42
THIS DOCUMENT IS A COPY OF THE FORM 10-K FILED ON JUNE 30, 1998
PURSUANT TO RULE 201 TEMPORARY HARDSHIP EXEMPTION.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1998
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to
___________
Commission file number: 0-14897
PLAYERS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada
95-4175832
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Suite 800, 1300 Atlantic Avenue, Atlantic City, New Jersey
(Address of principal executive offices)
08401
(Zip Code)
(609) 449-7777
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.005 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of June 25, 1998, the aggregate market value of the
registrant's Common Stock held by non-affiliates of the
registrants was not less than $114,000,000.
As of June 25, 1998, there were 31,941,737 shares of the
registrant's Common Stock outstanding.
Documents Incorporated by Reference:
The information required by Part III of this report is
incorporated by reference from the Registrant's Proxy Statement
to be filed with the Commission not later than 120 days after the
end of the fiscal year covered by this report.
PART I
Item 1. Business
General
Players International, Inc. (the "Company") is a multi-
jurisdictional gaming company with operations in Illinois,
Louisiana, Missouri and Kentucky. The Company operates a
cruising riverboat casino in Metropolis, Illinois (the
"Metropolis Riverboat"), two cruising riverboat casinos in Lake
Charles, Louisiana (the "Lake Charles Riverboats"), two dockside
riverboat casinos in Maryland Heights, Missouri (the "Company's
Maryland Heights Casinos") and the Players Bluegrass Downs horse
racetrack in Paducah, Kentucky ("Players Bluegrass Downs"). The
Metropolis Riverboat, which is the only riverboat operating in
Southern Illinois, attracts patrons from its target markets in
Illinois, Indiana, Kentucky, Missouri and Tennessee. The Lake
Charles Riverboats serve the Houston, Texas and southwest
Louisiana markets. On March 11, 1997, the Company and Harrah's
Entertainment, Inc. ("Harrah's") each opened two dockside
riverboat casinos and jointly opened a landside hotel and
entertainment facility in Maryland Heights, Missouri
(collectively, the "Maryland Heights Facility").
The Company's marketing and operational strategy is designed
to provide its guests with superior customer service and
entertainment value for their gaming dollar and focuses on middle-
income customers who live within a 150-mile radius of the
Company's facilities. The Company's sites are conveniently
located near frequently traveled interstate highways and have
easy access and ample parking to satisfy the demands of local and
frequent visitors. On-site customer service efforts are intended
to establish personal relationships with patrons that result in
ongoing loyalty to, and repeat patronage of, Players' casinos.
Player tracking systems record gaming activity and corresponding
complimentary expenses in a player database from which each
property targets its best players with special offers through
direct mail.
In September, 1996, the Company determined to focus its
financial resources and core operating competencies on its
Metropolis, Illinois and Lake Charles, Louisiana facilities and
its Maryland Heights, Missouri dockside casino project.
Consistent with this focus, the Company subsequently (i)
eliminated development efforts in emerging and developing gaming
jurisdictions, (ii) sold its unprofitable land-based casino spa
and resort in Mesquite, Nevada (the "Mesquite Property"), (iii)
reduced senior management and corporate staff that had
concentrated on development activities and (iv) disposed of
assets held for future development and assets that were not
needed for its core operating focus. The Company's capital
expenditures since that time have been used to complete and open
the Maryland Heights Facility in March, 1997, open a new island-
themed dining and entertainment barge at the Metropolis facility
in December, 1997, and acquire, in January, 1998, a 269-room
hotel formerly operated as the Lake Charles Holiday Inn, which is
located adjacent to the Company's Lake Charles facility (the
"Lake Charles Holiday Inn Acquisition").
The Company's principal executive offices are located at
1300 Atlantic Avenue, Suite 800, Atlantic City, New Jersey 08401
(Telephone: 609-449-7777).
Metropolis Operations
The Metropolis facility commenced operations on February
23, 1993 and is the only riverboat casino operating in southern
Illinois. The Company holds one of ten statutorily authorized
gaming licenses in Illinois. Under Illinois law, licenses are
renewed annually after the first three years of operation. The
Metropolis gaming license was most recently renewed for a one-
year period in February, 1998.
The Metropolis facility offers a four deck historical
replica of a paddlewheel riverboat. The riverboat features a
fully-equipped Las Vegas style casino that contains approximately
22,000 square feet of gaming space. The casino is equipped with
900 slot machines and 50 table games for a total of approximately
1,200 gaming positions as defined by Illinois regulation.
Beginning in June, 1995, the Company changed its Metropolis
cruising schedule from a three-hour cruise to a two-hour cruise
in order to increase patron boarding opportunities.
The docking site at the Metropolis facility includes a new
$9.6 million dining and entertainment facility which was added in
December, 1997. This 27,000 square foot barge has a tropical
theme and offers a 300-seat upgraded buffet facility, a 140-seat
fine dining facility, a new entertainment lounge, a queuing and
guest services area and a VIP area. The Metropolis facility has
approximately 1,400 automobile and bus parking spaces.
The Company also holds a 12.5% limited partnership interest
in a joint venture which constructed a 120-room hotel adjacent to
the Metropolis facility. The hotel opened in March, 1994. The
Company is entitled to a discounted rate for a specified number
of hotel rooms used for casino guests. The Company also leases,
under a ten-year agreement, a 350-seat cabaret style theater
adjacent to the hotel, which is used for special events and
promotions.
The Metropolis facility is located approximately three
miles from U.S. Interstate 24, a major highway through Illinois,
Kentucky and Tennessee. Passenger counts are higher during
warmer weather (from late Spring through early Fall) than during
the Winter months. The Company anticipates that this seasonal
passenger count trend will continue in the future.
Lake Charles Operations
The Lake Charles facility commenced operations in the City
of Lake Charles, Louisiana on December 8, 1993 with one riverboat
casino, the Players Lake Charles Riverboat. In January 1995, the
Company acquired all interests in a partnership that owned
another fully-equipped Las Vegas style riverboat casino, the Star
Riverboat, which previously operated for one and one-half years
on Lake Pontchartrain near New Orleans. The Company relocated
the Star Riverboat to Lake Charles and reopened it in April,
1995. The Company presently holds two of a current maximum of
fifteen statutorily authorized riverboat casino licenses in
Louisiana. Under Louisiana law, licenses are initially issued
for a term of five years and then considered for renewal annually
thereafter. The initial Players Lake Charles Riverboat license
will expire December 6, 1998. The initial Star Riverboat license
will expire August 9, 1998.
The Players Lake Charles Riverboat and the Star Riverboat
are docked at a common docking site. The Players Lake Charles
Riverboat is a fully-equipped three deck Las Vegas style casino
that has approximately 29,200 square feet of gaming space and is
equipped with 998 slot machines and 60 table games for a total of
approximately 1,427 gaming positions. The Star Riverboat is a
fully-equipped three deck Las Vegas style casino that has
approximately 21,730 square feet of gaming space and is equipped
with 729 slot machines and 46 table games for a total of
approximately 1,069 gaming positions. Both the Players Lake
Charles Riverboat and the Star Riverboat operate staggered three-
hour cruises up to 24 hours a day. While each riverboat is
required by state law to cruise, the staggered cruise schedules
allow the Company to offer patrons the equivalent of dockside
gaming since a riverboat is almost continually available for
boarding by patrons at the docking site.
The Lake Charles facility features the Players Hotel, a
Company-owned land based 134-room hotel with meeting and
entertainment space and a 60,000 square foot floating
entertainment "Island." Riverboat casino passengers walk through
the Island, which is connected to the Players Hotel by a covered
walkway, to board the Players Lake Charles Riverboat and the Star
Riverboat. The Island offers a tropical theme with lush foliage,
waterfalls and rockscapes. The Island includes a gift shop, a
150-seat upscale restaurant, a 350-seat buffet restaurant, a 145-
seat sports bar, and a 50-seat Cajun themed snack bar. The
Island also offers a large queuing area and a pirate themed
animatronics show for guests to view on their way to board the
riverboats. The Company also maintains a permanently moored
barge of approximately 10,000 square feet adjacent to the Island,
which houses an employee breakroom, administrative offices and
mechanical rooms.
On January 9, 1998, the Company completed the acquisition
of a 269-room hotel formerly operated as the Lake Charles Holiday
Inn, for a total purchase price of approximately $19.2 million.
The Company's management believes that the Lake Charles Holiday
Inn Acquisition will allow it to enhance its Lake Charles gaming
operations by offering additional hotel rooms as part of its
marketing programs and increasing the length of stay of traveling
patrons, thereby increasing traffic to the casinos. The hotel,
which is located adjacent to the Company's Lake Charles property,
is not operated as a Holiday Inn-franchised hotel.
Parking facilities at the Lake Charles facility consist of
a 540 space, on-site multi-story parking garage, a 270-space
surface parking area obtained through the Lake Charles Holiday
Inn Acquisition and several off-site surface parking facilities
that provide approximately 900 additional automobile and bus
parking spaces.
The Company recently reached an agreement with the City of
Lake Charles, both to settle certain litigation with the City and
to establish a permanent method of calculating the admission fee
payable to the City on the Company's two Lake Charles Riverboats.
Under the new agreement, which began as of March 1, 1998, the
Company will pay the City both a percentage of gaming revenue in
lieu of a per-passenger admission fee, and a fixed annual payment
of approximately $544,000 per year for ten years. The percentage
payment is subject to certain minimum payments, as specified in
the agreement. See "--Louisiana Gaming Regulation."
The City of Lake Charles and the surrounding area have a
population of approximately 300,000 adults of legal gaming age
within a 50-mile radius. The Lake Charles facility's primary
market area also includes such population centers as Houston,
Beaumont, Galveston, Orange and Port Arthur, Texas and Lafayette
and Baton Rouge, Louisiana. Approximately 4.4 million adults of
legal gaming age reside within 150 miles of the Lake Charles
facility. The Lake Charles facility is situated immediately
adjacent to U.S. Interstate 10 which connects Houston, Beaumont
and Lake Charles providing easy access to the casinos. The Lake
Charles Riverboats draw over half of their patrons from Texas,
due in large part to the current absence of legalized casino
gaming in Texas. The facility faces direct competition from Isle
of Capri casino, situated approximately one mile from the Lake
Charles facility, and the land-based Coushatta Indian casino
situated in Kinder, Louisiana, approximately 35 miles away.
Road construction is tentatively scheduled to begin on U.S.
Interstate 10 near the Company's Lake Charles facility in
September, 1998 and is scheduled to be completed in March, 1999.
The construction will result in lanes of U.S. Interstate 10
being closed for periods of time, although the Company has been
advised that one Eastbound lane and one Westbound lane will
always remain open, permitting access to and from the casino.
The Company does not know what effect, if any, the traffic delays
caused by road construction will have on patronage to the
facility, although significant delays may adversely impact
patronage to the Company's facility.
Maryland Heights Operations
On March 11, 1997, the Company and Harrah's opened a
riverboat casino entertainment facility in Maryland Heights,
Missouri, a suburb of St. Louis. The Maryland Heights Facility
offers four permanently moored, dockside riverboat casinos
totaling approximately 120,000 square feet of gaming space. The
four casinos at the Maryland Heights Facility are permanently
moored to a land-based 95,000 square foot entertainment facility,
which has a turn-of-the-century St. Louis theme and includes
retail shops, two 125-seat specialty restaurants (the Company and
Harrah's each operate one of the specialty restaurants), a 540-
seat buffet, a 125-seat entertainment lounge, a variety of retail
stores, a child care facility, 10,000 square feet of
convention/meeting space, a 9,000 square-foot sports bar and a
1,850 space parking garage and 2,650 surface parking spaces (the
"Maryland Heights Entertainment Facility"). The Maryland Heights
Facility also offers a 291-room hotel with 12 luxury suites
(individually, the "Maryland Heights Hotel," and together with
the Maryland Heights Entertainment Facility, the "Landside
Facility").
The Company and Harrah's each individually manage, operate
and market two of the four permanently moored, dockside casinos
pursuant to separate gaming licenses. The Company's Maryland
Heights Casinos have total gaming space of approximately 60,000
square feet and are equipped with, in the aggregate, 1,334 slot
machines and 80 table games for a total of approximately 1,814
gaming positions. The Company's Maryland Heights Casinos feature
a tropical island theme with lush foliage, waterfalls and
rockscape. In accordance with Missouri gaming regulations, one
of the Company's two casinos remains open for patron boarding for
a _ hour period while the other Company casino is closed to
boarding, and only one casino facility is open for boarding at
any given time. Only one of the Harrah's casinos at the Maryland
Heights Facility is likewise open for boarding at any given time.
The Company's Maryland Heights Casinos pay Harrah's a ground
lease payment based upon a percentage of their annual net gaming
revenue.
Both the Company and Harrah's are 50% owners of the
Maryland Heights Joint Venture, the entity which (i) owns the
Maryland Heights Entertainment Facility and the Maryland Heights
Hotel and (ii) owns the dockside barges that house each of
Harrah's and the Company's casino operations at the Maryland
Heights Facility. Under the agreement governing the Maryland
Heights Joint Venture (the "Maryland Heights Joint Venture
Agreement"), each of Players and Harrah's (i) is entitled to 50%
of all profits, and is responsible for 50% of all losses, from
the Landside Properties (excluding profits and losses from each
entity's separately operated specialty restaurant), (ii) was
responsible for the fit-out, furnishings and equipment at its own
specialty restaurant and casinos, and (iii) derives all profits,
and is responsible for all losses, from its separately operated
specialty restaurant and casinos. The Company expended
approximately $26.5 million for the fit-out, furnishings and
equipment of its separately operated specialty restaurant and
casinos, including approximately $12.6 million for slot machines
and other gaming equipment. The Company's share of the total
project cost, excluding capitalized interest, approximates $141
million.
The Maryland Heights Facility is strategically located to
attract patrons from a local population base of approximately 2.3
million in the greater St. Louis metropolitan region. The site
features easy accessibility, a high level of drive-by traffic,
and is located adjacent to the Riverport Amphitheater, which
currently attracts 500,000 visitors per year.
Pursuant to a separate management agreement (the
"Management Agreement"), an affiliate of Harrah's manages the
Maryland Heights Hotel and the Maryland Heights Entertainment
Facility, with the exception of the Company's specialty
restaurant and retail space. The Management Agreement has a basic
term that expires on December 31, 2005, with fourteen renewal
terms of five years each.
The Company maintains separate riverboat casino licenses for
each of its two casinos that are issued by the Missouri Gaming
Commission. Each license is for a one year term. Missouri
Gaming regulations limit patron gaming to $500 per two hour
cruise session. In addition, while the Company's two riverboat
casinos are permanently moored, state law requires the Company to
simulate two hour cruises.
The Company is involved in certain litigation regarding the
constitutionality of gaming facilities (such as the Maryland
Heights Facility) located upon artificial basins fed by the
Missouri River. See Part I, Item 3, W. Todd Akin, et al. v.
Missouri Gaming Commission. Based on the outcome of the November
referendum and subsequent court proceedings, the possibility
exists that the Company could be forced either to remediate or
close the Maryland Heights Facility.
Players Bluegrass Downs Operations
Players Bluegrass Downs, a racetrack located in Paducah,
Kentucky, was acquired by the Company in November, 1993 and holds
live racing meets each Fall as well as year-round simulcasting of
horse racing events. During the year when live race meets are
not scheduled, the racetrack facilities are leased for special
events and activities. During the fourth quarter of fiscal 1997,
the Company reevaluated Players Bluegrass Downs, determined that
the investment was impaired, and wrote down the facility to a
value of $475,000. During fiscal 1999, the Company plans to
begin operating Players Bluegrass Downs as a harness racetrack
and discontinue the thoroughbred racing that previously had been
conducted.
Discontinued Mesquite Operations
On February 28, 1997, the Company entered into an Asset
Purchase Agreement with RBG, LLC to sell substantially all of the
assets constituting its unprofitable Mesquite Property for $29
million cash and a $1.5 million two-year promissory note.
Following final consummation of the sale transaction, the Company
ceased operating the Mesquite Property on June 30, 1997.
Competition
The casino gaming industry includes land-based casinos,
dockside casinos, cruising riverboat casinos and land-based
casinos on Indian reservations. The gaming industry is highly
competitive and is composed of a large number of companies.
Numerous states have legalized gaming and several other states
are considering the legalization of gaming in designated areas.
Indian gaming on tribal land also continues to expand. As a
result of the proliferation of gaming, the Company's operations
have been adversely affected. New gaming facilities that have
opened in markets served by the Company's facilities have diluted
the market by competing for existing patrons of the Company's
facilities. The Company anticipates this trend will continue as
new competition comes on line and existing competitors enhance
their facilities. In addition, many of the Company's direct
competitors have significantly greater resources as compared to
those of the Company. Competitors with greater resources than
the Company enjoy a competitive advantage since they have more
flexibility in the manner in which they manage, operate and
expand their facilities.
The Metropolis facility's closest gaming competitor
operates in Evansville, Indiana, approximately 110 miles away.
Another competing riverboat casino operates in Caruthersville,
Missouri, which is approximately 120 miles southwest of the
Metropolis facility. A competitor plans to open a casino hotel
resort in late-1998 in Corydon, Indiana, across from Louisville
Kentucky, approximately 200 miles from Metropolis. While this
facility should have limited direct impact on Metropolis, the
introduction of additional capacity could intensify competition
for all existing gaming operators in Southern Illinois and
Indiana for patrons residing in common shared outer markets,
specifically patrons residing in Tennessee. The Metropolis
facility faces further competition as additional riverboats
become licensed in Southern Indiana and Missouri. Metropolis
also experiences significant competition for Tennessee patrons,
as well as some Illinois and Missouri patrons, from dockside
casinos in Tunica, Mississippi. Casinos operating in Tunica,
Mississippi enjoy a competitive advantage over the Company's
Metropolis facility since they offer permanently moored, dockside
facilities while the Company's riverboat is required to cruise by
state law.
The Lake Charles facility faces direct competition from
Isle of Capri, which opened with one Las Vegas style riverboat
casino on July 29, 1995 in Westlake, Louisiana, approximately one
mile from the Company's facility. In May 1996, the Isle of Capri
opened a 105,000 square foot pavilion which offers a 489-seat
buffet, a live entertainment facility, retail operations and a
1,400 space parking garage. In July, 1996, the Isle of Capri
opened a second Las Vegas style riverboat casino. The first of
the Isle of Capri's two riverboat casinos presently offers
approximately 24,700 square feet of gaming space with 892 slot
machines and 46 table games, while the other riverboat casino
offers approximately 24,200 square feet of gaming space with 944
slot machines and 48 table games. A 241-room hotel and a
restaurant constructed by Isle of Capri opened in September,
1997. Construction of another hotel has also been announced.
Eastbound travelers from Texas and western Louisiana on
Interstate 10 are able to access the Isle of Capri prior to
reaching the Company's facility.
The Lake Charles facility also faces direct competition
from the land-based Coushatta Indian casino facility in Kinder,
Louisiana. The Coushatta facility, which opened in January,
1995, and expanded in August, 1995, is a Las Vegas style casino
that currently offers approximately 71,000 square feet of gaming
space, 2,100 slot machines and 72 table games. Grand Casinos,
Inc., which manages the facility, has also opened an upscale
restaurant and a 200-pad RV park. Construction on a 650 room
hotel is underway, and further expansion plans, which include an
additional 27,000 square feet of gaming space, an additional
restaurant, and a golf course have been announced. In addition
to the Coushatta facility, the Lake Charles facility competes to
a lesser degree with riverboat operators in Baton Rouge,
approximately 125 miles east of Lake Charles, the New Orleans
area, approximately 200 miles east of Lake Charles, and the
Shreveport/Bossier City area, which is approximately 180 miles
north of Lake Charles.
In the 1997 Regular Session of the Louisiana Legislature, a
law was passed authorizing the operation of slot machines at
three horse racing tracks in Louisiana, including a racetrack
situated in Calcasieu Parish (the same Parish as the Company's
Lake Charles facility), Delta Downs. Under the law, before slot
machines can be operated at Delta Downs (a) voter approval is
required through a local referendum election in Calcasieu Parish
and (b) companion legislation must be passed by the Louisiana
Legislature to establish the tax rate to be levied on slot
machine revenues. In the Fall of 1997, voters in Calcasieu
Parish voted not to authorize the operation of slot machines at
Delta Downs. In addition, the Louisiana Legislature, in its 1998
Fiscal Session, failed to pass such companion tax legislation.
However, the law provides that another local referendum may be
conducted every two years, and companion tax legislation may be
considered in any future session of the Louisiana Legislature.
The Company's Maryland Heights Casinos compete with all of
the gaming operators in the greater St. Louis market, including
the Company's joint venture partner, Harrah's, the nearby St.
Charles Station in St. Charles, Missouri, the President Riverboat
in downtown St. Louis, Missouri, the Alton Belle in Alton,
Illinois and the Casino Queen in East St. Louis, Illinois. The
Company's joint venture partner, Harrah's, has 1,395 slot
machines and 60 table games for a total of approximately 1,755
gaming positions. The President facility operates a single
gaming facility with 1,065 slot machines and 60 table games for a
total of approximately 1,601 gaming positions. The St. Charles
facility consists of two riverboat gaming facilities with a total
of 1,792 slot machines and 90 table games for a total of
approximately 2,387 gaming positions. Additionally, St. Charles
has announced a $190 million expansion project, for which
construction has been halted for at least a temporary basis.
Casino Queen operates a single riverboat with 1,011 slots and 52
table games for a total of approximately 1,323 gaming positions.
Alton Belle has a total of 684 slots and 35 table games for a
total of approximately 894 gaming positions. As Illinois
operators, neither the Casino Queen nor the Alton Belle are
subject to the same loss limits per passenger imposed in
Missouri. The Company's Maryland Heights Casinos may compete
with additional riverboats in the St. Louis metropolitan area to
the extent that additional licenses, if any, are granted by the
Missouri Gaming Commission.
Employees
As of June 12, 1998, the Company had approximately 3,700
employees, including 850 employed in Metropolis, 1,781 employed
in Lake Charles, 44 employed at Players Bluegrass Downs, 990
employed in Maryland Heights and 36 employed in the Company's
corporate and administrative offices. The Company believes its
relations with its employees are generally good.
Gaming Regulation
The Company is subject to state and Federal laws which
regulate businesses generally and the gaming business
specifically. Below is a brief description of some of the more
significant regulations to which the Company is subject. All
laws are subject to change and different interpretations. This
is especially true with respect to current laws regulating the
gaming industry, since in many cases these laws and the
regulatory agencies applying them are relatively new. Changes in
laws or their interpretation may result in the imposition of more
stringent, burdensome and expensive requirements, or the outright
prohibition of an activity.
Illinois Gaming Regulation
The Riverboat Gambling Act of Illinois (the "Illinois
Riverboat Act") currently authorizes a five-member Illinois
Gaming Board to issue up to ten riverboat gaming licenses. Eight
additional licensees are currently operating in Illinois. A
ninth license was not renewed by the Board. The status of this
license renewal remains pending until final action by the Board
after administrative procedures are completed. The Illinois
General Assembly is currently entertaining legislation to expand
the number of permitted riverboat gaming licenses beyond ten.
Each owner's license entitles the licensee to own and operate up
to two riverboats (with a combined maximum of 1,200 "gaming
positions," as such term is defined under Illinois law) and
equipment thereon from a specified dock site. The duration of
the license initially runs for a period of three years.
Thereafter, the license is subject to renewal on an annual basis
upon, among other things, a determination by the Illinois Gaming
Board that the licensee continues to meet all of the requirements
of the Illinois Riverboat Act and the Illinois Gaming Board's
Rules. The Illinois Gaming Board issued an owner's license to a
wholly-owned subsidiary of the Company for its Metropolis
facility in February, 1993. The Metropolis facility's license
was most recently renewed in February, 1998. All licensees have
a continuing duty to maintain suitability for licensure.
The Illinois Riverboat Act and Illinois Gaming Board Rules
grant the Illinois Gaming Board extensive jurisdiction and
specific powers and duties for the purposes of administering,
regulating and enforcing the system of riverboat gaming. These
powers are far reaching and include the power to limit, proscribe
or effectively rescind the payment of dividends or the repayment
of indebtedness to the Company in certain circumstances,
including any adverse financial condition, default, non-
compliance or insolvency of any Subsidiary or the Company. The
Illinois Gaming Board may revoke, suspend or place conditions on
licenses or fine licensees, in any case as the Illinois Gaming
Board may see fit and in compliance with applicable laws of the
State of Illinois regarding administrative procedures and may
suspend an owner's license, without notice or hearing, upon a
determination that the safety or health of patrons or employees
is jeopardized by continuing a riverboat's operation. The
suspension may remain in effect until the Illinois Gaming Board
determines that the cause for suspension has been abated. The
Illinois Gaming Board may revoke the owner's license upon a
determination that the owner has not made satisfactory progress
toward abating the hazard.
A holder of an owner's license is required to obtain all
licenses from the Illinois Gaming Board necessary for the
operation of a riverboat, including a liquor license, a license
to prepare and serve food, and all other necessary licenses. All
sales, use, occupation and excise taxes which apply to food and
beverages apply to sales aboard riverboats.
All riverboats must be accessible to disabled persons, must
be either a replica of a 19th century Illinois riverboat or be of
a casino cruise ship design, and must comply with applicable
Federal and state laws, including U.S. Coast Guard regulations.
A person employed at a riverboat gaming operation must hold
an occupation license from the Illinois Gaming Board, which
permits the holder to perform only activities included within
such holder's level of occupation license or any lower level of
occupation license. The Illinois Gaming Board also requires that
officers, directors and other key persons of a gaming operation
be licensed. In addition, a riverboat licensee can purchase or
lease gaming equipment or supplies only from a supplier who has
been issued a supplier's license by the Illinois Gaming Board.
As a condition to maintaining an owner's license, the
licensee must, among other things, submit detailed financial
information and other information to the Illinois Gaming Board
including an annual audit by an independent certified public
accountant, selected by the Administrator of the Illinois Gaming
Board, of the financial transactions and conditions of the total
operations of a holder of an owner's license, including the
condition of the licensee and its internal control system. The
holder of an owner's license must prepare and send to the
Administrator, and the independent certified public accountant
selected by the Administrator, a written response to issues
raised by such accountant's reports on: (i) the procedures
required to be performed by such accountant on a quarterly basis
with respect to certain aspects of the licensee's operations; and
(ii) the annual audit referred to above. Among other continuing
obligations, the holder of an owner's license has a duty to
promptly disclose any material changes in the information it
provides to the Illinois Gaming Board. The holder of an owner's
license must report promptly to the Administrator of the Illinois
Gaming Board any facts which the holder has reasonable grounds to
believe indicate a violation of law (other than minor traffic
violations), an Illinois Gaming Board Rule, or a holder's
internal controls committed by suppliers or licensed employees
including, without limitation, the performance of licensed
activities different than those permitted under their license.
The duty to disclose changes in information previously provided
to the Illinois Gaming Board continues throughout the period of
licensure. A duty exists to promptly disclose the identity of a
compensated agent acting on behalf of the holder of an owner's
license with regard to action by the Illinois Gaming Board.
A holder of an owner's license is subject to the imposition
of fines, suspension or revocation of its license for any act or
failure to act on the part of the licensee or its agents or
employees that is injurious to the public health, safety, morals,
good order or general welfare of the people of the State of
Illinois or that would discredit or tend to discredit the
Illinois gaming industry or the State of Illinois, including,
without limitation: (i) failing to comply with or make provision
for compliance with applicable legal requirements including the
Illinois Riverboat Act, the rules promulgated thereunder or any
other applicable Federal, state or local law or regulation or
order or failure by the holder of an owner's license to comply
with or make provisions for complying with the holder's internal
controls; (ii) failing to comply with any rule, order or ruling
of the Illinois Gaming Board or its agents pertaining to gaming;
(iii) receiving goods or services from a person or business
entity which does not hold any required supplier's license; (iv)
being suspended or ruled ineligible for a gaming license or
having a gaming license revoked or suspended in any state or
gaming jurisdiction; (v) associating with, either socially or in
business affairs, or employing persons of notorious or unsavory
reputation or who have extensive police records or who have
failed to cooperate with any officially constituted investigatory
or administrative body, if public confidence and trust in gaming
would thereby be adversely affected; and (vi) employing in any
Illinois riverboat gaming operation any person known to have been
found guilty of cheating or using any improper device in
connection with any game.
Minimum and maximum wagers on games are not established by
regulation but are left to the discretion of the licensee;
however, wagering may not be conducted with money or other
negotiable currency. Riverboat cruises are limited to a duration
of four hours, and pursuant to the language of the Illinois
Riverboat Act, no gaming may be conducted while the riverboat is
docked. Illinois Gaming Board Rule, Section 3000.500, currently
permits gaming during the 30-minute time periods at the beginning
and end of a cruise while the passengers are embarking and
disembarking (total gaming time per cruise is limited to four
hours, however, including the pre- and post-docking periods). In
addition, pursuant to Illinois Gaming Board Rule, Section
3000.510, dockside gaming is permitted if the captain of the
riverboat reasonably determines that it is unsafe to cruise due
to inclement weather, mechanical or structural problems or river
icing. In such event, the riverboat must be cleared at least
once every four hours, at which time a new gaming session may
commence; patrons may leave the vessel at any time but may only
board the vessel during the first 30 minutes of the gaming
session. Pronouncements by the Illinois Gaming Board indicate
that the explanations for failure to cruise pursuant to Illinois
Gaming Board Rule, Section 3000.510 will be closely scrutinized
and that any abuse of the rule will result in disciplinary
actions, which may include, among other things, any of the
following: cancellation of future cruises, penalties, fines and
suspensions or revocation of license. No person under the age of
21 is permitted to wager, and wagers may only be taken from a
person present on a licensed riverboat. With respect to
electronic gaming devices, the payout percentage may not be less
than 80% nor more than 100%.
Effective January 1, 1998, the Illinois Riverboat Act
enacted a graduated wagering tax, from 15% to 35% of adjusted
gross receipts from gaming. The tax is calculated at the
following rates per calendar year: 15% up to and including
$25,000,000; 20% in excess of $25,000,000 but not exceeding
$50,000,000; 25% in excess of $50,000,000 but not exceeding
$75,000,000; 30% in excess of $75,000,000 but not exceeding
$100,000,000; and 35% in excess of $100,000,000. The tax imposed
is to be paid by the licensed owner to the Illinois Gaming Board
on the day after the gaming day when the wagers were made. Prior
to 1998, the wagering tax rate was a flat 20% of adjusted gross
receipts from gaming. The Illinois legislation also requires
that licensees pay a $2.00 admission tax for each person admitted
to a gaming cruise.
An ownership interest in a business entity (other than a
publicly traded corporation) which has an interest in a holder of
an owner's license may only be transferred or pledged as
collateral with the permission of the Illinois Gaming Board. Any
person or entity who or which, individually or in association
with others, acquires directly or indirectly, beneficial
ownership of more than 5% of any class of voting securities or
non-voting securities convertible into voting securities of a
publicly traded corporation which holds an ownership interest or
a beneficial interest in the holder of an owner's license is
required to file a Personal Disclosure Form 1. The Illinois
Gaming Board, however, takes the position that it may require any
individual or entity seeking a transfer of an ownership interest
in an owner's license to file a Personal Disclosure Form 1. The
Personal Disclosure Form 1 forms the basis of investigation by
the Illinois Gaming Board to determine suitability of the person
or entity seeking transfer of an ownership interest. If the
Illinois Gaming Board denies an application for such a transfer,
commencing as of the date the Illinois Gaming Board issues a
notice that it denies such application, it will be unlawful for
such applicant to receive any dividends or interest on his
shares, to exercise, directly or indirectly, any right conferred
by such shares, or to receive any remuneration from any person or
entity holding any license under the Illinois Riverboat Act for
services rendered. If the Illinois Gaming Board denies an
application for such a transfer and if no hearing is requested or
if the Illinois Gaming Board issues a final order of
disqualification, the holder of an owner's license shall purchase
all of the disqualified person's or entity's shares at the lesser
of either the market price or the purchase price for such shares.
A holder of an owner's license can only make distributions
to stockholders to the extent such distributions would not impair
the financial viability of the gaming operation. Factors to be
considered should include, but not be limited to, the following:
(i) working capital requirements; (ii) debt service requirements;
(iii) repairs and maintenance requirements; and (iv) capital
expenditure requirements.
Holders of an owner's license must immediately inform the
Illinois Gaming Board and obtain formal approval from the
Illinois Gaming Board whenever a change is proposed in the
following areas: key persons; type of entity; equity and debt
capitalization of entity; investors and/or debt holders; sources
of funds; applicant's economic development plan; riverboat
capacity or significant design change; gaming positions;
anticipated economic impact; or pro forma budgets and financial
statements.
Louisiana Gaming Regulation
In July 1991, the Louisiana legislature adopted legislation
permitting riverboat casinos on certain rivers and waterways in
Louisiana (the "Riverboat Act"). In addition to riverboat
casinos, there are many other forms of legalized gaming in
Louisiana including the lottery, racetracks and video lottery
terminals ("VLTs") at various types of facilities in the state,
including bars, truckstops, racetracks and off-track betting
parlors.
The Riverboat Act authorizes the issuance of up to 15
licenses to conduct gaming activities on a riverboat of new
construction in accordance with applicable law. However, no more
than six licenses may be granted to riverboats operating from any
one parish. Pursuant to legislation passed in a Special Session
of the Louisiana Legislature in March, 1996, authority to
supervise riverboat gaming activities is vested in the Louisiana
Gaming Control Board, the successor regulatory agency to the
Louisiana Riverboat Gaming Commission. The Louisiana Gaming
Control Board, by regulation, has delegated certain
responsibilities relating to investigations, issuance and renewal
of certain licenses and permits, audits and enforcement of
Louisiana riverboat gaming laws to the Riverboat Gaming
Enforcement Division of the Louisiana State Police (the
"Louisiana Enforcement Division"). The Louisiana Enforcement
Division has broad powers over licensees and such powers,
together with the provisions of the Riverboat Act could operate
to limit, proscribe or effectively rescind the payment of
dividends or the repayment of indebtedness to the Company in
certain circumstances, including any adverse financial condition,
default, non-compliance or insolvency of any Subsidiary or the
Company.
In issuing a license, the Louisiana Gaming Control Board
must find that the applicant is a person of good character,
honesty and integrity and a person whose prior activities,
criminal record, if any, reputation, habits, and associations do
not pose a threat to the public interest of the State of
Louisiana or to the effective regulation and control of gaming,
or create or enhance the dangers of unsuitable, unfair or illegal
practices, methods and activities in the conduct of gaming or the
carrying on of business and financial arrangements in connection
therewith. The Louisiana Gaming Control Board cannot grant a
license unless it finds that: (i) the applicant is capable of
conducting gaming operations, which means that the applicant can
demonstrate the capability, either through training, education,
business experience, or a combination of the above, to operate a
gaming casino; (ii) the proposed financing of the riverboat and
the gaming operation is adequate for the nature of the proposed
operation and from a source suitable and acceptable to the
Louisiana Gaming Control Board; (iii) the applicant demonstrates
a proven ability to operate a vessel of comparable size, capacity
and complexity to the proposed riverboat so as to ensure the
safety of its passengers; (iv) the applicant submits a detailed
plan of design of the riverboat in its application for a license;
(v) the applicant designates the docking facilities to be used by
the riverboat; (vi) the applicant shows adequate financial
ability to construct and maintain a riverboat; and (vii) the
applicant has a good faith plan to recruit, train and upgrade
minorities in all employment classifications.
Certain persons affiliated with a riverboat gaming
licensee, including directors and officers of the licensee,
directors and officers of any holding company of the licensee
involved in gaming operations, persons holding 5% or greater
interests in the licensee, and persons exercising influence over
a licensee ("Affiliated Gaming Persons"), are subject to the
application and suitability requirements of the Louisiana gaming
law.
The Louisiana gaming law specifies certain restrictions and
conditions relating to the operation of riverboat gaming,
including the following: (i) gaming is not permitted while a
riverboat is docked, other than the forty-five minutes between
excursions, and during times when dangerous weather or water
conditions exist; (ii) each round-trip riverboat cruise may not
be less than three nor more than eight hours in duration, subject
to specified exceptions; (iii) agents of the Louisiana
Enforcement Division are permitted on board at any time during
gaming operations; (iv) gaming devices, equipment and supplies
may only be purchased or leased from permitted suppliers; (v)
gaming may only take place in the designated gaming area while
the riverboat is upon a designated river or waterway; (vi) gaming
equipment may not be possessed, maintained or exhibited by any
person on a riverboat except in the specifically designated
gaming area, or a secure area used for inspection, repair or
storage of such equipment; (vii) wagers may be received only from
a person present on a licensed riverboat; (viii) persons under 21
are not permitted in designated gaming areas; (ix) except for
slot machine play, wagers may be made only with tokens, chips or
electronic cards purchased from the licensee aboard a riverboat;
(x) licensees may only use docking facilities and routes for
which they are licensed and may only board and discharge
passengers at the riverboat's licensed berth; (xi) licensees must
have adequate protection and indemnity insurance; (xii) licensees
must have all necessary Federal and state licenses, certificates
and other regulatory approvals prior to operating a riverboat;
and (xiii) gaming may only be conducted in accordance with the
terms of the license and the rules and regulations adopted by the
Louisiana Enforcement Division.
An initial license to conduct riverboat gaming operations
is valid for a term of five years. A subsidiary of the Company
was issued an initial operator's license by the Louisiana
Enforcement Division for the Players Lake Charles Riverboat on
December 6, 1993. Another subsidiary of the Company holds an
operator's license for the Star Riverboat (which was acquired by
the Company in 1995) which was issued on August 9, 1993 and is
scheduled to expire in August, 1998. The Louisiana gaming law
provides that a renewal application for each one year period
succeeding the initial five year term of the operator's license
must be made to the Louisiana Enforcement Division. The
application for renewal consists of a statement under oath of any
and all changes in information, including financial information,
provided in the previous application. The Company recently filed
the application for renewal of the Star Riverboat license.
The transfer of a license or permit or an interest in a
license or permit is prohibited. The sale, purchase, assignment,
transfer, pledge or other hypothecation, lease, disposition or
acquisition (a "Transfer") by any person of securities which
represent 5% or more of the total outstanding shares issued by a
corporation that holds a license is subject to Louisiana
Enforcement Division approval. A security issued by a
corporation that holds a license must generally disclose these
restrictions. Prior approval of the Louisiana Enforcement
Division is required for the Transfer of any ownership interest
of 5% or more in any non-corporate licensee or for the Transfer
of any "economic interest" of 5% or more in any licensee or
Affiliated Gaming Person. An "economic interest" is defined for
purposes of a Transfer as any interest whereby a person receives
or is entitled to receive, by agreement or otherwise, a profit,
gain, thing of value, loan, credit, security interest, ownership
interest or other economic benefit.
A licensee must notify the Louisiana Enforcement Division
of any withdrawals of capital, loans, advances or distributions
in excess of 5% of retained earnings for a corporate licensee, or
of capital accounts for a partnership or limited liability
company licensee, upon completion of any such transaction. No
prior approval of any such withdrawal, loan, advance or
distribution is required, but any such transaction is ineffective
if disapproved by the Louisiana Enforcement Division within 120
days after the required notification. In addition, the Louisiana
Enforcement Division may issue an emergency order for not more
than 10 days prohibiting payment of profits, income or accruals
by, or investments in, a licensee.
Riverboat gaming licensees and their Affiliated Gaming
Persons are required to notify the Louisiana Gaming Control Board
60 days prior to the receipt by any such persons of any loans or
extensions of credit, or modifications thereof. The Louisiana
Gaming Control Board is required to investigate the reported
loan, extension of credit or modification thereof and to
determine whether an exemption exists from the requirement of
prior written approval and, if no exclusion applies, to either
approve or disapprove the transaction. If disapproved, the
transaction cannot be entered into by the licensee or Affiliated
Gaming Person. The Company is an Affiliated Gaming Person of its
Louisiana subsidiaries that are the licensees of the Players Lake
Charles Riverboat and the Star Riverboat.
Fees for conducting gaming activities on a riverboat
include: (i) $50,000 per riverboat for the first year of
operation and $100,000 per year per riverboat thereafter; plus
(ii) 18-1/2% of net gaming proceeds.
The Company also has paid since opening a $2.50 per
passenger admission fee to the City of Lake Charles. The Company
and the City of Lake Charles recently instituted litigation
against each other (now settled) concerning the method of
computing this admission fee. In 1995, Louisiana enacted
legislation authorizing the governing authority of Calcasieu
Parish to levy an additional admission fee of fifty cents per
passenger, the proceeds of which are used primarily to fund
education in the parish. This increase is applicable to the
Company's two Lake Charles riverboats. The Company recently
reached an agreement with the City of Lake Charles, both to
settle such litigation with the City and to establish a permanent
method of calculating the admission fee payable to the City on
the Company's two Lake Charles Riverboats. Under the new
agreement, which began as of March 1, 1998, the Company will pay
the City both a percentage of gaming revenue in lieu of a per-
passenger admission fee, and a fixed annual payment of
approximately $544,000 per year for ten years. The percentage
payment is subject to certain minimum payments, as specified in
the agreement.
In the 1996 Special Session of the Louisiana Legislature,
legislation was enacted providing for local option elections in
November, 1996, on a parish-by-parish basis which gave voters in
communities across the state the opportunity to decide the fate
of certain forms of gaming in their parishes. In Calcasieu
Parish, where the Company's Lake Charles facility is located, the
referendum determined whether VLTs and riverboat gaming would
continue to be permitted. In November, 1996, voters in Calcasieu
Parish voted favorably to permit the continuation of both forms
of gaming.
In the 1996 Special Session, legislation was also enacted
placing a constitutional amendment on the October, 1996 election
ballot to limit the expansion of gaming in Louisiana. In
October, 1996, voters favorably passed the constitutional
amendment. The constitutional amendment requires local option
elections before new forms of gaming can be brought into a
parish. The measure also requires a local option referendum
before a riverboat can move into a parish that has not already
authorized riverboat gaming. In the 1997 Regular Session of the
Louisiana Legislature, a law was passed authorizing the operation
of slot machines at three horse racing tracks in Louisiana,
including a racetrack situated in Calcasieu Parish (the same
Parish as the Company's Lake Charles facility), Delta Downs.
Under the law, before slot machines can be operated at Delta
Downs both voter approval is required through a local referendum
election in Calcasieu Parish and the passage of companion
legislation by the Louisiana Legislature to establish the tax
rate to be levied on slot machine revenues. In the Fall of 1997,
voters in Calcasieu Parish voted not to authorize the operation
of slot machines at Delta Downs. In addition, the Louisiana
Legislature, in its 1998 Fiscal Session, failed to pass such
companion tax legislation. However, the law provides that
another local referendum may be conducted every two years, and
companion tax legislation may be considered in any future session
of the Louisiana Legislature.
Missouri Gaming Regulation
In November, 1992, the voters of Missouri approved a
referendum authorizing riverboat gaming in Missouri. In 1993,
the Missouri Legislature enacted legislation which substantially
revised the referendum legislation regarding riverboat gaming and
its regulation (the "Missouri Gaming Act"). The Missouri Gaming
Act established the Missouri Gaming Commission, which has broad
jurisdiction over and supervisory powers concerning gaming
operations conducted under the Missouri Gaming Act. These powers
are far reaching and include the power to limit, proscribe or
effectively rescind the payment of dividends or the repayment of
indebtedness to the Company in certain circumstances, including
any adverse financial condition, default, non-compliance or
insolvency of any Subsidiary or the Company.
Following a challenge to legislation authorizing riverboat
casino gaming, a January, 1994, Missouri Supreme Court ruling
created uncertainties regarding the extent to which casino gaming
is constitutional in Missouri. In February, 1994, the Missouri
Legislature passed legislation which permitted voters to amend
the State Constitution to permit legislation reauthorizing
riverboat casino gaming consistent with the State Constitution.
The vote on the proposed State Constitutional amendment was held
in April, 1994, to permit games of chance on riverboat casinos.
In the April, 1994, vote, the State Constitutional amendment was
narrowly defeated. As a result of the Missouri legislature's
actions in February, 1994, several municipalities in Missouri
which had previously approved local ordinances permitting gaming,
including the City of Maryland Heights, resubmitted the local
gaming activities ordinances to the voters in April, 1994, as
well. The Maryland Heights ordinance was approved by municipal
voters in the April, 1994, vote. Subsequently, at the statewide
general election held November 8, 1994, a second proposal to
amend the Missouri Constitution to permit games of chance on
riverboats and floating facilities on the Missouri and
Mississippi Rivers was adopted. As a result thereof, effective
December 8, 1994, reel slot machines and other games of chance
were authorized for use in Missouri casinos.
The Missouri Gaming Act calls for licensure of owners
(Class A license), operators (Class B license), suppliers and
gaming-related occupations. On March 11, 1997, a subsidiary of
the Company received two Class B licenses in Maryland Heights to
operate its two permanently moored riverboat casinos. In
addition, the Maryland Heights Joint Venture was issued four
Class A licenses, one for each of the four riverboat casinos
permanently moored at Maryland Heights, Missouri.
The Missouri Gaming Act provides a maximum loss limit of
$500 per individual player per gaming excursion. Gaming
excursions are required by regulation to be no less than two
hours and no more than four hours in duration. Excursion gaming
boats are required to cruise, unless the Missouri Gaming
Commission determines under applicable criteria to permit gaming
at a continuously docked boat. Such criteria include, among
other items, danger to the boat's passengers because of the
location of the dock or excursion cruising conditions, disruption
of interstate commerce, violation of another state's laws or
Federal law, or possible interference with railway or barge
transportation. On March 11, 1997 the Missouri Gaming Commission
authorized the Company's Maryland Heights Casinos to remain
continuously docked at its present Maryland Heights location. In
accordance with Missouri gaming regulations, one of the Company's
two casinos is open for patron boarding at different times than
the other Company casino, so that only one Company casino is
boarding at any given time. Harrah's casinos at the Maryland
Heights Facility operate in a similar manner.
Under the Missouri Gaming Act, gaming is permitted in
Missouri only on the Missouri and Mississippi Rivers. In
November 1997 the Missouri Supreme Court remanded a case
involving the Company. W. Todd Akin et. al. v. Missouri Gaming
Commission, to the trial court in Cole County, Missouri with
respect to issues raised under the Missouri Gaming Act. While
the Plaintiffs in this case have dismissed their claim without
prejudice, the Missouri Gaming Commission and the Attorney
General's Office of Missouri have notified the Company that they
have issued Preliminary Orders for Disciplinary Action against
the Company's Maryland Heights Facility. See Item 3 below for
more detailed description.
There is no statewide numerical limit to the number of
licenses which may be granted to permit riverboat casino
operations. As a result of the Missouri Legislature's May, 1994,
amendments to the Missouri Gaming Act, prior uncertainty has been
eliminated regarding whether any city or county outside of the
two major metropolitan areas of Missouri (St. Louis/St. Louis
County and the Kansas City metropolitan area) may be granted more
than one license. Under the May, 1994, amendments to the
Missouri Gaming Act, any city or county may be granted more than
one license if the "home dock" city or county has authorized more
than one excursion gaming boat. However, within all cities and
counties in Missouri, the Missouri Gaming Commission has the
ultimate responsibility for setting the number, location and type
of licensed boats. Excursion gaming boats also must be
authorized by the local home dock city or county.
Licensees must establish financial responsibility
sufficient to meet adequately the requirements of the proposed
enterprise. Additionally, the Missouri Gaming Commission's
regulations prohibit withdrawals of capital by, or the making of
loans, advances, or distributions of any type of assets to its
owner(s), in excess of 5% of such entity's accumulated earnings
without Missouri Gaming Commission approval.
The Missouri Gaming Act also requires that the excursion
gaming boat resemble historic Missouri riverboats, encourages use
of Missouri resources, goods and services in the operation of the
boat, and requires that the boat provide for non-gaming areas,
food service and a Missouri theme gift shop. Use of the space on
any vessel and operating criteria are determined in accordance
with rules and regulations of the U.S. Coast Guard. There is no
size limit on Missouri gaming boats and no minimum or maximum
space prescribed for gaming areas.
The Missouri Gaming Act directly subjects the gaming
enterprises to various Missouri taxes. An admission fee of $2.00
per ticket per excursion must be paid to the Missouri Gaming
Commission. Licensees may charge any admission fee above the
$2.00 amount that they desire. Gaming enterprises in Missouri
are also subject to an "adjusted gross receipts tax" equal to 20%
of the gross receipts from licensed gaming games and devices less
winnings paid to wagerers. Owners/operators are subject to all
other income taxes, sales taxes, earnings taxes, use taxes,
property taxes or any other tax or fee levied by local, state or
Federal governments.
Transfer of a Class A or Class B gaming license (the type
of licenses obtained in connection with the operation of the
Maryland Heights Facility) is not permitted without approval of
the Missouri Gaming Commission, nor may such interests be pledged
as collateral without the approval of the Missouri Gaming
Commission. No transfer of an interest of 5% or greater,
directly or indirectly, in a publicly traded company holding a
Class A or Class B license shall occur without the Missouri
Gaming Commission's approval. Additionally, the Missouri Gaming
Commission may require a licensee to maintain cash or cash
equivalents, in an amount sufficient to protect patrons against
defaults in gaming debts owed by the licensee.
Application fees are based upon costs of investigation and
approval of licenses. The minimum nonrefundable application fee
is $50,000. Initial Class A and Class B licenses are granted for
a term of one year. License renewal are granted for a term of
two years. The annual fee for licensure is $25,000.
Kentucky Gaming Regulation
The Company presently owns and operates Players Bluegrass
Downs. Pursuant to the Kentucky statutes governing horse racing,
the Kentucky Racing Commission (the "Racing Commission") has
plenary power to promulgate administrative regulations
prescribing conditions under which all legitimate horse racing
and wagering thereon is conducted. The Racing Commission issues
race track licenses on an annual basis and awards racing dates
subsequent to an annual application required to be filed with the
Racing Commission. The Racing Commission may revoke or suspend a
license if the Racing Commission has reason to believe that any
provision of the Kentucky statutes, administrative regulations,
or conditions established by the Racing Commission has not been
satisfied.
Proposed Texas Gaming Legislation
Since the original Players Lake Charles Riverboat began
operating on December 8, 1993, more than half of its patrons have
come from Texas, with a significant portion coming from the
metropolitan Houston area. Although casino gaming is not
currently permitted in Texas, and the Attorney General of Texas
has issued an opinion that gaming in Texas would require an
amendment to the State's Constitution, the Texas legislature has
considered various proposals to authorize casino gaming. To
date, no bill authorizing casino gaming has passed. Bills may be
introduced from time to time, however, whenever the legislature
is in session. Since the Texas legislature (which meets every
two years in odd-numbered years) did not pass legislation to
amend the Texas State Constitution during the 1997 regular
session, any such legislation will have to await the next regular
session in 1999, or a special session of the legislature.
Special sessions can only be called by the Governor for matters
that were pending in the regular legislative session. Governor
George Bush has taken a public position against legalized casino
gaming in Texas. A constitutional amendment requires a two-
thirds vote of those present and voting in each house of the
Texas state legislature and approval by the electorate at a
referendum.
U.S. Coast Guard
Each cruising riverboat also is regulated by the U.S.
Coast Guard, whose regulations affect boat design and stipulate
on-board facilities, equipment and personnel (including
requirements that each vessel be operated by a minimum complement
of licensed personnel) in addition to restricting the number of
persons who can be aboard the boat at any one time. All vessels
operated by the Company must hold a Certificate of Inspection.
Loss of the Certificate of Inspection of a vessel would preclude
its use as an operating riverboat. Cruising vessels such as
those operated by the Company must be inspected every five years
at a U.S. Coast Guard-approved dry-dock facility, which could
cause a temporary loss of service that could last one month or
longer, unless the U.S. Coast Guard determines that an
alternative to drydocking is acceptable. The next such
inspection is scheduled to occur in the Fall of 2000 for the
Metropolis Riverboat, the Spring of 2000 for the Players Lake
Charles Riverboat and the Fall of 1998 for the Lake Charles Star
Riverboat. The Company is pursuing, as an alternative to
drydocking, an underwater onsite inspection of the hull of the
Lake Charles Star Riverboat, subject to U.S. Coast Guard
approval. An underwater hull inspection would likely involve a
minimal disruption in operations; however, no assurance can be
given that drydocking and the related loss of service will not be
required. Less stringent rules apply to permanently moored
vessels such as the dockside barges used by the Company in
Maryland Heights, Missouri. The Company believes that these
regulations, and the requirements of operating and managing
cruising gaming vessels generally, make it more difficult to
conduct riverboat gaming than to operate land-based casinos.
All shipboard employees of the Company employed on U.S.
Coast Guard regulated vessels, even those who have nothing to do
with the actual operation of the vessel, such as dealers,
cocktail hostesses and security personnel, may be subject to the
Jones Act which, among other things, exempts those employees from
state limits on worker's compensation awards. The Company
believes that it has adequate insurance to cover employee claims.
Shipping Act of 1916
In order for the Company's vessels to have United States
flag registry, the Company must maintain "United States
citizenship" as defined in the Shipping Act of 1916, as amended
(the "Shipping Act"), and other applicable statutes. A
corporation operating any vessel in the coastwise trade, such as
the Company, is not considered a United States citizen unless,
among other things, United States citizens own 75% of its
outstanding capital stock.
Company Repurchase Rights with Respect to Company Securities
There are various regulations on the ownership of the
Company's Common Stock. The Company's Articles of Incorporation
provide that if any governmental commission, regulatory
authority, entity, agency or instrumentality (collectively, an
"Authority") having jurisdiction over the Company or any
affiliate of the Company or that has granted a license,
certificate of authority, franchise or similar approval
(collectively, a "License") to the Company or any affiliate of
the Company orders or requires any stockholder to divest any or
all of the shares of Common Stock (or options, convertible
securities or warrants to purchase Common Stock, collectively,
together with Common Stock ("Securities")) owned by such
stockholder (a "Divestiture Order") and the stockholder fails to
do so by the date required by the Divestiture Order (unless the
Divestiture Order is stayed), the Company will have the right to
acquire the securities from the stockholder that the stockholder
failed to divest as required by such Divestiture Order. If,
after reasonable notice and an opportunity for affected parties
to be heard, any Authority determines that continued ownership of
the Company's Securities by any stockholder shall be grounds for
the revocation, cancellation, non-renewal, restriction or
withholding of any License granted to or applied for by the
Company or any affiliate of the Company, or shall be grounds for
limiting the activities of such entity, such stockholder shall
divest the Securities that provide the basis for such
determination, and if such stockholder fails to divest Securities
within 10 days after the date the Authority's determination
becomes effective (unless the determination is stayed), the
Company shall have the right to acquire such Securities from the
stockholder. If the Company determines that persons who are not
citizens of the United States as determined under the Shipping
Act or other applicable statutes (the "Foreign Citizens") own
more than 25% of the Company's outstanding Common Stock, the
Company may require the Foreign Citizen(s) who most recently
acquired the shares that bring total Foreign Citizen ownership to
more than 25% of the outstanding Common Stock (the "Excess
Shares") to divest the Excess Shares to persons who are United
States citizens. If the Foreign Citizen(s) so directed fail to
divest the Excess Shares to United States citizens within 30 days
after the date on which the Company gives a written notice to the
Foreign Citizen(s) to divest the Excess Shares, the Company shall
have the right to acquire the shares that the Foreign Citizen(s)
failed to divest as required by the Company's notice.
Whenever the Company has the right to acquire Securities
from a stockholder pursuant to the provisions described in the
preceding paragraph, the Company will pay the stockholder $.10
per share or such higher price as may be required by applicable
legal requirements. Some state gaming regulations require a
purchase price equal to the fair market value of the Securities
under certain circumstances described above. If there is no
other applicable legal requirement, any amount payable to the
stockholder in excess of $.10 per share will be paid in five
equal annual installments with interest at the lower of the prime
rate or the LIBOR rate, as published from time to time in the
Wall Street Journal.
When any Divestiture Order is entered or when the Company
tenders the consideration for which it may acquire Securities, as
described above, the Securities in question shall no longer be
entitled to any voting, dividend or other rights until such time
as they have been appropriately divested. The foregoing
provisions of the Company's Articles of Incorporation relating to
required divestiture are in addition to, and not in replacement
of, any applicable legal requirements.
The terms of the Company's Senior Notes feature certain
analogous provisions which could give rise to the obligation of
the holder to sell such Senior Notes or the right of the Company
to repurchase the Senior Notes at a price equal to the lower of
the holder's cost, the principal amount or the then current
market prices.
Paid Advertising and Marketing
The Federal Communications Commission ("FCC") prohibits
radio and television broadcasters from accepting advertising that
actively promotes gaming, although the FCC does not ban all
advertising for casino facilities. Federal regulation also
restricts the circulation of certain materials related to gaming
through the United States mail. The Company, together with the
National Association of Broadcasters and several statewide
associations of broadcasters (radio and television stations),
brought suit against the FCC to invalidate the current
restrictions on radio and television advertising of casinos on
constitutional grounds. On December 16, 1997, the United States
District Court for the District of New Jersey ruled in the
Company's favor and declared the restrictions unconstitutional.
The Company is now seeking to enjoin the FCC from enforcing the
prohibitions nationwide.
Discouragement of Share Accumulations
Various state limits requiring approvals of shareholdings
over certain thresholds may discourage accumulations over such
limits and therefore may discourage changes in control of the
Company. See "- Gaming Regulations." The Federal laws referred
to above may also discourage ownership by stockholders who are
not citizens of the United States.
Forward-Looking Information
Certain information included in this section and elsewhere
in this Annual Report on Form 10-K contains, and other materials
filed or to be filed by the Company with the Securities and
Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the
Company) contain or will contain or include, forward-looking
statements within the meaning of Section 21E of the Securities
and Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. Such forward-looking
statements address, among other things, the effects of
competition, the resolution of pending or threatened litigation
or regulatory proceedings concerning the Company's alleged non-
compliance with Missouri's gaming laws and Constitution, plans
for future riverboat hull inspections, I-10 road construction in
Lake Charles, future borrowing and capital costs, equity
repurchases and future issuances, plans for projects currently
under development, plans for future expansion and property
enhancements, business development activities, capital
expenditure programs and requirements, financing sources and the
effects of legislation and regulation (including possible gaming
legislation, gaming licensure and regulation, state and local
regulation, tax regulation, and the potential for regulatory
reform). Forward looking statements can generally be identified
by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "estimate", "believe", or "continue" or the
negative thereof or variations thereon or similar terminology.
See Item 7: "Management's Discussion and Analysis of Financial
Condition and Results of Operation". Such forward-looking
information is based upon management's current plans or
expectations and is subject to a number of uncertainties and
risks that could significantly affect current plans, anticipated
actions, and the Company's future financial condition and results
of operations. These uncertainties and risks include, but are
not limited to, those relating to conducting operations in an
increasingly competitive environment, conducting operations at a
newly or recently developed site or in a jurisdiction for which
gaming has recently been permitted, changes in state and local
laws and regulations, development and construction activities,
leverage and debt service requirements (including sensitivity to
fluctuation in interest rates), general economic conditions, the
U.S. Coast Guard's acceptance of underwater hull inspections as
an alternative to dry docking and inspection, changes in federal
and state tax laws, the disruption to Lake Charles operations
caused by road construction, action taken under applications for
licenses (including renewals) and approvals under applicable laws
and regulations (including gaming laws and regulations), and the
legalization of gaming in certain jurisdictions. As a
consequence, current plans, anticipated actions, and future
financial condition and results may differ from those expressed
in any forward-looking statements made by or on behalf of the
Company and no assurance can be given that such statements will
prove to be correct.
Item 2. Properties
Metropolis, Illinois
The Company leases its docking facilities in Metropolis,
which cover 1,810 linear feet of riverfront, from the City of
Metropolis pursuant to a 20-year lease with a 20-year renewal
option at an annual rent of approximately $7,000. Under a
separate 20-year lease with the City of Metropolis, the Company
leases additional riverfront property immediately adjacent to its
docking facilities for surface parking at an annual rate of
$2,500. The Company also owns several parcels of land in
Metropolis, some with buildings, aggregating approximately eight
acres, and leases an additional two acres. The owned or leased
area is used primarily for customer parking or as office space.
Some of the land is being held for development, and some of the
current parking area may be developed, in which event the Company
believes suitable replacement parking space could be obtained.
In March, 1996, the Company completed a two-story office facility
which accommodates the administrative staff.
The Ohio River occasionally overflows its banks at the
Metropolis facility, most often during late winter and early
spring. Such flooding may cover a portion of the Company's
closest parking location, although the Company believes that it
will still have adequate available parking within reasonable
walking distance of its landing during typical flooding periods.
If flooding is especially severe, it may be impractical for
passengers to board the riverboat at its normal dock site. The
Company has developed an emergency plan that would permit gaming
activities to continue in such circumstances. Any use of an
alternate landing because of flooding may result in some loss of
service.
Lake Charles, Louisiana
On August 16, 1995, the Company entered into an agreement
(the "Beeber Agreement") with The Beeber Corporation ("Beeber")
to purchase Players Hotel and approximately 3 acres of real
estate comprising the landside facility for the Players Lake
Charles Riverboat and the Star Riverboat (collectively, the
"Property"). Under this arrangement, as amended, the Company
paid a total consideration of $6.7 million. As additional
consideration, the Company is required to continue making certain
payments to Beeber and a third party, which payments are related
to a lease agreement dated May 19, 1993 between the Company and
Beeber, as amended. Under this arrangement, the Company and such
parties have entered into an agreement, dated July 27, 1995,
whereby the Company is obligated to pay a total of $2.95 for each
passenger who patronizes the Company's Lake Charles riverboats,
subject to certain conditions.
Maryland Heights, Missouri
On November 2, 1995, the Company entered into the Maryland
Heights Joint Venture Agreement with Harrah's to form a joint
venture and co-develop the Maryland Heights Facility on an
approximately 215 acre site in Maryland Heights, Missouri. An
affiliate of Harrah's owns the property underlying the Maryland
Heights Facility. The Maryland Heights Joint Venture Agreement
provides for joint decision making with respect to major
decisions for the Maryland Heights Joint Venture, such as
matters relating to the approval of the annual operating budgets
and annual plans, the incurrence of debt beyond amounts set forth
in the operating budget and the construction of improvements to
the Maryland Heights Joint Venture. Each of the Company and
Harrah's have an eighty (80) year lease with the Harrah's
affiliate for the property underlying their respective casinos.
The leases for the Company and Harrah's are substantially
identical, except that the Company pays rent and Harrah's does
not pay rent. The Company's rent consists of a percentage rent
equal to the following specified percentages multiplied by the
relevant specified incremental levels of annual net gaming
revenues at the Company's Maryland Heights Casinos: 2% of annual
net gaming revenue up to $50 million, 3% of annual net gaming
revenue between $50 million and $100 million, and 4% of annual
net gaming revenue in excess of $100 million. Pursuant to the
Management Agreement, a Harrah's affiliate manages the Maryland
Heights Hotel and the Maryland Heights Entertainment Facility
except for the Company's specialty restaurant and retail
operations. See "Business-Maryland Heights Operations."
Bluegrass Downs, Kentucky
In November 1993, the Company acquired Players Bluegrass
Downs located in Paducah, Kentucky, in anticipation that the
Kentucky legislature would enact legislation to authorize casino-
type gaming, such as slot machines and table games, at licensed
racetracks. If any legislation is adopted permitting additional
forms of gaming at racetracks, the Company currently plans to
develop its track into a facility that would offer all permitted
forms of gaming. The racetrack is approximately ten miles from
the Company's Metropolis facility. The next closest Kentucky
racetrack to the Metropolis facility is Ellis Park, which is
approximately 100 miles from each of Paducah and Metropolis.
Players Bluegrass Downs consists of approximately 69.6 acres.
The Company owns 58.3 acres and leases the remaining 11.3 acres.
Players Bluegrass Downs includes a 5/8 mile oval racetrack, an
enclosed 17,000 square foot clubhouse housing dining and wagering
facilities, administrative areas, barns and related buildings
that can accommodate 725 horses, and a parking area for more than
1,400 cars.
Item 3. Legal Proceedings
Poulos, Ahern and Schreier Litigation
The Company, certain suppliers and distributors of video
poker and electronic slot machines and over forty other casino
operators have been named as defendants in a class action suit
filed April 26, 1994 in the United States District Court, Middle
District of Florida, by William Ahern and William H. Poulos.
The plaintiffs allege common law fraud and deceit, mail fraud,
wire fraud and Racketeer Influenced and Corrupt Organizations Act
violations in the marketing and operation of video poker games
and electronic slot machines. The suit seeks unspecified damages
and recovery of attorney's fees and costs. On December 9, 1994,
an Order was entered by the District Court in Florida
transferring the consolidated action to the United States
District Court for the District of Nevada. The defendants filed
various motions seeking dismissal of the action.
On or about October 27, 1995 the Company was served with a
purported class action captioned Schreier, et. al. v. Players
International, et al. in the United States District Court for the
District of Nevada, which is essentially identical to the Poulos
and Ahern litigation, except for certain variations in the
definition of the purported class. The matter has also been
consolidated with the Poulos and Ahern litigation.
On April 17, 1996, the Court dismissed plaintiffs'
Complaint without prejudice for failure to plead their claims
with specificity and dismissed defendants' remaining substantive
motions as moot. The Court permitted plaintiffs to file an
amended complaint. The matter is currently in the discovery
stage, after which substantive motions for dismissal will be
filed by the defendants. The Company believes that the
plaintiffs claims are wholly without merit and does not expect
that the lawsuit will have a material adverse effect on the
Company's financial position or results of operations.
J.A. Miller, et. al. v. Showboat Star Partnership, et al.
Showboat Star Partnership, a subsidiary of the Company, was
served with a petition captioned J.A. Miller, et. al. v.
Showboat Star Partnership, et. al. on or about February 27, 1997,
Docket No. 10-14544, in the 38th Judicial District Court, Parish
of Cameron, State of Louisiana. The plaintiffs, a group of
oyster fishermen, allege in the petition that on or about
February 2, 1997, the Star Riverboat discharged raw sewage and
other hazardous and toxic substances from the bilge of the vessel
into Lake Charles. Plaintiffs further allege that, since 1994,
the Star Riverboat and the Players Lake Charles Riverboat have
discharged raw sewage and other hazardous and toxic substances
into Lake Charles which is part of the Calcasieu Estuary.
Plaintiffs claim that alleged acts of the Company have resulted
in great damage to natural oyster beds forty-three (43) miles
down river in Cameron Parish, resulting in oysters situated
thereon to become dangerous and unfit for human consumption and
or/preventing the oyster fishermen from harvesting oysters. The
oyster fishermen are claiming both compensatory and punitive
damages. The matter is in the early stages of litigation. The
Company has filed several motions in response to the petition
including motions to dismiss the action. The Company has also
requested certain discovery in connection with the motions. The
Company intends to vigorously defend this action.
Ceola and Richard Morris v. Players Lake Charles, Inc.; et al.
Players Lake Charles, Inc. has been named as a defendant in
a claim in Louisiana State Court for personal injuries filed by
Ceola and Richard Morris. The claim allegedly resulted when a
piece of fret-work aboard the Players Lake Charles Riverboat fell
from the wall and allegedly hit Ms. Morris on the head. The
Company's primary insurer with respect to this claim, Anglo
American Insurance Company Limited ("Anglo American") has been
placed in liquidation, which liquidation proceedings are still
ongoing. It is not known whether, at the conclusion of such
proceedings, Anglo American will have sufficient assets remaining
to satisfy any judgment that may be obtained against the Company
in this case, which is currently set for trial on September 8,
1998. The Company continues to pursue its claim against Anglo
American.
W. Todd Akin, et. al. v. Missouri Gaming Commission
W. Todd Akin et. al. v. Missouri Gaming Commission was
filed in the Circuit Court of Cole County, Missouri, in August of
1996 in order to seek a judicial declaration that the Missouri
Gaming Act is unconstitutional because, allegedly contrary to the
Missouri Constitution, the Missouri Gaming Act permits gaming
facilities (such as the Maryland Heights Facility) to be located
upon artificial basins fed by the Missouri River. The Company
and Harrah's, the Missouri Riverboat Gaming Association and the
City of Maryland Heights intervened in order to protect their
respective interests. The statute was found constitutional and
the suit was dismissed without prejudice in its entirety on the
merits by the trial court in December, 1996. That dismissal was
appealed directly to the Missouri Supreme Court by the plaintiffs
in January, 1997. On November 25, 1997, the Missouri Supreme
Court ruled that gaming may occur only in artificial spaces that
are contiguous to the surface stream of the Missouri and
Mississippi Rivers. The case was remanded to the trial court for
a factual determination as to whether those casino operators meet
this requirement. The plaintiffs dismissed their case against
the Company after this ruling but prior to a determination by the
trial court on this issue. A number of Missouri gaming licensees
conduct gaming operations directly on the Missouri and
Mississippi rivers and thus these operators are not expected to
be adversely affected by the implications of the Akin decision.
In January, 1998, the Company was advised by the Missouri
Gaming Commission that it intended to take disciplinary action
against the licenses held by the Company in Maryland Heights for
failure to comply with Missouri law, as modified and interpreted
in the Akin decision, and to revoke the Company's licenses to
conduct games of chance at the Maryland Heights Facility. In
response to this, on January 9, 1998, the Company (and certain
other casino companies) sought and obtained a Preliminary Writ of
Prohibition from the Circuit Court of Cole County, prohibiting
the Missouri Gaming Commission from taking disciplinary action
against such companies. On January 29, 1998, following hearings
on the Petition for Writ of Prohibition, the Circuit Court of
Cole County made its Preliminary Writ of Prohibition permanent,
holding that the companies had a constitutional right to due
process which was violated by the proposed disciplinary actions
of the Missouri Gaming Commission. The Missouri Gaming
Commission appealed that decision granting a Writ of Prohibition
to the Missouri Supreme Court. On May 28, 1998 the Missouri
Supreme Court issued its decision in this case, reversing the
decision of the Circuit Court and quashing the Writ of
Prohibition issued against the Missouri Gaming Commission. The
Court found that because the Missouri Gaming Commission
presumptively had jurisdiction to take disciplinary action
against gaming facilities for failing to comply with state law
location requirements, a Writ of Prohibition was an inappropriate
remedy. The Court held that the companies' objections to
jurisdiction and other components of the proceedings should be
addressed to the agency, and to the courts of appeal should the
companies not prevail before the agency. The Court also held
that the appeal was an effective alternative remedy at law
because the Commission does have the authority to stay any
adverse decision pending the outcome of all appeals, thus
rendering prohibition an inappropriate remedy in the
circumstances.
On June 18, 1998, the Missouri Gaming Commission issued
its Preliminary Orders for Disciplinary Action to the gaming
companies affected by the Akin decision, including the Company.
The Company has until July 18, 1998 to request a hearing on the
Preliminary Orders for Disciplinary Action. The Company intends
to request such a hearing, which stays the effect of the proposed
Preliminary Orders indefinitely and entitles the Company to a
full evidentiary hearing before the Missouri Gaming Commission's
Hearing Officer. There are five gaming companies in separate
locations which will be receiving Preliminary Orders for
Disciplinary Action and for whom hearings must be conducted. The
Missouri Gaming Commission has indicated that all hearings will
be conducted prior to any recommended decision being submitted to
the Commission by its Hearing Officer for a vote of the
Commission on final discipline for any facility. Hearings are
anticipated to take several weeks. Discovery is permitted and it
is anticipated that hearings are unlikely to commence prior to
September or October of 1998. Should a recommendation adverse to
the Company be made and adopted by the Missouri Gaming
Commission, the Company may obtain a stay of any discipline, in
order to appeal to the Missouri Court of Appeals, Western
District. Appeals of this type ordinarily take six months to one
year from filing to decision. Further appeal from any adverse
decision of the Missouri Court of Appeals may then be taken by
transfer to the Missouri Supreme Court.
Because of management's belief that the Company is entitled
to clarification of the uncertainty caused by the Akin decision
and the Missouri Gaming Commission's and Attorney General's
interpretation of it, the Company and Harrah's filed suit for a
declaratory judgment in Circuit Court on January 22, 1998. Such
suit seeks a declaration that: (i) the Company's reasonable
reliance upon the prior approval of the Missouri Gaming
Commission of its location prohibits adverse action by the
Commission or Attorney General against the Company on the basis
of the subsequent Akin decision; (ii) the Company, if found not
in compliance to any extent, must be permitted a period of time
within which to remedy any deficiency in its facilities to bring
them into compliance; and (iii) the Company is entitled to be
justly compensated for any financial loss resulting from adverse
actions of the Missouri Gaming Commission or the Attorney General
in enforcing their interpretation of the Akin decision. On
February 23, 1998 the Commission filed its Motion to Dismiss the
Petition for Lack of Ripeness and Failure to Exhaust
Administrative Remedies. On March 26, 1998 arguments were heard
on the Commission's Motion by the Circuit Court. On April 13,
1998 the Circuit Court issued its Order denying the Motions to
Dismiss and requiring an Answer to be filed. Defendants' Answer
to the Petition was filed May 1, 1998 and Plaintiff's Discovery
commenced with Interrogatories and Requests for Production of
Documents on April 16, 1998. While this case involves no
monetary sum, it will be diligently prosecuted by the Company in
order to obtain relief from the uncertainty created by the Akin
decision.
Because of the questions raised, but not answered, in the
Missouri Supreme Court's Akin decision, and because the Company
has not yet had its hearing on the Missouri Gaming Commission's
Preliminary Order for Disciplinary Action, the Company cannot
predict what effect the Missouri Supreme Court's ruling, or any
action of the Attorney General or Missouri Gaming Commission,
will have on the operations at Maryland Heights. At this time,
based on discussions with Missouri legal counsel, management
believes that any potential problem could be remedied through (i)
a public referendum at the November 1998 Missouri election in
order to cure any ambiguity or uncertainty in the law or (ii) the
defenses available to the Company if a lawsuit or administrative
action based on this ruling were to be brought or (iii) remedial
action to the property. The riverboat gaming industry in
Missouri is currently circulating petitions for signatures of 8%
of the qualified voters in two-thirds of the state's
congressional districts for the purpose of placing on the
November 1998 statewide general election ballot a constitutional
amendment authorizing floating facilities within 1,000 feet of
the main channel of the Missouri and Mississippi Rivers. Such
initiative, if approved by the voters, would terminate all
litigation and disciplinary action described herein. The staff
of the Missouri Gaming Commission has suggested to counsel for
the Company that no final decision of the Missouri Gaming
Commission on disciplinary actions is anticipated prior to the
November, 1998 election. Should the initiative fail, the Company
shall pursue its state administrative remedies before the
Missouri Gaming Commission, judicial review before the courts of
appeal, and the Company's litigation for declaratory judgment,
injunction and compensation for regulatory taking of property
described above.
If, subsequent to any judicial or administrative resolution
of any of the foregoing issues, remediation of the Maryland
Heights property were considered, management would, prior to
undertaking any remediation, (i) consult with Harrah's concerning
the alternative means by which to remediate the property and the
terms thereof, including whether the Company in such
circumstances would be contractually obligated to fund any
remediation effort and (ii) individually evaluate whether the
cost of remediation would be justified in light of the projected
future results of the Company's Maryland Heights operations.
Management cannot presently provide any assurance as to whether
the Maryland Heights Facility would be permitted to modify the
facility to comply with any such remediation order or whether the
Company's legal defenses, legislative or electoral avenues or
other means available would be successful to permit continued use
of the facility without interruption. Further, it is unclear, in
the event of a determination of non-compliance, what penalty or
monetary obligation or sanction, if any, including a possible
temporary or permanent closure, could be imposed on the Maryland
Heights Facility or the Company. If the Company could not, or
chose not to, remediate the property and it were closed, the
Company would incur a substantial write-down in asset values
related to the property in addition to the possibility of
incurring substantial losses related to any potential shut-down
or suspension of operations. Such negative impacts may be
offset, in part, by certain tax benefits.
Item 4. Submission of Matters to a Vote of Security Holders;
Directors and Executive Officers of the Company
During the fourth quarter ended March 31, 1998, no matter
was submitted to a vote of the Company's stockholders. The
directors and executive officers of the Company are as follows:
PRESENT POSITION DIRECTOR
NAME WITH THE COMPANY SINCE AGE
Edward Fishman Chairman of the Board of 1985 55
Directors
Howard President, Chief Executive 1986 53
Goldberg Officer and Director
John Groom Executive Vice President, 1997 53
Chief Operating Officer and
Director
Marshall S. Director 1989 59
Geller
Lee Seidler Director 1987 63
Charles Masson Director 1996 45
Earl Webb Director 1996 42
Lawrence Cohen Director 1996 40
Vincent J. Director 1997 59
Naimoli
Alan R. Buggy Director 1997 49
Peter J. Executive Vice President -- 52
Aranow Finance, Chief Financial
Officer, Treasurer and
Secretary
Patrick H. Vice President and General -- 36
Madamba, Jr. Counsel
Edward Fishman has served as Chairman of the Board of the
Company since 1985. He served as Chief Executive Officer from
1985 until December, 1995 and served as President during May,
1993. Prior to his retirement as an active Company employee in
September, 1996, his principal activities for the Company related
to marketing, long-range development and strategic planning. He
has 18 years of marketing experience in the casino industry and
he has served as a marketing and strategic planning consultant to
casinos throughout the world.
Howard Goldberg became President and Chief Operating
Officer of the Company in May, 1993, and then became Chief
Executive Officer in December, 1995. Prior to joining the
Company as an officer, Mr. Goldberg was a director, and was the
managing shareholder practicing law in the Atlantic City, New
Jersey law firm of Horn, Goldberg, Gorny, Plackter, Weiss &
Perskie ("Horn, Goldberg"), which has represented the Company
since its inception. Since the advent of casino gaming in
Atlantic City, Mr. Goldberg specialized in representing casinos
in New Jersey and other jurisdictions for development and
regulatory matters. Mr. Goldberg's name remains a part of the
firm name of Horn, Goldberg, but he does not currently engage in
any firm related activities or matters. The amount of any
payments due him from the firm is not affected by or dependent
upon fees paid by the Company to Horn, Goldberg. Mr. Goldberg
currently serves as a director of iMall, Inc.
John Groom joined the Company as Executive Vice President,
Operations in January, 1996, and became Chief Operating Officer
of the Company in September, 1996. From May, 1979 until January,
1995, Mr. Groom served in various executive management positions
within the Caesars organization at Caesars Atlantic City and
Caesars Palace Las Vegas.
Marshall S. Geller is the Chairman and Chief Executive
Officer of Geller & Friend Capital, a merchant banking investment
company. He was formerly interim President and Chief Operating
Officer of the Company from November, 1992, through April, 1993.
From 1991 through 1995, Mr. Geller was the Senior Managing
Partner and founder of Golenberg & Geller, Inc., a merchant
banking investment company. Mr. Geller served as Vice Chairman
of Gruntal & Co. Inc., an investment banking firm, from 1988 to
1990. From 1967 until 1988, he was a Senior Managing Director of
Bear Stearns & Co. Inc., an investment banking firm ("Bear
Stearns"). He is currently a director, and was formerly the
interim Co-Chairman, of Hexcel Corporation. Mr. Geller is a
director of Value Vision International, Inc. and serves as
Chairman of its Investment Committee. He also serves on the
Boards of Ballantyne of Omaha, Inc., iMall, Inc., DataLink
Systems Corporation and Cabletel Communications Corporation.
Lee Seidler is a private investor. He is affiliated with
Bear Stearns as Managing Director Emeritus. From 1981 to 1989,
he was a Senior Managing Director of Bear Stearns. He is a
director of Synthetic Industries, Inc., The Shubert Organization,
Inc. and The Shubert Foundation. Mr. Seidler was a Professor of
Accounting and Price Waterhouse Professor of Auditing at New York
University from 1965 to 1985.
Charles M. Masson is an independent consultant and has
been President of McCloud Partners, a private advisory firm in
New York City since 1993. He served as the Chairman of the Board
of Directors of Cadillac Fairview Corporation Limited, a real
estate management and development company from September, 1994
through August, 1995, as a director of Salomon Brothers Inc. from
1991 through May, 1993, and as Vice President of Salomon Brothers
Inc. from 1990 through 1993. Mr. Masson served as a director of
Griffin Gaming & Entertainment, Inc. ("GG&E") (formerly Resorts
International, Inc.) from November, 1993 until December, 1996.
Mr. Masson served as a director of Color Tile, Inc. from August,
1996 until July, 1997.
Earl E. Webb is the head of LaSalle Partners' Investment
Banking Group, which provides real estate acquisition,
disposition and financing services to clients that include
domestic and foreign corporations, pension funds, developers and
financial institutions. He serves on the Board of Directors of
LaSalle Partners and as a member of its Management Committee.
Lawrence Cohen has served as President and Chief Executive
Officer of The Griffin Group since July 1, 1997. From 1988 to
June, 1997, he served as Executive Vice President and Chief
Financial Officer of The Griffin Group. From 1986 to 1988, he
was Assistant Corporate Controller of Columbia Pictures
Entertainment, Inc. Prior to 1986, Mr. Cohen was with the
accounting firm of Paneth, Haber & Zimmerman. He also served as
a director of Resorts International Hotel, Inc. from 1994 to
December, 1996. From 1994 until July, 1996, Mr. Cohen served as
a director of Liberty Broadcasting, Inc., a privately held
broadcasting company.
Vincent J. Naimoli has served as Chairman, President and
Chief Executive Officer of Anchor Industries International, Inc.,
a multi-industry, operating, holding and financial services
company since 1989 and as the Managing General Partner and Chief
Executive Officer of the Tampa Bay Devil Rays since 1995. Mr.
Naimoli served as a director of GG&E from May 1994 to December
1996, as Chairman, President and Chief Executive Officer of
Doehler-Jarvis, Inc., a designer and manufacturer of precision
aluminum castings, from 1991 to 1995, as Chairman, President and
Chief Executive Officer of Harvard Industries, Inc., an
automotive components company, from 1993 to 1997, and as
Chairman, President and Chief Executive Officer of Ladish
Company, Inc., a manufacturer of forged titanium and other metal
components, from 1993 to 1995. He serves on the Board of
Directors of Florida Progress Corporation, Russell-Stanley
Corporation and Simplicity Pattern Company, Inc.
Alan R. Buggy has served as President and Chief Executive
Officer of The Chalfont Group, an investment company, since 1997.
From 1994 to 1997, Mr. Buggy served as Managing Director of Price
Waterhouse. From 1990 to 1993, Mr. Buggy served as Executive
Chairman of ITC Entertainment Group. Mr. Buggy also served as
Managing Director of Samuel Montagu, Inc., a merchant banking
firm, from 1983 to 1990. From 1982 to 1983, he served as Senior
Vice President of American Scandinavian Bank, managing the
corporate finance and treasury divisions.
Peter J. Aranow joined the Company as an Executive Vice
President in May 1993, became Secretary in September 1993 and
Treasurer in March 1996. Mr. Aranow also served as Chief
Financial Officer of the Company from May 1993 until March 1996,
and from August 1997 to the present. From 1977 to May 1993, he
was a Senior Managing Director in the investment banking
department of Bear Stearns specializing in the gaming industry.
Patrick H. Madamba, Jr. was appointed Vice President and
General Counsel to the Company on June 10, 1997. Mr. Madamba
joined the Company in January 1995 as Vice President and
Associate General Counsel. From May, 1988 through January, 1995,
he was associated with the law firm of Horn, Goldberg. From 1985
through 1988, he held various positions at the Claridge Casino
Hotel in Atlantic City, New Jersey, including the position of
Regulatory Affairs Manager.
Howard Goldberg and Lee Seidler are brothers-in-law.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The Company's Common Stock is traded on the Nasdaq National
Market under the symbol "PLAY". The following table
sets forth the high and low closing sale prices of the Company's
Common Stock, as reported by the Nasdaq National Market, during
the periods indicated.
High Low
Fiscal 1997
First Quarter 12-1/8 9-1/8
Second Quarter 10-1/4 6-1/16
Third Quarter 7-13/16 5-1/8
Fourth Quarter 6-1/8 4-5/8
Fiscal 1998
First Quarter 4-9/16 3
Second Quarter 4-7/16 2-3/8
Third Quarter 4-7/16 2-9/16
Fourth Quarter 5-1/8 3-1/8
Fiscal 1999
First Quarter (through June 5-37/64 4-1/2
25, 1998)
The last reported sales price of the Common Stock on the Nasdaq
National Market on June 25, 1998 was 4 1/2 per share.
There were approximately 536 holders of record of the Company's Common
Stock as of June 19, 1998.
The Company has never declared or paid cash dividends on its
Common Stock. Under the terms of the covenants of its Senior
Notes and its Credit Line, the Company cannot pay cash dividends
to the holders of its Common Stock. The Company presently
intends to retain earnings to finance the operation and expansion
of its business. See " Business Gaming Regulation" and "Company
Repurchase Rights with Respect to Company Securities" with regard
to certain regulations and provisions affecting the Company's
securities.
Item 6. Selected Financial Data
Selected financial data for, and as of the end of, each of
the years in the five-year period ended March 31, 1998, are
presented below.
1998 1997 1996 1995 1994
(in thousands, except per share data)
Operations Data:
Total revenues $323,218 $291,210 $291,395 $223,695 $107,082
Net income (loss) 1,951 (46,298) 22,320 45,755 20,952
Earnings per Common Share Assuming
Dilution:
Net income (loss) $.06 $(1.56) $.70 $1.47 $.72
Balance Sheet Data:
Cash, cash equivalents and
marketable securities, net 17,223 20,567 23,247 50,332 77,546
Total assets 409,587 421,289 413,432 223,790 138,565
Long term debt, including 182,549 196,000 153,000 8,907 5,865
current portion
Total stockholders' equity 157,914 155,881 193,627 176,143 115,844
Selected Quarterly Financial Information (Unaudited)
Set forth below is selected financial information for the
last eight fiscal quarters. In management's opinion, the results
include all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of the information
for the periods presented when read in conjunction with the
historical Consolidated Financial Statements and notes thereto
contained elsewhere herein.
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
(in thousands, except per share data)
Fiscal 1998
Casino Revenues:
Lake Charles $37,337 $39,922 $36,056 $35,784 $149,099
Metropolis 18,725 21,032 19,118 21,350 80,225
Mesquite 4,438 - - - 4,438
Maryland Heights 15,287 17,425 17,050 18,813 68,575
$75,787 $78,379 $72,224 $75,947 $302,337
Loss on sale of Mesquite property(2) - - $ (400) (171) (571)
Agreement with City of Lake Charles - - - 4,153 4,153
Adjusted EBITDA (1) 12,658 15,632 11,447 15,487 55,224
Income before other income
(expense) and provision for
income taxes 6,745 9,400 5,682 4,511 26,338
Net income (loss) 293 2,120 166 (628) 1,951
Earnings (loss) per common share-
assuming dilution $.01 $.07 $.01 $(.02) $.06
Fiscal 1997
Casino Revenues:
Lake Charles $47,348 $41,407 $33,341 $36,943 $159,039
Metropolis 19,152 20,385 18,976 17,860 76,373
Mesquite 5,752 5,468 5,788 6,364 23,372
Maryland Heights - - - 3,876 3,876
$72,252 $67,260 $58,105 $65,043 $262,660
Impairment and write-down of assets - - - $7,357 $7,357
Loss on sale of Mesquite property(2) - - - $57,397 $57,397
Restructuring charge - $9,007 - - $9,007
Adjusted EBITDA (1) $16,870 $12,292 $7,754 $8,923 $45,839
Income (loss) before other income
(expense) and provision for
income taxes $11,572 $(2,687) $(1,152) $(64,002)(56,269)
Net income (loss) $ 4,762 $(3,843) $(3,105) $(44,112)(46,298)
Earnings (loss) per common share-
assuming dilution .15 (.13) (.11) (1.41) (1.56)
(1) Represents earnings, before interest income (expense),
provision for income taxes, depreciation and amortization
(including joint venture depreciation and amortization), pre-
opening expenses, impairment and write-down of assets, loss on
sale of Mesquite property, restructuring charge, agreement with
the City of Lake Charles and other income. Adjusted earnings
before interest, taxes, depreciation, and amortization ("Adjusted
EBITDA") is not intended to represent cash flows for any of the
quarterly periods, nor has it been presented as an alternative to
income from operations as an indicator of operating performance
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally
accepted accounting principles. EBITDA-based information is
presented solely as supplemental disclosure because EBITDA is
frequently used to analyze companies on the basis of operating
performance, leverage and liquidity.
(2) During 1997, the Company recorded a loss on the sale of the
Mesquite property totaling $57,397,000. During 1998, the
estimated remaining liabilities associated with the Mesquite
facility were re-evaluated and reduced by $571,000.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation
The following discussion and analysis provides information
which management believes is relevant to an assessment and
understanding of the consolidated results of operation and
financial condition of the Company and its subsidiaries. The
Company owns and operates riverboat gaming and entertainment
facilities. These include one riverboat casino in Metropolis,
Illinois (the "Metropolis Facility"), two riverboat casinos in
Lake Charles, Louisiana (the "Lake Charles Facility") and two
contiguous, permanently moored, dockside riverboat casinos in
Maryland Heights, Missouri (the "Maryland Heights Facility").
The Company operated a land-based casino resort in Mesquite,
Nevada (the "Mesquite Facility") until June 30, 1997. The
Company also owns and operates a thoroughbred racetrack in
Paducah, Kentucky ("Bluegrass Downs"). Since the Company's
fiscal year ends on March 31st, references to the years 1998,
1997, and 1996, mean the twelve month periods ended March 31,
1998, March 31, 1997, and March 31, 1996, respectively.
Results of Operations
Financial Highlights
Years ended March 31, % Increase/
1998 1997 1996 (Decrease)
98vs. 97vs.
(Dollars in thousands, except per share amounts) 97 96
Casino Revenues
Metropolis $80,225 $76,373 $82,191 5.0 (7.1)
Lake Charles 149,099 159,039 170,678 (6.3) (6.8)
Maryland Heights 68,575 3,876 - (c) -
Mesquite 4,438 23,372 16,870 (d) 38.5
302,337 262,660 269,739 15.1 (2.6)
Total Revenues
Metropolis 83,430 79,501 85,902 4.9 (7.5)
Lake Charles 157,102 167,107 176,061 (6.0) (5.1)
Maryland Heights 73,127 4,383 - (c) -
Mesquite 8,700 38,945 27,941 (d) 39.4
Other 859 1,274 1,491 (32.6) (14.6)
323,218 291,210 291,395 11.0 -
Operating Income (Loss)
Metropolis 21,659 21,580 29,139 - (25.9)
Lake Charles 20,797 25,862 46,926 (19.6) (44.9)
Maryland Heights (a) (4,317) (10,545) - (c) -
Mesquite (528) (8,077) (10,629) (d) 24.0
Corporate, development, (11,844) (18,685) (21,565) 36.6 13.4
pre-opening & other
Loss on sale of Mesquite 571 (57,397) - (e) -
Restructuring charge - (9,007) - - -
26,338 (56,269) 43,871 146.8 (228.3)
Depreciation and
amortization (b) 20,806 21,806 17,236 (4.6) 26.5
Interest expense (net) 23,466 15,761 8,868 48.9 77.7
Net income (loss) 1,951 (46,298) 22,320 104.2 (307.4)
Earnings (loss) per
share assuming dilution 0.06 (1.56) 0.70 103.8 (322.9)
Operating Margin (operating
income/total revenues)
Metropolis 26.0% 27.1% 33.9% (1.1) (6.8)
pts pts
Lake Charles 13.2% 15.5% 26.7% (2.3) (11.2)
pts pts
Maryland Heights (5.9%) (240.6%) - (c) -
Mesquite (6.1%) (20.7%) (38.0%) (d) 17.3
pts
Consolidated 8.1% (19.3%) 15.1% 27.4 (34.4)
pts pts
(a) Amount includes the Company's 50% share of both the Maryland
Heights Joint Venture operating losses and the Maryland Heights
Joint Venture depreciation and amortization. For 1998, Players
share of the total loss from investment in the Maryland Heights
Joint Venture was approximately $11.2 million which consisted of
$6.7 million in operating losses and $4.5 million in depreciation
and amortization. For 1997, Players share of the total loss from
investment in the Maryland Heights Joint Venture was $1.9
million, including $400,000 of depreciation and amortization.
(b) The 1998 and 1997 amounts do not include Player's share of
the Maryland Heights Joint Venture depreciation and amortization
of approximately $4.5 million and $400,000, respectively.
(c) The Maryland Heights Facility opened on March 11, 1997, and
was operational for less than one month in 1997.
(d) The Mesquite Facility was sold on June 30, 1997.
(e) The 1998 amount represents reversals of accruals taken with
respect to the 1997 loss on sale of Mesquite.
Results of Operations
Revenues
Increases in casino and total revenues in 1998 as compared to
1997 resulted primarily from the opening of the Company's
Maryland Heights Facility on March 11, 1997. Revenues from this
facility more than offset year to year decreases in revenues at
the Company's Lake Charles Facility and the absence of any
revenues from Mesquite after the facility's sale on June 30,
1997.
The year over year increase in revenues at the Metropolis
Facility was due to the new dining and entertainment complex
which was placed in service during December, 1997, the mild
winter experienced in Fiscal 1998, and the absence of flooding
which adversely impacted Metropolis results in March, 1997.
Increased competition and flooding in 1997 resulted in lower
revenues as compared to 1996.
In Lake Charles, the Company experienced year over year revenue
decreases from 1998 as compared to 1997 and 1997 as compared to
1996 due to the opening of a second riverboat by its primary Lake
Charles competitor in July, 1996, bringing the total number of
riverboats in the Lake Charles market to four. In addition, the
Company significantly curtailed its bus programs at the Lake
Charles Facility in the last quarter of Fiscal 1998 to eliminate
programs which were less accretive to operating income. Hotel
revenues increased in the last quarter of Fiscal 1998 due to the
Company's acquisition of the Lake Charles Holiday Inn.
The Maryland Heights Facility opened on March 11, 1997, and
contributed revenues for three weeks in 1997 versus an entire
year in 1998. The mild winter in Fiscal 1998 and the continued
growth of the St. Louis gaming market have resulted in sequential
quarterly increases in revenues.
The Mesquite Facility operated for three months in 1998 prior
to its sale on June 30, 1997, versus an entire year in 1997.
Operating Income (Loss)
Increases in operating income in 1998 as compared to 1997,
excluding the loss on the sale of Mesquite and restructuring
charge, were primarily attributable to decreased losses for
Maryland Heights, the absence of operating losses for Mesquite
following the facility's sale on June 30, 1997, and a significant
reduction in corporate, development, pre-opening and other
expenses.
The Metropolis Facility's operating income for 1998 as compared
to 1997 remained stable. Although revenues increased during the
comparable periods, increases in promotional and other expenses
reduced operating margins in 1998 as compared to 1997.
Operating income in Lake Charles was impacted by a $4.2 million
one-time charge taken in March, 1998, related to a new tax
agreement with the City of Lake Charles. The Company reached an
agreement with the City of Lake Charles both to settle litigation
and to establish a permanent method of calculating the City
admission fee on Players' riverboats. Under the new agreement,
which began March 1, 1998, the Company will pay the City both a
percentage of gaming revenue in lieu of a passenger admission
fee, and $544,000 per year for ten years. The present value of
the fixed annual payments, including expenses, was accounted for
as a one-time charge of $4.2 million in the fourth quarter of
Fiscal 1998. Excluding the one-time charge taken in March,
1998, the Lake Charles Facility's operating income for 1998 was
$25.0 million as compared to $25.9 million resulting in operating
margins of 15.9% and 15.5% respectively. The year-over-year
operating margin increase was the result of cost containment
efforts and a focus on eliminating programs which were less
accretive to earnings.
The Maryland Heights operating loss for 1998 and 1997 includes
the Company's casino operations, the Company's 50% share in the
operations of the joint venture, pre-opening costs, and a write-
down of contributed land. 1998 and 1997 comparative information
is as follows:
1998 1997
Players, Maryland Heights:
Operating (income) loss $(6,895) 496
Pre-opening costs - 4,099
Write-down of contributed land - 4,015
50% Share of Joint Venture:
Operating loss 11,212 1,070
Write-off of deferred pre-
opening costs - 1,590
Development period interest
income - (725)
Total Operating Loss (a) $4,317 $10,545
(a) The 1998 and 1997 amounts include Players Maryland Heights
depreciation and amortization of approximately $3.9 million and
$210,000, respectively, and Players share of the Maryland Heights
Joint Venture depreciation and amortization of approximately
$4.5 million and $411,000, respectively.
Corporate, development, pre-opening & other expenses decreased
substantially in 1998 as compared to 1997 principally due to the
absence of development costs in 1998 (approximately $2.0 million
in 1997), a $1.3 million decrease in corporate administrative
expenses, the absence in 1998 of a $2.6 million write-down for
the impairment of Bluegrass Downs, and a difference of $1.3
million in 1998 compared to 1997 in the amount of unamortized
financing costs written off.
The increase in depreciation and amortization expense in 1998
as compared to 1997 was due to depreciation from Maryland Heights
and the Maryland Heights Joint Venture in 1998 which was
partially offset by the absence of Mesquite depreciation in 1998
and a difference of $1.3 million in 1998 compared to 1997 in the
amount of unamortized financing costs written off ($1.4 million
write-off in 1998 versus $2.7 million write-off in 1997).
Decreases in operating income in 1997 as compared to 1996,
excluding the loss on the sale of Mesquite and the restructuring
charge, were primarily attributable to decreased casino revenue
coupled with additional spending on advertising, marketing,
promotions, and entertainment at the Metropolis and Lake Charles
Facilities, and the commencement of operations at the Maryland
Heights Facility in the fourth quarter of 1997.
The Maryland Heights Facility commenced operations in the last
month of Fiscal 1997. The operating loss for 1997 included the
first three weeks results of the Company's casino operations, the
first three weeks results of the Company's 50% share in the
operations of the joint venture, pre-opening costs, and the write-
down of land contributed to the joint venture.
Mesquite's operating loss was reduced in 1997 as compared to
1996. The facility operated for the entire year of 1997 versus
nine months in 1996.
Corporate, development, pre-opening & other expenses decreased
in 1997 as compared to 1996 principally due to the curtailment of
development activities with an accompanying decline in legal,
consulting and other professional fees, travel, and personnel
relocation expenses. This decline was partially offset by the
write-off of the $2.7 million of unamortized financing costs
related to the original Bank Credit Facility and the $2.6 million
write-down for the impairment of Bluegrass Downs which were
recorded in 1997.
Effective April 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121, ("SFAS 121") Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed. During the fourth quarter of Fiscal 1997, the
Company reevaluated its investment in Bluegrass Downs and
committed to a plan to remove from service and replace the
Metropolis dining and entertainment barge. In accordance with
SFAS 121, impairment losses for Bluegrass Downs and the
Metropolis barge of $2.6 million and $700,000 respectively, were
recorded in 1997.
The increase in depreciation and amortization expense in 1997
as compared to 1996 was due to assets, including the Lake Charles
"Island" dining and entertainment barge, the Lake Charles parking
garage, and the Mesquite Facility, which all had a full year of
depreciation expense in 1997 compared to partial year
depreciation in 1996. In addition, the write-off of $2.7 million
of unamortized financing costs related to the original Bank
Credit Facility was recorded in 1997.
Interest Expense (Net)
Interest expense, net of interest income, increased in 1998 as
compared to 1997 due to additional borrowings to complete the
Maryland Heights Facility and to acquire the Lake Charles Holiday
Inn, an increase in the Company's average borrowing rate, and a
decrease in the amount of capitalized interest. The interest
rate increase resulted from revisions to the Company's Bank
Credit Agreement in December, 1996. Interest expense, net of
interest income, increased in 1997 as compared to 1996 as a
result of additional borrowings under the Bank Credit Agreement
and liquidation of all remaining marketable securities to fund
the capital investment in Maryland Heights. Capitalized interest
totaled $381,000, $6.7 million, and $3.3 million in 1998, 1997,
and 1996 respectively.
Additional Factors Affecting Future Operating Income
Effective January 1, 1998, the State of Illinois approved a new
graduated tax schedule to replace the prior tax schedule for
gaming win for all Illinois licensees. Previously, a flat tax
rate of 20% was applied to all gaming win. Under the new
structure, the following tax schedule applies:
$0 to 25 million in gaming win - 15%
$25 million to $50 million in gaming win - 20%
$50 million to $75 million in gaming win - 25%
$75 million to $100 million in gaming win - 30%
Over $100 million in gaming win - 35%
Road construction is tentatively scheduled to begin on U.S.
Interstate 10 in front of the Company's Lake Charles Facility in
September, 1998, and is scheduled to be completed in March, 1999.
The construction will result in lanes of U.S. Interstate 10 being
closed for periods of time, although the Company has been advised
that one Eastbound lane and one Westbound lane will always remain
open, permitting access to and from the casino. The Company
cannot determine what effect any traffic delays caused by road
construction may have on patronage to the facility, although
significant delays may adversely impact patronage and revenues
during the construction period.
Investments and Capital Expenditures
On January 9, 1998, the Company completed the acquisition of a
269 room hotel, formerly operated as the Lake Charles Holiday
Inn, for a total purchase price of approximately $19.2 million.
The purchase was funded with borrowings under the Company's Bank
Credit Agreement.
On December 15, 1997, the Company opened its new, expanded
dining and entertainment barge at the Metropolis Facility. The
total project cost, excluding capitalized interest, was
approximately $9.6 million, of which $6.4 million was expended in
1998.
On March 11, 1997, the Company opened its Maryland Heights
Facility. The Company's share of the total project cost,
excluding capitalized interest, approximated $141 million, all of
which had been expended as of May 15, 1997.
Capital Resources and Liquidity
The Company's balance sheet at March 31, 1998, as compared to
March 31, 1997, reflects changes from capital expenditures in
Maryland Heights and Metropolis, the acquisition of the Lake
Charles Holiday Inn, the associated increase in bank debt, and
tax refunds received in 1998 related to the loss on the sale of
Mesquite. The balance sheet at March 31, 1997, versus March 31,
1996, reflects changes principally from capital expenditures in
Maryland Heights, additional investments in the Maryland Heights
Joint Venture, the associated increase in bank debt, and the sale
of Mesquite in March, 1997.
During 1998, cash generated by operations, cash from the sale
of Mesquite and the associated tax refund, net bank borrowings,
and equipment financing were the sources of funds for investments
in Maryland Heights, the construction of the new dining and
entertainment facility in Metropolis, and the acquisition of the
Lake Charles Holiday Inn. In July, 1997, the Company received
approximately $7 million in cash from the completion of the sale
of the Mesquite Facility and $23.8 million from a Federal income
tax refund for the fiscal year ended March 31, 1997, which was
used to reduce bank borrowings.
The following table summarizes the sources and uses of capital
for the past three fiscal years:
Years ended March 31, 1998 1997 1996
(Dollars in thousands)
Sources of capital:
Cash provided by
operations $53,265 $28,458 $20,748
Issuance of Senior Notes - - 150,000
Bank borrowings 48,000 65,500 3,000
Proceeds from sale of
property and equipment 7,718 30,749 -
Proceeds from sale of
marketable securities - 4,401 196,886
Exercise of stock options
and warrants 82 5,598 1,297
Total $109,065 $134,706 $371,931
Uses of capital:
Purchases/construction of
property and equipment $40,216 $46,499 $147,119
Purchases of marketable
securities - - 170,806
Investment in joint
venture 5,379 61,875 34,015
Repayments of long-term
debt 65,356 22,500 8,907
Purchase of treasury stock - - 7,294
Debt issuance costs 1,458 2,051 8,890
Increase (decrease) in
cash and cash equivalents (3,344) 1,781 (5,100)
Total $109,065 $134,706 $371,931
The Company has had a revolving credit agreement (the "Credit
Agreement") with a group of banks led by Wells Fargo since
August, 1995. The Credit Agreement was revised in December,
1996, following a default under its then current minimum EBITDA
covenant. The December, 1996 revisions permitted the Company to
complete the construction of the Maryland Heights project, but
eliminated the Company's ability to use borrowed funds for any
other purposes and required repayment of the full amount of the
loan by June 30, 1998. In July, 1997, following the completion
of Maryland Heights and the paydown of the bank line with the
proceeds of the Mesquite sale and the associated tax refund, the
Company began discussions with Wells Fargo to revise the terms of
the Credit Agreement. In March, 1998, the Company closed a new
$80 million five year bank agreement with Wells Fargo and a group
of participating banks. The new agreement reduced the Company's
floating rate interest cost from 2 1/2% over the prime rate to 2 1/2%
over LIBOR (from approximately 11% to 8 1/4% in the then current
interest rate environment). At the Company's discretion,
borrowings under the new bank agreement can be drawn at 1% over
prime to provide additional flexibility. The new agreement
contains covenants that, among other things, place restrictions
on additional indebtedness, dividends, capital expenditures, and
limit share repurchases to $10 million plus 50% of net income
during the term of the agreement.
The Company believes that expected cash flow from operations
will be sufficient to meet working capital requirements for
current operations and debt service through March 31, 1999. Cash
requirements beyond what is available from operating cash flow,
such as significant capital expenditure projects, if any, can be
met through the Company's $80 million bank credit facility of
which $30 million was outstanding as of March 31, 1998. The
Company currently has no plans for significant capital
expenditures beyond its normal maintenance capital expenditures.
Contingencies
The Company is involved in certain litigation regarding the
constitutionality of gaming facilities (such as the Maryland
Heights Facility) located upon artificial basins fed by the
Missouri River. See Part I, Item 3, W. Todd Akin, et al. v.
Missouri Gaming Commission. Based on the outcome of the November
referendum and subsequent court proceedings, the possibility
exists that the Company could be forced either to remediate or
close the Maryland Heights Facility. If either of these events
occur, the Company could incur substantial remediation costs or a
substantial write-down in asset values. The amounts involved
cannot be reasonably estimated at this time.
Each cruising riverboat is regulated by the U.S. Coast
Guard. U.S. Coast Guard regulations require that hulls of
vessels of the type being operated by the Company in Lake Charles
and Metropolis be inspected every five years at a U.S. Coast
Guard approved dry docking facility which will cause a temporary
loss of service that could last one month or longer, unless the
U.S. Coast Guard determines that an alternative to dry docking is
acceptable. The next inspection is scheduled to occur in the
fall of calendar 1998 for the Lake Charles Star Riverboat, the
fall of calendar 2000 for the Players III Lake Charles Riverboat,
and the fall of calendar 2000 for the Metropolis Riverboat.
Subject to U.S. Coast Guard approval, the Company is pursuing an
underwater onsite inspection of the hull of the Lake Charles Star
Riverboat as an alternative to dry docking. An underwater hull
inspection would likely involve a minimal disruption in
operations; however, no assurance can be given that dry docking
and the related loss of service will not be required.
Year 2000
The "Year 2000" problem refers to the inability of computers
and software programs to recognize and properly process data
fields containing a two digit year. A system which is not Year
2000 compliant would not be able to correctly process date-based
information, and in extreme situations, could cause entire
systems to be disabled.
During Fiscal 1998, the Company began evaluating its various
systems and applications to determine whether or not those
systems and applications were Year 2000 compliant. The process
involves system reviews, testing, and modification or replacement
of date-sensitive hardware and software. To date, an inventory
of systems has been completed. Based upon this review, the
Company has identified the major systems which are not compliant
and has implemented a plan of action to replace or update those
systems. The plan calls for completion of any identified systems
or application changes or upgrades connected with Year 2000
compliance before December 31, 1998. The total cost to the
Company for its Year 2000 compliance activities has not been and
is not anticipated to be material to its financial position or
results from operations.
Effects of Recent Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130,
Reporting Comprehensive Income, which is effective for fiscal
years beginning after December 15, 1997. This statement requires
businesses to disclose comprehensive income and its components in
their financial statements. Management intends to comply with
the disclosure requirements of this statement in the year ending
March 31, 1999.
The FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which is effective for fiscal
years beginning after December 15, 1997. This statement
redefines how operating segments are determined and requires
qualitative disclosure of certain financial and descriptive
information about a company's operating segments. The Company
will adopt SFAS No. 131 in the year ending March 31, 1999.
Management has not finalized its analysis of which operating
segments it will report on to comply with SFAS No. 131.
Forward Looking Information
Certain information included in this section and elsewhere in
this Annual Report on Form 10-K contains, and other materials
filed or to be filed by the Company with the Securities and
Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the
Company) contain or will contain or include, forward-looking
statements within the meaning of Section 21E of the Securities
and Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. Such forward-looking
statements address, among other things, the effects of
competition, the resolution of pending or threatened litigation
or regulatory proceedings concerning the Company's alleged non-
compliance with Missouri's gaming laws and Constitution, plans
for future riverboat hull inspections, I-10 road construction in
Lake Charles, future borrowing and capital costs,
plans for future expansion and property
enhancements, business development activities, capital
expenditure programs and requirements, financing sources and the
effects of legislation and regulation (including possible gaming
legislation, gaming licensure and regulation, state and local
regulation, tax regulation, and the potential for regulatory
reform). Forward looking statements can generally be identified
by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "estimate", "believe", or "continue" or the
negative thereof or variations thereon or similar terminology.
Such forward-looking information is based upon management's
current plans or expectations and is subject to a number of
uncertainties and risks that could significantly affect current
plans, anticipated actions, and the Company's future financial
condition and results of operations. These uncertainties and
risks include, but are not limited to, those relating to
conducting operations in an increasingly competitive environment,
conducting operations at a newly or recently developed site or in
a jurisdiction for which gaming has recently been permitted,
changes in state and local gaming laws and regulations,
development and construction activities, leverage and debt
service requirements (including sensitivity to fluctuation in
interest rates), general economic conditions, the U.S. Coast
Guard's acceptance of underwater hull inspections as an
alternative to dry docking and inspection, changes in federal and
state tax laws, the disruption to Lake Charles operations caused
by road construction, action taken under applications for
licenses (including renewals) and approvals under applicable laws
and regulations (including gaming laws and regulations), and the
legalization of gaming in certain jurisdictions. As a
consequence, current plans, anticipated actions, and future
financial condition and results may differ from those expressed
in any forward-looking statements made by or on behalf of the
Company and no assurance can be given that such statements will
prove to be correct.
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk
Not applicable.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements are as set forth in
the Index to Consolidated Financial Statements on page 34.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
None.
PART III
Except for the information regarding executive officers
called for by Item 401 of Regulation S-K, which is included in
Part I, Item 4 hereof, Items 10, 11, 12 and 13 will be
incorporated by reference to the Company's definitive proxy
statement for its Annual Meeting of Stockholders or by reference
to Form 10-K/A, which in either case will be filed not later than
120 days after the end of the Company's fiscal year, in
accordance with General Instruction G(3) to Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
(a) (1) and (2) Index to Financial Statements
PAGE
REPORT OF INDEPENDENT AUDITORS 35
CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1998 AND 1997
36
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED MARCH 31,
1998:
CONSOLIDATED STATEMENTS OF OPERATIONS 37
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 38
CONSOLIDATED STATEMENTS OF CASH FLOWS 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 41
All other schedules have been omitted because they are
not applicable or not required or the required
information is included in the Consolidated Financial
Statements or Notes thereto.
Exhibit Description
Number
3.1(1) Articles of Incorporation, as amended, of Players
International, Inc. (the "Company").
3.2(11) By-laws of the Company, as amended.
4.1(11) Indenture among certain subsidiaries of the Company and
First Fidelity Bank, National Association, as Trustee,
including form of Note (the "Senior Note Indenture").
4.2(1) Form of First Supplemental Indenture to the Senior Note
Indenture.
4.3(1) Form of Second Supplemental Indenture to the Senior
Note Indenture.
Form of Third Supplemental Indenture to the Senior Note
4.4 Indenture.
10.1(3) The Company's 1985 Incentive Stock Option Plan.
10.2(4) Amendment No. 1 to the Company's 1985 Incentive Stock
Option Plan.
10.3(5) The Company's 1990 Incentive Stock Option and Non-
Qualified Stock Option Plan, as amended.
10.4(2) The Company's 1993 Stock Incentive Plan.
10.5(2) Form of Registration Rights Agreement dated as of June
23, 1992 by and among the Company, Southern Illinois
Riverboat/Casino Cruises, Inc., and the purchasers
named therein.
10.6(2) Agreement dated February 12, 1993 by and between
Jebaco, Inc. and the Company with respect to the
assignment of an option agreement relating to the
Downtowner Hotel (now known as the Players Hotel).
10.7(2) Option Agreement dated December 24, 1991 by and among
The Beeber Corporation and Elisabeth S. Woodward and
Jebaco, Inc. with respect to the Downtowner Hotel (now
known as the Players Hotel).
10.8(2) Amendment to Option Agreement dated March 9, 1993 by
and among The Beeber Corporation and Elisabeth S.
Woodward and Players Lake Charles, Inc., a subsidiary
of the Company, with respect to the Downtowner Hotel
(now known as the Players Hotel).
10.9(2) License and Services Agreement dated December 8, 1992
by and among The Griffin Group, Inc., the Company and
Southern Illinois Riverboat/Casino Cruises, Inc., as
amended.
10.10(2)Joint Venture Agreement dated May 1993 between
Amerihost and a subsidiary of the Company with respect
to a hotel in Metropolis, Illinois adjacent to the
Company's Metropolis riverboat.
10.11(6)Lease dated March 19, 1993 by and among the Beeber
Corporation and Players Lake Charles, Inc., a
subsidiary of the Company.
10.12(7)Agreement of Purchase and Sale dated June 16, 1994,
between Gem Mesquite, Ltd. and Players Nevada, Inc., a
subsidiary of the Company (including form of letter
Agreement from the Company to Gem Mesquite, Ltd.
relating to registration rights).
10.13(7)Transfer of Data Agreement dated June 16, 1994, between
Gem Gaming, Inc. and Players Nevada, Inc. (including
form of Promissory Note).
10.14(7)Development Consulting Agreement dated June 16, 1994,
between Gem Gaming, Inc. and Players Nevada, Inc.
(including form of 1994 Series G Warrant).
10.15(7)Option Transfer Agreement dated June 16, 1994, between
Gem Gaming, Inc., Gem Mesquite, Ltd. and Players
Nevada, Inc.
10.16(8)The Company's 1994 Directors Stock Incentive Plan, as
adopted April 14, 1994, and as amended July 14, 1994.
10.17(9)Agreement for Sale of Partnership Interests among the
Company and certain of its subsidiaries and Showboat,
Inc. and certain of its subsidiaries.
10.18(1)Asset Purchase Agreement dated August 16, 1995 among
the Company, Players Lake Charles, Inc. and the Beeber
Corporation.
10.19(1)Form of Credit Agreement ("Credit Agreement") among the
Company, First Interstate Bank of Nevada, N.A., Bankers
Trust Company, BT Securities Corporation, and certain
other Lenders party thereto.
10.20(1)Form of Revolving Promissory Notes made by the Company
in favor of the Lenders party to the Credit Agreement.
10.21(1)Form of Swing Line Promissory Note made by the Company
in favor of First Interstate Bank of Nevada, N.A.
10.22(1)Form of Guaranty made by Players Lake Charles, Inc.,
Players Nevada, Inc., Southern Illinois
Riverboat/Casino Cruises, Inc., Players Bluegrass
Downs, Inc., Players Riverboat Management, Inc.,
Players Riverboat, Inc., Players Mesquite Golf Club,
Inc., Players Indiana, Inc., Players Riverboat, LLC,
Players Mesquite Land, Inc., Players Maryland Heights,
Inc., River Bottom Inc. and Showboat Star Partnership
in favor of First Interstate Bank of Nevada, N.A.
10.23(1)Form of Company Pledge Agreement between the Company
and First Interstate Bank of Nevada, N.A.
10.24(1)Form of Company Pledge Agreement (Nevada) between the
Company and First Interstate Bank of Nevada, N.A.
10.25(1)Form of First Amendment to Company Pledge Agreement
(Nevada) between the Company and First Interstate Bank
of Nevada, N.A.
10.26 Form of LLC Membership Interest Security Agreement
(1) between the Company and First Interstate Bank of
Nevada, N.A.
10.27 Form of Company Security Agreement between the Company
(1) and First Interstate Bank of Nevada, N.A.
10.28 Form of Subsidiary Security Agreement (Nevada) among
(1) Players Nevada, Inc., Players Mesquite Golf Club, Inc.,
Players Mesquite Land, Inc. and First Interstate Bank
of Nevada, N.A.
10.29 Form of Subsidiary Security Agreement (Louisiana) among
(1) Players Lake Charles, Inc., Showboat Star Partnership,
Players Riverboat LLC and First Interstate Bank of
Nevada, N.A.
10.30 Form of Subsidiary Security Agreement (Illinois)
(1) between Southern Illinois Riverboat/Casino Cruises,
Inc. and First Interstate Bank of Nevada, N.A.
10.31 Form of Partnership Interest Security Agreement between
(1) Players Riverboat Management, Inc. and First Interstate
Bank of Nevada, N.A.
10.32 Form of Collateral Account Agreement between the
(1) Company and First Interstate Bank of Nevada, N.A.
10.33 Form of Nevada Deed of Trust, Fixture Filing and
(1) Security Agreement with Assignment of Rents relating to
the Credit Agreement.
10.34 Form of Louisiana Act of Mortgage, Fixture Filing and
(1) Security Agreement between Players Lake Charles, Inc.
and First Interstate Bank of Nevada, N.A.
10.35 Form of Illinois Mortgage Fixture Filing and Security
(1) Agreement with Assignment of Rents relating to the
Credit Agreement.
10.36 Form of First Preferred Ship Mortgage made by Showboat
(1) Star Partnership (an entity owned, directly or
indirectly, by the Company and its subsidiaries) to
First Interstate Bank of Nevada, N.A.
10.37 Form of Environmental Indemnity made by the Company to
(1) First Interstate Bank of Nevada, N.A.
10.38 Form of Master Vessel and Collateral Trust Agreement
(1) between First Interstate Bank of Nevada, N.A. as
Administrative Agent and First Interstate Bank of
Nevada, N.A. as Trustee and acknowledged and accepted
by the Company.
10.39 Partnership Agreement dated November 2, 1995, by and
(10) between Harrah's Maryland Heights Corporation and
Players MH, L.P.
10.40 Guaranty of Players International, Inc. dated November
(10) 2, 1995.
10.41 Management Agreement dated November 2, 1995 by and
(10) between Riverside Joint Venture and Harrah's Maryland
Heights Operating Company.
10.42 License Agreement dated November 2, 1995 by and among
(10) Players International, Inc., Riverside Joint Venture
and Harrah's Maryland Heights Operating Company.
10.43 Ground Lease dated November 3, 1995 by and between
(10) Harrah's Maryland Heights LLC and Riverside Joint
Venture.
10.44 Lease Agreement dated as of November 3, 1995 by and
(10) between Riverside Joint Venture and Players MH, L.P.
10.45 Parent Guaranty of Players International, Inc. dated
(10) November 3, 1995.
10.46 Right of First Refusal to Purchase dated November 3,
(10) 1995 by and between Harrah's Maryland Heights LLC and
Players MH, L.P.
10.47 Option Agreement dated November 3, 1995 by and between
(10) Riverside Joint Venture and Harrah's Maryland Heights,
L.L.C.
10.48 Development of Agreement (Earth City Expressway
(10) Extension) by and between the City of Maryland Heights
and Riverside Joint Venture.
10.49 Form of Agreement between the Company and Lake Charles
Construction Corporation dated November 15, 1995 for
the Players Island-Entertainment Barge.
10.50 Agreement between the Company and Lake Charles
Construction Corporation dated February 16, 1996 for
the Players Island-Entertainment Barge.
10.51 Retirement Agreement and General Release dated
(12) September 9, 1996 between the Company and Edward
Fishman.
10.52 Retirement Agreement and General Release dated
(12) September 9, 1996 between the Company and David
Fishman.
10.53 Amended and Restated Credit Agreement, dated as of
(13) December 16, 1996, among the Company and the Lenders
party thereto, Wells Fargo Bank, N.A., Bankers Trust
Company and BT Securities Corporation.
10.54 Purchase Agreement by and among Players Nevada, Inc.,
(14) Players Mesquite Land, Inc., Players Mesquite Golf
Club, Inc. and RBG, LLC.
10.55 March 17, 1997 Letter Agreement to the Asset Purchase
(15) Agreement Extending Closing Date.
10.56 March 18, 1997 Letter Agreement to the Asset Purchase
(15) Agreement Regarding Application of Due of Due Diligence
Fee.
10.57 March 18, 1997 Letter Agreement to the Asset Purchase
(15) Agreement Regarding Certain Matters Incident to
Closing.
10.58 Asset Purchase Agreement dated as of September 30, 1997
by and between Lakeshore Hotels, Ltd. and Players
International, Inc.
10.59 November 13, 1997 Amendment No. 1 to Asset Purchase
Agreement
10.60 December 17, 1997 Amendment No. 2 to Asset Purchase
Agreement
10.61 Second Amended and Restated Credit Agreement, dated as
of March 11, 1998, among the Company and the Lenders
party thereto and Wells Fargo Bank, N.A.
10.62 March 24, 1998 Letter Agreement regarding execution of
the Settlement and Admission Fee Agreement.
10.63 Settlement and Admission Fee Agreement dated May 15,
1998 among Players Lake Charles, L.L.C., Showboat Star
Partnership and the City of Lake Charles
21 Subsidiaries of Players International, Inc.
27 Financial Data Schedule
____________
(1)Filed as an exhibit to the Company's Registration
Statement on Form S-4, File No. 33-60085, and
incorporated herein by reference.
(2)Filed as an exhibit to the Company's Registration
Statement on Form S-3, File No. 33-61026, and
incorporated herein by reference.
(3)Filed as an exhibit to the Company's Registration
Statement on Form 10 filed on August 13, 1986, File No.
0-14897, as amended on Form 8 filed October 17, 1987,
and incorporated herein by reference.
(4)Filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1988 and
incorporated herein by reference.
(5)Filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1991 and
incorporated herein by reference.
(6)Filed as an exhibit to the Company's Registration
Statement on Form S-3, as amended by Form S-3, File No.
33-75006, and incorporated herein by reference.
(7)Filed as an exhibit to the Company's Current Report on
Form 8-K filed on June 24, 1994, and incorporated herein
by reference.
(8)Filed as an exhibit to the Company's Registration
Statement on Form S-3 filed on July 24, 1994, and
incorporated herein by reference.
(9)Filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1995, and
incorporated herein by reference.
(10)Filed as an exhibit to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1995,
and incorporated herein by reference.
(11)Filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996,
incorporated herein by reference.
(12)Filed as an exhibit to the Company's Form 8-K dated for the
period September 17, 1996, and incorporated
by reference.
(13)Filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1996, and
incorporated herein by reference.
(14)Incorporated by reference to exhibit attached to Form 8-
K/A. Filing dated March 18, 1997, and incorporated herein by
reference.
(15)Incorporated by reference to exhibit attached to Form 8-K.
Filing dated March 18, 1997 and incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Players International, Inc.
Date: June 26, 1998 By /s/ Edward Fishman
Edward Fishman
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this annual report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated below. This annual report may be signed in
multiple identical counterparts all of which, taken together,
shall constitute a single document.
Dated: June 26, 1998 /s/ Edward Fishman
Edward Fishman
Chairman of the Board
Dated: June 26, 1998 /s/ Howard Goldberg
Howard Goldberg
President, Chief Executive Officer and
Director (Principal Executive Officer)
Dated: June 26, 1998 /s/ Peter J. Aranow
Peter J. Aranow
Executive Vice President Finance, Chief
Financial Officer,Treasurer
and Secretary (Principal Financial Officer)
Dated: June 26, 1998 /s/ John Groom
John Groom
Executive Vice President, Chief
Operating Officer and Director
Dated: June 26, 1998 /s/ Lydia Clement
Lydia Clement
Corporate Controller (Principal
Accounting Officer)
Dated: June 26, 1998 /s/ Vincent J. Naimoli
Vincent J. Naimoli, Director
Dated: June 26, 1998 /s/ Alan R. Buggy
Alan R. Buggy, Director
Dated: June 26, 1998 /s/ Lawrence Cohen
Lawrence Cohen, Director
Dated: June 26, 1998 /s/ Lee Seidler
Lee Seidler, Director
Dated: June 26, 1998 /s/ Marshall S. Geller
Marshall S. Geller, Director
Dated: June 26, 1998 /s/ Earl Webb
Earl Webb, Director
Dated: June 26, 1998 /s/ Charles Masson
Charles Masson, Director
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Auditors 35
Consolidated Balance Sheets as of March 31, 1998 and 1997 36
Consolidated Statements of Operations for the Years Ended
March 31, 1998, 1997 and 1996 37
Consolidated Statements of Stockholders' Equity for the 38
Years Ended March 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the Years Ended
March 31, 1998, 1997 and 1996 39
Notes to Consolidated Financial Statements 41
All other schedules have been omitted because they are not
applicable or not required or the required information is
included in the Consolidated Financial Statements or Notes
thereto.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Players International, Inc.
We have audited the accompanying consolidated balance sheets
of Players International, Inc. and Subsidiaries as of March 31,
1998 and 1997, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
three years in the period ended March 31, 1998. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of Players International, Inc.
and Subsidiaries at March 31, 1998 and 1997, and the consolidated
results of its operations and its cash flows for each of the
three years in the period ended March 31, 1998, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 18, 1998
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value)
ASSETS
March 31,
1998 1997
CURRENT ASSETS:
Cash and cash equivalents $17,223 $20,567
Accounts receivable, net of allowance for
doubtful accounts of $786 at March 31,
1998 and $750 at March 31, 1997 3,559 3,142
Inventories 1,476 1,955
Deferred income tax 2,010 1,881
Income taxes refundable 6,580 27,534
Prepaid expenses and other current assets 2,285 3,997
Assets held for sale - 8,500
Total current assets 33,133 67,576
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of
$44,405 at March 31, 1998 and $27,336 at
March 31, 1997 237,478 210,442
DEFERRED INCOME TAX - long-term - 4,654
NOTES RECEIVABLE 1,500 -
INTANGIBLES, net of accumulated amortization of
$3,572 at March 31, 1998 and
$2,593 at March 31, 1997 35,302 36,271
INVESTMENT IN JOINT VENTURE 96,587 95,401
OTHER ASSETS 5,587 6,945
$409,587 $421,289
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $2,008 $8,500
Accounts payable 4,590 6,466
Accrued liabilities 28,832 33,969
Other liabilities 3,775 2,921
Total current liabilities 39,205 51,856
DEFERRED INCOME TAX 2,930 -
LONG-TERM DEBT, net of current portion 180,541 187,500
OTHER LONG-TERM LIABILITIES 28,997 26,052
COMMITMENTS AND CONTINGENCIES (Note 16)
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, Authorized -- - -
10,000,000 shares, Issued - none
Common stock, $.005 par value, Authorized --
90,000,000 shares, Issued-
32,613,498 shares at March 31, 1998 and
32,563,348 shares at March 31, 1997 163 163
Additional paid-in capital 132,338 132,256
Treasury stock, at cost; 672,100 shares at
March 31, 1998 and March 31, 1997 (7,294) (7,294)
Retained earnings 32,707 30,756
Total stockholders' equity 157,914 155,881
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $409,587 $421,289
The accompanying notes are an integral part of these consolidated
statements.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Years ended March 31,
1998 1997 1996
REVENUES:
Casino $302,337 $262,660 $269,739
Food and beverage 11,978 14,139 11,825
Hotel 3,159 6,608 4,851
Other 5,744 7,803 4,980
323,218 291,210 291,395
COSTS AND EXPENSES:
Casino 141,338 122,250 110,959
Food and beverage 10,654 14,185 12,601
Hotel 1,625 3,144 2,503
Other operating expenses 41,350 38,136 34,351
Selling, general and administrative 58,531 56,246 45,700
Corporate and other non-operating costs 7,782 9,102 10,387
Allocated amounts of joint venture 11,212 1,934 -
City of Lake Charles agreement 4,153 - -
Impairment and write-down of assets - 7,357 -
Pre-opening and gaming development costs - 6,915 13,787
Depreciation and amortization 20,806 21,806 17,236
Loss on sale of Mesquite property (571) 57,397 -
Restructuring charge - 9,007 -
296,880 347,479 247,524
Income (loss) before other income
(expense) and provision (benefit)
for income taxes 26,338 (56,269) 43,871
OTHER INCOME (EXPENSE):
Interest income 651 237 5,850
Other income, net 274 241 1,587
Interest expense (24,117) (15,998) (14,718)
(23,192) (15,520) (7,281)
Income (loss) before provision (benefit)
for income taxes 3,146 (71,789) 36,590
PROVISION (BENEFIT) FOR INCOME TAXES 1,195 (25,491) 14,270
NET INCOME (LOSS) $1,951 ($46,298) $22,320
EARNINGS (LOSS) PER COMMON SHARE:
Basic $0.06 ($1.56) $0.75
Diluted $0.06 ($1.56) $0.70
The accompanying notes are an integral part of these consolidated
statements.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED MARCH 31, 1998
(dollars in thousands)
Additional
Common Stock Paid-In Unrealized Treasury Stock Retained
Shares Amount Capital Loss Shares Amount Earnings
BALANCE, March 31,
1995 29,672,400 148 $121,712 $(451) - - $54,734
Shares issued
under stock
option plans 187,180 1 1,296 - - - -
Tax benefit from
exercise of
non-qualified options - - 713 - - - -
Adjustment for number
of shares as the result
of the stock split - - (2) - - - -
Purchase of common
stock (672,100) - - - 672,100 7,294 -
Change in unrealized
loss on marketable
securities, net of tax- - - 450 - - -
Net income - - - - - - 22,320
BALANCE, March 31,
1996 29,187,480 149 123,719 (1) 672,100 7,294 77,054
Shares issued for
warrants
exercised 2,100,000 11 5,590 - - - -
Shares issued pursuant
to retirement
agreement 603,768 3 2,996 - - - -
Expired put options - - (49) - - - -
Change in unrealized
loss on marketable
securities, net of tax - - - 1 - - -
Net loss - - - - - - (46,298)
BALANCE, March 31
1997 31,891,248 163 132,256 - 672,100 7,294 30,756
Shares issued under
stock option plans 50,150 - 82 - - - -
Net income - - - - - - 1,951
BALANCE, March 31,
1998 31,941,398 $163 $132,338 $- 672,100 $7,294 $32,707
The accompanying notes are an integral part of these consolidated
statements.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Years ended March 31,
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $1,951 ($46,298) $22,320
Adjustment to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 20,806 21,806 17,236
Amortization of bond premium/(discount) - - (3,861)
Loss (gain) on disposition of property and
equipment (98) 60,321 -
Impairment and write-down of assets - 7,357 -
Equity in allocated amounts of joint venture 4,497 1,934 -
City of Lake Charles agreement 4,000 - -
Stock issued pursuant to retirement agreements - 3,000 -
Deferred income taxes 7,455 1,332 (2,459)
Other 1,059 924 468
Changes in assets and liabilities:
Accounts and notes receivable (1,476) 3,551 (4,985)
Inventories 479 (1,269) (1,856)
Income taxes payable (refundable) 20,954 (27,462) 1,772
Prepaid expenses and other current assets 1,712 975 (2,484)
Other assets 159 1,141 (1,812)
Accounts payable (1,876) (270) (1,497)
Accrued liabilities (5,137) 80 (918)
Other liabilities (1,220) 1,336 (1,176)
Net cash provided by operating activities 53,265 28,458 20,748
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property and equipment (40,216) (46,499)(147,119)
Proceeds from disposal of property and
equipment 7,718 30,749 -
Purchases of marketable securities - - (170,806)
Proceeds from sale of marketable securities - 4,401 196,886
Investment in joint venture (5,379) (61,875) (34,015)
Net cash used in investing activities (37,877) (73,224) (155,054)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 48,000 65,500 153,000
Repayments of long-term debt (65,356) (22,500) (8,907)
Purchase of common stock - - (7,294)
Debt issuance cost (1,458) (2,051) (8,890)
Proceeds from exercise of stock options and
warrants 82 5,598 1,297
Net cash provided by (used in) financing
activities (18,732) 46,547 129,206
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (3,344) 1,781 (5,100)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,567 18,786 23,886
CASH AND CASH EQUIVALENTS AT END OF PERIOD 17,223 20,567 18,786
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Years ended March 31,
1998 1997 1996
Interest paid 24,507 22,637 10,124
Income taxes paid 9 4,159 15,201
Debt incurred to purchase land and equipment 3,905 - -
Note receivable on sale of Mesquite property 1,500 - -
Assets acquired through capital leases 715 - -
Unrealized gain (loss) on marketable
securities, net of tax - - (450)
Accrued liabilities incurred to purchase
property and equipment - - 31,910
Land, property and equipment contributed to
joint venture - - 5,459
Tax benefit related to exercise of non-
qualified stock options - - 713
The accompanying notes are an integral part of these consolidated
statements.
Note 1 - Summary of Significant Accounting Policies
Fiscal Year
The Company has a fiscal year that ends on March 31.
Basis of Presentation
The Company, through wholly owned subsidiaries, operates
five riverboat casinos, a horse racetrack facility and, through a
joint venture, a riverboat casino entertainment complex. All
operations include food and beverage facilities and a retail gift
shop. Two of the facilities include hotel operations. During
the fiscal year ended March 31, 1997, the majority of the assets
comprising the Mesquite, Nevada facility ("Mesquite") were sold.
The remaining assets of that facility were sold in the first
quarter of 1998.
The consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been
eliminated. The investment in joint venture is accounted for by
the equity method.
Certain reclassifications have been made to the consolidated
financial statements as previously presented to conform to the
current classifications.
Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash includes the minimum cash balances required to be
maintained by certain state gaming commissions, which totaled
approximately $3,872,000 and $2,873,000 at March 31, 1998 and
1997, respectively. Cash equivalents are highly liquid
investments with a maturity of less than three months and are
stated at the lower of cost or market value which approximates
fair value.
Revenues and Promotional Allowances
Casino revenues are the net of gaming wins less losses.
Revenues exclude the retail value of complimentary admissions,
food and beverage, hotel and other items furnished to customers,
which totaled approximately $23,326,000, $27,238,000 and
$21,336,000 for the years ended March 31, 1998, 1997 and 1996,
respectively.
The estimated costs of providing such complimentary services
are included in casino costs and expenses through inter-
department allocations from the department granting the services
as follows:
Years ended March 31,
(dollars in thousands)
1998 1997 1996
Food and beverage $17,665 $20,736 $15,651
Admissions 106 157 1,725
Hotel 349 1,281 565
Other 670 1,370 1,177
$18,790 $23,544 $19,118
Pre-opening and Gaming Development Costs
All pre-opening and gaming development costs are expensed as
incurred except for the cost of property and equipment which is
capitalized.
Credit Risk
Historically, credit losses have not been material to the
results of operations. The financial instruments that subject the
Company to credit risk consist principally of accounts
receivable. Ongoing credit evaluations are performed and
potential credit losses are expensed at the time a receivable is
deemed to be uncollectable.
Inventories
Inventories consisting of food, beverage and retail items
are stated at the lower of cost (first-in, first-out) or market.
Property, Equipment, Depreciation and Amortization
Property 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.
Interest expense is capitalized on major construction projects.
Capitalized interest amounted to $381,000, $6,714,000 and
$3,329,000 in 1998, 1997 and 1996, respectively.
The Company computes depreciation for property and equipment
using primarily the straight-line method over the estimated
useful life of the assets. Amortization of leasehold and land
improvements is computed using the straight-line method over the
lesser of the estimated useful life or lease term.
The following estimated useful lives are used:
Riverboats and barges 30 - 40 year
Buildings 20 - 40 years
Furniture, fixtures and equipment 5-7 years
Leasehold and land improvements Lesser of useful life or lease term
Effective October 1, 1995, the Company revised its estimate
of the useful lives of certain property and equipment. These
changes were made to better reflect industry practice and the
estimated periods during which such assets will remain in
service. This change increased net income by approximately
$1,403,000 ($.04 per share on a diluted basis) for the year ended
March 31, 1996.
Depreciation expense of $17,181,000, $16,405,000 and
$13,145,000 was recorded for the fiscal years ended March 31,
1998, 1997 and 1996 respectively. Amortization expense amounted
to $3,625,000, $5,401,000 and $4,091,000 in 1998, 1997 and 1996
respectively.
Intangibles
Costs in excess of fair value of tangible assets acquired
are recorded as intangibles on the accompanying consolidated
balance sheets and are being amortized using the straight-line
method. Effective October 1, 1995, the Company revised its
estimate of the useful life of intangibles from 15 years to 40
years. This change was made to better reflect the estimated
periods during which the related tangible assets will remain in
service. This change increased net income by approximately
$466,000 ($.01 per share on a diluted basis) for the year ended
March 31, 1996.
The Company periodically evaluates whether the remaining
estimated useful life of intangibles may warrant revision or the
remaining balance of intangibles may require adjustment generally
based upon expectations of nondiscounted cash flows and operating
income. At March 31, 1996, the Company recorded a $1,500,000
write-down of goodwill associated with its racetrack facility.
Unamortized Loan Costs
Costs incurred in connection with the issuance of debt are
being amortized using the straight-line method over the term of
the related debt issue or loan.
Earnings Per Share
In accordance with the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings Per Share, basic
earnings per share is computed by dividing net income (loss) by
the number of weighted average common shares outstanding during
the year. Diluted earnings per share is computed by dividing net
income (loss) by the number of weighted average common shares
outstanding during the year, including common stock equivalents
(see Note 14). All earnings per share amounts for all periods
have been presented and, where appropriate, restated to conform
to SFAS No. 128 requirements.
Recently Issued Accounting Standards
The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130,
Reporting Comprehensive Income, which is effective for fiscal
years beginning after December 15, 1997. This statement requires
businesses to disclose comprehensive income and its components in
their financial statements. Management intends to comply with
the disclosure requirements of this statement in the year ending
March 31, 1999.
The FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which is effective for fiscal
years beginning after December 15, 1997. This statement
redefines how operating segments are determined and requires
qualitative disclosure of certain financial and descriptive
information about a company's operating segments. The Company
will adopt SFAS No. 131 in the year ending March 31, 1999.
Management has not finalized its analysis of which operating
segments it will report on to comply with SFAS No. 131.
Note 2 - Accrued Liabilities
A summary of accrued liabilities is as follows:
March 31,
(dollars in thousands)
1998 1997
Insurance claims 1,404 1,638
Chip and token liability 702 558
Accrued payroll and related expenses 9,814 8,657
Accrued interest expense 7,476 7,477
Accrued bonus points 1,831 2,100
Accrued gaming taxes 2,142 1,062
Progressive jackpot liabilities 663 664
Other accruals 3,527 7,741
Current portion of liabilities related to the
purchase of a riverboat and a hotel 1,273 4,072
$ 28,832 $ 33,969
Note 3 - Property and Equipment
A summary of property and equipment is as follows:
March 31,
(dollars in thousands)
1998 1997
Land and buildings $85,794 $65,174
Riverboats and barges 124,277 113,281
Furniture, fixtures and equipment 60,143 46,379
Leasehold and land improvements 9,439 8,032
Construction in progress 2,230 4,912
Less -- accumulated depreciation (44,405) (27,336)
$ 237,478 $ 210,442
Included in furniture, fixtures and equipment at March 31,
1998, is $715,000 of computer equipment relating to a capital
lease obligation with accumulated depreciation of $121,000.
Note 4 - City of Lake Charles Agreement
In the fourth quarter of 1998, the Company reached an
agreement with the City of Lake Charles, Louisiana both to settle
litigation and to establish a permanent method of calculating the
City admission fee on Players' riverboat casinos. Under the new
agreement, beginning March 1, 1998, Players will pay the City
both a percentage of gaming revenue in lieu of a passenger
admission fee, and a fixed annual payment of $544,000 per year
for ten years. The present value of the fixed annual payments,
including expenses, was accounted for as a one-time charge of
$4,153,000 in 1998.
Note 5 - Sale of Mesquite Property
On February 28, 1997, the Company entered into a definitive
agreement to sell the assets comprising the Mesquite casino
resort for a total purchase price of $30,500,000. The agreement
was structured to take place in two closings. The initial
closing was completed on March 18, 1997, in which the Company
received $22,000,000 in cash for primarily the non-gaming
property and equipment. On June 30, 1997, the second closing for
the gaming and other furniture and equipment of the property was
consummated. As a result of this closing, the Company received
$7,000,000 in cash and a two-year promissory note for $1,500,000.
The Company entered into a lease with the purchaser pursuant
to which the Company leased the property for the period between
the first and second closings and absorbed any income or loss
related to the operation of the facility during such period.
As of March 31, 1997, the Company recorded a loss on the
sale of Mesquite totaling $57,397,000. Such loss included a
write-down to fair value of the assets which were sold in the
second closing. The loss is summarized as follows (dollars in
thousands):
Carrying value of property
and equipment, net $ 84,232
Inventories and other
assets 2,208
Expenses related to sale 1,457
Proceeds received at first
closing (22,000)
Receivable at second
closing (8,500)
$ 57,397
During 1998, the estimated remaining liabilities associated
with the Mesquite facility were re-evaluated and reduced by
$571,000.
For the years ended March 31, 1998 and 1997, revenues for
Mesquite were $8,700,000 and $38,945,000, respectively and income
(losses) before other income (expense) were $43,000 and
($65,473,000), respectively, inclusive of the loss on sale.
Note 6 - Impairment and Write-down of Assets
During the fourth quarter of 1997, the Company re-evaluated
its investment in its horse racetrack facility, committed to a
plan to remove from service and replace a barge utilized by one
of its riverboat facilities and wrote-down to fair value land
that was contributed to a joint venture. Impairment losses and
the write-down of assets totaling $7,357,000 were recorded in the
year ended March 31, 1997, and are detailed below.
The Company incurred losses operating the racetrack since
its acquisition, and determined that due to flat or declining
demand for both live and simulcast pari-mutuel race wagering that
such operating losses would continue in the future in the absence
of additional forms of gaming at the facility. Due to this and
the continued lack of consensus within the State of Kentucky
governing body relating to the expansion of legalized gaming, the
Company determined that its investment in the racetrack was
impaired. Prior to the impairment, the book value of the
property and equipment of the racetrack was $3,142,000. Based on
an April 1997 appraisal, the land was valued at $475,000. It is
management's opinion that this represented the approximate fair
value of the property.
The barge at the Metropolis riverboat facility was removed
from service and replaced in 1998. A replacement barge was
purchased in 1997. The book value for the barge prior to the
impairment was $676,000. It was estimated that, net of disposal
costs, the fair value of the barge was zero.
In 1995, Players contributed land with a carrying value of
$4,944,000 to the joint venture. The land was originally
purchased as the potential gaming site for the Company. In the
fourth quarter of 1997, an audit of the joint venture was
completed which included an appraisal of the land determining its
fair market value to be $930,000. This value was used as the
basis for recording the contribution of the land in the joint
venture records. As a result, the Company reduced its investment
in the joint venture by $4,014,000 in the fourth quarter of 1997.
The reduction in value of the land by the joint venture did not
affect the 50% interest the Company holds in the joint venture.
Note 7 - Allocated Amounts of Joint Venture
In November, 1995, the Company formed a joint venture to co-
develop a riverboat casino complex with Harrah's in Maryland
Heights, Missouri, which opened in March, 1997. The Company
holds a 50% interest in the joint venture. The investment in the
joint venture portion of the project is accounted for using the
equity method of accounting.
Summary condensed financial information for the joint
venture is as follows (dollars in thousands):
Years ended March 31,
(unaudited)
1998 1997
Net revenues $ 18,520 $ 952
Depreciation and amortization 8,996 847
Net loss 22,424 3,869
March 31,
(unaudited)
1998 1997
Current assets $ 10,481 $25,646
Current liabilities 5,948 19,864
Total assets 200,917 210,254
Partners' capital 194,960 190,390
Note 8 - Income Taxes
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax assets and liabilities are as follows:
Years ended March 31,
(dollars in thousands)
1998 1997
Deferred tax assets:
Excess capital loss over capital gain $ 10 $266
State tax net operating loss
carryforwards 1,051 991
Excess intangible assets basis 447 542
Pre-opening, development and other
costs 3,412 7,843
Accrued liabilities and prepaid
expenses 5,107 7,230
Deferred revenue 215 244
Accrual of directors' option expense 428 475
Alternative minimum tax credits 2,133 -
Total deferred tax assets 12,803 17,591
Valuation allowance (1,149) (1,536)
Deferred tax assets, net
valuation allowance 11,654 16,055
Deferred tax liabilities:
Excess tax depreciation (11,262) (7,751)
Prepaid expenses (1,312) (1,769)
Total deferred tax liabilities (12,574) (9,520)
Net deferred tax assets (liabilities) $ (920) $ 6,535
The valuation allowance on the deferred tax assets consists
primarily of an allowance for state tax net operating loss
carryforwards and deferred tax assets related to various states.
The Company has state net operating losses available to offset
future taxable income of approximately $31,800,000 for various
states that will expire between the years 2004 and 2013. The
Company has an Alternative Minimum Tax credit carryforward of
approximately $2,133,000, which can be used to reduce future
Federal tax liabilities. This tax credit does not have an
expiration date.
Significant components of the provision for (benefit of)
income taxes attributable to operations are as follows:
Years ended March 31,
(dollars in thousands)
1998 1997 1996
Current:
Federal $ (5,441) $ (25,777) $ 13,975
State (819) (1,045) 2,745
Total current (6,260) (26,822) 16,720
Deferred:
Federal 6,776 624 (2,199)
State 679 707 (251)
Total deferred 7,455 1,331 (2,450)
Total provision (benefit) $1,195 $(25,491) $ 14,270
The 1998 and 1997 net tax losses have been carried back to
previous tax years and result in refunds of taxes previously
paid.
The reconciliation of income tax attributable to continuing
operations computed at the Federal statutory rates to income tax
expense is:
Years ended March 31,
1998 1997 1996
Federal statutory rate (benefit) 35% (35%) 35%
State taxes on income, net of (3%) (1%) 4%
Federal income tax benefit
Non-deductible expenses 2% - -
Other 4% - -
Financial statement provision rate
(benefit) 38% (36%) 39%
Note 9 - Restructuring Charge
The restructuring charge in 1997 reflects the Company's
decision to significantly reduce its pursuit of development
opportunities in new or emerging jurisdictions and instead
concentrate on improving its existing operations. The one-time
charge consists principally of the net loss on the disposal of
assets held for or used in development activities and the cost of
employee severance arrangements. This resulted from the sale of
the Players I riverboat, which was previously held for future
deployment, and a corporate aircraft, the closure of two
development offices and the retirement or termination of 21
senior management and staff. The affected employees included
those specifically responsible for the Company's developmental
activities and others affected by the Company's revised business
plan. In 1998 and 1997, approximately $800,000 and $7,800,000,
respectively, were charged against the reserve established by
the restructuring.
Note 10 - Other Long-Term Liabilities
A summary of other long-term liabilities follows:
March 31,
(dollars in thousands)
1998 1997
Net present value of estimated future payments
to purchase a hotel $ 24,990 $ 25,161
Long-term portion of agreement with the City of
Lake Charles 3,696 -
Long-term portion of liabilities related to
purchase of a riverboat - 800
Capital lease related to the purchase of
computer equipment 252 -
Other 59 91
$ 28,997 $ 26,052
In August 1995, the Company acquired a hotel for $6,700,000
plus future payments based on the number of passengers boarding
the riverboat casinos contiguous to it over the ensuing 28 years.
The estimated future payments were discounted at 11% and recorded
at their net present value. Actual payments in excess of the
amortization of the net present value of estimated future payment
are recorded as contingent payments (see Note 16).
Note 11 - Long-Term Debt
A summary of long-term debt is as follows:
March 31,
(dollars in thousands)
1998 1997
Senior Notes, interest at 10-7/8% payable semi-
annually on April 15 and October 15, due
2005 (fair value based on quoted market price is
approximately $163,500 and $155,250
for the years ended March 31, 1998 and 1997,
respectively) $150,000 $150,000
Note payable under revolving bank credit agreement,
weighted average interest rate of
10.98% and 9.10% for years ended March 31, 1998
and 1997, respectively (carrying
amount approximates fair value) 30,000 46,000
Note payable, secured by slot machines, interest at
12% due June 23, 1999 (carrying amount approximates
fair value) 2,549 -
182,549 196,000
Less current portion (2,008) (8,500)
$180,541 $187,500
The Company has had a revolving credit agreement (the
"Credit Agreement") with a group of banks led by Wells Fargo
since August, 1995. The Credit Agreement was revised in
December, 1996, following a default under its then current
minimum EBITDA covenant. The December, 1996 revisions permitted
the Company to complete the construction of the Maryland Heights
project, but eliminated the Company's ability to use borrowed
funds for any other purposes and required repayment of the full
amount of the loan by June 30, 1998. In July, 1997, following
the completion of Maryland Heights and the paydown of the bank
line with the proceeds of the Mesquite sale and the associated
tax refund, the Company began discussions with Wells Fargo to
revise the terms of the Credit Agreement. In March, 1998, the
Company closed a new $80,000,000 five year bank agreement with
Wells Fargo and a group of participating banks. The new
agreement reduced the Company's floating rate interest cost from
2 1/2% over the prime rate to 2 1/2% over LIBOR (from approximately
11% to 8 1/2% in the then current interest rate environment). At
the Company's discretion, borrowings under the new bank agreement
can be drawn at 1% over prime to provide additional flexibility.
The new agreement contains covenants that, among other things,
place restrictions on additional indebtedness, dividends, capital
expenditures, and limit share repurchases to $10,000,000 plus 50%
of net income during the term of the facility.
The Company wrote-off loan costs related to its revolving
credit agreement in the amount of $1,078,000 and $2,744,000 in
the years ended March 31, 1998 and 1997, respectively.
Note 12 - Stockholders' Equity
During 1996, the Company repurchased a total of 672,100
shares of its common stock for a total cost of $7,294,000.
On January 29, 1997, the Company announced that its Board of
Directors had approved the adoption of a Stockholders' Rights
Plan. The Plan is designed to ensure that all stockholders of
the Company receive fair value for their Common Shares in the
event of any proposed takeover and to guard against the use of
partial tender offers or other coercive tactics to gain control
of the Company without offering fair value to stockholders.
Pursuant to the Plan, holders of record as of October 27, 1997
will receive one Right for each Common Share, with each Right
representing the right to purchase one one-hundredth of a
preferred share or, upon the happening of certain events, Common
Shares or other securities and property.
Note 13 - Common Stock Options and Warrants
The Company has four stock option plans, the 1985 Incentive
Stock Option Plan ("1985 Plan") for employees covering 600,000
shares of common stock, the 1990 Incentive Stock Option and Non-
Qualified Option Plan covering 1,200,000 shares of common stock
("1990 Plan"), the 1993 Incentive Stock Option and Non-Qualified
Option Plan covering 3,000,000 shares of common stock ("1993
Plan"), and the 1994 Directors Stock Incentive Plan ("1994 Plan")
covering 900,000 shares of common stock. As of March 31, 1998,
the Company had 352,149 shares under the 1990 Plan, 1,695,500
shares under the 1993 Plan and 216,250 shares under the 1994 Plan
available for issuance in connection with future stock options
that may be granted. The 1985 Plan expired on April 22, 1995,
therefore, no additional grants may be made, although outstanding
awards may be exercised. Options granted are generally
exercisable between three and ten years from date of grant.
In addition to the foregoing plans, 220,377 other options
and 150,000 warrants were outstanding as of March 31, 1998.
Summarized information for all stock options and warrants is as
follows:
1998 1997 1996
Weighted- Weighted- Weighted-
Average Average Average
Options/ Exercise Options/ Exercise Options/ Exercise
Warrants Price Warrants Price Warrants Price
Outstanding
at
beginning
of year 3,278,278 $9.58 6,335,502 $9.54 6,027,767 $ 9.16
Granted:
Exercise
price equals
market price 709,000 $3.20 491,750 $ 7.65 528,250 $13.26
Exercise
price exceeds
market
price - - 1,082,300 $ 8.17 - -
Exercised (50,150) $1.63 (2,100,000) $ 2.67 (187,165) $6.94
Expired or
canceled (990,326) $10.41 (2,531,274) $ 14.24 (33,350) $14.20
Outstanding
at end
of year 2,946,802 $7.90 3,278,278 $ 9.58 6,335,502 $ 9.54
Options
exercisable
at end of
year 1,854,522 $9.07 2,076,351 $10.04 3,851,005 $6.48
Options granted and cancelled during 1997 include the
activity resulting from a special program approved by the Company
which enabled certain option holders to consent to the
cancellation of certain outstanding options, whether vested or
unvested, in exchange for a grant of new stock options with an
option price based on a minimum of 110% of the current market
price of the Company's stock. The new options vest in five equal
annual installments commencing September 19, 1996. In total,
1,442,900 options with an average exercise price of $13.59 per
share were cancelled in exchange for 842,300 new options with an
average exercise price of $7.91 per share.
The following table summarizes information regarding stock
options and warrants outstanding at March 31, 1998.
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercis Exercise
Prices Life Price able Price
$2.25 - $6.25 918,752 7.15 $ 3.94 429,752 $ 4.82
$7.00 - $7.70 1,000,550 2.77 $ 7.57 629,970 $ 7.64
$8.47 - $11.83 759,500 1.97 $10.16 552,600 $10.68
$13.56 - $19.33 268,000 1.66 $16.36 242,200 $16.65
2,946,802 1,854,522
The Company applies APB Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations in accounting
for its plans. Accordingly, no compensation expense has been
recognized for its stock option plans.
The following table discloses the Company's pro forma net
income (loss) and net income (loss) per share assuming
compensation cost for employee stock options had been determined
using the fair value-based method prescribed by SFAS 123,
Accounting for Stock Based Compensation. The table also
discloses the weighted-average assumptions used in estimating the
fair value of each option grant on the date of grant using the
Black-Scholes option pricing model. The model assumes no
expected future dividend payments on the Company's common stock
for the options granted in fiscal years ended March 31, 1998,
1997 and 1996.
Years ended March 31,
(Dollars in thousands, except per share data)
1998 1997 1996
Net income (loss)
As reported $1,951 $(46,298) $22,320
Pro forma $ 631 $(49,395) $21,572
Basic earnings (loss) per share
As reported $0.06 $ (1.56) $ 0.75
Pro forma $0.02 $ (1.66) $ 0.72
Diluted earnings (loss) per
share
As reported $0.06 $ (1.56) $ 0.70
Pro forma $0.02 $ (1.66) $ 0.67
Weighted-average assumptions
Expected stock price 60.20% 57.48% 55.27%
volatility
Risk-free interest rate 5.70% 6.38% 6.48%
Expected option lives 6.6 years 3.4 years 4.7 years
Because the provisions of SFAS No. 123 have not been applied
to options granted prior to April 1, 1995, and due to the
issuance in fiscal year 1997 of a large option grant under the
special program discussed above, the resulting pro forma
compensation cost for the years presented may not be
representative of that to be expected in future years.
The weighted average fair value of options granted is as
follows:
Years ended March 31,
1998 1997 1996
Options granted equal to
market price $2.01 $3.82 $6.96
Options granted greater
than market price - $2.75 -
Note 14 - Earnings Per Share
There are no adjustments required to be made to net income
(loss) for purposes of computing basic and diluted earnings per
share ("EPS").
The following is a reconciliation of basic weighted average
shares outstanding to diluted weighted average shares
outstanding:
Years ended March 31,
1998 1997 1996
Weighted average common
shares outstanding for
basic EPS calculation 31,904,658 29,765,483 29,765,151
Dilutive effect of stock
options and warrants 44,970 - 2,252,987
Weighted average common
shares outstanding
for diluted EPS 31,949,628 29,765,483 32,018,138
The calculation of diluted earnings per share excludes
certain options to purchase common stock. These options have
been excluded as they would be antidilutive to the diluted
earnings per share calculation. The weighted average number of
options excluded were 2,901,451, 5,302,425 and 1,637,555 for the
years ended March 31, 1998, 1997 and 1996, respectively.
Note 15 - Employee Benefit Plans
The Company has a defined contribution plan that provides
retirement benefits for participating employees. Eligible
employees may elect to participate by contributing a percentage
of their pre-tax earnings to the plan. Employee contributions to
the plan, up to certain limits, are matched at 25% by the
Company. The Company's contribution expense for the plan was
$269,000, $385,000 and $321,000 for the years ended March 31,
1998, 1997 and 1996, respectively.
Note 16 - Commitments and Contingencies
The Company leases office space, land and equipment under
operating and capital leases expiring at various dates through
December 2015. The minimum annual payments under non-terminable
lease agreements at March 31, 1998 are as follows (dollars in
thousands):
Capital Operating Leases
Years ending March 31, Lease
1999 $ 285 $863
2000 277 558
2001 - 237
2002 - 100
2003 - 100
Thereafter 1,016
Total minimum lease payments 562 2,874
Less: Amount representing
interest at 11% (58)
Present value of minimum capital
lease payments 504
Less: Current installments (252)
Obligations under capital leases-
less current liabilities $252
Rent expense for all operating leases was as follows:
Years ended March 31,
(dollars in thousands)
1998 1997 1996
Minimum rentals $ 4,569 $ 2,016 $ 4,227
Contingent payments 2,447 3,807 2,590
$ 7,016 $ 5,823 $ 6,817
For the fiscal years ended March 31, 1997 and 1996, $262,000
and $232,000, respectively, of rent expense is included in pre-
opening and gaming development costs in the accompanying
consolidated statements of operations.
The Company is involved in certain litigation regarding the
constitutionality of gaming facilities such as the Company's
facility in Maryland Heights, Missouri (the "Maryland Heights
Facility") located upon artificial basins fed by the Missouri
River. An amendment to the State constitution has been proposed
for the November 1998 ballot. Based on the outcome of the
November referendum and subsequent court proceedings, the
possibility exists that the Company could be forced either to
remediate or close the Maryland Heights Facility. If either of
these events occur, the Company could incur substantial
remediation costs or a substantial write-down in asset values.
The amounts involved cannot be reasonably estimated at this time.
Each cruising riverboat is regulated by the U.S. Coast
Guard. U.S. Coast Guard regulations require that hulls of
vessels of the type being operated by the Company in Lake Charles
and Metropolis be inspected every five years at a U.S. Coast
Guard approved dry docking facility which will cause a temporary
loss of service that could last one month or longer, unless the
U.S. Coast Guard determines that an alternative to dry docking is
acceptable. The next inspection is scheduled to occur in the
fall of calendar 1998 for the Lake Charles Star Riverboat, the
fall of calendar 2000 for the Players III Lake Charles Riverboat,
and the fall of calendar 2000 for the Metropolis Riverboat.
Subject to U.S. Coast Guard approval, the Company is pursuing an
underwater onsite inspection of the hull of the Lake Charles Star
Riverboat as an alternative to dry docking. An underwater hull
inspection would likely involve a minimal disruption in
operations; however, no assurance can be given that dry docking
and the related loss of service will not be required.
The Company and its subsidiaries are defendants in certain
other litigation. In the opinion of management, based upon the
advice of counsel, the aggregate liability, if any, arising from
such other litigation will not have a material adverse effect on
the accompanying consolidated financial statements.
Note 17 - Transactions with Related Parties
Marshall Geller, a member of the board of directors, was
paid $50,000 during the year ending March 31, 1996, in
consideration for consulting services rendered.
The Company purchases promotional items from a company owned
by Edward Fishman, Chairman of the Company. During the years
ended March 31, 1997 and 1996, the Company paid $312,000 and
$1,052,000 respectively, for such items. There were no purchases
in 1998.
The Company entered into a contract with Griffin Gaming &
Entertainment, Inc. (GGEI) dated July 18, 1995 for the production
of theater shows at its Mesquite property. Under the contract,
which expired on March 7, 1996, the Company paid an aggregate of
$396,000 to GGEI.
During fiscal year 1997, the Company entered into an
agreement with a company controlled by Merv Griffin, a major
stockholder of the Company, to modify its license agreement,
under which he acted as the public representative for all of the
Company's riverboat and dockside casinos, to reflect the
extension of its terms to the Company's second riverboat casino
in Lake Charles and its land-based casino in Mesquite effective
as of the opening of each facility. The fees that would have
been payable with respect to these two additional facilities were
replaced with one lump-sum payment of approximately $300,000 for
services at these facilities through the period ending December
31, 1996, the expiration date of the agreement.
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<TOTAL-ASSETS> 409587
<CURRENT-LIABILITIES> 39205
<BONDS> 180541
0
0
<COMMON> 163
<OTHER-SE> 157751
<TOTAL-LIABILITY-AND-EQUITY> 409587
<SALES> 0
<TOTAL-REVENUES> 323218
<CGS> 0
<TOTAL-COSTS> 153617
<OTHER-EXPENSES> 143263
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24117
<INCOME-PRETAX> 3146
<INCOME-TAX> 1195
<INCOME-CONTINUING> 1951
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1951
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
168483/2
52
EXHIBIT 21
PLAYERS INTERNATIONAL, INC.
SUBSIDIARIES OF THE COMPANY
Subsidiary State of Incorporation or
Organization
Metropolis, IL 1292 Limited Partnership Illinois
PCI, Inc. Nevada
Players Bluegrass Downs, Inc. Kentucky
Players Development, Inc. Nevada
Players Entertainment, Inc. Nevada
Players Holding, Inc. Nevada
Players International, Inc. Nevada
Players Lake Charles, LLC Louisiana
Players Lake Charles Riverboat, Inc. Louisiana
Players LC, Inc. Nevada
Players Maryland Heights, Inc. Missouri
Players MH, L.P. Missouri
Players Maryland Heights Nevada, Inc. Nevada
Players Mesquite Golf Club, Inc. Nevada
Players Mesquite Land, Inc. Nevada
Players Nevada, Inc. Nevada
Players Resources, Inc. Nevada
Players Riverboat, LLC Louisiana
Players Riverboat, Inc. Nevada
Players Riverboat Management, Inc. Nevada
Players Services, Inc. New Jersey
Riverfront Realty Corporation Illinois
Riverside Joint Venture Missouri
Showboat Star Partnership Louisiana
Southern Illinois Riverboat/Casino Cruises, Inc. Illinois
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of September 30, 1997, between
LAKESHORE HOTELS, LTD., a Louisiana limited partnership in
commendam ("Seller"), and PLAYERS INTERNATIONAL, INC., a Nevada
corporation, its designees or assignees ("Purchaser").
R E C I T A L S
A. Seller owns and operates or causes to be operated on
its behalf a hotel and related facilities and amenities in Lake
Charles, Calcasieu Parish, Louisiana commonly known as the
"Holiday Inn Lake Charles" (the "Hotel"). The business of Seller
as described in the preceding sentence is referred to herein as
the "Business."
B. Seller desires to sell to Purchaser substantially all
of Seller's assets, and Purchaser desires to purchase said
assets, all on the terms and subject to the conditions contained
in this Agreement.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, the
parties agree as follows:
ARTICLE I
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and
subject to the conditions contained in this Agreement, Purchaser
agrees to purchase from Seller, and Seller agrees to sell to
Purchaser, all of the assets, properties, rights and business as
a going concern, of whatever kind or nature and wherever situated
and located and whether reflected on Seller's books and records
or previously written-off or otherwise not shown on Seller's
books and records, of Seller (other than the items set forth in
Section 1.3 (the "Excluded Assets")). All of said assets,
properties, rights and business (other than the Excluded Assets)
are collectively referred to in this Agreement as the "Purchased
Assets."
1.2 Enumeration of Purchased Assets. The Purchased Assets
include, without limitation, the following items:
(a) all inventory, including, without limitation, raw
materials, work in process, finished goods, service parts
and supplies, as well as food and beverage stocks, gift shop
inventory and other merchandise held for sale or use in the
operation of the Business (collectively, the "Inventory");
(b) all furniture, furnishings, fixtures, systems,
equipment (including office equipment), machinery,
appliances, parts, computer hardware, tools, signs, motor
vehicles, utensils, tableware, china, glassware, silverware,
linens, uniforms, works of art, disposables, materials,
supplies and all other tangible personal property (other
than the Inventory), together with any and all warranties
thereon (collectively, the "Equipment");
(c) that certain real property described in Schedule
1.2(c) hereof and all appurtenances, easements and other
rights with respect thereto and buildings and other
improvements thereon or relating thereto (the "Real
Estate");
(d) all leasehold interests in personal property
leased to Seller, to the extent (and only to the extent) the
subject lease has been reviewed and accepted in writing by
Purchaser, in its sole discretion, prior to Closing (as
herein defined) (the "Leased Personalty");
(e) all claims and rights (and benefits arising
therefrom) with or against all persons whomsoever,
including, without limitation, all rights against
manufacturers, distributors and/or suppliers under
warranties covering any of the Purchased Assets and all
licenses, permits and approvals relating to the Business
and/or any of the Purchased Assets (the "Permits") and
Environmental Permits (as herein defined), to the extent
they are legally transferable by Seller;
(f) all intellectual property rights, including,
without limitation, patents and applications therefor,
know-how, unpatented inventions, trade secrets, secret
formulas, business and marketing plans, copyrights and
applications therefor, trademarks and applications therefor,
service marks and applications therefor, trade names and
applications therefor, trade dress, and names and slogans
used by Seller (including, without limitation, the names
"Holiday Inn Lake Charles," "Charley's," "Bayou Cafe,"
"Levee Bar" and "Riverboat Magic"), and all goodwill
associated with such intellectual property rights;
(g) all contracts, leases and concession agreements,
license agreements, distribution agreements, maintenance or
other service agreements, supply agreements, computer
software agreements and technical service agreements, to the
extent (and only to the extent) copies of the same have been
reviewed and accepted in writing by Purchaser, in its sole
discretion, prior to Closing;
(h) all customer lists, customer records and
information;
(i) all Seller's right, title and interest in and to
any intangible personal property owned by Seller and used in
the ownership or operation of the Business or any of the
assets and properties described in this Section 1.2, except
for those items specifically excepted or excluded therefrom;
(j) all computer software, including all documentation
and source codes with respect to such software, and licenses
and leases of software to the extent (and only to the
extent) such software license agreements and/or leases have
been reviewed and accepted in writing by Purchaser, in its
sole discretion, prior to Closing;
(k) all sales and promotional materials, catalogues
and advertising literature;
(l) all telephone numbers of Seller;
(m) all books and records, in whatever medium Seller
uses, including, without limitation, blueprints, surveys,
drawings and other technical papers, and other records,
ledgers, and books of original entry, and all insurance
records and OSHA and EPA files, relating to the Business or
any of the assets described herein;
(n) All conference, convention and banquet room
advance reservations, bookings, contracts and deposits, and
guest room reservations and deposits (the foregoing adjusted
as provided in Section 3.7(f) hereof);
(o) All leases, concessions and other agreements with
tenants or operators for occupancy of any portion of the
Real Estate, to the extent (and only to the extent) that
such leases or agreements have been reviewed and accepted in
writing by Purchaser, in its sole discretion, prior to
Closing; and
(p) All other properties and assets of Seller used or
usable in the operation of the Business, except for those
Excluded Assets described in Section 1.3 hereof.
Purchaser's election to accept any of the leases, contracts,
licenses, agreements or other items described in subsections (d),
(g), (j) or (o) hereof shall be made, if at all, by written
notice to Seller before the end of the Inspection Period (as
herein defined); provided that Purchaser must have received a
copy or (if copies are not available) detailed written
description thereof at least thirty (30) days prior to such date.
Purchaser shall not assume nor be deemed to have assumed any
liability or obligation with respect to any such item not
affirmatively accepted as provided above. If any of the
Purchased Assets are subject to an agreement, lease or contract
not disclosed to Purchaser either by delivery of a copy or
detailed description, as listed in Section 4.3(k) of the
Disclosure Schedule attached hereto, then Purchaser shall take
such Purchased Asset(s) free and clear of the subject
agreement(s), and Seller hereby indemnifies and agrees to hold
Purchaser harmless from loss, cost, claim or expense under, as a
result of, or in connection with the existence of, such
undisclosed lease(s), contract(s) or agreement(s). The foregoing
indemnity is in addition to and not in lieu of Seller's indemnity
obligation under Section 8.2 hereof, but shall nonetheless be
governed by the provisions of Sections 8.1, 8.4, 8.5 and 8.6
hereof.
1.3 Excluded Assets. Notwithstanding Sections 1.1 and 1.2,
the Purchased Assets shall not include the following assets of
Seller (the "Excluded Assets"):
(a) all cash on hand and in banks, cash equivalents,
and investments;
(b) claims (and benefits to the extent they arise
therefrom) and rights against third parties to the extent
such claims and litigation are not in any way related to the
Purchased Assets or the Assumed Liabilities (as herein
defined), and claims (and benefits to the extent they arise
therefrom) that relate to Excluded Liabilities (as herein
defined);
(c) Seller's organizational documents, income tax
returns, checkbooks and canceled checks;
(d) all leases, contracts, agreements and/or
obligations not accepted by Purchaser as contemplated under
Sections 1.2(d), (g), (j) and (o) hereof;
(e) all guest ledger receivables, trade accounts
receivable, notes receivable, negotiable instruments and
chattel paper (collectively, the "Accounts Receivable");
(f) all insurance policies of Seller, and any rights
to premium refunds due with respect to such policies, in
each case unless otherwise specifically agreed in writing by
Seller and Purchaser; and
(g) the assets, if any, described on Schedule 1.3(g).
1.4 Quality of Title.
(a) Good and marketable title to all of the Purchased
Assets shall be sold to Purchaser free and clear of any liens,
encumbrances or security interests for money owed, and free and
clear of any other title claims, encumbrances, rights,
restrictions, contract rights or interests whatsoever, except for
those title matters specified in Schedule 1.4(a), attached hereto
and by this reference made a part hereof ("Permitted
Exceptions").
(b) With respect to the Real Estate, title shall be
good and marketable and insurable at regular rates with no
exceptions other than Permitted Exceptions by Purchaser's title
insuror, on the current ALTA Owner's Title Policy. Title to all
personal property comprising the Purchased Assets shall be free
and clear of liens, restrictions and encumbrances other than
Permitted Exceptions.
(c) Seller shall take all reasonable steps to convey
to Purchaser at Closing the quality of title required hereunder,
including without limitation, use of the net proceeds of Closing
to satisfy outstanding liens, interests or encumbrances, or to
secure the termination of other title defects. Provided such
title defects are so satisfied and discharged at Closing, the
existence thereof immediately before Closing shall not constitute
a title defect sufficient to entitle Purchaser to avoid Closing.
Purchaser shall provide a copy of its title survey to Seller
promptly after receipt thereof. If Seller reasonably believes
that Purchaser's title survey is inaccurate, it may, by written
notice to Seller within seven (7) days after receipt of such
title survey from Purchaser, require Purchaser's surveyor to
verify Purchaser's title survey.
(d) If on the date of Closing the Real Estate or any
portion shall have been affected by a municipal or other
assessment or assessments, which have been assessed prior to the
date of Closing, or of which the first installment is then a
charge or lien, or has been paid, then for all purposes of this
Agreement all unpaid installments of any such assessment,
including those payable after Closing, shall be deemed to be due
and payable and shall constitute liens upon the Real Estate as of
Closing, and Seller shall pay, or provide for payment of, all
such assessments and installments thereof, whether due and
payable prior to or after the date of Closing. Seller shall, if
necessary, employ the proceeds of Closing to satisfy any such
assessment(s).
(e) Title to the Purchased Assets shall be conveyed
from Seller to Purchaser at Closing by general warranty deed for
the Real Estate, general warranty bill of sale for any Purchased
Assets which are tangible personal property and by general
warranty assignment for any Purchased Assets which are
intangibles, in each case in proper form for recording, if
appropriate, and duly executed and acknowledged by Seller. If
Purchaser causes a survey to be made, the description in such
deed shall be based upon the survey. Actual possession of the
Purchased Assets shall be delivered to Purchaser on the date of
Closing, subject only to the rights of occupancy of transient
guests holding advance reservations and tenants pursuant to
written leases disclosed to and approved by Purchaser as provided
herein.
(f) Without limiting the generality or effect of the
other provisions of this Section 1.4, Seller agrees specifically
to obtain and deliver to Purchaser prior to Closing a valid
release and termination of all rights of Jackpot Novelty, Inc.
under all agreements between that entity and Seller or its
Affiliate(s), including without limitation, that certain Coin
Operated Machine and Space Lease dated January 22, 1992.
1.5 Right to Market. Purchaser acknowledges that, between
the date hereof and the end of the Inspection Period (as
hereinafter defined), Hodges Ward Elliott, Inc. ("Seller's
Agent") will continue for Seller's benefit to market the Business
and the Purchased Assets for sale to third parties. Unless
Purchaser elects to terminate this Agreement during the
Inspection Period (as hereinafter defined) as provided in Section
5.5 hereof, such right to market the Business and/or any of the
Purchased Assets shall automatically terminate upon the
expiration of the Inspection Period and be of no force or effect.
Purchaser may, as a result of such marketing efforts, receive
offers to purchase the Purchased Assets. However,
notwithstanding the marketing right described in this Section
1.5, Seller shall have no right whatsoever, whether directly or
through its agents or Affiliates (as herein defined), to
negotiate such offers, or to enter into any agreement, contract,
letter of intent or other arrangement for the sale of Seller's
Business and/or any of the Purchased Assets, unless and until
Purchaser terminates this Agreement or this Agreement is
terminated as a result of Purchaser's default hereunder.
1.6 Affiliate Lease; Related Party Contracts. Seller
currently leases certain of the Equipment and other assets from
Ted W. Price, Jr., Ted W. Price, Sr., Robert W. Price, Sr. and
Robert W. Price, Jr. , individuals who are also the sole general
partners of the Seller (the "Individuals"), pursuant to a certain
Furniture, Fixtures and Equipment Lease dated as of October 1,
1990 (the "Affiliate Lease"). At or prior to Closing hereunder,
Seller and the Individuals shall cause the Affiliate Lease to be
terminated, and all of the Equipment and other assets now subject
to the Affiliate Lease to be conveyed to Seller, such that Seller
can deliver to Purchaser good and marketable title thereto at
Closing, as contemplated under this Agreement. The Individuals
covenant, represent and warrant to Purchaser that the terms of
such termination and conveyance shall not prohibit or impair
Seller's ability to perform its obligations hereunder. The
Individuals will cause any other contracts, leases or other
agreements between Seller and its Affiliates to be terminated at
or prior to Closing, such that Purchaser shall have no liability
or obligation thereunder. The Individuals have joined in the
execution of this Agreement to evidence their agreements
hereunder.
ARTICLE II
Assumption of Liabilities
2.1 Agreement to Assume. At the Closing, Purchaser shall
assume and agree to discharge and perform when due, and indemnify
and defend Seller against loss or liability for, those
liabilities of Seller (and only those liabilities of Seller) that
are enumerated in Section 2.2 (the "Assumed Liabilities"). All
claims against and liabilities and obligations of Seller not
specifically assumed by Purchaser pursuant to Section 2.2,
including, without limitation, the liabilities enumerated in
Section 2.3, are collectively referred to herein as "Excluded
Liabilities." Seller shall promptly pay and discharge when due,
and indemnify and defend Purchaser against, all of the Excluded
Liabilities.
2.2 Description of Assumed Liabilities. The Assumed
Liabilities shall consist of the following, and only the
following, liabilities of Seller:
(a) liabilities of Seller under any written
purchase order; sales order; lease; service, supply or other
agreement or commitment of any kind by which Seller is bound
on the Closing Date (as herein defined), which was made
prior to Closing in the ordinary course of business and
which Purchaser has reviewed and accepted in accordance with
the provisions of Sections 1.2(d), (g), (j) and (o) hereof,
in each case only to the extent such liabilities accrue and
relate to performance after the Closing Date;
(b) liabilities of Seller under any Permits or
Environmental Permits with respect to the Business or any of
the Purchased Assets, which were issued to Seller in the
ordinary course of business prior to the Closing Date and
which are assigned or transferred to Purchaser pursuant to
the provisions hereof, to the extent such liabilities relate
to performance after the Closing Date; and
(c) liabilities and obligations of Seller under or
with respect to any marketing and groups sales arrangements,
and guest rooms, banquet, conference or convention
reservations, bookings, contracts or similar commitments
incurred or made in the ordinary course of Seller's business
and existing as of the Closing Date, to the extent the same
relate to performance or guests' presence at the Hotel after
the Closing Date.
2.3 Excluded Liabilities. Without implication that
Purchaser is assuming any liability not expressly excluded by
this Section 2.3 and without implication that any of the
following would constitute Assumed Liabilities but for the
provisions of this Section 2.3, the following claims against and
liabilities of Seller are excluded and shall not be assumed or
discharged by Purchaser:
(a) trade or other accounts payable as of the
Closing Date, of any type or nature (the "Accounts
Payable");
(b) any liabilities for legal, accounting, audit
and investment banking fees, brokerage commissions, and any
other expenses incurred by Seller in connection with the
negotiation and preparation of this Agreement and the sale
of the Purchased Assets to Purchaser;
(c) any liabilities of Seller for Federal, state
or local taxes;
(d) any liability for or related to indebtedness
of Seller to banks, financial institutions, securities-
holders or other persons or entities (or their agents,
trustees, or representatives) with respect to borrowed
money;
(e) any liabilities of Seller to the extent that
their existence or magnitude constitutes or results in a
breach of a representation, warranty or covenant made by
Seller to Purchaser herein, or makes the information
contained in any Schedule attached hereto, materially
incorrect;
(f) any liabilities of Seller under those leases,
contracts, insurance policies, sales orders, purchase
orders, service or supply agreements, commitments or other
obligations, which are not accepted by and assigned to
Purchaser in accordance with the provisions of Sections
1.2(d), (g), (j) and (o) of this Agreement;
(g) any liabilities of Seller under collective
bargaining agreements pertaining to employees of Seller; any
liabilities of Seller to pay severance benefits to employees
of Seller whose employment is terminated prior to the
Closing Date or in connection with the sale of the Purchased
Assets pursuant to the provisions hereof; or any liability
under ERISA (as herein defined) or any Federal or state
civil rights or similar law, resulting from the termination
of employment of employees;
(h) liabilities for returns, refunds or
allowances arising out of or with respect to customer
complaints or disputes which accrued (i.e., were based on
goods or services provided) prior to the Closing Date,
whether required by a governmental body or otherwise;
(i) any claims against or liabilities of Seller
for injury to or death of persons or damage to or
destruction of property (including, without limitation, any
worker's compensation claim) regardless of when said claim
or liability is asserted, including, without limitation, any
claim or liability for consequential or punitive damages in
connection with the foregoing;
(j) any liabilities under or for contributions to
any employee benefit plans, including multi-employer pension
plans (each as defined in the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or under any
other employee welfare or benefit plans to which Seller
contributes on behalf of any employees, or with respect to
any health, medical, dental, or disability benefits for any
of Seller's employees;
(k) any liabilities (whether asserted before or
after Closing) for or arising in connection with any
misfeasance or malfeasance of Seller or its agents in the
conduct of the Business, or any breach of a representation,
warranty, or covenant, or for any claim for indemnification,
contained in any Permit or contract, agreement, lease or
commitment referred to in Section 2.2 hereof to the extent
that such liability, breach or claim arose out of or by
virtue of Seller's performance or nonperformance thereunder
on or prior to the Closing Date, it being understood that,
as between Seller and Purchaser, this paragraph (k) shall
apply notwithstanding any provisions which may be contained
in any form of consent to the assignment of any such
contract or document, or any novation agreement, which, by
its terms, imposes such liabilities upon Purchaser and which
assignment or novation agreement is accepted by Purchaser
notwithstanding the presence of such a provision, and that
Seller's failure to discharge any such liability shall
entitle Purchaser to indemnification in accordance with the
provisions of Article VIII hereof;
(l) any liabilities of Seller incurred in
connection with the transfer of the Purchased Assets
hereunder, including without limitation, and Federal, state
or local income, transfer or other tax;
(m) any liabilities under any employment
contracts with any of Seller's employees, or for salaries,
wages, bonuses, vacation pay, incentive compensation,
severance pay or other compensation which are otherwise owed
to employees of Seller, accrued prior to the Closing Date;
(n) any liabilities arising out of or in
connection with any violation by Seller of a statute or
governmental rule, regulation or directive;
(o) any liability of Seller under or in connection
with any litigation to which Seller is or may hereafter
become a party;
(p) any liabilities to any of Seller's
Affiliates, including without limitation, any management
agreement(s) with respect to the Business or any portion
thereof; and
(q) without limitation by the specific
enumeration of the foregoing, any liabilities not expressly
assumed by Purchaser pursuant to the provisions of Section
2.2.
2.4 No Expansion of Third Party Rights. The assumption
by Purchaser of the Assumed Liabilities shall not expand the
rights or remedies of any third party against Purchaser or Seller
as compared to the rights and remedies which such third party
would have had against Seller had Purchaser not assumed the
Assumed Liabilities. Without limiting the generality of the
preceding sentence, the assumption by Purchaser of the Assumed
Liabilities shall not create any third party beneficiary rights.
Purchaser does not assume any liability which may arise or be
created in favor of any third party, by virtue of Seller's
execution, delivery and/or performance of this Agreement.
2.5 No Liability Before Closing. Although certain of the
Assumed Liabilities may have been created prior to Closing,
Purchaser is not assuming any liability whatsoever that accrued
or relates to periods prior to Closing hereunder. Specifically
(but without limiting the foregoing), with respect to contracts,
leases, agreements or other obligations accepted by and assigned
to Purchaser under Sections 1.2(d), (g), (j) and (o) hereof,
Purchaser shall assume only such liability thereunder as accrues
or relates to periods after Closing hereunder. All liabilities
accrued or relating to periods prior to Closing hereunder shall
constitute Excluded Liabilities. Where needed, appropriate
adjustments and apportionments shall be made under Section 3.7
hereof to effectuate the foregoing.
ARTICLE III
Purchase Price, Manner of Payment and Closing
3.1 Purchase Price.
(a) The purchase price to be paid by Purchaser to
Seller for the Purchased Assets (the "Purchase Price") shall be
$18,500,000, plus or minus prorations and adjustments as provided
herein. Purchaser shall also be liable for the Assumed
Liabilities, and for certain "Holiday Inn Costs," as hereinafter
defined.
(b) At 11:00 p.m. on the day before the Closing
(whether or not a business day), Purchaser and Seller shall
jointly conduct a physical inventory count of Seller's
Consumables On-Hand (as herein defined). The Consumables On-Hand
so counted shall be valued, on an item-by-item basis, at the
lower of the actual cost thereof (using the average cost method)
or market value thereof, as of the date of such count. The
aggregate total value so computed shall be referred to herein as
the "Inventory Value". "Consumables On-Hand" shall mean Seller's
entire inventory of unopened food and beverage stocks, and other
items which are perishable, are consumed or are customarily
disposed of after single use; provided, however, that opened
perishables, obsolete inventories, and inventories which are
unsalable or unusable in the ordinary course of business shall be
valued at net realizable value. At Closing, Purchaser shall pay
to Seller, in addition to the Purchase Price, an amount equal to
the Inventory Value.
3.2 Time and Place of Closing. The transaction
contemplated by this Agreement shall be consummated (the
"Closing") at 10:00 a.m. at the offices of Stockwell, Sievert,
Shaddock & Viccellio, One Lakeside Plaza, 4th Floor, Lake
Charles, Louisiana 70601 on December 2, 1997 or on such other
date, or at such other time or place, as shall be mutually agreed
upon by Seller and Purchaser. Notwithstanding the foregoing, if
either party is unable, despite such party's good faith efforts,
to complete Closing by such date and time, then such party may
extend the date for Closing to December 17, 1997, upon written
notice to the other party hereunder, on or prior to the original
date for Closing. The foregoing extension right is available
only with respect to the originally scheduled Closing, and any
further extension of the date for Closing may only be made upon
the mutual agreement of the parties. The date (or extended date,
if applicable) on which the Closing occurs in accordance with the
preceding sentences, is referred to in this Agreement as the
"Closing Date." The Closing shall be deemed to be effective as
of 12:01 a.m. on the Closing Date at Lake Charles, Louisiana.
3.3 Manner of Payment of the Purchase Price.
(a) At the Closing, Purchaser shall assume the Assumed
Liabilities and shall pay the Purchase Price and the
Inventory Value to Seller, by wire transfer to such account
as Seller shall designate by written notice delivered to
Purchaser not later than three (3) business days prior to
the Closing Date.
(b) Purchaser has previously deposited with Stockwell,
Sievert, Shaddock & Viccellio, LLP, as Agent for Chicago
Title Insurance Company (the "Escrow Holder"), to be held in
an interest-bearing account: (i) the sum of $500,000 (the
"Primary Deposit"); and (ii) the sum of $50,000 (the
"Additional Deposit;" the Primary Deposit and the Additional
Deposit are sometimes referred to collectively hereinafter
as the "Deposit Monies"). The Deposit Monies shall be held
in escrow pending Closing hereunder. The Primary Deposit
shall be refunded to Purchaser, with interest thereon, at
Purchaser's request at any time during the Inspection Period
(as hereinafter defined) in connection with Purchaser's
termination of this Agreement under Section 5.5 hereof, upon
notice by Purchaser to the Escrow Holder given in
Purchaser's sole and absolute discretion. After expiration
of the Inspection Period, the Primary Deposit shall only be
refunded to Purchaser on default by Seller hereunder or
failure of any of the conditions to Purchaser's obligations
under Section 6.2 hereof by the date specified therefor.
The Additional Deposit shall only be refunded to Purchaser
(x) on default by Seller, or (y) if the condition on
Purchaser's obligations regarding Purchaser's ability to
obtain financing is not satisfied as provided under Section
6.2(h) hereof, or (z) if the condition regarding Holiday Inn
franchise matters under Section 6.2(i) hereof is not
satisfied. All of the Deposit Monies, plus interest
thereon, shall also be returned to Purchaser if this
Agreement is terminated because of a casualty under Section
6.3(a) hereof, or a taking under Section 6.4 hereof.
(c) Subject to refund in the case of Seller's default
hereunder or failure of conditions on Purchaser's
obligations as provided in subsection (b) hereof, after
expiration of the Inspection Period, the Deposit Monies
shall become non-refundable and shall serve as Seller's
liquidated damages under Section 9.2 hereof, in the event of
Purchaser's default.
(d) At the Closing, Purchaser shall receive a credit
against the Purchase Price in an amount equal to the amount
of the Deposit Monies, plus interest accrued thereon.
(e) Escrow Holder shall deposit the Deposit Monies in
a federally-insured account (subject to the coverage
limitations on such federal insurance). Seller and
Purchaser agree that Escrow Holder is acting as a
stakeholder only for the convenience and at the request of
Purchaser and Seller, and Escrow Holder shall be responsible
only for the safekeeping and proper disposition of the
Deposit Monies in accordance with the terms of this
Agreement. In taking any action hereunder, Escrow Holder
shall be entitled to rely upon any written notice, paper, or
other document from Seller or Purchaser, and Escrow Holder
shall not be required to seek or obtain verification of the
authenticity or proper authorization of such written notice,
paper, or other document. In no event shall Escrow Holder
be liable for any act performed or omitted to be performed
by it hereunder in the absence of gross negligence or
willful misconduct. In the event of a controversy between
Seller and Purchaser as to the disposition of the Escrow
Monies, Escrow Holder shall be entitled to deliver the
Escrow Monies to the clerk of a court of competent
jurisdiction in an interpleader action, whereupon Escrow
Holder shall be relieved of any further duties or
obligations regarding the Escrow Monies. Seller and
Purchaser agree to indemnify, defend and hold Escrow Holder
harmless from and against any loss, cost or expense arising
out of or related to the Escrow Monies not resulting from
Escrow Holder's gross negligence or willful misconduct.
Seller acknowledges and agrees that Escrow Holder is and has
been counsel to Purchaser in connection with the preparation
of this Agreement and otherwise. Seller and Purchaser
hereby agree that to the extent that Escrow Holder's serving
as the holder of the Deposit Monies may create a conflict of
interest or an appearance of a conflict of interest, any
such conflict of interest is hereby waived. Seller also
acknowledges and agrees that Escrow Holder serving as escrow
holder shall in no manner whatsoever disqualify or be cause
for disqualification of Escrow Holder with respect to the
current or future representation of Purchaser arising out of
or involving any matter or issue relating to the Deposit
Monies or this Agreement or otherwise; it being hereby
understood and agreed that Purchaser will continue to be
represented by Escrow Holder in connection with the
foregoing matters.
3.4 Closing Deliveries. At the Closing, the parties shall
execute and deliver such bills of sale, assignments, documents of
title, assumption agreements, closing certificates, searches,
title insurance policies and other documents as are reasonably
required in order to effectuate the consummation of the
transaction contemplated hereby. All documents to be delivered
by a party shall be in form and substance reasonably satisfactory
to the other party.
3.5 Allocation of Purchase Price. The Purchase Price shall
be allocated among the Purchased Assets by Purchaser, in the
manner required by Section 1060 of the Internal Revenue Code of
1986, as amended, and in a manner approved by Seller, which
approval shall not be unreasonably withheld. Purchaser shall
submit its proposed allocation to Seller on or before
November 17, 1997.
3.6 Franchise Matters.
(a) The Hotel is operated under a franchise license
agreement dated April 14, 1993 (the "Existing Agreement")
between Seller and Holiday Inns Franchising, Inc. ("Holiday
Inns"). Seller and Purchaser each hereby agrees to use its
commercially reasonable good faith efforts to cause a new
Holiday Inn franchise license agreement to be awarded to
Purchaser for its operation of the Business, on terms
acceptable to Purchaser, in its sole discretion (a "New
License Agreement"). The parties acknowledge and understand
that one of the conditions to obtaining a New License
Agreement is an agreement with Holiday Inns for a program of
physical improvements to the Real Estate or the other assets
used in the Business, as determined by Holiday Inns after
its inspection of the Purchased Assets and as designated by
Holiday Inns as a "Product Improvement Plan" (hereinafter,
"PIP"). Purchaser agrees that it shall be solely
responsible for all costs of determining and implementing
such PIP as determined by Holiday Inns, and for all other
costs associated with the obtaining of a New License
Agreement, including up-front fees, inspection costs,
franchise fees, costs of termination of the Existing
Agreement (and the associated release of Seller from
liability thereunder) (collectively, the "Holiday Inn
Costs"). Notwithstanding the foregoing, Purchaser's total
liability for all Holiday Inn Costs shall not exceed, in the
aggregate, the sum of One Million Five Hundred Thousand
Dollars ($1,500,000.00). If such aggregate total of the
actual or reasonably anticipated Holiday Inn Costs exceeds
or is reasonably expected by Purchaser to exceed
$1,500,000.00, then Purchaser may, in its sole discretion,
elect to terminate this Agreement by written notice to
Seller prior to Closing, in which event all Deposit Monies,
together with any interest thereon, shall be immediately
returned to Purchaser, and thereupon neither party shall
have any obligation to the other hereunder.
(b) Purchaser hereby acknowledges that the Existing
Agreement is not, by its terms, assignable to Purchaser.
Purchaser acknowledges further that the Existing Agreement
provides for a termination fee of approximately
$1,800,000.00 in the event the Existing Agreement is
terminated without the awarding of a New License Agreement
with respect to the Business (the "Termination Fee"). If
Purchaser elects to complete Closing hereunder, but does not
pursue the New License Agreement, Purchaser shall be solely
responsible for the Termination Fee. The parties agree that
Purchaser's obligation to pay the Termination Fee if it
completes Closing hereunder but elects not to pursue a New
License Agreement, shall not be taken into consideration in
calculating the total Holiday Inn Costs under subsection (a)
hereof, or Purchaser's costs of making Closing hereunder.
Purchaser shall not be liable for payment of the Termination
Fee if Purchaser does not complete Closing hereunder,
unless: (i) Closing does not occur because of Purchaser's
default hereunder; (ii) Seller has not defaulted hereunder;
and (iii) the Termination Fee becomes payable
(notwithstanding that Seller continues to own and operate
the Business) because of an act of Purchaser.
(c) Purchaser shall have the right, in its sole
discretion, to contest such Termination Fee, or the amount
thereof, so long as Purchaser posts as security for the
ultimate payment thereof, to the extent necessary, for the
benefit of Seller (and any other parties obligated under the
Existing Agreement), cash or a letter of credit reasonably
acceptable to Seller in an amount equal to the amount of the
Termination Fee. So long as such security is provided,
Seller shall cooperate with and not oppose Purchaser in the
prosecution of any such contest.
(d) Seller will cooperate with Purchaser and assist
Purchaser as reasonably requested, in Purchaser's dealings
with Holiday Inns as contemplated herein.
3.7 Adjustments and Prorations. The benefits and burdens
of ownership and operation of the Business and the Purchased
Assets shall transfer from Seller to Purchaser as of the Closing
Date, such that, except as otherwise expressly set forth in this
Agreement, Seller shall be liable for all costs and obligations
relating to periods prior to Closing, and Purchaser shall only be
liable for costs and obligations relating to periods after
Closing. To accomplish such transfer, the following matters and
items shall be apportioned between the parties hereto or, where
appropriate, credited in total to a particular party, as of 12:01
am, CST on the Closing Date (the "Cut-off Time") as provided
below:
(a) Prior Night's Room Revenue; Deposits. Each party
shall receive a credit equal to one-half of the amount of
transient guest room rentals for the full night which begins
on the day immediately preceding the Closing Date. Subject
to the terms hereof, Purchaser will honor, for its account,
the terms and rates of all pre-closing reservations made in
the ordinary course of business and confirmed by Seller for
dates on or after the Closing Date. Any pre-Closing down
payments or advance payments made to Seller on confirmed
guest room, banquet, conference or convention reservations
for dates on or after the Closing Date will be credited to
Purchaser at the Closing. Any post-Closing down payments
made to Seller on confirmed guest room, banquet, conference
or convention reservations for dates on or after the Closing
Date will be forwarded to Purchaser upon receipt.
(b) Taxes and Assessments. All real property and
other ad valorem taxes, special or general assessments,
personal property taxes, hotel room or bed taxes, water and
sewer rents, rates and charges, vault charges, canopy permit
fees, municipal permit fees and other municipal charges,
shall be prorated as of the Cut-off Time. Any special
assessments with respect to the Purchased Assets or Business
existing at the Cut-off Time shall be paid by Seller and
any special assessments thereafter arising shall be paid by
Purchaser. All business license, occupation, sales, use,
withholding or similar tax, or any other taxes of any kind
relating to the Business or Purchased Assets and
attributable to the period prior to the Cut-off Time shall
be paid by Seller, and all such taxes attributable to the
period after the Cut-off Time shall be paid by Purchaser.
(c) Utility Contracts. Telephone and telex contracts
and contracts for the supply of heat, steam, electric power,
gas, lighting and any other utility service shall be
prorated as of the Cut-off Time, with Seller receiving a
credit for each deposit, if any, made by Seller as security
under any such public service contracts if the same is
transferable and provided such deposit remains on deposit
for the benefit of Purchaser. Where possible, cut-off
readings will be secured for all utilities on the Closing
Date.
(d) Contracts and Space Leases. Any amounts prepaid
or payable under any contracts, agreements, leases of
Equipment, other leases and occupancy agreements, and other
obligations that Purchaser elects in its sole discretion to
accept, all as provided under Sections 1.2 (d), (g), (j) and
(o) hereof, shall be apportioned between the parties as of
the Cut-off Time. All security deposits under such accepted
leases or agreements shall be transferred to Purchaser and
all obligations with respect to such security deposits shall
be assumed by Purchaser.
(e) License Fees. Fees paid or payable for or under
any existing Permits shall be apportioned between the
parties as of the Cut-off Time.
(f) Employees; Employment Contracts. Seller shall be
responsible for, and shall pay when due, all compensation of
its employees, whether or not hired by Purchaser, through
the Cut-off Time. Purchaser shall have no obligation or
liability for pre-Closing compensation of, or other
employment-related obligations to, Seller's employees.
Purchaser assumes no obligations of Seller with respect to
any employee benefits, including without limitation accrued
vacation time, severance pay, personal time, unemployment
and/or disability premiums or payments, and state, parish or
federal withholdings, all of which shall be the
responsibility of Seller only. Seller shall indemnify,
defend and hold Purchaser harmless from the foregoing
liabiities and obligations. Except as set forth in Section
10.10, below, Purchaser assumes no obligation to hire or to
employ after Closing, any of Seller's employees.
(g) Other. Such other items as are provided for in
this Agreement or as are normally prorated and adjusted in
the sale of a hotel, including, without limitation, all
deposits and prepaid items which inure to the benefit of the
Purchaser.
(h) Leased Personalty. The Purchase Price was
determined on the assumption that all Equipment is owned by
Seller, free and clear of liens and other interests, and
that no Leased Personalty exists. Therefore, to the extent
any of the Purchased Assets are Leased Personalty, and to
the extent Purchaser elects to accept the subject lease
under Section 1.2(d) hereof, Purchaser shall receive a
credit reflecting the present value of the remaining lease
payment liability for each such item of Leased Personalty
accepted by Purchaser hereunder.
(i) Cash. All cash on hand and in registers as of the
Cut-off Time shall be and remain the property of Seller, and
Seller shall receive a credit for same at Closing.
3.8 Payment. Any net credit due to Seller as a result of
the adjustments and prorations under Section 3.7 shall be paid to
Seller in cash at the time of Closing. Any net credit due to
Purchaser as a result of the adjustments and prorations under
Section 3.7 shall be credited against the Purchase Price at the
time of Closing.
3.9 Receivables and Payables. Purchaser is not purchasing
any of the receivables of Seller, nor assuming any of its
payables. Seller shall be solely responsible for the collection
of all its accounts receivable, and timely payment of all its
accounts payable. Therefore no adjustment or proration of same
will be made. If Purchaser shall receive any payment made on any
such accounts receivable, it shall promptly remit such payment to
Seller.
3.10 Indeterminate Items. Items of revenue or expense which
are not susceptible of calculation, allocation and/or proration
at the Cut-off Time, shall be calculated, allocated and/or
prorated as follows. Within five (5) days following the Closing
Date, Seller and Purchaser shall undertake in good faith to
mutually agree upon and execute and deliver to each other a
statement setting forth the determination of the items to be
prorated and accounted for hereunder, and the net amount due, if
any, to either Purchaser or Seller, as the case may be, shall be
paid within five (5) business days following the receipt of such
statement. If, with respect to the Closing, Purchaser and Seller
are unable within said five (5) day period to agree upon the
appropriate proration of or payment due for an item of revenue
or expense or other item pursuant to this paragraph, then Seller
and Purchaser shall employ a nationally recognized accounting
firm as may be mutually selected by Seller and Purchaser, as
independent certified public accountants ("Accountant"), to
determine the amount of the proration or payment consistent with
the provisions of this Agreement. The Accountant shall make such
determination as promptly as possible and in no event later than
thirty (30) days following such engagement. The amount of the
proration or payment as of the Cut-off Time as determined by the
Accountant shall be final and binding upon Seller and Purchaser,
each of whom hereby consents to the procedure herein set forth
and waives any rights they may have or conflicting provisions of
applicable law. Seller and Purchaser shall each pay one-half
(1/2) of the Accountant's fees and expenses for making such
determination.
3.11 Withheld Funds. Seller acknowledges and agrees
that, at the Closing, there shall be withheld from the proceeds
of sale otherwise payable to Seller at the Closing the sum of
$85,000.00, as required under the provisions of Section 47:308 of
the Louisiana Revised Statutes, and any equivalent parish
requirements. To the extent any such funds are withheld at
Closing, Purchaser and Seller shall open an escrow account with
Escrow Holder, and Purchaser shall deposit such funds into
Escrow, to be held by Escrow Holder until such time as Seller
furnishes Escrow Holder the receipts or clearance certificates
provided for in said statutes (or parish requirements) that the
applicable obligations have been paid or discharged or that funds
out of the Purchase Price sufficient for such purpose are held by
Escrow Holder. If Seller does not produce such receipts,
certificates or evidence within 120 days after Closing, or by
such earlier date on which any lien or other claim therefor is
asserted against Purchaser or the Purchased Assets (or any
portion thereof), Escrow Holder may pay such sums to the
appropriate authority as may be required to eliminate Purchaser's
liability under such statutes, or any encumbrance on any of the
Purchased Assets for payment thereof. Seller shall supply such
records and tax returns as may be reasonably necessary for Escrow
Holder to establish the amount of such required escrows. The
foregoing escrow agreement shall be in addition to, and not in
lieu of, Seller's indemnification obligations under Section 8.2
of this Agreement.
ARTICLE IV
Representations and Warranties
4.1 General Statement. The parties make the
representations and warranties to each other which are set forth
in this Article IV, each of which shall be correct and complete
as of the date hereof and as of the Closing Date. All such
representations and warranties and all representations and
warranties which are set forth elsewhere in this Agreement and in
any financial statement, exhibit or document delivered by a party
hereto to the other party pursuant to this Agreement shall
survive the Closing (and none shall merge into any instrument of
conveyance), regardless of any investigation or lack of
investigation by any of the parties to this Agreement. No
specific representation or warranty shall limit the generality or
applicability of a more general representation or warranty. All
representations and warranties of Seller are made subject to the
exceptions which are noted in the schedule delivered by Seller to
Purchaser concurrently herewith and identified by the parties as
the "Disclosure Schedule." All exceptions noted in the
Disclosure Schedule shall be numbered to correspond to the
applicable paragraph of Section 4.3 to which such exception
refers.
4.2 Purchaser's Representations and Warranties.
Purchaser represents and warrants to Seller that, to the best of
Purchaser's knowledge:
(a) Purchaser is a corporation duly organized,
validly existing and in good standing, under the laws of the
State of Nevada.
(b) Purchaser has full corporate power and
authority to enter into and perform under (x) this Agreement
and (y) all documents and instruments to be executed by
Purchaser pursuant to this Agreement (collectively,
"Purchaser's Ancillary Documents"). This Agreement has
been, and Purchaser's Ancillary Documents will be, duly
executed and delivered by duly authorized officers of
Purchaser. This Agreement constitutes a valid and legally
binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms (except to the extent
that enforcement may be affected by laws relating to
bankruptcy, reorganization, insolvency and creditors' rights
and by the availability of injunctive relief, specific
performance and other equitable remedies).
(c) Except for approvals of gaming authorities
having jurisdiction, and approval by Purchaser's Board of
Directors, primary bank lenders and holders of Purchaser's
debt securities (or the trustee for such holders), or as
otherwise contemplated under Section 6.2 hereof, no consent,
authorization, order or approval of, or filing or
registration with, any governmental authority or other
person is required for the execution and delivery by
Purchaser of this Agreement and Purchaser's Ancillary
Agreements, and the consummation by Purchaser of the
transactions contemplated by this Agreement and Purchaser's
Ancillary Agreements.
(d) Subject to the filings and/or consents noted
in subsection (c), above, neither the execution and delivery
of this Agreement and Purchaser's Ancillary Documents by
Purchaser, nor the consummation by Purchaser of the
transactions herein contemplated, will conflict with or
result in a breach of any of the terms, conditions or
provisions of Purchaser's Articles of Incorporation or
By-laws, or of any statute or administrative regulation, or
of any order, writ, injunction, judgment or decree of any
court or governmental authority or of any arbitration award.
(e) Subject to the filings and/or consents noted
in subsection (c), above, Purchaser is not a party to any
unexpired, undischarged or unsatisfied written or oral
contract, agreement, indenture, mortgage, debenture, note or
other instrument under the terms of which performance by
Purchaser according to the terms of this Agreement will be a
default, or whereby timely performance by Purchaser
according to the terms of this Agreement may be prohibited,
prevented or delayed.
(f) Neither Purchaser, nor any of its Affiliates
has dealt with any person or entity who is or may be
entitled to a broker's commission, finder's fee, investment
banker's fee or similar payment for arranging the
transaction contemplated hereby or introducing the parties
to each other. As used herein, an "Affiliate" is any person
or entity which controls a party to this Agreement, which
that party controls, or which is under common control with
that party. In the case of Seller, an Affiliate shall
include Ted W. Price, Sr., Ted W. Price, Jr., Robert W.
Price, Sr., Robert W. Price, Jr., and any of their wives or
children, and Hotel Management and Development, Inc..
"Control" means the power, direct or indirect, to direct or
cause the direction of the management and policies of a
person or entity through voting securities, contract or
otherwise.
(g) Except as contemplated under Section 6.2 hereof,
there is no law, rule, regulation or ordinance of any
governmental body or agency prohibiting Purchaser's
execution, delivery and performance of the transactions
contemplated by this Agreement.
(h) Subject to the conditions described under
Section 6.2 hereof (including without limitation, the
financing contingency in Section 6.2(h) and the contingency
for consent of existing lenders and any trustee for the
holders of debt securities under Section 6.2(g)), as to
which Purchaser makes no representation or warranty,
Purchaser is financially capable of acquiring the Purchased
Assets pursuant to the provisions of this Agreement.
4.3 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser that, to the best of
Seller's knowledge and except as set forth in the Disclosure
Schedule:
(a) Seller is a limited partnership in commendam,
duly organized, validly existing and in good standing, under
the laws of the State of Louisiana. Seller has all
necessary power and authority to conduct the Business as the
Business is now being conducted.
(b) Except as set forth in the Disclosure
Schedule, Seller holds good and marketable title to the
Purchased Assets, free and clear of all mortgages, options,
liens, charges, easements, agreements, claims, rights,
restrictions or other encumbrances of any kind or nature
other than the Permitted Exceptions, and all items of
Equipment, Inventory and other personal property have been
fully paid for, to the extent that normal business practice
permits, except those items identified on the Disclosure
Schedule which are subject to installment payments or leases
and with respect to which there are no installments due
which are delinquent.
(c) Seller has full partnership power and
authority to enter into and perform under (x) this Agreement
and (y) all documents and instruments to be executed by
Seller pursuant to this Agreement (collectively, "Seller's
Ancillary Documents"). This Agreement has been, and
Seller's Ancillary Documents will be, duly authorized by all
necessary partnership action(s), and duly executed and
delivered by general partners of Seller so authorized. This
Agreement constitutes a valid and legally binding obligation
of Seller, enforceable against Seller in accordance with its
terms (except to the extent that enforcement may be affected
by laws relating to bankruptcy, reorganization, insolvency
and creditors' rights and by the availability of injunctive
relief, specific performance and other equitable remedies).
Except as contemplated under Section 6.1 hereof, there is no
law, rule, regulation or ordinance of any governmental body
or agency prohibiting Seller's execution, delivery and
performance of the transactions contemplated by this
Agreement. The sale transaction contemplated by this
Agreement is being made in connection with the winding-up of
Seller as contemplated under Section 13.02(f) of Seller's
Articles of Partnership In Commendam dated as of May 1,
1980.
(d) No consent, authorization, order or approval
of, or filing or registration with, any governmental
authority or other person is required for Seller's
execution and delivery of this Agreement and Seller's
Ancillary Documents and the consummation by Seller of the
transactions contemplated by this Agreement and Seller's
Ancillary Documents.
(e) Neither the execution and delivery of this
Agreement and Seller's Ancillary Documents by Seller, nor
the consummation by Seller of the transactions herein
contemplated, will conflict with or result in a breach of
any of the terms, conditions or provisions of Seller's
Articles of Partnership In Commendam or other organizational
documents, or of any statute or administrative regulation,
or of any order, writ, injunction, judgment or decree of any
court or any governmental authority or of any arbitration
award.
(f) Seller's books, accounts and records are, and
have been, maintained in Seller's usual, regular and
ordinary manner, in accordance with prudent business
practices and generally accepted accounting practices, and
all material transactions to which Seller is or has been a
party are properly reflected therein.
(g) Complete and accurate copies of the audited
balance sheets, statements of income and retained earnings,
statements of cash flows, and notes to financial statements
(together with any supplementary information thereto) of
Seller, all as of and for the years ended December 31, 1993,
1994, 1995, and 1996, respectively, as audited by Seller's
certified public accountants are contained in the Disclosure
Schedule. All such financial statements are referred to
herein collectively as the "Financial Statements." The
Financial Statements present accurately and completely the
financial position of Seller as of the respective dates
thereof, and the results of operations and cash flows of
Seller for the respective periods covered by said
statements, in accordance with GAAP, consistently applied.
The Disclosure Schedule contains complete and correct copies
of all attorneys' responses to audit inquiry letters and all
management letters from the Accountants with respect to
Seller's last four (4) fiscal years.
(h) Complete and accurate copies of the unaudited
balance sheet, statement of income and retained earnings and
statement of cash flows of Seller as of and for the seven
(7)-month period ended July 31, 1997, are contained in the
Disclosure Schedule. Such financial statements are herein
referred to as the "Interim Financial Statements." The
Interim Financial Statements present accurately and
completely the financial position of Seller as of the date
thereof, and the results of operations of Seller for the
period covered by said statements, in accordance with GAAP,
consistently applied.
(i) (i) The Disclosure Schedule lists all existing
Permits and such list is complete and correct in all
material respects; (ii) such Permits constitute all of the
Permits currently necessary for the ownership and operation
of the Business, including but not limited to, the food and
beverage licenses required to sell and serve food and
liquor; (iii) no default has occurred in the due observance
or performance of any requirements or condition of any
Permit which has not been heretofore corrected; and (iv) no
occupant under a lease or concession agreement has received
any notice from any source to the effect that there is
lacking any Permit needed in connection with the operation
of the Business or any restaurant, bar, gift shop or other
operation connected therewith.
(j) Seller has not suffered or been threatened
with any material adverse change in the business,
operations, assets, liabilities, financial condition or
prospects of the Business, including, without limiting the
generality of the foregoing, the existence or threat of any
labor dispute, or any material adverse change in, or loss
of, any relationship between Seller and any of its
customers, suppliers or key employees.
(k) The Disclosure Schedule correctly and completed
lists and describes all material contracts, leases, and
agreements to which Seller is a party and which relate to
the conduct of the Business, including, without limitation:
employment and employment-related agreements; covenants not
to compete; loan agreements, notes, and security agreements
(other than notes, loan agreements and related security
documents that are being satisfied at or prior to Closing);
sales representative, distribution, franchise, advertising
and similar agreements; concession or occupancy agreements;
leases and subleases of realty or personalty; guest room,
banquet, conference and convention contracts or bookings;
license agreements; purchase orders and purchase contracts
and sales orders and sales contracts. All contracts, leases
and other arrangements or instruments referred to in this
paragraph 4.3(k), and all other contracts or instruments to
which Seller is a party, are in full force and binding upon
the parties thereto. No default by Seller has occurred
thereunder and, to the best of Seller's knowledge, no
default by the other contracting parties has occurred
thereunder. No event, occurrence or condition exists which,
with the lapse of time, the giving of notice, or both, or
the happening of any further event or condition, would
become a default by Seller thereunder. Seller has given (or
will give, during the Inspection Period) to Purchaser true
and correct copies of all such agreements or leases, or a
detailed description thereof, all as described in Section
4.3(k) of the Disclosure Schedule. Seller shall indemnify
Purchaser as required under Section 1.2 hereof, against
loss, cost or liability under any contract, lease or
agreement not disclosed to Producer as required in this
Section 4.3(k).
(l) Seller is not a party to, or bound by, any
unexpired, undischarged or unsatisfied written or oral
contract, agreement, indenture, mortgage, debenture, note or
other instrument under the terms of which performance by
Seller according to the terms of this Agreement will be a
default or an event of acceleration, or whereby timely
performance by Seller according to the terms of this
Agreement may be prohibited, prevented or delayed. If any
such agreement exists, Seller shall terminate such agreement
(other than those expressly assumed by Purchaser) at or
prior to Closing.
(m) Except as disclosed on the Disclosure Schedule,
there are no commissions or referral fees relating to the
Business currently outstanding, nor will there be any such
commissions or referral fees outstanding, on or after the
Closing Date.
(n) With respect to employees of Seller:
(i) there is no pending or
threatened unfair labor practice charges or
employee grievance charges;
(ii) there is no request for union
representation, labor strike, dispute, slowdown or
stoppage actually pending or, to the best of
Seller's knowledge, threatened against or directly
affecting Seller;
(iii) no grievance or arbitration
proceeding arising out of or under collective
bargaining agreements is pending and no claims
therefor exist;
(iv) the employment of each of the
Seller's employees is terminable at will without
cost to the Seller except for payments required
under Seller's employee benefit plans, employee
welfare plans and similar plans and payment of
accrued salaries or wages and vacation pay (for
which Purchaser shall have no liability as
provided in Section 2.3, above). No employee or
former employee has any right to be rehired by the
Seller prior to the Seller's hiring a person not
previously employed by the Seller.
(v) The Disclosure Schedule
contains a true and complete list of all employees
who are employed by the Seller as of the date
hereof, and said list correctly reflects their
salaries, wages, other compensation (other than
benefits under the employee welfare, benefit and
similar plans), dates of employment and positions.
(vi) As of the date of this
Agreement, Seller has 136 full-time active
employees in the operation of the Business, and 31
part-time employees.
(vii) Seller has no retirement,
pension, profit sharing, employee welfare or
employee benefit plans for any of its employees.
(o) Except as set forth on the Disclosure
Schedule, there is no litigation or proceeding, in law or in
equity, and there are no proceedings or governmental
investigations before any commission or other administrative
authority, pending, or, to the best of Seller's knowledge,
threatened, against Seller or its Affiliates, or with
respect to the consummation of the transaction contemplated
hereby, or the use of the Purchased Assets (whether used by
Purchaser after the Closing or by Seller prior thereto), or
which would restrict or interfere with Seller's ability to
perform its obligations hereunder.
(p) There are no material claims pending or, to
the best of Seller's knowledge, anticipated or threatened
against Seller with respect to the quality of or absence of
or defects in Seller's products or services.
(q) Seller is not a party to, or bound by, any
decree, order, judgment or arbitration award (or agreement
entered into in any administrative, judicial or arbitration
proceeding with any governmental authority) with respect to
its properties, assets, personnel or business activities.
(r) Seller is not in violation of, or delinquent
in respect to, any decree, order or arbitration award or
law, statute, or regulation of, or agreement with, or Permit
from, any Federal, state or local governmental authority (or
to which any of the Purchased Assets, any of Seller's
personnel, or the Business are subject or to which it,
itself, is subject), including, without limitation, laws,
statutes and regulations relating to equal employment
opportunities, fair employment practices, unfair labor
practices, terms of employment, occupational health and
safety, wages and hours and discrimination, and zoning
ordinances and building codes. Copies of all notices of
violation of any of the foregoing which Seller has received
within the past three years are attached to the Disclosure
Schedule.
(s) Seller, the Purchased Assets and the
Business are in compliance with all Environmental Laws (as
herein defined) and any Environmental Permits (as herein
defined). A copy of any notice, citation, inquiry or
complaint which Seller has received in the past three years
of any alleged violation of any Environmental Law or
Environmental Permit is attached to the Disclosure Schedule.
Seller possesses all Environmental Permits which are
required for the operation of the Business, and is in
compliance with the provisions of all such Environmental
Permits. Copies of all Environmental Permits issued to
Seller are attached to the Disclosure Schedule. As used in
this Agreement, "Environmental Laws" means all federal,
state and local statutes, regulations, ordinances, rules,
regulations and policies, all court orders and decrees and
arbitration awards, and the common law, which pertain to
hazardous substances or materials, environmental matters or
contamination of any type whatsoever; and "Environmental
Permits" means licenses, permits, registrations,
governmental approvals, agreements and consents which are
required under or are issued pursuant to Environmental Laws.
(t) The Real Estate is identified and legally
described in Schedule 1.2(c) hereto. Seller holds fee simple
title to the Real Estate, subject only to the Permitted
Exceptions, none of which makes title to the Real Estate
unmarketable and none of which are violated by Seller or will
interfere with Purchaser's use thereof.
(u) Intentionally Omitted.
(v) There are no pending, or, to the knowledge of
Seller, threatened, condemnation proceedings or condemnation
actions against the Real Estate or any of the rights-of-way
located adjacent thereto.
(w) The Real Estate is currently zoned for its
present use and does not rely on parking or other facilities
or land not located on the Real Estate to satisfy any legal
requirements.
(x) Intentionally Omitted.
(y) The Hotel's mechanical, electrical, plumbing and
environmental systems are in good operating condition and
repair. None of the general partners of Seller has any
actual knowledge of any latent defects in or on the Real
Estate.
(z) Seller has not taken any actions which were
calculated to dissuade any present employees,
representatives or agents of Seller from becoming associated
with Purchaser.
(aa) The representations and warranties of Seller in
this Agreement do not omit to state a material fact
necessary in order to make the representations, warranties
or statements contained herein not misleading.
(bb) The copies of all documents furnished by Seller
to Purchaser pursuant to the terms of this Agreement are
complete and accurate. The Disclosure Schedule contains
complete and accurate copies of all documents referred to
therein. The information contained in the Disclosure
Schedule is complete and accurate.
(cc) Except for Seller's Agent, whose compensation is
the responsibility of Seller only, neither Seller, nor any
of its Affiliates, has dealt with any person or entity who
is or may be entitled to a broker's commission, finder's
fee, investment banker's fee or similar payment for
arranging the transaction contemplated hereby or introducing
the parties to each other.
(dd) No governmental assessment for sewer, sidewalk,
water, paving, electrical, power or other improvements is
pending or threatened.
(ee) All utility equipment and facilities required
for the operation and use of the Real Estate and Equipment
are located solely on the Real Estate and all agreements for
providing utilities are with direct providers.
(ff) (i) No materials designated as hazardous or
toxic under any Environmental Laws have been located on the
Real Estate, except for small amounts used in the ordinary
course of the Business (and then only in compliance with all
Environmental Laws) or have been released into the
environment, or discharged, placed or disposed of at, on or
under the Real Estate; (ii) no underground storage tanks
have been located on the Real Estate; (iii) the Real Estate
has never been used as a dump for waste material; and (iv)
the Real Estate and its prior uses comply with, and at all
times have complied with, any applicable Environmental Laws.
The parties acknowledge that hydraulic fluid, absent
specifically hazardous or toxic ingredients such as PCBs
(hereinafter defined), shall not by itself constitute a
hazardous or toxic material.
(gg) Seller has received no written notice that the
Real Estate, when used for the purposes and in the manner
presently used, violates or fails to comply with the
provisions of the Americans with Disabilities Act of 1990,
42 U.S.C. 12101 et seq. (the "ADA") and all other legal
requirements governing the use of the Property by persons
with disabilities.
(hh) None of Seller's officers, directors, employees
or partners, or members of their families (or any entity in
which any of them has a material financial interest,
directly or indirectly), owns any assets which are used in
the Business, except for assets being transferred by the
Individuals to Purchaser in accordance with the provisions
of Section 1.6 hereof. Except for the Affiliate Lease, and
the management agreements between Seller and Hotel
Management and Development, Inc., none of the contracts,
leases or agreements shown in the Disclosure Schedule is
between Seller and an Affiliate of Seller.
4.4 Limitation on Warranties. THE PURCHASED ASSETS ARE
BEING SOLD "AS IS," "WHERE IS" AND IN THEIR PRESENT CONDITION,
AND EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.3 OR ELSEWHERE IN
THIS AGREEMENT, SELLER MAKES (AND HAS MADE) NO WARRANTY OF ANY
KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION AS TO PHYSICAL CONDITION OR VALUE OF ANY OF THE
PURCHASED ASSETS, FITNESS FOR A PARTICULAR PURPOSE, EXISTENCE OF
HIDDEN OR LATENT DEFECTS OR THE FUTURE PROFITABILITY OR FUTURE
EARNINGS PERFORMANCE OF THE BUSINESS. Purchaser waives its right
to redhibition for an existing latent defect under Art. 2520 of
the La. Civil Code, but does not waive any right to recission as
a general remedy under this Agreement for a breach, default or
failure of warranty of Seller, as otherwise permitted under the
laws of the State of Louisiana. The foregoing limitations may be
incorporated into any deed or other conveyance delivered by
Seller pursuant to Section 7.3 hereof, provided the same shall
not limit or impair the warranties of title included or required
to be included thereunder.
ARTICLE V
Conduct Prior to the Closing
5.1 General. Seller and Purchaser shall have the rights
and obligations with respect to the period between the date
hereof and the Closing Date which are set forth in the remainder
of this Article V.
5.2 Seller's Obligations. The following are Seller's
obligations:
(a) Seller shall give to Purchaser's officers,
employees, attorneys, consultants, accountants, inspectors
and lenders reasonable access during normal business hours
to all of the assets, properties, books, contracts,
documents, records and personnel of Seller and shall furnish
to Purchaser such information as Purchaser may at any time
and from time to time reasonably request.
(b) Seller shall use its best efforts and make every
good faith attempt (and Purchaser shall cooperate with
Seller) to obtain all consents to the assignment of, or
alternate arrangements satisfactory to Purchaser with
respect to, any contract, lease, agreement, purchase order,
sales order, or other instrument accepted by Purchaser, or
any Permit or Environmental Permit, which consents may be
required for such assignment to be effective (collectively,
the "Consents").
(c) Seller shall use its best efforts to preserve its
business and the goodwill of its customers, suppliers and
others having business relations with Seller and to retain
its business organization intact, including keeping
available the services of its present employees,
representatives and agents, and shall maintain all of its
properties in their current operating condition and repair,
ordinary wear and tear excepted.
(d) Seller shall conduct the Business in the usual and
ordinary course and carry on all of its operations
(including, without limitation, the purchase and sale of
Inventory, the collection of Accounts Receivable and the
payment of Accounts Payable and other obligations) in
accordance with past practices. Without limiting the
foregoing, Seller shall allow its inventories of Consumables
On-Hand to be depleted to such levels as Purchaser may
reasonably request, provided the requested depletion does
not unreasonably interfere with Seller's operation of the
Business, in Seller's reasonable determination.
(e) Without the prior written consent of Purchaser,
and without limiting the generality of any other provision
of this Agreement, Seller shall not:
(i) Intentionally Omitted.
(ii) incur, assume or guarantee any long-term or
short-term indebtedness that would prohibit or prevent
Seller's performance of its obligations hereunder;
(iii) directly or indirectly, enter into or
assume any contract, agreement, obligation, lease, license
or commitment other than in the usual and ordinary course of
business in accordance with past practices;
(iv) adopt or amend any employee welfare or
benefit plan;
(v) sell, transfer or otherwise dispose of any
material asset or property except in the usual and ordinary
course of business and except for cash applied in payment of
Seller's liabilities in the usual and ordinary course of
business;
(vi) amend, terminate or give notice of
termination with respect to any existing contract or
agreement to which Seller is a party, or waive any material
rights;
(vii) directly or indirectly, enter into any
transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of
services) with any Affiliate of Seller that would prohibit
or prevent Seller's performance of its obligations
hereunder;
(viii) Intentionally Omitted.
(ix) terminate the employment, except for cause,
of any of its full time active employees (Seller shall give
Purchaser prompt written notice of any such terminations for
cause).
(f) Seller shall assist and cooperate with Purchaser
in the transfer of all Permits and Environmental Permits
necessary for the operation of the Business by Purchaser.
(g) Seller shall, at its own cost and expense, make
all filings, deliver all notices, pay all fees and otherwise
comply with the provisions of any applicable bulk transfer
or similar law regarding Seller's sale of the Purchased
Assets.
(h) Seller shall complete any planned capital
expenditures between now and Closing as they are currently
scheduled.
(i) Seller shall, at its own cost and expense prior to
Closing, complete any clean-up or remediation as contemplated
under Section 5.8 hereof.
5.3 Purchaser's Obligations. Subject to Purchaser's
termination rights under Section 5.5 hereof, Purchaser shall use
its good faith efforts to secure financing as contemplated under
Section 6.2(h) hereof, agreements with Holiday Inns as
contemplated under Section 6.2(i) hereof, as well as the consents
and approvals of its primary lenders and of any trustee for the
holders of its debt securities as contemplated under Section
6.2(g) hereof, and of any gaming regulatory authorities having
jurisdiction as contemplated under Section 6.2(e) hereof. In its
efforts to obtain mortgage financing as aforesaid, Purchaser may,
in its sole discretion, at any time prior to Closing, substitute
the lender so long as such substitution is not reasonably
expected to impair Purchaser's ability to make Closing hereunder.
5.4 Joint Obligations. The following shall apply with
equal force to Seller and Purchaser:
(a) Seller and Purchaser shall use their respective
good faith efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper
or advisable to consummate the transactions contemplated
hereby as soon as practicable.
(b) Each of Seller and Purchaser shall cooperate with
the efforts of the other in obtaining any Consents or any
other approvals contemplated hereunder.
(c) Each party shall promptly give the other party
written notice of the existence or occurrence of any
condition which would make any representation or warranty
herein contained of either party untrue or which might
reasonably be expected to prevent the consummation of the
transactions contemplated hereby; but failure in good faith
to provide such notice shall not itself constitute a default
of such party, nor excuse nonperformance of the other party,
hereunder. The party whose representation would be untrue,
or whose performance hereunder may be prevented or impaired,
as a result of such existence or occurrence, shall have an
additional period of ten (10) business days to correct such
condition, and if necessary Closing shall be extended to
accommodate such cure period.
(d) No party shall intentionally perform any act
which, if performed, or omit to perform any act which, if
omitted to be performed, would prevent or excuse the
performance of this Agreement by any party hereto or which
would result in any representation or warranty herein
contained of said party being untrue in any material respect
as if originally made on and as of the Closing Date.
(e) [Intentionally Omitted]
5.5 Due Diligence Inspection.
(a) Purchaser shall continue to be entitled to conduct
its due diligence inspection with respect to the Business
and its assets, from August 21, 1997 until 11:59 p.m. CST on
October 6, 1997 (the "Inspection Period").
(b) Seller has, and shall continue to promptly provide
to Purchaser, access to Seller's assets and Seller's books
and records with respect to the Business and/or Seller's
assets, on reasonable advance request of Purchaser. In
addition, Seller shall promptly supply to Purchaser and its
officers, directors, consultants, agents, inspectors,
lenders and professionals, those documents, materials and
information listed in Exhibit I to the Letter of Intent
dated August 21, 1997 between Seller and Purchaser, and any
other documentation or information reasonably requested by
Purchaser. Seller shall cooperate fully with Purchaser or
its officers, directors, consultants, agents, inspectors,
lenders and professionals, in the course of Purchaser's due
diligence review. Purchaser shall use its good faith
efforts to conduct its due diligence review so as not to
interfere unreasonably with the operation of the Business.
(c) At any time prior to the expiration of the
Inspection Period as aforesaid, Purchaser may, if it is not
fully satisfied with any result(s) of its diligence review,
in its sole and absolute discretion, terminate this
Agreement by written notice to Seller. If Purchaser
terminates this Agreement prior to the expiration of the
Inspection Period, then, without the necessity of further
documentation, this Agreement shall be deemed terminated,
the Primary Deposit and all interest thereon shall be
returned to Purchaser as provided in Section 3.3(b) hereof,
and thereupon neither party shall have any further
obligation or liability to the other hereunder. The
Additional Deposit shall only be refunded as provided in
Section 3.3(b) hereof.
(d) The parties hereto acknowledge that Purchaser has
incurred substantial costs in connection with the
negotiation and execution of this Agreement, will incur
additional substantial costs in conducting its due diligence
review hereunder, and would not have entered into this
Agreement without the availability of the Inspection Period.
Therefore, the parties agree that adequate consideration
exists to support the obligations of the parties hereunder,
even before expiration of the Inspection Period.
(e) Subject to Seller's performance under the terms of
this Agreement, and to satisfaction of all of the conditions
to Purchaser's obligations as set forth in Section 6.2
hereof, the Deposit Monies shall become non-refundable at
the expiration of the Inspection Period, and shall serve as
Seller's liquidated damages hereunder in the event of
Purchaser's default, all as contemplated under Section 9.2
hereof.
5.6 Inventory of Purchased Assets. Within ten (10) days
after the complete execution of this Agreement,
representatives of Seller and Purchaser shall jointly
conduct a physical inventory of the personal property
included in the Purchased Assets (other than Consumables On-
Hand), to the extent and with the detail determined by
Purchaser, in its sole discretion (the "Personalty
Inventory"). To the extent items were counted as part of
the Personalty Inventory, then at Closing, Seller shall be
obligated to convey to Purchaser such Purchased Assets
substantially as described in the Personalty Inventory
report. If at Closing items described in the Personalty
Inventory report are missing or so damaged as to be
unusable, Purchaser shall receive a credit at Closing for
the market value thereof, to the extent the aggregate market
value of such missing and/or damaged items exceeds
$7,500.00.
5.7 Contact with Employees. Purchaser's contacts with
Seller's employees in connection with this transaction shall
be limited to such contact(s) as may be: (i) reasonably
necessary in connection with Purchaser's due diligence
review under Section 5.5 hereof; or (ii) permitted as
contemplated under Section 10.10 hereof.
5.8 Environmental Matter. The Phase I Environmental Site
Assessment prepared for Purchaser in connection with this
transaction notes the fact that hydraulic fluid is stored
near the elevator facilities of the Hotel, and that such
hydraulic fluid may have been spilled or leaked. Such Site
Assessment also raises the possibility that such hydraulic
fluids may contain hazardous substances known as "PCBs", and
suggests sampling and testing of same. Seller has, at its
sole cost and expense, had certain of such hydraulic fluids
sampled, and a laboratory analysis thereof conductedby the
Meyers Group and Core Laboratories. No reports have yet
been issued by such consultants. The environmental
consultants of both Seller and Purchaser shall consult with
each other promptly after the execution hereof, and
determine which other areas and substances, if any, the
Purchaser's environmental consultant requires to be sampled
and analyzed, as noted in the aforesaid Phase I
Environmental Site Assessment. Based on such consultation,
Seller's environmental consultant shall conduct further
sampling and analysis of such other areas and substances, if
any. Seller shall obtain and deliver to Purchaser the
written reports of such consultants, as to all areas and
substances specified by Purchaser's environmental consultant
as aforesaid, certified to both Purchaser and Seller, within
twenty-one (21) days after the date of this Agreement. Each
such consultant shall acknowledge in writing that Purchaser
shall rely on, and is entitled to rely on, the aforesaid
reports in completing the transactions described herein. If
such sampling/testing discloses the presence of PCBs or
other hazardous substances, Seller shall, at its sole cost
and expense prior to Closing, have the same remediated in
accordance with all applicable state and federal
Environmental Laws. Such remediation shall be performed,
and certified to both Seller and Purchaser, by an
environmental contractor mutually acceptable to Seller and
Purchaser, in their reasonable discretion. Notwithstanding
the foregoing, if the cost of such remediation exceeds or is
reasonably expected (based on written quotations from
contractor(s) mutually acceptable to Seller and Purchaser)
to cost Seller more than $100,000, Seller may terminate this
Agreement by written notice to Purchaser, at which point all
Deposit Monies shall be returned to Purchaser, with
interest, and neither party shall have any further rights or
obligations hereunder.
ARTICLE VI
Conditions to Closing
6.1 Conditions to Seller's Obligations. The obligation of
Seller to consummate the transactions contemplated hereby is
subject to the fulfillment of all of the following conditions on
or prior to the Closing Date, upon the non-fulfillment of any of
which this Agreement may, at Seller's option, be terminated
pursuant to and with the effect set forth in Article IX:
(a) Each and every representation and warranty made by
Purchaser shall have been true and correct when made and
shall be true and correct in all material respects as if
originally made on and as of the Closing Date.
(b) All obligations of Purchaser to be performed
hereunder through, and including on, the Closing Date
(including, without limitation, all obligations which
Purchaser would be required to perform at the Closing if the
transaction contemplated hereby were consummated) shall have
been performed.
6.2 Conditions to Purchaser's Obligations. The obligation
of Purchaser to consummate the transaction contemplated hereby is
subject to the fulfillment of all of the following conditions on
or prior to the Closing Date, upon the non-fulfillment of any of
which this Agreement may, at Purchaser's option, be terminated
pursuant to and with the effect set forth in Article IX:
(a) Each and every representation and warranty made by
Seller shall have been true and correct when made and shall
be true and correct in all material respects as if
originally made on and as of the Closing Date.
(b) All obligations of Seller to be performed
hereunder through, and including on, the Closing Date
(including, without limitation, all obligations which Seller
would be required to perform at the Closing if the
transaction contemplated hereby were consummated) shall have
been performed.
(c) All of the Consents shall have been obtained.
(d) No suit, proceeding or investigation shall have
been commenced or threatened by any governmental authority
or private person(s), against any party (including without
limitation Seller and any of its affiliates, or any
partners, shareholders, officers or members of any of them),
on any grounds, the intent or likely effect of which
(exclusively or among other things) is to restrain, enjoin
or hinder, delay or to seek material damages on account of,
the consummation of the transaction contemplated hereby, or
to challenge any of the terms or provisions of this
Agreement, or arising out of this Agreement or the
transactions contemplated hereby.
(e) On or prior to November 17, 1997, Purchaser shall
have received all required consents, licenses and approvals
of the transactions contemplated hereunder (including
without limitation, Purchaser's financing thereof, and any
changes to existing financing to permit same) from the
gaming and other regulatory authorities having jurisdiction.
(f) Intentionally Omitted.
(g) On or prior to November 17, 1997, Purchaser shall
have received the prior written approval of Wells Fargo
Bank, N.A. and the Trustee for the holders of Purchaser's
debt securities to the transactions contemplated hereby
(including without limitation, Purchaser's financing
thereof, and any changes to existing financing to permit
same), all in form and substance satisfactory to Purchaser,
in its sole discretion.
(h) On or prior to November 17, 1997, Purchaser shall
have obtained mortgage financing for the transactions
contemplated hereby, on terms acceptable to Purchaser, in
its sole discretion, in the amount of at least seventy
percent (70%) of the aggregate total of the Purchase Price,
Holiday Inn Costs, Purchaser's costs of making Closing
hereunder and Purchaser's other expenses under the Letter of
Intent and this Agreement.
(i) On or prior to November 17, 1997, Purchaser shall
have entered into a New License Agreement and all related
agreements, or agreed with Holiday Inns upon the terms
thereof, in either case on terms acceptable to Purchaser, in
its sole discretion, as provided under Section 3.6 hereof
and Purchaser shall not have terminated this Agreement based
on the aggregate total amount of the Holiday Inn Costs, as
provided under Section 3.6 hereof.
(j) On or before October 16, 1997, Purchaser's Board
of Directors shall have approved this Agreement and the
transactions contemplated hereby.
(k) Prior to Closing, Purchaser shall not have
terminated this Agreement: (A) during the Inspection
Period, as provided under Section 5.5 hereof; or (B) by
virtue of a casualty, as provided under Section 6.3 hereof;
or (C) by virtue of a taking, as provided under Section 6.4
hereof.
If, despite Purchaser's good faith efforts, either of the
conditions set forth in subsections (g) or (i) hereof has not
been satisfied by November 17, 1997, the Purchaser may, at its
option, extend the date for satisfaction thereof, as described
above, to December 2, 1997, by written notice to Seller. If
Purchaser so elects to extend such date for either or both of
such conditions, then the Closing Date shall automatically be
extended to December 17, 1997 for all purposes hereunder.
6.3 Casualties. Risk of loss with respect to the
Purchased Assets shall remain with Seller until the Closing, and
thereafter with Purchaser. Therefore, the parties agree as
follows:
(a) If any damage to any of the Purchased Assets shall
occur prior to the Closing Date by reason of fire,
windstorm, earthquake, hail, explosion or other casualty,
and if, in Purchaser's reasonable judgment, the aggregate
cost of repairing such damage will equal or exceed Five
Hundred Thousand Dollars ($500,000.00), Purchaser may elect
to (i) terminate this Agreement by giving written notice to
Seller in which event the Deposit Monies and interest
thereon will be returned to Purchaser, and thereupon neither
party shall have any further obligations or liability
whatsoever to the other hereunder or (ii) receive an
assignment of all of Seller's rights to any insurance
proceeds (including business interruption proceeds) relating
to such damage (and a credit against the Purchase Price for
any such proceeds received by Seller) and acquire the
Purchased Assets without any adjustment in the Purchase
Price in connection therewith provided that, in such latter
event, Seller shall pay to Purchaser the amount of any
deductible under applicable insurance policies and uninsured
claims.
(b) If, in Purchaser's reasonable judgment, the cost
of repairing such damage will not exceed Five Hundred
Thousand Dollars ($500,000.00), the transactions
contemplated hereby shall close without any adjustment in
the Purchase Price in connection therewith, Purchaser shall
receive an assignment of all of Seller's rights to any
insurance proceeds (including business interruption
proceeds) (and a credit against the Purchase Price for any
such proceeds received by Seller), and Seller shall pay to
Purchaser the amount of any deductible under applicable
insurance policies and uninsured claims.
(c) If Purchaser does not terminate this Agreement as
provided in subparagraph (a) hereof, then any insurance
proceeds covering business interruption losses shall be
apportioned between Seller and Purchaser to the Closing
Date.
6.4 Takings. Risk of loss with respect to the Purchased
Assets shall remain with Seller until the Closing, and thereafter
with Purchaser. Therefore, the parties agree that in the event
of the actual or threatened taking (either temporary or
permanent) in any condemnation proceedings by exercise of right
of eminent domain, of all or any part of the Real Estate, between
the date hereof and the Closing Date, and if, in Purchaser's
reasonable judgment, such taking will result in the inability to
conduct the operations of the Business substantially in
accordance with the present standards, Purchaser may elect to:
(i) terminate this Agreement by giving written notice to Seller,
in which event the Deposit Monies and interest thereon will be
returned to Purchaser, and thereupon neither party shall have any
further obligations or liability whatsoever to the other
hereunder or (ii) receive an assignment of all of Seller's rights
to any condemnation award relating to such taking and acquire the
Purchased Assets without any adjustment in the Purchase Price in
connection therewith.
ARTICLE VII
Closing
7.1 Form of Documents. At the Closing, the parties shall
deliver the documents, and shall perform the acts, which are set
forth in this Article VII. All documents which Seller shall
deliver shall be in form and substance reasonably satisfactory to
Purchaser and Purchaser's counsel. All documents which Purchaser
shall deliver shall be in form and substance reasonably
satisfactory to Seller and Seller's counsel.
7.2 Purchaser's Deliveries. Subject to the fulfillment or
waiver of the conditions set forth in Sections 6.2, Purchaser
shall execute and/or deliver to Seller all of the following:
(i) Payment of the Purchase Price as required under
Section 3.3(a) hereof.
(ii) An assumption agreement, duly executed by
Purchaser, under which Purchaser assumes those Assumed
Liabilities described in Section 2.2 hereof.
(iii) An incumbency and specimen signature
certificate with respect to the officers of Purchaser
executing this Agreement and Purchaser's Ancillary Documents
on behalf of Purchaser.
(iv) A certified copy of resolutions of Purchaser's
Board of Directors, authorizing the execution, delivery and
performance of this Agreement and Purchaser's Ancillary
Documents
(v) A closing certificate executed by an executive
officer of Purchaser (or any other officer of Purchaser
specifically authorized to do so), on behalf of Purchaser,
pursuant to which Purchaser represents and warrants to
Seller that Purchaser's representations and warranties to
Seller are true and correct as of the Closing Date as if
then originally made (or, if any such representation or
warranty is untrue in any respect, specifying the respect in
which the same is untrue), that all covenants required by
the terms hereof to be performed by Purchaser on or before
the Closing Date, to the extent not waived by Purchaser in
writing, have been so performed (or, if any such covenant
has not been performed, indicating that such covenant has
not been performed), and that all documents to be executed
and delivered by Purchaser at the Closing have been executed
by duly authorized officers of Purchaser.
(vi) Such other documents from Purchaser as may
reasonably be required in order to effectuate the
transactions contemplated (i) hereby and (ii) by the
Purchaser's Ancillary Documents.
7.3 Seller's Deliveries. Subject to the fulfillment or
waiver of the conditions set forth in Section 6.1, Seller shall
execute (where applicable in recordable form) and/or deliver or
cause to be executed and/or delivered to Purchaser all of the
following:
(i) A general warranty deed (subject only to Permitted
Exceptions), an affidavit of title, a certificate in
compliance with the Foreign Investment in Real Property Tax
Act ("FIRPTA") certifying that Seller is not a person or
entity subject to withholding under FIRPTA, an ALTA
statement and all other documents required by Purchaser's
title insurance company with respect to the Real Estate, in
each case executed by Seller, together with any necessary
transfer declarations.
(ii) A general warranty bill of sale, executed by
Seller, conveying all of the Inventory, Equipment and other
tangible personal property included in the Purchased Assets
to Purchaser, free and clear of all liens, claims,
encumbrances and security interests other than Permitted
Exceptions and containing the warranties of title set forth
in this Agreement.
(iii) An assignment to Purchaser, executed by
Seller, of all of the Purchased Assets (other than the
Inventory, Equipment, and the Real Estate), along with the
original instruments (if any) representing, evidencing or
constituting such Purchased Assets, free and clear of all
liens, claims, encumbrances and security interests other
than Permitted Exceptions and containing the warranties of
title set forth in this Agreement. If necessary in the
opinion of Purchaser's counsel, Seller shall also execute
and deliver (in recordable form where required) separate
assignments of any of the Purchased Assets, and where
applicable, in the form required by the applicable
governmental agencies, insurance companies, customers,
lessors, and other parties with whom the assignments must be
filed.
(iv) Certificates of title or origin (or like
documents) with respect to all vehicles included in the
Purchased Assets and other Equipment, and any other items of
Purchased Assets for which a certificate of title or origin
is required in order for title thereto to be transferred to
Purchaser.
(v) Physical possession of the tangible items
comprising the Purchased Assets, and of any certificates or
documents representing intangible items of Purchased Assets.
(vi) An incumbency and specimen signature certificate
with respect to the general partner's officers of Seller
executing this Agreement and Seller's Ancillary Documents on
behalf of Seller.
(vii) A closing certificate duly executed by the
general partners of Seller (or any one of them specifically
authorized in writing by partnership action to do so), on
behalf of Seller, pursuant to which Seller represents and
warrants to Purchaser that Seller's representations and
warranties to Purchaser are true and correct as of the
Closing Date as if then originally made (or, if any such
representation or warranty is untrue in any respect,
specifying the respect in which the same is untrue), that
all covenants required by the terms hereof to be performed
by Seller on or before the Closing Date, have been so
performed (or, if any such covenant has not been so
performed, indicating that such covenant has not been
performed), and that all documents to be executed and
delivered by Seller at the Closing have been executed by
duly authorized officers of Seller.
(viii) A pay-off letter, accompanied by wire
transfer instructions from each secured lender of Seller and
written instructions from Seller directing Purchaser to
transfer funds, out of the Purchase Price, to each such
secured lender of Seller as necessary to pay off Seller's
indebtedness to each such lender.
(ix) Releases of all liens and other encumbrances and
security interests held by any lender of Seller in any of
the Purchased Assets, including, without limitation, UCC-3
termination statements.
(x) To the extent obtained, all necessary consents for
the assignment of contracts, leases, purchase orders, sales
orders, Permits and Environmental Permits which are to be
assigned to Purchaser or alternate arrangements with respect
thereto, all as reasonably acceptable to Purchaser.
(xi) Such other documents as may reasonably be required
in order to effectuate the provisions of Section 1.6 hereof.
(xii) Such other documents as may reasonably be
required from Seller in order to effectuate the transactions
contemplated (i) hereby and (ii) by the Seller's Ancillary
Documents.
7.4 No Merger. None of the covenants, representations,
warranties and agreements of Purchaser and Seller, as the case
may be, contained in this Agreement shall merge with any deed or
conveyance, and such covenants, representations, warranties and
agreements shall survive the Closing and shall continue in full
force and effect until such time, if any, as provided in such
covenant or agreement or otherwise limited by law.
ARTICLE VIII
Indemnification
8.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article VIII. For the
purposes of this Article VIII, each party shall be deemed to have
remade all of its representations and warranties contained in
this Agreement at the Closing with the same effect as if
originally made at the Closing. As used in this Agreement, the
term "Damages" shall mean all liabilities, demands, claims,
actions or causes of action, regulatory, legislative or judicial
proceedings or investigations, assessments, levies, losses,
fines, penalties, damages, costs and expenses, including, without
limitation, reasonable attorneys', accountants', investigators',
and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation of any such claim.
As used in this Agreement, the term "Indemnified Party" shall
mean a party hereto who is entitled to indemnification from the
other party hereto pursuant to this Article VIII; "Indemnifying
Party" shall mean a party hereto who is required to provide
indemnification under this Article VIII to the other party
hereto; and "Third Party Claims" shall mean any claims for
Damages asserted or threatened by a party other than the parties
hereto, their successors and permitted assigns, against any
Indemnified Party or to which an Indemnified Party is subject.
8.2 Indemnification Obligations of Seller. Seller shall
defend, indemnify, save and keep harmless Purchaser and its
successors and permitted assigns against and from all Damages
sustained or incurred by any of them resulting from or arising
out of or by virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Seller in this Agreement or in any
closing document delivered to Purchaser in connection with
this Agreement;
(b) any breach by Seller of, or failure by Seller to
comply with, any of its covenants or obligations under this
Agreement (including, without limitation, its obligations
under this Article VIII);
(c) the failure to discharge when due (whether before
or after Closing) any liability or obligation of Seller
other than the Assumed Liabilities, or any claim against
Purchaser or the Purchased Assets with respect to any such
liability or obligation or alleged liability or obligation;
(d) any claims by parties other than Purchaser to the
extent caused by acts or omissions of Seller on or prior to
the Closing Date, including, without limitation, claims for
Damages which arise or arose out of Seller's operation of
the Business or by virtue of Seller's ownership of the
Purchased Assets on or prior to the Closing Date;
(e) any employee pension benefit plan (as defined by
Section 3(2) of ERISA) or any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) which Seller or an
ERISA Affiliate has at any time maintained or administered
or to which Seller or any ERISA Affiliate has at any time
contributed (including, without limitation, any liability
for health continuation requirements under Code
Section 4980B or Part 6 of Subtitle B of Title I of ERISA
and any liability arising pursuant to Title IV of ERISA for
plan termination, withdrawal or partial withdrawal from any
multi-employer plan, or any lien to enforce any Title IV
liability);
(f) any benefits accrued pursuant to any employee
retirement plan, employee welfare plan or employee benefit
plan at or prior to the Closing Date other than benefits
payable under insurance policies constituting Purchased
Assets;
(g) any action or failure to act, in whole or in part,
at or prior to the Closing Date with respect to any employee
retirement plan, employee welfare plan or employee benefit
plan; or
(h) failure to deliver to Purchaser the quality of title
required under this Agreement.
8.3 Purchaser's Indemnification Covenants. Purchaser shall
defend, indemnify, save and keep harmless Seller and its
successors and permitted assigns against and from all Damages
sustained or incurred by any of them resulting from or arising
out of or by virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Purchaser in this Agreement or in any
closing document delivered to Seller in connection with this
Agreement;
(b) any breach by Purchaser of, or failure by
Purchaser to comply with, any of its covenants or
obligations under this Agreement (including, without
limitation, its obligations under this Article VIII);
(c) Purchaser's failure to pay, discharge and perform
any of the Assumed Liabilities; or
(d) any claims by parties other than Seller to the
extent caused by the acts or omissions of Purchaser after
the Closing Date and not constituting an Excluded Liability,
including, without limitation, claims for Damages which
arise out of Purchaser's operation of the Business after the
Closing Date.
8.4 Cooperation. Subject to the provisions of Section 8.5,
the Indemnifying Party shall have the right, at its own expense,
to participate in the defense of any Third Party Claim, and if
said right is exercised, the parties shall cooperate in the
investigation and defense of said Third Party Claim.
8.5 Third Party Claims. Forthwith following the receipt of
notice of a Third Party Claim, the party receiving the notice of
the Third Party Claim shall (i) notify the other party of its
existence setting forth with reasonable specificity the facts and
circumstances of which such party has received notice and (ii) if
the party giving such notice is an Indemnified Party, specifying
the basis hereunder upon which the Indemnified Party's claim for
indemnification is asserted. The Indemnified Party may, upon
reasonable notice, tender the defense of a Third Party Claim to
the Indemnifying Party. If:
(a) the defense of a Third Party Claim is so tendered
and such tender is accepted without qualification by the
Indemnifying Party; or
(b) within thirty (30) days after the date on which
written notice of a Third Party Claim has been given
pursuant to this Section 8.5, the Indemnifying Party shall
acknowledge with qualification its indemnification
obligations as provided in this Article VIII in writing to
the Indemnified Party, but shall commit to providing
defense;
then, except as hereinafter provided, the Indemnified Party shall
not have the right to defend or settle such Third Party Claim.
The Indemnified Party shall have the right to be represented by
counsel at its own expense in any such contest, defense,
litigation or settlement conducted by the Indemnifying Party
provided that the Indemnified Party shall be entitled to
reimbursement therefor if the Indemnifying Party shall lose its
right to contest, defend, litigate and settle the Third Party
Claim as herein provided. The Indemnifying Party shall lose its
right to defend and settle the Third Party Claim if it shall fail
to diligently contest the Third Party Claim. So long as the
Indemnifying Party has not lost its right and/or obligation to
defend and settle as herein provided, the Indemnifying Party
shall have the exclusive right to contest, defend and litigate
the Third Party Claim and shall have the exclusive right, in its
discretion exercised in good faith, and upon the advice of
counsel, to settle any such matter, either before or after the
initiation of litigation, at such time and upon such terms as it
deems fair and reasonable, provided that at least ten (10) days
prior to any such settlement, written notice of its intention to
settle shall be given to the Indemnified Party. All expenses
(including without limitation attorneys' fees) incurred by the
Indemnifying Party in connection with the foregoing shall be paid
by the Indemnifying Party. Notwithstanding the foregoing, in
connection with any settlement negotiated by an Indemnifying
Party, no Indemnified Party shall be required by an Indemnifying
Party to (x) enter into any settlement that does not include as
an unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or litigation, (y) enter into
any settlement that attributes by its terms liability to the
Indemnified Party or (z) consent to the entry of any judgment
that does not include as a term thereof a full dismissal of the
litigation or proceeding with prejudice. No failure by an
Indemnifying Party to acknowledge in writing its indemnification
obligations under this Article VIII shall relieve it of such
obligations to the extent they exist. If an Indemnified Party is
entitled to indemnification against a Third Party Claim, and the
Indemnifying Party fails to accept the defense of a Third Party
Claim tendered pursuant to this Section 8.5, or if, in accordance
with the foregoing, the Indemnifying Party shall lose its right
to contest, defend, litigate and settle such a Third Party Claim,
the Indemnified Party shall have the right, without prejudice to
its right of indemnification hereunder, in its discretion
exercised in good faith and upon the advice of counsel, to
contest, defend and litigate such Third Party Claim, and may
settle such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as the
Indemnified Party deems fair and reasonable, provided that at
least ten (10) days prior to any such settlement, written notice
of its intention to settle is given to the Indemnifying Party.
If, pursuant to this Section 8.5, the Indemnified Party so
defends or settles a Third Party Claim, for which it is entitled
to indemnification hereunder, as hereinabove provided, the
Indemnified Party shall be reimbursed by the Indemnifying Party
for the reasonable attorneys' fees and other expenses of
defending the Third Party claim which is incurred from time to
time, forthwith following the presentation to the Indemnifying
Party of itemized bills for said attorneys' fees and other
expenses.
8.6 Expiration. The liability of the parties to indemnify
each other under this Article VIII shall terminate and expire
thirty (30) months after the Closing Date, except for liability
with respect to claims for indemnity submitted prior to the end
of such 30-month period, as to which liability of the parties
hereunder shall survive and continue without limit until final
resolution thereof.
ARTICLE IX
Effect of Termination/Proceeding
9.1 Right to Terminate. This Agreement and the transaction
contemplated hereby may be terminated at any time prior to the
Closing by prompt notice given in accordance with Section 11.3:
(a) by the mutual written consent of Purchaser and
Seller; or
(b) by either of such parties if the Closing shall not
have occurred at or before 11:59 p.m. on the Closing Date;
provided, however, that the right to terminate this
Agreement under this Section 9.1(b) shall not be available
to any party whose failure to fulfill any material
obligation under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or prior
to the aforesaid date.
9.2 Remedies. In the event of a breach of this Agreement,
the non-breaching party shall not be limited to the remedy of
termination of this Agreement, but shall be entitled to pursue
all available legal and equitable rights and remedies, and shall
be entitled to recover all of its reasonable costs and expenses
incurred in pursuing them (including, without limitation,
reasonable attorneys' fees); provided, however, that the parties
agree that Seller's remedies for Purchaser's default hereunder
would be difficult, if not impossible, to determine. Therefore,
Seller's damages on Purchaser's default shall in all events be
limited to Seller's retention of the Deposit Monies, which are
agreed to be Seller's liquidated damages hereunder.
9.3 Injunctive Relief. Seller specifically recognizes that
any breach of the provisions of this Agreement will cause
irreparable injury to Purchaser and that actual damages may be
difficult to ascertain, and in any event, may be inadequate.
Accordingly (and without limiting the availability of legal or
equitable, including injunctive, remedies under any other
provisions of this Agreement), Seller agrees that in the event of
any such breach, Purchaser shall be entitled to equitable relief,
including the specific performance of Seller's obligations
hereunder, and such other legal and equitable remedies that may
be available.
ARTICLE X
Post Closing and Business Matters
10.1 Safes and Safe Deposit Boxes. Immediately after the
Closing, Seller shall send written notice to guests or tenants or
other persons who have valuables or other items in Seller's safe
deposit boxes, advising of the sale of the Business to Purchaser
and requesting immediate removal of the contents thereof or the
removal thereof and concurrent re-deposit of such contents
pursuant to new safe deposit agreements with Purchaser. Seller,
at its own expense, shall have a representative present when the
boxes are opened, in the presence of a representative of
Purchaser. Purchaser shall not be liable or responsible for any
items claimed to have been in such boxes unless such items are so
removed and re-deposited, and Seller agrees to indemnify and hold
harmless Purchaser and its Indemnitees from and against such
Liabilities.
10.2 Inspection of Records. Seller and Purchaser shall each
retain and make their respective books and records (including
work papers in the possession of their respective accountants)
available for inspection by the other party, or by its duly
accredited representatives, for reasonable business purposes at
all reasonable times during normal business hours, for a five
year period after the Closing Date, with respect to all
transactions occurring prior to and those relating to the
Closing, the historical financial condition, assets, liabilities,
results of operations and cash flows of Seller. As used in this
Section 10.2, the right of inspection includes the right to make
extracts or copies. The representatives of a party inspecting
the records of the other party shall be reasonably satisfactory
to the other party.
10.3 Certain Assignments. Any other provision of this
Agreement to the contrary notwithstanding, this Agreement shall
not constitute an agreement to transfer or assign, or a transfer
or assignment of, any claim, contract, lease, Permit,
Environmental Permit, commitment, sales order or purchase order,
or any benefit arising thereunder or resulting therefrom, if an
attempt at transfer or assignment thereof without the consent
required or necessary for such assignment, would constitute a
breach thereof or in any way adversely affect the rights of
Purchaser or Seller thereunder. If such a consent or agreement
to transfer or assign is not obtained for any reason, Purchaser
and Seller shall cooperate in any arrangement Purchaser may
reasonably request to provide for Purchaser the benefits under
such claim, contract, lease, Permit, Environmental Permit,
commitment or order.
10.4 Employees. Purchaser shall not be obligated to offer
employment to any employee of Seller, but Purchaser shall have
the right to employ employees of Seller as of the Closing Date,
on terms and conditions established by Purchaser in its sole
discretion. For a period of one year commencing on the Closing
Date, Seller shall not take any actions which are calculated to
persuade any salaried, technical or professional employees,
representatives or agents of Purchaser to terminate their
association with Purchaser.
10.5 Sales and Transfer Taxes and Fees. Seller shall pay
when due from assets other than the Purchased Assets, all
recording fees for documents necessary to clear title as required
hereunder, personal property title application fees, real
property transfer taxes and fees and all other taxes and fees on
transfer of the Purchased Assets arising by virtue of the sale of
the Purchased Assets to Purchaser, regardless of whether the
liability for said taxes or fees is imposed by law upon Seller or
upon Purchaser. Purchaser shall be responsible for any sales tax
due as a result of the sale of the Purchased Assets hereunder.
Seller shall nevertheless remain solely liable for all sales,
income and other taxes incurred in the operation of the Business
through the Cut-Off Time.
10.6 Further Assurances. The parties shall execute such
further documents, and perform such further acts, as may be
necessary to transfer and convey the Purchased Assets to
Purchaser, on the terms herein contained, and to otherwise comply
with the terms of this Agreement and consummate the transactions
contemplated hereby.
10.7 Regulatory Matters. Several of Purchaser's affiliates
("Players Entities") are licensed by and otherwise subject to the
authority of various casino and gaming regulatory agencies
including, but without limitation, gaming regulators in Illinois,
Kentucky, Louisiana, Missouri, Nevada and New Jersey ("Gaming
Regulators"). Purchaser has adopted a regulatory compliance
policy, and Seller, for itself and its successors and permitted
assigns, agrees to provide Purchaser with such documentation,
information and assurances regarding Seller and its general
partners as may be necessary in order for Purchaser to comply
with Purchaser's regulatory compliance policy and with the
request of any Gaming Regulators. The foregoing shall be a
material obligation of Seller hereunder.
10.8 Brokerage Matters. Seller agrees that at the
Closing it shall pay to Seller's Agent a commission with respect
to the transaction contemplated hereby. Each of the parties
hereto represents and warrants to the other that, except as
provided in the immediately preceding sentence, neither such
party nor any officer, director or agent of such party has
entered into any agreement for the payment of any brokerage or
finder's fees, commissions, compensation or expenses to any
person, firm or corporation in connection with the transactions
contemplated by this Agreement, and each agrees to indemnify and
hold and save the other or others harmless from any such fees,
commissions, compensation or expenses (including reasonable
attorneys' fees and other expenses incurred in connection with
any such claim which may be due or asserted by reason of any such
agreement or purported agreement by the indemnifying party).
10.9 Costs of Parties.
(a) Purchaser shall be responsible for the cost of
Purchaser's title abstract, its commitment for title
insurance and ALTA owner's title policy (provided that
Seller shall promptly provide to Purchaser a copy of any
previous title work on the Real Estate), the cost of any
survey or environmental site assessment of the Real Estate,
if any, and all recording fees and charges for the
conveyance instruments contemplated under Article VII
hereof. Purchaser shall be responsible for all direct costs
of its due diligence review under Section 5.5 hereof.
(b) Seller shall be solely responsible, at its own
cost, for compliance with any applicable bulk transfer or
similar law, with ERISA and any other employee welfare or
protection laws, as well as any other employment laws.
(c) Each party shall pay its own legal, accounting and
consulting fees relating to this transaction as contemplated
by Section 11.4 hereof.
10.10 Employees.
(a) Seller hereby represents and warrants that Seller
has 136 full-time active employees as of the date of this
Agreement. Seller covenants and agrees that it will not
terminate employment of any such full-time active employees
between the date hereof and the Closing Date, except in the
ordinary course of the Business, for cause. Purchaser
acknowledges that some of Seller's employees may also quit
their employment between the date of this Agreement and the
Closing Date. Seller agrees to use its good faith efforts
to retain its employees at the Hotel. Seller acknowledges
that Purchaser shall have no liability or obligation
relating to Seller's employer-employee relationship with the
employees of the Business, and Seller agrees to take all
appropriate and legally necessary actions in connection
therewith.
(b) Except as specifically provided under this Section
10.10, Purchaser shall have no obligation or liability to
hire or employ, from and after the Closing Date, any
employees of Seller. All compensation, obligations,
liabilities and claims (including under the Fair Labor
Standards Act or the WARN Act (as herein defined)) due to or
claimed by an employee of Seller, arising or accruing prior
to or by virtue of Closing (whether under an employment
contract or otherwise; and including severance or other
obligations), shall be the responsibility of Seller.
Purchaser shall not be responsible for any such liability or
obligations, and Seller agrees to indemnify and hold
Purchaser and its Affiliates harmless from and against same.
The foregoing indemnity shall include, without limitation,
all required tax withholdings and contributions to or
premiums for any other insurance or benefit programs or
plans, to the extent arising or accruing prior to Closing.
(c) Purchaser shall have the right, as part of its due
diligence review under Section 5.5 hereof, to review all of
Seller's employment records and personnel files. From and
after November 17, 1997 (or December 2, 1997 if Purchaser
elects to extend the date for satisfaction of the conditions
in Section 6.2(g) and for 6.2(i) hereof) (the "Contact
Date"), Purchaser shall also have the right to conduct a
"jobs fair" at the Hotel, and to meet with and interview all
of Seller's employees. Purchaser shall not contact Seller's
employees in connection with this transaction prior to the
Contact Date, except in connection with (and as necessary to
perform) Purchaser's due diligence review under Section 5.5
hereof.
(d) After the Contact Date but at least three (3)
business days before the Closing Date, Purchaser shall
identify to Seller those employees to whom it does not
intend to offer employment at the Business. Such employees
are referred to herein as "Non-hired Employees". All other
employees are referred to herein as "Rehired Employees".
(e) Purchaser agrees, based upon Seller's
representation, warranty and covenant set forth in
subsection (a) hereof, that the number of Non-hired
Employees shall not exceed one-third of the total number of
Seller's full-time active employees immediately prior to the
Closing Date. Such representation, warranty and covenant of
Seller are material obligations of Seller hereunder, and
Purchaser has relied thereon in entering into this
Agreement, specifically including, without limitation, this
Section 10.10 hereof. Purchaser shall, from and after the
closing Date, offer employment to the Rehired Employees at
such pay and on such other terms not materially less
favorable to such Rehired Employees than those provided by
Seller immediately prior to Closing. The covenants of
Purchaser in this subsection (e) are material obligations of
Purchaser hereunder and Seller has relied thereon in
entering into this Agreement, specifically including,
without limitation, this Section 10.10 hereof.
(f) In reliance on Seller's representation, warranty
and covenant set forth in subsection (a) hereof, Purchaser
shall be responsible for any liability under the Workers
Adjustment and Retraining Notification Act, 29 U.S.C. 2100
et seq (the "WARN Act") that may be caused by terminations
by Purchaser of Rehired Employees from and after the Closing
Date, and Purchaser shall indemnify and hold Seller harmless
from and against any liability under the WARN Act arising as
a result thereof.
10.11 Other Matters. Unless otherwise agreed by Seller
and Purchaser, Seller shall be solely responsible for all
severance benefits, incentive pay and vacation pay, if any, for
all employees, and shall provide all employees with severance
benefits, and the vacation pay they may have earned, the pro
rata part of the vacation pay they would have earned upon the
anniversary date of their employment, if any, as of Closing.
10.12 Names and Marks. From and after Closing, Seller
shall not use any of the names, marks or other intellectual
property described in Section 1.2(f) hereof.
ARTICLE XI
Miscellaneous
11.1 Confidentiality. Purchaser and Seller hereby agree to
maintain the confidentiality, other than to their (or their
Affiliate's) officers, employees, advisors, agents, and
consultants or as required by law, rule or regulation, of (a) all
information that is exchanged that is not public information, (b)
the fact that this Agreement has been entered into and the terms
and conditions of this Agreement, and (c) the results of the
inspections and tests that are done at the Hotel in connection
with Purchaser's due diligence. "Public information" shall mean
information that was in the public domain or independently
received from a third party with the right to disclose such
information, information that was previously known to a party
before entering into this Agreement, or information that is
required to be disclosed by law.
11.2 Publicity. Except as otherwise required by law, press
releases concerning this transaction shall be made only with the
prior agreement of the Seller and Purchaser, and no such press
releases or other publicity shall state the amount of the
Purchase Price. Purchaser agrees not to discuss the transaction
contemplated by this Agreement with Seller's employees before the
Contact Date unless Seller coordinates such discussion.
11.3 Notices. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by
facsimile, by nationally recognized private courier, or by United
States mail. Notices delivered by mail shall be deemed given
three (3) business days after being deposited in the United
States mail, postage prepaid, registered or certified mail.
Notices delivered by hand or by nationally recognized private
carrier shall be deemed given on the first business day following
receipt; notices delivered by facsimile shall be deemed given on
the day of receipt; provided, however, that a notice delivered by
facsimile shall only be effective if such notice is also
delivered by hand, or deposited in the United States mail,
postage prepaid, registered or certified mail, on or before two
(2) business days after its delivery by facsimile. All notices
shall be addressed as follows:
If to Seller
Addressed to
Lakeshore Hotels, Ltd.
505 N. Lakeshore Drive
Lake Charles, LA 70601
Attention: Ted W. Price, Jr.
Telecopier: 318-491-9938
with a copy to
John R. Pohorelsky, Esq.
Scofield, Gerard, Veron, Singletary & Pohorelsky
P.O. Drawer 3028
Lake Charles, LA 70602
Telecopier: 318-436-0306
If to Purchaser
Addressed to
Players International, Inc.
1300 Atlantic Avenue
Suite 800
Atlantic City, NJ 08401
Attention: Patrick Madamba, Jr., Vice President &
General Counsel
Telecopier: 609-449-7765
with a copy to
Daniel S. Ojserkis, Esq.
Horn, Goldberg, Gorny, Plackter, Weiss & Perskie,
P.A.
1300 Atlantic Ave., Suite 500
Atlantic City, NJ 08401
Telecopier: 609-348-6834
with another copy to
Charles D. Viccellio, Esquire
Stockwell, Sievert, Viccellio, Clements & Shaddock
L.L.P.
One Lakeside Plaza, 4th Floor
Lake Charles, Louisiana 70601
Telecopier: 318-493-7210
and/or to such other respective addresses and/or addressees as
may be designated by notice given in accordance with the
provisions of this Section 11.3. Counsel for either party may
give notice as provided for hereunder on behalf of such party.
11.4 Expenses. Each party hereto shall bear all fees and
expenses incurred by such party in connection with, relating to
or arising out of the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby, including, without limitation, attorneys', accountants'
and other professional fees and expenses.
11.5 Entire Agreement. This Agreement and the instruments
to be delivered by the parties pursuant to the provisions hereof
constitute the entire agreement between the parties. Each
exhibit, and the Disclosure Schedule, shall be considered
incorporated into this Agreement. Any amendments, or alternative
or supplementary provisions to this Agreement, must be made in
writing and duly executed by an authorized representative or
agent of each of the parties hereto.
11.6 Survival; Non-Waiver. All representations and
warranties shall survive the Closing regardless of any
investigation or lack of investigation by any of the parties
hereto. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or
conditions of this Agreement, to exercise any right or privilege
in this Agreement conferred, or the waiver by said party of any
breach of any of the terms, covenants or conditions of this
Agreement, shall not be construed as a subsequent waiver of any
such terms, covenants, conditions, right or privileges, but the
same shall continue and remain in full force and effect as if no
such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized
representative of the waiving party.
11.7 Applicable Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal
laws of the State of Louisiana applicable to contracts made in
that State.
11.8 Binding Effect; Benefit; Relationship. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto, and their successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended to confer on any
person other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
The relationship of Seller and Purchaser is strictly that of
vendor and vendee, and nothing in this Agreement, express or
implied, shall be deemed or construed to make Seller and
Purchaser partners, joint venturers, or principal and agent in
the conduct of their respective businesses.
11.9 Assignability. This Agreement shall not be assignable
by either party without the prior written consent of the other
party, except that at or prior to the Closing Purchaser may
assign its rights and delegate its duties under this Agreement to
one or more Affiliate entities and may assign its rights under
this Agreement to its lenders for collateral security purposes,
and after the Closing Purchaser may assign its rights and
delegate its duties under this Agreement to any third party.
11.10 Amendments. This Agreement shall not be modified or
amended except pursuant to an instrument in writing executed and
delivered on behalf of each of the parties hereto.
11.11 Headings. The headings contained in this Agreement
are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.
11.12 Construction. This Agreement shall not be
construed more strictly against one party than against the other,
merely by virtue of the fact that it may have been prepared
primarily by counsel for one of the parties, it being recognized
that both Purchaser and Seller have contributed substantially and
materially to the preparation of this Agreement.
11.13 Letter of Intent. By their execution of this
Asset Purchase Agreement, Seller and Purchaser hereby waive and
release each other from any default or claim of default they may
have against the other under the Letter of Intent between Seller
and Purchaser dated August 21, 1997, as amended.
SELLER:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this 30th day of September, 1997.
WITNESSES: LAKESHORE HOTELS, LTD., a
Louisiana
partnership in commendam
By:
Name:
Title:
_
NOTARY PUBLIC
PURCHASER:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this 30th day of September, 1997.
WITNESSES: PLAYERS INTERNATIONAL, INC., a
Nevada corporation
By:
Name:
Title:
NOTARY PUBLIC
JOINDER
The undersigned hereby join in the execution of this
Agreement, simultaneously with Seller, to evidence their
agreement to be bound by the provisions of Section 1.6 hereof:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this 30th day of September, 1997.
WITNESS (as to all signatures)
___________________________________
______________________________
Ted W. Price, Sr.
WITNESS (as to all signatures)
___________________________________
______________________________
Ted W. Price, Jr.
______________________________
Robert W. Price, Sr.
______________________________
Robert W. Price, Jr.
_
Notary Public
SCHEDULE 1.2(c)
Description of Real Estate
That certain tract or parcel of land situated in Section 31,
Township 9 South, Range 8 West, Calcasieu Parish, Louisiana and
being more particularly described as follows to wit;
For a point of commencement, begin at the Southeast corner of
Block 30 of Thomas Bilbo and Ann Lawrence subdivision in the City
of Lake Charles, Louisiana;
Thence West along the North right-of-way line of Lawrence Street
and along the West prolongation of the North right-of-way line of
Lawrence Street 450.0 feet to a point in the West right-of-way
line of U.S. Highway No. 90-business route and/or the West right-
of-way line of Orange Street (abandoned) projected South;
Thence West 60.0 feet along the agreement boundary line between
the State of Louisiana and the J.A. Bel Estate;
Thence North 57 50' 00" west 451.25 feet along the said agreement
line to the point of beginning of the tract herein described:
Thence North 31 56' 05" East 250.94 feet (Call - North 32 10' 00"
East 249.49 feet) to a point 10 feet West of the West line of
block 34 of Thomas Bilbo and Ann Lawrence subdivision;
Thence North 00 10' 55" West 148.03 feet (Call - due North 148.03
feet);
Thence North 89 49' 05" East 80.0 feet (Call - due East 80.0
feet);
Thence North 00 10' 55" West 96.6 feet (Call - North 96.6 feet)
more or less, to a point on the South right-of-way line; of U.S.
Highway No. 90-business route;
Thence Westerly on the said right-of-way line along the arc of a
curve having a radius of 355.0 feet (the chord of which bears
North 76 54' 55" West and measures 47.68 feet), (the chord of
which has a call of North 76 44' 00" West), a distance of 47.72
feet;
Thence North 83 45' 55" West 98.46 feet (Call - North 83 35' 00"
West 98.46 feet) along said South right-of-way line;
Thence North 80 34' 29" West 556.94 feet (Call - North 80 35' 00"
West 560.4 feet) along said South right-of-way line;
Thence South 06 13' 00" West 337.08 feet (Call - South 06 10' 00"
West 337.00 feet) to the agreement boundary line between the
State of Louisiana and the J.A. Bel Estate;
Thence South 80 14' 37" East 201.0 feet (Call - South 80 35' 00"
East 200.00 feet) along said agreement line;
Thence South 57 50' 00" East 378.25 feet along said agreement
line to the point of commencement.
Containing 5.80 acres, more or less.
SCHEDULE 1.3(g)
Other Excluded Assets
NONE.
SCHEDULE 1.4(a)
Permitted Exceptions
1. The effects of a Boundary Agreement between Earl K. Long,
Governor of the State of Louisiana, et al and John Albert
Bel, et al. filed July 26, 1951, recorded in Conveyance Book
498, Page 276.
2. Servitude from Lakeshore Hotels, Ltd. to Gulf States
Utilities Company dated September 10, 1981, recorded in
Conveyance Book 1643, Page 605.
3. Right of Way from Lake Charles Hilton to South Central Bell
Telephone Company dated October 27, 1981, recorded in
Conveyance Book 1656, Page 138.
4. Servitude from Lakeshore Hotels, Ltd. to the City of Lake
Charles dated August 2, 1996, recorded in Conveyance Book
2571, Page 372.
5. Ad valorem property taxes for the current tax year, to the
extent not yet due and payable.
6. Such encrouchments as may be reflected on Purchaser's title
survey for the Real Estate, so long as the same do not
interfere with Purchaser's intended use or occupancy of the
Real Estate.
DISCLOSURE SCHEDULE
Attached to and Made Part of Asset Purchase Agreement
between Lakeshore Hotels, Ltd., as Seller, and Players Internati
onal, Inc.,
its assignee or designee, as Purchaser
4.3(b) Title Exceptions (other than Permitted Liens)
- NONE -
Equipment Leases & Installment Payment Agreements
-NONE, except as disclosed in Schedule of
Contracts attached hereto (referenced under
Section 4.3(k) hereof)
4.3(g) Financial Statements of Seller (delivered
separately)
- Audited Financial Report of Lakeshore
Hotels, Ltd. for 1996 and 1995 prepared by
McElroy, Quirk and Birch
- Audited Financial Report of Lakeshore
Hotels, Ltd. for 1995 and 1994 prepared by
McElroy, Quirk and Birch
- Audited Financial Report of Lakeshore
Hotels, Ltd. for 1994 and 1993 prepared by
McElroy, Quirk and Birch
- Audited Financial Report of Lakeshore
Hotels, Ltd. for 1993 and 1992 prepared by
McElroy, Quirk and Birch
4.3(h) Interim Financial Statements
- Seller-prepared Profit and Loss Statement for
1/1/97 through 7/31/97
4.3(i) Permits
1. State Dept. of Revenue and Taxation, Office of
Alcoholic Beverage Control Permit to Sell Alcoholic
Beverages; expires November 30, 1997; Serial No.
226928, Permit No. 10000052 (Issued to: Hotel
Management & Development, Inc.; Holiday Inn Lake
Charles)
2. City of Lake Charles Permit to Sell Alcoholic
Beverages; expires 12/31/97; No. 2881, Account No. 4426
Class A Retail Dealer Liquor (Issued to: Hotel
Management & Development, Inc.; Holiday Inn Lake
Charles)
3. City of Lake Charles Permit to Sell Alcoholic
Beverages; expires 12/31/97; No. 2869 Account No. 4226
Class A Retail Dealer Beer (Issued to: Hotel Management
& Development, Inc.; Holiday Inn Lake Charles)
4. State Department of Health and Hospitals, Office
of Public Health Permit to Operate Any Permanent
Bar/Lounge; expires 6/30/98; Permit No. 10-1522,
Class 7, Operations Type 226 (Issued to: Lakeshore
Hotels, Ltd. - Riverboat Magic) (Last Inspection Report
7/25/97)
5. State Department of Health and Hospitals, Office
of Public Health Permit to Operate Any Permanent Food
Service Establishment; expires 6/30/98; Permit No.
10-1522, Class 7, Operations Type 225 (Issued to
Lakeshore Hotels, Ltd. - Riverboat Magic) (Last
Inspection Report 7/25/97)
6. City of Lake Charles Occupational License Tax -
proof of payment for Restaurant; Lic. Tax No. 2413
(Issued to: Hotel Management & Development, Inc.;
Holiday Inn-Lake Charles)
7. City of Lake Charles Occupational License Tax -
proof of payment for Motel; Lic. Tax No. 2789 (Issued
to: Hotel Management & Development, Inc.; Holiday
Inn-Lake Charles)
8. U.S. Army Corps of Engineers Permit; dated
March 13, 1996 (Issued to: Lakeshore Hotels, Ltd.)
4.3(k) Contracts, Leases, and Agreements
(Schedule attached hereto)
4.3(m) Commissions or Referral Fees
-10% Travel Agent Commissions paid to Holiday
Hospitality
-Credit Card Commissions: American Express
2.8%
Diners Club 2.8%
Visa 1.5%
MasterCard 1.6%
Discover 1.7%
4.3(n) Employees
(List and Payscale attached hereto)
4.3(o) Litigation, Proceedings, Governmental
Investigations
1. Katherine T. Hoffman et al. v. Hotel
Management & Development, Inc, Ted W. Price, Sr.,
Ted W. Price, Jr., Robert W. Price, Sr., and
Robert W. Price, Jr., Case No. 87-52127
2. Rose Perkins - SETTLED BUT INSUROR IN
RECEIVERSHIP
3. Ida Antoine - IN LITIGATION
4. Rose Gallien - IN LITIGATION
5. Additional General Liability, Workers
Compensation and other Claims as Shown on the
Attached Schedules.
4.3(r) Notices of Violation
- NONE -
4.3(s) Notices of Violation (Environmental)
- NONE -
Environmental Permits
- NONE -
SCHEDULE OF
CONTRACTS, LEASES, AGREEMENTS
1. (a) Franchise License Agreement dated
4/14/92 for Holiday Inns franchise
(b) General Data Agreement dated
4/30/92 for Holidex 2000 Reservation System
Each will terminate and be replaced
in connection with execution of New License
Agreement by Purchaser and Holiday Inns.
2. Furniture, Fixtures, and Equipment Lease -
effective 10/1/90 between Seller and the
Individuals _
Will terminate prior to Closing as
provided under Section 1.6 hereof.
3. Westinghouse Elevator Co. Hydraulic Elevator
Preventive Maintenance Agreement
Terminable on at least 90 days'
written notice prior to 12/1 of each year
Assignable on consent of
Westinghouse after notice
4. Auto-Chlor System Equipment Agreement
(laundry)
Dated 2/9/96
Lease of 3 pieces of equipment and
agreement for provision of cleaning services
Month to month
Terminable on at least 30 days'
written notice and must return equipment
Assignable on prior written consent
of Auto-Chlor
5. Auto-Chlor System Equipment Agreement
(housekeeping)
Dated 2/9/96
Lease of 1 piece of equipment,
agreement for provision of cleaning agents
Month to month
Terminable on at least 30 days'
written notice and must return equipment
Assignable on prior written consent
of Auto-Chlor
6. Auto-Chlor System Dishwashing Machine Lease
Agreement
Dated 2/30(?)/97
Terminable on at least 60 days'
written notice prior to anniversary date.
Valid termination if notice can be given by
12/31/97
Assignability not addressed
7. Coin Operated Machine and Space Lease dated
1/22/92 between Jackpot Novelty, Inc. and Hotel
Management & Development, Inc.
TERMINATED 11/8/96: month-to-month
only
To be fully terminated and release
obtained prior to Closing
8. (a) Management Agreement dated _______ with
Hotel Management & Development, Inc.
(b) Agreement dated 8/18/93 between Lakeshore
Hotels ("LSH") and Hotel Management and Development
("HMD")
Contracts with Affiliate of Seller
Each to be fully terminated and
release obtained prior to Closing
9. Cellular One Mobile Telephone Agreement
REVERSE SIDE NOT PROVIDED
Billing activation date 6/29/94 -
monthly billing
Terminable if cancelled thirty (30)
days before "contract renewal date" or
automatically renews for one (1) year
$200 cancellation fee if not
cancelled properly
10. Waste Management of Lake Charles Service
Agreement dated 6/1/92
Terminable on at least sixty (60)
days prior written notice to 6/5/98
If not terminated properly,
liquidated damages payable (max: monthly fee
x 6)
Trash bin must be returned
Assignability not addressed
11. Communications Services, Inc. - Bulk Rate
Agreement dated 2/1/97 (Cable TV)
Cable TV for hotel
Liquidated damages
References "Access Agreement" but
we do not have this
Not signed by Communication
Services
Terminable only with cause -
expires 1/1/99
Assignability not addressed
12. Communications Services, Inc. Service
Agreement dated May 5, 1997 (Background Music)
Expires after 36 mos.
Terminable with at least ninety
(90) days prior written notice to expiration
date - will automatically renew if no notice
Assignability not addressed
Must return equipment
13. Satellite Programming License (HBO, Showtime)
with World Cinema, Inc.
Not terminable - appears to expire
three (3) years after first day of Exhibition
of programming (Unknown)
Assignable with written consent of
World Cinema
14. Plant Lease dated 6/30/96 with Kuntry's
Interior Landscaping
Terminable on 30 days written
notice, but may have 1-year minimum
Assignable on notice to and consent
of Kuntry's
15. Tel-Comm Communications Consultants, Inc.
(Telephone Traffic Aggregator; Contract dated
8/7/96)
36-month intial term
No termination or assignment rights
16. XETA Corp. (Call accounting
equipment/software; Contract dated 2/20/97)
1 year term
No assignment or termination rights
NO COPIES PROVIDED OF THE FOLLOWING:
17. Standard Coffee (Coffee urns; No written
agreement exists)
18. Southwest Bar Needs, Inc. (Orange juice
machine; No written agreement exists)
19. Waffles of Louisiana, Inc. (Waffle irons; No
written agreement exists)
20. Eco-Lab (Pest Control; Terminable on 30 days
written notice)
21. Travel Agent Commissions (10% commissions
paid to Holiday Hospitality)
22. Mercury Cellular (Pagers; No written
agreement exists)
23. Techtronics (Service Agreement for 5 copy
machines; terminable on 90 days prior written
notice)
24. CK & Associates (Engineering/Environmental
Consultants for Grease Trap; No written agreement
exists)
25. Brian Ezell Services (Telephone Maintenance
Services; No written agreement exists)
26. Bell South, Inc. (Pay phones on premises; No
written agreement exists)
27. General Vending & Sales, Inc. (7 vending
machines; No written agreement exists)
28. Lake Charles Coca-Cola Bottling, Inc. (9
soft-drink machines; No written agreement exists)
AC-145324/1
11/13/9711/13/97
DSO/kg
AMENDMENT NO. 1
TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT is made as
of November ___, 1997, between LAKESHORE HOTELS, LTD., a
Louisiana limited partnership in commendam ("Seller"), and
PLAYERS INTERNATIONAL, INC., a Nevada corporation, its designees
or assignees ("Purchaser").
R E C I T A L S
A. Seller and Purchaser are parties to a certain Asset
Purchase Agreement dated as of September 30, 1997 (the "Original
Agreement"); capitalized terms not defined herein are used as
defined in the Original Agreement, unless the context clearly
requires otherwise.
B. Based upon the PIP prepared by Holiday Inns, Seller
and Purchaser anticipate that the Holiday Inn Costs will far
exceed $1,500,000. Notwithstanding the termination rights
available to Purchaser under the provisions of Section 3.6(a) of
the Original Agreement as a result thereof, Purchaser desires to
complete the purchase of the Purchased Assets without performing
the PIP required by Holiday Inns. Purchaser will not be able to
obtain a New License Agreement without performing such PIP work
as required by Holiday Inns; and without such New License
Agreement, Purchaser cannot obtain the financing as originally
intended.
B. Purchaser has made arrangements for alternate
financing, but such alternate financing will require renewed,
supplemental or different consents and approvals before it can be
implemented.
C. In order to accommodate Purchaser's efforts to obtain
such alternate financing, Seller and Purchaser desire to modify
the Original Agreement as hereinafter set forth.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, the
parties agree as follows:
1. Amendment re: Conditions. Section 6.2 of the
Original Agreement is hereby deleted entirely, and replaced with
the following:
6.2 Conditions to Purchaser's Obligations. The
obligation of Purchaser to consummate the transaction
contemplated hereby is subject to the fulfillment of all of
the following conditions on or prior to the Closing Date,
upon the non-fulfillment of any of which this Agreement may,
at Purchaser's option, be terminated pursuant to and with
the effect set forth in Article IX:
(a) Each and every representation and warranty
made by Seller shall have been true and correct when made
and shall be true and correct in all material respects as if
originally made on and as of the Closing Date.
(b) All obligations of Seller to be performed
hereunder through, and including on, the Closing Date
(including, without limitation, all obligations which Seller
would be required to perform at the Closing if the
transaction contemplated hereby were consummated) shall have
been performed.
(c) All of the Consents shall have been obtained.
(d) No suit, proceeding or investigation shall
have been commenced or threatened by any governmental
authority or private person(s), against any party (including
without limitation Seller and any of its affiliates, or any
partners, shareholders, officers or members of any of them),
on any grounds, the intent or likely effect of which
(exclusively or among other things) is to restrain, enjoin
or hinder, delay or to seek material damages on account of,
the consummation of the transaction contemplated hereby, or
to challenge any of the terms or provisions of this
Agreement, or arising out of this Agreement or the
transactions contemplated hereby.
(e) On or prior to December 15November 17, 1997,
Purchaser shall have received all required consents,
licenses and approvals of the transactions contemplated
hereunder (including without limitation, Purchaser's
financing thereof, and any changes to existing financing to
permit same) from the gaming and other regulatory
authorities having jurisdiction.
(f) Intentionally Omitted.
(g) On or prior to December 15November 17, 1997,
Purchaser shall have received the prior written approval of
Wells Fargo Bank, N.A. and the Trustee for the holders of
Purchaser's debt securities to the transactions contemplated
hereby (including without limitation, Purchaser's financing
thereof, and any changes to existing financing to permit
same), all in form and substance satisfactory to Purchaser,
in its sole discretion.
(h) On or prior to November 2017, 1997, Purchaser
shall have obtained a commitment from Wells Fargo Bank, N.A.
("Wells Fargo") to modify Purchaser's existing line of
credit with Wells Fargo to includemortgage financing for the
transactions contemplated hereby, on terms acceptable to
Purchaser, in its sole discretion, including without
limitation total borrowing availability under such line of
credit of Seventy Million Dollars ($70,000,000)in the amount
of at least seventy percent (70%) of the aggregate total of
the Purchase Price, Holiday Inn Costs, Purchaser's costs of
making Closing hereunder and Purchaser's other expenses
under the Letter of Intent and this Agreement.
(i) Intentionally OmittedOn or prior to
November 17, 1997, Purchaser shall have entered into a New
License Agreement and all related agreements, or agreed with
Holiday Inns upon the terms thereof, in either case on terms
acceptable to Purchaser, in its sole discretion, as provided
under Section 3.6 hereof and Purchaser shall not have
terminated this Agreement based on the aggregate total
amount of the Holiday Inn Costs, as provided under Section
3.6 hereof.
(j) On or before November 20, 1997October 16,
1997, Purchaser's Board of Directors shall have approved
this Agreement and the transactions contemplated hereby
(including without limitation, Purchaser's financing thereof
as described in subsection (h) hereof).
(k) Prior to Closing, Purchaser shall not have
terminated this Agreement: (A) during the Inspection
Period, as provided under Section 5.5 hereof; or (B) by
virtue of a casualty, as provided under Section 6.3 hereof;
or (C) by virtue of a taking, as provided under Section 6.4
hereof.
If, despite Purchaser's good faith efforts, either of the
conditions set forth in subsections (g) or (i) hereof has
not been satisfied by November 17, 1997, the Purchaser may,
at its option, extend the date for satisfaction thereof, as
described above, to December 2, 1997, by written notice to
Seller. If Purchaser so elects to extend such date for
either or both of such conditions, then the Closing Date
shall automatically be extended to December 17, 1997 for all
purposes hereunder.
2. Amendment re: Closing. Section 3.2 of the Original
Agreement is hereby deleted in its entirety and replaced with the
following:
3.2 Time and Place of Closing. The transaction
contemplated by this Agreement shall be consummated (the
"Closing") at 10:00 a.m. at the offices of Stockwell,
Sievert, Shaddock & Viccellio, One Lakeside Plaza, 4th
Floor, Lake Charles, Louisiana 70601 on December 18,
1997December 2, 1997 or on such other date, or at such other
time or place, as shall be mutually agreed upon by Seller
and Purchaser. Notwithstanding the foregoing, if Purchaser
either party is unable, despite Purchaser'ssuch party's good
faith efforts, to complete Closing by such date and time
because a condition contained in Wells Fargo's financing
commitment (as described in Section 6.2(h) hereof) has not
yet been satisfied, and such financing cannot therefore be
consummated, then Purchasersuch party may extend the date
for Closing to January 6, 1998December 17, 1997, upon
written notice to the other party hereunder, on or prior to
the original date for Closing. The foregoing extension
right is available only with respect to the originally
scheduled Closing, and any further extension of the date for
Closing may only be made upon the mutual agreement of the
parties. The date (or extended date, if applicable) on
which the Closing occurs in accordance with the preceding
sentences, is referred to in this Agreement as the "Closing
Date." The Closing shall be deemed to be effective as of
12:01 a.m. on the Closing Date at Lake Charles, Louisiana.
3. Amendment re: Allocation. The date for Purchaser to
submit its proposed allocation of the Purchase Price to Seller
under Section 3.5 of the Original Agreement is hereby reset and
extended to December 2, 1997.
4. Amendment re: Franchise.
(a) In consideration of Seller's agreements hereunder,
Purchaser hereby waives its right under the final sentence
of Section 3.6(a) of the Original Agreement, to terminate
the Original Agreement based on the amount of the Holiday
Inn Costs.
(b) The final sentence of Section 3.6(b) of the
Original Agreement is hereby amended to read as follows:
Purchaser shall not be liable for payment of the
Termination Fee if Purchaser does not complete Closing
hereunder, unless: (i) Closing does not occur because
of Purchaser's default hereunder; (ii) Seller has not
defaulted hereunder; and (iii) the Termination Fee
becomes payable (notwithstanding that Seller continues
to own and operate the Business) because of an act of
Purchaser, and through no act of Seller.
5. Amendment re: Return of Additional Deposit. The
penultimate sentence of Section 3.3(b) of the Original Agreement
is hereby deleted, and replaced with the following:
The Additional Deposit shall only be refunded to
Purchaser (x) on default by Seller, or (y) if the
condition on Purchaser's obligations regarding
Purchaser's ability to obtain financing is not
satisfied as provided under Section 6.2(h) hereof, or
(z) if the condition regarding Purchaser's Board of
Directors approvalHoliday Inn franchise matters under
Section 6.2(ji) hereof is not satisfied.
6. Amendment re: Employee Contact. Purchaser and Seller
agree that the Contact Date under Section 10.10(c) of the
Original Agreement shall in all events and for all purposes be:
(i) for salaried employees, December 2, 1997; and (ii) for hourly
employees, the earlier of December 15, 1997, or such earlier date
by which Purchaser shall have satisfied or waived the conditions
set forth in Sections 6.2(e) and 6.2(g) hereof.
7. Rooms; New Year's Arrangements. There is hereby
inserted in the Original Agreement a new Section 5.9, as follows:
5.9 Rooms; New Year's Arrangements
(a) Seller acknowledges Purchaser's need to have
extensive availability of rooms and hotel services for
Purchaser's gaming patrons for the New Year's Eve/New Year's
Day holiday. Therefore, in consideration of Purchaser's
agreements hereunder, Seller hereby agrees to reserve and
set aside for the exclusive use and occupancy of Purchaser
and its patrons: (i) that number of hotel rooms at the Hotel
for the room nights shown on Exhibit "A" hereto (the
"Reserved Rooms"); and (ii) all of Seller's banquet,
ballroom and meeting rooms and areas (the "Banquet
Facilities") for December 30 and 31, 1997, as shown on
Exhibit "A" hereto. Purchaser agrees to pay the lump sum
total price of $45,000 (including applicable taxes) for all
such Banquet Facilities and Reserved Rooms as described in
Exhibit "A", whether or not actually used or occupied for
the dates specified in Exhibit "A"; such payment to be
secured by a payment from Purchaser to Seller in the amount
of $70,000 (the "Advance Deposit"), to be made, in full, on
or before December 2, 1997. Seller agrees that the Advance
Deposit made by Purchaser pursuant to this Section 5.9(a)
shall be held by Seller as an advance deposit, and if
Closing is not extended by Purchaser as provided in Section
3.2 hereof, Purchaser shall receive a credit at Closing for
the full amount of such Advance Deposit as provided under
Section 3.7(a) of the Original Agreement. If Closing is
extended under Section 3.2 hereof, then at Closing,
Purchaser shall receive a credit for $25,000 of the Advance
Deposit (i.e., the portion not retained by Seller for the
Reserved Rooms and Banquet Facilities) as provided under
Section 3.7(a) of the Original Agreement. If the Closing is
extended under Section 3.2 hereof, but Closing is not held
because of Purchaser's default, Seller may retain the entire
Advance Deposit as damages hereunder.
(b) Incidental services such as set-up, security,
decoration, clean-up, sound and lighting shall be provided
by Seller at prices and on terms to be mutually agreed
between Seller and Purchaser. Failing such mutual
agreement, Purchaser may provide any of such incidental
services without cost or expense to Seller. In addition,
Seller shall provide alcoholic beverages to Purchaser for
Purchaser's shows, parties and special events at the Hotel
on the nights of December 30 and 31, 1997, at Seller's
actual cost without markup or profit, on a method of
calculation and payment terms to be mutually agreed between
Seller and Purchaser. Purchaser shall have the right to
have such beverages served by Purchaser's staff, provided
that: (i) service of alcoholic beverages at the Hotel by
Purchaser's staff complies with applicable law; and (ii)
Purchaser has provided to Seller the certificates or other
evidence of insurance as described in subsection (e) hereof
.
(c) During (or in preparation for) any of the special
events to be held by Purchaser at the Hotel on December 30
or 31, 1997, Purchaser may locate members of Purchaser's
staff in and at the Hotel to provide services and
accommodations to Purchaser's patrons while present at the
Hotel, including without limitation, welcome, patron-
relations, gift delivery, event management and similar
services for Purchaser's hotel guests and shows, parties
and/or special events at the Hotel.
(c) From and after the date hereof, Seller agrees not
to accept any reservations or bookings of guest rooms or
ballroom/conference/banquet facilities at the Hotel for any
of the dates listed on Exhibit "A" hereto, which would
interfere with the agreements of Seller described in this
Section 7.
(d) Seller agrees to cooperate in all reasonable ways
with Purchaser's efforts to promote the New Year's Eve
holiday (dates and room nights as specified in Exhibit "A"
hereto) as a special event of Purchaser, including special
decorations provided by Purchaser, permission to use the
name of the Hotel in Purchaser's advertising and marketing
efforts, use of the Hotel's pylon sign, and similar matters.
(e) Purchaser hereby indemnifies and agrees to hold
Seller harmless from and against all loss, cost, damage,
claim or expense caused by or arising out of Purchaser's
activities at the Hotel contemplated under this Section 5.9,
including without limitation, the acts or omissions of
Purchaser's staff present at the Hotel in connection with
such activities. Prior to December 19, 1997, Purchaser
shall provide to Seller certificates or other evidence of
general liability, worker's compensation, and liquor
liability insurance covering Purchaser's activities at the
Hotel as contemplated under this Section 5.9.
8. Effect of Amendment. Except as specifically set
forth herein, the Original Agreement shall remain unmodified and
in full force and effect, binding upon the parties thereto.
[Signatures on Following Page]
SELLER:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this ____ day of November, 1997.
WITNESSES: LAKESHORE HOTELS, LTD., a
Louisiana
partnership in commendam
__________________________
___________________________
By:
Name:
Title:
_
NOTARY PUBLIC
PURCHASER:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at
_____________________, ____________________ on this _____ day of
November, 1997.
WITNESSES: PLAYERS INTERNATIONAL, INC., a
Nevada corporation
_____________________________
_____________________________
By:
Name:
Title:
NOTARY PUBLIC
JOINDER
The undersigned hereby join in the execution of this
Amendment No. 1, simultaneously with Seller, to evidence their
agreement to be bound by the provisions hereof:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this ____ day of November, 1997.
WITNESS (as to all signatures)
___________________________________
______________________________
Ted W. Price, Sr.
WITNESS (as to all signatures)
___________________________________
______________________________
Ted W. Price, Jr.
______________________________
Robert W. Price, Sr.
______________________________
Robert W. Price, Jr.
_
Notary Public
05/01/98
DSO/mja
AC-158785/4
7
SETTLEMENT & ADMISSION FEE AGREEMENT
STATE OF LOUISIANA
PARISH OF CALCASIEU
BE IT KNOWN, that on the dates hereinafter set forth,
before the undersigned Notaries Public, duly commissioned and
qualified in and for the state and parish aforesaid, and in the
presence of the undersigned competent witnesses, personally came
and appeared PLAYERS LAKE CHARLES, LLC, a Louisiana limited
liability company ("PLC") and SHOWBOAT STAR PARTNERSHIP, a
Louisiana general partnership ("SSP"; PLC and SSP are separate
taxable entities, but are collectively referred to herein for
convenience as the "Operators"), herein represented by Catherine
A. Walker, the duly authorized officer of Players Lake Charles
Riverboat, Inc., the Managing Member of PLC, and of Players
Riverboat Management, Inc., the Managing Partner of SSP; and the
CITY OF LAKE CHARLES, LOUISIANA, a body politic and corporate of
the State of Louisiana (hereinafter called the "City"), herein
represented by Willie L. Mount, its duly authorized Mayor, who
declared that:
PLC is the owner of a riverboat gaming vessel
currently known as the "Players III Casino" (the
"Players Casino").
SSP is the owner of a riverboat gaming vessel currently
known as the "Star Casino" (the "Star Casino"; the Players
Casino and the Star Casino are sometimes referred to
collectively herein as the "Casinos"). The term "Casinos" shall
include all replacement or successor riverboat gaming vessel(s)
of either or both of the casinos named herein.
Each of Operators currently holds a license to
operate their respective Casinos in the State of
Louisiana by the Louisiana Riverboat Gaming Enforcement
Division of the Gaming Enforcement Section of the
Office of State Police, Department of Public Safety and
Corrections (the "Division").
Pursuant to the approval of the Louisiana Gaming
Control Board, successor agency to the Louisiana
Riverboat Gaming Commission (the "Commission") the
berthing site for both of the Casinos is located at a
common site in the City, known as 507 N. Lakeshore
Drive, Lake Charles, Louisiana (the "Site").
PLC owns and operates certain hotel, dining and
entertainment facilities at the Site, related to the
Casinos, for the mutual benefit of both Operators,
pursuant to agreements between the Operators.
Operators and the City are parties to a certain
Development Agreement dated as of January 27, 1995 (the
"Existing Development Agreement").
Certain disputes have arisen among Operators, the
City, McNeese State University, Sowela Technical
Institute (a/k/a/ Louisiana Technical College), the
Calcasieu Parish School Board and the Calcasieu Parish
Police Jury, regarding the calculation and payment of
certain admission fees ("Section 27:93A Fees") payable
under an ordinance enacted by the City pursuant to the
provisions now codified at La.R.S. 27:93A(1) and under
a Resolution passed by the Calcasieu Parish Police Jury
pursuant to the provisions now codified at La.R.S.
27:93A(6) of the Louisiana Riverboat Economic
Development and Gaming Control Act (the "Act").
McNeese State University, Sowela Technical Institute
(a/k/a/ Louisiana Technical College), and the Calcasieu
Parish School Board are referred to hereinafter as the
"Educational Institutions". As used herein, the term
"Police Jury" refers to the Calcasieu Parish Police
Jury.
Operators have filed a certain action in the 19th
Judicial District Court for the Parish of East Baton
Rouge, State of Louisiana styled Players Lake Charles,
LLC and Showboat Star Partnership vs. City of Lake
Charles and the Louisiana Gaming Control Board, Case
No. 447512-N; and the City has filed an action in the
14th Judicial District Court for the Parish of
Calcasieu, State of Louisiana styled City of Lake
Charles vs. Players Lake Charles, L.L.C. and Showboat
Star Partnership, Case No. 98-1473 (together, the
"Actions").
Operators, the City and the Educational
Institutions desire, by this Agreement, to: (1) settle
and resolve such disputes amicably, and dismiss the
Actions with prejudice, by virtue of the specific
agreements and as more particularly provided in Article
III hereof; and (2) provide for a new arrangement,
going forward, effective from and as of March 1, 1998
(the "Effective Date"), for calculation and payment of
the Section 27:93A Fees, as more particularly provided
in the other Articles hereof.
NOW THEREFORE, for and in consideration of the mutual
and dependent agreements of the City and the Operators
hereinafter set forth, Operators and the City agree to
the following:
ARTICLE I
SECTION 27:93A FEES
Section 1.1. Legally Mandated Admission Fees.
(a) From and after the Effective Date, in accordance with
the Act, for so long as the provisions now codified at La.R.S.
27:93A(6) and La.R.S. 27:93A(1) of the Act apply to Operators,
and for so long as the Casinos, or either of them, are located
and operated at a site in the City of Lake Charles, Operators
shall pay to the City a fee (the "Admission Fee"), which
Admission Fee shall be equal to the greater of (i) $7,025,000 per
annum (the "Guarantee Amount") or (ii) 4.20% (the "Applicable
Percentage") of the Net Gaming Proceeds (as defined in the Act)
of the Casinos. The Admission Fee shall be paid monthly on or
before the 20th day of each calendar month (commencing April 20,
1998), based upon one-twelfth (1/12) of the Guarantee Amount
(commencing with March, 1998). The Guarantee Amount shall be
subject to proration, adjustment or credit as provided in this
Agreement. Net Gaming Proceeds earned before the Effective Date
shall not be included in computation of the Admission Fee.
(b) Operators' obligation to pay the excess, if any, of
the Applicable Percentage of the Operators' Net Gaming Proceeds,
over the Guarantee Amount already paid, shall be determined on a
calendar year basis, in arrears as of the end of each calendar
year, commencing as of the end of calendar 1998. Such excess, if
any, shall be paid by January 31 of the following calendar year.
The Guarantee Amount for calendar year 1998 shall be prorated,
based on the number of months remaining in calendar 1998 after
the Effective Date. Therefore, Operators, the City and the
Educational Institutions agree that the Guarantee Amount for
calendar 1998 shall be $5,854,167.00.
(c) At March 1, 2003, the Guarantee Amount shall be
increased or decreased by the same percentage that the Consumer
Price Index (as herein defined and specified, the "CPI")
increases or decreases from March 1, 1998 to February 28, 2003,
but in no event increased or decreased by more than ten percent
(10%). At March 1, 2008 and each date which is a multiple of
five (5) years thereafter (i.e., March 1, 2013, March 1, 2018,
etc.) (each, an "Adjustment Date"), the then-current Guarantee
Amount shall be increased or decreased by the same percentage
that the CPI increases or decreases from the date which is five
(5) years prior to that Adjustment Date (i.e., a five-year
period), but in no event increased or decreased by more than ten
(10%) percent on any such Adjustment Date.
(d) As used herein, "CPI" shall mean the Consumer Price
Index for All Urban Consumers (CPI-U) - South Census Region, All
Items (1982-84 = 100) published by the Bureau of Labor Statistics
of the U.S. Department of Labor. If this index is no longer
published, the "CPI" shall mean the index of consumer prices in
the U.S. most closely comparable to the discontinued index, after
making such adjustments in items included for method of
compensation as may be prescribed by the agency publishing the
same or as otherwise may be required to compensate for changes
affecting such replacement index subsequent to the Effective
Date.
(e) From and after the actual commencement of "hard"
construction of the improvements to the eastbound lanes of
Interstate 10 in Calcasieu Parish (the "Start Date") from the
eastern foot of the I-10 bridge over the Calcasieu River to the
Bilbo Street I-10 on-ramp (the "I-10 Construction"), the
Guarantee Amount shall be subject to reduction as provided in
this subsection (e).
(i) The Net Gaming Proceeds of the Operators shall be
computed as of the last day of the sixth (6th) full
calendar month after the Start Date, or the date of
completion of the I-10 Construction, whichever is
earlier (the "Computation Date"), looking back on a 12
calendar month basis.
(ii) If the Operators' Net Gaming Proceeds amount for
such 12-month period is an amount less than One Hundred
Fifty Million Dollars ($150,000,000)(such deficit being
referred to herein as the "Revenue Shortfall"), then
the Guarantee Amount for the calendar year in which the
Computation Date falls shall be reduced by an amount
equal to five percent (5%) of the Revenue Shortfall
amount, up to a maximum reduction of Five Hundred
Thousand Dollars ($500,000).
(iii) The Revenue Shortfall shall be calculated on
a 12-month basis as of the Computation Date, and the
foregoing reduction (if any) to the Guarantee Amount
shall be made, regardless of whether there is actually
a Revenue Shortfall for the calendar year in which such
computation is made. No further reductions to the
Guarantee Amount shall be made under this subsection
(e).
(iv) The reduction in the Guarantee Amount, computed as
provided herein, shall be applied against the monthly
payment of the Guarantee Amount (under subsection (a)
hereof) next coming due.
Section 1.2. Education Fee.
(a) Operators, the City, and the Educational Institutions
acknowledge that for so long as the Casinos, or either of them,
are located and operated at a site in the City of Lake Charles,
and for so long as the Police Jury is legally authorized to levy
a fee (the "Education Fee") pursuant to the provisions now
codified at La.R.S. 27:93A(6), the Admission Fee amounts payable
to the City hereunder shall include (and the City shall collect
as part of the Admission Fee, and pay directly to the Educational
Institutions pursuant to a separate agreement between the City
and the Educational Institutions) an Education Fee equal to the
greater of (i) $950,000.00 per annum (the "Education Guarantee
Amount") or (ii) 0.57% (the "Education Applicable Percentage") of
the Net Gaming Proceeds of the Casinos. The percentage-based
Education Fee is in lieu of the per passenger admission fee of
$.50 authorized by the provisions now codified at La.R.S.
27:93A(6). From and after the Effective Date, the Education Fee
shall be paid by the City to the Educational Institutions
monthly, upon receipt of Operators' payment of the Admission Fee
as set forth in Sections 1.1(a) through (e) hereof. The
Education Guarantee Amount shall be subject to proration,
adjustment or credit as provided in this Agreement.
(b) The City's obligation to pay the Educational
Institutions the excess, if any, of the Education Fee based upon
the Education Applicable Percentage of the Operators' Net Gaming
Proceeds over the Education Guarantee Amount already paid, shall
be determined on a calendar year basis, in arrears as of the end
of each calendar year, commencing as of the end of calendar 1998.
Such excess, if any, shall be paid by January 31 of the following
calendar year. The Education Guarantee Amount for calendar year
1998 shall be prorated, based on the number of months remaining
in calendar 1998 after the Effective Date. Therefore, the City
and the Educational Institutions agree that the Education
Guarantee Amount for calendar 1998 shall be $791,667.00. The
City and the Educational Institutions agree further that the
Education Guaranty Amount shall be subject to adjustment or
credit in the same manner as the Guaranty Amount, pursuant to
Sections 1.4 (c), (d) and (e) hereof, as if those provisions were
fully set forth at this place.
(c) The City and Educational Institutions acknowledge and
agree that Operators' only payment obligation under this Article
I is the payment of the Admission Fee to the City as specified in
Section 1.1 hereof; and that so long as Operators satisfy such
Admission Fee payment obligation, the Education Fee shall be the
payment obligation of the City alone, and Operators shall have no
separate liability for same.
Section 1.3. Impact of Dockside; Other Events. Operators,
the City and the Educational Institutions acknowledge and agree
that, except as expressly provided herein, this Agreement
represents their exclusive agreement and arrangement concerning
admission or other similar fees, including those now codified
under the provisions of La.R.S. 27:93A(1) and 27:93A(6), or
payments in lieu thereof, for so long as such admission or other
similar fees (including those now codified under the provisions
of La.R.S. 27:93A(1) and 27:93A(6)) are authorized, and for so
long as the Casinos, or either of them, shall be located and
operated at a site in the City of Lake Charles. Therefore, this
Agreement shall not be subject to termination, and the
obligations of Operators under this Agreement (including without
limitation, the obligations of Operators to make payments
hereunder to the City or any other person or entity) shall not be
subject to increase, decrease or renegotiation in the event that
dockside gaming is authorized; nor in the event of any other
beneficial legislation or other development for Operators or the
City; nor in the event of the enactment of any additional
admission fees (or similar taxes, fees or payments in lieu
thereof) payable, directly or indirectly, to the City and/or the
Educational Institutions; nor in the event of any increase in the
authorized or permissible rate or amount of such admission fees
(or similar taxes, fees or payments in lieu thereof), whether or
not relating to any such development. This Agreement shall,
however, be subject to termination and renegotiation as
specifically provided in Article VII hereof.
Section 1.4. Separate Obligation. Operators' obligation
to pay the Admission Fee hereunder relates to the statutory
obligations of the Operators to the City and the Educational
Institutions, respectively, on a going forward basis from and
after the Effective Date, and is an obligation separate and
distinct from the Settlement Payments in settlement of the
Actions under Article III hereof.
Section 1.5. Nature of Agreement. Operators, the City and
the Educational Institutions agree that this Agreement represents
a contractual arrangement, binding upon all parties hereto,
applicable in lieu of the statutory authority to levy admission
fees given to the City and the Police Jury (and/or the
Educational Institutions), including without limitation those
provisions now codified in the Act at La.R.S. 27:93A(1) and
27:93A(6), respectively. Therefore, in consideration of the
Admission Fees paid by the Operators to the City hereunder, the
City and the Educational Institutions hereby waive, for so long
as this Agreement remains in effect, any existing or future right
that any of them may have to levy the fee currently authorized by
the Act in La.R.S. 27:93A(1) or 27:93A(6), or any future
substitute, increased or additional fee with respect thereto.
ARTICLE II
EXISTING DEVELOPMENT AGREEMENT
The Existing Development Agreement is and shall remain in
full force and effect, binding upon the parties thereto in
accordance with its terms, notwithstanding the execution,
delivery and performance of this Agreement.
ARTICLE III
EXISTING PAYMENT CLAIMS
Section 3.1. Settlement of Actions. The existing disputes
among the City, the Educational Institutions and the Operators,
including those evidenced by the Actions, involve claims and
counterclaims by the City, Educational Institutions and the
Operators regarding calculation and payment of Section 27:93A
Fees prior to the Effective Date (the "Payment Claims").
Section 3.2. Settlement Payments. Without admitting
liability for any Payment Claims, Operators hereby agree to pay
to the City, and the City hereby agrees to accept from Operators,
in full and final settlement of the Payment Claims, the sum of
Four Million Dollars ($4,000,000.00), together with interest
thereon at the rate of six percent (6%) per annum, in ten (10)
equal annual installments of combined principal and interest,
each in the amount of $543,475.00, such payments (the "Settlement
Payments"), totaling $5,434,750.00, commencing April 1, 1999 and
continuing on each April 1 thereafter until April 1, 2008.
Notwithstanding the foregoing, Operators shall have the right at
any time to prepay the principal obligation described herein,
without premium or penalty, provided that Operators shall also
pay all interest accrued hereunder at the rate aforesaid through
the date of such prepayment.
Section 3.3. Release. The City and the Educational
Institutions each hereby irrevocably and unconditionally RELEASE
and FOREVER DISCHARGE the Operators, their parent, subsidiary and
affiliated companies, and the present or former officers and
directors of any of them, as well as their respective heirs,
personal representatives, successors and assigns, from all
claims, counterclaims, demands, actions, causes of actions,
suits, debts, costs, dues, sums of money, accounts, covenants,
contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, expenses and liabilities
whatsoever, known or unknown, at law or in equity, relating in
any way to the Operators' obligations with respect to Section
27:93A Fees accrued prior to the Effective Date, the Actions or
the subject matter thereof.
Section 3.4. Dismissal of Actions. Immediately upon the
full execution of this Agreement, the City, Educational
Institutions, and Operators shall take all actions and execute
all documents necessary to provide for the dismissal with
prejudice of the Actions.
Section 3.5. Separate Obligation; Survival. Operators'
obligation to pay the Settlement Payments hereunder is a separate
obligation, supported by separate consideration (as described in
this Article III), and undertaken in full and final settlement of
the Actions. As such, Operators' obligation to pay the
Settlement Payments shall survive the termination of any or all
of Operators' other obligations hereunder.
Section 3.6. Educational Institutions Payment. The City,
the Police Jury and the Educational Institutions acknowledge and
agree that a portion of the Settlement Payments shall be paid to
the Educational Institutions by the City pursuant to a separate
agreement among them, and that such amounts shall constitute full
and final settlement of any Payment Claims of the Police Jury, or
any of the Educational Institutions. The Settlement Payments
shall not be increased based on any separate claim or demand of
the Police Jury, or any of the Educational Institutions. The
Operators shall have no liability for any separate or additional
payment obligations to the Police Jury, or any of the
Educational Institutions, based on the Payment Claims, and
Operators hereby admit no liability with respect to any such
Payment Claims. If, as a result of such additional or separate
Payment Claims of the Police Jury, or any of the Educational
Institutions, Operators (or either of them) suffer any liability
in addition to the amounts payable to the City for the
Educational Institutions under Section 1.2 hereof, then Operators
shall have the right to set-off the full amount of such
additional liability, against the amounts (and only up to the
amounts) otherwise payable to the City thereafter for the benefit
of the Educational Institutions under Section 1.2 hereof.
Section 3.7. No Admission. The payments made by Operators,
and the releases given by the Educational Institutions and City,
respectively, under this Article III, shall not be construed as
an admission of liability by Operators, or either of them, or by
City or the Educational Institutions, of any kind or nature
whatsoever as to any matter.
Section 3.8. Fees. Operators shall, in addition to making
the Settlement Payments under the provisions of Section 3.2
hereof, reimburse the City for the City's audit analysis fees
actually incurred in connection herewith, up to the aggregate
maximum amount of $55,000.00.
ARTICLE IV
OBLIGATIONS OF CITY AND EDUCATIONAL INSTITUTIONS
Section 4.1. Cooperation and Assistance. The City hereby
agrees to cooperate with and assist Operators to the fullest
possible extent and in an expeditious manner, without additional
payment obligation to the City, in the Operators' respective
efforts to develop, maintain and improve the Site and operate
their Casinos; provided, however, such cooperation and assistance
shall not interfere with or impair the City from setting or
making City policy. The foregoing shall include, without
limitation, an obligation on the part of the City to take no
action inconsistent with its prior actions with respect to a
dockside gaming initiative or similar legislative or
administrative action applicable to the Casinos. Furthermore,
the City shall assist Operators in the coordination of all
applicable federal, state, parish and local authorities to
resolve access, infrastructure and other issues arising during
the course of Operators' improvement of the Site and/or
maintenance or operation of the Casinos and related facilities.
Section 4.2. Repeal of Existing Ordinances. Promptly after
the execution and delivery of this Agreement, the City shall take
all necessary actions to repeal or otherwise terminate any
ordinances or other acts of the City inconsistent with the
provisions of this Agreement, including without limitation, City
Ordinance Nos. 9939, 10098 and the original 11236.
Section 4.3. Repeal of Policy Jury Resolution. The parties
agree that, in addition to the conditions specified in a certain
letter agreement among Operators, the City and Educational
Institutions dated March 24, 1998 (the "Letter Agreement"), this
Agreement shall not become effective unless and until the Police
Jury shall have taken, prior to May 1, 1998, all necessary
actions to repeal or otherwise terminate any resolutions or other
acts of the Police Jury inconsistent with the provisions of this
Agreement, including without limitation, the Police Jury
Resolution dated August 3, 1995 relating to the education fees
payable by the Operators. The City and the Educational
Institutions shall use their respective best efforts to secure
from the Parish such acknowledgements of, and consents to, this
Agreement, and such other actions (including, without limitation,
repeal of the aforesaid Resolutions), as Operators shall in their
sole discretion require, in order to ensure the enforcability
hereof.
Section 4.4. New Ordinance. The City hereby represents and
warrants that the execution and delivery of this Agreement, and
the performance by the City of its obligations hereunder, have
been duly authorized by a validly adopted City Ordinance that is
currently in full force and effect. Each of the Educational
Institutions hereby represents and warrants that the execution
and delivery of this Agreement, and the performance by them of
their respective obligations hereunder, have been duly authorized
by all necessary action.
ARTICLE V
GOVERNING LAW
This Agreement shall be governed by the laws of the State of
Louisiana. Any and all disputes or misunderstandings or
disagreements hereunder shall be resolved, and this Agreement may
be enforced, only in a District Court of the State of Louisiana,
or in U.S. Federal District Court for the State of Louisiana.
Each party hereto consents to such exclusive jurisdiction.
ARTICLE VI
BENEFIT - SUCCESSORS AND ASSIGNS
This Agreement and the rights and obligations contained
herein shall be binding upon, and inure to the benefit of, the
respective successors and assigns of the parties hereto. PLC and
SSP are separate taxable entities, and except with respect to the
Settlement Payments under Article III hereof, the liability of
Operators hereunder shall be individual and not joint and
several.
ARTICLE VII
CHANGES IN COMPETITION
Section 7.1. Operators, the Educational Institutions and
the City acknowledge and agree that the obligations of Operators
set forth in Article I hereof are based upon, and Operators, the
City and the Educational Institutions have acted in reliance
upon, the competitive and regulatory situation with respect to
casino gaming in Calcasieu Parish. In recognition that such
competitive and regulatory factors may change subsequent to the
date hereof, Operators, the Educational Institutions and the City
agree that the obligations of Operators set forth in Article I
hereof shall terminate on forty-five (45) days' written notice to
the City, and shall thereafter be subject to renegotiation by
Operators, the City and the Educational Institutions, in the
event of the occurrence of any of the following, provided that
at the time of Operators' written notice as aforesaid, the Net
Gaming Proceeds of the Casinos, after any such occurrence(s), is
below $120,000,000 on an annual basis:
(a) if a riverboat, barge, land-based or other casino
including without limitation, slot machines at
horse racetrack(s) (a "Competitive Casino") is
allowed within a one hundred (100) mile radius of
the City of Lake Charles, Louisiana, excepting
only the two (2) riverboats operated on Lake
Charles and the Calcasieu River by St. Charles
Gaming Company, Inc. and Grand Palais Riverboat,
Inc., and the land-based casino known as Grand
Casino Coushatta in Kinder, Louisiana; or
(b) if a Competitive Casino is allowed in the State of
Texas that has a material adverse impact on
Operators; or
(c) if a change in law or regulation is passed by the
State of Louisiana or any agency or political
subdivision thereof is passed, that directly or
indirectly prohibits or materially limits
Operators from lawfully operating the Casinos at
the Site.
Section 7.2. Operators, the Educational Institutions and
the City agree, in the event of the occurrence of any of the
matters set forth in Section 7.1 hereof, so long as both Casinos
are then operated from a site in Lake Charles, Louisiana, and
provided that the Net Gaming Proceeds of the Casinos, after any
such occurrence(s), is below $120,000,000 on an annual basis, to
renegotiate in good faith the financial obligations of Operators
(other than the Settlement Payments) set forth in Article I
hereof. In the event this Agreement terminates as contemplated
under this Article VII, each party hereto shall retain its rights
available under the Act and other applicable law.
Section 7.3. Effect of Article; Termination. If for any
reason one of the Casinos is no longer operated from a site in
Lake Charles, Louisiana, then from and after the date it ceases
to operate in Lake Charles, the provisions of this Article VII
shall no longer apply, but the remainder of this Agreement shall
remain in effect, binding in accordance with its terms.
ARTICLE VIII
APPROVALS
This Agreement is subject to approval of: (a) the Board of
Directors of Players International, Inc. (the parent company of
the Operators) on or before May 1, 1998; (b) the City Council of
the City on or before March 24, 1998; and (c) the governing
bodies of all the Educational Institutions; all as provided in
the Letter Agreement. This Agreement shall not be effective or
binding upon the Operators, the City or the Educational
Institutions, unless and until such approval is timely obtained
for all of the Operators, the City and the Educational
Institutions in accordance with such letter agreement. If any
such approvals are not timely obtained as aforesaid, this
Agreement shall be of no force or effect, as if it had never been
executed. In such event, each of the Operators, the City and the
Educational Institutions shall have and enjoy their respective
rights and remedies with respect to the subject matter hereof, as
if this Agreement had never been executed.
ARTICLE IX
MODIFICATION AND AMENDMENT
This Agreement shall not be amended or otherwise modified in
any manner except by an instrument in writing executed by all
parties hereto, and all parties joining in the execution hereof.
In addition, each of the City and the Educational Institutions
agrees that it shall not, from and after the date hereof, pass or
enact any ordinances, resolutions or other municipal or corporate
acts contrary to or inconsistent with the provisions hereof, and
that if any such ordinances or acts are so passed or enacted, the
proper officers of the City or the respective Educational
Institutions, as applicable, shall take all actions reasonably
necessary to repeal or otherwise terminate same.
ARTICLE X
UNDERSTANDINGS AND AGREEMENTS
This Agreement, taken together with the other documents
executed and delivered by the parties in connection herewith,
contains the entire agreement among the Operators, the City and
the Educational Institutions with respect to the matters
contained herein and supersedes all prior agreements.
ARTICLE XI
NOTICES
All notices, demands and requests which may be given or
which are required to be given by any party to the others, shall
be in writing and shall be deemed effective when either: (a)
personally delivered to the intended recipient; (b) sent by
certified or registered mail, return receipt requested, addressed
to the intended recipient at the address specified below; (c)
delivered in person to the address set forth below for the party
to which the notice was given; (c) deposited into the custody of
a nationally recognized overnight delivery service such as FedEx,
Airborne, Emery or Purolator, addressed to such party at the
address specified below; or (e) sent by facsimile, telegram or
telex, provided that receipt for such facsimile, telegram or
telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above.
Notices shall be effective on the date of delivery or receipt or,
if delivery is not accepted, on the earlier of the date that
deliver is refused or three (3) days after the date the notice is
mailed. For purposes of this Section, the addresses of the
parties for all notices are as follows (unless changes by similar
notice in writing are given by the particular person whose
address is to be changed):
If to the City, to the City of Lake
Charles, Louisiana, 326 Pujo Street, Lake
Charles, Louisiana 70601, Attention: Hon.
Willie L. Mount, Mayor (Fax: (318) 491-
1206);
With a copy to: John DeRosier, Esquire,
125 West School Street, Lake Charles,
Louisiana 70605 (Fax: (318) 478-6624);
If to Operators, or either of them, to
Players Lake Charles, LLC and/or Showboat
Star Partnership, c/o Players International,
Inc., 1300 Atlantic Avenue, Suite 800,
Atlantic City, New Jersey 08401, Attention:
Howard Goldberg, President (Fax: (609) 449-
7765);
With a copy to: Patrick Madamba, Jr.,
Vice President and General Counsel, Players
International, Inc. 1300 Atlantic Avenue,
Suite 800, Atlantic City, New Jersey 08401
(Fax: (609) 449-7765);
And a copy to: Cathy Walker, Vice
President and General Manager, Players Lake
Charles Riverboat, Inc. (if to PLC) and/or
Players Riverboat Management, Inc. (if to
SSP), 507 N. Lakeshore Drive, Lake Charles,
Louisiana 70601 (Fax: (318) 437-1586);
Any party hereto may designate a different address by notice
given to the other party. Counsel for any party may give
notice on behalf of its client.
ARTICLE XII
SEVERABILITY
If any provision of this Agreement is held to be invalid,
illegal or unenforceable, that shall not affect or impair, in any
way, the validity, legality or enforceability of the remainder of
this Agreement.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Construction. Whenever the context hereof so
requires, reference to the singular shall include the plural and
the plural shall include the singular; words denoting gender
shall be construed to mean the masculine, feminine or neuter, as
appropriate; and specific enumeration shall not exclude the
general, but shall be construed as cumulative of the general
recitation.
Section 13.2. Counterparts. To facilitate execution, this
Agreement may be executed in as many counterparts as may be
convenient or required. It shall not be necessary that the
signature and acknowledgment of, or on behalf of, each party, or
that the signature and acknowledgment of all persons required to
bind any party, appear on each counterpart. All counterparts
shall collectively constitute a single instrument. It shall not
be necessary in making proof of this Agreement to produce or
account for more than a single counterpart containing the
respective signatures and acknowledgments of each of the parties
hereto.
Section 13.3. Captions. The captions, headings and
arrangements used in this Agreement are for convenience only and
do not in any way affect, limit, amplify or modify the terms and
provisions hereof.
Section 13.4. Rule of Construction. Operators, the City
and the Educational Institutions acknowledge that each of them,
and their respective counsel, have reviewed and have had input in
the drafting of this Agreement, and such parties hereby agree
that normal rules 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 Agreement or any
amendments or exhibits hereto.
Section 13.5. No Third Party Beneficiaries. No person or
entity not a party to (or joining in the execution of) this
Agreement shall have any third party beneficiary claim or other
right hereunder or with respect thereto.
Section 13.6. Late Fees. Operators hereby agree that if
any payment required to be made hereunder shall remain unpaid for
ten (10) days after the date on which the same shall become due
and payable, Operators shall pay to the City, in addition to the
delinquent payment, a late fee in an amount equal to five percent
(5%) of such delinquent payment. Notwithstanding the foregoing,
the City and the Educational Institutions acknowledge and agree
that certain audits of the Net Gaming Proceeds of the Operators
will be made by the Operators' auditors, as well as auditors for
the Division. Additional amounts disclosed by, and required to
be paid solely as a result of, such audit(s) shall not be subject
to the aforesaid late fee; unless Operators' failure to pay such
amounts is willful, in which case the amounts unpaid shall bear
interest in favor of the City at the rate of fifteen percent
(15%) per annum, computed from the date the payment was
originally due.
{Signatures on Following Pages}
PLC
THUS DONE AND SIGNED in the presence
of the undersigned competent witnesses, on this ________ day of
, 1998.
WITNESSES PLAYERS LAKE CHARLES, LLC
By: PLAYERS LAKE CHARLES RIVERBOAT,
INC.,
Managing Member
By:
Name:
Title:
NOTARY PUBLIC
SSP
THUS DONE AND SIGNED in the presence
of the undersigned competent witnesses, on this ________ day of
, 1998.
WITNESSES SHOWBOAT STAR PARTNERSHIP
By: PLAYERS RIVERBOAT MANAGEMENT,
INC.,
Managing Partner
By:
Name:
Title:
NOTARY PUBLIC
CITY
THUS DONE AND SIGNED in Lake Charles, Louisiana, in the
presence of the undersigned competent witnesses, on this ______
day of ____________, 1998.
WITNESSES: CITY OF LAKE CHARLES,
LOUISIANA
By:
Willie Mount, Mayor
NOTARY PUBLIC
JOINDER
The undersigned hereby join in the execution of this
Settlement and Admission Fee Agreement for the purpose of
evidencing their consent to, and agreement to be bound by, the
provisions hereof.
THUS DONE AND SIGNED in Lake Charles, Louisiana, in the
presence of the undersigned competent witnesses, on this ______
day of __________, 1998.
WITNESSES: CALCASIEU PARISH SCHOOL BOARD
By:
____________________,
President
NOTARY PUBLIC
JOINDER (cont'd.)
THUS DONE AND SIGNED in the presence
of the undersigned competent witnesses, on this ________ day of
, 1998.
WITNESSES McNEESE STATE UNIVERSITY
By:
Name:
Title:
NOTARY PUBLIC
THUS DONE AND SIGNED in the presence
of the undersigned competent witnesses, on this ________ day of
, 1998.
WITNESSES SOWELA TECHNICAL INSTITUTE (a/k/a
Louisiana Technical College)
By:
Name:
Title:
NOTARY PUBLIC
PLAYERS LAKE CHARLES, LLC
SHOWBOAT STAR PARTNERSHIP
507 No. Lakeshore Drive
Lake Charles, LA 70601
March 24, 1998
CITY OF LAKE CHARLES, LOUISIANA
326 Pujo Street
Lake Charles, LA 70601
ATTN: Hon. Willie L. Mount, Mayor
Re: Development & Admission Fee
Agreement
among Players Lake Charles, LLC,
Showboat Star Partnership, and the City
of Lake Charles, Louisiana
Dear Mayor Mount:
Please have this letter confirm certain aspects of our
agreements concerning the authorization, execution and delivery
of the captioned agreement (the "Admission Fee Agreement"), and
regarding certain aspects of the Admission Fee Agreement.
Capitalized terms not specifically defined herein are used as
defined in the Admission Fee Agreement, unless the context
clearly requires otherwise. This letter shall constitute a part
of the Admission Fee Agreement, and shall not be merged into or
superseded by the Admission Fee Agreement.
Specifically, we have agreed as follows:
1. Education Fee Challenge. Effective when and if the
Admission Fee Agreement becomes effective, Operators agree that
they will not undertake, nor cause any other person or entity to
undertake on their behalf, any judicial challenge to the
statutory authority for the Education Fee. The City and
Educational Institutions acknowledge and agree that,
notwithstanding the foregoing, Operators shall retain (and
Operators hereby reserve and do not waive) the benefit of any
such judicial determination, or any rights with respect thereto.
2. Conditions to Effectiveness of Admission Fee Agreement.
(a) The Operators, the City and each of the Educational
Institutions acknowledge and agree that the Admission Fee
Agreement shall not be effective for any purpose, nor binding on
any party thereto (or joining in the execution thereof), unless
and until the following conditions have been satisfied:
(i) Prior to the April 23, 1998 (the "Date"), the form
of Admission Fee Agreement presented to the City immediately
prior to the meeting of the Lake Charles City Council on March
24, 1998 is revised to remove the Calcasieu Parish Police Jury as
a signatory thereto (with appropriate corresponding changes to
the text thereof);
(ii) Prior to the Date, Operators and the Calcasieu
Parish Police Jury shall have entered into arrangements, or the
Calcasieu Parish Police Jury shall have taken actions, in either
case satisfactory to Operators, as necessary in the sole
determination of Operators to confirm and safeguard the benefits
to Operators of the agreements among the City, the Operators and
the Educational Institutions under the current form of the
Admission Fee Agreement;
(iii) Each of them has, prior to the Date: (A) obtained
all necessary authorization(s) and approval(s) for the execution,
delivery and performance of the Admission Fee Agreement from its
Board of Directors, City Council or other governing body; and (2)
actually executed and delivered the Admission Fee Agreement, as
revised as contemplated under clause (i) hereof.
(b) The Operators shall, prior to the Date, provide to the
City a Certificate of Secretary regarding the approval, if any,
of the Admission Fee Agreement by the Board of Directors of
Players International, Inc. The City shall, prior to the Date,
provide to the Operators a copy of the Ordinance or other
approval of the Admission Fee Agreement by the Lake Charles City
Council. Execution and delivery of the Admission Fee Agreement
by each Educational Institution shall constitute a representation
and warranty by it, on which each other signatory may rely, that
such Educational Institution has obtained all necessary approvals
for its valid execution, delivery and performance of the
Admission Fee Agreement. On the satisfaction of the condition
set forth in clause (a)(ii) hereof prior to the Date, the
Operators shall provide written notice of such satisfaction to
the City.
3. Interim Payments.
(a) Notwithstanding that the Admission Fee Agreement shall
not be effective unless and until the conditions set forth in
Section 2 hereof have been satisfied, Operators hereby agree to
make the payments of the Admission Fee (as described in Section
1.1 of the Admission Fee Agreement) from the Effective Date
(which is March 1, 1998) until the earlier of: (i) the
satisfaction of all conditions set forth in Section 2 hereof; or
(ii) the Date, if all such conditions have not by then been
satisfied (the "Interim Payments").
(b) If all the conditions set forth in Section 2 hereof
have been satisfied prior to the Date, then Operators' obligation
to make payments hereunder shall automatically terminate under
this letter, but shall continue under the Admission Fee Agreement
as if it had been fully executed and delivered, and fully
effective, on and as of March 24, 1998.
(c) If all the conditions set forth in Section 2 hereof
have not been satisfied prior to the Date, then Operators'
obligation to make payments hereunder shall automatically
terminate and be of no further force or effect as of the Date, ;
and thereupon, the Admission Fee Agreement will be and become
void and of no force or effect, as if it had never been executed.
(d) If the Admission Fee Agreement becomes void as provided
in subsection (c) above, then each of the Operators, the City and
the Educational Institutions shall have all rights and remedies
with respect to the Actions, the Section 27:93A Fees and the
other issues discussed in the Admission Fee Agreement, at law or
in equity, as they may have had prior to the negotiation and
drafting thereof. In addition, if the Admission Fee Agreement
becomes void as provided in subsection (c), above, the Interim
Payments already made by Operators shall be applied against any
Section 27:93A Fees accrued between the date of this letter and
the date the Admission Fee Agreement becomes void as aforesaid.
The Operators, the City and the Educational Institutions
acknowledge and agree that both the Admission Fee Agreement and
this letter have been prepared, distributed and negotiated in an
attempt to settle existing disputes and existing litigation.
Therefore, if the Admission Fee Agreement becomes void as
provided in subsection (c), above, neither the Admission Fee
Agreement nor this letter shall be admissible as evidence in the
Actions.
(e) By executing this letter and making the Interim
Payments, Operators do not admit any liability of any kind, and
do not waive or release (and shall not be deemed or construed to
have waived or released) any rights or remedies available to
Operators, at law or in equity, with respect to the Actions, the
Section 27:93A Fees and the other issues discussed in the
Admission Fee Agreement, at law or in equity, as they may have
had prior to the negotiation and drafting thereof.
(f) Notwithstanding Section 3.4 of the Admission Fee
Agreement, the Actions shall not be dismissed unless and until
the Admission Fee Agreement becomes effective hereunder.
4. Counterpart Execution. To facilitate execution, this
letter agreement may be executed in as many counterparts as may
be convenient or required. It shall not be necessary that the
signature and acknowledgment of, or on behalf of, each party, or
that the signature and acknowledgment of all persons required to
bind any party, appear on each counterpart. All counterparts
shall collectively constitute a single instrument. It shall not
be necessary in making proof of this Agreement to produce or
account for more than a single counterpart containing the
respective signatures and acknowledgments of each of the parties
hereto.
If this letter accurately reflects our agreement concerning the
Admission Fee Agreement and the subject matter thereof, kindly
countersign it where indicated below and return the fully
executed letter to the undersigned. Upon complete execution,
this letter will be effective as of the date hereof, as set forth
above.
PLAYERS LAKE CHARLES, LLC
_____________________________
SHOWBOAT STAR PARTNERSHIP
_____________________________
AGREED TO AND ACCEPTED:
CITY OF LAKE CHARLES, LOUISIANA
_________________________________
McNEESE STATE UNIVERSITY
_________________________________
SOWELA TECHNICAL INSTITUTE
________________________________
CALCASIEU PARISH SCHOOL BOARD
_________________________________
AC 160594
04/03/98
21
PLAYERS INTERNATIONAL, INC.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is
dated as of March 11, 1998 and entered into by and among PLAYERS
INTERNATIONAL, INC., a Nevada corporation, as the borrower
("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a "Lender"
and collectively as "Lenders"), WELLS FARGO BANK, NATIONAL
ASSOCIATION, ("WFB," and, in its capacity as administrative agent
for Lenders, "Administrative Agent" and, in its capacity as
managing agent for Lenders, "Managing Agent"), as a Lender, the
Administrative Agent, the Managing Agent and the Arranger.
PRELIMINARY STATEMENTS
A. Company, Lenders, Administrative Agent, Managing
Agent and certain other financial institutions have heretofore
entered into that certain Credit Agreement dated as of August 25,
1995, as amended by that certain First Amendment to Credit
Agreement dated as of August 7, 1996 (as so amended, the
"Original Credit Agreement").
B. The Original Credit Agreement was amended and
restated by that certain Amended and Restated Credit Agreement
dated as of December 16, 1996 (said Amended and Restated Credit
Agreement, as amended by the First Amendment thereto dated as of
February 14, 1997 and the Second Amendment thereto dated as of
March 15, 1997, being the "Existing Credit Agreement").
C. Company, Lenders, Administrative Agent, Managing
Agent and Arranger desire to amend and restate the Existing
Credit Agreement in its entirety in order to provide, among other
things, that (i) the Commitments under the Existing Credit
Agreement, in the aggregate amount of $50,000,000, shall be
increased to $80,000,000; (ii) the Company shall have the right
to request that the Revolving Loans bear interest with respect to
either the Base Rate or the Adjusted Eurodollar Rate; (iii) the
Commitment Termination Date shall be extended to March 31, 2003;
(iv) the interest rates and commitment fees shall be revised as
set forth herein; (v) the covenants shall be revised as set forth
herein; and (vi) the other terms and provisions of the Existing
Credit Agreement shall otherwise be modified as set forth herein.
D. On the Effective Date, concurrently with the first
borrowing of Revolving Loans hereunder, the Company will repay
Existing Revolving Loans outstanding on the Effective Date in an
amount such that (i) all Existing Revolving Loans owed to each
Noncontinuing Lender shall be repaid in full and (ii) the
Revolving Loans owed to each Lender shall be in proportion to
each such Lender's Pro Rata Share. Immediately following such
repayment, each Noncontinuing Lender shall cease to be a Lender
hereunder.
E. Company agrees that its existing pledge and grant
of a security interest in substantially all of its present and
future real and personal property will continue as security for
the payment and performance of the Obligations of Company.
F. Company agrees that its existing pledge of all of
its capital stock in each of its Subsidiaries, whether now
existing or hereafter created or acquired, will continue as
security for the payment and performance of the Obligations of
Company.
G. Company agrees to cause each of its Subsidiaries
to confirm and agree that (i) its existing guaranty of the
obligations of Company under the Existing Credit Agreement will
continue as a guaranty of the Obligations hereunder and (ii) its
existing grant of a security interest in substantially all of its
assets to secure such guaranty will continue as security for the
payment and performance of such guaranty.
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained,
Company, Lenders, Administrative Agent, Managing Agent and
Arranger agree that the Existing Credit Agreement shall be
amended and restated, without novation, as follows:
SECTION 1.
DEFINITIONS
1.1 Certain Defined Terms.
The following terms used in this Agreement shall have
the following meanings:
"Acknowledgement and Confirmation" means an Acknowl
edgement and Confirmation Agreement dated as of the Effective
Date, substantially in the form of Exhibit X hereto, pursuant to
which each Guarantor shall acknowledge and confirm that its
obligations under the Guaranties and the Collateral Documents to
which it is a party shall continue to guaranty or secure, as the
case may be, the Obligations of Company hereunder, as such
Acknowledgement and Confirmation Agreement may hereafter be
amended, supplemented or otherwise modified from time to time.
"Adjusted Eurodollar Rate" means, for any Interest
Period, the arithmetic average of the rate of interest at which
deposits (approximately equal to the amount of the requested Loan
and for the same term as the requested Interest Period) are
offered to WFB in the London interbank eurodollar market for
delivery on the first day of the Interest Period, as adjusted for
reserve requirements and rounded upwards, if necessary, to the
next higher 1/16%.
"Administrative Agent" means WFB.
"Affected Lender" has the meaning assigned to that term
in subsection 2.6C.
"Affiliate", as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For the purposes of this
definition, "control" (including, with correlative meanings, the
terms "controlling", "controlled by" and "under common control
with"), as applied to any Person, means (i) the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or
otherwise or (ii) the beneficial ownership of 10% or more of any
class of voting capital stock of a Person (on a fully diluted
basis) or of warrants or other rights to acquire such class of
capital stock (whether or not presently exercisable).
"Agreement" means this Second Amended and Restated
Credit Agreement dated as of March 11, 1998, as it may be
amended, supplemented or otherwise modified from time to time.
"Allocated Costs of Internal Counsel" means, as of any
date of determination, the internal costs imputed to in-house
counsel employed by Administrative Agent for the review,
negotiation, preparation, execution and administration of the
Loan Documents, as based on the time records submitted to Company
within 90 days of the services performed by such counsel at an
hourly rate not to exceed the then prevailing market rate in Los
Angeles, California for an attorney with a minimum of ten years
experience in financing transactions.
"Amendments to Missouri Pledge and Security Agreements"
means (i) that certain Amendment to Company Pledge Agreement by
and between Company, and Administrative Agent, as Secured Party,
(ii) that certain Amendment to Players Holding Pledge Agreement
between PHI and Administrative Agent, as Secured Party, (iii)
that certain Amendment to Subsidiary Security Agreement
(Missouri) by and among PMHN, PMH, PMHLP, and Administrative
Agent, as Secured Party, (iv) that certain Amendment to Partner
ship Interest Security Agreement by and between PMH and
Administrative Agent, as Secured Party, (v) that certain Amend
ment to Partnership Interest Security Agreement by and between
PMHN and Administrative Agent, as Secured Party, and (vi) that
certain Amendment to Joint Venture Interest Security Agreement by
and between PMHLP and Administrative Agent, as Secured Party,
each dated as of the date hereof, substantially in the forms of
Exhibit XI-A, XI-B, XI-C, XI-D, XI-E, and XI-F hereto,
respectively, as each such amendment may hereafter be amended,
supplemented or otherwise modified from time to time.
"Applicable Base Rate Margin" means, as of any date of
determination, (i) a percentage per annum as shown below deter
mined by the Leverage Ratio on the date of the most recent
Pricing Determination Certificate delivered by Company pursuant
to Subsection 4.1T or Subsection 6.1(xvii) and the average daily
Total Utilization of Commitments for the 30 day period ending on
the date of such Pricing Determination Certificate; provided that
the Applicable Base Rate Margin shall not be adjusted upon
receipt of a Pricing Determination Certificate until the first
Business Day of the first calendar month following the date on
which such Pricing Determination Certificate is due or (ii) if
Company has failed to provide such certificate within the time
period set forth for such delivery in Subsection 6.1(xvii), the
Applicable Base Rate Margin shall be 1.00% on and after the first
Business Day following the date on which delivery of such Pricing
Determination Certificate was due until the first Business Day of
the month following the date that such past due certificate is
actually received by Administrative Agent; provided further that
on the first Business Day of the month following receipt of a
past due certificate by Administrative Agent, the Applicable Base
Rate Margin shall be determined as set forth in clause (i) above:
Leverage Ratio Applicable Base Rate Margin
less than or equal to 2.50 0.00%
greater than 2.50 0.75%
but less than or
equal to 3.00
greater than 3.00 1.00%
If on any date of determination, the average daily Total
Utilization of Commitments for the 30 day period ended on the
date of the most recent Pricing Determination Certificate
delivered by Company pursuant to Subsection 4.1T or Subsection
6.1(xvii) date is less than $30,000,000, then, subject to clauses
(i) and (ii) above, the Applicable Base Rate Margins listed above
shall be reduced by 15 basis points (0.15%) for such date of
determination; provided, however, such Applicable Base Rate
Margins shall never be less than zero.
"Applicable Commitment Fee Percentage" means, as of any
date of determination, (i) a percentage per annum as shown below
determined by the Leverage Ratio on the date of the most recent
Pricing Determination Certificate delivered by Company pursuant
to Subsection 4.1T or Subsection 6.1(xvii) and the average daily
Total Utilization of Commitments for the 30 day period ending on
the date of such Pricing Determination Certificate; provided that
the Applicable Commitment Fee Percentage shall not be adjusted
upon receipt of a Pricing Determination Certificate until the
first Business Day of the first calendar month following the date
on which such Pricing Determination Certificate is due or (ii) if
Company has failed to provide such certificate within the time
period set forth for such delivery in Subsection 6.1(xvii), the
Applicable Commitment Fee Percentage shall be 0.50% on and after
the first Business Day following the date on which delivery of
such Pricing Determination Certificate was due until the first
Business Day of the month following the date that such past due
certificate is actually received by Administrative Agent;
provided further that on the first Business Day of the month
following receipt of a past due certificate by Administrative
Agent, the Applicable Commitment Fee Percentage shall be deter
mined as set forth in clause (i) above:
Leverage Ratio Applicable Commitment Fee % _
less than or equal to 1.50 0.30%
greater than 1.50 0.40%
but less than or equal to 2.00
greater than 2.00 0.50%
If on any date of determination, the average daily Total
Utilization of Commitments for the 30 day period ended on the
date of the most recent Pricing Determination Certificate
delivered by Company pursuant to Subsection 4.1T or Subsection
6.1(xvii) date is less than $30,000,000, then, subject to clauses
(i) and (ii) above, the Applicable Commitment Fee Percentages
listed above shall be reduced by 10 basis points (0.10%) for such
date of determination.
"Applicable Eurodollar Margin" means, as of any date of
determination, (i) a percentage per annum as shown below deter
mined by the Leverage Ratio on the date of the most recent
Pricing Determination Certificate delivered by Company pursuant
to Subsection 4.1T or Subsection 6.1(xvii) and the average daily
Total Utilization of Commitments for the 30 day period ending on
the date of such Pricing Determination Certificate; provided that
the Applicable Eurodollar Margin shall not be adjusted upon
receipt of a Pricing Determination Certificate until the first
Business Day of the first calendar month following the date on
which such Pricing Determination Certificate is due or (ii) if
Company has failed to provide such certificate within the period
set forth for such delivery in Subsection 6.1(xvii), the
Applicable Eurodollar Margin shall be 2.50% on and after the
first Business Day following the date on which delivery of such
Pricing Determination Certificate was due until the first
Business Day of the month following the date that such past due
certificate is actually received by Administrative Agent;
provided further that on the first Business Day of the month
following receipt of a past due certificate by Administrative
Agent, the Applicable Eurodollar Margin shall be determined as
set forth in clause (i) above:
Leverage Ratio Applicable Eurodollar Margin
less than or equal to 1.50 1.00%
greater than 1.50 1.50%
but less than or equal to 2.00
greater than 2.00 2.00%
but less than or equal to 2.50
greater than 2.50 2.25%
but less than or equal to 3.00
greater than 3.00 2.50%
If on any date of determination, the average daily Total
Utilization of Commitments for the 30 day period ended on the
date of the most recent Pricing Determination Certificate
delivered by Company pursuant to Subsection 4.1T or Subsection
6.1(xvii) date is less than $30,000,000, then, subject to clauses
(i) and (ii) above, the Applicable Eurodollar Margins listed
above shall be reduced by 15 basis points (0.15%) for such date
of determination.
"Arranger" means WFB.
"Assessment" means the obligation of any Person that
owns an equity interest in any legal entity to pay or contribute
additional capital to such entity, whether such obligation arises
on a scheduled basis or upon the occurrence of one or more
contingent events.
"Asset Sale" means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of its
wholly-owned Subsidiaries of (i) any of the stock of any of
Company's Subsidiaries, (ii) 50% or more of the assets of Company
or any of its Subsidiaries, or (iii) any other assets used or
useful in the operations of Company or its Subsidiaries (whether
tangible or intangible) outside of the ordinary course of
business.
"Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy", as now and hereafter in effect, or
any successor statute.
"Barges" means all barges located at or used in
connection with the Illinois Facilities or the Louisiana
Facilities, whether owned on the date hereof or subsequently
acquired, including, without limitation, all barges that are
documented, registered or certified pursuant to the laws of the
State of Illinois or the State of Louisiana.
"Base Rate" means, at any time, the higher of (x) the
Prime Rate or (y) the rate which is 1/2 of 1% in excess of the
Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in
subsection 2.2A.
"Best Knowledge" means, as applied to any individual,
actual knowledge by such individual of any fact and means, as
applied to Company, (i) actual knowledge by any Responsible
Officer of any fact or (ii) imputed knowledge of any fact which
should, upon the reasonable exercise of diligence (appropriate
for the circumstances in question) by any such Responsible
Officer in his or her employment position, have been known.
"Business Day" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State
of California, Nevada or New Jersey or is a day on which banking
institutions located in any such state are authorized or required
by law or other governmental action to close, and (ii) with
respect to all notices, determinations, fundings and payments in
connection with the Adjusted Eurodollar Rate or any Eurodollar
Rate Loans, any day that is a Business Day described in
clause (i) above and that is also a day for trading by and
between banks in Dollar deposits in the London interbank market.
"Capital Lease," as applied to any Person, means any
lease of any property (whether real, personal or mixed) by that
Person as lessee that, in conformity with GAAP, is accounted for
as a capital lease on the balance sheet of that Person.
"Cash" means money, currency or a credit balance in a
Deposit Account.
"Cash Equivalents" means, as at any date of determina
tion, (i) marketable securities (a) issued or directly and
unconditionally guaranteed as to interest and principal by the
United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing
within one year after such date; (ii) marketable direct obliga
tions issued by any state of the United States of America or any
political subdivision of any such state or any public instrumen
tality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the
highest rating obtainable from either Standard & Poor's Ratings
Group ("S&P") or Moody's Investors Service, Inc. ("Moody's");
(iii) commercial paper maturing no more than one year from the
date of creation thereof and having, at the time of the acquisi
tion thereof, a rating of at least A-1 from S&P or at least P-1
from Moody's; (iv) certificates of deposit or bankers' accep
tances maturing within one year after such date and issued or
accepted by any Lender or by any commercial bank organized under
the laws of the United States of America or any state thereof or
the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary
Federal banking regulator), (b) has Tier 1 capital (as defined in
such regulations) of not less than $100,000,000 and (c) has a
long-term rating of not less than "A-" from S&P or "A3" from
Moody's; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types
of investments referred to in clauses (i) and (ii) above, (b) has
net assets of not less than $500,000,000, and (c) has the highest
rating obtainable from either S&P or Moody's.
"Cash Proceeds" means Cash payments (including any Cash
received by way of deferred payment pursuant to, or monetization
of, a note receivable or otherwise, but only as and when so
received) and Cash Equivalents received by Company or any of its
Subsidiaries from any Asset Sale or upon the occurrence of an
Event of Loss.
"Change of Control" means (i) any Person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act)
shall have acquired "beneficial ownership" (within the meaning of
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Company representing 20% or more of the combined
voting power of all securities of Company entitled to vote in the
election of directors; or (ii) during any period of up to 12
consecutive months, commencing before or after the date of this
Agreement, individuals who at the beginning of such 12-month
period were directors of Company shall cease for any reason to
constitute a majority of the Board of Directors of Company; or
(iii) any Person or "group" shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement
that upon consummation shall result in its or their acquisition
of or control over, securities of Company representing 20% or
more of the combined voting power of all securities of Company
entitled to vote in the election of directors; provided that a
Change of Control shall not be deemed to occur under clauses (i)
or (iii) above if the Person referred to in either such clause is
an Excluded Person, or the "group" referred to in either such
clause consists exclusively of two or more Excluded Persons,
unless (x) the transaction or series of transactions that creates
the Change of Control is subject to Rule 13e-3 under the Exchange
Act or any similar or successor rule and (y) immediately prior to
and during the 180-day period following either (1) such transac
tion or series of transactions referred to in clause (x), or (2)
the time that any such Excluded Person or "group" consisting
exclusively of two or more Excluded Persons shall have acquired
"beneficial ownership", directly or indirectly, of 20% or more of
such total voting power, as referred to in clause (iii), the
Senior Notes are or become rated, in the case of clause (1) or
(2), "B+" or below by S&P and "B1" or below by Moody's or, if
either such rating agency or both such rating agencies shall no
longer make a rating of the Senior Notes publicly available, the
comparable ratings of another nationally recognized securities
rating agency or agencies, as the case may be, selected by
Company, which shall be substituted for S&P or Moody's or both,
as the case may be; provided further that the 180-day period
referred to in clause (y) shall be extended for so long as the
rating of the Senior Notes is under publicly announced considera
tion for possible downgrade by any such rating agency.
"Collateral" means all the real, personal and mixed
property made subject to a Lien pursuant to the Collateral
Documents.
"Collateral Account" has the meaning assigned to that
term in the Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral
Account Agreement dated as of August 25, 1995, executed and
delivered pursuant to the Original Credit Agreement, pursuant to
which Company may pledge cash to Administrative Agent to secure
the obligations of Company to reimburse Administrative Agent for
payments made under one or more Letters of Credit as provided in
Section 8, as such Collateral Account Agreement has been amended
to the date hereof and as it may hereafter be amended, supple
mented or otherwise modified from time to time.
"Collateral Assignment Agreement" means that certain
Collateral Assignment Agreement between PMGC and Administrative
Agent dated as of August 25, 1995, executed and delivered pursu
ant to the Original Credit Agreement, as it has been amended to
the date hereof and as it may hereafter be amended, supplemented
or otherwise modified, from time to time.
"Collateral Documents" means the Existing Collateral
Documents, any amendments, supplements or modifications to the
Existing Collateral Documents, and all other instruments or
documents now or hereafter granting Liens on property of Company
or any of its Subsidiaries to Administrative Agent for benefit of
Lenders.
"Commitments" means the commitments of Lenders to make
Loans as set forth in subsection 2.1A, and the "Commitments" of
any Lender means the commitments of such Lender to make Loans as
set forth in subsection 2.1A.
"Commitment Termination Date" means March 31, 2003.
"Company" means Players International, Inc., a Nevada
corporation.
"Company Pledge Agreements" means those certain Pledge
Agreements between Company and Administrative Agent dated
August 25, 1995 executed and delivered pursuant to the Original
Credit Agreement, as each such agreement has been amended to the
date hereof and as each such agreement may hereafter be amended,
supplemented or otherwise modified, from time to time.
"Company Security Agreement" means that certain
Security Agreement between Company and Administrative Agent dated
August 25, 1995, executed and delivered pursuant to the Original
Credit Agreement, as it has been amended to the date hereof and
as it may hereafter be amended, supplemented or otherwise modi
fied, from time to time.
"Compliance Certificate" means a certificate substan
tially in the form of Exhibit IX annexed hereto delivered to
Administrative Agent and Lenders by Company pursuant to subsec
tion 6.1(iv).
"Consolidated Capital Expenditures" means, for any
period, the sum of the aggregate of all expenditures (whether
paid in cash or other consideration or accrued as a liability and
including that portion of Capital Leases that is capitalized on
the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property,
plant and equipment" or comparable items reflected in the consoli
dated statement of cash flows of Company and its Subsidiaries.
"Consolidated EBITDA" means, for any period Consoli
dated Net Income for such period plus, to the extent such items
were subtracted in the determination of Consolidated Net Income,
the sum of the amounts for such period of (i) Consolidated
Interest Expense, (ii) provisions for taxes based on income,
(iii) total depreciation expense, (iv) total amortization
expense, and (v) other non-cash items reducing Consolidated Net
Income less other non-cash and/or extraordinary, non-recurring
items increasing Consolidated Net Income plus other extraordinary
and non-recurring items decreasing Consolidated Net Income, all
of the foregoing as determined on a consolidated basis for
Company and its Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charges" means, for any period, the
sum (without duplication) of the amounts for such period of
(i) Consolidated Interest Expense, (ii) scheduled payments of
principal on the long-term portion of Consolidated Total Debt,
(iii) the principal component of payments on Capital Leases and
(iv) all Assessments payable by Company or any of its Subsid
iaries during such period.
"Consolidated Interest Expense" means, for any period,
total interest expense (including that portion attributable to
Capital Leases in accordance with GAAP and capitalized interest)
of Company and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of Company and its
Subsidiaries, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under
Interest Rate Agreements, but excluding, however, any amounts
referred to in subsection 2.3 payable to Administrative Agent and
Lenders on or before the Effective Date.
"Consolidated Net Income" means, for any period, the
net income (or loss) of Company and its Subsidiaries on a
consolidated basis for such period taken as a single accounting
period determined in conformity with GAAP; provided that there
shall be excluded (i) the income (or loss) of any Person (other
than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest,
except to the extent of the amount of dividends or other distri
butions actually paid to Company or any of its Subsidiaries by
such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of
Company or is merged into or consolidated with Company or any of
its Subsidiaries or that Person's assets are acquired by Company
or any of its Subsidiaries, (iii) the income of any Subsidiary of
Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that
income is not at the time permitted by operation of the terms of
its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to
that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan,
and (v) (to the extent not included in clauses (i) through (iv)
above) any net extraordinary gains or net non-cash extraordinary
losses.
"Consolidated Tangible Net Worth" means, as at any date
of determination, the sum of the par value of Company's capital
stock and additional paid-in capital plus retained earnings (or
minus accumulated deficits) less all intangible assets (including
goodwill and excess purchase price over historical basis entries)
of Company and its Subsidiaries on a consolidated basis deter
mined in conformity with GAAP plus, to the extent the Company's
net worth has been reduced thereby, the amount of any non-cash
impairment loss recognized in accordance with FASB 121 in the net
book value of or loss on the disposition of the Company's and its
Subsidiaries' interest in the Maryland Heights Facilities and in
any other assets used in the operation of the Maryland Heights
Facilities.
"Consolidated Total Assets" means as at any date of
determination, the total assets of Company and its Subsidiaries
which would be shown as assets on a consolidated balance sheet of
Company and its Subsidiaries as of such date prepared in accor
dance with GAAP, after eliminating all amounts properly attribut
able to minority interests, if any, in the stock and surplus of
Subsidiaries.
"Consolidated Total Debt" means, as at any date of
determination, the aggregate stated balance sheet amount of all
Indebtedness of Company and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"Consolidating" means, as used to describe financial
statements referred to in subsections 5.3, 6.1(ii), 6.1(iii) and
6.1(xiv), the separate financial statements reflecting the
accounts of Company and its Subsidiaries.
"Contingent Obligation", as applied to any Person,
means any direct or indirect liability, contingent or otherwise,
of that Person (i) with respect to any Indebtedness, lease,
dividend or other obligation of another if the primary purpose or
intent thereof by the Person incurring the Contingent Obligation
is to provide assurance to the obligee of such obligation of
another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof,
(ii) with respect to any letter of credit issued for the account
of that Person or as to which that Person is otherwise liable for
reimbursement of drawings, (iii) under Interest Rate Agreements,
or (iv) to make an Investment in any other Person. Contingent
Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of
the obligation of another, (b) the obligation to make take-or-pay
or similar payments if required regardless of non-performance by
any other party or parties to an agreement, and (c) any liability
of such Person for the obligation of another through any agree
ment (contingent or otherwise) (X) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (Y) to maintain the solvency or
any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The
amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if
less, the amount to which such Contingent Obligation is specifi
cally limited.
"Contractual Obligation", as applied to any Person,
means any provision of any Security issued by that Person or of
any material indenture, mortgage, deed of trust, contract,
undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"Deposit Account" means a demand, time, savings,
passbook or like account with a bank, savings and loan associa
tion, credit union or like organization, other than an account
evidenced by a negotiable certificate of deposit.
"Dollars" and the sign "$" mean the lawful money of the
United States of America.
"Effective Date" means the date on or before March 31,
1998, on which the conditions set forth in subsection 4.1 are
first satisfied or waived in writing by Administrative Agent and
Requisite Lenders.
"Eligible Assignee" means (A)(i) a commercial bank
organized under the laws of the United States or any state
thereof; (ii) a savings and loan association or savings bank
organized under the laws of the United States or any state
thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that
(x) such bank is acting through a branch or agency located in the
United States or (y) such bank is organized under the laws of a
country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act)
which extends credit or buys loans as one of its businesses
including, but not limited to, insurance companies, mutual funds
and lease financing companies, in each case (under clauses (i)
through (iv) above) that is reasonably acceptable to and
consented to by Managing Agent; and (B) any Lender and any
Affiliate of any Lender; provided that no Affiliate of Company
shall be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit
plan" as defined in Section 3(3) of ERISA which is, or was at any
time, maintained or contributed to by Company or any of its ERISA
Affiliates.
"Environmental Claim" means any accusation, allegation,
notice of violation, claim, demand, abatement order or other
order or direction (conditional or otherwise) by any governmental
authority or any Person for any damage, including, without
limitation, personal injury (including sickness, disease or
death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or restric
tions, in each case relating to, resulting from or in connection
with Hazardous Materials and relating to Company, any of its
Subsidiaries, any of their respective Affiliates or any Facility.
"Environmental Indemnities" means (i) the Environmental
Indemnity from Company in favor of Administrative Agent on behalf
of Lenders dated as of August 25, 1995, executed and delivered
pursuant to the Original Credit Agreement, pursuant to which
Company indemnifies Administrative Agent on behalf of Lenders
against environmental risks, as it has been amended to the date
hereof and as it may hereafter be amended, supplemented or other
wise modified from time to time and (ii) the Environmental Indem
nity from Company in favor of Administrative Agent on behalf of
Lenders dated as of January 9, 1998, executed and delivered
pursuant to the Existing Credit Agreement, pursuant to which
Company indemnifies Administrative Agent on behalf of Lenders
against environmental risks, as it has been amended to the date
hereof and as it may hereafter be amended, supplemented or other
wise modified from time to time.
"Environmental Laws" means all statutes, ordinances,
orders, rules, regulations, plans, policies or decrees and the
like relating to (i) environmental matters, including, without
limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses or
injuries resulting from the Release or threatened Release of
Hazardous Materials, (ii) the generation, use, storage, transpor
tation or disposal of Hazardous Materials, or (iii) occupational
safety and health, industrial hygiene, land use or the protection
of human, plant or animal health or welfare, in any manner appli
cable to Company or any of its Subsidiaries or any of their
respective properties, including, without limitation, the Compre
hensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. 9601 et seq.), the Hazardous Materials Transporta
tion Act (49 U.S.C. 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. 6901 et seq.), the Federal Water
Pollution Control Act ( 33 U.S.C. 1251 et seq.), the Clean Air
Act (42 U.S.C. 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. 2601 et seq.), the Federal Insecticide, Fungicide
and Rodenticide Act (7 U.S.C. 136 et seq.), the Occupational
Safety and Health Act (29 U.S.C. 651 et seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. 11001 et
seq.), each as amended or supplemented, and any analogous future
or present local, state and federal statutes and regulations
promulgated pursuant thereto, each as in effect as of the date of
determination.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor
statute.
"ERISA Affiliate", as applied to any Person, means
(i) any corporation which is, or was at any time, a member of a
controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person
is, or was at any time, a member; (ii) any trade or business
(whether or not incorporated) which is, or was at any time, a
member of a group of trades or businesses under common control
within the meaning of Section 414(c) of the Internal Revenue Code
of which that Person is, or was at any time, a member; and
(iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of
which that Person, any corporation described in clause (i) above
or any trade or business described in clause (ii) above is, or
was at any time, a member.
"ERISA Event" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued
thereunder with respect to any Pension Plan (excluding those for
which the provision for 30-day notice to the PBGC has been waived
by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect
to any Pension Plan (whether or not waived in accordance with
Section 412(d) of the Internal Revenue Code) or the failure to
make by its due date a required installment under Section 412(m)
of the Internal Revenue Code with respect to any Pension Plan or
the failure to make any required contribution to a Multiemployer
Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described
in Section 4041(c) of ERISA; (iv) the withdrawal by Company or
any of its ERISA Affiliates from any Pension Plan with two or
more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Sections 4063 or 4064 of
ERISA; (v) the institution by the PBGC of proceedings to termi
nate any Pension Plan, or the occurrence of any event or condi
tion which might constitute grounds under ERISA for the termina
tion of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on Company or any
of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal by Company or any of its ERISA
Affiliates in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of ERISA) from any Multiem
ployer Plan if there is any potential liability therefor, or the
receipt by Company or any of its ERISA Affiliates of notice from
any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could give rise
to the imposition on Company or any of its ERISA Affiliates of
any material fines, penalties, taxes or related charges under
Chapter 43 of the Internal Revenue Code or under Section 409 or
502(c), (i) or (l) or 4071 of ERISA in respect of any Employee
Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or against
Company or any of its ERISA Affiliates in connection with any
such Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any
other Employee Benefit Plan intended to be qualified under
Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of
any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal
Revenue Code; or (xi) the imposition of a Lien pursuant to
Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at
rates determined by reference to the Adjusted Eurodollar Rate as
provided in subsection 2.2A.
"Event of Default" means each of the events set forth
in Section 8.
"Event of Loss" means, with respect to any property or
asset, (i) any loss, destruction or damage of such property or
asset or (ii) any condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, of such property or
asset, or confiscation or requisition of the use of such property
or asset.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Excluded Person" means (a) Company or any Guarantor
wholly-owned by Company, (b) any employee benefit plan of Company
or any Guarantor wholly-owned by Company or any trustee or
similar fiduciary holding capital stock of Company for or
pursuant to the terms of any such plan, (c) Merv Griffin, (d)
Edward Fishman, (e) David Fishman, (f) Howard Goldberg, (g)
Thomas E. Gallagher, (h) Marshall S. Geller, (i) Lee Seidler, (j)
Peter J. Aranow, (k) Jay Green, (l) Earl Webb, (m) Lawrence
Cohen, (n) Charles Masson, (o) Henry Applegate III, (p) John
Groom and (q) members of the immediate families and Affiliates of
any such Person (where the determination of whether a Person is
an Affiliate is made without reference to clause (ii) of the
definition of such term).
"Existing Collateral Documents" means the Mortgages,
the Ship Mortgages, the Guaranties, the Company Security Agree
ment, the Subsidiary Security Agreements, the Company Pledge
Agreements, the LLC Membership Interest Security Agreements, the
Partnership Interest Security Agreements, the Resources Pledge
and Security Agreement, the Collateral Assignment Agreement, all
agreements listed on Schedule 1.1(a) hereto and all other instru
ments or documents now granting Liens on property of Company or
any of its Subsidiaries to Administrative Agent for benefit of
Lenders.
"Existing Credit Agreement" has the meaning specified
in Preliminary Statement B to this Agreement.
"Existing Letter of Credit" means each Letter of Credit
(as defined in the Existing Credit Agreement) outstanding on the
Effective Date that has not expired or been cancelled as of the
Effective Date.
"Existing Revolving Loan" has the meaning specified in
subsection 2.1F.
"Facilities" means, collectively, the Illinois Facili
ties, the Louisiana Facilities, the Maryland Heights Facilities
and the Louisiana Hotel Facilities.
"Facility Debt" means for any Fiscal Quarter, the
average of the aggregate principal amount of Loans outstanding,
including Swing Line Loans, and the aggregate stated amount of
Letters of Credit outstanding as of the last day of each calendar
month in such Fiscal Quarter.
"Federal Funds Effective Rate" means, 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 by
Agent from three Federal funds brokers of recognized standing
selected by Administrative Agent.
"FF&E" means any and all furniture, fixtures and equip
ment which have been installed or are to be installed and used in
connection with the operation of the Improvements located upon
any of the Premises and those items of furniture, fixtures and
equipment which have been purchased or leased or are hereafter
purchased or leased in connection with any of the Facilities.
"Fiscal Quarter" means the calendar quarters ending on
March 31, June 30, September 30 and December 31.
"Fiscal Year" means the fiscal year period beginning
April 1 of each calendar year and ending on the following
March 31.
"Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of (y) Consolidated EBITDA for the
consecutive four full Fiscal Quarters most recently ended on or
before such date of determination to (z) the sum of (i) Consoli
dated Fixed Charges plus (ii) to the extent not included in
clause (i), the amount of payments made in respect of purchase
obligations for the Louisiana Ship known as the Star Casino for
such four Fiscal Quarter period.
"Flood Act" means the National Flood Insurance Act of
1968 as amended by the Flood Disaster Protection Act of 1973 (42
U.S.C. 4013 et. seq.).
"Former Lender" has the meaning assigned to that term
in subsection 10.1B(iii).
"Funding and Payment Office" means the office of
Administrative Agent located at the address for Notices of
Borrowing set forth on the signature pages hereof.
"Funding Date" means the date of the funding of a Loan
or the issuance of a Letter of Credit.
"GAAP" means, subject to the limitations on the appli
cation thereof set forth in subsection 1.2, generally accepted
accounting principles set forth in opinions and pronouncements of
the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other state
ments by such other entity as may be approved by a significant
segment of the accounting profession, in each case as the same
are applicable to the circumstances as of the date of determina
tion.
"Gaming Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any
nature whatsoever of the United States federal or foreign govern
ment, any state, province or any city or other political subdivi
sion or otherwise and whether now or hereafter in existence, or
any officer or official thereof, including, without limitation,
the Illinois Gaming Authorities, the Missouri Gaming Authorities,
the Louisiana Gaming Authorities, and the Kentucky Gaming
Authorities, with authority to regulate any gaming operation (or
proposed gaming operation) owned, managed or operated by Company
or any of its Subsidiaries.
"Gaming Laws" means all statutes, rules, regulations,
ordinances, codes and administrative or judicial precedents
pursuant to which any Gaming Authority possesses regulatory,
licensing or permit authority over gambling, gaming or casino
activities conducted by Company and its Subsidiaries within its
jurisdiction, including the Illinois Riverboat Gambling Act, the
Kentucky Gaming Law, the Louisiana Riverboat Economic Development
and Gaming Control Act, and the Missouri Gaming Act.
"Governmental Acts" has the meaning assigned to that
term in subsection 3.5A.
"Governmental Authority" means any of the United States
government, the government of any state thereof and any political
subdivision, agency, department, commission, court, board, bureau
or instrumentality of any of them, including any local authori
ties and any Gaming Authority.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent, order or consent decree
of or from any Governmental Authority, including any Gaming
Authority.
"Guarantor" means any of PBD, PDI, PEI, PHI, PLC, PLCI,
PLCR, PMGC, PMH, PMHN, PML, PMHLP, PNEV, PRES, PRI, PRM, PRLLC,
PSI, RR, SIRCC, and SSP and "Guarantors" means all of them,
collectively; provided, however, that "Guarantors" shall also
mean any Person that becomes a Subsidiary of Company after the
Effective Date.
"Guaranties" means (i) the Guaranty dated as of
August 25, 1995, executed and delivered by each then existing
Guarantor in favor of Administrative Agent, pursuant to the
Original Credit Agreement, and (ii) the PHI Guaranty, as each
such agreement has been amended to the date hereof and as each
such agreement may hereafter be amended, supplemented or other
wise modified from time to time, including, without limitation,
by the inclusion as Guarantors of Persons becoming Subsidiaries
of Company after the Effective Date.
"Harrah's" means Harrah's Maryland Heights Corporation,
a Nevada corporation.
"Hazardous Materials" means (i) any chemical, material
or substance at any time defined as or included in the definition
of "hazardous substances", "hazardous wastes", "hazardous mate
rials", "extremely hazardous waste", "restricted hazardous
waste", "infectious waste", "toxic substances" or any other
formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosi
vity, reactivity, carcinogenicity, toxicity, reproductive toxi
city, "TCLP toxicity" or "EP toxicity" or words of similar import
under any applicable Environmental Laws or publications promul
gated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas
or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in any
form; (vii) urea formaldehyde foam insulation; (viii) electrical
equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per
million; (ix) pesticides; and (x) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated
by any governmental authority or which may or could pose a hazard
to the health and safety of the owners, occupants or any Persons
in the vicinity of the Facilities.
"Hostile Acquisition" means any acquisition of the
outstanding Securities or capital stock of any corporation,
partnership or other Person that is not an Affiliate of Company
other than (i) an acquisition which has been approved by resolu
tions of the Board of Directors of the Person being acquired or
by similar action if the Person is not a corporation, and as to
which such approval has not been withdrawn, or (ii) any acquisi
tion of less than twenty percent (20%) of the outstanding
Securities of any class or type of any Person; provided that an
acquisition of Securities described in clause (ii) hereof as to
which Company or any of its Subsidiaries is required to file a
statement containing the information required by Schedule 13D
under the Exchange Act shall not be considered a Hostile Acquisi
tion only if the then currently effective Schedule 13D of Company
or such Subsidiary indicates that Company or such Subsidiary
views the Securities as an attractive Investment and that Company
or such Subsidiary has no plans or proposals which relate to or
which would result in any of the transactions described in para
graphs (b) through (j) of Item 4 of Schedule 13D.
"Illinois Facilities" means the Illinois Premises and
the Improvements made thereon, along with all other related
personal and mixed property located thereon or related thereto,
including, without limitation, a four-deck paddle-wheeler
riverboat casino, a docking site (including all Barges), a new
office building, a cabaret style theater, all related restaurant,
bar, recreation and other facilities and all FF&E and other
personal property located therein, as more fully described in the
"Business" and "Properties" sections of the 10-K.
"Illinois Gaming Authorities" means, without limita
tion, the Illinois Gaming Board and any other applicable Govern
mental Authority involved in the regulation of gaming and gaming
activities conducted by Company or any of its Subsidiaries in the
State of Illinois.
"Illinois Mortgage" means that certain Mortgage,
Fixture Filing and Security Agreement with Assignment of Rents,
by and among SIRCC, as mortgagor and owner, in favor of Adminis
trative Agent, as mortgagee, dated August 25, 1995, executed and
delivered pursuant to the Original Credit Agreement, as it has
been amended to the date hereof and as it may hereafter be
amended, supplemented or otherwise modified from time to time.
"Illinois Premises" means the real property owned in
fee or leased by Company or its respective Subsidiaries with
respect to the property commonly known as the Metropolis complex
in Metropolis, Illinois, as more fully described on Schedule A-1
hereto.
"Illinois Riverboat Gambling Act" means the Riverboat
Gambling Act of Illinois, as from time to time amended, or any
successor provision of law, and the regulations promulgated
thereunder.
"Illinois Ships" means each of the Players Riverboat
Casino II and any other riverboat casino subsequently acquired by
Company or any of its Subsidiaries and operated out of the
Illinois Facilities, in each case, including the engines,
boilers, machinery, masts, derricks, drawworks, spars, boats,
anchors, cables, chains, tackle, fittings, pumping equipment and
all other components and appurtenances thereto, whether now owned
or hereafter acquired, whether on board or not, and whether
installed by Company, SIRCC or any other Person, and also any and
all changes, improvements, alterations, additions, renewals and
replacements at any time made in or to such units or any parts
thereof.
"Improvements" means all buildings, structures,
facilities and other improvements of every kind and description
now or hereafter located on any of the Premises, 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 screens, awnings, floor coverings,
partitions, elevators, escalators, motors, machinery, pipes,
fittings and other items of equipment and personal property of
every kind and description now or hereafter located on any of the
Premises or attached to the improvements that by the nature of
their location thereon or attachment thereto are real property
under applicable law; and including all materials intended for
the construction, reconstruction, repair, replacement, altera
tion, addition or improvement of or to such buildings, equipment,
fixtures, structures and improvements.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations
with respect to Capital Leases that is properly classified as a
liability on a balance sheet in conformity with GAAP, (iii) notes
payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such obli
gations incurred under ERISA), which purchase price is (a) due
more than six months from the date of incurrence of the obliga
tion in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien
on any property or asset owned or held by that Person regardless
of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that
Person. Any Contingent Obligation shall not constitute Indebted
ness until such time as, and only to the extent that, the under
lying obligation owed by the primary obligor to which such
Contingent Obligation relates has become due and payable and
remains unsatisfied after the due date thereof. Obligations
under Interest Rate Agreements constitute Contingent Obligations.
"Indemnitee" has the meaning assigned to that term in
subsection 10.3.
"Indenture" means that certain Indenture, dated as of
April 10, 1995, executed by Company, its Subsidiaries and First
Fidelity Bank, National Association, as trustee, in connection
with the issuance of and governing the terms of the Senior Notes,
as in effect on August 25, 1995, except to the extent amended in
accordance with subsection 7.13.
"Intellectual Property" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used
in or necessary for the conduct of the business of Company and
its Subsidiaries as currently conducted that are material to the
business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company and its Subsidiaries, taken as
a whole.
"Interest Coverage Ratio" means, as of any date of
determination, the ratio of (x) Consolidated EBITDA for the
immediately preceding four Fiscal Quarters to (y) the Consoli
dated Interest Expense for the immediately preceding four Fiscal
Quarters.
"Interest Payment Date" means (i) with respect to any
Base Rate Loan, the last Business Day of each March, June,
September and December of each year, commencing on the first such
date to occur after the Effective Date, and (ii) with respect to
any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided that in the case of each
Interest Period of longer than three months, "Interest Payment
Date" shall also include each date that is three months after the
commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term
in subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement or arrangement designed to
protect Company or any of its Subsidiaries against fluctuations
in interest rates.
"Interest Rate Exchangers" means any Lender that is a
party to a Lender Interest Rate Agreement.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended to the date hereof and from time to time
hereafter.
"Investment" means (i) any direct or indirect purchase
or other acquisition by Company or any of its Subsidiaries of, or
of a beneficial interest in, any Securities of any other Person
(other than a Person that is a wholly-owned Subsidiary of
Company), (ii) any direct or indirect redemption, retirement,
purchase or other acquisition for value, by any Subsidiary of
Company from any Person other than Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, or
(iii) any direct or indirect loan, advance (other than advances
to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course
of business) or capital contribution by Company or any of its
Subsidiaries to any other Person (other than a Person that is a
wholly-owned Subsidiary of Company), including all indebtedness
and accounts receivable from that other Person that are not
current assets or did not arise from sales to that other Person
in the ordinary course of business. The amount of any Investment
shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"Issuing Lender" means WFB and any assignee of WFB
acting as Issuing Lender.
"Joint Venture" means a joint venture, partnership or
other similar arrangement, whether in corporate, partnership or
other legal form; provided that in no event shall any corporate
Subsidiary of any Person be considered to be a Joint Venture to
which such Person is a party.
"Joint Venture Agreement" means the Partnership Agree
ment, dated as of November 2, 1995, by and between PMHLP and
Harrah's.
"Joint Venture Interest Security Agreement" means that
certain Joint Venture Interest Security Agreement between PMHLP
and Administrative Agent, dated as of December 16, 1996, executed
and delivered pursuant to the Existing Credit Agreement, as such
agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"Kentucky Gaming Authority" means the Kentucky Racing
Commission.
"Kentucky Gaming Law" means Section 230.225 of the
Kentucky Revised Statutes and the rules and regulations promul
gated thereunder.
"Lender" and "Lenders" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement,
together with their successors and permitted assigns pursuant to
subsection 10.1, and the term "Lenders" shall include Swing Line
Lender unless the context otherwise requires.
"Lender Assignment Agreement" has the meaning assigned
to that term in subsection 10.1A and a form of which is attached
as Exhibit IV hereto, as noted in subsection 10.1B.
"Lender Interest Rate Agreements" means each Interest
Rate Agreement between Company and a Lender, which agreement
provides that it is intended to be secured by the Collateral.
"Letter of Credit" or "Letters of Credit" means Standby
Letters of Credit issued or to be issued by Administrative Agent
for the account of Company pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which
is or at any time thereafter may become available for drawing
under all Letters of Credit then outstanding plus (ii) the aggre
gate amount of all drawings under Letters of Credit honored by
Administrative Agent and not theretofore reimbursed by Company
(including any such reimbursement out of the proceeds of Loans
pursuant to subsection 3.3B).
"Leverage Ratio" means, as of any date of determina
tion, the ratio of (y) Total Funded Debt on such date to (z)
Consolidated EBITDA for the consecutive four full Fiscal Quarters
most recently ended on or prior to such date.
"License Revocation" means the revocation, failure to
renew or suspension of, or the appointment of a receiver, super
visor or similar official with respect to, any casino, gambling
or gaming license issued by any Gaming Authority covering any
casino, gambling or gaming facility owned or operated by Company,
any of its Subsidiaries.
"Lien" means any lien, mortgage, pledge, assignment,
security interest, charge or encumbrance of any kind (including
any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any
security interest) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing.
"LLC Membership Interest Security Agreements" means
(i) those certain Security Agreements between each of PRI and
PRM, and Administrative Agent, dated as of August 25, 1995,
executed and delivered pursuant to the Original Credit Agreement,
as each such agreement has been amended to the date hereof and
each such agreement may hereafter be amended, supplemented or
otherwise modified from time to time and (ii) those certain LLC
Membership Interest Security Agreements between certain
Subsidiaries of Company and Administrative Agent, dated as of
December 16, 1996, executed and delivered pursuant to the
Existing Credit Agreement, as each such Agreement may hereafter
be amended, supplemented or otherwise modified from time to time.
"Loan Documents" means this Agreement, the Notes, the
Letters of Credit (and any applications for, or reimbursement
agreements or other documents or certificates executed by Company
in favor of Administrative Agent relating to, the Letters of
Credit), the Collateral Account Agreement, the Collateral
Documents, the New Loan Documents and all other instruments or
documents executed in connection therewith.
"Loan Exposure" means, with respect to any Lender as of
any date of determination (i) prior to the termination of the
Commitments, that Lender's Commitments and (ii) after the
termination of the Commitments, the sum of (a) the aggregate
outstanding principal amount of the Loans of that Lender plus
(b) in the event that Lender is Administrative Agent, the aggre
gate Letter of Credit Usage in respect of all Letters of Credit
issued by that Lender (in each case net of any participations
purchased by other Lenders in such Letters of Credit or any
unreimbursed drawings thereunder) plus (c) the aggregate amount
of all participations purchased by that Lender in any outstanding
Letters of Credit or any unreimbursed drawings under any Letters
of Credit plus (d) in the case of Swing Line Lender, the aggre
gate outstanding principal amount of all Swing Line Loans (net of
any participations therein purchased by other Lenders) plus
(e) the aggregate amount of all participations purchased by that
Lender in any outstanding Swing Line Loans.
"Loan Party" means any of Company and any Guarantor and
"Loan Parties" means Company and all Guarantors, collectively.
"Loans" means, collectively, all Revolving Loans made
pursuant to subsection 2.1A and all Swing Line Loans made
pursuant to subsection 2.1B.
"Louisiana Facilities" means the Louisiana Premises and
the Improvements made thereon, along with all other related
personal and mixed property located thereon or related thereto,
including, without limitation, two three-deck paddle-wheeler
riverboat casinos (individually known as the "Players Riverboat
III" and the "Star Casino"), a docking site, floating
entertainment island and floating administrative center (includ
ing all Barges), a hotel, all related restaurant, bar, recreation
and other facilities and all FF&E and other personal property
located therein, as more fully described in the "Business" and
"Properties" sections of the 10-K.
"Louisiana Gaming Authorities" means, without limita
tion, the Louisiana Gaming Control Board, the Riverboat Gaming
Enforcement Division of the Louisiana State Police and any other
applicable Governmental Authority involved in the regulation of
gaming and gaming activities conducted by Company or any of its
Subsidiaries in the State of Louisiana.
"Louisiana Gaming Control Act" means the Louisiana
Riverboat Economic Development and Gaming Control Act, as from
time to time amended, or any successor provision of law, and the
regulations promulgated thereunder.
"Louisiana Hotel Facilities" means the Louisiana Hotel
Premises and the Improvements made thereon, along with all other
related personal and mixed property located thereon or related
thereto, including without limitation a hotel building and other
facilities and all FF&E and other personal property located
therein.
"Louisiana Hotel Mortgage" means that certain Act of
Mortgage, Fixture Filing and Security Agreement with Pledge and
Assignment of Leases and Rents, by and among PLC, as mortgagor
and owner, in favor of Administrative Agent, as mortgagee, dated
January 9, 1998, as it has been amended to the date hereof and as
it may hereafter be amended, supplemented or otherwise modified
from time to time.
"Louisiana Hotel Premises" means the real property
owned in fee by Company or its Subsidiaries with respect to the
property formerly known as the Holiday Inn located in Lake
Charles, Louisiana, as more fully described on Schedule A-3
hereto.
"Louisiana Mortgage" means that certain Act of Mort
gage, Fixture Filing and Security Agreement with Pledge and
Assignment of Leases and Rents, among PLC, as mortgagor and
owner, in favor of Administrative Agent, as mortgagee, dated as
of August 25, 1995, executed and delivered pursuant to the
Original Credit Agreement, as it has been amended to the date
hereof and as it may hereafter be amended, supplemented or
otherwise modified from time to time.
"Louisiana Premises" means the real property owned in
fee or leased by Company or its respective Subsidiaries with
respect to the property commonly known as the Lake Charles
complex in Lake Charles, Louisiana, as more fully described on
Schedule A-2 hereto.
"Louisiana Ships" means each of the Star Casino, the
Players Riverboat III and any other riverboat casino subsequently
acquired by Company or any of its Subsidiaries and operated out
of the Louisiana Facilities, in each case, including the engines,
boilers, machinery, masts, derricks, drawworks, spars, boats,
anchors, cables, chains, tackle, fittings, pumping equipment and
all other components and appurtenances thereto, whether now owned
or hereafter acquired, whether on board or not, and whether
installed by Company, PLC, SSP or any other Person, and also any
and all changes, improvements, alterations, additions, renewals
and replacements at any time made in or to such units or any
parts thereof.
"Managing Agent" means WFB.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.
"Maryland Heights Facilities" means the riverboat
casino entertainment complex in Maryland Heights, Missouri
operated by the Riverside Joint Venture as more fully described
in the "Business" and "Properties" sections of the 10-K.
"Maryland Heights Premises" means the real property
owned in fee or leased by the Riverside Joint Venture with
respect to the property commonly known as the Players Island
Casino at Riverport Casino Center in Maryland Heights, St. Louis
County, Missouri.
"Maryland Heights Subsidiaries" means PMH, PMHN and
PMHLP.
"Material Adverse Effect" means (i) a material adverse
effect upon the business, operations, properties, assets, condi
tion (financial or otherwise) or prospects of Company and its
Subsidiaries, taken as a whole, or (ii) the impairment of the
ability of Company to perform, in any material respect, or of
Administrative Agent or Lenders to enforce, the Obligations.
"Missouri Gaming Act" means Sections 313.800 - 313.850
of the Revised Statutes of Missouri (Excursion Gambling Boats).
"Missouri Gaming Authority" means Missouri Gaming
Commission.
"Missouri Pledge and Security Agreements" means (i)
that certain Company Pledge Agreement dated as of August 25, 1995
between Company and Administrative Agent, (ii) the PHI Pledge
Agreement, (iii) that certain Subsidiary Security Agreement
(Missouri) dated as of December 16, 1996 between PMHN, PMH,
PMHLP, and Administrative Agent, (iv) that certain Partnership
Interest Security Agreement dated as of December 16, 1996 between
PMH and Administrative Agent, (v) that certain Partnership
Interest Security Agreement dated as of December 16, 1996 between
PMHN and Administrative Agent, and (vi) that certain Joint
Venture Interest Security Agreement dated as of December 16,
1996, between PMHLP and Administrative Agent.
"Mortgage Amendments" has the meaning assigned thereto
in subsection 4.1G.
"Mortgages" means the Illinois Mortgage, the Louisiana
Mortgage and the Louisiana Hotel Mortgage.
"Multiemployer Plan" means a "multiemployer plan", as
defined in Section 3(37) of ERISA, to which Company or any of its
ERISA Affiliates is contributing, or ever has contributed, or to
which Company or any of its ERISA Affiliates has, or ever has
had, an obligation to contribute.
"Net Cash Proceeds" means Cash Proceeds received from
any Asset Sale or upon the occurrence of an Event of Loss, in
each case, net of the sum of all bona fide direct fees, commis
sions and other expenses incurred in connection therewith less
the amount of (estimated reasonably and in good faith by Company)
income, franchise, sales and other applicable taxes required to
be paid by Company or any of its Subsidiaries as a result thereof
within two years of the date of receipt of any such Cash
Proceeds.
"New Loan Documents" means this Agreement, the Notes,
the Mortgage Amendments, the Ship Mortgage Amendments, the
Acknowledgement and Confirmation, the Amendments to Missouri
Pledge and Security Agreements and all other new agreements to be
executed by the Loan Parties on the Effective Date. The New Loan
Documents to be executed by each Loan Party are set forth on
Schedule 1.1(b) hereto.
"Noncontinuing Lenders" and "Noncontinuing Lender"
means the persons identified on Schedule 1.1(c) hereto.
"Notes" means, collectively, the Revolving Notes and
the Swing Line Notes, as they may be amended, supplemented, or
otherwise modified from time to time.
"Notice of Borrowing" means a notice substantially in
the form of Exhibit I annexed hereto delivered by Company to
Administrative Agent pursuant to subsection 2.1C with respect to
a proposed borrowing.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit II annexed hereto delivered
by Company to Administrative Agent pursuant to subsection 2.2D
with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect
to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a notice
substantially in the form of Exhibit III annexed hereto delivered
by Company to Administrative Agent pursuant to subsection 3.1B(i)
with respect to the proposed issuance of a Letter of Credit.
"Notification Date" has the meaning assigned to that
term in subsection 3.1A(iii).
"Obligations" means all obligations of every nature of
any Loan Party, from time to time owed to Administrative Agent,
Managing Agent, Arranger, Lenders or any of them under the Loan
Documents, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, fees, expenses,
indemnification or otherwise.
"Officers' Certificate" means, as applied to any
corporation, a certificate executed on behalf of such corporation
by its chairman of the board (if an officer) or president, vice
presidents, chief financial officer or treasurer; provided that
every Officers' Certificate with respect to the compliance with a
condition precedent to the making of any Loans hereunder shall
include (i) a statement that the officer or officers making or
giving such Officers' Certificate have read such condition and
any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examina
tion or investigation as is necessary to enable them to express
an informed opinion as to whether or not such condition has been
complied with, and (iii) a statement as to whether, in the
opinion of the signers, such condition has been complied with.
"Other Allowed Indebtedness (Secured)" means Indebted
ness of the Company or any Subsidiary that consists of Purchase
Money Debt and Capital Leases existing on the Effective Date plus
other Purchase Money Debt and Capital Leases incurred after the
Effective Date (including such Indebtedness incurred before the
date of its acquisition by a Subsidiary acquired by Company after
the Effective Date) in an aggregate outstanding principal amount
not to exceed $5,000,000 at any time.
"Other Allowed Indebtedness (Unsecured)" means Indebt
edness of the Company or any Subsidiary which consists of
(i) Indebtedness outstanding under the Senior Notes and (ii) all
other unsecured Indebtedness, whether existing on the Effective
Date or subsequently incurred (including such Indebtedness
incurred before the date of its acquisition by a Subsidiary
acquired after the Effective Date), of Company or any of its
Subsidiaries, in an aggregate outstanding principal amount not to
exceed in the case of this clause (ii) $15,000,000 at any time.
"Participant Subsidiary" has the meaning assigned to
that term in subsection 6.10B.
"Partnership Interest Security Agreements" means
(i) those certain Security Agreements between each of PRLLC and
PRM, and Administrative Agent, each dated as of August 25, 1995,
executed and delivered pursuant to the Original Credit Agreement,
as each such agreement has been amended to the date hereof and as
each such agreement may hereafter be amended, supplemented or
otherwise modified from time to time, and (ii) those certain
Partnership Interest Security Agreements between each of PMH,
PMHN and SIRCC and Administrative Agent, each dated as of
December 16, 1996, executed and delivered pursuant to the
Existing Credit Agreement, as each such agreement may hereafter
be amended, supplemented or otherwise modified from time to time.
"PBD" means Players Bluegrass Downs, Inc., a Kentucky
corporation.
"PBGC" means the Pension Benefit Guaranty Corporation
(or any successor thereto).
"PCI" means PCI, Inc., a Nevada corporation.
"PDI" means Players Development, Inc., a Nevada
corporation.
"PEI" means Players Entertainment, Inc., a Nevada
corporation.
"Pension Plan" means any Employee Benefit Plan, other
than a Multiemployer Plan, which is subject to Section 412 of the
Internal Revenue Code or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of
Liens (other than any such Lien imposed pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the time,
required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics and materialmen and other
Liens imposed by law incurred in the ordinary course of
business for sums not yet delinquent or being contested in
good faith, if such reserve or other appropriate provision,
if any, as shall be required by GAAP shall have been made
therefor;
(iii) Liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance
and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed
money);
(iv) any attachment or judgment Lien not constituting
an Event of Default under subsection 8.8;
(v) leases or subleases granted to others (including,
without limitation, any Subsidiary of Company) not inter
fering in any material respect with the ordinary conduct of
the business of Company or any of its Subsidiaries; and
(vi) easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and other
similar immaterial charges or encumbrances that (a) arise
prior to the Effective Date and are accepted by Administra
tive Agent as exceptions to the Title Policies or (b) arise
after the Effective Date and would not, either individually
or in the aggregate, result in a Material Adverse Effect.
"Person" means and includes natural persons, corpora
tions, limited partnerships, general partnerships, joint stock
companies, Joint Ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts, limited
liability companies or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions
thereof.
"PHI" means Players Holding, Inc., a Nevada corporation
wholly owned by Company.
"PHI Guaranty" means the Guaranty dated as of
December 16, 1996, executed and delivered by PHI in favor of
Administrative Agent pursuant to the Existing Credit Agreement,
as such Guaranty may hereafter be amended, supplemented or
otherwise modified from time to time.
"PHI Pledge Agreement" means that certain Pledge
Agreement between PHI and Administrative Agent dated as of
December 16, 1996, executed and delivered pursuant to the
Existing Credit Agreement, as such Pledge Agreement may hereafter
be amended, supplemented or otherwise modified from time to time.
"PLC" means Players Lake Charles, LLC, a Louisiana
limited liability company.
"PLCI" means Players LC, Inc., a Nevada corporation.
"PLCR" means Players Lake Charles Riverboat, Inc., a
Louisiana corporation.
"PMGC" means Players Mesquite Golf Club, Inc., a Nevada
corporation.
"PMH" means Players Maryland Heights, Inc., a Missouri
corporation.
"PMHLP" means Players MH, L.P., a Missouri limited
partnership.
"PMHN" means Players Maryland Heights Nevada, Inc., a
Nevada corporation.
"PML" means Players Mesquite Land, Inc., a Nevada
corporation.
"PNEV" means Players Nevada, Inc., a Nevada
corporation.
"PRES" means Players Resources, Inc., a Nevada
corporation.
"Policies of Insurance" means the insurance required to
be obtained and maintained by Company throughout the term of this
Agreement pursuant to subsection 6.4B hereof and Schedules 6.4(a)
and 6.4(b) annexed hereto.
"Potential Event of Default" means a condition or event
that, after notice or lapse of time or both, would constitute an
Event of Default.
"Premises" means, collectively, the Illinois Premises,
the Louisiana Premises and the Louisiana Hotel Premises.
"PRI" means Players Riverboat, Inc., a Nevada
corporation.
"Pricing Determination Certificate" means an Officers'
Certificate of Company delivered on the Effective Date pursuant
to subsection 4.1T and thereafter pursuant to subsection
6.1(xvii) setting forth in reasonable detail (i) the Consolidated
EBITDA for the four consecutive Fiscal Quarter period ending on
the date of such Officers' Certificate, (ii) the Leverage Ratio
as of the last day of such period, and (iii) the average daily
Total Utilization of Commitments for the 30 day period ending on
the date of such Officers' Certificate.
"Prime Rate" means the rate that WFB announces from
time to time at its principal office in San Francisco, California
as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer. WFB or
any other Lender may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.
"PRLLC" means Players Riverboat, LLC, a Louisiana
limited liability company.
"PRM" means Players Riverboat Management, Inc., a
Nevada corporation.
"Pro Rata Share" means, with respect to each Lender,
the percentage obtained by dividing (x) the Commitments of that
Lender by (y) the aggregate Commitments of all Lenders, as such
percentage may be adjusted by assignments permitted pursuant to
subsection 10.1. The initial Pro Rata Share of each Lender is
set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.
"PSI" means Players Services, Inc., a New Jersey
corporation.
"Purchase Money Debt" means Indebtedness incurred to
finance the acquisition of assets pertaining to any business
reasonably related to any of Company's or its Subsidiaries'
gaming business and necessary for, in support or anticipation of
and ancillary to or in preparation for such gaming business
provided that the amount of such Indebtedness does not exceed
eighty percent (80%) of the purchase price of the asset acquired
and provided further that such Indebtedness is incurred at the
time of, or within 30 days following, such acquisition and
provided still further that any Lien securing such Indebtedness
shall attach only to the asset acquired and not to any other
asset of the obligor of such Indebtedness.
"Railroad" has the meaning assigned to that term in
subsection 6.10D.
"Refunded Swing Line Loans" has the meaning assigned to
that term in subsection 2.1B.
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from time
to time.
"Reimbursement Date" has the meaning assigned to that
term in subsection 3.3B.
"Related Business" means the gaming business (including
parimutuel betting) conducted (or proposed to be conducted) by
Company and its Subsidiaries as of the Effective Date and any and
all reasonably related businesses necessary for, in support or
anticipation of and ancillary to or in preparation for, the
gaming business including, without limitation, the development,
expansion or operation of any casino, hotel, casino/hotel,
resort, casino/resort, riverboat casino, dock casino, any other
type of casino, golf course, retail facility, entertainment
center or similar facility.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous
Materials into the indoor or outdoor environment (including,
without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facility, including the
movement of any Hazardous Material through the air, soil, surface
water, groundwater or property.
"Requiring Lender" has the meaning given that term in
Subsection 2.9.
"Requisite Lenders" means two or more Lenders having or
holding not less than sixty-six and two-thirds percent (66-2/3%)
of the Loan Exposure, or if no Loans or Letters of Credit are
outstanding, having not less than sixty-six and two-thirds
percent (66-2/3%) of the Commitments; provided that, at any time
that there shall be only one Lender, such Lender shall constitute
Requisite Lenders.
"Resources Pledge and Security Agreement" means that
certain Pledge and Security Agreement between PRES and Adminis
trative Agent dated as of December 16, 1996, executed and deliv
ered pursuant to the Existing Credit Agreement, as such agreement
may be amended from time to time.
"Responsible Officer" means each of the following offi
cers of Company or any of its Subsidiaries, at the time that any
individual holds any such position: the chief executive officer,
the president, the chief financial officer, the treasurer, any
vice president, the general counsel and the corporate secretary.
"Restricted Payment" means (i) any dividend or other
distribution of items of distribution, direct or indirect, on
account of any class of stock of Company in Company now or
hereafter outstanding, except a distribution payable solely in
interests of that class of stock to the holders of that class,
(ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of
any interests of any class of stock of Company now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights
to acquire any interests of any class of stock of Company now or
hereafter outstanding, (iv) any payment or prepayment of princi
pal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in substance or legal defea
sance), sinking fund or similar payment with respect to, any
subordinated indebtedness, and (v) any payment or prepayment of
principal of, premium, if any, or redemption, purchase, retire
ment or defeasance (including in substance or legal defeasance)
of the outstanding principal of any of the Senior Notes other
than as required under the Indenture (after giving effect to any
mandatory prepayment pursuant to subsection 2.4A(iii)) upon the
occurrence of an Asset Sale or an Event of Loss.
"Revolving Commitment" means the commitment of a Lender
to make Revolving Loans to Company pursuant to subsection 2.1A,
and "Revolving Commitments" means such commitments of all Lenders
in the aggregate.
"Revolving Loans" means the Loans made by Lenders to
Company pursuant to subsection 2.1A and the Existing Revolving
Loans converted into Revolving Loans pursuant to subsection 2.1F.
"Revolving Notes" means the promissory notes of Company
issued pursuant to subsection 2.1E, to evidence the Revolving
Loans of the respective Lenders, substantially in the form of
Exhibit V annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
"Riverside Joint Venture" means that certain Joint
Venture between PMHLP and Harrah's for the development and opera
tion of a riverboat casino entertainment complex in Maryland
Heights, Missouri, as more fully described in the "Business" and
"Properties" sections of the 10-K.
"RR" means Riverfront Realty Corporation, an Illinois
corporation.
"Securities" means any stock, shares, partnership
interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes, or other evidences
of indebtedness, secured or unsecured, convertible, subordinated
or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or partici
pations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and any successor statute.
"Senior Notes" means those certain 10-7/8% Senior Notes
Due 2005 of Company, in the original aggregate principal amount
of $150,000,000 issued pursuant to the Indenture, as amended from
time to time.
"Ship Mortgages" means (i) the First Preferred Ship
Mortgage by SSP in favor of the Trustee, for the benefit of
Administrative Agent on behalf of Lenders, dated as of August 25,
1995, executed and delivered pursuant to the Original Credit
Agreement, as such mortgage has been amended to the date hereof
and as such mortgage may hereafter be amended, supplemented or
otherwise modified from time to time and (ii) the First Preferred
Ship Mortgages by each of PLC and SIRCC in favor of the Trustee,
for the benefit of Administrative Agent on behalf of Lenders,
each dated as of December 16, 1996, executed and delivered
pursuant to the Existing Credit Agreement, as such mortgages may
hereafter be amended, supplemented or otherwise modified from
time to time.
"Ship Mortgage Amendments" has the meaning assigned
thereto in subsection 4.1G.
"Ships" means, collectively, the Illinois Ships and the
Louisiana Ships.
"SIRCC" means Southern Illinois Riverboat/Casino
Cruises, Inc., an Illinois corporation.
"SIRCC Pledge Agreement" means that certain Pledge
Agreement between SIRCC and Administrative Agent dated as of
December 16, 1996, executed and delivered pursuant to the
Existing Credit Agreement, as such agreement may be amended from
time to time.
"Solvent" means, with respect to any Person, that as of
the date of determination both (A)(i) the then fair saleable
value of the property of such Person is (y) greater than the
total amount of liabilities (including contingent liabilities
with respect to Indebtedness) of such Person and (z) not less
than the amount that will be required to pay the probable
liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person;
(ii) such Person's capital is not unreasonably small in relation
to its business or any contemplated or undertaken transaction;
and (iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond
its ability to pay such debts as they become due; and (B) such
Person is "solvent" within the meaning given that term and
similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circum
stances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"SSP" means Showboat Star Partnership, a Louisiana
general partnership.
"Standby Letter of Credit" means any standby letter of
credit or similar instrument issued for the purpose of supporting
(i) Indebtedness of Company or any of its Subsidiaries in respect
of industrial revenue or development bonds or financings,
(ii) workers' compensation liabilities of Company or any of its
Subsidiaries, (iii) the obligations of third party insurers of
Company or any of its Subsidiaries arising by virtue of the laws
of any jurisdiction requiring third party insurers, (iv) obliga
tions with respect to Capital Leases or Operating Leases of
Company or any of its Subsidiaries, and (v) performance, payment,
deposit or surety obligations of Company or any of its Subsid
iaries, in any case if required by law or governmental rule or
regulation or in accordance with custom and practice in the
industry; provided that Standby Letters of Credit may not be
issued for the purpose of supporting (a) trade payables or
(b) any Indebtedness constituting "antecedent debt" (as that term
is used in Section 547 of the Bankruptcy Code.
"Subordinated Indebtedness" means Indebtedness of
Company subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization
schedules, covenants, defaults, remedies, subordination provi
sions and other material terms in form and substance satisfactory
to Administrative Agent and Requisite Lenders.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association, joint venture or other
business entity of which more than 50% of the total voting power
of shares of stock or other ownership interests entitled (without
regard to the occurrence of any contingency) to vote in the
election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having
the power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsid
iaries of that Person or a combination thereof.
"Subsidiary Security Agreements" means (i) those
certain Security Agreements between certain of Company's Subsid
iaries and Administrative Agent each dated as of August 25, 1995,
executed and delivered pursuant to the Original Credit Agreement,
as each such agreement has been amended to the date hereof and as
each such agreement may hereafter be amended, supplemented or
otherwise modified from time to time, including, without limita
tion, by the inclusion of Subsidiaries of Company formed after
the execution thereof, and (ii) those certain Security Agreements
between certain of Company's Subsidiaries and Administrative
Agent each dated as of December 16, 1996, executed and delivered
pursuant to the Existing Credit Agreement, as such agreements may
be amended from time to time.
"Substitute Lender" has the meaning assigned to that
term in subsection 10.1B(iii).
"Swing Line Lender" means WFB, in its capacity as Swing
Line Lender hereunder and any assignee of WFB acting as Swing
Line Lender.
"Swing Line Loan Commitment" means the commitment of
Swing Line Lender to make Swing Line Loans to Company pursuant to
subsection 2.1B.
"Swing Line Loans" means the Loans made by Swing Line
Lender to Company pursuant to subsection 2.1B.
"Swing Line Note" means any promissory note of Company
issued pursuant to subsection 2.1E to evidence the Swing Line
Loans of Swing Line Lender, substantially in the form of Exhibit
VI annexed hereto, as it may be amended, supplemented or
otherwise modified from time to time.
"Tax" or "Taxes" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature
and whatever called, by any Governmental Authority, on whomsoever
and wherever imposed, levied, collected, withheld or assessed;
provided that "Tax on the overall net income" of a Person shall
be construed as a reference to a tax imposed by any Governmental
Authority on all or part of the net income, profits or gains of
that Person (whether worldwide, or only insofar as such income,
profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise).
"10-K" means the annual report of the Company for the
Fiscal Year ended March 31, 1997, filed on Form 10-K with the
Securities and Exchange Commission.
"Title Company" means Chicago Title Insurance Company.
"Title Policies" means Policy Number LA-001-107-50497,
Policy Number 14 0142 107 00000001, Policy Number 29 0010 107
16901, Policy Number 29 0010 107 16902 and Policy Number
LA-01-107-97-197, each issued by the Title Company, insuring
Administrative Agent's interest as mortgagee on certain real
property described therein.
"Total Funded Debt" means, as of any date, the sum
(without duplication) of the outstanding principal amount of
Other Allowed Indebtedness (Secured) as of such date plus the
outstanding principal amount of Other Allowed Indebtedness
(Unsecured) as of such date plus the average daily Total
Utilization of Commitments for the Fiscal Quarter most recently
ended on or prior to such date plus, without duplication,
Contingent Obligations as of such date.
"Total Utilization of Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal
amount of all outstanding Revolving Loans (other than Revolving
Loans made for the purpose of repaying any Refunded Swing Line
Loans or reimbursing the Issuing Lender for any amount drawn
under any Letter of Credit but not yet so applied) plus (ii) the
aggregate principal amount of all outstanding Swing Line Loans
plus (iii) the Letter of Credit Usage.
"Trust Agreement" means the Master Vessel and Collat
eral Trust Agreement between the Trustee and Administrative Agent
on behalf of Lenders, dated as of August 25, 1995, executed and
delivered pursuant to the Original Credit Agreement, as such
agreement has been amended to the date hereof and as such
agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"Trustee" means WFB, solely in its capacity as trustee
under the Trust Agreement and not in its individual capacity.
"US Documented Barges" means all barges located at or
used in connection with any of the Facilities, whether owned on
the date hereof or subsequently acquired, that are subject to a
valid certificate of documentation issued by the United States
Coast Guard under the laws and regulations of the United States
and are listed on Schedule 5.5.
"WFB" has the meaning assigned to that term in the
first paragraph of this Agreement.
"Withdrawal Period" has the meaning assigned to that
term in subsection 10.1B(iii).
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement.
Except as otherwise expressly provided in this Agree
ment, all accounting terms not otherwise defined herein shall
have the meanings assigned to them in conformity with GAAP.
Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii) and
(xiii) of subsection 6.1 shall be prepared in accordance with
GAAP as in effect at the time of such preparation (and delivered
together with the reconciliation statements provided for in
subsection 6.1(iv)). Calculations in connection with the defini
tions, covenants and other provisions of this Agreement shall
utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in
subsection 5.3.
1.3 Other Definitional Provisions.
References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided. Any of the terms defined in
subsection 1.1 may, unless the context otherwise requires, be
used in the singular or the plural, depending on the reference.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; Notes.
A. Revolving Loans. Subject to the terms and conditions
of this Agreement and in reliance upon the representations and
warranties of the Loan Parties set forth in the Loan Documents,
each Lender hereby severally agrees, subject to the limitations
set forth below with respect to the maximum amount of Loans
permitted to be outstanding from time to time, to lend to Company
from time to time during the period from the Effective Date to
but excluding the Commitment Termination Date an aggregate amount
not at any time outstanding exceeding such Lender's Pro Rata
Share of the aggregate amount of the Revolving Commitments to be
used for the purposes identified in subsection 2.5A(i). The
original amount of each Lender's Revolving Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto, and the
aggregate original amount of the Revolving Commitments is
$80,000,000; provided that the Revolving Commitments of Lenders
shall be adjusted to give effect to any assignments of the
Revolving Commitments pursuant to subsection 10.1B; and provided
further that the amount of the Revolving Commitments shall be
reduced from time to time by the amount of any reductions thereto
made pursuant to subsections 2.4A and 2.4B. Each Lender's
Revolving Commitment shall expire on the Commitment Termination
Date and all Revolving Loans and all other amounts owed hereunder
with respect to the Revolving Loans and the Revolving Commitments
shall be paid in full no later than that date. Loans made by
Lenders pursuant to this subsection 2.1A are described herein as
"Revolving Loans." Amounts borrowed under this subsection 2.1A
may be repaid and reborrowed (subject to compliance with Section
4) to but excluding the Commitment Termination Date.
B. Swing Line Loans. Swing Line Lender hereby agrees,
subject to the limitations set forth below with respect to the
maximum amount of Swing Line Loans permitted to be outstanding
from time to time and subject to the other terms and conditions
hereof, to make a portion of the Revolving Commitments available
to Company from time to time during the period from the Effective
Date to but excluding the fifth Business Day prior to the Commit
ment Termination Date by making Swing Line Loans to Company in an
aggregate amount not exceeding the amount of the Swing Line Loan
Commitment to be used for the purposes identified in subsection
2.5A(iv), notwithstanding the fact that such Swing Line Loans,
when aggregated with Swing Line Lender's outstanding Revolving
Loans and Swing Line Lender's Pro Rata Share of the Letter of
Credit Usage then in effect, may exceed Swing Line Lender's
Revolving Commitment. The original amount of the Swing Line Loan
Commitment is $3,000,000; provided that any reduction of the
Commitments made pursuant to subsection 2.4A or 2.4B which
reduces the aggregate Revolving Commitments to an amount less
than the then current amount of the Swing Line Loan Commitment
shall result in an automatic corresponding reduction of the Swing
Line Loan Commitment to the amount of the Revolving Commitments,
as so reduced, without any further action on the part of Company
or Swing Line Lender. Each Swing Line Loan shall be due and
payable not more than five Business Days after the Funding Date
of such Swing Line Loan. The Swing Line Loan Commitment shall
expire on the fifth Business Day prior to the Commitment
Termination Date and all Swing Line Loans and all other amounts
owed hereunder with respect to the Swing Line Loans shall be paid
in full no later than that date. Amounts borrowed under this
subsection 2.1B may be repaid and reborrowed to but excluding the
fifth Business Day prior to the Commitment Termination Date.
Swing Line Lender shall not be obligated to make any Swing Line
Loans if it has elected not to do so after the occurrence and
during the continuation of a Potential Event of Default of which
it is aware or an Event of Default.
On Friday of each week, Swing Line Lender will notify
the Administrative Agent of the amount of Swing Line Loans then
outstanding and the Administrative Agent shall notify each Lender
of the amount of Swing Line Loans then outstanding.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line Loan
Commitment shall be subject to the limitation that in no event
shall the Total Utilization of Commitments at any time exceed the
Revolving Commitments then in effect.
With respect to any Swing Line Loans which have not
been voluntarily prepaid by Company pursuant to subsection
2.4B(i), Swing Line Lender may, at any time in its sole and
absolute discretion, deliver to Lenders (with a copy to Company),
no later than 8:30 A.M. (Pacific time) on the first Business Day
in advance of the proposed Funding Date, a notice (which shall be
deemed to be a Notice of Borrowing given by Company) requesting
Lenders to make Revolving Loans that are Base Rate Loans on such
Funding Date in an amount equal to the amount of such Swing Line
Loans (the "Refunded Swing Line Loans") outstanding on the date
such notice is given which Swing Line Lender requests Lenders to
prepay. Anything contained in this Agreement to the contrary
notwithstanding, (i) the proceeds of Revolving Loans made by
Lenders other than Swing Line Lender shall be immediately
delivered to Swing Line Lender (and not to Company) and applied
to repay a corresponding portion of the Refunded Swing Line Loans
and (ii) on the day such Revolving Loans are made, Swing Line
Lender's Pro Rata Share of the Refunded Swing Line Loans shall be
deemed to be paid with the proceeds of a Revolving Loan made by
Swing Line Lender, and such portion of the Swing Line Loans
deemed to be so paid shall no longer be outstanding as Swing Line
Loans and shall no longer be due under the Swing Line Note of
Swing Line Lender but shall instead constitute part of Swing Line
Lender's outstanding Revolving Loans and shall be due under the
Revolving Note of Swing Line Lender. Company hereby authorizes
Swing Line Lender to charge Company's account with Swing Line
Lender (up to the amount available in each such account) in order
to immediately pay Swing Line Lender the amount of the Refunded
Swing Line Loans to the extent the proceeds of such Revolving
Loans made by Lenders, including the Revolving Loan deemed to be
made by Swing Line Lender, are not sufficient to repay in full
the Refunded Swing Line Loans. If any portion of any such amount
paid (or deemed to be paid) to Swing Line Lender should be
recovered by or on behalf of Company from Swing Line Lender in
bankruptcy, by assignment for the benefit of creditors or other
wise, the loss of the amount so recovered shall be ratably shared
among all Lenders in the manner contemplated by subsection 10.5.
If, as a result of any bankruptcy or similar proceeding
with respect to Company, Revolving Loans are not made pursuant to
this subsection 2.1B in an amount sufficient to repay any amounts
owed to Swing Line Lender in respect of any outstanding Swing
Line Loans, each Lender shall be deemed to, and hereby agrees to,
have purchased a participation in such outstanding Swing Line
Loans in an amount equal to its Pro Rata Share (calculated with
out giving effect to clauses (d) and (e) of the definition of
Loan Exposure) of the unpaid amount together with accrued
interest thereon. Upon one Business Day's notice from Swing Line
Lender, each Lender shall deliver to Swing Line Lender an amount
equal to its respective participation in same day funds at the
Funding and Payment Office. In order to evidence such partici
pation each Lender agrees to enter into a participation agreement
at the request of Swing Line Lender in form and substance reason
ably satisfactory to all parties. In the event any Lender fails
to make available to Swing Line Lender the amount of such
Lender's participation as provided in this paragraph, Swing Line
Lender shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the rate
customarily used by Swing Line Lender for the correction of
errors among banks for three Business Days and thereafter at the
Base Rate. In the event Swing Line Lender receives a payment of
any amount in which other Lenders have purchased participations
as provided in this paragraph, Swing Line Lender shall promptly
distribute to each such other Lender its Pro Rata Share of such
payment.
Anything contained herein to the contrary notwith
standing, each Lender's obligation to make Revolving Loans for
the purpose of repaying any Refunded Swing Line Loan pursuant to
the second preceding paragraph and each Lender's obligation to
purchase a participation in any unpaid Swing Line Loan pursuant
to the immediately preceding paragraph shall be absolute and
unconditional and shall not be affected by any circumstance,
including without limitation (a) any set-off, counterclaim, re
coupment, defense or other right which such Lender may have
against Swing Line Lender, Company or any other Person for any
reason whatsoever; (b) the occurrence or continuation of an Event
of Default or a Potential Event of Default; (c) any adverse
change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company or any of its
Subsidiaries; (d) any breach of this Agreement or any other Loan
Document by any party thereto; or (e) any other circumstance,
happening or event whatsoever, whether or not similar to any of
the foregoing; provided if such unpaid Swing Line Loan increased
Total Utilization of Commitments (after giving effect to the
repayment of any Revolving Loan with the proceeds of such Swing
Line Loan), such obligation of each Lender is subject to the
condition that one of the following must have occurred:
(X) Swing Line Lender did not have actual knowledge that any of
the conditions under Section 4 to the making of the applicable
unpaid Swing Line Loans were not satisfied at the time such
unpaid Swing Line Loans were made, (Y) such Lender had actual
knowledge by receipt of any notices required to be delivered to
Lenders pursuant to subsection 6.1(x) or otherwise, that any such
condition had not been satisfied and such Lender failed to notify
Swing Line Lender in writing that it had no obligation to make
Revolving Loans until such condition was satisfied (any such
notice to be effective as of the date of receipt thereof by Swing
Line Lender), or (Z) the satisfaction of any such condition not
satisfied had been waived in accordance with subsection 10.6
prior to or at the time such unpaid Swing Line Loans were made.
C. Borrowing Mechanics. Revolving Loans made on any
Funding Date (other than Revolving Loans made pursuant to a
request by Swing Line Lender pursuant to subsection 2.1B for the
purpose of repaying any Refunded Swing Line Loans or Revolving
Loans made pursuant to subsection 3.3B for the purpose of
reimbursing the Issuing Lender for the amount of a drawing under
a Letter of Credit issued by it) shall be in an aggregate minimum
amount of $500,000 and integral multiples of $100,000 in excess
of that amount; provided that Revolving Loans made on any Funding
Date as Eurodollar Rate Loans with a particular Interest Period
shall be in an aggregate minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of that amount. Swing
Line Loans made on any Funding Date shall be in an aggregate
minimum amount of $500,000 and integral multiples of $100,000 in
excess of that amount. Whenever Company desires that Lenders
make Revolving Loans it shall deliver to Administrative Agent a
Notice of Borrowing no later than 8:30 A.M. (Pacific time) at
least three Business Days in advance of the proposed Funding Date
(in the case of a Eurodollar Rate Loan) or at least one Business
Day in advance of the proposed Funding Date (in the case of a
Base Rate Loan). Whenever Company desires that Swing Line Lender
make a Swing Line Loan, it shall deliver to Administrative Agent
a Notice of Borrowing no later than 8:30 A.M. (Pacific time) on
the proposed Funding Date. Each Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a Business
Day), (ii) the amount and type of Loans requested, (iii) in the
case of Swing Line Loans and any Revolving Loans made on the
Effective Date, that such Loans shall be Base Rate Loans, (iv) in
the case of any Revolving Loans not made on the Effective Date,
whether such Loans shall be Base Rate Loans or Eurodollar Rate
Loans, and (v) in the case of any Revolving Loans requested to be
made as Eurodollar Rate Loans, the initial Interest Period
requested therefor. Revolving Loans may be continued as or
converted into Base Rate Loans and Eurodollar Rate Loans in the
manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Adminis
trative Agent telephonic notice by the required time of any
proposed borrowing under this subsection 2.1C; provided that such
notice shall be promptly confirmed in writing by delivery of a
Notice of Borrowing to Administrative Agent on or before the
applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur
any liability to Company in acting upon any telephonic notice
referred to above that Administrative Agent believes in good
faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Company or for otherwise
acting in good faith under this subsection 2.1C, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to
any such telephonic notice Company shall have effected Loans
hereunder.
Company shall notify Administrative Agent prior to the
funding of any Loans in the event that any of the matters to
which Company is required to certify in the applicable Notice of
Borrowing is no longer true and correct as of the applicable
Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of
the applicable Funding Date, as to the matters to which Company
is required to certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C
and 2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or
telephonic notice in lieu thereof) shall be irrevocable on and
after the issuance thereof, and Company shall be bound to make a
borrowing in accordance therewith.
D. Disbursement of Funds. All Revolving Loans under this
Agreement shall be made by Lenders simultaneously and propor
tionately to their respective Pro Rata Shares, it being under
stood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Loan requested
hereunder. Promptly after receipt by Administrative Agent of a
Notice of Borrowing pursuant to subsection 2.1C (or telephonic
notice in lieu thereof), Administrative Agent shall notify each
Lender or Swing Line Lender, as the case may be, of the proposed
borrowing. Each Lender shall make the amount of its Loan
available to Administrative Agent not later than 11:00 A.M.
(Pacific time) on the applicable Funding Date, and Swing Line
Lender shall make the amount of its Swing Line Loan available to
Administrative Agent not later than 11:00 A.M. (Pacific time) on
the applicable Funding Date, in each case in same day funds in
Dollars, at the Funding and Payment Office. Except as provided
in subsection 2.1B or subsection 3.3B with respect to Revolving
Loans used to repay Refunded Swing Line Loans or to reimburse
Administrative Agent for the amount of a drawing under a Letter
of Credit issued by it, upon satisfaction or waiver of the
conditions precedent specified in subsections 4.1 (in the case of
Loans made or converted on the Effective Date), and 4.4 (in the
case of all Loans), Administrative Agent shall make the proceeds
of such Loans available to Company on the applicable Funding Date
by causing an amount of same day funds in Dollars equal to the
proceeds of all such Loans received by Administrative Agent from
Lenders or Swing Line Lender, as the case may be, to be credited
to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by
any Lender prior to the Funding Date for any Revolving Loans that
such Lender does not intend to make available to Administrative
Agent the amount of such Lender's Loan requested on such Funding
Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding
Date and Administrative Agent may, in its sole discretion, but
shall not be obligated to, make available to Company a correspond
ing amount on such Funding Date. If such corresponding amount is
not in fact made available to Administrative Agent by such
Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with
interest thereon, for each day from such Funding Date until the
date such amount is paid to Administrative Agent, at the custo
mary rate set by Administrative Agent for the correction of
errors among banks for three Business Days and thereafter at the
Base Rate. If such Lender does not pay such corresponding amount
forthwith upon Administrative Agent's demand therefor, Adminis
trative Agent shall promptly notify Company and Company shall
immediately pay such corresponding amount to Administrative Agent
together with interest thereon, for each day from such Funding
Date until the date such amount is paid to Administrative Agent,
at the rate payable under this Agreement for Base Rate Loans of
the type then being repaid by Company. Nothing in this
subsection 2.1D shall be deemed to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice
any rights that Company may have against any Lender as a result
of any default by such Lender hereunder.
E. Notes. On the Effective Date, the Company shall
execute and deliver to each Lender (or to Administrative Agent
for that Lender) a Revolving Note to evidence that Lender's
Revolving Loans, in the principal amount of that Lender's
Revolving Commitment and with other appropriate insertions, and
the Company shall execute and deliver to Swing Line Lender a
Swing Line Note to evidence Swing Line Lender's Swing Line Loans,
in the principal amount of the Swing Line Loan Commitment and
with other appropriate insertions. Upon the execution and
delivery to any Lender or Swing Line Lender of Notes pursuant to
this subsection 2.1E, the Revolving Note (and any Tranche A Note,
Tranche B Note and Tranche C Note, as each such term is defined
in the Existing Credit Agreement) or Swing Line Note, as the case
may be, that were executed and delivered to such Lender or Swing
Line Lender pursuant to the Existing Credit Agreement shall be
null and void, and such Lender or Swing Line Lender shall
promptly return such Revolving Note or Swing Line Note to Company
for cancellation.
Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and
until a Lender Assignment Agreement effecting the assignment or
transfer thereof shall have been accepted by Administrative Agent
as provided in subsection 10.1B(ii). 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 shall be conclusive and binding on any subsequent holder,
assignee or transferee of that Note or of any Note or Notes
issued in exchange therefor.
F. Conversion of Existing Revolving Loans into Revolving
Loans. Upon satisfaction or written waiver by Requisite
Lenders of the conditions set forth in subsections 4.1 and 4.4,
as of the Effective Date all Revolving Loans (as defined in the
Existing Credit Agreement) outstanding under the Existing Credit
Agreement as of, and at the time of, the Effective Date
("Existing Revolving Loans") shall be converted into and deemed
to be Revolving Loans for all purposes under this Agreement. Any
amounts of accrued interest or other amounts owed (whether or not
presently due and payable) by Company to the Lenders under or in
respect of the Existing Revolving Loans shall, as of the Effec
tive Date, continue to be due and payable to the Lenders under
the Revolving Notes issued to the Lenders hereunder. The conver
sion of the Existing Revolving Loans hereunder shall not be
deemed to be repayment thereof, and Company shall not be required
to deliver any notice of prepayment or notice of borrowing or to
satisfy any other condition relating to required amounts of
prepayments or borrowings hereunder with respect to such conver
sion of the Existing Revolving Loans.
2.2 Interest on the Loans.
A. Rate of Interest. Subject to the provisions of
subsections 2.2B, 2.2E, 2.6 and 2.7, each Revolving Loan shall
bear interest on the unpaid principal amount thereof from the
date made through maturity (whether by acceleration or otherwise)
at a rate determined by reference to the Base Rate or the
Adjusted Eurodollar Rate, as the case may be. Subject to the
provisions of subsection 2.7, the applicable basis for
determining the rate of interest with respect to any Loan shall
be selected by Company initially at the time a Notice of
Borrowing is given with respect to such Loan pursuant to
subsection 2.1C. If on any day a Loan is outstanding with
respect to which notice is required to be delivered to
Administrative Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the
rate of interest but such notice has not been so delivered, then
for that day that Loan shall bear interest determined by
reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7,
the Revolving Loans shall bear interest through maturity as
follows:
(a) if a Base Rate Loan, then at the sum of the Base
Rate plus the Applicable Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Eurodollar
Margin.
The Applicable Base Rate Margin and the Applicable
Eurodollar Margin shall automatically be adjusted in accordance
with the respective definitions of such terms.
Subject to the provisions of subsections 2.2E and 2.7,
the Swing Line Loans shall bear interest through their maturity
at the Prime Rate.
B. Interest Periods. In connection with each Eurodollar
Rate Loan, Company may, pursuant to the applicable Notice of
Borrowing or Notice of Conversion/Continuation, as the case may
be, select an interest period (each an "Interest Period") to be
applicable to such Loan, which Interest Period shall be, at
Company's option, either a one, two, three or six month period;
provided that:
(i) the initial Interest Period for any Eurodollar
Rate Loan shall commence on the Funding Date in respect of
such Loan, in the case of a Loan initially made as a
Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of
a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest
Periods applicable to a Eurodollar Rate Loan continued as
such pursuant to a Notice of Conversion/Continuation, each
successive Interest Period shall commence on the day on
which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire
on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day; provided
that, if any Interest Period would otherwise expire on a day
that 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;
(iv) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to
clause (v) of this subsection 2.2B, end on the last Business
Day of a calendar month;
(v) no Interest Period with respect to any portion of
the Revolving Loans shall extend beyond the Commitment
Termination Date;
(vi) no Interest Period with respect to any portion of
the Revolving Loans shall extend beyond the date on which a
permanent reduction of the Commitments is scheduled to occur
unless the sum of (a) the aggregate principal amount of
Revolving Loans that are Base Rate Loans plus (b) the
aggregate principal amount of Revolving Loans that are
Eurodollar Rate Loans with Interest Periods expiring on or
before such date plus (c) the excess of the Commitments then
in effect over the aggregate principal amount of Revolving
Loans then outstanding equals or exceeds the permanent
reduction of the Commitments that is scheduled to occur on
such date;
(vii) there shall be no more than five Interest
Periods outstanding at any time; and
(viii) in the event Company fails to specify an
Interest Period for any Eurodollar Rate Loan in the
applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have
selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of
subsection 2.2E, interest on each Loan shall be payable in
arrears on and to each Interest Payment Date applicable to that
Loan, upon any prepayment of that Loan (to the extent accrued on
the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Loans that are Base
Rate Loans are prepaid pursuant to subsection 2.4A(iii) or
2.4B(i), interest accrued on such Loans through the date of such
prepayment shall be payable on the next succeeding Interest
Payment Date applicable to Base Rate Loans (or, if earlier, at
final maturity).
D. Conversion or Continuation. Subject to the provisions
of subsection 2.6, Company shall have the option (i) to convert
at any time all or any part of its outstanding Base Rate Loans
equal to $5,000,000 and integral multiples of $1,000,000 in
excess of that amount to Eurodollar Rate Loans, (ii) to convert
at any time all or any part of its outstanding Eurodollar Rate
Loans equal to $500,000 and integral multiples of $100,000 in
excess of that amount to Base Rate Loans, or (iii) upon the
expiration of any Interest Period applicable to a Eurodollar Rate
Loan, to continue all or any portion of such Loan equal to
$5,000,000 and integral multiples of $1,000,000 in excess of that
amount as a Eurodollar Rate Loan; provided, however, that a
Eurodollar Rate Loan may only be converted into a Base Rate Loan
on the expiration date of an Interest Period applicable thereto.
Company shall deliver a Notice of
Conversion/Continuation to Administrative Agent no later than
8:30 A.M. (Pacific time) at least one Business Day in advance of
the proposed conversion date (in the case of a conversion to a
Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). A
Notice of Conversion/Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day),
(ii) the amount and type of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation, (iv) in
the case of a conversion to, or a continuation of, a Eurodollar
Rate Loan, the requested Interest Period, and (v) in the case of
a conversion to, or a continuation of, a Eurodollar Rate Loan,
that no Event of Default or, to Company's Best Knowledge
(following the reasonable exercise of diligence appropriate for
the circumstance in question by the officers of the Company
executing such certificate), no Potential Event of Default has
occurred and is continuing. In lieu of delivering the above-
described Notice of Conversion/Continuation, Company may give
Administrative Agent telephonic notice by the required time of
any proposed conversion/continuation under this subsection 2.2D;
provided that such notice shall be promptly confirmed in writing
by delivery of a Notice of Conversion/Continuation to Administra
tive Agent on or before the proposed conversion/continuation
date.
Neither Administrative Agent nor any Lender shall incur
any liability to Company in acting upon any telephonic notice
referred to above that Administrative Agent believes in good
faith consistent with commercial banking practices to have been
given by a duly authorized officer or other person authorized to
act on behalf of Company or for otherwise acting in good faith
under this subsection 2.2D, and upon conversion or continuation
of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant
to any such telephonic notice Company shall have effected a
conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C
and 2.6G, a Notice of Conversion/Continuation for conversion to,
or continuation of, a Eurodollar Rate Loan (or telephonic notice
in lieu thereof) shall be irrevocable on and after the related
Interest Rate Determination Date, and Company shall be bound to
effect a conversion or continuation in accordance therewith.
E. Post-Default Interest. Upon the occurrence and during
the continuation of any Event of Default, the outstanding
principal amount of all Loans and, to the extent permitted by
applicable law, the amount of any overdue interest payments on
the Loans or any overdue fees or other amounts owed hereunder
shall thereafter bear interest (including post-petition interest
in any proceeding under the Bankruptcy Code or other applicable
bankruptcy laws) payable on demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this
Agreement with respect to the applicable Loans (or, in the case
of any such fees and other amounts, at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this
Agreement for Base Rate Loans); provided that, in the case of
Eurodollar Rate Loans, upon the expiration of the Interest Period
in effect at the time any such increase in interest rate is
effective, such Eurodollar Rate Loans shall thereupon become Base
Rate Loans and shall thereafter bear interest payable upon demand
at a rate which is 2% per annum in excess of the interest rate
otherwise payable under this Agreement for Base Rate Loans.
Payment or acceptance of the increased rates of interest provided
for in this subsection 2.2E is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall
be computed (i) in the case of Base Rate Loans, on the basis of a
365-day or 366-day year, as the case may be, and (ii) in the case
of Eurodollar Rate Loans, on the basis of a 360-day year, in each
case for the actual number of days elapsed in the period during
which it accrues. In computing interest on any Loan, the date of
the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of conver
sion of such Eurodollar Rate Loan to such Base Rate Loan, as the
case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to
a Eurodollar Rate Loan, the date of conversion of such Base Rate
Loan to such Eurodollar Rate Loan, as the case may be, shall be
excluded; provided that if a Loan is repaid on the same day on
which it is made, one day's interest shall be paid on that Loan.
2.3 Fees.
A. Unused Commitment Fees. Company agrees to pay to
Administrative Agent, for distribution to each Lender in propor
tion to that Lender's Pro Rata Share, commitment fees for the
period from and including the Effective Date to and excluding the
Commitment Termination Date equal to (i) the average of the daily
excess of the Commitments over the sum of the aggregate principal
amount of Revolving Loans outstanding plus the Letter of Credit
Usage multiplied by (ii) Applicable Commitment Fee Percentage,
such commitment fees to be calculated on the basis of a 360-day
year, and the actual number of days elapsed and to be payable
quarterly in arrears on the last Business Day of March,
June, September and December of each year, commencing on the
first such date to occur after the Effective Date and on the
Commitment Termination Date.
B. Additional Fees.
(i) [omitted]
(ii) Company agrees to pay to Administrative Agent all
fees set forth in the Agent's fee letter executed and
delivered pursuant to subsection 4.1P.
(iii) Company agrees to pay to Administrative Agent
on the Effective Date for distribution to each Lender in
accordance with such Lender's Pro Rata Share, all accrued
unpaid interest and fees owed under the Existing Credit
Agreement, whether or not then due and payable under the
Existing Credit Agreement.
2.4 Payments, Prepayments and Reductions in Commitments; General
Provisions Regarding Payments.
A. Scheduled and Mandatory Reductions of Commitments and
Mandatory Prepayments.
(i) Scheduled Reductions of Revolving Commitments.
The Revolving Commitments shall terminate on the Commitment
Termination Date.
(ii) [omitted].
(iii) Mandatory Prepayments and Mandatory
Reductions of Commitments. The Loans shall be prepaid and
the Commitments shall be permanently reduced in the amounts
and under the circumstances set forth below, all such
prepayments and reductions to be applied as set forth below
or as more specifically provided in subsection 2.4C:
(a) Prepayments and Reductions From Asset Sales.
(1) If Company or any of its Subsidiaries receives any
Net Cash Proceeds in an amount equal to or greater than
$2,500,000 from any Asset Sale, Company shall prepay the
Loans and the Commitments shall be permanently reduced in an
aggregate amount equal to the excess of such Net Cash
Proceeds of such Asset Sale over the amount of such Net Cash
Proceeds that the Company intends to invest in a Related
Business and are so invested within 270 days of receipt by
the Company or any of its Subsidiaries. Such prepayment
shall be due and such reduction in Commitments shall occur
on the earlier of (i) the second Business Day following a
determination by a Responsible Officer that such Net Cash
Proceeds will not be invested in assets or property of a
Related Business or (ii) 270 days after the receipt of such
Cash Proceeds, if they have not been so invested in a
Related Business;
(2) If Company or any of its Subsidiaries receives any
Net Cash Proceeds in an amount less than $2,500,000 from any
Asset Sale, Company shall prepay the Loans and the
Commitments shall be permanently reduced in an aggregate
amount equal to the excess of such Net Cash Proceeds of such
Asset Sale over such Net Cash Proceeds that Company intends
to invest in a Related Business and are so invested within
270 days of receipt by Company or any of its Subsidiaries.
Such prepayment shall be due and such reduction in Commit
ments shall occur on the second Business Day following
receipt by Company or any of its Subsidiaries of Net Cash
Proceeds in an amount that, together with all Net Cash
Proceeds received by Company from Asset Sales since the
later of the Effective Date or the date of the most recent
payment made pursuant to this subsection 2.4A(iii)(a),
exceeds $6,000,000.
(3) Concurrently with any prepayment of the Loans and
reduction of the Commitments pursuant to this subsection
2.4A(iii)(a), Company shall deliver to Agent an Officers'
Certificate demonstrating the derivation of the Net Cash
Proceeds from the correlative Asset Sale from the gross
sales price thereof. In the event that Company shall, at
any time after receipt of Cash Proceeds from any Asset Sale
requiring a prepayment or a reduction of the Commitments
pursuant to this subsection 2.4A(iii)(a), determine that the
prepayments and/or reductions of the Commitments previously
made in respect of such Asset Sale were in an aggregate
amount less than that required by the terms of this
subsection 2.4A(iii)(a), Company shall promptly make an
additional prepayment of the Swing Line Loans, or Revolving
Loans, as the case may be (and the Commitments shall be
permanently reduced), in the manner described above in an
amount equal to the amount of any such deficit, and Company
shall concurrently therewith deliver to Agent an Officers'
Certificate demonstrating the derivation of the additional
Net Cash Proceeds resulting in such deficit.
(b) Prepayments and Reductions Due to the Occurrence
of an Event of Loss.
(1) If Company or any of its Subsidiaries receives any
Net Cash Proceeds in an amount equal to or greater than
$2,500,000 from any Event of Loss, Company shall prepay the
Loans and the Commitments shall be permanently reduced in an
aggregate amount equal to the excess of such Net Cash
Proceeds of from such Event of Loss over the amount of such
Net Cash Proceeds that the Company intends to invest in a
Related Business and are so invested within 270 days of
receipt by the Company or any of its Subsidiaries. Such
prepayment shall be due and such reduction in Commitments
shall occur on the earlier of (i) the second Business Day
following a determination by a Responsible Officer that such
Net Cash Proceeds will not be invested in assets or property
of a Related Business or (ii) 270 days after the receipt of
such Net Cash Proceeds, if they have not been so invested in
a Related Business;
(2) If Company or any of its Subsidiaries receives any
Net Cash Proceeds in an amount less than $2,500,000 from any
Event of Loss, Company shall prepay the Loans and the
Revolving Commitments shall be permanently reduced in an
aggregate amount equal to the excess of such Net Cash
Proceeds of such Asset Sale over such Net Cash Proceeds that
Company intends to invest in a Related Business and are so
invested within 270 days of receipt by Company or any of its
Subsidiaries. Such prepayment shall be due and such reduc
tion in Commitments shall occur on the second Business Day
following receipt by Company or any of its Subsidiaries of
Net Cash Proceeds in an amount that, together with all Net
Cash Proceeds received by Company from Events of Loss since
the later of the Effective Date or the date of the most
recent payment made pursuant to this subsection
2.4A(iii)(b), exceeds $6,000,000.
(3) Concurrently with any prepayment of the Loans and
reduction of the Commitments pursuant to this subsection
2.4A(iii)(b), Company shall deliver to Agent an Officers'
Certificate demonstrating the derivation of the Net Cash
Proceeds from the correlative Event of Loss. In the event
that Company shall, at any time after receipt of Cash
Proceeds from any Event of Loss requiring a prepayment or a
reduction of the Commitments pursuant to this subsection
2.4A(iii)(b), determine that the prepayments and/or
reductions of the Commitments previously made in respect of
such Event of Loss were in an aggregate amount less than
that required by the terms of this subsection 2.4A(iii)(b),
Company shall promptly make an additional prepayment of the
Swing Line Loans or Revolving Loans, as the case may be (and
the Commitments shall be permanently reduced), in the manner
described above in an amount equal to the amount of any such
deficit, and Company shall concurrently therewith deliver to
Agent an Officers' Certificate demonstrating the derivation
of the additional Net Cash Proceeds resulting in such
deficit.
(c) [omitted]
(d) [omitted]
(e) [omitted]
B. Voluntary Prepayments, Mandatory Prepayments and
Voluntary Reductions in Commitments.
(i) Voluntary Prepayments. Company may, upon written
or telephonic notice to Administrative Agent on or prior to
8:30 A.M. (Pacific time) on the date of prepayment, which
notice, if telephonic, shall be promptly confirmed in
writing, at any time and from time to time prepay without
premium or penalty any Swing Line Loan on any Business Day
in whole or in part in an aggregate minimum amount of
$500,000 and integral multiples of $100,000 in excess of
that amount. Company may, upon written or telephonic notice
given to Administrative Agent by 8:30 A.M. (Pacific time)
not less than three Business Days in advance (in the case of
a Eurodollar Rate Loan) or one Business Day in advance (in
the case of a Base Rate Loan) of any proposed prepayment
date and, if given by telephone, promptly confirmed in
writing to Administrative Agent (which written or telephone
notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and
from time to time prepay without premium and penalty any
Base Rate Loans on any Business Day in whole or in part in
an aggregate minimum amount of $1,000,000 and any integral
multiples of $100,000 in excess of that amount or any
Eurodollar Rate Loans on any Business Day in whole or in
part in an aggregate minimum amount of $5,000,000 and any
integral multiples of $1,000,000 in excess of that amount
and any such prepayment of Base Rate Loans or Eurodollar
Rate Loans will include all interest accrued thereon to the
day of prepayment; provided, however, that if a Eurodollar
Rate Loan is prepaid prior to the expiration of the Interest
Period applicable thereto, such prepayment shall include all
costs payable under Section 2.6D as a result of such prepay
ment. Any voluntary prepayments made pursuant to this
Section 2.4B(i) shall be applied to the type of Loan
directed by Company; provided that all voluntary prepayments
shall be used first to pay any interest and/or fees accrued
to the prepayment date on the Loan to be prepaid; provided
further that in the event Company fails to specify the Loans
to which any such prepayment shall be applied, such prepay
ment shall be applied first to repay outstanding Swing Line
Loans to the full extent thereof and second to repay
outstanding Revolving Loans to the full extent thereof.
(ii) Mandatory Prepayments. Company will make the
prepayments on the Loans required by subsection 2.4A.
(iii) Voluntary Reductions of Commitments. Company
may, upon not less than five Business Days' prior written or
telephonic notice confirmed in writing to Administrative
Agent (which original written or telephonic notice Adminis
trative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time
terminate in whole or permanently reduce in part, without
premium or penalty, the Commitments in an amount up to the
amount by which the Commitments exceed the Total Utilization
of Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of the
Commitments shall be in an aggregate minimum amount of
$5,000,000 and integral multiples of $1,000,000 in excess of
that amount. Company's notice to Administrative Agent shall
designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial
reduction, and such termination or reduction of the Commit
ments shall be effective on the date specified in Company's
notice and shall reduce the Commitment of each Lender
proportionately to its Pro Rata Share.
C. Application of Prepayments and Commitment Reductions.
(i) Application of Mandatory Prepayments by Type of
Loans. Any amount (the ``Prepayment Amount'') required to
be applied as a mandatory prepayment of the Loans pursuant
to subsections 2.4A(iii)(a)-(c) shall be applied first to
prepay the Swing Line Loans to the full extent thereof,
second, to the extent of any remaining portion of the
Prepayment Amount, to prepay the Revolving Loans to the full
extent thereof.
(ii) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Any prepayment of the Loans shall be
applied first to Base Rate Loans to the full extent thereof
before application to Eurodollar Rate Loans, in each case in
a manner which minimizes the amount of any payments required
to be made by Company pursuant to subsection 2.6D.
(iii) [omitted]
(iv) [omitted]
D. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by
Company of principal, interest, fees and other Obligations
hereunder and under the Notes, if any, shall be made in
Dollars in same day funds, without defense, setoff or
counterclaim, free of any restriction or condition, and
delivered to Administrative Agent not later than 11:00 A.M.
(Pacific time) on the date due at the Funding and Payment
Office for the account of Lenders; funds received by
Administrative Agent after that time on such due date shall
be deemed to have been paid by Company on the next succeed
ing Business Day. Company hereby authorizes Administrative
Agent to charge its accounts with Administrative Agent in
order to cause timely payment to be made to Administrative
Agent of all principal, interest, fees, expenses and other
amounts due hereunder (subject to sufficient funds being
available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest.
Except as set forth in subsection 2.2C, all payments in
respect of the principal amount of any Loan shall include
payment of accrued interest on the principal amount being
repaid or prepaid, and all such payments shall be applied to
the payment of interest before application to principal.
(iii) Apportionment of Payments. Subject to the
provisions of subsection 2.4D(vi), aggregate principal and
interest payments (other than payments in respect of Swing
Line Loans, which shall be made to the Swing Line Lender)
shall be apportioned among all outstanding Revolving Loans
to which such payments relate, in each case proportionately
to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its
primary address set forth below its name on the appropriate
signature page hereof or at such other address as such
Lender may request, its Pro Rata Share of all such payments
received by Administrative Agent and the commitment fees of
such Lender when received by Administrative Agent pursuant
to subsection 2.3A. Notwithstanding the foregoing provi
sions of this subsection 2.4D(iii), if (i) pursuant to the
provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected
Lender, (ii) any Affected Lender makes Base Rate Loans in
lieu of its Pro Rata Share of any Eurodollar Rate Loans,
(iii) Company repays all amounts owed to a Requiring Lender
pursuant to subsection 2.9, or (iv) Company prepays all
amounts owed to a Former Lender after the expiration of the
applicable Withdrawal Period pursuant to subsection
10.1B(iii), then Administrative Agent shall give effect
thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment
to be made hereunder shall be stated to be due on a day that
is not a Business Day, such payment shall be made on the
next succeeding Business Day except as set forth in
subsection 2.2B(iii), and such extension of time shall be
included in the computation of the payment of interest
hereunder or of the commitment fees hereunder, as the case
may be.
(v) Notation of Payment. Each Lender agrees that
before disposing of any Note held by it, or any part thereof
(other than by granting participations therein), that Lender
will make a notation thereon of all Revolving Loans
evidenced by that Note and all principal payments previously
made thereon and of the date to which interest thereon has
been paid; provided that the failure to make (or any error
in the making of) a notation of any Revolving Loans made
under such Note shall not limit or otherwise affect the
obligations of Company hereunder to the extent of Company's
actual indebtedness or under such Note with respect to any
Revolving Loans or any payments of principal or interest on
such Note.
(vi) Non-Pro Rata Prepayment on the Effective Date.
Anything contained herein or in the other Loan Documents to
the contrary notwithstanding, the parties hereto agree that
the prepayment of the Existing Revolving Loans on the
Effective Date pursuant to subsection 4.1N shall not be
applied to the prepayment of the Existing Revolving Loans in
proportion to the Lenders' respective Pro Rata Shares
thereof (as would otherwise be required pursuant to
subsection 2.4(D)(iii)) but shall instead shall be applied
(i) to the repayment in full of all Existing Revolving Loans
owed to the Noncontinuing Lenders on the Effective Date and
(ii) the repayment of Existing Revolving Loans owed to each
Lender in amounts such that, after giving effect thereto,
the Revolving Loans of each Lender shall be in an amount
directly proportional to such Lender's Pro Rata Share of all
Revolving Loans then outstanding.
2.5 Use of Proceeds.
A. Use of Proceeds.
(i) Revolving Loans. The proceeds of Revolving Loans
shall be applied by Company for general corporate purposes,
including share repurchases and other acquisitions (other
than Hostile Acquisitions) as permitted herein; provided,
however, Company may not apply all or any portion of the
proceeds of the Revolving Loans to fund, directly and
indirectly, a Hostile Acquisition.
(ii) [omitted]
(iii) [omitted]
(iv) Swing Line Loans. The proceeds of the Swing Line
Loans shall be applied by Company for general corporate
purposes; provided, however, that Company may not apply all
or any portion of the proceeds of Swing Line Loans to fund,
directly or indirectly, a Hostile Acquisition.
B. Margin Regulations. No portion of the proceeds of any
borrowing under this Agreement shall be used by Company or any of
its Subsidiaries in any manner that might cause the borrowing or
the application of such proceeds to violate Regulation G, Regula
tion U, Regulation T or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board
or to violate the Exchange Act, in each case as in effect on the
date or dates of such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding any other provision of this Agreement
to the contrary, the following provisions shall govern with
respect to Eurodollar Rate Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As soon as
practicable after 8:30 A.M. (Pacific time) on each Interest Rate
Determination Date, Administrative Agent shall determine (which
determination shall, absent manifest error, be final, conclusive
and binding upon all parties) the interest rate that shall apply
to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone
confirmed in writing) to Company and each Lender.
B. Inability to Determine Applicable Interest Rate. In
the event that Administrative Agent shall have determined (which
determination shall be final and conclusive and binding upon all
parties hereto), on any Interest Rate Determination Date with
respect to any Eurodollar Rate Loans, that by reason of circum
stances affecting the interbank Eurodollar market adequate and
fair means do not exist for ascertaining the interest rate appli
cable to such Loans on the basis provided for in the definition
of Adjusted Eurodollar Rate, Administrative Agent shall on such
date give notice (by telefacsimile or by telephone confirmed in
writing) to Company and each Lender of such determination,
whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent
notifies Company and Lenders that the circumstances giving rise
to such notice no longer exist and (ii) any Notice of Borrowing
or Notice of Conversion/Continuation given by Company with
respect to the Loans in respect of which such determination was
made shall be deemed to be rescinded by Company. If, at any time
following such a determination, Administrative Agent determines
that such circumstances that affected the interbank Eurodollar
market no longer exist, it shall promptly notify Company and each
Lender thereof, at which time the provisions of clauses (i) and
(ii) above shall no longer be effective.
C. Illegality or Impracticability of Eurodollar Rate
Loans. In the event that on any date any Lender shall have
determined (which determination shall be final and conclusive and
binding upon all parties hereto but shall be made only after
consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans
(i) has become unlawful as a result of compliance by such Lender
in good faith with any law, treaty, governmental rule, regula
tion, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the
force of law but which such Lender complies with as a matter of
policy even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such
Lender material hardship, as a result of contingencies occurring
after the date of this Agreement which materially and adversely
affect the interbank Eurodollar market or the position of such
Lender in that market, then, and in any such event, such Lender
shall be an "Affected Lender" and it shall on that day give
notice (by telefacsimile or by telephone confirmed in writing) to
Company and Administrative Agent of such determination (which
notice Administrative Agent shall promptly transmit to each other
Lender). Thereafter (a) the obligation of the Affected Lender to
make Loans as, or to convert Loans to, Eurodollar Rate Loans
shall be suspended until such notice shall be withdrawn by the
Affected Lender, (b) to the extent such determination by the
Affected Lender relates to a Eurodollar Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, the Affected Lender shall make
such Loan as (or convert such Loan to, as the case may be) a Base
Rate Loan, (c) the Affected Lender's obligation to maintain its
outstanding Eurodollar Rate Loans (the "Affected Loans") shall be
terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans
or when required by law, and (d) the Affected Loans shall auto
matically convert into Base Rate Loans on the date of such termi
nation. Notwithstanding the foregoing, to the extent a determi
nation by an Affected Lender as described above relates to a
Eurodollar Rate Loan then being requested by Company pursuant to
a Notice of Borrowing or a Notice of Conversion/Continuation,
Company shall have the option, subject to the provisions of
subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by
telefacsimile or by telephone confirmed in writing) to Adminis
trative Agent of such rescission on the date on which the
Affected Lender gives notice of its determination as described
above (which notice of rescission Administrative Agent shall
promptly transmit to each other Lender). Except as provided in
the immediately preceding sentence, nothing in this subsection
2.6C shall affect the obligation of any Lender other than an
Affected Lender to make or maintain Loans as, or to convert Loans
to, Eurodollar Rate Loans in accordance with the terms of this
Agreement.
D. Compensation For Breakage or Non-Commencement of
Interest Periods. Company shall compensate each Lender, upon
written request by that Lender (which request shall set forth the
basis for requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Rate Loans and any loss, expense
or liability sustained by that Lender in connection with the
liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that
Lender or the occurrence of an event described in subsection
2.6C) a borrowing of any Eurodollar Rate Loan does not occur on a
date specified therefor in a Notice of Borrowing or a telephonic
request for borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified therefor
in a Notice of Conversion/Continuation or a telephonic request
for conversion or continuation, (ii) if any prepayment or other
principal payment or any conversion of any of its Eurodollar Rate
Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any of
its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence
of any other default by Company in the repayment of its Eurodol
lar Rate Loans when required by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Subject to each
Lender's obligations under subsection 2.8, any Lender may make,
carry or transfer Eurodollar Rate Loans at, to, or for the
account of any of its branch offices or the office of an
Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate
Loans. Calculation of all amounts payable to a Lender under this
subsection 2.6 and under subsection 2.7A shall be made as though
that Lender had actually funded each of its relevant Eurodollar
Rate Loans through the purchase of a Eurodollar deposit bearing
interest at the Adjusted Eurodollar Rate in an amount equal to
the amount of such Eurodollar Rate Loan and having a maturity
comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of
that Lender to a domestic office of that Lender in the United
States of America; provided, however, that each Lender may fund
each of its Eurodollar Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes
of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occur
rence of and during the continuation of a Potential Event of
Default of which it is aware to its Best Knowledge or an Event of
Default, (i) Company may not elect to have a Loan be made or
maintained as, or converted to, a Eurodollar Rate Loan after the
expiration of any Interest Period then in effect for that Loan
and (ii) subject to the provisions of subsection 2.6D, any Notice
of Borrowing or Notice of Conversion/Continuation given by
Company with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed
to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
A. Compensation for Increased Costs and Taxes. Subject to
the provisions of subsection 2.7B, in the event that any Lender
shall reasonably determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule,
regulation or order adopted after the date hereof, or any change
therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes
effective after the date hereof, or compliance by such Lender
with any guideline, request or directive issued or made after the
date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending
office) to any additional Tax (other than any Tax on the
overall net income of such Lender) with respect to this
Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office)
of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement
against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by,
any office of such Lender; or
(iii) imposes any other condition (other than with
respect to a Tax matter) on or affecting such Lender (or its
applicable lending office) or its obligations hereunder or
the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to
such Lender of agreeing to make, making or maintaining Loans
hereunder or to reduce any amount received or receivable by such
Lender (or its applicable lending office) with respect thereto;
then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next
sentence, such additional amount or amounts (in the form of an
increased rate of, or a different method of calculating, interest
or otherwise as such Lender in its sole discretion shall deter
mine) as may be necessary to compensate such Lender for any such
increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Company (with a copy to
Administrative Agent) a written statement, setting forth in
reasonable detail the basis for calculating the additional
amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable
by Company under this Agreement and the other Loan Documents
shall be paid free and clear of and (except to the extent
required by law) without any deduction or withholding on
account of any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld
or assessed by or within the United States of America or any
political subdivision in or of the United States of America
or any other jurisdiction from or to which a payment is made
by or on behalf of Company or by any federation or organiza
tion of which the United States of America or any such
jurisdiction is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other
Person is required by law to make any deduction or
withholding on account of any such Tax from any sum paid or
payable by Company to Administrative Agent or any Lender
under any of the Loan Documents:
(a) Company shall notify Administrative
Agent of any such requirement or any change in any such
requirement as soon as Company becomes aware of it;
(b) Company shall pay any such Tax before
the date on which penalties attach thereto, such
payment to be made (if the liability to pay is imposed
on Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as
the case may be) on behalf of and in the name of
Administrative Agent or such Lender;
(c) the sum payable by Company in respect of
which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to
ensure that, after the making of that deduction,
withholding or payment, Administrative Agent or such
Lender, as the case may be, receives on the due date a
net sum equal to what it would have received had no
such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any sum from
which it is required by law to make any deduction or
withholding, and within 30 days after the due date of
payment of any Tax which it is required by clause (b)
above to pay, Company shall deliver to Administrative
Agent evidence satisfactory to the other affected
parties of such deduction, withholding or payment and
of the remittance thereof to the relevant taxing or
other authority.
(iii) Evidence of Exemption from U.S. Withholding
Tax.
(a) Each Lender that is organized under the
laws of any jurisdiction other than the United States
or any state or other political subdivision thereof
(for purposes of this subsection 2.7B(iii), a "Non-US
Lender") shall deliver to Administrative Agent for
transmission to Company, on or prior to the Effective
Date (in the case of each Lender listed on the signa
ture pages hereof) or on the date of the Lender Assign
ment Agreement pursuant to which it becomes a Lender
(in the case of each other Lender), and at such other
times as may be necessary in the determination of
Company or Administrative Agent (each in the reasonable
exercise of its discretion), (1) two original copies of
Internal Revenue Service Form 1001 or 4224 (or any
successor forms), properly completed and duly executed
by such Lender, together with any other certificate or
statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction
or withholding of United States federal income tax with
respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of
the Loan Documents or (2) if such Lender is not a
"bank" or other Person described in Section 881(c)(3)
of the Internal Revenue Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue
Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender, together
with any other certificate or statement of exemption
required under the Internal Revenue Code or the regula
tions issued thereunder to establish that such Lender
is not subject to deduction or withholding of United
States federal income tax with respect to any payments
to such Lender of interest payable under any of the
Loan Documents.
(b) Each Lender required to deliver any
forms, certificates or other evidence with respect to
United States federal income tax withholding matters
pursuant to subsection 2.7B(iii)(a) hereby agrees, from
time to time after the initial delivery by such Lender
of such forms, certificates or other evidence, whenever
a lapse in time or change in circumstances renders such
forms, certificates or other evidence obsolete or
inaccurate in any material respect, such Lender shall
(1) deliver to Administrative Agent for transmission to
Company two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank
Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly
completed and duly executed by such Lender, together
with any other certificate or statement of exemption
required in order to confirm or establish that such
Lender is not subject to deduction or withholding of
United States federal income tax with respect to
payments to such Lender under the Loan Documents or
(2) immediately notify Administrative Agent and Company
of its inability to deliver any such forms,
certificates or other evidence; provided that Company
may continue to rely on any form, certificate or other
evidence delivered to it pursuant to subsection
2.7B(iii)(a) until such time as it has received
information pursuant to this subsection 2.7B(iii)(b)
that is intended to replace or supplant the information
provided on any such previously delivered form or
certificate.
(c) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c)
of subsection 2.7B(ii) if such Lender shall have failed
to satisfy the requirements of subsection 2.7B(iii)(a);
provided that if such Lender shall have satisfied such
requirements on the Effective Date (in the case of each
Lender listed on the signature pages hereof) or on the
date of the Lender Assignment Agreement pursuant to
which it became a Lender (in the case of each other
Lender), nothing in this subsection 2.7B(iii)(c) shall
relieve Company of its obligation to pay any additional
amounts pursuant to clause (c) of subsection 2.7B(ii)
in the event that, as a result of any change in any
applicable law, treaty or governmental rule, regulation
or order, or any change in the interpretation, adminis
tration or application thereof, such Lender is no
longer properly entitled to deliver forms, certificates
or other evidence at a subsequent date establishing the
fact that such Lender is not subject to withholding as
described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall
reasonably have determined that the adoption, effectiveness,
phase-in or applicability after the date hereof of any law, rule
or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its
applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Lender or any corporation
controlling such Lender as a consequence of, or with reference
to, such Lender's Loans or Commitments or Letters of Credit or
participations therein or other obligations hereunder with
respect to the Loans or Letters of Credit to a level below that
which such Lender or such controlling corporation could have
achieved but for such adoption, effectiveness, phase-in, appli
cability, change or compliance (taking into consideration the
policies of such Lender or such controlling corporation with
regard to capital adequacy), then from time to time, within five
Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Company shall pay to
such Lender such additional amount or amounts as will compensate
such Lender or such controlling corporation on an after-tax basis
for such reduction. Such Lender shall deliver to Company (with a
copy to Administrative Agent) a written statement, setting forth
in reasonable detail the basis of the calculation of such add
itional amounts, which statement shall be conclusive and binding
upon all parties hereto absent manifest error.
2.8 Obligation of Lenders and Administrative Agent to Mitigate.
Each Lender and Administrative Agent agree that, as
promptly as practicable after the officer of such Lender or
Administrative Agent responsible for administering the Loans or
Letters of Credit of such Lender or Administrative Agent becomes
aware of the occurrence of an event or the existence of a
condition that would cause such Lender to become an Affected
Lender or that would entitle such Lender to receive payments
under subsection 2.6, subsection 2.7 or subsection 3.6, it will,
to the extent not inconsistent with the internal policies of such
Lender or Administrative Agent and any applicable legal or
regulatory restrictions, use reasonable efforts (i) to make,
issue, fund or maintain the Commitment of such Lender or Adminis
trative Agent or the affected Loans of such Lender or Adminis
trative Agent through another lending or letter of credit office
of such Lender or Administrative Agent, or (ii) take such other
measures as such Lender or Administrative Agent may deem reason
able, if as a result thereof the circumstances which would cause
such Lender or Administrative Agent to be an Affected Lender
would cease to exist or the additional amounts which would other
wise be required to be paid to such Lender or Administrative
Agent pursuant to subsection 2.6, subsection 2.7 or subsection
3.6 would be materially reduced and if, as determined by such
Lender or Administrative Agent in its sole discretion, the
making, issuing, funding or maintaining of such Commitment or
Loans or Letters of Credit through such other lending or letter
of credit office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely affect
such Commitment or Loans or Letters of Credit or the interests of
such Lender or Administrative Agent; provided that such Lender or
Administrative Agent will not be obligated to utilize such other
lending or letter of credit office pursuant to this subsection
2.8 unless Company agrees to pay all reasonable incremental
expenses incurred by such Lender or Administrative Agent as a
result of utilizing such other lending or letter of credit office
as described in clause (i) above. A certificate as to the amount
of any such expenses payable by Company pursuant to this
subsection 2.8 (setting forth in reasonable detail the basis for
requesting such amount) submitted by such Lender or Adminis
trative Agent to Company (with a copy to Administrative Agent)
shall be conclusive absent manifest error.
2.9 Replacement or Termination of Lenders.
In the event Company is required under the provisions
of subsection 2.7 or subsection 3.6 to make payments to any
Lender (a "Requiring Lender"), Company may, within 120 days after
the date any notice or demand requiring such payment under
subsection 2.7 or subsection 3.6 is given and so long as no Event
of Default shall have occurred and be continuing, elect to
terminate such Lender as a party to this Agreement; provided
that, concurrently with such termination, Company either (x)
voluntarily elects to terminate the Commitments of such Requiring
Lender and repays all principal, interest and other amounts then
owed to such Requiring Lender or (Y) solicits one or more Eligi
ble Assignees that agree(s) to assume the Commitments of such
Requiring Lender and assume all obligations of such Requiring
Lender pursuant to a Lender Assignment Agreement.
SECTION 3.
LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of
Participations Therein.
A. Letters of Credit. In addition to Company requesting
that Lenders make Revolving Loans pursuant to subsection 2.1A and
that Swing Line Lender make Swing Line Loans pursuant to subsec
tion 2.1B, Company may request, in accordance with the provisions
of this subsection 3.1, from time to time during the period from
the Effective Date to but excluding the fifth day prior to the
Commitment Termination Date, that the Issuing Lender issue
Letters of Credit for the account of Company for the purposes
specified in the definition of Standby Letters of Credit.
Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company
herein set forth, the Issuing Lender shall issue such Letters of
Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that the Issuing Lender
issue (and the Issuing Lender shall not issue):
(i) any Letter of Credit if, after giving effect to
such issuance, the Total Utilization of Commitments would
exceed the Revolving Commitments then in effect (and the
Issuing Bank shall not issue any Letter of Credit without a
confirmation in writing from Administrative Agent as to
compliance with the foregoing restriction);
(ii) any Letter of Credit if, after giving effect to
such issuance, the Letter of Credit Usage would exceed
$1,000,000;
(iii) any Letter of Credit having an expiration
date later than the earlier of (a) five days prior to the
Commitment Termination Date and (b) the date which is one
year from the date of issuance of such Letter of Credit;
provided that the immediately preceding clause (b) shall not
prevent the Issuing Lender from agreeing that a Letter of
Credit will automatically be extended for one or more
successive periods not to exceed one year each unless the
Issuing Lender elects not to extend for any such additional
period; or
(iv) any Letter of Credit denominated in a currency
other than Dollars.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires
the issuance of a Letter of Credit, it shall deliver to
the Issuing Lender (with a copy to Administrative
Agent) an irrevocable Notice of Issuance of Letter of
Credit substantially in the form of Exhibit III annexed
hereto no later than 10:00 A.M. (Pacific time) at least
5 Business Days, or in each case such shorter period as
may be agreed to by the Issuing Lender in any particu
lar instance, in advance of the proposed date of
issuance. The Notice of Issuance of Letter of Credit
shall specify (a) the proposed date of issuance (which
shall be a Business Day), (b) the face amount of the
Letter of Credit, (c) the expiration date of the
Letter of Credit, (d) the name and address of the
beneficiary, and (e) the verbatim text of the proposed
Letter of Credit or the proposed terms and conditions
thereof, including a precise description of any
documents and the verbatim text of any certificates to
be presented by the beneficiary which, if presented by
the beneficiary prior to the expiration date of the
Letter of Credit, would require the Issuing Lender to
make payment under the Letter of Credit; provided that
the Issuing Lender, in its reasonable discretion, may
require changes in the text of the proposed Letter of
Credit or any such documents or certificates; and
provided, further that no Letter of Credit shall
require payment against a conforming draft to be made
thereunder on the same business day (under the laws of
the jurisdiction in which the office of the Issuing
Lender to which such draft is required to be presented
is located) that such draft is presented if such
presentation is made after 10:00 A.M. (in the time zone
of such office of the Issuing Lender) on such business
day.
Company shall notify the Issuing Lender (with a
copy to Administrative Agent) prior to the issuance of any
Letter of Credit in the event that any of the matters to
which Company is required to certify in the applicable
Notice of Issuance of Letter of Credit is no longer true and
correct as of the proposed date of issuance of such Letter
of Credit, and upon the issuance of any Letter of Credit
Company shall be deemed to have re-certified, as of the date
of such issuance, as to the matters to which Company is
required to certify in the applicable Notice of Issuance of
Letter of Credit.
(ii) Issuance of Letter of Credit. Upon satisfaction
or waiver (in accordance with subsection 10.6) of the
conditions set forth in subsection 4.4, the Issuing Lender
shall issue the requested Letter of Credit in accordance
with Issuing Lender's standard operating procedures.
(iii) Notification to Lenders. Upon the issuance
of any Letter of Credit Issuing Lender shall notify
Administrative Agent and each other Lender of such issuance,
which notice shall be accompanied by a copy of such Letter
of Credit. Promptly after receipt of such notice (or, if
Administrative Agent is the Issuing Lender, together with
such notice, Administrative Agent shall notify each Lender
of the amount of such Lender's respective participation in
such Letter of Credit, determined in accordance with
subsection 3.1C.
(iv) Reports to Lenders. Within 15 days after the end
of each calendar quarter of Company ending after the
Effective Date, so long as any Letter of Credit shall have
been outstanding during such calendar quarter, the Issuing
Lender shall deliver to each other Lender a report setting
forth the average for such calendar quarter of the daily
maximum amount available to be drawn under the Letters of
Credit issued by the Issuing Lender that were outstanding
during such calendar quarter.
C. Lenders' Purchase of Participations in Letters of
Credit. Immediately upon the issuance of each Letter of Credit,
each Lender shall be deemed to, and hereby agrees to, have
irrevocably purchased from Administrative Agent a participation
in such Letter of Credit and drawings thereunder in an amount
equal to such Lender's Pro Rata Share of the maximum amount which
is or at any time may become available to be drawn thereunder.
D. Existing Letters of Credit. Each Existing Letter of
Credit outstanding on the Effective Date shall be deemed to be a
Letter of Credit hereunder.
3.2 Letter of Credit Fees.
Company agrees to pay the following amounts with
respect to Letters of Credit issued hereunder:
(i) on the date of issuance and of each extension
thereof of each Letter of Credit, (a) a non-refundable
letter of credit fee, payable to Administrative Agent for
the account of Lenders, equal to 1.00% per annum and (b) a
non-refundable fronting letter of credit fee, payable
directly to the Issuing Lender for its own account equal to
the greater of (x) 0.25% per annum of the maximum amount
available to be drawn under such Letter of Credit and (y)
$500, in each case computed on the basis of a 360 day year
for the actual number of days in the term of such Letter of
Credit, including any extension thereof.
(ii) with respect to the amendment or transfer of each
Letter of Credit and each drawing made thereunder (without
duplication of the fees payable under clause (i) above),
documentary and processing charges payable directly to the
issuing Lender for its own account in accordance with the
Issuing lender's standard schedule for such charges in
effect at the time of such issuance, amendment, transfer or
drawing, as the case may be and, to the extent such amend
ment increases the maximum amount available to be drawn
under any such Letter of Credit, increased fees in accor
dance with the formula set forth in subsection 3.2(i)(a)
above.
Promptly upon receipt by Administrative Agent of any amount
described in clause (i)(a) of this subsection 3.2, Administrative
Agent shall distribute to each other Lender its Pro Rata Share of
such amount.
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of
Credit.
A. Responsibility of Administrative Agent With Respect to
Drawings. In determining whether to honor any drawing under any
Letter of Credit by the beneficiary thereof, the Issuing Lender
shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit
have been delivered and that they comply on their face with the
requirements of such Letter of Credit.
B. Reimbursement by Company of Amounts Drawn Under Letters
of Credit. In the event the Issuing Lender has determined to
honor a drawing under a Letter of Credit issued by it, the
Issuing Lender shall immediately notify Company and (unless the
Issuing Letter is Administrative Agent) Administrative Agent, and
Company shall reimburse Administrative Agent on or before the
Business Day immediately following the date on which such drawing
is honored (the "Reimbursement Date") in an amount in Dollars and
in same day funds equal to the amount of such drawing; provided
that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless Company shall have notified Adminis
trative Agent and the Issuing Lender prior to 8:30 A.M. (Pacific
time) on the date of such drawing that Company intends to
reimburse the Issuing Lender for the amount of such drawing with
funds other than the proceeds of Revolving Loans, Company shall
be deemed to have given a timely Notice of Borrowing to
Administrative Agent requesting Lenders to make Base Rate Loans
on the Reimbursement Date in an amount in Dollars equal to the
amount of such drawing and (ii) subject to satisfaction or waiver
of the conditions specified in subsection 4.4B, Lenders shall, on
the Reimbursement Date, make Base Rate Loans in the amount of
such drawing, the proceeds of which shall be applied directly by
Administrative Agent to reimburse the Issuing Lender for the
amount of such drawing; and provided, further that if for any
reason proceeds of Revolving Loans are not received by the
Issuing Lender on the Reimbursement Date in an amount equal to
the amount of such drawing, Company shall reimburse the Issuing
Lender, on demand, in an amount in same day funds equal to the
excess of the amount of such drawing over the aggregate amount of
such Revolving Loans, if any, which are so received. Nothing in
this subsection 3.3B shall be deemed to relieve any Lender from
its obligation to make Revolving Loans on the terms and condi
tions set forth in this Agreement, and Company shall retain any
and all rights it may have against any Lender resulting from the
failure of such Lender to make such Revolving Loans under this
subsection 3.3B.
C. Payment by Lenders of Unreimbursed Drawings Under
Letters of Credit.
(i) Payment by Lenders. In the event that Company
shall fail for any reason to reimburse the Issuing Lender as
provided in subsection 3.3B in an amount equal to the amount
of any drawing honored by the Issuing Lender under a Letter
of Credit issued by it, the Issuing Lender shall promptly
notify each other Lender of the unreimbursed amount of such
drawing and of such other Lender's respective participation
therein based on such Lender's Pro Rata Share. Each Lender
shall make available to the Issuing Lender an amount equal
to its respective participation, in Dollars and in same day
funds, at the office of the Issuing Lender specified in such
notice, not later than 1:30 P.M. (Pacific time) on the first
business day (under the laws of the jurisdiction in which
such office of the Issuing Lender is located) after the date
notified by the Issuing Lender. In the event that any
Lender fails to make available to Administrative Agent on
such business day the amount of such Lender's participation
in such Letter of Credit as provided in this subsection
3.3C, the Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with interest
thereon at the rate customarily used by the Issuing Lender
for the correction of errors among banks for three Business
Days and thereafter at the Base Rate. Nothing in this
subsection 3.3C shall be deemed to prejudice the right of
any Lender to recover from the Issuing Lender any amounts
made available by such Lender to the Issuing Lender pursuant
to this subsection 3.3C in the event that it is determined
by the final judgment of a court of competent jurisdiction
that the payment with respect to a Letter of Credit by the
Issuing Lender in respect of which payment was made by such
Lender constituted gross negligence or willful misconduct on
the part of the Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received
From Company. In the event the Issuing Lender shall have
been reimbursed by other Lenders pursuant to subsection
3.3C(i) for all or any portion of any drawing honored by the
Issuing Lender under a Letter of Credit issued by it, the
Issuing Lender shall distribute to each other Lender which
has paid all amounts payable by it under subsection 3.3C(i)
with respect to such drawing such other Lender's Pro Rata
Share of all payments subsequently received by the Issuing
Lender from Company in reimbursement of such drawing when
such payments are received. Any such distribution shall be
made to a Lender at its primary address set forth below its
name on the appropriate signature page hereof or at such
other address as such Lender may request.
D. Interest on Amounts Drawn Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to
pay to the Issuing Lender, with respect to drawings made
under any Letters of Credit issued by it, interest on the
amount paid by the Issuing Lender in respect of each such
drawing from the date of such drawing to but excluding the
date such amount is reimbursed by Company (including any
such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B) at a rate equal to (a) for the
period from the date of such drawing to but excluding the
Reimbursement Date, the rate then in effect under this
Agreement with respect to Base Rate Loans and (b) there
after, a rate which is 2% per annum in excess of the rate of
interest otherwise payable under this Agreement with respect
to Base Rate Loans that. Interest payable pursuant to this
subsection 3.3D(i) shall be computed on the basis of a 360-
day year for the actual number of days elapsed in the period
during which it accrues and shall be payable on demand or,
if no demand is made, on the date on which the related
drawing under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by the Issuing
Lender. Promptly upon receipt by the Issuing Lender of any
payment of interest pursuant to subsection 3.3D(i) with
respect to a drawing under a Letter of Credit issued by it,
(a) the Issuing Lender shall distribute to each other
Lender, out of the interest received by the Issuing Lender
in respect of the period from the date of such drawing to
but excluding the date on which the Issuing Lender is
reimbursed for the amount of such drawing (including any
such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B), the amount that such other
Lender would have been entitled to receive in respect of the
letter of credit fee that would have been payable in respect
of such Letter of Credit for such period pursuant to
subsection 3.2 if no drawing had been made under such Letter
of Credit, and (b) in the event the Issuing Lender shall
have been reimbursed by other Lenders pursuant to subsection
3.3C(i) for all or any portion of such drawing, the Issuing
Lender shall distribute to each other Lender which has paid
all amounts payable by it under subsection 3.3C(i) with
respect to such drawing such other Lender's Pro Rata Share
of any interest received by the Issuing Lender in respect of
that portion of such drawing so reimbursed by other Lenders
for the period from the date on which such the Issuing
Lender was so reimbursed by other Lenders to and including
the date on which such portion of such drawing is reimbursed
by Company. Any such distribution shall be made to a Lender
at its primary address set forth below its name on the
appropriate signature page hereof or at such other address
as such Lender may request.
3.4 Obligations Absolute.
The obligation of Company to reimburse the Issuing
Lender for drawings made under the Letters of Credit issued by it
and to repay any Revolving Loans made by Lenders pursuant to
subsection 3.3B and the obligations of Lenders under subsection
3.3C(i) shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) the existence of any claim, set-off, defense or
other right which Company or any Lender may have at any time
against a beneficiary or any transferee of any Letter of
Credit (or any Persons for whom any such transferee may be
acting), the Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether
in connection with this Agreement, the transactions contem
plated herein or any unrelated transaction (including any
underlying transaction between Company or one of its
Subsidiaries and the beneficiary for which any Letter of
Credit was procured);
(iii) any draft, demand, certificate or 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) payment by the Issuing Lender under any Letter of
Credit against presentation of a demand, draft or certifi
cate or other document which does not comply with the terms
of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or
prospects of Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto;
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing;
or
(viii) the fact that an Event of Default or a
Potential Event of Default shall have occurred and be
continuing;
provided, in each case, that payment by the Issuing Lender under
the applicable Letter of Credit shall not have constituted gross
negligence or willful misconduct of the Issuing Lender under the
circumstances in question (as determined by a final judgment of a
court of competent jurisdiction).
3.5 Indemnification; Nature of the Issuing Lender's Duties.
A. Indemnification. In addition to amounts payable as
provided in subsection 3.6, Company hereby agrees to protect,
indemnify, pay and save harmless the Issuing Lender from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and Allocated Costs of
Internal Counsel) which the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit by the Issuing Lender, other
than as a result of (a) the gross negligence or willful miscon
duct of the Issuing Lender as determined by a final judgment of a
court of competent jurisdiction or (b) subject to the following
clause (ii), the wrongful dishonor by the Issuing Lender of a
proper demand for payment made under any Letter of Credit issued
by it or (ii) the failure of the Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future
de jure or de facto government or governmental authority (all
such acts or omissions herein called "Governmental Acts").
B. Nature of the Issuing Lender's Duties. As between
Company and the Issuing Lender, Company assumes all risks of the
acts and omissions of, or misuse of the Letters of Credit issued
by the Issuing Lender by, the respective beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the
foregoing, the Issuing Lender shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection
with the application for and issuance of any such Letter of
Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any such Letter
of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions
required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to
make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter
of Credit; or (viii) any consequences arising from causes beyond
the control of the Issuing Lender, including without limitation
any Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of the Issuing Lender's
rights or powers hereunder.
In furtherance and extension and not in limitation of
the specific provisions set forth in the first paragraph of this
subsection 3.5B, any action taken or omitted by the Issuing
Lender under or in connection with the Letters of Credit issued
by it or any documents and certificates delivered thereunder, if
taken or omitted in good faith, shall not put the Issuing Lender
under any resulting liability to Company.
Notwithstanding anything to the contrary contained in
this subsection 3.5, Company shall retain any and all rights it
may have against the Issuing Lender for any liability arising
solely out of the gross negligence or willful misconduct of such
the Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
In the event that the Issuing Lender or any Lender
shall determine (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties
hereto) that any law, treaty or governmental rule, regulation or
order, or any change therein or in the interpretation, adminis
tration or application thereof (including the introduction of any
new law, treaty or governmental rule, regulation or order), or
any determination of a court or governmental authority, in each
case that becomes effective after the date hereof, or compliance
by the Issuing Lender or Lenders with any guideline, request or
directive issued or made after the date hereof by any central
bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects the Issuing Lender or such Lender (or its
applicable lending or letter of credit office) to any addi
tional Tax (other than any Tax on the overall net income of
the Issuing Lender or such Lender) with respect to the issu
ing or maintaining of any Letters of Credit or the purchas
ing or maintaining of any participations therein or any
other obligations under this Section 3, whether directly or
by such being imposed on or suffered by the Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency,
supplemental, special or other reserve), special deposit,
compulsory loan, FDIC insurance or similar requirement in
respect of any Letters of Credit issued by the Issuing
Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with
respect to a Tax matter) on or affecting the Issuing Lender
or such Lender (or its applicable lending or letter of
credit office) regarding this Section 3 or any Letter of
Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to
the Issuing Lender or such Lender of agreeing to issue, issuing
or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce
any amount received or receivable by the Issuing Lender or such
Lender (or its applicable lending or letter of credit office)
with respect thereto; then, in any case, Company shall promptly
pay to the Issuing Lender or such Lender, upon receipt of the
statement referred to in the next sentence, such additional
amount or amounts as may be necessary to compensate the Issuing
Lender or such Lender for any such increased cost or reduction in
amounts received or receivable hereunder. the Issuing Lender or
such Lender shall deliver to Company a written statement, setting
forth in reasonable detail the basis for calculating the addi
tional amounts owed to the Issuing Lender or such Lender under
this subsection 3.6, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
SECTION 4.
CONDITIONS TO EFFECTIVENESS;
CONDITIONS TO LOANS AND LETTERS OF CREDIT
4.1 Conditions to Effectiveness.
This Agreement shall become effective only upon the
satisfaction or written waiver by Requisite Lenders of the
following conditions precedent, which satisfaction or waiver
shall be confirmed in writing on the Effective Date by
Administrative Agent to Company:
A. Company Documents. On or before the Effective Date,
Company shall deliver or cause to be delivered to Lenders (or to
Administrative Agent for Lenders with sufficient originally
executed copies, where appropriate, for each Lender and its
counsel) the following, each, unless otherwise noted, dated the
Effective Date:
(i) Certified copies of its charter documents,
together with a good standing certificate from the Secretary
of State of the State of Nevada and each state in which it
is qualified as a foreign corporation to do business and, to
the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing
authority of each of such states, each dated a recent date
prior to the Effective Date;
(ii) Copies of its Bylaws, certified as of the
Effective Date by its secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors
approving and authorizing the execution, delivery and
performance of this Agreement and the other New Loan
Documents to which it is a party, certified as of the
Effective Date by its secretary or an assistant secretary as
being in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of its
officers executing this Agreement and the other New Loan
Documents to which it is a party;
(v) Executed originals of this Agreement, the Notes
drawn to the order of each Lender and Swing Line Lender if
requested by such Lender or Swing Line Lender and with
appropriate insertions, the Acknowledgement and Confirmation
and the other New Loan Documents to which it is a party; and
(vi) Such other documents as Administrative Agent may
reasonably request.
B. Loan Party Documents. On or before the Effective Date,
each Loan Party shall deliver or cause to be delivered to Lenders
(or to Administrative Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender
and its counsel) the following, each, unless otherwise noted,
dated the Effective Date:
(i) Certified copies of its Certificate or Articles of
Incorporation, Formation or Organization or other charter
documents, together with a good standing certificate from
the Secretary of State of the state of its incorporation and
each other state in which it is qualified as a foreign
corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing
as to payment of any applicable franchise or similar taxes
from the appropriate taxing authority of each of such
states, each dated a recent date prior to the Effective
Date;
(ii) Copies of its Bylaws, Operating Agreements or
Partnership Agreements, if any, certified as of the
Effective Date by its corporate secretary or an assistant
secretary;
(iii) Resolutions or unanimous consents of its
Board of Directors, partners or members approving and
authorizing the execution, delivery and performance of the
New Loan Documents to which it is a party, certified as of
the Effective Date by its corporate secretary or an
assistant secretary as being in full force and effect
without modification or amendment;
(iv) Signature and incumbency certificates of its
officers executing the New Loan Documents to which it is a
party;
(v) Executed originals of the New Loan Documents to
which it is a party; and
(vi) Such other documents as Administrative Agent may
reasonably request.
C. Corporate and Capital Structure. The corporate
organizational structure of Company and its Subsidiaries shall be
as set forth on Schedule 4.1(c) annexed hereto.
D. Opinions of Company's Counsel. Lenders and their
respective counsel shall have received (i) originally executed
copies of the favorable written opinion of Morgan, Lewis &
Bockius LLP, counsel for Company, in form and substance
reasonably satisfactory to Administrative Agent and its counsel,
dated as of the Effective Date and setting forth substantially
the matters in the opinions designated in Exhibit VII annexed
hereto and as to such other matters as Administrative Agent
acting on behalf of Lenders may reasonably request and
(ii) opinions from special counsel to Company (including
admiralty counsel) with respect to such matters governed by the
laws of the states of Nevada, Illinois, Louisiana, Missouri,
Kentucky and New Jersey and by maritime law as Administrative
Agent acting on behalf of Lenders may reasonably request.
E. Opinions of Administrative Agent's Counsel. Lenders
shall have received originally executed copies of one or more
favorable written opinions of O'Melveny & Myers LLP, counsel to
Administrative Agent, dated as of the Effective Date,
substantially in the form of Exhibit VIII annexed hereto and as
to such other matters as Administrative Agent acting on behalf of
Lenders may reasonably request.
F. Flood Insurance. Administrative Agent shall have been
provided with satisfactory evidence, which may be in the form of
a letter from an insurance broker, municipal engineer, or other
knowledgeable source unaffiliated with Company, as to whether
(a) any of the Premises that are subject to the Lien of any
Mortgage are located in an area designated by the Department of
Housing and Urban Development as having special flood or mudslide
hazards, and (b) any of the communities in which any of the
Facilities are located is participating in the National Flood
Insurance Program. If both of the aforesaid conditions exist,
Administrative Agent shall receive satisfactory policies of flood
insurance covering the applicable Improvements as required by the
Flood Act.
G. Perfection of Security Interests. Loan Parties shall
have taken or caused to be taken such actions in such a manner so
that Administrative Agent, on behalf of Lenders, or the Trustee,
solely for the benefit of Administrative Agent, on behalf of
Lenders, as the case may be, each has a valid and perfected first
priority security interest (subject only to Liens permitted under
subsection 7.2) in all Collateral in which a Lien is purported to
be granted by the Collateral Documents. Such actions shall
include, without limitation, the following:
(i) the receipt by Administrative Agent of evidence
satisfactory to it that amendments ("Mortgage Amendments")
to each Mortgage heretofore executed and delivered with
respect to the Louisiana Facilities, the Illinois Facilities
and the Louisiana Hotel Facilities (such Mortgages being the
"Existing Mortgages") have been executed and acknowledged
and will be recorded in all jurisdictions as may be
necessary or, in the opinion of Administrative Agent,
desirable to effectively create or maintain in effect valid
and perfected Liens (subject only to Liens permitted under
subsection 7.2) created by the Existing Mortgages securing
the Obligations, as such Obligations have been amended or
modified by this Agreement;
(ii) the receipt by Administrative Agent of evidence
satisfactory to it that amendments ("Ship Mortgage
Amendments") to each Ship Mortgage heretofore executed and
delivered with respect to the Louisiana Ships and the
Illinois Ships (such Ship Mortgages being the "Existing Ship
Mortgages") have been executed and acknowledged and will be
recorded in all jurisdictions as may be necessary or, in the
opinion of Administrative Agent, desirable to effectively
create or maintain in effect valid and perfected Liens
(subject only to Liens permitted under subsection 7.2)
created by the Existing Ship Mortgages securing the
Obligations, as such Obligations have been amended or
modified by this Agreement; and
(iii) the receipt by Administrative Agent of
evidence satisfactory to it that all other filings,
recordings and other actions Administrative Agent deems
necessary or advisable to establish, preserve and perfect
the first priority Liens (subject only to Liens permitted
under subsection 7.2) granted to Administrative Agent in the
Collateral (including, without limitation, Collateral
subject to the Lien of any Collateral Document executed and
delivered pursuant to the Existing Credit Agreement) shall
have been made.
H. Amendments to Title Policies. Lenders shall have
received confirmation from the Title Company that the Title
Company will issue endorsements to, or rewrites of, the Title
Policies over all Liens other than Liens previously identified in
and excluded from the coverage of the Title Policies, and
otherwise providing the Lenders with the same types and levels of
insurance provided in the Title Policies.
I. Necessary Consents. On or before the Effective Date,
each Loan Party shall have obtained all consents that are
required for the operation of the Facilities, in each case, and
the transactions contemplated under this Agreement and the other
Loan Documents of (i) Illinois Gaming Authorities, Louisiana
Gaming Authorities, Missouri Gaming Authorities and other
Governmental Authorities and (ii) any Person required under any
Contractual Obligation of any Loan Party, all of the foregoing in
form and substance satisfactory to Administrative Agent.
J. Interest and Certain Fees. Company shall have paid to
Administrative Agent, for distribution (as appropriate) to
Administrative Agent and Lenders, all accrued and unpaid interest
and fees under the Existing Credit Agreement payable on the
Effective Date as provided in subsection 2.3B(iii).
K. [omitted]
L. [omitted]
M. Payment of Amounts owed under Existing Credit
Agreement. Company shall have paid to Administrative Agent for
distribution to the Lenders under the Existing Credit Agreement
(i) all interest and commitment fees that have accrued through
the Effective Date, (ii) all accrued and unpaid fees and
commissions with respect to all Existing Letters of Credit that
have accrued through the Effective Date and (iii) all other fees
and amounts owed under the Existing Credit Agreement (other than
the principal amount of the Loans that shall continue to be owed
hereunder and under the Notes).
N. Repayment of Existing Revolving Loans. On the
Effective Date, concurrently with any borrowing of Revolving
Loans made on the Effective Date, Company (i) shall repay in full
all Existing Revolving Loans owed to each Noncontinuing Lender
and (ii) shall repay Existing Revolving Loans owed to each Lender
in amounts such that, after giving effect thereto, the Revolving
Loans of each Lender shall be in an amount directly proportional
to such Lender's Pro Rata Share of all Revolving Loans
outstanding after giving effect to such repayment. Each such
repayment shall be made together with all interest accrued on
such Existing Revolving Loans to the date of repayment.
O. Administrative Agent's Counsel Fees. Company shall
have paid the reasonable fees and disbursements of counsel to
Administrative Agent.
P. Administrative Agent's Fees. Company shall have paid
to Administrative Agent the fees set forth in that certain letter
agreement between the Administrative Agent and Company dated
February 17, 1998.
Q. No Material Adverse Effect. Since March 31, 1997, no
Material Adverse Effect (in the sole opinion of each Lender)
shall have occurred.
R. Representations and Warranties; Performance of
Agreements. Company shall have delivered to Administrative Agent
an Officers' Certificate, in form and substance satisfactory to
Administrative Agent, to the effect that the representations and
warranties in Section 5 hereof are true, correct and complete on
and as of the Effective Date to the same extent as though made on
and as of that date and that Company shall have performed all
agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before the
Effective Date except as otherwise disclosed to and agreed to in
writing by Administrative Agent and each Lender.
S. Completion of Proceedings. All corporate and other
proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental
thereto not previously found acceptable by Administrative Agent,
acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to Administrative Agent and
such counsel, and Administrative Agent and such counsel shall
have received all such counterpart originals or certified copies
of such documents as Administrative Agent may reasonably request.
T. Delivery of Pricing Determination Certificate.
Administrative Agent shall have received a Pricing Determination
Certificate calculated utilizing the most recent financial
statements delivered to Administrative Agent under the Existing
Credit Agreement.
U. Appraisals. Administrative Agent shall have received
appraisals in form, scope and substance satisfactory to
Administrative Agent concerning the real property Collateral
securing the Loans, in each case to the extent required under
applicable laws and regulations as determined by Administrative
Agent in its discretion.
V. Leases. Administrative Agent shall have received
complete copies of all leases for any of the properties and
facilities comprising all or any portion of the Facilities that
are leased by Company or any of its Subsidiaries in each case
entered into after December 16, 1996, and a "landlord estoppel
certificate" for such leases (other than with respect to the
lease referred to in subsection 5.5A(iii)), certifying that no
defaults by the lessee currently exist under any such lease and
confirming, among other things, the annual rental amount paid by
Company or its Subsidiaries to lessor thereunder.
W. Governmental Authorizations. Administrative Agent
shall have received satisfactory evidence that Company and its
Subsidiaries have obtained all Governmental Authorizations
(including, without limitation, Governmental Authorizations from
Gaming Authorities and all zoning approvals, special or
conditional use permits, variances, permits, licenses, liquor
licenses, certificates of occupancy and franchises) necessary to
permit the use, occupancy and operation of each of the Facilities
presently in operation or necessary for Company to amend and
restate the Existing Credit Agreement pursuant to this Agreement
and for Loan Parties to perform the transactions contemplated
hereby.
X. No Disruption of Financial and Capital Markets. There
shall have been no material adverse change after the date hereof
in the syndication markets for credit facilities similar in
nature to the Loans, and there shall not have occurred and be
continuing a material disruption of or material adverse change in
the financial, banking or capital markets that would have an
adverse effect on such syndication market, in each case as
determined by Administrative Agent in its sole discretion.
Y. Effective Date. The Effective Date is on or before
March 31, 1998.
4.2 [omitted].
4.3 [omitted].
4.4 Conditions to All Loans.
The obligations of Lenders to make Revolving Loans and
of Swing Line Lender to make Swing Line Loans on each Funding
Date are subject to the following further conditions precedent:
A. Administrative Agent shall have received before that
Funding Date, in accordance with the provisions of subsection
2.1C, an originally executed Notice of Borrowing, in each case
signed by the chief executive officer, the chief financial
officer or the treasurer of Company or by any executive officer
of Company designated by any of the above-described officers on
behalf of Company in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained
herein and in the other Loan Documents shall be true,
correct and complete in all material respects on and as of
that Funding Date to the same extent as though made on and
as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in
which case such representations and warranties shall have
been true, correct and complete in all material respects on
and as of such earlier date;
(ii) No event shall have occurred and be continuing or
would result from the consummation of the borrowing
contemplated by such Notice of Borrowing that would
constitute an Event of Default or, to Company's Best
Knowledge (following the reasonable exercise of diligence
appropriate for the circumstance in question by the officers
of the Company executing the applicable Notice of
Borrowing), a Potential Event of Default;
(iii) Company shall have performed in all material
respects all agreements and satisfied all conditions which
this Agreement provides shall be performed or satisfied by
it on or before that Funding Date;
(iv) No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin
or restrain any Lender from making the Loans to be made by
it on that Funding Date; provided that any such order,
judgment or decree shall only relieve that Lender on whom
such order, judgment or decree is binding from its
obligation to make Loans to Company.
(v) The making of the Loans requested on such Funding
Date shall not violate any law including, without
limitation, Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal
Reserve System;
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any property
of Company or any of its Subsidiaries that has not been
disclosed by Company in writing pursuant to subsection 5.6
or 6.1(x) prior to the making of the last preceding Loans
(or, in the case of the initial Loans, prior to the
execution of this Agreement), and there shall have occurred
no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so
disclosed, that, in either event, in the reasonable opinion
of Administrative Agent or of Requisite Lenders, would be
expected to have a Material Adverse Effect; and no
injunction or other restraining order shall have been issued
and no hearing to cause an injunction or other restraining
order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the making of Loans
hereunder; and
(vii) No Material Adverse Effect (in the sole
opinion of each Lender) shall have occurred since either (i)
March 31, 1997 or (ii) the date of the most recent audited
financial statements of the Company delivered pursuant to
subsection 6.1(iii); provided that such opinion by any
Lender as to the occurrence of a Material Adverse Effect
shall only relieve that Lender holding such opinion from its
obligation to make Loans to Company.
C. Neither Administrative Agent nor any Lender has given
each other Lender written notice that it has actual knowledge of
the occurrence of any event that, on such Funding Date, either
(i) causes any of the representations and warranties to be made
by Company on such date to be untrue in any material respect as
of such date or (ii) causes any representations and warranties
that specifically relate to an earlier date to have been untrue
in any material respect on and as of such earlier date.
4.5 Conditions to Letters of Credit.
The issuance of any Letter of Credit hereunder is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter
of Credit pursuant to this Agreement, the conditions set forth in
subsection 4.1 shall have been satisfied or waived in writing by
Requisite Lenders.
B. On or before the date of issuance of such Letter of
Credit, the Issuing Lender shall have received, in accordance
with the provisions of subsection 3.1B(i), an originally executed
Notice of Issuance of Letter of Credit, signed by the chief
executive officer, the chief financial officer or the treasurer
of Company or by any executive officer of Company designated by
any of the above-described officers on behalf of Company in a
writing delivered to the Issuing Lender, together with all other
information specified in subsection 3.1B(i) and such other
documents or information as the Issuing Lender may reasonably
require in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.4B shall be
satisfied to the same extent as if the issuance of such Letter of
Credit were the making of a Loan and the date of issuance of such
Letter of Credit were a Funding Date.
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement
and to make the Loans, to induce Administrative Agent to issue
Letters of Credit and to induce other Lenders to purchase
participations therein, Company represents and warrants to each
Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the
following statements are true, correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries.
A. Organization and Powers. Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Nevada. Company has all requisite corporate
power and authority to own and operate its properties, to carry
on its business as now conducted and as proposed to be conducted,
to enter into the Loan Documents and to carry out the
transactions contemplated thereby.
B. Qualification and Good Standing. Company is qualified
to do business and in good standing in every jurisdiction where
its assets are located and wherever necessary to carry out its
business and operations, except in jurisdictions where the
failure to be so qualified or in good standing has not had and,
to Company's Best Knowledge, will not have a Material Adverse
Effect.
C. Conduct of Business. Company and its Subsidiaries are
engaged only in the businesses permitted to be engaged in
pursuant to subsection 7.10.
D. Subsidiaries. Except for Subsidiaries identified on
Schedule 5.1 with no substantial assets that are to be dissolved,
all of the Subsidiaries of Company are identified in Schedule 5.1
annexed hereto, as said Schedule 5.1 may be supplemented from
time to time pursuant to the provisions of subsection 6.1(xviii).
The capital stock of each of the Subsidiaries of Company
identified in Schedule 5.1 annexed hereto (as so supplemented) is
duly authorized, validly issued, fully paid and nonassessable and
none of such capital stock constitutes Margin Stock. Each of the
Subsidiaries of Company identified in Schedule 5.1 annexed hereto
(as so supplemented) is an entity duly organized, validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth therein,
has all requisite corporate or partnership power and authority to
own and operate its properties and to carry on its business as
now conducted and as proposed to be conducted, and is qualified
to do business and in good standing in every jurisdiction where
its assets are located and wherever necessary to carry out its
business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate or
partnership power and authority has not had and, to Company's
Best Knowledge, will not have a Material Adverse Effect except
for Subsidiaries identified on Schedule 5.1 with no substantial
assets that are to be dissolved. Schedule 5.1 annexed hereto (as
so supplemented) correctly sets forth the ownership interest of
Company and each of its Subsidiaries in each of the Subsidiaries
of Company identified therein.
5.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery
and performance of the Loan Documents have been duly authorized
by all necessary corporate action on the part of each Loan Party
that is a party thereto.
B. No Conflict. The execution, delivery and performance
by each Loan Party of the Loan Documents and the consummation of
the transactions contemplated by the Loan Documents do not and,
to Company's Best Knowledge, will not (i) violate (X) any
provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries the violation of
which could have a Material Adverse Effect, (Y) the Certificate
or Articles of Incorporation or Bylaws of Company or any of its
Subsidiaries or (Z) any order, judgment or decree of any court or
other agency of government binding on Company or any of its
Subsidiaries the violation of which could have a Material Adverse
Effect, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, if
the execution of any of the Loan Documents would afford any party
(other than Company) the right (after the giving of notice or
lapse of time or both) to terminate such Contractual Obligation
or seek judicial relief against Company as a result thereof,
(iii) result in or require the creation or imposition of any Lien
upon any of the properties or assets of Company or any of its
Subsidiaries (other than any Liens created under any of the Loan
Documents in favor of Administrative Agent on behalf of Lenders),
or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Company
or any of its Subsidiaries, except for such approvals or consents
which will be obtained on or before the Effective Date and
disclosed in writing to Lenders.
C. Governmental Consents. The execution, delivery and
performance by the Loan Parties of the Loan Documents and the
consummation of the transactions contemplated by the Loan
Documents do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or
by, any federal, state or other governmental authority or
regulatory body except (i) those that have been obtained and
copies of which have been delivered to Administrative Agent
pursuant to subsection 4.1I or the absence of which
Administrative Agent has deemed satisfactory pursuant to
subsection 4.1I, (ii) those notices or informational filings or
both that will be required to be given to the Securities and
Exchange Commission or any Gaming Board but that are not yet due,
(iii) any right of any Gaming Board to object to any Lender or
participant in the Loans at any future date, and (iv) any
regulatory approvals in Louisiana that are granted after the
fact.
D. Binding Obligation. Each of the Loan Documents has
been duly executed and delivered by the Loan Parties signatory
thereto and is the legally valid and binding obligation of such
Loan Party, enforceable against such Loan Party in accordance
with its respective terms, except as may be limited by bank
ruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
5.3 Financial Condition.
Company has heretofore delivered to Lenders, at
Lenders' request, the following financial statements and
information: (i) the audited consolidated balance sheet of
Company and its Subsidiaries as at March 31, 1997, and the
related consolidated statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for the Fiscal
Year then ended and (ii) the unaudited consolidated and
Consolidating balance sheets of Company and its Subsidiaries as
at December 31, 1997, and the related unaudited consolidated and
Consolidating statements of income, stockholders' equity and cash
flows of Company and its Subsidiaries for the six months then
ended. All such statements were prepared in conformity with GAAP
and fairly present the financial position (on a consolidated and,
where applicable, Consolidating basis) of the entities described
in such financial statements as at the respective dates thereof
and the results of operations and cash flows (on a consolidated
and, where applicable, Consolidating basis) of the entities
described therein for each of the periods then ended, subject, in
the case of any such unaudited financial statements, to changes
resulting from audit and normal year-end adjustments, including
the information presented in the footnotes to Company's audited
financial statements. Company does not (and will not following
the funding of the initial Loans) have any Contingent Obligation,
contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in
the foregoing financial statements or the notes thereto or,
following the funding of initial Loans, in the financial
statements required to be delivered pursuant to subsection 6.1
and which in any such case is material in relation to the
business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company and its Subsidiaries, taken as
a whole.
5.4 No Material Adverse Change; No Restricted Payments.
Since March 31, 1997, no event or change has occurred
that has caused or evidences, either in any case or in the aggre
gate, a Material Adverse Effect. Neither Company nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid
or made, or set apart any sum or property for, any Restricted
Payment or agreed to do so except as permitted by subsection 7.5.
5.5 Title to Properties; Liens.
A. Company and its Subsidiaries have (i) good, sufficient
and legal title to (in the case of fee interests in real
property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good
title to (in the case of all other personal property), all of
their respective properties and assets reflected in the financial
statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in
each case except for assets disposed of since the date of such
financial statements in the ordinary course of business or as
otherwise permitted under subsection 7.7. Except as permitted by
this Agreement, all such properties and assets are free and clear
of Liens.
B. (i) All of the assets, of whatever kind and nature,
whether real, personal or mixed property, used in connection
with the Illinois Facilities or placed or located in or on
the Illinois Premises are owned or leased directly by SIRCC
or RR and not by Company or any of Company's other
Subsidiaries.
(ii) All of the assets, of whatever kind and nature,
whether real, personal or mixed property, used in connection
with the Louisiana Facilities or placed or located in or on
the Louisiana Premises are owned or leased directly by PLC,
SSP or PRLLC and not by Company or any of Company's other
Subsidiaries.
(iii) Neither the Company nor any of its
Subsidiaries owns or leases any real or personal property
located in the state of Nevada, except for the lease by
PRES, PEI and PHI of an office within 301 East Clark Avenue,
Suite 870, Las Vegas, Nevada and except for a month to month
document storage space lease at 1120 Las Vegas, Nevada 89104
and successor arrangements.
(iv) All of the assets, of whatever kind and nature,
whether real, personal or mixed property, used in connection
with the Maryland Heights Facilities or placed or located in
or on the Maryland Heights Facilities are owned or leased
directly by the Maryland Heights Subsidiaries (or Harrah's)
and not by Company or any of Company's other Subsidiaries.
(v) All of the assets, of whatever kind and nature,
whether real, personal or mixed property, used in connection
with the Louisiana Hotel Facilities or placed or located in
or on the Louisiana Hotel Premises are owned or leased
directly by PLC and not by Company or any of Company's other
Subsidiaries.
C. (i) SIRCC, PLC, SSP, and PRLLC each have good and
valid title to the Ship or Ships and the Barge or Barges
owned by it, free and clear of all liens, charges,
encumbrances and security interests other than those in
favor of Administrative Agent pursuant to the Existing
Credit Agreement or those permitted under subsection 7.2;
(ii) each Ship listed on Schedule 5.5, as said Schedule
5.5 may be supplemented from time to time pursuant to the
provisions of subsection 6.1(xxi), is subject to a valid
certificate of documentation identifying SIRCC, PLC, SSP or
PRLLC, as the case may be, as the registered owner thereof
under the laws and regulations of the United States; and
(iii) SIRCC, PLC, SSP, and PRLLC each have all
necessary authority required to own and operate the Ship or
Ships and the Barge or Barges owned by it for such Ships' or
Barges' intended purposes.
D. On the Effective Date, the only water craft of any
nature whatsoever (whether constituting a vessel, Barge, US
Documented Barge, floating structure or otherwise) owned by
Company or any of its Subsidiaries that is subject to a valid
certificate of documentation pursuant to the laws of the United
States of America are the Star Casino, the Players Riverboat
Casino II, the Players Riverboat III (including both vessel
#999887 and vessel #999888) and the US Documented Barges
described on Schedule 5.5.
5.6 Litigation; Adverse Facts.
Except as set forth in Schedule 5.6 annexed hereto,
there are no actions, suits, proceedings, arbitrations or, to
Company's Best Knowledge, governmental investigations (whether or
not purportedly on behalf of Company or any of its Subsidiaries)
at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, pending or, to
the knowledge of Company, threatened against or affecting Company
or any of its Subsidiaries or any property of Company or any of
its Subsidiaries that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
Neither Company nor any of its Subsidiaries is (i) in violation
of any applicable laws that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse
Effect or (ii) subject to or in default with respect to any final
judgments, writs, injunctions, decrees, rules or regulations of
any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse
Effect.
5.7 Payment of Taxes.
Except to the extent permitted by subsection 6.3, all
tax returns and reports of Company and its Subsidiaries required
to be filed by any of them have been timely filed, and all taxes,
assessments, fees and other governmental charges upon Company and
its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have
been paid when due and payable. Company knows of no proposed tax
assessment against Company or any of its Subsidiaries which has
not been provided for or which is not being actively contested by
Company or such Subsidiary in good faith and by appropriate
proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements.
A. Neither Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any of its
Contractual Obligations, and no condition exists that, with the
giving of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, would not have a
Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party
to or is otherwise subject to any agreements or instruments or
any charter or other internal restrictions which, individually or
in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
5.9 Governmental Regulation.
Neither Company nor any of its Subsidiaries is subject
to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act or the
Investment Company Act of 1940 or under any other federal or
state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of
the Obligations unenforceable.
5.10 Securities Activities.
A. Neither Company nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or
carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not
more than 25% of the value of the assets (either of Company only
or of Company and its Subsidiaries on a consolidated basis)
subject to the provisions of subsection 7.2 or 7.7 or subject to
any restriction contained in any agreement or instrument, between
Company and any Lender or any Affiliate of any Lender, relating
to Indebtedness and within the scope of subsection 8.2, will be
Margin Stock.
5.11 Employee Benefit Plans.
A. Except as described in Schedule 5.11 annexed hereto,
Company and each of its ERISA Affiliates are in compliance with
all applicable provisions and requirements of ERISA and the
regulations and published interpretations thereunder with respect
to each Employee Benefit Plan, and have performed all their
obligations under each Employee Benefit Plan.
B. No ERISA Event has occurred or is reasonably expected
to occur with respect to Company or any of its ERISA Affiliates.
C. Except to the extent required under Section 4980B of
the Internal Revenue Code or except as set forth in Schedule 5.11
annexed hereto, no Employee Benefit Plan provides health or
welfare benefits (through the purchase of insurance or otherwise)
for any retired or former employees of Company or any of its
ERISA Affiliates.
D. As of the most recent valuation date for any Pension
Plan, the amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate
for all Pension Plans (excluding for purposes of such computation
any Pension Plans with respect to which assets exceed benefit
liabilities), does not exceed $5,000,000.
5.12 Certain Fees.
No broker's or finder's fee or commission will be
payable with respect to this Agreement or any of the transactions
contemplated hereby, and Company hereby indemnifies
Administrative Agent, Managing Agent and Arranger against, and
agrees that it will hold Administrative Agent, Managing Agent and
Arranger harmless from, any claim, demand or liability for any
such broker's or finder's fees alleged to have been incurred by
Administrative Agent, Managing Agent or Arranger as the result of
any action or inaction by Company in connection herewith or
therewith and any expenses (including reasonable fees, expenses
and disbursements of counsel) arising in connection with any such
claim, demand or liability.
5.13 Environmental Protection.
Except as set forth in Schedule 5.13 annexed hereto:
(i) the operations of Company and each of its
Subsidiaries (including, without limitation, all operations
and conditions at or in the Facilities) comply in all
material respects with all Environmental Laws;
(ii) Company and each of its Subsidiaries have obtained
all Governmental Authorizations under Environmental Laws
necessary to their respective operations, and all such
Governmental Authorizations are in good standing, and
Company and each of its Subsidiaries are in compliance with
all material terms and conditions of such Governmental
Authorizations;
(iii) neither Company nor any of its Subsidiaries
has received (a) any notice or claim to the effect that it
is or may be liable to any Person as a result of or in
connection with any Hazardous Materials or (b) any letter or
request for information under Section 104 of the Comprehen
sive Environmental Response, Compensation, and Liability Act
(42 U.S.C. 9604) or comparable state laws, and, to the
best of Company's knowledge, none of the operations of
Company or any of its Subsidiaries is the subject of any
federal or state investigation relating to or in connection
with any Hazardous Materials at any Facility or at any other
location;
(iv) none of the operations of Company or any of its
Subsidiaries is subject to any judicial or administrative
proceeding alleging the violation of or liability under any
Environmental Laws which if adversely determined could
reasonably be expected to have a Material Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor
any of their respective Facilities or operations are subject
to any outstanding written order or agreement with any
governmental authority or private party relating to (a) any
Environmental Laws or (b) any Environmental Claims;
(vi) neither Company nor any of its Subsidiaries has
any contingent liability in connection with any Release of
any Hazardous Materials by Company or any of its
Subsidiaries;
(vii) neither Company nor any of its Subsidiaries
nor, to Company's Best Knowledge, any predecessor of Company
or any of its Subsidiaries has filed any notice under any
Environmental Law indicating past or present treatment or
Release of Hazardous Materials at any Facility, and none of
Company's or any of its Subsidiaries' operations involves
the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R.
Parts 260-270 or any state equivalent;
(viii) no Hazardous Materials exist on, under or
about any Facility in a manner that has a reasonably
possibility of giving rise to an Environmental Claim having
a Material Adverse Effect, and neither Company nor any of
its Subsidiaries has filed any notice or report of a Release
of any Hazardous Materials that has a reasonable possibility
of giving rise to an Environmental Claim having a Material
Adverse Effect;
(ix) neither Company nor any of its Subsidiaries nor,
to Company's Best Knowledge, any of their respective
predecessors has disposed of any Hazardous Materials in a
manner that has a reasonable possibility of giving rise to
an Environmental Claim having a Material Adverse Effect;
(x) no surface impoundments are on or at any Facility
or, to Company's Best Knowledge, no underground storage
tanks are on or at any Facility; and
(xi) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or
has been attached to any Facility.
5.14 Employee Matters.
There is no strike or work stoppage in existence or
threatened involving Company or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect.
5.15 Solvency.
Company and each of its Subsidiaries (including PHI) is
and, upon the incurrence of any Obligations by Company on any
date on which this representation is made, will be, Solvent.
5.16 Disclosure.
No representation or warranty of Company or any of its
Subsidiaries contained in any Loan Document or in any other
document, certificate or written statement furnished to Lenders
by or on behalf of Company or any of its Subsidiaries for use in
connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to
state a material fact (known to Company, in the case of any
document not furnished by it) necessary in order to make the
statements contained herein or therein not misleading in light of
the circumstances in which the same were made. Any projections
and pro forma financial information contained in such materials
are based upon good faith estimates and assumptions believed by
Company to be reasonable at the time made, it being recognized by
Lenders that such projections as to future events are not to be
viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the
projected results. To Company's Best Knowledge, no facts exist
(other than matters of a general economic nature) that,
individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect and that have not been
disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the
transactions contemplated hereby.
5.17 Compliance With Laws.
Company and its Subsidiaries are in compliance with the
requirements of all applicable laws, rules, regulations,
ordinances and orders (including, without limitation, Gaming
Laws) if noncompliance would affect the ability of any such party
to operate any of the Facilities or the ability of any of Company
or any of its Subsidiaries to perform their obligations under the
Loan Documents to which it is a party, except where the failure
to so comply or perform would not have a Material Adverse Effect.
The use of each of the Facilities complies with applicable zoning
ordinances, regulations, restrictive covenants and requirements
of Governmental Authorizations affecting the respective
Facilities as well as all environmental, ecological, landmark,
and other applicable laws and regulations (including, without
limitation, Gaming Laws); and all requirements for such use have
been satisfied, except where the failure to so comply would not
have a Material Adverse Effect.
5.18 Representations Relating to Operation of Facilities.
A. Each of the Facilities is open to the public and all
authorizations, licenses and permits required by any Governmental
Authority for the use, occupancy and operation of the Premises
and the Maryland Heights Premises for the purposes contemplated
herein have been obtained and all requirements for such use have
been satisfied.
B. All utility services required to operate each of the
Facilities are available and in adequate supply.
5.19 Intangible Property.
Company and its Subsidiaries are the sole and exclusive
owner or licensee of all trade names, unregistered trademarks and
service marks, brand names, patents, registered and unregistered
copyrights, registered trademarks and service marks, and all
applications for any of the foregoing, and all permits, grants
and licenses or other rights with respect thereto, except where
the absence of such sole ownership would not have a Material
Adverse Effect. Schedule 5.19 annexed hereto sets forth a true
and complete list of all service marks and registered trademarks
(or trademarks for which registration is pending) of Company and
its Subsidiaries. None of Company and its Subsidiaries has been
charged with any material infringement of any intangible property
of the character described above or been notified or advised of
any material claim of any other Person relating to any of the
intangible property.
5.20 Rights to Agreements, Permits and Licenses.
From and after the Effective Date, Company (or its
Subsidiaries) will be the true owner of all rights in and to all
existing agreements, permits and licenses relating to all of its
facilities (now or hereafter acquired) and each of the respective
Premises (other than rights of third parties under leases and
agreements permitted hereunder), and will be the true owner of
all rights in and to all future agreements, permits and licenses
relating to all of its facilities (now or hereafter acquired),
other than rights of third parties under leases and agreements
permitted hereunder, except where the absence of such true
ownership would not have a Material Adverse Effect. Company's
interest in all such agreements, permits, and licenses is not
and, to Company's Best Knowledge, will not be subject to any
present claim (other than under the Loan Documents), set-off or
deduction other than in the ordinary course of business.
5.21 Classification of Ships.
From and after the Effective Date, the American Bureau
of Shipping classification of each Ship shall remain the highest
applicable classification and rating to which a ship of the same
age and type as such Ship can qualify under the rules and
standards of the American Bureau of Shipping.
5.22 Recordation of Ship Mortgages.
Each Ship Mortgage has been duly filed in the
appropriate office of the United States Coast Guard. Each Ship
Mortgage constitutes a legal, valid and binding first preferred
ship mortgage under the Ship Mortgage Act of 1920, as amended and
codified in Chapter 313 of Title 46 of the United States Code, on
the applicable Ship or US Documented Barge in favor of the
Trustee as mortgagee under such Ship Mortgage for the benefit of
Administrative Agent on behalf of Lenders. No other filings or
recordings or refilings or re-recordings of any other instruments
are necessary to cause the lien of any of the Ship Mortgages to
be legal, valid and binding on the parties thereto, and to create
in favor of the Trustee, as secured party, for the benefit of
Administrative Agent on behalf of Lenders, the preferred mortgage
which the Ship Mortgages purport to create.
5.23 Policies of Insurance.
Each of the copies of the declaration pages, original
binders and certificates of insurance evidencing the Policies of
Insurance delivered to Administrative Agent with respect to the
Louisiana Facilities, the Illinois Facilities and the Louisiana
Hotel Facilities is a true, correct and complete copy of the
respective original thereof as in effect on the date hereof, and
no amendments or modifications of said documents or instruments
not included in such copies have been made. Furthermore, none
of such documents or instruments has been terminated and each is
in full force and effect. Neither the Company nor any of its
Subsidiaries are in default in the observance or performance of
their respective obligations under said documents and instruments
and Company and its Subsidiaries have taken all actions required
to be performed under all Policies of Insurance to keep
unimpaired their rights thereunder.
5.24 Survival of Rights Created under Existing Credit Agreement.
Notwithstanding the modification or deletion of certain
representations and warranties of Company contained in the
Existing Credit Agreement (including, without limitation, the
deletion of representations and warranties as to the future
consequences of certain events which occurred prior to the date
of this Agreement), Company acknowledges and agrees that any
choses in action or other rights created in favor of any Lender
and their respective successors and assigns arising out of the
representations and warranties of Company contained in or
delivered (including representations and warranties delivered in
connection with the making of loans thereunder) in connection
with the Existing Credit Agreement, shall survive the execution
and delivery of this Agreement. Company and Lenders acknowledge
that certain representations and warranties made by Company under
the Existing Credit Agreement (including representations and
warranties as to the future consequences of certain events which
occurred prior to the date of this Agreement) were made subject
to changes in the facts and conditions on which such
representations and warranties were based, which such changes
were permitted or required under the Existing Credit Agreement or
this Agreement and any such representations and warranties
incorporated herein are so incorporated subject to such changes
permitted or required under the Existing Credit Agreement or this
Agreement.
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as the
Commitments hereunder shall remain in effect and until payment in
full of all of the Loans and other Obligations and the
cancellation or expiration of all Letters of Credit, unless each
Lender shall otherwise give prior written consent, Company shall
perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 Financial Statements and Other Reports.
Company will maintain, and cause each of its
Subsidiaries to maintain, a system of accounting established and
administered in accordance with sound business practices to
permit preparation of financial statements in conformity with
GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: As soon as available and in
any event within 35 days after the end of each month (and
concurrently with the delivery of financial statements
pursuant to subdivisions (ii) and (iii) below): (a) the
consolidated balance sheet of Company and its Subsidiaries
as at the end of such month and the related consolidated
statements of profit and loss, stockholders' equity and cash
flows of Company and its Subsidiaries for such month,
setting forth in each case in comparable form the
corresponding figures for the corresponding periods of the
previous Fiscal Year and the corresponding figures from the
consolidated plan and financial forecast for the current
Fiscal Year delivered pursuant to subsection 6.1(xiv), all
in reasonable detail and certified by the Chief Financial
Officer of the Company that they fairly present the
financial condition of Company and its Subsidiaries as at
the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end
adjustments, (b) an analysis of Company's operations during
such month which analysis shall explain the effect of the
Company's operations during such month or Company's ability
to perform its obligations under the Agreement and the other
Loan Documents and (c) the balance sheet of each Facility as
at the end of such month and the related statements of
profit and loss, stockholder's equity and cash flows of such
Facility for such month, setting forth in each case in
comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year all in
reasonable detail and certified by the Chief Financial
Officer of Company that they fairly present the financial
condition of such Facility as at the dates indicated and the
results of such Facility's operations and cash flows for the
period indicated, subject to changes resulting from audit
and normal year-end adjustments.
(ii) Quarterly Financials: as soon as available and in
any event within 45 days after the end of each of the first
three Fiscal Quarters of each Fiscal Year and, with respect
to the fourth Fiscal Quarter of each Fiscal Year,
concurrently with the delivery of financial statements
pursuant to subdivision (iii) below, (1) the consolidated
and Consolidating balance sheets of Company and its
Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated and Consolidating statements of income,
stockholders' equity and cash flows of Company and its
Subsidiaries for such Fiscal Quarter and for the period from
the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the
corresponding figures from the consolidated plan and
financial forecast for the current Fiscal Year delivered
pursuant to subsection 6.1(xiv), all in reasonable detail
and certified by the chief financial officer of Company that
they fairly present the financial condition of Company and
its Subsidiaries as at the dates indicated and the results
of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and
normal year-end adjustments and (2) copies of Company's
relevant 10-Q filed with the Securities and Exchange
Commission within 15 days of such filing;
(iii) Year-End Financials: as soon as available
and in any event within 120 days after the end of each
Fiscal Year, (a) (1) the consolidated and Consolidating
balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and
Consolidating statements of income, stockholders' equity and
cash flows of Company and its Subsidiaries for such Fiscal
Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year and, when
available, the corresponding figures from the consolidated
plan and financial forecast delivered pursuant to subsection
6.1(xiii) for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present
the financial condition of Company and its Subsidiaries as
at the dates indicated and the results of their operations
and their cash flows for the periods indicated, and (2)
copies of Company's relevant 10-K filed with the Securities
and Exchange Commission within 15 days of such filing, and
(b) in the case of such consolidated financial statements, a
report thereon of Ernst & Young, LLP or other independent
certified public accountants of recognized national standing
selected by Company and satisfactory to Managing Agent,
which report shall be unqualified, shall not express any
doubts about the ability of Company and its Subsidiaries to
continue as a going concern, and shall state that such
consolidated financial statements fairly present the
consolidated financial position of Company and its
Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods
indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed
in such financial statements) and that the examination by
such accountants in connection with such consolidated
financial statements has been made in accordance with
generally accepted auditing standards;
(iv) Officers' and Compliance Certificates:
(a) together with each delivery of financial statements of
Company and its Subsidiaries pursuant to subdivisions (i),
(ii) and (iii) above, an Officers' Certificate of Company
stating that the signers have reviewed the terms of this
Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the
transactions and condition of Company and its Subsidiaries
during the accounting period covered by such financial
statements and that such review has not disclosed the
existence during or at the end of such accounting period,
and that the signers do not have actual knowledge of the
existence as at the date of such Officers' Certificate, of
any condition or event that constitutes an Event of Default
or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of
existence thereof and what action Company has taken, is
taking and proposes to take with respect thereto; and
(b) together with each delivery of financial statements of
Company and its Subsidiaries pursuant to subdivision (i)
above, a Compliance Certificate demonstrating in reasonable
detail compliance (X) during and at the end of the
applicable accounting periods with the restrictions
contained in subsections 7.1, 7.3(v) and 7.5 and (Y) at the
end of the applicable accounting periods with the
restrictions contained in subsection 7.6, and setting forth
in reasonable detail the calculation of Consolidated EBITDA
for the four Fiscal Quarter period ending on the date of the
end of such accounting period and the Interest Coverage
Ratio as of such date;
(v) Reconciliation Statements: if, as a result of any
change in accounting principles and policies from those used
in the preparation of the audited financial statements
referred to in subsection 5.3, the consolidated financial
statements of Company and its Subsidiaries delivered
pursuant to subdivisions (ii) and (iii) of this subsection
6.1 will differ in any material respect from the
consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change
in accounting principles and policies been made, then
(a) together with the first delivery of financial statements
pursuant to subdivision (ii) and (iii) of this subsection
6.1 following such change, consolidated financial statements
of Company and its Subsidiaries for (y) the current Fiscal
Year to the effective date of such change and (z) the two
full Fiscal Years immediately preceding the Fiscal Year in
which such change is made, in each case prepared on a pro
forma basis as if such change had been in effect during such
periods, and (b) together with each delivery of financial
statements pursuant to subdivision (ii) and (iii) of this
subsection 6.1 following such change, a written statement of
the chief accounting officer or chief financial officer of
Company setting forth the differences which would have
resulted if such financial statements had been prepared
without giving effect to such change;
(vi) Accountants' Certification: together with each
delivery of consolidated financial statements of Company and
its Subsidiaries pursuant to subdivision (iii) above, a
written statement by the independent certified public
accountants giving the report thereon (a) stating that their
audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with
their audit examination, any condition or event that
constitutes an Event of Default or Potential Event of
Default has come to their attention and, if such a condition
or event has come to their attention, specifying the nature
and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to
obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course
of their audit examination, and (c) stating that based on
their audit examination nothing has come to their attention
that causes them to believe either or both that the
information contained in the certificates delivered
therewith pursuant to subdivision (iv) above is not correct
or that the matters set forth in the Compliance Certificates
delivered therewith pursuant to clause (b) of subdivision
(iv) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon, but in
no case later than 15 calendar days after, receipt thereof
(unless restricted by applicable professional standards),
copies of all reports submitted to Company by independent
certified public accountants in connection with each annual,
interim or special audit of the financial statements of
Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted
by such accountants to management in connection with their
annual audit;
(viii) Insurance: as soon as practicable and in any
event by the last day of each Fiscal Year, a report in form
and substance satisfactory to Administrative Agent outlining
all material insurance coverage maintained as of the date of
such report by Company and its Subsidiaries (including all
coverages referred to in subsection 6.4B hereof and
Schedules 6.4(a) and 6.4(b) annexed hereto, section 6 of
each of the Mortgages and within each of the Ship Mortgages
under the heading "Vessel Insurance Requirements and
Provisions") and all material insurance coverage then
planned to be maintained by Company and its Subsidiaries in
the immediately succeeding Fiscal Year, if in each case
there shall be any material changes in such insurance
coverage from the insurance coverage in existence on the
date hereof;
(ix) SEC Filings and Press Releases: promptly upon
their becoming available but in any event within 15 days
after filing with the Securities and Exchange Commission,
copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company
to its security holders or by any Subsidiary of Company to
its security holders other than Company or another
Subsidiary of Company, (b) all regular and periodic reports
and all registration statements (other than on Form S-8 or a
similar form) and prospectuses, if any, filed by any of
Company's Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or any governmental
or private regulatory authority, and (c) all press releases
and other statements made available generally by Company or
any of Company's Subsidiaries to the public concerning
material developments in the business of Company or any of
Company's Subsidiaries;
(x) Events of Default, etc.: promptly, but in any
event within 5 calendar days, upon Company's Best Knowledge
(a) of any condition or event that constitutes an Event of
Default or Potential Event of Default, or that any Lender
has given any notice (other than to Administrative Agent) or
taken any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person
has given any notice to Company or any of its Subsidiaries
or taken any other action with respect to a claimed default
or event or condition of the type referred to in subsection
8.2, (c) of any condition or event that would be required to
be disclosed in a current report filed by Company with the
Securities and Exchange Commission on Form 8-K (Items 1, 2,
4, 5 and 6 of such Form as in effect on the date hereof) if
Company were required to file such reports under the
Exchange Act, or (d) of the occurrence of any event or
change that has caused or evidences, either in any case or
in the aggregate, a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence of
such condition, event or change, or specifying the notice
given or action taken by any such Person and the nature of
such claimed Event of Default, Potential Event of Default,
default, event or condition, and what action Company has
taken, is taking and proposes to take with respect thereto;
(xi) Litigation or Other Proceedings: (a) promptly
upon any Responsible Officer obtaining knowledge of (X) the
institution of, or non-frivolous threat of, any action,
suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration
against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries
(collectively, "Proceedings") not previously disclosed in
writing by Company to Lenders or (Y) any material
development in any Proceeding that, in any case of (X) or of
(Y):
(1) if adversely determined, has a
reasonable possibility of giving rise to a Material
Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain
relief as a result of, the transactions contemplated
hereby;
written notice thereof together with such other information
as may be reasonably available to Company to enable Lenders
and their counsel to evaluate such matters; and (b) within
twenty days after the end of each Fiscal Quarter of Company,
a schedule of all Proceedings involving an alleged liability
of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $10,000,000 in the
aggregate, and promptly after request by Administrative
Agent such other information as may be reasonably requested
by Administrative Agent to enable Administrative Agent and
its counsel to evaluate any of such Proceedings;
(xii) ERISA Events: promptly upon becoming aware
of, but in no case later than 15 calendar days after, the
occurrence of or forthcoming occurrence of any ERISA Event,
a written notice specifying the nature thereof, what action
Company or any of its ERISA Affiliates has taken, is taking
or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect
thereto;
(xiii) ERISA Notices: with reasonable promptness,
copies of (a) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) as required to be filed by
Company or any of its ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan; (b) all
notices received by Company or any of its ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event;
and (c) such other documents or governmental reports or
filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xiv) Financial Plans: as soon as practicable and
in any event no later than 60 days after the beginning of
each Fiscal Year, a consolidated and Consolidating plan and
financial forecast for such Fiscal Year, including without
limitation (a) forecasted consolidated and Consolidating
balance sheet and forecasted consolidated statements of
income and cash flows of Company and its Subsidiaries for
such Fiscal Year, together with a pro forma Compliance
Certificate for such Fiscal Year and an explanation of the
assumptions on which such forecasts are based,
(b) forecasted consolidated and Consolidating statements of
income and cash flows of Company and its Subsidiaries for
each Fiscal Quarter of each such Fiscal Year, together with
an explanation of the assumptions on which such forecasts
are based, (c) the amount of forecasted unallocated overhead
for each such Fiscal Year, and (d) such other information
and projections as any Lender (through the Administrative
Agent) may reasonably request;
(xv) Environmental Audits and Reports: as soon as
practicable following receipt thereof, but in no case later
than 15 calendar days after, copies of all environmental
audits and reports, whether prepared by personnel of Company
or any of its Subsidiaries or by independent consultants,
with respect to significant environmental matters at any
Facility or which relate to an Environmental Claim which
could result in a Material Adverse Effect;
(xvi) Board of Directors: with reasonable
promptness, written notice of any change in the Board of
Directors of Company;
(xvii) Pricing Determination Certificate:
concurrently with the delivery of the financial statements
for each Fiscal Quarter required under subsection 6.1(ii),
and in any event no later than 45 days after the end of each
Fiscal Year, Company shall deliver a Pricing Determination
Certificate;
(xviii) New Subsidiaries: promptly upon any Person
becoming a Subsidiary of Company, a written notice setting
forth with respect to such Person (a) the date on which such
Person became a Subsidiary of Company and (b) all of the
data required to be set forth in Schedule 5.1 annexed hereto
with respect to all Subsidiaries of Company (it being
understood that such written notice shall be automatically
deemed to supplement Schedule 5.1 to this Agreement for all
purposes, including the Guaranty);
(xix) [omitted].
(xx) Gaming Board Communications: promptly, but in no
case later than 15 calendar days, after the same are
available, copies of any written communication to Company or
any of its Subsidiaries from any Gaming Board advising it of
a violation of or non-compliance with, any Gaming Law by
Company or any of its Subsidiaries;
(xxi) US Documented Barges: promptly upon the
acquisition or documentation by Company or any of its
Subsidiaries of any additional US Documented Barge, a
written notice setting forth with respect to such Person
(a) the date on which such barge became a US Documented
Barge and (b) all of the data required to be set forth in
Schedule 5.5 annexed hereto with respect to all US
Documented Barges (it being understood that such written
notice shall be automatically deemed to supplement Schedule
5.5 to this Agreement for all purposes); and
(xxii) Other Information: with reasonable
promptness, such other information and data with respect to
Company or any of its Subsidiaries as from time to time may
be reasonably requested by any Lender through the
Administrative Agent.
6.2 Corporate Existence, etc.
Except as permitted under subsection 7.7, Company will,
and will cause each of its Subsidiaries to, at all times preserve
and keep in full force and effect its corporate or other legal
existence, as applicable, and all rights and franchises material
to its business.
6.3 Payment of Taxes and Claims; Tax Consolidation.
A. Company will, and will cause each of its Subsidiaries
to, pay all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect
of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a
Lien upon any of its properties or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto;
provided that no such tax, charge or claim need be paid if being
contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity
with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than
Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance.
A. Company will, and will cause each of its Subsidiaries
to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all
material properties used or useful in the business of Company and
its Subsidiaries (including, without limitation, maintenance of
Intellectual Property) and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements
thereof.
B. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, throughout the term of
this Agreement, all Policies of Insurance required pursuant to
Schedules 6.4(a) and 6.4(b) annexed hereto and will otherwise
comply fully with the terms and conditions provided in
subsection 6 of each of the Mortgages and within each of the Ship
Mortgages under the heading "Vessel Insurance Requirements and
Provisions". Each such policy of insurance shall name
Administrative Agent for the benefit of Lenders as the loss payee
thereunder for amounts in excess of $2,500,000 and shall provide
for at least 30 days prior written notice to Administrative Agent
of any modification or cancellation of such policy.
6.5 Inspection; Lender Meeting.
Company shall, and shall cause each of its Subsidiaries
to, permit any authorized representatives designated by any
Lender to visit and inspect any of the properties of Company or
any of its Subsidiaries, including its and their financial and
accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public
accountants (provided that Company may, if it so chooses, be
present at or participate in any such discussion), all upon
reasonable notice and at such reasonable times during normal
business hours and as often as may be reasonably requested.
Without in any way limiting the foregoing, Company will, upon the
request of Managing Agent or Requisite Lenders, participate in a
meeting of Managing Agent and Lenders once during each Fiscal
Year to be held at Company's corporate offices (or such other
location as may be agreed to by Company and Managing Agent) at
such time as may be agreed to by Company and Managing Agent.
6.6 Compliance with Laws, etc.
Company shall, and shall cause each of its Subsidiaries
to, comply with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority, including
all Gaming Laws, and to obtain and keep in full force and effect
any permit, license, consent, or approval required under this
Agreement if such noncompliance or failure to obtain and keep in
full force and effect could reasonably be expected to cause a
Material Adverse Effect. Company shall and shall cause each of
its Subsidiaries to comply with the requirements of all Gaming
Laws applicable to such Person.
6.7 Environmental Disclosure and Inspection.
A. Company shall, and shall cause each of its Subsidiaries
to, exercise all due diligence in order to comply and use its
best efforts to cause (i) all tenants under any leases or
occupancy agreements affecting any portion of the Facilities and
(ii) all other Persons on or occupying such property, to comply
with all Environmental Laws.
B. Company agrees that Administrative Agent may, once
during each Fiscal Year until the Commitment Termination Date or
at any time upon the occurrence of an Event of Default, retain,
at Company's expense, an independent professional consultant to
review any report relating to Hazardous Materials prepared by or
for Company and to conduct its own investigation of any Facility
currently owned, leased, operated or used by Company or any of
its Subsidiaries, and Company agrees to use its best efforts to
obtain permission for Administrative Agent's professional
consultant to conduct its own investigation of any Facility
previously owned, leased, operated or used by Company or any of
its Subsidiaries. Company hereby grants to Administrative Agent
and its agents, employees, consultants and contractors the right
to enter into or on to the Facilities currently owned, leased,
operated or used by Company or any of its Subsidiaries to perform
such tests on such property as are reasonably necessary to
conduct such a review and/or investigation. Any such
investigation of any Facility shall be conducted, unless
otherwise agreed to by Company and Administrative Agent, during
normal business hours and, to the extent reasonably practicable,
shall be conducted so as not to interfere with the ongoing
operations at any such Facility or to cause any damage or loss to
any property at such Facility. Company and Administrative Agent
hereby acknowledge and agree that any report of any investigation
conducted at the request of Administrative Agent pursuant to this
subsection 6.7B will be obtained and shall be used by
Administrative Agent and Lenders solely for the purposes of
Lenders' internal credit decisions, to monitor and police the
Loans and to protect Lenders' security interests, if any, created
by the Loan Documents. Administrative Agent agrees to deliver a
copy of any such report to Company with the understanding that
Company acknowledges and agrees that (i) it will hold harmless
Administrative Agent and each Lender from any costs, losses or
liabilities relating to Company's use of or reliance on such
report, (ii) neither Administrative Agent nor any Lender makes
any representation or warranty with respect to such report, and
(iii) by delivering such report to Company, neither
Administrative Agent nor any Lender is requiring or recommending
the implementation of any suggestions or recommendations
contained in such report.
C. Company shall promptly advise Lenders in writing and in
reasonable detail of (i) any Release of any Hazardous Materials
required to be reported to any federal, state or local
governmental or regulatory agency under any applicable
Environmental Laws, (ii) any and all written communications with
respect to any Environmental Claims that have a reasonable
possibility of giving rise to a Material Adverse Effect or with
respect to any Release of Hazardous Materials required to be
reported to any federal, state or local governmental or
regulatory agency, (iii) any remedial action taken by Company or
any other Person in response to (x) any Hazardous Materials on,
under or about any Facility, the existence of which has a
reasonable possibility of resulting in an Environmental Claim
having a Material Adverse Effect, or (y) any Environmental Claim
that could have a Material Adverse Effect, (iv) discovery by any
Responsible Officer of any occurrence or condition on any real
property adjoining or in the vicinity of any Facility that could
cause such Facility or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws, and (v) any request for
information from any governmental agency that suggests such
agency is investigating whether Company or any of its
Subsidiaries may be potentially responsible for a Release of
Hazardous Materials.
D. Company shall promptly notify Lenders of (i) any
proposed acquisition of stock, assets, or property by Company or
any of its Subsidiaries that could reasonably be expected to
expose Company or any of its Subsidiaries to, or result in,
Environmental Claims that could have a Material Adverse Effect or
that could reasonably be expected to have a material adverse
effect on any Governmental Authorization then held by Company or
any of its Subsidiaries and (ii) any proposed action to be taken
by Company or any of its Subsidiaries to commence manufacturing,
industrial or other operations that could reasonably be expected
to subject Company or any of its Subsidiaries to additional laws,
rules or regulations, including, without limitation, laws, rules
and regulations requiring additional environmental permits or
licenses.
E. Company shall, at its own expense, provide copies of
such documents or information as Administrative Agent may
reasonably request in relation to any matters disclosed pursuant
to this subsection 6.7.
6.8 Company's Remedial Action Regarding Hazardous Materials.
Company shall promptly take, and shall cause each of
its Subsidiaries promptly to take, any and all necessary remedial
action in connection with the presence, storage, use, disposal,
transportation or Release of any Hazardous Materials on, under or
about any Facility in order to comply with all applicable
Environmental Laws and Governmental Authorizations. In the event
Company or any of its Subsidiaries undertakes any remedial action
with respect to any Hazardous Materials on, under or about any
Facility, Company or such Subsidiary shall conduct and complete
such remedial action in compliance with all applicable
Environmental Laws, and in accordance with the policies, orders
and directives of all federal, state and local governmental
authorities except when, and only to the extent that, Company's
or such Subsidiary's liability for such presence, storage, use,
disposal, transportation or discharge of any Hazardous Materials
is being contested in good faith by Company or such Subsidiary.
6.9 Post-Closing Matters.
Company shall comply with all covenants and obligations
set forth on Schedule 6.9 hereto, which are incorporated herein
by this reference.
6.10 New Subsidiaries; New Joint Ventures; Further Assurances.
A. In the event a Person becomes a Subsidiary of Company
after the Effective Date, Company, upon the request of
Administrative Agent, shall and shall cause such Subsidiary to
execute and deliver such guaranties, collateral documents and
such other agreements, pledges, assignments, documents and
certificates (including, without limitation, any amendments to
the Loan Documents) as may be necessary or desirable or as
Administrative Agent may request and do such other acts and
things as Administrative Agent reasonably may request in order to
have a lien on the stock of such Subsidiary and to have such
Subsidiary guaranty and/or secure the Obligations and effect
fully the purposes of this Agreement and the other Loan Documents
and any Lender Interest Rate Agreements and to provide for
payment of the Obligations hereunder and all obligations in
respect of any Lender Interest Rate Agreements in accordance with
the terms of this Agreement and the other Loan Documents and any
Lender Interest Rate Agreements.
B. In the event Company or any of its Subsidiaries enters
into any Joint Venture by means of the ownership of any
Subsidiary (a "Participant Subsidiary") that, directly or
indirectly, holds stock in a Joint Venture in corporate form or
acts as a partner in a Joint Venture in partnership form,
(i) Company shall, and shall cause each of its Subsidiaries to,
pledge its interests in such Participant Subsidiary that enters
into such Joint Venture as Collateral, (ii) neither Company nor
any of its Subsidiaries shall enter into any other agreement that
creates any Lien on the interests that Company or any such
Subsidiary owns in such Participant Subsidiary or Joint Venture
and (iii) neither Company nor any of its Subsidiaries will enter
into any agreement that prohibits, restricts or conditions
Lenders' rights to encumber the stock or ownership interests in
such Participant Subsidiary or Joint Venture.
C. Additionally, Company shall, and shall cause each of
its Subsidiaries to, execute such documents as Administrative
Agent reasonably may request to perfect Administrative Agent's
Lien on real or personal property located at any of the
Facilities acquired after the Effective Date.
D. Without limiting the generality of subsection 6.10C,
if, and at such time as, SIRCC or any Affiliate of Company
purchases any of the parking lots used in connection with the
Illinois Facilities from Burlington Northern Railroad Company
(the "Railroad"), which parking lots SIRCC currently leases from
the Railroad, unless Administrative Agent otherwise agrees,
Company shall cause SIRCC or such Affiliate purchasing such
parking lot (i) to grant to Administrative Agent a deed of trust
or mortgage, in form and substance acceptable to Administrative
Agent, on such parking lot(s), (ii) to pay or cause to be paid
any monetary Liens then encumbering such parking lot(s), (iii) to
provide Administrative Agent with a lender's policy of title
insurance and any endorsements thereto, in form and substance
acceptable to Administrative Agent (but, subject to such non-
monetary Liens as do not materially affect the use and operation
of such parking lot), insuring such deed of trust or mortgage as
a first priority Lien on such parking lot in favor of
Administrative Agent, and (iv) to execute and deliver such other
instruments and agreements and undertake such other acts as
Administrative Agent may request in connection therewith
(including, without limitation, executing security agreements,
fixture filings, and financing statements with respect to such
parking lots).
E. Company, Administrative Agent and each of the Lenders
will, at the expense of Company, do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and
delivered, such amendments or supplements hereto or to any of the
Loan Documents and such further documents, instruments and
transfers as any such party may reasonably require for the curing
of any defect in the execution or acknowledgment hereof or in any
of the Loan Documents, or in the description of the real property
or other Collateral or for the proper evidencing of giving notice
of each Lien or security interest securing repayment of the
Obligations. Further, upon the execution and delivery of the
Mortgages, the Ship Mortgages and each of the Loan Documents and
thereafter, from time to time, Company shall cause the Mortgages,
the Ship Mortgages and each of the Loan Documents and each
amendment and supplement thereto to be filed, registered and
recorded and to be refiled, re-registered and re-recorded in such
manner and in such places as may be reasonably required by
Requisite Lenders or Administrative Agent, in order to publish
notice of and fully protect the Liens of the Mortgages, the Ship
Mortgages and each of the Loan Documents in the Collateral and to
perform or cause to be performed from time to time any other
actions required by law and execute or cause to be executed any
and all instruments of further assurance that may be necessary
for such publication, perfection, continuation and protection.
F. Company shall give Administrative Agent written notice
(the "Initial Notice") promptly upon entering into contracts
after the Effective Date other than the Excluded Contracts (as
defined below) which individually or in the aggregate could give
rise to mechanic's liens in excess of $1,000,000 with respect to
the construction or renovation of Improvements or any other
contracts aggregating more than $1,000,000 that might give rise
to mechanics or other statutory Liens at any one of the following
locations (a) the Illinois Premises, (b) the Louisiana Premises
or (c) the Louisiana Hotel Premises, which notice shall include
the location at which such construction or renovation is taking
place and a brief description of the nature of the construction
or renovation. From and after the date of the Initial Notice,
Company shall give Administrative Agent written notice
("Subsequent Notice") promptly upon entering into contracts which
individually or in the aggregate increase Company's exposure to
mechanics or other statutory Liens by any amount in excess of
$100,000 from the amount of mechanics or other statutory Liens
for which Company was potentially liable on the day Company gave
the Initial Notice, or, thereafter, the day Company gave the most
recent prior Subsequent Notice. Administrative Agent shall
promptly transmit all such notices required under this clause to
Lenders and, upon receipt of written requests therefor from
Requisite Lenders, shall request Title Company to issue at
Company's expense a California Land Title Association Form 122
(or comparable) endorsement to the Title Policy issued at the
closing of this Agreement with respect to the location at which
such construction or renovation is being conducted, which
endorsement shall provide insurance against any mechanics or
other statutory liens arising from such construction or
renovation; provided that Requisite Lenders may request such an
endorsement be issued no more often than quarterly during the
period from the date of receipt of any such notice from Company
until such date as all of the following have occurred (x) a
certificate of use or occupancy (or comparable certificate in the
applicable jurisdiction) has been issued with respect to such
construction or renovation, (y) any statutory period within which
a mechanics Lien could be asserted has expired and (z) all
contractors with respect to such construction or renovation have
been paid in full. Company agrees to cooperate with the Title
Company to cause such endorsements to be issued. For purposes of
this Section 6.10F Excluded Contracts shall mean contracts with
respect to which the Title Policies delivered on the Effective
Date provided endorsements as to the absence of mechanics or
other statutory Liens arising in connection with the performance
thereof.
G. Upon each exercise of the option in the Waterbottom
Lease (as defined in the Louisiana Mortgage) that permits PLC to
lease additional waterbottom lands from the State of Louisiana,
Players shall record, or shall cause PLC to record, in the land
records of Calcasieu Parish, Louisiana, a memorandum of exercise
of option for purposes of putting of record PLC's rights in such
additional lands. Concurrently therewith, Players shall notify
Administrative Agent in writing and shall execute, deliver, and
record any instruments and agreements and do such other acts as
Administrative Agent may deem necessary or appropriate to insure
the senior priority of the lien of the Louisiana Mortgage over
such additional lands (including, without limitation, causing the
Title Company to issue, at Company's sole cost and expense, an
endorsement to the applicable Title Policy ensuring the senior
priority of the lien of the Louisiana Mortgage on PLC's rights in
such additional lands).
6.11 Exchange Listing.
Company shall take any and all actions to ensure that
at all times the shares of Company's common stock are listed on
NASDAQ or another national securities exchange.
SECTION 7.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as the
Commitments hereunder shall remain in effect and until payment in
full of all of the Loans and other Obligations and the
cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 7.
7.1 Indebtedness.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except
(i) the Loans;
(ii) the Senior Notes;
(iii) [omitted];
(iv) intercompany Indebtedness of Company owed to any
wholly-owned Subsidiary or any intercompany Indebtedness
owed by any wholly-owned Subsidiary of Company to Company or
any other wholly-owned Subsidiary of Company; provided that
any payment under any Guaranty shall result in a pro tanto
reduction of the amount of such intercompany Indebtedness
owed by a Guarantor to Company; and
(v) so long as no Event of Default or, to Company's
Best Knowledge, Potential Event of Default shall have
occurred and be continuing, or shall be caused thereby, (A)
Other Allowed Indebtedness (Secured) and (B) Company and its
Subsidiaries may create, incur, assume or guaranty or
otherwise become or remain liable directly or indirectly
liable with respect to Other Allowed Indebtedness
(Unsecured) if, after giving effect thereto, Company shall
be in compliance on a pro forma basis with subsection 7.6H.
7.2 Liens and Related Matters.
A. Prohibition on Liens. Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume or permit to exist any Lien on or with
respect to any of their respective assets, whether now owned or
hereafter acquired, or any income or profits therefrom, or file
or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with
respect to any of the Collateral under the Uniform Commercial
Code of any State or under any similar recording or notice
statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted or permitted pursuant to the
Collateral Documents;
(iii) Liens to secure Other Allowed Indebtedness
(Secured) to the extent permitted pursuant to the
definitions of "Other Allowed Indebtedness (Secured)" and
"Purchase Money Debt";
(iv) Liens existing on the Effective Date and described
on Schedule 7.2 annexed hereto; and
(v) a Lien to be granted by PMH and/or PMHLP, as
lessee, on certain of its gaming equipment and gaming
receivables, in favor of the Riverside Joint Venture, as
landlord, to secure the payment by PMH of certain lease
obligations owed to the Riverside Joint Venture in
connection with the operation of the Maryland Heights
Facilities.
B. No Further Negative Pledges. Except with respect to
specific property encumbered pursuant to subsection 7.2A or to be
sold pursuant to an executed agreement with respect to an Asset
Sale, neither Company nor any of its Subsidiaries shall enter
into any agreement prohibiting the creation or assumption of any
Lien upon any of its properties or assets, whether now owned or
hereafter acquired.
C. No Restrictions on Subsidiary Distributions to Company
or Other Subsidiaries. Except as provided herein, Company will
not, and will not permit any of its Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by
Company or any other Subsidiary of Company, (ii) repay or prepay
any Indebtedness owed by such Subsidiary to Company or any other
Subsidiary of Company, (iii) make loans or advances to Company or
any other Subsidiary of Company, or (iv) transfer any of its
property or assets to Company or any other Subsidiary of Company.
7.3 Investments, Loans and Advances; Capital Expenditures.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any
Investment or make any capital expenditure in any Person,
including any Joint Venture or to make Consolidated Capital
Expenditures, except:
(i) Investments in Cash Equivalents;
(ii) Investments of Net Cash Proceeds of Asset Sales in
a Related Business made within 270 days of the receipt of such
Net Cash Proceeds;
(iii) Company and its Subsidiaries may make
intercompany loans to the extent permitted under subsection 7.1;
provided that the obligations under any such loans are
subordinated to the Obligations of Company or any such Subsidiary
under the Loans or the Guaranty, as the case may be;
(iv) Company and its Subsidiaries may continue to own
the Investments owned by them on the Effective Date and described
in Schedule 7.3 annexed hereto; and
(v) Company and its Subsidiaries may make Consolidated
Capital Expenditures in the following amounts for the following
purposes:
(a) Consolidated Capital Expenditures for the
construction or acquisition of new facilities in an
aggregate amount not exceeding $35,000,000 for all periods
after the Effective Date;
(b) Consolidated Capital Expenditures for the
maintenance of facilities (including the replacement of
destroyed or damaged equipment with comparable new
equipment) in an amount not exceeding $10,000,000 in any
fiscal year;
(c) other Consolidated Capital Expenditures (for
construction of new facilities) in amounts not exceeding at
any date of determination the sum of (w) 100% of the net
cash proceeds received by Company from the sale of any
equity securities of Company during the period from the
Effective Date to such date of determination plus (x) 75% of
the net cash proceeds received by Company from the sale of
any Subordinated Indebtedness of the Company during the
period from the Effective Date to such date of determination
plus (y) 75% of Consolidated Net Income during the period
from the first Fiscal Quarter to end after the Effective
Date to such date of determination.
7.4 Contingent Obligations.
Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of
Administrative Agent and Requisite Lenders, directly or
indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Company and such Subsidiaries may become and
remain liable with respect to Contingent Obligations in
respect of any Indebtedness of Company or any of its
Subsidiaries permitted by subsection 7.1;
(ii) Company and such Subsidiaries may become and
remain liable with respect to Contingent Obligations in
respect to Interest Rate Agreements in respect of any
Indebtedness of Company hereunder;
(iii) Company and such Subsidiaries may become and
remain liable with respect to Contingent Obligations in
respect of Letters of Credit; and
(iv) Company and such Subsidiaries may become and
remain liable for Contingent Obligations to make Investments
permitted by subsection 7.3.
7.5 Restricted Payments.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment, except:
(i) Company may make open-market or private purchases
of its outstanding equity securities (or options or warrants
to purchase such securities) in an aggregate amount for all
such purchases made after the Effective Date not to exceed
the sum of (x) $10,000,000 plus (y) 50% of the sum of
Consolidated Net Income for each Fiscal Quarter ending after
the Effective Date and prior to the making of the applicable
Restricted Payment; provided that nothing contained in this
subsection 7.5 shall limit Company's ability to repurchase
Senior Notes pursuant to a Regulatory Redemption (as defined
in the Indenture); and
(ii) Company may make Restricted Payments to redeem,
retire or purchase for value any interests of any class of
stock of Company now or hereafter outstanding; provided that
the amount of any Restricted Payment made pursuant to this
clause (ii) shall not exceed the aggregate amount of net
cash proceeds from the issuance or sale of the same class of
stock of Company received by Company during the 180 day
period preceding the date such Restricted Payment was made
(excluding net cash proceeds applied to any other Restricted
Payment pursuant to this clause (ii)).
7.6 Financial Covenants.
A. Minimum Fixed Charge Coverage Ratio. Company shall not
permit the Fixed Charge Coverage Ratio on the last day of each
Fiscal Quarter to be less than 1.50:1.00.
B. [Omitted].
C. [Omitted].
D. [Omitted].
E. Minimum Consolidated Tangible Net Worth.
(i) Company shall not permit Consolidated Tangible Net
Worth on the last day of each Fiscal Quarter ending before
the first anniversary of the Effective Date to be less than
$114,000,000.
(ii) Company shall not permit Consolidated Tangible Net
Worth on the last day of each Fiscal Quarter ending on or
after the first anniversary of the Effective Date to be less
than the sum of (x) $114,000,000 plus (y) an amount equal to
75% of Consolidated Net Income during the period from the
first Fiscal Quarter commencing after the Effective Date to
the date of determination, excluding any Fiscal Year
(including, if applicable, the portion of the Fiscal Year
ending on the date of determination) for which Consolidated
Net Income was negative.
F. [Omitted].
G. Maximum Facility Debt Ratio. Company shall not permit
the ratio of Facility Debt on the last day of any Fiscal Quarter
to Consolidated EBITDA for the four consecutive Fiscal Quarters
ending on such day to be greater than 1.50:1.00.
H. Maximum Total Funded Debt Ratio. Company shall not
permit the ratio of Total Funded Debt on the last day of any
Fiscal Quarter ending during any period set forth below to
Consolidated EBITDA for the four consecutive Fiscal Quarters
ending on such day to be more than the amount set forth below
opposite such period:
Period Amount
Effective Date through December 30, 1998 4.75:1.00
December 31, 1998 through December 30, 1999 4.25:1.00
December 31, 1999 and thereafter 3.75:1.00
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions.
Company shall not, and shall not permit any of its
Subsidiaries to, alter the corporate, capital or legal structure
of Company or any of its Subsidiaries, or enter into any
transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, sub-lease, transfer or otherwise dispose of,
in one transaction or a series of transactions, all or any
substantial part of its business, property or fixed assets,
whether now owned or hereafter acquired, or acquire by purchase
or otherwise 50% or more of the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of,
any Person or any division or line of business of any Person,
except:
(i) any Subsidiary of Company (other than a Guarantor)
may be merged with or into Company or any wholly-owned
Subsidiary of Company, or be liquidated, wound up or
dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of
transactions, to Company or any wholly-owned Subsidiary of
Company; provided that, in the case of such a merger,
Company or such wholly-owned Subsidiary shall be the
continuing or surviving corporation; provided further if any
Guarantor or grantor under a Collateral Document is the
disappearing entity in a merger with a wholly-owned
Subsidiary that is not a Guarantor or grantor, the surviving
corporation shall execute a Guaranty and/or a Subsidiary
Security Agreement, as the case may be;
(ii) any Subsidiary of Company may change its legal
structure so long as (X) any such modification does not in
any manner impair any Lender's ability to realize the
Collateral owned by such Subsidiary upon an Event of Default
and (Y) if such Subsidiary is the disappearing entity in a
merger devised to effect such a structural change, the
surviving entity shall execute a Guaranty and/or a
Subsidiary Security Agreement, as the case may be;
(iii) subject to subsections 7.11 and 2.4A(iii),
Company and its Subsidiaries may make Asset Sales of assets
having a fair market value not in excess of $5,000,000 on an
individual basis; provided that, with respect to the sale of
any asset having a fair market value equal to or exceeding
$2,500,000, (x) the consideration received for such assets
shall be in an amount at least equal to the fair market
value thereof and (y) at least eighty percent (80%) of the
consideration received shall be Cash; and
(iv) Company and its Subsidiaries may make acquisitions
of Securities issued by Company consistent with subsection
7.5.
7.8 Transactions with Shareholders and Affiliates.
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the
rendering of any service) the subject matter of which involves an
amount in excess of $1,000,000 with any holder of 5% or more of
any class of equity Securities of Company or with any Affiliate
of Company or of any such holder, on terms that are less
favorable to Company or that Subsidiary, as the case may be, than
those that might be obtained at the time from Persons who are not
such a holder or Affiliate; provided that nothing contained in
the foregoing restriction shall apply to (i) any transaction
between Company and any of its wholly-owned Subsidiaries or
between any of its wholly-owned Subsidiaries or (ii) reasonable
and customary fees paid to members of the Boards of Directors of
Company and its Subsidiaries.
7.9 Disposal of Subsidiary Stock.
Company shall not:
(i) directly or indirectly sell, assign, pledge or
otherwise encumber or dispose of any shares of capital stock
or other equity Securities of any of its Subsidiaries,
except to qualify directors if required by applicable law;
or
(ii) permit any of its Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber or
dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of
Company, or to qualify directors if required by applicable
law.
7.10 Conduct of Business.
From and after the Effective Date, Company shall not,
and shall not permit any of its Subsidiaries to, engage in any
business other than (i) the businesses engaged in by Company and
its Subsidiaries on the Effective Date as described in the
"Business" and "Properties" section of the 10-K and any Related
Business and (ii) such other lines of business as may be
consented to by Requisite Lenders.
7.11 Tradenames, Trademarks and Servicemarks.
Company and its Subsidiaries shall not assign or in any
other manner alienate its interest in any tradenames, trademarks
or servicemarks relating or pertaining to any of the Facilities
other than (i) as provided on Schedule 7.11, (ii) assignments in
the ordinary course of Company's business and similar in nature
to the types of assignments undertaken by comparable gaming
entities or (iii) assignments to Company or any wholly-owned
Subsidiary of Company, if such assignment does not affect the
validity and enforceability of such tradenames, trademarks or
servicemarks and, prior to any such assignment, the assignee has
granted Administrative Agent a legally valid and enforceable
security interest in any such tradenames, trademarks or
servicemarks.
7.12 Change of Control Offer.
Company shall not commence a Change of Control Offer
(as defined in the Indenture) without the consent of Requisite
Lenders.
7.13 No Amendment of Indenture.
Company shall not amend the Indenture in any manner
without the prior written consent of Requisite Lenders, which
consent shall not be unreasonably withheld; provided that nothing
contained in this restriction shall apply to any amendment to the
Indenture that either (i) does not require the consent of any
holder of Senior Notes or (ii) is required by a final order or
decree of a court of competent jurisdiction.
7.14 No Movement of Other Barges.
Company and its Subsidiaries shall not permit any Barge
to be moved from permanent moorage at the Louisiana Premises or
the Illinois Premises, as applicable, unless and until (i) such
Barge is registered with the United States Coast Guard and (ii) a
first priority Lien has been created for the benefit of the
Lenders pursuant to a duly authorized, executed and delivered
Ship Mortgage.
SECTION 8.
EVENTS OF DEFAULT
IF any of the following conditions or events ("Events
of Default") shall occur:
8.1 Failure to Make Payments When Due.
Failure by Company to pay (i) any installment of
principal of or interest on any Loan when due, whether at stated
maturity, by acceleration, by notice of voluntary prepayment, by
mandatory prepayment or otherwise; (ii) when due any amount
payable to the Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or (iii) any interest on any Loan or
any fee or any other amount due under this Agreement within five
days after the date due; or
8.2 Default in Other Agreements.
(i) Failure of Company or any of its Subsidiaries to
pay when due (a) any principal of or interest on any Indebtedness
(other than Indebtedness referred to in subsection 8.1) in an
individual principal amount of $2,500,000 or more or any items of
Indebtedness with an aggregate principal amount of $5,000,000 or
more or (b) any Contingent Obligation in an individual principal
amount of $2,500,000 or more or any Contingent Obligations with
an aggregate principal amount of $5,000,000 or more, in each case
beyond the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its Subsidiaries with
respect to any other material term of (a) any evidence of any
Indebtedness in an individual principal amount of $2,500,000 or
more or any items of Indebtedness with an aggregate principal
amount of $5,000,000 or more or any Contingent Obligation in an
individual principal amount of $2,500,000 or more or any Contin
gent Obligations with an aggregate principal amount of $5,000,000
or more or (b) any loan agreement, mortgage, indenture or other
agreement relating to such Indebtedness or Contingent
Obligation(s), if the effect of such breach or default is to
cause, or to permit the holder or holders of that Indebtedness or
Contingent Obligation(s) (or a trustee on behalf of such holder
or holders) to cause, that Indebtedness or Contingent Obliga
tion(s) to become or be declared due and payable prior to its
stated maturity or the stated maturity of any underlying obliga
tion, as the case may be (upon the giving or receiving of notice,
lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
Failure of Company to perform or comply with any term
or condition contained in subsection 2.4A(iii), 2.4B(ii),
6.1(ix)(a), 6.2, 6.4B or Section 7 of this Agreement; or
8.4 Breach of Warranty.
Any representation, warranty, certification or other
statement made or deemed made by Company or any of its
Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its
Subsidiaries in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any material
respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
Company or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in this
Agreement or any of the other Loan Documents, other than any such
term referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within 15
days after the earlier of (i) a Responsible Officer becoming
aware of such default or (ii) receipt by Company of notice from
Administrative Agent or any Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of Company or any
of its Subsidiaries in an involuntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief shall be granted under
any applicable federal or state law; or (ii) an involuntary case
shall be commenced against Company or any of its Subsidiaries
under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect;
or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar
powers over Company or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of Company or any of
its Subsidiaries for all or a substantial part of its property;
or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of
Company or any of its Subsidiaries, and any such event described
in this clause (ii) shall continue for 45 days unless dismissed,
bonded, discharged or stayed; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Company or any of its Subsidiaries shall have an
order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter
in effect, or shall consent to the entry of an order for relief
in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or
Company or any of its Subsidiaries shall make any assignment for
the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts
become due; or the Board of Directors of Company or any of its
Subsidiaries (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of
the actions referred to in clause (i) above or this clause (ii);
or
8.8 Judgments and Attachments.
Any money judgment, writ or warrant of attachment or
similar process involving (i) in any individual case an amount in
excess of $2,500,000 or (ii) in the aggregate at any time an
amount in excess of $5,000,000 (in either case not adequately
covered by insurance as to which an unaffiliated insurance
company has acknowledged coverage) shall be entered or filed
against Company or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of 45 days (or in any event
later than five days prior to the date of any proposed sale
thereunder); or
8.9 Dissolution.
Any order, judgment or decree shall be entered against
Company or any of its Subsidiaries decreeing the dissolution or
split up of Company or that Subsidiary and such order shall
remain undischarged or unstayed for a period in excess of 30
days; or
8.10 Employee Benefit Plans.
A. There shall occur one or more ERISA Events which
individually or in the aggregate results in or might reasonably
be expected to result in liability of Company or any of its
Subsidiaries or any of their respective ERISA Affiliates in
excess of $5,000,000 during the term of this Agreement.
B. There shall exist an amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding
for purposes of such computation any Pension Plans with respect
to which assets exceed benefit liabilities), which exceeds
$5,000,000, and such default shall not have been remedied or
waived within 10 days after the earlier of (i) the date that, to
Company's Best Knowledge, such condition exists or (ii) receipt
by Company of notice from Administrative Agent or any Lender of
such default; or
8.11 Change in Control.
A Change of Control shall have occurred; or
8.12 Impairment of Collateral.
(A) A judgment creditor of Company or any of its
Subsidiaries shall obtain possession of any material portion of
the Collateral under the Collateral Documents by any means,
including, without limitation, levy, distraint, replevin or self-
help, (B) any substantial portion of the Collateral shall be
taken by eminent domain or condemnation, (C) any of the
Collateral Documents shall cease for any reason (other than an
act by Administrative Agent or any Lender) to be in full force
and effect, or any party thereto shall purport to disavow its
obligations thereunder or shall declare that it does not have any
further obligations thereunder or shall contest the validity or
enforceability thereof or Lenders shall cease to have a valid and
perfected first priority security interest in any material
Collateral therein, or (D) Lenders' security interests or liens
on any material portion of the Collateral under the Collateral
Documents shall become otherwise impaired or unenforceable; or
8.13 Loss of Gaming License.
The occurrence of a License Revocation by any Gaming
Authority in a jurisdiction in which Company or any of its
Subsidiaries owns or operates a casino, hotel, casino/hotel,
resort, casino/resort, riverboat casino, dock casino, any other
type of casino, golf course, entertainment center or similar
facility; provided that such License Revocation continues for at
least five (5) calendar days; or
8.14 [omitted].
8.15 Invalidity of Guaranties.
Either Guaranty, for any reason, other than the
satisfaction in full of all Obligations, the termination of this
Agreement or the termination of either Guaranty (or any
Guarantor's obligations thereunder) in accordance with its terms,
ceases to be in full force and effect or is declared to be null
and void by final order of a court of competent jurisdiction, or
any Guarantor (other than any Guarantor that is merged into
another Guarantor or the Company) denies that it has any further
liability under either Guaranty or claims that either Guaranty is
void or has no force or effect in whole or in part or gives
notice to such effect.
THEN
8.16 Remedies.
At any time, (i) upon the occurrence of any Event of
Default described in subsection 8.6 or 8.7, each of (a) the
unpaid principal amount of and accrued interest on the Loans, (b)
an amount equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding (whether or
not any beneficiary under any such Letter of Credit shall have
presented, or shall be entitled at such time to present, the
drafts or other documents or certificates required to draw under
such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind,
all of which are hereby expressly waived by Company, and the
obligation of each Lender to make any Loan and the obligation of
Administrative Agent to issue any Letter of Credit shall
thereupon terminate, and (ii) upon the occurrence and during the
continuation of any other Event of Default, Administrative Agent
shall, upon the written request or with the written consent of
Requisite Lenders, by written notice to Company, declare all or
any portion of the amounts described in clauses (a) through (c)
above to be, and the same shall forthwith become, immediately due
and payable, and the obligation of each Lender to make any Loan
shall thereupon terminate and the obligation of Administrative
Agent to issue any Letter of Credit hereunder shall thereupon
terminate; provided, however, that the foregoing shall not affect
in any way the obligations of Lenders under subsection 3.3C(i) or
the obligations of Lenders to purchase participations in any
unpaid Swing Line Loans as provided in subsection 2.1B.
Any amounts described in clause (b) above, when
received by Administrative Agent, shall be held by Administrative
Agent pursuant to the terms of the Collateral Account Agreement
and shall be applied as therein provided.
Notwithstanding anything contained in the second
preceding paragraph, if at any time within 60 days after an
acceleration of the Loans pursuant to such paragraph Company
shall pay all arrears of interest and all payments on account of
principal which shall have become due otherwise than as a result
of such acceleration (with interest on principal and, to the
extent permitted by law, on overdue interest, at the rates
specified in this Agreement) and all Events of Default and
Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall
be remedied or waived pursuant to subsection 10.6, then Requisite
Lenders, by written notice to Company, may at their option
rescind and annul such acceleration and its consequences; but
such action shall not affect any subsequent Event of Default or
Potential Event of Default or impair any right consequent
thereon. The provisions of this paragraph are intended merely to
bind Lenders to a decision that may be made at the election of
Requisite Lenders and are not intended to benefit Company and do
not grant Company the right to require Lenders to rescind or
annul any acceleration hereunder, even if the conditions set
forth herein are met.
SECTION 9.
ADMINISTRATIVE AGENT
9.1 Appointment.
WFB is hereby appointed Administrative Agent hereunder
and under the other Loan Documents and each Lender hereby
authorizes Administrative Agent to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents.
Administrative Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as
applicable. The provisions of this Section 9 are solely for the
benefit of Administrative Agent, Managing Agent, Arranger and
Lenders and Company shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, Administrative Agent
shall act solely as an agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Company or any of its
Subsidiaries.
9.2 Powers; General Immunity.
A. Duties Specified. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf
and to exercise such powers hereunder and under the other Loan
Documents as are specifically delegated to Administrative Agent
by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Administrative Agent shall have
only those duties and responsibilities that are expressly
specified in this Agreement and the other Loan Documents and it
may perform such duties by or through its agents or employees.
Neither the Managing Agent nor the Arranger shall have any duty
or responsibility under this Agreement or any Loan Document in
its capacity therein. Neither the Managing Agent, Arranger nor
Administrative Agent shall have, by reason of this Agreement or
any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to or
shall be so construed as to impose upon Administrative Agent any
obligations in respect of this Agreement or any of the other Loan
Documents except as expressly set forth herein or therein.
B. No Responsibility for Certain Matters. Administrative
Agent shall not be responsible to any Lender for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other Loan
Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral
statements or in any financial or other statements, instruments,
reports or certificates or any other documents furnished or made
by Administrative Agent to Lenders or by or on behalf of Company
to Administrative Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other
Person liable for the payment of any Obligations, nor shall
Administrative Agent be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the
use of the Letters of Credit or as to the existence or possible
existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary
notwithstanding, Administrative Agent shall not have any
liability arising from confirmations of the amount of outstanding
Loans or the Letter of Credit Usage or the component amounts
thereof.
C. Exculpatory Provisions. Neither Administrative Agent
nor any of its officers, directors, employees or agents shall be
liable to Lenders for any action taken or omitted by
Administrative Agent under or in connection with any of the Loan
Documents except to the extent caused by Administrative Agent's
gross negligence or willful misconduct. If Administrative Agent
shall request instructions from Lenders with respect to any act
or action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents,
Administrative Agent shall be entitled to refrain from such act
or taking such action unless and until Administrative Agent shall
have received instructions from Requisite Lenders. Without
prejudice to the generality of the foregoing, (i) Administrative
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed
by it to be genuine and correct and to have been signed or sent
by the proper person or persons, and shall be entitled to rely
and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional
advisors selected by it; and (ii) no Lender shall have any right
of action whatsoever against Administrative Agent as a result of
Administrative Agent acting or (where so instructed) refraining
from acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of Requisite
Lenders. Administrative Agent shall be entitled to refrain from
exercising any power, discretion or authority vested in it under
this Agreement or any of the other Loan Documents unless and
until it has obtained the instructions of Requisite Lenders or
all Lenders as required or permitted by this Agreement. Each
Lender agrees that it shall not exercise any right of set-off
described in subsection 10.4 without the concurrence of
Administrative Agent.
D. Administrative Agent Entitled to Act as Lender. The
agency hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations upon,
Administrative Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and
the Letters of Credit, Administrative Agent shall have the same
rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or
"Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Administrative Agent in its
individual capacity. Administrative Agent and its Affiliates may
accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with
Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other
consideration from Company for services in connection with this
Agreement and otherwise without having to account for the same to
Lenders.
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness.
Each Lender represents and warrants that it has made
its own independent investigation of the financial condition and
affairs of Company and its Subsidiaries in connection with the
making of the Loans and the issuance of the Letters of Credit
hereunder and that it has made and shall continue to make its own
appraisal of the creditworthiness of Company and its
Subsidiaries. Administrative Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of
Lenders or to provide any Lender 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, and Administrative Agent shall not have any
responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 Right to Indemnity.
Each Lender, in proportion to its Pro Rata Share,
severally agrees to indemnify Administrative Agent, to the extent
that Administrative Agent shall not have been reimbursed by
Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and
disbursements) or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against
Administrative Agent in performing its duties hereunder or under
the other Loan Documents or otherwise in its capacity as
Administrative Agent in any way relating to or arising out of
this Agreement or the other Loan Documents; provided that no
Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from
Administrative Agent's gross negligence or willful misconduct.
If any indemnity furnished to Administrative Agent for any
purpose shall, in the opinion of Administrative Agent, be
insufficient or become impaired, Administrative Agent may call
for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is
furnished.
9.5 Successor Administrative Agent.
Administrative Agent may resign at any time by giving
30 days' prior written notice thereof to Lenders and Company,
provided that on or before the effective date of any such
resignation, a successor Administrative Agent shall have been
appointed pursuant to this subsection 9.5A. Administrative Agent
may be removed at any time with cause by an instrument or
concurrent instruments in writing delivered to Company and
Administrative Agent and signed by Requisite Lenders. Upon any
such notice of resignation or any such removal, Requisite Lenders
shall have the right, upon five Business Days' notice to Company,
to appoint a successor Administrative Agent. Upon the acceptance
of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, that successor Administrative
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed
Administrative Agent and the retiring or removed Administrative
Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring or removed Administrative
Agent's resignation or removal hereunder as Administrative Agent,
the provisions of this Section 9 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
9.6 Collateral Documents.
Each Lender hereby further authorizes Administrative
Agent to enter into the Collateral Documents as secured party on
behalf of and for the benefit of each Lender and agrees to be
bound by the terms of the Collateral Documents; provided that
Administrative Agent shall not enter into or consent to any
amendment, modification, termination or waiver of any provision
contained in the Collateral Documents except as set forth in
subsection 10.6. Anything contained in any of the Loan Documents
to the contrary notwithstanding, each Lender agrees that no
Lender shall have any right individually to realize upon any of
the collateral under the Collateral Documents, it being
understood and agreed that all rights and remedies under the
Collateral Documents may be exercised solely by Administrative
Agent for the benefit of Lenders in accordance with the terms
thereof.
9.7 Release of Collateral.
Administrative Agent may release personal property
Collateral without the consent of any Lender to the extent sold
or disposed of by Company or any of its Subsidiaries in a
transaction or series of transactions that constitute a permitted
Asset Sale pursuant to subsection 7.7(ii) and that meets all of
the requirements contained therein. Administrative Agent may
also, upon Borrower's request, take such actions as are necessary
to terminate any Ship Mortgage relating to a Barge on file with
the United States Coast Guard if, and only if, (i) such Barge has
ceased, or will concurrently with such termination cease, to be a
US Documented Barge and (ii) Administrative Agent shall have
received assurances, reasonably satisfactory to Administrative
Agent, that upon giving effect to such termination, such Barge
will be subject to a perfected first priority Lien in favor of
Administrative Agent for the benefit of Lenders.
SECTION 10.
MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of
Credit
A. General. Each Lender shall have the right at any time
to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part
(subject to certain limitations set forth in subsection 10.1B
below) of its Commitments or any Loan or Loans made by it or its
Letters of Credit or participations therein or any other interest
herein or in any other Obligations owed to it, subject to the
following restrictions:
(v) no such sale, assignment, transfer or
participation shall, without the consent of Company,
require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify
such sale, assignment, transfer or participation under the
securities laws of any state;
(w) no such sale, assignment or transfer described
in clause (i) above shall be effective unless and until a
Lender Assignment Agreement (a "Lender Assignment
Agreement") effecting such sale, assignment or transfer
shall have been accepted by Administrative Agent as
provided in subsection 10.1B(ii); and
(x) no such sale, assignment, transfer or
participation of any Letter of Credit or any participation
therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in
the Commitments and the Loans of the Lender effecting such
sale, assignment, transfer or participation.
Except as otherwise provided in this subsection 10.1, no Lender
shall, as between Company and such Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment or
transfer of, or any granting of participations in, all or any
part of its Commitment or the Loans or the other Obligations owed
to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each
Commitment, Loan, Letter of Credit or participation
therein, or other Obligation may (a) be assigned in any
amount to another Lender or to an Affiliate of the
assigning Lender or another Lender, with the giving of
notice to Company and Administrative Agent or (b) be
assigned in an aggregate amount of not less than
$5,000,000 (or such lesser amount as shall constitute the
aggregate amount of the Commitments, Loans, Letters of
Credit and participations therein, and other Obligations
of the assigning Lender as may be agreed to by Company and
Administrative Agent) to any other Eligible Assignee with
the giving of notice to Company and with the consent of
Managing Agent (which consent shall not be unreasonably
withheld). To the extent of any such assignment in
accordance with either clause (a) or (b) above, the
assigning Lender shall be relieved of its obligations with
respect to its Commitments, Loans, Letters of Credit or
participations therein, or other Obligations or the
portion thereof so assigned. The parties to each such
assignment shall execute and deliver to Administrative
Agent, for its acceptance, a Lender Assignment Agreement,
together with a processing fee of $3,500 and such forms,
certificates or other evidence, if any, with respect to
United States federal income tax withholding matters as
the assignee under such Lender Assignment Agreement may be
required to deliver to Administrative Agent pursuant to
subsection 2.7B(iii)(a). Upon such execution, delivery,
acceptance and recordation from and after the effective
date specified in such Lender Assignment Agreement,
(y) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Lender Assignment
Agreement, shall have the rights and obligations of a
Lender hereunder and (z) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Lender
Assignment Agreement, relinquish its rights and be
released from its obligations under this Agreement (and,
in the case of a Lender Assignment Agreement covering all
or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall
cease to be a party hereto); provided that, anything
contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is Administrative Agent
with respect to any outstanding Letters of Credit such
Lender shall continue to have all rights and obligations
of an Administrative Agent with respect to such Letters of
Credit until the cancellation or expiration of such
Letters of Credit and the reimbursement of any amounts
drawn thereunder). The Commitments hereunder shall be
modified to reflect the Commitments of such assignee and
any remaining Commitments of such assigning Lender and the
assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable,
surrender its Note to Administrative Agent for
cancellation, and thereupon new Notes shall, if so
requested by the assignee and/or the assigning Lender in
accordance with subsection 2.1E, be issued to the assignee
and/or to the assigning Lender, substantially in the form
of Exhibits V or Exhibit VI, respectively, annexed hereto
with appropriate insertions, to reflect the new
Commitments of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent. Upon its
receipt of a Lender Assignment Agreement executed by an
assigning Lender and an assignee representing that it is
an Eligible Assignee, together with the processing fee and
any forms, certificates or other evidence with respect to
United States federal income tax withholding matters that
such assignee may be required to deliver to Administrative
Agent pursuant to subsection 2.7B(iii)(a), Administrative
Agent shall, if such Lender Assignment Agreement has been
completed and is in substantially the form of Exhibit IV
hereto and if Managing Agent have consented to the
assignment evidenced thereby (to the extent such consent
is required pursuant to subsection 10.1B(i)), (a) accept
such Lender Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance
shall evidence any required consent of Administrative
Agent to such assignment) and (b) give prompt notice
thereof to Company. Administrative Agent shall maintain a
copy of each Lender Assignment Agreement delivered to and
accepted by it as provided in this subsection 10.1B(ii).
(iii) Mandatory Assignment by Non-Suitable Lender. If
any Lender is required to qualify or be found suitable by
the regulations of any Gaming Authority and does not so
qualify or otherwise not meet the suitability standards
pursuant to such regulations (in such case, a "Former
Lender"), such Former Lender shall and hereby agrees to
sell its rights and obligations under this Agreement to
Eligible Assignee (the "Substitute Lender"). The
Substitute Lender shall assume the rights and obligations
of the Former Lender under this Agreement pursuant to a
Lender Assignment Agreement, which assumption shall be
required to comply with, and shall become effective in
accordance with, the provisions of subsection 10.1B;
provided that the purchase price to be paid by the
Substitute Lender to Administrative Agent for the account
of the Former Lender for such assumption shall equal the
sum of (i) the unpaid principal amount of any Loans held
by the Former Lender plus accrued interest thereon plus
(ii) the Former Lender's Pro Rata Share (through the
required purchase of participations pursuant to subsection
3.1C) of the aggregate amount of drawings under all
Letters of Credit that have not been reimbursed by
Company, plus accrued interest thereon, plus (iii) such
Former Lender's pro rata share of accrued fees to the date
of the assumption; provided further that, upon receipt by
the Former Lender of all such amounts, Administrative
Agent shall thereafter pay all obligations owing to the
Former Lender under the Loan Documents to the Substitute
Lender. Each Lender agrees that if it becomes a Former
Lender, upon payment to it by Administrative Agent (upon
Administrative Agent's receipt thereof from the Substitute
Lender) of all such amounts, if any, owing to it under the
Loan Documents, it will execute and deliver a Lender
Assignment Agreement.
Notwithstanding the foregoing, if any Lender becomes a
Former Lender and fails to find a Substitute Lender within
10 days of being determined unsuitable or unqualified, or
such lesser period of time as specified by any such Gaming
Authority for the withdrawal of a Former Lender (the
"Withdrawal Period"), Company shall have an additional 90
day period, or such lesser period of time as specified by
such Gaming Authority, to find a Substitute Lender, which
Substitute Lender shall assume the rights and obligations
of the Former Lender as provided in the preceding
paragraph. In the event that Company shall not have found
a Substitute Lender within such period of time, Company
shall immediately (i) prepay in full the outstanding
principal amount of Loans held by such Former Lender,
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 Company
either (A) place an amount equal to such Former Lender's
Pro Rata Share in each Letter of Credit issued by
Administrative Agent, in a separate cash collateral
account with Administrative Agent for each outstanding
Letter of Credit, which amount will be applied by
Administrative Agent to satisfy Company's reimbursement
obligations to Administrative Agent in respect of
unreimbursed drawings under the applicable Letter of
Credit or (B) if no Event of Default then exists,
terminate the Commitments of such Former Lender, at which
time the other Lenders' Pro Rata Shares 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
Lender's outstanding Revolving Loans, when added to the
product of (a) such Lender's Pro Rata Share and (b) the
sum of (I) the aggregate amount of all outstanding Letters
of Credit at such time and (II) the aggregate amount of
all Swing Line Loans then outstanding, would exceed such
Lender's Commitments at such time. Each Lender agrees
that, to the extent and for so long as required by any
applicable Gaming Authority, such Lender's rights and
obligations under this Agreement are subject to the
provisions of this subsection 10.1B(iii) and all
restrictions of any applicable Gaming Authority.
C. Participations. The holder of any participation, other
than an Affiliate of the Lender granting such participation,
shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly affecting
(i) the extension of the final maturity of any portion of the
principal amount of or interest on any Loan allocated to such
participation or (ii) a reduction of the principal amount of or
the rate of interest payable on any Loan allocated to such
participation, and all amounts payable by Company hereunder
(including without limitation amounts payable to such Lender
pursuant to subsection 2.7) shall be determined as if such Lender
had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections
10.4 and 10.5, (a) any participation will give rise to a direct
obligation of Company to the participant and (b) the participant
shall be considered to be a "Lender".
D. Assignments to Federal Reserve Banks. In addition to
the assignments and participations permitted under the foregoing
provisions of this subsection 10.1, any Lender may assign and
pledge all or any portion of its Loans, the other Obligations
owed to such Lender, and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve Bank; provided that
(i) no Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of any
such assignment and pledge and (ii) in no event shall such
Federal Reserve Bank be considered to be a "Lender" or be
entitled to require the assigning Lender to take or omit to take
any action hereunder.
E. Assignments and Participations Subject to Gaming Laws.
Subject to the last sentence of this subsection 10.1E, each
Lender agrees that all assignments and participations made
hereunder shall be subject to, and made in compliance with, all
Gaming Laws applicable to Lenders. Company hereby acknowledges
that unless Company has provided Lenders with a written opinion
of counsel as to the suitability standards applicable to Lenders
of any relevant Gaming Authority with jurisdiction over the
business of Company and its Subsidiaries, no Lender shall have
the responsibility of determining whether or not a potential
assignee or participant of such Lender would qualify as a
suitable Lender under the Gaming Laws of any such jurisdiction.
F. Information. Each Lender may furnish any information
concerning Company and its Subsidiaries in the possession of that
Lender from time to time to assignees and participants (including
prospective assignees and participants), subject to subsection
10.19.
10.2 Expenses.
Whether or not the transactions contemplated hereby
shall be consummated, Company agrees to pay promptly (i) all the
actual and reasonable costs and expenses of preparation of the
Loan Documents; (ii) all the costs of furnishing all opinions by
counsel for Company (including without limitation any opinions
requested by Lenders as to any legal matters arising hereunder)
and of each Loan Party's performance of and compliance with all
agreements and conditions on its part to be performed or complied
with under this Agreement and the other Loan Documents including,
without limitation, with respect to confirming compliance with
environmental and insurance requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to Administrative
Agent (including Allocated Costs of Internal Counsel) in
connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loans and any
consents, amendments, waivers or other modifications hereto or
thereto and any other documents or matters requested by Company
or any other Loan Party; (iv) all other actual and reasonable
costs and expenses incurred by Administrative Agent, Managing
Agent and Arranger in connection with the syndication of the
Commitments and the negotiation, preparation and execution of the
Loan Documents and the transactions contemplated hereby and
thereby; and (v) after the occurrence of an Event of Default, all
costs and expenses, including reasonable attorneys' fees
(including Allocated Costs of Internal Counsel) and costs of
settlement, incurred by Administrative Agent and Lenders in
enforcing any Obligations of or in collecting any payments due
from Company or any other Loan Party hereunder or under the other
Loan Documents by reason of such Event of Default or in
connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a
"work-out" or pursuant to any insolvency or bankruptcy
proceedings.
10.3 Indemnity.
In addition to the payment of expenses pursuant to
subsection 10.2, whether or not the transactions contemplated
hereby shall be consummated, Company agrees to defend, indemnify,
pay and hold harmless Administrative Agent, Managing Agent and Co-
Arranger and Lenders, and the officers, directors, employees,
agents and affiliates of Administrative Agent and Lenders
(collectively called the "Indemnitees") from and against any and
all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including without
limitation the reasonable fees and disbursements of counsel for
such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be
designated as a party or a potential party thereto), whether
direct, indirect or consequential and whether based on any
federal, state or foreign laws, statutes, rules or regulations
(including without limitation securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common
law or equitable cause or on contract or otherwise, that may be
imposed on, incurred by, or asserted against any such Indemnitee,
in any manner relating to or arising out of this Agreement or the
other Loan Documents or the transactions contemplated hereby or
thereby (including without limitation Lenders' agreement to make
the Loans hereunder or the use or intended use of the proceeds of
any of the Loans or the issuance of the Letters of Credit
hereunder or the use or intended use of any of the Letters of
Credit) or the statements contained in the commitment letter
delivered by any Lender to Company with respect thereto
(collectively called the "Indemnified Liabilities"); provided
that Company shall not have any obligation to any Indemnitee
hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise solely from the gross
negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, Company
shall contribute the maximum portion that it is permitted to pay
and satisfy under applicable law to the payment and satisfaction
of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuation of any
Event of Default each Lender (with the consent of Administrative
Agent) is hereby authorized by Company at any time or from time
to time, without notice to Company or to any other Person, any
such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or
special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other Indebtedness at any time
held or owing by that Lender to or for the credit or the account
of Company against and on account of the obligations and
liabilities of Company to that Lender under this Agreement, the
Letters of Credit and participations therein and the other Loan
Documents, including, but not limited to, all claims of any
nature or description arising out of or connected with this
Agreement, the Letters of Credit and participations therein or
any other Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal
of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have
become due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent or
unmatured. Company hereby further grants to Administrative Agent
and each Lender a security interest in all deposits and accounts
maintained with Administrative Agent or such Lender as security
for the Obligations.
10.5 Ratable Sharing.
Lenders hereby agree among themselves that if any of
them shall, whether by voluntary payment, by realization upon
security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise,
or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest,
amounts payable in respect of Letters of Credit, fees and other
amounts then due and owing to that Lender hereunder or under the
other Loan Documents (collectively, the "Aggregate Amounts Due"
to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such
other Lender, then the Lender receiving such proportionately
greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it
shall be deemed to have purchased from each seller of a
participation simultaneously upon the receipt by such seller of
its portion of such payment) in the Aggregate Amounts Due to the
other Lenders so that all such recoveries of Aggregate Amounts
Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender
ratably to the extent of such recovery, but without interest.
Company expressly consents to the foregoing arrangement and
agrees that any holder of a participation so purchased may
exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by Company
to that holder with respect thereto as fully as if that holder
were owed the amount of the participation held by that holder.
10.6 Amendments and Waivers.
No amendment, modification, termination or waiver of
any provision of this Agreement, the Notes or any other Loan
Document, or consent to any departure by Company therefrom, shall
in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment,
modification, termination, waiver or consent which: increases
the amount of any of the Commitments; changes any Lender's Pro
Rata Share; changes in any manner the definition of "Requisite
Lenders"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or
concurrence of all Lenders; postpones the Commitment Termination
Date; postpones the date on which any interest or any fees are
payable; decreases the interest rate borne by any of the Loans
(other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to subsection 2.2E) or
the amount of any fees payable hereunder; increases the maximum
duration of Interest Periods permitted hereunder; reduces the
amount or postpones the due date of any amount payable in respect
of, or extends the required expiration date of, any Letter of
Credit; changes in any manner the obligations of Lenders relating
to the purchase of participations in Letters of Credit; releases
any Collateral (other than pursuant to a permitted Asset Sale
pursuant to subsection 7.7(iii) that meets all of the
requirements contained therein) or changes in any manner the
provisions contained in subsection 8.1 or this subsection 10.6
shall be effective only if evidenced by a writing signed by or on
behalf of all Lenders. In addition, (i) any amendment, modifica
tion, termination or waiver of any of the provisions contained in
Section 4 shall be effective only if evidenced by a writing
signed by or on behalf of Administrative Agent and Requisite
Lenders, (ii) no amendment, modification, termination or waiver
of any provision of any Note shall be effective without the
written concurrence of the Lender which is the holder of that
Note, (iii) no amendment, modification, termination or waiver of
any provision of subsection 2.1B or any other provision of this
Agreement relating to the Swing Line Loan Commitment or the Swing
Line Loans shall be effective without the written concurrence of
Swing Line Lender, (iv) no amendment, modification, termination
or waiver of any provision of Section 3 or of any Letter of
Credit shall be effective without the written concurrence of
Administrative Agent, and (v) no amendment, modification, termi
nation or waiver of any provision of Section 9 or of any other
provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of Administrative Agent
shall be effective without the written concurrence of
Administrative Agent. Administrative Agent may, but shall have
no obligation to, with the written concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf
of that Lender. Any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it
was given. No notice to or demand on Company in any case shall
entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this
subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on
Company.
10.7 Independence of Covenants.
All covenants hereunder shall be given independent
effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence
of an Event of Default or Potential Event of Default if such
action is taken or condition exists.
10.8 Notices.
Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed
or sent by telefacsimile or United States mail or courier service
and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or telex, or
five Business Days after depositing it in the United States mail
with postage prepaid and properly addressed. For the purposes
hereof, the address of each party hereto shall be as set forth
under such party's name on the signature pages hereof or such
other address as shall be designated by such party in a written
notice delivered to the other parties hereto.
10.9 Survival of Representations, Warranties and Agreements.
A. All representations, warranties and agreements made
herein shall survive the execution and delivery of this Agreement
and the making of the Loans and the issuance of the Letters of
Credit hereunder.
B. Notwithstanding anything in this Agreement or implied
by law to the contrary, the agreements of Company set forth in
subsections 2.6D, 2.7, 10.2, 10.3 and 10.4 and the agreements of
Lenders set forth in subsections 9.2C, 9.4 and 10.5 shall survive
the payment of the Loans, the cancellation or termination of the
Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Administrative Agent
or any Lender in the exercise of any power, right or privilege
hereunder or under any other Loan Document shall impair such
power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement
and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
Neither Administrative Agent nor any Lender shall be
under any obligation to marshal any assets in favor of Company or
any other party or against or in payment of any or all of the
Obligations. To the extent that Company makes a payment or
payments to Administrative Agent or Lenders (or to Administrative
Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights
of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, any other state or federal law,
common law or any equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or
related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 General Release.
A. Except with respect to the matters, rights and
obligations specified in subsection 10.12B hereof, Company, for
itself and on behalf of its parent, subsidiary and affiliate
corporations, past or present, and each of them, as well as each
of their respective directors, officers, agents, servants,
shareholders, representatives, attorneys, administrators,
executors, heirs, assigns, predecessors and successors in
interest, and each of them (collectively, the "Releasors") hereby
release and forever discharge Lenders and each of their
respective parents, subsidiaries and affiliates, past or present,
and each of them, as well as each of their directors, officers,
agents, servants, employees, representatives, shareholders,
attorneys, administrators, executors, predecessors and successors
in interest, heirs and assigns, and all other persons, firms or
corporations with whom any of the former have been, are now, or
may hereafter be affiliated, and each of them (collectively, the
"Releasees"), from and against any and all claims, demands,
liens, agreements, contracts, covenants, actions, suits, causes
of action in law or equity, obligations, controversies, debts,
costs, expenses, damages, judgments, orders and liabilities of
whatever kind or nature in law, equity or otherwise, whether
known or unknown, fixed or contingent, suspected or unsuspected
by the Releasors, and whether concealed or hidden, which
Releasors now own or hold or have at any time heretofore owned or
held, which are based upon or arise out of or in connection with
any matter, cause or thing existing at any time prior to the date
hereof or anything done, omitted or suffered to be done or
omitted at any time prior to the date hereof, which relate in any
way to (i) the Existing Credit Agreement and the other Loan
Documents (as defined in the Existing Credit Agreement),
(ii) this Agreement and the other Loan Documents, and (iii) the
transactions occurring in connection with either of the foregoing
and the lending relationship established thereby, irrespective of
whether any such matter, cause or thing, or action done, omitted
or suffered to be done was authorized, permitted or prohibited by
the documents and agreements described in the preceding clauses
(i) and (ii) (collectively the "Released Matters").
B. Notwithstanding anything hereunder to the contrary,
this Release shall not release or alter any obligation arising on
or subsequent to the Effective Date to comply with the terms and
conditions of this Agreement and the other Loan Documents. It is
expressly understood and agreed that it is the intent of Company
to forever release certain claims against the Lenders, including,
but not limited to, any claims related to the actions and
omissions of Releasees prior to the date hereof, but that nothing
herein shall affect the obligations of the Releasees subsequent
to the date hereof, including, but not by way of limitation,
compliance subsequent to the date hereof with all terms and
conditions of this Agreement and the other Loan Documents.
C. Without limiting the generality of the foregoing,
Company for itself and on behalf of the other Releasors expressly
releases any and all past, present and future claims in
connection with the Released Matters, about which the Releasors
do not know of or suspect to exist in their favor, whether
through ignorance, oversight, error, negligence or otherwise, and
which, if known, would materially affect Company's decision to
give the release set forth in this subsection 10.12, and to this
end Company for itself and on behalf of each of the other
Releasors waives all rights under Section 1542 of the Civil Code
of California, which states in full as follows:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in
his favor at the time of executing the release,
which if known by him must have materially affected
his settlement with the debtor."
Company knowingly and willingly waives the provisions of Section
1542 and acknowledges and agrees that this waiver is an essential
and material term of this Agreement. Company has reviewed this
Agreement and the release contained in this subsection 10.12 with
Company's legal counsel, and Company understands and acknowledges
the significance and consequence of this Agreement and of the
specific waiver of Section 1542 of the Civil Code of California.
D. Company represents, warrants and agrees that in
executing and entering into this Agreement, Company is not
relying and has not relied upon any representation, promise or
statement made by anyone which is not recited, contained or
embodied in this Agreement or the other Loan Documents. Company
understands and expressly assumes the risk that any fact not
recited, contained or embodied therein may turn out hereafter to
be other than, different from, or contrary to the facts now known
to Company or believed by Company to be true. Nevertheless,
Company intends by this Agreement to release fully, finally and
forever all Released Matters and agrees that this Agreement shall
be effective in all respects notwithstanding any such difference
in facts, and shall not be subject to termination, modification
or rescission by reason of any such difference in facts.
E. Company hereby represents and warrants that it has not
heretofore assigned or transferred or purported to assign or
transfer to any person or entity all or any part of or any
interest in any Released Matter. Company agrees to indemnify and
hold harmless the Releasees against any claim, contention,
demand, cause of action, obligation and liability of any nature,
character or description whatsoever, including the payment of
attorney's fees and costs actually incurred, whether or not
litigation is commenced, which may be based upon or which may
arise out of or in connection with any such assignment or
transfer or purported assignment or transfer of any Released
Matter against any Releasee.
F. Company shall, from time to time, promptly execute and
deliver to the Lenders such further instruments, documents and
papers and perform such further acts as may be necessary or, in
Lenders' reasonable judgment, useful to carry out and effect the
terms of this subsection 10.12.
G. This subsection 10.12 is not to be construed and does
not constitute an admission of any liability by any person or
entity for any purpose.
H. Company represents, warrants and agrees that in
executing and entering into this Agreement, Company is not
relying upon, nor is Company acting in consideration of, any
other person or entity executing a similar release. This
Agreement shall be binding, valid and enforceable against Company
and the other Releasors irrespective of whether any other person
or entity executes any other release.
10.13 Severability.
In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.14 Obligations Several; Independent Nature of Lenders'
Rights.
The obligations of Lenders hereunder are several and no
Lender shall be responsible for the obligations or Commitment of
any other Lender hereunder. Nothing contained herein or in any
other Loan Document, and no action taken by Lenders pursuant
hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a Joint Venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall
be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to
be joined as an additional party in any proceeding for such
purpose.
10.15 Headings.
Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be
given any substantive effect.
10.16 Applicable Law.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING
SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA),
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES; PROVIDED THAT THE
EXERCISE OF CERTAIN RIGHTS HEREUNDER OR UNDER THE LOAN DOCUMENTS
MAY BE SUBJECT TO AND/OR REQUIRE COMPLIANCE WITH THE GAMING LAWS.
10.17 Successors and Assigns.
This Agreement shall be binding upon the parties hereto
and their respective successors and assigns and shall inure to
the benefit of the parties hereto and the successors and assigns
of Lenders (it being understood that Lenders' rights of
assignment are subject to subsection 10.1). Neither Company's
rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written
consent of all Lenders.
10.18 Consent to Jurisdiction and Service of Process; Choice of
Forum.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH
THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION.
Company hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or
certified mail, return receipt requested, to Company at its
address provided in subsection 10.8, such service upon receipt by
Company being hereby acknowledged by Company to be sufficient for
personal jurisdiction in any action against Company in any such
court upon such receipt and to be otherwise effective and binding
service in every respect. Nothing herein shall affect the right
to serve process in any other manner permitted by law or shall
limit the right of any Lender to bring proceedings against
Company in the courts of any other jurisdiction.
10.19 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate
to the subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter
into a business relationship, that each has already relied on
this waiver in entering into this Agreement, and that each will
continue to rely on this waiver in their related future dealings.
Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly
and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of
litigation, this Agreement may be filed as a written consent to a
trial by the court.
10.20 Confidentiality.
Each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement which has
been identified as confidential by Company in accordance with
such Lender's customary procedures for handling confidential
information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that
in any event a Lender may make disclosures reasonably required by
any bona fide assignee, transferee or participant in connection
with the contemplated assignment or transfer by such Lender of
any Loans or any participation therein or as required or
requested by any governmental agency or representative thereof or
pursuant to legal process; provided that, unless specifically
prohibited by applicable law or court order, each Lender shall
notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection
with any examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and
provided, further that in no event shall any Lender be obligated
or required to return any materials furnished by Company or any
of its Subsidiaries.
10.21 Licensing of Administrative Agent and Lenders.
If an Event of Default shall have occurred hereunder or
under any of the Loan Documents and it shall become necessary, or
in the opinion of Administrative Agent advisable, for an agent,
receiver or other representative of Administrative Agent to
become licensed under the provisions of the laws of the State of
Illinois, Louisiana, Kentucky, Missouri or Nevada, or rules and
regulations adopted pursuant thereto, as a condition to receiving
the benefit of any Collateral encumbered by the Collateral
Documents for the benefit of Administrative Agent on behalf of
Lenders or otherwise to enforce their rights hereunder, Company
does hereby give its consent, and agrees to cause its
Subsidiaries to give their consents, to the granting of such
license or licenses and agrees to execute such further documents
as may be required in connection with the evidencing of such
consent.
10.22 Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in
any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
This Agreement shall become effective upon (i) the execution of a
counterpart hereof by each of the parties hereto and receipt by
Company and Administrative Agent of written or telephonic
notification of such execution and authorization of delivery
thereof, (ii) the execution of a Consent to Amendment by each
Noncontinuing Lender in the form of Exhibit XII hereto, and
(iii) the satisfaction or waiver by Requisite Lenders of the
conditions set forth in subsection 4.1. At the time of the
effectiveness of this Agreement, this Agreement shall amend and
restate the Existing Credit Agreement, all obligations of Company
under the Existing Credit Agreement that have not been paid as of
the Effective Date shall become Obligations of Company hereunder,
and the commitments under the Existing Credit Agreement shall
terminate.
10.23 Cooperation With Gaming Authorities.
Administrative Agent and each Lender agree to cooperate
with all Gaming Boards in connection with the administration of
their regulatory jurisdiction over any Loan Party, including the
provision of such documents or other information as may be
requested by any such Gaming Authority relating to any Loan Party
or to the Loan Documents.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written
above.
PLAYERS
INTERNATIONAL, INC.,
as Borrower
By:
Title:
Notice Address:
Citicenter Building, Suite 800
1300 Atlantic Avenue
Atlantic City, New Jersey 08401
Attention: President
With copies to:
Players International, Inc.
Citicenter Building, Suite 800
1300 Atlantic Avenue
Atlantic City, New Jersey 08401
Attention: Chief Financial Officer
- and -
Players International, Inc.
Citicenter Building, Suite 800
1300 Atlantic Avenue
Atlantic City, New Jersey 08401
Attention:
General Counsel and Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION,
individually, as Administrative Agent,
Managing Agent and Co-Arranger
By:
Title:
Notice Address for Notices of Borrowing:
201 Third Street, 8th Floor
San Francisco, California 94103
Attention: Athene Mims
Notice Address for all other purposes:
3800 Howard Hughes Parkway
4th Floor, Suite 400
Las Vegas, Nevada 89109
Attention: Kathee Stone
COMMUNITY NATIONAL BANK,
as Lender
By:
Title:
Notice Address:
522 Market Street
Metropolis, Illinois 62960
FIRST NATIONAL BANK OF COMMERCE,
as Lender
By:
Title:
Notice Address:
First NBC Center
201 St. Charles Ave., 28th Floor
New Orleans, Louisiana 70170
PAMCO CAYMAN LTD.
By: Protective Asset Management Company
as Collateral Manager
By:
Title:
Notice Address:
1150 Two Galleria Tower
13455 Noel Road-LB #45
Dallas, Texas 75240
EXECUTION COPY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MARCH 11, 1998
AMONG
PLAYERS INTERNATIONAL, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
Individually and as Administrative Agent,
Managing Agent and Arranger
PLAYERS INTERNATIONAL, INC.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1.
DEFINITIONS 2
1.1 Certain Defined Terms 2
1.2Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement 35
1.3 Other Definitional Provisions 36
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS 36
2.1 Commitments; Making of Loans; Notes 36
2.2 Interest on the Loans 42
2.3 Fees 45
2.4Payments, Prepayments and Reductions in Commitments;
General Provisions Regarding Payments 46
2.5 Use of Proceeds 51
2.6Special Provisions Governing Eurodollar Rate Loans 52
2.7 Increased Costs; Taxes; Capital Adequacy 54
2.8Obligation of Lenders and Administrative
Agent to Mitigate 58
2.9 Replacement or Termination of Lenders 59
SECTION 3.
LETTERS OF CREDIT 59
3.1Issuance of Letters of Credit and Lenders' Purchase
of Participations Therein 59
3.2 Letter of Credit Fees 62
3.3Drawings and Reimbursement of Amounts Drawn Under
Letters of Credit. 62
3.4 Obligations Absolute 65
3.5Indemnification; Nature of the Issuing Lender's Duties 66
3.6Increased Costs and Taxes Relating to Letters of Credit 67
SECTION 4.
CONDITIONS TO EFFECTIVENESS;
CONDITIONS TO LOANS AND LETTERS OF CREDIT 68
4.1 Conditions to Effectiveness 68
4.2 [omitted]. 73
4.3 [omitted] 73
4.4 Conditions to All Loans 73
4.5 Conditions to Letters of Credit 75
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES 75
5.1Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries 76
5.2 Authorization of Borrowing, etc. 76
5.3 Financial Condition 77
5.4No Material Adverse Change; No Restricted Payments 78
5.5 Title to Properties; Liens 78
5.6 Litigation; Adverse Facts 80
5.7 Payment of Taxes 80
5.8Performance of Agreements; Materially Adverse Agreements 80
5.9 Governmental Regulation 81
5.10 Securities Activities 81
5.11 Employee Benefit Plans 81
5.12 Certain Fees 81
5.13 Environmental Protection 82
5.14 Employee Matters 83
5.15 Solvency 83
5.16 Disclosure 83
5.17 Compliance With Laws 84
5.18Representations Relating to Operation of Facilities
84
5.19 Intangible Property 84
5.20 Rights to Agreements, Permits and Licenses 85
5.21 Classification of Ships 85
5.22 Recordation of Ship Mortgages 85
5.23 Policies of Insurance 85
5.24Survival of Rights Created under Existing Credit Agreement 86
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS 86
6.1 Financial Statements and Other Reports 86
6.2 Corporate Existence, etc. 93
6.3 Payment of Taxes and Claims; Tax Consolidation 93
6.4 Maintenance of Properties; Insurance 93
6.5 Inspection; Lender Meeting 94
6.6 Compliance with Laws, etc. 94
6.7 Environmental Disclosure and Inspection 94
6.8Company's Remedial Action Regarding Hazardous
Materials 96
6.9 Post-Closing Matters 96
6.10New Subsidiaries; New Joint Ventures;
Further Assurances 96
6.11 Exchange Listing 99
SECTION 7.
COMPANY'S NEGATIVE COVENANTS 99
7.1 Indebtedness 99
7.2 Liens and Related Matters 100
7.3Investments, Loans and Advances; Capital Expenditures 101
7.4 Contingent Obligations 101
7.5 Restricted Payments 102
7.6 Financial Covenants 102
7.7Restriction on Fundamental Changes;
Asset Sales and Acquisitions 103
7.8 Transactions with Shareholders and Affiliates 104
7.9 Disposal of Subsidiary Stock 105
7.10 Conduct of Business 105
7.11 Tradenames, Trademarks and Servicemarks 105
7.12 Change of Control Offer 105
7.13 No Amendment of Indenture 105
7.14 No Movement of Other Barges 106
SECTION 8.
EVENTS OF DEFAULT 106
8.1 Failure to Make Payments When Due 106
8.2 Default in Other Agreements 106
8.3 Breach of Certain Covenants 107
8.4 Breach of Warranty 107
8.5 Other Defaults Under Loan Documents 107
8.6Involuntary Bankruptcy; Appointment of Receiver, etc.107
8.7Voluntary Bankruptcy; Appointment of Receiver, etc. 108
8.8 Judgments and Attachments 108
8.9 Dissolution 108
8.10 Employee Benefit Plans 108
8.11 Change in Control 109
8.12 Impairment of Collateral 109
8.13 Loss of Gaming License 109
8.14 [omitted] 109
8.15 Invalidity of Guaranties 109
8.16 Remedies 110
SECTION 9.
ADMINISTRATIVE AGENT 111
9.1 Appointment 111
9.2 Powers; General Immunity 111
9.3Representations and Warranties;
No Responsibility For Appraisal of Creditworthiness 113
9.4 Right to Indemnity 113
9.5 Successor Administrative Agent. 113
9.6 Collateral Documents 114
9.7 Release of Collateral 114
SECTION 10.
MISCELLANEOUS 114
10.1Assignments and Participations in Loans and
Letters of Credit 114
10.2 Expenses 119
10.3 Indemnity 119
10.4 Set-Off; Security Interest in Deposit Accounts 120
10.5 Ratable Sharing 120
10.6 Amendments and Waivers 121
10.7 Independence of Covenants 122
10.8 Notices 122
10.9Survival of Representations, Warranties and
Agreements 122
10.10Failure or Indulgence Not Waiver; Remedies
Cumulative 123
10.11 Marshalling; Payments Set Aside 123
10.12 General Release 123
10.13 Severability 125
10.14Obligations Several; Independent Nature of
Lenders' Rights 125
10.15 Headings 126
10.16 Applicable Law 126
10.17 Successors and Assigns 126
10.18Consent to Jurisdiction and Service of Process;
Choice of Forum 126
10.19 Waiver of Jury Trial 127
10.20 Confidentiality 127
10.21 Licensing of Administrative Agent and Lenders 128
10.22 Counterparts; Effectiveness. 128
10.23 Cooperation With Gaming Authorities 128
Signature pages S-1
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF LENDER ASSIGNMENT AGREEMENT
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF OPINION OF COMPANY COUNSEL
VIII FORM OF OPINION OF O'MELVENY & MYERS LLP
IX FORM OF COMPLIANCE CERTIFICATE
X FORM OF ACKNOWLEDGEMENT AND CONFIRMATION
XI FORMS OF AMENDMENTS TO MISSOURI PLEDGE AND SECURITY
AGREEMENTS
XII FORM OF CONSENT TO AMENDMENT BY NONCONTINUING
LENDERS
XIII FORM OF REMARKETING AGREEMENT
SCHEDULES
1.1(a) EXISTING COLLATERAL DOCUMENTS
1.1(b) NEW LOAN DOCUMENTS
1.1(c) NONCONTINUING LENDERS
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1(c) CORPORATE STRUCTURE OF COMPANY AND ITS SUBSIDIARIES
5.1 SUBSIDIARIES OF COMPANY
5.5 US DOCUMENTED BARGES
5.6 LITIGATION MATTERS
5.11 ERISA MATTERS
5.13 ENVIRONMENTAL MATTERS
5.19 TRADEMARK MATTERS
6.4(a) MINIMUM INSURANCE REQUIREMENTS
6.4(b) MINIMUM INSURANCE REQUIREMENTS - CONSTRUCTION
6.9 POST-CLOSING COVENANTS
7.2 LIENS
7.3 INVESTMENTS
7.11 INTELLECTUAL PROPERTY ASSIGNMENTS
A-1 DESCRIPTION OF ILLINOIS PREMISES
A-2 DESCRIPTION OF LOUISIANA PREMISES
A-3 DESCRIPTION OF LOUISIANA HOTEL PREMISES
AMENDMENT NO. 2
TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT is made as
of December ____, 1997, between LAKESHORE HOTELS, LTD., a
Louisiana limited partnership in commendam ("Seller"), and
PLAYERS INTERNATIONAL, INC., a Nevada corporation, its designees
or assignees ("Purchaser").
R E C I T A L S
A. Seller and Purchaser are parties to a certain Asset
Purchase Agreement dated as of September 30, 1997, as amended by
a certain Amendment No. 1 to Asset Purchase Agreement dated as of
November 13, 1997 (as so amended, the "Agreement"); capitalized
terms not defined herein are used as defined in the Original
Agreement, unless the context clearly requires otherwise.
B. Purchaser has been unable to satisfy certain of the
conditions to Purchaser's obligations under Section 6.2 of the
Agreement. Notwithstanding the termination rights available to
Purchaser under Section 6.2 of the Agreement, Purchaser desires
to complete the purchase of the Purchased Assets, and is in the
process of making alternate arrangements to do so.
C. In order to accommodate Purchaser's efforts to make
such alternate arrangements, Seller and Purchaser desire to
modify the Agreement as hereinafter set forth.
A G R E E M E N T S
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, the
parties agree as follows:
1. Amendment re: Conditions. Purchaser hereby waives the
conditions set forth in subsections (e) through (k) of Section
6.2 of the Agreement, and the same are hereby deleted entirely,
it being understood that all Deposit Monies are and shall be non
refundable except as specified in Sections 6.2 (a), (b), (c), (d)
and/or (k) of the Agreement.
2. Amendment re: Closing. In order to afford Purchaser
more time to modify and finalize its financing arrangements, and
to obtain any appropriate consents, permits, intercreditor
agreements, or approvals, with respect to such different
arrangements (none of which are deemed conditions to Purchasers
obligations under the Agreement, as amended hereby), the Closing
Date is hereby reset and extended to February 15, 1998.
Accordingly, Section 3.2 of the Agreement is hereby deleted in
its entirety and replaced with the following:
3.2 Time and Place of Closing. The transaction
contemplated by this Agreement shall be consummated
(the 'Closing') at 9:00 a.m. at the offices of
Stockwell, Sievert, Viccellio, Clements and Shaddock,
L.L.P., One Lakeside Plaza, 4th Floor, Lake Charles,
Louisiana 70601 on February 15, 1998; or such earlier
date specified by Purchaser on at least five (5)
business days' notice; or on such other date, or at
such other time or place, as shall be mutually agreed
upon by Seller and Purchaser. The date on which the
Closing occurs in accordance with the preceding
sentences, is referred to in this Agreement as the
"Closing Date.' The Closing shall be deemed to be
effective as of 12:01 a.m. on the Closing Date at Lake
Charles, Louisiana.
3. Amendment re: Allocation. The date for Purchaser to
submit its proposed allocation of the Purchase Price to Seller
under Section 3.5 of the Agreement is hereby reset and extended
to the date which is at least five (5) business days prior to
Closing hereunder, unless otherwise agreed by Seller and
Purchaser. Seller and Purchaser acknowledge and agree that
Closing may be scheduled on an expedited basis, such that
sufficient prior notice, as aforesaid, may not be practical or
possible. In such case, the parties will cooperate to satisfy the
needs of the other in all reasonable ways.
4. Amendment re: Employee Contact. Purchaser and Seller
agree that the Contact Date under Section 10.10(c) of the
Agreement shall in all events and for all purposes be: (i) for
salaried employees, December 2, 1997; and (ii) for hourly
employees, the date chosen by Purchaser that is not earlier than
ten (10) business days prior to Closing. Seller and Purchaser
acknowledge and agree that Closing may be scheduled on an
expedited basis, such that sufficient prior notice, as aforesaid,
may not be practical or possible. In such case, the parties will
cooperate to satisfy the needs of the other in all reasonable
ways.
5. Effect of Amendment. In the event of conflict or
inconsistency between the terms of the Agreement and the terms of
this Amendment No. 2, the terms of this Amendment No. 2 shall
govern. Except as specifically set forth herein, the Agreement
shall remain unmodified and in full force and effect, binding
upon the parties thereto.
6. Execution. This Amendment No. 2 may be executed in
multiple counterparts, which, taken together shall constitute one
complete copy of this Amendment. It shall not be necessary for
any party to produce original signatures for all parties on any
copy of this Amendment. Facsimile signatures shall be deemed
originals for purposes hereof.
{SIGNATURES BEGIN ON NEXT PAGE}
SELLER:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this _____ day of December, 1997.
WITNESSES: LAKESHORE HOTELS, LTD., a
Louisiana
Partnership in Commendam
BY:
NAME:
TITLE:
NOTARY PUBLIC
PURCHASER:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Atlantic City, New
Jersey on this _____ day of December, 1997.
WITNESSES: PLAYERS INTERNATIONAL, INC., a
Nevada
corporation
BY:
NAME:
TITLE:
NOTARY PUBLIC
AC-168627
JOINDER
The undersigned hereby join in the execution of this
Amendment No. 1, simultaneously with Seller, to evidence their
agreement to be bound by the provisions hereof:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this _____ day of December, 1997.
WITNESSES (as to all signatures)
WITNESSES (as to all signatures)
NOTARY PUBLIC
AC-168627
