Such
donations shall be made pursuant to the criteria and time frames
articulated in Part II, Subpart T of this Open Access Program;
and
e. Failure to implement and maintain an approved Certification
Process in accordance with Part II, Subpart H of this Open Access
Program. JCC shall arrange for the certification of all potential
contractors and subcontractors before a contract or subcontract
is executed, by reaching its decision on certification of an
applicant no later than fifteen (15) days after receipt of a
completed certification application; however, the parties
recognize that it may sometimes be impractical, due to a
combination of factors, to do so. Under these circumstances, JCC
shall strive to complete the review of a certification
application no later than fifteen (15) days after the contract is
executed or work commences, whichever comes first. Any contractor
that is not certified before the end of a given quarter shall not
be counted towards the achievement of JCC's MBE or WBE goals for
that particular quarter.
2. "Net hiring for the quarter" for any particular job category is the
figure which results from adding the new hires, plus the promotions
and the transfers into the job category or categories being considered
during the relevant quarter, and then subtracting (from that interim
number) the layoffs, demotions, terminations (both voluntary and
involuntary) and transfers out of the relevant job category during the
quarter involved. This number can be expressed as a percentage by
comparing the net hiring figure for a particular category of Open
Access Participants (e.g., non-minority women) for a particular job
category (e.g., professionals) to the net hiring figure for everyone
in that category for the quarter involved (i.e., the net
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hiring of women professionals compared to the net hiring of all
professionals during that quarter).
3. "Total employment of Open Access Participants in a particular
employment category at the end of a particular quarter" means the
percentage of each category of Open Access Participants in the
employment category involved on the last two (2) payroll days of the
quarter, averaged. Thus, the number of a particular category of Open
Access Participants (e.g., non-minority women) employed in a
particular job category (e.g., professionals) on the last two (2)
payroll days of the last month of a quarter (e.g., March 15 and March
29 for the first quarter) is compared to the total number of persons
employed in that category on those two (2) days, with the result
expressed as a percentage (e.g., 60 non-minority women professionals
out of 200 total professionals on March 15 and 66 non-minority women
professionals out of a total of 210 professionals on March 29 would
result in 30.73% non-minority women for the first quarter).
B. Waiver System
In the event that JCC reasonably believes in advance of the beginning of
any quarter that, despite it making all necessary and reasonable efforts, it
will be unable to achieve the goal in any particular employment category or
construction contracting category, JCC may apply to the RDC Board of Directors
for an advance waiver of that goal, in whole or in part, fully supporting its
application in writing with objective data and other relevant information about
the actual unavailability of Open Access Participants for the particular
employment category or actual unavailability of MBE or WBE companies for the
particular construction contracting category involved during the quarter for
which the waiver is requested. Such an application shall be made at least thirty
(30) days in advance of the beginning of the quarter for which it is requested.
Notwithstanding the submission of any such waiver application, JCC shall
continue to make all necessary and reasonable efforts to achieve the goal from
which JCC has requested a waiver.
The RDC Board shall designate a person (or persons) to review the
application. The RDC designee may, without a hearing, reject an application
which he or she deems inappropriate; in which case, the RDC designee must state
the reasons for rejection, in a letter to JCC, the Mayor, and the Chair of the
New Orleans City Council Rivergate/Gaming Committee (or its successor
committee). Alternatively, the RDC designee may arrange a meeting of persons he
or she deems appropriate, plus persons JCC deems appropriate, in order to
discuss and address the issues presented in the waiver request and the relevant
information. In either case, within twenty-one (21) days after receipt of the
waiver request, the RDC designee shall respond in writing, stating that he or
she will recommend the waiver, in whole or in part, or will not recommend it,
and stating the reasons for his or her decision. If the RDC designee recommends
the waiver, he or she shall send a written recommendation of a waiver for a
particular quarter to the Mayor and the Chair of the New Orleans City Council
Rivergate/Gaming Committee (or its successor). The New Orleans City Council
Rivergate/Gaming Committee (or its successor) will
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consider the recommendation at its next regularly scheduled meeting, and the
Mayor shall act expeditiously.
A waiver shall be effective only if it is approved in writing by both the
Mayor and the New Orleans City Council Rivergate/Gaming Committee (or its
successor), and shall be effective only for the quarter for which it is
approved. In the event there is no successor for the New Orleans City Council
Rivergate/Gaming Committee, approval must be obtained from a majority of the
members of the New Orleans City Council and from the Mayor. The parties
understand and agree that the timing of the application, meeting schedules,
volume of material to be considered, and other matters may result in the waiver
(if it is granted) being applicable to a quarter subsequent to the one for which
JCC originally made application. If a waiver is granted, whatever portion of the
goal that is not waived shall remain as the goal for the particular quarter
involved, and all of the rights, duties, and procedures articulated in this Part
IV of this Open Access Program shall remain applicable to that unwaived portion
of the goal. If a waiver is not granted for a particular quarter, then all of
the rights, duties, and procedures articulated in this Part IV of this Open
Access Program shall remain applicable for that quarter.
C. Violations with Respect to Employment and Contracting Goals
For each quarter in which the Mayor finds JCC to be in violation, the Mayor
may assess a fine of up to $10,000.00 for each Category of Violation relating to
any one of the eighteen (18) employment and six (6) contracting categories in
the Open Access Plans. See Part IV, Subpart A(1)(a) and Subpart A(1)(b) of this
Open Access Program. If subsequent violations of the same Category of Violation
are found by the Mayor for two or more consecutive quarters, the Mayor may
assess a fine for the second and subsequent quarters of up to $20,000.00 for
each Category of Violation.
D. Failure to Comply with Newcorp Funding and Public Support Efforts
Obligations
The fine for each violation of JCC's quarterly funding obligation to
Newcorp (See Part IV, Subpart A(1)(c) of this Open Access Program), or violation
of funding obligations for public support efforts (See Part IV, Subpart A(1)(d)
of this Open Access Program) shall be set by the Mayor in an amount not to
exceed $20,000.00 for the first violation. If subsequent violations of the same
Category of Violation are found by the Mayor for two or more consecutive
quarters, the Mayor may assess a fine for the second and subsequent quarters of
up to $40,000.00 for each Category of Violation.
E. Failure to Comply with Certification Process Requirements
In the event JCC counts as MBEs or WBEs in its quarterly reports companies
which it has not yet so certified, then the Mayor may impose a fine for each
such purported MBE or WBE that has been so counted. See Part IV, Subpart A(1)(e)
of this Open Access Program. The fine for each such violation of JCC's
certification obligation shall be set by the Mayor in an amount not to exceed
$20,000.00 for the first violation. If subsequent violations of this Category of
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Violation are found by the Mayor for two or more consecutive quarters, the Mayor
may assess a fine for the second and subsequent quarters of up to $40,000.00 for
each Category of Violation.
F. Measures of Compliance
If during any quarterly reporting period, JCC has: (a) achieved all the
employment goals (as specified in the Open Access Plans), as measured by "total
employment of Open Access Participants" in all employment categories at the end
of that quarter (as defined in Part IV, Subpart A(3), above); and (b) achieved
the MBE and WBE contracting goals specified in those Plans, as measured by
contracting dollars disbursed to MBEs and WBEs during the particular quarter;
and (c) complied with its obligations with respect to Newcorp; and (d) made the
required public support donations; and (e) complied with the Certification
Process requirements, then JCC shall be deemed to be in compliance with the
Plans for that reporting period.
If JCC's "total employment of Open Access Participants" for a particular
employment category at the end of the particular quarter involved is less than
the employment goal for that category of Open Access participants, or its
contracting dollars disbursed to MBEs and WBEs during the particular quarter
involved are less than the contracting goal for that category of contractors,
then the Mayor must evaluate the following factors:
1. Whether JCC has made all necessary and reasonable efforts to perform
the tasks identified as Compliance-Oriented Efforts (described in
Appendices A, B, C and D of this Open Access Program) in a manner
intended to achieve that particular goal;
2. Whether: (i) JCC's deficiency in reaching the particular employment
goal for the quarter involved is no more than ten percent (10%) below
the particular employment goal for the category of Open Access
Participants being considered (e.g. if the goal for non-minority women
professionals is thirty percent (30%), a positive score can be
obtained for this factor only if total employment of non-minority
women professionals at the end of the quarter, when rounded down to
the nearest whole number, is twenty-seven percent (27%) or higher), or
(ii) JCC's deficiency in reaching the particular employment goal for
the quarter involved would not have occurred if the "average of the
number of persons in the category of Open Access Participants" (e.g.,
non-minority women) in the job category being considered (e.g.,
professionals) on the two (2) payroll days used to calculate total
employment had been two persons higher than it actually was. For
purposes of this subparagraph 2(ii), the "average of the number of
persons in the category of Open Access Participants" is determined by
rounding down to the nearest whole number (e.g., if the average of the
number of non-minority women professionals is 7.8, then for purposes
of this subparagraph 2(ii), the number 7.8 is rounded down to 7).
Furthermore, this subparagraph 2(ii) is only applicable if the number
of persons in the category of Open Access Participants needed to meet
the particular employment goal being considered (e.g., thirteen
non-minority women professionals) is less than twenty (20). If the
number of persons in the category of
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Open Access Participants needed to meet the particular employment goal
being considered is twenty (20) or more, then only the calculation in
subparagraph 2(i) can be used.
3. Whether JCC's "net hiring for the quarter" (expressed as a percentage)
is at or above the goal for the category involved, or is within one
person of that goal or, for contracting, its contracting dollars
awarded during the quarter are at or above the goal for the category
of Open Access Participants involved;
4. For contracting, whether JCC's contracting dollars disbursed to MBEs
and WBEs on a cumulative basis, as of the end of the particular
quarter being considered, are at or above the goal for the category of
Open Access Participants involved; and
5. Whether JCC reached the goal in the category (or categories) involved
during both of the two prior quarters.
JCC shall be deemed to be in compliance for the particular quarter for a
particular employment category, if the Mayor determines that JCC has a positive
score on three of factor numbers 1, 2, 3 or 5 described above, and JCC prepares
an Action Plan of additional efforts to be performed during the next quarter
reasonably calculated to improve performance in the category involved. During
the subsequent quarter (or quarters, if the Action Plan covers more than one
quarter), JCC's performance of the tasks in the Action Plan (and the
reasonableness of the Action Plan) shall also be considered in evaluating factor
number 1, above, in the Mayor's evaluation of the factors described above.
JCC shall be deemed to be in compliance for the particular quarter for a
particular contracting category if the Mayor determines that JCC has a positive
score on three of factor numbers 1, 3, 4 or 5; and JCC prepares an Action Plan
of additional efforts to be performed during the next quarter reasonably
calculated to improve performance in the category involved. During the
subsequent quarter (or quarters, if the Action Plan covers more than one
quarter), JCC's performance of the tasks in the Action Plan (and the
reasonableness of the Action Plan) shall also be considered in evaluating factor
number 1, above, in the Mayor's evaluation of the factors described above.
In addition to the quarterly reporting requirements set forth in Part II,
Subpart C of this Open Access Program, each quarterly report filed by JCC shall
contain all information necessary to assist the Mayor in measuring compliance
through the evaluative process set forth above.
G. Requests for Review
If, after the Mayor has reviewed JCC's quarterly report (for employment and
contracting, this will, if applicable, include his or her evaluation of factors
1 through 5 described in Part IV, Subpart F of this Open Access Program), he or
she concludes that JCC has violated one or more of the Categories of Violation
described in Part IV, Subpart A(1) of this Open Access Program,
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he or she may, within thirty (30) days of receipt of the quarterly report, issue
a Request for Review to JCC.
The Request for Review shall set forth in detail the specific Categories of
Violation the Mayor believes that JCC has violated. In the Request for Review,
the Mayor may recommend actions to cure the areas of believed non-compliance. If
the Mayor fails to issue a Request for Review within this 30-day period, JCC
shall be deemed to be in compliance for that reporting period.
In the event JCC fails to file a quarterly report, the Mayor may conclude
that JCC has violated one or more Categories of Violation and the Mayor may,
within thirty (30) days of the deadline for filing the quarterly report, issue a
Request for Review.
H. Response to Request for Review; Notice of Fine
Within twenty (20) days of receipt of a Request for Review, JCC shall
either correct the deficiencies cited in the Request for Review, or respond with
an Action Plan, including time schedules, for curing or mitigating the areas of
non-compliance. Alternatively, if JCC believes that the Mayor's conclusion is in
error, JCC, within twenty (20) days of receipt of the Request for Review, may
submit a written statement of the basis for its belief that it is not in
violation of the Open Access Plans, including any explanations and extenuating
circumstances it deems relevant. The assertions of JCC in this regard shall be
supported by all documentary evidence, including affidavits, JCC believes
relevant, as well as any documentary support requested in the Mayor's Request
for Review.
In the event the Mayor finds that JCC's response to the Request for Review
does not adequately address the specific concerns set forth in the Request for
Review, the Mayor may, by Notice of Fine to JCC, impose a fine for each Category
of Violation for each quarterly reporting period (or periods) covered by the
Request for Review, in which the Mayor believes there was non-compliance. If a
Notice of Fine is issued, it must be issued no later than: (1) sixty (60) days
after receipt by the Mayor of the quarterly report for the quarter which
immediately follows the quarter for which the fines are assessed; or (2) sixty
(60) days after the Mayor receives data in response to a Request for Review or
other request issued to JCC; or (3) sixty (60) days after the Mayor receives
data from an RDC or other audit regarding the quarter for which the fines are
imposed, whichever is later. No fines shall be imposed for the quarter involved
if the Mayor fails to send a Notice of Fine within this time period. All Notices
of Fines shall be sent to JCC to its address set forth in Section 32.6 of the
Amended and Restated Lease Agreement and to each Leasehold Mortgagee (as defined
in the Amended and Restated Lease Agreement) at its last address actually known
by the Mayor.
I. Appeal of Fines
Any fine imposed by the Mayor under this Open Access Program may be
appealed to the New Orleans City Council. Any such appeal must be filed with the
Clerk of Council within fifteen (15) days of JCC's receipt of the Mayor's Notice
of Fine. If JCC fails to appeal the Mayor's determination of non-compliance and
Notice of Fine within that 15-day period, JCC
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shall pay all fines, plus costs and interest (at the same rate as that imposed
by Louisiana courts for judgments in accordance with the Louisiana Code of Civil
Procedure), from the date of the Notice of Fine until the date of payment, and
shall commence all necessary actions to comply with the Mayor's decisions. A
timely appeal shall stay the enforcement of the fine or any other action by the
City with respect to the Notice of Fine being appealed. After appropriate
hearings (pursuant to the New Orleans City Council Rules Governing Appeals
Pursuant to the Open Access Program), the New Orleans City Council may affirm or
reverse, in whole or in part, the Mayor's imposition of a fine. As to any fines
which the New Orleans City Council sustains, JCC shall pay interest at the same
rate as that imposed by Louisiana courts for judgments in accordance with the
Louisiana Code of Civil Procedure, from the date of issuance of the Notice of
Fine until the date of payment.
For each appeal, JCC shall reimburse the New Orleans City Council for the
fees and expenses of its consultants hired to advise the New Orleans City
Council in the appeal, not to exceed $50,000.00 per appeal "in 1995 dollars."
The term "1995 dollars" means that the dollar limit listed in this paragraph
will be adjusted to take account of inflation (as measured by the New Orleans
Consumer Price Index for All Items) from September 30, 1995 to the date upon
which the New Orleans City Council renders its decision. JCC shall reimburse
expenses incurred in excess of this $50,000.00 limit if new issues beyond the
scope of the appeal are considered or negotiated at the insistence of JCC, or
extensions are requested by JCC. The consultants shall provide to JCC, as well
as to the New Orleans City Council, copies of their invoices showing hours
worked by the persons involved and generally describing the type of work done
(but not their time sheets). The parties agree that such time sheets might
include privileged communications and that all such privileges are reserved and
not waived by virtue of anything contained herein. JCC's obligation to pay for
the fees and expenses of consultants hired to advise the New Orleans City
Council in the appeal shall terminate upon resolution of the issues of the
particular appeal; provided, however, that JCC shall remain obligated to pay (as
set forth in this paragraph) the fees and expenses of such consultants incurred
prior to the resolution of the issues of the particular appeal.
If a particular instance of non-compliance continues for one hundred eighty
(180) days after JCC's response to the Mayor's Request for Review or thirty (30)
days after receipt of the New Orleans City Council's decision, whichever is
later, then the Mayor shall have the right to recommend that the New Orleans
City Council authorize the issuance of a Notice of Default to JCC, pursuant to
the appropriate provisions of Article XXI of the Amended and Restated Lease
Agreement.
J. Judicial Review
If JCC believes, in good faith, that the decisions of the Mayor and the New
Orleans City Council are erroneous, then JCC may, within twenty (20) days of the
New Orleans City Council's decision, seek judicial relief, including injunctive
relief, from a court of competent jurisdiction. If JCC fails to appeal the New
Orleans City Council's decision within that twenty (20) day period, JCC shall
pay all fines, plus costs and interest (at the rate imposed by Louisiana courts
for judgments) and shall commence all necessary actions to comply with the New
Orleans City
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Council's decisions. A timely application for judicial relief by JCC shall stay
any other enforcement by the City for the particular violations involved in the
appeal. The City shall also have the right to seek injunctive relief to compel
compliance with the determinations of the Mayor and/or the New Orleans City
Council. In either case, judicial review shall be de novo. The entry of a final,
non-appealable judgment by a court of competent jurisdiction shall be binding
upon the parties. JCC shall have the right as set forth in Section 21.1(i) of
the Amended and Restated Lease Agreement to cure any default after entry of the
judgment confirming the default.
If the City prevails in the litigation to resolve disputes under the Open
Access Program, JCC shall: (a) immediately pay all fines, fees, costs, interest,
and reasonable attorney's fees connected with the litigation; (b) immediately
commence cure of the violations of the Open Access Program and the Open Access
Plans and diligently continue to effectuate such cure until completed.
Furthermore, the Mayor shall have the right to approve: (a) all hiring, (b) all
changes of JCC employees from one employment category to another, and (c) the
entering into and termination of contracts made by JCC for (i) construction,
(ii) professional services, and (iii) commodities and non-professional services
until JCC is in compliance with this Open Access Program and the Open Access
Plans.
K. Make-up of Shortfall
JCC warrants, covenants and guarantees to the City and the RDC that it will
make all necessary and reasonable efforts to cause the general/prime contractors
and the unions to meet all the obligations under the Open Access Program and
Amended and Restated Open Access Plans relating to construction contracting. In
the event, for any reason, (i) the general/prime contractors or the unions fail
to satisfy, in whole or in part, such obligations as of the end of the
construction phase immediately prior to the opening of the Casino, and (ii) the
Mayor issues a Notice of Fine, pursuant to the provisions of the Open Access
Program, Part IV, Subparts G and H, in response to such a partial or total
failure, then JCC shall use all necessary and reasonable efforts to make up any
shortfall resulting from such partial or total failure in the areas of
subsequent construction or renovation work, or operations contracting with the
relevant Open Access Participants. Any such new make-up services or purchases
shall be in addition to the contracting goals set forth in the Amended and
Restated Open Access Plans.
JCC must fulfill any such commitment for additional services or purchases
within one year of the issuance of the Notice of Fine. If JCC successfully makes
up any shortfall resulting from a failure by the general/prime contractors or
unions (as described above) within one (1) year after the date of the issuance
of the Notice of Fine relating to such partial or complete failure, then JCC
shall be entitled to reimbursement, without interest, of an amount equal to
seventy-five (75%) percent of such fine. This obligation shall continue until
the RDC and the City have determined that JCC has fully complied with its Open
Access obligations during the construction phase immediately prior to the
opening of the Casino.
The obligations described in the prior paragraph shall be covenants and
obligations of JCC, as tenant, running with the Amended and Restated Lease, to
be assumed by any assignee or
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successor in interest to JCC as a tenant. Furthermore, the obligations described
in the prior two paragraphs are over and above and in addition to any
obligations imposed by Part IV, Subpart F of this Open Access Program. In
particular, these obligations are in addition to the obligation to prepare and
implement an Action Plan under the conditions specified in said Part IV, Subpart
F.
If (a) JCC (or its successor) fails to perform its obligations under the
three immediately preceding paragraphs within the specified one year period, and
(b) the procedures set forth in Part IV, Subparts I and J result in a final and
nonappealable ruling with respect to the validity of the pertinent Notice of
Fine, then RDC and the City shall have the right to the following remedies: (i)
RDC shall have the right to collect from JCC as liquidated damages, and not as a
penalty, the actual dollar amount by which the MBE and/or WBE participation has
fallen short of the participation goals set forth in the Open Access Plans, plus
reasonable attorneys' fees and costs required to collect the liquidated damages,
minus the amount of any fine paid pursuant to the related Notice of Fine; and
(ii) in addition, RDC shall have and may exercise any and all rights and
remedies that it may have available at law or in equity and that may be
available under the Open Access Program or the Open Access Plans, or that may
otherwise be available.
L. Indemnity Assignment
Subject to the conditions set forth in the Memorandum of Understanding and
the separate contracts between JCC and its general contractors and the Union
Project Agreement, JCC is entitled to indemnification (the "Indemnity Right")
from its general contractors and from the unions for any fines or other damages
paid by JCC to the City or the RDC as a result of a general contractor's or
union's failure to comply with their respective obligations under the Open
Access Program or the Amended and Restated Open Access Plans. JCC's (or its
successor's) failure to exercise the Indemnity Right within thirty (30) days
after its payment of any such fines or damages shall constitute an "Assignment
Event." Upon the occurrence of any Assignment Event, JCC's (or its successor's)
related Indemnity Right shall be deemed to be automatically assigned to the RDC
and the City without the need for any further act or document.
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PART V
MEANS OF EVALUATION
AND RESOLUTION PROVISIONS
<PAGE>
A. Demonstration of Best Efforts
In determining whether JCC has made its best efforts to comply with the
Open Access Program, RDC and the Mayor will use the following criteria:
a. Whether pre-bid conferences have been scheduled by JCC to inform Open
Access Participant firms of contracting, subcontracting and procurement
opportunities for Open Access Participant firms;
b. Whether JCC has endeavored to compile lists of qualified Open Access
Participant firms and has established procedures to advise those firms of
available opportunities in connection with the casino project;
c. Whether JCC or its contractors and subcontractors have advertised in
general circulation and trade association publications concerning contracting
and subcontracting opportunities in connection with the casino project, and
whether JCC has allowed Open Access Participants time to respond;
d. Whether JCC or its contractors and subcontractors have advertised in
general circulation and trade association publications concerning procurement
opportunities in connection with the casino project, and whether JCC has allowed
Open Access Participants time to respond;
e. Whether JCC has provided written notice to a reasonable number of
specific Open Access Participants of available opportunities at the casino
project and allowed sufficient time for the Open Access Participants to
participate effectively;
f. Whether JCC has followed up initial solicitations of interest by
contacting Open Access Participants to determine with certainty whether the Open
Access Participants were interested in bidding;
g. Whether JCC has, where appropriate, broken down contracts into
economically feasible units to facilitate DBE participation;
h. Whether JCC or its contractors and subcontractors have provided
interested Open Access Participants with adequate information about the plans,
specifications and requirements for available contracts;
i. Whether JCC has made reasonable investigation of the capabilities of
interested Open Access Participants before making a determination as to their
qualifications for contracting and employment;
j. Whether JCC has documented its reasons in writing for rejecting any Open
Access Participant as unqualified;
k. Whether JCC has used the services of available Open Access Participant
community organizations, DBE contractors' groups, local, state and federal DBE
business
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assistance offices, and other organizations that provide assistance in the
recruitment and placement of Open Access Participant firms;
l. Whether JCC has documented its efforts to negotiate with Open Access
Participants for specific bids and sub-bids, including at a minimum:
1. names, addresses, and telephone numbers of Open Access Participants
that were contacted,
2. description of information provided to those Open Access
Participant firms, and
3. a statement of why additional agreements with Open Access
Participants were not reached.
m. Whether JCC has utilized the services of official public agencies
responsible for recruiting and placement of Orleans Parish residents in
connection with attaining JCC's residency goals.
n. Whether JCC has required its contractors and subcontractors to consider
JCC's residency and Open Access Participant goals in their recruiting processes
and to adopt the same employment goals as JCC.
o. Whether JCC has developed accredited training programs for the training
of potential employees for employment at the casino, with emphasis on the
training of Orleans Parish residents and on achievement of JCC's Open Access
Participant goals.
p. Whether JCC has established internship programs to qualify potential
employees for employment at the casino, with emphasis on the training of Orleans
Parish residents and on achievement of JCC's Open Access Participant goals.
q. Whether JCC has established apprenticeship programs to qualify potential
employees for employment at the casino, with emphasis on the training of Orleans
Parish residents and on achievement of JCC's Open Access Participant goals.
r. Whether JCC has funded Newcorp as prescribed in this Open Access
Program.
s. Whether JCC has implemented its bonding assistance program as prescribed
in Part II, Subpart N of this Open Access Program.
t. Whether JCC has implemented and enforced the Prompt Payment Policy set
forth in this Open Access Program.
u. Whether JCC has established the Home Ownership Program summarized in
JCC's Benefits Summary. (See Exhibit "J" to the Amended and Restated Lease
Agreement).
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v. Whether JCC has implemented the Child Care Program summarized in JCC's
Benefits Summary. (See Exhibit "J" to the Amended and Restated Lease Agreement
and Addendum N of the Open Access Plans).
w. Whether JCC has made special efforts to recruit African-American men for
its training programs.
x. Whether JCC has made efforts to select applications from Project
Independence for its training programs.
y. Whether JCC has adopted application and/or hiring requirements which
avoid use of irrelevant or unnecessary criteria which have a negative effect
upon the recruitment and/or hiring of minority individuals, disadvantaged
individuals, or women.
B. Record Keeping
JCC shall establish and maintain records and submit quarterly and annual
reports to RDC, the Mayor, and the New Orleans City Council, which will identify
and assess progress in achieving Open Access Program contracting and
subcontracting goals and other Open Access Program employment efforts. See Part
II, Subpart C, above. JCC will make all records pertaining to its Open Access
Program available to the foregoing entities for an annual evaluation.
Further JCC will adhere to the following timetable for reporting
requirements:
- - annual assessment of success in reducing unemployment, underemployment,
chronic unemployment, and underutilization of Open Access Participants
commencing twelve (12) months after the opening date of the Casino;
- - quarterly reports on hiring and retention of minority individuals, women,
and persons with disabilities, for each calendar quarter, with reports due
on the last day of April, July, October, and January. The first report
under this schedule was due October 31, 1994, and it covered the period
June 1 through September 30, 1994. Prior reports were due on March 31, 1994
and June 30, 1994;
- - quarterly reports on contracting with MBEs, WBEs and DBEs, and companies
owned by persons with disabilities, for each calendar quarter, with
quarterly reports due on the last day of April, July, October, and January.
The first report was due on October 31, 1994, and it covered contracting by
HJC from the commencement of this project through September 30, 1994;
- - annual assessments of the impact of JCC's services on the community
commencing twelve (12) months after the opening date of the Casino;
C. Reporting Requirements
JCC will include questions on employment application and certification
forms to
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ascertain information on unemployment, underemployment, chronic unemployment and
utilization of Open Access Participants considered for employment and/or
contractual services. Information derived from unemployment applications and
certification forms for those employed will be used to assess JCC's performance
in:
- Reduction in unemployment;
- Reduction in underemployment;
- Reduction in chronic unemployment; and
- Reduction in underutilization of Open Access Participants.
D. Reporting Mechanisms to Track the Hiring and Retention of Members of
Minority Groups, Women and Persons with Disabilities.
JCC will maintain a roster of all employees and enterprises with which JCC
is doing business. The roster will indicate the status of employees in the
following categories:
- Minority
- Non-Minority Women
- Men
- Persons with Disabilities
- MBE
- WBE
- DBE
- Other
The roster or employment monitoring form will reflect the dynamics of
changes in contracting and employment on a quarterly basis.
E. Upgrading Job Skills
This activity will largely be addressed through training programs that will
include:
- On-The-Job Training (OJT)
- Apprenticeship (for skilled trades)
- Internship (for administrative/management jobs)
Pre- and Post-evaluations/assessments will be made of individuals selected
to participate in these programs.
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F. Contractual Clauses
JCC hereby undertakes to include legally binding clauses in all contracting
agreements and require that any subcontracting agreements do likewise that will
bind the contractors and subcontractors to all provisions contained in this Open
Access Program that are applicable to them.
Other appropriate actions will be taken to ensure that prime contractors
and subcontractors comply with the Open Access provisions. These actions will
include:
a. desk audits to review material and information concerning the
contractor's compliance;
b. on-site reviews that include interviews, visits to project locations,
and inspection of documents and/or information not available at the desk audit
that pertain to the contractor's compliance;
c. additional investigations that may be called for by a lack of proper
record keeping, failure of the prime contractor to cooperate, failure of Open
Access Participants to cooperate, visible evidence of unsatisfactory
performance, or other evidence as may warrant further investigation.
JCC staff will make prompt compliance determinations regarding its prime
contractors. Documentation of noncompliance will include the specific areas in
which the contractor failed to comply. In these instances, appropriate action
consistent with this Open Access Program and other contractual provisions will
be taken.
G. Defense of Litigation/Invalidity of Program
In any suit brought to challenge the application or underlying provisions
and requirements of the Open Access Program or any Open Access Plan promulgated
under it, JCC agrees to provide a legal defense on behalf not only of itself,
but of the City of New Orleans, the Mayor, the New Orleans City Council, any of
its members, and the RDC (the "City-related parties"), should any of them be
named as parties to the suit. Such representation will be provided by competent
counsel selected by JCC, with the approval of the RDC, and JCC shall have the
right to control the defense of the litigation on behalf of all parties.
Any City-related party to such litigation shall have the option of
selecting its own legal counsel and conducting its own defense. In the event
that any such entity elects to do so, that separately represented defendant
shall pay its own separate attorney's fees as well as its pro rata share of
court costs and attorney's fees. In that circumstance, JCC and any separately
represented defendant or defendants shall each pursue the case as a separate
party, able to settle on behalf of itself and responsible for any judgment
entered against it. However, JCC may not agree to modify the Open Access Program
or any Open Access Plan without the approval of the New Orleans City Council.
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In the event of a judicial award of damages, attorney's fees and/or costs
against JCC and/or any City-related party or parties (other than a negotiated
settlement, a consent decree or an award against a separately represented
defendant) based on a claim that the Open Access Program or any Open Access
Plan, on its face or as applied to a particular party, is contrary to the
Fourteenth Amendment to the United States Constitution or otherwise constitutes
impermissible discrimination under any provision of state or federal law, the
total amount of such award or assessment shall be paid in equal amounts by JCC
and the City of New Orleans up to a total liability for the City of $125,000 per
year. Any liability over the amount of $5,000,000 per year shall be divided
between JCC and the City in the ratio of 80/20, with JCC bearing eighty percent
(80%). This allocation of financial responsibility shall apply to any such award
against JCC, the City, the Mayor, the New Orleans City Council, any of its
members, the RDC, or any of them, notwithstanding that either JCC or the City
may not itself be a party to the action. However, if the City is not a party to
the action, this financial allocation shall apply only if JCC directly notified
the Major, the New Orleans City Council and the RDC of the pending action in
writing within twenty (20) days of being served in the action. The City may
institute such arrangements, if any, as it deems appropriate for securing
reimbursement for any such payment from any of its affiliated parties (i.e., the
Mayor, the New Orleans City Council, any of its members, or the RDC), and any
such arrangements shall in no way qualify the obligation of the City under this
Open Access Program to make initial payment of its portion of the total award,
including attorney's fees and costs. Should the City fail to timely pay its
share of any such award, JCC shall have the option of making payment on the
City's behalf and withholding rent payments otherwise due in an amount equal to
the amount properly paid on the City's behalf.
The obligation of the City to pay its share of any such judicial award of
damages, attorney's fees and costs shall extend only to those judgments which
invalidate or otherwise award damages, attorney's fees or costs on the basis of
a provision or requirement of this Open Access Program or of any interim or
final Open Access Plans promulgated under this Open Access Program. Thus, the
City's financial obligation for a share of a judicial award, as described above,
shall not extend to judgments relating solely to the conduct of JCC employees or
agents, where no requirement or provision of the Open Access Program or of any
Open Access Plan is thereby called into question.
When any party (including JCC) makes a proposal to settle pending
litigation concerning the Open Access Program or any Open Access Plan, where JCC
is providing representation for itself and/or any City-related party, before
finally agreeing to such settlement proposal JCC shall submit it to the RDC for
its consideration. The RDC shall respond within fifteen (15) working days by
consenting or refusing to consent to the settlement. Absent express approval of
the settlement by the RDC, JCC shall agree to no revision of this Open Access
Program or any Open Access Plan as a condition of the settlement, and any amount
to be paid by JCC in settlement shall be the sole obligation of JCC. Any such
settlement entered without the express consent of the RDC shall pertain only to
JCC, and JCC shall bear no further responsibility for the representation of any
City-related parties (i.e., the City, the Mayor, the New Orleans City Council,
any of its members, or the RDC) in the matter.
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If this Open Access Program (or any portion thereof), or any Open Access
Plans adopted pursuant thereto are declared invalid by a final, non-appealable
judgment or consent judgment binding upon JCC and the City, then: (a) the
Amended and Restated Lease Agreement to which this Open Access Program is
attached as Exhibit "C" shall not terminate as a result thereof and instead
shall continue in full force and effect in accordance with its terms; and (b)
JCC shall prepare and present to the RDC and the New Orleans City Council an
alternative Open Access Program (or Open Access Plan, if such Open Access Plan
or one of its provisions has been invalidated) within sixty (60) days after the
date the judgment becomes final and nonappealable. Any such alternative Open
Access Program proposed shall be subject to the approval of the New Orleans City
Council pursuant to the New Orleans City Council's procedures for the adoption
of leases. Any alternative Open Access Plans proposed by JCC shall be submitted
to the New Orleans City Council for approval pursuant to the New Orleans City
Council's rules for adoption of motions. The purpose for such alternative Open
Access Program and/or Open Access Plans shall be to ensure that the Open Access
Program and/or Open Access Plans, as the circumstances require, conform to the
requirements of the final judgment of such court.
JCC shall, to the extent available from commercial insurers licensed to
issue such insurance in the State of Louisiana, obtain and maintain insurance in
the amount of $5,000,000 per occurrence, and $5,000,000 in the aggregate for
each policy year, with a deductible of $250,000 or such greater amount as from
time to time may be required by its insurer, insuring JCC against liability for
civil rights violations arising out of the Open Access Plans or Open Access
Program (the "OAP Risk").
JCC shall, subject to obtaining the cooperation of the RDC and the City in
completing all applications and providing all information required by JCC's
insurer, seek to obtain and maintain, at JCC's option, either: (a) an
endorsement to JCC's above described policy of insurance naming RDC and the City
as additional insured parties and waiving the insurer's rights of subrogation
against RDC and the City or (b) a separate policy of municipal liability
insurance naming the City and RDC as insured parties, and insuring the OAP Risk
of the City and RDC on the same or similar terms and coverage limits as above
described for JCC.
If the above insurance should become unavailable, available in lesser
amounts, or with greater deductibles or exclusions, or if the cost of such
insurance should increase materially above its current cost, JCC shall be
entitled to cease maintenance of such insurance or decrease the amount of, or
increase the exclusions from, coverage provided, as the case may be.
H. Interpretation
If any provision of this Open Access Program is contrary to, prohibited by,
or deemed invalid under any applicable law or regulation by final,
non-appealable judgment of a court of competent jurisdiction, then such
provision shall be deemed inapplicable and deemed omitted but shall not
invalidate the remaining provisions hereof.
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If the language of this Open Access Program is found to be ambiguous in any
way and if the ambiguity could be interpreted in such a manner as to render all
or any part of this Open Access Program invalid, then such ambiguous language
shall be construed, to the fullest extent possible, in a manner that will
support validity.
I. Modification
1. JCC will conduct an overall review and reassessment of the Open Access
Program, Open Access Plans and goals commencing no later than September 30,
2005, and concluding no later than June 30, 2006. Such an overall review and
reassessment shall be conducted every ten years thereafter, commencing no later
than September 30 each year ending in a "5" and concluding no later than June 30
of each year ending in a "6."
2. JCC will undertake reassessments of goals. The first reassessment will
be undertaken beginning in September, 2000 (to be completed no later than March
31, 2001). Such goal reassessments shall be undertaken beginning in September of
each year ending in a "0" and concluding no later than March 31 of each year
ending in an "1."
3. These reviews and reassessments shall be based upon methodology
comparable to that used by the NERA studies, as modified to accommodate the
then-controlling legal standards.
4. Any studies performed in connection with any goal reassessments under
this Part V, Subpart I shall be subject to the procedures set forth in Part I,
Subpart C of this Open Access Program (i.e., an RFP, the specified three-person
monitoring team, approval by the City Council and payment of fees and expenses
by JCC). If any review or reassessment of the Open Access Plans pursuant to Part
V, Subpart I(1) or (2) necessitates a modification of the goals or other aspects
of such Open Access Plans, JCC may submit amended Open Access Plans for approval
by the New Orleans City Council pursuant to the New Orleans City Council's rules
for the adoption of motions. Until such time as the modified Open Access Plans
shall have been submitted to and approved by the New Orleans City Council, the
Open Access Plans in effect prior to such modification shall remain in effect
pending the approval of such modified Open Access Plans. Similarly, this Open
Access Program shall remain in force until the City Council has adopted a new or
amended Open Access Program, pursuant to the City Council's procedures for the
adoption of leases.
J. Conclusion
JCC will pass through its Open Access Program obligations to Harrah's New
Orleans Management Company and/or any other casino operator, contractors and/or
vendors retained by JCC.
This document represents JCC's initial step in satisfying its commitment to
developing a comprehensive and quality Open Access Program. JCC's firm
commitment to the ideas of corporate responsibility involves the coordination
and linkage of resources to improve the quality of life for its employees and
the community. More importantly, JCC has set and will
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accomplish aggressive and realistic goals to ensure the participation of the
entire New Orleans community in the benefits to be derived from the casino
project.
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APPENDIX "A" TO THE OPEN ACCESS PROGRAM
LIST OF COMPLIANCE-ORIENTED EFFORTS FOR
CONSTRUCTION CONTRACTING
A. THE WORK:
A.1. Contracts. Where appropriate in light of the nature of work
to be performed and its relationship to other aspects of the
project, JCC will undertake to identify portions of the work
which may be performed by Open Access Participant firms (as
that term is defined in the Open Access Program) and will,
where economically feasible, break down contracts into work
or dollar units to facilitate MBE, WBE and DBE participation.
JCC shall look for such opportunities where the total amount
of a particular type of work to be done is large enough that
it can be profitably shared by multiple contractors and/or
subcontractors, and there is nothing inherent in the work
which requires it to be done by a single contractor and/or
subcontractor.
B. OUTREACH:
B.1. Open Access Participants. JCC has developed and will maintain
a directory of certified, qualified Open Access Participant
firms.
B.2. Community Resources. JCC shall use the services of available
minority and women's community organizations; minority and
women's contractors' groups; local, state and federal
minority and women's business assistance offices; disability
rights organizations; and other organizations that provide
assistance in the recruitment and placement of Open Access
Participant firms.
B.3. Advertisement for Recruitment. JCC shall advertise through
instrumentalities of the mass media which have a significant
audience in the minority community in an effort to recruit
Open Access Participant firms for certification and
contracting.
B.4. Joint Ventures. JCC shall encourage and facilitate the use of
joint ventures between Open Access Participant firms and
other contractors, as a means of expanding opportunities for
minority, women, and disadvantaged enterprises. JCC is
looking for such opportunities where the resources and
abilities of particular Open Access Participant firms will be
significantly complemented by association with one or more
majority contractors.
B.5. Technical Assistance. JCC shall make technical assistance
available to Open
<PAGE>
Access Participant firms in completing the application for
certification and in performance of the contract. The
certification application form will state that requests for
assistance in applying for certification should be directed
to the Certification Officer in JCC's Open Access Program
office. One-on-one consulting will be provided for
pre-construction and on-site assistance will be available in
specific areas such as construction management, contract
administration, cost control, scheduling and staffing.
Requests for assistance with regard to contract performance
should be directed to JCC's Open Access Program office or to
responsible personnel of the general contractor, who shall
make such requests known to JCC's Open Access Program office.
B.6. Bonding Assistance. Subcontractors which are unable to meet
the bonding requirements will nonetheless have their bids
considered by JCC and its general contractors, subject to
this Section B.6. Where an Open Access Participant firm,
based on all factors other than bonding capability, appears
to merit serious consideration for award of the contract, JCC
and its general contractors will discuss with the bidder its
ability to arrange bonding. Where they conclude that such a
bidder is or may be deserving of the award of a contract, but
that the bidder is unable to arrange bonding, or where a bond
can be secured only at a price appreciably above the New
Orleans average rate, JCC and its general contractors will
work to assist the bidder in satisfying the bonding
requirement. JCC believes and anticipates that, in most
cases, bonding difficulties can be overcome by a combination
of waivers (on some contracts under $200,000), assistance in
arranging appropriately priced bonding and arrangement of
financial assistance in funding the difference between the
market average premium and that quoted to the applicant.
B.7. Advertisement Regarding Subcontracting. Where appropriate,
JCC shall advertise in general circulation and trade
association publications, concerning subcontracting
opportunities, and will allow subcontractors reasonable time
to respond.
B.8. Written Notice Regarding Contracting and Subcontracting. JCC
shall take the necessary steps to provide written notice of
contracting and subcontracting opportunities in a manner
reasonably expected to notify Open Access Participants and
will allow sufficient time under the circumstances for them
to respond effectively.
C. BIDDING AND SELECTION.
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C.1. Pre-Award Meetings. Where appropriate, JCC shall schedule
pre-award, pre-bid, pre-proposal and/or pre-quote meetings to
inform Open Access Participant firms of prime contracting and
subcontracting opportunities, and to address issues relating
to the performance of those contracts.
C.2. Notice. JCC has established and will continue to utilize its
procedures to notify qualified Open Access Participant firms
of available opportunities separate and apart from pre-award,
pre-bid, pre-proposal and/or pre-quote conferences. These
procedures shall include when appropriate:
C.2.a. Written notice by certified mail to Open Access
Participant firms listed in the directory of
certified firms, at least thirty (30) days before a
pre-award, pre-bid, pre-proposal or pre-quote
conference;
C.2.b. Advertisements in the media described in Sections
B.3. and B.7., above, at least thirty (30) days
prior to a scheduled pre-award, pre- bid,
pre-proposal or pre-quote conference;
C.2.c. JCC will follow up initial indications of interest
by contacting Open Access Participant firms to
determine with certainty whether they are
interested in bidding;
C.2.d. Advertising contracting and subcontracting
opportunities in trade association publications and
publications targeted specifically to minorities
and women, at least thirty (30) days prior to a
scheduled pre-award, pre-bid, pre-proposal or
pre-quote conference;
C.2.e. Setting bid dates to give qualified Open Access
Participant firms adequate time to prepare bids,
quotes and/or proposals after pre-award, pre-bid,
pre-proposal or pre-quote conferences have been
held.
C.3. Information. JCC shall provide interested Open Access
Participant firms with adequate information about the plans,
specifications and requirements of the contract or
subcontract.
C.4. Notice to Newcorp. JCC shall provide Newcorp with bid
specifications, plans and/or contract requirements, when
appropriate, at least thirty (30) days prior to the bid or
response date.
C.5. Good Faith Negotiation. JCC will negotiate in good faith with
interested Open Access Participant firms and will not reject
Open Access Participant firms as unqualified without sound
business reasons based on a thorough investigation of their
capabilities.
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C.6. Contact Records. JCC shall maintain the following records for
each Open Access Participant firm which submits a bid or is
contacted by JCC:
C.6.a. Name, address, telephone number.
C.6.b. Description of information JCC provided.
C.6.c. A statement of whether JCC and the Open Access
Participant firm reached agreement, and if not, why
not.
C.7. Disqualification. If JCC rejects an Open Access Participant
firm as unqualified, JCC will maintain a written record of
its reason(s).
C.8. Participation Records. JCC will maintain a written record of
each general contract and each subcontract, the dollar value
of each general contract or subcontract, and the
certification status of each general contractor and each
subcontractor.
C.9. Changes in Contracts with Non-Open Access Participant Firms.
JCC shall strive to ensure that there are no changes to
construction contracts or subcontracts with majority-owned
firms that deprive MBE or WBE firms of a fair opportunity to
participate in the bidding process for such contracts or
subcontracts. JCC will give notice to the RDC of any such
change and will investigate any complaints by MBE or WBE
firms relating to any such changes.
C.10. Notice of Changes in Contracts with Open Access Participant
Firms. JCC shall strive to ensure that there are no
reductions in the price or scope of work of a contract
awarded to an MBE or WBE firm that is inconsistent with the
objectives of the Open Access Program, as stated in Part I,
Subpart B thereof. JCC will give notice to the RDC of any
reductions in the price or scope of work of MBE or WBE
contracts. JCC will investigate any complaints by MBE or WBE
firms relating to reductions in the price or scope of work of
their respective contracts.
C.11. Replacement of Contracts with Open Access Participant Firms.
JCC shall strive to ensure that majority-owned firms are not
substituted for contracted MBE or WBE firms in a manner that
is inconsistent with the objectives of the Open Access
Program as stated in Part I, Subpart B thereof. JCC will give
notice to the RDC of any substitution of a majority-owned
firm for an MBE or WBE. JCC will investigate any complaints
by MBE or WBE firms relating to substituting majority-owned
firms for them.
D. CONTRACT CONTENT AND ADMINISTRATION.
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D.1. Administration. JCC shall emphasize to contractors and
subcontractors the significance of Open Access goals.
D.2. Bonding Assistance. JCC shall continue to administer its
bonding assistance program described in Part II, Subpart N of
the Open Access Program and in the Amended and Restated Open
Access Plans.
D.3. Prompt Payment Policy. JCC has adopted and shall continue to
implement and enforce a Prompt Payment Policy for all
contractors and vendors employed in constructing the Casino.
JCC agrees to pay its general contractors and vendors within
ten (10) days of their submission of verifiable invoices for
services and/or goods. JCC requires that its prime
contractors pay their subcontractors and suppliers within
five (5) days thereafter, and that subcontractors pay their
subcontractors and suppliers within five (5) days thereafter.
Any contractor, subcontractor, supplier or vendor who
believes that JCC has failed to comply with this prompt
payment policy should report that to JCC's Construction
Accounting Manager or his or her successor.
D.4. Assistance to Newcorp. JCC shall make reasonable efforts to
encourage and assist Newcorp's Board of Directors.
D.5. Certification. JCC shall arrange for the certification of all
potential contractors and subcontractors before a contract or
subcontract is executed, by reaching its decision on
certification of an applicant no later than fifteen (15) days
after receipt of a completed certification application;
however, the parties recognize that it may sometimes be
impractical, due to a combination of factors, to do so. Under
those circumstances, JCC shall strive to complete the review
of a certification application no later than fifteen (15)
days after the contract is executed or work commences,
whichever comes first. Any contractor that is not certified
before the end of a given quarter shall not be counted
towards the achievement of JCC's MBE or WBE goals for that
particular quarter.
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APPENDIX "B" TO THE OPEN ACCESS PROGRAM
LIST OF COMPLIANCE-ORIENTED EFFORTS FOR
CONSTRUCTION EMPLOYMENT
A. OUTREACH:
A.1. JCC shall utilize the services of official public agencies
responsible for recruitment and placement of Orleans Parish
residents.
A.2. In its recruiting processes and requests, JCC shall notify
all JCC contractors and subcontractors in writing of JCC's
residency and Open Access Participant goals (as that term is
defined in the Glossary to the Open Access Program), and, if
possible, shall require contractors and subcontractors to
adopt the same hiring goals as JCC has adopted in its Amended
and Restated Open Access Plan for Construction Employment,
for all projects conducted by JCC.
B. MANAGEMENT:
B.1. Advisory Committee. JCC has appointed and will continue to
maintain a Casino Construction Advisory Committee composed of
business, community and university representatives, as well
as representatives of JCC. Some of these Casino Construction
Advisory Committee members may be members of other advisory
committees that have been or will be created under the Open
Access Program, but the membership of the advisory committees
shall not completely overlap. This Advisory Committee shall
at all times have a minimum of five (5) members. (See
Addendum B to the Amended and Restated Open Access Plans).
This Advisory Committee will meet at least quarterly to
review progress in pursuing the objectives of the Open Access
Program with regard to both employment and contracting in
connection with the construction of the Casino.
B.2. Compliance Monitoring. JCC shall monitor its general
contractors, subcontractors and unions for compliance with
the construction employment provisions of the Open Access
Program and Amended and Restated Open Access Plans. JCC's
monitoring will include at least quarterly review of a
general contractor's or subcontractor's success in meeting
Amended and Restated Open Access Plan employment goals, and,
where those goals have not been met, a review of the records
of JCC's general contractors', subcontractors', and unions'
efforts to meet those goals.
B.3. JCC's monitoring shall include the following actions:
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B.3.a. Desk audits to review material and information
concerning the general contractors',
subcontractors' and unions' compliance;
B.3.b. On-site reviews that include interviews, visits to
the construction site, and inspection of documents
and/or information not available at the desk audit
that pertain to the general contractors',
subcontractors' and unions' compliance;
B.3.c. Additional investigations by JCC that may be
necessitated by a lack of proper record keeping,
failure of the general contractor, subcontractor,
or union to cooperate, visible evidence of
unsatisfactory performance, or other evidence as
may indicate the need for further investigation;
B.3.d. Investigation of credible allegations that a union
hiring hall has refused to register or refused to
refer a person who came to the union hiring hall
for registration.
B.4. Regularly scheduled meetings among representatives of Mayor's
Office of Small and Emerging Business Development (or its
successor), the RDC and JCC will be held every month, unless
more frequent meetings are needed, to review the information
described in Sections D.1 through D.4, and E.3 of this
Appendix, below.
B.5. Meetings among representatives of the RDC, the City Council,
unions, general contractors and JCC will be scheduled every
six (6) weeks.
C. CONTRACTORS AND SUBCONTRACTORS:
C.1. Memorandum of Understanding. JCC has entered into and will
maintain a Memorandum of Understanding with each general
contractor, requiring the contractor to comply with all
obligations imposed by the Open Access Program and Amended
and Restated Open Access Plans. (See Addendum C to the
Amended and Restated Open Access Plans). JCC has and will
continue to communicate to each general contractor, and will
ensure that each general contractor includes a clause in each
subcontract requiring subcontractors to do the same things
that the prime contractor must do under the Memorandum of
Understanding. Copies of such written communications shall be
maintained in the files of JCC.
C.2. In the event JCC believes that any contractor or
subcontractor is in violation of the Memorandum of
Understanding with respect to hiring, based upon the
availability of Open Access Participants in the trades and
occupations used
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by that contractor or subcontractor, as measured by the
disaggregated NERA data set forth in the NERA Study, then JCC
will pro-actively assist that contractor or subcontractor to
improve their performance.
D. PROJECTIONS OF HIRING NEEDS:
D.1. JCC and its general contractors will identify the unions and
subcontractors that have not recruited minority and
non-minority women craft workers at the level of actual
availability for the craft involved and will pro-actively
assist them in doing so.
D.2. The general contractors and JCC will supply monthly and
quarterly projections for the particular number of persons
needed, by craft and trade, on anticipated dates, and this
information will be regularly updated. These projections will
be produced by "manloading" the hours and trades on the
Primavera and other software.
D.2.a. These projections will cover new construction,
maintenance, and renovations.
D.2.b. JCC will widely distribute the projections to
subcontractors, potential subcontractors,
vocational-technical schools and other training
programs, and potential employees via the community
outreach methods described in the Amended and
Restated Open Access Plans and via the methods
described in Section E.6. through E.9. of this
Appendix, below.
D.3. Both subcontractors and unions will supply to JCC specific
information regarding their performance. JCC will supply
specific information about recruitment and hourly employment,
by craft, to the City and the RDC. Also, JCC and the general
contractors will inform the unions of the specific effects of
particular subcontractors keeping their supervisory personnel
in place.
D.4. JCC and the general contractors will produce and report to
the City and the RDC the information identified in sections
D.1. through D.3. of this Appendix, above, as follows: (a)
monthly during the construction of the Casino-Phase I (as
defined in the Amended and Restated General Development
Agreement); (b) for any employment category for which JCC has
failed to meet the goal during construction of the
Casino-Phase I, monthly until JCC has achieved the
B-3
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goal in that employment category for two (2) consecutive
quarters; and (c) after the Casino-Phase I is completed,
quarterly, except that if JCC fails to achieve the goal in
any employment category in a quarter, the reporting on the
items specified in sections D.1. through D.3. above shall be
monthly until such time as JCC has achieved the goals in that
employment category for two (2) consecutive quarters, after
which reporting will return to quarterly (any subsequent
failure to achieve the employment goals in such category will
similarly result in a change to monthly reporting, to revert
to quarterly as specified in this subsection D.4(c)).
However, for any construction or renovation projects
undertaken after the opening of the Casino, the information
identified in Sections D.1. through D.3. of this Appendix,
above, shall be reported to the City Council and the RDC on a
monthly basis, unless the parties agree otherwise by amending
this provision.
E. UNIONS:
E.1. Union Compliance with Open Access Program. JCC will require
any union which is a signatory to the Project Agreement to
adhere to the requirements of the Open Access Program and the
Amended and Restated Open Access Plans. (See the Project
Agreement, attached as Addendum D to the Amended and Restated
Open Access Plans.) The Project Agreement shall not foreclose
any subcontractor without a collective bargaining agreement
from assigning supervisory personnel to perform work
otherwise covered under the Project Agreement if those
supervisory employees (a) have been employed by the
subcontractor within the prior one hundred twenty (120) days,
and (b) have registered with the respective craft unions.
E.2. Union Referrals. JCC shall specify that the union's opinion
of an applicant's qualifications, or lack thereof, shall not
be a ground for refusal to refer the applicant. In referring
all applicants, the union may provide to the contractor a
written statement of whether it finds the applicant qualified
or unqualified and if it finds the applicant unqualified, it
shall provide a full statement of the reasons why. Each union
shall also post a notice in a prominent location on the wall
of its hiring hall that states that it may not require union
membership as a condition of referral for employment. (See
Addendum D of the Amended and Restated Open Access Plans).
E.3. Union Reporting. JCC will require any union which is a
signatory to the Project Agreement to report to JCC at the
end of each calendar month on the names, race, gender and
disabled status (if known) of: (a) all persons, whether or
not union members, who come to the hiring hall to register
for referral for work on the Casino, including the date when
such request for registration occurs and the disposition of
that request; (b) all persons on the list of names from which
referrals for work on the Casino will be drawn, set forth in
order of priority for referral; and (c) all persons actually
referred by the union hiring hall for work on the Casino. JCC
shall also require the union to report at the end of each
calendar month on the reasons for the union failing to refer
for employment any Minority Individuals, women or Persons
B-4
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with Disabilities who have come to the hiring hall for
registration or referral. Copies of the written materials
submitted to JCC by any union in connection with the
requirements of this Section E.3. will be furnished to the
RDC within fourteen (14) days (or sooner if practical under
the circumstances) after they are received by JCC.
E.4. Right to Work. When recruiting workers for the construction
projects, JCC will make reasonable efforts to inform them
that the union may not require them to be members of the
union in order to be referred for employment, and that they
can contact JCC's compliance officer if they encounter
difficulties in their attempts to register with a union
hiring hall.
E.5. The Union Review Council, along with an RDC representative,
will meet weekly (in person or by conference call) to review
any and all complaints regarding the implementation of the
Amended and Restated Open Access Plans.
E.6. JCC will designate persons who will function to monitor union
activity on a weekly basis.
E.7. JCC and the unions will be pro-active and will work
aggressively with vocational-technical schools and other
training programs to recruit members of minority groups and
non-minority women. The unions will designate specific
persons to perform these outreach functions.
E.8. The general contractors, JCC and the unions will prepare
educational materials and make presentations to potential
employees regarding their obligations to the unions, to the
employer and others.
E.9. There will be additional outreach efforts by JCC and the
unions via the State Employment Service and the radio
stations and newspapers that service the African-American
community and female audiences. These efforts will include
increased contacts with churches and religious organizations,
community-based organizations and minority trade groups.
B-5
<PAGE>
APPENDIX "C" TO THE OPEN ACCESS PROGRAM
LIST OF COMPLIANCE-ORIENTED EFFORTS FOR
OPERATIONS CONTRACTING
A. THE WORK:
A.1. Contracts. Where appropriate in light of the nature of work
to be performed and its relationship to other aspects of the
project, JCC shall identify portions of the work which may be
performed by Open Access Participant firms (as that term is
defined in the Open Access Program) and will, where
economically feasible, break down contracts into work or
dollar units to facilitate MBE, WBE and DBE participation.
JCC shall look for such opportunities where the total amount
of a particular type of work to be done is large enough that
it can be profitably shared by multiple contractors and/or
subcontractors, and there is nothing inherent in the work
which requires it to be done by a single contractor and/or
subcontractor.
B. OUTREACH:
B.1. JCC shall schedule pre-award, pre-bid, pre-proposal and/or
pre-quote meetings to advise Open Access Participant firms of
contracting, subcontracting and procurement opportunities.
B.2. JCC has developed and will maintain a directory of qualified,
certified Open Access Participant firms.
B.3. JCC has established and will maintain procedures to notify
qualified Open Access Participant firms of available
opportunities separate and apart from pre-award, pre-bid,
pre-proposal and/or pre-quote conferences, including, when
appropriate:
B.3.a. Written notice by certified mail to Open Access
Participant firms listed in the directory of
certified firms, at least thirty (30) days before a
pre-award, pre-bid, pre-proposal or pre-quote
conference;
B.3.b. Advertisements in targeted media at least thirty
(30) days prior to a scheduled pre-award, pre-bid,
pre-proposal or pre-quote conference;
B.3.c. Following up initial indications of interest by
contacting Open Access Participant firms to
determine with certainty whether they are
interested in bidding;
<PAGE>
B.3.d. Advertising contracting and subcontracting
opportunities in trade association publications and
publications targeted specifically to minorities
and women, at least thirty (30) days prior to a
scheduled pre-award, pre-bid, pre-proposal or
pre-quote conference;
B.3.e. Setting bid dates to give qualified Open Access
Participant firms adequate time to prepare bids,
quotes and/or proposals after pre-award, pre-bid,
pre-proposal or pre-quote conferences have been
held.
B.4. Information. JCC shall provide Open Access Participant firms
with adequate information about the plans, specifications
and/or requirements of all contract opportunities.
B.5. When appropriate, JCC shall provide Newcorp with bid
specifications, plans and/or contract requirements, at least
thirty (30) days prior to the bid or response date.
B.6. Community Resources. JCC has and will continue to use the
services of available minority and women's community
organizations; minority and women's contractors' groups;
local, state and federal minority and women's business
assistance offices; disability rights organizations; and
other organizations that provide assistance in the
recruitment and placement of Open Access Participant firms
and in the recruitment of firms eligible for certification as
Open Access Participant firms.
B.7. Preliminary Meetings. JCC shall hold preliminary meetings to
inform interested Open Access Participant firms of service
and supply contracting opportunities.
B.8. Follow-Up. JCC shall follow up initial indications of
interest by contacting Open Access Participant firms to
determine with certainty whether they are interested in
obtaining service or supply contracts.
B.9. Advertisement. Where appropriate, JCC shall advertise in
general circulation and trade and professional association
publications, concerning service and supply contracting
opportunities, and will allow contractors reasonable time to
respond.
B.10. Written Notice. JCC shall take the steps necessary, when
reasonable time constraints permit to provide written notice
of service and supply contracting opportunities to Open
Access Participant firms, as well as companies that have
begun the certification process, and shall allow sufficient
time for them to participate effectively.
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B.11. Joint Ventures. JCC shall encourage and facilitate the use of
joint ventures between Open Access Participant contractors
and other contractors, as a means of expanding opportunities
for Open Access Participant firms. JCC will continue to look
for such opportunities where the resources and abilities of
particular Open Access Participant firms will be
significantly complemented by association with one or more
majority-owned contractors.
C. BIDDING AND SELECTION.
C.1. Good Faith Negotiation. JCC shall negotiate in good faith
with interested Open Access Participant firms and will not
reject an Open Access Participant firm as unqualified without
sound business reasons based on a thorough investigation of
its capabilities.
C.2. Disqualification. If JCC rejects an Open Access Participant
firm as unqualified, JCC will maintain a written record of
its reason(s).
C.3. Participation Records. JCC shall maintain a written record of
each supply and service contract, the dollar value of each
contract, and the MBE or WBE status of each contractor or
subcontractor.
C.4. Changes in Contracts with Open Access Participant Firms. JCC
shall strive to ensure that there are no changes to commodity
or service contracts or subcontracts with majority-owned
firms that deprive MBE or WBE firms of a fair opportunity to
participate in the bidding process for such contracts or
subcontracts. JCC will give notice to the RDC of any such
change and will investigate any complaints by MBE or WBE
firms relating to any such changes.
C.5. Notice of Changes in Contracts with Open Access Participant
Firms. JCC shall strive to ensure that there are no
reductions in the price or scope of work in a contract
awarded to an MBE or WBE firm that are inconsistent with the
objectives of the Open Access Program, as stated in Part I,
Subpart B thereof. JCC will give notice to the RDC of any
reductions in the price or scope of work of MBE or WBE
contracts. JCC will investigate any complaints by MBE or WBE
firms relating to reductions in the price or scope of work of
their respective contracts.
C.6. Replacement of Contracts with Open Access Participants. JCC
shall strive to ensure that majority-owned firms are not
substituted for contracted MBE or WBE firms in a manner that
is inconsistent with the objectives of the Open Access
Program, as stated in Part I, Subpart B thereof. JCC will
give notice to the RDC of any substitution of a
majority-owned firm for an MBE or WBE. JCC will investigate
any complaints by MBE or WBE firms
C-3
<PAGE>
relating to substituting majority-owned firms for them.
D. CONTRACT CONTENT AND ADMINISTRATION.
D.1. Bonding Assistance. JCC shall continue to administer its
bonding assistance program, described in Part II, Subpart N
of the Open Access Program and in the Amended and Restated
Open Access Plans.
D.2. Prompt Payment Policy. JCC has adopted and shall continue to
implement and enforce a Prompt Payment Policy for all
contractors and vendors. Where a supply or service contractor
with capitalization of less than $300,000 can demonstrate to
JCC an actual need for payment in less than thirty (30) days
for such supply or service contract, JCC will pay said
contractor within twenty (20) days of its submission of
verifiable invoices for supplies or services. Any supplier or
service contractor who has such an understanding with JCC and
believes that JCC has failed to comply with its prompt
payment commitment should report that to JCC's Accounts
Payable Manager.
D.3. Contact Records. JCC maintains and will continue to maintain
the following records for each Open Access Participant firm
that submits a proposal or is contacted by JCC regarding
service or supply contracts:
D.3.a. Name, address, telephone number.
D.3.b. Description of information JCC provided.
D.3.c. A statement of whether JCC reached agreement with
the Open Access Participant firm, and if not, why
not.
C-4
<PAGE>
APPENDIX "D" TO THE OPEN ACCESS PROGRAM
LIST OF COMPLIANCE-ORIENTED EFFORTS FOR
OPERATIONS EMPLOYMENT
A. OUTREACH:
A.1. JCC shall utilize the services of official public agencies
responsible for recruitment and placement of Orleans Parish
residents, such as the State Employment Service.
A.2. JCC shall notify all JCC contractors and subcontractors in
writing of JCC's residency goals and Open Access Participant
(as this term is defined in the Glossary of the Open Access
Program) goals and will request, and, if possible, require
that contractors and subcontractors adopt the same hiring
goals as JCC has under the Amended and Restated Open Access
Plan for Operations Employment.
A.3. JCC shall continue to develop, implement and monitor
accredited training programs to train potential casino
employees, emphasizing training for Orleans Parish residents
for purposes of meeting JCC's Open Access Participant goals.
The content of these training programs shall be made
available to the RDC for review, when requested within a
reasonable time frame.
A.4. JCC shall develop, implement, and monitor special efforts to
recruit African- American male participants to be trained in
JCC's training program. This includes working with the
Opportunity Industrialization Center, the National Council of
Negro Women and the Urban League to assist in conducting Life
Skills Training for the disadvantaged. JCC will also seek the
assistance of several organizations in the recruitment of
African-American men. Those organizations include: the
Coalition of 100 Black Men; the Zulu Social Aid & Pleasure
Club; the Dryades Street YMCA and the graduate chapters of
several Black fraternities (Alpha Phi Alpha, Kappa Alpha Psi,
Omega Psi Phi and Phi Beta Sigma).
A.5. JCC shall make special efforts to select applicants from
among Project Independence participants to be trained in
JCC's training program.
A.6. JCC shall not use irrelevant or unnecessary application
criteria which negatively impact recruitment of Minority
Individuals, Disadvantaged Individuals or women.
<PAGE>
A.7. Persons with Disabilities. JCC will continue relationships
with agencies that provide services to Persons with
Disabilities for the purpose of identifying job opportunities
with the Casino for which Persons with Disabilities are
qualified or may become qualified with reasonable
accommodation. JCC will seek assistance from such
organizations, as a recruiting source for potential employees
and as a source of information about potential employees with
disabilities, and it will otherwise work to enhance
employment opportunities for Persons with Disabilities.
A.8. Dissemination of Information on Employment Needs of the
Casino. JCC will widely distribute information on employment
opportunities at the Casino to institutions of higher
learning, skills training centers, religious organizations,
community centers and organizations. JCC will make follow-up
contacts with each organization. JCC will also, as needed,
use mass media to advertise employment opportunities. It will
advertise through a number of newspapers and radio stations
with substantial African-American audiences -- e.g., The
Louisiana Weekly, The New Orleans Data News Weekly, The New
Orleans Tribune, WYLD, WBOK, B97 and WQUE (Q93). Likewise,
JCC will use television announcements with the same focus.
A.9. Supervisory and Professional Recruitment. JCC's recruitment
effort for its supervisory and professional positions will
include colleges, universities, and alumni offices of schools
which are likely to have students or alumni who are women or
minorities (e.g., historically black colleges and all-female
schools).
A.10. Independent Training Agencies. Beginning with the
construction of the Casino-Phase I (as defined in the GDA),
JCC will conduct a variety of activities aimed at assisting
skills training centers, Open Access Participant firms and
others in establishing programs to train workers for jobs
existing at the Casino. JCC will describe the employment
needs of the Casino and provide direction and guidance in
formulating appropriate training programs for persons seeking
employment there. JCC will also identify teachers and/or
employees who are willing to work in training programs.
A.11. Internships. In order to identify highly qualified
individuals interested in pursuing full-time careers with
Harrah's, JCC will institute an internship program for
college and university students. This program will utilize
part-time employment to provide participants with exposure
and learning opportunities under the close supervision of an
internship manager. The internship program will utilize a
learning plan tailored to each intern's areas of activity and
interests and each intern's performance will be evaluated.
The internship program will be consistent with age
requirements of state statutes and regulations relating to
casino employment.
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<PAGE>
A.12. Internship Recruitment. JCC will continue to recruit interns
from a number of local institutions of higher learning that
have a substantial enrollment of Minority Individuals and/or
women.
A.13. Selection for Training. JCC has developed written criteria
for use in considering applicants for the internship and
training programs, which are attached to the Amended and
Restated Open Access Plans as Addendum G. JCC will submit any
revisions of these criteria to the City Council for approval.
In pursuing these internship and training programs, JCC shall
utilize aggressive measures to recruit prospective employees
from communities with high unemployment rates, which measures
shall include visits to schools, community organizations,
businesses, employment agencies and places frequented by the
chronically unemployed. Applicants must meet any requirements
imposed by the State of Louisiana for the position involved.
A.14. Recruiting Sources. JCC has and will maintain regular
communications with major recruiting sources, including those
focusing on employment of Minority Individuals, women and
persons with disabilities, as well as community agencies,
community leaders, churches and other religious organizations
with predominantly African-American membership, high schools,
vocational and technical schools, junior colleges and
colleges with a substantial number of African-American and/or
women students and the Louisiana State Employment Service.
JCC will encourage these sources to actively recruit and
refer Minority Individuals, women and persons with
disabilities for all positions for which the Casino hires.
A.15. Employment Advertisements. Placement of advertisements for
employment include electronic (where appropriate) and
newsprint media of special interest to minority audiences. If
groups of persons are pictured in employment advertisements,
members of both minority and non-minority groups, men and
women and Persons with Disabilities will be included. All
employment advertisements shall contain the phrase "An Equal
Opportunity Employer. Applicants for Employment will be
Considered without regard to Race, Color, Religion, Sex,
Sexual Preference, National Origin or Physical Handicap."
A.16. General Advertisements. JCC's general advertising will
continue to feature both employees and non-employees. It
shall also include members of both minority and non-minority
groups, men and women, as well as Persons with Disabilities.
A.17. Review of Position Descriptions. JCC has reviewed all
position descriptions to ensure that they accurately reflect
the duties performed. JCC shall review all selection criteria
on an ongoing basis to ensure that they are job-related
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<PAGE>
and non-discriminatory.
A.18. Recruiting. JCC will continue to interface with placement
departments of vocational, trade and business schools as well
as universities in the New Orleans area to present job
placement seminars at which applications will be distributed.
In particular, JCC shall recruit at local colleges and
secondary schools that have entirely or primarily women
student enrollments or women alumnae.
A.19. Job Fairs. JCC, independently or in conjunction with other
agencies and/or employers, shall continue to conduct job
fairs aimed at recruiting women in different areas of New
Orleans where applications will be distributed and collected.
JCC shall designate persons to direct these intensified
outreach efforts.
A.20. Benefits Advertising. JCC will engage in an ongoing
substantive print media and television campaign emphasizing
its Child Care, Education Assistance and Home Ownership
Programs. The publications selected will be those likely to
be read by women.
A.21. Encouragement of Contractors and Subcontractors. In the event
JCC believes that any contractor or subcontractor is in
violation of the goals with respect to hiring, based upon the
availability of Open Access Participants in the trades and
occupations used by that contractor or subcontractor (as
measured by the disaggregated NERA data), then JCC will work
pro-actively to assist that contractor or subcontractor to
improve its performance.
B. HIRING:
B.1. Employment Application. JCC's employment application does and
will continue to set forth prominently words communicating
JCC's policy of equal opportunity employment.
B.2. JCC shall not use irrelevant or unnecessary application or
hiring criteria which negatively impact the hiring of
Minority Individuals, Disadvantaged Individuals or women.
B.3. All JCC and HNOMC officials and staff members involved in the
hiring process have been and will continue to be given
training in accomplishing equal opportunity employment. This
training will include, but not be limited to, cultural and
sensitivity training and a complete explanation of the
philosophy behind, purposes of, and operation of the Open
Access Program and the Amended and Restated Open Access
Plans.
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<PAGE>
C. ON THE JOB:
C.1. Career Development. JCC will continue to pursue a
multi-faceted program of career development which can be
expected to produce substantial opportunities for Open Access
Participants. At the heart of this program is the annual
performance appraisal given to each employee, during which
career development possibilities are discussed and the
employee's performance during the year is assessed. JCC will
regularly utilize several specific types of career
development techniques, depending on the performance and
inclinations of individual employees, and upon the needs of
the business for persons with particular skills or abilities.
C.2. Comprehensive Training Plan. JCC shall fully implement its
comprehensive written training plan, which is attached as
Addendum F to the Amended and Restated Open Access Plans.
C.3. Performance Enhancement Training and On-the-Job Training.
JCC, at its own expense, and during an employee's paid work
time, shall make available a variety of classroom and other
training programs to enhance the knowledge and skills of
present employees with regard to the jobs that they presently
fill. Such training will be undertaken on a routine basis.
C.4. Apprenticeships. JCC shall utilize apprenticeships in order
to provide accelerated cross-occupational training to persons
in occupational areas outside of those in which they
presently work. These apprenticeships will utilize a
combination of classroom training, on-the-job training and
mentoring, in order to develop job skills in occupations
which may be new for the employees involved. Typically, these
apprenticeships will be directed toward preparation for
positions which are promotions (i.e., increases in
responsibility and compensation) from the apprentice's
current position.
C.5. JCC shall utilize apprenticeship as a preferred method for
filling higher level positions in the Casino. During the
pre-opening phase of the Casino, JCC will utilize
apprenticeship in the form of its Fast-Track program, through
which gaming employees are given appropriate training under
the guidance of a mentor and moved on an accelerated basis
into gaming supervisory positions. During the initial phase
of operations, JCC's Dual Rate Supervisor program will
utilize apprenticeship in a different form. This program will
allow promising employees, working under the personal
guidance of a Table Games Manager, to begin performing
supervisory duties on a part-time basis, while continuing to
perform their regular duties at other times. The content of
the referenced programs and any successor or related programs
shall be made available to the RDC for review when asked for
on a reasonable time frame.
D-5
<PAGE>
C.6. JCC expects to utilize apprenticeships in filling supervisory
positions starting at the end of Casino-Phase I, and it
believes that such apprenticeships will offer a significant
opportunity for advancement for Open Access Participants. JCC
likewise expects to make regular use of apprenticeships to
fill supervisory and other positions in the future.
C.7. JCC will establish and maintain a lay-off policy that
operates evenhandedly.
C.8. Policy Statements. JCC shall continue its practice of
providing all Casino employees with copies of the employee
handbook, which includes JCC's equal employment opportunity
and Open Access policies. The policies shall continue to be
included in the Supervisor's Manual.
C.9. Publications. JCC's equal employment opportunity and Open
Access policies shall continue to be featured periodically in
the employee newspaper. In addition, JCC's Open Access
activities in the New Orleans metropolitan community will be
periodically presented to employees through existing JCC news
media, special bulletins and brochures.
C.10. New Employee Orientation. JCC's commitment to equal
employment opportunity shall be presented as a part of the
orientation programs for all new employees.
C.11. Bulletin Boards. JCC's equal employment opportunity policy
and current and anticipated job openings shall be posted on
appropriate bulletin boards.
C.12. Posters. The required equal employment opportunity posters
will be prominently displayed in conspicuous places in the
Casino and in employment and testing areas.
C.13. Job Posting. JCC shall continue its job posting plan, which
includes professional and supervisory vacancies up to the
director level. Under this plan, openings are posted and any
employee may apply in writing. Counseling is available to all
employees concerning the enhancement of their qualifications
for desired opportunities.
C.14. Training for Advancement. JCC shall regularly monitor its
training programs to ensure Open Access Participants are
given equal access to all developmental training designed to
enhance an employee's ability to assume positions of greater
responsibility.
C.15. Tuition Refund Program. JCC shall continue to make available
a Tuition Refund Program for all full-time employees with one
(1) year of service. JCC will encourage minority employees,
women employees and employees
D-6
<PAGE>
with disabilities to participate in the Tuition Refund
Program. At new employee orientation sessions, the program
shall be explained and employees will be encouraged to
consider furthering their education.
C.16. Facilities. All work areas, cafeterias, rest and recreational
areas and other facilities shall be maintained on a
non-discriminatory basis.
C.17. Employee Counseling. Counselors shall be available on
reasonable request to work with an employee concerning
personal or work-related problems.
C.18. Support of Community Programs. JCC has recognized its role as
a corporate citizen in the New Orleans metropolitan
community, and it will continue its leadership through
programs designed to improve the socio-economic status of
disadvantaged persons and to eliminate discrimination in
employment. Among other actions, JCC shall:
C.18.a. encourage employees to work with and serve on the
advisory boards of various community self-help
groups;
C.18.b. encourage executives and managers to act as
advisers, members of boards of directors and fund
raisers and in various other capacities for
community organizations;
C.18.c. participate in and, where practical, sponsor
seminars for the business community on equal
employment opportunity and Open Access for
Minorities Individuals, women and Persons with
Disabilities; and
C.18.d. encourage its employees to spend personal time to
aid in the solution of urban and community
problems.
C.19. Accommodation to Physical and Mental Circumstances of Persons
with Disabilities. JCC shall make reasonable accommodation to
the physical and mental circumstances of qualified employees
or applicants with known disabilities, to the extent that it
is made aware of the need for such accommodation and the
accommodation does not impose an undue hardship on JCC.
C.20. Work Environment. JCC shall not tolerate the intimidation,
harassment or reprisal against minority or women employees or
employees with disabilities. Any employee who wishes to file
a complaint concerning an alleged violation of this policy
may do so by submitting it in writing to the Human Resources
Department. (See Addendum I to the Amended and Restated Open
Access
D-7
<PAGE>
Plans).
C.21. Employee Assistance Program. JCC has put in place and will
continue to maintain an employee assistance program having
two (2) components:
C.21.a. Child Care and Child Development Program. The
specific provisions of the Child Care Program are
set forth at Addendum N of the Amended and Restated
Open Access Plans. The Child Care Program shall be
in operation by the date any employees are hired to
work in the Casino operations or the date such
employees begin their training, whichever comes
first.
C.21.b. Home Ownership Program. JCC shall have in place a
home ownership program for employees with a
household income of $25,000 or less who have been
full-time employees for at least one (1) year from
their date of hiring. JCC will assist such
employees by contributing $1,000 and other
financial assistance to the down payment on a home
for first time home buyers.
C.22. Youth Employment Program. JCC has undertaken and will
continue to undertake to identify employment opportunities
for unemployed youth in the New Orleans area, will coordinate
with Newcorp to assist in starting businesses in which the
youth of New Orleans may play a role, and will work closely
with public and private concerns in providing training and
assistance to young residents of the New Orleans area.
C.23. JCC will develop the internships for women students,
described in the Amended and Restated Open Access Plans, see
Part III, Subpart A.4.g., which will be consistent with
state-mandated age requirements for casino employment.
D. MANAGEMENT:
D.1. JCC shall maintain documentation of applications by Open
Access Participants, including at a minimum:
D.1.a. names, addresses, and telephone numbers of Open
Access Participant applicants who were contacted,
D.1.b. description of information provided to those Open
Access Participants, and
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<PAGE>
D.1.c. a statement of why they were not hired (if they
were not).
D.2. Advisory Committee. JCC shall continue to maintain a Casino
Employment Advisory Committee to be composed of business,
community and university representatives with relevant
expertise to serve along with appropriate representatives of
JCC. This Advisory Committee shall at all times be composed
of a minimum of five (5) members. (See Addendum O to the
Amended and Restated Open Access Plans). Some of these
Advisory Committee members may be members of other advisory
committees that have been or will be created under the
Amended and Restated Open Access Plans, but the membership of
the advisory committees will not completely overlap. This
Advisory Committee will meet at least quarterly to review and
assist with JCC's efforts in the employment of Minority
Individuals, women, and other Disadvantaged Individuals in
the operation of the Casino, and to identify Open Access
concerns.
D.3. Meetings. Meetings shall be held regularly in which JCC
management employees are advised of JCC's equal employment
opportunity policy and of the philosophy behind, purposes of,
and operation of the Open Access Program and the Amended and
Restated Open Access Plans. The agendas of these meetings
include a statement from the management committee of JCC and
HNOMC's management expressing JCC's and HNOMC's full
endorsement of the Open Access Program and the Amended and
Restated Open Access Plans.
D.4. Staff Training. Management and other employees engaged in
employment, placement, training, transfer or promotion
activities will continue to receive additional training in
the applicable local, state and federal equal employment
opportunity laws, and in the Open Access Program and the
Amended and Restated Open Access Plans, as well as their
individual responsibility in assisting JCC and HNOMC to meet
their equal opportunity and Open Access objectives. All JCC
and HNOMC employees engaged in making hiring and selection
decisions will continue to be trained to ensure
non-discriminatory decision-making. Employment results will
continue to be reviewed to ensure non-discriminatory
treatment.
D.5. Applicant Flow. JCC shall regularly review the ethnic and
gender composition of its applicant pool, as a means of
self-evaluating its outreach and related efforts, in order to
ensure that sufficient numbers of Open Access Participants
are being recruited and are applying for employment with JCC.
D.6. Monitoring. JCC shall maintain logs of personnel
transactions, including applications, hires, promotions,
transfers and terminations, and shall analyze the
transactions at least quarterly to identify problem areas and
appropriate
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<PAGE>
remedial actions. A summary of these analyses, which are
reviewed by management, shall be prepared by the Human
Resources Department on a quarterly basis and shall be made
available to the RDC for audit.
D.7. Compliance with Federal, State and Local Discrimination
Statutes and Guidelines. JCC shall regularly review its
recruitment and advertising policies, its job policies and
practices and wage, compensation and benefit structure to
ensure that its practices conform to the requirements of
Title VII of the Civil Rights Act of 1964, as amended; the
Civil Rights Act of 1991; the Family and Medical Leave Act of
1993; the Americans with Disabilities Act; the Pregnancy
Discrimination Act of 1978; the Age Discrimination in
Employment Act, as amended; the Equal Pay Act; the Employee
Retirement Income Security Act of 1974, as amended; La.R.S.
23:1006 and 23:1008; and the City of New Orleans Human
Relations law. JCC shall maintain leave policies that are
non-discriminatory and JCC shall treat disability due to
pregnancy similar to any illness or injury. JCC shall also
make reasonable accommodations for the religious observances
and practices of employees and prospective employees, as
required. (See Addenda H and I to the Amended and Restated
Open Access Plans.)
D-10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE HARRAH'S
JAZZ COMPANY AND SUBSIDIARY (DEBTOR-IN-POSSESSION) CONDENSED CONSOLIDATED
BALANCE SHEET AS OF SEPTEMBER 30, 1998 AND CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,121
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,681
<PP&E> 206,197
<DEPRECIATION> (7,029)
<TOTAL-ASSETS> 359,418
<CURRENT-LIABILITIES> 65,742<F1>
<BONDS> 523,468<F2>
0
0
<COMMON> 0
<OTHER-SE> (229,792)
<TOTAL-LIABILITY-AND-EQUITY> 359,418
<SALES> 0
<TOTAL-REVENUES> 30
<CGS> 3,230
<TOTAL-COSTS> 3,230
<OTHER-EXPENSES> 1,443<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 886
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,528)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>REPRESENTS TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE
<F2>REPRESENTS LIABILITIES SUBJECT TO COMPROMISE
<F3>REPRESENTS REORGANIZATION EXPENSES
</FN>
</TABLE>
