As filed with the Securities and Exchange Commission on June 15, 1995.
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 14, 1995
The Promus Companies Incorporated
(Exact name of registrant as specified in its charter)
Delaware 1-10410 62-1411755
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
1023 Cherry Road
Memphis, Tennessee 38117
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 762- 8600
Not Applicable
- ----------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. Other Events.
The Promus Companies Incorporated ("Promus") intends to distribute
(the "Distribution") in the form of a special dividend to all holders of
Promus's outstanding shares of common stock, on a one-for-two basis, all
outstanding shares of common stock, and the associated stockholders' rights,
of Promus Hotel Corporation ("PHC"), an indirect wholly-owned subsidiary of
Promus. The Distribution will separate Promus's hotel business (the "Hotel
Business") from its casino entertainment business (the "Casino Business").
Prior to the Distribution, Promus will transfer to PHC the stock of certain
subsidiaries principally engaged in the Hotel Business, and consummate certain
other transfers intended to allocate assets and liabilities relating to the
Hotel Business to PHC and assets and liabilities relating to the Casino
Business to Promus. After the Distribution, PHC will operate and develop
the Hotel Business and Promus will operate and develop the Casino Business.
In addition, upon consummation of the Distribution, Promus will change its
name to "Harrah's Entertainment, Inc."
On May 26, 1995, stockholders of Promus approved the Distribution
and Promus's Board of Directors declared a dividend of shares of common
stock of PHC conditioned upon the occurrence of four events prior to
June 19, 1995. On June 14, 1995, Promus announced that the four events had
occurred and that the conditions to the dividend had been satisfied.
The Distribution will occur on June 30, 1995. On that date,
Embassy Suites, Inc., a wholly-owned subsidiary of Promus and the sole
stockholder of PHC, will distribute to Promus all of the outstanding shares
of common stock of PHC and the associated stockholders' rights. Substantially
concurrently therewith, Promus will make the Distribution to stockholders
of record of Promus as of June 21, 1995. Each stockholder will receive one
share of common stock of PHC for every two shares of common stock of Promus
held by such stockholder. Fractional shares will be aggregated and, after the
Distribution, sold in the public market and the aggregate net cash proceeds
will be distributed ratably to those stockholders of record otherwise entitled
to fractional interests.
<PAGE>
ITEM 7. Financial Statements and Exhibits
(c) Exhibits.
<TABLE><CAPTION>
No.
---
<C> <S>
4(1) First Supplemental Indenture dated as of June 2, 1995, with respect to the 8 3/4% Senior
Subordinated Notes due 2000, among Embassy Suites, Inc., as issuer, The Promus Companies
Incorporated, as guarantor, and The Bank of New York, as trustee.
4(2) First Supplemental Indenture dated as of June 2, 1995, with respect to the 10 7/8% Senior
Subordinated Notes due 2002, among Embassy Suites, Inc., as issuer, The Promus Companies
Incorporated, as guarantor, and The Bank of New York, as trustee.
10(1) Form of Plan of Reorganization and Distribution Agreement, dated June __, 1995,
between The Promus Companies Incorporated and Promus Hotel Corporation.
10(2) Credit Agreement, dated as of June 1, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., various banks and Bankers Trust Company, as Administrative
Agent.
10(3) Tranche A Credit Agreement, dated as of June 7, 1995, among Embassy Suites, Inc., as
Initial Borrower, Promus Hotels, Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as guarantors, the several lenders
from time to time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (1)
10(4) Tranche B Credit Agreement, dated as of June 7, 1995, among Embassy Suites, Inc., as
Initial Borrower, Promus Hotels, Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as guarantors, the several lenders
from time to time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (1)
10(5) Credit Agreement, dated as of July 22, 1993 and amended and restated as of
June 9, 1995, among The Promus Companies Incorporated, Embassy Suites, Inc., certain
subsidiaries of Embassy Suites, Inc., various banks, Bankers Trust Company, The Bank of
New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company, as Administrative Agent.
10(6) Credit Agreement, dated as of June 9, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., certain subsidiaries of Embassy Suites, Inc., various banks, Bankers
Trust Company, The Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-term Credit Bank of Japan, Limited, New York
Branch, NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank, Limited, New
York Branch, as Agents, and Bankers Trust Company, as Administrative Agent.
10(7) Form of Employee Benefits and Other Employment Matters Allocation Agreement, dated June __, 1995,
between The Promus Companies Incorporated and Promus Hotel Corporation.
10(8) Form of Risk Management Allocation Agreement, dated June __, 1995, between The Promus
Companies Incorporated and Promus Hotel Corporation.
10(9) Form of Tax Sharing Agreement, dated June __, 1995, between The Promus Companies
Incorporated and Promus Hotel Corporation.
10(10) Amendment, dated May 26, 1995, to The Promus Companies Incorporated Executive Deferred
Compensation Plan.
10(11) Amendment, dated May 26, 1995, to The Promus Companies Incorporated Deferred Compensation Plan.
10(12) Amendment, dated as of June 7, 1995, to Escrow Agreement among The Promus Companies
Incorporated, certain subsidiaries thereof and NationsBank.
10(13) Form of Severance Agreement, dated _________, 1995, to be entered into with Bradford W. Morgan.
99(1) Press Release, dated June 14, 1995, announcing the satisfaction of the final
conditions to the Distribution.
</TABLE>
FOOTNOTES
(1) Incorporated by reference from the Current Report on Form
8-K of Promus Hotel Corporation, filed June 15, 1995,
File No. 1-11463.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
THE PROMUS COMPANIES INCORPORATED
E.O. ROBINSON, JR.
---------------------------------------
E.O. Robinson, Jr.
Senior Vice President, General Counsel
and Secretary
Dated: June 15, 1995
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT
NO. Description
------- -----------
<C> <S>
4(1) First Supplemental Indenture dated as of June 2, 1995, with respect to the 8 3/4% Senior
Subordinated Notes due 2000, among Embassy Suites, Inc., as issuer, The Promus Companies
Incorporated, as guarantor, and The Bank of New York, as trustee.
4(2) First Supplemental Indenture dated as of June 2, 1995, with respect to the 10 7/8% Senior
Subordinated Notes due 2002, among Embassy Suites, Inc., as issuer, The Promus Companies
Incorporated, as guarantor, and The Bank of New York, as trustee.
10(1) Form of Plan of Reorganization and Distribution Agreement, dated June __, 1995,
between The Promus Companies Incorporated and Promus Hotel Corporation.
10(2) Credit Agreement, dated as of June 1, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., various banks and Bankers Trust Company, as Administrative
Agent.
10(3) Tranche A Credit Agreement, dated as of June 7, 1995, among Embassy Suites, Inc., as
Initial Borrower, Promus Hotels, Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as guarantors, the several lenders
from time to time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (1)
10(4) Tranche B Credit Agreement, dated as of June 7, 1995, among Embassy Suites, Inc., as
Initial Borrower, Promus Hotels, Inc., as the Subsequent Borrower, certain subsidiaries and
related parties from time to time party thereto, as guarantors, the several lenders
from time to time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (1)
10(5) Credit Agreement, dated as of July 22, 1993 and amended and restated as of
June 9, 1995, among The Promus Companies Incorporated, Embassy Suites, Inc., certain
subsidiaries of Embassy Suites, Inc., various banks, Bankers Trust Company, The Bank of
New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust as Administrative Agent.
10(6) Credit Agreement, dated as of June 9, 1995, among The Promus Companies Incorporated,
Embassy Suites, Inc., certain subsidiaries of Embassy Suites, Inc., various banks, Bankers
Trust Company, The Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-term Credit Bank of Japan, Limited, New York
Branch, NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank, Limited, New
York Branch, as Agents, and Bankers Trust Company, as Administrative Agent.
10(7) Form of Employee Benefits and Other Employment Matters Allocation Agreement, dated June __, 1995,
between The Promus Companies Incorporated and Promus Hotel Corporation.
10(8) Form of Risk Management Allocation Agreement, dated June __, 1995, between The Promus
Companies Incorporated and Promus Hotel Corporation.
10(9) Form of Tax Sharing Agreement, dated June __, 1995, between The Promus Companies
Incorporated and Promus Hotel Corporation.
10(10) Amendment, dated May 26, 1995, to The Promus Companies Incorporated Executive Deferred
Compensation Plan.
10(11) Amendment, dated May 26, 1995, to The Promus Companies Incorporated Deferred Compensation Plan.
10(12) Amendment, dated as of June 7, 1995, to Escrow Agreement among The Promus Companies
Incorporated, certain subsidiaries thereof and NationsBank.
10(13) Form of Severance Agreement, dated _________, 1995, to be entered into with Bradford W. Morgan.
99(1) Press Release, dated June 14, 1995, announcing the satisfaction of the final
conditions to the Distribution.
</TABLE>
FOOTNOTES
(1) Incorporated by reference from the Current Report on Form
8-K of Promus Hotel Corporation, filed June 15, 1995,
File No. 1-11463.
Exhibit 4(1)
FIRST SUPPLEMENTAL INDENTURE
dated as of June 2, 1995
-----------
EMBASSY SUITES, INC.,
Issuer
THE PROMUS COMPANIES
INCORPORATED,
Guarantor
and
THE BANK OF NEW YORK,
Trustee
-----------
$200,000,000
8 3/4% Senior Subordinated Notes Due 2000
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, entered into as of June 2, 1995,
among Embassy Suites, Inc., a Delaware corporation ("Embassy"), The Promus
Companies Incorporated, a Delaware corporation ("Promus"), and The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, as trustee (the "Trustee").
WHEREAS, Embassy, Promus and the Trustee (collectively, the "Parties")
entered into an Indenture, dated as of August 1, 1993 (as amended from time to
time, the "Indenture"), with respect to Embassy's 8 3/4% Senior Subordinated
Notes due 2000 (the "Securities");
WHEREAS, pursuant to a resolution of the Board of Directors of Embassy
and in accordance with the Indenture, Embassy issued the Securities;
WHEREAS, Embassy desires to distribute (the "Embassy Distribution") to
Promus all outstanding shares of common stock ("PHC Stock") of Promus Hotel
Corporation, a Delaware corporation, and Promus desires to distribute, in the
form of a special dividend to all holders of Promus's outstanding shares of
common stock, all outstanding shares of PHC Stock (the "Distribution" and,
together with the "Embassy Distribution," the "Distributions");
WHEREAS, Promus and Embassy proposed to amend the Indenture to modify
the definition of "Restricted Payments" to permit the Embassy Distribution (the
"Proposed Amendment");
WHEREAS, the Trustee has received the consent of the Holders (as
defined in the Indenture) of not less than a majority in aggregate principal
amount of the Outstanding (as defined in the Indenture) Securities to the
Proposed Amendment; and
2
<PAGE>
WHEREAS, the Parties desire to enter into this First Supplemental
Indenture to give effect to the Proposed Amendment.
NOW, THEREFORE, Embassy, Promus and the Trustee agree as follows:
Section 1. Capitalized terms used herein and not otherwise defined
herein are used as defined in the Indenture.
Section 2. The definition of "Restricted Payments" contained in
Section 101 of the Indenture is hereby deleted and replaced with a new
definition which reads in its entirety as follows:
""Restricted Payments" means, with respect to any Person,
(i) any dividend or other distribution on shares of Capital
Stock of the Guarantor, the Company or any Subsidiary of
either, (ii) any payment on account of the purchase,
redemption or other acquisition or retirement for value of
any shares of Capital Stock of the Guarantor, the Company or
any Subsidiary of either, (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, in
whole or in part, of any Junior Debt and (iv) any loan or
any advance to or investment in the Guarantor; provided,
however, that the term "Restricted Payment" does not include
(i) any dividend, distribution or other payment on account
of shares of Capital Stock of an issuer payable solely in
shares of Capital Stock of such issuer that is at least as
junior in ranking as the Capital Stock on which such
dividend, distribution or other payment is to be made, (ii)
any dividend, distribution or other payment to the Company,
or any of its directly or indirectly owned Subsidiaries, by
any of its directly or indirectly owned Subsidiaries, by any
of the Company's Subsidiaries, (iii) any defeasance,
redemption, repurchase or other acquisition or retirement
for value, in whole or in part, of any Junior Debt of an
issuer payable solely in shares of Capital Stock or Junior
Debt of such issuer, (iv) any payment made by the Guarantor,
the Company or any Subsidiary of either pursuant to the
Credit Documents (as defined in the Credit Agreement, as
amended from time to time), or (v) the distribution of the
outstanding shares of Common Stock, par value $0.10 (and any
associated stockholders' rights) and the assets and
liabilities of Promus Hotel Corporation, a wholly-owned
subsidiary of the Company, to the Guarantor, on the date to
be established by the
3
<PAGE>
Company's Board of Directors following the 1995 Annual
Meeting of the Guarantor's stockholders, and any asset
transfers, payments, distributions, purchases, redemptions
or acquisitions related thereto."
Section 3. This First Supplemental Indenture may be executed in any
number of counterparts all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute the instrument by
signing any such counterpart.
Section 4. The effectiveness of the First Supplemental Indenture is
conditioned upon (i) the consummation of the Distributions, and (ii) subject to
waiver by Embassy, the absence of any law or regulation which would, and the
absence of any injunction or action or other proceeding (pending or threatened)
which (in the case of any action or proceeding, if adversely determined) would,
make unlawful or invalid or enjoin the implementation or the Proposed Amendment,
the entering into of this First Supplemental Indenture or the making of any
payments to the registered holders of the Securities who submitted (and did not
revoke) valid consents to the Proposed Amendment, or question the legality or
validity thereof, or otherwise adversely affect the Distributions. If either or
both of the Distributions are not consummated, this First Supplemental Indenture
shall not be effective. This First Supplemental Indenture will terminate by its
terms if the foregoing conditions are not satisfied by September 30, 1995.
Section 5. This First Supplemental Indenture and the rights, powers,
trusts, duties and obligations of the Parties hereunder shall be governed by the
laws of the State of New York (without regard to its conflicts of laws
principles).
4
<PAGE>
IN WITNESS WHEREOF, each of the Parties hereto has caused this First
Supplemental Indenture to be duly executed by one of its authorized officers
hereunto duly authorized.
EMBASSY SUITES, INC.
By: __________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
THE PROMUS COMPANIES INCORPORATED
By: _________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
THE BANK OF NEW YORK
By: _________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
5
Exhibit 4(2)
FIRST SUPPLEMENTAL INDENTURE
dated as of June 2, 1995
-----------
EMBASSY SUITES, INC.,
Issuer
THE PROMUS COMPANIES
INCORPORATED,
Guarantor
and
THE BANK OF NEW YORK,
Trustee
-----------
$200,000,000
10 7/8% Senior Subordinated Notes Due 2002
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, entered into as of June 2, 1995,
among Embassy Suites, Inc., a Delaware corporation ("Embassy"), The Promus
Companies Incorporated, a Delaware corporation ("Promus"), and The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, as trustee (the "Trustee").
WHEREAS, Embassy, Promus and the Trustee (collectively, the "Parties")
entered into an Indenture, dated as of August 1, 1993 (as amended from time to
time, the "Indenture"), with respect to Embassy's 10 7/8% Senior Subordinated
Notes due 2002 (the "Securities");
WHEREAS, pursuant to a resolution of the Board of Directors of Embassy
and in accordance with the Indenture, Embassy issued the Securities;
WHEREAS, Embassy desires to distribute (the "Embassy Distribution") to
Promus all outstanding shares of common stock ("PHC Stock") of Promus Hotel
Corporation, a Delaware corporation, and Promus desires to distribute, in the
form of a special dividend to all holders of Promus's outstanding shares of
common stock, all outstanding shares of PHC Stock (the "Distribution" and,
together with the "Embassy Distribution," the "Distributions");
WHEREAS, Promus and Embassy proposed to amend the Indenture to modify
the definition of "Restricted Payments" to permit the Embassy Distribution (the
"Proposed Amendment");
WHEREAS, the Trustee has received the consent of the Holders (as
defined in the Indenture) of not less than a majority in aggregate principal
amount of the Outstanding (as defined in the Indenture) Securities to the
Proposed Amendment; and
2
<PAGE>
WHEREAS, the Parties desire to enter into this First Supplemental
Indenture to give effect to the Proposed Amendment.
NOW, THEREFORE, Embassy, Promus and the Trustee agree as follows:
Section 1. Capitalized terms used herein and not otherwise defined
herein are used as defined in the Indenture.
Section 2. The definition of "Restricted Payments" contained in
Section 101 of the Indenture is hereby deleted and replaced with a new
definition which reads in its entirety as follows:
""Restricted Payments" means, with respect to any Person,
(i) any dividend or other distribution on shares of Capital
Stock of the Guarantor, the Company or any Subsidiary of
either, (ii) any payment on account of the purchase,
redemption or other acquisition or retirement for value of
any shares of Capital Stock of the Guarantor, the Company or
any Subsidiary of either, (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, in
whole or in part, of any Junior Debt and (iv) any loan or
any advance to or investment in the Guarantor; provided,
however, that the term "Restricted Payment" does not include
(i) any dividend, distribution or other payment on account
of shares of Capital Stock of an issuer payable solely in
shares of Capital Stock of such issuer that is at least as
junior in ranking as the Capital Stock on which such
dividend, distribution or other payment is to be made, (ii)
any dividend, distribution or other payment to the Company,
or any of its directly or indirectly owned Subsidiaries, by
any of its directly or indirectly owned Subsidiaries, by any
of the Company's Subsidiaries, (iii) any defeasance,
redemption, repurchase or other acquisition or retirement
for value, in whole or in part, of any Junior Debt of an
issuer payable solely in shares of Capital Stock or Junior
Debt of such issuer, (iv) any payment made by the Guarantor,
the Company or any Subsidiary of either pursuant to the
Credit Documents (as defined in the Credit Agreement, as
amended from time to time), or (v) the distribution of the
outstanding shares of Common Stock, par value $0.10 (and any
associated stockholders' rights) and the assets and
liabilities of Promus Hotel Corporation, a wholly-owned
subsidiary of the Company, to the Guarantor, on the date to
be established by the
3
<PAGE>
Company's Board of Directors following the 1995 Annual
Meeting of the Guarantor's stockholders, and any asset
transfers, payments, distributions, purchases, redemptions
or acquisitions related thereto."
Section 3. This First Supplemental Indenture may be executed in any
number of counterparts all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute the instrument by
signing any such counterpart.
Section 4. The effectiveness of the First Supplemental Indenture is
conditioned upon (i) the consummation of the Distributions, and (ii) subject to
waiver by Embassy, the absence of any law or regulation which would, and the
absence of any injunction or action or other proceeding (pending or threatened)
which (in the case of any action or proceeding, if adversely determined) would,
make unlawful or invalid or enjoin the implementation or the Proposed Amendment,
the entering into of this First Supplemental Indenture or the making of any
payments to the registered holders of the Securities who submitted (and did not
revoke) valid consents to the Proposed Amendment, or question the legality or
validity thereof, or otherwise adversely affect the Distributions. If either or
both of the Distributions are not consummated, this First Supplemental Indenture
shall not be effective. This First Supplemental Indenture will terminate by its
terms if the foregoing conditions are not satisfied by September 30, 1995.
Section 5. This First Supplemental Indenture and the rights, powers,
trusts, duties and obligations of the Parties hereunder shall be governed by the
laws of the State of New York (without regard to its conflicts of laws
principles).
4
<PAGE>
IN WITNESS WHEREOF, each of the Parties hereto has caused this First
Supplemental Indenture to be duly executed by one of its authorized officers
hereunto duly authorized.
EMBASSY SUITES, INC.
By: __________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
THE PROMUS COMPANIES INCORPORATED
By: _________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
THE BANK OF NEW YORK
By: _________________________________
Name:
Title:
Attest:
By: __________________________
Name:
Title:
5
Exhibit 10(1)
PLAN OF REORGANIZATION
AND
DISTRIBUTION AGREEMENT
between
THE PROMUS COMPANIES INCORPORATED
and
PROMUS HOTEL CORPORATION
dated as of
June ___, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01. General . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Terms Defined Elsewhere in Agreement . . . . . . . 13
ARTICLE II - TRANSFER OF ASSETS . . . . . . . . . . . . . . . . . . . . 14
Section 2.01. Transfer of Assets to PRH; Harrah's Mergers . . . . 14
Section 2.02. Transfers Not Effected Prior to the Distribution . 16
Section 2.03. Cooperation Re: Assets . . . . . . . . . . . . . . 17
Section 2.04. No Representations or Warranties; Consents . . . . 17
Section 2.05. Conveyancing and Assumption Instruments . . . . . . 19
Section 2.06. Cash Allocation . . . . . . . . . . . . . . . . . . 20
Section 2.07. Financing . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III - ASSUMPTION AND SATISFACTION OF LIABILITIES . . . . . . . 22
Section 3.01. Assumption and Satisfaction of Liabilities . . . . 22
ARTICLE IV - THE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 23
Section 4.01. Cooperation Prior to the Distribution . . . . . . . 23
Section 4.02. Promus Board Action; Conditions Precedent to the
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.03. The Distribution . . . . . . . . . . . . . . . . . 26
Section 4.04. Cash in Lieu of Fractional Shares . . . . . . . . . 26
ARTICLE V - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.01. Indemnification by Promus . . . . . . . . . . . . . 27
Section 5.02. Indemnification by PRH . . . . . . . . . . . . . . 27
Section 5.03. Insurance Proceeds . . . . . . . . . . . . . . . . 28
Section 5.04. Procedure for Indemnification . . . . . . . . . . . 29
Section 5.05. Remedies Cumulative . . . . . . . . . . . . . . . . 33
Section 5.06. Survival of Indemnities . . . . . . . . . . . . . . 33
i
<PAGE>
Page
----
ARTICLE VI - CERTAIN ADDITIONAL MATTERS . . . . . . . . . . . . . . . . 33
Section 6.01. PRH Board . . . . . . . . . . . . . . . . . . . . . 33
Section 6.02. Resignations; Promus Board . . . . . . . . . . . . 34
Section 6.03. Certificate and Bylaws . . . . . . . . . . . . . . 34
Section 6.04. Certain Post-Distribution Transactions . . . . . . 34
Section 6.05. Corporate Name . . . . . . . . . . . . . . . . . . 36
Section 6.06. PRH Rights Plan . . . . . . . . . . . . . . . . . . 36
ARTICLE VII - ACCESS TO INFORMATION AND SERVICES . . . . . . . . . . . 37
Section 7.01. Provision of Corporate Records . . . . . . . . . . 37
Section 7.02. Access to Information . . . . . . . . . . . . . . . 37
Section 7.03. Production of Witnesses . . . . . . . . . . . . . . 38
Section 7.04. Reimbursement . . . . . . . . . . . . . . . . . . . 39
Section 7.05. Retention of Records . . . . . . . . . . . . . . . 39
Section 7.06. Confidentiality . . . . . . . . . . . . . . . . . . 39
Section 7.07. Privileged Matters . . . . . . . . . . . . . . . . 40
ARTICLE VIII - ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . 43
Section 8.01. Non-Competition Agreement . . . . . . . . . . . . . 43
Section 8.02. Hiring of Employees . . . . . . . . . . . . . . . . 45
Section 8.03. Settlement Agreement . . . . . . . . . . . . . . . 45
ARTICLE IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.01. Complete Agreement; Construction . . . . . . . . . 45
Section 9.02. Expenses . . . . . . . . . . . . . . . . . . . . . 46
Section 9.03. Accounting Adjustments . . . . . . . . . . . . . . 46
Section 9.04. Governing Law . . . . . . . . . . . . . . . . . . . 46
Section 9.05. Notices . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.06. Amendments . . . . . . . . . . . . . . . . . . . . 47
Section 9.07. Successors and Assigns . . . . . . . . . . . . . . 47
Section 9.08. Termination . . . . . . . . . . . . . . . . . . . . 47
Section 9.09. Subsidiaries . . . . . . . . . . . . . . . . . . . 47
Section 9.10. No Third-Party Beneficiaries . . . . . . . . . . . 48
Section 9.11. Titles and Headings . . . . . . . . . . . . . . . . 48
Section 9.12. Exhibits and Schedules . . . . . . . . . . . . . . 48
Section 9.13. Legal Enforceability . . . . . . . . . . . . . . . 48
Section 9.14. Arbitration of Disputes . . . . . . . . . . . . . . 49
EXHIBITS
SCHEDULES
ii
<PAGE>
EXHIBITS
Exhibit A: Employee Benefits Allocation Agreement
Exhibit B-1: Harrah's Entertainment Pro Forma Balance Sheet
Exhibit B-2: Harrah's Entertainment Pro Forma Statement of Income
Exhibit C: Information Technology Agreements
Exhibit C-1: Data Center Lease
Exhibit C-2: Marketing Services Agreement
Exhibit C-3: Satellite Services Agreement
Exhibit C-4: Software Agreement
Exhibit C-5: Transitional Service Agreement
Exhibit C-6: Administrative Systems Services Agreement
Exhibit C-7: Disaster Recovery Agreement
Exhibit D: PRH Bylaws
Exhibit E: PRH Certificate
Exhibit F-1: PRH Pro Forma Balance Sheet
Exhibit F-2: PRH Pro Forma Statement of Income
Exhibit G: Risk Management Allocation Agreement
Exhibit H: Tax Sharing Agreement
Exhibit I: Trademark Assignment Agreement
Exhibit J: Property Tax Services Agreement
Exhibit K: Opinion of James D. Wolfensohn Incorporated
<PAGE>
PLAN OF REORGANIZATION AND DISTRIBUTION AGREEMENT
This PLAN OF REORGANIZATION AND DISTRIBUTION AGREEMENT (this
"Agreement") is made as of this __th day of June, 1995 between The Promus
Companies Incorporated, a Delaware corporation ("Promus") and Promus Hotel
Corporation, a Delaware corporation and an indirect wholly-owned subsidiary
of Promus ("PRH").
RECITALS
--------
WHEREAS, Promus, through subsidiaries, develops, manages and owns
a hotel business consisting of the Embassy Suites, Hampton Inn, Hampton Inn
and Suites and Homewood Suites hotel brands (the "PRH Business") and the
Harrah's casino entertainment business (the "Casino Business");
WHEREAS, the Board of Directors of Promus has determined that it
is in the best interests of Promus and the stockholders of Promus to
separate the Casino Business, on the one hand, and the PRH Business, on the
other hand, and, in order to effect such separation, to transfer (or to
cause its subsidiaries to transfer) to PRH or its Subsidiaries the stock of
certain Promus subsidiaries principally engaged in the PRH Business and
certain other assets relating principally to the PRH Business (the "Asset
Transfers"), and thereafter to cause Embassy Suites, Inc., a wholly-owned
subsidiary of Promus ("Embassy"), to distribute all of the outstanding
shares of common stock, par value $0.10 per share, of PRH to Promus (the
"Embassy Distribution") and thereafter to cause Promus to distribute such
PRH common stock to the holders of Promus common stock (the
"Distribution");
<PAGE>
WHEREAS, Promus has already effected certain preliminary
transfers and corporate restructurings, which transactions are not
contingent upon consummation of the Distribution and will not be undone if
the Distribution does not occur; and
WHEREAS, in connection with the Distribution, Promus and PRH have
determined that it is necessary and desirable to set forth the principal
corporate transactions required to effect the Asset Transfers and the
Distribution, and to set forth the agreements that will govern certain
matters following the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01. General. As used in this Agreement, the following
-------
terms shall have the following meanings:
Action: Any action, claim, suit, arbitration, inquiry,
------
proceeding or investigation by or before any court, any governmental or
other regulatory or administrative agency or commission or any arbitration
tribunal.
Affiliate: Means with respect to any specified Person, any other
---------
Person directly or indirectly controlling or controlled by, or under direct
or indirect common control with, such specified Person. For purposes of
this definition, "control," when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" shall have
meanings correlative to the foregoing. Notwithstanding the foregoing, (i)
the Affiliates of Promus shall not include
2
<PAGE>
PRH, the PRH Subsidiaries or any other Person which would be an Affiliate
of Promus by reason of Promus's ownership of the capital stock of PRH prior
to the Distribution or the fact that any officer or director of PRH or any
of the PRH Subsidiaries shall also serve as an officer or director of
Promus or any of the Retained Subsidiaries, and (ii) the Affiliates of PRH
shall not include Promus, the Retained Subsidiaries or any other Person
which would be an Affiliate of PRH by reason of Promus's ownership of the
capital stock of PRH prior to the Distribution or the fact that any officer
or director of PRH or any of the PRH Subsidiaries shall also serve as an
officer or director of Promus or any of the Retained Subsidiaries.
Agent: The distribution agent appointed by Promus to distribute
-----
the PRH Common Stock and cash in lieu of fractional shares pursuant to the
Distribution.
Annual Meeting: The 1995 Annual Meeting of Stockholders of
--------------
Promus held on May 26, 1995, at which the Distribution and certain other
matters relating to the Distribution were ratified and approved by the
holders of a majority of the outstanding shares of Promus Common Stock.
Code: The Internal Revenue Code of 1986, as amended.
----
Commission: The Securities and Exchange Commission.
----------
Conveyancing and Assumption Instruments: Collectively, the
---------------------------------------
various agreements, instruments and other documents to be entered into to
effect the Asset Transfers and the assumption of Liabilities in the manner
contemplated by this Agreement and the Related Agreements.
3
<PAGE>
Distribution Date: The date determined by the Promus Board as
-----------------
the date on which the Distribution shall be effected, which Distribution
Date is contemplated by the Promus Board to occur on or about June 30,
1995.
Distribution Record Date: The date established by the Promus
------------------------
Board as the date for taking a record of the Holders of Promus Common Stock
entitled to participate in the Distribution, which Distribution Record Date
has been established as June 21, 1995, subject to the fulfillment on or
before June 18, 1995 of certain conditions to the Distribution as provided
in Section 4.02.
Employee Benefits Allocation Agreement: The Benefits and Other
--------------------------------------
Employment Matters Allocation Agreement between Promus and PRH, which
agreement shall be entered into on or prior to the Distribution Date in
substantially the form of Exhibit A attached hereto.
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Existing Management and Lease Agreements: The existing
----------------------------------------
management or lease agreements with hotel property owners (including those
entities in which Promus or its Subsidiaries are a partner or hold an
equity interest) to which Promus and its Subsidiaries are parties, pursuant
to which Promus or its Subsidiaries lease, manage or operate lodging
properties.
Existing Promus Credit Facilities: The credit facilities of
---------------------------------
Promus set forth on Schedule 1.01(a).
Financing Obligations: All (i) indebtedness for borrowed money,
---------------------
(ii) obligations evidenced by bonds, notes, debentures or similar
instruments, (iii) obligations under capitalized leases and deferred
purchase arrangements, (iv) reimbursement or other
4
<PAGE>
obligations relating to letters of credit or similar arrangements, and (v)
obligations to guarantee, directly or indirectly, any of the foregoing
types of obligations on behalf of others.
Franchise Agreements: All license, franchise or other agreements
--------------------
or commitments to which Promus or any of its Subsidiaries is a party
pursuant to which Promus (either directly or through any such Subsidiary)
has granted franchise rights with respect to the operation of hotel
properties, and all other franchise rights either granted or received by
Promus or any of its Subsidiaries relating to the PRH Business.
Harrah's: Harrah's, a Nevada corporation.
--------
Harrah's Club: Harrah's Club, a Nevada corporation.
-------------
Harrah's Entertainment Pro Forma Balance Sheet: The Pro Forma
----------------------------------------------
Consolidated Balance Sheet for Harrah's Entertainment, Inc. as of March 31,
1995 attached hereto as Exhibit B-1.
Harrah's Entertainment Pro Forma Statement of Income: The Pro
----------------------------------------------------
Forma Consolidated Statement of Income for Harrah's Entertainment, Inc. as
of March 31, 1995 attached hereto as Exhibit B-2.
Holders: The holders of record of Promus Common Stock as of the
-------
Distribution Record Date.
Information Technology Agreements: The agreements to be entered
---------------------------------
into between Promus and PRH on or prior to the Distribution Date, providing
for certain matters related to information technology after the
Distribution Date, in substantially the forms of the following: Data
Center Lease attached as Exhibit C-1, Marketing Services Agreement attached
as Exhibit C-2, Satellite Services Agreement attached as Exhibit C-3,
Software
5
<PAGE>
Agreement attached as Exhibit C-4, Transitional Service Agreement attached
as Exhibit C-5, Administrative Systems Services Agreement attached as
Exhibit C-6, and Disaster Recovery Agreement attached as Exhibit C-7.
Insurance Proceeds: Those moneys (i) received by an insured from
------------------
an insurance carrier or (ii) paid by an insurance carrier on behalf of the
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, cost or reserve paid
or held by or for the benefit of such insured.
IRS: The Internal Revenue Service.
---
Liabilities: Any and all debts, liabilities and obligations,
-----------
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including all
costs and expenses relating thereto, and including, without limitation,
those debts, liabilities and obligations arising under any law, rule,
regulation, Action, threatened Action, order or consent decree of any
governmental entity or any award of any arbitrator of any kind, and those
arising under any contract, agreement, commitment or undertaking.
Meeting Record Date: The record date established by the Promus
-------------------
Board for determining stockholders of Promus entitled to vote at the Annual
Meeting.
NYSE: The New York Stock Exchange.
----
6
<PAGE>
Person: Any individual, corporation, partnership, limited
------
liability company, association, trust, estate or other entity or
organization, including any governmental entity or authority.
PHI: Promus Hotels, Inc., a Delaware corporation and a wholly-
---
owned subsidiary of PRH.
Pre-Paid Transaction Expenses: Amounts paid by Promus prior to
-----------------------------
the allocation of cash pursuant to Section 2.06 for legal, investment
banking, accounting, filing, printing and related expenses incurred by
Promus in connection with the Distribution.
PRH Board: The Board of Directors of PRH.
---------
PRH Books and Records: The books and records (including
---------------------
computerized records) of PRH and the PRH Subsidiaries and all books and
records owned by Promus and its Subsidiaries which relate to the PRH
Business or are necessary to operate the PRH Business including, without
limitation, all such books and records relating to PRH Employees, all files
relating to any Action being assumed by PRH as part of the PRH Liabilities,
original corporate minute books, stock ledgers and certificates and
corporate seals, and all licenses, leases, agreements and filings, relating
to PRH, the PRH Subsidiaries or the PRH Business (but not including the
Promus Books and Records, provided that PRH shall have access to, and have
the right to obtain duplicate copies of, the Promus Books and Records in
accordance with the provisions of Article VII).
PRH Business: The businesses conducted by PRH and the PRH
------------
Subsidiaries and the businesses conducted pursuant to or utilizing the PRH
Assets, including without limitation the management, operation and
franchising of hotels, including all hotels in the
7
<PAGE>
"Embassy Suites," "Hampton Inn," "Homewood Suites," and "Hampton Inn and
Suites" hotel chains.
PRH Bylaws: The Bylaws of PRH, substantially in the form of
----------
Exhibit D, to be in effect at the Distribution Date.
PRH Certificate: The Restated Certificate of Incorporation of
---------------
PRH, substantially in the form of Exhibit E, to be in effect at the
Distribution Date.
PRH Common Stock: The common stock, par value $0.10 per share,
----------------
of PRH (together with any PRH Rights issued pursuant to the PRH Rights
Plan).
PRH Credit Agreement: The Credit Agreement between NationsBank,
--------------------
N.A., Embassy, PHI, the Guarantors and the Several Lenders referred to
therein, dated as of June 7, 1995, and all documents evidencing or securing
such Credit Agreement or executed and delivered by the parties to such
Credit Agreement in connection therewith.
PRH Employees: The meaning specified in the Employee Benefits
-------------
Allocation Agreement.
PRH Group: PRH and the PRH Subsidiaries, collectively.
---------
PRH Liabilities: (i) All of the Liabilities of the PRH Group
---------------
under, or to be retained or assumed by PRH or any of the PRH Subsidiaries
pursuant to, this Agreement or any of the Related Agreements, including
those set forth on Schedule 1.01(b), (ii) all of the Liabilities under the
PRH Credit Agreement, (iii) all Liabilities for payment of outstanding
drafts of Promus attributable to the PRH Business existing as of the
Distribution Date, and (iv) all other Liabilities (excluding Embassy
liabilities with respect to the Excluded Assets) arising out of or in
connection with any of the PRH Assets or the PRH Business, determined on a
basis consistent with the determination of the Liabilities of PRH included
on the PRH
8
<PAGE>
Pro Forma Balance Sheet (as reflected in the "Distribution Pro Forma
column") (including, without limitation, any liabilities arising out of or
related to the transfer to PRH or its Affiliates of the PRH Assets or the
PRH Business).
PRH Pro Forma Balance Sheet: The Pro Forma Consolidated Balance
---------------------------
Sheet for PRH as of March 31, 1995 attached hereto as Exhibit F-1.
PRH Pro Forma Statement of Income: The Pro Forma Combined
---------------------------------
Statement of Income for PRH as of March 31, 1995 attached hereto as
Exhibit F-2.
PRH Subsidiaries: The Transferred Subsidiaries and all
----------------
Subsidiaries of PRH or the Transferred Subsidiaries at the time of the
Distribution.
Privileges: All privileges regarding Information or use of
----------
lawyers, accountants or other service providers that may be asserted under
applicable law including, without limitation, privileges or rights arising
under or relating to the attorney-client relationship (including but not
limited to the attorney-client and work product privileges and waivers of
conflicts of interest), the accountant-client privilege, and privileges
relating to internal valuative processes.
Privileged Information: All Information as to which Promus, PRH
----------------------
or any of their Subsidiaries are entitled to assert the protection of a
Privilege.
Promus Board: The Board of Directors of Promus.
------------
Promus Books and Records: The books and records (including
------------------------
computerized records) of Promus and the Retained Subsidiaries and all books
and records owned by Promus and its Subsidiaries which relate to the
Retained Business, are necessary to operate the Retained Business, or are
required by law to be retained by Promus, including, without limitation,
all such books and records relating to Retained Employees, all files
relating to any
9
<PAGE>
Action pertaining to the Retained Liabilities, all records required to be
maintained by Promus under the Settlement Agreement, original corporate
minute books, stock ledgers and certificates and corporate seals, and all
licenses, leases, agreements and filings, relating to Promus, the Retained
Subsidiaries or the Retained Business (but not including the PRH Books and
Records, provided that Promus shall have access to, and shall have the
right to obtain duplicate copies of, the PRH Books and Records in
accordance with the provisions of Article VII).
Promus Common Stock: The common stock, par value $0.10 per
-------------------
share, of Promus.
Promus Group: Promus and the Retained Subsidiaries,
------------
collectively.
Property Tax Services Agreement: The Property Tax Services
-------------------------------
Agreement between PRI and Embassy, which agreement shall be entered into on
or prior to the Distribution Date in substantially the form of Exhibit J
attached hereto.
Proxy Statement: The proxy statement dated April 25, 1995
---------------
provided to the holders of Promus Common Stock as of the Meeting Record
Date in connection with the Annual Meeting.
Related Agreements: All of the agreements, contracts,
------------------
instruments, understandings, assignments or other arrangements which are
entered into in connection with the transactions contemplated hereby and
which are set forth in a writing, including, without limitation: the
Conveyancing and Assumption Instruments, the Employee Benefits Allocation
Agreement, the Tax Sharing Agreement, the Trademark Assignment Agreement,
the Information Technology Agreements, the Risk Management Allocation
Agreement, and the Property Tax Services Agreement.
Retained Assets: The assets of Promus other than the PRH Assets,
---------------
including without limitation (i) the capital stock of the Retained
Subsidiaries, (ii) the Retained Real Property, (iii) assets relating to the
Retained Business, determined on a basis consistent with
10
<PAGE>
the determination of assets included on the Harrah's Entertainment Pro
Forma Balance Sheet (as reflected in the "Distribution Pro Forma" column),
(iv) all of the assets expressly allocated to Promus or any of the Retained
Subsidiaries under this Agreement or the Related Agreements, including
those set forth on Schedule 1.01(c), (v) any other assets of Promus and its
Affiliates relating to the Retained Business, and (vi) the Excluded Assets
set forth on Schedule 2.01(a).
Retained Business: The businesses conducted by Promus and its
-----------------
Affiliates other than the PRH Business, including without limitation, the
Casino Business.
Retained Employees: The meaning specified in the Employee
------------------
Benefits Allocation Agreement.
Retained Liabilities: (i) All of the Liabilities arising out of
--------------------
or in connection with the Retained Assets or the Retained Business
determined on a basis consistent with the determination of the Liabilities
of Promus included on the Harrah's Entertainment Pro Forma Consolidated
Balance Sheet (as reflected in the "Distribution Pro Forma" column), (ii)
all of the Liabilities of Promus under, or to be retained or assumed by
Promus or any of the Retained Subsidiaries pursuant to, this Agreement or
any of the Related Agreements, including those set forth on
Schedule 1.01(d), (iii) any Financing Obligations not constituting PRH
Liabilities (including, without limitation, the Existing Promus Credit
Facilities identified on Schedule 1.01(a)), (iv) all Liabilities for the
payment of outstanding drafts of Promus attributable to the Retained
Business existing as of the Distribution Date, (v) all debts, liabilities
or other obligations, including any related claims that may be asserted,
whether prior to or after the Distribution Date, arising from the
Settlement Agreement and (vi) all other Liabilities of Promus not
constituting PRH Liabilities.
11
<PAGE>
Retained Real Property: The ownership interests of Promus and
----------------------
its Affiliates in real property that is not Transferred Real Property,
including the real property identified on Schedule 1.01(e).
Retained Subsidiaries: All Subsidiaries of Promus, except PRH
---------------------
and the PRH Subsidiaries.
Risk Management Allocation Agreement: The Risk Management
------------------------------------
Allocation Agreement between Promus and PRH, which agreement shall be
entered into on or prior to the Distribution Date in substantially the form
of Exhibit G hereto.
Securities Act: the Securities Act of 1933, as amended.
--------------
Senior Subordinated Notes: The 10-7/8% Senior Subordinated Notes
-------------------------
due 2002 and the 8-3/4% Senior Subordinated Notes due 2000 of Embassy.
Settlement Agreement: The Settlement Agreement dated March 17,
--------------------
1995, whereby Plaintiff and defendant settled the litigation styled Bass
----
Public Limited Company, Bass International Holdings N.V., (U.S.A.)
- ------------------------------------------------------------------
Incorporated, Holiday Corporation and Holiday Inns, Inc. v. The Promus
- ----------------------------------------------------------------------
Companies Incorporated formerly pending in the United States District Court
- ----------------------
for the Southern District of New York (92 Civ. 0969).
Subsidiary: With respect to any Person, (a) any corporation of
----------
which at least a majority in interest of the outstanding voting stock
(having by the terms thereof voting power under ordinary circumstances to
elect a majority of the directors of such corporation, irrespective of
whether or not at the time stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
or controlled by such Person, by one or more Subsidiaries of such Person,
or by such Person and one or more of its
12
<PAGE>
Subsidiaries, or (b) any non-corporate entity in which such Person, one or
more Subsidiaries of such Person, or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest.
Tax Sharing Agreement: The Tax Sharing Agreement between PRH and
---------------------
Promus, which agreement shall be entered into on or prior to the
Distribution Date in substantially the form of Exhibit H attached hereto.
Trademark Assignment Agreement: The Trademark Assignment
------------------------------
Agreement between Promus and PRH, pursuant to which Promus will convey
certain intellectual property rights to PRH, which agreement shall be
entered into on or prior to the Distribution Date in substantially the form
of Exhibit I attached hereto.
Transferred Joint Venture Interests: The partnership and joint
-----------------------------------
venture interests and minority equity interests identified on
Schedule 1.01(f).
Transferred Real Property: The real property identified on
-------------------------
Schedule 1.01(g).
Transferred Subsidiaries: The Subsidiaries identified on
------------------------
Schedule 1.01(h).
Transferred Subsidiary Stock: All of the issued and outstanding
----------------------------
capital stock of the Transferred Subsidiaries.
Section 1.02. Terms Defined Elsewhere in Agreement.
------------------------------------
Each of the following terms is defined in the Section set forth
opposite such term:
13
<PAGE>
Term Section
---- -------
Asset Transfers Recitals
Consents 4.01
Distribution Recitals
Embassy Distribution Recitals
Form 10 Registration Statement 4.02
Indemnifiable Loss 5.01
Indemnifying Party 5.03
Indemnitee 5.03
Information 7.02
Promus Recitals
Promus Indemnitees 5.02
PRH Recitals
PRH Assets 2.01
PRH Indemnitees 5.01
PRH Rights 6.06
PRH Rights Plan 6.06
Third-Party Claim 5.04
ARTICLE II
TRANSFER OF ASSETS
------------------
Section 2.01. Transfer of Assets to PRH; Harrah's Mergers.
-------------------------------------------
(a) Prior to the Distribution Date, Promus shall take or cause
to be taken all actions necessary to cause the transfer, assignment,
delivery and conveyance to PRH or its Subsidiaries (as directed by PRH) of
all of Promus's and its Subsidiaries' right, title and interest in the PRH
Assets. The "PRH Assets" shall consist of the following assets:
(i) the Transferred Subsidiary Stock;
(ii) the trademarks, service marks, goodwill and other
intangible properties and rights to be conveyed to PRH
pursuant to the Trademark Assignment Agreement;
14
<PAGE>
(iii) the Existing Management and Lease Agreements;
(iv) the Franchise Agreements;
(v) the Transferred Real Property;
(vi) the Transferred Joint Venture Interests;
(vii) the PRH Books and Records;
(viii) all licenses and permits relating to the PRH
Business;
(ix) the two U.S. Dollar Swap Transactions between Embassy
and NationsBank, N.A., each with the notional amount of
$50 million, effective on March 20, 1995 and January
26, 1995, respectively;
(x) all of the other assets to be assigned to PRH under
this Agreement or the Related Agreements; and
(xi) all other assets relating to the PRH Business,
determined on a basis consistent with the determination
of the assets included on the PRH Pro Forma Combined
Balance Sheet (as reflected in the "Distribution Pro
Forma" column);
provided, that the PRH Assets shall exclude any rights of Embassy pursuant
- --------
to the agreements set forth on Schedule 2.01(a).
(b) Following the consummation of the Asset Transfers described
in Section 2.01(a) and prior to the Distribution Date, Promus shall take or
cause to be taken all actions necessary to cause Casino Holding Company to
be merged with and into Harrah's Club (with Harrah's Club as the surviving
corporation) and to cause Embassy to contribute to
15
<PAGE>
the capital of Harrah's (which shall in turn contribute to the capital of
Harrah's Club) all of Embassy's right, title and interest in its Northern
Nevada and Las Vegas casino properties.
Section 2.02. Transfers Not Effected Prior to the Distribution.
------------------------------------------------
To the extent that any transfers contemplated by this Article II
shall not have been fully effected on the Distribution Date, the parties
shall cooperate to effect such transfers as promptly as shall be
practicable following the Distribution Date. Nothing herein shall be
deemed to require the transfer of any assets or the assumption of any
Liabilities which by their terms or operation of law cannot be transferred
or assumed; provided, however, that Promus and PRH and their respective
-------- -------
Subsidiaries and Affiliates shall cooperate in seeking to obtain any
necessary consents or approvals for the transfer of all assets and
Liabilities contemplated to be transferred pursuant to this Article II. In
the event that any such transfer of assets or Liabilities has not been
consummated effective as of the Distribution Date, the party retaining such
asset or Liability shall thereafter hold such asset in trust for the use
and benefit of the party entitled thereto (at the expense of the party
entitled thereto) and retain such Liability for the account of the party by
whom such Liability is to be assumed pursuant hereto, and take such other
actions as may be reasonably required in order to place the parties,
insofar as reasonably possible, in the same position as would have existed
had such asset been transferred or such Liability been assumed as
contemplated hereby. As and when any such asset or Liability becomes
transferable, such transfer and assumption shall be effected forthwith.
The parties agree that, except as set forth in this subsection (a), as of
the Distribution Date, each party hereto shall be deemed to have acquired
complete and sole beneficial ownership over all of the assets, together
with all
16
<PAGE>
rights, powers and privileges incidental thereto, and shall be deemed to
have assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incidental
thereto, which such party is entitled to acquire or required to assume
pursuant to the terms of this Agreement.
Section 2.03. Cooperation Re: Assets.
-----------------------
In the case that at any time after the Distribution Date, PRH
reasonably determines that any of the Retained Assets (other than the
assets set forth on Schedule 2.01(a)) are essential for the conduct of the
PRH Business, or Promus reasonably determines that any of the PRH Assets
are essential for the conduct of the Retained Business, and the nature of
such assets makes it impracticable for PRH or Promus, as the case may be,
to obtain substitute assets or to make alternative arrangements on
commercially reasonable terms to conduct their respective businesses, and
reasonable provisions for the use thereof are not already included in the
Related Agreements, then PRH (with respect to the PRH Assets) and Promus
(with respect to the Retained Assets) shall cooperate to make such assets
available to the other party on commercially reasonable terms, as may be
reasonably required for such party to maintain normal business operations
(provided that such assets shall be required to be made available only
until such time as the other party may reasonably obtain substitute assets
or make alternative arrangements on commercially reasonable terms to permit
it to maintain normal business operations).
Section 2.04. No Representations or Warranties; Consents. Each
------------------------------------------
of the parties hereto understands and agrees that no party hereto is, in
this Agreement or in any other agreement or document contemplated by this
Agreement or otherwise, representing or
17
<PAGE>
warranting in any way (i) as to the value or freedom from encumbrance of,
or any other matter concerning, any assets of such party or (ii) as to the
legal sufficiency to convey title to any asset transferred pursuant to this
Agreement or any Related Agreement, including, without limitation, any
Conveyancing or Assumption Instruments. It is also agreed and understood
that there are no warranties whatsoever, express or implied, given by
either party to the Agreement, as to the condition, quality,
merchantability or fitness of any of the assets, businesses or other rights
either transferred to or retained by the parties, as the case may be, and
all such assets, businesses or other rights shall be "as is, where is" and
"with all faults" (provided, however, that the absence of warranties given
by the parties shall not negate the allocation of Liabilities under this
Agreement and shall have no effect on any manufacturers', sellers', or
other third parties' warranties which are intended to be transferred with
such assets). Similarly, each party hereto understands and agrees that no
party hereto is, in this Agreement or in any other agreement or document
contemplated by this Agreement or otherwise, representing or warranting in
any way that the obtaining of any consents or approvals, the execution and
delivery of any amendatory agreements and the making of any filings or
applications contemplated by this Agreement will satisfy the provisions of
any or all applicable laws or judgments or other instruments or agreements
relating to such assets. Notwithstanding the foregoing, the parties shall
use their good faith efforts to obtain all consents and approvals, to enter
into all reasonable amendatory agreements and to make all filings and
applications which may be reasonably required for the consummation of the
transactions contemplated by this Agreement, and shall take all such
further actions as shall be deemed reasonably necessary to preserve for
each of the PRH Group and the Promus
18
<PAGE>
Group, to the greatest extent reasonably feasible, consistent with this
Agreement, the economic and operational benefits of the allocation of
assets and Liabilities provided for in this Agreement. In case at any time
after the Distribution Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall take all such necessary or desirable
action, provided, that any financial cost shall be borne by the party
--------
receiving the benefit of the action.
Section 2.05. Conveyancing and Assumption Instruments. In
---------------------------------------
connection with the Asset Transfers and the assumptions of Liabilities
contemplated by this Agreement, the parties shall execute or cause to be
executed by the appropriate entities the Conveyancing and Assumption
Instruments in such forms as the parties shall reasonably agree, including
the transfer of the Transferred Real Property with deeds as may be
appropriate, the assignment of trademarks and franchise rights and the
assignment and assumption of the Existing Management and Lease Agreements,
Transferred Joint Venture Interests, and the Franchise Agreements. The
transfer of capital stock shall be effected by means of delivery of stock
certificates and executed stock powers and notation on the stock record
books of the corporation or other legal entities involved and, to the
extent required by applicable law, by notation on public registries.
19
<PAGE>
Section 2.06. Cash Allocation.
---------------
(a) Cash Allocation on the Distribution Date.
----------------------------------------
The allocation between Promus and PRH of all domestic and
international cash bank balances and short-term investments ("cash") of
Promus and its Subsidiaries recorded per the books of Promus and its
Subsidiaries as of the close of business on the Distribution Date (the
"Pre-Distribution Cash Balance") shall be in accordance with the following:
(i) all petty cash accounts of hotel properties on the
Distribution Date shall be transferred to PRH;
(ii) all cash received in and deposits made to the local
deposit accounts for business activities relating to
the PRH Business to and including the Distribution Date
which has not previously been transferred to Promus
shall be remitted to Promus no later than five business
days following the Distribution Date; and
(iii) all Liabilities for payment of outstanding drafts
drawn on accounts allocated to PRH shall be paid
by PRH (except that, with respect to outstanding
drafts relating to Existing Management and Lease
Agreements, including Transferred Joint Venture
Interests, Promus shall reimburse PRH for such
outstanding drafts net of any corresponding
receivable transferred to PRH).
(b) Cash Management After the Distribution Date. PRH shall
-------------------------------------------
establish and maintain a separate cash management system and accounting
records with respect to the PRH
20
<PAGE>
Business effective as of 12:01 a.m. on the day following the Distribution
Date; thereafter, (i) any payments by Promus or its Retained Subsidiaries
on behalf of PRH or the PRH Subsidiaries in connection with the PRH
Business (including, without limitation, any such payments in respect of
Liabilities or other obligations of PRH or the PRH Subsidiaries under the
Employee Benefits Allocation Agreement) shall be recorded in the accounts
of the PRH Group as a payable from the PRH Group to the Promus Group; (ii)
any payments by PRH or the PRH Subsidiaries on behalf of Promus or its
Retained Subsidiaries in connection with the Retained Business (including,
without limitation, any such payments in respect to Liabilities or other
obligations of Promus or its Retained Subsidiaries under the Employee
Benefits Allocation Agreement) shall be recorded in the accounts of the
Promus Group as a payable from the Promus Group to the PRH Group; (iii) any
cash payments received by Promus and the Retained Subsidiaries relating to
the PRH Business or the PRH Assets shall be recorded in the accounts of the
Promus Group as a payable from the Promus Group to the PRH Group; (iv) any
cash payments received by PRH or the PRH Subsidiaries relating to the
Retained Business or the Retained Assets shall be recorded in the accounts
of the PRH Group as a payable from the PRH Group to the Promus Group; (v)
PRH and Promus shall make adjustments for late deposits, checks returned
for not sufficient funds and other post-Distribution Date transactions as
shall be reasonable under the circumstances consistent with the purpose and
intent of this Agreement; and (vi) the net balance due to the Promus Group
or the PRH Group, as the case may be, in respect of the aggregate amounts
of clauses (i), (ii), (iii), (iv) and (v) shall be paid by PRH or Promus,
as appropriate, as promptly as practicable. For purposes of this Section
2.06(b), the parties contemplate that the Retained
21
<PAGE>
Business and the PRH Business, including but not limited to the
administration of accounts payable and accounts receivable, will be
conducted in the normal course.
(c) All transactions contemplated in this Section 2.06 shall be
subject to audit by the parties, and any dispute thereunder shall be
resolved by Arthur Andersen LLP ("Arthur Andersen") (or, if Arthur Andersen
is not available, by such other independent firm of certified public
accounts mutually acceptable to Promus and PRH), whose decision shall be
final and unappealable.
Section 2.07. Financing.
---------
Prior to the Asset Transfers and other transactions described in
this Article II, Embassy shall enter into the PRH Credit Agreement and
shall borrow $215 million in cash under the PRH Credit Agreement. Embassy
shall use the net proceeds of the borrowings under the PRH Credit Agreement
to retire a portion of its indebtedness outstanding under the Existing
Promus Credit Facilities.
ARTICLE III
ASSUMPTION AND SATISFACTION OF LIABILITIES
------------------------------------------
Section 3.01. Assumption and Satisfaction of Liabilities.
------------------------------------------
(a) Except as set forth in the Employee Benefits Allocation
Agreement, the Tax Sharing Agreement or other Related Agreements, effective
as of and after the Distribution Date, (i) PRH shall, and/or shall cause
the PRH Subsidiaries to, assume, pay, perform, and discharge in due course
all of the PRH Liabilities and (ii) Promus shall, and/or shall cause the
Retained Subsidiaries to, pay, perform and discharge in due course all of
the Retained Liabilities.
22
<PAGE>
(b) Effective as of and after the Distribution Date, PRH shall
cause Embassy to be released and discharged from any and all Liabilities
under the PRH Credit Agreement.
ARTICLE IV
THE DISTRIBUTION
----------------
Section 4.01. Cooperation Prior to the Distribution.
-------------------------------------
(a) Promus and PRH shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereof which are appropriate to reflect the establishment of,
or amendments to, any employee benefit plans and other plans contemplated
by the Employee Benefits Allocation Agreement.
(b) Promus and PRH shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of states or
other political subdivisions of the United States in connection with the
transactions contemplated by this Agreement and the Related Agreements.
(c) Promus and PRH shall use all reasonable efforts to obtain
any third-party consents or approvals necessary or desirable in connection
with the transactions contemplated hereby ("Consents").
(d) Promus and PRH will use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or desirable under applicable law, to consummate the transactions
contemplated under this Agreement.
23
<PAGE>
Section 4.02. Promus Board Action; Conditions Precedent to the
------------------------------------------------
Distribution. The Promus Board shall, in its discretion, establish any
- ------------
appropriate procedures in connection with the Distribution. In no event
shall the Distribution occur unless the following conditions shall have
been satisfied:
(i) each of the Distribution Proposals (as defined in the
Proxy Statement) having been approved by Promus's
stockholders;
(ii) the Promus Board having received an opinion from Latham
& Watkins to the effect that the Embassy Distribution
and the Distribution will qualify as a tax-free
transaction under Section 355 of the Code;
(iii) the transfers of assets and Liabilities
contemplated by this Agreement having been
consummated in all material respects;
(iv) the PRH Common Stock and associated PRH Rights having
been approved for listing on the New York Stock
Exchange subject to official notice of issuance;
(v) the PRH Board, comprised as contemplated by
Section 6.01, having been elected by Embassy, as sole
stockholder of PRH, and the PRH Certificate and the PRH
Bylaws, as each will be in effect after the
Distribution, having been adopted and being in effect;
(vi) PRH having entered into the PRH Credit Agreement;
24
<PAGE>
(vii) the Registration Statement on Form 10 with respect
to the PRH Common Stock (the "Form 10 Registration
Statement") having become effective under the
Exchange Act;
(viii) all third party consents to the transactions
contemplated by the Distribution Proposals having
been obtained (including, without limitation,
consents having been obtained from holders of the
Senior Subordinated Notes to certain amendments to
the covenants contained in such Notes), except for
those the failure of which to obtain would not
have a material adverse effect on PRH or Harrah's
Entertainment;
(ix) Embassy having obtained from its lenders under the
Existing Promus Credit Facilities consents to the
transactions contemplated by the Distribution
Proposals; and
(x) James D. Wolfensohn Incorporated having delivered an
updated opinion to the Promus Board, dated as of the
Distribution Date, in substantially the same form as
the opinion set forth in Exhibit K;
provided, however, that (i) any such condition may be waived by the Promus
- -------- -------
Board in its sole discretion, and (ii) the satisfaction of such conditions
shall not create any obligation on the part of Promus or any other party
hereto to effect the Distribution or in any way limit Promus's power of
termination set forth in Section 9.07 or alter the consequences of any such
termination from those specified in such Section.
25
<PAGE>
Section 4.03. The Distribution. On the Distribution Date,
----------------
subject to the conditions and rights of termination set forth in this
Agreement, PRH shall issue and deliver to Embassy, and Embassy shall assign
and deliver to Promus, and Promus shall endorse in blank and deliver to the
Agent, a share certificate for PRH Common Stock representing a number of
such shares which, when taken together with the shares of PRH Common Stock
already owned by Embassy, will result in Embassy owning one share of PRH
Common Stock for each two shares of Promus Common Stock issued and
outstanding on the Distribution Record Date. Promus shall instruct the
Agent to distribute, on or as soon as practicable following the
Distribution Date, to the Holders one share of the PRH Common Stock for
each two shares of Promus Common Stock held by such Holders and cash in
lieu of fractional shares of PRH Common Stock as provided in Section 4.04.
PRH agrees to provide all share certificates that the Agent shall require
in order to effect the Distribution.
Section 4.04. Cash in Lieu of Fractional Shares.
---------------------------------
No certificate or scrip representing fractional shares of PRH
Common Stock shall be issued as part of the Distribution and in lieu
thereof, each holder of PRH Common Stock who would otherwise be entitled to
receive a fractional share of the PRH Common Stock will receive cash for
such fractional share. Promus shall instruct the Agent to determine the
number of whole shares and fractional shares of PRH Common Stock allocable
to each holder of record of the Promus Common Stock as of the Distribution
Record Date. Promus shall instruct the Agent to aggregate all such
fractional shares into whole shares and sell the whole shares obtained
thereby in the open market as soon as practicable following the
Distribution Date at then prevailing prices on behalf of Holders who
otherwise would be
26
<PAGE>
entitled to receive fractional share interests and to distribute to each
such Holder such Holder's ratable share of the proceeds of such sale as
soon as practicable after the Distribution Date. Promus shall bear the
costs of commissions incurred in connection with such sales.
ARTICLE V
INDEMNIFICATION
---------------
Section 5.01. Indemnification by Promus. Except as otherwise
-------------------------
expressly set forth in a Related Agreement, Promus shall indemnify, defend
and hold harmless PRH and each of the PRH Subsidiaries, and each of their
respective directors, officers, employees, agents and Affiliates and each
of the heirs, executors, successors and assigns of any of the foregoing
(the "PRH Indemnitees") from and against the Retained Liabilities and any
and all losses, Liabilities and damages, including, without limitation, the
costs and expenses of any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or
threatened Actions (collectively, "PRH Indemnifiable Losses" and,
individually, a "PRH Indemnifiable Loss") of the PRH Indemnitees arising
out of or due to the failure or alleged failure of Promus or any of its
Affiliates (i) to pay, perform or otherwise discharge in due course any of
the Retained Liabilities, or (ii) comply with the provisions of Section
6.04.
Section 5.02. Indemnification by PRH. Except as otherwise
----------------------
expressly set forth in a Related Agreement (other than a deed giving effect
to a transfer of the Transferred Real Property), PRH shall indemnify,
defend and hold harmless Promus and each of the Retained Subsidiaries, and
each of their directors, officers, employees, agents
27
<PAGE>
and Affiliates and each of the heirs, executors, successors and assigns of
any of the foregoing (the "Promus Indemnitees") from and against the PRH
Liabilities and any and all losses, Liabilities, damages, including,
without limitation, the costs and expenses of any and all Actions,
threatened Actions, demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending
against any such Actions or threatened Actions (collectively, "Promus
Indemnifiable Losses" and, individually, a "Promus Indemnifiable Loss") of
the Promus Indemnitees arising out of or due to the failure or alleged
failure of PRH or any of its Affiliates to (i) pay, perform or otherwise
discharge in due course any of the PRH Liabilities or (ii) comply with the
provisions of Section 6.04. The "PRH Indemnifiable Losses" and the "Promus
Indemnifiable Losses" are collectively referred to as the "Indemnifiable
Losses."
Section 5.03. Insurance Proceeds. The amount which any party
------------------
(an "Indemnifying Party") is or may be required to pay to any other Person
(an "Indemnitee") pursuant to Section 5.01 or Section 5.02 shall be reduced
(including, without limitation, retroactively) by any Insurance Proceeds or
other amounts actually recovered by or on behalf of such Indemnitee in
reduction of the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party
in respect of an Indemnifiable Loss and shall subsequently actually receive
Insurance Proceeds, or other amounts in respect of such Indemnifiable Loss
as specified above, then such Indemnitee shall pay to such Indemnifying
Party a sum equal to the amount of such Insurance Proceeds or other amounts
actually received.
28
<PAGE>
Section 5.04. Procedure for Indemnification.
-----------------------------
(a) Except as may be set forth in a Related Agreement, if an
Indemnitee shall receive notice or otherwise learn of the assertion by a
Person (including, without limitation, any governmental entity) who is not
a party to this Agreement or to any of the Related Agreements of any claim
or of the commencement by any such Person of any Action (a "Third-Party
Claim") with respect to which an Indemnifying Party may be obligated to
provide indemnification pursuant to this Agreement, such Indemnitee shall
give such Indemnifying Party written notice thereof promptly after becoming
aware of such Third-Party Claim; provided, that the failure of any
--------
Indemnitee to give notice as required by this Section 5.04 shall not
relieve the Indemnifying Party of its obligations under this Article V,
except to the extent that such Indemnifying Party is prejudiced by such
failure to give notice. Such notice shall describe the Third-Party Claim
in reasonable detail, and shall indicate the amount (estimated if
necessary) of the Indemnifiable Loss that has been or may be sustained by
such Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to
settle or compromise, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third-Party Claim, provided that the
Indemnifying Party must confirm in writing that it agrees that the
Indemnitee is entitled to indemnification hereunder in respect of such
Third-Party Claim. Within 30 days of the receipt of notice from an
Indemnitee in accordance with Section 5.04(a) (or sooner, if the nature of
such Third-Party Claim so requires), the Indemnifying Party shall notify
the Indemnitee of its election whether to assume responsibility for such
Third-Party Claim (provided that if the Indemnifying Party
29
<PAGE>
does not so notify the Indemnitee of its election within 30 days after
receipt of such notice from the Indemnitee, the Indemnifying Party shall be
deemed to have elected not to assume responsibility for such Third-Party
Claim), and such Indemnitee shall cooperate in the defense or settlement or
compromise of such Third-Party Claim. After notice from an Indemnifying
Party to an Indemnitee of its election to assume responsibility for a
Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Article V for any legal or other expenses (except
expenses approved in advance by the Indemnifying Party) subsequently
incurred by such Indemnitee in connection with the defense thereof;
provided, that if the defendants or parties against which relief is sought
- --------
in any such claim include both the Indemnifying Party and one or more
Indemnitees and in such Indemnitees' reasonable judgment a conflict of
interest between such Indemnitees and such Indemnifying Party exists in
respect of such claim, such Indemnitees shall have the right to employ
separate counsel and in that event the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel reasonably
satisfactory to the Indemnifying Party) shall be paid by such Indemnifying
Party. If an Indemnifying Party elects not to assume responsibility for a
Third-Party Claim (which election may be made only in the event of a good
faith dispute that a claim was inappropriately tendered under Section 5.01
or 5.02, as the case may be) such Indemnitee may defend or (subject to the
following sentence) seek to compromise or settle such Third-Party Claim.
Notwithstanding the foregoing, an Indemnitee may not settle or compromise
any claim without prior written notice to the Indemnifying Party, which
shall have the option within ten days following the receipt of such notice
(i) to disapprove the settlement and assume all past and future
responsibility for the claim,
30
<PAGE>
including reimbursing the Indemnitee for prior expenditures in connection
with the claim, or (ii) to disapprove the settlement and continue to
refrain from participation in the defense of the claim, in which event the
Indemnifying Party shall have no further right to contest the amount or
reasonableness of the settlement if the Indemnitee elects to proceed
therewith, or (iii) to approve the amount of the settlement, reserving the
Indemnifying Party's right to contest the Indemnitee's right to indemnity,
or (iv) to approve and agree to pay the settlement. In the event the
Indemnifying Party makes no response to such written notice from the
Indemnitee, the Indemnifying Party shall be deemed to have elected option
(ii).
(c) If an Indemnifying Party chooses to defend or to seek to
compromise any Third-Party Claim, the Indemnitee shall make available to
such Indemnifying Party any personnel and any books, records or other
documents within its control or which it otherwise has the ability to make
available that are necessary or appropriate for such defense or compromise.
(d) Notwithstanding anything else in this Section 5.04 to the
contrary, an Indemnifying Party shall not settle or compromise any Third-
Party Claim unless such settlement or compromise contemplates as an
unconditional term thereof the giving by such claimant or plaintiff to the
Indemnitee of a written release from all liability in respect of such
Third-Party Claim (and provided further that such settlement may not
provide for any non-monetary relief by Indemnitee without the written
consent of Indemnitee) and unless such settlement or compromise does not
involve any new or additional contractual or other burdens on the
Indemnitee. In the event the Indemnitee shall notify the Indemnifying
Party in writing that such Indemnitee declines to accept any such
settlement or compromise, such
31
<PAGE>
Indemnitee may continue to contest such Third-Party Claim, free of any
participation by such Indemnifying Party, at such Indemnitee's sole
expense. In such event, the obligation of such Indemnifying Party to such
Indemnitee with respect to such Third-Party Claim shall be equal to (i) the
costs and expenses of such Indemnitee prior to the date such Indemnifying
Party notifies such Indemnitee of the offer to settle or compromise (to the
extent such costs and expenses are otherwise indemnifiable hereunder) plus
----
(ii) the lesser of (A) the amount of any offer of settlement or compromise
which such Indemnitee declined to accept and (B) the actual out-of-pocket
amount such Indemnitee is obligated to pay subsequent to such date as a
result of such Indemnitee's continuing to pursue such Third-Party Claim.
(e) Any claim on account of an Indemnifiable Loss which does not
result from a Third-Party Claim shall be asserted by written notice given
by the Indemnitee to the applicable Indemnifying Party. Such Indemnifying
Party shall have a period of 15 days after the receipt of such notice
within which to respond thereto. If such Indemnifying Party does not
respond within such 15-day period, such Indemnifying Party shall be deemed
to have refused to accept responsibility to make payment. If such
Indemnifying Party does not respond within such 15-day period or rejects
such claim in whole or in part, such Indemnitee shall be free to pursue
such remedies as may be available to such party under applicable law or
under this Agreement.
(f) In addition to any adjustments required pursuant to Section
5.03, if the amount of any Indemnifiable Loss shall, at any time subsequent
to the payment required by this Agreement, be reduced by recovery,
settlement or otherwise, the amount of such
32
<PAGE>
reduction, less any expenses incurred in connection therewith, shall
promptly be repaid by the Indemnitee to the Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such
Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right or claim relating to such Third-Party Claim
against any claimant or plaintiff asserting such Third-Party Claim. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable
manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
Section 5.05. Remedies Cumulative. The remedies provided in
-------------------
this Article V shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
Section 5.06. Survival of Indemnities. The obligations of each
-----------------------
of PRH and Promus under this Article V shall survive the sale or other
transfer by it of any assets or businesses or the assignment by it of any
Liabilities, with respect to any Indemnifiable Loss of the other related to
such assets, businesses or Liabilities.
Section 5.07. After-Tax Indemnification Payments. Except as
----------------------------------
otherwise expressly provided herein or in a Related Agreement, any
indemnification payment made by either party under this Article V shall give
effect to, and be reduced by the value of, any and all applicable deductions,
losses, credits, offsets or other items for Federal, state or other tax
purposes attributable to the payment of the indemnified liability by the
Indemnitee in a matter consistent with the treatment of tax indemnity payments
under the Tax Sharing Agreement.
Section 5.08. Characterization of Payments. Any payment (other
----------------------------
than interest thereon) made by either party under this Article V shall be
treated by all parties for tax purposes to the extent permitted by law, and
for accounting purposes to the extent permitted by generally accepted
accounting principles, as non-taxable dividend distributions or capital
contributions made prior to the close of business on the Closing Date.
ARTICLE VI
CERTAIN ADDITIONAL MATTERS
--------------------------
Section 6.01. PRH Board. PRH and Promus shall take all actions
---------
which may be required to constitute, effective as of the Distribution Date,
the following persons as the directors of PRH: Michael D. Rose, Ronald
Terry, Ben C. Peternell, Raymond E. Schultz,
33
<PAGE>
David Sullivan, U. Bertram Ellis, Jr., Debra J. Fields, Christopher W.
Hart, C. Warren Neel, Michael I. Roth, and Jay Stein.
Section 6.02. Resignations; Promus Board. PRH shall cause all
--------------------------
of its directors and PRH Employees to resign, effective as of the
Distribution Date, from all boards of directors or similar governing bodies
of Promus or any of its Retained Subsidiaries on which they serve, and from
all positions as officers or employees of Promus or any of its Retained
Subsidiaries in which they serve, except that (i) Michael D. Rose shall
serve as a director and Chairman of Promus and as a director and Chairman
of PRH, and (ii) Ben C. Peternell shall serve as an executive officer of
Promus (as well an officer of Embassy) and as a director of PRH. Promus
shall cause all of its directors and the Retained Employees to resign from
all boards of directors or similar governing bodies of PRH or any of its
subsidiaries on which they serve, and from all positions as officers or
employees of PRH or any of its subsidiaries in which they serve, except to
the extent specified in the preceding sentence.
Section 6.03. Certificate and Bylaws. On or prior to the
----------------------
Distribution Date, PRH shall adopt the PRH Certificate and the PRH Bylaws,
and shall file the PRH Certificate with the Secretary of State of the State
of Delaware.
Section 6.04. Certain Post-Distribution Transactions.
--------------------------------------
(a) PRH. (i) PRH shall, and shall cause each of the PRH
---
Subsidiaries to, comply with each representation and statement made, or to
be made, to Latham & Watkins in connection with its tax opinion or any
other opinion obtained, or to be obtained, by Promus and PRH acting
together, from any tax counsel with respect to any transaction
34
<PAGE>
contemplated by this Agreement and (ii) until the second anniversary of the
Distribution Date, neither PRH nor any of its subsidiaries shall (A)
liquidate, merge with any other corporation or sell or otherwise dispose of
a material portion of its assets, except in the ordinary course of
business and except for contributions of hotel real estate to ventures or
entities in which PRH will continute to own an equity interest and with
respect to which hotel real estate PRH retains a contractual right to serve
as manager or franchisor, (B) repurchase or issue any PRH capital stock
(other than stock issued pursuant to employee plans), or (C) cease the active
conduct of a material portion of its business independently, with its own
employees and without material change, unless, in each of cases (A), (B) and
(C), in the opinion of counsel to PRH, which opinion shall be reasonably
satisfactory to Promus, or pursuant to a favorable IRS ruling letter reasonably
satisfactory to Promus, such act or omission would not adversely affect the
tax consequences of the Distribution to Promus or the stockholders of
Promus, as set forth in any tax opinion issued by Latham & Watkins; and PRH
has no present intention to take any such actions.
(b) Promus. (i) Promus shall, and shall cause each of its
------
subsidiaries to, comply with each representation and statement made, or to
be made, to Latham & Watkins in connection with its tax opinion or any
other opinion obtained, by Promus and PRH acting together, from any tax
counsel with respect to any transaction contemplated by this Agreement; and
(ii) until the second anniversary of the Distribution Date, neither Promus
nor any of its subsidiaries shall (A) liquidate, merge with any other
corporation or sell or otherwise dispose of a material portion of its
assets (other than the PRH Assets), except in the ordinary course of
business, (B) repurchase or issue any capital stock of Promus (other than
stock issued pursuant to employee plans), or (C) cease the active conduct
of a material portion of its business independently, with its own employees
and without material change, unless, in each of cases (A), (B) and (C), in
the opinion of counsel to Promus, which opinion
35
<PAGE>
shall be reasonably satisfactory to PRH, or pursuant to a favorable IRS
ruling letter reasonably satisfactory to PRH, such act or omission would
not adversely affect the tax consequences of the Distribution to PRH or the
stockholders of PRH, as set forth in any opinion issued by Latham &
Watkins; and Promus has no present intention to take any such actions.
Section 6.05. Corporate Name. Effective as of the Distribution
--------------
Date, Promus shall change its corporate name to "Harrah's Entertainment,
Inc." and Embassy shall change its corporate name to "Harrah's Operating
Company, Inc." All references to Promus and Embassy herein shall be
references to each such corporation both before and after such corporate
name change.
Section 6.06. PRH Rights Plan. Prior to the Distribution Date,
---------------
the PRH Board may elect, in its sole discretion, to recommend that PRH
adopt a stockholder rights plan (the "PRH Rights Plan"). The PRH Rights
Plan will provide for the distribution of preferred share purchase rights
("PRH Rights") with respect to each share of PRH Common Stock. The PRH
Rights will be attached to the PRH Common Stock and will not be
exercisable, or transferable apart from the PRH Common Stock, unless and
until certain events occur. If certain events occur relating to the
acquisition by an acquiring person of PRH Common Stock, or a merger or
other combination of PRH with an acquiring person, the PRH Rights will
entitle holders (other than the acquiring person) to purchase either PRH
Common Stock or common stock of the acquiring person at a discount. The
specific terms of the PRH Rights will be determined by the Board of
Directors of PRH consistent with the description thereof in the Proxy
Statement.
36
<PAGE>
ARTICLE VII
ACCESS TO INFORMATION AND SERVICES
----------------------------------
Section 7.01. Provision of Corporate Records.
------------------------------
(a) Except as may otherwise be provided in a Related Agreement,
Promus shall arrange as soon as practicable following the Distribution
Date, to the extent not previously delivered in connection with the
transactions contemplated in Article II, for the transportation (at PRH's
cost) to PRH of the PRH Books and Records in its possession, except to the
extent such items are already in the possession of PRH or a PRH Subsidiary.
Such PRH Books and Records shall be the property of PRH, but shall be
available to Promus for review and duplication until Promus shall notify
PRH in writing that such records are no longer of use to Promus or until
the 10th anniversary of this Agreement.
(b) Except as otherwise provided in a Related Agreement, PRH
shall arrange as soon as practicable following the Distribution Date, to
the extent not previously delivered in connection with the transactions
contemplated in Article II, for the transportation (at Promus's cost) to
Promus of the Promus Books and Records in its possession, except to the
extent such items are already in the possession of Promus. The Promus
Books and Records shall be the property of Promus, but shall be available
to PRH for review and duplication until PRH shall notify Promus in writing
that such records are no longer of use to PRH or until the 10th anniversary
of this Agreement.
Section 7.02. Access to Information. Except as otherwise
---------------------
provided in a Related Agreement, from and after the Distribution Date,
Promus shall afford to PRH and its authorized accountants, counsel and
other designated representatives reasonable access
37
<PAGE>
(including using reasonable efforts to give access to persons or firms
possessing information) and duplicating rights during normal business hours
to all records, books, contracts, instruments, computer data and other data
and information relating to pre-Distribution operations (collectively,
"Information") within Promus's possession insofar as such access is
reasonably required by PRH for the conduct of its business, subject to
appropriate restrictions for confidential or Privileged Information.
Similarly, except as otherwise provided in a Related Agreement, PRH shall
afford to Promus and its authorized accountants, counsel and other
designated representatives reasonable access (including using reasonable
efforts to give access to persons or firms possessing information) and
duplicating rights during normal business hours to Information within PRH's
possession, insofar as such access is reasonably required by Promus for the
conduct of its business, subject to appropriate restrictions for
confidential or Privileged Information. Information may be requested under
this Article VII for the legitimate business purposes of either party,
including without limitation, audit, accounting, claims (including claims
for indemnification hereunder), litigation and tax purposes, as well as for
purposes of fulfilling disclosure and reporting obligations and for
performing this Agreement and the transactions contemplated hereby.
Section 7.03. Production of Witnesses. At all times from and
-----------------------
after the Distribution Date, each of PRH and Promus shall use reasonable
efforts to make available to the other, upon written request, its and its
subsidiaries' officers, directors, employees and agents as witnesses to the
extent that such persons may reasonably be required in connection with any
Action.
38
<PAGE>
Section 7.04. Reimbursement. Except to the extent otherwise
-------------
contemplated in any Related Agreement, a party providing Information or
witness services to the other party under this Article VII shall be
entitled to receive from the recipient, upon the presentation of invoices
therefor, payments of such amounts, relating to supplies, disbursements and
other out-of-pocket expenses (at cost) and direct and indirect expenses of
employees who are witnesses or otherwise furnish assistance (at cost), as
may be reasonably incurred in providing such Information or witness
services.
Section 7.05. Retention of Records. Except as otherwise
--------------------
required by law or agreed to in a Related Agreement or otherwise in
writing, each of Promus and PRH may destroy or otherwise dispose of any of
the Information, which is material Information and is not contained in
other Information retained by Promus or PRH, as the case may be, at any
time after the 10th anniversary of this Agreement, provided that, prior to
such destruction or disposal, (a) it shall provide no less than 90 or more
than 120 days prior written notice to the other, specifying in reasonable
detail the Information proposed to be destroyed or disposed of and (b) if a
recipient of such notice shall request in writing prior to the scheduled
date for such destruction or disposal that any of the Information proposed
to be destroyed or disposed of be delivered to such requesting party, the
party proposing the destruction or disposal shall promptly arrange for the
delivery of such of the Information as was requested at the expense of the
party requesting such Information.
Section 7.06. Confidentiality. Each of Promus and its
---------------
Subsidiaries on the one hand, and PRH and its Subsidiaries on the other
hand, shall hold, and shall cause its consultants and advisors to hold, in
strict confidence, all Information concerning the other in
39
<PAGE>
its possession or furnished by the other or the other's representatives
pursuant to this Agreement (except to the extent that such Information has
been (i) in the public domain through no fault of such party or (ii) later
lawfully acquired from other sources by such party), and each party shall
not release or disclose such Information to any other person, except its
auditors, attorneys, financial advisors, rating agencies, bankers and other
consultants and advisors, unless compelled to disclose by judicial or
administrative process or by other requirements of law or regulation, or
unless such Information is reasonably required to be disclosed in
connection with (x) any litigation with any third parties or litigation
between the Promus Group and the PRH Group, (y) any contractual agreement
to which the Promus Group or the PRH Group are currently parties, or (z) in
exercise of either party's rights hereunder.
Section 7.07. Privileged Matters. Promus and PRH recognize that
------------------
legal and other professional services that have been and will be provided
prior to the Distribution Date have been and will be rendered for the
benefit of both the Promus Group and the PRH Group and that both the Promus
Group and the PRH Group should be deemed to be the client for the purposes
of asserting all Privileges. To allocate the interests of each party in
the Privileged Information, the parties agree as follows:
(a) Promus shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged
Information which relates solely to the Retained Business, whether or not
the Privileged Information is in the possession of or under the control of
Promus or PRH. Promus shall also be entitled, in perpetuity, to control
the assertion or waiver of all Privileges in connection with Privileged
Information that relates
40
<PAGE>
solely to the subject matter of any claims constituting Retained
Liabilities, now pending or which may be asserted in the future, in any
lawsuits or other proceedings initiated against or by Promus, whether or
not the Privileged Information is in the possession of or under the control
of Promus or PRH.
(b) PRH shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged
Information which relates solely to the PRH Business, whether or not the
Privileged Information is in the possession of or under the control of
Promus or PRH. PRH shall also be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged
Information which relates solely to the subject matter of any claims
constituting PRH Liabilities, now pending or which may be asserted in the
future, in any lawsuits or other proceedings initiated against or by PRH,
whether or not the Privileged Information is in the possession of PRH or
under the control of Promus or PRH.
(c) Promus and PRH agree that they shall have a shared
Privilege, with equal right to assert or waive, subject to the restrictions
in this Section 7.07, with respect to all Privileges not allocated pursuant
to the terms of Sections 7.07(a) and (b). All Privileges relating to any
claims, proceedings, litigation, disputes, or other matters which involve
both Promus and PRH in respect of which Promus and PRH retain any
responsibility or liability under this Agreement, shall be subject to a
shared Privilege.
(d) No party may waive any Privilege which could be asserted
under any applicable law, and in which the other party has a shared
Privilege, without the consent of the other party, except to the extent
reasonably required in connection with any litigation
41
<PAGE>
with third parties or as provided in subsection (e) below. Consent shall
be in writing, or shall be deemed to be granted unless written objection is
made within 20 days after notice upon the other party requesting such
consent.
(e) In the event of any litigation or dispute between a member
of the Promus Group and a member of the PRH Group, either party may waive a
Privilege in which the other party has a shared Privilege, without
obtaining the consent of the other party, provided that such waiver of a
shared Privilege shall be effective only as to the use of Information or
counsel with respect to the litigation or dispute between the Promus Group
and the PRH Group, and shall not operate as a waiver of the shared
Privilege with respect to third parties.
(f) If a dispute arises between the parties regarding whether a
Privilege should be waived to protect or advance the interest of either
party, each party agrees that it shall negotiate in good faith, shall
endeavor to minimize any prejudice to the rights of the other party, and
shall not unreasonably withhold consent to any request for waiver by the
other party. Each party specifically agrees that it will not withhold
consent to waiver for any purpose except to protect its own legitimate
interests.
(g) Upon receipt by any party of any subpoena, discovery or
other request which arguably calls for the production or disclosure of
Information subject to a shared Privilege or as to which the other party
has the sole right hereunder to assert a Privilege, or if any party obtains
knowledge that any of its current or former directors, officers, agents or
employees have received any subpoena, discovery or other requests which
arguably calls for the production or disclosure of such Privileged
Information, such party shall promptly notify
42
<PAGE>
the other party of the existence of the request and shall provide the other
party a reasonable opportunity to review the Information and to assert any
rights it may have under this Section 7.07 or otherwise to prevent the
production or disclosure of such Privileged Information.
(h) The transfer of the PRH Books and Records and the Promus
Books and Records and other Information between Promus and its Subsidiaries
and PRH and its Subsidiaries, is made in reliance on the agreement of
Promus and PRH, as set forth in Sections 7.06 and 7.07, to maintain the
confidentiality of Privileged Information and to assert and maintain all
applicable Privileges with respect to third parties. The access to
information being granted pursuant to Sections 7.01 and 7.02 hereof, the
agreement to provide witnesses and individuals pursuant to Section 7.03
hereof and the transfer of Privileged Information between Promus and its
Subsidiaries and PRH and its Subsidiaries pursuant to this Agreement shall
not be deemed a waiver of any Privilege that has been or may be asserted
under this Agreement or otherwise.
ARTICLE VIII
ADDITIONAL COVENANTS
--------------------
Section 8.01. Non-Competition Agreement.
-------------------------
(a) PRH. Until 5 years after the Distribution Date, PRH and its
---
Affiliates shall not, without the express written consent of Harrah's
Entertainment, compete with the Casino Business of Harrah's Entertainment,
provided (i) that two years after the Distribution Date and for the
- --------
remaining term of this covenant, such restrictions shall not prevent PRH or
any of its Affiliates from competing with the Casino Business in geographic
areas where Harrah's Entertainment is prohibited, by law or by contract,
from operating casino facilities
43
<PAGE>
(or any additional casino facilities) and (ii) that such restrictions shall
not prevent PRH or any of its Affiliates from operating the Hotel Business
in competition with Harrah's Entertainment's casino facilities or from
operating a limited scale casino (no more than 10,000 square feet or 300
gaming positions) in a predominantly hotel facility. In the event that PRH
or any of its Affiliates determines to operate a limited scale casino as
described above, PRH shall offer to Harrah's Entertainment the right to
provide management or consulting services to PRH in connection therewith.
In the event that PRH determines not to accept such services on the terms
specified by Harrah's Entertainment, then PRH and its Affiliates shall not
enter into any management or consulting agreement with any other person on
terms and conditions that are less favorable to PRH than the terms offered
by Harrah's Entertainment, without first offering such terms to Harrah's
Entertainment.
(b) Harrah's Entertainment. Until 5 years after the
----------------------
Distribution Date, Harrah's Entertainment and its Affiliates shall not,
without the express written consent of PRH, compete with the Hotel Business
of PRH, provided that such restrictions shall not prevent or impair the
operation or ownership by Harrah's Entertainment or any of its Affiliates
of any hotel facility related to or supporting a casino facility as such
hotel facility may be operated presently or in the future.
(c) As used in this Section 8.01, the term "Affiliates" includes
any entity in which PRH or Harrah's Entertainment owns a 20% or greater
interest, but excludes any entity owning a controlling or other interest in
either company (now or in the future). PRH and Harrah's Entertainment will
not be permitted to unreasonably withhold their consent to transactions
involving Affiliates that are not controlled by the other Company.
44
<PAGE>
Section 8.02. Hiring of Employees. 8.02(ii) In order to provide
-------------------
opportunities for increased line-level responsibility and career growth to
field operations employees of Promus and PRH at the manager, director and
vice-president officer levels, Promus and PRH and their respective Affiliates
may employ any employee of the other company in the following categories:
(1) General manager or assistant general manager of any Embassy
Suites, Hampton Inn, Hampton Inn and Suites or Homewood Suites
hotel.
(2) Manager, director or vice president of any Harrah's casino
operation.
Section 8.03. Settlement Agreement. PRH and Promus shall
--------------------
cooperate with each other in respect of the Settlement Agreement by making
available to each other such documents or other information and facilities
which, in the reasonable opinion of the party requesting such documents or
other information and facilities, may be necessary. PRH shall promptly
advise Promus upon receipt of any notices or other communications related
to the Settlement Agreement. Promus agrees to pay all of the out-of-pocket
expenses (including any reasonable fees of legal counsel) of PRH related to
such cooperation. PRH agrees that the defense or prosecution of the claims
pursuant to the Settlement Agreement shall be solely under the direction
and control of Promus; provided that, without PRH's consent, Promus may not
--------
settle any claims or enter into any agreements in connection therewith if
doing so would prejudice PRH in a manner not adequately compensated by the
indemnification provided in Section 5.01.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.01. Complete Agreement; Construction. This Agreement,
--------------------------------
including the Schedules and Exhibits and the Related Agreements and other
agreements and documents
45
<PAGE>
referred to herein or delivered pursuant hereto, shall constitute the
entire agreement between the parties with respect to the subject matter
hereof and thereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.
Notwithstanding any other provisions in this Agreement to the contrary, in
the event and to the extent that there shall be a conflict between the
provisions of this Agreement and the provisions of the Related Agreements,
then the Related Agreements shall control; provided, however, that this
Agreement shall control in the event of any conflict between the provisions
of this Agreement and the deeds which effect the transfer of the
Transferred Real Property.
Section 9.02. Expenses. Except as otherwise set forth in this
--------
Agreement or any Related Agreement, all costs and expenses incurred through
the Distribution Date in connection with the preparation, execution,
delivery and implementation of this Agreement, the Distribution and with
the consummation of the transactions contemplated by this Agreement shall
be charged to Promus (other than the costs and expenses of the PRH Credit
Agreement, which shall be charged to PRH). Except as otherwise set forth
in this Agreement or any Related Agreement, all costs and expenses incurred
following the Distribution Date in connection with implementation of the
transactions contemplated in this Agreement shall be charged to the party
for whose benefit the expenses are incurred, with any expenses which cannot
be allocated on such basis to be split equally between the parties.
Section 9.03. Accounting Adjustments. Except as otherwise set
----------------------
forth in this Agreement or any Related Agreement, Promus and PRH agree (i)
after the Distribution Date, to cooperate in finalizing any adjustments
required to finalize accounting allocations and entries made to account for
the transactions contemplated by this Agreement and the Related Agreements,
and (ii) that any such adjustments shall be finalized by December 31, 1995.
Subsequent to December 31, 1995, any accounting
46
<PAGE>
required to adjust either PRH's or Promus's books and records shall be the
responsibility of the respective companies and no adjustments will be made
to account for the transactions contemplated by this Agreement and the
Related Agreements. This Section 9.03 is not intended to impact any other
sections of this Agreement or any of the Related Agreements.
Section 9.04. Governing Law. This Agreement shall be governed
-------------
by and construed in accordance with the laws of the State of Tennessee,
without regard to the principles of conflicts of laws thereof.
Section 9.05. Notices. All notices and other communications
-------
hereunder shall be in writing and shall be delivered by hand or mailed by
registered or certified mail (return receipt requested) to the parties at
the following addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which
such notice is received:
To PRH:
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, TN 38138
Attention: Ralph B. Lake
General Counsel
To Promus:
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
Attention: Corporate Secretary
47
<PAGE>
Section 9.06. Amendments. This Agreement may not be modified or
----------
amended except by an agreement in writing signed by the parties.
Section 9.07. Successors and Assigns. This Agreement and all of
----------------------
the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.
Section 9.08. Termination. This Agreement may be terminated and
-----------
the Distribution abandoned at any time prior to the Distribution Date by
and in the sole discretion of the Promus Board without the approval of PRH
or of Promus's stockholders. In the event of such termination, no party
shall have any liability to any other party pursuant to this Agreement.
Section 9.09. Subsidiaries. Each of the parties hereto shall
------------
cause to be performed, and hereby guarantees the performance of, all
actions, agreements and obligations set forth herein to be performed by any
Subsidiary of such party which is contemplated to be a Subsidiary of such
party on and after the Distribution Date.
Section 9.10. No Third-Party Beneficiaries. This Agreement is
----------------------------
solely for the benefit of the parties hereto and their respective
Subsidiaries and Affiliates and should not be deemed to confer upon third
parties any remedy, claim, Liability, reimbursement, claim of action or
other right in excess of those existing without reference to this
Agreement.
Section 9.11. Titles and Headings. Titles and headings to
-------------------
sections herein are inserted for the convenience of reference only and are
not intended to be a part of or to affect the meaning or interpretation of
this Agreement.
48
<PAGE>
Section 9.12. Exhibits and Schedules. The Exhibits and
----------------------
Schedules shall be construed with and as an integral part of this Agreement
to the same extent as if the same had been set forth verbatim herein.
Section 9.13. Legal Enforceability. Any provision of this
--------------------
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof.
Any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. Without prejudice to any rights or remedies otherwise
available to any party hereto, each party hereto acknowledges that damages
would be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the parties hereunder shall be
specifically enforceable.
Section 9.14. Arbitration of Disputes. (a) Any controversy or
-----------------------
claim arising out of this Agreement, or any breach of this Agreement,
including any controversy relating to a determination of whether specific
assets constitute PRH Assets or Retained Assets or whether specific
Liabilities constitute PRH Liabilities or Retained Liabilities, but
excluding any controversy relating to the matters set forth in Section
2.06, shall be settled by arbitration in accordance with the Rules of the
American Arbitration Association then in effect, as modified by this
Section 9.13 or by the further agreement of the parties.
(b) Such arbitration shall be conducted in Memphis, Tennessee.
(c) Any judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. The arbitrators shall
not, under any
49
<PAGE>
circumstances, have any authority to award punitive, exemplary or similar
damages, and may not, in any event, make any ruling, finding or award that
does not conform to the terms and conditions of this Agreement.
(d) Nothing contained in this Section 9.13 shall limit or
restrict in any way the right or power of a party at any time to seek
injunctive relief in any court and to litigate the issues relevant to such
request for injunctive relief before such court (i) to restrain the other
party from breaching this Agreement or (ii) for specific enforcement of
this Section 9.13. The parties agree that any legal remedy available to a
party with respect to a breach of this Section 9.13 will not be adequate
and that, in addition to all other legal remedies, each party is entitled
to an order specifically enforcing this Section 9.13.
(e) The Parties hereby consent to the jurisdiction of the
federal courts located in Memphis, Tennessee for all purposes.
(f) Neither party nor the arbitrators may disclose the existence
or results of any arbitration under this Agreement or any evidence
presented during the course of the arbitration without the prior written
consent of both parties, except as required to fulfill applicable
disclosure and reporting obligations, or as otherwise required by law.
(g) Each party shall bear its own costs incurred in the
arbitration. If either party refuses to submit to arbitration any dispute
required to be submitted to arbitration pursuant to this Section 9.13, and
instead commences any other proceeding, including, without limitation,
litigation, then the party who seeks enforcement of the obligation to
arbitrate shall be entitled to its attorneys' fees and costs incurred in
any such proceeding.
50
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
THE PROMUS COMPANIES INCORPORATED,
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
PROMUS HOTEL CORPORATION,
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
51
<PAGE>
SCHEDULES
1.01(a) Existing Promus Credit Facilities
1.01(b) PRH Liabilities
1.01(c) Retained Assets
1.01(d) Retained Liabilities
1.01(e) Retained Real Property
1.01(f) Transferred Joint Venture Interest
1.01(g) Transferred Real Property
1.01(h) Transferred Subsidiaries
2.01(a) Excluded Assets
<PAGE>
Schedule 1.01(a)
Existing Promus Credit Facilities
---------------------------------
1. Credit Agreement dated as of July 22, 1993 among The Promus
Companies Incorporated, Embassy Suites, Inc., Certain
Subsidiaries of Embassy Suites, Inc., Various Banks, Bankers
Trust Company, The Bank of New York, Credit Lyonnais, Atlanta
Agency and The Sumitomo Bank, Limited, New York Branch, as
Agents, and Bankers Trust Company, as Administrative Agent.
As amended and restated pursuant to: Amended and Restated
Credit Agreement dated as of June 9, 1995 among The Promus
Companies Incorporated, Embassy Suites, Inc., Certain
Subsidiaries of Embassy Suites, Inc., Various Banks, Bankers
Trust Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of California,
The Long-Term Credit Bank of Japan, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (to be
effective upon the satisfaction of certain conditions set
forth therein on or before the Distribution Date)
2. Credit Agreement dated as of June 9, 1995 among The Promus
Companies Incorporated, Embassy Suites, Inc., Certain
Subsidiaries of Embassy Suites, Inc., Various Banks, Bankers
Trust Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of California,
The Long-Term Credit Bank of Japan, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (to be
effective upon the satisfaction of certain conditions set
forth therein on or before the Distribution Date)
3. Credit Agreement dated as of June 1, 1994 among The Promus
Companies Incorporated, Embassy Suites, Inc., Various Banks
and Bankers Trust Company as Administrative Agent
<PAGE>
Schedule 1.01(b)
PRH Liabilities
---------------
1. Capital Leases
Embassy - Tucson $ 44,350
Embassy - Orlando $ 31,362
Embassy - Thomas Road $ 35,072
Embassy - Philadelphia Airport $ 41,031
Information Technology $ 1,773,302
Marketing Services Center $ 68,061
2. Notes
Embassy - DeBanks Henwood $ 917,641
Hampton - San Francisco land $ 296,724
3. Guarantees
Meadowlands Land Lease $ 29,356,749
Chicago Lombard $ 500,000
Embassy Pacific Partner LP,
Embassy Atlanta Buckhead Partners LP
and Embassy LaJolla Partners LP $ 4,000,000
Executive Life Guarantee [Not to exceed $8,100,000]
4. Executive Life Guarantee, based on amounts allocable to PRH
employee, not to exceed $8,100,000
5. Executive Deferred Compensation Plans and Deferred Compensation
Plan
6. Commitment to purchase $25,000,000 of shares in Felcor Suites
Hotels, Inc. or units in Felcor Suites Hotels Limited
Partnership
7. Indemnity for hotel-related letters of credit issued under
Bankers Trust facility
<PAGE>
Schedule 1.01
Retained Assets
---------------
- - Aircraft
- - Hangar and related facilities at Memphis airport
- - Cherry Road office (including all furniture, fixtures and
equipment located thereat or associated therewith)
- - Racquet Club Membership and suite
- - Memphis State Basketball tickets
- - Pyramid Arena Suite
- - Equitable portion of other purchased tickets, memberships,
subscriptions and the like
- - Vehicles related principally to the Cherry road offices
- - Antique automobiles
- - Proceeds of Joe Francis life insurance in escrow
<PAGE>
Schedule 1.01 (d)
Retained Liabilities
--------------------
1. Hotel-related letters of credit issued under the Bankers Trust
facility and covered by an indemnity agreement from PRH
2. Other hotel-related liabilities covered by an indemnity
agreement from PRH
<PAGE>
Schedule 1.01(e)
Retained Real Property
----------------------
1. Casino in Reno, Nevada
2. Casino in Las Vegas, Nevada
3. Casino in Lake Tahoe, Nevada
4. Bill's Casino in Lake Tahoe, Nevada
5. Cherry Road campus in Memphis, Tennessee
6. Chalfonte property in Atlantic City, New Jersey
7. Camelot property in Atlantic City, New Jersey
<PAGE>
Schedule 1.01(f)
Transferred Joint Venture Interests
-----------------------------------
1. Barshop-HII Joint Venture, a Texas general partnership formed
-------------------------
pursuant to that certain Joint Venture Agreement dated
January 17, 1984 and amended by that certain Amendment to Joint
Venture Agreement dated February 1, 1995 between Embassy Suites,
Inc. and PMB Associates, Ltd.
2. Embassy AKERS Venture, a Georgia general partnership formed
---------------------
pursuant to that certain Joint Venture Agreement dated March 2,
1984 among Embassy Suites, Inc., George H. Johnson, and Charles
C. Barton.
3. SES/D.C. Venture, a District of Columbia general partnership
----------------
formed pursuant to that certain Amended and Restated Joint
Venture Agreement dated April 8, 1988 between Embassy Suites,
Inc., CHS/D.C. One Associates and Shuwa Hotel Joint Venture.
4. Embassy/GACL Lombard Venture, an Illinois general partnership
----------------------------
formed pursuant to that certain Joint Venture Agreement dated
July 28, 1987 as amended by that certain First Amendment to
Joint Venture Agreement of Embassy/GACL Lombard Venture dated
June 30, 1992 between Embassy Suites, Inc., Embassy Development
Corporation and GACL Lombard, Inc.
5. Embassy Shaw/Parsippany Venture, a New Jersey general
-------------------------------
partnership formed pursuant to that certain Joint Venture
Agreement dated January 4, 1986 between Embassy Suites, Inc. and
CHS Parsippany Associates, L.P.
6. Embassy Shaw/Rochester Venture, a New York general partnership
------------------------------
formed pursuant to that certain Joint Venture Agreement dated
April 7, 1989 between Embassy Suites, Inc. and CHS Investment
Company, Inc.
7. EPT Atlanta-Perimeter Center Limited Partnership, a Delaware
------------------------------------------------
limited partnership, formed pursuant to that certain Limited
Partnership Agreement dated December 3, 1987 among Suite Life,
Inc. and APCGEPT Realty Corporation as general partners and
Embassy Suites, Inc. and EPT Hotel Equities Ltd. as limited
partners.
8. EPT Austin Limited Partnership, a Delaware limited partnership
------------------------------
formed pursuant to that certain Limited Partnership Agreement
dated July 11, 1986 as amended by that certain First Amendment
to Limited Partnership Agreement dated December 12, 1986 among
Suite Life, Inc. and ATEPT Realty Corporation as general
partners and Embassy Suites, Inc. and EPT Hotel Equities Ltd. as
limited partners.
9. EPT Bloominqton Limited Partnership, a Delaware limited
-----------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated July 11, 1986 as amended by that certain First
Amendment to Limited Partnership Agreement dated December 12,
<PAGE>
1986 among Suite Life, Inc. and BMEPT Realty Corporation as
general partners and Embassy Suites, Inc. and EPT Hotel Equities
Ltd. as limited partners.
10. EPT Covina Limited Partnership, a Delaware limited partnership
------------------------------
formed pursuant to that certain Limited Partnership Agreement
dated July 11, 1986 as amended by that certain First Amendment
to Limited Partnership Agreement dated December 12, 1986 among
Suite Life, Inc. and CCEPT Realty Corporation as general
partners and Embassy Suites, Inc. and EPT Hotel Equities Ltd. as
limited partners.
11. EPT Crystal City Land Limited Partnership, a Delaware
-----------------------------------------
limited partnership formed pursuant to that certain
Limited Partnership Agreement dated June 27, 1989 among
Suite Life, Inc. and CCVEPT Realty Corporation as
general partners and Embassy Suites, Inc. and EPT Hotel
Equities Ltd. as limited partners.
12. EPT Kansas City Limited Partnership, a Delaware limited
-----------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated July 11, 1986 as amended by that certain First
Amendment to Limited Partnership Agreement dated December 12,
1986 among Suite Life, Inc. and KCMEPT Realty Corporation as
general partners and Embassy Suites, Inc. and EPT Hotel Equities
Ltd. as limited partners.
13. EPT Meadowlands Limited Partnership, a Delaware limited
-----------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated December 3, 1987 among Suite Life, Inc. and
MNJEPT Realty Corporation as general partners and Embassy
Suites, Inc. and EPT Hotel Equities Ltd. as limited partners.
14. EPT Omaha Limited Partnership, a Delaware limited partnership
-----------------------------
formed pursuant to that certain Limited Partnership Agreement
dated July 11, 1986 as amended by that certain First Amendment
to Limited Partnership Agreement dated December 12, 1986, among
Suite Life, Inc. and ONEPT Realty Corporation as general
partners and Embassy Suites, Inc. and EPT Hotel Equities Ltd. as
limited partners.
15. EPT Overland Park Limited Partnership, a Delaware limited
-------------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated December 3, 1987 among Suite Life, Inc. and
OPKEPT Realty Corporation as general partners and Embassy
Suites, Inc. and EPT Hotel Equities Ltd. as limited partners.
16. EPT Raleiqh Limited Partnership, a Delaware limited partnership
-------------------------------
formed pursuant to that certain Limited Partnership Agreement
dated December 3, 1987 among Suite Life, Inc. and RNCEPT Realty
Corporation as general partners and Embassy Suites, Inc. and EPT
Hotel Equities Ltd. as limited partners.
17. EPT San Antonio Limited Partnership, a Delaware limited
-----------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated July 11, 1986 and amended by that certain First
Amendment to Limited Partnership Agreement December 12, 1986
among Suite Life, Inc. and SATEPT Realty Corporation as general;
<PAGE>
partners and Embassy Suites, Inc. and EPT Hotel Equities Ltd. as
limited partners.
18. E.S. Philadelphia Airport Joint Venture, a Pennsylvania general
---------------------------------------
partnership formed pursuant to that certain Joint Venture
Agreement dated February 2, 1989 between Embassy Suites, Inc.
and ES/PA, L.P.
19. Granada Royale Hometel-Tucson, an Arizona limited partnership
-----------------------------
formed pursuant to that certain Certificate and Agreement of
Limited Partnership dated March 3, 1975, amended by that certain
Amendment to Certificate and Agreement of Limited Partnership
dated August 18, 1975, and amended by that certain Second
Amendment to Certificate and Agreement of Limited Partnership on
December 10, 1975, among Embassy Suites, Inc. as general partner
and certain limited partners.
20. Granada Royale Hometel-West, an Arizona limited partnership,
---------------------------
formed pursuant to that certain Certificate and Agreement of
Limited Partnership dated January 1, 1976, amended by that
certain Amended, Restated and Refiled Certificate and Agreement
of Limited Partnership dated March 30, 1984, and amended by that
certain Amendment to Certificate and Agreement of Limited
Partnership dated March 28, 1985, among Embassy Suites, Inc. as
general partner and certain limited partners.
21. Kinq Street Station Hotel Associates, L.P., a Virginia limited
------------------------------------------
partnership formed pursuant to that certain Limited Partnership
Agreement dated April 28, 1989 among The Oliver Carr Company and
Duke Street Partnership L.P. as general partners and Embassy
Suites, Inc. as limited partner.
22. MHV Joint Venture, a Texas general partnership formed pursuant
-----------------
to that certain Joint Venture Agreement dated January 6, 1989
between Embassy Suites, Inc. and Submarin, L.P.
23. Pacific Market Investment Company, a California general
---------------------------------
partnership formed pursuant to that certain Joint Venture
Agreement dated December 19, 1986 between Harbor Drive Company
and Embassy Suites, Inc.
24. Riverview/Embassy Joint Venture, an inactive joint
-------------------------------
venture in which Embassy Suites has a 50% interest.
25. Embassy Suites Club No. Two, Inc., a Texas corporation in
---------------------------------
which Embassy Suites, Inc. has a 49% ownership interest.
<PAGE>
Schedule 1.01(g)
Transferred Real Property
-------------------------
1. Orlando - Lake Buena Vista (fee interest)
2. Phoenix - 24th & Thomas Road (ground lease interest)
3. Dallas - Market Center (leasehold interest)
4. Data Center Building (fee interest)
5. Ridgeway Center Offices - 850 Ridge Lake Boulevard, Memphis,
Tennessee (multiple leasehold interests)
6. Ridgeway Center Offices - 860 Ridge Lake Boulevard, Memphis,
Tennessee (multiple leasehold interests)
7. Ridgeway Center Offices - 959 Ridgeway Loop, Memphis, Tennessee
(multiple leasehold interests)
8. Southwind - 8245 Tournament Drive, Memphis, Tennessee (multiple
leasehold interests)
9. Southwind - 3239 Players Club Parkway, Memphis, Tennessee
(leasehold interest)
10. 6800 Poplar, Memphis, Tennessee (leasehold interest)
<PAGE>
Schedule 1.01(h)
Transferred Subsidiaries
------------------------
1. Buckleigh, Inc. (100% owned by ESI)
2. ATM Hotels (50% owned by ESI; 50% owned by Pacific Hotels, Inc.)
3. Compass, Inc. (100% owned by ESI)
4. EJP Corporation (100% owned by ESI)
5. Embassy Development Corporation (100% owned by ESI)
6. Embassy Equity Development Corporation (100% owned by ESI)
7. Embassy Memphis Corporation (100% owned by ESI)
8. Embassy Pacific Equity Corporation (100% owned by ESI)
9. Embassy Suites Club No. 1, Inc. (100% owned by ESI)
10. Embassy Suites Club No. Three, Inc. (100% owned by ESI)
11. Embassy Suites De Mexico, S.A., De C.V. (96% owned by ESI)
12. Embassy Suites (Isla Verde), Inc. (100% owned by ESI)
13. Embassy Suites (Puerto Rico), Inc. (100% owned by ESI)
14. Embassy Vacation Resorts, Inc. (100% owned by ESI)
15. EPAM Corporation (100% owned by ESI)
16. ESI Development, Inc. (100% owned by ESI)
17. ESI Mortgage Development Corporation (100% owned by ESI)
18. ESI Mortgage Development Corporation II (100% owned by ESI)
19. E.S. Philadelphia Airport Venture (ESI owns a 90% interest)
20. GOL (Heathrow), Inc. (100% owned by ESI)
21. Granada Royale Hometel-West, a limited partnership (ESI owns
a 50.003% interest)
22. Granada Royale Hometel-Tucson, a limited partnership (ESI
owns a 65% interest)
23. Hampton Inns, Inc. (100% owned by ESI)
24. Old Town Hotel Corporation (100% owned by ESI)
25. Pacific Hotels, Inc. (100% owned by ESI)
<PAGE>
Schedule 2.01(a)
Excluded Assets
---------------
Interests in those partnerships necessary to avoid Internal Revenue Code
Section 708 tax terminations.
<PAGE>
Exhibit B-1
HARRAH'S ENTERTAINMENT, INC.
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE><CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
------------- ------------ -------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents....................................... $ 71,200 $ (6,560)(a) $ 71,200
6,560 (b)
Receivables, including notes receivable of $658 and less
allowance for doubtful accounts of $10,417.................... 40,932 -- 40,932
Deferred income taxes........................................... 19,363 -- 19,363
Prepayments..................................................... 6,494 -- 6,494
Supplies........................................................ 11,194 -- 11,194
Other........................................................... 16,565 -- 16,565
------------- ------------ -------------
Total current assets....................................... 165,748 -- 165,748
------------- ------------ -------------
Land, buildings riverboats and equipment.......................... 1,621,398 -- 1,621,398
Less: Accumulated depreciation and amortization................... (489,919) -- (489,919)
------------- ------------ -------------
1,131,479 -- 1,131,479
Net assets of discontinued operations............................. 160,332 (5,000)(c) --
(3,170)(d)
(152,162)(e)
Investments in and advance to nonconsolidated affiliates.......... 111,499 -- 111,499
Deferred costs and other.......................................... 174,034 3,170 (d) 177,204
------------- ------------ -------------
$ 1,743,092 $ (157,162) $ 1,585,930
------------- ------------ -------------
------------- ------------ -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable................................................ $ 56,563 $ -- $ 56,563
Accrued litigation settlement and related costs................. 1,873 -- 1,873
Construction payables........................................... 2,589 -- 2,589
Accrued expenses................................................ 167,321 (2,752)(a) 164,569
Current portion of long-term debt............................... 1,330 -- 1,330
------------- ------------ -------------
Total current liabilities.................................. 229,676 (2,752) 226,924
Long-term debt.................................................... 758,150 6,560 (b) 759,710
(5,000)(c)
Deferred credits and other........................................ 73,259 -- 73,259
Deferred income taxes............................................. 8,792 -- 8,792
------------- ------------ -------------
1,069,877 (1,192) 1,068,685
------------- ------------ -------------
Minority interests................................................ 20,002 -- 20,002
------------- ------------ -------------
Stockholders' equity
Common Stock.................................................... 10,252 (5)(f) 10,247
Capital surplus................................................. 358,456 (755)(f) 357,701
Retained earnings............................................... 288,676 (5,000)(a) 131,514
(152,162)(e)
Deferred compensation related to restricted stock................. (4,171) 1,192 (a) (2,219)
760 (f)
------------- ------------ -------------
Total stockholders' equity................................. 653,213 (155,970) 497,243
------------- ------------ -------------
$ 1,743,092 $ (157,162) $ 1,585,930
------------- ------------ -------------
------------- ------------ -------------
</TABLE>
See accompanying notes to pro forma financial statements.
1
<PAGE>
Exhibit B-2
HARRAH'S ENTERTAINMENT, INC.
PRO FORMA STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE><CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ -----------
<S> <C> <C> <C>
Revenues
Casino............................................................... $ 298,532 $ -- $ 298,532
Rooms................................................................ 24,654 -- 24,654
Food and beverage.................................................... 41,885 -- 41,885
Management fees...................................................... 2,977 -- 2,977
Other................................................................ 23,390 -- 23,390
Less: casino promotional allowances.................................. (34,957) -- (34,957)
---------- ------------ -----------
Total revenues.................................................. 356,481 -- 356,481
---------- ------------ -----------
Operating expense
Direct
Casino............................................................ (144,550) -- (144,550)
Rooms............................................................. (7,640) -- (7,640)
Food and beverage................................................. (18,942) -- (18,942)
Depreciation of buildings and equipment.............................. (18,249) -- (18,249)
Development costs.................................................... (4,248) -- (4,248)
Other................................................................ (85,049) (600)(g) (85,649)
---------- ------------ -----------
Total operating expenses........................................ (278,678) (600) (279,278)
---------- ------------ -----------
77,803 (600) 77,203
Corporate expense...................................................... (5,382) 288 (g) (5,094)
---------- ------------ -----------
Operating income....................................................... 72,421 (312) 72,109
Interest expense, net of interest capitalized.......................... (22,064) (123)(h) (22,187)
Other.................................................................. 2,033 -- 2,033
---------- ------------ -----------
Income before income taxes and minority interest....................... 52,390 (435) 51,955
Provision for income taxes............................................. (20,357) 170 (i) (20,187)
Minority interest...................................................... (3,337) -- (3,337)
---------- ------------ -----------
Income from continuing operations...................................... $ 28,696 $ (265) $ 28,431
---------- ------------ -----------
---------- ------------ -----------
Income from continuing operations per share............................ $ 0.28 $ -- $ 0.28
---------- ------------ -----------
---------- ------------ -----------
Average shares outstanding............................................. 103,014 -- 103,014
---------- ------------ -----------
---------- ------------ -----------
</TABLE>
See accompanying notes to pro forma financial statements.
2
<PAGE>
HARRAH'S ENTERTAINMENT, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1995
(a) Reflects estimated incremental costs of the Distribution to be paid by
Harrah's Entertainment and reported as a component of income from
discontinued hotel operations in the second quarter 1995 consolidated income
statement of Harrah's Entertainment and are not included in the pro forma
statement of income.
(b) Reflects additional revolver borrowings incurred to fund payments made in
(a).
(c) Records the allocation of an additional $5.0 million of existing corporate
debt to PRH by Promus prior to the Distribution.
(d) Records the transfer to Harrah's Entertainment of the March 31, 1995,
deferred finance charge balance which had been allocated to PRH.
(e) Reflects Distribution of PRH Common Stock to Promus' stockholders.
(f) Reflects cancellation of unvested RSP shares of PRH employees.
(g) Reflects estimated net incremental operating costs of Harrah's Entertainment
of approximately $0.3 million, before income taxes, expected to be incurred
after the Distribution primarily related to information technology and risk
management functions.
(h) Reflects additional interest expense incurred as a result of additional
revolver borrowings in (b).
(i) Reflects income tax effect of the pro forma adjustments to income at a 39.0%
marginal tax rate.
3
<PAGE>
Exhibit F-1
PROMUS HOTEL CORPORATION
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE><CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents........................................... $ 2,087 $ -- $ 2,087
Receivables, including notes receivable of $581, less allowance for
doubtful accounts of $1,272....................................... 21,650 -- 21,650
Deferred income taxes............................................... 2,863 -- 2,863
Prepayments......................................................... 1,464 -- 1,464
Supplies............................................................ 3,114 -- 3,114
Other............................................................... 197 -- 197
----------- ------------ -----------
Total current assets........................................... 31,375 -- 31,375
----------- ------------ -----------
Land, buildings and equipment......................................... 441,485 -- 441,485
Less: Accumulated depreciation and amortization....................... (94,978) -- (94,978)
----------- ------------ -----------
346,507 -- 346,507
Investments in and advances to nonconsolidated affiliates............. 35,740 -- 35,740
Deferred costs and other.............................................. 44,208 (3,170)(a) 44,538
3,000 (b)
500 (c)
----------- ------------ -----------
$ 457,830 $ 330 $ 458,160
----------- ------------ -----------
----------- ------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.................................................... $ 16,928 $ -- $ 16,928
Accrued expenses.................................................... 14,870 -- 14,870
Current portion of long-term debt................................... 1,073 -- 1,073
----------- ------------ -----------
Total current liabilities...................................... 32,871 -- 32,871
Long-term debt........................................................ 211,458 3,000 (b) 219,958
500 (c)
5,000 (d)
Deferred credits and other............................................ 29,421 -- 29,421
Deferred income taxes................................................. 23,748 -- 23,748
----------- ------------ -----------
297,498 8,500 305,998
----------- ------------ -----------
Stockholders' equity
Common Stock........................................................ -- 5,126 (e) 5,131
5 (f)
Capital surplus..................................................... 147,036 (e) 147,791
-- 755 (f)
Retained earnings................................................... -- -- --
Deferred compensation related to restricted stock................... -- (760)(f) (760)
Parent company investment........................................... 160,332 (3,170)(a) --
(5,000)(d)
(152,162)(e)
----------- ------------ -----------
Total stockholders' equity..................................... 160,332 (8,170) 152,162
----------- ------------ -----------
$ 457,830 $ 330 $ 458,160
----------- ------------ -----------
----------- ------------ -----------
</TABLE>
See accompanying notes to pro forma financial statements.
4
<PAGE>
Exhibit F-2
PROMUS HOTEL CORPORATION
PRO FORMA STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE><CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ------------ -----------
<S> <C> <C> <C>
Revenues
Rooms................................................................ $ 29,469 $ -- $ 29,469
Food and beverage.................................................... 1,892 -- 1,892
Franchise and management fees........................................ 17,496 -- 17,496
Other................................................................ 14,361 -- 14,361
---------- ------------ -----------
Total revenues.................................................. 63,218 -- 63,218
---------- ------------ -----------
Operating expense
Direct
Rooms............................................................. (13,600) -- (13,600)
Food and beverage................................................. (1,702) -- (1,702)
Depreciation of buildings and equipment.............................. (6,760) -- (6,760)
Other................................................................ (15,047) (714)(g) (15,786)
(25)(h)
---------- ------------ -----------
Total operating expenses........................................ (37,109) (739) (37,848)
---------- ------------ -----------
26,109 (739) 25,370
General and administrative............................................. (868) (928)(g) (1,796)
Property transactions.................................................. (298) -- (298)
---------- ------------ -----------
Operating income....................................................... 24,943 (1,667) 23,276
Interest expense, net of interest capitalized.......................... (8,407) 4,853 (i) (7,928)
(4,374)(j)
Other.................................................................. 51 -- 51
---------- ------------ -----------
Income before income taxes............................................. 16,587 (1,188) 15,399
Provision for income taxes............................................. (6,983) 463 (k) (6,520)
---------- ------------ -----------
Income from continuing operations...................................... $ 9,604 $ (725) $ 8,879
---------- ------------ -----------
---------- ------------ -----------
Income from continuing operations per share............................ $ 0.17
-----------
-----------
Average shares outstanding............................................. 51,507 (e) 51,507
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to pro forma financial statements.
5
<PAGE>
PROMUS HOTEL CORPORATION
NOTES TO PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1995
(a) Records the transfer back to Promus through parent company investment of the
balance of historical unamortized deferred finance charges allocated by
Promus to PRH as of March 31, 1995, based on the percentage of Promus'
existing corporate debt expected to be retired using proceeds drawn under
the PRH Bank Credit Facilities.
(b) Records the estimated $3.0 million of deferred finance charges expected to
be incurred at the inception of the PRH Bank Credit Facilities and paid with
funds drawn on the Facilities.
(c) Records the payment by PRH of estimated organization costs using funds drawn
under the PRH Bank Credit Facilities.
(d) Records the allocation of an additional $5.0 million of existing corporate
debt to PRH by Promus prior to the Distribution.
(e) Records the issuance of 51,259,000 shares of PRH Common Stock at the time of
the Distribution.
(f) Records the issuance of approximately 50,000 shares of restricted stock to
PRH employees at the time of the Distribution. These shares replace Promus
restricted shares held by these employees immediately prior to and cancelled
upon consummation of the Distribution.
(g) Records the estimated incremental costs, primarily for information
technology, insurance programs and administrative support functions,
expected to be incurred by PRH to support its stand-alone operations.
(h) Records amortization of estimated organization costs (see Note (c)) on a
straight-line basis over five years.
(i) Reflects the reversal of historical interest expense allocated by
Promus to PRH.
(j) Reflects a full quarter of interest expense arising from the PRH Bank
Credit Facilities, including:
i. interest on outstanding balance computed at LIBOR plus 0.55%. The
LIBOR rate as of the date of receipt of the PRH Bank Credit
Facilities commitment (6.75%) has been used as the basis for
computing interest expense for this pro forma income statement.
ii. commitment fee on unused revolver balance at 0.20%.
iii. amortization of deferred finance charges incurred at inception of
the PRH Bank Credit Facilities (see Note (b)) following the
interest method over the expected five-year term of the debt.
iv. impact on PRH interest expense of the assumption from Promus of
two interest rate swaps with a combined notional amount of $100
million effectively converting a portion of PRH's floating rate
bank debt to a fixed rate.
(k) Reflects income tax effect of the pro forma adjustments to income at the 39%
marginal income tax rate.
6
Exhibit 10(2)
===========================================================
CREDIT AGREEMENT
among
THE PROMUS COMPANIES INCORPORATED,
EMBASSY SUITES, INC.,
VARIOUS BANKS
and
BANKERS TRUST COMPANY,
as Administrative Agent
__________________________________
Dated as of June 1, 1995
__________________________________
===========================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . 1
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . 2
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . 2
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . 4
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . 4
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . 5
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . 6
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . 9
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . 10
SECTION 2. Fees; Reductions of Revolving Loan
Commitments. . . . . . . . . . . . . . . . . . . . . . . 10
2.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.02 Voluntary Termination of Unutilized Revolving Loan
Commitments . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Mandatory Reduction of Revolving Loan Commitments . . . . . 11
SECTION 3. Prepayments; Payments; Taxes. . . . . . . . . . . . . . . . 11
3.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 11
3.02 Mandatory Repayments . . . . . . . . . . . . . . . . . . . 12
3.03 Method and Place of Payment; Net Payments . . . . . . . . . 12
SECTION 4. Conditions Precedent to the Effective
Date and Revolving Loans . . . . . . . . . . . . . . . . . 13
4.01 Execution of Agreement, Revolving Notes . . . . . . . . . . 13
4.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . 13
4.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . 13
4.04 Corporate Documents; Proceedings . . . . . . . . . . . . . 13
4.05 Adverse Change . . . . . . . . . . . . . . . . . . . . . . 14
4.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 14
4.07 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.08 Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.09 No Default; Representations and Warranties . . . . . . . . 15
4.10 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . 15
(i)
<PAGE>
Page
----
SECTION 5. Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . 16
5.01 Corporate or Partnership Status . . . . . . . . . . . . . . 16
5.02 Corporate or Partnership Power and Authority . . . . . . . 16
5.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . 17
5.04 Governmental Approvals . . . . . . . . . . . . . . . . . . 17
5.05 Financial Statements; Financial Condition; Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . 17
5.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 18
5.07 True and Complete Disclosure . . . . . . . . . . . . . . . 19
5.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . 19
5.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . 19
5.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 20
5.11 Properties . . . . . . . . . . . . . . . . . . . . . . . . 20
5.12 Compliance with Statutes, etc. . . . . . . . . . . . . . . 20
5.13 Investment Company Act . . . . . . . . . . . . . . . . . . 21
5.14 Public Utility Holding Company Act . . . . . . . . . . . . 21
5.15 Environmental Matters . . . . . . . . . . . . . . . . . . . 21
5.16 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 22
5.17 Patents, Licenses, Franchises and Formulas . . . . . . . . 22
5.18 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . 23
SECTION 6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.01 Incorporation by Reference . . . . . . . . . . . . . . . . 23
SECTION 7. Events of Default . . . . . . . . . . . . . . . . . . . . . 24
7.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.02 Representations, etc. . . . . . . . . . . . . . . . . . . . 25
7.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.04 Default Under Other Agreements . . . . . . . . . . . . . . 25
7.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . 26
7.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.07 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.08 Gaming Authority . . . . . . . . . . . . . . . . . . . . . 27
7.09 Changes of Control . . . . . . . . . . . . . . . . . . . . 27
SECTION 8. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9. The Administrative Agent. . . . . . . . . . . . . . . . . . 33
9.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 33
9.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . 33
9.03 Lack of Reliance on the Administrative Agent . . . . . . . 33
(ii)
<PAGE>
Page
----
9.04 Certain Rights of the Administrative Agent . . . . . . . . 34
9.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . 34
9.07 The Administrative Agent in its Individual Capacity . . . . 35
9.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.09 Resignation by the Administrative Agent . . . . . . . . . . 35
SECTION 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 36
10.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . 36
10.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . 38
10.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . 39
10.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . 43
10.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . 43
10.07 Calculations; Computations . . . . . . . . . . . . . . . . 44
10.08 Governing Law; Submission to Jurisdiction; Venue; Waiver
of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 44
10.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 45
10.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 46
10.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . 46
10.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . 46
10.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . 47
10.15 Application of Gaming Regulations. . . . . . . . . . . . . 47
10.16 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 48
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B Form of Revolving Note
EXHIBIT C Form of Officers' Certificate
EXHIBIT D Form of Assignment and Assumption Agreement
(iii)
<PAGE>
CREDIT AGREEMENT, dated as of June 1, 1995, among THE PROMUS
COMPANIES INCORPORATED, a Delaware corporation ("Parent"), EMBASSY SUITES,
INC., a Delaware corporation (the "Borrower"), the financial institutions
party hereto from time to time (the "Banks"), and Bankers Trust Company, as
Administrative Agent (in such capacity, and together with any successor
agent, the "Administrative Agent"). Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 8 shall have the
respective meanings provided in said Section 8, and all other capitalized
terms used herein and defined in the Existing Promus/Embassy Credit
Agreement (as defined in said Section 8) shall have the respective meanings
provided in said Existing Promus/Embassy Credit Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the credit
facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. Subject to and upon the terms and
---------------
conditions set forth herein, each Bank severally agrees to make, from time
to time on or after the Effective Date and prior to the Final Maturity
Date, a revolving loan or revolving loans (each, a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower, which Revolving Loans
(i) shall, at the option of the Borrower, be Base Rate Loans or Eurodollar
Loans, provided that, except as otherwise specifically provided in Section
--------
1.10(b), all Revolving Loans comprising the same Borrowing shall at all
times be of the same Type, (ii) may be repaid and reborrowed in accordance
with the provisions hereof and (iii) shall not exceed for any Bank at any
time outstanding that aggregate principal amount which equals the Revolving
Loan Commitment of such Bank at such time.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
--------------------------------
amount of each Borrowing of Revolving Loans shall not be less than
$500,000. More than one Borrowing may
<PAGE>
occur on the same date, but at no time shall there be outstanding more than
five Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. Whenever the Borrower desires to make
-------------------
a Borrowing of Revolving Loans hereunder, it shall give the Administrative
Agent at its Notice Office at least one Business Day's prior written notice
of each Base Rate Loan and at least three Business Days' prior written
notice of each Eurodollar Loan to be made hereunder, provided that any such
--------
notice shall be deemed to have been given on a certain day only if given
before 12:00 Noon (New York time) on such day. Each such notice (each a
"Notice of Borrowing"), except as otherwise expressly provided in Section
1.10, shall be irrevocable and shall be given by the Borrower in the form
of Exhibit A, appropriately completed to specify the aggregate principal
amount of the Revolving Loans to be made pursuant to such Borrowing, the
date of such Borrowing (which shall be a Business Day), whether the
Revolving Loans being made pursuant to such Borrowing are to be initially
maintained as Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans,
the initial Interest Period to be applicable thereto. The Administrative
Agent shall promptly give each Bank notice of such proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters required
by the immediately preceding sentence to be specified in the Notice of
Borrowing.
1.04 Disbursement of Funds. Except as otherwise specifically
---------------------
provided in the immediately succeeding sentence, not later than 10:00 A.M.
(New York time) on the date specified in each Notice of Borrowing, each
Bank will make available its pro rata portion of each such Borrowing
--- ----
requested to be made on such date. All such amounts shall be made avail-
able in Dollars and in immediately available funds at the Payment Office of
the Administrative Agent, and the Administrative Agent will make available
to the Borrower at the Payment Office the aggregate of the amounts so made
available by the Banks. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Administrative Agent such Bank's portion of
any Borrowing to be made on such date, the Administrative Agent may assume
that such Bank has made such amount available to the Administrative Agent
on such date of Borrowing and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Bank, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from
-2-
<PAGE>
such Bank. If such Bank does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify the Borrower and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover on demand from such Bank or the
Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower until the date such
corresponding amount is recovered by the Administrative Agent, at a rate
per annum equal to (i) if recovered from such Bank, at the overnight
Federal Funds Rate and (ii) if recovered from the Borrower, the rate of
interest applicable to the respective Borrowing, as determined pursuant to
Section 1.08. Nothing in this Section 1.04 shall be deemed to relieve any
Bank from its obligation to make Revolving Loans hereunder or to prejudice
any rights which the Borrower may have against any Bank as a result of any
failure by such Bank to make Revolving Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal
-----
of, and interest on, the Revolving Loans made by each Bank shall be
evidenced by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B with blanks appropriately completed
in conformity herewith (each, a "Revolving Note" and, collectively, the
"Revolving Notes").
(b) The Revolving Note issued to each Bank shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank and be dated the
Effective Date, (iii) be in a stated principal amount equal to the Revolv-
ing Loan Commitment of such Bank and be payable in the principal amount of
the outstanding Revolving Loans evidenced thereby, (iv) mature on the Final
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the
case may be, evidenced thereby, (vi) be subject to voluntary and mandatory
repayment as provided in Sections 3.01 and 3.02 and (vii) be entitled to
the benefits of this Agreement and the other Credit Documents.
(c) Each Bank will note on its internal records the amount of
each Revolving Loan made by it and each payment in respect thereof and will
prior to any transfer of any of its Revolving Notes endorse on the reverse
side thereof the outstanding principal amount of Revolving Loans evidenced
thereby. Failure to make any such notation or any error in
-3-
<PAGE>
any such notation or endorsement shall not affect the Borrower's obli-
gations in respect of such Revolving Loans.
1.06 Conversions. The Borrower shall have the option to
-----------
convert, on any Business Day, all or a portion equal to at least $500,000
of the outstanding principal amount of Revolving Loans made pursuant to one
or more Borrowings of one or more Types of Revolving Loans into a Borrowing
of another Type of Revolving Loan, provided that (i) except as otherwise
--------
provided in Section 1.10(b), Eurodollar Loans may be converted into Base
Rate Loans only on the last day of an Interest Period applicable to the
Revolving Loans being converted and no such partial conversion of
Eurodollar Loans shall reduce the outstanding principal amount of such
Eurodollar Loans made pursuant to a single Borrowing to less than $500,000,
(ii) Base Rate Loans may only be converted into Eurodollar Loans if no
Default or Event of Default is in existence on the date of the conversion
and (iii) no conversion pursuant to this Section 1.06 shall result in a
greater number of Borrowings of Eurodollar Loans than is permitted under
Section 1.02. Each such conversion shall be effected by the Borrower
giving the Administrative Agent at its Notice Office prior to 12:00 Noon
(New York time) at least three Business Days' prior notice (each a "Notice
of Conversion") specifying the Revolving Loans to be so converted, the Bor-
rowing(s) pursuant to which such Revolving Loans were made and, if to be
converted into Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank prompt
notice of any such proposed conversion affecting any of its Revolving
Loans. Upon any such conversion, the proceeds thereof will be deemed to be
applied directly on the day of such conversion to prepay the outstanding
principal amount of the Revolving Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Revolving Loans
-------------------
under this Agreement shall be incurred from the Banks pro rata on the basis
--- ----
of their Revolving Loan Commitments. It is understood that no Bank shall
be responsible for any default by any other Bank of its obligation to make
Revolving Loans hereunder and that each Bank shall be obligated to make the
Revolving Loans provided to be made by it hereunder, regardless of the
failure of any other Bank to make its Revolving Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in
--------
respect of the unpaid principal amount of each Base Rate Loan from the date
the proceeds thereof are made available to the Borrower until the maturity
thereof (whether
-4-
<PAGE>
by acceleration or otherwise) at a rate per annum which shall be equal to
the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof
are made available to the Borrower until the maturity thereof (whether by
acceleration or otherwise) at a rate per annum which shall be equal to the
sum of the Applicable Margin plus the Eurodollar Rate for such Interest
Period.
(c) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Revolving Loan and any other overdue
amount payable hereunder shall, in each case, bear interest at a rate per
annum equal to the greater of (x) 2% per annum in excess of the Base Rate
in effect from time to time and (y) the rate which is 2% in excess of the
rate then borne by such Revolving Loans, in each case with such interest to
be payable by the Borrower on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect
of each Eurodollar Loan, on the last day of each Interest Period applicable
thereto and (iii) in respect of each Revolving Loan, on any repayment or
prepayment (on the amount repaid or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period
applicable to Eurodollar Loans and shall promptly notify the Borrower and
the Banks thereof. Each such determination shall, absent manifest error,
be final and conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time the Borrower gives any
----------------
Notice of Borrowing or Notice of Conversion in respect of the making of, or
conversion into, any Eurodollar Loan (in the case of the initial Interest
Period applicable thereto) or on the third Business Day prior to the
expiration of an Interest Period applicable to such Eurodollar Loan (in the
case of any subsequent Interest Period), the Borrower shall have the right
to elect, by giving the Administrative Agent notice thereof, the interest
period (each an "Interest Period") applicable to such Eurodollar Loan,
which Interest Period shall, at the option of the Borrower, be a one, two
or three-month period, provided that:
--------
-5-
<PAGE>
(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including
the date of any conversion thereto from a Revolving Loan of a
different Type) and each Interest Period occurring thereafter in
respect of such Eurodollar Loan shall commence on the day on which the
next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest
-------- -------
Period for a Eurodollar Loan would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a
Default or an Event of Default is then in existence; and
(vi) no Interest Period shall be selected which extends beyond
the Final Maturity Date.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such
Eurodollar Loans as provided above, the Borrower shall be deemed to have
elected to convert such Eurodollar Loans into Base Rate Loans effective as
of the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
---------------------------------
any Bank shall have determined in good faith (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto but, with
-6-
<PAGE>
respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan because of (x) any change since the
date of this Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the
force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule, regu-
lation, order, guideline or request, such as, for example, but not
limited to: (A) a change in the basis of taxation of payment to any
Bank of the principal of or interest on such Eurodollar Loan or any
other amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or profits of such
Bank pursuant to the laws of the jurisdiction in which it is organized
or in which its principal office or applicable lending office is
located or any subdivision thereof or therein) or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation
of the Eurodollar Rate and/or (y) other circumstances since the date
of this Agreement affecting such Bank or the interbank Eurodollar
market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental request (whether or not having force
of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the
case of clause (i) above) shall promptly give notice (by telephone
confirmed in writing) to the Borrower
-7-
<PAGE>
and, except in the case of clause (i) above, to the Administrative Agent of
such determination (which notice the Administrative Agent shall promptly
transmit to each of the other Banks). Thereafter (x) in the case of clause
(i) above, Eurodollar Loans shall no longer be available until such time as
the Administrative Agent notifies the Borrower and the Banks that the
circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by
the Borrower with respect to Eurodollar Loans which have not yet been
incurred (including by way of conversion) shall be deemed rescinded by the
Borrower, (y) in the case of clause (ii) above, the Borrower agrees to pay
to such Bank, upon written demand therefor, such additional amounts (in the
form of an increased rate of, or a different method of calculating,
interest or otherwise as such Bank in its sole discretion shall determine)
as shall be required to compensate such Bank for such increased costs or
reductions in amounts received or receivable hereunder (a written notice as
to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the Borrower by such Bank in good faith
shall, absent manifest error, be final and conclusive and binding on all
the parties hereto) and (z) in the case of clause (iii) above, the Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii) above, the Borrower
may (and in the case of a Eurodollar Loan affected by the circumstances
described in Section 1.10(a)(iii) above shall) either (x) if the affected
Eurodollar Loan is then being made initially or pursuant to a conversion,
cancel the respective Borrowing by giving the Administrative Agent
telephonic notice (confirmed in writing) on the same date that the Borrower
was notified by the affected Bank or the Administrative Agent pursuant to
Section 1.10(a)(ii) or (iii) above or (y) if the affected Eurodollar Loan
is then outstanding, upon at least three Business Days' written notice to
the Administrative Agent, require the affected Bank to convert such
Eurodollar Loan into a Base Rate Loan, provided that, if more than one Bank
--------
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that the introduction of
or any change in any applicable law or governmental rule, regulation,
order, guideline, directive or
-8-
<PAGE>
request (whether or not having the force of law and including, without
limitation, those announced or published prior to the Effective Date)
concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or
comparable agency, will have the effect of increasing the amount of capital
required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Revolving Loan
Commitment hereunder or its obligations hereunder, then the Borrower agrees
to pay to such Bank, upon its written demand therefor, such additional
amounts as shall be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such other corporation
or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good faith and
will use averaging and attribution methods which are reasonable, provided
--------
that such Bank's reasonable good faith determination of compensation owing
under this Section 1.10(c) shall, absent manifest error, be final and
conclusive and binding on all the parties hereto. Each Bank, upon deter-
mining that any additional amounts will be payable pursuant to this Section
1.10(c), will give prompt written notice thereof to the Borrower, which
notice shall show the basis for calculation of such additional amounts.
1.11 Compensation. The Borrower agrees to compensate each Bank,
------------
upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Bank to fund its Eurodollar Loans but excluding any
loss of anticipated profit) which such Bank may sustain: (i) if for any
reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of, or conversion from or into, Eurodollar Loans does not occur
on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repay-
ment made pursuant to Section 3.01 or 3.02 or a result of an acceleration
of the Revolving Loans pursuant to Section 7) or conversion of any of its
Eurodollar Loans occurs on a date which is not the last day of an Interest
Period with respect thereto; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default
-9-
<PAGE>
by the Borrower to repay Revolving Loans when required by the terms of this
Agreement or any Revolving Note held by such Bank or (y) any election made
pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
------------------------
occurrence of any event giving rise to the operation of
Section 1.10(a)(ii), 1.10(a)(iii), 1.10(c) or 3.03 with respect to such
Bank, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Bank) to designate
another lending office for any Revolving Loans affected by such event,
provided that such designation is made on such terms that such Bank and its
- --------
lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the
operation of such Section. Nothing in this Section 1.12 shall affect or
postpone any of the obligations of the Borrower or the right of any Bank
provided in Sections 1.10 and 3.03.
SECTION 2. Fees; Reductions of Revolving Loan Commitments.
----------------------------------------------
2.01 Fees. (a) The Borrower agrees to pay to the Administrative
----
Agent for distribution to each Bank a commitment commission (the
"Commitment Commission") for the period from the Effective Date to but
excluding the Final Maturity Date (or such earlier date as the Total
Revolving Loan Commitment shall have been terminated), computed at a rate
for each day equal to the Applicable Commitment Commission Percentage on
the daily average Unutilized Revolving Loan Commitment of such Bank.
Accrued Commitment Commission shall be due and payable quarterly in arrears
on the last Business Day of each March, June, September and December and on
the Final Maturity Date or such earlier date upon which the Total Revolving
Loan Commitment is terminated.
(b) The Borrower shall pay to the Administrative Agent, for its
own account, such fees as have been agreed to in writing by the Borrower
and the Administrative Agent.
2.02 Voluntary Termination of Unutilized Revolving Loan
--------------------------------------------------
Commitments. Upon at least two Business Days' prior written notice to the
- -----------
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Borrower shall
have the right, at any time or from time to time, without premium or
penalty, to terminate the Total Unutilized Revolving Loan Commitment, in
whole or in part, in integral multiples of $500,000 in the case of partial
reductions to the Total Un
-10-
<PAGE>
utilized Revolving Loan Commitment, provided that each such reduction shall
--------
apply proportionately to permanently reduce the Revolving Loan Commitment
of each Bank.
2.03 Mandatory Reduction of Revolving Loan Commitments. (a) The
-------------------------------------------------
Total Revolving Loan Commitment (and the Revolving Loan Commitment of each
Bank) shall terminate in its entirety on the Final Maturity Date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, on the 15th day after the date on which any
Change of Control occurs, the Total Revolving Loan Commitment shall be
reduced to zero unless the Required Banks otherwise agree in writing in
their sole discretion.
(c) The Total Revolving Loan Commitment shall be reduced, and
the Revolving Loan Commitment of the respective Former Bank shall be
terminated, in the amount and at the times provided in Section 10.04(d).
SECTION 3. Prepayments; Payments; Taxes.
----------------------------
3.01 Voluntary Prepayments. The Borrower shall have the right
---------------------
to prepay the Revolving Loans made to it, without premium or penalty, in
whole or in part at any time and from time to time on the following terms
and conditions:
(i) the Borrower shall give the Administrative Agent prior to
12:00 Noon (New York time) at its Notice Office (x) at least one
Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Base Rate Loans and (y)
at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, the amount of such prepayment and the Types of
Revolving Loans to be prepaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made, which
notice the Administrative Agent shall promptly transmit to each of the
Banks;
(ii) each prepayment shall be in an aggregate principal amount of
at least $500,000, provided that, if any partial prepayment of
--------
Eurodollar Loans made pursuant to any Borrowing shall reduce the out-
standing Eurodollar Loans made pursuant to such Borrowing to an amount
less than $500,000, then such Borrowing may not be continued as a
Borrowing of Eurodollar Loans and any election of
-11-
<PAGE>
an Interest Period with respect thereto given by the Borrower shall
have no force or effect; and
(iii) each prepayment in respect of any Revolving Loans made pur-
suant to a Borrowing shall be applied pro rata among such Revolving
--- ----
Loans.
3.02 Mandatory Repayments. (a) On any day on which the sum of
--------------------
the aggregate outstanding principal amount of Revolving Loans exceeds the
Total Revolving Loan Commitment as then in effect, there shall be required
to be repaid on such date that principal amount of Revolving Loans equal to
such excess.
(b) With respect to each repayment of Revolving Loans required
by this Section 3.02, the Borrower may designate the Types of Revolving
Loans which are to be repaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings pursuant to which made, provided that:
--------
(i) repayments of Eurodollar Loans pursuant to this Section 3.02 may only
be made on the last day of an Interest Period applicable thereto unless all
Eurodollar Loans with Interest Periods ending on such date of required
repayment and all Base Rate Loans have been paid in full; (ii) if any
repayment of Eurodollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to
an amount less than $500,000 such Borrowing shall be converted at the end
of the then current Interest Period into a Borrowing of Base Rate Loans;
and (iii) each repayment of any Revolving Loans made pursuant to a Borrow-
ing shall be applied pro rata among such Revolving Loans. In the absence
--- ----
of a designation by the Borrower as described in the preceding sentence,
the Administrative Agent shall, subject to the above, make such designation
in its sole discretion.
(c) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, all then outstanding Revolving Loans shall be repaid in
full on the Final Maturity Date.
3.03 Method and Place of Payment; Net Payments. All payments
-----------------------------------------
made by the Borrower hereunder or under any Revolving Note shall be on the
same basis as payments by the Borrower are made under Sections 4.03 and
4.04 of the Existing Promus/Embassy Credit Agreement, and the Borrower
hereby agrees to pay all increased amounts, and all indemnities, as
provided in said Sections, with necessary reference changes to relate to
this Agreement, the Revolving Notes and the Revolving Loans hereunder.
-12-
<PAGE>
SECTION 4. Conditions Precedent to the Effective Date and
----------------------------------------------
Revolving Loans. The occurrence of the Effective Date pursuant to Section
- ---------------
10.10, and the obligation of each Bank to make Revolving Loans hereunder
(including Revolving Loans made on the Effective Date) is subject, at the
time of the Effective Date and each such Revolving Loan (except as
hereinafter indicated), to the satisfaction of the following conditions:
4.01 Execution of Agreement, Revolving Notes. On or prior to
---------------------------------------
the Effective Date, (i) this Agreement shall have been executed and
delivered as provided in Section 10.12 and (ii) there shall have been
delivered to the Administrative Agent for the account of each Bank the
appropriate Revolving Notes executed by the Borrower, in the amount,
maturity and as otherwise provided herein.
4.02 Officer's Certificate. On the Effective Date, the
---------------------
Administrative Agent shall have received a certificate dated the Effective
Date signed on behalf of the Borrower by the President, any Senior Vice
President or any Vice President of the Borrower stating that all of the
conditions in Sections 4.05, 4.06, 4.07 and 4.09 have been satisfied on
such date.
4.03 Opinions of Counsel. On the Effective Date, the Adminis-
-------------------
trative Agent shall have received (i) from Latham & Watkins, counsel to the
Credit Parties, an opinion addressed to the Administrative Agent and each
of the Banks and dated the Effective Date, in form and substance satisfac-
tory to the Administrative Agent and the Required Banks and (ii) from E.O.
Robinson, Jr., General Counsel to the Credit Parties, an opinion addressed
to the Administrative Agent and each of the Banks in form and substance
satisfactory to the Administrative Agent and the Required Banks.
4.04 Corporate Documents; Proceedings. (a) On the Effective
--------------------------------
Date, the Administrative Agent shall have received a certificate, dated the
Effective Date, signed by the President, any Senior Vice President or any
Vice President of each Credit Party, and attested to by the Secretary or
any Assistant Secretary of such Credit Party, in the form of Exhibit C with
appropriate insertions, together with the resolutions of such Credit Party
referred to in such certificate, and the foregoing shall be acceptable to
the Administrative Agent in its reasonable discretion.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transac-
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<PAGE>
tions contemplated by this Agreement shall be satisfactory in form and
substance to the Administrative Agent and the Required Banks, and the
Administrative Agent shall have received all information and copies of all
other documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down tele-
grams, if any, which the Administrative Agent reasonably may have requested
in connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
4.05 Adverse Change. On or prior to the Effective Date, nothing
--------------
shall have occurred (and the Banks shall have become aware of no facts or
conditions not previously known) which the Administrative Agent or the
Required Banks shall determine has, or could reasonably be expected to
have, a material adverse effect on the rights or remedies of the Admin-
istrative Agent or the Banks, or on the ability of any Credit Party to per-
form its obligations to the Administrative Agent and the Banks or which
has, or could reasonably be expected to have, a materially adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole.
4.06 Litigation. On the Effective Date, no litigation by any
----------
entity (private or governmental) shall be pending or threatened with
respect to this Agreement or any documentation executed in connection
herewith or the transactions contemplated hereby, or with respect to any
material Indebtedness of Parent or any of its Subsidiaries or which the
Administrative Agent or the Required Banks shall determine could reasonably
be expected to have a materially adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
4.07 Approvals. (a) On or prior to the Effective Date, all
---------
necessary governmental (domestic and foreign) and third party approvals (in
any event including all approvals required of Gaming Authorities) in
connection with the transactions contemplated by this Agreement and
otherwise referred to herein shall be satisfied and no New Jersey or Nevada
gaming license, authorization, qualification, waiver or exemption of the
Banks is required on or prior to the Effective Date by reason of this
Agreement.
(b) Parent, its shareholders and Subsidiaries shall have
received any qualifications required under
-14-
<PAGE>
applicable Gaming Regulations in connection with this Agreement and each
Credit Party shall have received all other approvals, authorizations or
consents of, or notices to or registrations with any governmental body and
required releases and consents from other appropriate Persons in connection
with this Agreement and shall have provided copies or other satisfactory
evidence of all approvals, authorizations or consents referred to above to
the Administrative Agent.
4.08 Fees, etc. On the Effective Date, the Borrower shall have
----------
paid to the Administrative Agent and the Banks all costs, fees and expenses
(including, without limitation, legal fees and expenses of counsel to the
Administrative Agent only) payable to the Administrative Agent and the
Banks to the extent then due.
4.09 No Default; Representations and Warranties. On the
------------------------------------------
Effective Date and at the time of each Revolving Loan and also after giving
effect thereto (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained herein and in the other
Credit Documents shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made
on the Effective Date and on the date of the making of such Revolving Loans
(it being understood and agreed that any representation or warranty which
by its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such a specified date).
4.10 Notice of Borrowing. Prior to the making of each Revolving
-------------------
Loan, the Administrative Agent shall have received a Notice of Borrowing
meeting the requirements of Section 1.03.
The occurrence of the Effective Date and the incurrence of each
Revolving Loan shall constitute a representation and warranty by Parent and
the Borrower to the Administrative Agent and each of the Banks that all of
the applicable conditions specified in this Section 4 have been satisfied
as of that time. All of the Revolving Notes, certificates, legal opinions
and other documents and papers referred to in this Section 4, unless
otherwise specified, shall be delivered to the Administrative Agent at the
Notice Office for the account of each of the Banks and, except for the
Revolving Notes, in sufficient counterparts for each of the Banks and shall
be in form and substance satisfactory to the Required Banks.
-15-
<PAGE>
SECTION 5. Representations, Warranties and Agreements. In order
------------------------------------------
to induce the Banks to enter into this Agreement and to make the Revolving
Loans as provided herein, each of Parent and the Borrower makes the follow-
ing representations, warranties and agreements, all of which shall survive
the execution and delivery of this Agreement and the Revolving Notes and
the making of the Revolving Loans, with the occurrence of the Effective
Date and the incurrence of each Revolving Loan on or after the Effective
Date being deemed to constitute a representation and warranty that the
matters specified in this Section 5 are true and correct in all material
respects on and as of the Effective Date and on the date of the incurrence
of each such Revolving Loan (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only
as of such specified date).
5.01 Corporate or Partnership Status. Each of Parent and each
-------------------------------
of its Subsidiaries (i) is a duly organized and validly existing corpora-
tion or partnership in good standing under the laws of the jurisdiction of
its organization, (ii) has the corporate or partnership power and authority
to own its property and assets and to transact the business in which it is
engaged and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of
its business requires such qualifications except for failures to be so
qualified which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries taken as a whole.
5.02 Corporate or Partnership Power and Authority. Each Credit
--------------------------------------------
Party has the corporate or partnership power and authority to execute,
deliver and perform the terms and provisions of this Agreement and the
other Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance by it
of each of this Agreement and the other Credit Documents to which it is a
party. Each Credit Party has duly executed and delivered this Agreement
and the other Credit Documents to which it is a party, and this Agreement
and the other Credit Documents to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their terms,
except to the extent that the enforceability thereof may be limited by
applicable bank-
-16-
<PAGE>
ruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
5.03 No Violation. Neither the execution, delivery or
------------
performance by any Credit Party of this Agreement or the other Credit
Documents to which it is a party, nor compliance by it with the terms and
provisions hereof or thereof, (i) will contravene any provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in
any breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or
assets of Parent or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan agreement, or
any other material agreement, contract or instrument, to which Parent or
any of its Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the certificate of incorporation, partnership agreement or by-
laws of Parent or any of its Subsidiaries.
5.04 Governmental Approvals. No order, consent, approval,
----------------------
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made), or exemption by,
any governmental or public body or authority, or any subdivision thereof,
is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Agreement or the other Credit
Documents or (ii) the legality, validity, binding effect or enforceability
of this Agreement or the other Credit Documents.
5.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities. (a) The statements of financial condition of Parent and its
- -----------
Consolidated Subsidiaries at December 31, 1994 and March 31, 1995, and the
related statements of income and cash flow and changes in shareholders'
equity of Parent and its Consolidated Subsidiaries for the fiscal year and
three-month period ended on such date, and furnished to the Banks prior to
the Effective Date present fairly the financial condition of Parent and its
Consolidated Subsidiaries at the date of such statements of financial
condition and the results of the operations of Parent and its Consolidated
Subsidiaries for such fiscal year. All such
-17-
<PAGE>
financial statements have been prepared in accordance with generally
accepted accounting principles and practices consistently applied. Since
December 31, 1994, there has been no material adverse change in the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
(b) On and as of the Effective Date, after giving effect to all
Indebtedness (including the Revolving Loans) being incurred or assumed by
the Credit Parties in connection herewith, (a) the sum of the assets, at a
fair valuation, of each of the Borrower and the Borrower and its
Subsidiaries taken as a whole will exceed their respective debts; (b) none
of the Borrower or the Borrower and its Subsidiaries taken as a whole has
incurred, nor do they intend to incur or believe that they will incur,
debts beyond their ability to pay such debts as such debts mature; and (c)
each of the Borrower and the Borrower and its Subsidiaries taken as a whole
will have sufficient capital with which to conduct its respective business.
For purposes of this Section 5.05(b), "debt" means any liability on a
claim, and "claim" means (i) right to payment, whether or not such a right
is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 5.05(a), there were as of the Effective Date
no liabilities or obligations with respect to Parent or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually
or in aggregate, would be material to Parent and its Subsidiaries taken as
a whole. As of the Effective Date, neither Parent nor the Borrower knows
of any basis for the assertion against Parent or any of its Subsidiaries of
any liability or obligation of any nature whatsoever that is not fully
disclosed in the financial statements delivered pursuant to Section 5.05(a)
which, either individually or in the aggregate, is material to Parent and
its Subsidiaries taken as a whole.
5.06 Litigation. There are no actions, suits or proceedings
----------
pending or, to the best knowledge of Parent or
-18-
<PAGE>
the Borrower, threatened (i) with respect to this Agreement or the other
Credit Documents, (ii) with respect to any material Indebtedness of Parent
or any of its Subsidiaries or (iii) that could reasonably be expected to
materially and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent or
any of its Subsidiaries taken as a whole.
5.07 True and Complete Disclosure. All factual information
----------------------------
(taken as a whole) furnished by or on behalf of Parent or the Borrower in
writing to the Administrative Agent or any Bank for purposes of or in con-
nection with this Agreement, the other Credit Documents or any transaction
contemplated herein or therein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of the Borrower in
writing to the Administrative Agent or any Bank will be, true and accurate
in all material respects on the date as of which such information is dated
or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such
information was provided.
5.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
-----------------------------------
the Revolving Loans shall be used by the Borrower (i) to pay fees and
expenses related to this Agreement and (ii) for the Borrower's and its
Subsidiaries' general corporate purposes.
(b) No part of the proceeds of any Revolving Loan will be used
to purchase or carry any Margin Stock or to extend credit for the purpose
of purchasing or carrying any Margin Stock. Neither the making of any
Revolving Loan nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
5.09 Tax Returns and Payments. Each of Parent and its
------------------------
Subsidiaries and each Person for whose tax Parent or any of its
Subsidiaries could be liable has filed or caused to be filed with the
appropriate taxing authority, all Returns required to be filed by it and
has paid or caused to be paid (i) all material taxes due for the periods
covered thereby and (ii) all taxes pursuant to any assessment received by
Parent, any of its Subsidiaries or any such Person, excluding, in each
case, any such taxes that have been contested in good faith and for which
adequate reserves have been established in accordance with generally
accepted accounting principles.
-19-
<PAGE>
5.10 Compliance with ERISA. Each Plan is in substantial
---------------------
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither Parent nor any Subsidiary of Parent nor
any ERISA Affiliate has incurred any material liability to or on account of
a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of
the Code or expects to incur any liability under any of the foregoing
Sections with respect to any Plan; no proceedings have been instituted by
the PBGC to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to Parent or any Subsidiary
of Parent or any ERISA Affiliate of incurring a liability to or on account
of a Plan pursuant to the foregoing provisions of ERISA and the Code; no
lien imposed under the Code or ERISA on the assets of Parent or any
Subsidiary of Parent or any ERISA Affiliate exists or is likely to arise on
account of any Plan; and Parent and its Subsidiaries may cease
contributions to or terminate any employee benefit plan maintained by any
of them without incurring any material liability to any person interested
therein other than for accrued benefits; it being understood that any
representation or warranty made in this Section 5.10 with respect to any
multiemployer plan (labor union) is to the best knowledge of Parent and the
Borrower.
5.11 Properties. Parent and each of its Subsidiaries have good
----------
title to all material properties owned by them, free and clear of all
Liens, other than Liens permitted by Section 9.01 of the Existing
Promus/Embassy Credit Agreement as such Section is incorporated herein by
reference.
5.12 Compliance with Statutes, etc. Each of Parent and each of
------------------------------
its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls),
except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condi-
-20-
<PAGE>
tion (financial or otherwise) or prospects of Parent and its Subsidiaries
taken as a whole.
5.13 Investment Company Act. Neither Parent nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
5.14 Public Utility Holding Company Act. Neither Parent nor any
----------------------------------
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
5.15 Environmental Matters. (a) Parent and each of its
---------------------
Subsidiaries have complied with, and on the Effective Date and the date of
such Revolving Loan are in compliance with, all applicable Environmental
Laws and the requirements of any permits issued under such Environmental
Laws. There are no pending or, to the best knowledge of Parent or the
Borrower after due inquiry, past or threatened Environmental Claims against
Parent or any of its Subsidiaries or any Real Property owned or operated by
Parent or any of its Subsidiaries that individually or in the aggregate
could reasonably be expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
There are no facts, circumstances, conditions or occurrences on any Real
Property owned or operated by Parent or any of its Subsidiaries or, to the
best knowledge of Parent or the Borrower after due inquiry, on any property
adjoining or in the vicinity of any such Real Property that, to the best
knowledge of Parent or the Borrower after due inquiry, could reasonably be
expected (i) to form the basis of an Environmental Claim against Parent or
any of its Subsidiaries or any such Real Property that individually or in
the aggregate could reasonably be expected to materially and adversely
affect the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole, or (ii) to cause any such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such
Real Property by Parent or any of its Subsidiaries under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, any Real Property
owned or operated by Parent or any of
-21-
<PAGE>
its Subsidiaries where such generation, use, treatment or storage has
violated or could reasonably be expected to violate any Environmental Law.
Hazardous Materials have not at any time been Released on or from any Real
Property owned or operated by Parent or any of its Subsidiaries where such
Release has violated or could reasonably be expected to violate any
applicable Environmental Law. There are not now any underground storage
tanks located on any Real Property owned or operated by Parent or any of
its Subsidiaries which are not in compliance with all Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section
5.15, the representations made in this Section 5.15 shall only be untrue if
the aggregate effect of all failures and noncompliances of the types
described above could reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
5.16 Labor Relations. Neither Parent nor any of its
---------------
Subsidiaries is engaged in any unfair labor practice that could reasonably
be expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending against Parent or any of its Subsidiaries or, to the best
knowledge of Parent or the Borrower, threatened against any of them, before
the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is
so pending against Parent or any of its Subsidiaries or, to the best knowl-
edge of Parent or the Borrower, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against Parent or any
of its Subsidiaries or, to the best knowledge of Parent or the Borrower,
threatened against Parent or any of its Subsidiaries and (iii) to the best
knowledge of Parent or the Borrower, no union representation question
existing with respect to the employees of Parent or any of its
Subsidiaries, except (with respect to any matter specified in clause (i),
(ii) or (iii) above, either individually or in the aggregate) such as could
not reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
5.17 Patents, Licenses, Franchises and Formulas. Each of Parent
------------------------------------------
and its Subsidiaries own all the patents, trademarks, permits, service
marks, trade names, copyrights,
-22-
<PAGE>
licenses, franchises and formulas, or rights with respect to the foregoing,
and has obtained assignments of all leases and other rights of whatever
nature, necessary for the present conduct of its business, without any
known conflict with the rights of others which, or the failure to obtain
which, as the case may be, would result in a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
5.18 Subordinated Debt. The subordination pro-visions of the
-----------------
Subordinated Debt are enforceable against the respective borrower or
guarantor thereunder, as the case may be, and all Obligations hereunder and
under the other Credit Documents are within the definition of "Senior Debt"
included in such subordination provisions, as the case may be.
SECTION 6. Covenants. Each of Parent and the Borrower covenants
---------
and agrees that on and after the Effective Date and until the Total
Revolving Loan Commitment has terminated and the Revolving Loans and
Revolving Notes, together with interest and all other obligations incurred
hereunder and thereunder, are paid in full:
6.01 Incorporation by Reference. Each of Parent and the
--------------------------
Borrower will comply with each of the covenants contained in Sections 8.01
through 8.10 of the Existing Promus/Embassy Credit Agreement and Sections
9.01 through 9.15 of the Existing Promus/Embassy Credit Agreement, which
Sections, together with all definitions in the Existing Promus/Embassy
Credit Agreement applicable to such Sections, are hereby incorporated by
reference as if set forth herein in their entirety, provided that:
--------
(a) all references to "Parent" therein shall mean and be a
reference to "Parent" herein;
(b) all references to "the Company" therein shall mean and be a
reference to the "Borrower" herein;
(c) all references to the "Borrower" or "Borrowers" therein
shall mean and be a reference to the "Borrower" herein;
(d) all references to "this Agreement," "herein," "hereunder"
and words of similar import therein shall mean and be a reference to
this "Agreement";
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<PAGE>
(e) all references to "Parent and the Borrowers" therein shall
mean and be a reference to "Parent and the Borrower" herein;
(f) all references to "Parent or any Borrower" therein shall
mean and be a reference to "Parent or the Borrower" herein;
(g) all references to the "Administrative Agent" therein shall
mean and be a reference to the "Administrative Agent" herein;
(h) all references to any "Bank" or the "Banks" therein shall
mean and be a reference to any "Bank" or the "Banks" herein;
(i) all references to the "Required Banks" therein shall mean
and be a reference to the "Required Banks" herein;
(j) all references to a "Default" therein shall mean and be a
reference to a "Default" herein;
(k) all references to an "Event of Default" therein shall mean
and be a reference to an "Event of Default" herein;
(l) Section 9.04 of the Existing Promus/Embassy Credit Agreement
as incorporated herein by reference shall include Indebtedness
incurred under this Agreement and the Revolving Notes; and
(m) if, and for so long as, the Existing
Promus/Embassy Credit Agreement remains in effect, any provision of
Section 9.02 or 9.05 of the Existing Promus/Embassy Credit Agreement
as incorporated herein by reference which would give rise to a
violation of Section 9.11 of the Existing Promus/Embassy Credit
Agreement shall be deemed modified to the extent (but only to the
extent) that the incorporation by reference of such Sections herein
would not give rise to such a violation.
SECTION 7. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
7.01 Payments. The Borrower shall (i) default in the payment
--------
when due of any principal of any Revolving Loan
-24-
<PAGE>
or any Revolving Note or (ii) default, and such default shall continue un-
remedied for three or more days, in the payment when due of any interest on
any Revolving Loan or Revolving Note, or (iii) default, and such default
shall continue unremedied for five or more days after written notice to the
Borrower by the Administrative Agent or any Bank, in the payment when due
of any other amounts owing hereunder or under any other Credit Document,
provided, however, that such notice shall not be required to be given if a
- -------- -------
Default or an Event of Default under Section 7.05 shall have occurred and
be continuing; or
7.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document
or in any certificate delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed
made; or
7.03 Covenants. Any Credit Party shall (i) default in the due
---------
performance or observance by it of any term, covenant or agreement con-
tained in Section 8.01(e)(i), 8.08 or 9 of the Existing Promus/Embassy
Credit Agreement as such Sections are incorporated herein by reference or
(ii) default in the due performance or observance by it of any other term,
covenant or agreement contained in this Agreement and such default shall
continue unremedied for a period of 30 days after written notice to the
Borrower by the Administrative Agent or any Bank; or
7.04 Default Under Other Agreements. (i) Parent or any
------------------------------
Subsidiary of Parent shall (x) default in any payment of any Indebtedness
(other than the Revolving Notes) beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (y) default in the observance or performance of any agreement or
condition relating to any Indebtedness (other than the Revolving Notes) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause (determined without regard to whether any
notice is required), any such Indebtedness to become due prior to its
stated maturity, or (ii) any Indebtedness (other than the Revolving Notes)
of Parent or any Subsidiary of Parent shall be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated
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<PAGE>
maturity thereof, provided that it shall not be a Default or an Event of
--------
Default under this Section 7.04 unless the aggregate principal amount of
all Indebtedness as described in preceding clauses (i) and (ii) is at least
$25,000,000; or
7.05 Bankruptcy, etc. Parent or any Subsidiary of Parent shall
----------------
commence a voluntary case concerning itself under the Bankruptcy Code; or
an involuntary case is commenced against Parent or any Subsidiary of
Parent, and the petition is not controverted within 10 days, or is not dis-
missed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all
or substantially all of the property of Parent or any Subsidiary of Parent,
or Parent or any Subsidiary of Parent commences any other proceeding under
any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to Parent or any Subsidiary of
Parent, or there is commenced against Parent or any Subsidiary of Parent
any such proceeding which remains undismissed for a period of 60 days, or
Parent or any Subsidiary of Parent is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or Parent or any Subsidiary of Parent suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or Parent or any
Subsidiary of Parent makes a general assignment for the benefit of credi-
tors; or any corporate action is taken by Parent or any Subsidiary of
Parent for the purpose of effecting any of the foregoing; or
7.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
-----
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had a trustee appointed
by the PBGC to administer such Plan, any Plan is, shall have been or is
likely to be terminated or to be the subject of termination proceedings
under ERISA, any Plan shall have an Unfunded Current Liability, Parent or
any Subsidiary of Parent or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code, or Parent or any Subsidiary of Parent
has incurred or is likely to incur liabilities pursuant to one or more em-
ployee welfare benefit plans (as defined in Section 3(1) of ERISA) which
provide benefits to retired employees (other
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<PAGE>
than as required by Section 601 of ERISA) or employee pension benefit plans
(as defined in Section 3(2) of ERISA); (b) there shall result from any such
event or events the imposition of a lien, the granting of a security inter-
est, or a liability or a material risk of incurring a liability; and (c)
which lien, security interest or liability, in the opinion of the Required
Banks, could reasonably be expected to have a material adverse effect upon
the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole; or
7.07 Judgments. One or more judgments or decrees shall be
---------
entered against Parent or any Subsidiary of Parent involving in the aggre-
gate for Parent and its Subsidiaries a liability (not paid or fully covered
by a reputable insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or
stayed or bonded pending appeal for any period of 30 consecutive days, and
the aggregate amount of all such judgments exceeds $10,000,000; or
7.08 Gaming Authority. Any Gaming Authority having jurisdiction
----------------
over any Casino Property shall determine that Parent or any of its
Subsidiaries that is required to be qualified under the Gaming Regulations
does not qualify, or that the qualification or license of any of them with
respect to any Casino Property should be revoked, not renewed or suspended
for more than 30 days, or any such Gaming Authority shall have appointed a
conservator, supervisor or trustee to oversee any of the operations of any
of them; or
7.09 Changes of Control. Any Change of Control shall have
------------------
occurred;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the
written request of the Required Banks, shall by written notice to the
Borrower, take any or all of the following actions, without prejudice to
the rights of the Administrative Agent, any Bank or the holder of any
Revolving Note to enforce its claims against either Credit Party (provided
--------
that, if an Event of Default specified in Section 7.05 shall occur with re-
spect to Parent or the Borrower, the result which would occur upon the giv-
ing of written notice by the Administrative Agent to the Borrower as spec-
ified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Revolving Loan
Commitment terminated, whereupon the
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<PAGE>
Revolving Loan Commitment of each Bank shall forthwith terminate immedi-
ately; and (ii) declare the principal of and any accrued interest in re-
spect of all Revolving Loans and the Revolving Notes and all Obligations
owing hereunder and thereunder to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each Credit Party.
SECTION 8. Definitions. The following terms shall have the
-----------
meanings herein specified. Such definitions shall be equally applicable to
the singular and plural forms of the terms defined.
"Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
thereof), extended, renewed, refinanced or replaced from time to time.
"Applicable Commitment Commission Percentage" shall mean a
percentage per annum equal to the Applicable Commitment Commission
Percentage in effect from time to time under the Existing Promus/Embassy
Credit Agreement.
"Applicable Margin" shall mean a percentage per annum equal to
the Applicable Margin in effect from time to time under the Existing
Promus/Embassy Credit Agreement.
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit D
(appropriately completed).
"Bank" shall mean each of the financial institutions listed on
Schedule I, as well as any Person which becomes a "Bank" hereunder pursuant
to Section 10.04(b) or (c).
"Base Rate Loan" shall mean each Revolving Loan designated or
deemed designated as such by the Borrower at the time of the incurrence
thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean the borrowing of one Type of Revolving
Loan from all the Banks having Revolving Loan
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<PAGE>
Commitments on a given date (or resulting from a conversion or conversions
on such date) having in the case of Eurodollar Loans the same Interest
Period, provided that Base Rate Loans incurred pursuant to Section 1.10(b)
shall be considered part of the related Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action
to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) above and
which is also a day for trading by and between banks in the New York inter-
bank Eurodollar market.
"Commitment Commission" shall have the meaning provided in
Section 2.01(a).
"Credit Documents" shall mean this Agreement and the Revolving
Notes.
"Credit Party" shall mean Parent and the Borrower.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Effective Date" shall have the meaning provided in Section
10.10.
"Eurodollar Loan" shall mean each Revolving Loan designated as
such by the Borrower at the time of incurrence thereof or conversion
thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to first-
class banks in the New York interbank Eurodollar market by the
Administrative Agent for Dollar deposits of amounts in immediately
available funds comparable to the outstanding principal amount of the
Eurodollar Loan of the Administrative Agent with maturities comparable to
the Interest Period applicable to such Eurodollar Loan commencing two
Business Days thereafter as of 10:00 A.M. (New York time) on the date
which is two Business Days prior to the commencement of such Interest
Period, divided by (b) a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including, without limitation,
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<PAGE>
any marginal, emergency, supplemental, special or other reserves required
by applicable law) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 7.
"Existing Promus/Embassy Credit Agreement" shall mean the Credit
Agreement, dated as of July 22, 1993, among Parent, the Borrower, certain
Subsidiaries of the Borrower, various lenders, Bankers Trust Company, The
Bank of New York, Credit Lyonnais, Atlanta Agency, and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust Company, as Admin-
istrative Agent, as such Credit Agreement is in effect on the Effective
Date and without giving effect to any amendments, modifications,
supplements or terminations thereof or thereto after the Effective Date
unless, and to the extent, the Required Banks specifically agree that the
respective change will be given effect to for purposes of this Agreement.
Notwithstanding anything to the contrary contained above, for purposes of
determining whether the Existing Promus/Embassy Credit Agreement remains in
effect or has terminated, amendments, modifications, supplements or
terminations thereof shall be given effect to.
"Fees" shall mean all amounts payable pursuant to or referred to
in Section 2.01.
"Final Maturity Date" shall mean the earlier of (x) the
consummation of the Hotel Spin-Off and (y) September 29, 1995.
"Former Bank" shall have the meaning provided in Section
10.04(c).
"Hotel Spin-Off" shall mean the consummation of the spin-off by
Parent to its shareholders of the Hotel Business of the Borrower and its
Subsidiaries as contemplated by Parent's Schedule 14A as filed with the SEC
on March 22, 1995.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
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<PAGE>
"Interest Period" shall have the meaning provided in Section
1.09.
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention:
Patricia Rapisarda, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent or any Bank pursuant to the terms of this Agreement or any other
Credit Document.
"Parent" shall have the meaning provided in the first paragraph
of this Agreement.
"Payment Office" shall mean the office of the Administrative
Agent located at One Bankers Trust Plaza, New York, New York 10006, or such
other office as the Administrative Agent may hereafter designate in writing
as such to the other parties hereto.
"Qualified Person" shall mean, with respect to any Bank party to
this Agreement on the Effective Date or that becomes a Bank pursuant to
Section 10.04(b) or 10.04(c), a banking or other licensed lending
institution within the meaning of the New Jersey Gaming Regulations or a
financial source or qualifier approved under the Gaming Regulations of the
State of New Jersey applicable to lenders (or waived or exempted from the
applicable requirements thereof) and which shall not have been found
unsuitable under the Gaming Regulations of the State of Nevada applicable
to lenders and which meets the requirements of all other jurisdictions
regulating the gaming business of Parent and its Subsidiaries to the extent
that the Borrower has so notified the Banks of such requirements of such
other jurisdiction pursuant to Section 10.04(e).
"Required Banks" shall mean Banks, the sum of whose Revolving
Loan Commitments (or after the termination thereof, outstanding Revolving
Loans) represent an amount greater than fifty percent of the sum of the
Total Revolving Loan
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<PAGE>
Commitment (or after the termination thereof, the sum of the then total
outstanding Revolving Loans).
"Revolving Loan" shall have the meaning provided in Section 1.01.
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as the same may be (x) reduced from
time to time pursuant to Sections 2.02, 2.03 and/or 7 or (y) adjusted from
time to time as a result of assignments to or from such Bank pursuant to
Section 10.04.
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"Substitute Bank" shall have the meaning provided in Section
10.04(c).
"Total Revolving Loan Commitment" shall mean, at any time, the
sum of the Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment less (y) the sum of the aggregate principal amount of Revolving
Loans then outstanding.
"Type" shall mean the type of Revolving Loan determined with
regard to the interest option applicable thereto, i.e., whether a Base Rate
----
Loan or a Eurodollar Loan.
"Unutilized Revolving Loan Commitment" with respect to any Bank,
at any time, shall mean such Bank's Revolving Loan Commitment at such time
less an amount equal to the aggregate outstanding principal amount of all
Revolving Loans made by such Bank.
"Withdrawal Period" shall have the meaning provided in Section
10.04(d).
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<PAGE>
SECTION 9. The Administrative Agent.
------------------------
9.01 Appointment. The Banks hereby designate Bankers Trust
-----------
Company as Administrative Agent to act as specified herein and in the other
Credit Documents. Each Bank hereby irrevocably authorizes, and each holder
of any Revolving Note by the acceptance of such Revolving Note shall be
deemed irrevocably to authorize, the Administrative Agent to take such
action on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of
the Administrative Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Administrative Agent may
perform any of its duties hereunder by or through its officers, directors,
agents or employees.
9.02 Nature of Duties. The Administrative Agent shall not have
----------------
any duties or responsibilities except those expressly set forth in this
Agreement. Neither the Administrative Agent nor any of its officers,
directors, agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Administrative Agent
shall be mechanical and administrative in nature; the Administrative Agent
shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Bank or the holder of any
Revolving Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose
upon the Administrative Agent any obligations in respect of this Agreement
or any other Credit Document except as expressly set forth herein or
therein.
9.03 Lack of Reliance on the Administrative Agent. Independ-
--------------------------------------------
ently and without reliance upon the Administrative Agent, each Bank and the
holder of each Revolving Note, to the extent it deems appropriate, has made
and shall continue to make (i) its own independent investigation of the
financial condition and affairs of Parent and its Subsidiaries in connec-
tion with the making and the continuance of the Revolving Loans and the
taking or not taking of any action in connection herewith and (ii) its own
appraisal of the creditworthiness of Parent and its Subsidiaries and,
except as expressly provided in this Agreement, the Administrative Agent
shall not have any duty or responsibility, either initially
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<PAGE>
or on a continuing basis, to provide any Bank or the holder of any
Revolving Note with any credit or other information with respect thereto,
whether coming into its possession before the making of the Revolving Loans
or at any time or times thereafter. The Administrative Agent shall not be
responsible to any Bank or the holder of any Revolving Note for any
recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection here-
with or for the execution, effectiveness, genuineness, validity, enforce-
ability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document or the financial condition of Parent
or any of its Subsidiaries or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any other Credit Document, or the financial
condition of Parent or any of its Subsidiaries or the existence or possible
existence of any Default or Event of Default.
9.04 Certain Rights of the Administrative Agent. If the
------------------------------------------
Administrative Agent shall request instructions from the Required Banks
with respect to any act or action (including failure to act) in connection
with this Agreement or any other Credit Document, the Administrative Agent
shall be entitled to refrain from such act or taking such action unless and
until the Administrative Agent shall have received instructions from the
Required Banks; and the Administrative Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no
Bank or holder of any Revolving Note shall have any right of action what-
soever against the Administrative Agent as a result of the Administrative
Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
9.05 Reliance. The Administrative Agent shall be entitled to
--------
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by any Person that the Administrative Agent believed
to be the proper Person, and, with respect to all legal matters pertaining
to this Agreement and any other Credit Document and its duties hereunder
and thereunder, upon advice of counsel selected by the Administrative
Agent.
9.06 Indemnification. To the extent the Administrative Agent is
---------------
not reimbursed and indemnified by the Credit Parties, the Banks will
reimburse and indemnify the Adminis-
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<PAGE>
trative Agent, in proportion to their respective "percentages" as used in
determining the Required Banks, for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed
on, asserted against or incurred by the Administrative Agent in performing
its duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document;
provided that no Bank shall be liable for any portion of such liabilities,
- --------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct.
9.07 The Administrative Agent in its Individual Capacity. With
---------------------------------------------------
respect to its obligation to make Revolving Loans under this Agreement, the
Administrative Agent shall have the rights and powers specified herein for
a "Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required
Banks," "holders of Revolving Notes" or any similar terms shall, unless the
context clearly otherwise indicates, include the Administrative Agent in
its individual capacity. The Administrative Agent may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or
other business with any Credit Party or any Subsidiary or Affiliate of any
Credit Party as if it were not performing the duties specified herein, and
may accept fees and other consideration from any Credit Party for services
in connection with this Agreement and otherwise without having to account
for the same to the Banks.
9.08 Holders. The Administrative Agent may deem and treat the
-------
payee of any Revolving Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment, transfer or
endorsement thereof, as the case may be, shall have been filed with the
Administrative Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is
the holder of any Revolving Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of
such Revolving Note or of any Revolving Note or Revolving Notes issued in
exchange therefor.
9.09 Resignation by the Administrative Agent. (a) The
---------------------------------------
Administrative Agent may resign from the performance of all its functions
and duties hereunder and/or under the
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<PAGE>
other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Borrower and the Banks. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Borrower shall
appoint a successor Administrative Agent hereunder or thereunder who shall
be a commercial bank or trust company reasonably acceptable to the Required
Banks (it being understood and agreed that any Bank is deemed to be accept-
able to the Required Banks), provided that, if a Default or an Event of
--------
Default exists at the time of such resignation, the Required Banks shall
appoint such successor Administrative Agent.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent,
with the consent of the Borrower, shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent hereunder or
thereunder until such time, if any, as the Borrower or Required Banks, as
the case may be, appoint a successor Administrative Agent as provided
above.
(d) If no successor Administrative Agent has been appointed pur-
suant to clause (b) or (c) above by the 30th Business Day after the date
such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Banks
shall thereafter perform all the duties of the Administrative Agent here-
under and/or under any other Credit Document until such time, if any, as
the Required Banks appoint a successor Administrative Agent.
SECTION 10. Miscellaneous.
-------------
10.01 Payment of Expenses, etc. (a) The Borrower shall: (i)
-------------------------
whether or not the transactions herein contemplated are consummated, pay
all reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and disbursements of
White & Case) in connection with the preparation, execution and delivery of
this Agreement and the other Credit Documents and the documents and
instruments referred to herein and therein and any amendment, waiver or
consent relating hereto or thereto, of the Administrative Agent in
connection with its syndication efforts with respect to this Agreement and
of the Administrative Agent and each of
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<PAGE>
the Banks in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred to herein
and therein (including, without limitation, the reasonable fees and
disbursements of counsel (including allocated costs of in-house counsel)
for the Administrative Agent and for each of the Banks); (ii) pay and hold
each of the Banks harmless from and against any and all present and future
stamp, excise and other similar taxes with respect to the foregoing matters
and save each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iii)
indemnify the Administrative Agent and each Bank, and each of their
respective officers, directors, employees, representatives and agents from
and hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements
(including reasonable attorneys' (including allocated costs of in-house
counsel) and consultants' fees and disbursements) incurred by, imposed on
or assessed against any of them as a result of, or arising out of, or in
any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent or any Bank is a
party thereto) related to the entering into and/or performance of this
Agreement or any other Credit Document or the use of the proceeds of any
Revolving Loans or the consummation of any transactions contemplated herein
or in the other Credit Documents (including, without limitation, the
exercise of any of their rights or remedies provided herein or in the other
Credit Documents), or (b) the actual or alleged presence of Hazardous
Materials in the air, surface water or groundwater or on the surface or
subsurface of any Real Property owned, leased or at any time operated by
Parent or any of its Subsidiaries, the Release, generation, storage,
transportation, handling or disposal of Hazardous Materials at any loca-
tion, whether or not owned or operated by Parent or any of its Subsidi-
aries, the non-compliance of any Real Property with foreign, federal, state
and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim
relating in any way to Parent or any of its Subsidiaries, their operations,
or any Real Property owned, leased or at any time operated by Parent or any
of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding
(but excluding any losses, liabilities, claims, damages or expenses to the
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<PAGE>
extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified). To the extent that the undertaking to
indemnify, pay or hold harmless the Administrative Agent or any Bank set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
(b) The Borrower further agrees to pay the reasonable legal fees
of gaming counsel for the Administrative Agent in New Jersey and Nevada and
any other relevant state and all reasonable costs (including costs of
investigation) associated with any qualification (or exemption or waiver
therefrom) of any Bank under, or compliance in connection with, the Gaming
Regulations in connection with this Agreement and further syndication under
this Agreement after the Effective Date, provided that in the event that
--------
any assignee Bank or potential assignee Bank is not already a Qualified
Person (before giving effect to any actions taken to become such in
connection with this Agreement), then all costs associated with such Person
becoming a Qualified Person shall be borne by the respective assignee Bank
or potential assignee Bank.
10.02 Right of Setoff. In addition to any rights now or
---------------
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
each Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing
by such Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of the
Credit Parties against and on account of the Obligations and liabilities of
the Credit Parties to such Bank under this Agreement or under any Revolving
Note, including, without limitation, all interests in Obligations purchased
by such Bank pursuant to Section 10.06(b), and all other claims of any
nature or description arising out of or connected with this Agreement or
any such other Credit Document, irrespective of whether or not such Bank
shall have made any demand hereunder and although said Obligations, lia-
bilities or claims, or any of them, shall be contingent or unmatured.
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<PAGE>
10.03 Notices. Except as otherwise expressly provided herein,
-------
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication)
and mailed, telegraphed, telexed, telecopied, cabled or delivered: if to
Parent or the Borrower at such Credit Party's address specified opposite
its signature below; if to any Bank, at its address specified opposite its
name on Schedule II; and if to the Administrative Agent, at its Notice
Office; or, as to Parent, the Borrower or the Administrative Agent, at such
other address as shall be designated by such party in a written notice to
the other parties hereto and, as to each Bank, at such other address as
shall be designated by such Bank in a written notice to the Borrower and
the Administrative Agent. All such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the tele-
graph company, cable company or overnight courier, as the case may be, or
sent by telex or telecopier, except that notices and communications to the
Administrative Agent and the Borrower shall not be effective until received
by the Administrative Agent or the Borrower, as the case may be.
10.04 Benefit of Agreement. (a) This Agreement shall be
--------------------
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto; provided, however,
-------- -------
the Borrower may not assign or transfer any of its rights, obligations or
interest hereunder or under any other Credit Document without the prior
written consent of the Administrative Agent and the Banks and, provided
--------
further, that, although any Bank may transfer, assign or grant participa-
- -------
tions in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of
its Revolving Loan Commitments hereunder except as provided in Section
10.04(b)) and the transferee, assignee or participant, as the case may be,
shall not constitute a "Bank" hereunder and, provided further, that no Bank
----------------
shall transfer or grant any participation under which the participant shall
have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would
extend the final scheduled maturity of any Revolving Loan or Revolving
Note in which such participant is participating, or reduce the rate or
extend the time of payment of interest or Fees thereon (except in connec-
tion with a waiver of applicability of any post-default increase in
interest rates) or reduce the principal amount thereof, or increase the
amount of the
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<PAGE>
participant's participation over the amount thereof then in effect (it
being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in the Total Revolving Loan Commitment shall not
constitute a change in the terms of such participation, and that an
increase in any Revolving Loan Commitment or Revolving Loan shall be
permitted without the consent of any participant if the participant's
participation is not increased as a result thereof). In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights
against such Bank in respect of such participation to be those set forth in
the agreement executed by such Bank in favor of the participant relating
thereto) and the Borrower shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement and the other Credit Documents and all amounts payable by the
Borrower hereunder shall be determined as if such Bank had not sold such
participation. Any agreement pursuant to which any Bank may grant such a
participation shall be in a form approved by the Administrative Agent and
Parent and shall be satisfactory under the Gaming Regulations of the State
of New Jersey so as not to require participants to be approved financial
sources or qualified under such Gaming Regulations applicable to lenders.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of
its Revolving Loan Commitments and related outstanding Obligations
hereunder to its parent company and/or any affiliate of such Bank which is
at least 50% owned by such Bank or its parent company or to one or more
Banks or (y) assign all, or if less than all, a portion equal to at least
$5,000,000 in the aggregate for the assigning Bank or assigning Banks, of
such Revolving Loan Commitments and related outstanding Obligations
hereunder, in either case to one or more Qualified Persons, each of which
assignees shall become a party to this Agreement as a Bank by execution of
an Assignment and Assumption Agreement, provided that, (i) at such time
--------
Schedule I shall be deemed modified to reflect the Revolving Loan
Commitments of such new Bank and of the existing Banks, (ii) new Revolving
Notes will be issued to such new Bank and to the assigning Bank upon the
request of such new Bank or assigning Bank, such new Revolving Notes to be
in conformity with the requirements of Section 1.05 to the extent needed to
reflect the revised Revolving Loan Commitments, (iii) the consent of the
Administrative Agent shall be required in connection with any assignment
(which consent shall not be unreasonably withheld) and (iv) the Adminis-
-40-
<PAGE>
trative Agent shall receive at the time of each such assignment, from
either the assigning or assignee Bank or Banks, the payment of a non-
refundable assignment fee of $3,500 in the case of any assignment to a
Qualified Person which is not a Bank immediately prior to such assignment
or $1,000 in the case of any assignment to a then existing Bank. To the
extent of any assignment pursuant to this Section 10.04(b), the assigning
Bank shall be relieved of its obligations hereunder with respect to its
assigned Revolving Loan Commitments. At the time of each assignment
pursuant to this Section 10.04(b) to a Person which is not already a Bank
hereunder and which is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Bank shall, to the extent legally entitled to do so,
provide to the Borrower in the case of a Bank described in clause (ii) or
(iv) of Section 4.04(b) of the Existing Promus/Embassy Credit Agreement,
the forms described in such clause (ii) or (iv), as the case may be. To
the extent that an assignment of all or any portion of a Bank's Revolving
Loan Commitments and related outstanding Obligations pursuant to this
Section 10.04(b) would, at the time of such assignment, result in increased
costs under Section 1.11, 1.12 or 3.03 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall
not be obligated to pay such increased costs (although the Borrower shall
be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).
(c) If the New Jersey Gaming Authorities shall determine that
any Bank is not qualified as an approved financial source or otherwise does
not meet the standards pursuant to the Gaming Regulations in New Jersey, or
the Nevada Gaming Authorities shall determine that any Bank does not meet
the Suitability Standards under the Nevada Gaming Regulations or any other
Gaming Authority with jurisdiction over the gaming business of Parent and
its Subsidiaries shall determine that any Bank does not meet its
suitability standards (in any such case, a "Former Bank"), the Admin-
istrative Agent or the Borrower shall have the right (but not the duty) to
designate a bank or banks (in each case, a "Substitute Bank," which may be
any Bank or Banks that agree to become a Substitute Bank) that has agreed
to assume the rights and obligations of the Former Bank, subject to receipt
by the Administrative Agent of evidence that such Substitute Bank is a
Qualified Person. The Substitute Bank shall assume the rights and
obligations of the Former Bank under this Agreement pursuant to an
Assignment and Assumption Agreement,
-41-
<PAGE>
which assumption shall be required to comply with, and shall become
effective in accordance with, the provisions of Section 10.04(b), provided
--------
that the purchase price to be paid by the Substitute Bank to the
Administrative Agent for the account of the Former Bank for such assumption
shall equal the sum of (i) the unpaid principal amount of any Revolving
Notes held or Revolving Loans made by the Former Bank plus accrued interest
thereon plus (ii) such Former Bank's pro rata share of accrued Fees to the
--- ----
date of the assumption, and, provided further, the Borrower shall pay all
----------------
obligations owing to the Former Bank under the Credit Documents (including
all obligations, if any, owing pursuant to Section 1.11, but excluding
those amounts in respect of which the purchase price is being paid as
provided above). Each Bank agrees that if it becomes a Former Bank, upon
payment to it by the Borrower of all such amounts, if any, owing to it
under the Credit Documents, it will execute and deliver an Assignment and
Assumption Agreement, upon payment of such purchase price.
(d) Notwithstanding the provisions of subsection (c) of this
Section 10.04, if any Bank becomes a Former Bank, and if the Administrative
Agent or the Borrower fails to find a Substitute Bank pursuant to
subsection (c) of this Section within any time period specified by the
appropriate Gaming Authority for the withdrawal of a Former Bank (the
"Withdrawal Period"), the Borrower shall, immediately (i) prepay in full
the outstanding principal amount of each Revolving Note held or Revolving
Loan made by such Former Bank, together with accrued interest thereon to
the earlier of (x) the date of payment or (y) the last day of any With-
drawal Period, and (ii) if no Default or Event of Default then exists,
terminate the Revolving Loan Commitment of such Former Bank.
(e) Subject to the last sentence of this Section 10.04(e), each
Bank agrees that all participations and assignments made hereunder shall be
subject to, and made in compliance with, all Gaming Regulations applicable
to lenders. The Borrower hereby acknowledges that unless the Borrower has
provided the Banks with a written opinion of counsel as to the suitability
standards applicable to lenders of any relevant Gaming Authority (excluding
New Jersey and Nevada except to the extent that the suitability standards
set forth in the Gaming Regulations of such States change from those in
effect on the Effective Date) with jurisdiction over the Gaming Business of
Parent and its Subsidiaries, no Bank shall have the responsibility of
determining whether or
-42-
<PAGE>
not a potential assignee of such Bank would be a Qualified Person under the
Gaming Regulations of any such jurisdiction.
(f) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Revolving Loans and Revolving Notes hereunder to a
Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank.
10.05 No Waiver; Remedies Cumulative. No failure or delay on
------------------------------
the part of the Administrative Agent or any Bank or any holder of any
Revolving Note in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between any Credit
Party and the Administrative Agent or any Bank or the holder of any
Revolving Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any
other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder.
The rights, powers and remedies herein or in any other Credit Document
expressly provided are cumulative and not exclusive of any rights, powers
or remedies which the Administrative Agent or any Bank or the holder of any
Revolving Note would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver
of the rights of the Administrative Agent or any Bank or the holder of any
Revolving Note to any other or further action in any circumstances without
notice or demand.
10.06 Payments Pro Rata. (a) Except as otherwise provided in
-----------------
this Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of the Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its pro rata share of
--- ----
any such payment) pro rata based upon their respective shares, if any, of
--- ----
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Revolving Loans or Commitment
-43-
<PAGE>
Commission, of a sum which with respect to the related sum or sums received
by other Banks is in a greater proportion than the total of such Obligation
then owed and due to such Bank bears to the total of such Obligation then
owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without
recourse or warranty from the other Banks an interest in the Obligations of
the respective Party to such Banks in such amount as shall result in a
proportional participation by all the Banks in such amount; provided that
--------
if all or any portion of such excess amount is thereafter recovered from
such Bank, such purchase shall be rescinded and the purchase price restored
to the extent of such recovery, but without interest.
10.07 Calculations; Computations. (a) The financial statements
--------------------------
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by Parent
to the Banks); provided that, except as otherwise specifically provided
--------
herein, all computations determining compliance with Sections 9.03 through
9.05, inclusive, and Sections 9.07 through 9.10, inclusive, of the Existing
Promus/Embassy Credit Agreement, as such Sections are incorporated herein
by reference, shall utilize accounting principles and policies in conform-
ity with those used to prepare the historical financial statements
delivered to the Banks pursuant to Section 5.05.
(b) All computations of interest, Commitment Commission and
other Fees hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest, Commitment Commission
or other Fees are payable.
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
--------------------------------------------------------
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
- -------------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH CREDIT PARTY HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROP-
-44-
<PAGE>
ERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH CREDIT PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK JURISDICTION OVER SUCH CREDIT PARTY, AND AGREES NOT TO
PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID
COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH CREDIT PARTY.
EACH CREDIT PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER
CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT UNDER THIS AGREEMENT, ANY BANK OR THE HOLDER OF ANY REVOLVING NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER
JURISDICTION.
(b) EACH CREDIT PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.09 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with the Borrower and the Administrative Agent.
-45-
<PAGE>
10.10 Effectiveness. This Agreement shall become effective on
-------------
the date (the "Effective Date") and at the time on which (i) Parent, the
Borrower and the Banks shall have signed a counterpart hereof (whether the
same or different counterparts) and shall have delivered the same to the
Administrative Agent at its Notice Office or, in the case of the Banks,
shall have given to the Administrative Agent telephonic (confirmed in
writing), written or telex notice (actually received) at such office that
the same has been signed and mailed to it and (ii) the conditions contained
in Section 4 are met to the satisfaction of the Administrative Agent and
the Required Banks. Unless the Administrative Agent has received actual
notice from any Bank that the conditions contained in Section 4 have not
been met to its satisfaction, upon the satisfaction of the condition
described in clause (i) of the immediately preceding sentence and upon the
Administrative Agent's good faith determination that the conditions
described in clause (ii) of the immediately preceding sentence have been
met, then the Effective Date shall have been deemed to have occurred,
regardless of any subsequent determination that one or more of the
conditions thereto had not been met (although the occurrence of the
Effective Date shall not release any Credit Party from any liability for
failure to satisfy one or more of the applicable conditions contained in
Section 4). The Administrative Agent will give Parent, the Borrower and
each Bank prompt written notice of the occurrence of the Effective Date.
10.11 Headings Descriptive. The headings of the several
--------------------
sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
10.12 Amendment or Waiver. Neither this Agreement nor any other
-------------------
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or ter-
mination is in writing signed by the respective Credit Parties party
thereto and the Required Banks, provided that no such change, waiver,
--------
discharge or termination shall, without the consent of each Bank (with
Obligations being directly affected thereby), (i) extend the final sched-
uled maturity of any Revolving Loan or Revolving Note, or reduce the rate
or extend the time of payment of interest or Fees thereon, or reduce the
principal amount thereof, (ii) amend, modify or waive any provision of this
Section 10.12, (iii) reduce the percentage specified in the definition of
Required Banks (it being understood that, with the consent of the Required
Banks, additional extensions of
-46-
<PAGE>
credit pursuant to this Agreement may be included in the determination of
the Required Banks on substantially the same basis as the extensions of
Revolving Loan Commitments are included on the Restatement Effective Date)
or (iv) consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement; provided further, that no such
----------------
change, waiver, discharge or termination shall (x) increase the Revolving
Loan Commitment of any Bank over the amount thereof then in effect without
the consent of such Bank (it being understood that waivers or modifications
of conditions precedent, covenants, Defaults or Events of Default or of a
mandatory reduction in the Total Revolving Loan Commitment shall not
constitute an increase of the Revolving Loan Commitment of any Bank, and
that an increase in the available portion of any Revolving Loan Commitment
of any Bank shall not constitute an increase in the Revolving Loan
Commitment of such Bank) or (y) without the consent of the Administrative
Agent, amend, modify or waive any provision of Section 9 or any other
provision as same relates to the rights or obligations of the
Administrative Agent.
10.13 Survival. All indemnities set forth herein including,
--------
without limitation, in Sections 1.10, 1.11, 3.03, 9.06 and 10.01, shall
survive the execution, delivery and termination of this Agreement and the
Revolving Notes, and the making and repayment of the Revolving Loans.
10.14 Domicile of Loans. Each Bank may transfer and carry its
-----------------
Revolving Loans at, to or for the account of any office, Subsidiary or
Affiliate of such Bank. Notwithstanding anything to the contrary contained
herein, to the extent that a transfer of Revolving Loans pursuant to this
Section 10.14 would, at the time of such transfer, result in increased
costs under Section 1.10, 1.11 or 3.03 (as a result of any of the events
set forth in Section 4.04 of the Existing Promus/Embassy Credit Agreement,
as such Section is incorporated herein by reference) from those being
charged by the respective Bank prior to such transfer, then the Borrower
shall not be obligated to pay such increased costs (although the Borrower
shall be obligated to pay any other increased costs of the type described
above resulting from changes after the date of the respective transfer).
10.15 Application of Gaming Regulations. Parent, the Borrower
---------------------------------
and the Banks acknowledge that the consummation of the transactions contem-
plated by the Credit Documents is subject to the Gaming Regulations (and
Parent and the
-47-
<PAGE>
Borrower represent and warrant that all requisite approvals thereunder have
been duly obtained).
10.16 Confidentiality. (a) Subject to the provisions of clause
---------------
(b) of this Section 10.16, each Bank agrees that it will use its best
effort not to disclose without the prior consent of the Borrower (other
than to its employees, auditors or counsel or to another Bank if the Bank
or such Bank's holding or parent company in its sole discretion determines
that any such party should have access to such information) any information
with respect to Parent or any of its Subsidiaries which is now or in the
future furnished pursuant to this Agreement or any other Credit Document
and which is designated by the Borrower to the Banks in writing as
confidential, provided that any Bank may disclose any such information (a)
--------
as has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or
ruling applicable to such Bank, and (e) to any prospective or actual
transferee or participant in connection with any contemplated transfer or
participation of any of the Revolving Notes or Revolving Loan Commitments
or any interest therein by such Bank, provided, that such prospective
--------
transferee executes an agreement with such Bank containing provisions
substantially identical to those contained in this Section.
(b) The Borrower hereby acknowledges and agrees that each Bank
may share with any of its affiliates any information related to Parent or
any of its Subsidiaries (including, without limitation, any nonpublic
customer information regarding the creditworthiness of Parent and its
Subsidiaries).
-48-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers as of the date first above
written.
ADDRESSES
- ---------
1023 Cherry Road THE PROMUS COMPANIES INCORPORATED
Memphis, TN 38117
Tel: (901) 762-8600
Fax: (901) 762-8777
Attn: Treasurer By
-------------------------------
(with a copy at the Title:
same address to the
Corporate Secretary)
1023 Cherry Road EMBASSY SUITES, INC.
Memphis, TN 38117
Tel: (901) 762-8600
Fax: (901) 762-8777
Attn: Treasurer By
------------------------------
(with a copy at the Title:
same address to the
Corporate Secretary)
BANKERS TRUST COMPANY, Individually
and as Administrative Agent
By
------------------------------
Title:
-49-
<PAGE>
SCHEDULE I
----------
REVOLVING LOAN COMMITMENTS
--------------------------
Revolving Loan
Bank Commitment
- ---- --------------
Bankers Trust Company $25,000,000
-----------
Total: $25,000,000
===========
<PAGE>
SCHEDULE II
-----------
BANK ADDRESSES
--------------
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Mary Kay Coyle
Telephone No.: (212) 250-9094
Telecopier No.: (212) 250-7218
<PAGE>
EXHIBIT A
---------
NOTICE OF BORROWING
[Date]
Bankers Trust Company, as
Administrative Agent for
the Banks party to
the Credit Agreement
referred to below
One Bankers Trust Plaza
New York, New York 10006
Attention: ______________________
Gentlemen:
The undersigned, Embassy Suites, Inc. (the
"Borrower"), refers to the Credit Agreement, dated as of June
1, 1995 (as amended from time to time, the "Credit Agree-
ment", the terms defined therein being used herein as therein
defined), among The Promus Companies Incorporated, the
Borrower, the financial institutions from time to time party
thereto, and you, as Administrative Agent, and hereby gives
you notice, irrevocably, pursuant to Section 1.03 of the
Credit Agreement, that the undersigned hereby requests a
Borrowing of Revolving Loans under the Credit Agreement, and
in that connection sets forth below the information relating
to such Borrowing (the "Proposed Borrowing") as required by
Section 1.03 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is
_________, 19__.1/
-
(ii) The aggregate principal amount of the Proposed
Borrowing is $___________.
____________________
1/ Shall be a Business Day at least one Business Day in
- -
the case of Base Rate Loans and three Business Days in the
case of Eurodollar Rate Loans, in each case, after the date
hereof.
<PAGE>
EXHIBIT A
Page 2
(iii) The Revolving Loans to be made pursuant to
the Proposed Borrowing shall be initially maintained as
[Base Rate Loans] [Eurodollar Loans].
(iv) The initial Interest Period for the Proposed
Borrowing is ___ month(s).2/
-
The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on
the date of the Proposed Borrowing:
(A) the representations and warranties contained
in the Credit Agreement and in the other Credit
Documents are and will be true and correct in all
material respects, both before and after giving effect
to the Proposed Borrowing and to the application of the
proceeds thereof, as though made on such date (it being
understood and agreed that any representation or
warranty which by its terms is made as of a specified
date shall be required to be true and correct in all
material respects only as of such specified date); and
(B) no Default or Event of Default has occurred
and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds there-
of.
Very truly yours,
EMBASSY SUITES, INC.
By____________________________
Name:
Title:
____________________
2/ To be included for a Proposed Borrowing of Eurodollar
- -
Loans.
<PAGE>
EXHIBIT B
---------
REVOLVING NOTE
$_________________ New York, New York
______ __, 1995
FOR VALUE RECEIVED, EMBASSY SUITES, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay
to the order of ___________________________ (the "Bank"), in
lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company
located at One Bankers Trust Plaza, New York, New York 10006
on the Final Maturity Date (as defined in the Agreement
referred to below) the principal sum of _______________
DOLLARS ($______________) or, if less, the then unpaid
principal amount of all Revolving Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the
unpaid principal amount hereof in like money at said office
from the date hereof until paid at the rates and at the times
provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to
in the Credit Agreement, dated as of June 1, 1995, among The
Promus Companies Incorporated, Embassy Suites, Inc., the
financial institutions from time to time party thereto
(including the Bank) and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the
"Agreement"), and is entitled to the benefits thereof and of
the other Credit Documents (as defined in the Agreement).
As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the
Final Maturity Date, in whole or in part.
In case an Event of Default (as defined in the
Agreement) shall occur and be continuing, the principal of
and accrued interest on this Note may be declared to be due
and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand,
protest or notice of any kind in connection with this Note.
<PAGE>
EXHIBIT B
Page 2
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
EMBASSY SUITES, INC.
By_____________________________
Title:
<PAGE>
EXHIBIT C
---------
[NAME OF CREDIT PARTY]
Officers' Certificate
I, the undersigned, [President/Senior Vice
President/Vice President] of [Name of Credit Party], a corpo-
ration organized and existing under the laws of the State of
_________ (the "Company"), do hereby certify that:
1. This Certificate is furnished pursuant to the
Credit Agreement, dated as of June 1, 1995, among The Promus
Companies Incorporated, Embassy Suites, Inc., the financial
institutions from time to time party thereto and Bankers
Trust Company, as Administrative Agent (such Credit Agree-
ment, as in effect on the date of this Certificate, being
herein called the "Credit Agreement"). Unless otherwise
defined herein, capitalized terms used in this Certificate
shall have the meanings set forth in the Credit Agreement.
2. The individuals named on Exhibit A hereto are
elected officers of the Company or Authorized Signatories,
and each either holds the office of the Company set forth
opposite such officer's name and has held such office at
least since _______________, 1995, or has been designated an
Authorized Signatory pursuant to the resolutions described in
paragraph 5 hereof. The signature written opposite the name
and title of each such officer or Authorized Signatory is
such officer's or Authorized Signatory's correct signature.
3. Attached hereto as Exhibit B is a true and
correct copy of resolutions which were duly adopted on
__________, 19__ [by unanimous written consent of the Board
of Directors of the Company] [by a meeting of the Board of
Directors of the Company at which a quorum was present and
acting throughout] [as required by the Partnership
Agreement], and said resolutions have not been rescinded,
amended or modified. Except as attached hereto as Exhibit D,
no resolutions have been adopted by [the Board of Directors
of] the Company which deal with the execution, delivery or
performance of any of the Credit Documents to which the
Company is a party.
<PAGE>
EXHIBIT C
Page 2
[4. On the date hereof, all of the conditions in
Sections 4.05, 4.06, 4.07 and 4.09 of the Credit Agreement
have been satisfied.](1)
[4.][5.] There is no proceeding for the dissolu-
tion or liquidation of the Company or threatening its
existence.
IN WITNESS WHEREOF, I have hereunto set my hand
this ___ day of __________, 1995.
______________________________
Name:
Title:
- --------------------
(1) To be included in the Certificate delivered by Embassy
Suites, Inc.
<PAGE>
[NAME OF CREDIT PARTY]
I, the undersigned, [Secretary/Assistant Secretary] of the
Company, do hereby certify that:
1. [Name of Person making above certifications]
is the duly elected and qualified [President/Senior Vice
President/Vice President] of the Company and the signature
above is his genuine signature.
2. The certifications made by [name of Person
making above certifications] in Items 2, 3 and 4 above are
true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand
this _____ day of _________, 1995.
____________________________
Name:
Title:
<PAGE>
Exhibit A
to Officers' Certificate
------------------------
Office/
Authorized
Name(2) Signatory Signature
---- --------- ---------
______________ __________________ ________________
______________ __________________ ________________
______________ __________________ ________________
______________ __________________ ________________
--------------------
2 Include name, office and signature of each officer who
will sign any Credit Document, including the officer who
will sign the certification at the end of this Certificate.
<PAGE>
EXHIBIT D
---------
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date __________, 19__
Reference is made to the Credit Agreement described
in Item 2 of Annex I hereto (as such Credit Agreement may
hereafter be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"). Unless defined in
Annex I hereto, terms defined in the Credit Agreement are
used herein as therein defined. ___________ (the "Assignor")
and __________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee without recourse and without representation or war-
ranty (other than as expressly provided herein), and the
Assignee hereby purchases and assumes from the Assignor, that
interest in and to all of the Assignor's rights and obliga-
tions under the Credit Agreement as of the date hereof which
represents the percentage interest specified in Item 4 of
Annex I hereto (the "Assigned Share") of all of the outstand-
ing rights and obligations under the Credit Agreement relat-
ing to the Revolving Loan Commitment of the Assignor, in-
cluding, without limitation, all rights and obligations with
respect to the Assigned Share of the Revolving Loans.
2. The Assignor (i) represents and warrants that
it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and
clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in con-
nection with the Credit Agreement or the other Credit Docu-
ments or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or
the other Credit Documents or any other instrument or docu-
ment furnished pursuant thereto; and (iii) makes no repre-
sentation or warranty and assumes no responsibility with
respect to the financial condition of Parent or any of its
Subsidiaries or the performance or observance by any Credit
Party of any of its respective obligations under the Credit
Agreement or the other Credit Documents to which it is a
party or any other instrument or document furnished pursuant
thereto.
<PAGE>
EXHIBIT D
Page 2
3. The Assignee (i) confirms that it has received
a copy of the Credit Agreement and the other Credit Docu-
ments, together with copies of the financial statements re-
ferred to therein and such other documents and information as
it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agree-
ment; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor or any
other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the
Credit Agreement; (iii) confirms that it is a Qualified
Person; (iv) appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit
Documents as are delegated to the Administrative Agent by the
terms thereof, together with such powers as are reasonably
incidental thereto; [and] (v) agrees that it will perform in
accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be per-
formed by it as a Bank[; and (vi) to the extent legally
entitled to do so, attaches the forms described in the
penultimate sentence of Section 10.04(b) of the Credit
Agreement]1/.
-
4. Following the execution of this Assignment and
Assumption Agreement by the Assignor and the Assignee, an
executed original hereof (together with all attachments) will
be delivered to the Administrative Agent. The effective date
of this Assignment and Assumption Agreement shall be the date
of execution hereof by the Assignor and the Assignee and the
receipt of the consent of the Administrative Agent and
receipt by the Administrative Agent of the administrative fee
referred to in such Section 10.04(b), unless otherwise
specified in Item 5 of Annex I hereto (the "Settlement
Date").
5. Upon the delivery of a fully executed original
hereof to the Administrative Agent, as of the Settlement
Date, (i) the Assignee shall be a party to the Credit Agree-
ment and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a
Bank thereunder and under the other Credit Documents and (ii)
the Assignor shall, to the extent provided in this Assignment
and Assumption Agreement, relinquish its rights and be re-
- --------------------
1/ Include if the Assignee is organized under the laws of
- -
a jurisdiction outside of the United States.
<PAGE>
EXHIBIT D
Page 3
leased from its obligations under the Credit Agreement and
the other Credit Documents.
6. It is agreed that the Assignee shall be enti-
tled to (x) all interest on the Assigned Share of the
Revolving Loans at the rates specified in Item 6 of Annex I;
and (y) all Commitment Commission on the Assigned Share of
the Total Revolving Loan Commitment at the rate specified in
Item 7 of Annex I hereto, which, in each case, accrue on and
after the Settlement Date; such interest and Commitment
Commission to be paid by the Administrative Agent directly to
the Assignee. It is further agreed that all payments of
principal made on the Assigned Share of the Revolving Loans
which occur on and after the Settlement Date will be paid
directly by the Administrative Agent to the Assignee. Upon
the Settlement Date, the Assignee shall pay to the Assignor
an amount specified by the Assignor in writing which repre-
sents the Assigned Share of the principal amount of the re-
spective Revolving Loans made by the Assignor pursuant to the
Credit Agreement which are outstanding on the Settlement
Date, net of any closing costs, and which are being assigned
hereunder. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit
Agreement for periods prior to the Settlement Date directly
between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
<PAGE>
EXHIBIT D
Page 4
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Assignment and Assumption Agreement, as of the date first
above written, such execution also being made on Annex I
hereto.
Accepted this _____ day [NAME OF ASSIGNOR]
of ____________, 19__ as Assignor
By_____________________________
Title:
[NAME OF ASSIGNEE]
as Assignee
By_____________________________
Title:
Acknowledged and Agreed:
BANKERS TRUST COMPANY,
as Administrative Agent
By__________________________
Title:
<PAGE>
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrower:
Embassy Suites, Inc.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of June 1, 1995, among The
Promus Companies Incorporated, the Borrower, the Banks
party thereto from time to time and Bankers Trust
Company, as Administrative Agent.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
Revolving
Loan Com-
mitment
---------
a. Aggregate Amount
for all Banks $___________
b. Assigned Share2/ ___________%
-
c. Amount of
Assigned Share $___________
5. Settlement Date: ______ __, 199_
6. Rate of Interest As set forth in Section 1.08
to the Assignee: of the Credit Agreement (unless
otherwise agreed to by the Assignor
and the Assignee)3/
-
- --------------------
2/ Percentage taken to 12 decimal places.
- -
3/ The Borrower and the Administrative Agent shall direct
- -
the entire amount of the interest to the Assignee at the
rate set forth in Section 1.08 of the Credit Agreement,
(continued...)
<PAGE>
Annex I
Page 2
7. Commitment As set forth in Section 2.01(a) of the
Commission: Credit Agreement (unless otherwise
agreed to by the Assignor and the
Assignee)4/
-
8. Notice:
ASSIGNOR:
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions:
ASSIGNOR:
_____________________
_____________________
_____________________
Attention:
- --------------------
3/(...continued)
- -
with the Assignor and Assignee effecting the agreed upon
sharing of the interest through payments by the Assignee to
the Assignor.
4/ The Borrower and the Administrative Agent shall direct
- -
the entire amount of the Commitment Commission to the
Assignee at the rate set forth in Section 2.01(a) of the
Credit Agreement, with the Assignor and the Assignee
effecting the agreed upon sharing of Commitment Commission
through payment by the Assignee to the Assignor.
<PAGE>
Annex I
Page 3
Reference:
ASSIGNEE:
_____________________
_____________________
_____________________
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By_______________________ By______________________
_______________________ ______________________
(Print Name and Title) (Print Name and Title)
Exhibit 10(5)
==============================================================================
CREDIT AGREEMENT
among
THE PROMUS COMPANIES INCORPORATED (which will be renamed
"HARRAH'S ENTERTAINMENT, INC."),
EMBASSY SUITES, INC. (which will be renamed
"HARRAH'S OPERATING COMPANY, INC."),
CERTAIN SUBSIDIARIES OF EMBASSY SUITES, INC.,
VARIOUS BANKS,
BANKERS TRUST COMPANY,
THE BANK OF NEW YORK,
CIBC INC.,
CREDIT LYONNAIS, ATLANTA AGENCY,
FIRST INTERSTATE BANK
OF CALIFORNIA,
THE LONG-TERM CREDIT
BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
NATIONSBANK OF GEORGIA, N.A.,
SOCIETE GENERALE
and
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH,
as AGENTS
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
__________________________________
Dated as of July 22, 1993
and
Amended and Restated
as of June 9, 1995
__________________________________
==============================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . . . 6
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . 6
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . 7
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . 10
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . 11
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . 12
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . . . 16
1.13 Replacement of Banks . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 18
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 18
2.02 Minimum Stated Amount . . . . . . . . . . . . . . . . . . . . 20
2.03 Letter of Credit Requests . . . . . . . . . . . . . . . . . . 20
2.04 Letter of Credit Participations . . . . . . . . . . . . . . . 20
2.05 Agreement to Repay Letter of Credit Drawings . . . . . . . . . 24
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . 25
2.07 Responsibility of Letter of Credit Issuers; Reimbursement of
Expenses and Disclaimer of Liability . . . . . . . . . . . . 26
SECTION 3. Commitment Commission; Fees; Reductions of Revolving Loan
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.02 Voluntary Termination of Unutilized Revolving Loan Commit-
ments . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.03 Mandatory Reduction of Revolving Loan Commitments . . . . . . 30
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . 32
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . 32
4.02 Mandatory Repayments. . . . . . . . . . . . . . . . . . . . 33
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . 35
4.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5. Conditions Precedent to the Restatement
(i)
<PAGE>
Page
----
Effective Date . . . . . . . . . . . . . . . . . . . . . . . 38
5.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . 38
5.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . . 39
5.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . 39
5.04 Corporate Documents; Proceedings . . . . . . . . . . . . . . . 39
5.05 Master Collateral Agreement . . . . . . . . . . . . . . . . . 40
5.06 Pledge Agreements . . . . . . . . . . . . . . . . . . . . . . 40
5.07 Security Agreement . . . . . . . . . . . . . . . . . . . . . . 40
5.08 Company/Sub Guaranty . . . . . . . . . . . . . . . . . . . . . 41
5.09 Mortgages; Title Insurance; Surveys; etc. . . . . . . . . . . 41
5.10 Assignment of Partnership Interests Agreement . . . . . . . . 42
5.11 Assignment of Leases . . . . . . . . . . . . . . . . . . . . . 42
5.12 Net Lease Agreements . . . . . . . . . . . . . . . . . . . . . 42
5.13 Consent Letter . . . . . . . . . . . . . . . . . . . . . . . . 42
5.14 Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . 42
5.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.16 Hotel Transaction . . . . . . . . . . . . . . . . . . . . . . 43
5.17 Approvals, etc. . . . . . . . . . . . . . . . . . . . . . . . 44
5.18 Solvency Certificate; Evidence of Insurance . . . . . . . . . 45
5.19 Payment of Fees, Etc. . . . . . . . . . . . . . . . . . . . . 46
5.20 364-Day Credit Agreement. . . . . . . . . . . . . . . . . . . 46
5.21 Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6. Conditions Precedent to All Credit Events . . . . . . . . . . 47
6.01 No Default; Representations and Warranties . . . . . . . . . . 47
6.02 Notice of Borrowing; Letter of Credit Request . . . . . . . . 47
6.03 Election to Become a Subsidiary Borrower . . . . . . . . . . . 47
SECTION 7. Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.01 Corporate or Partnership Status . . . . . . . . . . . . . . . 50
7.02 Corporate or Partnership Power and Authority . . . . . . . . . 50
7.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.04 Governmental Approvals . . . . . . . . . . . . . . . . . . . . 51
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. . . . . . . . . . . . . . . . 51
7.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.07 True and Complete Disclosure . . . . . . . . . . . . . . . . . 53
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . 53
7.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . 54
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . 54
(ii)
<PAGE>
Page
----
7.11 The Collateral Documents . . . . . . . . . . . . . . . . . . . 55
7.12 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.13 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 57
7.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.15 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . 57
7.16 Investment Company Act . . . . . . . . . . . . . . . . . . . . 58
7.17 Public Utility Holding Company Act . . . . . . . . . . . . . . 58
7.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . 58
7.19 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . 59
7.20 Patents, Licenses, Franchises and Formulas . . . . . . . . . . 60
7.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . 60
7.22 Hotel Transaction . . . . . . . . . . . . . . . . . . . . . . 60
7.23 No Other Ventures . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 8. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . 61
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . 61
8.02 Books, Records and Inspections . . . . . . . . . . . . . . . . 64
8.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . 65
8.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . 66
8.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . 67
8.06 Compliance with Environmental Laws . . . . . . . . . . . . . . 67
8.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . 69
8.09 Performance of Obligations . . . . . . . . . . . . . . . . . . 69
8.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . 69
8.11 Registry . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.12 Additional Guarantors; Additional Collateral; etc . . . . . . 70
SECTION 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . 72
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . 76
9.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 78
9.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 80
9.05 Advances, Investments and Loans . . . . . . . . . . . . . . . 84
9.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . 85
9.07 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . 85
9.08 Consolidated Interest Coverage Ratio . . . . . . . . . . . . . 86
9.09 Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . 86
9.10 Limitation on Payments and Modifications of Subordinated
Debt; Modifications of Certificate of Incorporation,
Partnership Agreements and By-Laws. . . . . . . . . . . . . 86
9.11 Limitation on Certain Restrictions on Subsidiaries . . . . . . 88
(iii)
<PAGE>
Page
----
9.12 Limitation on Issuance of Capital Stock . . . . . . . . . . . 88
9.13 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.14 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . 89
9.15 Special Purpose Corporation . . . . . . . . . . . . . . . . . 89
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . . . . . 89
10.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . 90
10.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 90
10.04 Default Under Other Agreements . . . . . . . . . . . . . . . 90
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . 90
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
10.07 Collateral Documents . . . . . . . . . . . . . . . . . . . . 92
10.08 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . 92
10.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 92
10.10 Gaming Authority . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 11. Definitions and Accounting Terms . . . . . . . . . . . . . . 93
11.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 12. The Administrative Agent and Agents. . . . . . . . . . . . . 128
12.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . 128
12.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . 128
12.03 Lack of Reliance on the Administrative Agent and Agents . . . 129
12.04 Certain Rights of the Administrative Agent . . . . . . . . . 130
12.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . 130
12.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 130
12.07 The Administrative Agent and the Agents in their Individual
Capacities . . . . . . . . . . . . . . . . . . . . . . . . . 131
12.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
12.09 Resignation by the Administrative Agent and Agents . . . . . 131
SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 132
13.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . . 132
13.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . 134
13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
13.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . 135
13.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . 140
13.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . 140
13.07 Calculations; Computations . . . . . . . . . . . . . . . . . 141
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . 142
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 143
(iv)
<PAGE>
Page
----
13.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . 143
13.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . 144
13.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . 144
13.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 146
13.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . 146
13.15 Application of Gaming Regulations. . . . . . . . . . . . . . 146
13.16 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 147
13.17 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 147
13.18. Certain Agreements with Respect to Existing Indentures . . . 148
SECTION 14. Parent Guaranty . . . . . . . . . . . . . . . . . . . . . . 150
14.01 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . . 150
14.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . 151
14.03 Nature of Liability . . . . . . . . . . . . . . . . . . . . . 151
14.04 Independent Obligation . . . . . . . . . . . . . . . . . . . 152
14.05 Authorization . . . . . . . . . . . . . . . . . . . . . . . . 152
14.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . 153
14.07 Subordination . . . . . . . . . . . . . . . . . . . . . . . . 153
14.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
SCHEDULE I Revolving Loan Commitments
SCHEDULE II Existing Letters of Credit
SCHEDULE III Tax Matters
SCHEDULE IV Subsidiaries
SCHEDULE V Existing Indebtedness
SCHEDULE VI Joint Ventures
SCHEDULE VII Insurance
SCHEDULE VIII Existing Liens
SCHEDULE IX Hotel Subsidiaries
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Revolving Note
EXHIBIT B-2 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(iii) Certificate
EXHIBIT E Officers' Certificate
EXHIBIT F First Amendment to the Master Collateral
Agreement
EXHIBIT G-1 First Amendment to the Parent Pledge
Agreement
EXHIBIT G-2 First Amendment to the Company/Sub
Pledge Agreement
EXHIBIT H First Amendment to the Security Agreement
EXHIBIT I First Amendment to the Company/Sub Guaranty
(v)
<PAGE>
EXHIBIT J-1 First Amendment to the Atlantic City Mortgage
EXHIBIT J-2 First Amendment to the Nevada Mortgages
EXHIBIT K First Amendment to the Assignment of
Partnership Interests Agreement
EXHIBIT L First Amendment to the Assignment of Leases
EXHIBIT M Consent Letter
EXHIBIT N Solvency Certificate
EXHIBIT O 364-Day Credit Agreement
EXHIBIT P Election to Become a Subsidiary Borrower
EXHIBIT Q Assignment and Assumption Agreement
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of July 22, 1993 and Amended and
Restated as of June 9, 1995, among THE PROMUS COMPANIES INCORPORATED (which
will be renamed "HARRAH'S ENTERTAINMENT, INC."), a Delaware corporation
("Parent"), EMBASSY SUITES, INC. (which will be renamed "HARRAH'S OPERATING
COMPANY, INC."), a Delaware corporation (the "Company"), each Subsidiary
Borrower (together with the Company, each a "Borrower" and, collectively, the
"Borrowers"), the Banks party hereto from time to time, BANKERS TRUST
COMPANY, THE BANK OF NEW YORK, CIBC INC., CREDIT LYONNAIS, ATLANTA AGENCY,
FIRST INTERSTATE BANK OF CALIFORNIA, THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH, NATIONSBANK OF GEORGIA, N.A., SOCIETE GENERALE, and
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH, as Agents, and BANKERS TRUST
COMPANY, as Administrative Agent (all capitalized terms used herein and
defined in Section 11 are used herein as therein defined).
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Parent, the Borrowers, the Banks, the Agents and the
Administrative Agent are party to a Credit Agreement, dated as of July 22,
1993 (as the same has been amended, modified or supplemented to, but not
including, the Restatement Effective Date, the "Original Credit Agreement");
WHEREAS, the Original Credit Agreement refinanced and replaced the
Existing Credit Facilities (as defined in the Original Credit Agreement); and
WHEREAS, the parties hereto wish to amend and restate and refinance
the Original Credit Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree that the Original Credit
Agreement shall be and hereby is amended and restated in its entirety as
follows:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. (a) Subject to and upon the terms and
---------------
conditions set forth herein, each Bank severally agrees, (A) to convert, on
the Restatement Effective Date, Original Revolving Loans made by such Bank to
the respective Borrowers pursuant to the Original Credit
<PAGE>
Agreement and outstanding on the Restatement Effective Date into a Borrowing
of Revolving Loans hereunder to such Borrowers (as so converted, together
with all Revolving Loans made pursuant to following clause (B), the
"Revolving Loans" and each, a "Revolving Loan") and (B) at any time and from
time to time on and after the Restatement Effective Date and prior to the
Final Maturity Date, to make one or more additional Revolving Loans to one or
more Borrowers, all of which Revolving Loans made pursuant to preceding
clauses (A) and (B):
(i) shall, at the option of the respective Borrower, be Base Rate
Loans or Eurodollar Loans, provided that, except as otherwise
--------
specifically provided in Section 1.10(b), all Revolving Loans comprising
the same Borrowing shall at all times be of the same Type;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
(iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of (x) such
Bank's Adjusted Percentage and (y) the sum of (I) the aggregate amount
of all Letter of Credit Outstandings (exclusive of Unpaid Drawings which
are repaid with the proceeds of, and simultaneously with the incurrence
of, the respective incurrence of Revolving Loans) at such time and (II)
the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultane-
ously with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals (1) if such Bank is a Non-Defaulting
Bank, the Adjusted Revolving Loan Commitment of such Bank at such time
and (2) if such Bank is a Defaulting Bank, the Revolving Loan Commitment
of such Bank at such time;
(iv) shall not exceed for all Non-Defaulting Banks at any time
outstanding that aggregate principal amount which, when added to (x) the
amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving Loans) at such
time and (y) the aggregate principal amount of all Swingline Loans
(exclusive of Swingline Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then out-
-2-
<PAGE>
standing, equals the Adjusted Total Revolving Loan Commitment at such
time;
(v) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when added to (x) the amount of all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of Revolving Loans) at such time and (y) the
aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultane-
ously with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals the Total Revolving Loan Commitment at
such time; and
(vi) shall not exceed for any Subsidiary Borrower at any time
outstanding that aggregate principal amount which, when added to (x) the
amount of all Letter of Credit Outstandings (exclusive of Unpaid Draw-
ings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) of such
Subsidiary Borrower at such time and (y) the aggregate principal amount
of all Swingline Loans (exclusive of Swingline Loans which are repaid
with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) of such Subsidiary Borrower
then outstanding, equals such Subsidiary Borrower's Sub-Limit.
(b) Subject to and upon the terms and conditions set forth herein,
BTCo in its individual capacity agrees (A) to convert, on the Restatement
Effective Date, Original Swingline Loans made by BTCo to the respective
Borrowers pursuant to the Original Credit Agreement and outstanding on the
Restatement Effective Date into a Borrowing of Swingline Loans hereunder to
such Borrowers (as so converted, together with all Swingline Loans made
pursuant to following clause (B), the "Swingline Loans" and each, a
"Swingline Loan") and (B) to make at any time and from time to time on and
after the Restatement Effective Date and prior to the Swingline Expiry Date,
one or more additional Swingline Loans to one or more Borrowers, which Swing-
line Loans:
(i) shall be made and maintained as Base Rate Loans;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
-3-
<PAGE>
(iii) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Banks then outstanding and all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are
repaid with the proceeds of, and simultaneously with the incurrence of,
the respective incurrence of Revolving Loans) at such time, an amount
equal to the Adjusted Total Revolving Loan Commitment at such time
(after giving effect to any reductions to the Adjusted Total Revolving
Loan Commitment on such date);
(iv) shall not exceed for any Subsidiary Borrower at any time
outstanding that aggregate principal amount which, when combined with
the aggregate principal amount of all Revolving Loans of such Subsidiary
Borrower then outstanding and the Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) of such Subsidiary Borrower at such time, equals such
Subsidiary Borrower's Sub-Limit; and
(v) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount.
Notwithstanding anything to the contrary in this Section 1.01(b),
BTCo will not make a Swingline Loan after it has received written notice from
the Required Banks stating that a Default or an Event of Default is then in
existence and specifically requesting that BTCo not make any Swingline Loans,
provided that BTCo may continue making Swingline Loans at such time
thereafter as the respective Default or Event of Default has been cured or
waived in accordance with the requirements of this Agreement or the Required
Banks have withdrawn the written notice described above in this sentence.
(c) On any Business Day, BTCo may, in its sole discretion, give
notice to the Banks that its outstanding Swingline Loans shall be funded with
one or more Borrowings of Revolving Loans (with the Borrowers thereof being
the respective Borrowers of the Swingline Loans) (provided that such notice
--------
shall be deemed to have been automatically given upon the occurrence of an
Event of Default under Section 10.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 10), in which case one or
more Borrowings of Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be
-4-
<PAGE>
funded on the immediately succeeding Business Day by all Banks (without
giving effect to any reductions thereto pursuant to the last paragraph of
Section 10) pro rata based on each Bank's Adjusted Percentage (determined
--- ----
before giving effect to any termination of the Revolving Loan Commitments
pursuant to the last paragraph of Section 10) and the proceeds thereof shall
be applied directly to BTCo to repay BTCo for such outstanding Swingline
Loans. Each Bank hereby irrevocably agrees to make Revolving Loans upon one
Business Day's notice pursuant to each Mandatory Borrowing in the amount and
in the manner specified in the preceding sentence and on the date specified
in writing by BTCo notwithstanding (i) the amount of the Mandatory Borrowing
may not comply with the minimum amount for Borrowings otherwise required
hereunder, (ii) whether any conditions specified in Section 6 are then satis-
fied, (iii) whether a Default or an Event of Default then exists, (iv) the
date of such Mandatory Borrowing and (v) the Total Revolving Loan Commitment
or the Adjusted Total Revolving Loan Commitment at such time. In the event
that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to any
Borrower), then each Bank hereby agrees that it shall forthwith purchase (as
of the date the Mandatory Borrowing would otherwise have occurred, but
adjusted for any payments received from the respective Borrower on or after
such date and prior to such purchase) from BTCo such participations in the
outstanding Swingline Loans as shall be necessary to cause the Banks to share
in such Swingline Loans ratably based upon their respective Adjusted Percen-
tages (determined before giving effect to any termination of the Revolving
Loan Commitments pursuant to the last paragraph of Section 10), provided that
--------
(x) all interest payable on the Swingline Loans shall be for the account of
BTCo until the date as of which the respective participation is required to
be purchased and, to the extent attributable to the purchased participation,
shall be payable to the participant from and after such date and (y) at the
time any purchase of participations pursuant to this sentence is actually
made, the purchasing Bank shall be required to pay BTCo interest on the
principal amount of participation purchased for each day from and including
the day upon which the Mandatory Borrowing would otherwise have occurred to
but excluding the date of payment for such participation, at the overnight
Federal Funds Rate for the first three days and at the rate otherwise
applicable to Revolving Loans maintained as Base Rate Loans hereunder for
each day thereafter.
-5-
<PAGE>
(d) Notwithstanding anything to the contrary contained in this
Agreement, on the Restatement Effective Date (and concurrently with the
repayment of any Original Revolving Loans contemplated by the Hotel
Transaction Documents) the Borrowers shall, in coordination with the
Administrative Agent and the Banks, repay outstanding Revolving Loans (after
giving effect to the conversion of Original Revolving Loans on such date) of
certain Banks and, if necessary, incur additional Revolving Loans from other
Banks in each case so that the Banks participate in each Borrowing of
Revolving Loans pro rata on the basis of their Revolving Loan Commitments.
--- ----
1.02 Minimum Amount of Each Borrowing. The aggregate principal
--------------------------------
amount of each Borrowing of Revolving Loans shall not be less than $5,000,000
and, if greater, shall be in an integral multiple of $1,000,000; provided
--------
that Mandatory Borrowings shall be made in the amounts required by Section
1.01(c). The aggregate principal amount of each Borrowing of Swingline Loans
shall not be less than $1,000,000 and, if greater, shall be in an integral
multiple of $500,000. More than one Borrowing may occur on the same date,
but at no time shall there be outstanding more than ten Borrowings of
Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever a Borrower desires to
-------------------
make a Borrowing of Revolving Loans hereunder (excluding Borrowings of
Revolving Loans pursuant to a Mandatory Borrowing), it shall give the
Administrative Agent at its Notice Office at least one Business Day's prior
notice of each Base Rate Loan and at least three Business Days' prior notice
of each Eurodollar Loan to be made hereunder, provided that any such notice
--------
shall be deemed to have been given on a certain day only if given before
12:00 Noon (New York time) on such day. Each such notice (each a "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.10, shall be
irrevocable and shall be given by such Borrower in the form of Exhibit A,
appropriately completed to specify the aggregate principal amount of the
Revolving Loans to be made pursuant to such Borrowing, the date of such Bor-
rowing (which shall be a Business Day), whether the Revolving Loans being
made pursuant to such Borrowing are to be initially maintained as Base Rate
Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest
Period to be applicable thereto. The Administrative Agent shall promptly
give each Bank written notice of such proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters required by the immedi-
ately
-6-
<PAGE>
preceding sentence to be specified in the Notice of Borrowing.
(b)(i) Whenever a Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give BTCo not later than 12:00 Noon (New
York time) on the date that a Swingline Loan is to be made, written notice or
telephonic notice confirmed in writing of each Swingline Loan to be made
hereunder. Each such notice shall be irrevocable and specify in each case
(A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be made pursuant to such
Borrowing.
(ii) Without in any way limiting the obligation of such Borrower to
confirm in writing any telephonic notice of such Borrowing of Swingline
Loans, BTCo may act without liability upon the basis of telephonic notice of
such Borrowing, believed by BTCo in good faith to be from a President, a
Senior Vice President, a Vice President, a Treasurer or an Assistant
Treasurer of such Borrower, or any other person designated in writing by any
two of the foregoing officers who has appropriate signature cards on file
with BTCo, prior to BTCo's receipt of such written confirmation. In each
such case, such Borrower hereby waives the right to dispute BTCo's record of
the terms of such telephonic notice of such Borrowing of Swingline Loans.
(iii) Mandatory Borrowings shall be made upon the notice specified
in Section 1.01(c), with the respective Borrower irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of the Mandatory Borrowings
as set forth in Section 1.01(c).
1.04 Disbursement of Funds. Except as otherwise specifically
---------------------
provided in the immediately succeeding sentence, not later than 10:00 A.M.
(New York time) on the date specified in each Notice of Borrowing (or (x) in
the case of Swingline Loans, not later than 2:00 P.M. (New York time) on the
date specified pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory
Borrowings, not later than 12:00 Noon (New York time) on the date specified
in Section 1.01(c)), each Bank will make available its pro rata portion of
--- ----
each such Borrowing requested to be made on such date (or in the case of
Swingline Loans, BTCo shall make available the full amount thereof). All
such amounts shall be made available in Dollars and in immediately available
funds at the Payment Office of the Administrative Agent, and the
Administrative Agent will make available to the respective Borrower at the
Payment Office the aggregate of the amounts so made available
-7-
<PAGE>
by the Banks. Unless the Administrative Agent shall have been notified by
any Bank prior to the date of Borrowing that such Bank does not intend to
make available to the Administrative Agent such Bank's portion of any
Borrowing to be made on such date, the Administrative Agent may assume that
such Bank has made such amount available to the Administrative Agent on such
date of Borrowing and the Administrative Agent may, in reliance upon such
assumption, make available to the respectiveBorrower a corresponding amount.
If such corresponding amount is not in fact made available to the Adminis-
trative Agent by such Bank, the Administrative Agent shall be entitled to re-
cover such corresponding amount on demand from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent shall promptly notify the
respective Borrower and such Borrower shall immediately pay such corre-
sponding amount to the Administrative Agent. The Administrative Agent shall
also be entitled to recover on demand from such Bank or such Borrower, as the
case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the
Administrative Agent to such Borrower until the date such corresponding
amount is recovered by the Administrative Agent, at a rate per annum equal to
(i) if recovered from such Bank, the overnight Federal Funds Rate and (ii) if
recovered from such Borrower, the rate of interest applicable to the respec-
tive Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Bank from its obligation to make
Loans hereunder or to prejudice any rights which the respective Borrower may
have against any Bank as a result of any failure by such Bank to make Loans
hereunder.
1.05 Notes. (a) Each Borrower's obligation to pay the principal
-----
of, and interest on, the Loans made by each Bank to such Borrower shall be
evidenced (i) if Revolving Loans, by a promissory note duly executed and
delivered by such Borrower substantially in the form of Exhibit B-1, with
blanks appropriately completed in conformity herewith (each a "Revolving
Note" and, collectively, the "Revolving Notes") and (ii) if Swingline Loans,
by a promissory note duly executed and delivered by such Borrower substan-
tially in the form of Exhibit B-2, with blanks appropriately completed in
conformity herewith (each a "Swingline Note" and, collectively, the
"Swingline Notes").
(b) The Revolving Note issued by each Borrower to each Bank shall
(i) be payable to the order of such Bank and be dated the Restatement
Effective Date, (ii) be in a stated
-8-
<PAGE>
principal amount equal to the Revolving Loan Commitment of such Bank and be
payable in the principal amount of the outstanding Revolving Loans evidenced
thereby, (iii) mature on the Final Maturity Date, (iv) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby, (v)
be subject to mandatory repayment as provided in Section 4.02 and (vi) be
entitled to the benefits of this Agreement and the other Credit Documents.
(c) The Swingline Note issued by each Borrower to BTCo shall (i)
be payable to the order of BTCo and be dated the Restatement Effective Date,
(ii) be in a stated principal amount equal to the Maximum Swingline Amount
and be payable in the principal amount of the outstanding Swingline Loans
evidenced thereby from time to time, (iii) mature on the Swingline Expiry
Date, (iv) bear interest as provided in the appropriate clause of Section
1.08 in respect of the Base Rate Loans evidenced thereby, (v) be subject to
mandatory repayment as provided in Section 4.02 and (vi) be entitled to the
benefits of this Agreement and the other Credit Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation (or any error in such notation) shall not affect any Borrower's
obligations in respect of such Loans.
1.06 Conversions. Each Borrower shall have the option to convert,
-----------
on any Business Day, at least $5,000,000 of the outstanding principal amount
of the Revolving Loans made pursuant to one or more Borrowings of one or more
Types of Revolving Loans into a Borrowing of another Type of Revolving Loan,
provided that (i) except as otherwise provided in Section 1.10(b), Eurodollar
--------
Loans may be converted into Base Rate Loans only on the last day of an
Interest Period applicable to the Revolving Loans being converted and no such
conversion of Eurodollar Loans shall reduce the outstanding principal amount
of such Eurodollar Loans made pursuant to a single Borrowing to less than
$5,000,000, (ii) unless the Required Banks otherwise agree, Base Rate Loans
may only be converted into Eurodollar Loans if no Event of Default is in
existence on the date of the conversion and (iii) no conversion pursuant to
this Section 1.06 shall result in a greater number of Borrowings of Euro-
dollar Loans than is permitted under Section 1.02. Each such
-9-
<PAGE>
conversion shall be effected by the respective Borrower by giving the
Administrative Agent at its Notice Office prior to 12:00 Noon (New York time)
at least three Business Days' prior notice (each a "Notice of Conversion")
specifying the Revolving Loans to be so converted, the Borrowing(s) pursuant
to which such Revolving Loans were made and, if to be converted into
Eurodollar Loans, the Interest Period to be initially applicable thereto.
The Administrative Agent shall give each Bank prompt written notice of any
such proposed conversion affecting any of its Revolving Loans. Upon any such
conversion the proceeds thereof will be deemed to be applied directly on the
day of such conversion to prepay the outstanding principal amount of the
Revolving Loans being converted.
1.07 Pro Rata Borrowings. All Borrowings of Revolving Loans under
-------------------
this Agreement shall be incurred from the Banks pro rata on the basis of
--- ----
their Revolving Loan Commitments; provided that all Borrowings of Revolving
--------
Loans made pursuant to a Mandatory Borrowing shall be incurred from the Banks
pro rata on the basis of their Adjusted Percentages. It is understood that
--- ----
no Bank shall be responsible for any default by any other Bank of its obli-
gation to make Revolving Loans hereunder and that each Bank shall be obli-
gated to make the Revolving Loans provided to be made by it hereunder, re-
gardless of the failure of any other Bank to make its Revolving Loans here-
under.
1.08 Interest. (a) Each Borrower agrees to pay interest in
--------
respect of the unpaid principal amount of each Base Rate Loan from the date
the proceeds thereof are made available to such Borrower until the maturity
thereof (whether by acceleration or otherwise) at a rate per annum which
shall be equal to the Base Rate in effect from time to time.
(b) Each Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof
are made available to such Borrower until the maturity thereof (whether by
acceleration or otherwise) at a rate per annum which shall, during each
Interest Period applicable thereto, be equal to the sum of the Applicable
Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to the
greater of (x) 2% per annum in excess of the Base Rate in effect from time
-10-
<PAGE>
to time and (y) the rate which is 2% in excess of the rate then borne by such
Loans, in each case with such interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Base Rate Loan, quarterly in arrears on the last Business
Day of each March, June, September and December, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period in excess of three months, on each
date occurring at three month intervals after the first day of such Interest
Period and (iii) in respect of each Loan, on any repayment (on the amount re-
paid), at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period applicable
to Eurodollar Loans and shall promptly notify the respective Borrower and the
Banks thereof. Each such determination shall, absent manifest error, be
final and conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of
----------------
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period
applicable thereto) or on the third Business Day prior to the expiration of
an Interest Period applicable to such Eurodollar Loan (in the case of any
subsequent Interest Period), each Borrower shall have the right to elect, by
giving the Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to such Eurodollar Loan, which Interest Period
shall, at the option of such Borrower, be a one, two, three or six month
period, provided that:
--------
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Loan (including the date of
any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Loan shall com-
mence on the day on which the next preceding Interest Period applicable
thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on
a day for which there is no numer-
-11-
<PAGE>
ically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period
-------- -------
for a Eurodollar Loan would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(v) unless the Required Banks otherwise agree, no Interest Period
may be selected at any time when an Event of Default is then in
existence;
(vi) no Interest Period shall be selected which extends beyond the
Final Maturity Date; and
(vii) no Interest Period in respect of any Borrowing of Revolving
Loans shall be selected which extends beyond any date upon which a
mandatory repayment of the Revolving Loans will be required to be made
under Section 4.02(a), as a result of reductions to the Total Revolving
Loan Commitment pursuant to Section 3.03(b), unless the aggregate
principal amount of Revolving Loans which are Base Rate Loans or which
have Interest Periods which will expire on or before such date will be
sufficient to make such required prepayment.
If upon the expiration of any Interest Period applicable to a Bor-
rowing of Eurodollar Loans, the respective Borrower has failed to elect, or
is not permitted to elect, a new Interest Period to be applicable to such
Eurodollar Loans as provided above, such Borrower shall be deemed to have
elected to convert such Eurodollar Loans into Base Rate Loans effective as of
the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
---------------------------------
Bank shall have determined (which determination shall, absent manifest error,
be final and conclusive and binding upon all parties hereto but, with respect
to clause (i) below, may be made only by the Administrative Agent):
-12-
<PAGE>
(i) on any Interest Determination Date that, by reason of any
changes arising after the Restatement Effective Date affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect
to any Eurodollar Loan because of (x) any change since the Restatement
Effective Date in any applicable law or governmental rule, regulation,
order, guideline or request (whether or not having the force of law) or
in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, order,
guideline or request, such as, for example, but not limited to: (A) a
change in the basis of taxation of payment to any Bank of the principal
of or interest on the Notes or any other amounts payable hereunder
(except for changes in the rate of tax on, or determined by reference
to, the net income or profits of such Bank pursuant to the laws of the
jurisdiction in which it is organized or in which its principal office
or applicable lending office is located or any subdivision thereof or
therein) or (B) a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate and/or (y) other
circumstances since the Restatement Effective Date affecting such Bank
or the interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule,
regulation or order, (y) impossible by compliance by any Bank in good
faith with any governmental request (whether or not having force of law)
or (z) impracticable as a result of a contingency occurring after the
Restatement Effective Date which materially and adversely affects the
interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the
case of clause (i) above) shall promptly give telephonic notice (confirmed in
writing) to the respective Borrower and, except in the case of clause (i)
above, to the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the
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other Banks). Thereafter (x) in the case of clause (i) above, Eurodollar
Loans shall no longer be available until such time as the Administrative
Agent notifies the respective Borrower and the Banks that the circumstances
giving rise to such notice by the Administrative Agent no longer exist, and
any Notice of Borrowing or Notice of Conversion given by such Borrower with
respect to Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by such Borrower, (y) in the
case of clause (ii) above, the respective Borrower shall pay to such Bank,
upon written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, submitted to such Borrower by such Bank shall, absent manifest
error, be final and conclusive and binding on all the parties hereto) and (z)
in the case of clause (iii) above, the respective Borrower shall take one of
the actions specified in Section 1.10(b) as promptly as possible and, in any
event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the respective
Borrower may (and in the case of any Eurodollar Loan affected by the
circumstances described in Section 1.10(a)(iii) shall) either (x) if the
affected Eurodollar Loan is then being made initially or pursuant to a
conversion, cancel the respective Borrowing by giving the Administrative
Agent telephonic notice (confirmed in writing) on the same date that such
Borrower was notified by the affected Bank or the Administrative Agent
pursuant to Section 1.10(a)(ii) or (iii) or (y) if the affected Eurodollar
Loan is then outstanding, upon at least three Business Days' written notice
to the Administrative Agent, require the affected Bank to convert such
Eurodollar Loan into a Base Rate Loan; provided that, if more than one Bank
--------
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that the introduction of or
any change in any applicable law or governmental rule, regulation, order,
guideline, directive or request (whether or not having the force of law and
including, without limitation, those announced or published prior to the
Restatement Effective Date) concerning capital
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adequacy, or any change in interpretation or administration thereof by any
governmental authority, central bank or comparable agency, will have the
effect of increasing the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank based on the
existence of such Bank's Revolving Loan Commitment hereunder or its obli-
gations hereunder, then the Borrowers shall pay (and shall be jointly and
severally obligated to pay) to such Bank, upon its written demand therefor,
such additional amounts as shall be required to compensate such Bank or such
other corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good faith and will
use averaging and attribution methods which are reasonable, provided that
--------
such Bank's determination of compensation owing under this Section 1.10(c)
shall, absent manifest error, be final and conclusive and binding on all the
parties hereto. Each Bank, upon determining that any additional amounts will
be payable pursuant to this Section 1.10(c), will give prompt written notice
thereof to the Borrowers, which notice shall show the basis for calculation
of such additional amounts.
1.11 Compensation. The respective Borrower shall compensate each
------------
Bank, upon its written request (which request shall (x) set forth the basis
for requesting such compensation and (y) absent manifest error, be final and
conclusive and binding upon all the parties hereto), for all reasonable
losses, expenses and liabilities (including, without limitation, any loss,
expense or liability incurred by reason of the liquidation or reemployment of
deposits or other funds required by such Bank to fund its Eurodollar Loans)
which such Bank may sustain: (i) if for any reason (other than a default by
such Bank or the Administrative Agent) a Borrowing of Eurodollar Loans, or
conversion from or into Eurodollar Loans, does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by such Borrower or deemed withdrawn pursuant to Section 1.10(a));
(ii) if any repayment (including any repayment made pursuant to Section 4.01
or 4.02 or a result of an acceleration of the Loans pursuant to Section 10)
or conversion of any of its Eurodollar Loans occurs on a date which is not
the last day of an Interest Period with respect thereto; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date specified
in a notice of prepayment given by such Borrower; or (iv) as a consequence of
(x) any other default by such Borrower to repay its Loans when required by
the terms of this Agreement or any Note held
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by such Bank or (y) any election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii)
or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such
Bank, it will, if requested by the Company, use reasonable efforts (subject
to overall policy considerations of such Bank) to designate another lending
office for any Loans or Letters of Credit affected by such event, provided
--------
that such designation is made on such terms that such Bank and its lending
office suffer no economic, legal or regulatory disadvantage, with the object
of avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or postpone any of the
obligations of any Borrower or the right of any Bank provided in
Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. If any Bank (1) becomes a Defaulting
--------------------
Bank or otherwise defaults in its obligations to make Loans or fund Unpaid
Drawings, (2) is incurring or is reasonably expected to incur costs which are
or would be material in amount and are associated with a Gaming Authority's
investigation of whether or not such Bank is a Qualified Person or (3)
refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as provided in Section 13.12(b), the Company shall have the
right, if no Default or Event of Default will exist immediately after giving
effect to such replacement, to replace such Bank (the "Replaced Bank") with
one or more other Qualified Person or Persons, none of whom shall constitute
a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank"), acceptable to the Administrative Agent and each Letter
of Credit Issuer, provided that:
--------
(i) at the time of any replacement pursuant to this Section
1.13, the Replacement Bank shall enter into one or more Assignment
and Assumption Agreements pursuant to, and in accordance with the
terms of, Section 13.04(b) (and with all fees payable pursuant to
said Section 13.04(b) to be paid by the Replacement Bank) pursuant
to which the Replacement Bank shall acquire the Revolving Loan
Commitment and all outstanding Revolving Loans of, and in each case
participations in Letters of Credit by, the Replaced Bank and, in
connection
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<PAGE>
therewith, shall pay to (x) the Replaced Bank in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and
all accrued interest on, all outstanding Revolving Loans of the Replaced
Bank, (B) an amount equal to all Unpaid Drawings that have been funded
by (and not reimbursed to) such Replaced Bank, together with all then
unpaid interest with respect thereto at such time and (C) an amount
equal to all accrued, but theretofore unpaid, Fees owing to the Replaced
Bank pursuant to Section 3.01, (y) the respective Letter of Credit
Issuer an amount equal to such Replaced Bank's Adjusted Percentage (for
this purpose, determined as if the adjustment described in clause (y) of
the immediately succeeding sentence had been made with respect to such
Replaced Bank) of any applicable Unpaid Drawing (which at such time re-
mains an Unpaid Drawing) with respect to Letters of Credit issued by
such Letter of Credit Issuer to the extent such amount was not
theretofore funded by such Replaced Bank and (z) BTCo an amount equal to
such Replaced Bank's Adjusted Percentage of any Mandatory Borrowing to
the extent such amount was not theretofore funded by such Replaced Bank;
and
(ii) all obligations of the Borrowers owing to the Replaced
Bank (including all obligations, if any, owing pursuant to Section
1.11, but excluding those obligations specifically described in
clause (i) above in respect of which the assignment purchase price
has been, or is concurrently being, paid) shall be paid in full to
such Replaced Bank concurrently with such replacement.
Upon the execution of the respective Assignment and Assumption Agreements,
the payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Revolving Notes executed by the Borrowers, (x) the Replacement
Bank shall become a Bank hereunder and the Replaced Bank shall cease to
constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections
1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which shall survive as to such
Replaced Bank and (y) if such Replaced Bank is a Defaulting Bank, the
Adjusted Percentages of the Banks shall be automatically adjusted at such
time to give effect to such
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<PAGE>
replacement (and to give effect to the replacement of a Defaulting Bank with
one or more Non-Defaulting Banks).
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions set forth herein, any Borrower may request that a Letter of Credit
Issuer issue, at any time and from time to time on and after the Restatement
Effective Date and prior to the Final Maturity Date, for the account of such
Borrower and for the benefit of any holder (or any trustee, agent or other
similar representative for any such holder) of L/C Supportable Indebtedness
of such Borrower or any of its Subsidiaries, an irrevocable standby letter of
credit, in a form customarily used by such Letter of Credit Issuer or in such
other form as has been approved by such Letter of Credit Issuer (each such
standby letter of credit, a "Letter of Credit") in support of such L/C
Supportable Indebtedness. It is hereby acknowledged and agreed that each of
the letters of credit which were issued under the Original Credit Agreement
prior to the Restatement Effective Date and which remain outstanding on the
Restatement Effective Date (the "Existing Letters of Credit") shall, from and
after the Restatement Effective Date, constitute a "Letter of Credit" for
purposes of this Agreement. Each Existing Letter of Credit and the Stated
Amount thereof, together with the account party and beneficiary thereunder,
is set forth on Schedule II.
(b) Each Letter of Credit Issuer hereby agrees that it will, at
any time and from time to time on or after the Restatement Effective Date and
prior to the Final Maturity Date, following its receipt of the respective
Letter of Credit Request, issue for the account of the respective Borrower
one or more Letters of Credit in support of such L/C Supportable Indebtedness
of such Borrower or any of its Subsidiaries as is permitted to remain
outstanding without giving rise to a Default or an Event of Default, provided
--------
that no Letter of Credit Issuer shall be under any obligation to issue any
Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter
of Credit Issuer from issuing such Letter of Credit or any requirement
of law applicable to such Letter of Credit Issuer or any request or
directive (whether or not having the force of law) from any governmental
authority with jurisdiction over such Letter of Credit Issuer shall
prohibit, or request that such Letter of Credit Issuer refrain from,
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the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Letter of Credit Issuer with
respect to such Letter of Credit any restriction or reserve or capital
requirement (for which such Letter of Credit Issuer is not otherwise
compensated) not in effect on the date hereof, or any unreimbursed loss,
cost or expense which was not applicable, in effect or known to such
Letter of Credit Issuer as of the date hereof and which such Letter of
Credit Issuer in good faith deems material to it; or
(ii) such Letter of Credit Issuer shall have received notice from
the Required Banks prior to the issuance of such Letter of Credit of the
type described in the penultimate sentence of Section 2.03(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit shall
hereafter be issued the Stated Amount of which, when added to the Letter of
Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the
date of, and prior to the issuance of, the respective Letter of Credit) at
such time, would exceed, when added to the aggregate principal amount of all
Revolving Loans made by Non-Defaulting Banks and all Swingline Loans then
outstanding, an amount equal to the Adjusted Total Revolving Loan Commitment
at such time, (ii) no Letter of Credit shall hereafter be issued the Stated
Amount of which, when added to the Letter of Credit Outstandings (exclusive
of Unpaid Drawings which are repaid on the date of, and prior to the issuance
of, the respective Letter of Credit) at such time, would exceed $50,000,000,
(iii) no Letter of Credit shall hereafter be issued for the account of any
Subsidiary Borrower the Stated Amount of which, when added to the sum of (A)
the Letter of Credit Outstandings for such Subsidiary Borrower (exclusive of
Unpaid Drawings which are repaid on the date of, and prior to the issuance
of, the respective Letter of Credit) at such time and (B) the aggregate
principal amount of all Revolving Loans and Swingline Loans then outstanding
for such Subsidiary Borrower, would exceed such Subsidiary Borrower's Sub-
Limit and (iv) each Letter of Credit hereafter issued shall by its terms
terminate on or before the earlier of (x) the date which occurs 12 months
after the date of the issuance thereof (although any such Letter of Credit
may be extendable for successive periods of up to 12 months, but not beyond
the Final Maturity Date, on terms acceptable to the respective Letter of
Credit Issuer) and (y) the Final Maturity Date.
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<PAGE>
2.02 Minimum Stated Amount. The Stated Amount of each Letter of
---------------------
Credit shall be not less than $500,000 or such lesser amount as is acceptable
to the respective Letter of Credit Issuer.
2.03 Letter of Credit Requests. (a) Whenever a Borrower desires
-------------------------
that a Letter of Credit be issued for its account, such Borrower shall give
the Administrative Agent and the respective Letter of Credit Issuer at least
five Business Days' (or such shorter period as is acceptable to such Letter
of Credit Issuer in any given case) written notice thereof. Each notice
shall be in the form of Exhibit C (each a "Letter of Credit Request"). The
Administrative Agent shall promptly transmit copies of each Letter of Credit
Request to each Bank.
(b) The making of each Letter of Credit Request shall be deemed to
be a representation and warranty by the respective Borrower that such Letter
of Credit may be issued in accordance with, and will not violate the
requirements of, Section 2.01(c). Unless the respective Letter of Credit
Issuer has received written notice from the Required Banks before it issues a
Letter of Credit that one or more of the conditions specified in Section 5 or
Section 6 are not then satisfied, or that the issuance of such Letter of
Credit would violate Section 2.01(c), then such Letter of Credit Issuer may
issue the requested Letter of Credit for the account of the respective Bor-
rower in accordance with such Letter of Credit Issuer's usual and customary
practices. Upon its issuance of any Letter of Credit, the respective Letter
of Credit Issuer shall promptly notify each Bank of such issuance, which
notice shall be accompanied by a copy of the Letter of Credit actually
issued.
2.04 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by a Letter of Credit Issuer of any Letter of Credit (or upon the
Restatement Effective Date with respect to the Existing Letters of Credit),
such Letter of Credit Issuer shall be deemed to have sold and transferred to
each Bank, other than such Letter of Credit Issuer (each such Bank, in its
capacity under this Section 2.04, a "Participant"), and each such Participant
shall be deemed irrevocably and unconditionally to have purchased and
received from such Letter of Credit Issuer, without recourse or warranty, an
undivided interest and participation, to the extent of such Participant's Ad-
justed Percentage, in such Letter of Credit, each drawing made thereunder and
the obligations of the respective Borrower under this Agreement with respect
thereto, and any security therefor or guaranty pertaining
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<PAGE>
thereto. This Agreement is intended by the parties to effect an immediate
purchase by each Participant and sale by the respective Letter of Credit
Issuer of such Participant's Adjusted Percentage of such rights and
obligations in each Letter of Credit issued hereunder, and it is not to be
construed as a loan or a commitment to make a loan by such Participant to
such Letter of Credit Issuer, and the relationship between such Participant
and such Letter of Credit Issuer shall notbe a debtor-creditor relationship.
Each Participant hereby absolutely and unconditionally assumes and agrees to
pay and discharge when due, ratably in accordance with its Adjusted
Percentage, the obligations of each Letter of Credit Issuer under the Letters
of Credit issued by it, by paying to such Letter of Credit Issuer in
accordance with and to the extent provided by clause (c) of this Section
2.04, its ratable share of all amounts advanced by such Letter of Credit
Issuer subsequent to the date hereof in connection with any Letter of Credit
issued by it. Upon any change in the Revolving Loan Commitments or Adjusted
Percentages of the Banks pursuant to Section 1.13 or 13.04 or as a result of
a Bank Default, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment
to the participations pursuant to this Section 2.04 to reflect the new
Adjusted Percentages of the assignor and assignee Bank or of all Banks, as
the case may be.
(b) In determining whether to pay under any Letter of Credit, the
respective Letter of Credit Issuer shall have no obligation relative to the
Participants other than to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and that
they appear to comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by the respective Letter of
Credit Issuer under or in connection with any Letter of Credit if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
create for such Letter of Credit Issuer any resulting liability to any
Borrower or any Participant.
(c) In the event that any Letter of Credit Issuer makes any
payment under any Letter of Credit (including any Existing Letter of Credit)
and the respective Borrower shall not have reimbursed such amount in full to
such Letter of Credit Issuer pursuant to Section 2.05(a), such Letter of
Credit Issuer shall promptly notify the Administrative Agent, which shall
promptly notify each Participant of such failure, and each Participant shall
absolutely and unconditionally pay to the Administrative Agent for the
account of such Letter of
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Credit Issuer the amount of such Participant's Adjusted Percentage of such
unreimbursed payment. Each Participant required to fund a payment pursuant
to the preceding sentence shall do so in Dollars and in same day funds,
without reduction for any setoff or counterclaim of any nature whatsoever, on
the Business Day on which the Administrative Agent so notified such
Participant, if such notice was given before 11:00 A.M. (New York time), or
if such notice was not given by such time, on the Business Day next following
such notice. If and to the extent such Participant shall not have so made
its Adjusted Percentage of the amount of such payment available as aforesaid,
such Participant agrees to pay to the Administrative Agent for the account of
such Letter of Credit Issuer, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is
paid to such Letter of Credit Issuer at the overnight Federal Funds Rate.
The failure of any Participant to make available to the respective Letter of
Credit Issuer its Adjusted Percentage of any payment under any Letter of
Credit shall not relieve any other Participant of its obligation hereunder to
make available as aforesaid, its Adjusted Percentage of any Letter of Credit
on the date required, as specified above, nor shall any Participant be
relieved of its obligations to make such payments by reason of noncompliance
by any other party to and with the terms of the other Credit Documents or for
any other reason, but no Participant shall be responsible for the failure of
any other Participant to make available to such Letter of Credit Issuer such
other Participant's Adjusted Percentage of any such payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which it has received any payments from any
Participant pursuant to clause (c) of this Section 2.04 such Letter of Credit
Issuer shall promptly pay such amount in Dollars and in same day funds, less
the proportion of such amount due to such Letter of Credit Issuer, to the
Administrative Agent for the account of each Participant which has paid its
Adjusted Percentage thereof, whereupon the Administrative Agent shall
promptly distribute the amount so paid to each such Participant ratably in
accordance with its proportion of the aggregate amount theretofore funded by
all Participants.
(e) Upon the request of any Participant, the respective Letter of
Credit Issuer shall furnish to such Participant copies of any Letter of
Credit issued by it and such other documentation as may reasonably be
requested by such Participant.
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(f) The obligations of the Participants to make payments as
provided in clause (c) of this Section 2.04 with respect to Letters of Credit
issued by it shall be irrevocable and not subject to any counterclaim, set-
off, other defense or any qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right
which the respective Borrower or Participant may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, any Participant, or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or therein or any unrelated
transactions (including any underlying transaction between the
respective Borrower and the beneficiary named in any such Letter of
Credit);
(iii) any draft, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
(g) If any Participant shall fail to make any payment required
pursuant to this Agreement in respect of any Letter of Credit at the time, in
the funds and at the place provided, the respective Letter of Credit Issuer
may, but shall not be obligated to, advance funds on behalf of such
Participant (the "Defaulting Participant"). Each such advance shall be
secured by the Defaulting Participant's interest in all payments and remedies
under this Agreement and the other Credit Documents, the respective Letter of
Credit Issuer shall be subrogated to the rights of the Defaulting Participant
in this Agreement and the other Credit
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<PAGE>
Documents and, at the request of the respective Letter of Credit Issuer, the
Administrative Agent shall cause such advance to be repaid by application of
payments which the Defaulting Participant would otherwise be entitled to
receive under this Agreement and the other Credit Documents. Notwithstanding
clause (c) of this Section 2.04, any amount not paid by the Defaulting
Participant to the respective Letter of Credit Issuer as provided herein and
each advance made by such Letter of Credit Issuer hereunder shall bear
interest for each day from the date each such payment was due or such advance
was made until such payment shall be made in full or advance repaid in full
at the overnight Federal Funds Rate for the first three days during which the
Defaulting Participant is in default, and thereafter at the Prime Lending
Rate.
2.05 Agreement to Repay Letter of Credit Drawings. (a) Each
--------------------------------------------
Borrower hereby agrees to reimburse the respective Letter of Credit Issuer,
by making payment to the Administrative Agent for the account of such Letter
of Credit Issuer in immediately available funds at the Payment Office, for
any payment or disbursement made by such Letter of Credit Issuer under any
Letter of Credit issued for such Borrower's account (each such amount, so
paid until reimbursed, an "Unpaid Drawing"), immediately after, and in any
event on the date of, such payment or disbursement, with interest on the
amount so paid or disbursed by such Letter of Credit Issuer, to the extent
not reimbursed prior to 12:00 Noon (New York time) on the date of such
payment or disbursement, from and including the date paid or disbursed to but
excluding the date such Letter of Credit Issuer was reimbursed by such
Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time, provided, however, to the extent such amounts are not
-------- -------
reimbursed prior to 12:00 Noon (New York time) on the third Business Day
following notice to the Company by the Administrative Agent or the respective
Letter of Credit Issuer of such payment or disbursement, interest shall
thereafter accrue on the amounts so paid or disbursed by such Letter of
Credit Issuer (and until reimbursed by such Borrower) at a rate per annum
which shall be the Base Rate in effect from time to time plus 2%, in each
such case, with interest to be payable on demand, it being understood and
agreed, however, that the notice referred to in the immediately preceding
proviso shall not be required to be given if a Bankruptcy Event shall have
occurred and be continuing and, in such case, interest shall accrue on and
after such third Business Day at the rate provided in such proviso. The
respective Letter of Credit Issuer shall give the respective Borrower prompt
notice of each Drawing under any Letter of
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Credit, provided that the failure to give any such notice shall in no way
--------
affect, impair or diminish such Borrower's obligations hereunder.
(b) The obligations of each Borrower under this Section 2.05 to
reimburse the respective Letter of Credit Issuer with respect to Unpaid Draw-
ings (including, in each case, interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which such Borrower may have or have had
against any Bank (including in its capacity as issuer of the Letter of Credit
or as Participant), including, without limitation, any defense based upon the
failure of any drawing under a Letter of Credit (each a "Drawing") to conform
to the terms of the Letter of Credit or any nonapplication or misapplication
by the beneficiary of the proceeds of such Drawing; provided, however, that
-------- -------
such Borrower shall not be obligated to reimburse such Letter of Credit
Issuer for any wrongful payment made by such Letter of Credit Issuer under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Letter of Credit Issuer.
2.06 Increased Costs. If at any time the introduction of or any
---------------
change in any applicable law, rule, regulation, order, guideline or request
or in the interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by any Letter of Credit Issuer or any Participant with any request
or directive by any such authority (whether or not having the force of law),
or any change in generally accepted accounting principles, shall either
(i) impose, modify or make applicable any reserve, deposit, capital adequacy
or similar requirement against letters of credit issued by such Letter of
Credit Issuer or participated in by any Participant, or (ii) impose on such
Letter of Credit Issuer or any Participant any other conditions relating,
directly or indirectly, to this Agreement or any Letter of Credit; and the
result of any of the foregoing is to increase the cost to such Letter of
Credit Issuer or any Participant of issuing, maintaining or participating in
any Letter of Credit, or reduce the amount of any sum received or receivable
by such Letter of Credit Issuer or any Participant hereunder or reduce the
rate of return on its capital with respect to Letters of Credit, then, upon
demand to the respective Borrower by such Letter of Credit Issuer or any
Participant (a copy of which demand shall be sent by such Letter of Credit
Issuer or such Participant to the Administrative Agent), such Borrower shall
pay (and the Borrowers shall be
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jointly and severally obligated to pay) to such Letter of Credit Issuer or
such Participant such additional amount or amounts as will compensate such
Letter of Credit Issuer or such Participant for such increased cost or re-
duction in the amount receivable or reduction on the rate of return on its
capital. Any Letter of Credit Issuer or any Participant, upon determining
that any additional amounts will be payable pursuant to this Section 2.06,
will give prompt written notice thereof to the respective Borrower, which
notice shall include a certificate submitted to such Borrower by such Letter
of Credit Issuer or such Participant (a copy of which certificate shall be
sent by such Letter of Credit Issuer or such Participant to the
Administrative Agent), setting forth in reasonable detail the basis for the
calculation of such additional amount or amounts necessary to compensate such
Letter of Credit Issuer or such Participant. The certificate required to be
delivered pursuant to this Section 2.06 shall, absent manifest error, be
final and conclusive and binding on the respective Borrower.
2.07 Responsibility of Letter of Credit Issuers; Reimbursement of
------------------------------------------------------------
Expenses and Disclaimer of Liability. (a) Each Letter of Credit Issuer, in
------------------------------------
dealing with the participation share granted to any Participant under this
Agreement, shall have no duties or responsibilities except for those that are
expressly set forth in this Agreement. The duties of each Letter of Credit
Issuer shall be ministerial and administrative in nature; no Letter of Credit
Issuer shall have by reason of this Agreement or any other agreement a
fiduciary relationship with any Participant.
(b) Each Letter of Credit Issuer will handle all matters
concerning this Agreement in accordance with its usual practice in managing
its own affairs in the ordinary course of business, and will not be liable to
any Participant, except for its gross negligence or willful misconduct.
Without limiting the generality of the foregoing limitation of liability, and
subject to the obligation to handle matters in accordance with the respective
Letter of Credit Issuer's usual practice in managing its own affairs in the
ordinary course of business, such Letter of Credit Issuer (i) shall not be
responsible to any Participant for any statement, representation or warranty
made in this Agreement, (ii) shall not be responsible for the due execution,
effectiveness, legality, validity, binding effect, enforceability or
sufficiency of this Agreement, (iii) shall not be bound to ascertain or
inquire as to the performance of any of the terms, provisions or conditions
of this Agreement
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<PAGE>
on the part of any Person, (iv) shall be entitled to rely upon any writing,
statement or notice or any telegraph, telex or teletyped message reasonably
believed by it to be genuine and correct and believed by it to be signed and
sent by the proper person, (v) may consult with legal counsel, independent
public accountants, architects and any other experts such Letter of Credit
Issuer may select with reasonable care and shall be fully protected in any
action taken or omitted to be taken by it in accordance with the advice or
opinion of such counsel, accountants, architects or experts, (vi) may employ
agents or attorneys-in-fact and shall not be liable for the default or
misconduct of any such person selected by such Letter of Credit Issuer with
reasonable care and (vii) shall not be responsible for the performance of the
repayment obligations under this Agreement, provided that clauses (i), (ii)
--------
and (iii) of this clause (b) shall not be interpreted to relieve any Letter
of Credit Issuer of its own responsibility in such matters under this
Agreement.
(c) No Letter of Credit Issuer has made nor does it make any
express or implied representations or warranties with respect to the past,
present or future financial condition of any Credit Party or with respect to
the legality, enforceability, validity, genuineness, subsistence, priority or
value of the repayment obligations of any Credit Party under (i) this
Agreement or any other Credit Document or (ii) any security therefor.
(d) Each Participant will reimburse the respective Letter of
Credit Issuer on demand, ratably in accordance with such Participant's
Adjusted Percentage, against any and all reasonable costs, losses,
liabilities, expenses and disbursements that may be incurred or made by such
Letter of Credit Issuer in connection with any action that may be necessary
or advisable to be taken by such Letter of Credit Issuer to recover amounts
owed with respect to any Letter of Credit issued by such Letter of Credit
Issuer or the other Credit Documents for which such Letter of Credit Issuer
has not been reimbursed. Each Participant will reimburse the respective
Letter of Credit Issuer on demand, ratably in accordance with such
Participant's Adjusted Percentage, against any and all reasonable costs,
losses, liabilities, expenses and disbursements that may be incurred by such
Letter of Credit Issuer in connection with the performance of its duties
under this Agreement, provided that no Participant will be liable for any
--------
such costs, losses, liabilities, expenses and disbursements which arise
solely out of the
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<PAGE>
gross negligence or willful misconduct of such Letter of Credit Issuer.
(e) Nothing contained in this Agreement shall confer upon any
Letter of Credit Issuer or any Participant any interest in, or subject any
Letter of Credit Issuer or any Participant to any liability for, the assets
or liabilities of the other parties to the Credit Documents, except as to the
transactions referred to in this Agreement. No Letter of Credit Issuer
assumes any liability to any Participant for the repayment of its
participation except to the extent that such Participant shall be entitled to
receive payments in accordance with Section 2.04 of this Agreement.
SECTION 3. Commitment Commission; Fees; Reductions of Revolving
----------------------------------------------------
Loan Commitment.
---------------
3.01 Fees. (a) The Company agrees to pay to the Administrative
----
Agent for distribution to each Non-Defaulting Bank a commitment commission
(the "Commitment Commission") for the period from the Restatement Effective
Date to but excluding the Final Maturity Date (or such earlier date as the
Total Revolving Loan Commitment shall have been terminated), computed at a
rate for each day equal to the Applicable Commitment Commission Percentage on
the daily average Unutilized Revolving Loan Commitment of such Non-Defaulting
Bank. Accrued Commitment Commission shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December
and on the Final Maturity Date or such earlier date upon which the Total
Revolving Loan Commitment is terminated.
(b) The Company agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank (based on their respective Adjusted
Percentages) a fee in respect of each Letter of Credit issued hereunder,
including each Existing Letter of Credit (the "Letter of Credit Fee"), for
the period from and including the date of issuance of such Letter of Credit
(or, in the case of the Existing Letters of Credit, from the Restatement
Effective Date) to and including the termination of such Letter of Credit,
computed at a rate per annum equal to the Applicable Margin for Eurodollar
Loans, as in effect from time to time, on the daily average Stated Amount of
such Letter of Credit. Accrued Letter of Credit Fees shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December and upon the first day on or after the termination of
the Total Revolving Loan Commitment upon which no Letters of Credit remain
outstanding.
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<PAGE>
(c) The Company agrees to pay to each Letter of Credit Issuer, for
its own account, a facing fee in respect of each Letter of Credit issued by
it hereunder, including each Existing Letter of Credit (the "Facing Fee"),
for the period from and including the date of issuance of such Letter of
Credit (or, in the case of the Existing Letters of Credit, from the
Restatement Effective Date) to and including the termination of such Letter
of Credit, computed at a rate equal to 1/8 of 1% per annum of the daily
average Stated Amount of such Letter of Credit. Accrued Facing Fees shall be
due and payable quarterly in arrears on the last Business Day of each March,
June, September and December and upon the first day on or after the
termination of the Total Revolving Loan Commitment upon which no Letters of
Credit remain outstanding.
(d) The Company agrees to pay to each Letter of Credit Issuer,
upon each drawing under, issuance of, or amendment to, any Letter of Credit
issued by such Letter of Credit Issuer, such amount as shall at the time of
such event be the administrative charge which such Letter of Credit Issuer is
generally imposing in connection with such occurrence with respect to letters
of credit.
(e) Each Borrower agrees to pay to the Administrative Agent, for
its own account, such other fees as have been agreed to in writing by such
Borrower and the Administrative Agent.
3.02 Voluntary Termination of Unutilized Revolving Loan Commit-
----------------------------------------------------------
ments. (a) Upon at least two Business Days' prior written notice to the
-----
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Company shall have
the right, at any time or from time to time, without premium or penalty, to
terminate the Total Unutilized Revolving Loan Commitment, in whole or in
part, in integral multiples of $5,000,000 in the case of partial reductions
to the Total Unutilized Revolving Loan Commitment, provided that (i) each
--------
such reduction shall apply to reduce the remaining Scheduled Commitment
Reductions in direct order of maturity (based upon the amount of each such
remaining Scheduled Commitment Reduction), (ii) each such reduction shall
apply proportionately to permanently reduce the Revolving Loan Commitment of
each Bank and (iii) the reduction to the Total Unutilized Revolving Loan
Commitment shall in no case be in an amount which would cause the Revolving
Loan Commitment of any Bank to be reduced (as required by preceding clause
(ii)) by an amount which exceeds the remainder of (x) the
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Unutilized Revolving Loan Commitment of such Bank as in effect immediately
before giving effect to such reduction minus (y) such Bank's Adjusted
Percentage of the aggregate principal amount of Swingline Loans then
outstanding.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 13.12(b), the Company shall have the right, upon five Business Days'
prior written notice to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the
Banks), to terminate the entire Revolving Loan Commitment of such Bank, so
long as all Revolving Loans, together with accrued and unpaid interest, Fees
and all other amounts owing to such Bank are repaid concurrently with the
effectiveness of such termination (at which time Schedule I shall be deemed
modified to reflect such changed amounts), and at such time, such Bank shall
no longer constitute a "Bank" for purposes of this Agreement, except with
respect to indemnifications under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which shall
survive as to such repaid Bank.
3.03 Mandatory Reduction of Revolving Loan Commitments. (a) In
-------------------------------------------------
addition to any other mandatory commitment reductions pursuant to this
Section 3.03, the Total Revolving Loan Commitment (and the Revolving Loan
Commitment of each Bank) shall terminate in its entirety on the Final
Maturity Date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, but subject to reduction as provided in clause
(i) of the proviso set forth in Section 3.02(a), on each date set forth
below, the Total Revolving Loan Commitment shall be reduced by the amount set
forth opposite such date (each reduction required by this Section 3.03(b), a
"Scheduled Commitment Reduction"):
Date Amount
---- ------
July 31, 1998 $50,000,000
January 31, 1999 $75,000,000
July 31, 1999 $75,000,000
January 31, 2000 $100,000,000
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<PAGE>
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on the 15th day after the date on which any
Change of Control occurs, the Total Revolving Loan Commitment shall be
reduced to zero unless the Required Banks otherwise agree in writing in their
sole discretion.
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Restatement Effective
Date upon which Parent or any of its Subsidiaries receives any proceeds from
any incurrence by Parent or any of its Subsidiaries of Permitted Designated
Indebtedness, the Total Revolving Loan Commitment shall be reduced by an
amount equal to its Share of the cash proceeds of the respective incurrence
of Permitted Designated Indebtedness (net of underwriting or placement
discounts and commissions and other reasonable costs associated therewith),
provided that in the case of each incurrence of Existing Casino Non-Recourse
--------
Financing, the Total Revolving Loan Commitment shall only be reduced by an
amount equal to its Share of the Minimum Proceeds Amount for the respective
Casino Property; provided further, to the extent that the 364-Day Banks do
not require that their full Share be applied to reduce the Total 364-Day
Revolving Loan Commitment, the amount of their Share not so applied shall
instead be applied to reduce the Total Revolving Loan Commitment as required
by clause (f) of this Section 3.03.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date after the Restatement Effective
Date upon which Parent or any of its Subsidiaries receives proceeds from any
sale of assets constituting Collateral (but excluding (i) sales of inventory,
materials and equipment in the ordinary course of business and (ii) sales of
obsolete, uneconomic or worn-out equipment or materials), the Total Revolving
Loan Commitment shall be reduced by an amount equal to its Share of 100% of
the Net Sale Proceeds thereof, provided that, in the case of any sale of a
Casino Property, the Total Revolving Loan Commitment shall only be reduced by
an amount equal to its Share of the Minimum Proceeds Amount for the
respective Casino Property or Casino Owner thereof; provided further, to the
extent that the 364-Day Banks do not require that their full Share be applied
to reduce the Total 364-Day Revolving Loan Commitment, the amount of their
Share not so applied instead be applied to reduce the Total Revolving Loan
Commitment as required by clause (f) of this Section 3.03.
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<PAGE>
(f) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, following any mandatory commitment reduction
required by Section 3.03(d) or (e) with respect to which the Shares of the
various Issues of Senior Debt have been calculated in accordance with clause
(A) of the definition of "Share," on the first date thereafter upon which it
is subsequently determined that the amount which will actually be required to
mandatorily reduce the Total 364-Day Revolving Loan Commitment is less than
the Share applicable thereto (whether because the 364-Day Banks elected not
to require such reduction or otherwise), then the amount which will not be so
required to mandatorily reduce the Total 364-Day Revolving Loan Commitment
shall instead be required to reduce the Total Revolving Loan Commitment as
required by Section 3.03(d) or (e), as the case may be.
(g) The Total Revolving Loan Commitment shall be reduced, and the
Revolving Loan Commitment of the respective Former Bank shall be terminated,
in the amount and at the times provided in Section 13.04(d).
(h) Except as otherwise provided in clause (g) of this Section
3.03, each reduction to the Total Revolving Loan Commitment pursuant to this
Section 3.03 shall be applied proportionately to reduce the Revolving Loan
Commitment of each Bank.
SECTION 4. Prepayments; Payments; Taxes.
----------------------------
4.01 Voluntary Prepayments. Each Borrower shall have the right to
---------------------
prepay the Loans made to it, without premium or penalty, in whole or in part
at any time and from time to time on the following terms and conditions:
(i) such Borrower shall give the Administrative Agent prior to
12:00 Noon (New York time) at its Notice Office (x) at least one
Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Base Rate Loans (or same
day notice in the case of Swingline Loans provided such notice is given
prior to 12:00 Noon (New York time) on such Business Day) and (y) at
least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of its intent to prepay Eurodollar Loans,
whether Revolving Loans or Swingline Loans shall be prepaid, the amount
of such prepayment and the Types of Loans to be prepaid and, in the case
of Eurodollar Loans, the specific Borrowing or Borrowings
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<PAGE>
pursuant to which made, which notice the Administrative Agent shall
promptly transmit to each of the Banks;
(ii) each prepayment shall be in an aggregate principal amount of
at least $5,000,000 (or $1,000,000 in the case of Swingline Loans),
provided that, if any partial prepayment of Eurodollar Loans made
--------
pursuant to any Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than $5,000,000, then
such Borrowing may not be continued as a Borrowing of Eurodollar Loans
and any election of an Interest Period with respect thereto given by the
Borrower shall have no force or effect;
(iii) each prepayment in respect of any Revolving Loans made pur-
suant to a Borrowing shall be applied pro rata among such Revolving
--- ----
Loans, provided that, at the respective Borrower's election in connec-
--------
tion with any prepayment of Revolving Loans pursuant to this Section
4.01, such prepayment shall not be applied to any Revolving Loan of a
Defaulting Bank; and
(iv) in the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with
respect to this Agreement which have been approved by the Required Banks
as provided in Section 13.12(b), the Borrowers shall have the right,
upon five Business Days' prior written notice to the Administrative
Agent at its Notice Office (which notice the Administrative Agent shall
promptly transmit to each of the Banks) repay all Revolving Loans,
together with accrued and unpaid interest, Fees, and other amounts owing
to such Bank in accordance with said Section 13.12(b) so long as (A) the
Revolving Loan Commitment of such Bank is terminated concurrently with
such repayment (at which time Schedule I shall be deemed modified to
reflect the changed Revolving Loan Commitments) and (B) the consents
required by Section 13.12(b) in connection with the repayment pursuant
to this clause (iv) have been obtained.
4.02 Mandatory Repayments. (a)(i) On any day on which the sum of
--------------------
the aggregate outstanding principal amount of Revolving Loans made by Non-
Defaulting Banks, Swingline Loans and the Letter of Credit Outstandings
exceeds the Adjusted Total Revolving Loan Commitment as then in effect, there
shall be required to be repaid on such date that principal amount of
Swingline Loans and, after all Swingline Loans have been repaid in full,
Revolving Loans of Non-
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<PAGE>
Defaulting Banks in an amount equal to such excess. If, after giving effect
to the repayment of all outstanding Swingline Loans and Revolving Loans of
Non-Defaulting Banks, the aggregate amount of the Letter of Credit Out-
standings exceeds the Adjusted Total Revolving Loan Commitment as then in
effect, the Company shall pay to the Administrative Agent at the Payment
Office on such date an amount of cash or cash equivalents equal to the amount
of such excess (up to a maximum amount equal to the Letter of Credit
Outstandings at such time), such cash or cash equivalents to be held as
security for all obligations of the Borrowers to Non-Defaulting Banks
hereunder in a cash collateral account to be established by the
Administrative Agent.
(ii) On any day on which the sum of the aggregate outstanding
principal amount of Revolving Loans and Swingline Loans made to any
Subsidiary Borrower and the Letter of Credit Outstandings in respect of
Letters of Credit issued for the account of such Subsidiary Borrower exceeds
such Subsidiary Borrower's Sub-Limit, such Subsidiary Borrower shall repay
principal of its Swingline Loans and, after the Swingline Loans have been
repaid in full, its Revolving Loans in an amount equal to such excess. If,
after giving effect to the repayment of all of its outstanding Swingline
Loans and Revolving Loans, the aggregate amount of its Letter of Credit
Outstandings exceeds such Subsidiary Borrower's Sub-Limit, such Subsidiary
shall pay to the Administrative Agent at the Payment Office on such date an
amount of cash or cash equivalents equal to the amount of such excess (up to
a maximum amount equal to its Letter of Credit Outstandings at such time),
such cash or cash equivalents to be held as security for all obligations of
such Subsidiary Borrower hereunder in a cash collateral account to be
established by the Administrative Agent.
(iii) On any day on which the aggregate outstanding principal amount
of Revolving Loans made by any Defaulting Bank exceeds the Revolving Loan
Commitment of such Defaulting Bank, the Borrowers shall repay principal of
Revolving Loans of such Defaulting Bank in an amount equal to such excess.
(b) With respect to each repayment of Revolving Loans required by
this Section 4.02, the respective Borrower may designate the Types of
Revolving Loans which are to be repaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made, provided that:
--------
(i) repayments of Eurodollar Loans pursuant to this Section 4.02 may only be
made on the last day of an Interest Period applicable thereto unless all
Eurodollar Loans with
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Interest Periods ending on such date of required repayment and all Base Rate
Loans have been paid in full; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than $5,000,000, such
Borrowing shall be converted on such day into a Borrowing of Base Rate Loans;
(iii) each repayment of any Revolving Loans made by Non-Defaulting Banks
pursuant to a Borrowing shall be applied pro rata among such Revolving Loans;
--- ----
and (iv) each repayment of any Revolving Loans made by Defaulting Banks
pursuant to a Borrowing shall be applied pro rata among suchRevolving Loans.
--- ----
In the absence of a designation by any Borrower as described in the preceding
sentence, the Administrative Agent shall, upon telephonic notice to the
Company and subject to the above, make such designation in its sole
discretion.
(c) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, (i) all then outstanding Swingline Loans shall be repaid
in full on the Swingline Expiry Date and (ii) all then outstanding Revolving
Loans shall be repaid in full on the Final Maturity Date.
4.03 Method and Place of Payment. Except as otherwise
---------------------------
specifically provided herein, all payments under this Agreement or under any
Note shall be made to the Administrative Agent for the account of the Bank or
Banks entitled thereto not later than 12:00 Noon (New York time) on the date
when due and shall be made in Dollars in immediately available funds at the
Payment Office of the Administrative Agent. Whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
4.04 Net Payments. (a) All payments made by any Borrower
------------
hereunder or under any Note, will be made without setoff, counterclaim or
other defense. Except as provided in Section 4.04(b), all such payments will
be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect
to such payments (but excluding, except as provided in the immediately
succeeding sentence, any tax imposed on or measured by the net income or
profits of a Bank pursuant to
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<PAGE>
the laws of the United States and the jurisdiction in which it is organized
or in which the principal office or applicable lending office of such Bank is
located or any subdivision or taxing authority thereof or therein) and all
interest, penalties or similar liabilities with respect thereto
(collectively, "Taxes"). If any amounts are payable in respect of Taxes
pursuant to the preceding sentence, then the Borrowers agree to reimburse
each Bank, upon the written request of such Bank, for taxes imposed on or
measured by the net income of such Bank pursuant to the laws of the jurisdic-
tion in which the principal office or applicable lending office of such Bank
is located or under the laws of any political subdivision or taxing authority
of any such jurisdiction in which the principal office or applicable lending
office of such Bank is located and for any withholding of income or similar
taxes imposed by the United States of America as such Bank shall determine
are payable by, or withheld from, such Bank in respect of such amounts so
paid to or on behalf of such Bank pursuant to the preceding sentence and in
respect of any amounts paid to or on behalf of such Bank pursuant to this
sentence. If any Taxes are so levied or imposed, the Borrowers agree to pay
the full amount of such Taxes, and such additional amounts as may be neces-
sary so that every payment of all amounts due under this Agreement or under
any Note, after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein or in such Note. The
Borrowers will furnish to the Administrative Agent within 45 days after the
date the payment of any Taxes is due pursuant to applicable law copies of
official tax receipts received from the relevant taxing authority evidencing
such payment by the Borrowers. The Borrowers agree to indemnify and hold
harmless each Bank, and reimburse such Bank upon its written request, for the
amount of any Taxes so levied or imposed and paid by such Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees (i) in the case of any such Bank that is a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and which constitutes a Bank
hereunder on the Restatement Effective Date, to provide to the Company and
the Administrative Agent within five days after the Restatement Effective
Date two original signed copies of Internal Revenue Service Form 4224 or Form
1001 certifying to such Bank's entitlement to an exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, (ii) in the case of any such Bank that is a "bank" within the
meaning of
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Section 881(c)(3)(A) of the Code, that, to the extent legally entitled to do
so, (x) with respect to a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.13 or 13.04 (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), within five days after such assignment or transfer
to such Bank, and (y) with respect to any such Bank, from time to time upon
the reasonable written request of the Company or the Administrative Agent
after the Restatement Effective Date, such Bank will provide to the Company
and the Administrative Agent two original signed copies of Internal Revenue
Service Form 4224 or Form 1001 (or any successor forms) certifying to such
Bank's entitlement to an exemption from, or reduction in, United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, (iii) in the case of any such Bank (other than a Bank
described in clause (i) or (ii) above) which constitutes a Bank hereunder on
the Restatement Effective Date, to provide to the Company and the
Administrative Agent, within five days after the Restatement Effective Date
(x) a certificate substantially in the form of Exhibit D (any such certi-
ficate, a "Section 4.04(b)(iii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8, certi-
fying to such Bank's entitlement at the date of such certificate (assuming
compliance by the Company with Section 8.11) to an exemption from United
States withholding tax under the provisions of Section 881(c) of the Code
with respect to payments to be made under this Agreement and under any Note
and (iv) in the case of any such Bank (other than a Bank described in clause
(i) or (ii) above), to the extent legally entitled to do so, (x) with respect
to a Bank that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.13 or 13.04 (unless the respective Bank was
already a Bank hereunder immediately prior to such assignment or transfer),
within five days after such assignment or transfer to such Bank, and (y) with
respect to any such Bank, from time to time upon the reasonable written re-
quest of the Company or the Administrative Agent after the Restatement Ef-
fective Date, to provide to the Company and the Administrative Agent such
other forms as may be required in order to establish the entitlement of such
Bank to an exemption from withholding with respect to payments under this
Agreement and under any Note. Notwithstanding anything to the contrary
contained in Section 4.04(a), but subject to the immediately succeeding
sentence, each Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from
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<PAGE>
interest, fees or other amounts payable hereunder (without any obligation to
pay the respective Bank additional amounts with respect thereto) for the
account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes and which has not provided to the Company such forms required to be
provided to the Company pursuant to the first sentence of this Section
4.04(b). Notwithstanding anything to the contrary contained in the preceding
sentence and except as set forth in Section 13.04(b), each Borrower agrees to
indemnify each Bank in the manner set forth in Section 4.04(a) in respect of
any amounts deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Restatement Effective
Date in any applicable law, treaty, governmental rule, regulation, guideline
or order, or in the interpretation thereof, relating to the deducting or
withholding of income or similar Taxes.
(c) If any Borrower pays any additional amount under this Section
4.04 to a Bank and such Bank determines that it has received or realized in
connection therewith any refund or any reduction of, or credit against, its
Tax liabilities in or with respect to the taxable year in which the
additional amount is paid, such Bank shall pay to the respective Borrower an
amount that the Bank shall, in its sole discretion, determine is equal to the
net benefit, after tax, which was obtained by the Bank in such taxable year
as a consequence of such refund, reduction or credit.
SECTION 5. Conditions Precedent tothe Restatement Effective Date.
-----------------------------------------------------
The occurrence of the Restatement Effective Date pursuant to Section 13.10,
and the obligation of each Bank to make Loans, and the obligation of any
Letter of Credit Issuer to issue Letters of Credit, on the Restatement
Effective Date is subject to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the
-----------------------------
Restatement Effective Date, (i) this Agreement shall have been executed and
delivered as provided in Section 13.10 and (ii) there shall have been
delivered to the Administrative Agent for the account of each Bank the
appropriate Revolving Notes executed by the respective Borrowers, and to BTCo
the appropriate Swingline Notes executed by such Borrowers, in each case in
the amount, maturity and as otherwise provided herein.
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5.02 Officer's Certificate. On the Restatement Effective Date,
---------------------
the Administrative Agent shall have received a certificate dated the
Restatement Effective Date signed on behalf of the Company by the President,
any Senior Vice President or any Vice President of the Company stating that
all of the conditions in Sections 5.14, 5.15, 5.16, 5.17, 5.19, 5.20 and 6.01
have been satisfied on such date.
5.03 Opinions of Counsel. On the Restatement Effective Date, the
-------------------
Administrative Agent shall have received (i) from Latham & Watkins, counsel
to Parent, the Company and the Subsidiary Borrowers, an opinion addressed to
the Administrative Agent and each of the Banks and dated the Restatement
Effective Date in form and substance satisfactory to the Administrative Agent
and the Required Banks, (ii) from E.O. Robinson, Jr., General Counsel to
Parent and the Company, an opinion addressed to the Administrative Agent and
each of the Banks and dated the Restatement Effective Date in form and
substance satisfactory to the Administrative Agent and the Required Banks and
(iii) from local counsel reasonably satisfactory to the Administrative Agent,
opinions each of which shall be in form and substance satisfactory to the
Administrative Agent and the Required Banks and shall cover the New Jersey
and Nevada Gaming Regulations and the perfection and priority of the security
interests granted pursuant to the Security Agreement and the Mortgages
(except that no opinion need be given with respect to the priority of the
Lien of any Mortgage) and such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably request.
5.04 Corporate Documents; Proceedings. (a) On the Restatement
--------------------------------
Effective Date, the Administrative Agent shall have received a certificate,
dated the Restatement Effective Date, signed by the President, any Senior
Vice President or any Vice President of each of the Credit Parties, and
attested to by the Secretary or any Assistant Secretary of each such Credit
Party, in the form of Exhibit E with appropriate insertions, together with
copies of the certificate of incorporation, partnership agreement and by-laws
of such Credit Party, as the case may be, and the resolutions of such Credit
Party referred to in such certificate, and the foregoing shall be acceptable
to the Administrative Agent in its reasonable discretion.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this
Agreement, the other Credit Documents and the Hotel Transaction Documents
shall be
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satisfactory in form and substance to the Administrative Agent and the
Required Banks, and the Administrative Agent shall have received true and
correct copies of all Hotel Transaction Documents, together with all infor-
mation and copies of all other documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams, if any, which the Administrative Agent reasonably may
have requested in connection therewith, such documents and papers where
appropriate to be certified by proper corporate or governmental authorities.
5.05 Master Collateral Agreement. On the Restatement Effective
---------------------------
Date, the Administrative Agent, the Collateral Agent and each Collateral
Grantor shall have entered into an amendment to the Master Collateral
Agreement in the form of Exhibit F, and the Master Collateral Agreement, as
so amended, shall be in full force and effect.
5.06 Pledge Agreements. (a) On the Restatement Effective Date,
-----------------
the Collateral Agent and Parent shall have entered into an amendment to the
Parent Pledge Agreement in the form of Exhibit G-1, and the Parent Pledge
Agreement, as so amended, shall be in full force and effect. On the Re-
statement Effective Date, the Collateral Agent, as Pledgee, shall have in its
possession all the Pledged Securities referred to in the Parent Pledge
Agreement then owned by Parent, together with executed and undated stock
powers.
(b) On the Restatement Effective Date, the Collateral Agent and
each Collateral Grantor party to the Company/Sub Pledge Agreement shall have
entered into an amendment to the Company/Sub Pledge Agreement in the form of
Exhibit G-2, and the Company/Sub Pledge Agreement, as so amended, shall be in
full force and effect. On the Restatement Effective Date, the Collateral
Agent, as Pledgee, shall have in its possession all the Pledged Securities
referred to in the Company/Sub Pledge Agreement then owned by the respective
Collateral Grantor, together with executed and undated stock powers.
5.07 Security Agreement. On the Restatement Effective Date, the
------------------
Collateral Agent and each Collateral Grantor party to the Security Agreement
shall have entered into an amendment to the Security Agreement in the form of
Exhibit H, and the Security Agreement, as so amended, shall be in full force
and effect. On the Restatement Effective Date, no filings, recordings or
registrations (other than those made prior to the Restatement Effective Date)
shall be
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necessary or required to perfect (or maintain the perfection and priority of)
the security interest created under the Security Agreement.
5.08 Company/Sub Guaranty. On the Restatement Effective Date, the
--------------------
Collateral Agent, the Company and each other Guarantor (other than Parent)
shall have entered into an amendment to the Company/Sub Guaranty in the form
of Exhibit I, and the Company/Sub Guaranty, as so amended, shall be in full
force and effect.
5.09 Mortgages; Title Insurance; Surveys; etc. On the Restatement
-----------------------------------------
Effective Date, the Collateral Agent shall have received:
(i) fully executed counterparts of amendments (each a "Mortgage
Amendment" and, collectively, the "Mortgage Amendments") to each of the
Mortgages in the form of Exhibit J-1 in the case of the Atlantic City
Property and Exhibit J-2 in the case of the other Casino Properties,
together with evidence that counterparts of the Mortgage Amendments have
been delivered to the title insurance company insuring the Lien of such
Mortgages for recording in all places to the extent necessary or desir-
able, in the judgment of the Collateral Agent, effectively to create or
maintain a valid and enforceable first priority mortgage lien on each
such Mortgaged Property in favor of the Collateral Agent for the benefit
of the Secured Parties;
(ii) endorsements to the Mortgage Policies issued by First American
Title Insurance Company or such other title insurers reasonably
satisfactory to the Administrative Agent in amounts satisfactory to the
Administrative Agent assuring the Administrative Agent that the
Mortgages on the Mortgaged Properties are valid and enforceable first
priority mortgage liens on the respective Mortgaged Properties, free and
clear of all defects and encumbrances except Permitted Encumbrances and
such endorsements shall otherwise be in form and substance satisfactory
to the Administrative Agent, and shall include, as appropriate, an
endorsement for future advances under this Agreement and the Notes and
for any other matter that the Administrative Agent in its discretion may
reasonably request, shall not include an exception for mechanics' liens,
and shall provide for affirmative insurance and such reinsurance as the
Administrative Agent in its discretion may reasonably request; and
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(iii) either (x) an officer's certificate of the Company with
respect to each Mortgaged Property certifying that there has been no
material alterations or improvements to such Mortgaged Property, which
certificate shall be in form and substance satisfactory to the
Administrative Agent or (y) in the case of any Mortgaged Property for
which the foregoing certification cannot be made, an updated survey for
such Mortgaged Property, in form and substance reasonably satisfactory
to the Administrative Agent, certified by a licensed professional
surveyor reasonably satisfactory to the Administrative Agent.
5.10 Assignment of Partnership Interests Agreement. On the
---------------------------------------------
Restatement Effective Date, the Collateral Agent, Marina, Harrah's Atlantic
City and Harrah's New Jersey shall have entered into an amendment to the
Assignment of Partnership Interests Agreement in the form of Exhibit K, and
the Assignment of Partnership Interests Agreement, as so amended, shall be in
full force and effect.
5.11 Assignment of Leases. On the Restatement Effective Date,
--------------------
the Collateral Agent and Marina shall have entered into an amendment to the
Assignment of Leases in the form of Exhibit L, and the Assignment of Leases,
as so amended, shall be in full force and effect.
5.12 Net Lease Agreements. On the Restatement Effective Date,
--------------------
each of the Net Lease Agreements shall be in full force and effect, provided
--------
that, to the extent the Company transfers its ownership interest in any of
the Casino Properties located in Nevada to Harrah's Club as permitted by
Section 9.02(a), the Net Lease Agreement with respect to each such Casino
Property may be terminated.
5.13 Consent Letter. On the Restatement Effective Date, the
--------------
Administrative Agent shall have received a letter from CT Corporation System,
presently located at 1633 Broadway, New York, New York 10019, substantially
in the form of Exhibit M, indicating its consent to its appointment by each
Credit Party as its agent to receive service of process as specified in
Section 13.08.
5.14 Adverse Change. On or prior to the Restatement Effective
--------------
Date, nothing shall have occurred (and the Banks shall have become aware of
no facts or conditions not previously known) which the Administrative Agent
or the Required Banks shall determine has, or could reasonably be expected to
have, a material adverse effect on the rights or
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remedies of the Administrative Agent, the Collateral Agent, or the Banks, or
on the ability of Parent or any Borrower or any other Credit Party to perform
its obligations to the Administrative Agent, the Collateral Agent and the
Banks or which has, or could reasonably be expected to have, a materially
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
5.15 Litigation. On the Restatement Effective Date, no litigation
----------
by any entity (private or governmental) shall be pending or threatened with
respect to this Agreement, the Hotel Transaction or any documentation
executed in connection herewith or therewith or the transactions contemplated
hereby or thereby, or with respect to any material Indebtedness of Parent or
any of its Subsidiaries or which the Administrative Agent or the Required
Banks shall determine could reasonably be expected to have a materially
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
5.16 Hotel Transaction. (a) On the Restatement Effective Date,
-----------------
Parent shall have changed its legal corporate name to "Harrah's
Entertainment, Inc.", and the Company shall have changed its legal corporate
name to "Harrah's Operating Company, Inc."
(b) On the Restatement Effective Date, the Company and the Hotel
Subsidiaries shall have entered into the Hotel Facility, no default or event
of default shall exist thereunder and the Company shall have incurred not
less than $210,000,000 of loans thereunder.
(c) On the Restatement Effective Date, the Company shall have
consummated the Hotel Transfer.
(d) On the Restatement Effective Date, in consideration of the
Hotel Transfer described in clause (c) of this Section 5.16, the Company
shall have irrevocably and unconditionally assigned to the Hotel Company, and
the Hotel Company shall have irrevocably and unconditionally assumed from the
Company, and the Company shall have been irrevocably and unconditionally
released from, all of the Company's rights and obligations under the Hotel
Facility.
(e) On the Restatement Effective Date, Parent and the Company
shall have declared and paid the Hotel Stock Dividend.
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<PAGE>
5.17 Approvals, etc. (a) On or prior to the Restatement Effective
---------------
Date, all necessary governmental (domestic and foreign) and third party
approvals (including, without limitation, the approval of the holders of the
8-3/4% Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes) in
connection with the transactions contemplated by this Agreement, the Hotel
Transaction Documents and otherwise referred to herein or therein shall have
been obtained and remain in effect, and all applicable waiting periods shall
have expired without any action being taken by any competent authority which
restrains, prevents or imposes materially adverse conditions upon the
consummation of the transactions contemplated by this Agreement, the Hotel
Transaction Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other re-
straint pending or notified prohibiting or imposing materially adverse con-
ditions upon the consummation of the transactions contemplated by this
Agreement, the Hotel Transaction Documents or otherwise referred to herein or
therein.
(b) On or prior to the Restatement Effective Date, the Company
shall have received sufficient Consents to authorize the execution and
delivery of the indenture supplements to the 8-3/4% Senior Subordinated Notes
Indenture and the 10-7/8% Senior Subordinated Notes Indenture and such
indenture supplements shall have been duly executed and delivered by the
Company and the respective indenture trustee thereunder and all conditions to
the effectiveness thereof shall have been satisfied. All of the terms and
conditions of the Consents and the respective indenture supplements shall be
reasonably satisfactory to the Administrative Agent and the Required Banks
and in compliance with the applicable Hotel Transaction Documents and all
applicable laws (including, without limitation, Federal and state securities
laws).
(c) On or prior to the Restatement Effective Date, the
Administrative Agent shall have received evidence that the Banks are
qualified under the New Jersey Gaming Regulations as financial sources or
qualifiers, or are exempt or waived therefrom, and shall be satisfied that no
other New Jersey or Nevada gaming license, authorization, qualification,
waiver or exemption of the Banks is required on or prior to the Restatement
Effective Date by reason of this Agreement or the Collateral Documents. The
Administrative Agent also shall be satisfied in its discretion with any
conditions or requirements imposed by the
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<PAGE>
New Jersey, Nevada or other relevant Gaming Authorities upon the Banks, this
Agreement, the Collateral Documents, the Collateral or the Hotel Transaction.
(d) Parent, its shareholders and Subsidiaries shall have received
any qualifications required under applicable Gaming Regulations in connection
with this Agreement, the Collateral Documents and the Hotel Transaction, and
the Borrowers and the Guarantors shall have received all other approvals,
authorizations or consents of, or notices to or registrations with any
governmental body and required releases and consents from other appropriate
Persons (including, without limitation, the shareholders of Parent) in
connection with this Agreement, the Collateral Documents and the Hotel
Transaction and shall have provided copies or other satisfactory evidence of
all approvals, authorizations or consents referred to above to the
Administrative Agent.
(e) On or prior to the Restatement Effective Date, the Company
shall have demonstrated (including by providing appropriate legal opinions
and, in the case of the 8-3/4% Senior Subordinated Notes Indenture, a
certificate of its Chief Financial Officer, Treasurer or Controller) to the
Administrative Agent's and the Required Banks' satisfaction that loans in
aggregate principal amount equal to the sum of the Total Revolving Loan
Commitment and the Total 364-Day Revolving Loan Commitment may be incurred on
the Restatement Effective Date without violating the terms of the 8-3/4%
Senior Subordinated Notes Indenture and the 10-7/8% Senior Subordinated Notes
Indenture and, in the case of the 8-3/4% Senior Subordinated Notes Indenture,
that loans in the amount specified above would be permitted to be incurred on
the Restatement Effective Date pursuant to the second paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture (and that the
Consolidated Fixed Charge Ratio referred to therein would be at least equal
to 2.0 to 1 after giving effect thereto).
5.18 Solvency Certificate; Evidence of Insurance. On the
-------------------------------------------
Restatement Effective Date, there shall have been delivered to the
Administrative Agent (i) a certificate in the form of Exhibit N, addressed to
the Administrative Agent and each of the Banks and dated the Restatement
Effective Date, from the chief financial officer of Parent, providing the
opinion of such chief financial officer as to the solvency of Parent, the
Company, each Subsidiary Borrower and Parent and its Subsidiaries taken as a
whole, and (ii) evidence of insurance (A) satisfactory to the Administrative
Agent that insurance is in effect with respect to each of the
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<PAGE>
Mortgaged Properties and covering such risks and in such amounts and with
such coverages as required by the Administrative Agent and (B) that each
insurance policy covering the Collateral and each other material insurance
policy is effective as required in accordance with the requirements of
Section 8.03 for the business and properties of Parent and its Subsidiaries,
in scope, form and substance satisfactory to the Administrative Agent and the
Required Banks and naming the Collateral Agent, in the case of Collateral, as
an additional insured and/or loss payee, and stating that such insurance
shall not be cancelled or revised without at least 30 days' prior written
notice by the respective insurer to the Collateral Agent.
5.19 Payment of Fees, Etc. (a) On the Restatement Effective
---------------------
Date, all interest and Fees accrued (and not theretofore paid) under the
Original Credit Agreement shall be paid in full, and all other costs, fees
and expenses owing to any of the Banks or the Administrative Agent under the
Original Credit Agreement shall be paid to the extent due. Furthermore, on
the Restatement Effective Date, all costs, fees and expenses (including,
without limitation, legal fees and expenses) and other compensation
contemplated hereby or otherwise agreed and payable to the Banks or the
Administrative Agent shall have been paid to the extent due.
(b) On the Restatement Effective Date, all Interest Periods with
respect to any outstanding Original Revolving Loans shall have expired in
accordance with the terms thereof or shall have been terminated by the
Borrowers.
5.20 364-Day Credit Agreement. On the Restatement Effective Date,
------------------------
Parent, the Company, the Subsidiary Borrowers, the 364-Day Banks and the
Administrative Agent shall have entered into the 364-Day Credit Agreement in
the form of Exhibit O, and the 364-Day Credit Agreement shall be in full
force and effect. On the Restatement Effective Date, the Company shall have
delivered to the Administrative Agent a true and correct copy of the 364-Day
Credit Agreement, which shall be required to be in form and substance
satisfactory to the Administrative Agent and the Required Banks.
5.21 Schedules. On the Restatement Effective Date, the Company
---------
shall have delivered to each of the Banks true and complete copies of
Schedules II through IX, which Schedules shall be in form and substance
satisfactory to the Administrative Agent and the Required Banks.
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<PAGE>
SECTION 6. Conditions Precedent to All Credit Events. The
-----------------------------------------
obligation of each Bank to make Loans (including Loans made on the
Restatement Effective Date, but excluding Mandatory Borrowings made
thereafter, which shall be made as provided in Section 1.01(c)), and the
obligation of each Letter of Credit Issuer to issue any Letter of Credit, is
subject, at the time of each such Credit Event (except as hereinafter
indicated), to the satisfaction of the following conditions:
6.01 No Default; Representations and Warranties. At the time of
------------------------------------------
each such Credit Event and also after giving effect thereto (i) there shall
exist no Default or Event of Default (it being understood and agreed,
however, that an Unpaid Drawing will not prevent a Borrowing of Revolving
Loans so long as the proceeds thereof are applied to repay in full all then
outstanding Unpaid Drawings and no other Default or Event of Default then
exists) and (ii) all representations and warranties contained herein and in
the other Credit Documents shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on the date of the making of such Credit Event (it being understood and
agreed that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material
respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to
---------------------------------------------
the making of each Revolving Loan (excluding Revolving Loans made pursuant to
a Mandatory Borrowing), the Administrative Agent shall have received a Notice
of Borrowing meeting the requirements of Section 1.03(a). Prior to the
making of any Swingline Loan, BTCo shall have received the notice required by
Section 1.03(b)(i).
(b) Prior to the issuance of any Letter of Credit, the
Administrative Agent and the respective Letter of Credit Issuer shall have
received a Letter of Credit Request meeting the requirements of Section 2.03.
6.03 Election to Become a Subsidiary Borrower. Prior to the
----------------------------------------
incurrence of any Loans by, or the issuance of any Letter of Credit for the
account of, a Subsidiary Borrower which is not a Subsidiary Borrower on the
Restatement
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<PAGE>
Effective Date, the following additional conditions shall be satisfied:
(i) such new Subsidiary Borrower shall have duly authorized,
executed and delivered to the Administrative Agent an Election to Become
a Subsidiary Borrower in the form of Exhibit P, which shall be in full
force and effect;
(ii) such Subsidiary Borrower shall have duly authorized, executed
and delivered to (A) the Administrative Agent for the account of each of
the Banks the appropriate Revolving Note and (B) to BTCo the appropriate
Swingline Note, in each case in the amount, maturity and as otherwise
provided herein; and
(iii) to the extent not previously accomplished, such Subsidiary
Borrower shall have duly authorized, executed and delivered to the
Administrative Agent counterparts of the Company/Sub Guaranty and each
Collateral Document to the extent applicable, together with (x) such
financing statements and instruments required to be delivered by the
respective Collateral Documents and (y) such other documents,
certificates, resolutions, opinions and writings that would have been
required to be delivered pursuant to Sections 5.03 and 5.04 of this
Agreement and Section 5.19 of the Original Credit Agreement if such
Subsidiary Borrower had been subject to such Sections on the Restatement
Effective Date, all of which shall be in form and substance satisfactory
to the Administrative Agent.
Section 6.04. Additional Conditions to Certain Credit Events. If
----------------------------------------------
at any time after the Restatement Effective Date and prior to the repayment
in full of the
8-3/4% Senior Subordinated Notes, the Total Outstandings are reduced to an
amount which is less than the remainder of $150,000,000 less the 364-Day
Revolving Loan Commitment Reduction Amount, if any, at such time, then as a
condition precedent to any Credit Event which would cause the Total
Outstandings to exceed the Lowest Outstanding Amount then in effect by more
than $450,000,000 plus the 364-Day Revolving Loan Commitment Reduction
Amount, if any, at such time, the Company shall have first delivered to the
Agent and each of the Banks a satisfactory (to the Agent) legal opinion and
certificate of its Chief Financial Officer, Treasurer or Controller, each in
form and scope satisfactory to the Administrative Agent demonstrating in
reasonable detail that
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such Credit Event may be incurred without violating the terms of the 8-3/4%
Senior Subordinated Notes Indenture.
The occurrence of the Restatement Effective Date and the acceptance
of the proceeds of each Credit Event shall constitute a representation and
warranty by Parent and the respective Borrower to the Administrative Agent
and each of the Banks that all the conditions specified in Section 5 and in
this Section 6 and applicable to such Credit Event have been satisfied as of
that time. All of the Notes, certificates, legal opinions and other docu-
ments and papers referred to in Section 5 and in this Section 6, unless
otherwise specified, shall be delivered to the Administrative Agent at the
Notice Office for the account of each of the Banks and, except for the Notes,
in sufficient counterparts for each of the Banks and shall be in form and
substance satisfactory to the Required Banks.
Notwithstanding anything to the contrary contained above or in
Section 13.10, if the Restatement Effective Date does not occur on or prior
to September 30, 1995, then it shall not thereafter occur (unless the
Required Banks agree in writing to an extension of such date), and this
Agreement shall cease to be of any force or effect and the Original Credit
Agreement shall continue to be effective, as the same may have been, or may
thereafter be, amended, modified or supplemented from time to time.
SECTION 7. Representations, Warranties and Agreements. In order
------------------------------------------
to induce the Banks to enter into this Agreement and to make the Loans, and
issue (or participate in) the Letters of Credit as provided herein, each of
Parent, the Company and each Subsidiary Borrower makes the following
representations, warranties and agreements, in each case after giving effect
to the Hotel Transaction, all of which shall survive the execution and
delivery of this Agreement and the Notes and the making of the Loans and
issuance of the Letters of Credit, with the occurrence of the Restatement
Effective Date and the occurrence of each Credit Event on or after the
Restatement Effective Date being deemed to constitute a representation and
warranty that the matters specified in this Section 7 are true and correct on
and as of the Restatement Effective Date and on the date of each such Credit
Event (it being understood and agreed that (i) any representation or warranty
which by its terms is made as of a specified date shall be required to be
true and correct in all material respects only as of such specified date and
(ii) for purposes of making any representation or warranty in
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<PAGE>
this Section 7 after the Restatement Effective Date the term Documents shall
not include the Hotel Transaction Documents).
7.01 Corporate or Partnership Status. Each of Parent and its
-------------------------------
Subsidiaries (i) is a duly organized and validly existing corporation or
partnership, in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate or partnership power and authority to
own its property and assets and to transact the business in which it is
engaged and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction where
the ownership, leasing or operation of its property or the conduct of its
business requires such qualifications except for failures to be so qualified
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole.
7.02 Corporate or Partnership Power and Authority. Each Credit
--------------------------------------------
Party has the corporate or partnership power and authority to execute,
deliver and perform the terms and provisions of each of the Documents to
which it is party and has taken all necessary corporate or partnership action
to authorize the execution, delivery and performance by it of each of such
Documents. Each Credit Party has duly executed and delivered each of the
Documents to which it is party, and each of such Documents constitutes its
legal, valid and binding obligation enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).
7.03 No Violation. Neither the execution, delivery or performance
------------
by any Credit Party of the Documents to which it is a party, nor compliance
by it with the terms and provisions thereof, (i) will contravene any pro-
vision of any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or governmental instrumentality, (ii) will conflict
with or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pur-
suant to the Collateral Documents and, in the case of the Hotel Company and
the Hotel Subsidiaries, pursuant to the Hotel Facility) upon any of the
property or assets of Parent
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or any of its Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, credit agreement or loan agreement, or any other material
agreement, contract or instrument, to which Parent or any of its Subsidiaries
is a party or by which it or any of its property or assets is bound or to
which it may be subject or (iii) will violate any provision of the
certificate of incorporation, partnership agreement or by-laws of Parent or
any of its Subsidiaries.
7.04 Governmental Approvals. No order, consent, approval,
----------------------
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made on or prior to the Restatement
Effective Date), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the Hotel Transaction, (ii) the execution,
delivery and performance of any Document or (iii) the legality, validity,
binding effect or enforceability of any such Document.
7.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; etc. (a) The statements of financial condition of
------------------------------
Parent and its Consolidated Subsidiaries at December 31, 1994 (including the
December 31, 1994 financial statements contained in the Proxy Statement which
show the Hotel Business as discontinued operations) and March 31, 1995, and
the related statements of income and cash flow and changes in shareholders'
equity of Parent and its Consolidated Subsidiaries for the fiscal year and
three-month period ended on such date, as the case may be, and furnished to
the Banks prior to the Restatement Effective Date present fairly the
financial condition of Parent and its Consolidated Subsidiaries at the date
of such statements of financial condition and the results of the operations
of Parent and its Consolidated Subsidiaries for the respective fiscal year or
three-month period, as the case may be. All such financial statements have
been prepared in accordance with generally accepted accounting principles and
practices consistently applied. Since December 31, 1994 (but after giving
effect to the Hotel Transaction), there has been no material adverse change
in the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken as
a whole.
(b) On and as of the Restatement Effective Date, both before and
after giving effect to the Hotel Transaction and to all Indebtedness
(including the Loans) being incurred or assumed and Liens created by Parent
and its Subsidiaries in connection therewith, (a) the sum of the assets, at a
fair
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valuation, of each of Parent, the Company, each Subsidiary Borrower, Parent
and its Subsidiaries taken as a whole and the Company and its Subsidiaries
taken as a whole will exceed their respective debts; (b) none of Parent, the
Company, any Subsidiary Borrower, Parent and its Subsidiaries taken as a
whole or the Company and its Subsidiaries taken as a whole has incurred, nor
do they intend to incur or believe that they will incur, debts beyond their
ability to pay such debts as such debts mature; and (c) each of Parent, the
Company, each Subsidiary Borrower, Parent and its Subsidiaries taken as a
whole and the Company and its Subsidiaries taken as a whole will have
sufficient capital with which to conduct its respective business. For
purposes of this Section 7.05(b), "debt" means any liability on a claim, and
"claim" means (i) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (ii) right
to an equitable remedy for breach of performance if such breach gives rise to
a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a), there were as of the Restatement
Effective Date no liabilities or obligations with respect to Parent or any of
its Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or
in aggregate, would be material to Parent and its Subsidiaries taken as a
whole. As of the Restatement Effective Date, neither Parent nor any Borrower
knows of any basis for the assertion against Parent or any of its
Subsidiaries of any liability or obligation of any nature whatsoever that is
not fully disclosed in the financial statements delivered pursuant to Section
7.05(a) which, either individually or in the aggregate, is material to Parent
and its Subsidiaries taken as a whole.
(d) On and as of the Restatement Effective Date, (i) the financial
projections (the "Projections") prepared by the Company and delivered to the
Banks by the Administrative Agent prior to the Restatement Effective Date
were prepared based upon the assumptions concerning various industry trends
described therein for the periods presented, (ii) the Projections were based
on good faith assumptions and estimates, and (iii) although a range of
possible different assumptions and estimates might also be reasonable, the
Company is not aware of any facts that would lead it to believe that the
assump-
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<PAGE>
tions and estimates on which the Projections were based are not reasonable;
provided that no assurance can be given that the projected results will be
realized or with respect to the ability of the Company to achieve the
projected results, and while the Projections are necessarily presented with
numerical specificity, the actual results achieved during the periods
presented in all likelihood will differ from the projected results and such
differences may be material.
7.06 Litigation. There are no actions, suits or proceedings
----------
pending or, to the best knowledge of Parent or any Borrower, threatened (i)
with respect to any Document or the Hotel Transaction, (ii) with respect to
any material Indebtedness of Parent or any of its Subsidiaries or (iii) that
could reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of Parent and its Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual information (taken
----------------------------
as a whole) furnished by or on behalf of Parent or its Subsidiaries in
writing to the Administrative Agent or any Bank (including, without
limitation, all information contained in the Credit Documents) for purposes
of or in connection with this Agreement, the other Credit Documents or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Parent
or its Subsidiaries in writing to the Administrative Agent or any Bank will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which
such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
-----------------------------------
the Loans shall be used by the Borrowers (i) to pay fees and expenses related
to this Agreement and (ii) for the Borrowers' and their Subsidiaries' general
corporate purposes.
(b) No part of the proceeds of any Loan will be used to purchase
or carry any Margin Stock or to extend credit for the purpose of purchasing
or carrying any Margin Stock. Neither the making of any Loan nor the use of
the proceeds thereof nor the occurrence of any other Credit Event will
violate or be inconsistent with the provisions of Regu-
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<PAGE>
lation G, T, U or X of the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Each of Parent and its
------------------------
Subsidiaries and each Person for whose tax Parent or any of its Subsidiaries
could be liable has filed or caused to be filed with the appropriate taxing
authority, all Federal and all other material returns, statements, forms and
reports for all taxes (the "Returns") required to be filed by it and has paid
or caused to be paid (i) all material taxes due for the periods covered
thereby and (ii) all taxes pursuant to any assessment received by Parent, any
of its Subsidiaries or any such Person, excluding, in each case, any such
taxes that have been contested in good faith and for which adequate reserves
have been established in accordance with generally accepted accounting
principles. Except as disclosed on Schedule III, as of the Restatement
Effective Date, there is no action, suit, proceeding, investigation, audit,
or claim now pending or, to the knowledge of Parent or any of its
Subsidiaries, threatened by any governmental or taxing authority regarding
any material taxes relating to Parent or any of its Subsidiaries. Except as
disclosed on Schedule III, as of the Restatement Effective Date, neither
Parent nor any of its Subsidiaries has entered into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
any material taxes of Parent or any of its Subsidiaries.
7.10 Compliance with ERISA. Each Plan is in substantial
---------------------
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither Parent nor any Subsidiary of Parent nor any
ERISA Affiliate has incurred any material liability to or on account of a
Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code
or expects to incur any liability under any of the foregoing Sections with
respect to any Plan; no proceedings have been instituted by the PBGC to
terminate or appoint a trustee to administer any Plan; no condition exists
which presents a material risk to Parent or any Subsidiary of Parent or any
ERISA Affiliate of incurring a liability to or on account of a Plan pursuant
to the foregoing provisions of ERISA and the Code; no lien imposed under the
Code or ERISA on the assets of Parent or any Subsidiary
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<PAGE>
of Parent or any ERISA Affiliate exists or is likely to arise on account of
any Plan; and Parent and its Subsidiaries may cease contributions to or
terminate any employee benefit plan maintained by any of them without
incurring any material liability to any person interested therein other than
accrued benefits; it being understood that any representation or warranty
made in this Section 7.10 with respect to any multiemployer plan (labor
union) is to the best knowledge of Parent, the Company and each Subsidiary
Borrower.
7.11 The Collateral Documents. (a) The provisions of the
------------------------
Security Agreement are effective to create in favor of the Collateral Agent
for the benefit of the Secured Parties a legal, valid and enforceable
security interest in all right, title and interest of the Collateral Grantors
in the Security Agreement Collateral described therein, and the Security
Agreement creates a fully perfected first lien on, and security interest in,
all right, title and interest of the Collateral Grantors, in all of the
Security Agreement Collateral described therein, subject to no other Liens
other than Permitted Liens. The recordation of the Security Agreement in the
United States Patent and Trademark Office together with filings on Form UCC-1
made pursuant to the Security Agreement will be effective, under federal law,
to perfect the security interest granted to the Collateral Agent in the
trademarks and patents covered by the Security Agreement and the filing of
the Security Agreement with the United States Copyright Office together with
filings on Form UCC-1 made pursuant to the Security Agreement will be
effective under federal law to perfect the security interest granted to the
Collateral Agent in the copyrights covered by the Security Agreement. Each
Collateral Grantor has good and marketable title to all Security Agreement
Collateral described therein, free and clear of all Liens except those
described above in this clause (a).
(b) The security interests created in favor of the Collateral
Agent for the benefit of the Secured Parties under the Pledge Agreements
constitute first perfected security interests in the Pledged Securities
described in the Pledge Agreements, subject to no security interests of any
other Person. No filings or recordings are required in order to perfect (or
maintain the perfection or priority of) the security interests created in the
Pledged Securities under the Pledge Agreements.
(c) The security interests created in favor of the Collateral
Agent for the benefit of the Secured Parties under the Assignment of
Partnership Interests Agreement constitute
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<PAGE>
first perfected security interests in the Partnership Interests described in
the Assignment of Partnership Interests Agreement, subject to no security
interests of any other Person. Except for filings that have been made prior
to the Restatement Effective Date, no filings or recordings are required in
order to perfect (or maintain the perfection or priority of) the security
interests created in the Partnership Interests under the Assignment of
Partnership Interests Agreement.
(d) The Mortgages create, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and mortgage lien on all of the Mortgaged Properties in favor of
the Collateral Agent for the benefit of the Secured Parties, superior to and
prior to the rights of all third Persons (except that the security interest
and mortgage lien created in the Mortgaged Properties may be subject to the
Permitted Encumbrances related thereto) and subject to no other Liens (other
than Liens permitted under Section 9.01). The Company or Harrah's Club, as
the case may be, has good and marketable title to the following three
Mortgaged Properties, Harrah's Reno Hotel Casino, Harrah's Lake Tahoe Hotel
Casino (including Bill's Casino) and Harrah's Las Vegas Hotel Casino; Marina
has good and marketable title to the Mortgaged Property at the Harrah's
Atlantic City Hotel Casino; and Harrah's Laughlin has good and marketable
title to the Mortgaged Property at Harrah's Laughlin Hotel Casino, in each
case free and clear of all Liens except those described in the first sentence
of this subsection (d).
(e) The Assignment of Leases and, to the extent not theretofore
terminated, the Net Lease Agreements create, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and Lien on the respective Collateral covered thereby in favor of
the Collateral Agent for the benefit of the Secured Parties, superior to and
prior to the rights of all third Persons and subject to no other Liens.
(f) Pursuant to the Collateral Documents, perfected security
interests have been created in favor of the Collateral Agent for the benefit
of the Secured Parties in all of the Required Collateral.
7.12 Properties. Parent and each of its Subsidiaries have good
----------
title to all material properties owned by them, free and clear of all Liens,
other than Liens permitted by Section 9.01.
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<PAGE>
7.13 Capitalization. (a) On the Restatement Effective Date, the
--------------
authorized capital stock of Parent shall consist of 360,000,000 shares of
common stock, $1.50 par value per share, of which, as of March 31, 1995,
102,518,639 shares shall be issued and outstanding. All such outstanding
shares have been duly and validly issued, are fully paid and nonassessable
and are free of preemptive rights. As of the Restatement Effective Date and
except as disclosed in the most recent report on Form 10-K or 10-Q filed by
Parent with the SEC, Parent does not have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any
rights to subscribe for or to purchase, or any options for the purchase of,
or any agreement providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital
stock.
(b) On the Restatement Effective Date, the authorized capital
stock of the Company shall consist of 1,000 shares of common stock, $1.00 par
value per share, all of which shares were issued and outstanding and owned by
Parent. All such outstanding shares have been duly and validly issued, are
fully paid and nonassessable and are free of preemptive rights. The Company
does not have outstanding any securities convertible into or exchangeable for
its capital stock or outstanding any rights to subscribe for or to purchase,
or any options for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or claims of
any character relating to, its capital stock.
7.14 Subsidiaries. Except as otherwise agreed by the Required
------------
Banks, Parent has no Subsidiaries other than (i) the Company and its
Subsidiaries and (ii) Aster Insurance Ltd. All Subsidiaries of the Company
as of the Restatement Effective Date, and the direct owner of the capital
stock thereof, are listed on Schedule IV. Schedule IV also accurately shows,
as of the Restatement Effective Date, with respect to each Subsidiary (i)
whether such Subsidiary is a Material Subsidiary and (ii) whether such
Subsidiary is a Guarantor.
7.15 Compliance with Statutes, etc. Each of Parent and its
------------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environ-
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<PAGE>
mental standards and controls), except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its Sub-
sidiaries taken as a whole.
7.16 Investment Company Act. Neither Parent nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
7.17 Public Utility Holding Company Act. Neither Parent nor any
----------------------------------
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.18 Environmental Matters. (a) Parent and each of its
---------------------
Subsidiaries have complied with, and on the date of such Credit Event are in
compliance with, all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws. There are no pending or,
to the best knowledge of Parent or any Borrower after due inquiry, past or
threatened Environmental Claims against Parent or any of its Subsidiaries or
any Real Property owned or operated by Parent or any of its Subsidiaries that
individually or in the aggregate could reasonably be expected to materially
and adversely affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole. There are no facts, circumstances, conditions
or occurrences on any Real Property owned or operated by Parent or any of its
Subsidiaries or, to the best knowledge of Parent or any Borrower after due
inquiry, on any property adjoining or in the vicinity of any such Real Prop-
erty that, to the best knowledge of Parent or any Borrower after due inquiry,
could reasonably be expected (i) to form the basis of an Environmental Claim
against Parent or any of its Subsidiaries or any such Real Property that in-
dividually or in the aggregate could reasonably be expected to materially and
adversely affect the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole, or (ii) to cause any such Real Property to be
subject to any restrictions on the ownership, occupancy, use or transfer-
ability of such Real Property by Parent or any of its Subsidiaries under any
applicable Environmental Law.
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<PAGE>
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by Parent or any of its Subsidiaries where such generation, use,
treatment or storage has violated or could reasonably be expected to violate
any Environmental Law. Hazardous Materials have not at any time been
Released on or from any Real Property owned or operated by Parent or any of
its Subsidiaries where such Release has violated or could reasonably be
expected to violate any applicable Environmental Law. There are not now any
underground storage tanks located on any Real Property owned or operated by
Parent or any of its Subsidiaries which are not in compliance with all
Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section 7.18,
the representations made in this Section 7.18 shall only be untrue if the
aggregate effect of all failures and noncompliances of the types described
above could reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
7.19 Labor Relations. Neither Parent nor any of its Subsidiaries
---------------
is engaged in any unfair labor practice that could reasonably be expected to
have a material adverse effect on Parent and its Subsidiaries taken as a
whole. There is (i) no unfair labor practice complaint pending against
Parent or any of its Subsidiaries or, to the best knowledge of the Parent or
any Borrower, threatened against any of them, before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against Parent or any
of its Subsidiaries or, to the best knowledge of Parent or any Borrower,
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Parent or any of its Subsidiaries or, to the best
knowledge of Parent or any Borrower, threatened against Parent or any of its
Subsidiaries and (iii) to the best knowledge of Parent or any Borrower, no
union representation question existing with respect to the employees of
Parent or any of its Subsidiaries, except (with respect to any matter speci-
fied in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
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<PAGE>
7.20 Patents, Licenses, Franchises and Formulas. Each of Parent
------------------------------------------
and its Subsidiaries own all the patents, trademarks, permits, service marks,
trade names, copyrights, licenses, franchises and formulas, or rights with
respect to the foregoing, and has obtained assignments of all leases and
other rights of whatever nature, necessary for the present conduct of its
business, without any known conflict with the rights of others which, or the
failure to obtain which, as the case may be, would result in a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
7.21 Existing Indebtedness. Schedule V sets forth a true and
---------------------
complete list of all Indebtedness of Parent and its Subsidiaries as of the
Restatement Effective Date and which is to remain outstanding after giving
effect thereto, in each case showing the respective borrower thereof (ex-
cluding Indebtedness under this Agreement and the 364-Day Credit Agreement),
with Part A of such Schedule V to indicate that Indebtedness which
constitutes "Existing Indebtedness" under (and as defined in) the Original
Credit Agreement and Part B of such Schedule V to indicate all such other
Indebtedness outstanding on the Restatement Effective Date. The subordin-
ation provisions of the Subordinated Debt set forth on Schedule V are
enforceable against the respective borrower or guarantor thereunder, as the
case may be, and all Obligations hereunder and under the other Credit
Documents are within the definition of "Senior Debt," "Guarantor Senior
Debt", "Designated Senior Debt" and "Designated Senior Debt of the Guarantor"
included in such subordination provisions, as the case may be.
7.22 Hotel Transaction. At the time of consummation thereof, the
-----------------
Hotel Transaction shall have been consummated in accordance with the terms of
the respective Hotel Transaction Documents and all applicable laws and all
conditions precedent thereto shall have been satisfied, or waived with the
consent of the Required Banks. At the time of consummation thereof, all
consents and approvals of, and filings and registrations with, and all other
actions in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate the Hotel
Transaction have been obtained, given, filed or taken and are or will be in
full force and effect (or effective judicial relief with respect thereto has
been obtained). All applicable waiting periods with respect thereto have or,
prior to the time when required, will have, expired without, in all such
cases, any action being taken by any competent
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<PAGE>
authority which restrains, prevents, or imposes material adverse conditions
upon the Hotel Transaction. Additionally, there does not exist any judgment,
order or injunction prohibiting or imposing material adverse conditions upon
the Hotel Transaction, or the occurrence of any Credit Event or the
performance by Parent or any other Credit Party of their obligations under
the respective Documents. All actions taken by Parent and its Subsidiaries
pursuant to or in furtherance of the consummation of the Hotel Transaction
have been taken in compliance with the respective documents therefor and all
applicable laws. The Hotel Transaction has been consummated in accordance
with the terms of the Hotel Transaction Documents and all applicable laws.
7.23 No Other Ventures. Except as set forth on Schedule VI, as of
-----------------
the Restatement Effective Date, neither Parent nor any of its Subsidiaries is
engaged in any Joint Venture or partnership with any other Person.
SECTION 8. Affirmative Covenants. Each of Parent, the Company and
---------------------
each Subsidiary Borrower covenants and agrees that on and after the
Restatement Effective Date and until the Total Revolving Loan Commitment and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Draw-
ings, together with interest, Fees and all other obligations incurred here-
under and thereunder, are paid in full:
8.01 Information Covenants. Parent will furnish to each Bank:
---------------------
(a) Quarterly Financial Statements. Within 45 days after the
------------------------------
close of the first three quarterly accounting periods in each fiscal
year of Parent and within 90 days after the close of the fourth
quarterly accounting period in each fiscal year of Parent, the
consolidated balance sheet of Parent and its Consolidated Subsidiaries
as at the end of such quarterly accounting period and the related
consolidated statements of income and statement of cash flows, in each
case for such quarterly accounting period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly accounting
period, in each case setting forth comparative figures for the related
periods in the prior fiscal year, all of which shall be certified by the
chief financial officer, controller or treasurer of Parent, subject to
normal year-end audit adjustments.
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(b) Annual Financial Statements. Within 120 days after the close
---------------------------
of each fiscal year of Parent, the consolidated balance sheet of Parent
and its Consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income and retained earnings and
statement of cash flows for such fiscal year setting forth comparative
figures for the preceding fiscal year and certified by Arthur Andersen &
Co. or such other independent certified public accountants of recognized
national standing reasonably acceptable to the Required Banks, together
with a statement of the firm of such independent accountants as to
whether, in conducting their audit, anything came to their attention to
cause them to believe that Parent and the Company were not in compliance
with Sections 9.07, 9.08 and 9.09, insofar as such Sections relate to
accounting and auditing matters, on the date of such statements.
(c) Budgets. No later than 90 days after the commencement of each
-------
fiscal year of Parent, a budget which shall include an annual balance
sheet for such fiscal year, quarterly statements of income and sources
and uses of cash for each of the four fiscal quarters of such fiscal
year, together with a business plan for such fiscal year, in each case
consolidated for Parent and its Subsidiaries, and accompanied by a
statement of the chief financial officer, controller or treasurer of
Parent that the budget has been approved by the Board of Directors of
Parent or the Company.
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 8.01(a) and (b), a
certificate of the chief financial officer, controller or treasurer of
Parent to the effect that, to the best of such officer's knowledge, no
Default or Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof, which certificate shall set forth (i) the
calculations required to establish whether Parent and the Borrowers were
in compliance with the provisions of Sections 3.03(d) and (e), 9.03(v),
9.04(vi), (ix) through and including (xii), (xiv) and (xv), 9.05 and
9.07 through 9.09, inclusive, at the end of such fiscal quarter or year,
as the case may be and (ii) the Senior Implied Indebtedness ratings, if
any, assigned by Moody's and S&P to the Company's Indebtedness at the
end of such fiscal quarter or year, as the case may be.
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<PAGE>
(e) Notice of Default or Litigation. Promptly upon, and in any
-------------------------------
event within three Business Days after, an officer of Parent or any
Borrower obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or an Event of Default and (ii) any
litigation or governmental investigation or proceeding (including any
investigation by any Gaming Authority) pending (x) against Parent or any
of its Subsidiaries which could reasonably be expected to materially and
adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent
and its Subsidiaries taken as a whole, (y) with respect to any material
Indebtedness of Parent or any of its Subsidiaries or (z) with respect to
any Credit Document.
(f) Other Reports and Filings. Promptly, (i) copies of all
-------------------------
financial statements, reports and proxy materials which Parent has
mailed to its shareholders generally, (ii) copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-
Q and 8-K (or their equivalent) which Parent or any of its Subsidiaries
shall file with the Securities and Exchange Commission or any successor
thereof (the "SEC") and (iii) to the extent not otherwise provided to
the Banks, copies of all notices, reports and financial statements which
Parent or any of its Subsidiaries shall deliver to holders of any issue
of Indebtedness if the aggregate principal amount thereof exceeds (or
upon the utilization of any used commitments may exceed) $25,000,000
pursuant to the terms of the documentation governing any such issue of
Indebtedness (or any trustee, agent or other representative therefor).
(g) Environmental Matters. Promptly upon, and in any event within
---------------------
ten Business Days after, an officer of Parent or any Borrower obtains
knowledge thereof, notice of one or more of the following environmental
matters, unless such environmental matters could not, individually or
when aggregated with all other such environmental matters, be reasonably
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries taken as a whole: (i) any
pending or threatened Environmental Claim against Parent or any of its
Subsidiaries or any Real Property owned or operated by Parent or any of
its
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Subsidiaries; (ii) any condition or occurrence on or arising from any
Real Property owned or operated by Parent or any of its Subsidiaries
that (a) results in noncompliance by Parent or any of its Subsidiaries
with any applicable Environmental Law or (b) could reasonably be
expected to form the basis of an Environmental Claim against Parent or
any of its Subsidiaries or any such Real Property; (iii) any condition
or occurrence on any Real Property owned or operated by Parent or any of
its Subsidiaries that could reasonably be expected to cause such Real
Property to be subject to any restrictions on the ownership, occupancy,
use or transferability by Parent or any of its Subsidiaries of such Real
Property under any Environmental Law; and (iv) the taking of any removal
or remedial action in response to the actual or alleged presence of any
Hazardous Material on any Real Property owned or operated by Parent or
any of its Subsidiaries as required by any Environmental Law or any
governmental or other administrative agency; provided that in any event
--------
Parent shall deliver to each Bank all notices received by Parent or any
of its Subsidiaries from any government or governmental agency under, or
pursuant to, CERCLA. All such notices shall describe in reasonable
detail the nature of the claim, investigation, condition, occurrence or
removal or remedial action and Parent's or such Subsidiary's response
thereto. In addition, Parent will provide the Banks with copies of all
material written communications by Parent or any of its Subsidiaries
with any government or governmental agency relating to Environmental
Laws, all material written communications with any person relating to
Environmental Claims, and such detailed reports of any Environmental
Claim as may reasonably be requested by the Banks.
(h) Other Information. From time to time, such other information
-----------------
or documents (financial or otherwise) with respect to Parent or its
Subsidiaries as the Administrative Agent or any Bank may reasonably
request.
8.02 Books, Records and Inspections. Parent will, and will cause
------------------------------
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. Parent
will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Administrative Agent or any Bank to visit
and inspect, at the Admin-
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istrative Agent's or such Bank's expense and under guidance of officers of
Parent or such Subsidiary, any of the properties of Parent or such Sub-
sidiary, and to examine the books of account of Parent or such Subsidiary and
discuss the affairs, finances and accounts of Parent or such Subsidiary with,
and be advised as to the same by, its and their officers and independent
public accountants, provided that a representative of Parent or such
--------
Subsidiary is present, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or such Bank may request,
provided that the Administrative Agent and the Banks shall have no right
--------
pursuant to this Section 8.02 to obtain any information relating to (i) the
identity of gaming patrons obligated under Markers or (ii) any filings made
pursuant to Regulation 6A or 6.090 of the Regulations of the Nevada Gaming
Commission (except that the Administrative Agent and the Banks may review the
reports of an independent auditor with respect to such filings).
8.03 Maintenance of Property; Insurance. (a) Parent will, and
----------------------------------
will cause each of its Material Subsidiaries to, keep all property necessary
in the reasonable conduct of its business in good working order and condi-
tion.
(b) Schedule VII sets forth a true and complete listing of all
insurance maintained by Parent and its Subsidiaries as of the Restatement
Effective Date. Parent will maintain, and will cause each of its Material
Subsidiaries to maintain, (i) physical damage insurance on all real and
personal property on an all risk basis (including the perils of flood and
quake), covering the repair and replacement cost of all such property and
consequential loss coverage for business interruption and extra expense, and
(ii) such other insurance coverage in such amounts and with respect to such
risks as the Administrative Agent or the Required Banks may reasonably
request; provided, however, that flood, earthquake and business interruption
-------- -------
insurance will be required only to the extent available on a commercially
reasonable basis and so long as it is consistent with reasonable and prudent
insurance underwriting practices. All such insurance shall be provided by
insurers having an A.M. Best general policyholders service rating of not less
than "B+VI" or such other insurers as the Administrative Agent may approve in
writing. In addition, all insurance with respect to the Collateral shall
name the Collateral Agent as loss payee, for the benefit of the Secured
Parties, and shall provide that (a) the proceeds thereof shall be paid
directly to the Collateral Agent, subject to Section 3.01(c) of each Mortgage
and Section 11 of the Security Agreement and (b) no cancellation,
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material change or reduction thereof shall be effective until at least 30
days after receipt by the Collateral Agent of written notice thereof. Parent
will deliver to the Banks (i) upon request of any Bank through the
Administrative Agent from time to time full information as to the insurance
carried, (ii) for insurance with respect to the Collateral and all other
material insurance, within five days of receipt of notice from any insurer, a
copy of any notice of cancellation or material change in coverage from that
existing on the date of this Agreement and (iii) forthwith, notice of any
cancellation or nonrenewal of any insurance coverage of Parent or any of its
Material Subsidiaries with respect to the Collateral or any other material
insurance coverage of Parent or any of its Subsidiaries. Nothing in this
Section 8.03(b) shall be construed to restrict the right of Parent or any
Material Subsidiaries from obtaining blanket insurance as permitted under the
Mortgages, or self insurance of certain risks to the extent such insurance is
consistent with the past practices of Parent or such Material Subsidiary and
consistent with reasonable and prudent insurance underwriting practices. The
provisions of this Section 8.03(b) shall be deemed supplemental to, but not
duplicative of, the provisions of the Security Agreement and the Mortgages.
If Parent or any of its Material Subsidiaries shall fail to insure its
property in accordance with this Section 8.03(b), the Collateral Agent shall
have the right (but shall be under no obligation) upon notice to Parent or
the respective Material Subsidiary to procure such insurance and Parent and
each Borrower agrees to reimburse the Collateral Agent for all costs and
expenses of procuring such insurance.
8.04 Corporate Franchises. Parent will, and will cause each of
--------------------
its Material Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that nothing in
-------- -------
this Section 8.04 shall prevent (i) sales of stock or assets by Parent or any
of its Subsidiaries in accordance with Section 9.02, (ii) the withdrawal by
Parent or any of its Subsidiaries of its qualification as a foreign
corporation in any jurisdiction where such withdrawal could not reasonably be
expected to have a material adverse effect on the business, operations, prop-
erty, assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole or (iii) the taking of any
action respecting any right, franchise, license or patent determined by the
management of Parent or such Subsidiary to be in the best interest of Parent
or such Subsidiary.
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8.05 Compliance with Statutes, etc. Parent will, and will cause
------------------------------
each of its Subsidiaries to, comply with all applicable statutes, regulations
(including Gaming Regulations) and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations, prop-
erty, assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole.
8.06 Compliance with Environmental Laws. (a) Parent will comply,
----------------------------------
and will cause each of its Subsidiaries to comply, in all material respects
with all Environmental Laws applicable to ownership or use of the Required
Collateral now or hereafter owned or operated by Parent or any of its Sub-
sidiaries, will promptly pay or cause to be paid all costs and expenses
incurred in such compliance, and will keep or cause to be kept all such
Required Collateral free and clear of any Liens imposed pursuant to such
Environmental Laws other than Liens which could not materially detract from
the value of any such Required Collateral. Neither Parent nor any of its
Subsidiaries will generate, use, treat, store, release or dispose of, or
permit (to the extent within Parent's or such Subsidiary's reasonable
control) the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
managed by Parent or any of its Subsidiaries, or transport or permit (to the
extent within Parent's or such Subsidiary's reasonable control) the trans-
portation of Hazardous Materials to or from any such Real Property except as
in material compliance with all applicable Environmental Laws and reasonably
required in connection with the operation, use and maintenance of any such
Real Property in the conduct of Parent's or such Subsidiary's business.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time after either (i) an Event of
Default shall have occurred and be continuing or (ii) the Banks shall have
received notice under Section 8.01(g) for any event for which notice is
required to be delivered for any such Real Property, Parent will provide, at
Parent's sole cost and expense, an environmental site assessment report con-
cerning any Real Property, prepared by an environmental consulting firm
approved by the Required Banks, indicating the presence
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or absence of Hazardous Materials and the potential cost of any removal or
remedial action in connection with any Hazardous Materials on such Real
Property. If Parent fails to provide the same ninety (90) days after such
request was made, the Administrative Agent may order the same, and Parent and
each Borrower shall grant and hereby grants to the Administrative Agent and
the Banks and their agents access to such Real Property and specifically
grants the Administrative Agent and the Banks an irrevocable non-exclusive
license, subject to the rights of tenants, to undertake such an assessment,
all at Parent's and the Borrowers' expense.
8.07 ERISA. As soon as possible and, in any event, within 10 days
-----
after Parent or any Borrower or any ERISA Affiliate knows or has reason to
know of the occurrence of any of the following, Parent will deliver to each
of the Banks a certificate of the chief financial officer, controller or
treasurer of Parent setting forth details as to such occurrence and the
action, if any, which Parent, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed
to be given to or filed with or by Parent, such Subsidiary, such ERISA
Affiliate, the PBGC, a Plan participant or the Plan administrator with
respect thereto: that a Reportable Event has occurred; that an accumulated
funding deficiency has been incurred or an application may be or has been
made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code with
respect to a Plan; that a Plan has been or may be terminated, reorganized,
partitioned or declared insolvent under Title IV of ERISA; that a Plan has an
Unfunded Current Liability giving rise to a lien under ERISA or the Code;
that proceedings may be or have been instituted by the PBGC to terminate or
appoint a trustee to administer a Plan; that a proceeding has been instituted
pursuant to Section 515 of ERISA to collect a delinquent contribution to a
Plan; that Parent, any Subsidiary of Parent or any ERISA Affiliate will or
may incur any liability (including any contingent, or secondary liability) to
or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan
under Section 401(a)(29), 4971 or 4975 of the Code or Section 409 or 502(i)
or 502(l) of ERISA. Parent will deliver to each of the Banks a complete copy
of the annual report (Form 5500) of each Plan (including, to the extent
required to be filed with Form 5500, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and
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information) required to be filed with the Internal Revenue Service. In
addition to any certificates or notices delivered to the Banks pursuant to
the first sentence hereof, copies of annual reports and any notices received
by Parent or any Subsidiary of Parent or any ERISA Affiliate with respect to
any Plan shall be delivered to the Banks no later than 10 days after the date
such report has been filed with the Internal Revenue Service or such notice
has been received by Parent, the Subsidiary or the ERISA Affiliate, as
applicable.
8.08 End of Fiscal Years; Fiscal Quarters. Parent and the Company
------------------------------------
will cause (i) each of its fiscal years to end on December 31, and (ii) each
of its fiscal quarters to end on March 31, June 30, September 30 and December
31.
8.09 Performance of Obligations. Parent will, and will cause each
--------------------------
of its Subsidiaries to, perform all of its obligations under the terms of
each mortgage, indenture, security agreement and other debt instrument by
which it is bound, except such non-performances as could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. Parent will pay and discharge, and will
----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, in each case on a timely
basis, and all lawful claims which, if unpaid, might become a lien or charge
upon any properties of Parent or any of its Subsidiaries; provided that
--------
neither Parent nor any of its Subsidiaries shall be required to pay any such
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if it has maintained adequate reserves with respect
thereto in accordance with generally accepted accounting principles.
8.11 Registry. The Company hereby covenants that it shall
--------
maintain a register on which it will record the Revolving Loan Commitments
from time to time of each of the Banks, the Loans made by each of the Banks
and each repayment in respect of the principal amount of the Loans of each
Bank. Failure to make any such recordation, or any error in such recordation
shall not affect any Borrower's obligations in respect of such Loans. Upon
the written request of the Com-
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pany, the Administrative Agent hereby agrees to use its reasonable efforts to
provide to the Company such information, not otherwise available to the
Company, as the Company shall reasonably request from time to time in order
to enable it to fulfill its obligations pursuant to this Section 8.11 and the
Company shall have no obligation to make any such recordation until it
receives such requested information from the Administrative Agent. Without
limiting the Company's obligations hereunder, the Company shall indemnify any
Bank described in Section 4.04(b)(iii) or (iv) for any losses (including
withholding of Taxes required) arising as a result of the Company's failure
to comply with this Section 8.11. With respect to any Bank described in Sec-
tion 4.04(b)(iii) or (iv), (a) the transfer of the Revolving Loan Commitments
of such Bank and the rights to the principal of, and interest on, any Loan
made pursuant to such Revolving Loan Commitments shall not be effective until
such transfer is recorded on the register maintained by the Company with
respect to ownership of such Revolving Loan Commitments and Loans and prior
to such recordation all amounts owing to the transferor with respect to such
Revolving Loan Commitments and Loans shall remain owing to the transferor and
(b) the Company shall immediately record all such transfers when notified
thereof by the transferor Bank and such transfer shall be made only through
(x) the surrender of a Note and the reissuance of such Note by the Company to
the new holder of the old Note or the issuance by the Company of a new Note
to the new holder (the "Issuance System") or (y) a register maintained by the
Company and referred to in the first sentence of this Section (the "Book
Entry System"). The Borrowers jointly and severally agree to indemnify any
transferee Bank from and against any and all losses, claims, damages and
liabilities (including, without limitation, any amounts paid by the trans-
feree to the transferor in connection with the transfer and all amounts which
would otherwise be owing to the transferee if the transfer had been properly
recorded) resulting from the Company's failure to record any such transfer
through either the Issuance System or the Book Entry System.
8.12 Additional Guarantors; Additional Collateral; etc. (a) In
--------------------------------------------------
the event that at any time after the Restatement Effective Date any Person
becomes (x) a First-Tier Material Subsidiary, (y) a Material Subsidiary
pursuant to clause (b) of this Section 8.12 or clause (ii) of the definition
thereof or (z) a guarantor under the 364-Day Credit Agreement, then Parent
and the Company will, except as otherwise provided in the last sentence of
this clause (a), cause such Person (each such Person a "Required Additional
Guarantor"), within 30 days after it becomes a Required
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Additional Guarantor, to duly authorize, execute and deliver to the
Administrative Agent counterparts of the Company/Sub Guaranty, together with
such other documents, certificates, resolutions, opinions and writings that
would have been required to be delivered pursuant to Sections 5.03, 5.04 and
5.13 if such Subsidiary had been a Guarantor on the Restatement Effective
Date and subject to such Sections on such date, all of which shall be in form
and substance satisfactory to the Administrative Agent. Notwithstanding the
foregoing, any Subsidiary of the Company which is not a Wholly-Owned
Subsidiary or which has incurred then outstanding Non-Recourse Indebtedness
pursuant to Section 9.04(ix) or (x) shall not be required to become a
Guarantor pursuant to the Company/Sub Guaranty.
(b) In the event that at any time after the Restatement Effective
Date Parent or any of its Subsidiaries acquires any Required Collateral, or
it is determined that any Required Collateral is not then subject to a
perfected security interest pursuant to the relevant Collateral Documents or
any additional collateral is provided under the 364-Day Revolving Credit
Agreement, then in each such case perfected security interests shall
immediately be granted in such Required Collateral or other collateral
pursuant to the respective Collateral Documents and, to the extent reasonably
determined necessary or desirable by the Administrative Agent, additional
security documents shall be entered into in order to effectively grant such
perfected security interests (all such additional security documents entered
into pursuant to this Section 8.12(b), "Additional Collateral Documents"),
together with such other documents, certificates, resolutions, instruments,
financing statements, opinions and writings that would have been required to
be delivered pursuant to Sections 5.03 and 5.04 of this Agreement and
Sections 5.06 through 5.13 of the Original Credit Agreement, as applicable,
if perfected security interests had been created in respect of such Required
Collateral or other collateral on or prior to the Restatement Effective Date,
all of which shall be in form and substance satisfactory to the
Administrative Agent.
(c) In the event that the Administrative Agent or the Required
Banks at any time after the Restatement Effective Date determine in its or
their good faith discretion (as a result of events or circumstances affecting
the Collateral Agent or the Required Banks after the Restatement Effective
Date) that real estate appraisals satisfying the requirements set forth in 12
C.F.R., Part 34-Subpart C, or any successor or similar statute, rule,
regulation, guideline
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or order (any such appraisal a "Required Appraisal") are or were required to
be obtained, or should be obtained, in connection with any Mortgaged Property
or Mortgaged Properties, then, within 120 days after receiving written notice
thereof from the Administrative Agent or the Required Banks, as the case may
be, such Required Appraisal shall be delivered, at the expense of the
Company, to the Administrative Agent, which Required Appraisal, and the
respective appraiser, shall be satisfactory to the Administrative Agent.
SECTION 9. Negative Covenants. Each of Parent, the Company and
------------------
each Subsidiary Borrower covenants and agrees that on and after the
Restatement Effective Date and until the Total Revolving Loan Commitment and
all Letters of Credit have terminated and the Loans, Notes and Unpaid Draw-
ings, together with interest, Fees and all other Obligations incurred here-
under and thereunder, are paid in full:
9.01 Liens. Parent will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or intan-
gible) of Parent or any of its Subsidiaries, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to Parent or any of its
Subsidiaries), or assign any right to receive income or permit the filing of
any financing statement under the UCC or any other similar notice of Lien
under any similar recording or notice statute; provided that the provisions
--------
of this Section 9.01 shall not prevent the creation, incurrence, assumption
or existence of the following (Liens described below are herein referred to
as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental charges
or levies not yet due or Liens for taxes, assessments or governmental
charges or levies being contested in good faith and by appropriate pro-
ceedings for which adequate reserves have been established in accordance
with generally accepted accounting principles;
(ii) Liens in respect of property or assets of Parent or any of its
Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary
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course of business, and (x) which do not in the aggregate materially
detract from the value of Parent's or such Subsidiary's property or
assets or materially impair the use thereof in the operation of the
business of Parent or such Subsidiary or (y) which are being contested
in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;
(iii) Liens permitted pursuant to Section 9.01(iii) of the Original
Credit Agreement which remain in existence on the Restatement Effective
Date and which are listed, and the property subject thereto described,
in Schedule VIII, but only to the respective date, if any, set forth in
such Schedule VIII for the removal and termination of any such Liens,
without any renewals or extensions thereof;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Collateral Documents;
(vi) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of Parent or any of its
Subsidiaries or materially detracting from the value of the respective
assets of Parent or such Subsidiary;
(vii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security in the ordinary course of
business;
(viii) Liens placed upon equipment or machinery used in the ordinary
course of business of the Company or any of its Subsidiaries at the time
of acquisition thereof by the Company or any such Subsidiary or within
90 days thereafter to secure Indebtedness incurred to pay all or a
portion of the purchase price thereof provided that (x) the aggregate
principal amount of all Indebtedness secured by Liens permitted by this
clause (viii) incurred in any fiscal year of Parent does not exceed
$1,000,000 and (y) in all events, the Lien encumbering the equipment or
machinery so acquired does not encumber any other asset of Parent or
such Subsidiary;
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(ix) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances, and minor title deficiencies, in
each case not securing Indebtedness and not materially interfering with
the conduct of the business of Parent or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
(xi) Liens arising out of judgments or awards in respect of which
Parent or any of its Subsidiaries shall in good faith be prosecuting an
appeal or proceedings for review in respect of which there shall have
been secured a subsisting stay of execution pending such appeal or
proceedings provided that the aggregate amount of all such judgments or
awards (and any cash and the fair market value of any property subject
to such Liens) does not exceed $15,000,000 at any time outstanding;
(xii) statutory and common law landlords' liens under leases to
which Parent or any of its Subsidiaries is a party;
(xiii) Liens incurred or deposits made to secure the performance of
tenders, bids, statutory obligations, government contracts, performance
and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations
for the payment of borrowed money);
(xiv) Liens securing reimbursement obligations with respect to
commercial and standby letters of credit incurred by the Company or any
of its Subsidiaries in the ordinary course of business provided that (x)
each such letter of credit is in a face amount of less than $1,000,000
and (y) the aggregate face amount of all such letters of credit does not
exceed $5,000,000;
(xv) restrictions pursuant to legends on stock required by (x)
Gaming Regulations and (y) the partnership agreement for Harrah's Jazz
(as such partnership agreement is in effect on the Restatement Effective
Date, which restrictions, in any event, do not prohibit the granting of
the Liens on any Required Collateral or the exercise of remedies
pursuant to the Collateral Documents), in each case to the extent such
restrictions constitute a Lien;
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(xvi) Liens securing Existing Casino Non-Recourse Financing
permitted under Section 9.04(ix) so long as such Liens only encumber the
Casino Property or the two Casino Properties (including the furniture,
fixtures and equipment related thereto) in respect of which Existing
Casino Non-Recourse Financing is then being or has theretofore been
obtained, provided that such Liens may attach to any Casino Property
only upon the occurrence of the respective Casino Release in accordance
with the terms hereof;
(xvii) any Lien existing on any asset of any corporation at the time
such corporation becomes a Subsidiary of Parent so long as any such Lien
was not created in contemplation of such event;
(xviii) any Lien existing on any asset prior to the acquisition
thereof by the Company or any of its Subsidiaries so long as any such
Lien was not created in contemplation of such acquisition;
(xix) Liens on equipment or machinery subject to Capitalized Lease
Obligations to the extent permitted by Section 9.04(v);
(xx) Liens securing Non-Recourse Indebtedness of Specified
Subsidiaries permitted under Section 9.04(x) so long as such Liens only
encumber the Gaming Properties owned by Specified Subsidiaries being
developed or financed with such Non-Recourse Indebtedness, including any
Real Property and furniture, fixtures and equipment related thereto, it
being understood and agreed that such assets of Specified Subsidiaries
also may secure Non-Recourse Indebtedness incurred by other Specified
Subsidiaries pursuant to Section 9.04(x);
(xxi) Liens on the Company's or any of its Subsidiaries' respective
equity interest in any Joint Venture so long as such Liens only secure
Indebtedness of such Joint Venture; and
(xxii) Liens placed upon the Hotel Collateral securing the
Indebtedness and other obligations of the Company and the Hotel
Subsidiaries under the Hotel Facility, it being understood that such
Liens shall not be permitted with respect to any assets or properties of
Parent or any Subsidiary of Parent after the Restatement Effective Date.
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9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. (a)
-------------------------------------------------------
Parent will not, and will not permit any of its Material Subsidiaries to,
wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or substantially all
of its assets, whether in a single transaction or a series of related
transactions, provided, however, (A) that in no event shall Parent or any of
-------- -------
its Subsidiaries sell, lease or otherwise dispose of the capital stock or
partnership interest in any Material Subsidiary or any Casino Property
unless, in the case of any sale of any Casino Property (including any
fixtures, furniture and equipment related thereto), or the sale of capital
stock or partnership interest of any Casino Owner that owns the related
Casino Property, (i) such sale is for cash and the Net Sale Proceeds
therefrom equals at least the Minimum Proceeds Amount for such Casino
Property or the Casino Owner thereof, provided that no more than two Casino
Properties or the two Casino Owners thereof in the aggregate may be the
subject of a Casino Release, whether pursuant to this Section 9.02 or Section
9.04(ix), and only one of either the Atlantic City Property or the Las Vegas
Property may be the subject of a Casino Release, (ii) the Casino Owner of
such Casino Property, if a Subsidiary Borrower, ceases to be a Subsidiary
Borrower and all Loans incurred by such Subsidiary Borrower are repaid in
full and the Company shall become the account party with respect to any
outstanding Letter of Credit issued for the account of such Subsidiary
Borrower pursuant to documentation satisfactory to the Administrative Agent
and the respective Letter of Credit Issuer, (iii) at the time of such sale no
Default or Event of Default then exists or would exist after giving effect
thereto and the Total Revolving Loan Commitment is reduced as required by
Section 3.03(e), (B) Harrah's New Jersey may merge with and into Harrah's
Atlantic City so long as at the time of such merger (i) no Default or Event
of Default shall exist, (ii) all of the assets of Marina are distributed to
the surviving corporation of such merger, (iii) the surviving corporation of
such merger is a Wholly-Owned Subsidiary of the Company all of the capital
stock of which is pledged by the Company pursuant to the terms of the
Company/Sub Pledge Agreement and (iv) all steps are taken that are necessary,
or in the opinion of the Collateral Agent desirable, to maintain the
perfection and priority of the Liens on the Collateral theretofore owned by
Marina pursuant to the terms of the respective Collateral Documents, (C) the
Hotel Transfer and the Hotel Stock Dividend shall be permitted, (D) the
Company may transfer its ownership interest in any of the Casino Properties
located in
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Nevada to Harrah's Club so long as at the time of any such transfer (i) no
Default or Event of Default shall exist and (ii) all steps are taken that are
necessary, or in the opinion of the Collateral Agent desirable, to maintain
the perfection and priority of the Liens on the Collateral theretofore owned
by the Company pursuant to the respective Collateral Documents and so
transferred to Harrah's Club and (E) Casino Holding Company may merge with
and into Harrah's Club so long as Harrah's Club is the surviving corporation
of such merger Harrah's may merge with and into the Company so long as the
Company is the surviving corporation of such merger, and Harrah's Club may
merge with and into the Company so long as the Company is the surviving
corporation of such merger and in each case so long as no Default or Event of
Default then exists and all steps are taken that are necessary, or in the
opinion of the Collateral Agent desirable, to maintain the perfection and
priority of the Lien's on the Collateral theretofore owned by Casino Holding
Company, Harrah's Club and Harrah's, as applicable, pursuant to the terms of
the respective Collateral Documents. Notwithstanding anything to the
contrary contained above, the Company may transfer any Casino Property (and
the fixtures, furniture and equipment related thereto) owned by it to a
special purpose Wholly-Owned Subsidiary of the Company for the purpose of
either (i) selling the capital stock of such special purpose Wholly-Owned
Subsidiary pursuant to clause (A) of this Section 9.02 or (ii) permitting
such special purpose Wholly-Owned Subsidiary to incur Existing Casino Non-
Recourse Financing pursuant to Section 9.04(ix) so long as in either case
such transfer occurs at the time of, or immediately prior to, such sale or
the incurrence of such Existing Casino Non-Recourse Financing.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent will not, and will not permit any of its Subsidiaries to,
sell, transfer or dispose of any Collateral (except for the Pledged
Securities of any Hotel Subsidiary as part of the Hotel Transfer), except
that (i) up to two Casino Properties (or the capital stock or partnership
interests in the respective Casino Owners) may be sold in accordance with
clause (A) of the proviso to the first sentence of Section 9.02(a), (ii)
sales of inventory, materials and equipment may be made in the ordinary
course of business, (iii) sales of obsolete, uneconomic or worn out equipment
or materials shall be permitted and (iv) so long as no Default or Event of
Default then exists or would exist after giving effect thereto, Collateral
(other than any Casino Property, the "Harrah's" name (although same may be
used or licensed on a non-exclusive basis in connection with
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the extension of the Gaming Business of the Company and its Subsidiaries and
Joint Ventures) and any capital stock or partnership interest in any Material
Subsidiary) may be sold at fair market value as determined in good faith by
the Company and so long as at least 75% of the gross proceeds therefrom
consist of cash, and so long as any reduction to the Total Revolving Loan
Commitment required by Section 3.03(e) and (f) is effected (and any resultant
required payments are made pursuant to Section 4.02) in accordance with the
terms thereof.
(c) To the extent the Required Banks waive in writing the provi-
sions of this Section 9.02 with respect to the sale of any Collateral, or any
Collateral is sold as permitted by this Section 9.02, such Collateral shall
be sold free and clear of the Liens created by the Collateral Documents, and
the Administrative Agent and Collateral Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing.
9.03 Dividends. Parent will not, and will not permit any of its
---------
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Parent or any of its Subsidiaries, except that:
(i) any Subsidiary of the Company may pay Dividends to the Company
or any Wholly-Owned Subsidiary of the Company;
(ii) any non-Wholly-Owned Subsidiary of the Company may pay cash
Dividends to its shareholders generally on a pro rata basis;
--- ----
(iii) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company may
pay cash Dividends to Parent which are used by Parent to pay cash
Dividends to its shareholders to the extent necessary, as determined in
the good faith judgment of the Board of Directors of Parent or the
Company, to prevent the filing of any disciplinary action by any Gaming
Authority or to prevent the loss or secure the reinstatement of any
license or franchise from any governmental agency, including Gaming
Authorities, held by Parent or any of its Subsidiaries which license or
franchise is conditioned upon some or all of the holders of Parent's
capital stock possessing prescribed qualifications, in each case only if
such loss or failure to reinstate would have a material adverse effect
on the business, operations,
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property, assets, liabilities, condition (financial or otherwise) or
prospects of Parent and its Subsidiaries taken as a whole, provided that
the aggregate amount of cash Dividends permitted to be paid pursuant to
this clause (iii) shall not exceed $5,000,000;
(iv) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company may
pay cash Dividends to Parent in the amounts permitted pursuant to
clauses (v) and (vi) of this Section 9.03, provided that Parent uses the
proceeds thereof to pay Dividends within three days after receipt
thereof for the purposes set forth in such clauses (v) and (vi);
(v) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), Parent may pay
cash Dividends in an aggregate amount for any fiscal year of Parent not
to exceed the lesser of (x) 10% of Consolidated Net Income for the prior
fiscal year and (y) $20,000,000;
(vi) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), Parent may
redeem the Rights outstanding pursuant to the terms of the Rights
Agreement, provided that (i) Parent shall not pay more than $.05 per
Right in connection therewith and (ii) the aggregate amount of Dividends
paid pursuant to this clause (vi) shall not exceed $2,500,000;
(vii) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company may
pay cash Dividends to Parent so long as the proceeds thereof are
promptly used by Parent to pay (i) operating expenses in the ordinary
course of business and other similar corporate overhead costs and
expenses and (ii) amounts necessary to fund Aster Insurance Ltd. in the
ordinary course of its business;
(viii) the Company may pay cash Dividends to Parent in the amounts
and at the times of any payment by Parent in respect of federal, state,
franchise or other taxes (provided that any refund shall be promptly
returned by Parent to the Company); and
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(ix) Parent and the Company may declare and, on the Restatement
Effective Date pay, the Hotel Stock Dividend.
Nothing in this Section 9.03 shall prohibit the making of any Dividend within
45 days after the declaration thereof if such declaration was not prohibited
by this Section 9.03 at the time of such declaration.
9.04 Indebtedness. Parent will not, and will not permit any of
------------
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Indebtedness permitted under Section 9.04(ii) of the Original
Credit Agreement which remains outstanding on the Restatement Effective
Date and which is listed on Part A of Schedule V, provided that no re-
--------
financings or renewals thereof shall be permitted except as expressly
set forth on Part A of Schedule V and then, in any event, such
refinancings and renewals shall not be in excess of the respective
amounts set forth on Part A of Schedule V;
(iii) accrued expenses and current trade accounts payable incurred
in the ordinary course;
(iv) unsecured Indebtedness of Parent or the Company under
performance bonds and guarantees in respect of the completion of the
construction of any property in accordance with the plans or standards
as agreed with the obligee of such guarantee so long as such bonds or
guarantees are incurred by Parent or the Company in the ordinary course
of the Gaming Property development business of the Company and its
Subsidiaries;
(v) Indebtedness of the Company or any of its Subsidiaries subject
to Liens permitted under Section 9.01(viii) or evidenced by Capitalized
Lease Obligations provided that such Capitalized Lease Obligations only
relate to equipment or machinery (not constituting Collateral) of the
Company or any of its Subsidiaries;
(vi) Indebtedness of the Company or any of its Subsidiaries
consisting of (x) reimbursement obligations on letters of credit (other
than Letters of Credit),
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bankers acceptances or similar instruments, provided that (i) the
--------
aggregate amount thereof at any one time outstanding shall not exceed
$5,000,000 and (ii) any such Indebtedness in excess of $1,000,000 in the
aggregate at any one time outstanding shall be unsecured other than by
documents of title and (y) surety, performance or appeal bonds to the
extent permitted by Section 9.01(xi);
(vii) Indebtedness of the Company and the Hotel Subsidiaries under
the Hotel Facility, it being understood that neither Parent nor any
Subsidiary of Parent shall be liable in respect of such Indebtedness
after the Restatement Effective Date;
(viii) Indebtedness of Parent, the Company or any Wholly-Owned
Subsidiary of the Company to Parent, the Company or any Subsidiary of
the Company (other than a Subsidiary that has incurred Existing Casino
Non-Recourse Financing or other Non-Recourse Indebtedness) or
Indebtedness of any Subsidiary of Parent to the Parent, the Company or
any Wholly-Owned Subsidiary of the Company (other than a Subsidiary that
has incurred Existing Casino Non-Recourse Financing or other Non-
Recourse Indebtedness);
(ix) Existing Casino Non-Recourse Financing incurred by any Casino
Owner (including any special purpose Wholly-Owned Subsidiary of the
Company formed to become a Casino Owner in accordance with the last
sentence of Section 9.02(a)) so long as (i) the net cash proceeds
received by such Casino Owner therefrom equals at least the Minimum
Proceeds Amounts for such Casino Property, (ii) if such Casino Owner is
a Subsidiary Borrower, such Casino Owner ceases to be a Subsidiary
Borrower and all Loans incurred by such Casino Owner are repaid in full
and the Company shall become the account party with respect to any
outstanding Letters of Credit issued for the account of such Casino
Owner pursuant to documentation satisfactory to the Administrative Agent
and the respective Letter of Credit Issuer, (iii) at the time of
incurrence of such Existing Casino Non-Recourse Financing and after
giving effect thereto, no Default or Event of Default shall exist, (iv)
at the time of incurrence of such Existing Casino Non-Recourse
Financing, the respective Casino Owner's business and assets shall
consist substantially of only the Casino Property (including related
fixtures, furniture and equipment) subject to such financing, (v) no
more than
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two Casino Properties in the aggregate may be the subject of a Casino
Release, whether pursuant to this Section 9.04(ix) or Section 9.02, and
only one of either the Atlantic City Property or the Las Vegas Property
may be the subject of a Casino Release and (vi) at the time of the
incurrence of such Existing Casino Non-Recourse Financing, the Total
Revolving Loan Commitment shall be reduced as required by Section
3.03(d);
(x) Non-Recourse Indebtedness of Specified Subsidiaries to finance
the development of Gaming Properties so long as the aggregate principal
amount thereof at any time outstanding does not exceed $300,000,000, it
being understood and agreed, however, that (i) a Specified Subsidiary
which has incurred outstanding Non-Recourse Indebtedness pursuant to
this Section 9.04(x) may guaranty the Non-Recourse Indebtedness incurred
pursuant to this Section 9.04(x) by other Specified Subsidiaries, and
(ii) such Non-Recourse Indebtedness may be guaranteed by the Company and
its other Subsidiaries to the extent provided in Section 9.04(xii);
(xi) Subordinated Debt of the Company not otherwise outstanding on
the date hereof so long as (i) the terms and conditions thereof
(including, but not limited to, subordination provisions) are no more
favorable to the holders of such Subordinated Debt than those set forth
in the 8-3/4% Senior Subordinated Notes Indenture (provided that the
indebtedness covenant contained in any such other issue of Subordinated
Debt shall have sufficient availability (without relying on any
incurrence ratios) to justify the full amount of the Total Revolving
Loan Commitment and the Total 364-Day Revolving Loan Commitment) or the
10-7/8% Senior Subordinated Notes Indenture and (ii) if such
Subordinated Debt (or any portion thereof) constitutes Permitted
Designated Indebtedness, the Total Revolving Loan Commitment shall be
reduced as required by Section 3.03(d);
(xii) Parent and its Subsidiaries may guarantee on an unsecured
basis obligations of Specified Subsidiaries, Joint Ventures and parties
to management agreements with the Company or its Subsidiaries or with
such Joint Ventures, in each case with respect to the development of
Gaming Property in an amount not to exceed $100,000,000 at any one time
outstanding for any individual Gaming Property and $325,000,000 at any
one
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time outstanding for all such Gaming Properties, provided that (i) the
--------
aggregate limitation set forth above shall be (A) increased (or
decreased if Consolidated Net Income is negative) on the first day of
each fiscal year of the Company commencing on January 1, 1996 by an
amount equal to 50% (or 100% for each fiscal year for which Consolidated
Net Income is negative) of the Consolidated Net Income for the fiscal
year last ended, and (B) decreased from time to time by the amount of
Dividends paid by the Company to Parent pursuant to Section 9.03(iv) on
and after the Restatement Effective Date and prior to the date of deter-
mination, (ii) the aggregate amount of guarantees permitted to be out-
standing by Parent and its Subsidiaries pursuant to this Section
9.04(xii) shall be reduced by the amount of Investments outstanding
pursuant to clause (i) of the proviso to Section 9.05 and (iii) the
$100,000,000 individual limitation set forth above shall not apply to
the Cherokee Investments;
(xiii) Parent, the Company and Harrah's may guarantee on an unsecured
basis any obligations (except that it may not provide any guaranties,
direct or indirect, of Non-Recourse Indebtedness pursuant to this clause
(xiii)) of their respective Subsidiaries;
(xiv) Indebtedness of Parent and the other Guarantors under the 364-
Day Credit Agreement (but only to the extent that Parent or such other
Guarantors are Guarantors under, or in respect of, this Agreement) in an
aggregate principal amount not to exceed $150,000,000 (as reduced by any
mandatory reductions thereto as contemplated by Section 3.03(d) and (e))
at any one time outstanding; and
(xv) Indebtedness of Parent or any of its Subsidiaries not
otherwise permitted under this Section 9.04 in an aggregate principal
amount not to exceed $25,000,000 at any one time outstanding.
At the time any Casino Owner obtains Existing Casino Non-Recourse
Financing in accordance with clause (ix) of this Section 9.04, the Casino
Property (and fixtures, furniture and equipment related thereto) subject to
such financing shall be so financed free and clear of the Liens created by
the respective Mortgage and Collateral Documents, and the Administrative
Agent and Collateral Agent shall be authorized to take any actions deemed
appropriate in order to effect the foregoing.
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9.05 Advances, Investments and Loans. Parent will not, and will
-------------------------------
not permit any of its Subsidiaries to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person (collectively, "Investments") other than
Investments in the ordinary course of business, Subsidiary Investments and
other Investments existing on the Restatement Effective Date, provided that:
(i) Investments other than Subsidiary Investments shall not be
made with respect to the development or operation of Gaming Properties
or in connection with Gaming Businesses (and reasonable extensions
thereof), except that Investments in any Joint Venture relating to the
Gaming Business or Investments in parties to management agreements with
the Company or its Subsidiaries or such Joint Ventures for gaming
projects may be made so long as the aggregate amount thereof does not
exceed $100,000,000 at any one time outstanding (determined without
regard to any write-downs or write-offs of such Investments) for any
individual Gaming Business or gaming project or $325,000,000 at any one
time outstanding (determined without regard to any write-downs or write-
offs of such Investments) for all such Gaming Businesses and gaming
projects, provided that (w) the aggregate limitation set forth above
--------
shall be (A) increased (or decreased if Consolidated Net Income is
negative) on the first day of each fiscal year of the Company commencing
on January 1, 1996 by an amount equal to 50% (or 100% for each fiscal
year for which Consolidated Net Income is negative) of the Consolidated
Net Income for the fiscal year last ended and (B) decreased from time to
time by the amount of Dividends paid by the Company to Parent pursuant
to Section 9.03(iv) on and after the Restatement Effective Date, (x) the
aggregate amount of such Investments permitted to be made pursuant to
this Section 9.05(i) shall be reduced by the aggregate amount of
guarantees outstanding pursuant to Section 9.04(xii), (y) the
$100,000,000 individual limitation set forth above shall not apply to
the Cherokee Investments and (z) Investments in, to or for the benefit
of Harrah's Jazz and its Subsidiaries shall not be permitted to be made
pursuant to this Section 9.05(i); and
(ii) Investments constituting Harrah's Jazz Investments shall be
permitted, provided that the aggregate amount of all such Investments
(other than in
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respect of the Harrah's Jazz Completion Obligation Loans, the Harrah's
Jazz Title Indemnity Arrangements and the Harrah's Jazz Completion
Guaranties), whether made prior to, on or after the Restatement
Effective Date, shall not exceed $150,000,000.
Notwithstanding the foregoing provisions of this Section 9.05,
Investments in the ordinary course of business shall not include the
purchases of (i) Margin Stock and (ii) non-investment grade debt securities
of any Person.
9.06 Transactions with Affiliates. Parent will not, and will not
----------------------------
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of Parent or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to Parent or such Subsidiary as would reasonably be obtained by
Parent or such Subsidiary at that time in a comparable arm's-length transac-
tion with a Person other than an Affiliate, except that (i) Dividends may be
paid to the extent provided in Section 9.03, (ii) loans may be made and other
transactions may be entered into by Parent and its Subsidiaries to the extent
permitted by Sections 9.04 and 9.05 and (iii) transactions among Parent, the
Company and any Subsidiary of the Company shall be permitted so long as any
such transactions, individually or in the aggregate, would not have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole.
9.07 Maximum Leverage Ratio. Parent will not permit the ratio of
----------------------
Consolidated Debt to Consolidated Net Worth at any time during a period set
forth below to be greater than the ratio set forth opposite such period
below:
Period Ratio
------ -----
Restatement Effective Date to and
including December 31, 1996 2.75:1
January 1, 1997 to and
including December 31, 1997 2.50:1
January 1, 1998 to and
including December 31, 1998 2.25:1
January 1, 1999 and
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thereafter 2.00:1
9.08 Consolidated Interest Coverage Ratio. Parent will not permit
------------------------------------
the Consolidated Interest Coverage Ratio for any Test Period ended on the
last day of a fiscal quarter set forth below to be less than the ratio set
forth opposite such fiscal quarter below:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters ending
June 30, 1995,
September 30, 1995 and
December 31, 1995 2.5:1
Fiscal quarters ending
March 31, 1996
and thereafter 3.0:1
9.09 Minimum Consolidated Net Worth. Parent will not permit
------------------------------
Consolidated Net Worth at any time during a period or calendar year set forth
below to be less than the amount set forth opposite such period or calendar
year below:
Period Amount
------ ------
Restatement Effective Date to and
including December 31, 1995 $ 450,000,000
Year ending December 31, 1996 $ 550,000,000
Year ending December 31, 1997 $ 650,000,000
Year ending December 31, 1998 $ 800,000,000
Year ending December 31, 1999 $1,000,000,000
Year ending December 31, 2000 $1,000,000,000
9.10 Limitation on Payments and Modifications of Subordinated
--------------------------------------------------------
Debt; Modifications of Certificate of Incorporation, Partnership Agreements
---------------------------------------------------------------------------
and By-Laws. Parent will not, and will not permit any of its Subsidiaries
-----------
to, (i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying when
due) any Subordinated Debt (other than the Company's 8-3/8%
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Subordinated Debentures due 1996), (ii) make (or give any notice in respect
of) any mandatory payment or prepayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with the
trustee with respect thereto money or securities before due for the purpose
of when due) any Subordinated Debt as a result of any sale of assets by
Parent or any of its Subsidiaries, (iii) amend or modify, or permit the
amendment or modification of, any provision of any Subordinated Debt or of
any agreement (including, without limitation, any purchase agreement,
indenture or loan agreement) relating thereto (except modifications relating
to the 10-7/8% Senior Subordinated Notes Indenture and 8-3/4% Senior
Subordinated Notes Indenture in order to obtain the respective holders'
consent to the Hotel Transaction so long as the documentation with respect to
such consent is in form and substance satisfactory to the Administrative
Agent and the Required Banks), (iv) amend or modify, or permit the amendment
or modification of, any financial or business covenants and/or defaults of
the 364-Day Credit Agreement which would have the effect of making the same
more stringent or restrictive as applied to Parent or any of its Subsidiaries
in each case unless parallel changes are made to both this Agreement and the
364-Day Credit Agreement or (v) amend, modify or change its certificate of
incorporation (including, without limitation, by the filing or modification
of any certificate of designation), partnership agreement or by-laws except
such modifications which would not have a material adverse effect on Parent
and its Subsidiaries taken as a whole or an adverse effect on the rights and
remedies of the Administrative Agent or the Banks under any of the Credit
Documents. Notwithstanding anything to the contrary contained in clause (i)
of this Section 9.10, the Company may prepay, repurchase, redeem, defease or
otherwise retire Subordinated Debt if no Default or Event of Default then
exists or would result therefrom to the extent necessary in the good faith
judgment of the Board of Directors of Parent or the Company to prevent the
filing of a disciplinary action by any Gaming Authority or to prevent the
loss or secure the reinstatement of any license or franchise from any
governmental agency (including the Gaming Authorities) held by Parent, the
Company or any Subsidiary of Parent or the Company which license or franchise
is conditioned upon some or all of the holders of such Subordinated Debt
possessing prescribed qualifications, if such loss or failure to reinstate
would have a material adverse effect on the business, operations, property,
assets, liabilities, conditions (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole.
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9.11 Limitation on Certain Restrictions on Subsidiaries. Parent
--------------------------------------------------
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary of Parent to
(a) pay dividends or make any other distributions on its capital stock or any
other interest or participation in its profits owned by Parent or any
Subsidiary of Parent, or pay any Indebtedness owed to Parent or a Subsidiary
of Parent, (b) make loans or advances to Parent or any Subsidiary of Parent
or (c) transfer any of its properties or assets to Parent or any Subsidiary
of Parent, except for such encumbrances or restrictions existing under or by
reason of (i) regulatory actions or applicable law, (ii) this Agreement, the
other Credit Documents and the 364-Day Credit Agreement, (iii) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of Parent or a Subsidiary of Parent, (iv) customary provi-
sions restricting the assignment or transfer of any licensing agreement,
franchise agreement, management contract, joint venture agreement or any
similar types of agreement entered into by Parent or a Subsidiary of Parent
in the ordinary course of business, (v) customary restrictions imposed in
connection with any asset sale permitted by this Agreement for the benefit of
the purchaser or owner of such asset, (vi) restrictions existing in any
document executed in connection with Existing Casino Non-Recourse Financing
so long as such restrictions only apply to the Casino Property (and any
fixtures, furniture and equipment related thereto) serving as security for
such financing, (vii) restrictions existing in any document executed in con-
nection with Non-Recourse Indebtedness permitted under Section 9.04(x) so
long as such restrictions only apply to the property serving as security for
such debt, (viii) customary restrictions on the transfer of assets used to
secure Indebtedness permitted to be incurred (and so long as the Liens are
permitted to exist) by this Agreement, (ix) restrictions imposed in
connection with any new gaming Subsidiaries of the Company which are not
Material Subsidiaries and (x) restrictions imposed on the Company and the
Hotel Subsidiaries pursuant to the Hotel Facility, provided that the
restrictions imposed pursuant to the Hotel Facility shall not apply to Parent
or any Subsidiary of Parent after the Restatement Effective Date.
9.12 Limitation on Issuance of Capital Stock. Parent will not
---------------------------------------
permit any of its Material Subsidiaries to issue any capital stock (including
by way of sales of treasury stock) or any options or warrants to purchase, or
securities convertible into, capital stock, except (i) for trans-
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fers and replacements of then outstanding shares of capital stock, (ii) for
stock splits, stock dividends and similar issuances which do not decrease the
percentage ownership of Parent or any of its Subsidiaries in any class of the
capital stock of such Subsidiary and (iii) to qualify directors to the extent
required by applicable law.
9.13 Business. Parent will not, and will not permit any of its
--------
Subsidiaries to, engage (directly or indirectly) in any business other than
the business in which Parent or such Subsidiary is engaged on the Restatement
Effective Date (after giving effect to the Hotel Transaction) and any other
reasonably related businesses.
9.14 Ownership of Subsidiaries. Parent will maintain its direct
-------------------------
100% ownership interest in the Company, and, except as expressly provided in
Section 9.02(a), the Company will maintain the same direct or indirect 100%
ownership interest in each of the Material Subsidiaries, provided that if the
Company owns (directly or indirectly) less than 100% of the capital stock or
other equity interest of any Material Subsidiary at the time same becomes a
Material Subsidiary, then the Company shall maintain at least such direct or
indirect ownership interest in such Material Subsidiary so long as it remains
a Material Subsidiary, it being understood that the Company may divest its
ownership interest in the Hotel Company and the Hotel Subsidiaries as a
result of the Hotel Stock Dividend.
9.15 Special Purpose Corporation. Parent will engage in no
---------------------------
material business activities other than the ownership of the capital stock of
the Company.
SECTION 10. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
10.01 Payments. Any Borrower shall (i) default in the payment
--------
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for three or more days, in the payment when
due of any Unpaid Drawings or interest on any Loan or Note or any regularly
accruing Fees, or (iii) default, and such default shall continue unremedied
for five or more days after written notice to the Company by the Administra-
tive Agent or any Bank, in the payment when due of any other Fees or amounts
owing hereunder or under any other Credit Document, provided, however, that
-------- -------
such notice shall not be required to be given
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if a Bankruptcy Event shall have occurred and be continuing; or
10.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document or
in any certificate delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made;
or
10.03 Covenants. Parent or any Borrower shall (i) default in the
---------
due performance or observance by it of any term, covenant or agreement con-
tained in Section 8.01(e)(i), 8.08 or 9 or (ii) default in the due perfor-
mance or observance by it of any other term, covenant or agreement contained
in this Agreement and such default shall continue unremedied for a period of
30 days after written notice to the Company by the Administrative Agent or
any Bank; or
10.04 Default Under Other Agreements. Parent or any Subsidiary of
------------------------------
Parent shall (i) default in any payment of any Indebtedness (other than the
Loans and the Notes) beyond the period of cure or grace, if any, provided in
the instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition relat-
ing to any Indebtedness (other than the Loans and the Notes) or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or holders)
to cause (determined without regard to whether any notice is required), any
such Indebtedness to become due prior to its stated maturity, or (iii) any
Indebtedness (other than the Loans and the Notes) of Parent or any Subsidiary
of Parent shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof, provided that it shall not be a Default or an Event of
--------
Default under this Section 10.04 unless the aggregate principal amount of all
Indebtedness as described in preceding clauses (i) through (iii), inclusive,
is at least $25,000,000; or
10.05 Bankruptcy, etc. Parent or any Subsidiary of Parent shall
----------------
commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor
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thereto (the "Bankruptcy Code"); or an involuntary case is commenced against
Parent or any Subsidiary of Parent, and the petition is not controverted
within 10 days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of Parent or any
Subsidiary of Parent, or Parent or any Subsidiary of Parent commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any jurisdiction whether now or hereafter in effect relating to Parent or any
Subsidiary of Parent, or there is commenced against Parent or any Subsidiary
of Parent any such proceeding which remains undismissed for a period of 60
days, or Parent or any Subsidiary of Parent is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or Parent or any Subsidiary of Parent suffers any
appointment of any custodian or the like for it or any substantial part of
its property to continue undischarged or unstayed for a period of 60 days; or
Parent or any Subsidiary of Parent makes a general assignment for the benefit
of creditors; or any corporate action is taken by Parent or any Subsidiary of
Parent for the purpose of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
-----
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had a trustee appointed by
the PBGC to administer such Plan, any Plan is, shall have been or is likely
to be terminated or to be the subject of termination proceedings under ERISA,
any Plan shall have an Unfunded Current Liability, Parent or any Subsidiary
of Parent or any ERISA Affiliate has incurred or is likely to incur a
liability to or on account of a Plan under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29),
4971 or 4975 of the Code, or Parent or any Subsidiary of Parent has incurred
or is likely to incur liabilities pursuant to one or more employee welfare
benefit plans (as defined in Section 3(1) of ERISA) which provide benefits to
retired employees (other than as required by Section 601 of ERISA) or
employee pension benefit plans (as defined in Section 3(2) of ERISA); (b)
there shall result from any such event or events the imposition of a lien,
the granting of a security interest, or a liability or a material risk of
incurring a liability; and (c) which lien, security interest or liability, in
the opinion of the Required Banks, could reasonably be expected
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to have a material adverse effect upon the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole; or
10.07 Collateral Documents. At any time after the execution and
--------------------
delivery thereof, any of the Collateral Documents shall cease to be in full
force and effect, or shall cease to give the Collateral Agent for the benefit
of the Secured Parties the Liens, rights, powers and privileges purported to
be created thereby (including, without limitation, a perfected security
interest in, and Lien on, all of the Collateral), in favor of the Collateral
Agent, superior to and prior to the rights of all third Persons (except as
permitted by Section 9.01), and subject to no other Liens (except as
permitted by Section 9.01), or any Credit Party shall default in the due per-
formance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any of the Collateral Documents and such
default shall continue beyond any cure or grace period specifically applic-
able thereto pursuant to the terms of such Collateral Document; or
10.08 Guarantees. Any Guaranty or any provision thereof shall
----------
cease to be a legal, valid and binding obligation enforceable against the
obligor thereof, or any Guarantor or any Person acting by or on behalf of any
Guarantor shall deny or disaffirm such Guarantor's obligations under its
Guaranty, or any Guarantor shall default in its due performance of any term,
covenant or agreement on its part to be performed or observed pursuant to its
Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be
---------
entered against Parent or any Subsidiary of Parent involving in the aggregate
for Parent and its Subsidiaries a liability (not paid or fully covered by a
reputable insurance company) and such judgments and decrees either shall be
final and non-appealable or shall not be vacated, discharged or stayed or
bonded pending appeal for any period of 30 consecutive days, and the aggre-
gate amount of all such judgments exceeds $10,000,000; or
10.10 Gaming Authority. Any Gaming Authority having jurisdiction
----------------
over any Casino Property shall determine that Parent or any of its
Subsidiaries that is required to be qualified under the Gaming Regulations
does not qualify, or that the qualification or license of any of them with
respect to any Casino Property should be revoked, not renewed or suspended
for more than 30 days, or any such Gaming Authority
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shall have appointed a conservator, supervisor or trustee to oversee any of
the operations of any of them;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the written
request of the Required Banks, shall by written notice to the Borrowers, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent, any Bank or the holder of any Note to enforce its
claims against any Credit Party (provided that, if an Event of Default
--------
specified in Section 10.05 shall occur with respect to Parent or any
Borrower, the result which would occur upon the giving of written notice by
the Administrative Agent to the Borrowers as specified in clauses (i) and
(ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Revolving Loan Commitment terminated, whereupon the
Revolving Loan Commitment of each Bank shall forthwith terminate immediately
and any Commitment Commission shall forthwith become due and payable without
any other notice of any kind; (ii) declare the principal of and any accrued
interest in respect of all Loans and the Notes and all Obligations owing
hereunder and thereunder to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Credit Party; (iii) terminate
any Letter of Credit, which may be terminated, in accordance with its terms;
(iv) direct the Borrowers to pay (and the Borrowers jointly and severally
agree that upon receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 10.05 with respect to any Borrower, they will
pay) to the Collateral Agent at the Payment Office such additional amount of
cash, to be held as security by the Collateral Agent, as is equal to the
aggregate Stated Amount of all Letters of Credit issued for the account of
the Borrowers and then outstanding; and (v) enforce, as Collateral Agent, all
of the Liens and security interests created pursuant to the Collateral Docu-
ments.
SECTION 11. Definitions and Accounting Terms.
--------------------------------
11.01 Defined Terms. As used in this Agreement, the following
-------------
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Collateral Documents" shall have the meaning provided
in Section 8.12(b).
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"Adjusted Certificate of Deposit Rate" shall mean, on any day, the
sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing
(x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market
as published in the most recent Federal Reserve System publication entitled
"Select Interest Rates," published weekly on Form H.15 as of the date hereof,
or if such publication or a substitute containing the foregoing rate
information shall not be published by the Federal Reserve System for any
week, the weekly average offering rate determined by the Administrative Agent
on the basis of quotations for such certificates received by it from three
certificate of deposit dealers in New York of recognized standing or, if such
quotations are unavailable, then on the basis of other sources reasonably
selected by the Administrative Agent, by (y) a percentage equal to 100% minus
the stated maximum rate of all reserve requirements as specified in
Regulation D applicable on such day to a three-month certificate of deposit
of a member bank of the Federal Reserve System in excess of $100,000 (in-
cluding, without limitation, any marginal, emergency, supplemental, special
or other reserves), plus (2) the then daily net annual assessment rate as
estimated by the Administrative Agent for determining the current annual
assessment payable by the Administrative Agent to the Federal Deposit
Insurance Corporation for insuring three-month certificates of deposit.
"Adjusted Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank such Bank's Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by
dividing such Bank's Revolving Loan Commitment at such time by the Adjusted
Total Revolving Loan Commitment at such time, it being understood that all
references herein to Revolving Loan Commitments and the Adjusted Total
Revolving Loan Commitment at a time when the Total Revolving Loan Commitment
or Adjusted Total Revolving Loan Commitment, as the case may be, has been
terminated shall be references to the Revolving Loan Commitments or Adjusted
Total Revolving Loan Commitment, as the case may be, in effect immediately
prior to such termination, provided that (A) no Bank's Adjusted Percentage
--------
shall change upon the occurrence of a Bank Default from that in effect
immediately prior to such Bank Default if after giving effect to such Bank
Default, and any repayment of Revolving Loans and Swingline Loans at such
time pursuant to Section 4.02(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-
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Defaulting Banks plus (ii) the aggregate outstanding principal amount of
Swingline Loans plus (iii) the Letter of Credit Outstandings, exceed the
Adjusted Total Revolving Loan Commitment; (B) the changes to the Adjusted
Percentage that would have become effective upon the occurrence of a Bank
Default but that did not become effective as a result of the preceding clause
(A) shall become effective on the first date after the occurrence of the
relevant Bank Default on which the sum of (i) the aggregate outstanding
principal amount of the Revolving Loans of all Non-Defaulting Banks plus (ii)
the aggregate outstanding principal amount of the Swingline Loans plus (iii)
the Letter of Credit Outstandings is equal to or less than the Adjusted Total
Revolving Loan Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted
Percentage is changed pursuant to the preceding clause (B) and (ii) any re-
payment of such Bank's Revolving Loans, or of Unpaid Drawings with respect to
Letters of Credit or of Swingline Loans, that were made during the period
commencing after the date of the relevant Bank Default and ending on the date
of such change to its Adjusted Percentage must be returned to any Borrower as
a preferential or similar payment in any bankruptcy or similar proceeding of
such Borrower, then the change to such Non-Defaulting Bank's Adjusted Percen-
tage effected pursuant to said clause (B) shall be reduced to that positive
change, if any, as would have been made to its Adjusted Percentage if (x)
such repayments had not been made and (y) the maximum change to its Adjusted
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted Percentage of
the outstanding principal amount of Swingline Loans and of Letter of Credit
Outstandings equalling such Bank's Revolving Loan Commitment at such time.
"Adjusted Revolving Loan Commitment" for each Non-Defaulting Bank
shall mean at any time the product of such Bank's Adjusted Percentage and the
Adjusted Total Revolving Loan Commitment.
"Adjusted Total Revolving Loan Commitment" shall mean at any time
the Total Revolving Loan Commitment less the aggregate Revolving Loan
Commitments of all Defaulting Banks.
"Administrative Agent" shall mean Bankers Trust Company, in its
capacity as Administrative Agent for the Banks hereunder, and shall include
any successor to the Administrative Agent appointed pursuant to Section
12.09.
"Affiliate" shall mean, with respect to any Person, any other
Person (i) directly or indirectly controlling (in-
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cluding, but not limited to, all directors and officers of such Person),
controlled by, or under direct or indirect common control with, such Person
or (ii) that directly or indirectly owns more than 5% of the voting
securities or capital stock of such Person. A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by contract
or otherwise.
"Agent" shall mean each of Bankers Trust Company, The Bank of New
York, CIBC Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale, and The Sumitomo Bank
Limited, New York Branch.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented or amended from time to time.
"Applicable Commitment Commission Percentage" shall mean 1/4 of 1%
less the then applicable Reduction Discount.
"Applicable Margin" shall mean 7/8 of 1% less the then applicable
Reduction Discount.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit Q (appropriately
completed).
"Assignment of Leases" shall mean the Assignment of Leases, dated
as of July 22, 1993, between Marina and the Collateral Agent, as modified,
supplemented or amended from time to time.
"Assignment of Partnership Interests Agreement" shall mean the
Assignment of Partnership Interests Agreement, dated as of July 22, 1993,
among Harrah's New Jersey, Harrah's Atlantic City and the Collateral Agent,
as modified, supplemented or amended from time to time.
"Atlantic City Property" shall mean the Harrah's Atlantic City
Hotel Casino.
"Bank" shall mean each financial institution listed on Schedule I,
as well as any institution which becomes a "Bank" hereunder pursuant to
Section 1.13 or 13.04(b) or (c), provided that in any event each such
institution shall be a Qualified Person.
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"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing
(including any Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.04(c) or (ii) a Bank having notified in
writing the Borrowers and/or the Administrative Agent that it does not intend
to comply with its obligations under Section 1.01(a), 1.01(b) or 1.01(c) or
Section 2, in the case of either clause (i) or (ii) above as a result of any
takeover of such Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Bankruptcy Event" shall mean any Default or Event of Default of
the type described in Section 10.05.
"Base Rate" at any time shall mean the highest of (i) 1/2 of 1% in
excess of the Adjusted Certificate of Deposit Rate, (ii) the Prime Lending
Rate and (iii) 1/2 of 1% in excess of the overnight Federal Funds Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) any
Revolving Loan designated or deemed designated as such by a Borrower at the
time of the incurrence thereof or conversion thereto.
"Book Entry System" shall have the meaning provided in Section
8.11.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean and include (i) the borrowing of Swingline
Loans from BTCo on a given date and (ii) the borrowing of one Type of
Revolving Loan from all the Banks on a given date (or resulting from a
conversion or conversions on such date) having in the case of Eurodollar
Loans the same Interest Period, provided that Base Rate Loans incurred pursu-
--------
ant to Section 1.10(b) shall be considered part of the related Borrowing of
Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are
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authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) above and which is also a day for
trading by and between banks in the New York interbank Eurodollar market.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under generally accepted accounting principles, are or
will be required to be capitalized on the books of such Person, in each case
taken at the amount thereof accounted for as indebtedness in accordance with
such principles.
"Casino Holding Company" shall mean Casino Holding Company, a
Delaware corporation.
"Casino Owner" shall mean any Subsidiary of the Company that owns a
Casino Property.
"Casino Property" shall mean and include each of the Harrah's Reno
Hotel Casino, Harrah's Lake Tahoe Hotel Casino (including Bill's Casino),
Harrah's Las Vegas Hotel Casino, Harrah's Atlantic City Hotel Casino and
Harrah's Laughlin Hotel Casino.
"Casino Release" shall mean the release of a specific Casino
Property from the Liens created by the respective Collateral Documents as a
result of the sale thereof pursuant to Section 9.02 or the incurrence of
Existing Casino Non-Recourse Financing with respect thereto pursuant to
Section 9.04(ix).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time
to time, 42 U.S.C. Sec. 9601 et seq.
-- ----
"Change of Control" shall mean (i) Parent shall cease to own 100%
of the capital stock of the Company, (ii) the direct or indirect acquisition
by any Person or group (as such term is defined in Section 13(d)(3) of the
Securities Exchange Act) of beneficial ownership (as such term is defined in
Rule 13D-3 promulgated under the Securities Exchange Act) of 25% or more of
the outstanding shares of common stock of Parent, (iii) the Board of
Directors of Parent shall not consist of a majority of Continuing Directors
or (iv) any "change of control" or similar event
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shall occur under any issue of Indebtedness of Parent or any of its
Subsidiaries in an aggregate principal amount which exceeds (or upon
utilization of any unused commitments may exceed) $25,000,000.
"Cherokee Casino" shall mean the casino to be constructed,
developed and operated by the Eastern Band of Cherokee Indians in Cherokee,
North Carolina, and the manager of which shall be Parent or a Wholly-Owned
Subsidiary of Parent.
"Cherokee Investments" shall mean (i) one or more guaranties given
by Parent and/or the Company for the benefit of the lenders providing
construction financing for the Cherokee Casino and (ii) additional
Investments in the Cherokee Casino.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect on
the date of this Agreement, and to any subsequent provision of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal)
with respect to which any security interests have been granted (or purport to
be granted) pursuant to any Collateral Document, including, without limi-
tation, all Pledge Agreement Collateral, all Security Agreement Collateral,
all Mortgaged Properties and all cash and cash equivalents delivered as
collateral pursuant to Section 4.02(a) or 10.
"Collateral Agent" shall mean and include the Administrative Agent
acting as collateral agent for the Secured Parties pursuant to the Collateral
Documents and any sub-agents or sub-trustees appointed by the Administrative
Agent pursuant to the Master Collateral Agreement and permitted under
applicable Gaming Regulations.
"Collateral Document" shall mean and include each Pledge Agreement,
the Security Agreement, each Mortgage, the Assignment of Partnership
Interests Agreement, the Assignment of Leases, each Net Lease Agreement, the
Master Collateral Agreement and, after the execution and delivery thereof,
each Additional Collateral Document.
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"Collateral Grantor" shall mean and include Parent, the Company and
each Subsidiary of the Company which is party to any Collateral Document,
provided that, from and after the date of the release of all Collateral of
any Subsidiary of the Company from the provisions of the Collateral
Documents, and so long as the respective Subsidiary at such time owns no
Required Collateral, such Subsidiary shall cease to constitute a Collateral
Grantor and the Collateral Agent shall be authorized to execute such
documentation as is necessary or desirable to effect such release.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Company" shall have the meaning provided in the first paragraph of
this Agreement.
"Company/Sub Guaranty" shall mean the Company/Sub Guaranty, dated
as of July 22, 1993, made by the Company and the other Guarantors party
thereto, as modified, supplemented or amended from time to time.
"Company/Sub Pledge Agreement" shall mean the Company/Sub Pledge
Agreement, dated as of July 22, 1993, among the Company, the other Collateral
Grantors party thereto and the Collateral Agent, as modified, supplemented or
amended from time to time.
"Consent" shall mean each written consent from a holder of the 8-
3/4% Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes
permitting the Company and the respective indenture trustee to enter into
indenture supplements to the 8-3/4% Senior Subordinated Notes Indenture and
the 10-7/8% Senior Subordinated Notes Indenture.
"Consolidated Debt" shall mean, at any time, the sum of the
aggregate outstanding principal amount of all Indebtedness (including,
without limitation, guarantees, Non-Recourse Debt and the principal component
of Capitalized Lease Obligations) of Parent and its Consolidated
Subsidiaries.
"Consolidated EBIT" shall mean, for any period, the Consolidated
Net Income plus Consolidated Interest Expense (to the extent same was
deducted in determining Consolidated Net Income) and provision for taxes, and
without giving effect to any extraordinary gains or losses or gains or losses
from sales of assets other than inventory sold in the ordinary course of
business.
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"Consolidated Interest Coverage Ratio" for any period shall mean
the ratio of Consolidated EBIT to Consolidated Interest Expense.
"Consolidated Interest Expense" shall mean, for any period, the
total consolidated interest expense of Parent and its Consolidated
Subsidiaries (without deduction for minority interests in Subsidiaries) for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, (i) that portion of Capitalized Lease
Obligations of Parent and its Consolidated Subsidiaries representing the
interest factor for such period and (ii) the Company's or such Consolidated
Subsidiary's share of interest expense of any Joint Venture.
"Consolidated Net Income" shall mean, for any period, net income of
Parent and its Consolidated Subsidiaries (without deduction for minority
interests in Subsidiaries) for such period.
"Consolidated Net Worth" shall mean, at any time, the net worth of
Parent and its Consolidated Subsidiaries determined on a consolidated basis.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with generally accepted accounting
principles in the United States.
"Contingent Obligation" shall mean, as to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing (including, without limitation, as a result of such Person being
a general partner of the other Person, unless the underlying obligation is
expressly made non-recourse as to such general partner) any Indebtedness or
other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation (whether
arising by virtue of partnership arrangements, by agreement to keepwell, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
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Indebtedness shall not include endorsements for collection or deposit in the
ordinary course of business.
"Continuing Directors" shall mean the directors of Parent on the
Restatement Effective Date and each other director, if such other director's
nomination for election to the Board of Directors of Parent is recommended by
a majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement, each Note, each
Letter of Credit, each Guaranty and each Collateral Document.
"Credit Event" shall mean the making of any Loan, the conversion of
any Original Revolving Loan or Original Swingline Loan on the Restatement
Effective Date or the issuance of any Letter of Credit.
"Credit Party" shall mean Parent, the Company and each other
Subsidiary of Parent that is a Subsidiary Borrower, a Guarantor or a
Collateral Grantor.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Defaulting Participant" shall have the meaning provided in Section
2.04(g).
"Disqualified Stock" shall mean any capital stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable at the option of the holder thereof, in whole or in part on, or
prior to, or is exchangeable for debt securities of Parent or its
Subsidiaries prior to, the first anniversary of the Final Maturity Date.
"Dividend" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or
delivery of property (other than common stock of such Person) or cash to its
stockholders as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any
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shares of any class of its capital stock outstanding on or after the
Restatement Effective Date (or any options or warrants issued by such Person
with respect to its capital stock), or set aside any funds for any of the
foregoing purposes, or shall have permitted any of its Subsidiaries to
purchase or otherwise acquire for a consideration any shares of any class of
the capital stock of such Person outstanding on or after the Restatement
Effective Date (or any options or warrants issued by such Person with respect
to its capital stock). Without limiting the foregoing, "Dividends" with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock appreciation rights, plans,
equity incentive or achievement plans or any similar plans or setting aside
of any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents and the Hotel
Transaction Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Drawing" shall have the meaning provided in Section 2.05(b).
"8-3/4% Senior Subordinated Notes" shall mean the Company's 8-3/4%
Senior Subordinated Notes due 2000.
"8-3/4% Senior Subordinated Notes Indenture" shall mean the
indenture relating to the 8-3/4% Senior Subordinated Notes.
"Election to Become a Subsidiary Borrower" shall mean an Election
to Become a Subsidiary Borrower substantially in the form of Exhibit P, which
shall be executed by each Subsidiary of the Company which becomes a
Subsidiary Borrower after the date hereof.
"End Date" shall have the meaning provided in the definition of
Reduction Discount.
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims,
liens, notices of noncompliance or violation, investigations of which Parent
or any Borrower has received notice or proceedings relating in any way to any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including, without limitation, (a)
any and all
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Claims by governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation
or injunctive relief in connection with alleged injury or threat of injury to
health, safety or the environment due to the presence of Hazardous Materials.
"Environmental Law" means any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy
and rule of common law now or hereafter in effect and in each case as
amended, including any judicial or administrative order, consent decree or
judgment, relating to the environment, employee health and safety or Hazard-
ous Materials, including, without limitation, CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.; the Toxic Substances
-- ----
Control Act, 15 U.S.C. Sec. 2601 et seq.; the Clean Air Act, 42 U.S.C. Sec.
-------
7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sec. 3803 et seq.; the
------- -------
Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; the Emergency
-------
Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. Sec. 11001
et seq., the Hazardous Material Transportation Act, 49 U.S.C. Sec. 1801
-------
et seq. and the Occupational Safety and Health Act, 29 U.S.C. Sec. 651
-------
et seq.; and any state and local or foreign counterparts or equivalents,
-------
in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement, and to any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Parent or any Subsidiary of Parent would
be deemed to be a "single employer" within the meaning of Section 414(b),
(c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean each Revolving Loan designated as such
by a Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the arithmetic average (rounded to
the nearest 1/1000 of 1%) of the offered quotation to first-class banks in
the New York interbank
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Eurodollar market by each Reference Bank for Dollar deposits of amounts in
immediately available funds comparable to the outstanding principal amount of
the Eurodollar Loan of such Reference Bank with maturities comparable to the
Interest Period applicable to such Eurodollar Loan commencing two Business
Days thereafter as of 10:00 A.M. (New York time) on the date which is two
Business Days prior to the commencement of such Interest Period, divided by
(b) a percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency funding or liabilities as defined in Regulation D (or any
successor category of liabilities under Regulation D); provided that if one
or more of the Reference Banks fails to provide the Administrative Agent with
its aforesaid rate, then the Eurodollar Rate shall be determined based on the
rate or rates provided to the Administrative Agent by the other Reference
Bank or Banks.
"Event of Default" shall have the meaning provided in Section 10.
"Existing Casino Non-Recourse Financing" shall mean Non-Recourse
Indebtedness incurred by any Casino Owner pursuant to Section 9.04(ix) and
which is to be secured solely by the Casino Property (including any fixtures,
furniture and equipment related thereto) owned by such Casino Owner, except
that if two Casino Properties are subject to Existing Casino Non-Recourse
Financings, then each issue (or either issue) of such Existing Casino Non-
Recourse Financing may be cross-collateralized by the other Casino Property
subject to Existing Casino Non-Recourse Financing.
"Existing Letters of Credit" shall have the meaning provided in
Section 2.01(a).
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for
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any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
Funds brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final Maturity Date" shall mean July 31, 2000.
"First-Tier Material Subsidiary" shall mean each Material
Subsidiary which is a direct Subsidiary of the Company.
"Former Bank" shall have the meaning provided in Section 13.04(c).
"Gaming Authority" shall mean the governmental authorities charged
with the administration and enforcement of the Gaming Regulations.
"Gaming Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, the Casino
Properties and any other casinos, hotel casinos or gaming businesses now or
in the future owned by the Company or any of its Subsidiaries or in which
Parent or any of its Subsidiaries has an interest either through a Joint
Venture or as a party to a management agreement.
"Gaming Property" of any Person shall mean those properties and
assets of such Person which relate to such Person's casino or hotel casino
businesses and operations.
"Gaming Regulations" shall mean the laws, rules, regulations and
orders applicable to the casino and gaming business or activities of Parent,
the Company or any of their Subsidiaries, as in effect from time to time,
including the policies, interpretations and administration thereof by the
Gaming Authorities.
"Guaranteed Obligations" shall mean the irrevocable and
unconditional guaranty made by Parent under the Parent Guaranty (i) to the
Administrative Agent and each Bank for the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of the princi-
pal and interest on each Note issued by each Borrower to such Bank, and Loans
made, under this Agreement and all reimbursement
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obligations in respect of Drawings on Letters of Credit, together with all
the other obligations and liabilities (including, without limitation,
indemnities, fees and interest thereon) of each of the Borrowers to the
Administrative Bank and such Bank now existing or hereafter incurred under,
arising out of or in connection with this Agreement or any other Credit
Document and the due performance and compliance with the terms of the Credit
Documents by the Borrowers and (ii) to each Secured Interest Rate Protection
Creditor which has entered into, or in the future enters into, a Secured
Interest Rate Protection or Other Hedging Agreement with any Borrower, the
full and prompt payment when due (whether by acceleration or otherwise) of
all obligations of each Borrower owing under, or with respect to, any such
Secured Interest Rate Protection or Other Hedging Agreement, whether now in
existence or hereafter arising, and the due performance and compliance with
all terms, conditions and agreements contained therein.
"Guarantor", at any time, shall mean each of the Initial Guarantors
and each Required Additional Guarantor which has executed and delivered a
counterpart of the Company/Sub Guaranty in accordance with Section 8.12(a),
provided that, from and after the date of the release of any Subsidiary of
--------
the Company from the provisions of the Company/Sub Guaranty in accordance
with the terms thereof or hereof, such Subsidiary shall cease to constitute a
Guarantor.
"Guaranty" shall mean and include the Parent Guaranty and the
Company/Sub Guaranty.
"Harrah's" shall mean Harrah's, a Nevada corporation.
"Harrah's Atlantic City" shall mean Harrah's Atlantic City, Inc., a
New Jersey corporation.
"Harrah's Club" shall mean Harrah's Club, a Nevada corporation.
"Harrah's Jazz" shall mean Harrah's Jazz Company, a Louisiana
general partnership.
"Harrah's Jazz Completion Guaranties" shall mean one or more
completion guaranties heretofore given by Parent and/or the Company in favor
of certain lenders to Harrah's Jazz, the City of New Orleans and one or more
other governmental agencies of the State of Louisiana.
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"Harrah's Jazz Completion Obligation Loans" shall mean any payments
made by Parent and/or the Company under the Harrah's Jazz Completion
Guaranties or the Harrah's Jazz Title Indemnity Arrangements to the extent
that such payments are characterized as additional loans or advances made by
Parent and/or the Company to Harrah's Jazz.
"Harrah's Jazz Investments" shall mean Investments in or to
Harrah's Jazz and/or for the benefit of Harrah's Jazz, including the Harrah's
Jazz Completion Obligation Loans, the Harrah's Jazz Completion Guaranties and
the Harrah's Jazz Title Indemnity Arrangements.
"Harrah's Jazz Title Indemnity Arrangements" shall mean those
certain indemnity agreements heretofore given by Parent and the Company to
the title insurance companies providing title insurance for Harrah's Jazz's
casino the City of New Orleans.
"Harrah's Laughlin" shall mean Harrah's Laughlin, Inc., a Nevada
corporation.
"Harrah's New Jersey" shall mean Harrah's New Jersey, Inc., a New
Jersey corporation.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
that contain dielectric fluid containing levels of polychlorinated biphenyls,
and radon gas; (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous waste,"
"hazardous materials," "extremely hazardous substances," "restricted
hazardous waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority.
"Hotel Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, its existing
(immediately prior to the Restatement Effective Date) hotel businesses and
operations and any other hotels owned by the Company or any of its
Subsidiaries immediately prior to the Restatement Effective Date that are not
included in the Gaming Business or in which Parent or any of its Subsidiaries
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has an interest either through a Joint Venture or as a party to a management
or franchise agreement.
"Hotel Collateral" shall mean the collateral securing the Hotel
Facility, which collateral shall only consist of the assets of the Hotel
Business of the Company and the Hotel Subsidiaries (including the capital
stock of the Hotel Subsidiaries).
"Hotel Company" shall mean Promus Hotel Corporation, a newly formed
Wholly-Owned Subsidiary of the Company.
"Hotel Facility" shall mean two new senior secured credit
facilities aggregating $350,000,000 which shall be (i) secured by the Hotel
Collateral and (ii) guaranteed by the Hotel Subsidiaries.
"Hotel Property" shall mean any hotel, any land or building under
development or any other property or asset which relates to the Hotel
Business of Parent and its Subsidiaries other than those properties or assets
which are included as Gaming Properties.
"Hotel Stock Dividend" shall mean, collectively, (i) the
distribution by the Company to Parent as a stock dividend of all of the
capital stock of the Hotel Company and (ii) the distribution by Parent to its
stockholders immediately thereafter as a stock dividend of all of the capital
stock of the Hotel Company.
"Hotel Subsidiaries" shall mean those existing Subsidiaries of the
Company which are engaged in the Hotel Business and which are set forth on
Schedule IX.
"Hotel Transaction" shall mean, collectively, the Hotel Stock
Dividend, the Hotel Transfer, the entering into of the Hotel Facility and the
incurrence by the Company of at least $210,000,000 of loans thereunder, the
assignment to, and the assumption by, the Hotel Company of the Hotel
Facility, the obtaining of the Consents and the entering into of the related
indenture supplements and the obtaining of the consent of Parent's
shareholders to the Hotel Transaction.
"Hotel Transaction Documents" shall mean (i) the Hotel Facility,
(ii) the Consents, the indenture supplements to the 8-3/4% Senior
Subordinated Notes Indenture and the 10-7/8% Senior Subordinated Notes
Indenture and the Proxy Statement delivered to Parent's shareholders in
connection
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with the Hotel Transaction and (iii) the Distribution Agreement, the Tax
Sharing Agreement, the Trademark Assignment Agreement and an Employee
Benefits Allocation Agreement, which agreements are in the forms delivered to
the Administrative Agent pursuant to Section 5.04(b) and are to be entered
into by the Company and the Hotel Company in connection with the Hotel
Transfer and the Hotel Stock Dividend.
"Hotel Transfer" shall mean the transfer by the Company to the
Hotel Company of the Hotel Properties and Hotel Business of the Company and
the capital stock of the Hotel Subsidiaries, it being understood and agreed
that $210,000,000 of proceeds from the loans incurred by the Company under
the Hotel Facility on the Restatement Effective Date shall not be transferred
by the Company to the Hotel Company.
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising
in the ordinary course of business, (iv) all obligations of such person as
lessee which are capitalized in accordance with generally accepted accounting
principles, (v) all obligations of such Person to reimburse or repay any bank
or other Person in respect of amounts paid or available to be drawn under a
letter of credit, banker's acceptance, surety, performance or appeal bond or
any similar instrument (each such obligation to be valued at the face amount
of such instrument), (vi) all Indebtedness of others secured by a Lien on any
asset of such Person, (vii) all Contingent Obligations of such Person with
respect to any Indebtedness of any other Person and (viii) the amount of any
Disqualified Stock.
"Initial Guarantors" shall mean each of Parent, the Company, Casino
Holding Company, Embassy Development Corporation, Embassy Equity Development
Corporation, ESI Equity Development Corporation, Hampton Inn Equity
Development Corporation, Hampton Inns, Inc., Harrah's, Harrah's Atlantic
City, Harrah's Club, Harrah's Las Vegas, Inc., Harrah's Laughlin, Harrah's
New Jersey, Harrah's Reno Holding Company, Inc., Homewood Suites Equity
Development Corporation and Marina; provided, that from and after the
Restatement Effective Date, Embassy Development Corporation, Embassy Equity
Development Corporation, ESI Equity Development Cor-
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poration, Hampton Inn Equity Development Corporation, Hampton Inns, Inc. and
Homewood Suites Equity Development Corporation shall be (and hereby are)
released from the Company/Sub Guaranty and shall no longer constitute
Guarantors.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection or Other Hedging Agreements" shall mean
one or more (i) interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or
other similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time entered into by the Company or any of its
Subsidiaries.
"Investments" shall have the meaning provided in Section 9.05.
"Issuance System" shall have the meaning provided in Section 8.11.
"Issue" shall mean each of the two different types of Senior Debt,
there being two separate Issues for purposes of this Agreement, i.e., the
----
Indebtedness under this Agreement and the Indebtedness under the 364-Day
Credit Agreement.
"Joint Venture" shall mean any entity or arrangement between the
Company or any of its Subsidiaries (so long as the Company and its
Subsidiaries own 50% or less of such entity) and one or more Persons other
than Parent or any of its Subsidiaries (whether now existing or created in
the future) for (i) the joint ownership, management, construction or
development of any Gaming Property or (ii) the joint ownership or operation
of any Gaming Business.
"Las Vegas Property" shall mean the Harrah's Las Vegas Hotel
Casino.
"L/C Supportable Indebtedness" shall mean (i) obligations of the
Company or any of its Subsidiaries incurred
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in the ordinary course of business and (ii) all obligations supported by
Existing Letters of Credit.
"Leaseholds" of any Person means all the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean (x) BTCo and (y) with the
consent of the Administrative Agent, any other Bank to the extent such Bank
agrees, in its sole discretion, to become a Letter of Credit Issuer for the
purpose of issuing Letters of Credit pursuant to Section 2.
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC
or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Revolving Loan and each Swingline Loan.
"Lowest Outstanding Amount" shall have the meaning provided in
Section 13.18(b).
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(c).
"Margin Reduction Period" shall mean each period which shall
commence on a date on which the financial state-
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ments are delivered pursuant to Section 8.01(a) or (b) and which shall end on
the earlier of (i) the date of actual delivery of the next financial
statements pursuant to Section 8.01(a) or (b) and (ii) the latest date on
which the next financial statements are required to be delivered pursuant to
Section 8.01(a) or (b).
"Margin Stock" shall have the meaning provided in Regulation U.
"Marina" shall mean Marina Associates, a New Jersey general
partnership.
"Markers" shall have the meaning provided in the Master Collateral
Agreement.
"Master Collateral Agreement" shall mean the Master Collateral
Agreement, dated as of July 22, 1993, among Parent, the Company, the other
Collateral Grantors, the Administrative Agent and the Collateral Agent, as
modified, supplemented or amended from time to time.
"Material Subsidiary" shall mean each of (a) each Initial
Guarantor other than Parent and the Company, (b) each Subsidiary Borrower and
each Collateral Grantor and (c) as at the date of determination, (i) any
direct or indirect Subsidiary of Parent that holds any license or licenses
needed to conduct gaming operations with respect to any Casino Property
(which has not theretofore been released from the respective Mortgage
encumbering same in accordance with the terms thereof), (ii) any direct or
indirect Subsidiary of Parent that owns any Collateral or Required Collateral
or that directly or indirectly owns stock of a Subsidiary which owns
Collateral or Required Collateral or (iii) any Subsidiary of Parent that
(together with its Subsidiaries) accounts for, or holds, at least 10% of any
of (x) the consolidated assets of Parent and its Subsidiaries, (y) the
consolidated revenues of Parent and its Subsidiaries or (z) the Consolidated
EBIT of Parent and its Subsidiaries, in each case as determined at the end of
each fiscal quarter of Parent and, in the case of preceding clauses (y) and
(z), for the Test Period then last ended, it being understood and agreed that
Harrah's Jazz and Desplaines Development Limited Partnership shall not be
considered Material Subsidiaries under this sub-clause (iii) to the extent
that such Subsidiaries would otherwise constitute such a Material Subsidiary
so long as such Subsidiaries would not otherwise constitute a Material
Subsidiary under any of the other clauses of this definition.
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"Maximum Swingline Amount" shall mean $25,000,000.
"Minimum Proceeds Amount" with respect to any Casino Property (or
with respect to the Casino Owner that owns such Casino Property) shall mean
the amount set forth below opposite such Casino Property:
Harrah's Atlantic City
Hotel Casino $250,000,000
Harrah's Las Vegas
Hotel Casino $250,000,000
Harrah's Reno
Hotel Casino $150,000,000
Harrah's Lake Tahoe
Hotel Casino
(including Bill's Casino) $150,000,000
Harrah's Laughlin
Hotel Casino $150,000,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean each of (i) the Deed of Trust, Leasehold Deed
of Trust, Assignment, Assignment of Leases and Rents, Security Agreement and
Financing Statement, dated as of July 22, 1993, from the Company, Harrah's
Laughlin, Inc. and Harrah's Reno Holding Company, Inc., as Grantors, to First
American Title Insurance Company of Nevada, as Trustee, and BTCo, as
Beneficiary, as modified, supplemented or amended from time to time and (ii)
the Mortgage, Leasehold Mortgage, Assignment, Assignment of Leases and Rents
and Security Agreement, dated as of July 22, 1993, from Marina and the
Company, as Mortgagors, to BTCo, as Collateral Agent and Mortgagee, as
modified, supplemented or amended from time to time.
"Mortgage Amendment" shall have the meaning provided in Section
5.09(i).
"Mortgage Policies" shall mean each of the mortgage title insurance
policies delivered pursuant to Section 5.10(ii) of the Original Credit
Agreement.
"Mortgaged Property" shall mean and include each of the Casino
Properties until same are released from the Liens created by the respective
Mortgage in accordance with the terms hereof and thereof.
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"Net Lease Agreement" shall mean each of (i) the Net Lease
Agreement, dated as of July 22, 1993, among Parent, the Company, Harrah's,
Harrah's Club and the Collateral Agent (Harrah's Hotel and Casino, Lake
Tahoe), (ii) the Net Lease Agreement, dated as of July 22, 1993, among
Parent, the Company, Harrah's Las Vegas, Inc. and the Collateral Agent
(Harrah's Hotel and Casino, Las Vegas), (iii) the Net Lease Agreement, dated
as of July 22, 1993, among Parent, the Company, Harrah's, Harrah's Club and
the Collateral Agent (Harrah's Hotel and Casino, Reno) and (iv) the Net Lease
Agreement, dated as of July 22, 1993, among Parent, the Company, Harrah's
Laughlin and the Collateral Agent (Harrah's Laughlin Hotel and Casino), in
each case as modified, supplemented or amended from time to time, it being
understood and agreed that in the event the Company transfers its ownership
interest in any of the Casino Properties located in Nevada to Harrah's Club
as permitted by Section 9.02(a), the Net Lease Agreement with respect to each
such Casino Property may be terminated.
"Net Sale Proceeds" shall mean for any sale of assets, the gross
cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and when
received) received from any sale of assets, net of reasonable transaction
costs and payments of unassumed liabilities relating to the assets sold at
the time of, or within 60 days after, the date of such sale and the amount of
such gross cash proceeds required to be used to repay any Indebtedness (other
than Indebtedness of the Banks pursuant to the Credit Documents) which is
secured by the respective assets which were sold.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Non-Recourse Indebtedness" shall mean (x) with respect to any
Casino Owner or Owners, Indebtedness incurred by such Casino Owner or Owners
meeting the requirements of Existing Casino Non-Recourse Financing and which
shall be (i) secured only by the Casino Property or Properties owned by such
Casino Owner or Owners, including any fixtures, furniture and equipment
related thereto (it being understood and agreed that, if two Casino
Properties are subject to Existing Casino Non-Recourse Financings, then such
properties may cross-collateralize the other issue of Existing Casino Non-
Recourse Financing) and (ii) expressly made non-recourse to Parent and its
Subsidiaries other than the respective Casino Owners, provided that recourse
may be had to the respective property serving as security therefor and (y)
with
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respect to any Specified Subsidiary, Indebtedness incurred by such Specified
Subsidiary which shall be (i) secured only by Gaming Properties being
developed with Non-Recourse Indebtedness incurred pursuant to Section
9.04(x), including any fixtures, furniture and equipment related thereto and
(ii) non-recourse to Parent and its Subsidiaries, provided that recourse may
be had to the extent permitted by Section 9.04(x) and to the respective
property or properties serving as security therefor.
"Note" shall mean each Swingline Note and each Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention: Patricia
Rapisarda, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original Credit Agreement" shall have the meaning provided in the
first Whereas clause of this Agreement.
"Original Revolving Loans" shall mean the "Revolving Loans" under,
and as defined in, the Original Credit Agreement.
"Original Swingline Loans" shall mean the "Swingline Loans" under,
and as defined in, the Original Credit Agreement.
"Parent" shall have the meaning provided in the first paragraph of
this Agreement.
"Parent Guaranty" shall mean the guaranty provided by Parent
pursuant to Section 14.
"Parent Pledge Agreement" shall mean the Parent Pledge Agreement,
dated as of July 22, 1993, between Parent
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and the Collateral Agent, as modified, supplemented or amended from time to
time.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006, or such other
office as the Administrative Agent may hereafter designate in writing as such
to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the
Total Revolving Loan Commitment at such time, provided that, if the
--------
Percentage of any Bank is to be determined after the Total Revolving Loan
Commitment has been terminated, then the Percentage of such Bank shall be
determined immediately prior (and without giving effect) to such termination.
"Permitted Designated Indebtedness" shall mean (i) any Existing
Casino Non-Recourse Financing and (ii) all Subordinated Debt (or portions
thereof) incurred pursuant to Section 9.04(xi) to the extent the aggregate
amount of Subordinated Debt incurred after the Restatement Effective Date
pursuant to said Section is in excess of $200,000,000.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the Mortgage Policy
with respect thereto.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of), Parent or a Subsidiary
of
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Parent or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which Parent, or a Subsidiary of
Parent or an ERISA Affiliate maintained, contributed to or had an obligation
to contribute to such plan.
"Pledge Agreements" shall mean and include the Parent Pledge
Agreement and the Company/Sub Pledge Agreement.
"Pledged Securities" shall have the meaning assigned that term in
the respective Pledge Agreements.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a refer-
ence rate and does not necessarily represent the lowest or best rate actually
charged to any customer. BTCo may make commercial loans or other loans at
rates of interest at, above or below the Prime Lending Rate.
"Projections" shall have the meaning provided in Section 7.05(d).
"Proxy Statement" shall mean Parent's Proxy Statement dated April
25, 1995 which was delivered to Parent's shareholders in connection with the
Hotel Transaction.
"Qualified Person" shall mean, with respect to any Bank party to
this Agreement on the Restatement Effective Date or that becomes a Bank
pursuant to Section 1.13, 13.04(b) or 13.04(c), a banking or other licensed
lending institution within the meaning of the New Jersey Gaming Regulations
or a financial source or qualifier approved under the Gaming Regulations of
the State of New Jersey applicable to lenders (or waived or exempted from the
applicable requirements thereof) and which shall not have been found
unsuitable under the Gaming Regulations of the State of Nevada applicable to
lenders and which meets the requirements of all other jurisdictions
regulating the gaming business of Parent and its Subsidiaries to the extent
that the Company has so notified the Banks of such requirements of such other
jurisdiction pursuant to Section 13.04(e).
"RCRA" shall mean the Resource Conservation and Recovery Act, as
the same may be amended from time to time, 42 U.S.C. Sec. 6901 et seq.
-- ----
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"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Reduction Discount" shall mean initially zero and from and after
the first day of any Margin Reduction Period (the "Start Date") to and
including the last day of such Margin Reduction Period (the "End Date"), the
Reduction Discount shall be the respective percentage per annum set forth in
clause (A), (B) or (C) below if, but only if, as of the last day of the most
recent fiscal quarter of Parent ended immediately prior to such Start Date
(the "Test Date") the conditions in clause (A), (B) or (C) below are met:
(A) (x) in the case of Eurodollar Loans, 1/8 of 1% and (y) in the
case of Commitment Commission, 5/100 of 1% in each case if, but only if,
as of the Test Date for such Start Date either of the following
conditions are met and the conditions set forth in none of clauses (B)
and (C) below are satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 3.00:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB- Senior Implied by S&P or Baa3 Senior Implied by
Moody's;
(B) (x) in the case of Eurodollar Loans, 3/8 of 1% and (y) in the
case of Commitment Commission, 10/100 of 1% in each case if, but only
if, as of the Test Date for such Start Date either of the following
conditions are met and the conditions set forth in clause (C) below are
not satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 3.50:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB Senior Implied by S&P or Baa2 Senior Implied by
Moody's; or
(C) (x) in the case of Eurodollar Loans, 1/2 of 1% and (y) in the
case of Commitment Commission, 1/8 of 1% in each case if, but only if,
as of the Test Date for such Start Date either of the following
conditions are met:
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(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 4.00:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB+ Senior Implied by S&P or Baa1 Senior Implied by
Moody's.
Notwithstanding anything to the contrary above in this definition, the
Reduction Discount shall be reduced to zero at all times when a Default under
Section 8.01(a) or (b) shall exist or an Event of Default shall exist.
"Reference Banks" shall mean BTCo, The Sumitomo Bank Limited, New
York Branch, Credit Lyonnais and The Bank of New York.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
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"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"Required Additional Guarantor" shall have the meaning provided in
Section 8.12(a).
"Required Appraisal" shall have the meaning provided in Section
8.12(c).
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
Revolving Loan Commitments (or after the termination thereof, outstanding
Revolving Loans and Adjusted Percentage of outstanding Swingline Loans and
Letter of Credit Outstandings) represent an amount greater than fifty percent
of the sum of the Adjusted Total Revolving Loan Commitment (or after the
termination thereof, the sum of the then total outstanding Revolving Loans of
Non-Defaulting Banks and the aggregate Adjusted Percentages of all Non-
Defaulting Banks of the total outstanding Swingline Loans and Letter of
Credit Outstandings at such time).
"Required Collateral" shall mean and include all the following
assets and property:
(i) each Casino Property;
(ii) 100% of the capital stock of the Company;
(iii) 100% of the capital stock of each of Harrah's, Harrah's Club,
Casino Holding Company, Harrah's Atlantic City, Harrah's New Jersey,
Harrah's Reno Holding Company, Inc., Harrah's Laughlin and Harrah's Las
Vegas, Inc.;
(iv) 100% of the partnership interests in Marina;
(v) 100% of the capital stock or partnership interests, as the
case may be, of each Subsidiary Borrower;
(vi) 100% of the capital stock or partnership interests, as the
case may be, in any other Subsidiary of the Company which owns assets or
property, or is the direct or indirect parent of any Subsidiary which
owns assets or property, which constitutes Required Collateral pursuant
to any of the other clauses of this definition;
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(vii) 100% of the capital stock or partnership interests owned
directly by the Company in any Guarantor or Material Subsidiary;
(viii) all of the Company's and its Subsidiaries' interests in
building fixtures and personal property located in or owned or used in
connection with the Casino Properties, including (subject to applicable
Gaming Regulations) gaming equipment; all trademarks and trade names
(including the Harrah's name, subject to a non-exclusive license to be
granted to the Company in accordance with the terms of the Collateral
Documents) and other intangible property owned or used in connection
with the Casino Properties; and all licenses and permits held in
connection with the Casino Properties (excluding (x) gaming licenses and
(y) non-transferable liquor licenses and other non-transferable
licenses); and all revenues derived from the Casino Properties located
in Nevada, including (subject to applicable Gaming Regulations) gaming
revenues; and
(ix) the assignment of leases and net lease agreements effected
pursuant to the Assignment of Leases and Net Lease Agreements.
Notwithstanding anything to the contrary contained above, assets or property
shall cease to constitute Required Collateral at such time, if any, as same
are released pursuant to the terms of the respective Collateral Documents and
this Agreement.
"Required Secured Parties" shall have the meaning provided in the
Master Collateral Agreement.
"Restatement Effective Date" shall have the meaning provided in
Section 13.10.
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loan" shall have the meaning provided in Section
1.01(a).
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as same may (x) be reduced from time to
time pursuant to Sections 3.02, 3.03 and/or 10 or (y) be adjusted
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from time to time as a result of assignments to or from such Bank pursuant to
Section 1.13, 13.04(b) or 13.04(c).
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"Rights" shall have the meaning provided in the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement, dated as of
February 7, 1990, between Parent and The Bank of New York, as Rights Agent,
as in effect on the date hereof.
"S&P" shall mean Standard & Poor's Corporation.
"Scheduled Commitment Reduction" shall have the meaning provided in
Section 3.03(b).
"SEC" shall have the meaning provided in Section 8.01(f).
"Section 4.04(b)(iii) Certificate" shall have the meaning provided
in Section 4.04(b).
"Secured Interest Rate Protection Creditor" shall have the meaning
provided in the Master Collateral Agreement.
"Secured Interest Rate Protection or Other Hedging Agreement" shall
have the meaning provided in the Master Collateral Agreement.
"Secured Parties" shall have the meaning assigned that term in the
Collateral Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement, dated as of
July 22, 1993, among the Company, the other Collateral Grantors party thereto
and the Collateral Agent, as modified, supplemented or amended from time to
time.
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"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Senior Debt" shall mean the Indebtedness under this Agreement and
the Indebtedness under the 364-Day Credit Agreement.
"Share" shall mean, for each Issue, (A) if the event requiring a
mandatory commitment reduction to Senior Debt pursuant to Section 3.03(d) or
(e) would, in accordance with the terms of the 364-Day Credit Agreement, give
rise to a mandatory commitment reduction to the Total 364-Day Revolving Loan
Commitment, then the "Share" (x) applicable to the Total 364-Day Revolving
Loan Commitment shall equal the lesser of (1) the amount required to be
applied to reduce the commitments in respect of Senior Debt pursuant to
Section 3.03(d) or (e) multiplied by a fraction the numerator of which is the
amount of the Total 364-Day Revolving Loan Commitment then in effect and the
denominator of which is the sum of (i) the Total 364-Day Revolving Loan
Commitment then in effect plus (ii) the Total Revolving Loan Commitment then
in effect and (2) the maximum amount which would be required to be applied to
mandatorily reduce the Total 364-Day Revolving Loan Commitment in accordance
with the terms of the 364-Day Credit Agreement as a result of the respective
event requiring a reduction to the commitments in respect of Senior Debt
pursuant to Section 3.03(d) or (e) and (y) applicable to the Total Revolving
Loan Commitment shall equal the remainder of the amount required to be
applied to reduce the commitments in respect of Senior Debt pursuant to
Section 3.03(d) or (e), less the "Share" applicable to the Total 364-Day
Revolving Loan Commitment as determined pursuant to preceding clause (x), and
(B) if the event giving rise to a mandatory commitment reduction in respect
of Senior Debt would not require a mandatory reduction to the Total 364-Day
Revolving Loan Commitment of the 364-Day Credit Agreement in accordance with
the terms of the 364-Day Credit Agreement, the "Share" of each Issue shall
equal (x) in the case of the 364-Day Credit Agreement, $0 and (y) in the case
of this Agreement, the amount required to be applied to Senior Debt pursuant
to Section 3.03(d) or (e).
"Specified Subsidiary" shall mean any Subsidiary of the Company
(other than any Subsidiary Borrower, Collateral Grantor or Casino Owner) so
long as such Subsidiary has no material assets other than the Gaming
Properties to be developed and financed with Non-Recourse Indebtedness
incurred pursuant to Section 9.04(x).
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"Start Date" shall have the meaning provided in the definition of
Reduction Discount.
"Stated Amount" of each Letter of Credit shall, at any time, mean
the maximum amount available to be drawn thereunder (in each case determined
without regard to whether any conditions to drawing could then be met).
"Sub-Limit" shall mean (i) with respect to Marina, $400,000,000 and
(ii) with respect to each other Subsidiary of the Company that becomes a
Subsidiary Borrower after the date hereof, such aggregate amount as shall be
established by the Administrative Agent and the Required Banks at the time
such Subsidiary becomes a Subsidiary Borrower hereunder.
"Subordinated Debt" shall mean each issue of Subordinated Debt of
the Company as is set forth on Schedule V as well as any additional issuance
of Subordinated Debt by the Company that is permitted under Section 9.04(xi).
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corpora-
tion (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Subsidiaries of such Person has more than a 50% equity interest at the
time.
"Subsidiary Borrower" shall mean Marina and any other Wholly-Owned
Subsidiary of the Company that is found acceptable to, and approved in
writing by, the Administrative Agent and the Required Banks, provided that at
the time any such Subsidiary incurs Existing Casino Non-Recourse Financing
pursuant to Section 9.04(ix) or the Casino Property owned by such Subsidiary
is sold pursuant to Section 9.02, such Subsidiary shall cease to be a
Subsidiary Borrower.
"Subsidiary Investments" shall mean any Investment by the Company
in one or more of its Subsidiaries provided that (x) any acquisition of a new
Subsidiary shall be through a transaction not involving the acquisition by
the Company or any of its Subsidiaries of Margin Stock and (y) any new
Subsidiary so acquired shall be engaged primarily in the Gaming Business.
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"Substitute Bank" shall have the meaning in Section 13.04(c).
"Swingline Expiry Date" shall mean, at any time, the date which is
two Business Days prior to the Final Maturity Date.
"Swingline Loan" shall have the meaning provided in Section
1.01(b).
"Swingline Note" shall have the meaning provided in Section
1.05(a).
"Taxes" shall have the meaning provided in Section 4.04(a).
"10-7/8% Senior Subordinated Notes" shall mean the Company's 10-
7/8% Senior Subordinated Notes due 2002.
"10-7/8% Senior Subordinated Notes Indenture" shall mean the
indenture relating to the 10-7/8% Senior Subordinated Notes.
"Test Date" shall have a meaning provided in the definition of
Reduction Discount.
"Test Period" shall mean the four consecutive fiscal quarters of
Parent then last ended (in each case taken as one accounting period).
"364-Day Banks" shall mean the lenders from time to time party to
the 364-Day Credit Agreement.
"364-Day Credit Agreement" shall mean the Credit Agreement, in the
form of Exhibit O, among Parent, the Company, certain Subsidiaries of the
Company, the 364-Day Banks, the Agents and BTCo, as Administrative Agent, as
amended, modified, supplemented or extended from time to time in accordance
with the terms thereof and hereof.
"364-Day Revolving Loan Commitment Reduction Amount" shall have the
meaning provided in Section 13.18(b).
"Total Outstandings" at any time shall mean the then outstanding
principal amount of Revolving Loans and Swingline Loans and the then
aggregate amount of Letter of Credit Outstandings.
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"Total Revolving Loan Commitment" shall mean, at any time, the sum
of the Revolving Loan Commitments of each of the Banks.
"Total 364-Day Revolving Loan Commitment" shall mean the "Total
Revolving Loan Commitment" under, and as defined in, the 364-Day Credit
Agreement.
"Total 364-Day Outstandings" shall mean, at any time, the aggregate
principal amount of loans outstanding pursuant to the 364-Day Credit
Agreement.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment, less (y) the sum of the aggregate principal amount of Revolving
Loans and Swingline Loans then outstanding plus the then aggregate amount of
Letter of Credit Outstandings.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time
in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if any,
by which the actuarial present value of the accumulated benefits under the
Plan as of the close of its most recent plan year, determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets allocable
thereto, determined in accordance with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unutilized Revolving Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Revolving Loan Commitment at such time less
the sum of (i) the then aggregate outstanding principal amount of Revolving
Loans made by such Bank and (ii) such Bank's Adjusted Percentage of the
Letter of Credit Outstandings at such time.
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"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
"Withdrawal Period" shall have the meaning provided in Section
13.04(d).
SECTION 12. The Administrative Agent and Agents.
-----------------------------------
12.01 Appointment. The Banks hereby designate Bankers Trust
-----------
Company as Administrative Agent (for purposes of this Section 12, the term
"Administrative Agent" shall include Bankers Trust Company in its capacity as
Collateral Agent pursuant to the Collateral Documents) to act as specified
herein and in the other Credit Documents. The Banks hereby designate Bankers
Trust Company, The Bank of New York, CIBC Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term Credit Bank of
Japan, Limited, New York Branch, NationsBank of Georgia, N.A., Societe
Generale, and The Sumitomo Bank, Limited, New York Branch, as Agents to act
as specified herein and in the other Credit Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Administrative Agent or
any Agent to take such action on its behalf under the provisions of this
Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to
or required of the Administrative Agent or any Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The
Administrative Agent and any Agent may perform any of their duties hereunder
by or through their respective officers, directors, agents (including any
sub-agents or sub-trustees to act as a Collateral Agent pursuant to the
Master Collateral Agreement or any other Collateral Document) or employees.
Each Bank further agrees to be bound by all of the terms and conditions set
forth in the Collateral Documents.
12.02 Nature of Duties. Neither the Administrative Agent nor any
----------------
Agent shall have any duties or responsibilities except those expressly set
forth in this Agreement and the Collateral Documents, it being understood
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and agreed, however, that none of the Agents in their capacities as such
shall have any duties or responsibilities under the Credit Documents.
Neither the Administrative Agent, any Agent nor any of their officers,
directors, agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Administrative Agent and
Agents shall be mechanical and administrative in nature; neither the
Administrative Agent nor any Agent shall have by reason of this Agreement or
any other Credit Document a fiduciary relationship in respect of any Bank or
the holder of any Note; and nothing in this Agreement or any other Credit
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Administrative Agent or any Agent any obligations in respect
of this Agreement or any other Credit Document except as expressly set forth
herein or therein.
12.03 Lack of Reliance on the Administrative Agent and Agents.
-------------------------------------------------------
Independently and without reliance upon the Administrative Agent or any
Agent, each Bank and the holder of each Note, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent in-
vestigation of the financial condition and affairs of Parent and its
Subsidiaries in connection with the making and the continuance of the Loans
and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of Parent and its Subsidiaries and,
except as expressly provided in this Agreement, neither the Administrative
Agent nor any Agent shall have any duty or responsibility, either initially
or on a continuing basis, to provide any Bank or the holder of any Note with
any credit or other information with respect thereto, whether coming into its
possession before themaking of the Loans or at any time or times thereafter.
Neither the Administrative Agent nor any Agent shall be responsible to any
Bank or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority
or sufficiency of this Agreement or any other Credit Document or the
financial condition of Parent or any of its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Parent or any of its Subsidiaries
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or the existence or possible existence of any Default or Event of Default.
12.04 Certain Rights of the Administrative Agent. If the
------------------------------------------
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with
this Agreement or any other Credit Document, the Administrative Agent shall
be entitled to refrain from such act or taking such action unless and until
the Administrative Agent shall have received instructions from the Required
Banks; and the Administrative Agent shall not incur liability to any Person
by reason of so refraining. Without limiting the foregoing, no Bank or the
holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or re-
fraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks.
12.05 Reliance. The Administrative Agent and each Agent shall be
--------
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or
telephone message signed, sent or made by any Person that the Administrative
Agent or such Agent believed to be the proper Person, and, with respect to
all legal matters pertaining to this Agreement and any other Credit Document
and its duties hereunder and thereunder, upon advice of counsel selected by
the Administrative Agent or such Agent.
12.06 Indemnification. To the extent the Administrative Agent or
---------------
any Agent is not reimbursed and indemnified by the Credit Parties, the Banks
will reimburse and indemnify the Administrative Agent or such Agent, in
proportion to their respective "percentages" as used in determining the
Required Banks, for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, costs, expenses or dis-
bursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Administrative Agent or such Agent in performing
its duties hereunder or under any other Credit Document, in any way relating
to or arising out of this Agreement or any other Credit Document; provided
--------
that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Administrative Agent's or such
Agent's gross negligence or willful misconduct.
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12.07 The Administrative Agent and the Agents in their Individual
-----------------------------------------------------------
Capacities. With respect to its obligation to make Loans under this Agree-
----------
ment, the Administrative Agent and each Agent shall have the rights and
powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include each of the
Administrative Agent and Agent in its individual capacity. The
Administrative Agent and each Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with any
Credit Party or any Affiliate of any Credit Party as if it were not
performing the duties specified herein, and may accept fees and other con-
sideration from the Borrowers or any other Credit Party for services in con-
nection with this Agreement and otherwise without having to account for the
same to the Banks.
12.08 Holders. The Administrative Agent may deem and treat the
-------
payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof, as
the case may be, shall have been filed with the Administrative Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall
be conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
12.09 Resignation by the Administrative Agent and Agents.
--------------------------------------------------
(a) The Administrative Agent and any Agent may resign from the performance
of all its functions and duties hereunder and/or under the other Credit
Documents at any time by giving 15 Business Days' prior written notice to the
Company and the Banks. In the case of the resignation by the Administrative
Agent, such resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below. In the case of a resignation by an Agent, such resignation
shall become effective immediately.
(b) Upon any such notice of resignation, the Company shall appoint
a successor Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Required Banks
(it being understood and agreed that any Bank is deemed to be acceptable to
the Required Banks), provided that, if a
--------
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Default or an Event of Default exists at the time of such resignation, the
Required Banks shall appoint such successor Administrative Agent.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with
the consent of the Company, shall then appoint a successor Administrative
Agent who shall serve as Administrative Agent hereunder or thereunder until
such time, if any, as the Company or Required Banks, as the case may be,
appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursu-
ant to clause (b) or (c) above by the 30th Business Day after the date such
notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Banks shall
thereafter perform all the duties of the Administrative Agent hereunder
and/or under any other Credit Document until such time, if any, as the
Required Banks appoint a successor Administrative Agent.
SECTION 13. Miscellaneous.
-------------
13.01 Payment of Expenses, etc. (a) The Borrowers jointly and
-------------------------
severally shall: (i) whether or not the transactions herein contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees and
disbursements of White & Case and local counsel and all appraisal fees,
trustee's fees, documentary and recording taxes, title insurance and
recording, filing and other expenses) in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents and
the documents and instruments referred to herein and therein and any
amendment, waiver or consent relating hereto or thereto, of the
Administrative Agent in connection with its syndication efforts with respect
to this Agreement and of the Administrative Agent and each of the Banks in
connection with the enforcement of this Agreement and the other Credit Docu-
ments and the documents and instruments referred to herein and therein
(including, without limitation, the reasonable fees and disbursements of
counsel (including allocated costs of in-house counsel) for the
Administrative Agent and for each of the Banks); (ii) pay and hold each of
the Banks harmless from and against any and all present and future stamp,
excise and other similar taxes with respect to the foregoing matters and save
each of the Banks
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harmless from and against any and all liabilities with respect to or result-
ing from any delay or omission (other than to the extent attributable to such
Bank) to pay such taxes; and (iii) indemnify the Administrative Agent, each
Agent, each Letter of Credit Issuer and each Bank, and each of their
respective officers, directors, employees, representatives and agents from
and hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' (including allocated costs of in-house counsel) and
consultants' fees and disbursements) incurred by, imposed on or assessed
against any of them as a result of, or arising out of, or in any way related
to, or by reason of, (a) any investigation, litigation or other proceeding
(whether or not the Administrative Agent, any Agent, any Letter of Credit
Issuer or any Bank is a party thereto) related to the entering into and/or
performance of this Agreement or any other Credit Document or the use of any
Letter of Credit or the proceeds of any Loans hereunder or the consummation
of any transactions contemplated herein (including, without limitation, the
Hotel Transaction) or in any other Credit Document or the exercise of any of
their rights or remedies provided herein or in the other Credit Documents, or
(b) the actual or alleged presence of Hazardous Materials in the air, surface
water or groundwater or on the surface or subsurface of any Real Property
owned or at any time operated by Parent or any of its Subsidiaries, the
generation, storage, transportation, handling or disposal of Hazardous
Materials at any location, whether or not owned or operated by Parent or any
of its Subsidiaries, the non-compliance of any Real Property with foreign,
federal, state and local laws, regulations, and ordinances (including
applicable permits thereunder) applicable to any Real Property, or any
Environmental Claim relating in any way to Parent, any of its Subsidiaries,
their operations or any Real Property owned or at any time operated by Parent
or any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding
(but excluding any losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified). To the extent that the undertaking to
indemnify, pay or hold harmless the Administrative Agent, any Agent, any
Letter of Credit Issuer or any Bank set forth in the preceding sentence may
be unenforceable because it is violative of any law or public policy, the
Borrowers shall make the maximum contribution to
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the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
(b) The Borrowers further jointly and severally agree to pay the
reasonable legal fees of gaming counsel for the Administrative Agent in
Nevada and New Jersey and any other relevant state and all reasonable costs
(including costs of investigation) associated with any qualification (or
exemption or waiver therefrom) of any Bank under, or compliance in connection
with the Gaming Regulations in connection with the syndication under this
Agreement, provided that in the event that any assignee Bank or potential as-
signee Bank is not already a Qualified Person (before giving effect to any
actions taken to become such in connection with this Agreement), then all
costs associated with such Person becoming a Qualified Person shall be borne
by the respective assignee Bank or potential assignee Bank. Notwithstanding
the foregoing, after a Bank has been replaced pursuant to Section 1.13, the
Borrowers shall not be required to reimburse such Bank for any such costs
incurred by it after the date of such replacement.
13.02 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of
any such rights, upon the occurrence of an Event of Default, each Bank is
hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to any Credit Party or to any
other Person, any such notice being hereby expressly waived, to set off and
to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of the Credit Parties against and on account of the
Obligations and liabilities of the Credit Parties to such Bank under this
Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations purchased by such Bank pursuant to
Section 13.06(b), and all other claims of any nature or description arising
out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Bank shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall
be contingent or unmatured, provided that such right of set-off may only be
--------
exercised by any such Bank if Nevada Revised Statutes 40.430(4)(g) (1989)
remains in force and effect without modification, and such Bank has received
advice of New Jersey and Nevada counsel acceptable to the Administrative
Agent that there is no other
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provision of Nevada or New Jersey law, as appropriate, under which such
action of set off might jeopardize any right of the Collateral Agent or any
Bank in or with respect to any Collateral. The provisions of the foregoing
proviso to this Section 13.02 are for the benefit of the Banks only, and may
be amended, modified or waived in any respect by the Required Banks without
the requirements of prior notice to or consent by any Credit Party and does
not constitute a waiver of any rights against any Credit Party or against any
Collateral.
13.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to Parent or any
Borrower, at such Credit Party's address specified opposite its signature
below or in the respective Election to Become a Subsidiary Borrower; if to
any Bank, at its address specified opposite its name below; and if to the
Administrative Agent, at its Notice Office; or, as to any Credit Party or the
Administrative Agent, at such other address as shall be designated by such
party in a written notice to the other parties hereto and, as to each Bank,
at such other address as shall be designated by such Bank in a written notice
to the Company and the Administrative Agent. All such notices and communi-
cations shall, when mailed, telegraphed, telexed, telecopied, or cabled or
sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as
the case may be, or sent by telex or telecopier, except that notices to the
Administrative Agent, the Company and any Letter of Credit Issuer shall not
be effective until received by such Person.
13.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, except as
-------- -------
provided in Sections 9.02, 9.04(ix) and 13.17(a), no Borrower may assign or
transfer any of its rights, obligations or interest hereunder or under any
other Credit Document without the prior written consent of the Administrative
Agent and the Banks (although any Subsidiary Borrower may, at its request and
with the consent of the Required Banks, otherwise cease to be a Subsidiary
Borrower hereunder so long as no Default or Event of Default then exists and
all Loans incurred by such Subsidiary are repaid in full and the Company
shall become the account party with respect to any outstanding Letters of
Credit issued for the account of such Subsidiary Borrower
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pursuant to documentation satisfactory to the Administrative Agent and the
respective Letter of Credit Issuer) and, provided further, that, although any
----------------
Bank may transfer, assign or grant participations in its rights hereunder,
such Bank shall remain a "Bank" for all purposes hereunder (and may not
transfer or assign all or any portion of its Revolving Loan Commitments
hereunder except as provided in Section 13.04(b)) and the transferee,
assignee or participant, as the case may be, shall not constitute a "Bank"
hereunder and, provided further, that no Bank shall transfer or grant any
----------------
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except
to the extent such amendment or waiver would extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit
is not extended beyond the Final Maturity Date) in which such participant is
participating, or reduce the rate or extend the time of payment of interest
or Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total
Revolving Loan Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Revolving Loan Commitment or Loan
shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof). In the
case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the participant's
rights against such Bank in respect of such participation to be those set
forth in the agreement executed by such Bank in favor of the participant
relating thereto) and the Borrowers shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
under this Agreement and the other Credit Documents and all amounts payable
by the Borrowers hereunder shall be determined as if such Bank had not sold
such participation. Any agreement pursuant to which any Bank may grant such
a participation shall be in a form approved by the Administrative Agent and
Parent and shall be satisfactory under the Gaming Regulations of the State of
New Jersey so as not to require participants to be approved financial sources
or qualified under such Gaming Regulations applicable to lenders.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x)
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assign all or a portion of its Revolving Loan Commitments and related out-
standing Obligations hereunder to its parent company and/or any affiliate of
such Bank which is at least 50% owned by such Bank or its parent company or
to one or more Banks or (y) assign all, or if less than all, a portion equal
to at least $5,000,000 in the aggregate for the assigning Bank or assigning
Banks, of such Revolving Loan Commitments and related outstanding Obligations
hereunder, in either case to one or more Qualified Persons, each of which
assignees shall become a party to this Agreement as a Bank by execution of an
Assignment and Assumption Agreement, provided that, (i) at such time Schedule
--------
I shall be deemed modified to reflect the Revolving Loan Commitments of such
new Bank and of the existing Banks, (ii) new Notes will be issued to such new
Bank and to the assigning Bank upon the request of such new Bank or assigning
Bank, such new Notes to be in conformity with the requirements of Section
1.05 to the extent needed to reflect the revised Revolving Loan Commitments,
(iii) the consent of BTCo and each Letter of Credit Issuer shall be required
in connection with any assignment (which consent shall not be unreasonably
withheld) and (iv) the Administrative Agent shall receive at the time of each
such assignment, from either the assigning or assignee Bank or Banks, the
payment of a non-refundable assignment fee of $3,500 in the case of any
assignment to a Qualified Person which is not a Bank immediately prior to
such assignment or $1,000 in the case of any assignment to a then existing
Bank. To the extent of any assignment pursuant to this Section 13.04(b), the
assigning Bank shall be relieved of its obligations hereunder with respect to
its assigned Revolving Loan Commitments. At the time of each assignment
pursuant to this Section 13.04(b) to a Person which is not already a Bank
hereunder and which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Bank shall, to the extent legally entitled to do so,
provide to the Borrowers in the case of a Bank described in clause (ii) or
(iv) of Section 4.04(b), the forms described in such clause (ii) or (iv), as
the case may be. To the extent that an assignment of all or any portion of a
Bank's Revolving Loan Commitments and related outstanding Obligations
pursuant to Section 1.13 or this Section 13.04(b) would, at the time of such
assignment, result in increased costs under Section 1.10, 1.11 or 4.04 from
those being charged by the respective assigning Bank prior to such
assignment, then the Borrowers shall not be obligated to pay such increased
costs (although the Borrowers shall be obligated to pay any other increased
costs of the type described above resulting from changes after the date of
the respective assignment).
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(c) If the New Jersey Gaming Authorities shall determine that any
Bank is not qualified as an approved financial source or otherwise does not
meet the standards pursuant to the Gaming Regulations in New Jersey, or the
Nevada Gaming Authorities shall determine that any Bank does not meet the
Suitability Standards under the Nevada Gaming Regulations or any other Gaming
Authority with jurisdiction over the gaming business of Parent and its
Subsidiaries shall determine that any Bank does not meet its suitability
standards (in any such case, a "Former Bank"), the Administrative Agent and
each Letter of Credit Issuer or the Company shall have the right (but not the
duty) to designate a bank or banks (in each case, a "Substitute Bank," which
may be any Bank or Banks that agree to become a Substitute Bank) that has
agreed to assume the rights and obligations of the Former Bank, subject to
receipt by the Administrative Agent of evidence that such Substitute Bank is
a Qualified Person. The Substitute Bank shall assume the rights and
obligations of the Former Bank under this Agreement pursuant to an Assignment
and Assumption Agreement, which assumption shall be required to comply with,
and shall become effective in accordance with, the provisions of Section
13.04(b), provided that the purchase price to be paid by the Substitute Bank
--------
to the Administrative Agent for the account of the Former Bank for such
assumption shall equal the sum of (i) the unpaid principal amount of any
Notes held or Loans made by the Former Bank plus accrued interest thereon
plus (ii) the Former Bank's pro rata share of the aggregate amount of Draw-
--- ----
ings under all Letters of Credit that have not been reimbursed by the
Borrowers, plus accrued interest thereon, plus (iii) such Former Bank's pro
---
rata share of accrued Fees to the date of the assumption, and, provided
---- --------
further, the Borrowers shall pay all obligations owing to the Former Bank
-------
under the Credit Documents (including all obligations, if any, owing pursuant
to Section 1.11, but excluding those amounts in respect of which the purchase
price is being paid as provided above). Each Bank agrees that if it becomes
a Former Bank, upon payment to it by the Borrowers of all such amounts, if
any, owing to it under the Credit Documents, it will execute and deliver an
Assignment and Assumption Agreement, upon payment of such purchase price.
(d) Notwithstanding the provisions of subsection (c) of this
Section 13.04, if any Bank becomes a Former Bank, and if the Administrative
Agent or the Company fails to find a Substitute Bank pursuant to subsection
(c) of this Section within any time period specified by the appropriate
Gaming Authority for the withdrawal of a Former Bank (the "Withdrawal
Period"), the Borrowers shall, immediately (i)
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prepay in full the outstanding principal amount of each Note held or Loan
made by such Former Bank, together with accrued interest thereon to the
earlier of (x) the date of payment or (y) the last day of any Withdrawal
Period, and (ii) at the option of the Company either (A) place an amount
equal to such Former Bank's Adjusted Percentage in each Letter of Credit in a
separate cash collateral account with the Administrative Agent for each
outstanding Letter of Credit which amount will be applied by the
Administrative Agent to satisfy the Borrower's reimbursement obligations to
the respective Letter of Credit Issuer in respect of Drawings under the
applicable Letter of Credit or (B) if no Default or Event of Default then
exists, terminate the Revolving Loan Commitment of such Former Bank at which
time the other Banks' Percentages and Adjusted Percentages will be
automatically adjusted as a result thereof, provided that the option
specified in this clause (B) may only be exercised if, immediately after
giving effect thereto, no Bank's outstanding Revolving Loans, when added to
the product of (a) such Bank's Adjusted Percentage and (b) the sum of (I) the
aggregate amount of all Letter of Credit Outstandings at such time and (II)
the aggregate amount of all Swingline Loans then outstanding, would exceed
such Bank's Revolving Loan Commitment at such time.
(e) Subject to the last sentence of this Section 13.04(e), each
Bank agrees that all participations and assignments made hereunder shall be
subject to, and made in compliance with, all Gaming Regulations applicable to
lenders. Each Bank agrees further that it will not grant participations or
assignments prior to receiving notice from the Administrative Agent that it
has completed the primary syndication of this facility. The Administrative
Agent shall provide such notice to the Banks promptly after completing such
primary syndication. Each Bank agrees to notify the New Jersey Gaming
Authorities of any dispute arising between such Bank and any participant
concerning Collateral located in New Jersey. Each Borrower hereby
acknowledges that unless the Company has provided the Banks with a written
opinion of counsel as to the suitability standards applicable to lenders of
any relevant Gaming Authority (excluding New Jersey and Nevada except to the
extent that the suitability standards set forth in the Gaming Regulations of
such States change from those in effect on the Restatement Effective Date as
described in the gaming memoranda delivered to the Banks prior to the
Restatement Effective Date) with jurisdiction over the Gaming Business of
Parent and its Subsidiaries, no Bank shall have the responsibility of
determining whether or
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not a potential assignee of such Bank would be a Qualified Person under the
Gaming Regulations of any such jurisdiction.
(f) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrowers or any other Credit
Party and the Administrative Agent or any Bank or the holder of any Note
shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Administrative Agent or any Bank or the holder of any Note would otherwise
have. No notice to or demand on any Credit Party in any case shall entitle
any Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Administrative
Agent or any Bank or the holder of any Note to any other or further action in
any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in
-----------------
this Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of a Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its pro rata share of
--- ----
any such payment) pro rata based upon their respective shares, if any, of the
--- ----
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or
interest on, the Loans, Unpaid Drawings, Commitment Commission or Letter of
Credit Fees, of a sum which with respect to the related sum or sums received
by other Banks is
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in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all
of the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Party to such
Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; provided that if all or any portion of such excess
--------
amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing pay-
ments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations. (a) The financial statements
--------------------------
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in
the notes thereto or as otherwise disclosed in writing by Parent to the
Banks); provided that, (i) except as otherwise specifically provided herein,
--------
all computations determining compliance with Sections 9.03 through 9.05,
inclusive, and Sections 9.07 through 9.09, inclusive, shall utilize ac-
counting principles and policies in conformity with those used to prepare the
historical financial statements delivered to the Banks pursuant to Section
7.05(a), provided that for all Test Periods which include periods prior to
the Restatement Effective Date, all calculations used in determining the
Consolidated Interest Coverage Radio for such Test Periods (both for purposes
of Section 9.08 and the definition of Reduction Discount) shall be made on a
pro forma basis as if the Hotel Transaction had been consummated on the first
--- -----
day of each such Test Period and all historical financial information shall
be restated (on a basis consistent with the methodology used in the Proxy
Statement) to retroactively reflect the Hotel Business as discontinued
operations and to exclude from such calculations the results of operations of
the Hotel Business, and (ii) at no time shall Harrah's Jazz and its
Subsidiaries be treated as Subsidiaries of Parent for purposes of this
Agreement even though (x) Harrah's Jazz and its Subsidiaries may at any time
fall within the definition of "Subsidiary" or (y) generally
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<PAGE>
accepted accounting principles would require otherwise but shall instead be
treated as an equity investment by Parent.
(b) All computations of interest, Commitment Commission and other
Fees hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, Commitment Commission or
other Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
----------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT
AS OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF PARENT AND EACH BORROWER HERE-
BY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH
OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS ITS
DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON
ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT
SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH SUCH CREDIT PARTY AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS
AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE
AGENT. EACH OF PARENT AND EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO SUCH CREDIT PARTY AT ITS ADDRESS SET FORTH OPPOSITE
ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT,
ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY SUCH CREDIT PARTY IN ANY OTHER JURISDICTION.
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(b) EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO
IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrowers and the Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the
-------------
date (the "Restatement Effective Date") and at the time on which (i) Parent,
the Company, each existing Subsidiary Borrower and the Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered the same to the Administrative Agent at its Notice
Office or, in the case of the Banks, shall have given to the Administrative
Agent telephonic (confirmed in writing), written or telex notice (actually
received) at such office that the same has been signed and mailed to it and
(ii) the conditions contained in Sections 5 and 6 are met to the satisfaction
of the Administrative Agent and the Required Banks. Unless the
Administrative Agent has received actual notice from any Bank that the
conditions contained in Sections 5 and 6 have not been met to its
satisfaction, upon the satisfaction of the condition described in clause (i)
of the immediately preceding sentence and upon the Administrative Agent's
good faith determination that the conditions described in clause (ii) of the
immediately preceding sentence have been met, then the Restatement Effective
Date shall have been deemed to have occurred, regardless of any subsequent
determination that one or more of the conditions thereto had not been met
(although the occurrence of the Restatement Effective Date
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shall not release Parent or any Borrower from any liability for failure to
satisfy one or more of the applicable conditions contained in Section 5 or
6). The Administrative Agent will give Parent, the Company, each existing
Subsidiary Borrower and each Bank prompt written notice of the occurrence of
the Restatement Effective Date.
13.11 Headings Descriptive. The headings of the several sections
--------------------
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
13.12 Amendment or Waiver. (a) Neither this Agreement nor any
-------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the respective Credit Parties party thereto (except
as otherwise provided in Section 13.02) and the Required Banks (or the
Required Secured Parties in the case of a change, waiver, discharge or
termination with respect to a Collateral Document to the extent provided
therein), provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected thereby), (i) extend the final scheduled
maturity of any Loan or Note or extend the stated maturity of any Letter of
Credit beyond the Final Maturity Date, or reduce the rate or extend the time
of payment of interest or Fees thereon, or reduce the principal amount there-
of, (ii) release all or substantially all of the Collateral (except as
expressly provided in the Collateral Documents) under all the Collateral
Documents, provided that such release of Collateral may be effected by only
--------
the Required Banks if at the time of such release the Company's Indebtedness
shall be rated at least BBB- Senior Implied by S&P or Baa3 Senior Implied by
Moody's, (iii) amend, modify or waive any provision of this Section 13.12,
(iv) reduce the percentage specified in the definition of Required Banks (it
being understood that, with the consent of the Required Banks, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Required Banks on substantially the same basis as the
extensions of Revolving Loan Commitments are included on the Restatement
Effective Date) or (v) except as set forth in Section 9.02, 9.04(ix) or
13.17(a), consent to the assignment or transfer by any Borrower of any of its
rights and obligations under this Agreement (although any Subsidiary Borrower
may, at its request and with the consent of the Required Banks, otherwise
cease to be a Subsidiary Borrower
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hereunder so long as no Default or Event of Default exists and all Loans
incurred by such Subsidiary Borrower are repaid in full and the Company shall
become the account party with respect to any outstanding Letters of Credit
issued for the account of such Subsidiary Borrower pursuant to documentation
satisfactory to the Administrative Agent and the respective Letter of Credit
Issuer); provided further, that no such change, waiver, discharge or termina-
----------------
tion shall (v) increase the Revolving Loan Commitment of any Bank over the
amount thereof then in effect without the consent of such Bank (it being
understood that waivers or modifications of conditions precedent, covenants,
Defaults or Events of Default or of a mandatory reduction in the Total
Revolving Loan Commitment shall not constitute an increase of the Revolving
Loan Commitment of any Bank, and that an increase in the available portion of
any Revolving Loan Commitment of any Bank shall not constitute an increase in
the Revolving Loan Commitment of such Bank), (w) without the consent of each
Letter of Credit Issuer, amend, modify or waive any provision of Section 2 or
3.01(c) or alter its rights or obligations with respect to Letters of Credit,
(x) without the consent of BTCo, alter its rights and obligations with
respect to Swingline Loans, (y) without the consent of the Administrative
Agent, amend, modify or waive any provision of Section 12 or any other
provision as same relates to the rights or obligations of the Administrative
Agent and (z) without the consent of the Collateral Agent, amend, modify or
waive any provision relating to the rights or obligations of the Collateral
Agent. Notwithstanding anything to the contrary contained above, any Letter
of Credit may be modified by the respective Letter of Credit Issuer so long
as the terms thereof would be permitted in a newly issued Letter of Credit in
accordance with Section 2.
(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the consent of one or more
of such other Banks whose consent is required is not obtained, then the
Company shall have the right, so long as all non-consenting Banks whose
individual consent is required are treated as described in either clauses (A)
or (B) below, to either (A) replace each such non-consenting Bank or Banks
with one or more Replacement Banks pursuant to Section 1.13 so long as at the
time of such replacement, each such Replacement Bankconsents to the proposed
change, waiver, discharge or termination or (B) terminate such non-consenting
Bank's Revolving Loan Commitment and repay all outstanding
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Revolving Loans of such Bank in accordance with Sections 3.02(b) and/or
4.01(iv), provided that, unless the Revolving Loan Commitments are
--------
terminated, and Revolving Loans repaid, pursuant to preceding clause (B) are
immediately replaced in full at such time through the addition of new Banks
or the increase of the Revolving Loan Commitments and/or outstanding
Revolving Loans of existing Banks (who in each case must specifically consent
thereto), then in the case of any action pursuant to preceding clause (B) the
Required Banks (determined before giving effect to the proposed action) shall
specifically consent thereto, provided further, that in any event the Company
----------------
shall not have the right to replace a Bank, terminate its Revolving Loan
Commitment or repay its Revolving Loans solely as a result of the exercise of
such Bank's rights (and the withholding of any required consent by such Bank)
pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein (including,
--------
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01)
shall survive the execution, delivery and termination of this Agreement and
the Notes and the making and repayment of the Loans. Notwithstanding the
occurrence of the Restatement Effective Date, all indemnities set forth in
the Original Credit Agreement for the benefit of the Existing Banks and the
Existing Agents shall survive in accordance with the terms thereof.
13.14 Domicile of Loans. Each Bank may transfer and carry its
-----------------
Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Bank. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 13.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 1.11 or
4.04 from those being charged by the respective Bank prior to such transfer,
then the Borrowers shall not be obligated to pay such increased costs
(although the Borrowers shall be obligated to pay any other increased costs
of the type described above resulting from changes after the date of the
respective transfer).
13.15 Application of Gaming Regulations. Parent, the Company,
---------------------------------
each Subsidiary Borrower and the Banks acknowledge that (i) the consummation
of the transactions contemplated by the Credit Documents is subject to the
Gaming Regulations (and Parent, the Company and each Subsidiary Borrower
represent and warrant that all requisite approvals thereunder have been duly
obtained) and (ii) the exercise of remedies
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under the Collateral Documents with respect to the Collateral will be subject
to the Gaming Regulations.
13.16 Confidentiality. (a) Subject to the provisions of clause
---------------
(b) of this Section 13.16, each Bank agrees that it will use its best effort
not to disclose without the prior consent of the Company (other than to its
employees, auditors or counsel or to another Bank if the Bank or such Bank's
holding or parent company in its sole discretion determines that any such
party should have access to such information) any information with respect to
Parent or any of its Subsidiaries which is now or in the future furnished
pursuant to this Agreement or any other Credit Document and which is
designated by the Company to the Banks in writing as confidential, provided
--------
that any Bank may disclose any such information (a) as has become generally
available to the public, (b) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over such Bank or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in respect to any summons
or subpoena or in connection with any litigation, (d) in order to comply with
any law, order, regulation or ruling applicable to such Bank, and (e) to any
prospective or actual transferee or participant in connection with any
contemplated transfer or participation of any of the Notes or Revolving Loan
Commitments or any interest therein by such Bank, provided, that such
--------
prospective transferee executes an agreement with such Bank containing
provisions substantially identical to those contained in this Section.
(b) Each Borrower hereby acknowledges and agrees that each Bank may
share with any of its affiliates any information related to Parent or any of
its Subsidiaries (including, without limitation, any nonpublic customer
information regarding the creditworthiness of Parent and its Subsidiaries).
13.17 Miscellaneous. (a) Notwithstanding anything to the
-------------
contrary contained in this Agreement, the Required Banks may consent to a
corporate reorganization of Parent and its Subsidiaries, which corporate
reorganization may include the transfer of one or more Subsidiaries of the
Company as direct Subsidiaries of Parent. In connection with any such
corporate reorganization, the Required Banks may, at their option, require
that Parent or one or more of its
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<PAGE>
Subsidiaries become direct borrowers with respect to the Obligations. In
addition, any necessary amendments or supplements to this Agreement or the
other Credit Documents to effect such corporate reorganization, including to
preserve the perfection and priority of the Liens created under the
Collateral Documents and retaining the benefits of the Guarantees, may be
made with consent of the Required Banks.
(b) Each of the Banks hereby acknowledges that the law firms of
Vargas & Bartlett, Norris, McLaughlin & Marcus and Saiber Schlesinger Satz &
Goldstein have jointly represented the Banks and the Credit Parties in
connection with certain of the local real estate and/or gaming matters
related to the transactions contemplated by this Agreement. Each of the
Banks further acknowledges that such dual representation may give rise to a
conflict of interest under the Rules of Professional Conduct under the laws
of the States of New Jersey and Nevada. In that such connection, the
Administrative Agent, on behalf (and with the authority) of the Banks and at
the request of such law firms, signed certain waivers in the forms of
Exhibits R-1, R-2 and R-3, respectively to the Original Credit Agreement.
Each of the Banks understands the contents of such waivers and acknowledges
that such waivers remain in effect.
13.18. Certain Agreements with Respect to Existing Indentures.
------------------------------------------------------
(a) The Borrowers agree that they shall not incur or suffer to exist at any
time any Debt (as defined in the 10-7/8% Senior Subordinated Notes Indenture)
pursuant to clause (a) of the first paragraph of Section 1008 of the 10-7/8%
Senior Subordinated Notes Indenture, except that (x) Debt pursuant to this
Agreement and the 364-Day Credit Agreement shall be justified as outstanding
pursuant to said clause (a) and (y) other Debt in an aggregate outstanding
principal amount not to exceed $768,000,000 less the sum of (a) the then
Total Revolving Loan Commitment (or if greater, the Total Outstandings at
such time) and (b) the Total 364-Day Revolving Loan Commitment (or, if
greater, the Total 364-Day Outstandings at such time) may be outstanding at
any time pursuant to said clause (a). For purposes of determining compliance
with the 10-7/8% Senior Subordinated Notes Indenture, all incurrences of
Loans and issuances of Letters of Credit will be deemed incurred pursuant to
clause (a) of the first paragraph of Section 1008 of the 10-7/8% Senior
Subordinated Notes Indenture. The Borrowers represent and warrant that all
Indebtedness incurred under this Agreement shall be permitted to be incurred
and remain outstanding pursuant to the 10-7/8% Senior Subordinated Notes
Indenture,
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<PAGE>
and the Borrowers hereby also covenant and agree that they shall not take any
action with respect to the incurrence of any Indebtedness (including under
this Agreement) which is inconsistent with this Section 13.18(a). This
clause (a) shall cease to be of further force or effect at such time as all
10-7/8% Senior Subordinated Notes have been repaid in full and the provisions
of Section 1008 of the 10-7/8% Senior Subordinated Notes Indenture are no
longer effective.
(b) Each Borrower represents and warrants to the Banks that, on
the Restatement Effective Date, loans in aggregate principal amount equal to
the sum of the Total Revolving Loan Commitment and the Total 364-Day
Revolving Loan Commitment would be permitted to be incurred pursuant to the
second paragraph of Section 1008 of the 8-3/4% Senior Subordinated Notes
Indenture (and that the Consolidated Fixed Charge Ratio referred to therein
would be at least equal to 2.0 to 1 after giving effect thereto).
Furthermore, the Borrowers agree that they (x) shall not incur or suffer to
exist at any time any Debt (as defined in the 8-3/4% Senior Subordinated
Notes Indenture) pursuant to clause (a) of the first paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture, except that up to
$125,000,000 of outstanding Debt incurred from time to time pursuant to the
364-Day Credit Agreement may be justified as outstanding pursuant to said
clause (a) and up to $450,000,000 (plus the amount of all reductions to the
Total 364-Day Revolving Loan Commitment after the Restatement Effective Date
so long as the Debt outstanding under the 364-Day Credit Agreement does not
exceed the Total 364-Day Revolving Loan Commitment as so reduced (with such
amount being herein called the "364-Day Revolving Loan Commitment Reduction
Amount")) of Debt outstanding from time to time pursuant to this Agreement
may be justified as having been incurred pursuant to said clause (a) and (y)
shall not incur or suffer to exist at any time more than $25,000,000 of
outstanding Debt (other than pursuant to the 364-Day Credit Agreement)
pursuant to clause (f) of the first paragraph of Section 1008 of the 8-3/4%
Senior Subordinated Notes Indenture, thereby leaving at least $25,000,000
under said clause (f) to justify outstanding Debt pursuant to the 364-Day
Credit Agreement. For purposes of determining compliance with the 8-3/4%
Senior Subordinated Notes Indenture for Credit Events occurring after the
Restatement Effective Date, all incurrences of Loans and issuances of Letters
of Credit after the Restatement Effective Date will be deemed incurred
pursuant to clause (a) of the first paragraph of Section 1008 of the 8-3/4%
Senior Subordinated Notes Indenture; provided that if at any time after the
Restatement Effective Date the Total Outstandings
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<PAGE>
are reduced below an amount equal to the remainder of $150,000,000 less the
364-Day Revolving Loan Commitment Reduction Amount, if any, at such time
(with the lowest amount below said remainder to which the Total Outstandings
hereunder have at any time been reduced (as such amount may be adjusted as
herein provided), being herein called the "Lowest Outstanding Amount", it
being understood that if the Total Outstandings hereunder ever exceed the
then previous Lowest Outstanding Amount by more than $450,000,000, the then
previous Lowest Outstanding Amount shall be increased by an amount equal to
such excess, provided that in no event shall the Lowest Outstanding Amount
ever exceed $150,000,000), then at any time thereafter the Borrowers shall
not be permitted to incur Loans or have Letters of Credit issued which would
cause the Total Outstandings to exceed the theretofore Lowest Outstanding
Amount by more than $450,000,000 plus the 364-Day Revolving Loan Commitment
Reduction Amount, if any, at such time unless, in connection with any such
Credit Event, the Borrowers establish to the satisfaction of the Agent
(including by the delivery of a satisfactory legal opinion and a certificate
of the Company's Chief Financial Officer, Treasurer or Controller) that the
incurrence of such Loans or issuance of such Letter of Credit would be
permitted pursuant to the terms of the 8-3/4% Senior Subordinated Notes
Indenture. The Borrowers represent and warrant that all Indebtedness
incurred under this Agreement shall be permitted to be incurred and remain
outstanding pursuant to the 8-3/4% Senior Subordinated Notes Indenture, and
the Borrowers hereby also covenant and agree that they shall not take any
action with respect to the incurrence of any Indebtedness (including under
this Agreement) which is inconsistent with this Section 13.18(b). This
clause (b) shall cease to be of further force or effect at such time as all
8-3/4% Senior Subordinated Notes have been repaid in full and the provisions
of Section 1008 of the 8-3/4% Senior Subordinated Notes Indenture are no
longer effective.
SECTION 14. Parent Guaranty.
---------------
14.01 The Guaranty. In order to induce the Administrative Agent
------------
and Banks to enter into this Agreement and to extend credit hereunder and in
recognition of the direct benefits to be received by Parent from the proceeds
of the Loans and the issuance of the Letters of Credit, Parent hereby agrees
with the Administrative Agent, the Banks and the Secured Interest Rate
Protection Creditors as follows: Parent hereby unconditionally and
irrevocably guarantees as primary obligor and not merely as surety the full
and prompt
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<PAGE>
payment when due, whether upon maturity, by acceleration or otherwise, of any
and all of the Guaranteed Obligations of the Borrowers to the Administrative
Agent, the Banks and the Secured Interest Rate Protection Creditors. If any
or all of the Guaranteed Obligations of the Borrowers to the Administrative
Agent, the Banks or the Secured Interest Rate Protection Creditors becomes
due and payable, Parent unconditionally promises to pay such indebtedness to
the Administrative Agent, the Banks and the Secured Interest Rate Protection
Creditors, or order, on demand, together with any and all reasonable expenses
which may be incurred by the Administrative Agent, the Banks or the Secured
Interest Rate Protection Creditors in collecting any of the Guaranteed
Obligations.
14.02 Bankruptcy. Additionally, Parent unconditionally and
----------
irrevocably guarantees the payment of any and all of the Guaranteed
Obligations of the Borrowers to the Administrative Agent, the Banks and the
Secured Interest Rate Protection Creditors whether or not due or payable by
the Borrowers upon the occurrence in respect of any Borrowers of any of the
events specified in Section 10.05, and unconditionally and irrevocably
promises to pay such Guaranteed Obligations to the Administrative Agent, the
Banks or the Secured Interest Rate Protection Creditors, as the case may be,
or order, on demand, in Dollars.
14.03 Nature of Liability. The liability of Parent hereunder is
-------------------
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrowers whether executed by Parent, any other
Guarantor, any other guarantor or by any other party, and the liability of
Parent hereunder shall not be affected or impaired by (a) any direction as to
application of payment by any Borrower or by any other party (other than for
misappropriation of funds by the respective Bank), or (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor
or of any other party as to the Guaranteed Obligations of any Borrower, or
(c) any payment on or in reduction of any such other guaranty or undertaking,
or (d) any dissolution, termination or increase, decrease or change in per-
sonnel by any Borrower, or (e) any payment made to the Administrative Agent,
the Banks or the Secured Interest Rate Protection Creditors on the indebt-
edness which the Administrative Agent, such Banks or such Secured Interest
Rate Protection Creditors repay to such Borrower pursuant to court order in
any bankruptcy, reorganization, arrangement, moratorium or other debtor re-
lief proceeding, and Parent waives any right to the
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<PAGE>
deferral or modification of its obligations hereunder by reason of any such
proceeding.
14.04 Independent Obligation. The obligations of Parent hereunder
----------------------
are independent of the obligations of any other Guarantor, any other
guarantor or any Borrower, and a separate action or actions may be brought
and prosecuted against Parent whether or not action is brought against any
other Guarantor, any other guarantor or any Borrower and whether or not any
other Guarantor, any other guarantor or any Borrower be joined in any such
action or actions. Parent waives, to the fullest extent permitted by law,
the benefit of any statute of limitations affecting its liability hereunder
or the enforcement thereof. Any payment by any Borrower or other
circumstance which operates to toll any statute of limitations as to such
Borrower shall operate to toll the statute of limitations as to Parent.
14.05 Authorization. Parent authorizes the Administrative Agent,
-------------
the Banks and the Secured Interest Rate Protection Creditors without notice
or demand (except (i) as shall be required by applicable statute and cannot
be waived and (ii) for any consents of the respective Credit Parties required
by the terms of the respective Credit Documents), and without affecting or
impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the Parent
Guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) in
or hereof, and/or any offset thereagainst;
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<PAGE>
(c) exercise or refrain from exercising any rights against any
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors,
any Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of any Borrower to its creditors other
than the Administrative Agent, the Banks and the Secured Interest Rate
Protection Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrowers to the Administrative Agent,
the Banks and the Secured Interest Rate Protection Creditors regardless
of what liability or liabilities of Parent or the Borrowers remain
unpaid; and/or
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements.
14.06 Reliance. It is not necessary for the Administrative Agent,
--------
the Banks or the Secured Interest Rate Protection Creditors to inquire into
the capacity or powers of Parent or its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on its behalf, and
any Guaranteed Obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
14.07 Subordination. Any of the indebtedness of the Borrowers
-------------
relating to the Guaranteed Obligations now or hereafter owing to Parent is
hereby subordinated to the Guaranteed Obligations of the Borrowers owing to
the Administrative Agent, the Banks and the Secured Interest Rate Protection
Creditors, provided that payment may be made by any Borrower on any such
indebtedness relating to the Guaranteed Obligations owing to Parent so long
as the same is not prohibited by this Agreement and provided further, that if
----------------
the Administrative Agent so requests at a time when an
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<PAGE>
Event of Default exists, all such indebtedness relating to the Guaranteed
Obligations of the Borrowers to Parent shall be collected, enforced and re-
ceived by Parent for the benefit of the Banks and the Secured Interest Rate
Protection Creditors and be paid over to the Administrative Agent on behalf
of the Administrative Agent, the Banks and the Secured Interest Rate
Protection Creditors on account of the Guaranteed Obligations of the Bor-
rowers to the Administrative Agent, the Banks, but without affecting or im-
pairing in any manner the liability of Parent under the other provisions of
this Parent Guaranty. Prior to the transfer by Parent of any note or nego-
tiable instrument evidencing any of the indebtedness relating to the
Guaranteed Obligations of the Borrowers to Parent, Parent shall mark such
note or negotiable instrument with a legend that the same is subject to this
subordination.
14.08 Waiver. (a) Parent waives any right (except as shall be
------
required by applicable statute and cannot be waived) to require the
Administrative Agent, the Banks or the Secured Interest Rate Protection
Creditors to (i) proceed against any Borrower, any other Guarantor, any other
guarantor or any other party, (ii) proceed against or exhaust any security
held from any Borrower, any other Guarantor, any other guarantor or any other
party or (iii) pursue any other remedy in the Administrative Agent's, the
Banks' or the Secured Interest Rate Protection Creditors' power whatsoever.
Parent waives any defense based on or arising out of any defense of any
Borrower, any other Guarantor, any other guarantor or any other party other
than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of any
Borrower, any other Guarantor, any other guarantor or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Borrower other
than payment in full of the Guaranteed Obligations. The Administrative
Agent, the Banks and the Secured Interest Rate Protection Creditors may, at
their election, foreclose on any security held by the Administrative Agent,
the Collateral Agent, the Banks or the Secured Interest Rate Protection
Creditors by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale
is permitted by applicable law), or exercise any other right or remedy the
Administrative Agent, the Banks and the Secured Interest Rate Protection
Creditors may have against any Borrower or any other party, or any security,
without affecting or impairing in any way the liability of Parent hereunder
except to the
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<PAGE>
extent the Guaranteed Obligations have been paid. Parent waives any defense
arising out of any such election by the Administrative Agent, the Banks and
the Secured Interest Rate Protection Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of Parent against any Borrower or any other party or
any security.
(b) Parent waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Parent
Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Parent assumes all responsibility for
being and keeping itself informed of the Borrowers' financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks
which Parent assumes and incurs hereunder, and agrees that the Administrative
Agent, the Banks and the Secured Interest Rate Protection Creditors shall
have no duty to advise Parent of information known to them regarding such
circumstances or risks.
-155-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date
first above written.
Address:
-------
1023 Cherry Road THE PROMUS COMPANIES
Memphis, Tennessee 38117 INCORPORATED
Tel: (901) 762-8600
Fax: (901) 762-8777
Attention: Treasurer By
------------------------------
Title:
with a copy to the same
address to the attention
of the Corporate Secretary
1023 Cherry Road EMBASSY SUITES, INC.
Memphis, Tennessee 38117
Tel: (901) 762-8600
Fax: (901) 762-8777
Attention: Treasurer By
-------------------------------
Title:
with a copy to the same
address to the attention
of the Corporate Secretary
1023 Cherry Road MARINA ASSOCIATES
Memphis, Tennessee 38117
Tel: (901) 762-8600 By: HARRAH'S ATLANTIC CITY, INC.,
Fax: (901) 762-8777 a general partner
Attention: Treasurer
with a copy to the same
address to the attention By
------------------------------
of the Corporate Secretary Title:
By: HARRAH'S NEW JERSEY, INC.,
a general partner
By
------------------------------
Title:
130 Liberty Street BANKERS TRUST COMPANY,
New York, New York 10006 Individually and as
Tel: (212) 250-9094 Administrative Agent
Fax: (212) 250-7218 and as an Agent
Attention: Mary Kay Coyle
By
------------------------------
Title:
<PAGE>
One Wall Street THE BANK OF NEW YORK,
New York, New York 10286 Individually and as an
Tel: (212) 635-6898 Agent
Fax: (212) 635-6434
Attention: Greg Batson
By
-------------------------------
Title:
300 South Grand Avenue CIBC INC., Individually and as
Los Angeles, California 90071 an Agent
Tel: (213) 617-6226
Fax: (213) 346-0157
Attention: Paul Chakmak By
-------------------------------
Title:
303 Peachtree Street CREDIT LYONNAIS, ATLANTA AGENCY,
Suite 4400 Individually and as an Agent
Atlanta, Georgia 30308
Tel: (404) 524-3700
Fax: (404) 584-5249
Attention: David Cawrse By
------------------------------
Title:
c/o Credit Lyonnais, CREDIT LYONNAIS CAYMAN ISLAND
Atlanta Agency BRANCH
303 Peachtree Street
Suite 4400
Atlanta, Georgia 30308 By
------------------------------
Tel: (404) 524-3700 Title:
Fax: (404) 584-5249
Attention: David Cawrse
707 Wilshire Boulevard FIRST INTERSTATE BANK OF
Los Angeles, California 90017 CALIFORNIA, Individually and
Tel: (213) 614-3903 as an Agent
Fax: (213) 614-2569
Attention: Edith Lim
By
-------------------------------
Title:
<PAGE>
4894 Poplar Avenue FIRST AMERICAN NATIONAL BANK
Memphis, Tennessee 38117
Tel: (901) 762-5688
Fax: (901) 762-5665 By
-------------------------------
Attention: David May Title:
165 Madison Avenue FIRST TENNESSEE BANK NATIONAL
Memphis, Tennessee 38101 ASSOCIATION
Tel: (901) 523-4444
Fax: (901) 523-4267
Attention: Steve Wade By
-------------------------------
Title:
One Ninety One Peachtree THE INDUSTRIAL BANK OF JAPAN,
Tower LIMITED
191 Peachtree Street
Suite 3600
Atlanta, Georgia 30303-1757 By
-------------------------------
Tel: (404) 524-8770 Title:
Fax: (404) 524-8509 (for Credit Matters)
Attention: Jackie Brunetto
Fax: (404) 577-6818 (for Administrative Matters)
Attention: Business Operations Department
6000 Midlantic Drive MIDLANTIC BANK, N.A.
Mount Laurel, New Jersey 08054 (formerly known as Midlantic
Tel: (609) 778-2683 National Bank)
Fax: (609) 778-2673
Attention: Denise Killen
By
-------------------------------
Title:
Georgia-Pacific Center THE SANWA BANK, LIMITED,
Suite 4750 ATLANTA AGENCY
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Tel: (404) 586-8809 By
-------------------------------
Fax: (404) 589-1629 Title:
Attention: Virginia Mahoney
555 S.W. Oak Street UNITED STATES NATIONAL BANK
Suite 400 OF OREGON
Portland, Oregon 97204
Tel: (503) 275-3192
Fax: (503) 275-4267 By
-------------------------------
Attention: Claire Jones Title:
<PAGE>
210 East Capitol Street DEPOSIT GUARANTY NATIONAL BANK
P.O. Box 1200
Jackson, Mississippi 39215
Tel: (601) 968-4749
Fax: (601) 354-8315
Attention: Larry C. Ratzlaff By
-------------------------------
Title:
520 Madison Avenue THE MITSUBISHI TRUST & BANKING
New York, New York 10022 CORP.
Tel: (212) 838-7700
Fax: (212) 755-2349
Attention: Jay Kato By
-------------------------------
Title:
1211 Avenue of the Americas WESTDEUTSCHE LANDESBANK
New York, New York 10036 GIROZENTRALE, NEW YORK BRANCH
Tel: (212) 852-6023
Fax: (212) 852-6163
Attention: Alan Bookspan
By
-------------------------------
Title:
By
-------------------------------
Title:
<PAGE>
101 California Street ABN AMRO BANK N.V.
Suite 4550
San Francisco, California 94111
Tel: (415) 984-3703
Fax: (415) 362-3524
Attention: Jeffrey French By
-------------------------------
Title:
By
-------------------------------
Title:
6000 Poplar Avenue THIRD NATIONAL BANK
Suite 145
Memphis, Tennessee 38119
Tel: (901) 766-7561
Fax: (901) 766-7565 By
-------------------------------
Attention: Carol Yochem Title:
210 Baronne Street FIRST NATIONAL BANK
4th Floor OF COMMERCE
New Orleans, Louisiana 70160
Tel: (504) 561-1989
Fax: (504) 561-1316
Attention: Louis Ballero
By
-------------------------------
Title:
<PAGE>
165 Broadway THE LONG-TERM CREDIT BANK OF
JAPAN,
New York, New York 10006 LIMITED, NEW YORK BRANCH,
Tel: (212) 335-4529 Individually and as an Agent
Fax: (212) 608-2371
Attention: Philip Marsden
By
-------------------------------
Title:
with a copy to
245 Peachtree Center Avenue
Suite 2801
Atlanta, Georgia 30303
Tel: (404) 659-7210
Fax: (404) 658-9751
Attention: Rebecca Sedlar
One NationsBank Plaza-M-5 NATIONSBANK OF GEORGIA, N.A.,
Nashville, Tennessee 37239-1697 Individually and as an Agent
Tel: (615) 749-3524
Fax: (615) 749-4640 By
-------------------------------
Attention: Ashley Crabtree Title:
2029 Century Park East SOCIETE GENERALE, Individually
Suite 2900 and as an Agent
Los Angeles, California 90067
Tel: (310) 788-7104
Fax: (310) 551-1537 By
-------------------------------
Attention: Donald L. Schubert Title:
277 Park Avenue THE SUMITOMO BANK, LIMITED,
6th Floor NEW YORK BRANCH, Individually
New York, New York 10172 and as an Agent
Tel: (212) 224-4129
Fax: (212) 224-5188
Attention: Suresh Tata By
-------------------------------
Title:
555 South Flower Street BANK OF AMERICA NATIONAL TRUST
Entertainment Media, 10th Floor AND SAVING ASSOCIATION
Los Angeles, California 90071
Tel: (213) 228-2768
Fax: (213) 228-2641 By
-------------------------------
Attention: Scott Faber Title:
550 South Hope Street THE NIPPON CREDIT BANK, LTD.,
Suite 2500 LOS ANGELES AGENCY
Los Angeles, California 90071
Tel: (213) 243-5555
Fax: (213) 892-0111 By
-------------------------------
Attention: Jay Schwartz Title:
<PAGE>
Atlanta Agency THE BANK OF NOVA SCOTIA
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308 By
-------------------------------
Tel: (404) 877-1500 Title:
Fax: (404) 888-8998
Attention: F.C.H. Ashby (Operations Contact)
with a copy to
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Tel: (713) 752-0900
Fax: (713) 752-2425
Park Avenue Tower GIROCREDIT BANK A.G. DER
65 East 55th Street SPARKASSEN, GRAND CAYMAN
New York, New York 10022 ISLAND BRANCH
Tel: (212) 644-0660
Fax: (212) 644-0644
Attention: Lalit Malhotra By
-------------------------------
Title:
Park Avenue Plaza THE TOKAI BANK, LIMITED,
55 East 52nd Street NEW YORK BRANCH
New York, New York 10055
Tel: (212) 339-1117
Fax: (212) 754-2170 By
-------------------------------
Attention: Stuart Schulman Title:
One Boatmen's Plaza THE BOATMEN'S NATIONAL BANK
800 Market Street OF ST. LOUIS
12th Floor
St. Louis, Missouri 63101
Tel: (314) 466-7651 By
-------------------------------
Fax: (314) 466-6499 Title:
Attention: Doug Thornsberry
One Peachtree Center THE DAIWA BANK, LIMITED
Suite 4420
303 Peachtree Street
Atlanta, Georgia 30303 By
-------------------------------
Tel: (404) 524-6544 Title:
Fax: (404) 523-7983
Attention: Terry Herron
By
-------------------------------
Title:
<PAGE>
SCHEDULE I
----------
REVOLVING LOAN COMMITMENTS
--------------------------
Revolving Loan
Commitment
--------------
Bankers Trust Company $ 46,000,000
The Bank of New York $ 34,000,000
CIBC Inc. $ 34,000,000
Credit Lyonnais, Atlanta Agency $ 34,000,000
First Interstate Bank of
California $ 34,000,000
The Long-Term Credit Bank of
Japan, Limited, New York Branch $ 34,000,000
NationsBank of Georgia, N.A. $ 34,000,000
Societe Generale $ 34,000,000
The Sumitomo Bank, Limited,
New York Branch $ 30,000,000
Bank of America National Trust
and Savings Association $ 26,000,000
The Bank of Nova Scotia $ 26,000,000
The Industrial Bank of
Japan Limited $ 24,000,000
The Mitsubishi Trust & Banking
Corp. $ 24,000,000
The Tokai Bank, Limited,
New York Branch $ 24,000,000
The Sanwa Bank, Limited,
Atlanta Agency $ 20,000,000
<PAGE>
SCHEDULE I
Page 2
Midlantic Bank, N.A. $ 16,000,000
United States National Bank
of Oregon $ 16,000,000
Westdeutsche Landesbank Girozentrale, $ 14,000,000
New York Branch
ABN Amro Bank N.V. $ 12,000,000
The Boatmen's National Bank
of St. Louis $ 12,000,000
First American National Bank $ 12,000,000
First Tennessee Bank National
Association $ 12,000,000
The Nippon Credit Bank, Ltd.,
Los Angeles Agency $ 12,000,000
The Daiwa Bank, Limited $ 8,000,000
Deposit Guaranty National Bank $ 8,000,000
Third National Bank $ 8,000,000
GiroCredit Bank A.G. Der
Sparkassen, Grand Cayman Island Branch $ 8,000,000
First National Bank
of Commerce $ 4,000,000
------------
TOTAL: $600,000.000
<PAGE>
SCHEDULE II
-----------
EXISTING LETTERS OF CREDIT
--------------------------
<PAGE>
SCHEDULE III
------------
TAX MATTERS
-----------
<PAGE>
SCHEDULE IV
-----------
SUBSIDIARIES
------------
<PAGE>
SCHEDULE V
----------
EXISTING INDEBTEDNESS
---------------------
<PAGE>
SCHEDULE VI
-----------
JOINT VENTURES
--------------
<PAGE>
SCHEDULE VII
------------
INSURANCE
---------
<PAGE>
SCHEDULE VIII
-------------
EXISTING LIENS
--------------
<PAGE>
SCHEDULE IX
-----------
HOTEL SUBSIDIARIES
------------------
<PAGE>
EXHIBIT A
---------
NOTICE OF BORROWING
[Date]
Bankers Trust Company, as
Administrative Agent for
the Banks party to
the Credit Agreement
referred to below
One Bankers Trust Plaza
New York, New York 10006
Attention:
----------------------
Gentlemen:
The undersigned, (the
---------------------
"Borrower"), refers to the Credit Agreement, dated as of
July 22, 1993 and amended and restated as of June 9, 1995
(as amended from time to time, the "Credit Agreement", the
terms defined therein being used herein as therein
defined), among Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated), Harrah's
Operating Company, Inc. (formerly known as Embassy Suites,
Inc.), each Subsidiary Borrower, the financial institutions
from time to time party thereto, Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and you, as
Administrative Agent, and hereby gives you notice,
irrevocably, pursuant to Section 1.03(a) of the Credit
Agreement, that the undersigned hereby requests a Borrowing
of Revolving Loans under the Credit Agreement, and in that
connection sets forth below the information relating to
such Borrowing (the "Proposed Borrowing") as required by
Section 1.03(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing
is _________, 19__.1/
--------------------
1/ Shall be a Business Day at least one Business Day in
the case of Base Rate Loans and three Business Days in the
case of Eurodollar Rate Loans, in each case after the date
hereof.
<PAGE>
EXHIBIT A
Page 2
(ii) The aggregate principal amount of the
Proposed Borrowing is $___________.
(iii) The Revolving Loans to be made pursuant to
the Proposed Borrowing shall be initially maintained
as [Base Rate Loans] [Eurodollar Loans].
(iv) The initial Interest Period for the Proposed
Borrowing is ___ month(s).2/
The undersigned hereby certifies that the
following statements are true on the date hereof, and will
be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained
in the Credit Agreement and in the other Credit
Documents are and will be true and correct in all
material respects, both before and after giving effect
to the Proposed Borrowing and to the application of
the proceeds thereof, as though made on such date (it
being understood and agreed that any representation or
warranty which by its terms is made as of a specified
date shall be required to be true and correct in all
material respects only as of such specified date); and
(B) no Default or Event of Default has occurred
and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds
thereof.
Very truly yours,
[NAME OF BORROWER]
By____________________________
Name:
Title:
--------------------
2/ To be included for a Proposed Borrowing of Eurodollar
Loans.
<PAGE>
EXHIBIT B-1
-----------
REVOLVING NOTE
$ New York, New York
-----------------
______ __, 199_
FOR VALUE RECEIVED, , a
------------------ --------
[corporation][general partnership] (the "Borrower"), hereby
promises to pay to the order of
-----------------------
(the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of
Bankers Trust Company located at One Bankers Trust Plaza,
New York, New York 10006 on the Final Maturity Date (as
defined in the Agreement referred to below) the principal
sum of _______________ DOLLARS ($______________) or, if
less, the then unpaid principal amount of all Revolving
Loans (as defined in the Agreement) made by the Bank
pursuant to the Agreement.
The Borrower promises also to pay interest on the
unpaid principal amount hereof in like money at said office
from the date hereof until paid at the rates and at the
times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred
to in the Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, among Harrah's
Entertainment, Inc. (formerly known as The Promus Companies
Incorporated), Harrah's Operating Company, Inc. (formerly
known as Embassy Suites, Inc.), each Subsidiary Borrower
(as defined in the Agreement), the financial institutions
from time to time party thereto (including the Bank),
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent (as from time to time in effect, the "Agreement"),
and is entitled to the benefits thereof and of the other
Credit Documents (as defined in the Agreement). This Note
is secured by the Collateral Documents (as defined in the
Agreement) and is entitled to the benefits of the
Guarantees (as defined in the Agreement). As provided in
the Agreement, this Note is
<PAGE>
EXHIBIT B-1
Page 2
subject to voluntary prepayment and mandatory repayment
prior to the Final Maturity Date, in whole or in part.
In case an Event of Default (as defined in the
Agreement) shall occur and be continuing, the principal of
and accrued interest on this Note may be declared to be due
and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand,
protest or notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
[NAME OF BORROWER]
By_____________________________
Title:
<PAGE>
EXHIBIT B-2
-----------
SWINGLINE NOTE
$25,000,000 New York, New York
______ __, 199_
FOR VALUE RECEIVED, , a
------------------ --------
[corporation][general partnership] (the "Borrower"), hereby
promises to pay to the order of BANKERS TRUST COMPANY (the
"Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust
Company located at One Bankers Trust Plaza, New York,
New York 10006 on the Swingline Expiry Date (as defined in
the Agreement referred to below) the principal sum of
TWENTY-FIVE MILLION DOLLARS ($25,000,000) or, if less, the
then unpaid principal amount of all Swingline Loans (as
defined in the Agreement) made by the Bank pursuant to the
Agreement.
The Borrower promises also to pay interest on the
unpaid principal amount hereof in like money at said office
from the date hereof until paid at the rates and at the
times provided in Section 1.08 of the Agreement.
This Note is one of the Swingline Notes referred
to in the Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, among Harrah's
Entertainment, Inc. (formerly known as The Promus Companies
Incorporated), Harrah's Operating Company, Inc. (formerly
known as Embassy Suites, Inc.), each Subsidiary Borrower
(as defined in the Agreement), the financial institutions
from time to time party thereto (including the Bank),
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent (as from time to time in effect, the "Agreement"),
and is entitled to the benefits thereof and of the other
Credit Documents (as defined in the Agreement). This Note
is secured by the Collateral Documents (as defined in the
Agreement) and is entitled to the benefits of the
Guarantees (as defined in the Agreement). As provided in
the Agreement, this Note is subject to voluntary prepayment
and mandatory repayment prior to the Swingline Expiry Date,
in whole or in part.
<PAGE>
In case an Event of Default (as defined in the
Agreement) shall occur and be continuing, the principal of
and accrued interest on this Note may be declared to be due
and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand,
protest or notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
[NAME OF BORROWER]
By____________________________
Title:
<PAGE>
EXHIBIT C
---------
LETTER OF CREDIT REQUEST
No. (1) Dated (2)
------- ---------------
Bankers Trust Company, as Administrative
Agent under the Credit Agreement (as
amended, modified or supplemented from
time to time, the "Credit Agreement"),
dated as of July 22, 1993 and amended
and restated as of June 9, 1995, among
Harrah's Entertainment, Inc. (formerly
known as The Promus Companies
Incorporated), Harrah's Operating
Company, Inc. (formerly known as Embassy
Suites, Inc.), each Subsidiary Borrower,
the financial institutions from time to
time party thereto, Bankers Trust
Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo
Bank, New York Branch, as Agents, and
Bankers Trust Company, as Administrative
Agent
One Bankers Trust Plaza
New York, New York 10006
[Name and Address of Proposed
Letter of Credit Issuer]
Dear Sirs:
We hereby request that [name of proposed Letter
of Credit Issuer] issue a Letter of Credit for the account
--------------------
(1) Letter of Credit Request Number.
(2) Date of Letter of Credit Request.
<PAGE>
EXHIBIT C
Page 2
of the undersigned on (3) (the "Date of
--------
Issuance") in the aggregate stated amount of
(4) .
---------------
For purposes of this Letter of Credit Request,
unless otherwise defined herein, all capitalized terms used
herein which are defined in the Credit Agreement shall have
the respective meaning provided therein.
The beneficiary of the requested Letter of Credit
will be (5) , and such Letter of Credit will
---------------
be in support of (6) and will have a stated
---------------
expiration date of (7) .
---------------
We hereby certify that:
(1) The representations and warranties contained
in the Credit Agreement and in the other Credit
Documents will be true and correct in all material
respects, both before and after giving effect to the
issuance of the Letter of Credit requested hereby, on
the Date of Issuance (it being understood and agreed
that any representation or warranty which by its terms
is made as of a specified date shall be required to be
true and correct in all material respects only as of
such date).
(2) No Default or Event of Default has occurred
and is continuing or, after giving effect to the
--------------------
(3) Date of Issuance which shall be at least 5 Business Days
(or such shorter period as is acceptable to such Letter
of Credit Issuer) from the date hereof.
(4) Aggregate initial stated amount of Letter of Credit.
(5) Insert name and address of beneficiary.
(6) Insert description of L/C Supportable Indebtedness.
(7) Insert last date upon which drafts may be presented
which may not be later than (i) 12 months after the Date
of Issuance or, (ii) if earlier, the Final Maturity
Date.
<PAGE>
EXHIBIT C
Page 3
issuance of the Letter of Credit requested hereby,
would such a Default or an Event of Default occur.
(3) The Letter of Credit requested hereby will
be issued in accordance with, and will not violate the
requirements of, Section 2.01(c) of the Credit
Agreement.
Copies of all documentation with respect to the
supported transaction are attached hereto.
[NAME OF BORROWER]
By_____________________________
Title:
<PAGE>
EXHIBIT D
---------
Section 4.04(b)(iii) Certificate
--------------------------------
Reference is hereby made to the Credit Agreement,
dated as of July 22, 1993 and amended and restated as of
June 9, 1995, among Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated), Harrah's
Operating Company, Inc. (formerly known as Embassy Suites,
Inc.), each Subsidiary Borrower, the financial institutions
from time to time party thereto, Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo Bank
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent, as amended to the date
hereof (the "Credit Agreement"). Pursuant to the
provisions of Section 4.04(b)(iii) of the Credit Agreement,
the undersigned hereby certifies that it is not a "bank" as
such term is used in Section 881(c)(3)(A) of the Internal
Revenue Code of 1986, as amended.
[NAME OF BANK]
By:______________________
Title:
Date:
<PAGE>
EXHIBIT E
---------
[NAME OF CREDIT PARTY]
Officers' Certificate
I, the undersigned, [President/Senior Vice
President/Vice President] of [Name of Credit Party], a
[corporation/partnership] organized and existing under the
laws of the State of (the "Company"), do hereby
-----------
certify that:
1. This Certificate is furnished pursuant to
(i) the Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, among Harrah's
Entertainment, Inc. (formerly known as The Promus Companies
Incorporated, "Parent"), Harrah's Operating Company, Inc.
(formerly known as Embassy Suites, Inc., ("Harrah's
Operating"), each Subsidiary Borrower, the financial
institutions from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (such Credit
Agreement, as in effect on the date of this Certificate,
being herein called the "5-Year Credit Agreement") and (ii)
the Credit Agreement, dated as of June 9, 1995, among
Parent, Harrah's Operating, each Subsidiary Borrower, the
financial institutions from time to time party thereto,
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent (such Credit Agreement, as in effect on the date of
this Certificate, being herein called the "364-Day Credit
Agreement"). Unless otherwise defined herein, capitalized
terms used in this Certificate shall have the meanings set
forth in the 5-Year Credit Agreement.
2. The individuals named on Exhibit A hereto
are elected officers of the Company or authorized
signatories, and each either holds the office of the Com-
pany set forth opposite such officer's name and has held
such office at least since ____________, or has been
designated an authorized signatory pursuant to the
resolutions described in
<PAGE>
EXHIBIT E
Page 2
paragraph 5 hereof. The signature written opposite the
name and title of each such officer or authorized signatory
is such officer's or authorized signatory's correct signa-
ture.
3. Attached hereto as Exhibit B is a certified
copy of the [Certificate of Incorporation of the Company as
filed in the Office of the Secretary of State of the State
of on _________ __, 19__,][Partnership
------------
Agreement of the Company], together with all amendments
thereto adopted through the date hereof.
4. Attached hereto as Exhibit C is a true and
correct copy of the By-Laws of the Company which were duly
adopted, are in full force and effect on the date hereof,
and have been in effect since __________ __, 19__.
5. Attached hereto as Exhibit D is a true and
correct copy of resolutions which were duly adopted on
__________, 19__ [by unanimous written consent of the Board
of Directors of the Company] [by a meeting of the Board of
Directors of the Company at which a quorum was present and
acting throughout] [as required by the Partnership
Agreement], and said resolutions have not been rescinded,
amended or modified. Except as attached hereto as Exhibit
D, no resolutions have been adopted by [the Board of
Directors of] the Company which deal with the execution,
delivery or performance of any of the Documents or any
other documents relating to the Transaction to which the
Company is party.
6. There is no proceeding for the dissolution
or liquidation of the Company or threatening its existence.
[7. On the date hereof, all of the conditions in
Sections 5.14, 5.15, 5.16, 5.17(a), (b) and (d), 5.19, 5.20
and 6.01 of the 5-Year Credit Agreement and Sections 4.14,
4.15, 4.16, 4.17(a), (b) and (d), 4.19, 4.20 and 5.01 of
the 364-Day Credit Agreement, in each case have been
satisfied.
8. Attached hereto as Exhibit E are true and
correct copies of all Hotel Transaction Documents.
<PAGE>
EXHIBIT E
Page 3
9. Attached hereto as Exhibit F is a true and
correct copy of the 364-Day Credit Agreement.]1
--------------------
1 To be included in the Certificate delivered by Harrah's
Operating Company.
<PAGE>
EXHIBIT E
Page 4
IN WITNESS WHEREOF, I have hereunto set my hand
this ___ day of __________, 1995.
______________________________
Name:
Title:
<PAGE>
EXHIBIT E
Page 5
[NAME OF CREDIT PARTY]
I, the undersigned, [Secretary/Assistant Secretary] of the
Company, do hereby certify that:
1. [Name of Person making above certifications]
is the duly elected and qualified [President/Senior Vice
President/Vice President] of the Company and the signature
above is his genuine signature.
2. The certifications made by [name of Person
making above certifications] in Items 2, 3, 4, 5 and 6
above are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand
this _____ day of _________, 1995.
____________________________
Name:
Title:
<PAGE>
Exhibit A
to Officers' Certificate
------------------------
Office/
Authorized
Name2 Signatory Signature
---- --------- ---------
______________ __________________ ________________
______________ __________________ ________________
______________ __________________ ________________
______________ __________________ ________________
--------------------
2 Include name, office and signature of each officer who
will sign any Credit Document, including the officer who
will sign the certification at the end of this Certificate.
<PAGE>
EXHIBIT F
---------
FIRST AMENDMENT TO MASTER COLLATERAL AGREEMENT
----------------------------------------------
FIRST AMENDMENT TO MASTER COLLATERAL AGREEMENT
(this "Amendment"), dated as of _______________, 1995,
among HARRAH'S ENTERTAINMENT, INC. (formerly known as The
Promus Companies Incorporated) ("Parent"), HARRAH'S
OPERATING COMPANY, INC. (formerly known as Embassy Suites,
Inc.) (the "Company"), the other parties listed on the
signature pages hereof under the caption "Collateral
Grantors," BANKERS TRUST COMPANY, as Administrative Agent
for the Banks party to the Credit Agreements referred to
below, and BANKERS TRUST COMPANY, as Collateral Agent (the
"Collateral Agent") for the benefit of the Secured Parties
under the Master Collateral Agreement referred to below.
Except as otherwise defined herein, capitalized terms used
herein and defined in the Master Collateral Agreement shall
be used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "5-
Year Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "5-Year
Administrative Agent"), have entered into a Credit
Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making of
loans and the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or replaced
from time to time, the "5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank
<PAGE>
EXHIBIT F
Page 2
of New York, Credit Lyonnais, Atlanta Agency, and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"), have
entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "364-Day
Credit Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, Parent, the Company, the
other Collateral Grantors, the 5-Year Administrative Agent
and the Collateral Agent entered into the Master Collateral
Agreement, dated as of July 22, 1993 (as amended, modified
or supplemented from time to time, the "Master Collateral
Agreement");
WHEREAS, the parties hereto wish to amend the
Master Collateral Agreement to provide that the 364-Day
Banks and the 364-Day Administrative Agent are secured on a
pari passu basis with the 5-Year Banks, the 5-Year
---- -----
Administrative Agent and the Secured Interest Rate
Protection Creditors;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Collateral Grantors shall have executed and delivered this
Amendment to the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Master Collateral Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The introductory paragraph of the Master
Collateral Agreement is hereby amended by deleting the
words "(the "Administrative Agent") for the Banks party to
the Credit Agreement" appearing therein and inserting the
words "for the Banks party to the Credit Agreements" in
lieu thereof.
<PAGE>
EXHIBIT F
Page 3
2. The first recital of the Master Collateral
Agreement is hereby deleted in its entirety and the
following two new recitals are inserted in lieu thereof:
"WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"5-Year Banks") from time to time party thereto,
Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-Term Credit
Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo
Bank, Limited, New York Branch, as Agents, and Bankers
Trust Company, as Administrative Agent (together with
any successor administrative agent, the "5-Year
Administrative Agent"), have entered into a Credit
Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making
of loans and the issuance of, and participation in,
letters of credit as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced
or replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
3. The fourth and sixth recitals (in each case,
before giving effect to this Amendment) of the Master
<PAGE>
EXHIBIT F
Page 4
Collateral Agreement are hereby amended by deleting the
words "Credit Agreement" appearing therein and inserting
the words "Credit Agreements" in lieu thereof.
4. Section 1.01(a) of the Master Collateral
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words "5-
Year Credit Agreement or 364-Day Credit Agreement, as the
case may be," in lieu thereof.
5. The definition of "Administrative Agent"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new definition is inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
6. The definition of "Banks" appearing in
Section 1.01(b) of the Master Collateral Agreement is
hereby amended by deleting the word "first" appearing
therein and inserting the word "second" in lieu thereof.
7. The definition of "Credit Agreement
Obligations" appearing in Section 1.01(b) of the Master
Collateral Agreement is hereby amended by deleting the word
"the" appearing immediately before the words
"Administrative Agent" appearing therein and inserting the
word "any" in lieu thereof.
8. The definition of "Estimated
Collateralization Amount" appearing in Section 1.01(b) of
the Master Collateral Agreement is hereby amended by
inserting the word "respective" immediately before the
words "Administrative Agent" appearing therein.
9. The definition of "Event of Default"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby amended by deleting the words "the
Credit Agreement" appearing therein and inserting the words
"the 5-Year Credit Agreement or the 364-Day Credit
Agreement, as the case may be," in lieu thereof.
10. The definition of "Notice Event of Default"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following
<PAGE>
EXHIBIT F
Page 5
new definition of "Notice Event of Default" is inserted in
lieu thereof:
"Notice Event of Default" shall mean a written
notice to the Collateral Agent from or on behalf of
the Required Secured Parties, provided, that, in the
case of an Event of Default under Section 10.01 of the
5-Year Credit Agreement or Section 9.01 of the 364-Day
Credit Agreement, such notice may be given by the
respective Administrative Agent, stating that an Event
of Default (or an Event of Default under Section 10.01
of the 5-Year Credit Agreement or Section 9.01 of the
364-Day Credit Agreement, as the case may be) has
occurred and is continuing, which notice may be oral
if immediately confirmed in writing, including
facsimile or telex, provided that the lack of such an
immediate confirmation shall not affect the
conclusiveness and binding effect of such notice."
11. The definition of "Required Secured Parties"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new definition of "Required Secured Parties" is
inserted in lieu thereof:
"Required Secured Parties" shall mean (i) so
long as any Credit Agreement Obligations remain
outstanding, Banks the sum of whose Revolving Loan
Commitments under the Credit Agreements (or after the
termination of such Revolving Loan Commitments,
outstanding Revolving Loans and Competitive Bid Loans
and Percentage of outstanding Swingline Loans and
Letter of Credit Outstandings) represent an amount
greater than fifty percent of the sum of the Total
Revolving Loan Commitments under the Credit Agreements
(or after the termination of the Total Revolving Loan
Commitments, the sum of the then total outstanding
Revolving Loans and Competitive Bid Loans and the
aggregate Percentages of the total outstanding
Swingline Loans and Letter of Credit Outstandings at
such time) or (ii) if no Credit Agreement Obligations
remain outstanding, the holders of a majority of the
outstanding principal amount of the Secured Interest
Rate Protection Obligations."
<PAGE>
EXHIBIT F
Page 6
12. The definition of "Secured Documents"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby amended by (i) deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "each" in lieu
thereof and (ii) deleting the words "the 9% Notes
Reimbursement Agreement, the 9% Reimbursement Agreement
Note," appearing therein.
13. The definition of "Secured Interest Rate
Protection Creditors" appearing in Section 1.01(b) of the
Master Collateral Agreement is hereby amended by inserting
the word "respective" immediately before the words "Credit
Agreement" appearing in clause (iii) thereof.
14. The definition of "Secured Parties"
appearing in Section 1.01(b) of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" appearing therein and inserting the
words "Administrative Agents" in lieu thereof.
15. Section 1.01(b) of the Master Collateral
Agreement is hereby further amended by inserting in the
appropriate alphabetical order the following new
definitions:
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
"Required 5-Year Banks" shall mean the "Required
Banks" under, and as defined in, the 5-Year Credit
Agreement.
"Required 364-Day Banks" shall mean the "Required
Banks" under, and as defined in, the 364-Day Credit
Agreement.
<PAGE>
EXHIBIT F
Page 7
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
16. Section 3.01 of the Master Collateral
Agreement is hereby amended by (i) deleting the comma
appearing immediately after the words "Required Secured
Parties" appearing in the first sentence thereof, (ii)
deleting the proviso appearing in the first sentence
thereof in its entirety and inserting the following new
proviso in lieu thereof:
"(provided that, in the case of an Event of Default
--------
under Section 10.01 of the 5-Year Credit Agreement or
Section 9.01 of the 364-Day Credit Agreement, such
notice may be given by the respective Administrative
Agent)."
and (iii) deleting the second parenthetical appearing in
the second sentence thereof in its entirety and inserting
the following new parenthetical in lieu thereof:
"(provided that, in the case of an Event of Default
--------
under Section 10.01 of the 5-Year Credit Agreement or
Section 9.01 of the 364-Day Credit Agreement, the
respective Administrative Agent may instruct the
Collateral Agent to instruct the Beneficiary or
Mortgagee under the respective Mortgages to record,
file and mail a notice of breach and election to
sell)".
17. Section 3.08 of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new Section 3.08 is inserted in lieu thereof:
"SECTION 3.08. Absolute Rights of the
----------------------
Administrative Agents and the Collateral Agent.
----------------------------------------------
Notwithstanding any other provision of this Agreement
or any other Collateral Document, but subject to
mandatory provisions of applicable law (including,
without limitation,
<PAGE>
EXHIBIT F
Page 8
applicable Gaming Regulations and Bankruptcy Laws),
the following rights of the Administrative Agents and
the Collateral Agent, as the case may be, each of
which is absolute and unconditional, shall not be
impaired or adversely affected without the written
consent of the Administrative Agents or the Collateral
Agent, as the case may be: (i) the right of each
Administrative Agent on behalf of the respective Banks
to receive payments under the respective Credit Agree-
ment, (ii) the right of the Administrative Agents or
the Collateral Agent, as the case may be (acting at
the direction of the Required Secured Parties) on
behalf of the Secured Parties to seek, in any
Proceeding in which Parent, the Company or any of the
other Collateral Grantors is a debtor, adequate pro-
tection of its interest and the interests of the
Secured Parties under the Secured Documents and in the
Collateral, (iii) the right of the respective
Administrative Agent (acting at the direction of the
Required 5-year Banks or Required 364-Day Banks, as
the case may be) on behalf of the Secured Parties to
institute suit for the enforcement of its rights and
the rights of the respective Banks under the Secured
Documents, or (iv) the right of the respective
Administrative Agent or the Collateral Agent, as the
case may be (acting at the direction of the Required
Secured Parties) on behalf of the respective Banks
otherwise to assert its position and views or those of
the Secured Parties or to act (including making and
voting claims) as a secured creditor in any Proceeding
in which Parent, the Company or any of the other
Collateral Grantors is a debtor."
18. Section 4.01 of the Master Collateral
Agreement is hereby amended by deleting the second sentence
thereof in its entirety and inserting the following second
sentence in lieu thereof:
"Each such Collateral Account and Restoration Account
shall be established and maintained by the Collateral
Agent at an office of the Collateral Agent or an
Administrative Agent, or at an office of such other
bank or trust company as the Required Secured Parties
shall designate in writing to the Collateral Agent and
each such Collateral Account and Restoration Account
shall have noted thereon the lien and security
interest
<PAGE>
EXHIBIT F
Page 9
therein in favor of the Collateral Agent for the
benefit of the Secured Parties."
19. Section 4.03 of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" each place such words appear therein
and inserting the words "Administrative Agents" in lieu
thereof in each such place.
20. Section 4.04(a) of the Master Collateral
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words
"Credit Agreements" in lieu thereof.
21. Section 4.04(b) of the Master Collateral
Agreement is hereby amended by inserting the word
"respective" immediately before the words "Administrative
Agent" appearing therein.
22. Section 4.05 of the Master Collateral
Agreement is hereby amended by (i) deleting clause (i)
thereof in its entirety and inserting the following new
clause (i) in lieu thereof:
"(i) the respective Administrative Agent as to
the amounts payable under the respective Credit
Agreement, and";
and (ii) deleting the word "the" appearing immediately
before the words "Administrative Agent" appearing in the
second sentence thereof and inserting the word "any" in
lieu thereof.
23. Section 5.02 of the Master Collateral
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words
"Credit Agreements" in lieu thereof.
24. Section 5.07 of the Master Collateral
Agreement is hereby amended by deleting the words "and
Section 8.03(b) of the Credit Agreement" appearing therein
inserting the following words in lieu thereof:
", Section 8.03(b) of the 5-Year Credit Agreement and
Section 7.03(b) of the 364-Day Credit Agreement."
<PAGE>
EXHIBIT F
Page 10
25. Section 6.01(a) of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" appearing therein and inserting the
words "Administrative Agents" in lieu thereof.
26. Section 6.01(b) of the Master Collateral
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "any" in lieu
thereof.
27. Section 6.01(f) of the Master Collateral
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Administrative
Agent" each place such words appear therein and inserting
the word "any" in lieu thereof in each such place.
28. Section 6.03(c) of the Master Collateral
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Administrative
Agent" appearing therein and inserting the word "any" in
lieu thereof.
29. Sections 6.04(a) and (b) of the Master
Collateral Agreement are hereby amended by deleting the
word "the" appearing before the words "Administrative
Agent" appearing therein and inserting the word "each" in
lieu thereof.
30. Sections 6.06(a) and (b) of the Master
Collateral Agreement are hereby amended by deleting the
words "Administrative Agent" appearing therein and
inserting the words "Administrative Agents" in lieu
thereof.
31. Sections 6.08(a), (b) and (c) of the Master
Collateral Agreement are hereby amended by deleting the
words "Administrative Agent" each place such words appear
therein and inserting the words "Administrative Agents" in
lieu thereof in each such place.
32. Section 6.09 of the Master Collateral
Agreement is hereby amended by inserting the word
"respective" immediately before the words "Credit
Agreement" appearing therein.
<PAGE>
EXHIBIT F
Page 11
33. Section 7.01 of the Master Collateral
Agreement is hereby amended by deleting the last sentence
thereof in its entirety and inserting the following new
sentence in lieu thereof:
"Notwithstanding anything to the contrary contained herein,
all or substantially all of the Collateral may be otherwise
released from the Liens created by the Collateral Documents
at the direction of (acting collectively) (i) all of the 5-
Year Banks (or the Required 5-Year Banks to the extent
permitted under Section 13.12(a) of the 5-Year Credit
Agreement) and (ii) all of the 364-Day Banks (or the
Required 364-Day Banks to the extent permitted under
Section 12.12(a) of the 364-Day Credit Agreement)."
34. Section 7.02(a) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new Section 7.02(a) is inserted in lieu thereof:
"SECTION 7.02. Conditions to Partial Release.
-----------------------------
(a) Subject to the conditions in Sections 7.03 and
7.04 hereof, the respective Collateral shall be
released from the Lien created by the applicable
Collateral Documents in connection with a sale or
other disposition permitted by Section 9.02 of the 5-
Year Credit Agreement and Section 8.02 of the 364-Day
Credit Agreement or in connection with an Existing
Casino Non-Recourse Financing permitted by Section
9.04(ix) of the 5-Year Credit Agreement and Section
8.04(ix) of the 364-Day Credit Agreement so long as in
each such case the proceeds of such sale or Existing
Casino Non-Recourse Financing are applied in
accordance with, and to the extent required by, the
provisions of Section 4.02 of the 5-Year Credit
Agreement and Section 3.02 of the 364-Day Credit
Agreement as a result of any corresponding reduction
to the Total 5-Year Revolving Loan Commitment pursuant
to Section 3.03(d) or (e) of the 5-Year Credit
Agreement or the Total 364-Day Revolving Loan
Commitment pursuant to Section 3.03(b) or (c) of the
364-Day Credit Agreement, as the case may be, in
connection with any such sale or financing. Pledged
Securities shall also be released from the Lien
created under the Company/Sub Pledge Agreement to the
extent such Pledged Securities no longer constitute
Required Collateral and the Partnership Interests
shall be released from the Lien
<PAGE>
EXHIBIT F
Page 12
created under the Assignment of Partnership Interests
Agreement upon the merger of Harrah's New Jersey with
and into Harrah's Atlantic City pursuant to Section
9.02(a)(B) of the 5-Year Credit Agreement and Section
8.02(a)(B) of the 364-Day Credit Agreement."
35. Section 7.02(c) of the Master Collateral
Agreement is hereby deleted in its entirety and the
following new Section 7.02(c) is inserted in lieu thereof:
"(c) Any cash or cash equivalents required to be
delivered to the respective Administrative Agent
pursuant to Section 4.02(a) of the 5-Year Credit
Agreement or Section 3.02(a) of the 364-Day Credit
Agreement may be released by such Administrative Agent
in accordance with the terms of such Section 4.02(a)
or Section 3.02(a)."
36. Section 7.03(d) of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" each place such words appear therein
and inserting the words "Administrative Agents" in lieu
thereof in each such place.
37. Sections 7.04(a) and (b) of the Master
Collateral Agreement are hereby amended by deleting the
words "Administrative Agent" appearing therein and
inserting the words "Administrative Agents" in lieu
thereof.
38. Section 7.06 of the Master Collateral
Agreement is hereby amended by deleting the words
"Administrative Agent" appearing therein and inserting the
words "Administrative Agents" in lieu thereof.
39. Section 8.01 of the Master Collateral
Agreement is hereby amended by deleting the second sentence
thereof in its entirety and inserting the following new
second sentence in lieu thereof:
"For the purpose of this Agreement, the term "Class"
shall mean each class of Secured Parties, i.e.,
----
whether (x) the 5-Year Banks as holders of the Credit
Agreement Obligations under, or in respect of, the 5-
Year Credit Agreement, (y) the 364-Day Banks as
holders of the Credit Agreement Obligations under, or
in respect of,
<PAGE>
EXHIBIT F
Page 13
the 364-Day Credit Agreement or (z) the Secured
Interest Rate Protection Creditors as the holders of
the Secured Interest Rate Protection Obligations; and
the term "Requisite Secured Parties" of any Class
shall mean each of (x) the Required 5-year Banks with
respect to the Credit Agreement Obligations under, or
in respect of, the 5-Year Credit Agreement, (y) the
Required 364-Day Banks with respect to the Credit
Agreement Obligations under, or in respect of, the
364-Day Agreement and (z) the holders of a majority of
all obligations outstanding from time to time under
the Secured Interest Rate Protection Agreements or
Other Hedging Agreements with respect to the Secured
Interest Rate Protection Obligations."
40. Section 8.02(i) of the Credit Agreement is
hereby amended by (i) deleting the word "the" appearing
immediately before the words "Administrative Agent"
appearing therein and inserting the word "either" in lieu
thereof and (ii) deleting the name "Christopher Stadler"
appearing therein and inserting the name "Mary Kay Coyle"
in lieu thereof.
41. Each of the Collateral Grantors hereby
reaffirms its respective obligations under the Master
Collateral Agreement.
42. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Master Collateral Agreement.
43. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Credit Parties, the Administrative Agents and the
Collateral Agent.
44. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
45. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each
<PAGE>
EXHIBIT F
Page 14
Collateral Grantor, the Administrative Agents and the
Collateral Agent shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have
delivered (including by way of telecopier) the same to the
Collateral Agent, (ii) the Restatement Effective Date
under, and as defined in, the 5-year Credit Agreement
occurs and (iii) the Effective Date under, and as defined
in, the 364-Day Credit Agreement occurs.
46. From and after the First Amendment Effective
Date, all references in the Master Collateral Agreement and
each of the Credit Documents to the Master Collateral
Agreement shall be deemed to be references to the Master
Collateral Agreement as amended hereby.
<PAGE>
EXHIBIT F
Page 15
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Collateral Grantors:
HARRAH'S ENTERTAINMENT, INC.
By
-------------------------------
Name:
Title:
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------------
Name:
Title:
HARRAH'S
By
-------------------------------
Name:
Title:
HARRAH'S CLUB
By
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT F
Page 16
HARRAH'S RENO HOLDING
COMPANY, INC.
By
-------------------------------
Name:
Title:
HARRAH'S LAS VEGAS, INC.
By
-------------------------------
Name:
Title:
HARRAH'S LAUGHLIN, INC.
By
-------------------------------
Name:
Title:
MARINA ASSOCIATES,
a New Jersey partnership
By HARRAH'S NEW JERSEY, INC.,
a New Jersey corporation, a
General Partner
By
----------------------------
Name:
Title:
<PAGE>
EXHIBIT F
Page 17
By HARRAH'S ATLANTIC CITY, INC.,
a New Jersey corporation, a
General Partner
By
----------------------------
Name:
Title:
CASINO HOLDING COMPANY
By
-------------------------------
Name:
Title:
HARRAH'S ATLANTIC CITY, INC.
By
-------------------------------
Name:
Title:
HARRAH'S NEW JERSEY, INC.
By
-------------------------------
Name:
Title:
Administrative Agent:
--------------------
BANKERS TRUST COMPANY
By
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT F
Page 18
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT G-1
-----------
FIRST AMENDMENT TO PARENT PLEDGE AGREEMENT
------------------------------------------
FIRST AMENDMENT TO PARENT PLEDGE AGREEMENT (this
"Amendment"), dated as of ____________, 1995, among
HARRAH'S ENTERTAINMENT, INC. (formerly known as The Promus
Companies Incorporated) (the "Pledgor") and BANKERS TRUST
COMPANY, not in its individual capacity but solely as
Collateral Agent (the "Collateral Agent"). Except as
otherwise defined herein, capitalized terms used herein and
defined in the Parent Pledge Agreement referred to below
shall be used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Pledgor, Harrah's Operating Company,
Inc. (formerly known as Embassy Suites, Inc.) (the
"Company"), each Subsidiary Borrower thereunder, the
financial institutions (the "5-Year Banks") from time to
time party thereto, Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-Term Credit Bank of
Japan, Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited, New
York Branch, as Agents, and Bankers Trust Company, as
Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative Agent"),
have entered into a Credit Agreement, dated as of July 22,
1993 and amended and restated as of June 9, 1995, providing
for the making of loans and the issuance of, and
participation in, letters of credit as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "5-Year
Credit Agreement");
WHEREAS, the Pledgor, the Company, each
Subsidiary Borrower thereunder, the financial institutions
(the "364-Day Banks," and together with the 5-Year Banks,
the "Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank,
<PAGE>
EXHIBIT G-1
Page 2
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Pledgor and the
Collateral Agent entered into the Parent Pledge Agreement,
dated as of July 22, 1993 (as amended, modified or
supplemented from time to time, the "Parent Pledge
Agreement");
WHEREAS, the parties hereto wish to amend the
Parent Pledge Agreement to provide that the 364-Day Banks
and the 364-Day Administrative Agent are secured on a pari
----
passu basis with the 5-Year Banks, the 5-Year
-----
Administrative Agent and the Secured Interest Rate
Protection Creditors with respect to the Pledge Collateral;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Pledgor shall have executed and delivered this Amendment to
the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Parent Pledge Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The first recital of the Parent Pledge
Agreement is hereby deleted in its entirety and the
following two new recitals are inserted in lieu thereof:
"WHEREAS, the Pledgor, Harrah's Operating Company
(formerly known as Embassy Suites, Inc.) (the
"Company"), each Subsidiary Borrower thereunder, the
financial institutions (the "5-Year Banks") from time
to time party thereto, Bankers Trust Company, The Bank
of
<PAGE>
EXHIBIT G-1
Page 3
New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"5-Year Administrative Agent"), have entered into a
Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, providing for
the making of loans and the issuance of, and
participation in, letters of credit as contemplated
therein (as amended, modified, supplemented, extended,
renewed, refinanced or replaced from time to time, the
"5-Year Credit Agreement");
WHEREAS, the Pledgor, the Company, each
Subsidiary Borrower thereunder, the financial
institutions (the "364-Day Banks," and together with
the 5-Year Banks, the "Banks"), Bankers Trust Company,
The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California,
The Long-Term Credit Bank of Japan, Limited, New York
Branch, NationsBank of Georgia, N.A., Societe Generale
and The Sumitomo Bank, Limited, New York Branch, as
Agents, and Bankers Trust Company, as Administrative
Agent (together with any successor administrative
agent, the "364-Day Administrative Agent," and
together with the 5-Year Administrative Agent, the
"Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced
or replaced from time to time, the "364-Day
Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");".
2. The fourth recital (before giving effect to
this Amendment) of the Parent Pledge Agreement is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "Credit Agreements" in lieu
thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Parent Pledge Agreement is hereby
amended by (i) deleting the words "Administrative Agent"
<PAGE>
EXHIBIT G-1
Page 4
appearing therein and inserting the words "Administrative
Agents" in lieu thereof and (ii) deleting the words "Credit
Agreement" appearing therein and inserting the words
"Credit Agreements" in lieu thereof.
4. The introductory paragraph of Section 1 of
the Parent Pledge Agreement is hereby amended by deleting
the words "Credit Agreement" appearing therein and
inserting the words "5-Year Credit Agreement or 364-Day
Credit Agreement, as the case may be," in lieu thereof.
5. The definition of "Administrative Agent"
appearing in Section 1 of the Parent Pledge Agreement is
hereby deleted in its entirety and the following new
definition is inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
6. The definition of "Parent" appearing in
Section 1 of the Parent Pledge Agreement is hereby deleted
in its entirety.
7. Section 1 of the Parent Pledge Agreement is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"Banks" shall have the meaning provided in the
second recital of this Agreement.
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
"Pledgor" shall have the meaning provided in the
introductory paragraph of this Agreement.
<PAGE>
EXHIBIT G-1
Page 5
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
8. Section 7 of the Parent Pledge Agreement is
hereby amended by (i) deleting the words "Credit Agreement"
appearing in clause (x) of the first sentence thereof and
inserting the following words in lieu thereof:
"5-Year Credit Agreement and Section 8.03(viii)
of the 364-Day Credit Agreement";
(ii) deleting the words "Credit Agreement" appearing in
clause (y) of the first sentence thereof and inserting the
following words in lieu thereof:
"5-Year Credit Agreement and Section 8.03 of the
364-Day Credit Agreement";
and (iii) deleting the word "the" appearing immediately
before the words "Credit Agreement" appearing in the third
sentence thereof and inserting the word "each" in lieu
thereof.
9. Section 8 of the Parent Pledge Agreement is
hereby amended by deleting the second parenthetical
appearing in the second paragraph thereof and inserting the
following parenthetical in lieu thereof:
"(which notice (i) shall be deemed to have been
given if the respective Administrative Agent
gives notice pursuant to Section 10.03 of the 5-
Year Credit Agreement or Section 9.03 of the 364-
Day Credit Agreement and (ii) shall not be
required if an Event of Default specified in
Section 10.05 of the 5-Year Credit Agreement or
Section 9.05 of the 364-Day Credit Agreement has
occurred)".
<PAGE>
EXHIBIT G-1
Page 6
10. Section 13 of the Parent Pledge Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "each" in lieu thereof.
11. Section 18 of the Parent Pledge Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "either" in lieu thereof.
12. The Pledgor hereby reaffirms its obligations
under the Parent Pledge Agreement and the grant of the
Security Interests contemplated thereby.
13. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Parent Pledge Agreement.
14. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Pledgor Parties and the Collateral Agent.
15. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
16. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
the Pledgor and the Collateral Agent shall have signed a
counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Collateral Agent, (ii) the
Restatement Effective Date under, and as defined in, the
5-Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
17. From and after the First Amendment Effective
Date, all references in the Parent Pledge Agreement and
each of the Credit Documents to the Parent Pledge Agreement
shall
<PAGE>
EXHIBIT G-1
Page 7
be deemed to be references to the Parent Pledge Agreement
as amended hereby.
<PAGE>
EXHIBIT G-1
Page 8
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
PLEDGOR
-------
HARRAH'S ENTERTAINMENT, INC.
By
-------------------------------
Name:
Title:
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT G-2
-----------
FIRST AMENDMENT TO COMPANY/SUB PLEDGE AGREEMENT
-----------------------------------------------
FIRST AMENDMENT TO COMPANY/SUB PLEDGE AGREEMENT
(this "Amendment"), dated as of __________, 1995, among
HARRAH'S OPERATING COMPANY, INC. (formerly known as Embassy
Suites, Inc.) (the "Company"), each of the other persons
listed on the signature pages hereto under the caption
"Pledgors" (the Company and such other Pledgors are
collectively referred to herein as the "Pledgors"), BANKERS
TRUST COMPANY, not in its individual capacity but solely as
a collateral agent hereunder (the "General Collateral
Agent"), and BANK OF AMERICA NEVADA, not in its individual
capacity but solely as a collateral agent hereunder (the
"Nevada Collateral Sub-Agent"). Except as otherwise
defined herein, capitalized terms used herein and defined
in the Company/Sub Pledge Agreement referred to below shall
be used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"), the
Company, each Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time party
thereto, Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale and The Sumitomo Bank, Limited, New York
Branch, as Agents, and Bankers Trust Company, as
Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative Agent"),
have entered into a Credit Agreement, dated as of July 22,
1993 and amended and restated as of June 9, 1995, providing
for the making of loans and the issuance of, and
participation in, letters of credit as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "5-Year
Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from
<PAGE>
EXHIBIT G-2
Page 2
time to time party thereto, Bankers Trust Company, The Bank
of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term Credit
Bank of Japan, Limited, New York Branch, NationsBank of
Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Pledgors, the General
Collateral Agent and the Nevada Collateral Sub-Agent
entered into the Company/Sub Pledge Agreement, dated as of
July 22, 1993 (as amended, modified or supplemented from
time to time, the "Company/Sub Pledge Agreement");
WHEREAS, the parties hereto wish to amend the
Company/Sub Pledge Agreement to provide that the 364-Day
Banks and the 364-Day Administrative Agent are secured on a
pari passu basis with the 5-Year Banks, the 5-Year
---- -----
Administrative Agent and the Secured Interest Rate
Protection Creditors with respect to the Pledged
Collateral;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Pledgors shall have executed and delivered this Amendment
to the Collateral Agents; and
WHEREAS, the parties hereto wish to amend the
Company/Sub Pledge Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The first recital of the Company/Sub Pledge
Agreement is hereby deleted in its entirety and the
following two new recitals are inserted in lieu thereof:
<PAGE>
EXHIBIT G-2
Page 3
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as the Promus Companies Incorporated)
("Parent"), the Company, each Subsidiary Borrower
thereunder, the financial institutions (the "5-Year
Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company,
as Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative
Agent"), have entered into a Credit Agreement, dated
as of July 22, 1993 and amended and restated as of
June 9, 1995, providing for the making of loans and
the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified, supple-
mented, extended, renewed, refinanced or replaced from
time to time, the "364-Day Agreement," and together
with the 5-Year Credit Agreement, the "Credit
Agreements");".
2. The fourth recital (before giving effect to
this Amendment) of the Company/Sub Pledge Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing
<PAGE>
EXHIBIT G-2
Page 4
therein and inserting the words "Credit Agreements" in lieu
thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Company/Sub Pledge Agreement is
hereby amended by (i) deleting the words "Administrative
Agent" appearing therein and inserting the words
"Administrative Agents" in lieu thereof and (ii) deleting
the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
4. The introductory paragraph of Section 1 of
the Company/Sub Pledge Agreement is hereby amended by
deleting the words "Credit Agreement" appearing therein and
inserting the words "5-Year Credit Agreement or 364-Day
Credit Agreement, as the case may be," in lieu thereof.
5. The definition of "Administrative Agent"
appearing in Section 1 of the Company/Sub Pledge Agreement
is hereby deleted in its entirety and the following new
definition is inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
6. Section 1 of the Company/Sub Pledge
Agreement is hereby further amended by inserting in the
appropriate alphabetical order the following new
definitions:
"Banks" shall have the meaning provided in the
second recital of this Agreement.
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
<PAGE>
EXHIBIT G-2
Page 5
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
7. Section 7 of the Company/Sub Pledge
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "each" in lieu
thereof.
8. Section 8 of the Company/Sub Pledge
Agreement is hereby amended by deleting the second
parenthetical appearing in the second paragraph thereof and
inserting the following parenthetical in lieu thereof:
"(which notice (i) shall be deemed to have been
given if the respective Administrative Agent
gives notice pursuant to Section 10.03 of the
5-Year Credit Agreement or Section 9.03 of the
364-Day Credit Agreement and (ii) shall not be
required if an Event of Default specified in
Section 10.05 of the 5-Year Credit Agreement or
Section 9.05 of the 364-Day Credit Agreement has
occurred)".
9. Section 13 of the Company/Sub Pledge
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "each" in lieu
thereof.
10. Section 16 of the Company/Sub Pledge
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words "5-
Year Credit Agreement or Section 7.12(b) of the 364-Day
Credit Agreement" in lieu thereof.
11. Section 19 of the Company/Sub Pledge
Agreement is hereby amended by deleting the word "the"
appearing immediately before the words "Credit Agreement"
appearing therein and inserting the word "either" in lieu
thereof.
<PAGE>
EXHIBIT G-2
Page 6
12. Each Pledgor hereby reaffirms its
obligations under the Company/Sub Agreement and the grant
by such Pledgor of the Security Interests contemplated
thereby.
13. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Company/Sub Pledge Agreement.
14. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Pledgors, the General Collateral Agent and the
Nevada Collateral Sub-Agent.
15. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
16. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Pledgor, the General Collateral Agent and the Nevada
Collateral Sub-Agent shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have
delivered (including by way of telecopier) the same to the
General Collateral Agent, (ii) the Restatement Effective
Date under, and as defined in, the 5-Year Credit Agreement
occurs and (iii) the Effective Date under, and as defined
in, the 364-Day Credit Agreement occurs.
17. From and after the First Amendment Effective
Date, all references in the Company/Sub Pledge Agreement
and each of the Credit Documents to the Company/Sub Pledge
Agreement shall be deemed to be references to the
Company/Sub Pledge Agreement as amended hereby.
<PAGE>
EXHIBIT G-2
Page 7
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Pledgors:
--------
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------------
Name:
Title:
HARRAH'S
By
-------------------------------
Name:
Title:
HARRAH'S CLUB
By
-------------------------------
Name:
Title:
CASINO HOLDING COMPANY
By
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT G-2
Page 8
General Collateral Agent:
------------------------
BANKERS TRUST COMPANY
By
-------------------------------
Name:
Title:
Nevada Collateral Sub-Agent:
---------------------------
BANK OF AMERICA NEVADA
By
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT H
---------
FIRST AMENDMENT TO SECURITY AGREEMENT
-------------------------------------
FIRST AMENDMENT TO SECURITY AGREEMENT (this
"Amendment"), dated as of _____________, 1995, among
HARRAH'S OPERATING COMPANY, INC. (formerly known as Embassy
Suites, Inc.) (the "Company"), the other parties listed on
the signature pages hereof under the caption "Collateral
Grantors" (the Company and such other Collateral Grantors
are collectively referred to herein as the "Collateral
Grantors"), and BANKERS TRUST COMPANY, not in its
individual capacity but solely as Collateral Agent (the
"Collateral Agent"). Except as otherwise defined herein,
capitalized terms used herein and defined in the Security
Agreement referred to below shall be used herein as so
defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"), the
Company, each Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time party
thereto, Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale and The Sumitomo Bank, Limited, New York
Branch, as Agents, and Bankers Trust Company, as
Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative Agent"),
have entered into a Credit Agreement, dated as of July 22,
1993 and amended and restated as of June 9, 1995, providing
for the making of loans and the issuance of, and
participation in, letters of credit as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "5-Year
Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit
<PAGE>
EXHIBIT H
Page 2
Bank of Japan, Limited, New York Branch, NationsBank of
Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Collateral Grantors and
the Collateral Agent entered into the Security Agreement,
dated as of July 22, 1993 (as amended, modified or
supplemented from time to time, the "Security Agreement");
WHEREAS, the parties hereto wish to amend the
Security Agreement to provide that the 364-Day Banks and
the 364-Day Administrative Agent are secured on a pari
----
passu basis with the 5-Year Banks, the 5-Year
-----
Administrative Agent and the Secured Interest Rate
Protection Creditors with respect to the Collateral;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Collateral Grantors shall have executed and delivered this
Amendment to the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Security Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The first recital of the Security Agreement
is hereby deleted in its entirety and the following two new
recitals are inserted in lieu thereof:
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated)
("Parent"), the Company, each Subsidiary Borrower
thereunder, the financial institutions (the "5-Year
Banks") from time to
<PAGE>
EXHIBIT H
Page 3
time party thereto, Bankers Trust Company, The Bank of
New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"5-Year Administrative Agent"), have entered into a
Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, providing for
the making of loans and the issuance of, and
participation in, letters of credit as contemplated
therein (as amended, modified, supplemented, extended,
renewed, refinanced or replaced from time to time, the
"5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
2. The fourth recital (before giving effect to
this Amendment) of the Security Agreement is hereby amended
by deleting the words "Credit Agreement" appearing therein
and inserting the words "Credit Agreements" in lieu
thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Security Agreement is hereby amended
by (i) deleting the words "Administrative Agent" appearing
<PAGE>
EXHIBIT H
Page 4
therein and inserting the words "Administrative Agents" in
lieu thereof and (ii) deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
4. Section 1(a) of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement or 364-Day Credit Agreement, as the case may be,"
in lieu thereof.
5. The definition of "Bank" appearing in
Section 1(b) of the Security Agreement is hereby deleted in
its entirety and the following new definition is inserted
in lieu thereof:
"Banks" shall have the meaning provided in the
second recital of this Agreement.
6. The definition of Credit Agreement appearing
in Section 1(b) of the Security Agreement is hereby deleted
in its entirety and the following new definition is
inserted in lieu thereof:
"Credit Agreements" shall have the meaning
provided in the second recital of this Agreement.
7. The definition of "Permitted Personalty
Liens" appearing in Section 1(b) of the Security Agreement
is hereby amended by deleting the word "the" appearing
immediately before the words "Administrative Agent"
appearing in clause (2) thereof and inserting the word
"any" in lieu thereof.
8. Section 1(b) of the Security Agreement is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"Administrative Agents" shall have the meaning
provided in the second recital of this Agreement.
"Collateral Grantors" shall have the meaning
provided in the introductory paragraph of this
Agreement.
<PAGE>
EXHIBIT H
Page 5
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Agreement.
"5-Year Banks" shall have the meaning provided in
the first recital of this Agreement.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Agreement.
"Parent" shall have the meaning provided in the
first recital of this Agreement.
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Agreement.
"364-Day Banks" shall have the meaning provided
in the second recital of this Agreement.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Agreement.
9. Section 2 of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
in clause (g) thereof and inserting the word "each" in lieu
thereof.
10. Section 6(a) of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Administrative Agent" each
place such word appear therein and inserting the word "any"
in lieu thereof in each such place.
11. Section 17(b) of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "either" in lieu thereof.
12. Section 17(c) of the Security Agreement is
hereby deleted in its entirety and the following new
Section 17(c) is inserted in lieu thereof:
"(c) In addition to the foregoing clauses (a) and
(b) of this Section 17, upon the sale of a Casino
Property pursuant to Section 9.02 of the 5-Year Credit
<PAGE>
EXHIBIT H
Page 6
Agreement and Section 8.02 of the 364-Day Credit
Agreement or the incurrence of Existing Casino Non-
Recourse Financing with respect thereto pursuant to
Section 9.04(ix) of the 5-Year Credit Agreement and
Section 8.04(ix) of the 364-Day Credit Agreement, the
personal property and fixtures relating solely to such
Casino Property shall automatically be released from
the Lien and security interest created by this
Agreement in accordance with Article VII of the Master
Collateral Agreement."
13. Section 22(b) of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement and Section 12.16 of the 364-Day Credit
Agreement" in lieu thereof.
14. Section 25 of the Security Agreement is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" each place
such words appear therein and inserting the word "each" in
lieu thereof in each such place.
15. Section 27 of the Security Agreement is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement or Section 7.12(b) of the 364-Day Credit
Agreement" in lieu thereof.
16. Each Collateral Grantor hereby reaffirms its
obligations under the Security Agreement and the grant by
such Collateral Grantor of the Security Interests
contemplated thereby.
17. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Security Agreement.
18. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Collateral Grantors and the Collateral Agent.
<PAGE>
EXHIBIT H
Page 7
19. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
20. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Collateral Grantor and the Collateral Agent shall have
signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Collateral Agent, (ii) the
Restatement Effective Date under, and as defined in, the 5-
Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
21. From and after the First Amendment Effective
Date, all references in the Security Agreement and each of
the Credit Documents to the Security Agreement shall be
deemed to be references to the Security Agreement as
amended hereby.
<PAGE>
EXHIBIT H
Page 8
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Collateral Grantors:
-------------------
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------
Name:
Title:
HARRAH'S
By
-------------------------
Name:
Title:
HARRAH'S CLUB
By
-------------------------
Name:
Title:
HARRAH'S RENO HOLDING
COMPANY, INC.
By
-------------------------
Name:
Title:
<PAGE>
EXHIBIT H
Page 9
HARRAH'S LAS VEGAS, INC.
By
-------------------------
Name:
Title:
HARRAH'S LAUGHLIN, INC.
By
-------------------------
Name:
Title:
MARINA ASSOCIATES,
a New Jersey partnership
By HARRAH'S NEW JERSEY, INC.,
a New Jersey corporation, a
General Partner
By
-----------------------
Name:
Title:
By HARRAH'S ATLANTIC CITY, INC.,
a New Jersey corporation, a
General Partner
By
-----------------------
Name:
Title:
CASINO HOLDING COMPANY
<PAGE>
EXHIBIT H
Page 10
By
--------------------------
Name:
Title:
HARRAH'S ATLANTIC CITY, INC.
By
--------------------------
Name:
Title:
HARRAH'S NEW JERSEY, INC.
By
--------------------------
Name:
Title:
Collateral Agent:
----------------
BANKERS TRUST COMPANY
By
-------------------------
Name:
Title:
<PAGE>
EXHIBIT I
---------
FIRST AMENDMENT TO COMPANY/SUB GUARANTY
---------------------------------------
FIRST AMENDMENT TO COMPANY/SUB GUARANTY (this
"Amendment"), dated as of _____ __, 1995, among each party
listed on the signature pages hereto under the caption
"Guarantors" (the "Guarantors") and BANKERS TRUST COMPANY,
not in its individual capacity but solely as Collateral
Agent (the "Collateral Agent"). Except as otherwise
defined herein, capitalized terms used herein and defined
in the Company/Sub Guaranty referred to below shall be used
herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as the Promus Companies Incorporated) ("Parent"),
Harrah's Operating Company, Inc. (the "Company"), each
Subsidiary Borrower thereunder, the financial institutions
(the "5-Year Banks") from time to time party thereto,
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent (together with any successor administrative agent,
the "5-Year Administrative Agent"), have entered into a
Credit Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making of
loans and the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or replaced
from time to time, the "5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank,
<PAGE>
EXHIBIT I
Page 2
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Guarantors and the
Collateral Agent entered into the Company/Sub Guaranty,
dated as of July 22, 1993 (as amended, modified or
supplemented from time to time, the "Company/Sub
Guaranty");
WHEREAS, the parties hereto wish to amend the
Company/Sub Guaranty to provide that the obligations of the
Borrowers to the 364-Day Banks and the 364-Day
Administrative Agent are guaranteed by the Guarantors on
the same basis as the obligations of the Borrowers to the
5-Year Banks, the 5-Year Administrative Agent and the
Secured Interest Rate Protection Creditors are guaranteed;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Guarantors shall have executed and delivered this Amendment
to the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Company/Sub Guaranty as herein provided;
NOW, THEREFORE, it is agreed:
1. The first recital of the Company/Sub
Guaranty is hereby deleted in its entirety and the
following two new recitals are inserted in lieu thereof:
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated)
("Parent"), Harrah's Operating Company (formerly known
as Embassy Suites, Inc.) (the "Company"), each
Subsidiary Borrower thereunder, the financial
institutions (the "5-Year
<PAGE>
EXHIBIT I
Page 3
Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company,
as Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative
Agent"), have entered into a Credit Agreement, dated
as of July 22, 1993 and amended and restated as of
June 9, 1995, providing for the making of loans and
the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
2. The fourth recital (before giving effect to
this Amendment) of the Company/Sub Guaranty is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Company/Sub Guaranty is hereby
amended
<PAGE>
EXHIBIT I
Page 4
by deleting the words "Credit Agreement" each place such
words appear therein and inserting the words "Credit
Agreements" in lieu thereof in each such place.
4. The sixth recital (before giving effect to
this Amendment) of the Company/Sub Guaranty is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "Credit Agreements" in lieu
thereof.
5. Section 1 of the Company/Sub Guaranty is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement or 364-Day Credit Agreement, as the case may be,"
in lieu thereof.
6. Section 2 of the Company/Sub Guaranty is
hereby amended by deleting the words "Administrative Agent"
each place such words appear therein and inserting the
words "Administrative Agents" in lieu thereof in each such
place.
7. Section 3 of the Company/Sub Guaranty is
hereby amended by deleting the word "the" appearing
immediately before the words "Administrative Agent"
appearing in clauses (e) and (g) thereof and inserting the
word "any" in lieu thereof in each such place.
8. Section 10 of the Company/Sub Guaranty is
hereby amended by deleting the words "Administrative Agent"
appearing in clause (d) thereof and inserting the words
"Administrative Agents" in lieu thereof.
9. Section 11 of the Company/Sub Guaranty is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement and Sections 7 and 8 of the 364-Day Credit
Agreement" in lieu thereof.
10. Section 13 of the Company/Sub Guaranty is
hereby amended by (i) deleting the words "Credit Agreement"
appearing in clause (x) thereof and inserting the words
"Credit Agreements" in lieu thereof and (ii) deleting the
words "on the signature pages of the Administrative Agent
in the Credit Agreement" appearing in clause (y) thereof
and inserting the words "in the Master Collateral
Agreement" in lieu thereof.
<PAGE>
EXHIBIT I
Page 5
11. Section 14 of the Company/Sub Guaranty is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
12. Section 21 of the Company/Sub Guaranty is
hereby deleted in its entirety and the following new
Section 21 is inserted in lieu thereof:
"21. In the event that (i) all of the capital
stock of one or more Guarantors is sold in connection
with a sale permitted by Section 9.02 of the 5-Year
Credit Agreement and Section 8.02 of the 364-Day
Credit Agreement and the proceeds of such sale or
sales are applied in accordance with, and to the
extent required by, the terms of each such Credit
Agreement or (ii) one or more Guarantors no longer is
required to guaranty obligations of the Secured
Parties as provided in either of the Credit
Agreements, each such Guarantor shall be released from
this Guaranty with respect to each such Credit
Agreement and this Guaranty shall, as to each such
Guarantor, terminate and have no further force or
effect with respect to each such Credit Agreement."
13. Each Guarantor hereby reaffirms its
obligations under the Company/Sub Guaranty and the guaranty
by such Guarantor of the obligations of the Borrowers under
the Secured Documents.
14. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Company/Sub Guaranty.
15. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Guarantors and the Collateral Agent.
16. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
<PAGE>
EXHIBIT I
Page 6
17. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Guarantor and the Collateral Agent shall have signed a
counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Collateral Agent, (ii) the
Restatement Effective Date under, and as defined in, the
5-Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
18. From and after the First Amendment Effective
Date, all references in the Company/Sub Guaranty and each
of the Credit Documents to the Company/Sub Guaranty shall
be deemed to be references to the Company/Sub Guaranty as
amended hereby.
<PAGE>
EXHIBIT I
Page 7
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
The Guarantors:
--------------
HARRAH'S OPERATING COMPANY, INC.
By:
------------------------------
Name:
Title:
CASINO HOLDING COMPANY
By:
------------------------------
Name:
Title:
HARRAH'S
By:
------------------------------
Name:
Title:
HARRAH'S ATLANTIC CITY, INC.
By:
------------------------------
Name:
Title:
<PAGE>
EXHIBIT I
Page 8
HARRAH'S CLUB
By:
------------------------------
Name:
Title:
HARRAH'S LAUGHLIN, INC.,
By:
------------------------------
Name:
Title:
HARRAH'S NEW JERSEY, INC.
By:
------------------------------
Name:
Title:
HARRAH'S RENO HOLDING COMPANY,
INC.,
By:
------------------------------
Name:
Title:
HARRAH'S LAS VEGAS, INC.
By:
------------------------------
Name:
Title:
<PAGE>
EXHIBIT I
Page 9
MARINA ASSOCIATES,
a New Jersey partnership
By: HARRAH'S NEW JERSEY, INC., a
New Jersey corporation, a
general partner
By:
------------------------------
Name:
Title:
By: HARRAH'S ATLANTIC CITY,
INC., a New Jersey
corporation, a general
partner
By:
------------------------------
Name:
Title:
Collateral Agent:
BANKERS TRUST COMPANY
By:
------------------------------
Name:
Title:
<PAGE>
This instrument was prepared by the [Atlantic County, New Jersey]
attorney described below:
___________________________________
Jeffrey J. Temple
Recording Requested By EXHIBIT J-1
-----------
and when Recorded
Return to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
FIRST AMENDMENT TO MORTGAGE, LEASEHOLD MORTGAGE,
ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
----------------------------------------------------------
FIRST AMENDMENT TO MORTGAGE, LEASEHOLD MORTGAGE,
ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT (this "Amendment"), dated
as of _____________, 1995, among HARRAH'S OPERATING
COMPANY, INC. (formerly known as Embassy Suites, Inc.) (the
"Company"), MARINA ASSOCIATES ("Marina", each of Marina and
Embassy being a "Mortgagor" and, collectively, the
"Mortgagors") and BANKERS TRUST COMPANY, not in its
individual capacity but solely as Collateral Agent (the
"Mortgagee"). Except as otherwise defined herein,
capitalized terms used herein and defined in the Mortgage
referred to below shall be used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"), the
Company, each Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time party
thereto, Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale and The Sumitomo Bank, Limited, New York
Branch, as
<PAGE>
EXHIBIT J-1
Page 2
Agents, and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the "5-
Year Administrative Agent"), have entered into a Credit
Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making of
loans and the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or replaced
from time to time, the "5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"), have
entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "364-Day
Credit Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Mortgagors executed and
delivered to the Mortgagee a Mortgage, Leasehold Mortgage,
Assignment, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of July 22,
1993 (as amended, modified or supplemented from time to
time, the "Mortgage");
WHEREAS, the parties hereto wish to amend the
Mortgage to provide that the 364-Day Banks and the 364-Day
Administrative Agent are secured on a pari passu basis with
---- -----
the 5-Year Banks, the 5-Year Administrative Agent and the
Secured Interest Rate Protection Creditors with respect to
the Collateral and to renew and extend the liens granted
therein;
<PAGE>
EXHIBIT J-1
Page 3
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Mortgagors shall have executed and delivered this Amendment
to the Mortgage; and
WHEREAS, the parties hereto wish to amend the
Mortgage as herein provided.
NOW, THEREFORE, it is agreed:
1. The first recital of the Mortgage is hereby
deleted in its entirety and the following two new recitals
are inserted in lieu thereof:
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated)
("Parent"), the Company, each Subsidiary Borrower
thereunder, the financial institutions (the "5-Year
Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company,
as Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative
Agent"), have entered into a Credit Agreement, dated
as of July 22, 1993 and amended and restated as of
June 9, 1995, providing for the making of loans and
the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,and
Bankers Trust Company, as Administrative Agent
(together with any
<PAGE>
EXHIBIT J-1
Page 4
successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"),
have entered into a Credit Agreement, dated as of June
9, 1995, providing for the making of loans as
contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
2. Each reference to the word "Embassy"
contained in the Mortgage shall be deemed deleted and the
words "the Company" shall be inserted in lieu thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Mortgage is hereby amended by
deleting (i) the words "Credit Agreement" appearing therein
and inserting the words "respective Credit Agreements" in
lieu thereof, (ii) the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof and (iii) the amount "$650,000,000"
appearing therein and inserting the amount "$750,000,000"
in lieu thereof.
4. The sixth recital (before giving effect to
this Amendment) of the Mortgage is hereby amended by
deleting the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
5. The seventh recital (before giving effect to
this Amendment) of the Mortgage is hereby amended by (i)
deleting the words "Administrative Agent" appearing therein
and inserting the words "Administrative Agents" in lieu
thereof and (ii) deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
6. The first paragraph of the granting clauses
of the Mortgage is hereby amended by deleting the words
"Credit Agreement" appearing therein and inserting the
words "Credit Agreements" in lieu thereof.
7. Section 1.01(a) of the Mortgage is hereby
amended by deleting the words "Credit Agreement" appearing
in the second sentence of the introductory paragraph
thereof and
<PAGE>
EXHIBIT J-1
Page 5
inserting the words "the 5-year Credit Agreement or the
364-Day Credit Agreement, as the case may be" in lieu
thereof.
8. The definition of "Administrative Agent"
appearing in Section 1.01(a) of the Mortgage is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Mortgage.
9. The definition of "Bank" appearing in
Section 1.01(a) of the Mortgage is hereby amended by
deleting the word "First" appearing therein and inserting
the word "Second" in lieu thereof.
10. The definition of "Credit Agreement"
appearing in Section 1.01(a) of the Mortgage is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Credit Agreements" shall have the meaning
provided in the second recital of this Mortgage.
11. The definition of "Interest Rate" appearing
in Section 1.01(a) of the Mortgage is hereby deleted in its
entirety and the following new definition is inserted in
lieu thereof:
"Interest Rate" is defined in Section 1.08(c) of
the 5-Year Credit Agreement.
12. Section 1.01(a) of the Mortgage is hereby
further amended by inserting in the appropriate
alphabetical order the following new definitions:
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this
Mortgage.
"5-Year Banks" shall have the meaning provided in
the first recital of this Mortgage.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Mortgage.
<PAGE>
EXHIBIT J-1
Page 6
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this
Mortgage.
"364-Day Banks" shall have the meaning provided
in the second recital of this Mortgage.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Mortgage.
13. Section 1.01(b) of the Mortgage is hereby
amended by deleting the word "the" appearing immediately
before the words "Credit Agreement" appearing therein and
inserting the word "each" in lieu thereof.
14. Section 2.07(a) of the Mortgage is hereby
amended by deleting the words "Administrative Agent has"
and inserting the words "Administrative Agents have" in
lieu thereof.
15. Section 2.13(a) of the Mortgage is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit and Section
9 of the 364 Day Credit Agreement" in lieu thereof.
16. Section 2.14(a) of the Mortgage is hereby
amended by deleting the words "Credit Agreement" and
inserting the words "Credit Agreements" in lieu thereof.
17. Section 3.06 of the Mortgage is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the word "Mortgagee" in
lieu thereof.
18. Section 4.01(a) of the Mortgage is hereby
amended by (i) inserting the words ", Competitive Bid
Loans" immediately following the words "Revolving Loans"
appearing therein and (ii) deleting the words "Credit
Agreement" each place such words appear therein and
inserting the words "respective Credit Agreements" in lieu
thereof in each such place.
19. Section 4.01(b) of the Mortgage is hereby
amended by deleting the amount "$650,000,000" appearing
therein and inserting the amount "$750,000,000" in lieu
thereof.
<PAGE>
EXHIBIT J-1
Page 7
20. Section 4.03 of the Mortgage is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit Agreement
and Section 12.01 of the 364-Day Credit Agreement" in lieu
thereof.
21. Section 5.01(a) of the Mortgage is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit Agreement
and Section 9 of the 364-Day Credit Agreement" in lieu
thereof.
22. Section 5.01(b) of the Mortgage is hereby
amended by deleting the word "the" appearing immediately
before the words "Credit Agreement" each place such word so
appears therein and inserting the word "each" in lieu
thereof in each such place.
23. Section 7.01(b) of the Mortgage is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof.
24. Each Mortgagor hereby reaffirms to the
Secured Parties each of their representations, warranties,
covenants and agreements set forth in the Mortgage with the
same force and affect as if each were separately stated
herein and made as of the date hereof.
25. Each Mortgagor hereby ratifies, affirms,
reaffirms, acknowledges, confirms and agrees that the
Mortgage, as modified by this Amendment, and each and every
other document and/or instrument which evidences and/or
secures payment of the Secured Obligations represent the
valid, enforceable and collectible obligations of the
Mortgagors and further acknowledges there are no existing
claims, defenses, personal or otherwise, or rights of set-
off whatsoever with respect to any of the aforementioned
instruments and/or documents known to the Mortgagors and
further acknowledges and represents that, to the
Mortgagors' knowledge no event has occurred and no
condition exists which would constitute a default under the
Mortgage or this Amendment either with or without notice or
lapse of time or both.
26. Each Mortgagor hereby waives, discharges and
releases forever any and all existing claims and defenses,
<PAGE>
EXHIBIT J-1
Page 8
personal or otherwise, and rights of set-off known to each
of them that it may have against the Mortgagee or any other
Secured Party or which might affect the enforceability by
the Mortgagee or any other Secured Party of their various
rights and remedies under the Mortgage or any of the other
Credit Documents.
27. Except as specifically modified herein, all
of the terms and provisions of the Mortgage and all other
documents executed by the parties hereto or binding upon
the parties hereto in connection with the Mortgage are
ratified and reaffirmed by the parties hereto, and are
incorporated herein by reference, the Mortgagors
specifically acknowledging the validity and enforceability
thereof.
28. The Mortgagors agree to pay all costs in
connection herewith, including, but without limitation,
recordation and filing fees, taxes, reasonable attorneys'
fees and expenses charges for title examination and title
insurance premiums. The Mortgagors further agree to have
the Mortgagee's existing title insurance policy updated at
its sole cost and expense, the endorsement thereto being
subject to the Mortgagee's approval to the extent provided
in the 5-Year Credit Agreement and the 364-Day Credit
Agreement.
29. The liens, security interests, assignments
and other rights evidenced by the Mortgage are hereby
renewed, extended and modified to secure the Secured
Obligations.
30. This Amendment is limited as specified and
other than the specific amendments contained herein shall
not constitute an amendment, modification or waiver of, or
otherwise affect, in any way, any other provisions of the
Mortgage. As modified hereby, the Mortgage is ratified and
confirmed in all respects.
31. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Mortgagors and the Mortgagee.
<PAGE>
EXHIBIT J-1
Page 9
32. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
the Mortgagors and the Mortgagee shall have signed a
counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Mortgagee, (ii) the Restatement
Effective Date under, and as defined in, the 5-Year Credit
Agreement occurs and (iii) the Effective Date under, and as
defined in, the 364-Day Credit Agreement occurs.
33. From and after the First Amendment Effective
Date, all references in the Mortgage and each of the Credit
Documents to the Mortgage shall be deemed to be references
to the Mortgage as amended hereby.
<PAGE>
EXHIBIT J-1
Page 10
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Mortgagors:
----------
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------
Name:
Title:
MARINE ASSOCIATES
By: HARRAH'S ATLANTIC CITY, INC.
general partner
By:_________________________
Name:
Title:
By: HARRAH'S NEW JERSEY, INC.
general partner
By:_________________________
Name:
Title:
<PAGE>
EXHIBIT J-1
Page 11
Mortgagee:
---------
BANKERS TRUST COMPANY
By
-------------------------
Name:
Title:
<PAGE>
[_______ County, Nevada]
Recording Requested By EXHIBIT J-2
-----------
and when Recorded
Return to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
FIRST AMENDMENT TO DEED OF TRUST, LEASEHOLD DEED OF TRUST,
ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
----------------------------------------------------------
FIRST AMENDMENT TO DEED OF TRUST, LEASEHOLD DEED
OF TRUST, ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT (this
"Amendment"), dated as of _____________, 1995, among
HARRAH'S OPERATING COMPANY, INC. (formerly known as Embassy
Suites, Inc.) (the "Company"), HARRAH'S LAUGHLIN, INC.
("Laughlin"), HARRAH'S RENO HOLDING COMPANY, INC. ("Reno",
and together with the Company and Laughlin, the "Grantors"
and each a "Grantor"), HARRAH'S ("Harrah's"), HARRAH'S CLUB
("Harrah's Club") and HARRAH'S LAS VEGAS, INC. ("Harrah's
Las Vegas", and together with Harrah's and Harrah's Club,
the "Collateral Grantors" and each a "Collateral Grantor")
and BANKERS TRUST COMPANY, not in its individual capacity
but solely as Collateral Agent (the "Beneficiary"). Except
as otherwise defined herein, capitalized terms used herein
and defined in the Deed of Trust referred to below shall be
used herein as so defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"), the
Company, each Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time party
thereto, Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale and The Sumitomo Bank, Limited, New York
Branch, as Agents, and Bankers Trust Company, as
Administrative Agent
<PAGE>
EXHIBIT J-2
Page 2
(together with any successor administrative agent, the "5-
Year Administrative Agent"), have entered into a Credit
Agreement, dated as of July 22, 1993 and amended and
restated as of June 9, 1995, providing for the making of
loans and the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or replaced
from time to time, the "5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"), have
entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "364-Day
Credit Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Grantors and the
Collateral Grantors executed and delivered to the Trustee
and the Beneficiary a Deed of Trust, Leasehold Deed of
Trust, Assignment, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of July 22,
1993 (as amended, modified or supplemented from time to
time, the "Deed of Trust");
WHEREAS, the parties hereto wish to amend the
Deed of Trust to provide that the 364-Day Banks and the
364-Day Administrative Agent are secured on a pari passu
---- -----
basis with the 5-Year Banks, the 5-Year Administrative
Agent and the Secured Interest Rate Protection Creditors
with respect to the Collateral and to renew and extend the
liens granted therein;
<PAGE>
EXHIBIT J-2
Page 3
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Grantors and Collateral Grantors shall have executed and
delivered this Amendment to the Beneficiary; and
WHEREAS, the parties hereto wish to amend the
Deed of Trust as herein provided.
NOW, THEREFORE, it is agreed:
1. The first recital of the Deed of Trust is
hereby deleted in its entirety and the following two new
recitals are inserted in lieu thereof:
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated)
("Parent"), the Company, each Subsidiary Borrower
thereunder, the financial institutions (the "5-Year
Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit
Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited,
New York Branch, as Agents, and Bankers Trust Company,
as Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative
Agent"), have entered into a Credit Agreement, dated
as of July 22, 1993 and amended and restated as of
June 9, 1995, providing for the making of loans and
the issuance of, and participation in, letters of
credit as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "5-Year Credit
Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any
<PAGE>
EXHIBIT J-2
Page 4
successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"),
have entered into a Credit Agreement, dated as of June
9, 1995, providing for the making of loans as
contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements");".
2. Each reference to the word "Embassy"
contained in the Deed of Trust shall be deemed deleted and
the words "the Company" shall be inserted in lieu thereof.
3. The fifth recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
deleting (i) the words "Credit Agreement" appearing therein
and inserting the words "respective Credit Agreements" in
lieu thereof, (ii) the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof and (iii) the amount "$650,000,000"
appearing therein and inserting the amount "$750,000,000"
in lieu thereof.
4. The seventh recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
deleting the words "Credit Agreement" appearing therein and
inserting the words "Credit Agreements" in lieu thereof.
5. The eighth recital (before giving effect to
this Amendment) of the Deed of Trust is hereby amended by
(i) deleting the words "Administrative Agent" appearing
therein and inserting the words "Administrative Agents" in
lieu thereof and (ii) deleting the words "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
6. The first paragraph of the granting clauses
of the Deed of Trust is hereby amended by deleting the
words "Credit Agreement" appearing therein and inserting
the words "Credit Agreements" in lieu thereof.
7. Section 1.01(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing in the second sentence of the introductory
paragraph thereof and
<PAGE>
EXHIBIT J-2
Page 5
inserting the words "the 5-year Credit Agreement or the
364-Day Credit Agreement, as the case may be" in lieu
thereof.
8. The definition of "Administrative Agent"
appearing in Section 1.01(a) of the Deed of Trust is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Administrative Agents" shall have the meaning
provided in the second recital of this Deed of Trust.
9. The definition of "Banks" appearing in
Section 1.01(a) of the Deed of Trust is hereby amended by
deleting the word "First" appearing therein and inserting
the word "Second" in lieu thereof.
10. The definition of "Credit Agreement"
appearing in Section 1.01(a) of the Deed of Trust is hereby
deleted in its entirety and the following new definition is
inserted in lieu thereof:
"Credit Agreements" shall have the meaning
provided in the second recital of this Deed of Trust.
11. The definition of "Interest Rate" appearing
in Section 1.01(a) of the Deed of Trust is hereby deleted
in its entirety and the following new definition is
inserted in lieu thereof:
"Interest Rate" is defined in Section 1.08(c) of
the 5-Year Credit Agreement.
12. Section 1.01(a) of the Deed of Trust is
hereby further amended by inserting in the appropriate
alphabetical order the following new definitions:
"5-Year Administrative Agent" shall have the
meaning provided in the first recital of this Deed of
Trust.
"5-Year Banks" shall have the meaning provided in
the first recital of this Deed of Trust.
"5-Year Credit Agreement" shall have the meaning
provided in the first recital of this Deed of Trust.
<PAGE>
EXHIBIT J-2
Page 6
"364-Day Administrative Agent" shall have the
meaning provided in the second recital of this Deed of
Trust.
"364-Day Banks" shall have the meaning provided
in the second recital of this Deed of Trust.
"364-Day Credit Agreement" shall have the meaning
provided in the second recital of this Deed of Trust.
13. Section 1.01(b) of the Deed of Trust is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" appearing
therein and inserting the word "each" in lieu thereof.
14. Section 2.07(a) of the Deed of Trust is
hereby amended by deleting the words "Administrative Agent
has" and inserting the words "Administrative Agents have"
in lieu thereof.
15. Section 2.13(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
and Section 9 of the 364 Day Credit Agreement" in lieu
thereof.
16. Section 2.14(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement" and
inserting the words "Credit Agreements" in lieu thereof.
17. Section 3.06 of the Deed of Trust is hereby
amended by deleting the words "Administrative Agent"
appearing therein and inserting the word "Beneficiary" in
lieu thereof.
18. Section 4.01(a) of the Deed of Trust is
hereby amended by (i) inserting the words ", Competitive
Bid Loans" immediately following the words "Revolving
Loans" appearing therein and (ii) deleting the words
"Credit Agreement" each place such words appear therein and
inserting the words "respective Credit Agreements" in lieu
thereof in each such place.
19. Section 4.01(b) of the Deed of Trust is
hereby amended by deleting the amount "$650,000,000"
appearing
<PAGE>
EXHIBIT J-2
Page 7
therein and inserting the amount "$750,000,000" in lieu
thereof.
20. Section 4.03 of the Deed of Trust is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit Agreement
and Section 12.01 of the 364-Day Credit Agreement" in lieu
thereof.
21. Section 5.01(a) of the Deed of Trust is
hereby amended by deleting the words "Credit Agreement"
appearing therein and inserting the words "5-Year Credit
Agreement and Section 9 of the 364-Day Credit Agreement" in
lieu thereof.
22. Section 5.01(b) of the Deed of Trust is
hereby amended by deleting the word "the" appearing
immediately before the words "Credit Agreement" each place
such word so appears therein and inserting the word "each"
in lieu thereof in each such place.
23. Section 7.01(b) of the Deed of Trust is
hereby amended by deleting the words "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof.
24. Each Grantor and each Collateral Grantor
hereby reaffirms to the Secured Parties each of their
representations, warranties, covenants and agreements set
forth in the Deed of Trust with the same force and affect
as if each were separately stated herein and made as of the
date hereof.
25. Each Grantor and each Collateral Grantor
hereby ratifies, affirms, reaffirms, acknowledges, confirms
and agrees that the Deed of Trust, as modified by this
Amendment, and each and every other document and/or
instrument which evidences and/or secures payment of the
Secured Obligations represent the valid, enforceable and
collectible obligations of the Grantors and Collateral
Grantors and further acknowledges there are no existing
claims, defenses, personal or otherwise, or rights of set-
off whatsoever with respect to any of the aforementioned
instruments and/or documents known to the Grantors and
Collateral Grantors and further acknowledges and represents
that, to the Grantors' and Collateral Grantors' knowledge
no
<PAGE>
EXHIBIT J-2
Page 8
event has occurred and no condition exists which would
constitute a default under the Deed of Trust or this
Amendment either with or without notice or lapse of time or
both.
26. Each Grantor and each Collateral Grantor
hereby waives, discharges and releases forever any and all
existing claims and defenses, personal or otherwise, and
rights of set-off known to each of them that it may have
against the Beneficiary or any other Secured Party or which
might affect the enforceability by the Beneficiary or any
other Secured Party of their various rights and remedies
under the Deed of Trust or any of the other
Credit Documents.
27. Except as specifically modified herein, all
of the terms and provisions of the Deed of Trust and all
other documents executed by the parties hereto or binding
upon the parties hereto in connection with the Deed of
Trust are ratified and reaffirmed by the parties hereto,
and are incorporated herein by reference, the Grantors and
Collateral Grantors specifically acknowledging the validity
and enforceability thereof.
28. The Grantors agree to pay all costs in
connection herewith, including, but without limitation,
recordation and filing fees, taxes, reasonable attorneys'
fees and expenses charges for title examination and title
insurance premiums. The Grantors further agree to have the
Beneficiary's existing title insurance policy updated at
its sole cost and expense, the endorsement thereto being
subject to the Beneficiary's approval to the extent
provided in the 5-Year Credit Agreement and the 364-Day
Credit Agreement.
29. The liens, security interests, assignments
and other rights evidenced by the Deed of Trust are hereby
renewed, extended and modified to secure the Secured
Obligations.
30. This Amendment is limited as specified and
other than the specific amendments contained herein shall
not constitute an amendment, modification or waiver of, or
otherwise affect, in any way, any other provisions of the
Deed of Trust. As modified hereby, the Deed of Trust is
ratified and confirmed in all respects.
<PAGE>
EXHIBIT J-2
Page 9
31. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Grantors, the Collateral Grantors and the
Beneficiary.
32. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Grantor, each Collateral Grantor and the Beneficiary
shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (including
by way of telecopier) the same to the Beneficiary, (ii) the
Restatement Effective Date under, and as defined in, the 5-
Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
33. From and after the First Amendment Effective
Date, all references in the Deed of Trust and each of the
Credit Documents to the Deed of Trust shall be deemed to be
references to the Deed of Trust as amended hereby.
<PAGE>
EXHIBIT J-2
Page 10
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Grantors:
--------
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------
Name:
Title:
HARRAH'S LAUGHLIN, INC.
By
-------------------------
Name:
Title:
HARRAH'S RENO HOLDING
COMPANY, INC.
By
-------------------------
Name:
Title:
Collateral Grantors:
-------------------
HARRAH'S
By
-------------------------
Name:
Title:
<PAGE>
EXHIBIT J-2
Page 11
HARRAH'S CLUB
By
-------------------------
Name:
Title:
HARRAH'S LAS VEGAS, INC.
By
-------------------------
Name:
Title:
Beneficiary:
-----------
BANKERS TRUST COMPANY
By
-------------------------
Name:
Title:
<PAGE>
EXHIBIT K
---------
FIRST AMENDMENT TO ASSIGNMENT OF
PARTNERSHIP INTERESTS AGREEMENT
--------------------------------
FIRST AMENDMENT TO ASSIGNMENT OF PARTNERSHIP
INTERESTS AGREEMENT (this "Amendment"), dated as of
__________, 1995, among HARRAH'S NEW JERSEY, INC., HARRAH'S
ATLANTIC CITY, INC. (each a "Partner"), and BANKERS TRUST
COMPANY, not in its individual capacity but solely as
Collateral Agent (the "Collateral Agent"). Except as
otherwise defined herein, capitalized terms used herein and
defined in the Assignment of Partnership Interests
Agreement referred to below shall be used herein as so
defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"),
Harrah's Operating Company, Inc. (formerly known as Embassy
Suites, Inc.) (the "Company"), each Subsidiary Borrower
thereunder, the financial institutions (the "5-Year Banks")
from time to time party thereto, Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "5-Year Administrative
Agent"), have entered into a Credit Agreement, dated as of
July 22, 1993 and amended and restated as of June 9, 1995,
providing for the making of loans and the issuance of, and
participation in, letters of credit as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "5-Year
Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit
<PAGE>
EXHIBIT K
Page 2
Bank of Japan, Limited, New York Branch, NationsBank of
Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (together with any
successor administrative agent, the "364-Day Administrative
Agent," and together with the 5-Year Administrative Agent,
the "Administrative Agents"), have entered into a Credit
Agreement, dated as of June 9, 1995, providing for the
making of loans as contemplated therein (as amended,
modified, supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Credit Agreement,"
and together with the 5-Year Credit Agreement, the "Credit
Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Partners and the
Collateral Agent entered into the Assignment of Partnership
Interests Agreement, dated as of July 22, 1993 (as amended,
modified or supplemented from time to time, the "Assignment
of Partnership Interests Agreement");
WHEREAS, the parties hereto wish to amend the
Assignment of Partnership Interests Agreement to provide
that the 364-Day Banks and the 364-Day Administrative Agent
are secured on a pari passu basis with the 5-Year Banks,
---- -----
the 5-Year Administrative Agent and the Secured Interest
Rate Protection Creditors with respect to the Partnership
Interests;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that each
Partner shall have executed and delivered this Amendment to
the Collateral Agent; and
WHEREAS, the parties hereto wish to amend the
Assignment of Partnership Interests Agreement as herein
provided;
NOW, THEREFORE, it is agreed:
1. The second sentence of the introductory
paragraph of the Assignment of Partnership Interests
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words
"5-Year
<PAGE>
EXHIBIT K
Page 3
Credit Agreement or 364-Day Credit Agreement, as the case
may be," in lieu thereof.
2. The first recital of the Assignment of
Partnership Interests Agreement is hereby deleted in its
entirety and the following two new recitals are inserted in
lieu thereof:
"WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated)
("Parent"), Harrah's Operating Company, Inc. (formerly
known as Embassy Suites, Inc.) (the "Company"), each
Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time
party thereto, Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"5-Year Administrative Agent"), have entered into a
Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, providing for
the making of loans and the issuance of, and
participation in, letters of credit as contemplated
therein (as amended, modified, supplemented, extended,
renewed, refinanced or replaced from time to time, the
"5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated
<PAGE>
EXHIBIT K
Page 4
therein (as amended, modified, supplemented, extended,
renewed, refinanced or replaced from time to time, the
"364-Day Agreement," and together with the 5-Year
Credit Agreement, the "Credit Agreements");".
3. The fourth recital (before giving effect to
this Amendment) of the Assignment of Partnership Interests
Agreement is hereby deleted in its entirety and the
following new recital is inserted in lieu thereof:
"WHEREAS, in order to induce the Administrative
Agents and the Banks to provide the credit facilities
pursuant to the Credit Agreements, the Collateral
Grantors are willing to secure the Secured Obligations
(as defined in the Master Collateral Agreement) by
this Agreement and the other Collateral Documents and
the parties hereto are willing to enter into the
agreements set forth herein with respect to the
Partnership Interests (as defined below);".
4. The fifth recital (before giving effect to
this Amendment) of the Assignment of Partnership Interests
Agreement is hereby amended by deleting the words "Credit
Agreement" appearing therein and inserting the words
"Credit Agreements" in lieu thereof.
5. Each Partner hereby reaffirms its
obligations under the Assignment of Partnership Interests
Agreement and the grant by such Partner of the security
interests in and to the Partnership Interests contemplated
thereby.
6. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver
of any other provision of the Assignment of Partnership
Interests Agreement.
7. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Partners and the Collateral Agent.
<PAGE>
EXHIBIT K
Page 5
8. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
9. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
each Partner and the Collateral Agent shall have signed a
counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Collateral Agent, (ii) the
Restatement Effective Date under, and as defined in, the 5-
Year Credit Agreement occurs and (iii) the Effective Date
under, and as defined in, the 364-Day Credit Agreement
occurs.
10. From and after the First Amendment Effective
Date, all references in the Assignment of Partnership
Interests Agreement and each of the Credit Documents to the
Assignment of Partnership Interests Agreement shall be
deemed to be references to the Assignment of Partnership
Interests Agreement as amended hereby.
<PAGE>
EXHIBIT K
Page 6
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
HARRAH'S NEW JERSEY, INC.,
as a Partner
By
-------------------------------
Name:
Title:
HARRAH'S ATLANTIC CITY, INC.,
as a Partner
By
-------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Collateral Agent
By
-------------------------------
Name:
Title:
Acknowledged and Accepted
-------------------------
MARINA ASSOCIATES,
a New Jersey partnership
By Its General Partners
By: HARRAH'S NEW JERSEY, INC.
a New Jersey corporation
<PAGE>
EXHIBIT K
Page 7
By:
-------------------------------
Name:
Title:
By: HARRAH'S ATLANTIC CITY, INC.,
a New Jersey corporation
By:
-------------------------------
Name:
Title:
<PAGE>
This instrument was prepared by the [Atlantic County, New Jersey]
attorney described below:
___________________________________
Jeffrey J. Temple
Recording Requested By EXHIBIT L
---------
and when Recorded
Return to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
FIRST AMENDMENT TO ASSIGNMENT OF LEASES AND RENTS
-------------------------------------------------
FIRST AMENDMENT TO ASSIGNMENT OF LEASES AND RENTS
(this "Amendment"), dated as of _____________, 1995, among
HARRAH'S OPERATING COMPANY, INC. (formerly known as Embassy
Suites, Inc.) (the "Company"), MARINA ASSOCIATES ("Marina",
each of Marina and the Company being an "Assignor" and,
collectively, the "Assignors") and BANKERS TRUST COMPANY,
not in its individual capacity but solely as Collateral
Agent (the "Assignee"). Except as otherwise defined
herein, capitalized terms used herein and defined in the
Assignment referred to below shall be used herein as so
defined.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"), the
Company, each Subsidiary Borrower thereunder, the financial
institutions (the "5-Year Banks") from time to time party
thereto, Bankers Trust Company, The Bank of New York, CIBC,
Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale and The Sumitomo Bank, Limited, New York
Branch, as Agents, and Bankers Trust Company, as
Administrative Agent (together with any successor
administrative agent, the "5-Year Administrative Agent"),
have entered into a Credit Agreement, dated as of July 22,
1993 and amended and restated
<PAGE>
EXHIBIT L
Page 2
as of June 9, 1995, providing for the making of loans and
the issuance of, and participation in, letters of credit as
contemplated therein (as amended, modified, supplemented,
extended, renewed, refinanced or replaced from time to
time, the "5-Year Credit Agreement");
WHEREAS, Parent, the Company, each Subsidiary
Borrower thereunder, the financial institutions (the "364-
Day Banks," and together with the 5-Year Banks, the
"Banks") from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (together
with any successor administrative agent, the "364-Day
Administrative Agent," and together with the 5-Year
Administrative Agent, the "Administrative Agents"), have
entered into a Credit Agreement, dated as of June 9, 1995,
providing for the making of loans as contemplated therein
(as amended, modified, supplemented, extended, renewed,
refinanced or replaced from time to time, the "364-Day
Credit Agreement," and together with the 5-Year Credit
Agreement, the "Credit Agreements");
WHEREAS, in connection with the initial execution
of the 5-Year Credit Agreement, the Assignors executed and
delivered to the Assignee an Assignment of Leases and
Rents, dated as of July 22, 1993 (as amended, modified or
supplemented from time to time, the "Assignment");
WHEREAS, the parties hereto wish to amend the
Assignment to provide that the 364-Day Banks and the 364-
Day Administrative Agent are secured on a pari passu basis
---- -----
with the 5-Year Banks, the 5-Year Administrative Agent and
the Secured Interest Rate Protection Creditors with respect
to the Collateral and to renew and extend the liens and
security interests granted therein;
WHEREAS, it is a condition precedent to the
extensions of credit under the Credit Agreements that the
Assignors shall have executed and delivered this Amendment
to the Assignee; and
<PAGE>
EXHIBIT L
Page 3
WHEREAS, the parties hereto wish to amend the
Assignment as herein provided.
NOW, THEREFORE, it is agreed:
1. Recital B. of the Assignment is hereby
deleted in its entirety and the following new recital B is
inserted in lieu thereof:
"B. Marina is an indirect, Wholly-Owned
Subsidiary (as such term is defined in the Credit
Agreement) of the Company. The Company is a direct,
Wholly-Owned Subsidiary of Harrah's Entertainment,
Inc. (formerly known as The Promus Companies
Incorporated) (the "Parent"). The Company, the
Parent, each Subsidiary Borrower thereunder, the
financial institutions (the "5-Year Banks") from time
to time party thereto, Bankers Trust Company, The Bank
of New York, CIBC, Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-
Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"5-Year Administrative Agent"), have entered into a
Credit Agreement, dated as of July 22, 1993 and
amended and restated as of June 9, 1995, providing for
the making of loans and the issuance of, and
participation in, letters of credit as contemplated
therein (as amended, modified, supplemented, extended,
renewed, refinanced or replaced from time to time, the
"5-Year Credit Agreement"). The Company, the Parent,
each Subsidiary Borrower thereunder, the financial
institutions from time to time party thereto (the
"364-Day Banks," and together with the 5-Year Banks,
the "Banks"), Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents,
and Bankers Trust Company, as Administrative Agent
(together with any successor administrative agent, the
"364-Day Administrative Agent," and together with the
5-Year Administrative Agent, the "Administrative
<PAGE>
EXHIBIT L
Page 4
Agents"), have entered into a Credit Agreement, dated
as of June 9, 1995, providing for the making of loans
as contemplated therein (as amended, modified,
supplemented, extended, renewed, refinanced or
replaced from time to time, the "364-Day Agreement,"
and together with the 5-Year Credit Agreement, the
"Credit Agreements")."
2. Each reference to the word "Embassy"
contained in the Assignment shall be deemed deleted and the
words "the Company" shall be inserted in lieu thereof.
3. Recital D. of the Assignment is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "respective Credit
Agreements" in lieu thereof.
4. Recital E. of the Assignment is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "respective Credit
Agreements" in lieu thereof.
5. Recital F. of the Assignment is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "respective Credit
Agreements" in lieu thereof.
6. Recital G. of the Assignment is hereby
amended by deleting the words (i) "Administrative Agent"
appearing therein and inserting the words "Administrative
Agents" in lieu thereof and (ii) "Credit Agreement"
appearing therein and inserting the words "Credit
Agreements" in lieu thereof.
7. Recital H. of the Assignment is hereby
amended by deleting the reference to the amount
"$650,000,000" appearing therein and inserting the amount
"$750,000,000" in lieu thereof.
8. The first paragraph of the granting clauses
of the Assignment is hereby amended by deleting the words
"Credit Agreement" appearing therein and inserting the
words "the 5-year Credit Agreement or the 364-Day Credit
Agreement, as the case may be," in lieu thereof.
<PAGE>
EXHIBIT L
Page 5
9. Section 1 of the Assignment is hereby
further amended by inserting in the appropriate
alphabetical order the following new definitions:
"5-Year Administrative Agent" shall have the
meaning provided in the Recital B. of this Assignment.
"5-Year Banks" shall have the meaning provided in
the Recital B. of this Assignment.
"5-Year Credit Agreement" shall have the meaning
provided in the Recital B. of this Assignment.
"364-Day Administrative Agent" shall have the
meaning provided in the Recital B. of this Assignment.
"364-Day Banks" shall have the meaning provided
in the Recital B. of this Assignment.
"364-Day Credit Agreement" shall have the meaning
provided in the Recital B. of this Assignment.
10. Section 6(a) of the Assignment is hereby
amended by deleting the words "Credit Agreement" appearing
therein and inserting the words "5-Year Credit Agreement
and Section 9 of the 364-Day Credit Agreement" in lieu
thereof.
11. Each Assignor hereby reaffirms to the
Secured Parties each of their representations, warranties,
covenants and agreements set forth in the Assignment with
the same force and affect as if each were separately stated
herein and made as of the date hereof.
12. Each Assignor hereby ratifies, affirms,
reaffirms, acknowledges, confirms and agrees that the
Assignment, as modified by this Amendment, and each and
every other document and/or instrument which evidences
and/or secures payment of the Secured Obligations represent
the valid, enforceable and collectible obligations of the
Assignors and further acknowledges there are no existing
claims, defenses, personal or otherwise, or rights of set-
off whatsoever with respect to any of the aforementioned
instruments and/or documents known to the Assignors and
further acknowledges and represents that, to the
Assignors's knowledge no event has occurred and no
condition exists which
<PAGE>
EXHIBIT L
Page 6
would constitute a default under the Assignment or this
Amendment either with or without notice or lapse of time or
both.
13. Each Assignor hereby waives, discharges and
releases forever any and all existing claims and defenses,
personal or otherwise, and rights of set-off known to each
of them that it may have against the Assignee or any other
Secured Party or which might affect the enforceability by
the Assignee or any other Secured Party of their various
rights and remedies under the Assignment or any of the
other Credit Documents.
14. Except as specifically modified herein, all
of the terms and provisions of the Assignment and all other
documents executed by the parties hereto or binding upon
the parties hereto in connection with the Assignment are
ratified and reaffirmed by the parties hereto, and are
incorporated herein by reference, the Assignors
specifically acknowledging the validity and enforceability
thereof.
15. The Assignors agree to pay all costs in
connection herewith, including, but without limitation,
recordation and filing fees, taxes, reasonable attorneys'
fees and expenses charges for title examination and title
insurance premiums.
16. The liens, security interests, assignments
and other rights evidenced by the Assignment are hereby
renewed, extended and modified to secure the Secured
Obligations.
17. This Amendment is limited as specified and
other than the specific amendments contained herein shall
not constitute an amendment, modification or waiver of, or
otherwise affect, in any way, any other provisions of the
Assignment. As modified hereby, the Assignment is ratified
and confirmed in all respects.
18. This Amendment may be executed in any number
of counterparts and by the different parties hereto on
separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of
which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged
with the Assignors and the Assignee.
<PAGE>
EXHIBIT L
Page 7
19. This Amendment shall become effective on the
date (the "First Amendment Effective Date") on which (i)
the Assignors and the Assignee shall have signed a
counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of
telecopier) the same to the Assignee, (ii) the Restatement
Effective Date under, and as defined in, the 5-Year Credit
Agreement occurs and (iii) the Effective Date under, and as
defined in, the 364-Day Credit Agreement occurs.
20. From and after the First Amendment Effective
Date, all references in the Assignment and each of the
Credit Documents to the Assignment shall be deemed to be
references to the Assignment as amended hereby.
<PAGE>
EXHIBIT L
Page 8
IN WITNESS WHEREOF, each of the parties hereto
has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
Assignors:
---------
HARRAH'S OPERATING COMPANY, INC.
By
-------------------------
Name:
Title:
MARINE ASSOCIATES
By: HARRAH'S ATLANTIC CITY, INC.
general partner
By:_________________________
Name:
Title:
By: HARRAH'S NEW JERSEY, INC.
general partner
By:_________________________
Name:
Title:
<PAGE>
EXHIBIT L
Page 9
Assignee:
--------
BANKERS TRUST COMPANY
By
-------------------------
Name:
Title:
<PAGE>
EXHIBIT M
---------
[Letterhead of Agent for Service of Process]
[Date]
To the Administrative Agents
and the financial institutions party
to the Credit Agreements referred
to below:
Ladies and Gentlemen:
Reference is made to the (i) Credit Agreement,
dated as of July 22, 1993 and amended and restated as of
June 9, 1995, among Harrah's Entertainment Inc. (formerly
known as The Promus Companies Incorporated) ("Parent"),
Harrah's Operating Company, Inc. (formerly known as Embassy
Suites, Inc.) (the "Company"), each Subsidiary Borrower
thereunder (as defined therein), the financial institutions
from time to time party thereto, Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (as such Credit Agreement
may be modified, supplemented, amended, amended and
restated or extended from time to time, the "5-Year Credit
Agreement"), (ii) the Credit Agreement, dated as of June 9,
1995, among Parent, the Company, each Subsidiary Borrower
thereunder (as defined therein), the financial institutions
from time to time party thereto, Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta
Agency, First Interstate Bank of California, The Long-Term
Credit Bank of Japan, Limited, New York Branch, NationsBank
of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (as such Credit Agreement
may be modified, supplemented, amended, amended and
restated or extended from time to time, the "364-Day Credit
Agreement") and (iii) the Guaranty, dated as of July 22,
1993 (as may be amended, modified or supplemented from time
to time, the "Company/Sub Guaranty"), made by each
Guarantor party thereto (each such Guarantor, together with
Parent, the Company and each Subsidiary Borrower are herein
called the "Credit Parties," and each a "Credit Party").
<PAGE>
Exhibit M
page 2
Each Credit Party, pursuant to Section 13.08 of
the 5-Year Credit Agreement, Section 12.08 of the 364-Day
Credit Agreement or Section 18 of the Company/Sub Guaranty,
as the case may be, has irrevocably designated, appointed
and empowered the undersigned, CT Corporation System, with
offices currently located at 1633 Broadway, New York, New
York 10019, as its authorized designee, appointee and
agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and
all legal process, summons, notices and documents which may
be served in any such legal action or proceeding with
respect to the 5-Year Credit Agreement, the 364-Day Credit
Agreement or any other Credit Document (as defined in each
such Credit Agreement) in the courts of the State of New
York or of the United States of America for the Southern
District of New York.
The undersigned hereby informs you that it irrev-
ocably accepts such appointment as agent as set forth in
Section 13.08 of the 5-Year Credit Agreement, Section 12.08
of the 364-Day Credit Agreement and Section 18 of the
Company/Sub Guaranty and agrees with you that the
undersigned (i) shall inform each Administrative Agent
promptly in writing of any change of its address in New
York City, (ii) shall perform its obligations as such
process agent in accordance with the provisions of Section
13.08 of the 5-Year Credit Agreement, Section 12.08 of the
364-Day Credit Agreement and Section 18 of the Company/Sub
Guaranty and (iii) shall forward promptly to each Credit
Party any legal process received by the undersigned in its
capacity as process agent.
As process agent, the undersigned, and its
successor or successors, agree to discharge the above-
mentioned obligations and will not refuse fulfillment of
such obligations under Section 13.08 of the 5-Year Credit
Agreement, Section 12.08 of the 364-Day Credit Agreement
and Section 18 of the Company/Sub Guaranty.
Very truly yours,
CT CORPORATION SYSTEM
By___________________________
Title:
<PAGE>
EXHIBIT N
---------
OFFICER'S SOLVENCY CERTIFICATE
------------------------------
I, the undersigned, the Chief Financial Officer
of HARRAH'S ENTERTAINMENT, INC., a corporation organized
and existing under the laws of the State of Delaware
("Parent"), do hereby certify on behalf of Parent that:
1. This Certificate is furnished pursuant to (i)
Section 5.18(i) of the Credit Agreement, dated as of July
22, 1993 and amended and restated as of June 9, 1995, among
Parent, Harrah's Operating Company, Inc. (the "Company"),
each Subsidiary Borrower, the financial institutions from
time to time party thereto (the "Banks"), Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and
Bankers Trust Company, as Administrative Agent (such Credit
Agreement, as in effect on the date of this Certificate,
being herein called the "5-Year Credit Agreement") and (ii)
Section 4.18(i) of the Credit Agreement, dated as of June
9, 1995, among Parent, the Company, each Subsidiary
Borrower, the Banks, Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-Term Credit Bank of
Japan, Limited, New York Branch, NationsBank of Georgia,
N.A., Societe Generale and The Sumitomo Bank, Limited, New
York Branch, as Agents, and Bankers Trust Company, as
Administrative Agent (such Credit Agreement, as in effect
on the date of this Certificate, being herein called the
"364-Day Credit Agreement"). Unless otherwise defined
herein, capitalized terms used in this Certificate shall
have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms
below shall have the following definitions:
(a) "Fair Value"
The amount at which the assets, in their
entirety, of Parent (on a stand alone basis),
Parent and its
<PAGE>
Exhibit N
Page 2
Subsidiaries (on a consolidated basis) and the
Company and each Subsidiary Borrower (each on a
stand alone basis), in each case would change
hands between a willing buyer and a willing
seller, within a commercially reasonable period
of time, each having reasonable knowledge of the
relevant facts, with neither being under any
compulsion to act.
(b) "Present Fair Salable Value"
The amount that could be obtained by an
independent willing seller from an independent
willing buyer if the assets of each of Parent (on
a stand alone basis), Parent and its Subsidiaries
(on a consolidated basis) and the Company and
each Subsidiary Borrower (each on a stand alone
basis) are sold with reasonable promptness under
normal selling conditions in a current market.
(c) "New Financing"
The indebtedness incurred or to be incurred by
Parent and its Subsidiaries under the Credit
Documents and the 364-Day Credit Agreement
(assuming the full utilization by the Borrowers
of the Total Revolving Loan Commitment and the
Total 364-Day Revolving Loan Commitment) and all
other financing contemplated by the Credit
Documents, in each case after giving effect to
the Hotel Transaction and the incurrence of all
financings contemplated therewith.
(d) "Stated Liabilities"
The recorded liabilities (including Contingent
Liabilities that would be recorded in accordance
with generally accepted accounting principles
("GAAP") consistently applied) of each of Parent
(on a stand alone basis), Parent and its
Subsidiaries (on a consolidated basis) and the
Company and each Subsidiary Borrower (each on a
stand alone basis), in each case at December 31,
1994, together with (i) the net change in long-
term debt (including current maturities) between
December 31, 1994 and the date hereof and (ii)
without duplication, the amount of all New
Financing.
<PAGE>
Exhibit N
Page 3
(e) "Contingent Liabilities"
The maximum estimated amount of liability
reasonably likely to result from pending
litigation, asserted claims and assessments,
guaranties, uninsured risks and other contingent
liabilities of each of Parent (on a stand alone
basis), Parent and its Subsidiaries (on a
consolidated basis) and the Company and each
Subsidiary Borrower (each on a stand alone basis)
(exclusive of such Contingent Liabilities to the
extent reflected in Stated Liabilities).
(f) "Will be able to pay its Stated Liabilities,
including Contingent Liabilities, as they mature"
For the period from the date hereof through the
stated maturity of all New Financing, each of
Parent (on a stand alone basis), Parent and its
Subsidiaries (on a consolidated basis) and the
Company and each Subsidiary Borrower (each on a
stand alone basis) will have sufficient assets
and cash flow to pay its respective Stated
Liabilities and Contingent Liabilities as those
liabilities mature or otherwise become due.
(g) For purposes of the foregoing definitions, the
Contingent Liability of any of the Guarantors
(other than the Company) with respect to the
Guaranteed Obligations (as defined in the
respective Guaranty) shall be deemed to be
reduced by the amount of the expected
contribution by the Company, any Subsidiary
Borrower and the other Guarantors with respect
thereto.
(h) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the
stated maturity of all New Financing, each of
Parent (on a stand alone basis), Parent and its
Subsidiaries (on a consolidated basis) and the
Company and each Subsidiary Borrower (each on a
stand alone basis), in each case both before and
after consummation of the Hotel Transaction and
all Indebtedness being incurred or assumed and
Liens created in connection therewith, is a going
concern and has sufficient capital to ensure that
it will continue to be a going concern for such
period and to remain a going concern despite
<PAGE>
Exhibit N
Page 4
moderately negative deviations from the
Projections discussed below.
3. For purposes of this Certificate, I, or
officers of Parent under my direction and supervision, have
performed the following procedures as of and for the
periods set forth below.
(a) I have reviewed the consolidated statements of
financial condition of Parent and its
Subsidiaries and the Company at December 31, 1994
and March 31, 1995, and the related consolidated
statements of income and cash flow and changes in
shareholders' equity of Parent and its
Subsidiaries for the fiscal year and three-month
period ended on such date, as the case may be.
(b) I have made inquiries of certain other officials
of Parent who have responsibility for financial
and accounting matters regarding:
1. whether the unaudited consolidated financial
statements at March 31, 1995 are in
conformity with GAAP applied on a basis
substantially consistent with that of the
audited financial statements as at December
31, 1994, and whether omitted notes to the
unaudited consolidated financial statements
would have disclosed any new information,
except to update amounts included in the
notes to the December 31, 1994 audited
consolidated financial statements; and
2. whether, at December 31, 1994, there were
any decreases as compared with March 31,
1995, in the consolidated net assets or the
excess of consolidated current assets over
consolidated current liabilities of Parent
and the Subsidiaries.
(c) I have read or been briefed by certain officials
of Parent who have responsibility for legal,
financial and accounting matters with respect to
the substance and financial effect of the Credit
Documents, the 364-Day Credit Agreement and the
respective Schedules and Exhibits thereto.
(d) With respect to Contingent Liabilities, I:
<PAGE>
Exhibit N
Page 5
1. inquired of certain officials of Parent who
have responsibility for legal, financial and
accounting matters as to the existence and
estimated liability with respect to all
Contingent Liabilities known to them;
2. confirmed with senior officers of Parent
that, to the best of such officers'
knowledge, (i) all appropriate items were
included in Stated Liabilities or Contingent
Liabilities made known to me in the course
of my inquiry and that (ii) the amounts
relating thereto were the maximum estimated
amount of liability reasonably likely to
result therefrom as of the date hereof; and
3. hereby certify that, to the best of my
knowledge, all material Contingent
Liabilities that may arise from any pending
litigation, asserted claims and assessments,
guarantees, uninsured risks and other
Contingent Liabilities of Parent and its
Subsidiaries (exclusive of such Contingent
Liabilities to the extent reflected in
Stated Liabilities) have been considered in
making the certification set forth in
paragraph 4 below.
(e) I have had the Projections, which have been
previously delivered to the Banks, prepared under
my direction and have re-examined the Projections
on the date hereof and considered the effect
thereon of any changes since the date of the
preparation thereof on the results projected
therein. After such review, I am satisfied with
the representation contained in Section 7.05(d)
of the Credit Agreement and that the Projections
support the conclusions contained in the last
paragraph of this Certificate.
(f) I have made inquiries of certain officers of
Parent and the Company which have responsibility
for financial reporting and accounting matters
regarding whether they were aware of any events
or conditions that, as of the date hereof, would
cause each of Parent (on a stand alone basis),
Parent and its Subsidiaries (on a consolidated
basis) and the Company and each Subsidiary
Borrower (each on a stand alone basis), in each
<PAGE>
Exhibit N
Page 6
case both before and after giving effect to the
consummation of the Hotel Transaction and the
related financing transactions (including the
incurrence of the New Financing), to (i) have
assets with a Fair Value or Present Fair Salable
Value that are less than the sum of their Stated
Liabilities and Contingent Liabilities; (ii) have
Unreasonably Small Capital; or (iii) not be able
to pay its Stated Liabilities and Contingent
Liabilities as they mature or otherwise become
due.
4. Based on and subject to the foregoing, I
hereby certify on behalf of Parent that, both before and
after giving effect to the Hotel Transaction and the
related financing transactions (including the New
Financing), it is my informed opinion that as of the date
hereof (i) the Fair Value and Present Fair Salable Value of
the assets of each of Parent (on a stand alone basis),
Parent and its Subsidiaries (on a consolidated basis) and
the Company and each Subsidiary Borrower (each on a stand
alone basis), in each case exceed their Stated Liabilities
and Contingent Liabilities; (ii) each of Parent (on a stand
alone basis), Parent and its Subsidiaries (on a
consolidated basis) and the Company and each Subsidiary
Borrower (each on a stand alone basis) will not have
Unreasonably Small Capital; and (iii) each of Parent (on a
stand alone basis), Parent and its Subsidiaries (on a
consolidated basis) and the Company and each Subsidiary
Borrower (each on a stand alone basis) will be able to pay
their respective Stated Liabilities and Contingent
Liabilities as they mature or otherwise become due.
IN WITNESS WHEREOF, Parent has caused its duly
authorized chief financial officer to execute and deliver
this Certificate this ___ day of ____________, 1995.
HARRAH'S ENTERTAINMENT, INC.
By________________________________
Name:
Title:
<PAGE>
EXHIBIT P
---------
ELECTION TO BECOME A SUBSIDIARY BORROWER
[Date]
Bankers Trust Company, as Administrative Agent
One Bankers Trust Plaza
New York, New York 10006
Gentlemen:
The undersigned, [name of Subsidiary Borrower], a
______________ corporation, refers to the Credit Agreement,
dated as of July 22, 1993 and amended and restated as of
June 9, 1995 (as amended from time to time, the "Credit
Agreement"), among Harrah's Entertainment, Inc. (formerly
known as The Promus Companies Incorporated), Harrah's
Operating Company, Inc. (formerly known as Embassy Suites,
Inc.), each other Subsidiary Borrower party thereto, the
financial institutions from time to time party thereto,
Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe
Generale and The Sumitomo Bank, Limited, New York Branch,
as Agents, and Bankers Trust Company, as Administrative
Agent. All capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the
Credit Agreement.
The undersigned, desiring to incur Loans under
the Credit Agreement hereby elects, as required by Section
6.03 of the Credit Agreement, to become a Subsidiary
Borrower for purposes of the Credit Agreement, effective
from the date hereof. The undersigned confirms that the
representations and warranties set forth in Section 7 of
the Credit Agreement are true and correct as to the
undersigned and its Subsidiaries as of the date hereof, and
the undersigned hereby agrees to comply with all the
obligations of a Borrower under, and to be bound in all
respects by the terms of, the Credit Agreement as if the
undersigned were an original signatory thereto. The
undersigned, simultaneously with its execution hereof, is
delivering (i) the appropriate Revolving Note to the
Administrative Agent for the account of each of the Banks
and (ii) the appropriate Swingline Note to Bankers Trust
Company for its account, in accordance with the
<PAGE>
EXHIBIT P
Page 2
terms of the Credit Agreement. All notices and other
communications provided for under the Credit Agreement may
be sent to the address specified below.
Very truly yours,
Address: [NAME OF SUBSIDIARY BORROWER]
By_________________________
Title:
Acknowledged and Agreed:
HARRAH'S ENTERTAINMENT, INC.
By:
----------------------------
Title:
HARRAH'S OPERATING COMPANY, INC.
By:
----------------------------
Title:
BANKERS TRUST COMPANY,
as Administrative Agent
By:
----------------------------
Title:
<PAGE>
EXHIBIT Q
---------
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date __________, 19__
Reference is made to the Credit Agreement described in Item 2 of Annex I
hereto (as such Credit Agreement may hereafter be amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"). Unless defined
in Annex I hereto, terms defined in the Credit Agreement are used herein as
therein defined. ________________ (the "Assignor") and ________________ (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without recourse
and without representation or warranty (other than as expressly provided
herein), and the Assignee hereby purchases and assumes from the Assignor,
that interest in and to all of the Assignor's rights and obligations under the
Credit Agreement as of the date hereof which represents the percentage interest
specified in Item 4 of Annex I hereto (the "Assigned Share") of all of the
outstanding rights and obligations under the Credit Agreement relating to the
Revolving Loan Commitment of the Assignor, including, without limitation, all
rights and obligations with respect to the Assigned Share of the Revolving
Loans, Swingline Loans and Letters of Credit.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement or the other Credit Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or
the other Credit Documents or any other instrument or document furnished
pursuant thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Parent, any Borrower
or any other Subsidiary of Parent or the performance or observance by any
Credit Party of any of its respective obligations under the Credit Agreement
or the other Credit Documents to which it is a party or any other instrument
or document furnished pursuant thereto.
<PAGE>
EXHIBIT Q
Page 2
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement and the other Credit Documents, together with copies of the financial
statements referred to therein and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Assumption Agreement; (ii) agrees that it will,
independently and without reliance upon the Administrative Agent, the Agents,
the Assignor or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement; (iii)
confirms that it is a Qualified Person; (iv) appoints and authorizes the
Administrative Agent (including the Administrative Agent in its capacity as
Collateral Agent) to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit Documents as are
delegated to the Administrative Agent or the Collateral Agent, as the case may
be, by the terms thereof, together with such powers as are reasonably incidental
thereto; [and] (v) agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Credit Agreement are required
to be performed by it as a Bank[; and (vi) to the extent legally entitled to do
so, attaches the forms described in the penultimate sentence of Section 13.04(b)
of the Credit Agreement] 1/.
4. Following the execution of this Assignment and Assumption Agreement by
the Assignor and the Assignee, an executed original hereof (together with all
attachments) will be delivered to the Administrative Agent. The effective date
of this Assignment and Assumption Agreement shall be the date of execution
hereof by the Assignor and the Assignee and the receipt of the consent of
Bankers Trust Company and each Letter of Credit Issuer and receipt by the
Administrative Agent of the administrative fee referred to in such Section
13.04(b), unless otherwise specified in Item 5 of Annex I hereto (the
"Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
and Assumption Agreement, have the rights and obligations of a Bank thereunder
and under the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment
1/ Include if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
<PAGE>
EXHIBIT Q
Page 3
and Assumption Agreement, relinquish its rights and be released from its
obligations under the Credit Agreement and the other Credit Documents.
6. It is agreed that the Assignee shall be entitled to (w) all interest on
the Assigned Share of the Revolving Loans at the rates specified in Item 6 of
Annex I; (x) all Commitment Commission on the Assigned Share of the Total
Revolving Loan Commitment at the rate specified in Item 7 of Annex I hereto;
and (y) all Letter of Credit Fees on the Assignee's participation in all
Letters of Credit at the rate specified in Item 8 of Annex I hereto, which, in
each case, accrue on and after the Settlement Date; such interest, Commitment
Commission and Letter of Credit Fees to be paid by the Administrative Agent
directly to the Assignee. It is further agreed that all payments of principal
made on the Assigned Share of the Revolving Loans which occur on and after the
Settlement Date will be paid directly by the Administrative Agent to the
Assignee. Upon the Settlement Date, the Assignee shall pay to the Assignor an
amount specified by the Assignor in writing which represents the Assigned Share
of the principal amount of the respective Revolving Loans made by the Assignor
pursuant to the Credit Agreement which are outstanding on the Settlement Date,
net of any closing costs, and which are being assigned hereunder. The Assignor
and the Assignee shall make all appropriate adjustments in payments under the
Credit Agreement for periods prior to the Settlement Date directly between
themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
EXHIBIT Q
Page 4
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Assignment and Assumption Agreement, as of
the date first above written, such execution also being made on Annex I hereto.
Accepted this ________ day [NAME OF ASSIGNOR]
of _____________ , 19__ as Assignor
By__________________________________
Title:
[NAME OF ASSIGNEE]
as Assignee
By__________________________________
Title:
Acknowledged and Agreed:
BANKERS TRUST COMPANY,
as Administrative Agent
By__________________________________
Title:
[NAME OF EACH LETTER OF CREDIT ISSUER]
By__________________________________
Title:
<PAGE>
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrowers:
Harrah's Operating Company, Inc. and each Subsidiary Borrower party
thereto.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of July 22, 1993 and amended and restated as
of June 9, 1995, among Harrah's Entertainment, Inc., Harrah's Operating
Company, Inc., each Subsidiary Borrower, the Banks party thereto from
time to time, Bankers Trust Company, The Bank of New York, CIBC, Inc.,
Credit Lyonnais, Atlanta Agency, First Interstate Bank of California, The
Long-Term Credit Bank of Japan, Limited, New York Branch, NationsBank of
Georgia, N.A., Societe General and The Sumitomo Bank, Limited, New York
Branch, as Agents, and Bankers Trust Company, as Administrative Agent,
as amended to the date hereof.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
Revolving
Loan Commitment
a. Aggregate Amount
for all Banks $_______________
b. Assigned Share 2/ _______________%
c. Amount of
Assigned Share $_______________
_____________________
2/ Percentage taken to 12 decimal places.
<PAGE>
Annex I
Page 2
5. Settlement Date: ___________ __, 199_
6. Rate of Interest As set forth in Section 1.08
to the Assignee: of the Credit Agreement (unless
otherwise agreed to by the Assignor
and the Assignee) 3/
7. Commitment As set forth in Section 3.01(a) of the
Commission: Credit Agreement (unless otherwise agreed
to by the Assignor and the Assignee) 4/
8. Letter of Credit As set forth in Section 3.01(b)
Fees to the of the Credit Agreement (unless otherwise
Assignee: agreed to by the Assignor and the
Assignee) 5/
_______________________
3/ The Borrower and the Administrative Agent shall direct the entire amount of
the interest to the Assignee at the rate set forth in Section 1.08 of the
Credit Agreement, with the Assignor and Assignee effecting the agreed upon
sharing of the interest through payments by the Assignee to the Assignor.
4/ The Company and the Administrative Agent shall direct the entire amount of
the Commitment Commission to the Assignee at the rate set forth in Section
3.01(a) of the Credit Agreement, with the Assignor and the Assignee effecting
the agreed upon sharing of Commitment Commission through payment by the
Assignee to the Assignor.
5/ The Company and the Administrative Agent shall direct the entire amount of
the Letter of Credit Fees to the Assignee at the rate set forth in Section
3.01(b) of the Credit Agreement, with the Assignor and the Assignee effecting
the agreed upon sharing of Letter of Credit Fees through payment by the
Assignee to the Assignor.
<PAGE>
Annex I
Page 3
9. Notice:
ASSIGNOR:
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions:
ASSIGNOR:
_____________________
_____________________
_____________________
Attention:
Reference:
ASSIGNEE:
_____________________
_____________________
_____________________
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By__________________________ By__________________________
____________________________ ____________________________
(Print Name and Title) (Print Name and Title)
Exhibit 10(6)
===========================================================================
CREDIT AGREEMENT
among
THE PROMUS COMPANIES INCORPORATED
(which will be renamed "HARRAH'S ENTERTAINMENT, INC."),
EMBASSY SUITES, INC.
(which will be renamed "HARRAH'S OPERATING COMPANY, INC."),
CERTAIN SUBSIDIARIES OF EMBASSY SUITES, INC.,
VARIOUS BANKS,
BANKERS TRUST COMPANY,
THE BANK OF NEW YORK,
CIBC INC.,
CREDIT LYONNAIS, ATLANTA AGENCY,
FIRST INTERSTATE BANK
OF CALIFORNIA,
THE LONG-TERM CREDIT
BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
NATIONSBANK OF GEORGIA, N.A.,
SOCIETE GENERALE
and
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH,
as AGENTS
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
----------------------------------
Dated as of June 9, 1995
----------------------------------
============================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing of Revolving Loans . . . . 2
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . 3
1.04 Competitive Bid Borrowings . . . . . . . . . . . . . . . . 3
1.05 Disbursement of Funds . . . . . . . . . . . . . . . . . . . 5
1.06 Notes; Register . . . . . . . . . . . . . . . . . . . . . . 6
1.07 Conversions . . . . . . . . . . . . . . . . . . . . . . . . 7
1.08 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . 8
1.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.10 Interest Periods . . . . . . . . . . . . . . . . . . . . . 9
1.11 Increased Costs, Illegality, etc. . . . . . . . . . . . . . 11
1.12 Compensation . . . . . . . . . . . . . . . . . . . . . . . 13
1.13 Change of Lending Office . . . . . . . . . . . . . . . . . 14
1.14 Replacement of Banks . . . . . . . . . . . . . . . . . . . 14
SECTION 2. Fees; Reductions of Revolving Loan
Commitment; Final Maturity Date
Extensions . . . . . . . . . . . . . . . . . . . . . . . 16
2.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.02 Voluntary Termination of Unutilized
Revolving Loan Commitments . . . . . . . . . . . . . . . 16
2.03 Mandatory Reduction of Revolving Loan
Commitments . . . . . . . . . . . . . . . . . . . . . . 17
2.04 Final Maturity Date Extensions . . . . . . . . . . . . . . 18
SECTION 3. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . 20
3.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 20
3.02 Mandatory Repayments. . . . . . . . . . . . . . . . . . . 21
3.03 Method and Place of Payment . . . . . . . . . . . . . . . . 22
3.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4. Conditions Precedent to the Effective
Date . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . 25
4.02 Officer's Certificate . . . . . . . . . . . . . . . . . . . 25
4.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . 25
4.04 Corporate Documents; Proceedings . . . . . . . . . . . . . 26
4.05 Master Collateral Agreement . . . . . . . . . . . . . . . . 27
4.06 Pledge Agreements . . . . . . . . . . . . . . . . . . . . . 27
4.07 Security Agreement . . . . . . . . . . . . . . . . . . . . 27
(i)
<PAGE>
Page
----
4.08 Company/Sub Guaranty . . . . . . . . . . . . . . . . . . . 27
4.09 Mortgages; Title Insurance; Surveys; etc. . . . . . . . . . 28
4.10 Assignment of Partnership Interests Agreement . . . . . . . 29
4.11 Assignment of Leases . . . . . . . . . . . . . . . . . . . 29
4.12 Net Lease Agreements . . . . . . . . . . . . . . . . . . . 29
4.13 Consent Letter . . . . . . . . . . . . . . . . . . . . . . 29
4.14 Adverse Change . . . . . . . . . . . . . . . . . . . . . . 29
4.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 30
4.16 Hotel Transaction . . . . . . . . . . . . . . . . . . . . . 30
4.17 Approvals, etc. . . . . . . . . . . . . . . . . . . . . . . 30
4.18 Solvency Certificate; Evidence of Insurance . . . . . . . . 32
4.19 Payment of Fees . . . . . . . . . . . . . . . . . . . . . . 32
4.20 5-Year Credit Agreement. . . . . . . . . . . . . . . . . . 32
4.21 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5. Conditions Precedent to All Loans . . . . . . . . . . . . . 33
5.01 No Default; Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . 33
5.02 Notice of Borrowing; Competitive Bid
Loans . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.03 Election to Become a Subsidiary Borrower . . . . . . . . . 33
SECTION 6. Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . . . . . 34
6.01 Corporate or Partnership Status . . . . . . . . . . . . . . 35
6.02 Corporate or Partnership Power and
Authority . . . . . . . . . . . . . . . . . . . . . . . 35
6.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . 35
6.04 Governmental Approvals . . . . . . . . . . . . . . . . . . 36
6.05 Financial Statements; Financial
Condition; Undisclosed Liabilities;
Projections; etc. . . . . . . . . . . . . . . . . . . . . 36
6.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 38
6.07 True and Complete Disclosure . . . . . . . . . . . . . . . 38
6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . 38
6.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . 39
6.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 39
6.11 The Collateral Documents . . . . . . . . . . . . . . . . . 40
6.12 Properties . . . . . . . . . . . . . . . . . . . . . . . . 42
6.13 Capitalization . . . . . . . . . . . . . . . . . . . . . . 42
6.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 42
6.15 Compliance with Statutes, etc. . . . . . . . . . . . . . . 43
6.16 Investment Company Act . . . . . . . . . . . . . . . . . . 43
(ii)
<PAGE>
Page
----
6.17 Public Utility Holding Company Act . . . . . . . . . . . . 43
6.18 Environmental Matters . . . . . . . . . . . . . . . . . . . 43
6.19 Labor Relations . . . . . . . . . . . . . . . . . . . . . . 44
6.20 Patents, Licenses, Franchises and
Formulas . . . . . . . . . . . . . . . . . . . . . . . . 45
6.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . 45
6.22 Hotel Transaction . . . . . . . . . . . . . . . . . . . . . 45
6.23 No Other Ventures . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . 46
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . 46
7.02 Books, Records and Inspections . . . . . . . . . . . . . . 49
7.03 Maintenance of Property; Insurance . . . . . . . . . . . . 50
7.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . 51
7.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . 52
7.06 Compliance with Environmental Laws . . . . . . . . . . . . 52
7.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . 54
7.09 Performance of Obligations . . . . . . . . . . . . . . . . 54
7.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 54
7.11 Registry . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.12 Additional Guarantors; Additional
Collateral; etc . . . . . . . . . . . . . . . . . . . . 56
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . 57
8.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.02 Consolidation, Merger, Purchase or Sale
of Assets, etc. . . . . . . . . . . . . . . . . . . . . 61
8.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 65
8.05 Advances, Investments and Loans . . . . . . . . . . . . . . 68
8.06 Transactions with Affiliates . . . . . . . . . . . . . . . 70
8.07 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . 70
8.08 Consolidated Interest Coverage Ratio . . . . . . . . . . . 70
8.09 Minimum Consolidated Net Worth . . . . . . . . . . . . . . 71
8.10 Limitation on Payments and Modifications of Subordinated
Debt; Modifications of Certificate of Incorporation,
Partnership Agreements and By-Laws . . . . . . . . . . . 71
8.11 Limitation on Certain Restrictions on
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 72
8.12 Limitation on Issuance of Capital Stock . . . . . . . . . . 73
8.13 Business . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.14 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . 74
8.15 Special Purpose Corporation . . . . . . . . . . . . . . . . 74
(iii)
<PAGE>
Page
----
SECTION 9. Events of Default . . . . . . . . . . . . . . . . . . . . . 74
9.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . 74
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.04 Default Under Other Agreements . . . . . . . . . . . . . . 75
9.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . 75
9.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.07 Collateral Documents . . . . . . . . . . . . . . . . . . . 77
9.08 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . 77
9.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.10 Gaming Authority . . . . . . . . . . . . . . . . . . . . . 77
SECTION 10. Definitions and Accounting Terms . . . . . . . . . . . . . 78
10.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11. The Administrative Agent and Agents. . . . . . . . . . . . 110
11.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . 110
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . 111
11.03 Lack of Reliance on the Administrative
Agent and Agents . . . . . . . . . . . . . . . . . . . . 111
11.04 Certain Rights of the Administrative
Agent . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.06 Indemnification . . . . . . . . . . . . . . . . . . . . . 112
11.07 The Administrative Agent and the Agents
in their Individual Capacities . . . . . . . . . . . . . 113
11.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.09 Resignation by the Administrative Agent
and Agents . . . . . . . . . . . . . . . . . . . . . . . 113
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 114
12.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . 114
12.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . 116
12.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 117
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . 117
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . 121
12.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . 122
12.07 Calculations; Computations . . . . . . . . . . . . . . . . 123
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY
TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . 123
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 124
12.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 125
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . 125
12.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . 125
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 127
(iv)
<PAGE>
Page
----
12.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . 127
12.15 Application of Gaming Regulations. . . . . . . . . . . . . 127
12.16 Confidentiality. . . . . . . . . . . . . . . . . . . . . . 128
12.17 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 128
SECTION 13. Parent Guaranty . . . . . . . . . . . . . . . . . . . . . 131
13.01 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . 131
13.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . 131
13.03 Nature of Liability . . . . . . . . . . . . . . . . . . . 131
13.04 Independent Obligation . . . . . . . . . . . . . . . . . . 132
13.05 Authorization . . . . . . . . . . . . . . . . . . . . . . 132
13.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 133
13.07 Subordination . . . . . . . . . . . . . . . . . . . . . . 133
13.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 134
SCHEDULE I Revolving Loan Commitments
SCHEDULE II Tax Matters
SCHEDULE III Subsidiaries
SCHEDULE IV Existing Indebtedness
SCHEDULE V Joint Ventures
SCHEDULE VI Insurance
SCHEDULE VII Existing Liens
SCHEDULE VIII Hotel Subsidiaries
EXHIBIT A Notice of Borrowing
EXHIBIT B Notice of Competitive Bid Borrowing
EXHIBIT C Revolving Note
EXHIBIT D Section 3.04(b)(iii) Certificate
EXHIBIT E Election to Become a Subsidiary Borrower
EXHIBIT F Assignment and Assumption Agreement
(v)
<PAGE>
CREDIT AGREEMENT, dated as of June 9, 1995, among THE PROMUS
COMPANIES INCORPORATED (which will be renamed "HARRAH'S ENTERTAINMENT,
INC."), a Delaware corporation ("Parent"), EMBASSY SUITES, INC. (which will
be renamed "HARRAH'S OPERATING COMPANY, INC."), a Delaware corporation (the
"Company"), each Subsidiary Borrower (together with the Company, each a
"Borrower" and, collectively, the "Borrowers"), the Banks party hereto from
time to time, BANKERS TRUST COMPANY, THE BANK OF NEW YORK, CIBC INC.,
CREDIT LYONNAIS, ATLANTA AGENCY, FIRST INTERSTATE BANK OF CALIFORNIA, THE
LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH, NATIONSBANK OF
GEORGIA, N.A., SOCIETE GENERALE, and THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Agents, and BANKERS TRUST COMPANY, as Administrative Agent (all
capitalized terms used herein and defined in Section 10 are used herein as
therein defined).
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Original 5-Year Credit Agreement refinanced and
replaced the Existing Credit Facilities (as defined in the Original 5-Year
Credit Agreement);
WHEREAS, this Agreement refinances and replaces, in part, the
Original 5-Year Credit Agreement; and
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrowers the credit
facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
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1.01 The Commitments. (a) Subject to and upon the terms and
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conditions set forth herein, each Bank severally agrees, at any time and
from time to time on and after the Effective Date and prior to the Maturity
Date for such Bank, to make a revolving loan or revolving loans (each a
"Revolving Loan" and, collectively, the "Revolving Loans") to one or more
Borrowers, which Revolving Loans:
(i) shall, at the option of the respective Borrower, be Base
Rate Loans or Eurodollar Loans, provided
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that, except as otherwise specifically provided in Section 1.11(b), all
Revolving Loans comprising the same Borrowing shall at all times be of the
same Type;
(ii) may be repaid and reborrowed in accordance with the
provisions hereof;
(iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which equals the Revolving Loan Commitment
of such Bank at such time;
(iv) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when added to the aggregate
principal amount of all Competitive Bid Loans (exclusive of
Competitive Bid Loans which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then outstanding, equals the Total Revolving Loan
Commitment at such time; and
(v) shall not exceed for any Subsidiary Borrower at any time
outstanding that aggregate principal amount which equals such
Subsidiary Borrower's Sub-Limit.
(b) Subject to and upon the terms and conditions set forth
herein, each Bank severally agrees that the Company may incur a loan or
loans (each a "Competitive Bid Loan" and, collectively, the "Competitive
Bid Loans") pursuant to a Competitive Bid Borrowing from time to time on
and after the Effective Date and prior to the date which is the Business
Day preceding the date which is 30 days prior to the Final Maturity Date
then in effect, provided that after giving effect to any Competitive Bid
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Borrowing then being made the aggregate principal amount of all Competitive
Bid Loans then outstanding, when added to the aggregate principal amount of
all Revolving Loans then outstanding, shall not exceed the Total Revolving
Loan Commitment at such time. Within the foregoing limits and subject to
the terms and conditions set forth in Sections 1.04 and 5, Competitive Bid
Loans may be repaid and reborrowed in accordance with the provisions
hereof.
1.02 Minimum Amount of Each Borrowing of Revolving Loans. The
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aggregate principal amount of each Borrowing of Revolving Loans shall not
be less than $5,000,000 and, if greater, shall be in an integral multiple
of $1,000,000. More than one Borrowing of Revolving Loans may occur on the
same date, but at no time shall there be outstanding more than six
Borrowings of Eurodollar Loans.
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1.03 Notice of Borrowing. Whenever a Borrower desires to make a
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Borrowing of Revolving Loans hereunder, it shall give the Administrative
Agent at its Notice Office at least one Business Day's prior notice of each
Base Rate Loan and at least three Business Days' prior notice of each Euro-
dollar Loan to be made hereunder, provided that any such notice shall be
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deemed to have been given on a certain day only if given before 12:00 Noon
(New York time) on such day. Each such notice (each a "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.11, shall
be irrevocable and shall be given by such Borrower in the form of Exhibit
A, appropriately completed to specify the aggregate principal amount of the
Revolving Loans to be made pursuant to such Borrowing, the date of such
Borrowing (which shall be a Business Day), whether the Revolving Loans
being made pursuant to such Borrowing are to be initially maintained as
Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the initial
Interest Period to be applicable thereto. The Administrative Agent shall
promptly give each Bank written notice of such proposed Borrowing, of such
Bank's proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.
1.04 Competitive Bid Borrowings. (a) Whenever the Company
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desires to incur a Competitive Bid Borrowing, it shall deliver to the
Administrative Agent at its Notice Office not later than 11:00 A.M (New
York time) at least three Business Days prior to the date of such proposed
Competitive Bid Borrowing, a written notice substantially in the form of
Exhibit B (each a "Notice of Competitive Bid Borrowing"), such notice to
specify in each case (i) the date (which shall be a Business Day) and the
aggregate principal amount of the proposed Competitive Bid Borrowing (which
shall not be less than $5,000,000), (ii) the maturity date for repayment of
each Competitive Bid Loan to be made as part of such Competitive Bid
Borrowing (which maturity date may not be earlier than seven days after the
date of such Competitive Bid Borrowing or later than the fifth Business Day
preceding the Final Maturity Date then in effect), (iii) the interest
payment date or dates relating thereto (which shall be at least every three
months in the case of maturities in excess of three months), (iv) the
Senior Implied Indebtedness rating assigned by S&P and Moody's to the
Company's Indebtedness, which ratings shall be at least BBB- Senior Implied
in the case of S&P or Baa3 Senior Implied in the case of Moody's and (v)
any other terms to be applicable to such Competitive Bid Borrowing. The
Administrative Agent shall promptly notify each Bidder Bank of each such
request for a Competitive Bid
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<PAGE>
Borrowing received by it from the Company by telecopying to each such
Bidder Bank a copy of the related Notice of Competitive Bid Borrowing.
(b) Each Bidder Bank shall, if in its sole discretion it elects
to do so, irrevocably offer to make one or more Competitive Bid Loans to
the Company as part of such proposed Competitive Bid Borrowing at a rate or
rates of interest specified by such Bidder Bank in its sole discretion and
determined by such Bidder Bank independently of each other Bidder Bank, by
notifying the Administrative Agent in writing (which shall give prompt
written notice thereof to the Company), before 10:00 A.M. (New York time)
on the date (the "Reply Date") which is two Business Days before the date
of such proposed Competitive Bid Borrowing, of the minimum amount, if any,
and maximum amount of each Competitive Bid Loan which such Bidder Bank
would be willing to make as part of such proposed Competitive Bid Borrowing
(which amounts may, subject to the proviso to the first sentence of Section
1.01(b), exceed such Bank's Revolving Loan Commitment) and the rate or
rates of interest therefor; provided, that if the Administrative Agent in
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its capacity as a Bidder Bank shall, in its sole discretion, elect to make
any such offer, it shall notify the Company in writing of such offer before
9:30 A.M. (New York time) on the Reply Date. If any Bidder Bank shall
elect not to make such an offer, such Bidder Bank shall so notify the
Administrative Agent, before 10:00 A.M. (New York time) on the Reply Date,
and such Bidder Bank shall not be obligated to, and shall not, make any
Competitive Bid Loan as part of such Competitive Bid Borrowing; provided,
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that the failure by any Bidder Bank to give such notice shall not cause
such Bidder Bank to be obligated to, and such Bidder Bank shall not, make
any Competitive Bid Loan as part of such proposed Competitive Bid Bor-
rowing.
(c) The Company shall, in turn, before 12:00 Noon (New York
time) on the Reply Date, either
(1) cancel such Competitive Bid Borrowing by giving the
Administrative Agent notice (in writing or by telephone confirmed in
writing) to that effect, or
(2) accept one or more of the offers made by any Bidder Bank or
Bidder Banks pursuant to clause (b) above by giving notice (in writing
or by telephone confirmed in writing) to the Administrative Agent of
the amount of each Competitive Bid Loan (which amount shall be equal
to or greater than the minimum amount, if any, and equal to or less
than the maximum amount, notified to the
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Company by the Administrative Agent on behalf of each such Bidder Bank
for such Competitive Bid Borrowing) and reject any remaining offers
made by Bidder Banks pursuant to clause (b) above by giving the
Administrative Agent notice to that effect; provided that acceptance
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of offers may only be made on the basis of ascending Absolute Rates
commencing with the lowest rate so offered; provided further, however,
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if offers are made by two or more Bidder Banks at the same rate and
acceptance of all such equal offers would result in a greater princi-
pal amount of Competitive Bid Loans being accepted than the aggregate
principal amount requested by the Company, the Company shall have the
right to accept one or more such equal offers in their entirety and
reject the other equal offer or offers or to allocate acceptance among
all such equal offers (but giving effect to the minimum amounts, if
any, and maximum amounts specified for each such offer pursuant to
clause (b) above), as the Company may elect in its sole discretion.
(d) If the Company notifies the Administrative Agent that such
Competitive Bid Borrowing is cancelled pursuant to clause (c)(1) above, the
Administrative Agent shall give prompt written notice thereof to the Bidder
Banks and such Competitive Bid Borrowing shall not be made.
(e) If the Company accepts one or more of the offers made by any
Bidder Bank or Bidder Banks pursuant to clause (c)(2) above, the
Administrative Agent shall in turn promptly notify (in writing or by
telephone confirmed in writing) (x) each Bidder Bank that has made an offer
as described in clause (b) above, of the date and aggregate amount of such
Competitive Bid Borrowing and whether or not any offer or offers made by
such Bidder Bank pursuant to clause (b) above have been accepted by the
Company and (y) each Bidder Bank that is to make a Competitive Bid Loan as
part of such Competitive Bid Borrowing, of the amount of each Competitive
Bid Loan to be made by such Bidder Bank as part of such Competitive Bid
Borrowing.
(f) On the last Business Day of each calendar quarter, the
Administrative Agent shall notify the Company and the Banks of the
aggregate principal amount of Competitive Bid Loans outstanding at such
time.
1.05 Disbursement of Funds. Except as otherwise specifically
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provided in the immediately succeeding sentence, not later than 10:00 A.M.
(New York time) on the date speci-
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<PAGE>
fied in each Notice of Borrowing (or in the case of Competitive Bid
Borrowings, not later than 10:00 A.M. (New York time) on the date specified
pursuant to Section 1.04(b)), each Bank will make available its pro rata
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portion of each such Borrowing requested to be made on such date (or in the
case of Competitive Bid Loans, each Bidder Bank participating in the
respective Competitive Bid Borrowing will make available its share
thereof). All such amounts shall be made available in Dollars and in im-
mediately available funds at the Payment Office of the Administrative
Agent, and the Administrative Agent will make available to the respective
Borrower at the Payment Office the aggregate of the amounts so made
available by the Banks. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Administrative Agent such Bank's portion of
any Borrowing to be made on such date, the Administrative Agent may assume
that such Bank has made such amount available to the Administrative Agent
on such date of Borrowing and the Administrative Agent may, in reliance
upon such assumption, make available to the respective Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Bank, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from
such Bank. If such Bank does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative Agent
shall promptly notify the respective Borrower and such Borrower shall
immediately pay such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover on demand from such
Bank or such Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
made available by the Administrative Agent to such Borrower until the date
such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if recovered from such Bank, the overnight
Federal Funds Rate and (ii) if recovered from such Borrower, the rate of
interest applicable to the respective Borrowing, as determined pursuant to
Section 1.09. Nothing in this Section 1.05 shall be deemed to relieve any
Bank from its obligation to make Loans hereunder or to prejudice any rights
which the respective Borrower may have against any Bank as a result of any
failure by such Bank to make Loans hereunder.
1.06 Notes; Register. (a) Each Borrower's obligation to pay
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the principal of, and interest on, the Revolving Loans made by each Bank to
such Borrower shall be evidenced by a promissory note duly executed and
delivered by
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<PAGE>
such Borrower substantially in the form of Exhibit C, with blanks
appropriately completed in conformity herewith (each a "Revolving Note"
and, collectively, the "Revolving Notes").
(b) The Revolving Note issued by each Borrower to each Bank
shall (i) be payable to the order of such Bank and be dated the Effective
Date, (ii) be in a stated principal amount equal to the Revolving Loan
Commitment of such Bank and be payable in the principal amount of the out-
standing Revolving Loans evidenced thereby, (iii) mature on such Bank's
Maturity Date, (iv) bear interest as provided in the appropriate clause of
Section 1.09 in respect of the Base Rate Loans and Eurodollar Loans, as the
case may be, evidenced thereby, (v) be subject to mandatory repayment as
provided in Section 3.02 and (vi) be entitled to the benefits of this
Agreement and the other Credit Documents.
(c) Each Bank will note on its internal records the amount of
each Revolving Loan made by it and each payment in respect thereof and will
prior to any transfer of any of its Revolving Notes endorse on the reverse
side thereof the outstanding principal amount of Revolving Loans evidenced
thereby. Failure to make any such notation (or any error in such notation)
shall not affect any Borrower's obligations in respect of such Revolving
Loans.
(d) The Administrative Agent shall maintain at its Payment
Office a register for the recordation of the names and addresses of the
Banks, the Revolving Loan Commitments of the Banks from time to time, and
the principal amount of the Revolving Loans and Competitive Bid Loans owing
to each Bank from time to time, together with the maturity and interest
rates applicable to each Competitive Bid Loan and the other terms
applicable thereto (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error. The
Register shall be available for inspection by each Borrower or any Bank at
any reasonable time and from time to time upon reasonable prior notice to
the Administrative Agent.
1.07 Conversions. Each Borrower shall have the option to
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convert, on any Business Day, at least $5,000,000 of the outstanding prin-
cipal amount of the Revolving Loans made pursuant to one or more Borrowings
of one or more Types of Revolving Loans into a Borrowing of another Type of
Revolving Loan, provided that (i) except as otherwise provided in Section
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1.11(b), Eurodollar Loans may be converted into Base Rate Loans only on the
last day of an
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<PAGE>
Interest Period applicable to the Revolving Loans being converted and no
such conversion of Eurodollar Loans shall reduce the outstanding principal
amount of such Eurodollar Loans made pursuant to a single Borrowing to less
than $5,000,000, (ii) unless the Required Banks otherwise agree, Base Rate
Loans may only be converted into Eurodollar Loans if no Event of Default is
in existence on the date of the conversion and (iii) no conversion pursuant
to this Section 1.07 shall result in a greater number of Borrowings of
Eurodollar Loans than is permitted under Section 1.02. Each such
conversion shall be effected by the respective Borrower by giving the
Administrative Agent at its Notice Office prior to 12:00 Noon (New York
time) at least three Business Days' prior notice (each a "Notice of Con-
version") specifying the Revolving Loans to be so converted, the Bor-
rowing(s) pursuant to which such Revolving Loans were made and, if to be
converted into Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Administrative Agent shall give each Bank prompt
written notice of any such proposed conversion affecting any of its
Revolving Loans. Upon any such conversion the proceeds thereof will be
deemed to be applied directly on the day of such conversion to prepay the
outstanding principal amount of the Revolving Loans being converted.
1.08 Pro Rata Borrowings. All Borrowings of Revolving Loans
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under this Agreement shall be incurred from the Banks pro rata on the basis
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of their Revolving Loan Commitments. It is understood that no Bank shall
be responsible for any default by any other Bank of its obligation to make
Revolving Loans hereunder and that each Bank shall be obligated to make the
Revolving Loans provided to be made by it hereunder, regardless of the
failure of any other Bank to make its Revolving Loans hereunder.
1.09 Interest. (a) Each Borrower agrees to pay interest in
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respect of the unpaid principal amount of each Base Rate Loan from the date
the proceeds thereof are made available to such Borrower until the maturity
thereof (whether by acceleration or otherwise) at a rate per annum which
shall be equal to the Base Rate in effect from time to time.
(b) Each Borrower agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan from the date the proceeds
thereof are made available to such Borrower until the maturity thereof
(whether by acceleration or otherwise) at a rate per annum which shall,
during each Interest Period applicable thereto, be equal to the sum of
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<PAGE>
the Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) The Company agrees to pay interest in respect of the unpaid
principal amount of each Competitive Bid Loan from the date the proceeds
thereof are made available to the Company until the maturity thereof
(whether by acceleration or otherwise) at the rate or rates per annum
specified pursuant to Section 1.04(b) by the Bidder Bank or Bidder Banks,
as the case may be, making such Competitive Bid Loan and accepted by the
Company pursuant to Section 1.04(c)(2).
(d) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount
payable hereunder shall, in each case, bear interest at a rate per annum
equal to the greater of (x) 2% per annum in excess of the Base Rate in
effect from time to time and (y) the rate which is 2% in excess of the rate
then borne by such Loans, in each case with such interest to be payable on
demand.
(e) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan, quarterly in arrears on the last
Business Day of each March, June, September and December, (ii) in respect
of each Eurodollar Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of three months,
on each date occurring at three month intervals after the first day of such
Interest Period, (iii) in respect of each Competitive Bid Loan, at such
times as specified in the Notice of Competitive Bid Borrowing relating
thereto and (iv) in respect of each Loan, on any repayment (on the amount
repaid), at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(f) Upon each Interest Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period
applicable to Eurodollar Loans and shall promptly notify the respective
Borrower and the Banks thereof. Each such determination shall, absent
manifest error, be final and conclusive and binding on all parties hereto.
1.10 Interest Periods. At the time it gives any Notice of
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Borrowing or Notice of Conversion in respect of the making of, or
conversion into, any Eurodollar Loan (in the case of the initial Interest
Period applicable thereto) or on the third Business Day prior to the
expiration of an Interest Period applicable to such Eurodollar Loan (in the
case of any subsequent Interest Period), each Borrower shall have the
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<PAGE>
right to elect, by giving the Administrative Agent notice thereof, the in-
terest period (each an "Interest Period") applicable to such Eurodollar
Loan, which Interest Period shall, at the option of such Borrower, be a
one, two, three or six month period, provided that:
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(i) all Eurodollar Loans comprising a Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Loan (including the date of
any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Loan shall
commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest
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Period for a Eurodollar Loan would otherwise expire on a day which is
not a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(v) unless the Required Banks otherwise agree, no Interest
Period may be selected at any time when an Event of Default is then in
existence; and
(vi) no Interest Period shall be selected which extends beyond
the Final Maturity Date as then in effect.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the respective Borrower has failed to elect,
or is not permitted to elect, a new Interest Period to be applicable to
such Eurodollar Loans as provided above, such Borrower shall be deemed to
have elected to convert such Eurodollar Loans into Base Rate Loans effec-
tive as of the expiration date of such current Interest Period.
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1.11 Increased Costs, Illegality, etc. (a) In the event that
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any Bank shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto but,
with respect to clause (i) below, may be made only by the Administrative
Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the Effective Date affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascer-
taining the applicable interest rate on the basis provided for in the
definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loan or Competitive Bid Loan, as the case
may be, because of (x) any change since the Effective Date in any
applicable law or governmental rule, regulation, order, guideline or
request (whether or not having the force of law) or in the inter-
pretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or re-
quest, such as, for example, but not limited to: (A) a change in the
basis of taxation of payment to any Bank of the principal of or
interest on the Revolving Notes, the Competitive Bid Loans or any
other amounts payable hereunder (except for changes in the rate of tax
on, or determined by reference to, the net income or profits of such
Bank pursuant to the laws of the jurisdiction in which it is organized
or in which its principal office or applicable lending office is
located or any subdivision thereof or therein) or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation
of the Eurodollar Rate and/or (y) other circumstances since the
Effective Date affecting such Bank or the interbank Eurodollar market
or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan or Competitive Bid Loan, as the case may be, has been
made (x) unlawful by any law or governmental rule, regulation or
order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring
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after the Effective Date which materially and adversely affects the
interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the
case of clause (i) above) shall promptly give telephonic notice (confirmed
in writing) to the respective Borrower and, except in the case of clause
(i) above, to the Administrative Agent of such determination (which notice
the Administrative Agent shall promptly transmit to each of the other
Banks). Thereafter (x) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the Administrative Agent
notifies the respective Borrower and the Banks that the circumstances
giving rise to such notice by the Administrative Agent no longer exist, and
any Notice of Borrowing or Notice of Conversion given by such Borrower with
respect to Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by such Borrower, (y) in the
case of clause (ii) above, the respective Borrower shall pay to such Bank,
upon written demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as shall be
required to compensate such Bank for such increased costs or reductions in
amounts received or receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, submitted to such Borrower by such Bank shall, absent manifest
error, be final and conclusive and binding on all the parties hereto) and
(z) in the case of clause (iii) above, the respective Borrower shall take
one of the actions specified in Section 1.11(b) as promptly as possible
and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan or Competitive Bid Loan
is affected by the circumstances described in Section 1.11(a)(ii) or (iii),
the respective Borrower may (and in the case of any Eurodollar Loan or
Competitive Bid Loan affected by the circumstances described in Section
1.11(a)(iii) shall) either (x) if the affected Eurodollar Loan or
Competitive Bid Loan is then being made initially or pursuant to a
conversion, cancel the respective Borrowing by giving the Administrative
Agent telephonic notice (confirmed in writing) on the same date that such
Borrower was notified by the affected Bank or the Administrative Agent
pursuant to Section 1.11(a)(ii) or (iii), (y) if the affected Eurodollar
Loan is then outstanding, upon at least three Business Days' written notice
to the Administrative Agent, require the affected Bank to
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convert such Eurodollar Loan into a Base Rate Loan or (z) if the affected
Competitive Bid Loan is then outstanding, repay such Competitive Bid Loan
in full; provided that, if more than one Bank is affected at any time, then
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all affected Banks must be treated the same pursuant to this Section
1.11(b).
(c) If at any time any Bank determines that the introduction of
or any change in any applicable law or governmental rule, regulation,
order, guideline, directive or request (whether or not having the force of
law and including, without limitation, those announced or published prior
to the Effective Date) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority,
central bank or comparable agency, will have the effect of increasing the
amount of capital required or expected to be maintained by such Bank or any
corporation controlling such Bank based on the existence of such Bank's
Revolving Loan Commitment hereunder or its obligations hereunder, then the
Borrowers shall pay (and shall be jointly and severally obligated to pay)
to such Bank, upon its written demand therefor, such additional amounts as
shall be required to compensate such Bank or such other corporation for the
increased cost to such Bank or such other corporation or the reduction in
the rate of return to such Bank or such other corporation as a result of
such increase of capital. In determining such additional amounts, each
Bank will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable, provided that such Bank's deter-
--------
mination of compensation owing under this Section 1.11(c) shall, absent
manifest error, be final and conclusive and binding on all the parties
hereto. Each Bank, upon determining that any additional amounts will be
payable pursuant to this Section 1.11(c), will give prompt written notice
thereof to the Borrowers, which notice shall show the basis for calculation
of such additional amounts.
1.12 Compensation. The respective Borrower shall compensate
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each Bank, upon its written request (which request shall (x) set forth the
basis for requesting such compensation and (y) absent manifest error, be
final and conclusive and binding upon all the parties hereto), for all
reasonable losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Bank to fund its
Eurodollar Loans or Competitive Bid Loans) which such Bank may sustain:
(i) if for any reason (other than a default by such Bank or the Admin-
istrative Agent) a Borrowing of Eurodollar Loans or
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Competitive Bid Loans, or conversion from or into Eurodollar Loans, does
not occur on a date specified therefor in a Notice of Borrowing, Notice of
Competitive Bid Borrowing or Notice of Conversion (whether or not withdrawn
by such Borrower or deemed withdrawn pursuant to Section 1.11(a)); (ii) if
any repayment (including any repayment made pursuant to Section 3.01 or
3.02 or a result of an acceleration of the Loans pursuant to Section 9) or
conversion of any of its Eurodollar Loans or Competitive Bid Loans occurs
on a date which is not the last day of an Interest Period with respect
thereto or the maturity date thereof; (iii) if any prepayment of any of its
Eurodollar Loans is not made on any date specified in a notice of prepay-
ment given by such Borrower; or (iv) as a consequence of (x) any other
default by such Borrower to repay its Loans when required by the terms of
this Agreement or any Revolving Note held by such Bank or (y) any election
made pursuant to Section 1.11(b).
1.13 Change of Lending Office. Each Bank agrees that on the
------------------------
occurrence of any event giving rise to the operation of Section 1.11(a)(ii)
or (iii), Section 1.11(c) or Section 3.04 with respect to such Bank, it
will, if requested by the Company, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending
office for any Loans affected by such event, provided that such designation
--------
is made on such terms that such Bank and its lending office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section.
Nothing in this Section 1.13 shall affect or postpone any of the obliga-
tions of any Borrower or the right of any Bank provided in Sections 1.11
and 3.04.
1.14 Replacement of Banks. If any Bank (1) becomes a Defaulting
--------------------
Bank or otherwise defaults in its obligation to make Revolving Loans,
(2) is incurring or is reasonably expected to incur costs which are or
would be material in amount and are associated with a Gaming Authority's
investigation of whether or not such Bank is a Qualified Person, (3)
refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as provided in Section 12.12(b) or (4) if any Bank becomes a
Non-Continuing Bank, the Company shall have the right, if no Default or
Event of Default will exist immediately after giving effect to such
replacement, to replace such Bank (the "Replaced Bank") with one or more
other Qualified Person or Persons, none of whom shall constitute a
Defaulting Bank at the time of such replacement (collectively, the
"Replacement
-14-
<PAGE>
Bank"), acceptable to the Administrative Agent; provided that:
--------
(i) at the time of any replacement pursuant to this Section
1.14, the Replacement Bank shall enter into one or more Assignment and
Assumption Agreements pursuant to, and in accordance with the terms
of, Section 12.04(b) (and with all fees payable pursuant to said
Section 12.04(b) to be paid by the Replacement Bank) pursuant to which
the Replacement Bank shall acquire the Revolving Loan Commitment and
all outstanding Loans of the Replaced Bank and, in connection there-
with, shall pay to the Replaced Bank in respect thereof an amount
equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Replaced Bank and
(B) an amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank pursuant to Section 2.01;
(ii) all obligations of the Borrowers owing to the Replaced Bank
(including all obligations, if any, owing pursuant to Section 1.12,
but excluding those obligations specifically described in clause (i)
above in respect of which the assignment purchase price has been, or
is concurrently being, paid) shall be paid in full to such Replaced
Bank concurrently with such replacement; and
(iii) the Maturity Date applicable to the Replacement Bank's
Revolving Loan Commitment shall be the Final Maturity Date then in
effect (or as same may be extended from time to time thereafter by
such Bank pursuant to Section 2.04).
Upon the execution of the respective Assignment and Assumption Agreements,
the payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of the
appropriate Revolving Notes executed by the Borrowers, the Replacement Bank
shall become a Bank hereunder and the Replaced Bank shall cease to consti-
tute a Bank hereunder, except with respect to indemnification provisions
under this Agreement (including, without limitation, Sections 1.11, 1.12,
3.04, 12.01 and 12.06), which shall survive as to such Replaced Bank.
-15-
<PAGE>
SECTION 2. Fees; Reductions of Revolving Loan Commitment; Final
----------------------------------------------------
Maturity Date Extensions.
- ------------------------
2.01 Fees. (a) The Company agrees to pay to the Administrative
----
Agent for distribution to each Non-Defaulting Bank a facility fee (the
"Facility Fee") for the period from the Effective Date to but excluding the
Final Maturity Date then in effect (or such earlier date as the Total
Revolving Loan Commitment shall have been terminated), computed at a rate
for each day equal to the Applicable Facility Fee Percentage on the daily
average Revolving Loan Commitment of such Non-Defaulting Bank. Accrued
Facility Fees shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December and on the Final
Maturity Date then in effect or such earlier date upon which the Total
Revolving Loan Commitment shall have been terminated and, with respect to
any Facility Fee owing to any Bank whose Revolving Loan Commitment shall
have been terminated pursuant to Section 1.14, on the date on which such
Bank's Revolving Loan Commitment shall have been terminated.
(b) Each Borrower agrees to pay to the Administrative Agent, for
its own account, such other fees as have been agreed to in writing by such
Borrower and the Administrative Agent.
2.02 Voluntary Termination of Unutilized Revolving Loan Commit-
----------------------------------------------------------
ments. (a) Upon at least two Business Days' prior written notice to the
- -----
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Company shall have
the right, at any time or from time to time, without premium or penalty, to
terminate the Total Unutilized Revolving Loan Commitment, in whole or in
part, in integral multiples of $5,000,000 in the case of partial reductions
to the Total Unutilized Revolving Loan Commitment, provided that each such
--------
reduction shall apply proportionately to permanently reduce the Revolving
Loan Commitment of each Bank.
(b) In the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with respect
to this Agreement which have been approved by the Required Banks as
provided in Section 12.12(b), the Company shall have the right, upon five
Business Days' prior written notice to the Administrative Agent at its
Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Banks), to terminate the entire Revolving Loan
Commitment of such Bank, so long as
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<PAGE>
all Loans, together with accrued and unpaid interest, Fees and all other
amounts owing to such Bank are repaid concurrently with the effectiveness
of such termination (at which time Schedule I shall be deemed modified to
reflect such changed amounts), and at such time, such Bank shall no longer
constitute a "Bank" for purposes of this Agreement, except with respect to
indemnifications under this Agreement (including, without limitation,
Sections 1.11, 1.12, 3.04, 12.01 and 12.06), which shall survive as to such
repaid Bank.
2.03 Mandatory Reduction of Revolving Loan Commitments. (a)
-------------------------------------------------
(i) In addition to any other mandatory commitment reductions pursuant to
this Section 2.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the Final
Maturity Date then in effect.
(ii) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, each Bank's Revolving Loan Commitment shall
terminate on such Bank's Maturity Date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, on the 15th day after the date on which any
Change of Control occurs, the Total Revolving Loan Commitment shall be
reduced to zero unless the Required Banks otherwise agree in writing in
their sole discretion.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, on each date after the Effective Date upon
which Parent or any of its Subsidiaries receives any proceeds from any
incurrence by Parent or any of its Subsidiaries of Permitted Designated
Indebtedness, the Total Revolving Loan Commitment shall be reduced by an
amount equal to its Share of the cash proceeds of the respective incurrence
of Permitted Designated Indebtedness (net of underwriting or placement
discounts and commissions and other reasonable costs associated therewith),
provided that in the case of each incurrence of Existing Casino Non-
- --------
Recourse Financing, the Total Revolving Loan Commitment shall only be
reduced by an amount equal to its Share of the Minimum Proceeds Amount for
the respective Casino Property; provided further, to the extent that the 5-
-------- -------
Year Banks do not require that their full Share be applied to reduce the
Total 5-Year Revolving Loan Commitment, the amount of their Share not so
applied shall instead be applied to reduce the Total Revolving Loan
Commitment as required by clause (e) of this Section 2.03.
-17-
<PAGE>
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, on each date after the Effective Date upon
which Parent or any of its Subsidiaries receives proceeds from any sale of
assets constituting Collateral (but excluding (i) sales of inventory,
materials and equipment in the ordinary course of business and (ii) sales
of obsolete, uneconomic or worn-out equipment or materials), the Total
Revolving Loan Commitment shall be reduced by an amount equal to its Share
of 100% of the Net Sale Proceeds thereof, provided that, in the case of any
sale of a Casino Property, the Total Revolving Loan Commitment shall only
be reduced by an amount equal to its Share of the Minimum Proceeds Amount
for the respective Casino Property or Casino Owner thereof; provided
further, to the extent that the 5-Year Banks do not require that their full
Share be applied to reduce the Total 5-Year Revolving Loan Commitment, the
amount of their Share not so applied instead be applied to reduce the Total
Revolving Loan Commitment as required by clause (e) of this Section 2.03.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 2.03, following any mandatory commitment reduction
required by Section 2.03(c) or (d) with respect to which the Shares of the
various Issues of Senior Debt have been calculated in accordance with
clause (A) of the definition of "Share," on the first date thereafter upon
which it is subsequently determined that the amount which will actually be
required to mandatorily reduce the Total 5-Year Revolving Loan Commitment
is less than the Share applicable thereto (whether because the 5-Year Banks
elected not to require such reduction or otherwise), then the amount which
will not be so required to mandatorily reduce the Total 5-Year Revolving
Loan Commitment shall instead be required to reduce the Total Revolving
Loan Commitment as required by Section 2.03(c) or (d), as the case may be.
(f) The Total Revolving Loan Commitment shall be reduced, and
the Revolving Loan Commitment of the respective Former Bank shall be
terminated, in the amount and at the times provided in Section 12.04(d).
(g) Except as otherwise provided in clauses (a)(ii) and (f) of
this Section 2.03, each reduction to the Total Revolving Loan Commitment
pursuant to this Section 2.03 shall be applied proportionately to reduce
the Revolving Loan Commitment of each Bank.
2.04 Final Maturity Date Extensions. (a) Not less than 45 days
------------------------------
and not more than 90 days prior to the Final Maturity Date then in effect,
the Company may make a written request to the Administrative Agent, who
shall forward a copy of each such request to each of the Banks, that the
Final
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<PAGE>
Maturity Date then in effect be extended to the date which occurs 364 days
after the Requested Extension Effective Date specified by the Company in
its written request as described in the immediately succeeding sentence.
Each request by the Company pursuant to the immediately preceding sentence
shall specify a date (the "Requested Extension Effective Date"), which
shall be not earlier than 15 days after the giving of the respective notice
and not later than 15 days prior to the Final Maturity Date then in effect,
which would be the date of the effectiveness of the changes to the Final
Maturity Date and the Maturity Dates of the consenting Banks. Each request
pursuant to the first sentence of this Section 2.04 shall also be
accompanied by a certificate of a senior officer of the Company stating
that no Default or Event of Default has occurred and is continuing. Each
Bank, acting in its sole discretion and with no obligation to grant any
extension pursuant to this Section 2.04, shall, by written notice to the
Company and the Administrative Agent, such notice to be given on or prior
to the earlier of (x) the Requested Extension Effective Date and (y) the
30th day following receipt by such Bank of such request by the Company,
advise the Company and the Administrative Agent whether or not such Bank
agrees to such extension, provided that any Bank which fails to so notify
the Company and the Administrative Agent as provided above shall be deemed
to have elected not to grant such extension. In giving any extensions
pursuant to the immediately preceding sentence, any Bank, at its option,
may specify that its extension is conditioned upon each other Bank agreeing
to the extension of the Final Maturity Date or, in lieu thereof, may
specify that Banks with a certain minimum aggregate amount of Revolving
Loan Commitments (to be specified by such Bank) shall have agreed to such
extension. The Administrative Agent shall notify the Company and each of
the Banks as to which Banks have agreed to such extension and as to the new
Final Maturity Date as a result thereof.
(b) In the event that the Final Maturity Date is extended by
some but not all of the Banks, unless the Non-Continuing Bank or Banks
shall have been replaced by a Replacement Bank on or before the Maturity
Date of each such Non-Continuing Bank pursuant to Section 1.14, on the
Maturity Date of each such Non-Continuing Bank the Borrower shall repay all
Loans of each such Non-Continuing Bank, together with all accrued and
unpaid interest thereon, and all Fees and other amounts owing to each such
Non-Continuing Bank and
-19-
<PAGE>
upon such payment each such Non-Continuing Bank shall cease to constitute a
Bank hereunder, except with respect to the indemnification provisions under
this Agreement (including, without limitation, Sections 1.11, 1.12, 3.04,
12.01 and 12.06), which shall survive as to each such Non-Continuing Bank.
SECTION 3. Prepayments; Payments; Taxes.
----------------------------
3.01 Voluntary Prepayments. Each Borrower shall have the right
---------------------
to prepay the Loans made to it, without premium or penalty, in whole or in
part at any time and from time to time on the following terms and
conditions:
(i) such Borrower shall give the Administrative Agent prior to
12:00 Noon (New York time) at its Notice Office (x) at least one
Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay Base Rate Loans and (y)
at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, the amount of such prepayment and the Types of
Revolving Loans to be prepaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made, which
notice the Administrative Agent shall promptly transmit to each of the
Banks;
(ii) each prepayment shall be in an aggregate principal amount of
at least $5,000,000, provided that, if any partial prepayment of
--------
Eurodollar Loans made pursuant to any Borrowing shall reduce the out-
standing Eurodollar Loans made pursuant to such Borrowing to an amount
less than $5,000,000, then such Borrowing may not be continued as a
Borrowing of Eurodollar Loans and any election of an Interest Period
with respect thereto given by the Borrower shall have no force or
effect;
(iii) each prepayment in respect of any Revolving Loans made pur-
suant to a Borrowing shall be applied pro rata among such Revolving
--- ----
Loans, provided that, at the respective Borrower's election in connec-
--------
tion with any prepayment of Revolving Loans pursuant to this Section
3.01, such prepayment shall not be applied to any Revolving Loan of a
Defaulting Bank;
(iv) in the event of certain refusals by a Bank to consent to
certain proposed changes, waivers, discharges or terminations with
respect to this Agreement which
-20-
<PAGE>
have been approved by the Required Banks as provided in Section
12.12(b), the Borrowers shall have the right, upon five Business Days'
prior written notice to the Administrative Agent at its Notice Office
(which notice the Administrative Agent shall promptly transmit to each
of the Banks) repay all Loans, together with accrued and unpaid
interest, Fees, and other amounts owing to such Bank in accordance
with said Section 12.12(b) so long as (A) the Revolving Loan Commit-
ment of such Bank is terminated concurrently with such repayment (at
which time Schedule I shall be deemed modified to reflect the changed
Revolving Loan Commitments) and (B) the consents required by Section
12.12(b) in connection with the repayment pursuant to this clause (iv)
have been obtained; and
(v) except as otherwise provided in preceding clause (iv), the
Company may not voluntarily prepay any Competitive Bid Loans without
the consent of the Bank that had made such Competitive Bid Loans.
3.02 Mandatory Repayments. (a)(i) On any day on which the sum
--------------------
of the aggregate outstanding principal amount of Revolving Loans and
Competitive Bid Loans exceeds the Total Revolving Loan Commitment as then
in effect, there shall be required to be repaid on such date that principal
amount of Revolving Loans and, after all such Revolving Loans have been
repaid in full, Competitive Bid Loans in an amount equal to such excess.
(ii) On any day on which the aggregate outstanding principal
amount of Revolving Loans made to any Subsidiary Borrower exceeds such
Subsidiary Borrower's Sub-Limit, such Subsidiary Borrower shall repay
principal of its Revolving Loans in an amount equal to such excess.
(b) With respect to each repayment of Revolving Loans required
by this Section 3.02, the respective Borrower may designate the Types of
Revolving Loans which are to be repaid and, in the case of Eurodollar
Loans, the specific Borrowing or Borrowings pursuant to which made,
provided that: (i) repayments of Eurodollar Loans pursuant to this Section
- --------
3.02 may only be made on the last day of an Interest Period applicable
thereto unless all Eurodollar Loans with Interest Periods ending on such
date of required repayment and all Base Rate Loans have been paid in full;
(ii) if any repayment of Eurodollar Loans made pursuant to a single
Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than $5,000,000,
-21-
<PAGE>
such Borrowing shall be converted on such day into a Borrowing of Base Rate
Loans; and (iii) each repayment of any Revolving Loans made pursuant to a
Borrowing shall be applied pro rata among such Revolving Loans. Each
--- ----
prepayment of Competitive Bid Loans required by this Section 3.02 shall be
applied pro rata among all outstanding Competitive Bid Loans. In the
--- ----
absence of a designation by any Borrower as described in the second preced-
ing sentence, the Administrative Agent shall, upon telephonic notice to the
Company and subject to the above, make such designation in its sole
discretion.
(c) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, (i) all then outstanding Competitive Bid Loans shall be
repaid in full on the fifth Business Day preceding the Final Maturity Date
then in effect and (ii) all then outstanding Revolving Loans shall be
repaid in full on the Final Maturity Date then in effect.
3.03 Method and Place of Payment. Except as otherwise
---------------------------
specifically provided herein, all payments under this Agreement or under
any Revolving Note shall be made to the Administrative Agent for the
account of the Bank or Banks entitled thereto not later than 12:00 Noon
(New York time) on the date when due and shall be made in Dollars in
immediately available funds at the Payment Office of the Administrative
Agent. Whenever any payment to be made hereunder or under any Revolving
Note shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest shall be payable at the
applicable rate during such extension.
3.04 Net Payments. (a) All payments made by any Borrower
------------
hereunder or under any Revolving Note, will be made without setoff,
counterclaim or other defense. Except as provided in Section 3.04(b), all
such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties,
fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding,
except as provided in the immediately succeeding sentence, any tax imposed
on or measured by the net income or profits of a Bank pursuant to the laws
of the United States and the jurisdiction in which it is organized or in
which the principal office or applicable lending office of such Bank is
located or any subdivision or taxing authority thereof or therein) and all
interest, penalties or similar liabilities with respect
-22-
<PAGE>
thereto (collectively, "Taxes"). If any amounts are payable in respect of
Taxes pursuant to the preceding sentence, then the Borrowers agree to
reimburse each Bank, upon the written request of such Bank, for taxes
imposed on or measured by the net income of such Bank pursuant to the laws
of the jurisdiction in which the principal office or applicable lending
office of such Bank is located or under the laws of any political subdivi-
sion or taxing authority of any such jurisdiction in which the principal
office or applicable lending office of such Bank is located and for any
withholding of income or similar taxes imposed by the United States as such
Bank shall determine are payable by, or withheld from, such Bank in respect
of such amounts so paid to or on behalf of such Bank pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of
such Bank pursuant to this sentence. If any Taxes are so levied or
imposed, the Borrowers agree to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any Revolving Note, after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein or in such Revolving Note. The Borrowers will furnish
to the Administrative Agent within 45 days after the date the payment of
any Taxes is due pursuant to applicable law copies of official tax receipts
received from the relevant taxing authority evidencing such payment by the
Borrowers. The Borrowers agree to indemnify and hold harmless each Bank,
and reimburse such Bank upon its written request, for the amount of any
Taxes so levied or imposed and paid by such Bank.
(b) Each Bank which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees (i) in the case of any such Bank that is a "bank" within
the meaning of Section 881(c)(3)(A) of the Code and which constitutes a
Bank hereunder on the Effective Date, to provide to the Company and the
Administrative Agent within five days after the Effective Date two original
signed copies of Internal Revenue Service Form 4224 or Form 1001 certifying
to such Bank's entitlement to an exemption from United States withholding
tax with respect to payments to be made under this Agreement and under any
Revolving Note, (ii) in the case of any such Bank that is a "bank" within
the meaning of Section 881(c) (3)(A) of the Code, that, to the extent
legally entitled to do so, (x) with respect to a Bank that is an assignee
or transferee of an interest under this Agreement pursuant to Section 1.14
or 12.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or
-23-
<PAGE>
transfer), within five days after such assignment or transfer to such Bank,
and (y) with respect to any such Bank, from time to time upon the
reasonable written request of the Company or the Administrative Agent after
the Effective Date, such Bank will provide to the Company and the
Administrative Agent two original signed copies of Internal Revenue Service
Form 4224 or Form 1001 (or any successor forms) certifying to such Bank's
entitlement to an exemption from, or reduction in, United States
withholding tax with respect to payments to be made under this Agreement
and under any Revolving Note, (iii) in the case of any such Bank (other
than a Bank described in clause (i) or (ii) above) which constitutes a Bank
hereunder on the Effective Date, to provide to the Company and the
Administrative Agent, within five days after the Effective Date (x) a
certificate substantially in the form of Exhibit D (any such certificate, a
"Section 3.04(b)(iii) Certificate") and (y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8, certifying to
such Bank's entitlement at the date of such certificate (assuming
compliance by the Company with Section 7.11) to an exemption from United
States withholding tax under the provisions of Section 881(c) of the Code
with respect to payments to be made under this Agreement and under any
Revolving Note and (iv) in the case of any such Bank (other than a Bank
described in clause (i) or (ii) above), to the extent legally entitled to
do so, (x) with respect to a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.14 or 12.04 (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), within five days after such assignment or transfer
to such Bank, and (y) with respect to any such Bank, from time to time upon
the reasonable written request of the Company or the Administrative Agent
after the Effective Date, to provide to the Company and the Administrative
Agent such other forms as may be required in order to establish the enti-
tlement of such Bank to an exemption from withholding with respect to
payments under this Agreement and under any Revolving Note. Notwith-
standing anything to the contrary contained in Section 3.04(a), but subject
to the immediately succeeding sentence, each Borrower shall be entitled, to
the extent it is required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder (without any obligation to pay the respective Bank
additional amounts with respect thereto) for the account of any Bank which
is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes
-24-
<PAGE>
and which has not provided to the Company such forms required to be
provided to the Company pursuant to the first sentence of this Section
3.04(b). Notwithstanding anything to the contrary contained in the
preceding sentence and except as set forth in Section 12.04(b), each
Borrower agrees to indemnify each Bank in the manner set forth in Section
3.04(a) in respect of any amounts deducted or withheld by it as described
in the immediately preceding sentence as a result of any changes after the
Effective Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating
to the deducting or withholding of income or similar Taxes.
(c) If any Borrower pays any additional amount under this
Section 3.04 to a Bank and such Bank determines that it has received or
realized in connection therewith any refund or any reduction of, or credit
against, its Tax liabilities in or with respect to the taxable year in
which the additional amount is paid, such Bank shall pay to the respective
Borrower an amount that the Bank shall, in its sole discretion, determine
is equal to the net benefit, after tax, which was obtained by the Bank in
such taxable year as a consequence of such refund, reduction or credit.
SECTION 4. Conditions Precedent to the Effective Date. The
------------------------------------------
occurrence of the Effective Date pursuant to Section 12.10, and the obli-
gation of each Bank to make Revolving Loans on the Effective Date is
subject to the satisfaction of the following conditions:
4.01 Execution of Agreement; Notes. On or prior to the
-----------------------------
Effective Date, (i) this Agreement shall have been executed and delivered
as provided in Section 12.10 and (ii) there shall have been delivered to
the Administrative Agent for the account of each Bank the appropriate
Revolving Notes executed by the respective Borrowers, in the amount,
maturity and as otherwise provided herein.
4.02 Officer's Certificate. On the Effective Date, the
---------------------
Administrative Agent shall have received a certificate dated the Effective
Date signed on behalf of the Company by the President, any Senior Vice
President or any Vice President of the Company stating that all of the
conditions in Sections 4.14, 4.15, 4.16, 4.17, 4.19, 4.20 and 5.01 have
been satisfied on such date.
4.03 Opinions of Counsel. On the Effective Date, the
-------------------
Administrative Agent shall have received (i) from Latham
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<PAGE>
& Watkins, counsel to Parent, the Company and the Subsidiary Borrowers, an
opinion addressed to the Administrative Agent and each of the Banks and
dated the Effective Date in form and substance satisfactory to the
Administrative Agent and the Required Banks, (ii) from E.O. Robinson, Jr.,
General Counsel to Parent and the Company, an opinion addressed to the
Administrative Agent and each of the Banks and dated the Effective Date in
form and substance satisfactory to the Administrative Agent and the
Required Banks and (iii) from local counsel reasonably satisfactory to the
Administrative Agent, opinions each of which shall be in form and substance
satisfactory to the Administrative Agent and the Required Banks and shall
cover the New Jersey and Nevada Gaming Regulations and the perfection and
priority of the security interests granted pursuant to the Security
Agreement and the Mortgages (except that no opinion need be given with
respect to the priority of the Lien of any Mortgage) and such other matters
incident to the transactions contemplated herein as the Administrative
Agent may reasonably request.
4.04 Corporate Documents; Proceedings. (a) On the Effective
--------------------------------
Date, the Administrative Agent shall have received a certificate, dated the
Effective Date, signed by the President, any Senior Vice President or any
Vice President of each of the Credit Parties, and attested to by the
Secretary or any Assistant Secretary of each such Credit Party, in the form
of Exhibit E to the 5-Year Credit Agreement with appropriate insertions,
together with copies of the certificate of incorporation, partnership
agreement and by-laws of such Credit Party, as the case may be, and the re-
solutions of such Credit Party referred to in such certificate, and the
foregoing shall be acceptable to the Administrative Agent in its reasonable
discretion.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this
Agreement, the other Credit Documents and the Hotel Transaction Documents
shall be satisfactory in form and substance to the Administrative Agent and
the Required Banks, and the Administrative Agent shall have received true
and correct copies of all Hotel Transaction Documents, together with all
information and copies of all other documents and papers, including records
of corporate proceedings, governmental approvals, good standing
certificates and bring-down telegrams, if any, which the Administrative
Agent reasonably may have requested in connection therewith, such documents
and papers where appropriate to be certified by proper corporate or
governmental authorities.
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<PAGE>
4.05 Master Collateral Agreement. On the Effective Date, the
---------------------------
Administrative Agent, the Collateral Agent and each Collateral Grantor
shall have entered into an amendment to the Master Collateral Agreement in
the form of Exhibit F to the 5-Year Credit Agreement, and the Master
Collateral Agreement, as so amended, shall be in full force and effect.
4.06 Pledge Agreements. (a) On the Effective Date, the
-----------------
Collateral Agent and Parent shall have entered into an amendment to the
Parent Pledge Agreement in the form of Exhibit G-1 to the 5-Year Credit
Agreement, and the Parent Pledge Agreement, as so amended, shall be in full
force and effect. On the Effective Date, the Collateral Agent, as Pledgee,
shall have in its possession all the Pledged Securities referred to in the
Parent Pledge Agreement then owned by Parent, together with executed and
undated stock powers.
(b) On the Effective Date, the Collateral Agent and each
Collateral Grantor party to the Company/Sub Pledge Agreement shall have
entered into an amendment to the Company/Sub Pledge Agreement in the form
of Exhibit G-2 to the 5-Year Credit Agreement, and the Company/Sub Pledge
Agreement, as so amended, shall be in full force and effect. On the
Effective Date, the Collateral Agent, as Pledgee, shall have in its
possession all the Pledged Securities referred to in the Company/Sub Pledge
Agreement then owned by the respective Collateral Grantor, together with
executed and undated stock powers.
4.07 Security Agreement. On the Effective Date, the Collateral
------------------
Agent and each Collateral Grantor party to the Security Agreement shall
have entered into an amendment to the Security Agreement in the form of
Exhibit H to the 5-Year Credit Agreement, and the Security Agreement, as so
amended, shall be in full force and effect. On the Effective Date, no
filings, recordings or registrations (other than those made prior to the
Effective Date) shall be necessary or required to perfect (or maintain the
perfection and priority of) the security interest created under the
Security Agreement.
4.08 Company/Sub Guaranty. On the Effective Date, the
--------------------
Collateral Agent, the Company and each other Guarantor (other than Parent)
shall have entered into an amendment to the Company/Sub Guaranty in the
form of Exhibit I to the 5-Year Credit Agreement, and the Company/Sub
Guaranty, as so amended, shall be in full force and effect.
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<PAGE>
4.09 Mortgages; Title Insurance; Surveys; etc. On the Effective
-----------------------------------------
Date, the Collateral Agent shall have received:
(i) fully executed counterparts of amendments (each a "Mortgage
Amendment" and, collectively, the "Mortgage Amendments") to each of
the Mortgages in the form of Exhibit J-1 to the 5-Year Credit
Agreement in the case of the Atlantic City Property and Exhibit J-2 to
the 5-Year Credit Agreement in the case of the other Casino
Properties, together with evidence that counterparts of the Mortgage
Amendments have been delivered to the title insurance company insuring
the Lien of such Mortgages for recording in all places to the extent
necessary or desirable, in the judgment of the Collateral Agent,
effectively to create or maintain a valid and enforceable first
priority mortgage lien on each such Mortgaged Property in favor of the
Collateral Agent for the benefit of the Secured Parties;
(ii) endorsements to the Mortgage Policies issued by First
American Title Insurance Company or such other title insurers
reasonably satisfactory to the Administrative Agent in amounts satis-
factory to the Administrative Agent assuring the Administrative Agent
that the Mortgages on the Mortgaged Properties are valid and enforce-
able first priority mortgage liens on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except Per-
mitted Encumbrances and such endorsements shall otherwise be in form
and substance satisfactory to the Administrative Agent, and shall
include, as appropriate, an endorsement for future advances under this
Agreement and the Revolving Notes and for any other matter that the
Administrative Agent in its discretion may reasonably request, shall
not include an exception for mechanics' liens, and shall provide for
affirmative insurance and such reinsurance as the Administrative Agent
in its discretion may reasonably request; and
(iii) either (x) an officer's certificate of the Company with
respect to each Mortgaged Property certifying that there has been no
material alterations or improvements to such Mortgaged Property, which
certificate shall be in form and substance satisfactory to the
Administrative Agent or (y) in the case of any Mortgaged Property for
which the foregoing certification cannot be made, an updated survey
for such Mortgaged Property, in form and substance reasonably satis-
factory to the Administrative Agent, certified by a licensed
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<PAGE>
professional surveyor reasonably satisfactory to the Administrative
Agent.
4.10 Assignment of Partnership Interests Agreement. On the
---------------------------------------------
Effective Date, the Collateral Agent, Marina, Harrah's Atlantic City and
Harrah's New Jersey shall have entered into an amendment to the Assignment
of Partnership Interests Agreement in the form of Exhibit K to the 5-Year
Credit Agreement, and the Assignment of Partnership Interests Agreement, as
so amended, shall be in full force and effect.
4.11 Assignment of Leases. On the Effective Date, the
--------------------
Collateral Agent and Marina shall have entered into an amendment to the
Assignment of Leases in the form of Exhibit L to the 5-Year Credit
Agreement, and the Assignment of Leases, as so amended, shall be in full
force and effect.
4.12 Net Lease Agreements. On the Effective Date, each of the
--------------------
Net Lease Agreements shall be in full force and effect, provided that, to
the extent the Company transfers its ownership interest in any of the
Casino Properties located in Nevada to Harrah's Club as permitted by
Section 8.02(a), the Net Lease Agreement with respect to each such Casino
Property may be terminated.
4.13 Consent Letter. On the Effective Date, the Administrative
--------------
Agent shall have received a letter from CT Corporation System, presently
located at 1633 Broadway, New York, New York 10019, substantially in the
form of Exhibit M to the 5-Year Credit Agreement, indicating its consent to
its appointment by each Credit Party as its agent to receive service of
process as specified in Section 12.08.
4.14 Adverse Change. On or prior to the Effective Date, nothing
--------------
shall have occurred (and the Banks shall have become aware of no facts or
conditions not previously known) which the Administrative Agent or the
Required Banks shall determine has, or could reasonably be expected to
have, a material adverse effect on the rights or remedies of the Admin-
istrative Agent, the Collateral Agent or the Banks, or on the ability of
Parent or any Borrower or any other Credit Party to perform its obligations
to the Administrative Agent, the Collateral Agent and the Banks or which
has, or could reasonably be expected to have, a materially adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole.
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<PAGE>
4.15 Litigation. On the Effective Date, no litigation by any
----------
entity (private or governmental) shall be pending or threatened with
respect to this Agreement, the Hotel Transaction or any documentation
executed in connection herewith or therewith or the transactions
contemplated hereby or thereby, or with respect to any material Indebt-
edness of Parent or any of its Subsidiaries or which the Administrative
Agent or the Required Banks shall determine could reasonably be expected to
have a materially adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole.
4.16 Hotel Transaction. (a) On the Effective Date, Parent shall
-----------------
have changed its legal corporate name to "Harrah's Entertainment, Inc.",
and the Company shall have changed its legal corporate name to "Harrah's
Operating Company, Inc."
(b) On the Effective Date, the Company and the Hotel Subsidiaries
shall have entered into the Hotel Facility, no default or event of default
shall exist thereunder and the Company shall have incurred not less than
$210,000,000 of loans thereunder.
(c) On the Effective Date, the Company shall have consummated the
Hotel Transfer.
(d) On the Effective Date, in consideration of the Hotel Transfer
described in clause (c) of this Section 4.16, the Company shall have
irrevocably and unconditionally assigned to the Hotel Company, and the
Hotel Company shall have irrevocably and unconditionally assumed from the
Company, and the Company shall have been irrevocably and unconditionally
released from, all of the Company's rights and obligations under the Hotel
Facility.
(e) On the Effective Date, Parent and the Company shall have
declared and paid the Hotel Stock Dividend.
4.17 Approvals, etc. (a) On or prior to the Effective Date, all
---------------
necessary governmental (domestic and foreign) and third party approvals
(including, without limitation, the approval of the holders of the 8-3/4%
Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes) in
connection with the transactions contemplated by this Agreement, the Hotel
Transaction Documents and otherwise referred to herein or therein shall
have been obtained and remain in effect, and all applicable waiting periods
shall
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<PAGE>
have expired without any action being taken by any competent authority
which restrains, prevents or imposes materially adverse conditions upon the
consummation of the transactions contemplated by this Agreement, the Hotel
Transaction Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or
other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially
adverse conditions upon the consummation of the transactions contemplated
by this Agreement, the Hotel Transaction Documents or otherwise referred to
herein or therein.
(b) On or prior to the Effective Date, the Company shall have
received sufficient Consents to authorize the execution and delivery of the
indenture supplements to the 8-3/4% Senior Subordinated Notes Indenture and
the 10-7/8% Senior Subordinated Notes Indenture and such indenture
supplements shall have been duly executed and delivered by the Company and
the respective indenture trustee thereunder and all conditions to the
effectiveness thereof shall have been satisfied. All of the terms and
conditions of the Consents and the respective indenture supplements shall
be reasonably satisfactory to the Administrative Agent and the Required
Banks and in compliance with the applicable Hotel Transaction Documents and
all applicable laws (including, without limitation, Federal and state
securities laws).
(c) On or prior to the Effective Date, the Administrative Agent
shall have received evidence that the Banks are qualified under the New
Jersey Gaming Regulations as financial sources or qualifiers, or are exempt
or waived therefrom, and shall be satisfied that no other New Jersey or
Nevada gaming license, authorization, qualification, waiver or exemption of
the Banks is required on or prior to the Effective Date by reason of this
Agreement or the Collateral Documents. The Administrative Agent also shall
be satisfied in its discretion with any conditions or requirements imposed
by the New Jersey, Nevada or other relevant Gaming Authorities upon the
Banks, this Agreement, the Collateral Documents, the Collateral or the
Hotel Transaction.
(d) Parent, its shareholders and Subsidiaries shall have
received any qualifications required under applicable Gaming Regulations in
connection with this Agreement, the Collateral Documents and the Hotel
Transaction, and the Borrowers and the Guarantors shall have received all
other approvals, authorizations or consents of, or notices to or
registrations with any governmental body and
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<PAGE>
required releases and consents from other appropriate Persons (including,
without limitation, the shareholders of Parent) in connection with this
Agreement, the Collateral Documents and the Hotel Transaction and shall
have provided copies or other satisfactory evidence of all approvals,
authorizations or consents referred to above to the Administrative Agent.
4.18 Solvency Certificate; Evidence of Insurance. On the
-------------------------------------------
Effective Date, there shall have been delivered to the Administrative Agent
(i) a certificate in the form of Exhibit N to the 5-Year Credit Agreement,
addressed to the Administrative Agent and each of the Banks and dated the
Effective Date, from the chief financial officer of Parent, providing the
opinion of such chief financial officer as to the solvency of Parent, the
Company, each Subsidiary Borrower and Parent and its Subsidiaries taken as
a whole, and (ii) evidence of insurance (A) satisfactory to the
Administrative Agent that insurance is in effect with respect to each of
the Mortgaged Properties and covering such risks and in such amounts and
with such coverages as required by the Administrative Agent and (B) that
each insurance policy covering the Collateral and each other material
insurance policy is effective as required in accordance with the
requirements of Section 7.03 for the business and properties of Parent and
its Subsidiaries, in scope, form and substance satisfactory to the Admin-
istrative Agent and the Required Banks and naming the Collateral Agent, in
the case of Collateral, as an additional insured and/or loss payee, and
stating that such insurance shall not be cancelled or revised without at
least 30 days' prior written notice by the respective insurer to the
Collateral Agent.
4.19 Payment of Fees. On the Effective Date, all costs, fees
---------------
and expenses (including, without limitation, legal fees and expenses) and
other compensation contemplated hereby or otherwise agreed and payable to
the Banks or the Administrative Agent shall have been paid to the extent
due.
4.20 5-Year Credit Agreement. On the Effective Date, Parent,
-----------------------
the Company, the Subsidiary Borrowers, the 5-Year Banks and the
Administrative Agent shall have entered into the 5-Year Credit Agreement,
and the 5-Year Credit Agreement shall be in full force and effect. On the
Effective Date, the Company shall have delivered to the Administrative
Agent a true and correct copy of the 5-Year Credit Agreement, which shall
be required to be in form and substance satisfactory to the Administrative
Agent and the Required Banks.
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<PAGE>
4.21 Schedules. On the Effective Date, the Company shall have
---------
delivered to each of the Banks true and complete copies of Schedules II
through VIII, which Schedules shall be in form and substance satisfactory
to the Administrative Agent and the Required Banks.
SECTION 5. Conditions Precedent to All Loans. The obligation of
---------------------------------
each Bank to make Loans (including Loans made on the Effective Date), is
subject, at the time of the making of each such Loan (except as hereinafter
indicated), to the satisfaction of the following conditions:
5.01 No Default; Representations and Warranties. At the time of
------------------------------------------
each such Loan and also after giving effect thereto (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on the date of the making of
such Loan (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of such
specified date).
5.02 Notice of Borrowing; Competitive Bid Loans. (a) Prior to
------------------------------------------
the making of each Revolving Loan, the Administrative Agent shall have
received a Notice of Borrowing meeting the requirements of Section 1.03.
(b) Prior to the making of any Competitive Bid Loans, (i) all of
the applicable conditions specified in Section 1.04 shall have been
satisfied and (ii) the Company's Indebtedness shall be rated at least BBB-
Senior Implied by S&P or at least Baa3 Senior Implied by Moody's.
5.03 Election to Become a Subsidiary Borrower. Prior to the
----------------------------------------
incurrence of any Revolving Loans by a Subsidiary Borrower which is not a
Subsidiary Borrower on the Effective Date, the following additional
conditions shall be satisfied:
(i) such new Subsidiary Borrower shall have duly authorized,
executed and delivered to the Administrative Agent an Election to
Become a Subsidiary Borrower in the form of Exhibit E, which shall be
in full force and effect;
(ii) such Subsidiary Borrower shall have duly authorized,
executed and delivered to the Administrative
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<PAGE>
Agent for the account of each of the Banks the appropriate Revolving
Note in the amount, maturity and as otherwise provided herein; and
(iii) to the extent not previously accomplished, such Subsidiary
Borrower shall have duly authorized, executed and delivered to the
Administrative Agent counterparts of the Company/Sub Guaranty and each
Collateral Document to the extent applicable, together with (x) such
financing statements and instruments required to be delivered by the
respective Collateral Documents and (y) such other documents,
certificates, resolutions, opinions and writings that would have been
required to be delivered pursuant to Sections 4.03 and 4.04 of this
Agreement and Section 5.19 of the Original Five-Year Credit Agreement
if such Subsidiary Borrower had been subject to such Sections on the
Effective Date, all of which shall be in form and substance
satisfactory to the Administrative Agent.
The occurrence of the Effective Date and the acceptance of the
proceeds of each Loan shall constitute a representation and warranty by
Parent and the respective Borrower to the Administrative Agent and each of
the Banks that all the conditions specified in Section 4 and in this
Section 5 and applicable to such Loan have been satisfied as of that time.
All of the Revolving Notes, certificates, legal opinions and other docu-
ments and papers referred to in Section 4 and in this Section 5, unless
otherwise specified, shall be delivered to the Administrative Agent at the
Notice Office for the account of each of the Banks and, except for the
Revolving Notes, in sufficient counterparts for each of the Banks and shall
be in form and substance satisfactory to the Required Banks.
Notwithstanding anything to the contrary contained above or in
Section 12.10, if the Effective Date does not occur on or prior to
September 30, 1995, then it shall not thereafter occur (unless the Required
Banks agree in writing to an extension of such date), and this Agreement
shall cease to be of any force or effect.
SECTION 6. Representations, Warranties and Agreements. In order
------------------------------------------
to induce the Banks to enter into this Agreement and to make the Loans,
each of Parent, the Company and each Subsidiary Borrower makes the
following representations, warranties and agreements, in each case after
giving effect to the Hotel Transaction, all of which shall survive the
execution and delivery of this Agreement and the Revolving
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<PAGE>
Notes and the making of the Loans, with the occurrence of the Effective
Date and the making of each Loan on or after the Effective Date being
deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct on and as of the Effective
Date and on the date of each such Loan (it being understood and agreed that
(i) any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material
respects only as of such specified date and (ii) for purposes of making any
representation or warranty in this Section 6 after the Effective Date the
term Documents shall not include the Hotel Transaction Documents).
6.01 Corporate or Partnership Status. Each of Parent and its
-------------------------------
Subsidiaries (i) is a duly organized and validly existing corporation or
partnership, in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate or partnership power and authority to
own its property and assets and to transact the business in which it is
engaged and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of
its business requires such qualifications except for failures to be so
qualified which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or pros-
pects of Parent and its Subsidiaries taken as a whole.
6.02 Corporate or Partnership Power and Authority. Each Credit
--------------------------------------------
Party has the corporate or partnership power and authority to execute,
deliver and perform the terms and provisions of each of the Documents to
which it is party and has taken all necessary corporate or partnership
action to authorize the execution, delivery and performance by it of each
of such Documents. Each Credit Party has duly executed and delivered each
of the Documents to which it is party, and each of such Documents
constitutes its legal, valid and binding obligation enforceable in accord-
ance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights and
by equitable principles (regardless of whether enforcement is sought in
equity or at law).
6.03 No Violation. Neither the execution, delivery or
------------
performance by any Credit Party of the Documents to which it is a party,
nor compliance by it with the terms and
-35-
<PAGE>
provisions thereof, (i) will contravene any provision of any law, statute,
rule or regulation or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or con-
stitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Collateral
Documents and, in the case of the Hotel Company and the Hotel Subsidiaries,
pursuant to the Hotel Facility) upon any of the property or assets of
Parent or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement or loan agreement, or any other
material agreement, contract or instrument, to which Parent or any of its
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of
the certificate of incorporation, partnership agreement or by-laws of
Parent or any of its Subsidiaries.
6.04 Governmental Approvals. No order, consent, approval,
----------------------
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made on or prior to the
Effective Date), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the Hotel Transaction, (ii) the execution,
delivery and performance of any Document or (iii) the legality, validity,
binding effect or enforceability of any such Document.
6.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; etc. (a) The statements of financial condition
- ------------------------------
of Parent and its Consolidated Subsidiaries at December 31, 1994 (including
the December 31, 1994 financial statements contained in the Proxy Statement
which shows the Hotel Business as discontinued operations) and March 31,
1995, and the related statements of income and cash flow and changes in
shareholders' equity of Parent and its Consolidated Subsidiaries for the
fiscal year and three-month period ended on such date, as the case may be,
and furnished to the Banks prior to the Effective Date present fairly the
financial condition of Parent and its Consolidated Subsidiaries at the date
of such statements of financial condition and the results of the operations
of Parent and its Consolidated Subsidiaries for the respective fiscal year
or three-month period, as the case may be. All such financial statements
have been prepared in accordance with generally accepted accounting
principles and practices consistently applied. Since December 31, 1994
(but after giving effect to
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<PAGE>
the Hotel Transaction), there has been no material adverse change in the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
(b) On and as of the Effective Date, both before and after
giving effect to the Hotel Transaction and to all Indebtedness (including
the Loans) being incurred or assumed and Liens created by Parent and its
Subsidiaries in connection therewith, (a) the sum of the assets, at a fair
valuation, of each of Parent, the Company, each Subsidiary Borrower, Parent
and its Subsidiaries taken as a whole and the Company and its Subsidiaries
taken as a whole will exceed their respective debts; (b) none of Parent,
the Company, any Subsidiary Borrower, Parent and its Subsidiaries taken as
a whole or the Company and its Subsidiaries taken as a whole has incurred,
nor do they intend to incur or believe that they will incur, debts beyond
their ability to pay such debts as such debts mature; and (c) each of
Parent, the Company, each Subsidiary Borrower, Parent and its Subsidiaries
taken as a whole and the Company and its Subsidiaries taken as a whole will
have sufficient capital with which to conduct its respective business. For
purposes of this Section 6.05(b), "debt" means any liability on a claim,
and "claim" means (i) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or
(ii) right to an equitable remedy for breach of performance if such breach
gives rise to a payment, whether or not such right to an equitable remedy
is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 6.05(a), there were as of the Effective Date
no liabilities or obligations with respect to Parent or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually
or in aggregate, would be material to Parent and its Subsidiaries taken as
a whole. As of the Effective Date, neither Parent nor any Borrower knows
of any basis for the assertion against Parent or any of its Subsidiaries of
any liability or obligation of any nature whatsoever that is not fully
disclosed in the financial statements delivered pursuant to Section 6.05(a)
which, either individually or in the aggregate, is material to Parent and
its Subsidiaries taken as a whole.
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<PAGE>
(d) On and as of the Effective Date, (i) the financial
projections (the "Projections") prepared by the Company and delivered to
the Banks by the Administrative Agent prior to the Effective Date were
prepared based upon the assumptions concerning various industry trends
described therein for the periods presented, (ii) the Projections were
based on good faith assumptions and estimates, and (iii) although a range
of possible different assumptions and estimates might also be reasonable,
the Company is not aware of any facts that would lead it to believe that
the assumptions and estimates on which the Projections were based are not
reasonable; provided that no assurance can be given that the projected
results will be realized or with respect to the ability of the Company to
achieve the projected results, and while the Projections are necessarily
presented with numerical specificity, the actual results achieved during
the periods presented in all likelihood will differ from the projected
results and such differences may be material.
6.06 Litigation. There are no actions, suits or proceedings
----------
pending or, to the best knowledge of Parent or any Borrower, threatened (i)
with respect to any Document or the Hotel Transaction, (ii) with respect to
any material Indebtedness of Parent or any of its Subsidiaries or (iii)
that could reasonably be expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
6.07 True and Complete Disclosure. All factual information
----------------------------
(taken as a whole) furnished by or on behalf of Parent or its Subsidiaries
in writing to the Administrative Agent or any Bank (including, without
limitation, all information contained in the Documents) for purposes of or
in connection with this Agreement, the other Credit Documents or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of
Parent or its Subsidiaries in writing to the Administrative Agent or any
Bank will be, true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete by omitting
to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circum-
stances under which such information was provided.
6.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
-----------------------------------
the Loans shall be used by the Borrowers (i) to pay fees and expenses re-
lated to this Agreement and (ii)
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<PAGE>
for the Borrowers' and their Subsidiaries' general corporate purposes.
(b) No part of the proceeds of any Loan will be used to purchase
or carry any Margin Stock or to extend credit for the purpose of purchasing
or carrying any Margin Stock. Neither the making of any Loan nor the use
of the proceeds thereof will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System.
6.09 Tax Returns and Payments. Each of Parent and its
------------------------
Subsidiaries and each Person for whose tax Parent or any of its
Subsidiaries could be liable has filed or caused to be filed with the
appropriate taxing authority, all Federal and all other material returns,
statements, forms and reports for all taxes (the "Returns") required to be
filed by it and has paid or caused to be paid (i) all material taxes due
for the periods covered thereby and (ii) all taxes pursuant to any
assessment received by Parent, any of its Subsidiaries or any such Person,
excluding, in each case, any such taxes that have been contested in good
faith and for which adequate reserves have been established in accordance
with generally accepted accounting principles. Except as disclosed on
Schedule II, as of the Effective Date, there is no action, suit,
proceeding, investigation, audit, or claim now pending or, to the knowledge
of Parent or any of its Subsidiaries, threatened by any governmental or
taxing authority regarding any material taxes relating to Parent or any of
its Subsidiaries. Except as disclosed on Schedule II, as of the Effective
Date, neither Parent nor any of its Subsidiaries has entered into an agree-
ment or waiver extending any statute of limitations relating to the payment
or collection of any material taxes of Parent or any of its Subsidiaries.
6.10 Compliance with ERISA. Each Plan is in substantial
---------------------
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for an extension of any amortization period within the meaning of
Section 412 of the Code; neither Parent nor any Subsidiary of Parent nor
any ERISA Affiliate has incurred any material liability to or on account of
a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of
the Code or expects to incur any liability under any of the foregoing
Sections with respect to
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<PAGE>
any Plan; no proceedings have been instituted by the PBGC to terminate or
appoint a trustee to administer any Plan; no condition exists which
presents a material risk to Parent or any Subsidiary of Parent or any ERISA
Affiliate of incurring a liability to or on account of a Plan pursuant to
the foregoing provisions of ERISA and the Code; no lien imposed under the
Code or ERISA on the assets of Parent or any Subsidiary of Parent or any
ERISA Affiliate exists or is likely to arise on account of any Plan; and
Parent and its Subsidiaries may cease contributions to or terminate any
employee benefit plan maintained by any of them without incurring any
material liability to any person interested therein other than accrued
benefits; it being understood that any representation or warranty made in
this Section 6.10 with respect to any multiemployer plan (labor union) is
to the best knowledge of Parent, the Company and each Subsidiary Borrower.
6.11 The Collateral Documents. (a) The provisions of the
------------------------
Security Agreement are effective to create in favor of the Collateral Agent
for the benefit of the Secured Parties a legal, valid and enforceable
security interest in all right, title and interest of the Collateral
Grantors in the Security Agreement Collateral described therein, and the
Security Agreement creates a fully perfected first lien on, and security
interest in, all right, title and interest of the Collateral Grantors, in
all of the Security Agreement Collateral described therein, subject to no
other Liens other than Permitted Liens. The recordation of the Security
Agreement in the United States Patent and Trademark Office together with
filings on Form UCC-1 made pursuant to the Security Agreement will be
effective, under federal law, to perfect the security interest granted to
the Collateral Agent in the trademarks and patents covered by the Security
Agreement and the filing of the Security Agreement with the United States
Copyright Office together with filings on Form UCC-1 made pursuant to the
Security Agreement will be effective under federal law to perfect the
security interest granted to the Collateral Agent in the copyrights covered
by the Security Agreement. Each Collateral Grantor has good and marketable
title to all Security Agreement Collateral described therein, free and
clear of all Liens except those described above in this clause (a).
(b) The security interests created in favor of the Collateral
Agent for the benefit of the Secured Parties under the Pledge Agreements
constitute first perfected security interests in the Pledged Securities
described in the Pledge Agreements, subject to no security interests of any
other Person. No filings or recordings are required in order to
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<PAGE>
perfect (or maintain the perfection or priority of) the security interests
created in the Pledged Securities under the Pledge Agreements.
(c) The security interests created in favor of the Collateral
Agent for the benefit of the Secured Parties under the Assignment of
Partnership Interests Agreement constitute first perfected security
interests in the Partnership Interests described in the Assignment of
Partnership Interests Agreement, subject to no security interests of any
other Person. Except for filings that have been made prior to the
Effective Date, no filings or recordings are required in order to perfect
(or maintain the perfection or priority of) the security interests created
in the Partnership Interests under the Assignment of Partnership Interests
Agreement.
(d) The Mortgages create, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and mortgage lien on all of the Mortgaged Properties in favor
of the Collateral Agent for the benefit of the Secured Parties, superior to
and prior to the rights of all third Persons (except that the security
interest and mortgage lien created in the Mortgaged Properties may be
subject to the Permitted Encumbrances related thereto) and subject to no
other Liens (other than Liens permitted under Section 8.01). The Company
or Harrah's Club, as the case may be, has good and marketable title to the
following three Mortgaged Properties, Harrah's Reno Hotel Casino, Harrah's
Lake Tahoe Hotel Casino (including Bill's Casino) and Harrah's Las Vegas
Hotel Casino; Marina has good and marketable title to the Mortgaged
Property at the Harrah's Atlantic City Hotel Casino; and Harrah's Laughlin
has good and marketable title to the Mortgaged Property at Harrah's
Laughlin Hotel Casino, in each case free and clear of all Liens except
those described in the first sentence of this subsection (d).
(e) The Assignment of Leases and, to the extent not theretofore
terminated, the Net Lease Agreements create, as security for the
obligations purported to be secured thereby, a valid and enforceable
perfected security interest in and Lien on the respective Collateral
covered thereby in favor of the Collateral Agent for the benefit of the
Secured Parties, superior to and prior to the rights of all third Persons
and subject to no other Liens.
(f) Pursuant to the Collateral Documents, perfected security
interests have been created in favor of the
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<PAGE>
Collateral Agent for the benefit of the Secured Parties in all of the
Required Collateral.
6.12 Properties. Parent and each of its Subsidiaries have good
----------
title to all material properties owned by them, free and clear of all
Liens, other than Liens permitted by Section 8.01.
6.13 Capitalization. (a) On the Effective Date, the authorized
--------------
capital stock of Parent shall consist of 360,000,000 shares of common
stock, $1.50 par value per share, of which, as of March 31, 1995,
102,518,639 shares shall be issued and outstanding. All such outstanding
shares have been duly and validly issued, are fully paid and nonassessable
and are free of preemptive rights. As of the Effective Date and except as
disclosed in the most recent report on Form 10-K or 10-Q filed by Parent
with the SEC, Parent does not have outstanding any securities convertible
into or exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital
stock.
(b) On the Effective Date, the authorized capital stock of the
Company shall consist of 1,000 shares of common stock, $1.00 par value per
share, all of which shares were issued and outstanding and owned by Parent.
All such outstanding shares have been duly and validly issued, are fully
paid and nonassessable and are free of preemptive rights. The Company does
not have outstanding any securities convertible into or exchangeable for
its capital stock or outstanding any rights to subscribe for or to pur-
chase, or any options for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock.
6.14 Subsidiaries. Except as otherwise agreed by the Required
------------
Banks, Parent has no Subsidiaries other than (i) the Company and its
Subsidiaries and (ii) Aster Insurance Ltd. All Subsidiaries of the Company
as of the Effective Date, and the direct owner of the capital stock
thereof, are listed on Schedule III. Schedule III also accurately shows,
as of the Effective Date, with respect to each Subsidiary (i) whether such
Subsidiary is a Material Subsidiary and (ii) whether such Subsidiary is a
Guarantor.
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6.15 Compliance with Statutes, etc. Each of Parent and its
------------------------------
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls),
except such noncompliances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
6.16 Investment Company Act. Neither Parent nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
6.17 Public Utility Holding Company Act. Neither Parent nor any
----------------------------------
of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
6.18 Environmental Matters. (a) Parent and each of its
---------------------
Subsidiaries have complied with, and on the date of each such Loan are in
compliance with, all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws. There are no pending or,
to the best knowledge of Parent or any Borrower after due inquiry, past or
threatened Environmental Claims against Parent or any of its Subsidiaries
or any Real Property owned or operated by Parent or any of its Subsidiaries
that individually or in the aggregate could reasonably be expected to
materially and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole. There are no facts, circumstances,
conditions or occurrences on any Real Property owned or operated by Parent
or any of its Subsidiaries or, to the best knowledge of Parent or any
Borrower after due inquiry, on any property adjoining or in the vicinity of
any such Real Property that, to the best knowledge of Parent or any Bor-
rower after due inquiry, could reasonably be expected (i) to form the basis
of an Environmental Claim against Parent or any of its Subsidiaries or any
such Real Property that individually or in the aggregate could reasonably
be expected to materially
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<PAGE>
and adversely affect the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole, or (ii) to cause any such Real Property
to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property by Parent or any of its Subsidiaries
under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated,
used, treated or stored on, or transported to or from, any Real Property
owned or operated by Parent or any of its Subsidiaries where such
generation, use, treatment or storage has violated or could reasonably be
expected to violate any Environmental Law. Hazardous Materials have not at
any time been Released on or from any Real Property owned or operated by
Parent or any of its Subsidiaries where such Release has violated or could
reasonably be expected to violate any applicable Environmental Law. There
are not now any underground storage tanks located on any Real Property
owned or operated by Parent or any of its Subsidiaries which are not in
compliance with all Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section
6.18, the representations made in this Section 6.18 shall only be untrue if
the aggregate effect of all failures and noncompliances of the types
described above could reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
6.19 Labor Relations. Neither Parent nor any of its
---------------
Subsidiaries is engaged in any unfair labor practice that could reasonably
be expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending against Parent or any of its Subsidiaries or, to the best
knowledge of the Parent or any Borrower, threatened against any of them,
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is
so pending against Parent or any of its Subsidiaries or, to the best knowl-
edge of Parent or any Borrower, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against Parent or any
of its Subsidiaries or, to the best knowledge of Parent or any Borrower,
threatened against Parent or any of its Subsidiaries and (iii) to the best
knowledge of Parent or any Borrower, no union representation question
existing with respect to the employees of Parent or
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<PAGE>
any of its Subsidiaries, except (with respect to any matter specified in
clause (i), (ii) or (iii) above, either individually or in the aggregate)
such as could not reasonably be expected to have a material adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole.
6.20 Patents, Licenses, Franchises and Formulas. Each of Parent
------------------------------------------
and its Subsidiaries own all the patents, trademarks, permits, service
marks, trade names, copyrights, licenses, franchises and formulas, or
rights with respect to the foregoing, and has obtained assignments of all
leases and other rights of whatever nature, necessary for the present
conduct of its business, without any known conflict with the rights of
others which, or the failure to obtain which, as the case may be, would
result in a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole.
6.21 Existing Indebtedness. Schedule IV sets forth a true and
---------------------
complete list of all Indebtedness of Parent and its Subsidiaries as of the
Effective Date and which is to remain outstanding after giving effect
thereto, in each case showing the respective borrower thereof (excluding
Indebtedness under this Agreement and the 5-Year Credit Agreement), with
Part A of such Schedule IV to indicate that Indebtedness which constitutes
"Existing Indebtedness" under (and as defined in) the Original 5-Year
Credit Agreement and Part B of such Schedule IV to indicate all such other
Indebtedness outstanding on the Effective Date. The subordination
provisions of the Subordinated Debt set forth on Schedule IV are enforce-
able against the respective borrower or guarantor thereunder, as the case
may be, and all Obligations hereunder and under the other Credit Documents
are within the definition of "Senior Debt," "Guarantor Senior Debt,"
"Designated Senior Debt" and "Designated Senior Debt of the Guarantor"
included in such subordination provisions, as the case may be.
6.22 Hotel Transaction. At the time of consummation thereof,
-----------------
the Hotel Transaction shall have been consummated in accordance with the
terms of the respective Hotel Transaction Documents and all applicable laws
and all conditions precedent thereto shall have been satisfied, or waived
with the consent of the Required Banks. At the time of consummation
thereof, all consents and approvals of, and filings and registrations with,
and all other actions in
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<PAGE>
respect of, all governmental agencies, authorities or instrumentalities
required in order to make or consummate the Hotel Transaction have been
obtained, given, filed or taken and are or will be in full force and effect
(or effective judicial relief with respect thereto has been obtained). All
applicable waiting periods with respect thereto have or, prior to the time
when required, will have, expired without, in all such cases, any action
being taken by any competent authority which restrains, prevents, or
imposes material adverse conditions upon the Hotel Transaction.
Additionally, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the Hotel
Transaction, or the making of any Loan or the performance by Parent or any
other Credit Party of their obligations under the respective Documents.
All actions taken by Parent and its Subsidiaries pursuant to or in
furtherance of the consummation of the Hotel Transaction have been taken in
compliance with the respective documents therefor and all applicable laws.
The Hotel Transaction has been consummated in accordance with the terms of
the Hotel Transaction Documents and all applicable laws.
6.23 No Other Ventures. Except as set forth on Schedule V, as
-----------------
of the Effective Date, neither Parent nor any of its Subsidiaries is
engaged in any Joint Venture or partnership with any other Person.
SECTION 7. Affirmative Covenants. Each of Parent, the Company
---------------------
and each Subsidiary Borrower covenants and agrees that on and after the
Effective Date and until the Total Revolving Loan Commitment has terminated
and the Loans and the Revolving Notes, together with interest, Fees and
all other obligations incurred hereunder and thereunder, are paid in full:
7.01 Information Covenants. Parent will furnish to each Bank:
---------------------
(a) Quarterly Financial Statements. Within 45 days after the
------------------------------
close of the first three quarterly accounting periods in each fiscal
year of Parent and within 90 days after the close of the fourth
quarterly accounting period in each fiscal year of Parent, the
consolidated balance sheet of Parent and its Consolidated Subsidiaries
as at the end of such quarterly accounting period and the related
consolidated statements of income and statement of cash flows, in each
case for such quarterly accounting period and for the elapsed portion
of the fiscal year ended with the last
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<PAGE>
day of such quarterly accounting period, in each case setting forth
comparative figures for the related periods in the prior fiscal year,
all of which shall be certified by the chief financial officer,
controller or treasurer of Parent, subject to normal year-end audit
adjustments.
(b) Annual Financial Statements. Within 120 days after the
---------------------------
close of each fiscal year of Parent, the consolidated balance sheet of
Parent and its Consolidated Subsidiaries as at the end of such fiscal
year and the related consolidated statements of income and retained
earnings and statement of cash flows for such fiscal year setting
forth comparative figures for the preceding fiscal year and certified
by Arthur Andersen & Co. or such other independent certified public
accountants of recognized national standing reasonably acceptable to
the Required Banks, together with a statement of the firm of such
independent accountants as to whether, in conducting their audit,
anything came to their attention to cause them to believe that Parent
and the Company were not in compliance with Sections 8.07, 8.08 and
8.09, insofar as such Sections relate to accounting and auditing
matters, on the date of such statements.
(c) Budgets. No later than 90 days after the commencement of
-------
each fiscal year of Parent, a budget which shall include an annual
balance sheet for such fiscal year, quarterly statements of income and
sources and uses of cash for each of the four fiscal quarters of such
fiscal year, together with a business plan for such fiscal year, in
each case consolidated for Parent and its Subsidiaries, and accom-
panied by a statement of the chief financial officer, controller or
treasurer of Parent that the budget has been approved by the Board of
Directors of Parent or the Company.
(d) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 7.01(a) and (b), a
certificate of the chief financial officer, controller or treasurer of
Parent to the effect that, to the best of such officer's knowledge, no
Default or Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof, which certificate shall set forth (i)
the calculations required to establish whether Parent and the
Borrowers were in compliance with the provisions of Sections 2.03(c)
and (d), 8.03(v), 8.04(vi), (ix)
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<PAGE>
through and including (xii), (xiv) and (xv), 8.05 and 8.07 through
8.09, inclusive, at the end of such fiscal quarter or year, as the
case may be and (ii) the Senior Implied Indebtedness ratings, if any,
assigned by Moody's and S&P to the Company's Indebtedness at the end
of such fiscal quarter or year, as the case may be.
(e) Notice of Default or Litigation. Promptly upon, and in any
-------------------------------
event within three Business Days after, an officer of Parent or any
Borrower obtains knowledge thereof, notice of (i) the occurrence of
any event which constitutes a Default or an Event of Default and (ii)
any litigation or governmental investigation or proceeding (including
any investigation by any Gaming Authority) pending (x) against Parent
or any of its Subsidiaries which could reasonably be expected to mate-
rially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects
of Parent and its Subsidiaries taken as a whole, (y) with respect to
any material Indebtedness of Parent or any of its Subsidiaries or (z)
with respect to any Credit Document.
(f) Other Reports and Filings. Promptly, (i) copies of all
-------------------------
financial statements, reports and proxy materials which Parent has
mailed to its shareholders generally, (ii) copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K,
10-Q and 8-K (or their equivalent) which Parent or any of its
Subsidiaries shall file with the Securities and Exchange Commission or
any successor thereof (the "SEC") and (iii) to the extent not
otherwise provided to the Banks, copies of all notices, reports and
financial statements which Parent or any of its Subsidiaries shall
deliver to holders of any issue of Indebtedness if the aggregate
principal amount thereof exceeds (or upon the utilization of any used
commitments may exceed) $25,000,000 pursuant to the terms of the
documentation governing any such issue of Indebtedness (or any
trustee, agent or other representative therefor).
(g) Environmental Matters. Promptly upon, and in any event
---------------------
within ten Business Days after, an officer of Parent or any Borrower
obtains knowledge thereof, notice of one or more of the following
environmental matters, unless such environmental matters could not,
individually or when aggregated with all other such environmental
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<PAGE>
matters, be reasonably expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (finan-
cial or otherwise) or prospects of Parent and its Subsidiaries taken
as a whole: (i) any pending or threatened Environmental Claim against
Parent or any of its Subsidiaries or any Real Property owned or oper-
ated by Parent or any of its Subsidiaries; (ii) any condition or
occurrence on or arising from any Real Property owned or operated by
Parent or any of its Subsidiaries that (a) results in noncompliance by
Parent or any of its Subsidiaries with any applicable Environmental
Law or (b) could reasonably be expected to form the basis of an
Environmental Claim against Parent or any of its Subsidiaries or any
such Real Property; (iii) any condition or occurrence on any Real
Property owned or operated by Parent or any of its Subsidiaries that
could reasonably be expected to cause such Real Property to be subject
to any restrictions on the ownership, occupancy, use or transfer-
ability by Parent or any of its Subsidiaries of such Real Property
under any Environmental Law; and (iv) the taking of any removal or
remedial action in response to the actual or alleged presence of any
Hazardous Material on any Real Property owned or operated by Parent or
any of its Subsidiaries as required by any Environmental Law or any
governmental or other administrative agency; provided that in any
--------
event Parent shall deliver to each Bank all notices received by Parent
or any of its Subsidiaries from any government or governmental agency
under, or pursuant to, CERCLA. All such notices shall describe in
reasonable detail the nature of the claim, investigation, condition,
occurrence or removal or remedial action and Parent's or such Subsidi-
ary's response thereto. In addition, Parent will provide the Banks
with copies of all material written communications by Parent or any of
its Subsidiaries with any government or governmental agency relating
to Environmental Laws, all material written communications with any
person relating to Environmental Claims, and such detailed reports of
any Environmental Claim as may reasonably be requested by the Banks.
(h) Other Information. From time to time, such other
-----------------
information or documents (financial or otherwise) with respect to
Parent or its Subsidiaries as the Administrative Agent or any Bank may
reasonably request.
7.02 Books, Records and Inspections. Parent will, and will
------------------------------
cause each of its Subsidiaries to, keep proper books
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of record and account in which full, true and correct entries in conformity
with generally accepted accounting principles and all requirements of law
shall be made of all dealings and transactions in relation to its business
and activities. Parent will, and will cause each of its Subsidiaries to,
permit officers and designated representatives of the Administrative Agent
or any Bank to visit and inspect, at the Administrative Agent's or such
Bank's expense and under guidance of officers of Parent or such Subsidiary,
any of the properties of Parent or such Subsidiary, and to examine the
books of account of Parent or such Subsidiary and discuss the affairs,
finances and accounts of Parent or such Subsidiary with, and be advised as
to the same by, its and their officers and independent public accountants,
provided that a representative of Parent or such Subsidiary is present, all
- --------
at such reasonable times and intervals and to such reasonable extent as the
Administrative Agent or such Bank may request, provided that the
--------
Administrative Agent and the Banks shall have no right pursuant to this
Section 7.02 to obtain any information relating to (i) the identity of
gaming patrons obligated under Markers or (ii) any filings made pursuant
to Regulation 6A or 6.090 of the Regulations of the Nevada Gaming
Commission (except that the Administrative Agent and the Banks may review
the reports of an independent auditor with respect to such filings).
7.03 Maintenance of Property; Insurance. (a) Parent will, and
----------------------------------
will cause each of its Material Subsidiaries to, keep all property
necessary in the reasonable conduct of its business in good working order
and condition.
(b) Schedule VI sets forth a true and complete listing of all
insurance maintained by Parent and its Subsidiaries as of the Effective
Date. Parent will maintain, and will cause each of its Material
Subsidiaries to maintain, (i) physical damage insurance on all real and
personal property on an all risk basis (including the perils of flood and
quake), covering the repair and replacement cost of all such property and
consequential loss coverage for business interruption and extra expense,
and (ii) such other insurance coverage in such amounts and with respect to
such risks as the Administrative Agent or the Required Banks may reasonably
request; provided, however, that flood, earthquake and business
-------- -------
interruption insurance will be required only to the extent available on a
commercially reasonable basis and so long as it is consistent with
reasonable and prudent insurance underwriting practices. All such
insurance shall be provided by insurers having an A.M. Best general policy-
holders service rating of not less than "B+VI" or such other
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insurers as the Administrative Agent may approve in writing. In addition,
all insurance with respect to the Collateral shall name the Collateral
Agent as loss payee, for the benefit of the Secured Parties, and shall
provide that (a) the proceeds thereof shall be paid directly to the
Collateral Agent, subject to Section 3.01(c) of each Mortgage and Section
11 of the Security Agreement and (b) no cancellation, material change or
reduction thereof shall be effective until at least 30 days after receipt
by the Collateral Agent of written notice thereof. Parent will deliver to
the Banks (i) upon request of any Bank through the Administrative Agent
from time to time full information as to the insurance carried, (ii) for
insurance with respect to the Collateral and all other material insurance,
within five days of receipt of notice from any insurer, a copy of any
notice of cancellation or material change in coverage from that existing on
the date of this Agreement and (iii) forthwith, notice of any cancellation
or nonrenewal of any insurance coverage of Parent or any of its Material
Subsidiaries with respect to the Collateral or any other material insurance
coverage of Parent or any of its Subsidiaries. Nothing in this Section
7.03(b) shall be construed to restrict the right of Parent or any Material
Subsidiaries from obtaining blanket insurance as permitted under the
Mortgages, or self insurance of certain risks to the extent such insurance
is consistent with the past practices of Parent or such Material Subsidiary
and consistent with reasonable and prudent insurance underwriting
practices. The provisions of this Section 7.03(b) shall be deemed
supplemental to, but not duplicative of, the provisions of the Security
Agreement and the Mortgages. If Parent or any of its Material Subsidiaries
shall fail to insure its property in accordance with this Section 7.03(b),
the Collateral Agent shall have the right (but shall be under no
obligation) upon notice to Parent or the respective Material Subsidiary to
procure such insurance and Parent and each Borrower agrees to reimburse the
Collateral Agent for all costs and expenses of procuring such insurance.
7.04 Corporate Franchises. Parent will, and will cause each of
--------------------
its Material Subsidiaries to, do or cause to be done, all things necessary
to preserve and keep in full force and effect its existence and its
material rights, franchises, licenses and patents; provided, however, that
-------- -------
nothing in this Section 7.04 shall prevent (i) sales of stock or assets by
Parent or any of its Subsidiaries in accordance with Section 8.02, (ii) the
withdrawal by Parent or any of its Subsidiaries of its qualification as a
foreign corporation in any jurisdiction where such withdrawal could not
reasonably be expected to have a material adverse effect on the business,
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<PAGE>
operations, property, assets, liabilities, condition (financial or other-
wise) or prospects of Parent and its Subsidiaries taken as a whole or (iii)
the taking of any action respecting any right, franchise, license or patent
determined by the management of Parent or such Subsidiary to be in the best
interest of Parent or such Subsidiary.
7.05 Compliance with Statutes, etc. Parent will, and will cause
------------------------------
each of its Subsidiaries to, comply with all applicable statutes,
regulations (including Gaming Regulations) and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
7.06 Compliance with Environmental Laws. (a) Parent will
----------------------------------
comply, and will cause each of its Subsidiaries to comply, in all material
respects with all Environmental Laws applicable to ownership or use of the
Required Collateral now or hereafter owned or operated by Parent or any of
its Subsidiaries, will promptly pay or cause to be paid all costs and
expenses incurred in such compliance, and will keep or cause to be kept all
such Required Collateral free and clear of any Liens imposed pursuant to
such Environmental Laws other than Liens which could not materially detract
from the value of any such Required Collateral. Neither Parent nor any of
its Subsidiaries will generate, use, treat, store, release or dispose of,
or permit (to the extent within Parent's or such Subsidiary's reasonable
control) the generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned, leased or
managed by Parent or any of its Subsidiaries, or transport or permit (to
the extent within Parent's or such Subsidiary's reasonable control) the
transportation of Hazardous Materials to or from any such Real Property
except as in material compliance with all applicable Environmental Laws and
reasonably required in connection with the operation, use and maintenance
of any such Real Property in the conduct of Parent's or such Subsidiary's
business.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time after either (i) an Event of
Default shall have
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<PAGE>
occurred and be continuing or (ii) the Banks shall have received notice
under Section 7.01(g) for any event for which notice is required to be
delivered for any such Real Property, Parent will provide, at Parent's sole
cost and expense, an environmental site assessment report concerning any
Real Property, prepared by an environmental consulting firm approved by the
Required Banks, indicating the presence or absence of Hazardous Materials
and the potential cost of any removal or remedial action in connection with
any Hazardous Materials on such Real Property. If Parent fails to provide
the same ninety (90) days after such request was made, the Administrative
Agent may order the same, and Parent and each Borrower shall grant and
hereby grants to the Administrative Agent and the Banks and their agents
access to such Real Property and specifically grants the Administrative
Agent and the Banks an irrevocable non-exclusive license, subject to the
rights of tenants, to undertake such an assessment, all at Parent's and the
Borrowers' expense.
7.07 ERISA. As soon as possible and, in any event, within 10
-----
days after Parent or any Borrower or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, Parent will
deliver to each of the Banks a certificate of the chief financial officer,
controller or treasurer of Parent setting forth details as to such
occurrence and the action, if any, which Parent, such Subsidiary or such
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by Parent, such
Subsidiary, such ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred;
that an accumulated funding deficiency has been incurred or an application
may be or has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under
Section 412 of the Code with respect to a Plan; that a Plan has been or may
be terminated, reorganized, partitioned or declared insolvent under Title
IV of ERISA; that a Plan has an Unfunded Current Liability giving rise to a
lien under ERISA or the Code; that proceedings may be or have been
instituted by the PBGC to terminate or appoint a trustee to administer a
Plan; that a proceeding has been instituted pursuant to Section 515 of
ERISA to collect a delinquent contribution to a Plan; that Parent, any Sub-
sidiary of Parent or any ERISA Affiliate will or may incur any liability
(including any contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA
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or with respect to a Plan under Section 401(a)(29), 4971 or 4975 of the
Code or Section 409 or 502(i) or 502(l) of ERISA. Parent will deliver to
each of the Banks a complete copy of the annual report (Form 5500) of each
Plan (including, to the extent required to be filed with Form 5500, the
related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information) required
to be filed with the Internal Revenue Service. In addition to any certifi-
cates or notices delivered to the Banks pursuant to the first sentence
hereof, copies of annual reports and any notices received by Parent or any
Subsidiary of Parent or any ERISA Affiliate with respect to any Plan shall
be delivered to the Banks no later than 10 days after the date such report
has been filed with the Internal Revenue Service or such notice has been
received by Parent, the Subsidiary or the ERISA Affiliate, as applicable.
7.08 End of Fiscal Years; Fiscal Quarters. Parent and the
------------------------------------
Company will cause (i) each of its fiscal years to end on December 31, and
(ii) each of its fiscal quarters to end on March 31, June 30, September 30
and December 31.
7.09 Performance of Obligations. Parent will, and will cause
--------------------------
each of its Subsidiaries to, perform all of its obligations under the terms
of each mortgage, indenture, security agreement and other debt instrument
by which it is bound, except such non-performances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Parent and its
Subsidiaries taken as a whole.
7.10 Payment of Taxes. Parent will pay and discharge, and will
----------------
cause each of its Subsidiaries to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, in each case on a timely
basis, and all lawful claims which, if unpaid, might become a lien or
charge upon any properties of Parent or any of its Subsidiaries; provided
--------
that neither Parent nor any of its Subsidiaries shall be required to pay
any such tax, assessment, charge, levy or claim which is being contested in
good faith and by proper proceedings if it has maintained adequate reserves
with respect thereto in accordance with generally accepted accounting
principles.
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7.11 Registry. The Company hereby covenants that it shall
--------
maintain a register on which it will record the Revolving Loan Commitments
from time to time of each of the Banks, the Loans made by each of the Banks
and each repayment in respect of the principal amount of the Loans of each
Bank. Failure to make any such recordation, or any error in such
recordation shall not affect any Borrower's obligations in respect of such
Loans. Upon the written request of the Company, the Administrative Agent
hereby agrees to use its reasonable efforts to provide to the Company such
information, not otherwise available to the Company, as the Company shall
reasonably request from time to time in order to enable it to fulfill its
obligations pursuant to this Section 7.11 and the Company shall have no
obligation to make any such recordation until it receives such requested
information from the Administrative Agent. Without limiting the Company's
obligations hereunder, the Company shall indemnify any Bank described in
Section 3.04(b)(iii) or (iv) for any losses (including withholding of Taxes
required) arising as a result of the Company's failure to comply with this
Section 7.11. With respect to any Bank described in Section 3.04(b)(iii)
or (iv), (a) the transfer of the Revolving Loan Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant
to such Revolving Loan Commitments shall not be effective until such
transfer is recorded on the register maintained by the Company with respect
to ownership of such Revolving Loan Commitments and Loans and prior to such
recordation all amounts owing to the transferor with respect to such
Revolving Loan Commitments and Loans shall remain owing to the transferor
and (b) the Company shall immediately record all such transfers when
notified thereof by the transferor Bank and such transfer shall be made
only through (x) the surrender of a Revolving Note and the reissuance of
such Revolving Note by the Company to the new holder of the old Revolving
Note or the issuance by the Company of a new Revolving Note to the new
holder (the "Issuance System") or (y) a register maintained by the Company
and referred to in the first sentence of this Section (the "Book Entry
System"). The Borrowers jointly and severally agree to indemnify any
transferee Bank from and against any and all losses, claims, damages and
liabilities (including, without limitation, any amounts paid by the trans-
feree to the transferor in connection with the transfer and all amounts
which would otherwise be owing to the transferee if the transfer had been
properly recorded) resulting from the Company's failure to record any such
transfer through either the Issuance System or the Book Entry System.
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7.12 Additional Guarantors; Additional Collateral; etc. (a) In
--------------------------------------------------
the event that at any time after the Effective Date any Person becomes (x)
a First-Tier Material Subsidiary, (y) a Material Subsidiary pursuant to
clause (b) of this Section 7.12 or clause (ii) of the definition thereof or
(z) a guarantor under the 5-Year Credit Agreement, then Parent and the
Company will, except as otherwise provided in the last sentence of this
clause (a), cause such Person (each such Person a "Required Additional
Guarantor"), within 30 days after it becomes a Required Additional
Guarantor, to duly authorize, execute and deliver to the Administrative
Agent counterparts of the Company/Sub Guaranty, together with such other
documents, certificates, resolutions, opinions and writings that would have
been required to be delivered pursuant to Sections 4.03, 4.04 and 4.13 if
such Subsidiary had been a Guarantor on the Effective Date and subject to
such Sections on such date, all of which shall be in form and substance
satisfactory to the Administrative Agent. Notwithstanding the foregoing,
any Subsidiary of the Company which is not a Wholly-Owned Subsidiary or
which has incurred then outstanding Non-Recourse Indebtedness pursuant to
Section 8.04(ix) or (x) shall not be required to become a Guarantor
pursuant to the Company/Sub Guaranty.
(b) In the event that at any time after the Effective Date
Parent or any of its Subsidiaries acquires any Required Collateral, or it
is determined that any Required Collateral is not then subject to a
perfected security interest pursuant to the relevant Collateral Documents
or any additional collateral is provided under the 5-Year Credit Agreement,
then in each such case perfected security interests shall immediately be
granted in such Required Collateral or other collateral pursuant to the
respective Collateral Documents and, to the extent reasonably determined
necessary or desirable by the Administrative Agent, additional security
documents shall be entered into in order to effectively grant such
perfected security interests (all such additional security documents
entered into pursuant to this Section 7.12(b), "Additional Collateral
Documents"), together with such other documents, certificates, resolutions,
instruments, financing statements, opinions and writings that would have
been required to be delivered pursuant to Sections 4.03 and 4.04 of this
Agreement and Sections 5.06 through 5.13 of the Original 5-Year Credit
Agreement, as applicable, if perfected security interests had been created
in respect of such Required Collateral or other collateral on or prior to
the Effective Date, all of which shall be in form and substance
satisfactory to the Administrative Agent.
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<PAGE>
(c) In the event that the Administrative Agent or the Required
Banks at any time after the Effective Date determine in its or their good
faith discretion (as a result of events or circumstances affecting the
Collateral Agent or the Required Banks after the Effective Date) that real
estate appraisals satisfying the requirements set forth in 12 C.F.R., Part
34-Subpart C, or any successor or similar statute, rule, regulation,
guideline or order (any such appraisal a "Required Appraisal") are or were
required to be obtained, or should be obtained, in connection with any
Mortgaged Property or Mortgaged Properties, then, within 120 days after
receiving written notice thereof from the Administrative Agent or the
Required Banks, as the case may be, such Required Appraisal shall be
delivered, at the expense of the Company, to the Administrative Agent,
which Required Appraisal, and the respective appraiser, shall be
satisfactory to the Administrative Agent.
SECTION 8. Negative Covenants. Each of Parent, the Company and
------------------
each Subsidiary Borrower covenants and agrees that on and after the
Effective Date and until the Total Revolving Loan Commitment has terminated
and the Loans and the Revolving Notes, together with interest, Fees and all
other Obligations incurred hereunder and thereunder, are paid in full:
8.01 Liens. Parent will not, and will not permit any of its
-----
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of Parent or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable with recourse to
Parent or any of its Subsidiaries), or assign any right to receive income
or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute; pro-
----
vided that the provisions of this Section 8.01 shall not prevent the
- -----
creation, incurrence, assumption or existence of the following (Liens
described below are herein referred to as "Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been estab-
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<PAGE>
lished in accordance with generally accepted accounting principles;
(ii) Liens in respect of property or assets of Parent or any of
its Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money,
such as carriers', warehousemen's, materialmen's and mechanics' liens
and other similar Liens arising in the ordinary course of business,
and (x) which do not in the aggregate materially detract from the
value of Parent's or such Subsidiary's property or assets or materi-
ally impair the use thereof in the operation of the business of Parent
or such Subsidiary or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of prevent-
ing the forfeiture or sale of the property or assets subject to any
such Lien;
(iii) Liens permitted pursuant to Section 9.01(iii) of the
Original 5-Year Credit Agreement which remain in existence on the
Effective Date and which are listed, and the property subject thereto
described, in Schedule VII, but only to the respective date, if any,
set forth in such Schedule VII for the removal and termination of any
such Liens, without any renewals or extensions thereof;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Collateral Documents;
(vi) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of Parent or any of its
Subsidiaries or materially detracting from the value of the respective
assets of Parent or such Subsidiary;
(vii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security in the ordinary course of
business;
(viii) Liens placed upon equipment or machinery used in the
ordinary course of business of the Company or any of its Subsidiaries
at the time of acquisition thereof by the Company or any such
Subsidiary or within 90 days thereafter to secure Indebtedness
incurred to pay all or
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a portion of the purchase price thereof provided that (x) the
aggregate principal amount of all Indebtedness secured by Liens
permitted by this clause (viii) incurred in any fiscal year of Parent
does not exceed $1,000,000 and (y) in all events, the Lien encumbering
the equipment or machinery so acquired does not encumber any other
asset of Parent or such Subsidiary;
(ix) easements, rights-of-way, restrictions, encroachments and
other similar charges or encumbrances, and minor title deficiencies,
in each case not securing Indebtedness and not materially interfering
with the conduct of the business of Parent or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
(xi) Liens arising out of judgments or awards in respect of which
Parent or any of its Subsidiaries shall in good faith be prosecuting
an appeal or proceedings for review in respect of which there shall
have been secured a subsisting stay of execution pending such appeal
or proceedings provided that the aggregate amount of all such
judgments or awards (and any cash and the fair market value of any
property subject to such Liens) does not exceed $15,000,000 at any
time outstanding;
(xii) statutory and common law landlords' liens under leases to
which Parent or any of its Subsidiaries is a party;
(xiii) Liens incurred or deposits made to secure the performance of
tenders, bids, statutory obligations, government contracts, perform-
ance and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations
for the payment of borrowed money);
(xiv) Liens securing reimbursement obligations with respect to
commercial and standby letters of credit incurred by the Company or
any of its Subsidiaries in the ordinary course of business provided
that (x) each such letter of credit is in a face amount of less than
$1,000,000 and (y) the aggregate face amount of all such letters of
credit does not exceed $5,000,000;
(xv) restrictions pursuant to legends on stock required by (x)
Gaming Regulations and (y) the
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partnership agreement for Harrah's Jazz (as such partnership agreement
is in effect on the Effective Date, which restrictions, in any event,
do not prohibit the granting of the Liens on any Required Collateral
or the exercise of remedies pursuant to the Collateral Documents), in
each case to the extent such restrictions constitute a Lien;
(xvi) Liens securing Existing Casino Non-Recourse Financing
permitted under Section 8.04(ix) so long as such Liens only encumber
the Casino Property or the two Casino Properties (including the
furniture, fixtures and equipment related thereto) in respect of which
Existing Casino Non-Recourse Financing is then being or has
theretofore been obtained, provided that such Liens may attach to any
Casino Property only upon the occurrence of the respective Casino
Release in accordance with the terms hereof;
(xvii) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary of Parent so long as any
such Lien was not created in contemplation of such event;
(xviii) any Lien existing on any asset prior to the acquisition
thereof by the Company or any of its Subsidiaries so long as any such
Lien was not created in contemplation of such acquisition;
(xix) Liens on equipment or machinery subject to Capitalized
Lease Obligations to the extent permitted by Section 8.04(v);
(xx) Liens securing Non-Recourse Indebtedness of Specified
Subsidiaries permitted under Section 8.04(x) so long as such Liens
only encumber the Gaming Properties owned by Specified Subsidiaries
being developed or financed with such Non-Recourse Indebtedness,
including any Real Property and furniture, fixtures and equipment
related thereto, it being understood and agreed that such assets of
Specified Subsidiaries also may secure Non-Recourse Indebtedness
incurred by other Specified Subsidiaries pursuant to Section 8.04(x);
(xxi) Liens on the Company's or any of its Subsidiaries'
respective equity interest in any Joint Venture so long as such Liens
only secure Indebtedness of such Joint Venture; and
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(xxii) Liens placed upon the Hotel Collateral securing the
Indebtedness and other obligations of the Company and the Hotel
Subsidiaries under the Hotel Facility, it being understood that such
Liens shall not be permitted with respect to any assets or properties
of Parent or any Subsidiary of Parent after the Effective Date.
8.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
-------------------------------------------------------
(a) Parent will not, and will not permit any of its Material Subsidiaries
to, wind up, liquidate or dissolve its affairs or enter into any
transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or
substantially all of its assets, whether in a single transaction or a
series of related transactions, provided, however, (A) that in no event
-------- -------
shall Parent or any of its Subsidiaries sell, lease or otherwise dispose of
the capital stock or partnership interest in any Material Subsidiary or any
Casino Property unless, in the case of any sale of any Casino Property
(including any fixtures, furniture and equipment related thereto), or the
sale of capital stock or partnership interest of any Casino Owner that owns
the related Casino Property, (i) such sale is for cash and the Net Sale
Proceeds therefrom equals at least the Minimum Proceeds Amount for such
Casino Property or the Casino Owner thereof, provided that no more than two
Casino Properties or the two Casino Owners thereof in the aggregate may be
the subject of a Casino Release, whether pursuant to this Section 8.02 or
Section 8.04(ix), and only one of either the Atlantic City Property or the
Las Vegas Property may be the subject of a Casino Release, (ii) the Casino
Owner of such Casino Property, if a Subsidiary Borrower, ceases to be a
Subsidiary Borrower and all Loans incurred by such Subsidiary Borrower are
repaid in full, (iii) at the time of such sale no Default or Event of
Default then exists or would exist after giving effect thereto and the
Total Revolving Loan Commitment is reduced as required by Section 2.03(d),
(B) Harrah's New Jersey may merge with and into Harrah's Atlantic City so
long as at the time of such merger (i) no Default or Event of Default shall
exist, (ii) all of the assets of Marina are distributed to the surviving
corporation of such merger, (iii) the surviving corporation of such merger
is a Wholly-Owned Subsidiary of the Company all of the capital stock of
which is pledged by the Company pursuant to the terms of the Company/Sub
Pledge Agreement and (iv) all steps are taken that are necessary, or in the
opinion of the Collateral Agent desirable, to maintain the perfection and
priority of the Liens on the Collateral theretofore owned by Marina
pursuant
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to the terms of the respective Collateral Documents, (C) the Hotel Transfer
and the Hotel Stock Dividend shall be permitted, (D) the Company may
transfer its ownership interest in any of the Casino Properties located in
Nevada to Harrah's Club so long as at the time of any such transfer (i) no
Default or Event of Default shall exist and (ii) all steps are taken that
are necessary, or in the opinion of the Collateral Agent desirable, to
maintain the perfection and priority of the Liens on the Collateral
theretofore owned by the Company pursuant to the respective Collateral
Documents and so transferred to Harrah's Club and (E) Casino Holding
Company may merge with and into Harrah's Club so long as Harrah's Club is
the surviving corporation of such merger Harrah's may merge with and into
the Company so long as the Company is the surviving corporation of such
merger, and Harrah's Club may merge with and into the Company so long as
the Company is the surviving corporation of such merger, in each case so
long as no Default or Event of Default then exists and all steps are taken
that are necessary, or in the opinion of the Collateral Agent desirable, to
maintain the perfection and priority of the Lien's on the Collateral
theretofore owned by Harrah's Club and Harrah's, as applicable, pursuant to
the terms of the respective Collateral Documents. Notwithstanding anything
to the contrary contained above, the Company may transfer any Casino
Property (and the fixtures, furniture and equipment related thereto) owned
by it to a special purpose Wholly-Owned Subsidiary of the Company for the
purpose of either (i) selling the capital stock of such special purpose
Wholly-Owned Subsidiary pursuant to clause (A) of this Section 8.02 or (ii)
permitting such special purpose Wholly-Owned Subsidiary to incur Existing
Casino Non-Recourse Financing pursuant to Section 8.04(ix) so long as in
either case such transfer occurs at the time of, or immediately prior to,
such sale or the incurrence of such Existing Casino Non-Recourse Financing.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Parent will not, and will not permit any of its Subsidiaries to,
sell, transfer or dispose of any Collateral (except for the Pledged
Securities of any Hotel Subsidiary as part of the Hotel Transfer), except
that (i) up to two Casino Properties (or the capital stock or partnership
interests in the respective Casino Owners) may be sold in accordance with
clause (A) of the proviso to the first sentence of Section 8.02(a), (ii)
sales of inventory, materials and equipment may be made in the ordinary
course of business, (iii) sales of obsolete, uneconomic or worn out
equipment or materials shall be permitted and (iv) so long as
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no Default or Event of Default then exists or would exist after giving
effect thereto, Collateral (other than any Casino Property, the "Harrah's"
name (although same may be used or licensed on a non-exclusive basis in
connection with the extension of the Gaming Business of the Company and its
Subsidiaries and Joint Ventures) and any capital stock or partnership
interest in any Material Subsidiary) may be sold at fair market value as
determined in good faith by the Company and so long as at least 75% of the
gross proceeds therefrom consist of cash, and so long as any reduction to
the Total Revolving Loan Commitment required by Section 2.03(d) and (e) is
effected (and any resultant required payments are made pursuant to Section
3.02) in accordance with the terms thereof.
(c) To the extent the Required Banks waive in writing the provi-
sions of this Section 8.02 with respect to the sale of any Collateral, or
any Collateral is sold as permitted by this Section 8.02, such Collateral
shall be sold free and clear of the Liens created by the Collateral Docu-
ments, and the Administrative Agent and Collateral Agent shall be
authorized to take any actions deemed appropriate in order to effect the
foregoing.
8.03 Dividends. Parent will not, and will not permit any of its
---------
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Parent or any of its Subsidiaries, except that:
(i) any Subsidiary of the Company may pay Dividends to the
Company or any Wholly-Owned Subsidiary of the Company;
(ii) any non-Wholly-Owned Subsidiary of the Company may pay cash
Dividends to its shareholders generally on a pro rata basis;
--- ----
(iii) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company
may pay cash Dividends to Parent which are used by Parent to pay cash
Dividends to its shareholders to the extent necessary, as determined
in the good faith judgment of the Board of Directors of Parent or the
Company, to prevent the filing of any disciplinary action by any
Gaming Authority or to prevent the loss or secure the reinstatement of
any license or franchise from any governmental agency, including
Gaming Authorities, held by Parent or any of its Subsidiaries which
license or franchise is conditioned
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upon some or all of the holders of Parent's capital stock possessing
prescribed qualifications, in each case only if such loss or failure
to reinstate would have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a
whole, provided that the aggregate amount of cash Dividends permitted
to be paid pursuant to this clause (iii) shall not exceed $5,000,000;
(iv) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company
may pay cash Dividends to Parent in the amounts permitted pursuant to
clauses (v) and (vi) of this Section 8.03, provided that Parent uses
the proceeds thereof to pay Dividends within three days after receipt
thereof for the purposes set forth in such clauses (v) and (vi);
(v) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), Parent may pay
cash Dividends in an aggregate amount for any fiscal year of Parent
not to exceed the lesser of (x) 10% of Consolidated Net Income for the
prior fiscal year and (y) $20,000,000;
(vi) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), Parent may
redeem the Rights outstanding pursuant to the terms of the Rights
Agreement, provided that (i) Parent shall not pay more than $.05 per
Right in connection therewith and (ii) the aggregate amount of
Dividends paid pursuant to this clause (vi) shall not exceed
$2,500,000;
(vii) so long as no Default or Event of Default shall exist (both
before and after giving effect to the payment thereof), the Company
may pay cash Dividends to Parent so long as the proceeds thereof are
promptly used by Parent to pay (i) operating expenses in the ordinary
course of business and other similar corporate overhead costs and
expenses and (ii) amounts necessary to fund Aster Insurance Ltd. in
the ordinary course of its business;
(viii) the Company may pay cash Dividends to Parent in the amounts
and at the times of any payment by Parent in respect of federal,
state, franchise or other taxes
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(provided that any refund shall be promptly returned by Parent to the
Company); and
(ix) Parent and the Company may declare and, on the Effective
Date pay, the Hotel Stock Dividend.
Nothing in this Section 8.03 shall prohibit the making of any Dividend
within 45 days after the declaration thereof if such declaration was not
prohibited by this Section 8.03 at the time of such declaration.
8.04 Indebtedness. Parent will not, and will not permit any of
------------
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Indebtedness permitted under Section 9.04(ii) of the
Original 5-Year Credit Agreement which remains outstanding on the
Effective Date and which is listed on Schedule IV, provided that no
--------
refinancings or renewals thereof shall be permitted except as
expressly set forth on Part A of Schedule IV and then, in any event,
such refinancings and renewals shall not be in excess of the
respective amounts set forth on Part A of Schedule IV;
(iii) accrued expenses and current trade accounts payable incurred
in the ordinary course;
(iv) unsecured Indebtedness of Parent or the Company under
performance bonds and guarantees in respect of the completion of the
construction of any property in accordance with the plans or standards
as agreed with the obligee of such guarantee so long as such bonds or
guarantees are incurred by Parent or the Company in the ordinary
course of the Gaming Property development business of the Company and
its Subsidiaries;
(v) Indebtedness of the Company or any of its Subsidiaries
subject to Liens permitted under Section 8.01(viii) or evidenced by
Capitalized Lease Obligations provided that such Capitalized Lease
Obligations only relate to equipment or machinery (not constituting
Collateral) of the Company or any of its Subsidiaries;
(vi) Indebtedness of the Company or any of its Subsidiaries
consisting of (x) reimbursement obligations on
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letters of credit, bankers acceptances or similar instruments,
provided that (i) the aggregate amount thereof at any one time
--------
outstanding shall not exceed $5,000,000 and (ii) any such Indebtedness
in excess of $1,000,000 in the aggregate at any one time outstanding
shall be unsecured other than by documents of title and (y) surety,
performance or appeal bonds to the extent permitted by Section
8.01(xi);
(vii) Indebtedness of the Company and the Hotel Subsidiaries under
the Hotel Facility, it being understood that neither Parent nor any
Subsidiary of Parent shall be liable in respect of such Indebtedness
after the Effective Date;
(viii) Indebtedness of Parent, the Company or any Wholly-Owned
Subsidiary of the Company to Parent, the Company or any Subsidiary of
the Company (other than a Subsidiary that has incurred Existing Casino
Non-Recourse Financing or other Non-Recourse Indebtedness) or
Indebtedness of any Subsidiary of Parent to the Parent, the Company or
any Wholly-Owned Subsidiary of the Company (other than a Subsidiary
that has incurred Existing Casino Non-Recourse Financing or other Non-
Recourse Indebtedness);
(ix) Existing Casino Non-Recourse Financing incurred by any
Casino Owner (including any special purpose Wholly-Owned Subsidiary of
the Company formed to become a Casino Owner in accordance with the
last sentence of Section 8.02(a)) so long as (i) the net cash proceeds
received by such Casino Owner therefrom equals at least the Minimum
Proceeds Amounts for such Casino Property, (ii) if such Casino Owner
is a Subsidiary Borrower, such Casino Owner ceases to be a Subsidiary
Borrower and all Loans incurred by such Casino Owner are repaid in
full, (iii) at the time of incurrence of such Existing Casino Non-
Recourse Financing and after giving effect thereto, no Default or
Event of Default shall exist, (iv) at the time of incurrence of such
Existing Casino Non-Recourse Financing, the respective Casino Owner's
business and assets shall consist substantially of only the Casino
Property (including related fixtures, furniture and equipment) subject
to such financing, (v) no more than two Casino Properties in the
aggregate may be the subject of a Casino Release, whether pursuant to
this Section 8.04(ix) or Section 8.02, and only one of either the
Atlantic City Property or the Las Vegas Property may be the subject of
a Casino Release and (vi)
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at the time of the incurrence of such Existing Casino Non-Recourse
Financing, the Total Revolving Loan Commitment shall be reduced as
required by Section 2.03(c);
(x) Non-Recourse Indebtedness of Specified Subsidiaries to
finance the development of Gaming Properties so long as the aggregate
principal amount thereof at any time outstanding does not exceed
$300,000,000, it being understood and agreed, however, that (i) a
Specified Subsidiary which has incurred outstanding Non-Recourse
Indebtedness pursuant to this Section 8.04(x) may guaranty the Non-
Recourse Indebtedness incurred pursuant to this Section 8.04(x) by
other Specified Subsidiaries, and (ii) such Non-Recourse Indebtedness
may be guaranteed by the Company and its other Subsidiaries to the
extent provided in Section 8.04(xii);
(xi) Subordinated Debt of the Company not otherwise outstanding
on the date hereof so long as (i) the terms and conditions thereof
(including, but not limited to, subordination provisions) are no more
favorable to the holders of such Subordinated Debt than those set
forth in the 8-3/4% Senior Subordinated Notes Indenture (provided that
the indebtedness convenant contained in any such other issue of
Subordinated Debt shall have sufficient availability (without relying
on any incurrence ratios) to justify the full amount of the Total
Revolving Loan Commitment and the Total 5-Year Revolving Loan
Commitment) or the 10-7/8% Senior Subordinated Notes Indenture and
(ii) if such Subordinated Debt (or any portion thereof) constitutes
Permitted Designated Indebtedness, the Total Revolving Loan Commitment
shall be reduced as required by Section 2.03(c);
(xii) Parent and its Subsidiaries may guarantee on an unsecured
basis obligations of Specified Subsidiaries, Joint Ventures and
parties to management agreements with the Company or its Subsidiaries
or with such Joint Ventures, in each case with respect to the
development of Gaming Property in an amount not to exceed $100,000,000
at any one time outstanding for any individual Gaming Property and
$325,000,000 at any one time outstanding for all such Gaming
Properties, provided that (i) the aggregate limitation set forth above
--------
shall be (A) increased (or decreased if Consolidated Net Income is
negative) on the first day of each fiscal year
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of the Company commencing on January 1, 1996 by an amount equal to 50%
(or 100% for each fiscal year for which Consolidated Net Income is
negative) of the Consolidated Net Income for the fiscal year last
ended, and (B) decreased from time to time by the amount of Dividends
paid by the Company to Parent pursuant to Section 8.03(iv) on and
after the Effective Date and prior to the date of determination, (ii)
the aggregate amount of guarantees permitted to be outstanding by
Parent and its Subsidiaries pursuant to this Section 8.04(xii) shall
be reduced by the amount of Investments outstanding pursuant to clause
(i) of the proviso to Section 8.05 and (iii) the $100,000,000
individual limitation set forth above shall not apply to the Cherokee
Investments;
(xiii) Parent, the Company and Harrah's may guarantee on an
unsecured basis any obligations (except that it may not provide any
guaranties, direct or indirect, of Non-Recourse Indebtedness pursuant
to this clause (xiii)) of their respective Subsidiaries;
(xiv) Indebtedness of Parent and the other
Guarantors under the 5-Year Credit Agreement (but only to the extent
that Parent or such other Guarantors are Guarantors under, or in
respect of, this Agreement) in an aggregate principal amount not to
exceed $600,000,000 (as reduced by any mandatory reductions thereto as
contemplated by Section 2.03(c) and (d)) at any one time outstanding;
and
(xv) Indebtedness of Parent or any of its Subsidiaries not
otherwise permitted under this Section 8.04 in an aggregate principal
amount not to exceed $25,000,000 at any one time outstanding.
At the time any Casino Owner obtains Existing Casino Non-Recourse
Financing in accordance with clause (ix) of this Section 8.04, the Casino
Property (and fixtures, furniture and equipment related thereto) subject to
such financing shall be so financed free and clear of the Liens created by
the respective Mortgage and Collateral Documents, and the Administrative
Agent and Collateral Agent shall be authorized to take any actions deemed
appropriate in order to effect the foregoing.
8.05 Advances, Investments and Loans. Parent will not, and will
-------------------------------
not permit any of its Subsidiaries to, directly or indirectly, lend money
or credit or make advances to any
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Person, or purchase or acquire any stock, obligations or securities of, or
any other interest in, or make any capital contribution to, any other
Person (collectively, "Investments") other than Investments in the ordinary
course of business, Subsidiary Investments and other Investments existing
on the Effective Date, provided that:
(i) Investments other than Subsidiary Investments shall not be
made with respect to the development or operation of Gaming Properties
or in connection with Gaming Businesses (and reasonable extensions
thereof), except that Investments in any Joint Venture relating to the
Gaming Business or Investments in parties to management agreements
with the Company or its Subsidiaries or such Joint Ventures for gaming
projects may be made so long as the aggregate amount thereof does not
exceed $100,000,000 at any one time outstanding (determined without
regard to any write-downs or write-offs of such Investments) for any
individual Gaming Business or gaming project or $325,000,000 at any
one time outstanding (determined without regard to any write-downs or
write-offs of such Investments) for all such Gaming Businesses and
gaming projects, provided that (w) the aggregate limitation set forth
--------
above shall be (A) increased (or decreased if Consolidated Net Income
is negative) on the first day of each fiscal year of the Company
commencing on January 1, 1996 by an amount equal to 50% (or 100% for
each fiscal year for which Consolidated Net Income is negative) of the
Consolidated Net Income for the fiscal year last ended and (B)
decreased from time to time by the amount of Dividends paid by the
Company to Parent pursuant to Section 8.03(iv) on and after the
Effective Date, (x) the aggregate amount of such Investments permitted
to be made pursuant to this Section 8.05(i) shall be reduced by the
aggregate amount of guarantees outstanding pursuant to Section
8.04(xii), (y) the $100,000,000 individual limitation set forth above
shall not apply to the Cherokee Investments and (z) Investments in, to
or for the benefit of Harrah's Jazz and its Subsidiaries shall not be
permitted to be made pursuant to this Section 8.05(i); and
(ii) Investments constituting Harrah's Jazz Investments shall be
permitted, provided that the aggregate amount of all such Investments
(other than in respect of the Harrah's Jazz Completion Obligation
Loans, the Harrah's Jazz Title Indemnity Arrangements and the Harrah's
Jazz Completion Guaranties), whether
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made prior to, on or after the Effective Date, shall not exceed
$150,000,000.
Notwithstanding the foregoing provisions of this Section 8.05,
Investments in the ordinary course of business shall not include the
purchases of (i) Margin Stock and (ii) non-investment grade debt securities
of any Person.
8.06 Transactions with Affiliates. Parent will not, and will
----------------------------
not permit any of its Subsidiaries to, enter into any transaction or series
of related transactions, whether or not in the ordinary course of business,
with any Affiliate of Parent or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to Parent or such Subsidiary as would reasonably be obtained by
Parent or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that
(i) Dividends may be paid to the extent provided in Section 8.03, (ii)
loans may be made and other transactions may be entered into by Parent and
its Subsidiaries to the extent permitted by Sections 8.04 and 8.05 and
(iii) transactions among Parent, the Company and any Subsidiary of the
Company shall be permitted so long as any such transactions, individually
or in the aggregate, would not have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
8.07 Maximum Leverage Ratio. Parent will not permit the ratio
----------------------
of Consolidated Debt to Consolidated Net Worth at any time during a period
set forth below to be greater than the ratio set forth opposite such period
below:
Period Ratio
------ -----
Effective Date to and
including December 31, 1996 2.75:1
January 1, 1997 to and
including December 31, 1997 2.50:1
January 1, 1998 to and
including December 31, 1998 2.25:1
January 1, 1999 and 2.00:1
thereafter
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8.08 Consolidated Interest Coverage Ratio. Parent will not
------------------------------------
permit the Consolidated Interest Coverage Ratio for any Test Period ended
on the last day of a fiscal quarter set forth below to be less than the
ratio set forth opposite such fiscal quarter below:
Fiscal Quarter Ratio
-------------- -----
Fiscal quarters ending
June 30, 1995,
September 30, 1995
and December 31, 1995 2.5:1
Fiscal quarters ending
March 31, 1996
and thereafter 3.0:1
8.09 Minimum Consolidated Net Worth. Parent will not permit
------------------------------
Consolidated Net Worth at any time during a period or calendar year set
forth below to be less than the amount set forth opposite such period or
calendar year below:
Period Amount
------ ------
Effective Date to and
including December 31, 1995 $ 450,000,000
Year ending December 31, 1996 $ 550,000,000
Year ending December 31, 1997 $ 650,000,000
Year ending December 31, 1998 $ 800,000,000
Year ending December 31, 1999 $1,000,000,000
Year ending December 31, 2000 $1,000,000,000
8.10 Limitation on Payments and Modifications of Subordinated
--------------------------------------------------------
Debt; Modifications of Certificate of Incorporation, Partnership Agreements
- ---------------------------------------------------------------------------
and By-Laws. Parent will not, and will not permit any of its Subsidiaries
- -----------
to, (i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto money or securities before due for the purpose of paying
when due) any Subordinated Debt (other than the Company's 8-3/8%
Subordinated Debentures due 1996), (ii) make (or give any notice in respect
of) any mandatory payment or prepayment on
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or redemption or acquisition for value of (including, without limitation,
by way of depositing with the trustee with respect thereto money or
securities before due for the purpose of when due) any Subordinated Debt as
a result of any sale of assets by Parent or any of its Subsidiaries, (iii)
amend or modify, or permit the amendment or modification of, any provision
of any Subordinated Debt or of any agreement (including, without limit-
ation, any purchase agreement, indenture or loan agreement) relating
thereto (except modifications relating to the 10-7/8% Senior Subordinated
Notes Indenture and 8-3/4% Senior Subordinated Notes Indenture in order to
obtain the respective holders' consent to the Hotel Transaction so long as
the documentation with respect to such consent is in form and substance
satisfactory to the Administrative Agent and the Required Banks), (iv)
amend or modify, or permit the amendment or modification of, any financial
or business covenants and/or defaults of the 5-Year Credit Agreement which
would have the effect of making the same more stringent or restrictive as
applied to Parent or any of its Subsidiaries in each case unless parallel
changes are made to both this Agreement and the 5-Year Credit Agreement or
(v) amend, modify or change its certificate of incorporation (including,
without limitation, by the filing or modification of any certificate of
designation), partnership agreement or by-laws except such modifications
which would not have a material adverse effect on Parent and its
Subsidiaries taken as a whole or an adverse effect on the rights and
remedies of the Administrative Agent or the Banks under any of the Credit
Documents. Notwithstanding anything to the contrary contained in clause
(i) of this Section 8.10, the Company may prepay, repurchase, redeem,
defease or otherwise retire Subordinated Debt if no Default or Event of
Default then exists or would result therefrom to the extent necessary in
the good faith judgment of the Board of Directors of Parent or the Company
to prevent the filing of a disciplinary action by any Gaming Authority or
to prevent the loss or secure the reinstatement of any license or franchise
from any governmental agency (including the Gaming Authorities) held by
Parent, the Company or any Subsidiary of Parent or the Company which
license or franchise is conditioned upon some or all of the holders of such
Subordinated Debt possessing prescribed qualifications, if such loss or
failure to reinstate would have a material adverse effect on the business,
operations, property, assets, liabilities, conditions (financial or
otherwise) or prospects of Parent and its Subsidiaries taken as a whole.
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8.11 Limitation on Certain Restrictions on Subsidiaries. Parent
--------------------------------------------------
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary
of Parent to (a) pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits owned
by Parent or any Subsidiary of Parent, or pay any Indebtedness owed to
Parent or a Subsidiary of Parent, (b) make loans or advances to Parent or
any Subsidiary of Parent or (c) transfer any of its properties or assets to
Parent or any Subsidiary of Parent, except for such encumbrances or
restrictions existing under or by reason of (i) regulatory actions or
applicable law, (ii) this Agreement, the other Credit Documents and the 5-
Year Credit Agreement, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of Parent or a
Subsidiary of Parent, (iv) customary provisions restricting the assignment
or transfer of any licensing agreement, franchise agreement, management
contract, joint venture agreement or any similar types of agreement entered
into by Parent or a Subsidiary of Parent in the ordinary course of
business, (v) customary restrictions imposed in connection with any asset
sale permitted by this Agreement for the benefit of the purchaser or owner
of such asset, (vi) restrictions existing in any document executed in
connection with Existing Casino Non-Recourse Financing so long as such
restrictions only apply to the Casino Property (and any fixtures, furniture
and equipment related thereto) serving as security for such financing,
(vii) restrictions existing in any document executed in connection with
Non-Recourse Indebtedness permitted under Section 8.04(x) so long as such
restrictions only apply to the property serving as security for such debt,
(viii) customary restrictions on the transfer of assets used to secure
Indebtedness permitted to be incurred (and so long as the Liens are
permitted to exist) by this Agreement, (ix) restrictions imposed in
connection with any new gaming Subsidiaries of the Company which are not
Material Subsidiaries and (x) restrictions imposed on the Company and the
Hotel Subsidiaries pursuant to the Hotel Facility, provided that the
restrictions imposed pursuant to the Hotel Facility shall not apply to
Parent or any Subsidiary of Parent after the Effective Date.
8.12 Limitation on Issuance of Capital Stock. Parent will not
---------------------------------------
permit any of its Material Subsidiaries to issue any capital stock
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, capital stock, except (i) for
trans-
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fers and replacements of then outstanding shares of capital stock, (ii) for
stock splits, stock dividends and similar issuances which do not decrease
the percentage ownership of Parent or any of its Subsidiaries in any class
of the capital stock of such Subsidiary and (iii) to qualify directors to
the extent required by applicable law.
8.13 Business. Parent will not, and will not permit any of its
--------
Subsidiaries to, engage (directly or indirectly) in any business other than
the business in which Parent or such Subsidiary is engaged on the Effective
Date (after giving effect to the Hotel Transaction) and any other
reasonably related businesses.
8.14 Ownership of Subsidiaries. Parent will maintain its direct
-------------------------
100% ownership interest in the Company, and, except as expressly provided
in Section 8.02(a), the Company will maintain the same direct or indirect
100% ownership interest in each of the Material Subsidiaries, provided that
if the Company owns (directly or indirectly) less than 100% of the capital
stock or other equity interest of any Material Subsidiary at the time same
becomes a Material Subsidiary, then the Company shall maintain at least
such direct or indirect ownership interest in such Material Subsidiary so
long as it remains a Material Subsidiary, it being understood that the
Company may divest its ownership interest in the Hotel Company and the
Hotel Subsidiaries as a result of the Hotel Stock Dividend.
8.15 Special Purpose Corporation. Parent will engage in no
---------------------------
material business activities other than the ownership of the capital stock
of the Company.
SECTION 9. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each an "Event of Default"):
9.01 Payments. Any Borrower shall (i) default in the payment
--------
when due of any principal of any Loan or any Revolving Note or (ii)
default, and such default shall continue unremedied for three or more days,
in the payment when due of interest on any Loan or Revolving Note or any
regularly accruing Fees, or (iii) default, and such default shall continue
unremedied for five or more days after written notice to the Company by the
Administrative Agent or any Bank, in the payment when due of any other Fees
or amounts owing hereunder or under any other Credit Document, provided,
--------
however, that such notice shall not be required to be given
- -------
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if a Bankruptcy Event shall have occurred and be continuing; or
9.02 Representations, etc. Any representation, warranty or
---------------------
statement made by any Credit Party herein or in any other Credit Document
or in any certificate delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed
made; or
9.03 Covenants. Parent or any Borrower shall (i) default in the
---------
due performance or observance by it of any term, covenant or agreement con-
tained in Section 7.01(e)(i), 7.08 or 8 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default shall continue unremedied for
a period of 30 days after written notice to the Company by the
Administrative Agent or any Bank; or
9.04 Default Under Other Agreements. Parent or any Subsidiary
------------------------------
of Parent shall (i) default in any payment of any Indebtedness (other than
the Loans and the Revolving Notes) beyond the period of cure or grace, if
any, provided in the instrument or agreement under which such Indebtedness
was created or (ii) default in the observance or performance of any
agreement or condition relating to any Indebtedness (other than the Loans
and the Revolving Notes) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (iii) any Indebtedness (other
than the Loans and the Revolving Notes) of Parent or any Subsidiary of
Parent shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the
stated maturity thereof, provided that it shall not be a Default or an
--------
Event of Default under this Section 9.04 unless the aggregate principal
amount of all Indebtedness as described in preceding clauses (i) through
(iii), inclusive, is at least $25,000,000; or
9.05 Bankruptcy, etc. Parent or any Subsidiary of Parent shall
----------------
commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor
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thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against Parent or any Subsidiary of Parent, and the petition is not contro-
verted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Parent or any Subsidiary of Parent, or Parent or any Subsidiary
of Parent commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency
or liquidation or similar law of any jurisdiction whether now or hereafter
in effect relating to Parent or any Subsidiary of Parent, or there is
commenced against Parent or any Subsidiary of Parent any such proceeding
which remains undismissed for a period of 60 days, or Parent or any Subsid-
iary of Parent is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; or Parent
or any Subsidiary of Parent suffers any appointment of any custodian or the
like for it or any substantial part of its property to continue undis-
charged or unstayed for a period of 60 days; or Parent or any Subsidiary of
Parent makes a general assignment for the benefit of creditors; or any cor-
porate action is taken by Parent or any Subsidiary of Parent for the
purpose of effecting any of the foregoing; or
9.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
-----
funding standard required for any plan year or part thereof or a waiver of
such standard or extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had a trustee appointed
by the PBGC to administer such Plan, any Plan is, shall have been or is
likely to be terminated or to be the subject of termination proceedings
under ERISA, any Plan shall have an Unfunded Current Liability, Parent or
any Subsidiary of Parent or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code, or Parent or any Subsidiary of Parent
has incurred or is likely to incur liabilities pursuant to one or more em-
ployee welfare benefit plans (as defined in Section 3(1) of ERISA) which
provide benefits to retired employees (other than as required by Section
601 of ERISA) or employee pension benefit plans (as defined in Section 3(2)
of ERISA); (b) there shall result from any such event or events the imposi-
tion of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) which lien, security
interest or liability, in the opinion of the Required Banks, could
reasonably be expected
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to have a material adverse effect upon the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of
Parent and its Subsidiaries taken as a whole; or
9.07 Collateral Documents. At any time after the execution and
--------------------
delivery thereof, any of the Collateral Documents shall cease to be in full
force and effect, or shall cease to give the Collateral Agent for the
benefit of the Secured Parties the Liens, rights, powers and privileges
purported to be created thereby (including, without limitation, a perfected
security interest in, and Lien on, all of the Collateral), in favor of the
Collateral Agent, superior to and prior to the rights of all third Persons
(except as permitted by Section 8.01), and subject to no other Liens (ex-
cept as permitted by Section 8.01), or any Credit Party shall default in
the due performance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any of the Collateral Docu-
ments and such default shall continue beyond any cure or grace period
specifically applicable thereto pursuant to the terms of such Collateral
Document; or
9.08 Guarantees. Any Guaranty or any provision thereof shall
----------
cease to be a legal, valid and binding obligation enforceable against the
obligor thereof, or any Guarantor or any Person acting by or on behalf of
any Guarantor shall deny or disaffirm such Guarantor's obligations under
its Guaranty, or any Guarantor shall default in its due performance of any
term, covenant or agreement on its part to be performed or observed
pursuant to its Guaranty; or
9.09 Judgments. One or more judgments or decrees shall be
---------
entered against Parent or any Subsidiary of Parent involving in the
aggregate for Parent and its Subsidiaries a liability (not paid or fully
covered by a reputable insurance company) and such judgments and decrees
either shall be final and non-appealable or shall not be vacated,
discharged or stayed or bonded pending appeal for any period of 30 consecu-
tive days, and the aggregate amount of all such judgments exceeds
$10,000,000; or
9.10 Gaming Authority. Any Gaming Authority having jurisdiction
----------------
over any Casino Property shall determine that Parent or any of its
Subsidiaries that is required to be qualified under the Gaming Regulations
does not qualify, or that the qualification or license of any of them with
respect to any Casino Property should be revoked, not renewed or suspended
for more than 30 days, or any such Gaming Authority
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shall have appointed a conservator, supervisor or trustee to oversee any of
the operations of any of them;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent, upon the
written request of the Required Banks, shall by written notice to the
Borrowers, take any or all of the following actions, without prejudice to
the rights of the Administrative Agent, any Bank or the holder of any Note
to enforce its claims against any Credit Party (provided that, if an Event
--------
of Default specified in Section 9.05 shall occur with respect to Parent or
any Borrower, the result which would occur upon the giving of written
notice by the Administrative Agent to the Borrowers as specified in clauses
(i) and (ii) below shall occur automatically without the giving of any such
notice): (i) declare the Total Revolving Loan Commitment terminated,
whereupon the Revolving Loan Commitment of each Bank shall forthwith term-
inate immediately and any Facility Fees shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal of
and any accrued interest in respect of all Loans and the Revolving Notes
and all Obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit Party; and (iii) enforce, as Collateral Agent, all of the Liens and
security interests created pursuant to the Collateral Documents.
SECTION 10. Definitions and Accounting Terms.
--------------------------------
10.01 Defined Terms. As used in this Agreement, the following
-------------
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Absolute Rate" shall mean an interest rate (rounded to the
nearest .0001) expressed as a decimal.
"Additional Collateral Documents" shall have the meaning provided
in Section 7.12(b).
"Adjusted Certificate of Deposit Rate" shall mean, on any day,
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by
dividing (x) the most recent weekly average dealer offering rate for
negotiable certificates of deposit with a three-month maturity in the
secondary market as published in the most recent Federal Reserve System
publication entitled "Select Interest Rates," published weekly
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on Form H.15 as of the date hereof, or if such publication or a substitute
containing the foregoing rate information shall not be published by the
Federal Reserve System for any week, the weekly average offering rate
determined by the Administrative Agent on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in
New York of recognized standing or, if such quotations are unavailable,
then on the basis of other sources reasonably selected by the
Administrative Agent, by (y) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements as specified in Regulation D
applicable on such day to a three-month certificate of deposit of a member
bank of the Federal Reserve System in excess of $100,000 (including, with-
out limitation, any marginal, emergency, supplemental, special or other re-
serves), plus (2) the then daily net annual assessment rate as estimated by
the Administrative Agent for determining the current annual assessment
payable by the Administrative Agent to the Federal Deposit Insurance
Corporation for insuring three-month certificates of deposit.
"Administrative Agent" shall mean Bankers Trust Company, in its
capacity as Administrative Agent for the Banks hereunder, and shall include
any successor to the Administrative Agent appointed pursuant to Section
11.09.
"Affiliate" shall mean, with respect to any Person, any other
Person (i) directly or indirectly controlling (including, but not limited
to, all directors and officers of such Person), controlled by, or under
direct or indirect common control with, such Person or (ii) that directly
or indirectly owns more than 5% of the voting securities or capital stock
of such Person. A Person shall be deemed to control another Person if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" shall mean each of Bankers Trust Company, The Bank of New
York, CIBC Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented or amended from time to time.
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"Applicable Facility Fee Percentage" shall mean 15/100 of 1% less
the then applicable Reduction Discount.
"Applicable Margin" shall mean 3/4 of 1% less the then applicable
Reduction Discount.
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit F
(appropriately completed).
"Assignment of Leases" shall mean the Assignment of Leases, dated
as of July 22, 1993, between Marina and the Collateral Agent, as modified,
supplemented or amended from time to time.
"Assignment of Partnership Interests Agreement" shall mean the
Assignment of Partnership Interests Agreement, dated as of July 22, 1993,
among Harrah's New Jersey, Harrah's Atlantic City and the Collateral Agent,
as modified, supplemented or amended from time to time.
"Atlantic City Property" shall mean the Harrah's Atlantic City
Hotel Casino.
"Bank" shall mean each financial institution listed on Schedule
I, as well as any institution which becomes a "Bank" hereunder pursuant to
Section 1.14 or 12.04(b) or (c), provided that in any event each such
institution shall be a Qualified Person.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or
(ii) a Bank having notified in writing the Borrowers and/or the
Administrative Agent that it does not intend to comply with its obligations
under Section 1.01(a), in the case of either clause (i) or (ii) above as a
result of any takeover of such Bank by any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Bankruptcy Event" shall mean any Default or Event of Default of
the type described in Section 9.05.
"Base Rate" at any time shall mean the highest of (i) 1/2 of 1%
in excess of the Adjusted Certificate of Deposit Rate, (ii) the Prime
Lending Rate and (iii) 1/2 of 1% in excess of the overnight Federal Funds
Rate.
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"Base Rate Loan" shall mean any Revolving Loan designated or
deemed designated as such by a Borrower at the time of the incurrence
thereof or conversion thereto.
"Bidder Bank" shall mean each Bank that has informed the
Administrative Agent and the Company in writing (which has not been
retracted) that such Bank desires to participate generally in the bidding
arrangements relating to Competitive Bid Borrowings.
"Book Entry System" shall have the meaning provided in Section
7.11.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean and include (i) the borrowing of one Type
of Revolving Loan from all the Banks on a given date (or resulting from a
conversion or conversions on such date) having in the case of Eurodollar
Loans the same Interest Period, provided that Base Rate Loans incurred
--------
pursuant to Section 1.11(b) shall be considered part of the related
Borrowing of Eurodollar Loans and (ii) a Competitive Bid Borrowing.
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action
to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) above and
which is also a day for trading by and between banks in the New York inter-
bank Eurodollar market.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting principles,
are or will be required to be capitalized on the books of such Person, in
each case taken at the amount thereof accounted for as indebtedness in
accordance with such principles.
"Casino Holding Company" shall mean Casino Holding Company, a
Delaware corporation.
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"Casino Owner" shall mean any Subsidiary of the Company that owns
a Casino Property.
"Casino Property" shall mean and include each of the Harrah's
Reno Hotel Casino, Harrah's Lake Tahoe Hotel Casino (including Bill's
Casino), Harrah's Las Vegas Hotel Casino, Harrah's Atlantic City Hotel
Casino and Harrah's Laughlin Hotel Casino.
"Casino Release" shall mean the release of a specific Casino
Property from the Liens created by the respective Collateral Documents as a
result of the sale thereof pursuant to Section 8.02 or the incurrence of
Existing Casino Non-Recourse Financing with respect thereto pursuant to
Section 8.04(ix).
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from
time to time, 42 U.S.C. Sec. 9601 et seq.
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"Change of Control" shall mean (i) Parent shall cease to own 100%
of the capital stock of the Company, (ii) the direct or indirect
acquisition by any Person or group (as such term is defined in Section
13(d)(3) of the Securities Exchange Act) of beneficial ownership (as such
term is defined in Rule 13D-3 promulgated under the Securities Exchange
Act) of 25% or more of the outstanding shares of common stock of Parent,
(iii) the Board of Directors of Parent shall not consist of a majority of
Continuing Directors or (iv) any "change of control" or similar event shall
occur under any issue of Indebtedness of Parent or any of its Subsidiaries
in an aggregate principal amount which exceeds (or upon utilization of any
unused commitments may exceed) $25,000,000.
"Cherokee Casino" shall mean the casino to be constructed,
developed and operated by the Eastern Band of Cherokee Indians in Cherokee,
North Carolina, and the manager of which shall be Parent or a Wholly-Owned
Subsidiary of Parent.
"Cherokee Investments" shall mean (i) one or more guaranties
given by Parent and/or the Company for the benefit of the lenders providing
construction financing for the Cherokee Casino and (ii) additional
Investments in the Cherokee Casino.
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"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect
on the date of this Agreement, and to any subsequent provision of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal)
with respect to which any security interests have been granted (or purport
to be granted) pursuant to any Collateral Document, including, without
limitation, all Pledge Agreement Collateral, all Security Agreement Collat-
eral and all Mortgaged Properties.
"Collateral Agent" shall mean and include the Administrative
Agent acting as collateral agent for the Secured Parties pursuant to the
Collateral Documents and any sub-agents or sub-trustees appointed by the
Administrative Agent pursuant to the Master Collateral Agreement and
permitted under applicable Gaming Regulations.
"Collateral Document" shall mean and include each Pledge
Agreement, the Security Agreement, each Mortgage, the Assignment of
Partnership Interests Agreement, the Assignment of Leases, each Net Lease
Agreement, the Master Collateral Agreement and, after the execution and
delivery thereof, each Additional Collateral Document.
"Collateral Grantor" shall mean and include Parent, the Company
and each Subsidiary of the Company which is party to any Collateral
Document, provided that, from and after the date of the release of all
--------
Collateral of any Subsidiary of the Company from the provisions of the
Collateral Documents, and so long as the respective Subsidiary at such time
owns no Required Collateral, such Subsidiary shall cease to constitute a
Collateral Grantor and the Collateral Agent shall be authorized to execute
such documentation as is necessary or desirable to effect such release.
"Company" shall have the meaning provided in the first paragraph
of this Agreement.
"Company/Sub Guaranty" shall mean the Company/Sub Guaranty, dated
as of July 22, 1993, made by the Company and the other Guarantors party
thereto, as modified, supplemented or amended from time to time.
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"Company/Sub Pledge Agreement" shall mean the Company/Sub Pledge
Agreement, dated as of July 22, 1993, among the Company, the other
Collateral Grantors party thereto and the Collateral Agent, as modified,
supplemented or amended from time to time.
"Competitive Bid Borrowing" shall mean a Borrowing of Competitive
Bid Loans pursuant to Section 1.04 with respect to which the Company has
requested that the Bidder Banks offer to make Competitive Bid Loans at
Absolute Rates.
"Competitive Bid Loans" shall have the meaning provided in
Section 1.01(b).
"Consent" shall mean each written consent from a holder of the 8-
3/4% Senior Subordinated Notes and 10-7/8% Senior Subordinated Notes
permitting the Company and the respective indenture trustee to enter into
indenture supplements to the 8-3/4% Senior Subordinated Notes Indenture and
the 10-7/8% Senior Subordinated Notes Indenture.
"Consolidated Debt" shall mean, at any time, the sum of the
aggregate outstanding principal amount of all Indebtedness (including,
without limitation, guarantees, Non-Recourse Debt and the principal
component of Capitalized Lease Obligations) of Parent and its Consolidated
Subsidiaries.
"Consolidated EBIT" shall mean, for any period, the Consolidated
Net Income plus Consolidated Interest Expense (to the extent same was
deducted in determining Consolidated Net Income) and provision for taxes,
and without giving effect to any extraordinary gains or losses or gains or
losses from sales of assets other than inventory sold in the ordinary
course of business.
"Consolidated Interest Coverage Ratio" for any period shall mean
the ratio of Consolidated EBIT to Consolidated Interest Expense.
"Consolidated Interest Expense" shall mean, for any period, the
total consolidated interest expense of Parent and its Consolidated
Subsidiaries (without deduction for minority interests in Subsidiaries) for
such period (calculated without regard to any limitations on the payment
thereof) plus, without duplication, (i) that portion of Capitalized Lease
Obligations of Parent and its Consolidated Subsidiaries representing the
interest factor for such period and (ii) the
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Company's or such Consolidated Subsidiary's share of interest expense of
any Joint Venture.
"Consolidated Net Income" shall mean, for any period, net income
of Parent and its Consolidated Subsidiaries (without deduction for minority
interests in Subsidiaries) for such period.
"Consolidated Net Worth" shall mean, at any time, the net worth
of Parent and its Consolidated Subsidiaries determined on a consolidated
basis.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with generally accepted
accounting principles in the United States.
"Contingent Obligation" shall mean, as to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing (including, without limitation, as a result of such Person
being a general partner of the other Person, unless the underlying
obligation is expressly made non-recourse as to such general partner) any
Indebtedness or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation (whether arising by virtue of partnership arrangements, by
agreement to keepwell, to purchase assets, goods, securities or services,
to take-or-pay or to maintain financial statement conditions or otherwise)
or (ii) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect the obligee against loss in respect thereof (in whole or in
part), provided that the term Indebtedness shall not include endorsements
--------
for collection or deposit in the ordinary course of business.
"Continuing Directors" shall mean the directors of Parent on the
Effective Date and each other director, if such other director's nomination
for election to the Board of Directors of Parent is recommended by a
majority of the then Continuing Directors.
"Credit Documents" shall mean this Agreement, each Revolving
Note, each Guaranty and each Collateral Document.
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"Credit Party" shall mean Parent, the Company and each other
Subsidiary of Parent that is a Subsidiary Borrower, a Guarantor or a
Collateral Grantor.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Disqualified Stock" shall mean any capital stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or
in part on, or prior to, or is exchangeable for debt securities of Parent
or its Subsidiaries prior to, the first anniversary of the Final Maturity
Date.
"Dividend" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or
delivery of property (other than common stock of such Person) or cash to
its stockholders as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for a consideration any shares of any
class of its capital stock outstanding on or after the Effective Date (or
any options or warrants issued by such Person with respect to its capital
stock), or set aside any funds for any of the foregoing purposes, or shall
have permitted any of its Subsidiaries to purchase or otherwise acquire for
a consideration any shares of any class of the capital stock of such Person
outstanding on or after the Effective Date (or any options or warrants
issued by such Person with respect to its capital stock). Without limiting
the foregoing, "Dividends" with respect to any Person shall also include
all payments made or required to be made by such Person with respect to any
stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents and the Hotel
Transaction Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
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"Effective Date" shall have the meaning provided in Section
12.10.
"8-3/4% Senior Subordinated Notes" shall mean the Company's 8-
3/4% Senior Subordinated Notes due 2000.
"8-3/4% Senior Subordinated Notes Indenture" shall mean the
indenture relating to the 8-3/4% Senior Subordinated Notes.
"Election to Become a Subsidiary Borrower" shall mean an Election
to Become a Subsidiary Borrower substantially in the form of Exhibit E,
which shall be executed by each Subsidiary of the Company which becomes a
Subsidiary Borrower after the date hereof.
"End Date" shall have the meaning provided in the definition of
Reduction Discount.
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations of
which Parent or any Borrower has received notice or proceedings relating in
any way to any Environmental Law or any permit issued, or any approval
given, under any such Environmental Law (hereafter, "Claims"), including,
without limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and
(b) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in
connection with alleged injury or threat of injury to health, safety or the
environment due to the presence of Hazardous Materials.
"Environmental Law" means any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy
and rule of common law now or hereafter in effect and in each case as
amended, including any judicial or administrative order, consent decree or
judgment, relating to the environment, employee health and safety or
Hazardous Materials, including, without limitation, CERCLA; RCRA; the
Federal Water Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.; the Toxic
-- ----
Substances Control Act, 15 U.S.C. Sec. 2601 et seq.; the Clean Air Act, 42
-- ----
U.S.C. Sec. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sec. 3803 et
-- ---- --
seq.; the Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; the
- ---- -- ----
Emergency Planning and the Community Right-to-Know Act of
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1986, 42 U.S.C. Sec. 11001 et seq., the Hazardous Material Transportation Act,
-- ----
49 U.S.C. Sec. 1801 et seq. and the Occupational Safety and Health Act, 29
-- ----
U.S.C. Sec. 651 et seq.; and any state and local or foreign counterparts or
-- ----
equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement, and to any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Parent or any Subsidiary of Parent would
be deemed to be a "single employer" within the meaning of Section 414(b),
(c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean each Revolving Loan designated as
such by a Borrower at the time of the incurrence thereof or conversion
thereto.
"Eurodollar Rate" shall mean (a) the arithmetic average (rounded
to the nearest 1/1000 of 1%) of the offered quotation to first-class banks
in the New York interbank Eurodollar market by each Reference Bank for
Dollar deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Eurodollar Loan of such Reference Bank
with maturities comparable to the Interest Period applicable to such Euro-
dollar Loan commencing two Business Days thereafter as of 10:00 A.M. (New
York time) on the date which is two Business Days prior to the com-
mencement of such Interest Period, divided by (b) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (in-
cluding, without limitation, any marginal, emergency, supplemental, special
or other reserves required by applicable law) applicable to any member bank
of the Federal Reserve System in respect of Eurocurrency funding or liabil-
ities as defined in Regulation D (or any successor category of liabilities
under Regulation D); provided that if one or more of the Reference Banks
fails to provide the Administrative Agent with its aforesaid rate, then the
Eurodollar Rate shall be determined based on the rate or rates provided to
the Administrative Agent by the other Reference Bank or Banks.
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"Event of Default" shall have the meaning provided in Section 9.
"Existing Casino Non-Recourse Financing" shall mean Non-Recourse
Indebtedness incurred by any Casino Owner pursuant to Section 8.04(ix) and
which is to be secured solely by the Casino Property (including any
fixtures, furniture and equipment related thereto) owned by such Casino
Owner, except that if two Casino Properties are subject to Existing Casino
Non-Recourse Financings, then each issue (or either issue) of such Existing
Casino Non-Recourse Financing may be cross-collateralized by the other
Casino Property subject to Existing Casino Non-Recourse Financing.
"Facility Fee" shall have the meaning provided in Section
2.01(a).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average
of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal Funds brokers of recognized standing selected by
the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to
in Section 2.01.
"Final Maturity Date" shall mean the 364th day from the Effective
Date, as the same may be extended from time to time pursuant to Section
2.04, it being understood and agreed, however, that no extension pursuant
to such Section 2.04 shall be effective if the Final Maturity Date would
extend beyond July 31, 2000.
"First-Tier Material Subsidiary" shall mean each Material
Subsidiary which is a direct Subsidiary of the Company.
"5-Year Banks" shall mean the lenders from time to time party to
the 5-Year Credit Agreement.
"5-Year Credit Agreement" shall mean the Credit Agreement, dated
as of July 22, 1993 and amended and restated
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as of June 9, 1995, among Parent, the Company, the Subsidiaries of the
Company party thereto, the 5-Year Banks, the Agents and Bankers Trust
Company, as Administrative Agent, as amended, modified, supplemented,
extended, refinanced or replaced from time to time in accordance with the
terms thereof and hereof.
"Former Bank" shall have the meaning provided in Section
12.04(c).
"Gaming Authority" shall mean the governmental authorities
charged with the administration and enforcement of the Gaming Regulations.
"Gaming Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, the Casino
Properties and any other casinos, hotel casinos or gaming businesses now or
in the future owned by the Company or any of its Subsidiaries or in which
Parent or any of its Subsidiaries has an interest either through a Joint
Venture or as a party to a management agreement.
"Gaming Property" of any Person shall mean those properties and
assets of such Person which relate to such Person's casino or hotel casino
businesses and operations.
"Gaming Regulations" shall mean the laws, rules, regulations and
orders applicable to the casino and gaming business or activities of
Parent, the Company or any of their Subsidiaries, as in effect from time to
time, including the policies, interpretations and administration thereof by
the Gaming Authorities.
"Guaranteed Obligations" shall mean the irrevocable and
unconditional guaranty made by Parent under the Parent Guaranty to the
Administrative Agent and each Bank for the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of the
principal and interest on each Revolving Note issued by each Borrower to
the Administrative Agent and such Bank, and Loans made, under this Agree-
ment, together with all the other obligations and liabilities (including,
without limitation, indemnities, fees and interest thereon) of each of the
Borrowers to such Bank now existing or hereafter incurred under, arising
out of or in connection with this Agreement or any other Credit Document
and the due performance and compliance with the terms of the Credit
Documents by the Borrowers.
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"Guarantor", at any time, shall mean each of the Initial
Guarantors and each Required Additional Guarantor which has executed and
delivered a counterpart of the Company/Sub Guaranty in accordance with
Section 7.12(a), provided that, from and after the date of the release of
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any Subsidiary of the Company from the provisions of the Company/Sub
Guaranty in accordance with the terms thereof or hereof, such Subsidiary
shall cease to constitute a Guarantor.
"Guaranty" shall mean and include the Parent Guaranty and the
Company/Sub Guaranty.
"Harrah's" shall mean Harrah's, a Nevada corporation.
"Harrah's Atlantic City" shall mean Harrah's Atlantic City, Inc.,
a New Jersey corporation.
"Harrah's Club" shall mean Harrah's Club, a Nevada corporation.
"Harrah's Jazz" shall mean Harrah's Jazz Company, a Louisiana
general partnership.
"Harrah's Jazz Completion Guaranties" shall mean one or more
completion guaranties heretofore given by Parent and/or the Company in
favor of certain lenders to Harrah's Jazz, the City of New Orleans and one
or more other governmental agencies of the State of Louisiana.
"Harrah's Jazz Completion Obligation Loans" shall mean any
payments made by Parent and/or the Company under the Harrah's Jazz
Completion Guaranties or the Harrah's Jazz Title Indemnity Arrangements to
the extent that such payments are characterized as additional loans or
advances made by Parent and/or the Company to Harrah's Jazz.
"Harrah's Jazz Investments" shall mean Investments in or to
Harrah's Jazz and/or for the benefit of Harrah's Jazz, including the
Harrah's Jazz Completion Obligation Loans, the Harrah's Jazz Completion
Guaranties and the Harrah's Jazz Title Indemnity Arrangements.
"Harrah's Jazz Title Indemnity Arrangements" shall mean those
certain indemnity agreements heretofore given by Parent and the Company to
the title insurance companies providing title insurance for Harrah's Jazz's
casino the City of New Orleans.
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"Harrah's Laughlin" shall mean Harrah's Laughlin, Inc., a Nevada
corporation.
"Harrah's New Jersey" shall mean Harrah's New Jersey, Inc., a New
Jersey corporation.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
substances," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar import,
under any applicable Environmental Law; and (c) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"Hotel Business" shall mean the businesses and operations of the
Company and its Subsidiaries with respect to, and the properties and assets
of the Company and its Subsidiaries used in connection with, its existing
(immediately prior to the Effective Date) hotel businesses and operations
and any other hotels owned by the Company or any of its Subsidiaries
immediately prior to the Effective Date that are not included in the Gaming
Business or in which Parent or any of its Subsidiaries has an interest
either through a Joint Venture or as a party to a management or franchise
agreement.
"Hotel Collateral" shall mean the collateral securing the Hotel
Facility, which collateral shall only consist of the properties
constituting the Hotel Business of the Company and the Hotel Subsidiaries
(including the capital stock of the Hotel Subsidiaries).
"Hotel Company" shall mean Promus Hotel Corporation, a newly
formed Wholly-Owned Subsidiary of the Company.
"Hotel Facility" shall mean two new senior secured credit
facilities aggregating $350,000,000 which shall be (i) secured by the Hotel
Collateral and (ii) guaranteed by the Hotel Subsidiaries.
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"Hotel Property" shall mean any hotel, any land or building under
development or any other property or asset which relates to the Hotel
Business of Parent and its Subsidiaries other than those properties or
assets which are included as Gaming Properties.
"Hotel Stock Dividend" shall mean, collectively, (i) the
distribution by the Company to Parent as a stock dividend of all of the
capital stock of the Hotel Company and (ii) the distribution by Parent to
its stockholders immediately thereafter as a stock dividend of all of the
capital stock of the Hotel Company.
"Hotel Subsidiaries" shall mean those existing Subsidiaries of
the Company which are engaged in the Hotel Business and which are set forth
on Schedule VIII.
"Hotel Transaction" shall mean, collectively, the Hotel Stock
Dividend, the Hotel Transfer, the entering into of the Hotel Facility and
the incurrence by the Company of at least $210,000,000 of loans thereunder,
the assignment to, and the assumption by, the Hotel Company of the Hotel
Facility, the obtaining of the Consents and the entering into of the
related indenture supplements and the obtaining of the consent of Parent's
shareholders to the Hotel Transaction.
"Hotel Transaction Documents" shall mean (i) the Hotel Facility,
(ii) the Consents, the indenture supplements to the 8-3/4% Senior
Subordinated Notes Indenture and the 10-7/8% Senior Subordinated Notes
Indenture and the Proxy Statement delivered to Parent's shareholders in
connection with the Hotel Transaction and (iii) the Distribution Agreement,
the Tax Sharing Agreement, the Trademark Assignment Agreement and an
Employee Benefits Allocation Agreement, which agreements are in the forms
delivered to the Administrative Agent pursuant to Section 4.04(b) and are
to be entered into by the Company and the Hotel Company in connection with
the Hotel Transfer and the Hotel Stock Dividend.
"Hotel Transfer" shall mean the transfer by the Company to the
Hotel Company of the Hotel Properties and Hotel Business of the Company and
the capital stock of the Hotel Subsidiaries, it being understood and agreed
that $210,000,000 of proceeds from the loans incurred by the Company under
the Hotel Facility on the Effective Date shall not be transferred by the
Company to the Hotel Company.
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"Indebtedness" shall mean, as to any Person, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such
person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all obligations of such Person to
reimburse or repay any bank or other Person in respect of amounts paid or
available to be drawn under a letter of credit, banker's acceptance,
surety, performance or appeal bond or any similar instrument (each such
obligation to be valued at the face amount of such instrument), (vi) all
Indebtedness of others secured by a Lien on any asset of such Person, (vii)
all Contingent Obligations of such Person with respect to any Indebtedness
of any other Person and (viii) the amount of any Disqualified Stock.
"Initial Guarantors" shall mean each of Parent, the Company,
Casino Holding Company, Embassy Development Corporation, Embassy Equity
Development Corporation, ESI Equity Development Corporation, Hampton Inn
Equity Development Corporation, Hampton Inns, Inc., Harrah's, Harrah's
Atlantic City, Harrah's Club, Harrah's Las Vegas, Inc., Harrah's Laughlin,
Harrah's New Jersey, Harrah's Reno Holding Company, Inc., Homewood Suites
Equity Development Corporation and Marina; provided, that from and after
the Effective Date, Embassy Development Corporation, Embassy Equity
Development Corporation, ESI Equity Development Corporation, Hampton Inn
Equity Development Corporation, Hampton Inns, Inc. and Homewood Suites
Equity Development Corporation shall be (and hereby are) released from the
Company/Sub Guaranty and shall no longer constitute Guarantors.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.10.
"Interest Rate Protection or Other Hedging Agreements" shall mean
one or more (i) interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or
other
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similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time entered into by the Company or any of its
Subsidiaries.
"Investments" shall have the meaning provided in Section 8.05.
"Issuance System" shall have the meaning provided in Section 7.11.
"Issue" shall mean each of the two different types of Senior
Debt, there being two separate Issues for purposes of this Agreement, i.e.,
----
the Indebtedness under this Agreement and the Indebtedness under the 5-Year
Credit Agreement.
"Joint Venture" shall mean any entity or arrangement between the
Company or any of its Subsidiaries (so long as the Company and its
Subsidiaries own 50% or less of such entity) and one or more Persons other
than Parent or any of its Subsidiaries (whether now existing or created in
the future) for (i) the joint ownership, management, construction or
development of any Gaming Property or (ii) the joint ownership or operation
of any Gaming Business.
"Las Vegas Property" shall mean the Harrah's Las Vegas Hotel
Casino.
"Leaseholds" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the UCC or any other similar recording or notice statute, and
any lease having substantially the same effect as any of the foregoing).
"Loan" shall mean each Revolving Loan and each Competitive Bid
Loan.
"Margin Reduction Period" shall mean each period which shall
commence on a date on which the financial state-
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ments are delivered pursuant to Section 7.01(a) or (b) and which shall end
on the earlier of (i) the date of actual delivery of the next financial
statements pursuant to Section 7.01(a) or (b) and (ii) the latest date on
which the next financial statements are required to be delivered pursuant
to Section 7.01(a) or (b).
"Margin Stock" shall have the meaning provided in Regulation U.
"Marina" shall mean Marina Associates, a New Jersey general
partnership.
"Markers" shall have the meaning provided in the Master
Collateral Agreement.
"Master Collateral Agreement" shall mean the Master Collateral
Agreement, dated as of July 22, 1993, among Parent, the Company, the other
Collateral Grantors, the Administrative Agent and the Collateral Agent, as
modified, supplemented or amended from time to time.
"Material Subsidiary" shall mean each of (a) each Initial
Guarantor other than Parent and the Company, (b) each Subsidiary Borrower
and each Collateral Grantor and (c) as at the date of determination, (i)
any direct or indirect Subsidiary of Parent that holds any license or
licenses needed to conduct gaming operations with respect to any Casino
Property (which has not theretofore been released from the respective
Mortgage encumbering same in accordance with the terms thereof), (ii) any
direct or indirect Subsidiary of Parent that owns any Collateral or
Required Collateral or that directly or indirectly owns stock of a
Subsidiary which owns Collateral or Required Collateral or (iii) any Sub-
sidiary of Parent that (together with its Subsidiaries) accounts for, or
holds, at least 10% of any of (x) the consolidated assets of Parent and its
Subsidiaries, (y) the consolidated revenues of Parent and its Subsidiaries
or (z) the Consolidated EBIT of Parent and its Subsidiaries, in each case
as determined at the end of each fiscal quarter of Parent and, in the case
of preceding clauses (y) and (z), for the Test Period then last ended, it
being understood and agreed that Harrah's Jazz and Desplaines Development
Limited Partnership shall not be considered Material Subsidiaries under
this sub-clause (iii) to the extent that such Subsidiaries would otherwise
constitute such a Material Subsidiary so long as such Subsidiaries would
not otherwise constitute a Material Subsidiary under any of the other
clauses of this definition.
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"Maturity Date" shall mean, with respect to each Bank, the Final
Maturity Date in effect at the time such Bank first became party to this
Agreement, as the same may be extended pursuant to Section 2.04, provided
that such extension has been consented to by such Bank. It is understood
that in the event that a Bank does not consent to an extension of the Final
Maturity Date, the Maturity Date for such Bank shall be the Final Maturity
Date in effect immediately prior to the effectiveness of such extension.
"Minimum Proceeds Amount" with respect to any Casino Property (or
with respect to the Casino Owner that owns such Casino Property) shall mean
the amount set forth below opposite such Casino Property:
Harrah's Atlantic City
Hotel Casino $250,000,000
Harrah's Las Vegas
Hotel Casino $250,000,000
Harrah's Reno
Hotel Casino $150,000,000
Harrah's Lake Tahoe
Hotel Casino
(including Bill's Casino) $150,000,000
Harrah's Laughlin
Hotel Casino $150,000,000.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean each of (i) the Deed of Trust, Leasehold
Deed of Trust, Assignment, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of July 22, 1993, from the
Company, Harrah's Laughlin, Inc. and Harrah's Reno Holding Company, Inc.,
as Grantors, to First American Title Insurance Company of Nevada, as
Trustee, and BTCo, as Beneficiary, as modified, supplemented or amended
from time to time and (ii) the Mortgage, Leasehold Mortgage, Assignment,
Assignment of Leases and Rents and Security Agreement, dated as of July 22,
1993, from Marina and the Company, as Mortgagors, to BTCo, as Collateral
Agent and Mortgagee, as modified, supplemented or amended from time to
time.
"Mortgage Amendment" shall have the meaning provided in Section
4.09(i).
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"Mortgage Policies" shall mean each of the mortgage title
insurance policies delivered pursuant to Section 5.10(ii) of the Original
5-Year Credit Agreement.
"Mortgaged Property" shall mean and include each of the Casino
Properties until same are released from the Liens created by the respective
Mortgage in accordance with the terms hereof and thereof.
"Net Lease Agreement" shall mean each of (i) the Net Lease
Agreement, dated as of July 22, 1993, among Parent, the Company, Harrah's,
Harrah's Club and the Collateral Agent (Harrah's Hotel and Casino, Lake
Tahoe), (ii) the Net Lease Agreement, dated as of July 22, 1993, among
Parent, the Company, Harrah's Las Vegas, Inc. and the Collateral Agent
(Harrah's Hotel and Casino, Las Vegas), (iii) the Net Lease Agreement,
dated as of July 22, 1993, among Parent, the Company, Harrah's Club and the
Collateral Agent (Harrah's Hotel and Casino, Reno) and (iv) the Net Lease
Agreement, dated as of July 22, 1993, among Parent, the Company, Harrah's
Laughlin and the Collateral Agent (Harrah's Laughlin Hotel and Casino), in
each case as modified, supplemented or amended from time to time, it being
understood and agreed that in the event the Company transfers its ownership
interest in any of the Casino Properties located in Nevada to Harrah's Club
as permitted by Section 8.02(a), the Net Lease Agreement with respect to
each such Casino Property may be terminated.
"Net Sale Proceeds" shall mean for any sale of assets, the gross
cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and
when received) received from any sale of assets, net of reasonable trans-
action costs and payments of unassumed liabilities relating to the assets
sold at the time of, or within 60 days after, the date of such sale and the
amount of such gross cash proceeds required to be used to repay any
Indebtedness (other than Indebtedness of the Banks pursuant to the Credit
Documents) which is secured by the respective assets which were sold.
"Non-Continuing Bank" shall mean, at any time, each Bank the
Maturity Date of which has not been extended pursuant to Section 2.04.
"Non-Defaulting Bank" shall mean and include each Bank other than
a Defaulting Bank.
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"Non-Recourse Indebtedness" shall mean (x) with respect to any
Casino Owner or Owners, Indebtedness incurred by such Casino Owner or
Owners meeting the requirements of Existing Casino Non-Recourse Financing
and which shall be (i) secured only by the Casino Property or Properties
owned by such Casino Owner or Owners, including any fixtures, furniture and
equipment related thereto (it being understood and agreed that, if two
Casino Properties are subject to Existing Casino Non-Recourse Financings,
then such properties may cross-collateralize the other issue of Existing
Casino Non-Recourse Financing) and (ii) expressly made non-recourse to
Parent and its Subsidiaries other than the respective Casino Owners,
provided that recourse may be had to the respective property serving as
security therefor and (y) with respect to any Specified Subsidiary,
Indebtedness incurred by such Specified Subsidiary which shall be (i)
secured only by Gaming Properties being developed with Non-Recourse
Indebtedness incurred pursuant to Section 8.04(x), including any fixtures,
furniture and equipment related thereto and (ii) non-recourse to Parent and
its Subsidiaries, provided that recourse may be had to the extent permitted
by Section 8.04(x) and to the respective property or properties serving as
security therefor.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Competitive Bid Borrowing" shall have the meaning
provided in Section 1.04(a).
"Notice of Conversion" shall have the meaning provided in Section
1.07.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention:
Patricia Rapisarda, or such other office as the Administrative Agent may
hereafter designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"Original 5-Year Credit Agreement" shall mean the Credit
Agreement, dated as of July 22, 1993, among Parent, the Company, the
Subsidiaries of the Company party thereto, the financial institutions party
thereto and Bankers Trust
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Company, as Administrative Agent, as in effect immediately prior to the
Effective Date.
"Parent" shall have the meaning provided in the first paragraph
of this Agreement.
"Parent Guaranty" shall mean the guaranty provided by Parent
pursuant to Section 13.
"Parent Pledge Agreement" shall mean the Parent Pledge Agreement,
dated as of July 22, 1993, between Parent and the Collateral Agent, as
modified, supplemented or amended from time to time.
"Payment Office" shall mean the office of the Administrative
Agent located at One Bankers Trust Plaza, New York, New York 10006, or such
other office as the Administrative Agent may hereafter designate in writing
as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the
Total Revolving Loan Commitment at such time, provided that, if the
--------
Percentage of any Bank is to be determined after the Total Revolving Loan
Commitment has been terminated, then the Percentage of such Bank shall be
determined immediately prior (and without giving effect) to such
termination.
"Permitted Designated Indebtedness" shall mean (i) any Existing
Casino Non-Recourse Financing and (ii) all Subordinated Debt (or portions
thereof) incurred pursuant to Section 8.04(xi) to the extent the aggregate
amount of Subordinated Debt incurred after the Effective Date pursuant to
said Section is in excess of $200,000,000.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the Mortgage Policy
with respect thereto.
"Permitted Liens" shall have the meaning provided in Section
8.01.
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"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government
or political subdivision or any agency, department or instrumentality
thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of), Parent or a
Subsidiary of Parent or an ERISA Affiliate, and each such plan for the five
year period immediately following the latest date on which Parent, or a
Subsidiary of Parent or an ERISA Affiliate maintained, contributed to or
had an obligation to contribute to such plan.
"Pledge Agreements" shall mean and include the Parent Pledge
Agreement and the Company/Sub Pledge Agreement.
"Pledged Securities" shall have the meaning assigned that term in
the respective Pledge Agreements.
"Prime Lending Rate" shall mean the rate which BTCo announces
from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate
is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. BTCo may make commercial loans or
other loans at rates of interest at, above or below the Prime Lending Rate.
"Projections" shall have the meaning provided in Section 6.05(d).
"Proxy Statement" shall mean Parent's Proxy Statement dated April
25, 1995 which was delivered to Parent's shareholders in connection with
the Hotel Transaction.
"Qualified Person" shall mean, with respect to any Bank party to
this Agreement on the Effective Date or that becomes a Bank pursuant to
Section 1.14, 12.04(b) or 12.04(c), a banking or other licensed lending
institution within the meaning of the New Jersey Gaming Regulations or a
financial source or qualifier approved under the Gaming Regulations of the
State of New Jersey applicable to lenders (or waived or exempted from the
applicable requirements thereof) and which shall not have been found
unsuitable under the Gaming Regulations of the State of Nevada applicable
to lenders and which meets the requirements of all other
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jurisdictions regulating the gaming business of Parent and its Subsidiaries
to the extent that the Company has so notified the Banks of such
requirements of such other jurisdiction pursuant to Section 12.04(e).
"RCRA" shall mean the Resource Conservation and Recovery Act, as
the same may be amended from time to time, 42 U.S.C. Sec. 6901 et seq.
-- ----
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Reduction Discount" shall mean initially zero and from and after
the first day of any Margin Reduction Period (the "Start Date") to and
including the last day of such Margin Reduction Period (the "End Date"),
the Reduction Discount shall be the respective percentage per annum set
forth in clause (A), (B) or (C) below if, but only if, as of the last day
of the most recent fiscal quarter of Parent ended immediately prior to such
Start Date (the "Test Date") the conditions in clause (A), (B) or (C) below
are met:
(A) (x) in the case of Eurodollar Loans, 1/8 of 1% and (y) in the
case of the Facility Fee, 4/100 of 1% in each case if, but only if, as
of the Test Date for such Start Date either of the following
conditions are met and the conditions set forth in none of clauses (B)
and (C) below are satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 3.00:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB- Senior Implied by S&P or Baa3 Senior Implied
by Moody's;
(B) (x) in the case of Eurodollar Loans, 3/8 of 1% and (y) in the
case of the Facility Fee, 5.5/100 of 1% in each case if, but only if,
as of the Test Date for such Start Date either of the following
conditions are met and the conditions set forth in clause (C) below
are not satisfied:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 3.50:1.00; or
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(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB Senior Implied by S&P or Baa2 Senior Implied by
Moody's; or
(C) (x) in the case of Eurodollar Loans, 1/2 of 1% and (y) in the
case of the Facility Fee, 7/100 of 1% in each case if, but only if, as
of the Test Date for such Start Date either of the following
conditions are met:
(i) the Consolidated Interest Coverage Ratio for the Test Period
ended on such Test Date shall be greater than 4.00:1.00; or
(ii) the Indebtedness of the Company on such Test Date shall be
rated at least BBB+ Senior Implied by S&P or Baa1 Senior Implied
by Moody's.
Notwithstanding anything to the contrary above in this definition, the
Reduction Discount shall be reduced to zero at all times when a Default
under Section 7.01(a) or (b) shall exist or an Event of Default shall
exist.
"Reference Banks" shall mean Bankers Trust Company, The Sumitomo
Bank, Limited, New York Branch, Credit Lyonnais and The Bank of New York.
"Register" shall have the meaning provided in Section 1.06(d).
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
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"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.14.
"Replacement Bank" shall have the meaning provided in
Section 1.14.
"Reply Date" shall have the meaning provided in Section 1.04(b).
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
"Requested Extension Effective Date" shall have the meaning
provided in Section 2.04(a).
"Required Additional Guarantor" shall have the meaning provided in
Section 7.12(a).
"Required Appraisal" shall have the meaning provided in Section
7.12(c).
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
Revolving Loan Commitments (or after the termination thereof, outstanding
Revolving Loans and Competitive Bid Loans) represent an amount greater than
fifty percent of the sum of the Total Revolving Loan Commitment (or after
the termination thereof, the sum of the then total outstanding Revolving
Loans and Competitive Bid Loans).
"Required Collateral" shall mean and include all the following
assets and property:
(i) each Casino Property;
(ii) 100% of the capital stock of the Company;
(iii) 100% of the capital stock of each of Harrah's, Harrah's
Club, Casino Holding Company, Harrah's Atlantic City, Harrah's New
Jersey, Harrah's Reno Holding Company, Inc., Harrah's Laughlin and
Harrah's Las Vegas, Inc.;
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(iv) 100% of the partnership interests in Marina;
(v) 100% of the capital stock or partnership interests, as the
case may be, of each Subsidiary Borrower;
(vi) 100% of the capital stock or partnership interests, as the
case may be, in any other Subsidiary of the Company which owns assets
or property, or is the direct or indirect parent of any Subsidiary
which owns assets or property, which constitutes Required Collateral
pursuant to any of the other clauses of this definition;
(vii) 100% of the capital stock or partnership interests owned
directly by the Company in any Guarantor or Material Subsidiary;
(viii) all of the Company's and its Subsidiaries' interests in
building fixtures and personal property located in or owned or used in
connection with the Casino Properties, including (subject to
applicable Gaming Regulations) gaming equipment; all trademarks and
trade names (including the Harrah's name, subject to a non-exclusive
license to be granted to the Company in accordance with the terms of
the Collateral Documents) and other intangible property owned or used
in connection with the Casino Properties; and all licenses and permits
held in connection with the Casino Properties (excluding (x) gaming
licenses and (y) non-transferable liquor licenses and other non-
transferable licenses); and all revenues derived from the Casino
Properties located in Nevada, including (subject to applicable Gaming
Regulations) gaming revenues; and
(ix) the assignment of leases and net lease agreements effected
pursuant to the Assignment of Leases and Net Lease Agreements.
Notwithstanding anything to the contrary contained above, assets or
property shall cease to constitute Required Collateral at such time, if
any, as same are released pursuant to the terms of the respective
Collateral Documents and this Agreement.
"Required Secured Parties" shall have the meaning provided in the
Master Collateral Agreement.
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"Returns" shall have the meaning provided in Section 6.09.
"Revolving Loan" shall have the meaning provided in Section
1.01(a).
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as same may be (x) reduced from time
to time pursuant to Sections 2.02, 2.03 and/or 9 or (y) adjusted from time
to time as a result of assignments to or from such Bank pursuant to Section
1.14, 12.04(b) or 12.04(c).
"Revolving Note" shall have the meaning provided in Section
1.06(a).
"Rights" shall have the meaning provided in the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement, dated as of
February 7, 1990, between Parent and The Bank of New York, as Rights Agent,
as in effect on the date hereof.
"S&P" shall mean Standard & Poor's Corporation.
"SEC" shall have the meaning provided in Section 7.01(f).
"Section 3.04(b)(iii) Certificate" shall have the meaning provided
in Section 3.04(b).
"Secured Parties" shall have the meaning assigned that term in the
Collateral Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Security Agreement, dated as
of July 22, 1993, among the Company, the other Collateral Grantors party
thereto and the Collateral Agent, as modified, supplemented or amended from
time to time.
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"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Senior Debt" shall mean the Indebtedness under this Agreement and
the Indebtedness under the 5-Year Credit Agreement.
"Share" shall mean, for each Issue, (A) if the event requiring a
mandatory commitment reduction to Senior Debt pursuant to Section 2.03(c)
or (d) would, in accordance with the terms of the 5-Year Credit Agreement,
give rise to a mandatory commitment reduction to the Total 5-Year Revolving
Loan Commitment, then the "Share" (x) applicable to the Total 5-Year
Revolving Loan Commitment shall equal the lesser of (1) the amount required
to be applied to reduce the commitments in respect of Senior Debt pursuant
to Section 2.03(c) or (d) multiplied by a fraction the numerator of which
is the amount of the Total 5-Year Revolving Loan Commitment then in effect
and the denominator of which is the sum of (i) the Total 5-Year Revolving
Loan Commitment then in effect plus (ii) the Total Revolving Loan
Commitment then in effect and (2) the maximum amount which would be re-
quired to be applied to mandatorily reduce the Total 5-Year Revolving Loan
Commitment in accordance with the terms of the 5-Year Credit Agreement as a
result of the respective event requiring a reduction to the commitments in
respect of Senior Debt pursuant to Section 2.03(c) or (d) and (y)
applicable to the Total Revolving Loan Commitment shall equal the remainder
of the amount required to be applied to reduce the commitments in respect
of Senior Debt pursuant to Section 2.03(c) or (d), less the "Share"
applicable to the Total 5-Year Revolving Loan Commitment as determined
pursuant to preceding clause (x), and (B) if the event giving rise to a
mandatory commitment reduction in respect of Senior Debt would not require
a mandatory reduction to the Total 5-Year Revolving Loan Commitment of the
5-Year Credit Agreement in accordance with the terms of the 5-Year Credit
Agreement, the "Share" of each Issue shall equal (x) in the case of the 5-
Year Credit Agreement, $0 and (y) in the case of this Agreement, the amount
required to be applied to Senior Debt pursuant to Section 2.03(c) or (d).
"Specified Subsidiary" shall mean any Subsidiary of the Company
(other than any Subsidiary Borrower, Collateral Grantor or Casino Owner) so
long as such Subsidiary has no material assets other than the Gaming
Properties to be developed and financed with Non-Recourse Indebtedness
incurred pursuant to Section 8.04(x).
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"Start Date" shall have the meaning provided in the definition of
Reduction Discount.
"Sub-Limit" shall mean (i) with respect to Marina, $150,000,000
and (ii) with respect to each other Subsidiary of the Company that becomes
a Subsidiary Borrower after the date hereof, such aggregate amount as shall
be established by the Administrative Agent and the Required Banks at the
time such Subsidiary becomes a Subsidiary Borrower hereunder.
"Subordinated Debt" shall mean each issue of Subordinated Debt of
the Company as is set forth on Schedule IV as well as any additional
issuance of Subordinated Debt by the Company that is permitted under
Section 8.04(xi).
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any partner-
ship, association, joint venture or other entity in which such Person
and/or one or more Subsidiaries of such Person has more than a 50% equity
interest at the time.
"Subsidiary Borrower" shall mean Marina and any other Wholly-Owned
Subsidiary of the Company that is found acceptable to, and approved in
writing by, the Administrative Agent and the Required Banks, provided that
at the time any such Subsidiary incurs Existing Casino Non-Recourse
Financing pursuant to Section 8.04(ix) or the Casino Property owned by such
Subsidiary is sold pursuant to Section 8.02, such Subsidiary shall cease to
be a Subsidiary Borrower.
"Subsidiary Investments" shall mean any Investment by the Company
in one or more of its Subsidiaries provided that (x) any acquisition of a
new Subsidiary shall be through a transaction not involving the acquisition
by the Company or any of its Subsidiaries of Margin Stock and (y) any new
Subsidiary so acquired shall be engaged primarily in the Gaming Business.
"Substitute Bank" shall have the meaning in Section 12.04(c).
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"Taxes" shall have the meaning provided in Section 3.04(a).
"10-7/8% Senior Subordinated Notes" shall mean the Company's 10-
7/8% Senior Subordinated Notes due 2002.
"10-7/8% Senior Subordinated Notes Indenture" shall mean the
indenture relating to the 10-7/8% Senior Subordinated Notes.
"Test Date" shall have a meaning provided in the definition of
Reduction Discount.
"Test Period" shall mean the four consecutive fiscal quarters of
Parent then last ended (in each case taken as one accounting period).
"Total 5-Year Revolving Loan Commitment" shall mean the "Total
Revolving Loan Commitment" under, and as defined in, the 5-Year Credit
Agreement.
"Total 5-Year Outstandings" shall mean, at any time, the aggregate
principal amount of all loans outstanding pursuant to the 5-Year Credit
Agreement and the aggregate amount of all letters of credit and, without
duplication, unreimbursed drawings thereunder outstanding pursuant to the
5-Year Credit Agreement.
"Total Outstandings" shall mean, at any time, the aggregate
outstanding principal amount of Loans.
"Total Revolving Loan Commitment" shall mean, at any time, the sum
of the Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment less (y) the sum of the aggregate principal amount of Revolving
Loans and Competitive Bid Loans then outstanding.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
----
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time
in effect in the relevant jurisdiction.
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"Unfunded Current Liability" of any Plan means the amount, if any,
by which the actuarial present value of the accumulated benefits under the
Plan as of the close of its most recent plan year, determined in accordance
with Statement of Financial Accounting Standards No. 35, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the Plan, exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States of
America.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Wholly-
Owned Subsidiaries of such Person has a 100% equity interest at such time.
"Withdrawal Period" shall have the meaning provided in Section
12.04(d).
SECTION 11. The Administrative Agent and Agents.
-----------------------------------
11.01 Appointment. The Banks hereby designate Bankers Trust
-----------
Company as Administrative Agent (for purposes of this Section 11, the term
"Administrative Agent" shall include Bankers Trust Company in its capacity
as Collateral Agent pursuant to the Collateral Documents) to act as spec-
ified herein and in the other Credit Documents. The Banks hereby designate
Bankers Trust Company, The Bank of New York, CIBC Inc., Credit Lyonnais,
Atlanta Agency, First Interstate Bank of California, The Long-Term Credit
Bank of Japan, Limited, New York Branch, NationsBank of Georgia, N.A.,
Societe Generale, and The Sumitomo Bank, Limited, New York Branch, as
Agents to act as specified herein and in the other Credit Documents. Each
Bank hereby irrevocably authorizes, and each holder of any Revolving Note
by the acceptance of such Revolving Note shall be deemed irrevocably to
authorize, the Administrative Agent or any Agent to take such action on its
behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and
to exercise such powers and to perform such duties hereunder and thereunder
as are specifically delegated to or required of the Administrative Agent or
any Agent by the terms hereof and thereof and such other
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powers as are reasonably incidental thereto. The Administrative Agent and
any Agent may perform any of their duties hereunder by or through their
respective officers, directors, agents (including any sub-agents or sub-
trustees to act as a Collateral Agent pursuant to the Master Collateral
Agreement or any other Collateral Document) or employees. Each Bank
further agrees to be bound by all of the terms and conditions set forth in
the Collateral Documents.
11.02 Nature of Duties. Neither the Administrative Agent nor any
----------------
Agent shall have any duties or responsibilities except those expressly set
forth in this Agreement and the Collateral Documents, it being understood
and agreed, however, that none of the Agents in their capacities as such
shall have any duties or responsibilities under the Credit Documents.
Neither the Administrative Agent, any Agent nor any of their officers,
directors, agents or employees shall be liable for any action taken or
omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Administrative Agent
and Agents shall be mechanical and administrative in nature; neither the
Administrative Agent nor any Agent shall have by reason of this Agreement
or any other Credit Document a fiduciary relationship in respect of any
Bank or the holder of any Revolving Note; and nothing in this Agreement or
any other Credit Document, expressed or implied, is intended to or shall be
so construed as to impose upon the Administrative Agent or any Agent any
obligations in respect of this Agreement or any other Credit Document
except as expressly set forth herein or therein.
11.03 Lack of Reliance on the Administrative Agent and Agents.
-------------------------------------------------------
Independently and without reliance upon the Administrative Agent or any
Agent, each Bank and the holder of each Revolving Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own inde-
pendent investigation of the financial condition and affairs of Parent and
its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of Parent and its
Subsidiaries and, except as expressly provided in this Agreement, neither
the Administrative Agent nor any Agent shall have any duty or responsibil-
ity, either initially or on a continuing basis, to provide any Bank or the
holder of any Revolving Note with any credit or other information with
respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter. Neither the Administrative
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Agent nor any Agent shall be responsible to any Bank or the holder of any
Revolving Note for any recitals, statements, information, representations
or warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority
or sufficiency of this Agreement or any other Credit Document or the
financial condition of Parent or any of its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Parent or any of its Subsidiaries
or the existence or possible existence of any Default or Event of Default.
11.04 Certain Rights of the Administrative Agent. If the
------------------------------------------
Administrative Agent shall request instructions from the Required Banks
with respect to any act or action (including failure to act) in connection
with this Agreement or any other Credit Document, the Administrative Agent
shall be entitled to refrain from such act or taking such action unless and
until the Administrative Agent shall have received instructions from the
Required Banks; and the Administrative Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, no
Bank or the holder of any Revolving Note shall have any right of action
whatsoever against the Administrative Agent as a result of the Adminis-
trative Agent acting or refraining from acting hereunder or under any other
Credit Document in accordance with the instructions of the Required Banks.
11.05 Reliance. The Administrative Agent and each Agent shall be
--------
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or
telephone message signed, sent or made by any Person that the
Administrative Agent or such Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any
other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent or such Agent.
11.06 Indemnification. To the extent the Administrative Agent or
---------------
any Agent is not reimbursed and indemnified by the Credit Parties, the
Banks will reimburse and indemnify the Administrative Agent or such Agent,
in proportion to their respective "percentages" as used in determining the
Required Banks, for and against any and all liabilities,
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obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed
on, asserted against or incurred by the Administrative Agent or such Agent
in performing its duties hereunder or under any other Credit Document, in
any way relating to or arising out of this Agreement or any other Credit
Document; provided that no Bank shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's or such Agent's gross negligence or willful misconduct.
11.07 The Administrative Agent and the Agents in their Individual
-----------------------------------------------------------
Capacities. With respect to its obligation to make Loans under this Agree-
- ----------
ment, the Administrative Agent and each Agent shall have the rights and
powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and
the term "Banks," "Required Banks," "holders of Revolving Notes" or any
similar terms shall, unless the context clearly otherwise indicates, in-
clude each of the Administrative Agent and Agent in its individual capac-
ity. The Administrative Agent and each Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Credit Party or any Affiliate of any Credit Party as if
it were not performing the duties specified herein, and may accept fees and
other consideration from the Borrowers or any other Credit Party for ser-
vices in connection with this Agreement and otherwise without having to
account for the same to the Banks.
11.08 Holders. The Administrative Agent may deem and treat the
-------
payee of any Revolving Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment, transfer or
endorsement thereof, as the case may be, shall have been filed with the
Administrative Agent. Any request, authority or consent of any Person who,
at the time of making such request or giving such authority or consent, is
the holder of any Revolving Note shall be conclusive and binding on any
subsequent holder, transferee, assignee or indorsee, as the case may be, of
such Revolving Note or of any Revolving Note or Revolving Notes issued in
exchange therefor.
11.09 Resignation by the Administrative Agent and Agents.
--------------------------------------------------
(a) The Administrative Agent and any Agent may resign from the performance
of all its functions and duties hereunder and/or under the other Credit
Documents at any time
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by giving 15 Business Days' prior written notice to the Company and the
Banks. In the case of the resignation by the Administrative Agent, such
resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as otherwise
provided below. In the case of a resignation by an Agent, such resignation
shall become effective immediately.
(b) Upon any such notice of resignation, the Company shall appoint
a successor Administrative Agent hereunder or thereunder who shall be a
commercial bank or trust company reasonably acceptable to the Required
Banks (it being understood and agreed that any Bank is deemed to be accept-
able to the Required Banks), provided that, if a Default or an Event of
--------
Default exists at the time of such resignation, the Required Banks shall
appoint such successor Administrative Agent.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent,
with the consent of the Company, shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent hereunder or
thereunder until such time, if any, as the Company or Required Banks, as
the case may be, appoint a successor Administrative Agent as provided
above.
(d) If no successor Administrative Agent has been appointed pursu-
ant to clause (b) or (c) above by the 30th Business Day after the date such
notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Banks
shall thereafter perform all the duties of the Administrative Agent here-
under and/or under any other Credit Document until such time, if any, as
the Required Banks appoint a successor Administrative Agent.
SECTION 12. Miscellaneous.
-------------
12.01 Payment of Expenses, etc. (a) The Borrowers jointly and
-------------------------
severally shall: (i) whether or not the transactions herein contemplated
are consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees
and disbursements of White & Case and local counsel and all appraisal fees,
trustee's fees, documentary and recording taxes, title insurance and
recording, filing and other expenses) in connection with the preparation,
execution and delivery of this Agreement and the other Credit Documents and
the docu-
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<PAGE>
ments and instruments referred to herein and therein and any amendment,
waiver or consent relating hereto or thereto, of the Administrative Agent
in connection with its syndication efforts with respect to this Agreement
and of the Administrative Agent and each of the Banks in connection with
the enforcement of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein (including,
without limitation, the reasonable fees and disbursements of counsel
(including allocated costs of in-house counsel) for the Administrative
Agent and for each of the Banks); (ii) pay and hold each of the Banks harm-
less from and against any and all present and future stamp, excise and
other similar taxes with respect to the foregoing matters and save each of
the Banks harmless from and against any and all liabilities with respect to
or resulting from any delay or omission (other than to the extent
attributable to such Bank) to pay such taxes; and (iii) indemnify the
Administrative Agent, each Agent and each Bank, and each of their
respective officers, directors, employees, representatives and agents from
and hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements (in-
cluding reasonable attorneys' (including allocated costs of in-house
counsel) and consultants' fees and disbursements) incurred by, imposed on
or assessed against any of them as a result of, or arising out of, or in
any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent, any Agent or any
Bank is a party thereto) related to the entering into and/or performance of
this Agreement or any other Credit Document or the proceeds of any Loans
hereunder or the consummation of any transactions contemplated herein
(including, without limitation, the Hotel Transaction) or in any other
Credit Document or the exercise of any of their rights or remedies provided
herein or in the other Credit Documents, or (b) the actual or alleged
presence of Hazardous Materials in the air, surface water or groundwater or
on the surface or subsurface of any Real Property owned or at any time
operated by Parent or any of its Subsidiaries, the generation, storage,
transportation, handling or disposal of Hazardous Materials at any loca-
tion, whether or not owned or operated by Parent or any of its Subsidi-
aries, the non-compliance of any Real Property with foreign, federal, state
and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim
relating in any way to Parent, any of its Subsidiaries, their operations or
any Real Property owned or at any time operated by Parent or any of
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its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding
(but excluding any losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified). To the extent that the undertaking to
indemnify, pay or hold harmless the Administrative Agent, any Agent or any
Bank set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrowers shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
(b) The Borrowers further jointly and severally agree to pay the
reasonable legal fees of gaming counsel for the Administrative Agent in
Nevada and New Jersey and any other relevant state and all reasonable costs
(including costs of investigation) associated with any qualification (or
exemption or waiver therefrom) of any Bank under, or compliance in
connection with the Gaming Regulations in connection with the syndication
under this Agreement, provided that in the event that any assignee Bank or
potential assignee Bank is not already a Qualified Person (before giving
effect to any actions taken to become such in connection with this
Agreement), then all costs associated with such Person becoming a Qualified
Person shall be borne by the respective assignee Bank or potential assignee
Bank. Notwithstanding the foregoing, after a Bank has been replaced
pursuant to Section 1.14, the Borrowers shall not be required to reimburse
such Bank for any such costs incurred by it after the date of such
replacement.
12.02 Right of Setoff. In addition to any rights now or
---------------
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default,
each Bank is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing
by such Bank (including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the account of the
Credit Parties against and on account of the Obligations and liabilities of
the Credit Parties to such Bank under this Agreement or under any of the
other Credit Documents, includ-
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<PAGE>
ing, without limitation, all interests in Obligations purchased by such
Bank pursuant to Section 12.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Bank shall have made
any demand hereunder and although said Obligations, liabilities or claims,
or any of them, shall be contingent or unmatured, provided that such right
--------
of set-off may only be exercised by any such Bank if Nevada Revised
Statutes 40.430(4)(g) (1989) remains in force and effect without
modification, and such Bank has received advice of New Jersey and Nevada
counsel acceptable to the Administrative Agent that there is no other
provision of Nevada or New Jersey law, as appropriate, under which such
action of set off might jeopardize any right of the Collateral Agent or any
Bank in or with respect to any Collateral. The provisions of the foregoing
proviso to this Section 12.02 are for the benefit of the Banks only, and
may be amended, modified or waived in any respect by the Required Banks
without the requirements of prior notice to or consent by any Credit Party
and does not constitute a waiver of any rights against any Credit Party or
against any Collateral.
12.03 Notices. Except as otherwise expressly provided herein,
-------
all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication)
and mailed, telegraphed, telexed, telecopied, cabled or delivered: if to
Parent or any Borrower, at such Credit Party's address specified opposite
its signature below or in the respective Election to Become a Subsidiary
Borrower; if to any Bank, at its address specified opposite its name below;
and if to the Administrative Agent, at its Notice Office; or, as to any
Credit Party or the Administrative Agent, at such other address as shall be
designated by such party in a written notice to the other parties hereto
and, as to each Bank, at such other address as shall be designated by such
Bank in a written notice to the Company and the Administrative Agent. All
such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective when
deposited in the mails, delivered to the telegraph company, cable company
or overnight courier, as the case may be, or sent by telex or telecopier,
except that notices to the Administrative Agent and the Company shall not
be effective until received by such Person.
12.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the
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parties hereto; provided, however, except as provided in Sections 8.02,
-------- -------
8.04(ix) and 12.17(a), no Borrower may assign or transfer any of its
rights, obligations or interest hereunder or under any other Credit
Document without the prior written consent of the Administrative Agent and
the Banks (although any Subsidiary Borrower may, at its request and with
the consent of the Required Banks, otherwise cease to be a Subsidiary
Borrower hereunder so long as no Default or Event of Default then exists
and all Loans incurred by such Subsidiary are repaid in full and, provided
--------
further, that, although any Bank may transfer, assign or grant participa-
- -------
tions in its rights hereunder, such Bank shall remain a "Bank" for all
purposes hereunder (and may not transfer or assign all or any portion of
its Revolving Loan Commitments hereunder except as provided in Section
12.04(b)) and the transferee, assignee or participant, as the case may be,
shall not constitute a "Bank" hereunder and, provided further, that no Bank
----------------
shall transfer or grant any participation under which the participant shall
have rights to approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment or waiver would
extend the final scheduled maturity of any Loan or Revolving Note in which
such participant is participating, or reduce the rate or extend the time of
payment of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Revolving Loan Commitment shall not constitute a
change in the terms of such participation, and that an increase in any
Revolving Loan Commitment or Loan shall be permitted without the consent of
any participant if the participant's participation is not increased as a
result thereof). In the case of any such participation, the participant
shall not have any rights under this Agreement or any of the other Credit
Documents (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank
in favor of the participant relating thereto) and the Borrowers shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement and the other Credit
Documents and all amounts payable by the Borrowers hereunder shall be
determined as if such Bank had not sold such participation. Any agreement
pursuant to which any Bank may grant such a participation shall be in a
form approved by the Administrative Agent and Parent and shall be
satisfactory under the Gaming Regulations of the State of New
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Jersey so as not to require participants to be approved financial sources
or qualified under such Gaming Regulations applicable to lenders.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its
Revolving Loan Commitments and related outstanding Obligations hereunder to
its parent company and/or any affiliate of such Bank which is at least 50%
owned by such Bank or its parent company or to one or more Banks or (y)
assign all, or if less than all, a portion equal to at least $2,500,000 in
the aggregate for the assigning Bank or assigning Banks, of such Revolving
Loan Commitments and related outstanding Obligations hereunder, in either
case to one or more Qualified Persons, each of which assignees shall become
a party to this Agreement as a Bank by execution of an Assignment and
Assumption Agreement, provided that, (i) at such time Schedule I shall be
--------
deemed modified to reflect the Revolving Loan Commitments of such new Bank
and of the existing Banks, (ii) new Revolving Notes will be issued to such
new Bank and to the assigning Bank upon the request of such new Bank or
assigning Bank, such new Revolving Notes to be in conformity with the
requirements of Section 1.06 to the extent needed to reflect the revised
Revolving Loan Commitments, (iii) the consent of the Administrative Agent
shall be required in connection with any assignment (which consent shall
not be unreasonably withheld) and (iv) the Administrative Agent shall re-
ceive at the time of each such assignment, from either the assigning or
assignee Bank or Banks, the payment of a non-refundable assignment fee of
$3,500 in the case of any assignment to a Qualified Person which is not a
Bank immediately prior to such assignment or $1,000 in the case of any
assignment to a then existing Bank. To the extent of any assignment
pursuant to this Section 12.04(b), the assigning Bank shall be relieved of
its obligations hereunder with respect to its assigned Revolving Loan
Commitments. At the time of each assignment pursuant to this Section
12.04(b) to a Person which is not already a Bank hereunder and which is not
a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for Federal income tax purposes, the respective assignee Bank
shall, to the extent legally entitled to do so, provide to the Borrowers in
the case of a Bank described in clause (ii) or (iv) of Section 3.04(b), the
forms described in such clause (ii) or (iv), as the case may be. To the
extent that an assignment of all or any portion of a Bank's Revolving Loan
Commitments and related outstanding Obligations pursuant to Section 1.14 or
this Section 12.04(b) would, at the time of such assignment, result in
increased costs under Section
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1.11, 1.12 or 3.04 from those being charged by the respective assigning
Bank prior to such assignment, then the Borrowers shall not be obligated to
pay such increased costs (although the Borrowers shall be obligated to pay
any other increased costs of the type described above resulting from
changes after the date of the respective assignment).
(c) If the New Jersey Gaming Authorities shall determine that any
Bank is not qualified as an approved financial source or otherwise does not
meet the standards pursuant to the Gaming Regulations in New Jersey, or the
Nevada Gaming Authorities shall determine that any Bank does not meet the
Suitability Standards under the Nevada Gaming Regulations or any other
Gaming Authority with jurisdiction over the gaming business of Parent and
its Subsidiaries shall determine that any Bank does not meet its
suitability standards (in any such case, a "Former Bank"), the Admin-
istrative Agent or the Company shall have the right (but not the duty) to
designate a bank or banks (in each case, a "Substitute Bank," which may be
any Bank or Banks that agree to become a Substitute Bank) that has agreed
to assume the rights and obligations of the Former Bank, subject to receipt
by the Administrative Agent of evidence that such Substitute Bank is a
Qualified Person. The Substitute Bank shall assume the rights and
obligations of the Former Bank under this Agreement pursuant to an
Assignment and Assumption Agreement, which assumption shall be required to
comply with, and shall become effective in accordance with, the provisions
of Section 12.04(b), provided that the purchase price to be paid by the
--------
Substitute Bank to the Administrative Agent for the account of the Former
Bank for such assumption shall equal the sum of (i) the unpaid principal
amount of any Revolving Notes held or Loans made by the Former Bank plus
accrued interest thereon plus (ii) such Former Bank's pro rata share of
--- ----
accrued Fees to the date of the assumption, and, provided further, the
----------------
Borrowers shall pay all obligations owing to the Former Bank under the
Credit Documents (including all obligations, if any, owing pursuant to
Section 1.12, but excluding those amounts in respect of which the purchase
price is being paid as provided above). Each Bank agrees that if it
becomes a Former Bank, upon payment to it by the Borrowers of all such
amounts, if any, owing to it under the Credit Documents, it will execute
and deliver an Assignment and Assumption Agreement, upon payment of such
purchase price.
(d) Notwithstanding the provisions of subsection (c) of this
Section 12.04, if any Bank becomes a Former Bank, and if the Administrative
Agent or the Company fails to find
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a Substitute Bank pursuant to subsection (c) of this Section within any
time period specified by the appropriate Gaming Authority for the
withdrawal of a Former Bank (the "Withdrawal Period"), the Borrowers shall,
immediately (i) prepay in full the outstanding principal amount of each
Revolving Note held or Loan made by such Former Bank, together with accrued
interest thereon to the earlier of (x) the date of payment or (y) the last
day of any Withdrawal Period, and (ii) if no Default or Event of Default
then exists, terminate the Revolving Loan Commitment of such Former Bank at
which time the other Banks' Percentages will be automatically adjusted as a
result thereof.
(e) Subject to the last sentence of this Section 12.04(e), each
Bank agrees that all participations and assignments made hereunder shall be
subject to, and made in compliance with, all Gaming Regulations applicable
to lenders. Each Bank agrees further that it will not grant participations
or assignments prior to receiving notice from the Administrative Agent that
it has completed the primary syndication of this facility. The
Administrative Agent shall provide such notice to the Banks promptly after
completing such primary syndication. Each Bank agrees to notify the New
Jersey Gaming Authorities of any dispute arising between such Bank and any
participant concerning Collateral located in New Jersey. Each Borrower
hereby acknowledges that unless the Company has provided the Banks with a
written opinion of counsel as to the suitability standards applicable to
lenders of any relevant Gaming Authority (excluding New Jersey and Nevada
except to the extent that the suitability standards set forth in the Gaming
Regulations of such States change from those in effect on the Effective
Date as described in the gaming memoranda delivered to the Banks prior to
the Effective Date) with jurisdiction over the Gaming Business of Parent
and its Subsidiaries, no Bank shall have the responsibility of determining
whether or not a potential assignee of such Bank would be a Qualified
Person under the Gaming Regulations of any such jurisdiction.
(f) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Revolving Notes hereunder to a Federal Reserve
Bank in support of borrowings made by such Bank from such Federal Reserve
Bank.
12.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent or any Bank or any holder of any Revolving
Note in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrowers or
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any other Credit Party and the Administrative Agent or any Bank or the
holder of any Revolving Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights, powers and remedies herein or in any other Credit
Document expressly provided are cumulative and not exclusive of any rights,
powers or remedies which the Administrative Agent or any Bank or the holder
of any Revolving Note would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Administrative Agent or any Bank or the holder
of any Revolving Note to any other or further action in any circumstances
without notice or demand.
12.06 Payments Pro Rata. (a) Except as otherwise provided in
-----------------
this Agreement, the Administrative Agent agrees that promptly after its
receipt of each payment from or on behalf of a Borrower in respect of any
Obligations hereunder, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its pro rata share of
--- ----
any such payment) pro rata based upon their respective shares, if any, of
--- ----
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Credit Documents,
or otherwise), which is applicable to the payment of the principal of, or
interest on, the Loans or Facility Fees, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than
the total of such Obligation then owed and due to such Bank bears to the
total of such Obligation then owed and due to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess payment shall
purchase for cash without recourse or warranty from the other Banks an
interest in the Obligations of the respective Party to such Banks in such
amount as shall result in a proportional participation by all the Banks in
such amount; provided that if all or any portion of such excess amount is
--------
thereafter recovered from such Bank, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
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(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 12.06(a) and (b) shall be subject
to the express provisions of this Agreement which require, or permit,
differing payments to be made to Non-Defaulting Banks as opposed to
Defaulting Banks.
12.07 Calculations; Computations. (a) The financial statements
--------------------------
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by Parent
to the Banks); provided that, (i) except as otherwise specifically provided
--------
herein, all computations determining compliance with Sections 8.03 through
8.05, inclusive, and Sections 8.07 through 8.09, inclusive, shall utilize
accounting principles and policies in conformity with those used to prepare
the historical financial statements delivered to the Banks pursuant to
Section 6.05(a), provided that for all Test Periods which include periods
prior to the Effective Date, all calculations used in determining the
Consolidated Interest Coverate Ratio for such Test Periods (both for
purposes of Section 8.08 and the definition of Reduction Discount) shall be
made on a pro forma basis as if the Hotel Transaction had been consummated
--- -----
on the first day of each such Test Period and all historical financial
information shall be restated (on a basis consistent with that methodology
used in the Proxy Statement) to retroactively reflect the Hotel Business as
discontinued operations and to exclude from such calculations the results
of operations of the Hotel Business, and (ii) at no time shall Harrah's
Jazz and its Subsidiaries be treated as Subsidiaries of Parent for purposes
of this Agreement even though (x) Harrah's Jazz and its Subsidiaries may at
any time fall within the definition of "Subsidiary" or (y) generally
accepted accounting principles would require otherwise but shall instead be
treated as an equity investment by Parent.
(b) All computations of interest, Facility Fees and other Fees
hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such interest, Facility Fees or other
Fees are payable.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
- ----------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL,
EXCEPT AS OTHERWISE
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PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS. EACH OF PARENT AND EACH BORROWER
HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM,
WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR
AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL
LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY
SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH SUCH CREDIT PARTY
AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON
THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE
ADMINISTRATIVE AGENT. EACH OF PARENT AND EACH BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH CREDIT PARTY AT ITS
ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE ADMINISTRATIVE AGENT, ANY BANK OR THE HOLDER OF ANY REVOLVING
NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY SUCH CREDIT PARTY IN ANY
OTHER JURISDICTION.
(b) EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS
REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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12.09 Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall
be lodged with the Borrowers and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on
-------------
the date (the "Effective Date") and at the time on which (i) Parent, the
Company, each existing Subsidiary Borrower and each Bank shall have signed
a counterpart hereof (whether the same or different counterparts) and shall
have delivered the same to the Administrative Agent at its Notice Office
or, in the case of the Banks, shall have given to the Administrative Agent
telephonic (confirmed in writing), written or telex notice (actually
received) at such office that the same has been signed and mailed to it and
(ii) the conditions contained in Sections 4 and 5 are met to the
satisfaction of the Administrative Agent and the Required Banks. Unless
the Administrative Agent has received actual notice from any Bank that the
conditions contained in Sections 4 and 5 have not been met to its
satisfaction, upon the satisfaction of the condition described in clause
(i) of the immediately preceding sentence and upon the Administrative
Agent's good faith determination that the conditions described in clause
(ii) of the immediately preceding sentence have been met, then the
Effective Date shall have been deemed to have occurred, regardless of any
subsequent determination that one or more of the conditions thereto had not
been met (although the occurrence of the Effective Date shall not release
Parent or any Borrower from any liability for failure to satisfy one or
more of the applicable conditions contained in Section 4 or 5). The
Administrative Agent will give Parent, the Company, each existing
Subsidiary Borrower and each Bank prompt written notice of the occurrence
of the Effective Date.
12.11 Headings Descriptive. The headings of the several sections
--------------------
and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of
this Agreement.
12.12 Amendment or Waiver. (a) Neither this Agreement nor any
-------------------
other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party
thereto
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<PAGE>
(except as otherwise provided in Section 12.02) and the Required Banks (or
the Required Secured Parties in the case of a change, waiver, discharge or
termination with respect to a Collateral Document to the extent provided
therein), provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank)
(with Obligations being directly affected thereby), (i) extend the final
scheduled maturity of any Loan or Revolving Note, or reduce the rate or
extend the time of payment of interest or Fees thereon, or reduce the
principal amount thereof, (ii) release all or substantially all of the Col-
lateral (except as expressly provided in the Collateral Documents) under
all the Collateral Documents, provided that such release of Collateral may
--------
be effected by only the Required Banks if at the time of such release the
Company's Indebtedness shall be rated at least BBB- Senior Implied by S&P
or Baa3 Senior Implied by Moody's, (iii) amend, modify or waive any pro-
vision of this Section 12.12, (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of
the Required Banks, additional extensions of credit pursuant to this Agree-
ment may be included in the determination of the Required Banks on
substantially the same basis as the extensions of Revolving Loan
Commitments are included on the Effective Date) or (v) except as set forth
in Section 8.02, 8.04(ix) or 12.17(a), consent to the assignment or trans-
fer by any Borrower of any of its rights and obligations under this
Agreement (although any Subsidiary Borrower may, at its request and with
the consent of the Required Banks, otherwise cease to be a Subsidiary
Borrower hereunder so long as no Default or Event of Default exists and all
Loans incurred by such Subsidiary Borrower are repaid in full; provided
--------
further, that no such change, waiver, discharge or termination shall (x)
- -------
increase the Revolving Loan Commitment of any Bank over the amount thereof
then in effect without the consent of such Bank (it being understood that
waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Revolving Loan
Commitment shall not constitute an increase of the Revolving Loan Commit-
ment of any Bank, and that an increase in the available portion of any
Revolving Loan Commitment of any Bank shall not constitute an increase in
the Revolving Loan Commitment of such Bank), (y) without the consent of the
Administrative Agent, amend, modify or waive any provision of Section 11 or
any other provision as same relates to the rights or obligations of the
Administrative Agent and (z) without the consent of the Collateral Agent,
amend, modify or waive any provision relating to the rights or obligations
of the Collateral Agent.
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(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as contemplated
by clauses (i) through (v), inclusive, of the first proviso to Section
12.12(a), the consent of the Required Banks is obtained but the consent of
one or more of such other Banks whose consent is required is not obtained,
then the Company shall have the right, so long as all non-consenting Banks
whose individual consent is required are treated as described in either
clauses (A) or (B) below, to either (A) replace each such non-consenting
Bank or Banks with one or more Replacement Banks pursuant to Section 1.14
so long as at the time of such replacement, each such Replacement Bank
consents to the proposed change, waiver, discharge or termination or (B)
terminate such non-consenting Bank's Revolving Loan Commitment and repay
all outstanding Loans of such Bank in accordance with Sections 2.02(b)
and/or 3.01(iv), provided that, unless the Revolving Loan Commitments are
--------
terminated, and Loans repaid, pursuant to preceding clause (B) are
immediately replaced in full at such time through the addition of new Banks
or the increase of the Revolving Loan Commitments and/or outstanding Loans
of existing Banks (who in each case must specifically consent thereto),
then in the case of any action pursuant to preceding clause (B) the
Required Banks (determined before giving effect to the proposed action)
shall specifically consent thereto, provided further, that in any event the
----------------
Company shall not have the right to replace a Bank, terminate its Revolving
Loan Commitment or repay its Loans solely as a result of the exercise of
such Bank's rights (and the withholding of any required consent by such
Bank) pursuant to the second proviso to Section 12.12(a).
12.13 Survival. All indemnities set forth herein (including,
--------
without limitation, in Sections 1.11, 1.12, 3.04, 11.06 and 12.01) shall
survive the execution, delivery and termination of this Agreement and the
Revolving Notes and the making and repayment of the Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its
-----------------
Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Bank. Notwithstanding anything to the contrary contained herein, to
the extent that a transfer of Loans pursuant to this Section 12.14 would,
at the time of such transfer, result in increased costs under Section 1.11,
1.12 or 3.04 from those being charged by the respective Bank prior to such
transfer, then the Borrowers shall not be obligated to pay such increased
costs (although the Borrowers shall be obligated to pay any other increased
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<PAGE>
costs of the type described above resulting from changes after the date of
the respective transfer).
12.15 Application of Gaming Regulations. Parent, the Company,
---------------------------------
each Subsidiary Borrower and the Banks acknowledge that (i) the
consummation of the transactions contemplated by the Credit Documents is
subject to the Gaming Regulations (and Parent, the Company and each
Subsidiary Borrower represent and warrant that all requisite approvals
thereunder have been duly obtained) and (ii) the exercise of remedies under
the Collateral Documents with respect to the Collateral will be subject to
the Gaming Regulations.
12.16 Confidentiality. (a) Subject to the provisions of clause
---------------
(b) of this Section 12.16, each Bank agrees that it will use its best
effort not to disclose without the prior consent of the Company (other than
to its employees, auditors or counsel or to another Bank if the Bank or
such Bank's holding or parent company in its sole discretion determines
that any such party should have access to such information) any information
with respect to Parent or any of its Subsidiaries which is now or in the
future furnished pursuant to this Agreement or any other Credit Document
and which is designated by the Company to the Banks in writing as
confidential, provided that any Bank may disclose any such information (a)
--------
as has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the
United States or elsewhere) or their successors, (c) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or
ruling applicable to such Bank, and (e) to any prospective or actual
transferee or participant in connection with any contemplated transfer or
participation of any of the Revolving Notes or Revolving Loan Commitments
or any interest therein by such Bank, provided, that such prospective
--------
transferee executes an agreement with such Bank containing provisions
substantially identical to those contained in this Section.
(b) Each Borrower hereby acknowledges and agrees that each Bank
may share with any of its affiliates any information related to Parent or
any of its Subsidiaries (including, without limitation, any nonpublic
customer informa-
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<PAGE>
tion regarding the creditworthiness of Parent and its Subsidiaries).
12.17 Miscellaneous. (a) Notwithstanding anything to the
-------------
contrary contained in this Agreement, the Required Banks may consent to a
corporate reorganization of Parent and its Subsidiaries, which corporate
reorganization may include the transfer of one or more Subsidiaries of the
Company as direct Subsidiaries of Parent. In connection with any such
corporate reorganization, the Required Banks may, at their option, require
that Parent or one or more of its Subsidiaries become direct borrowers with
respect to the Obligations. In addition, any necessary amendments or
supplements to this Agreement or the other Credit Documents to effect such
corporate reorganization, including to preserve the perfection and priority
of the Liens created under the Collateral Documents and retaining the
benefits of the Guarantees, may be made with consent of the Required Banks.
(b) Each of the Banks hereby acknowledges that the law firms of
Vargas & Bartlett, Norris, McLaughlin & Marcus and Saiber Schlesinger Satz
& Goldstein have jointly represented the Banks and the Credit Parties in
connection with certain of the local real estate and/or gaming matters
related to the transactions contemplated by this Agreement. Each of the
Banks further acknowledges that such dual representation may give rise to a
conflict of interest under the Rules of Professional Conduct under the laws
of the States of New Jersey and Nevada. In that such connection, the
Administrative Agent, on behalf (and with the authority) of the Banks and
at the request of such law firms, signed certain waivers in the forms of
Exhibits R-1, R-2 and R-3, respectively to the Original 5-Year Credit
Agreement. Each of the Banks understands the contents of such waivers and
acknowledges that such waivers remain in effect.
Section 12.18. Certain Agreements with Respect to Existing
-------------------------------------------
Indentures. (a) The Borrowers agree that they shall not incur or suffer
- ----------
to exist at any time any Debt (as defined in the 10-7/8% Senior
Subordinated Notes Indenture) pursuant to clause (a) of the first paragraph
of Section 1008 of the 10-7/8% Senior Subordinated Notes Indenture, except
that (x) Debt pursuant to this Agreement and the 5-Year Credit Agreement
shall be justified as outstanding pursuant to said clause (a) and (y) other
Debt in an aggregate outstanding principal amount not to exceed
$768,000,000 less the sum of (a) the then Total Revolving Loan Commitment
(or if greater, the Total Outstandings at such time) and (b) the
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Total 5-Year Revolving Loan Commitment (or, if greater, the Total 5-Year
Outstandings at such time) may be outstanding at any time pursuant to said
clause (a). For purposes of determining compliance with the 10-7/8% Senior
Subordinated Notes Indenture, all incurrences of Loans will be deemed
incurred pursuant to clause (a) of the first paragraph of Section 1008 of
the 10-7/8% Senior Subordinated Notes Indenture. The Borrowers represent
and warrant that all Indebtedness incurred under this Agreement shall be
permitted to be incurred and remain outstanding pursuant to the 10-7/8%
Senior Subordinated Notes Indenture, and the Borrowers hereby also covenant
and agree that they shall not take any action with respect to the
incurrence of any Indebtedness (including under this Agreement) which is
inconsistent with this Section 13.18(a). This clause (a) shall cease to be
of further force or effect at such time as all 10-7/8% Senior Subordinated
Notes have been repaid in full and the provisions of Section 1008 of the
10-7/8% Senior Subordinated Notes Indenture are no longer effective.
(b) The Borrowers agree that they (x) shall not incur or suffer
to exist at any time any Debt (as defined in the 8-3/4% Senior Subordinated
Notes Indenture) pursuant to clause (a) of the first paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture, except that up to
$125,000,000 of outstanding Debt incurred from time to time pursuant to
this Agreement may be justified as outstanding pursuant to said clause (a)
and up to $450,000,000 (plus the amount of all reductions to the Total
Revolving Loan Commitment after the Effective Date so long as the Debt
outstanding under this Agreement does not exceed the Total Revolving Loan
Commitment as so reduced) of Debt outstanding from time to time pursuant to
the 5-Year Credit Agreement may be justified as having been incurred
pursuant to said clause (a) and (y) shall not incur or suffer to exist at
any time more than $25,000,000 of outstanding Debt (other than pursuant to
this Agreement) pursuant to clause (f) of the first paragraph of Section
1008 of the 8-3/4% Senior Subordinated Notes Indenture, thereby leaving at
least $25,000,000 under said clause (f) to justify outstanding Debt
pursuant to this Agreement. For purposes of determining compliance with
the 8-3/4% Senior Subordinated Notes Indenture for all incurrences of Loans
under this Agreement, up to $125,000,000 of Loans incurred under this
Agreement will be deemed incurred pursuant to clause (a) of the first
paragraph of Section 1008 of the 8-3/4% Senior Subordinated Notes Indenture
and up to $25,000,000 of Loans incurred under this Agreement will be deemed
incurred pursuant to clause (f) of the first paragraph of such Section
1008. The Borrowers
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represent and warrant that all Indebtedness incurred under this Agreement
shall be permitted to be incurred and remain outstanding pursuant to the 8-
3/4% Senior Subordinated Notes Indenture, and the Borrowers hereby also
covenant and agree that they shall not take any action with respect to the
incurrence of any Indebtedness (including under this Agreement) which is
inconsistent with this Section 12.18(b). This clause (b) shall cease to be
of further force or effect at such time as all 8-3/4% Senior Subordinated
Notes have been repaid in full and the provisions of Section 1008 of the 8-
3/4% Senior Subordinated Notes Indenture are no longer effective.
SECTION 13. Parent Guaranty.
---------------
13.01 The Guaranty. In order to induce the Administrative Agent
------------
and Banks to enter into this Agreement and to extend credit hereunder and
in recognition of the direct benefits to be received by Parent from the
proceeds of the Loans, Parent hereby agrees with the Administrative Agent
and the Banks as follows: Parent hereby unconditionally and irrevocably
guarantees as primary obligor and not merely as surety the full and prompt
payment when due, whether upon maturity, by acceleration or otherwise, of
any and all of the Guaranteed Obligations of the Borrowers to the
Administrative Agent and the Banks. If any or all of the Guaranteed
Obligations of the Borrowers to the Administrative Agent and the Banks
becomes due and payable hereunder, Parent unconditionally promises to pay
such indebtedness to the Administrative Agent and the Banks, or order, on
demand, together with any and all reasonable expenses which may be incurred
by the Administrative Agent or the Banks in collecting any of the
Guaranteed Obligations.
13.02 Bankruptcy. Additionally, Parent unconditionally and
----------
irrevocably guarantees the payment of any and all of the Guaranteed
Obligations of the Borrowers to the Administrative Agent and the Banks whe-
ther or not due or payable by the Borrowers upon the occurrence in respect
of any Borrowers of any of the events specified in Section 9.05, and
unconditionally and irrevocably promises to pay such Guaranteed Obligations
to the Administrative Agent or the Banks, as the case may be, or order, on
demand, in Dollars.
13.03 Nature of Liability. The liability of Parent hereunder is
-------------------
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrowers whether executed by Parent, any
other Guarantor, any other guarantor or by any other party, and the
liability of Parent
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hereunder shall not be affected or impaired by (a) any direction as to
application of payment by any Borrower or by any other party (other than
for misappropriation of funds by the respective Bank), or (b) any other
continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations of any
Borrower, or (c) any payment on or in reduction of any such other guaranty
or undertaking, or (d) any dissolution, termination or increase, decrease
or change in personnel by any Borrower, or (e) any payment made to the
Administrative Agent or the Banks on the indebtedness which the Administra-
tive Agent or such Banks repay to such Borrower pursuant to court order in
any bankruptcy, reorganization, arrangement, moratorium or other debtor re-
lief proceeding, and Parent waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.
13.04 Independent Obligation. The obligations of Parent
----------------------
hereunder are independent of the obligations of any other Guarantor, any
other guarantor or any Borrower, and a separate action or actions may be
brought and prosecuted against Parent whether or not action is brought
against any other Guarantor, any other guarantor or any Borrower and
whether or not any other Guarantor, any other guarantor or any Borrower be
joined in any such action or actions. Parent waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by any
Borrower or other circumstance which operates to toll any statute of
limitations as to such Borrower shall operate to toll the statute of
limitations as to Parent.
13.05 Authorization. Parent authorizes the Administrative Agent
-------------
and the Banks without notice or demand (except (i) as shall be required by
applicable statute and cannot be waived and (ii) for any consents of the
respective Credit Parties required by the terms of the respective Credit
Documents), and without affecting or impairing its liability hereunder,
from time to time to:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate
or alter, any of the Guaranteed Obligations (including any increase or
decrease in the rate of interest thereon), any security therefor, or
any liability incurred directly or indirectly in respect thereof, and
the Parent Guaranty herein made shall apply to the Guaranteed
Obligations as so changed, extended, renewed or altered;
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(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against any
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors,
any Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of any Borrower to its creditors
other than the Administrative Agent and the Banks;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Borrowers to the Administrative
Agent and the Banks regardless of what liability or liabilities of
Parent or the Borrowers remain unpaid; and/or
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements.
13.06 Reliance. It is not necessary for the Administrative
--------
Agent or the Banks to inquire into the capacity or powers of Parent or its
Subsidiaries or the officers, directors, partners or agents acting or
purporting to act on its behalf, and any Guaranteed Obligations made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
13.07 Subordination. Any of the indebtedness of the Borrowers
-------------
relating to the Guaranteed Obligations now or hereafter owing to Parent is
hereby subordinated to the Guar-
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anteed Obligations of the Borrowers owing to the Administrative Agent and
the Banks, provided that payment may be made by any Borrower on any such
indebtedness relating to the Guaranteed Obligations owing to Parent so long
as the same is not prohibited by this Agreement and provided further, that
----------------
if the Administrative Agent so requests at a time when an Event of Default
exists, all such indebtedness relating to the Guaranteed Obligations of the
Borrowers to Parent shall be collected, enforced and received by Parent for
the benefit of the Banks and be paid over to the Administrative Agent on
behalf of the Administrative Agent and the Banks on account of the Guaran-
teed Obligations of the Borrowers to the Administrative Agent and the
Banks, but without affecting or impairing in any manner the liability of
Parent under the other provisions of this Parent Guaranty. Prior to the
transfer by Parent of any note or negotiable instrument evidencing any of
the indebtedness relating to the Guaranteed Obligations of the Borrowers to
Parent, Parent shall mark such note or negotiable instrument with a legend
that the same is subject to this subordination.
13.08 Waiver. (a) Parent waives any right (except as shall be
------
required by applicable statute and cannot be waived) to require the
Administrative Agent or the Banks to (i) proceed against any Borrower, any
other Guarantor, any other guarantor or any other party, (ii) proceed
against or exhaust any security held from any Borrower, any other Guar-
antor, any other guarantor or any other party or (iii) pursue any other
remedy in the Administrative Agent's or the Banks' power whatsoever. Pare-
nt waives any defense based on or arising out of any defense of any
Borrower, any other Guarantor, any other guarantor or any other party other
than payment in full of the Guaranteed Obligations, including, without
limitation, any defense based on or arising out of the disability of any
Borrower, any other Guarantor, any other guarantor or any other party, or
the unenforceability of the Guaranteed Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of any Borrower
other than payment in full of the Guaranteed Obligations. The
Administrative Agent and the Banks may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or the
Banks by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale
is permitted by applicable law), or exercise any other right or remedy the
Administrative Agent and the Banks may have against any Borrower or any
other party, or any security, without affecting or impairing in any way the
liability of Parent hereunder except to the extent the Guaranteed Obliga-
-134-
<PAGE>
tions have been paid. Parent waives any defense arising out of any such
election by the Administrative Agent and the Banks, even though such elec-
tion operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of Parent against any Borrower or any
other party or any security.
(b) Parent waives all presentments, demands for performance,
protests and notices, including without limitation notices of
nonperformance, notices of protest, notices of dishonor, notices of
acceptance of this Parent Guaranty, and notices of the existence, creation
or incurring of new or additional Guaranteed Obligations. Parent assumes
all responsibility for being and keeping itself informed of the Borrowers'
financial condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the Guaranteed Obligations and the nature, scope
and extent of the risks which Parent assumes and incurs hereunder, and
agrees that the Administrative Agent and the Banks shall have no duty to
advise Parent of information known to them regarding such circumstances or
risks.
-135-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date
first above written.
Address:
- -------
1023 Cherry Road THE PROMUS COMPANIES INCORPORATED
Memphis, Tennessee 38117
Tel: (901) 762-8600
Fax: (901) 762-8777
Attention: Treasurer By
------------------------------
Title:
with a copy to the same
address to the attention
of the Corporate Secretary
1023 Cherry Road EMBASSY SUITES, INC.
Memphis, Tennessee 38117
Tel: (901) 762-8600
Fax: (901) 762-8777
Attention: Treasurer By
-------------------------------
Title:
with a copy to the same
address to the attention
of the Corporate Secretary
1023 Cherry Road MARINA ASSOCIATES
Memphis, Tennessee 38117
Tel: (901) 762-8600 By: HARRAH'S ATLANTIC CITY, INC.,
Fax: (901) 762-8777 a general partner
Attention: Treasurer
with a copy to the same
address to the attention By
------------------------------
of the Corporate Secretary Title:
By: HARRAH'S NEW JERSEY, INC.,
a general partner
By
------------------------------
Title:
130 Liberty Street BANKERS TRUST COMPANY,
New York, New York 10006 Individually and as
Tel: (212) 250-9094 Administrative Agent
Fax: (212) 250-7218 and as an Agent
Attention: Mary Kay Coyle
By
------------------------------
Title:
<PAGE>
165 Broadway THE LONG-TERM CREDIT BANK OF JAPAN,
New York, New York 10006 LIMITED, NEW YORK BRANCH,
Tel: (212) 335-4529 Individually and as an Agent
Fax: (212) 608-2371
Attention: Philip Marsden
By
-------------------------------
Title:
with a copy to
245 Peachtree Center Avenue
Suite 2801
Atlanta, Georgia 30303
Tel: (404) 659-7210
Fax: (404) 658-9751
Attention: Rebecca Sedlar
One NationsBank Plaza-M-5 NATIONSBANK OF GEORGIA, N.A.,
Nashville, Tennessee 37239-1697 Individually and as an Agent,
Tel: (615) 749-3524
Fax: (615) 749-4640
Attention: Ashley Crabtree By
-------------------------------
Title:
2029 Century Park East SOCIETE GENERALE, Individually and
Suite 2900 as an Agent
Los Angeles, California 90067
Tel: (310) 788-7104
Fax: (310) 551-1537 By
-------------------------------
Attention: Donald L. Schubert Title:
277 Park Avenue THE SUMITOMO BANK, LIMITED,
6th Floor NEW YORK BRANCH, Individually
New York, New York 10172 and as an Agent
Tel: (212) 224-4129
Fax: (212) 224-5188
Attention: Suresh Tata By
-------------------------------
Title:
555 South Flower Street BANK OF AMERICA NATIONAL TRUST
Entertainment Media, 10th Floor AND SAVING ASSOCIATION
Los Angeles, California 90071
Tel: (213) 228-2768
Fax: (213) 228-2641 By
-------------------------------
Attention: Scott Faber Title:
<PAGE>
550 South Hope Street THE NIPPON CREDIT BANK, LTD.,
Suite 2500 LOS ANGELES AGENCY
Los Angeles, California 90071
Tel: (213) 243-5555
Fax: (213) 892-0111 By
-------------------------------
Attention: Jay Schwartz Title:
Atlanta Agency THE BANK OF NOVA SCOTIA
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308 By
-------------------------------
Tel: (404) 877-1500 Title:
Fax: (404) 888-8998
Attention: F.C.H. Ashby (Operations Contact)
with a copy to
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Tel: (713) 752-0900
Fax: (713) 752-2425
Park Avenue Tower GIROCREDIT BANK A.G. DER
65 East 55th Street SPARKASSEN, GRAND CAYMAN
New York, New York 10022 ISLAND BRANCH
Tel: (212) 644-0660
Fax: (212) 644-0644
Attention: Lalit Malhotra By
-----------------------------------------
Title:
By
-------------------------------
Title:
Park Avenue Plaza THE TOKAI BANK, LIMITED,
55 East 52nd Street NEW YORK BRANCH
New York, New York 10055
Tel: (212) 339-1117 By
-------------------------------
Fax: (212) 754-2170 Title:
Attention: Stuart Schulman
<PAGE>
One Wall Street THE BANK OF NEW YORK,
New York, New York 10286 Individually and as an
Tel: (212) 635-6898 Agent
Fax: (212) 635-6434
Attention: Greg Batson
By
--------------------------------
Title:
300 South Grand Avenue CIBC INC., Individually and as
Los Angeles, California 90071 an Agent
Tel: (213) 617-6226
Fax: (213) 346-0157
Attention: Paul Chakmak By
-------------------------------
Title:
303 Peachtree Street CREDIT LYONNAIS, ATLANTA AGENCY,
Suite 4400 Individually and as an Agent
Atlanta, Georgia 30308
Tel: (404) 524-3700
Fax: (404) 584-5249
Attention: David Cawrse By
------------------------------
Title:
c/o Credit Lyonnais, CREDIT LYONNAIS CAYMAN ISLAND
Atlanta Agency BRANCH
303 Peachtree Street
Suite 4400
Atlanta, Georgia 30308 By
------------------------------
Tel: (404) 524-3700 Title:
Fax: (404) 584-5249
Attention: David Cawrse
707 Wilshire Boulevard FIRST INTERSTATE BANK OF
Los Angeles, California 90017 CALIFORNIA,
Tel: (213) 614-3903 Individually and as Agent
Fax: (213) 614-2569
Attention: Edith Lim By
-------------------------------
Title:
<PAGE>
One Boatmen's Plaza THE BOATMEN'S NATIONAL BANK
800 Market Street OF ST. LOUIS
12th Floor
St. Louis, Missouri 63101
Tel: (314) 466-7651 By
-------------------------------
Fax: (314) 466-6499 Title:
Attention: Doug Thornsberry
One Peachtree Center THE DAIWA BANK, LIMITED
Suite 4420
303 Peachtree Street
Atlanta, Georgia 30308 By
-------------------------------
Tel: (404) 524-6544 Title:
Fax: (404) 523-7983
Attention: Terry Herron
By
-------------------------------
Title:
4894 Poplar Avenue FIRST AMERICAN NATIONAL BANK
Memphis, Tennessee 38117
Tel: (901) 762-5688
Fax: (901) 762-5665 By
-------------------------------
Attention: David May Title:
165 Madison Avenue FIRST TENNESSEE BANK NATIONAL
Memphis, Tennessee 38101 ASSOCIATION
Tel: (901) 523-4444
Fax: (901) 523-4267
Attention: Steve Wade By
-------------------------------
Title:
One Ninety One Peachtree THE INDUSTRIAL BANK OF JAPAN,
Tower LIMITED
191 Peachtree Street
Suite 3600
Atlanta, Georgia 30303-1757 By
-------------------------------
Tel: (404) 524-8770 Title:
Fax: (404) 524-8509 (for Credit Matters)
Attention: Jackie Brunetto
Fax: (404) 577-6818 (for Administrative Matters)
Attention: Business Operations Department
<PAGE>
6000 Midlantic Drive MIDLANTIC BANK, N.A.
Mount Laurel, New Jersey 08054 (formerly known as Midlantic
Tel: (609) 778-2683 National Bank)
Fax: (609) 778-2673
Attention: Denise Killen
By
-------------------------------
Title:
Georgia-Pacific Center THE SANWA BANK, LIMITED,
Suite 4750 ATLANTA AGENCY
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
Tel: (404) 586-8809 By
-------------------------------
Fax: (404) 589-1629 Title:
Attention: Virginia Mahoney
555 S.W. Oak Street UNITED STATES NATIONAL BANK
Suite 400 OF OREGON
Portland, Oregon 97204
Tel: (503) 275-3192
Fax: (503) 275-4267 By
-------------------------------
Attention: Claire Jones Title:
210 East Capitol Street DEPOSIT GUARANTY NATIONAL BANK
P.O. Box 1200
Jackson, Mississippi 39215
Tel: (601) 968-4749
Fax: (601) 354-8315
Attention: Larry C. Ratzlaff By
-------------------------------
Title:
520 Madison Avenue THE MITSUBISHI TRUST & BANKING
New York, New York 10022 CORP.
Tel: (212) 838-7700
Fax: (212) 755-2349
Attention: Jay Kato By
-----------------------------------------
Title:
<PAGE>
1211 Avenue of the Americas WESTDEUTSCHE LANDESBANK
New York, New York 10036 GIROZENTRALE, NEW YORK BRANCH
Tel: (212) 852-6023
Fax: (212) 852-6163
Attention: Alan Bookspan By
-----------------------------------------
Title:
By
-----------------------------------------
Title:
101 California Street ABN AMRO BANK N.V.
Suite 4550
San Francisco, California 94111
Tel: (415) 984-3703
Fax: (415) 362-3524 By
-----------------------------------------
Attention: Jeffrey French Title:
By
-----------------------------------------
Title:
6000 Poplar Avenue THIRD NATIONAL BANK
Suite 145
Memphis, Tennessee 38119
Tel: (901) 766-7561 By
-------------------------------
Fax: (901) 766-7565 Title
Attention: Carol Yochen
210 Baronne Street FIRST NATIONAL BANK OF COMMERCE
4th Floor
New Orleans, Louisianna 70161
Tel: (504) 561-1989
Fax: (504) 561-1316 By
-----------------------------------------
Attention: Louis Ballero Title:
<PAGE>
SCHEDULE I
----------
REVOLVING LOAN COMMITMENTS
--------------------------
Revolving
Loan
Bank Commitment
- ---- ------------
Bankers Trust Company $ 11,500,000
The Bank of New York $ 8,500,000
CIBC Inc. $ 8,500,000
Credit Lyonnais $ 8,500,000
First Interstate Bank of California $ 8,500,000
The Long-Term Credit Bank of Japan,
Limited, New York Branch $ 8,500,000
NationsBank of Georgia, N.A. $ 8,500,000
Societe General $ 8,500,000
The Sumitomo Bank, Limited, New York Branch $ 7,500,000
Bank of America National Trust and Saving
Association $ 6,500,000
The Bank of Nova Scotia $ 6,500,000
The Industrial Bank of Japan, Limited $ 6,000,000
The Mitsubishi Trust & Banking Corp. $ 6,000,000
The Tokai Bank, Limited, New York Branch $ 6,000,000
The Sanwa Bank, Limited,
Atlanta Agency $ 5,000,000
Midlantic Bank, N.A. $ 4,000,000
United States National Bank of Oregon $ 4,000,000
Westdeutsche Landesbank Girozentrale,
New York Branch $ 3,500,000
ABN Amro Bank N.V. $ 3,000,000
The Boatmen's National Bank of St. Louis $ 3,000,000
First American National Bank $ 3,000,000
First Tennessee Bank National Association $ 3,000,000
The Nippon Credit Bank, Ltd.,
Los Angeles Agency $ 3,000,000
The Daiwa Bank, Limited $ 2,000,000
Deposit Guaranty National Bank $ 2,000,000
Girocredit Bank A.G. Der
Sparkassen, Grand Cayman Branch $ 2,000,000
Third National Bank $ 2,000,000
First National Bank of Commerce $ 1,000,000
------------
TOTAL: $150,000,000
============
<PAGE>
SCHEDULE II
-----------
TAX MATTERS
-----------
<PAGE>
SCHEDULE III
------------
SUBSIDIARIES
------------
<PAGE>
SCHEDULE IV
-----------
EXISTING INDEBTEDNESS
---------------------
<PAGE>
SCHEDULE V
----------
JOINT VENTURES
--------------
<PAGE>
SCHEDULE VI
-----------
INSURANCE
---------
<PAGE>
SCHEDULE VII
------------
EXISTING LIENS
--------------
<PAGE>
SCHEDULE VIII
-------------
HOTEL SUBSIDIARIES
------------------
<PAGE>
EXHIBIT A
---------
NOTICE OF BORROWING
[Date]
Bankers Trust Company, as
Administrative Agent for
the Banks party to
the Credit Agreement
referred to below
One Bankers Trust Plaza
New York, New York 10006
Attention:
----------------------
Gentlemen:
The undersigned, (the "Borrower"), refers
---------------------
to the Credit Agreement, dated as of June 9, 1995 (as amended from time to
time, the "Credit Agreement", the terms defined therein being used herein
as therein defined), among Harrah's Entertainment, Inc. (formerly known as
The Promus Companies Incorporated), Harrah's Operating Company, Inc.
(formerly known as Embassy Suites, Inc.), each Subsidiary Borrower, the
financial institutions from time to time party thereto, Bankers Trust
Company, The Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency,
First Interstate Bank of California, The Long-Term Credit Bank of Japan,
Limited, New York Branch, NationsBank of Georgia, N.A., Societe Generale
and The Sumitomo Bank, Limited, New York Branch, as Agents, and you, as
Administrative Agent, and hereby gives you notice, irrevocably, pursuant to
Section 1.03 of the Credit Agreement, that the undersigned hereby requests
a Borrowing of Revolving Loans under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 1.03 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________,
19__.1/
- --------------------
1/ Shall be a Business Day at least one Business Day in the case of Base
Rate Loans and three Business Days in the case of Eurodollar Rate Loans, in
each case after the date hereof.
<PAGE>
(ii) The aggregate principal amount of the Proposed Borrowing is
$___________.
(iii) The Revolving Loans to be made pursuant to the Proposed
Borrowing shall be initially maintained as [Base Rate Loans]
[Eurodollar Loans].
(iv) The initial Interest Period for the Proposed Borrowing is ___
month(s).2/
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in the Credit
Agreement and in the other Credit Documents are and will be true and
correct in all material respects, both before and after giving effect
to the Proposed Borrowing and to the application of the proceeds
thereof, as though made on such date (it being understood and agreed
that any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all
material respects only as of such specified date); and
(B) no Default or Event of Default has occurred and is
continuing, or would result from such Proposed Borrowing or from the
application of the proceeds thereof.
Very truly yours,
[NAME OF BORROWER]
By
----------------------------
Name:
Title:
- --------------------
2/ To be included for a Proposed Borrowing of Eurodollar Loans.
<PAGE>
EXHIBIT B
---------
NOTICE OF COMPETITIVE
BID BORROWING
[Date]
Bankers Trust Company, as Administrative Agent
for the Banks parties
to the Credit Agreement
(as defined below)
130 Liberty Street
New York, New York 10006
Attention:
Gentlemen:
The undersigned, refers to the Credit Agreement, dated as of June
9, 1995 (as amended from time to time, the "Credit Agreement," the terms
defined therein being used herein as therein defined), among Harrah's
Entertainment, Inc. (formerly known as the Promus Companies Incorporated),
Harrah's Operating Company, Inc. (formerly known as Embassy Suites, Inc.
(the "Company"), each Subsidiary Borrower, the financial institutions from
time to time party thereto, Bankers Trust Company, The Bank of New York,
CIBC, Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and you, as Administrative Agent, and
hereby gives you notice pursuant to Section 1.04(a) of the Credit Agreement
that the undersigned hereby requests a Competitive Bid Borrowing under the
Credit Agreement, and in that connection sets forth the terms on which such
Competitive Bid Borrowing (the "Proposed Competitive Bid Borrowing") is
requested to be made:
(A) The Business Day of the
Proposed Competitive Bid
Borrowing
----------------------
(B) Aggregate Principal
Amount of the Proposed
Competitive Bid
Borrowing
----------------------
(C) Reply Date
----------------------
<PAGE>
EXHIBIT B
(D) Maturity Date
----------------------
(E) Interest Payment
Date(s)
----------------------
(F) Moody's Senior Implied
Indebtedness Rating
----------------------
(G) S&P's Senior Implied
Indebtedness Rating
----------------------
(H)
----------------- ----------------------
(I)
----------------- ----------------------
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Competitive Bid Borrowing:
(A) the representations and warranties contained in the Credit
Agreement and in the other Credit Documents are and will be true and
correct in all material respects, both before and after giving effect
to the Proposed Competitive Bid Borrowing and to the application of
the proceeds thereof, as though made on such date (it being understood
and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct
in all material respects only as of such specified date); and
(B) no Default or Event of Default has occurred and is
continuing, or would result from such Proposed Competitive Bid Bor-
rowing or from the application of the proceeds thereof.
Very truly yours,
HARRAH'S OPERATING
COMPANY, INC.
By Name:
-----------------------
Title:
<PAGE>
EXHIBIT C
---------
REVOLVING NOTE
$ New York, New York
-----------------
______ __, 199_
FOR VALUE RECEIVED, , a
------------------ --------
[corporation][general partnership] (the "Borrower"), hereby promises to pay
to the order of (the "Bank"), in lawful money of
-----------------------
the United States of America in immediately available funds, at the office
of Bankers Trust Company located at One Bankers Trust Plaza, New York,
New York 10006 on the Maturity Date (as defined in the Agreement referred
to below) for the Bank the principal sum of _______________ DOLLARS
($______________) or, if less, the then unpaid principal amount of all
Revolving Loans (as defined in the Agreement) made by the Bank pursuant to
the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof
until paid at the rates and at the times provided in Section 1.09 of the
Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of June 9, 1995, among Harrah's Entertainment, Inc.
(formerly known as The Promus Companies Incorporated), Harrah's Operating
Company, Inc. (formerly known as Embassy Suites, Inc.), each Subsidiary
Borrower (as defined in the Agreement), the financial institutions from
time to time party thereto (including the Bank), Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent (as from time to time in effect, the
"Agreement"), and is entitled to the benefits thereof and of the other
Credit Documents (as defined in the Agreement). This Note is secured by
the Collateral Documents (as defined in the Agreement) and is entitled to
the benefits of the Guaranty (as defined in the Agreement). As provided in
the Agreement, this Note is subject to voluntary prepayment and mandatory
<PAGE>
EXHIBIT C
Page 2
repayment prior to the Final Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this Note
may be declared to be due and payable in the manner and with the effect
provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
[NAME OF BORROWER]
By
----------------------------
Title:
<PAGE>
EXHIBIT D
---------
Section 3.04(b)(iii) Certificate
--------------------------------
Reference is hereby made to the Credit Agreement, dated as of
June 9, 1995, among Harrah's Entertainment, Inc. (formerly known as The
Promus Companies Incorporated), Harrah's Operating Company, Inc. (formerly
known as Embassy Suites, Inc.), each Subsidiary Borrower, the financial
institutions from time to time party thereto, Bankers Trust Company, The
Bank of New York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First
Interstate Bank of California, The Long-Term Credit Bank of Japan, Limited,
New York Branch, NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent, as amended to the date hereof (the
"Credit Agreement"). Pursuant to the provisions of Section 3.04(b)(iii) of
the Credit Agreement, the undersigned hereby certifies that it is not a
"bank" as such term is used in Section 881(c)(3)(A) of the Internal Revenue
Code of 1986, as amended.
[NAME OF BANK]
By:
----------------------
Title:
Date:
<PAGE>
EXHIBIT E
---------
ELECTION TO BECOME A SUBSIDIARY BORROWER
[Date]
Bankers Trust Company, as Administrative Agent
One Bankers Trust Plaza
New York, New York 10006
Gentlemen:
The undersigned, [name of Subsidiary Borrower], a ______________
corporation, refers to the Credit Agreement, dated as of June 9, 1995 (as
amended from time to time, the "Credit Agreement"), among Harrah's
Entertainment, Inc. (formerly known as The Promus Companies Incorporated),
Harrah's Operating Company, Inc. (formerly known as Embassy Suites, Inc.),
each other Subsidiary Borrower party thereto, the financial institutions
from time to time party thereto, Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First Interstate Bank of
California, The Long-Term Credit Bank of Japan, Limited, New York Branch,
NationsBank of Georgia, N.A., Societe Generale and The Sumitomo Bank,
Limited, New York Branch, as Agents, and Bankers Trust Company, as
Administrative Agent. All capitalized terms used herein and not otherwise
defined herein shall have the meaning set forth in the Credit Agreement.
The undersigned, desiring to incur Loans under the Credit
Agreement hereby elects, as required by Section 5.03 of the Credit
Agreement, to become a Subsidiary Borrower for purposes of the Credit
Agreement, effective from the date hereof. The undersigned confirms that
the representations and warranties set forth in Section 6 of the Credit
Agreement are true and correct as to the undersigned and its Subsidiaries
as of the date hereof, and the undersigned hereby agrees to comply with all
the obligations of a Borrower under, and to be bound in all respects by the
terms of, the Credit Agreement as if the undersigned were an original
signatory thereto. The undersigned, simultaneously with its execution
hereof, is delivering the appropriate Revolving Note to the Administrative
Agent for the account of each of the Banks, in accordance with the terms of
the Credit
<PAGE>
EXHIBIT E
Page 2
Agreement. All notices and other communications provided for under the
Credit Agreement may be sent to the address specified below.
Very truly yours,
Address: [NAME OF SUBSIDIARY BORROWER]
By
----------------------------
Title:
Acknowledged and Agreed:
HARRAH'S ENTERTAINMENT, INC.
By:
----------------------------
Title:
HARRAH'S OPERATING COMPANY, INC.
By:
----------------------------
Title:
BANKERS TRUST COMPANY,
as Administrative Agent
By:
----------------------------
Title:
<PAGE>
EXHIBIT F
---------
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date __________, 19__
Reference is made to the Credit Agreement described in Item 2 of
Annex I hereto (as such Credit Agreement may hereafter be amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"). Unless defined in Annex I hereto, terms defined in the Credit
Agreement are used herein as therein defined. ___________ (the "Assignor")
and __________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obliga-
tions under the Credit Agreement as of the date hereof which represents the
percentage interest specified in Item 4 of Annex I hereto (the "Assigned
Share") of all of the outstanding rights and obligations under the Credit
Agreement relating to the Revolving Loan Commitment of the Assignor, in-
cluding, without limitation, all rights and obligations with respect to the
Assigned Share of the Revolving Loans.
2. The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
the Credit Agreement or the other Credit Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of
the Credit Agreement or the other Credit Documents or any other instrument
or document furnished pursuant thereto; and (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of Parent, any Borrower or any other Subsidiary of Parent or the
performance or observance by any Credit Party of any of its respective
obligations under the Credit Agreement or the other Credit Documents to
which it is a party or any other instrument or document furnished pursuant
thereto.
<PAGE>
EXHIBIT F
Page 2
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement and the other Credit Documents, together with copies of
the financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment and Assumption Agreement; (ii)
agrees that it will, independently and without reliance upon the
Administrative Agent, the Agents, the Assignor or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is a Qualified Person;
(iv) appoints and authorizes the Administrative Agent (including the
Administrative Agent in its capacity as Collateral Agent) to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Credit Documents as are delegated to the
Administrative Agent or the Collateral Agent, as the case may be, by the
terms thereof, together with such powers as are reasonably incidental
thereto; [and] (v) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Bank[; and (vi) to the extent legally
entitled to do so, attaches the forms described in the penultimate sentence
of Section 12.04(b) of the Credit Agreement]1/.
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Administrative
Agent. The effective date of this Assignment and Assumption Agreement
shall be the date of execution hereof by the Assignor and the Assignee and
the receipt of the consent of Bankers Trust Company and receipt by the
Administrative Agent of the administrative fee referred to in such Section
12.04(b), unless otherwise specified in Item 5 of Annex I hereto (the
"Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent, as of the Settlement Date, (i) the Assignee shall be
a party to the Credit Agreement and, to the extent provided in this
Assignment and Assumption Agreement, have the rights and obligations of a
Bank thereunder and under the other Credit Documents and (ii) the Assignor
shall, to the extent provided in this Assignment
- --------------------
1/ Include if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
<PAGE>
EXHIBIT F
Page 3
and Assumption Agreement, relinquish its rights and be released from its
obligations under the Credit Agreement and the other Credit Documents.
6. It is agreed that the Assignee shall be entitled to (x) all
interest on the Assigned Share of the Revolving Loans at the rates
specified in Item 6 of Annex I; and (y) all Facility Fees on the Assigned
Share of the Total Revolving Loan Commitment at the rate specified in Item
7 of Annex I hereto, which, in each case, accrue on and after the
Settlement Date; such interest and Facility Fees to be paid by the
Administrative Agent directly to the Assignee. It is further agreed that
all payments of principal made on the Assigned Share of the Revolving Loans
which occur on and after the Settlement Date will be paid directly by the
Administrative Agent to the Assignee. Upon the Settlement Date, the
Assignee shall pay to the Assignor an amount specified by the Assignor in
writing which represents the Assigned Share of the principal amount of the
respective Revolving Loans made by the Assignor pursuant to the Credit
Agreement which are outstanding on the Settlement Date, net of any closing
costs, and which are being assigned hereunder. The Assignor and the
Assignee shall make all appropriate adjustments in payments under the
Credit Agreement for periods prior to the Settlement Date directly between
themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
EXHIBIT F
Page 4
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being
made on Annex I hereto.
Accepted this _____ day [NAME OF ASSIGNOR]
of ____________, 19__ as Assignor
By
----------------------------
Title:
[NAME OF ASSIGNEE]
as Assignee
By
----------------------------
Title:
Acknowledged and Agreed:
BANKERS TRUST COMPANY,
as Administrative Agent
By
-------------------------
Title:
<PAGE>
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrowers:
Harrah's Operating Company, Inc. and each Subsidiary Borrower party
thereto.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of June 9, 1995, among Harrah's
Entertainment, Inc. (formerly known as The Promus Companies
Incorporated), Harrah's Operating Company, Inc. (formerly known as
Embassy Suites, Inc.), each Subsidiary Borrower, the Banks party
thereto from time to time, Bankers Trust Company, The Bank of New
York, CIBC, Inc., Credit Lyonnais, Atlanta Agency, First Interstate
Bank of California, The Long-Term Credit Bank of Japan, Limited, New
York Branch, NationsBank of Georgia, N.A., Societe Generale and The
Sumitomo Bank, Limited, New York Branch, as Agents, and Bankers Trust
Company, as Administrative Agent, as amended to the date hereof.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
Revolving
Loan Com-
mitment
---------
a. Aggregate Amount
for all Banks $___________
b. Assigned Share2/ ___________%
c. Amount of
Assigned Share $___________
5. Settlement Date: ______ __, 199_
- --------------------
2/ Percentage taken to 12 decimal places.
<PAGE>
Annex I
Page 2
6. Rate of Interest As set forth in Section 1.09
to the Assignee: of the Credit Agreement (unless otherwise agreed
to by the Assignor and the Assignee)3/
7. Facility Fee: As set forth in Section 2.01(a) of theCredit
Agreement (unless otherwise agreed to by the
Assignor and the Assignee)4/
8. Notice:
ASSIGNOR:
---------------------
---------------------
---------------------
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
---------------------
---------------------
---------------------
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions:
- --------------------
3/ The Borrower and the Administrative Agent shall direct the entire amount
of the interest to the Assignee at the rate set forth in Section 1.09 of the
Credit Agreement, with the Assignor and Assignee effecting the agreed upon
sharing of the interest through payments by the Assignee to the Assignor.
4/ The Company and the Administrative Agent shall direct the entire amount
of the Facility Fees to the Assignee at the rate set forth in Section 2.01(a)
of the Credit Agreement, with the Assignor and the Assignee effecting the
agreed upon sharing of Facility Fees through payment by the Assignee to the
Assignor.
<PAGE>
Annex I
Page 3
ASSIGNOR:
---------------------
---------------------
---------------------
Attention:
Reference:
ASSIGNEE:
---------------------
---------------------
---------------------
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By
---------------------
By
---------------------
---------------------
(Print Name and Title) (Print Name and Title)
Exhibit 10(7)
EMPLOYEE BENEFITS & OTHER EMPLOYMENT MATTERS
ALLOCATION AGREEMENT
by and between
THE PROMUS COMPANIES INCORPORATED
(to be known as Harrah's Entertainment, Inc.)
and
PROMUS HOTEL CORPORATION
dated as of June , 1995
---
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Aggregate Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Asset Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . 2
Assumed Deferred Compensation Liabilities . . . . . . . . . . . . . . 2
Base Matching Contribution . . . . . . . . . . . . . . . . . . . . . . 2
COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Collective Bargaining Agreement . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(i) Employer Common Stock . . . . . . . . . . . . . . . . . . . . . 2
(ii) Harrah's Entertainment Common Stock . . . . . . . . . . . . 2
(iii) PHC Common Stock . . . . . . . . . . . . . . . . . . . . . 2
(iv) Promus Common Stock . . . . . . . . . . . . . . . . . . . . 2
Conversion Award . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Current Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Deferred Compensation Plan . . . . . . . . . . . . . . . . . . . . . . 3
(i) Harrah's Entertainment Deferred Compensation Plan . . . . . . . 3
(ii) Harrah's Entertainment Executive Deferred Compensation Plan 3
(iii) PHC Deferred Compensation Plan . . . . . . . . . . . . . . 3
(iv) PHC Executive Deferred Compensation Plan . . . . . . . . . 3
(v) Promus Deferred Compensation Plan . . . . . . . . . . . . . . . 3
(vi) Promus Executive Deferred Compensation Plan . . . . . . . . 4
Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Discretionary Matching Contribution . . . . . . . . . . . . . . . . . 4
Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . 4
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Distribution Record Date . . . . . . . . . . . . . . . . . . . . . . . 4
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(i) Harrah's Employee . . . . . . . . . . . . . . . . . . . . . . . 4
(ii) Hotel Terminee . . . . . . . . . . . . . . . . . . . . . . 4
(iii) PHC Employee . . . . . . . . . . . . . . . . . . . . . . . 4
(iv) Promus Employee . . . . . . . . . . . . . . . . . . . . . . 5
(v) Promus Terminee . . . . . . . . . . . . . . . . . . . . . . . . 5
(vi) Retained Employee . . . . . . . . . . . . . . . . . . . . . 5
(vii) Transferred Employee . . . . . . . . . . . . . . . . . . . 5
Employee Bonus Plan . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i) Harrah's Entertainment Bonus Plan . . . . . . . . . . . . . . . 5
i
<PAGE>
Page
----
(ii) PHC Bonus Plan . . . . . . . . . . . . . . . . . . . . . . 5
(iii) Promus Bonus Plan . . . . . . . . . . . . . . . . . . . . . 5
Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Employer Restricted Stock Plan . . . . . . . . . . . . . . . . . . . . 5
(i) Harrah's Entertainment Restricted Stock Plan . . . . . . . . . 5
(ii) PHC Restricted Stock Plan . . . . . . . . . . . . . . . . . 6
(iii) Promus Restricted Stock Plan . . . . . . . . . . . . . . . 6
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Existing Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Promus Restricted Stock Plan . . . . . . . . . . . . . . . . . 6
(ii) Promus Stock Option Plan . . . . . . . . . . . . . . . . . 6
HMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Human Resources Committee . . . . . . . . . . . . . . . . . . . . . . 6
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Medical/Dental Plan . . . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Harrah's Entertainment Medical/Dental Plans . . . . . . . . . . 6
(ii) PHC Medical/Dental Plans . . . . . . . . . . . . . . . . . 6
(iii) Promus Medical/Dental Plans . . . . . . . . . . . . . . . . 6
Medical Retirees . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PHC Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PHC Individual . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PHC Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Post-Conversion Stock Price . . . . . . . . . . . . . . . . . . . . . 7
Pre-Distribution Stock Price . . . . . . . . . . . . . . . . . . . . . 7
Prior Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Promus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Promus Employee Stock Purchase Plan . . . . . . . . . . . . . . . . . 7
Promus Individual . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Promus Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . 8
Qualified Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Harrah's Entertainment Qualified Beneficiary . . . . . . . . . 8
(ii) PHC Qualified Beneficiary . . . . . . . . . . . . . . . . . 8
(iii) Promus Qualified Beneficiary . . . . . . . . . . . . . . . 8
Rabbi Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Harrah's Entertainment Rabbi Trust . . . . . . . . . . . . . . 8
(ii) PHC Rabbi Trust . . . . . . . . . . . . . . . . . . . . . . 8
(iii) Promus Rabbi Trust . . . . . . . . . . . . . . . . . . . . 8
Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Retained Business . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Retained Individual . . . . . . . . . . . . . . . . . . . . . . . . . 9
Retiree Medical/Dental Benefits . . . . . . . . . . . . . . . . . . . 9
Savings and Retirement Plan . . . . . . . . . . . . . . . . . . . . . 9
ii
<PAGE>
Page
----
(i) Harrah's Entertainment Savings and Retirement Plan . . . . . . 9
(ii) Promus Savings and Retirement Plan . . . . . . . . . . . . 9
(iii) PHC Savings and Retirement Plan . . . . . . . . . . . . . . 9
Service Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stock Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Transferred Individual . . . . . . . . . . . . . . . . . . . . . . . . 9
Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1.02 Other Terms . . . . . . . . . . . . . . . . . . . . . . 10
Section 1.03 Certain Constructions . . . . . . . . . . . . . . . . . 10
Section 1.04 Sections . . . . . . . . . . . . . . . . . . . . . . . 10
Section 1.05 Survival . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . 10
Section 2.01 Employment . . . . . . . . . . . . . . . . . . . . . . 10
(a) Allocation of Responsibilities on Distribution Date . . . . . . 10
(b) Assumption of Liabilities on Distribution Date . . . . . . . . 10
(c) Service Credits . . . . . . . . . . . . . . . . . . . . . . . . 11
(i) Distribution Date Transfers . . . . . . . . . . . . . . . . 11
(ii) Post-Distribution Date Terminations . . . . . . . . . . 11
(d) Post-Distribution Date Transfers Through December 31, 1995 . . 11
Section 2.02 Savings and Retirement Plans . . . . . . . . . . . . . 12
(a) Establishment of PHC Savings and Retirement Plan . . . . . . . 12
(b) Obligation to Make Base Matching Contribution . . . . . . . . . 12
(c) Transfer and Acceptance of Account Balances . . . . . . . . . . 12
(d) Harrah's Entertainment to Provide Information . . . . . . . . . 13
(e) Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . 13
(f) Account Balances of Retained Employees . . . . . . . . . . . . 13
(g) Post-Distribution Employment Transfers Through December 31, 1995
14
(h) Post-Distribution Employment Transfers After December 31, 1995 14
Section 2.03 Deferred Compensation Plans . . . . . . . . . . . . . . 14
(a) PHC Deferred Compensation Plans . . . . . . . . . . . . . . . . 14
(b) Harrah's Entertainment Deferred Compensation Plans . . . . . . 15
(c) Post-Distribution Employment Transfers . . . . . . . . . . . . 16
(d) Special Provisions With Respect To Allocation of Deferred
Compensation Liabilities of Michael D. Rose ("Mr. Rose") . . . . . 16
(1) Proration to Harrah's Entertainment Executive Deferred
Compensation Plan . . . . . . . . . . . . . . . . . . . . 16
(2) Proration to PHC Executive Deferred Compensation Plan . . . 16
(3) Proration Applicable to Each Year of Deferral . . . . . . . 16
Section 2.04 Stock Plans . . . . . . . . . . . . . . . . . . . . . . 17
(a) PHC Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Harrah's Entertainment Stock Plans . . . . . . . . . . . . . . 17
iii
<PAGE>
Page
----
(c) Effect of the Distribution on Awards Made Prior to the Cut-off
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(i) Restricted Stock . . . . . . . . . . . . . . . . . . . . . 17
(A) Dividend . . . . . . . . . . . . . . . . . . . . . . . 17
(B) Harrah's Entertainment Restricted Stock . . . . . . . . 17
(C) PHC Restricted Stock . . . . . . . . . . . . . . . . . 18
(ii) Adjustment of Stock Options . . . . . . . . . . . . . . 18
(A) Harrah's Entertainment Stock Options . . . . . . . . . 18
(B) PHC Stock Options . . . . . . . . . . . . . . . . . . . 18
Section 2.05 Promus Employee Stock Purchase Plan. . . . . . . . . . 19
(a) Calculation of Bonuses for Transferred Employees For the Current
Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Payment of Bonuses for Current Plan Year . . . . . . . . . . . 20
(c) Harrah's Entertainment Bonus Plan . . . . . . . . . . . . . . . 20
(d) No Right to Bonus Created . . . . . . . . . . . . . . . . . . . 20
Section 2.07 Harrah's Entertainment Medical/Dental Plans . . . . . . 20
(a) Liability for Claims . . . . . . . . . . . . . . . . . . . . . 20
(b) Continuation Coverage Administration . . . . . . . . . . . . . 20
(c) Continuation Coverage Claims . . . . . . . . . . . . . . . . . 20
(d) Liability for Medical Retirees . . . . . . . . . . . . . . . . 21
Section 2.08 PHC Medical/Dental Plans . . . . . . . . . . . . . . . 21
(a) Establishment of New PHC Medical/Dental Plans . . . . . . . . . 21
(b) Harrah's Entertainment to Provide Information . . . . . . . . . 21
(c) Liability for Claims . . . . . . . . . . . . . . . . . . . . . 22
(d) Continuation Coverage Administration . . . . . . . . . . . . . 22
(e) Continuation Coverage Claims . . . . . . . . . . . . . . . . . 22
Section 2.09 Vacation and Sick Pay Liabilities . . . . . . . . . . . 23
(a) Division of Liabilities . . . . . . . . . . . . . . . . . . . . 23
(b) Funded Reserves . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Post-Distribution Transfers . . . . . . . . . . . . . . . . . . 23
Section 2.10 Adjustments for Welfare Plans . . . . . . . . . . . . . 24
Section 2.11 Preservation of Right To Amend or Terminate Plans . . . 24
Section 2.12 Reimbursement . . . . . . . . . . . . . . . . . . . . . 24
Section 2.13 Payroll Reporting and Withholding . . . . . . . . . . . 24
(a) Form W-2 Reporting . . . . . . . . . . . . . . . . . . . . . . 24
(b) Forms W-4 and W-5 . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Garnishments, Tax Levies, Child Support Orders, and Wage
Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) Authorizations for Payroll Deductions . . . . . . . . . . . . . 25
(e) Withholding Taxes on Account of The Distribution to Promus
Restricted Stockholders Who Are Transferred Employees . . . . 25
ARTICLE III LABOR AND EMPLOYMENT MATTERS . . . . . . . . . . . . . . . 26
Section 3.01 Separate Employers . . . . . . . . . . . . . . . . . . 26
Section 3.02 Employment Policies and Practices . . . . . . . . . . . 26
iv
<PAGE>
Page
----
Section 3.03 Collective Bargaining Agreements . . . . . . . . . . . 26
Section 3.04 Claims . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Employment-Related Claims . . . . . . . . . . . . . . . . . . . 26
(c) Obligation to Indemnify . . . . . . . . . . . . . . . . . . . . 27
(d) Pre-Distribution Employment-Related Claims . . . . . . . . . . 27
(e) Other Employment-Related Claims . . . . . . . . . . . . . . . . 28
(f) Post-Distribution Employment-Related Claims . . . . . . . . . . 28
(g) Special Matters . . . . . . . . . . . . . . . . . . . . . . . . 28
(i) Medical Retirees . . . . . . . . . . . . . . . . . . . . . 28
(ii) Promus Deferred Compensation Plan . . . . . . . . . . . 28
(iii) Administrative Services In Connection With The PHC
Savings And Retirement Plan . . . . . . . . . . . . . 28
(iv) Allocation of Group Insurance Reserves . . . . . . . . 29
Section 3.05 Funding of Union Plans . . . . . . . . . . . . . . . . 29
Section 3.06 Notice of Claims . . . . . . . . . . . . . . . . . . . 29
Section 3.07 Assumption of Unemployment Tax Rates . . . . . . . . . 29
Section 3.08 Intercompany Service Charge . . . . . . . . . . . . . . 29
Section 3.09 Employees on Leave of Absence . . . . . . . . . . . . . 29
Section 3.10 No Third Party Beneficiary Rights . . . . . . . . . . . 30
Section 3.11 Attorney-Client Privilege . . . . . . . . . . . . . . . 30
ARTICLE IV DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.01 Default . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.02 Force Majeure . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.01 Relationship of Parties . . . . . . . . . . . . . . . . 31
Section 5.02 Access to Information; Cooperation . . . . . . . . . . 31
Section 5.03 Assignment . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.04 Headings . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.05 Severability of Provisions . . . . . . . . . . . . . . 31
Section 5.06 Parties Bound . . . . . . . . . . . . . . . . . . . . . 31
Section 5.07 Notices . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.08 Further Action . . . . . . . . . . . . . . . . . . . . 32
Section 5.09 Waiver . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.10 Governing Law . . . . . . . . . . . . . . . . . . . . . 32
Section 5.11 Consent to Jurisdiction . . . . . . . . . . . . . . . . 32
Section 5.12 Entire Agreement . . . . . . . . . . . . . . . . . . . 32
v
<PAGE>
EMPLOYEE BENEFITS & OTHER EMPLOYMENT MATTERS
--------------------------------------------
ALLOCATION AGREEMENT
--------------------
THIS EMPLOYEE BENEFITS & OTHER EMPLOYMENT MATTERS ALLOCATION
AGREEMENT ("Agreement") is made and entered into as of June ___, 1995, by
and between THE PROMUS COMPANIES INCORPORATED, a Delaware corporation
("Promus"), to be known as HARRAH'S ENTERTAINMENT, INC. after the spin off
of Promus' hotel business, and PROMUS HOTEL CORPORATION, a Delaware
corporation ("PHC", and collectively with Promus, the "Parties"), effective
as of the Distribution Date (as herein after defined).
R E C I T A L S
WHEREAS, subject to shareholder approval and certain other
conditions, Promus intends to spin-off its hotel business by distributing a
special dividend of one share of PHC Common Stock per two shares of Promus
Common Stock to the holders of shares of Promus Common Stock (the
"Distribution"); and
WHEREAS, in connection with said spin-off, PROMUS and PHC have
entered into a Distribution Agreement (the "Distribution Agreement"); and
WHEREAS, pursuant to the aforesaid Distribution Agreement, Promus
and PHC have agreed to enter into an agreement allocating responsibilities
with respect to employee compensation, benefits, labor and certain other
employment matters pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Promus and PHC agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the
-----------
following terms shall have the meanings indicated below:
Aggregate Spread: the difference between the exercise price of a
----------------
Promus Stock Option and the Pre-Distribution Stock Price, multiplied by the
number of shares covered by such Promus Stock Option remaining unexercised
on the Cut-off Date.
1
<PAGE>
Asset Transfer Agreement: the Asset Transfer Agreement, dated as
------------------------
of , 1995 between the Trustees of the Promus Savings and Retirement
----
Plan and the Trustees of the PHC Savings and Retirement Plan, which
provides for the spin-off of that portion of the Promus Savings and
Retirement Plan attributable to Transferred Employees and Hotel Terminees
to the PHC Savings and Retirement Plan.
Assumed Deferred Compensation Liabilities: all liabilities and
-----------------------------------------
obligations of Promus to Transferred Employees accrued through the Cut-off
Date with respect to the Promus Executive Deferred Compensation Plan and
the Promus Deferred Compensation Plan, along with earnings required to be
credited to account balances included therein through the Cut-off Date, to
be assumed by PHC in accordance with Section 2.03.
Base Matching Contribution: the base matching contribution of
--------------------------
Promus under the Promus Savings and Retirement Plan (as provided in the
Promus Savings and Retirement Plan document).
COBRA: Code Section 4980B and ERISA Sections 601 through 608,
-----
establishing employer requirements for continuation of health care benefits
for the benefit of certain current and former employees or dependents
thereof.
Code: the Internal Revenue Code of 1986, as amended, or any
----
successor legislation.
Collective Bargaining Agreement: any collective bargaining
-------------------------------
agreement or other labor agreement to which Promus or any of its
subsidiaries or affiliates was a party on or before the Cut-off Date.
Commission: the Securities and Exchange Commission.
----------
Common Stock: the common stock of Promus, Harrah's Entertainment
------------
or PHC, as more specifically described below:
(i) Employer Common Stock: Harrah's Entertainment Common
---------------------
Stock in the case of Retained Employees and Promus Terminees and PHC Common
Stock in the case of PHC Employees; or
(ii) Harrah's Entertainment Common Stock: the common stock,
-----------------------------------
par value $0.10 per share, of Harrah's Entertainment after the Distribution
Date; or
(iii)PHC Common Stock: the common stock, par value
----------------
$0.10 per share, of PHC; or
(iv) Promus Common Stock: the common stock, par value $0.10
-------------------
per share, of Promus prior to the Distribution Date.
2
<PAGE>
Conversion Award: an award of an option to acquire Common Stock
----------------
made to a Transferred Employee or a Retained Employee to reflect the
effect of the Distribution on awards of Promus Stock Options held on the
Cut-off Date, in accordance with Section 2.04.
Current Plan Year: the plan year or fiscal year, to the extent
-----------------
applicable with respect to any Plan, during which the Distribution occurs.
Cut-off Date: the Distribution Date.
------------
Deferred Compensation Plan: a plan of deferred compensation that
--------------------------
is not intended to be tax-qualified under Section 401(a) of the Code and
that is maintained for Employees of Promus and their beneficiaries, or for
Employees of Harrah's Entertainment or PHC and their beneficiaries, as
described below:
(i) Harrah's Entertainment Deferred Compensation Plan: the
-------------------------------------------------
Promus Deferred Compensation Plan, as continued by Harrah's Entertainment
pursuant to Section 2.03(b) after the Distribution Date for eligible Harrah's
Employees, Harrah's Entertainment Directors and any Promus Terminees receiving
benefits or entitled to receive deferred benefits under the Promus Deferred
Compensation Plan; or
(ii) Harrah's Entertainment Executive Deferred Compensation
------------------------------------------------------
Plan: the Promus Executive Deferred Compensation Plan, as continued by
- ----
Harrah's Entertainment pursuant to Section 2.03(b) after the Distribution
Date for eligible Harrah's Employees, Harrah's Entertainment Directors and
any Promus Terminees receiving benefits or entitled to receive deferred
benefits under the Promus Executive Deferred Compensation Plan; or
(iii)PHC Deferred Compensation Plan: the Promus Hotel
------------------------------
Corporation 1995 Deferred Compensation Plan for eligible PHC Employees
(and eligible PHC Directors for the remainder of the Current Plan
Year and with respect to cash compensation in any succeeding Plan Year); or
(iv) PHC Executive Deferred Compensation Plan: the Promus
----------------------------------------
Executive Deferred Compensation Plan for eligible PHC Employees; or
(v) Promus Deferred Compensation Plan: The Promus
---------------------------------
Companies Incorporated Deferred Compensation Plan dated October 16, 1991,
for Promus Employees (and eligible Promus Directors for the remainder of
the Current Plan Year and with
3
<PAGE>
respect to cash compensation in any succeeding Plan Year); or
(vi) Promus Executive Deferred Compensation Plan: The
-------------------------------------------
Promus Companies Incorporated Executive Deferred Compensation Plan for
eligible Promus Employees or Promus Directors (for the remainder of the Current
Plan Year).
Director: a member of the Board of Directors of Harrah's
--------
Entertainment, Promus or PHC, as the context indicates.
Discretionary Matching Contribution: the employer discretionary
-----------------------------------
matching contribution under the Employer's Savings and Retirement Plan, as
may be determined by the Chief Executive Officer in his sole and absolute
discretion.
Distribution Agreement: the agreement described in the second
----------------------
recital of this Agreement.
Distribution Date: the date on which the Distribution occurs.
-----------------
Distribution Record Date: June 21, 1995.
------------------------
Employee: an individual who is identified as being in any of the
--------
following categories:
(i) Harrah's Employee: any individual who is (a) a
-----------------
Retained Employee, or (b) not a Retained Employee but becomes an employee
of Harrah's Entertainment on or after the Distribution Date; or
(ii) Hotel Terminee: any Promus Terminee who, as of
--------------
January 1, 1995 had terminated his employment with Promus within the five
consecutive years preceding that date or who had terminated his employment
with Promus between January 1, 1995 and the Distribution Date and whose
remaining account balances as of the Distribution Date under the Promus
Savings and Retirement Plan are entirely unvested and whose last employment
with Promus was primarily related to a Transferred Business; or
(iii)PHC Employee: any individual who is (a) a
------------
Transferred Employee, or (b) not a Transferred Employee but becomes an
employee of PHC on or after the Distribution Date; or
4
<PAGE>
(iv) Promus Employee: any individual who is an employee of
---------------
Promus prior to the Distribution Date; or
(v) Promus Terminee: any individual formerly employed by
---------------
Promus who terminated such employment prior to the Distribution Date,
including but not limited to any Promus employee or director who has retired
prior to the Distribution Date; or
(vi) Retained Employee: any individual who immediately
-----------------
prior to the Distribution was a Promus Employee and who is an Employee of
Harrah's Entertainment immediately following the Distribution; or
(vii) Transferred Employee: any individual who
--------------------
immediately prior to the Distribution was a Promus Employee and whose
employment, immediately after the Distribution, is to be transferred to PHC
pursuant to the Spin-off. It also includes any director of Promus who resigns
from the Promus Board before the Distribution and concurrently or within 90
days thereafter is elected to the PHC Board.
Employee Bonus Plan: a plan providing incentive compensation to
-------------------
eligible Employees based upon achievement of performance criteria by the
Employer or the operating unit of the Employer to which the Employee is
assigned, as more particularly described below:
(i) Harrah's Entertainment Bonus Plan: the Promus Bonus
---------------------------------
Plan as renamed and continued by Harrah's Entertainment after the
Distribution; or
(ii) PHC Bonus Plan: the Promus Hotel Corporation Annual
--------------
Management Bonus Plan, as established by PHC pursuant to Section 2.06,
effective as of the Distribution Date; or
(iii)Promus Bonus Plan: The Promus Companies
-----------------
Incorporated Annual Management Bonus Plan as in effect on the Distribution
Date.
Employer: Harrah's Entertainment, PHC or Promus, as the context
--------
indicates.
Employer Restricted Stock Plan: a plan which provides for awards
------------------------------
of additional compensation to key Employees and non-employee Directors in
the form of shares of Employer Restricted Stock, as described below:
(i) Harrah's Entertainment Restricted Stock Plan: the
--------------------------------------------
Harrah's Entertainment, Inc. 1990 Restricted Stock Plan, as the Promus
Restricted Stock Plan shall be renamed and continued immediately after
the Distribution pursuant to Section 2.04(b).
5
<PAGE>
(ii) PHC Restricted Stock Plan: the Promus Hotel
-------------------------
Corporation 1995 Restricted Stock Plan as established by PHC effective as
of the Distribution pursuant to Section 2.04(a).
Employer Stock Option Plan: a plan which provides for awards
--------------------------
of additional compensation to eligible Employees in the form of nonqualified
or incentive options to purchase Employer Common Stock, as more particularly
described below:
(i) Harrah's Entertainment Stock Option Plan: the
----------------------------------------
Harrah's Entertainment, Inc. 1990 Stock Option Plan, as the Promus Stock
Option Plan shall be renamed and continued by Harrah's Entertainment
immediately after the Distribution pursuant to Section 2.04(b); or
(ii) PHC Stock Option Plan: the Promus Hotel Corporation
---------------------
1995 Stock Option Plan, as established by PHC pursuant to Section 2.04(a).
ERISA: the Employee Retirement Income Security Act of 1974, as
-----
amended, or any successor legislation.
Existing Stock Plans: certain stock-based compensation plans
--------------------
maintained by Promus prior to the Distribution Date for eligible Promus
Employees and eligible Promus Directors, as described below:
(i) Promus Restricted Stock Plan: the Promus Companies
----------------------------
Incorporated 1990 Restricted Stock Plan, a plan which provides for awards
of additional compensation to key Employees and non-Employee Directors in
the form of shares of Promus Restricted Stock; and
(ii) Promus Stock Option Plan: the Promus Companies
------------------------
Incorporated 1990 Stock Option Plan, which provides for awards of
non-qualified and incentive stock options to eligible Promus Employees.
Harrah's Entertainment: Harrah's Entertainment, Inc., a Delaware
----------------------
corporation (to which Promus shall change its name after the spin-off of
Promus' hotel business), or any of its direct or indirect subsidiaries.
Harrah's Entertainment Stock Option: an option to purchase Harrah's
-----------------------------------
Entertainment Common Stock pursuant to the Harrah's Entertainment Stock Option
Plan.
HMO: any health maintenance organization organized under 42
---
U.S.C. Sec. 300e-9, or a state health maintenance organization statute that
provides medical services for Retained Individuals or PHC Individuals under
any Plan.
Human Resources Committee: the Human Resources Committee of the
-------------------------
Board of Directors of Promus, Harrah's Entertainment or PHC, as the context
indicates.
IRS: the Internal Revenue Service.
---
Medical/Dental Plan: a Welfare Plan providing health benefits to
-------------------
Employees and their dependents as described below:
(i) Harrah's Entertainment Medical/Dental Plans: the
-------------------------------------------
Promus Medical/Dental Plans as renamed and continued by Harrah's
Entertainment after the Distribution pursuant to Section 2.07; or
(ii) PHC Medical/Dental Plans: the Medical/Dental Plans to
------------------------
be established by PHC in accordance with Section 2.08(a); or
(iii)Promus Medical/Dental Plans: any Medical/Dental
---------------------------
Plans maintained prior to the Distribution Date for Promus Individuals.
Medical Retirees: any Promus Terminee (or dependent or
----------------
beneficiary thereof) who was retired or disabled on or before the Cut-off
Date, and who was receiving or other-
6
<PAGE>
wise entitled to receive Retiree Medical/Dental Benefits, other than, or in
addition to, coverage mandated by COBRA, as a retiree (or dependent or
beneficiary thereof) under any Promus Medical/Dental Plan immediately
prior to the Distribution.
PHC: Promus Hotel Corporation, a Delaware corporation, or any of
---
its direct or indirect subsidiaries.
PHC Individual: any individual who (i) is a Transferred Employee,
--------------
or (ii) a PHC Employee, or (iii) is a dependent or beneficiary of any
individual described in clause (i) or (ii).
PHC Participant: as defined in Section 2.02(a).
---------------
PHC Stock Option: an option to purchase PHC Common Stock pursuant
----------------
to the PHC Stock Option Plan.
Plan: any plan, policy, arrangement, contract or agreement
----
providing compensation benefits for any group of Employees or former
Employees or individual Employee or former Employee, or the dependents or
beneficiaries of any such Employee or former Employee, whether formal or
informal or written or unwritten, and including, without limitation, any
means, whether or not legally required, pursuant to which any benefit is
provided by an Employer to any Employee or former Employee or the
beneficiaries of any such Employee or former Employee, adopted or entered
into by a Party prior to, or upon, the Distribution. The term "Plan" as
used in this Agreement does not include any contract, agreement or
understanding entered into by Promus prior to the Distribution or Harrah's
Entertainment or PHC after the Distribution relating to settlement of actual
or potential Employee related litigation claims.
Post-Conversion Stock Price: the average of the per share New York
---------------------------
Stock Exchange closing prices of PHC Common Stock or Harrah's Entertainment
Common Stock, as the context indicates, during the ten-trading day period
immediately following the Distribution Date.
Pre-Distribution Stock Price: the New York Stock Exchange
----------------------------
closing price per share for Promus Common Stock on the Distribution Date
(before giving effect to the Distribution).
Prior Plan Year: a plan year or fiscal year or portion thereof,
---------------
to the extent applicable with respect to any Plan, ending on or prior to
the Cut-off Date.
Promus: The Promus Companies Incorporated, a Delaware
------
corporation (which will be renamed Harrah's Entertainment, Inc. effective
as of the Distribution Date), or any of its direct or indirect subsidiaries.
Promus Employee Stock Purchase Plan: that certain arrangement
-----------------------------------
between Promus and Merrill Lynch which provides Promus Employees with the
opportunity to purchase Promus Common Stock in market transactions at
reduced commissions, the cost of such commissions being borne by Promus.
7
<PAGE>
Promus Individual: any individual who is (i) a Promus Employee,
-----------------
(ii) a Promus Terminee, or (iii) a dependent or beneficiary of any
individual specified in clauses (i) or (ii).
Promus Stock Option: an option to purchase Promus Common Stock
-------------------
pursuant to the Promus Stock Option Plan.
Qualified Beneficiary: an individual (or dependent thereof) who
---------------------
either (1) experiences a "qualifying event" (as that term is defined in
Code Section 4980B(f)(3) and ERISA Section 603) while a participant in any
Medical/Dental Plan, or (2) becomes a "qualified beneficiary" (as that term
is defined in Code Section 4980B(g)(1) and ERISA 607(3)) under any
Medical/Dental Plan, and who is included in any one of the following
categories:
(i) Harrah's Entertainment Qualified Beneficiary: any
--------------------------------------------
Retained Individual (or dependent thereof) who, on or before the Cut-off
Date, was a Qualified Beneficiary under any Promus Medical/Dental Plan; or
(ii) PHC Qualified Beneficiary: any Transferred Individual
-------------------------
(or dependent thereof) who, on or before the Cut-off Date, was a Qualified
Beneficiary under any Promus Medical/Dental Plan; or
(iii)Promus Qualified Beneficiary: any Promus Individual
----------------------------
who, immediately following the Distribution, is not a Harrah's Entertainment
Qualified Beneficiary or a PHC Qualified Beneficiary and who, immediately
prior to the Distribution, was a Qualified Beneficiary under any Promus
Medical/Dental Plan.
Rabbi Trust: a trust maintained by an Employer which holds
-----------
assets to satisfy certain contingent or deferred payment obligations of an
Employer to an Employee under a Deferred Compensation Plan or severance
agreement with such Employee, as more particularly described below:
(i) Harrah's Entertainment Rabbi Trust: the Promus Rabbi
----------------------------------
Trust as renamed, amended and continued by Harrah's Entertainment
immediately after the Distribution; or
(ii) PHC Rabbi Trust: the Escrow Agreement to be entered
---------------
into between PHC and NationsBank effective immediately after the
Distribution; or
(iii) Promus Rabbi Trust: the Escrow Agreement dated
------------------
February 6, 1990, between Promus and NationsBank (formerly Sovran Bank), as
amended.
Restricted Stock: shares of Employer Common Stock issued
----------------
pursuant to an Employer Restricted Stock Plan.
8
<PAGE>
Retained Business: any business or operation of Promus or its
-----------------
subsidiaries which is, pursuant to the Distribution Agreement, to be
conducted, following the Distribution, by Harrah's Entertainment.
Retained Individual: any individual who (i) is a Retained
-------------------
Employee, or (ii) is, as of the Cut-off Date, a Promus Terminee whose last
employment with Promus or subsidiary of Promus was with a Retained Business,
or (iii) is a dependent or beneficiary of any individual described in clause
(i) or (ii).
Retiree Medical/Dental Benefits: health, medical and dental
-------------------------------
benefits provided to a Promus Terminee (or a dependent or beneficiary thereof)
who is a retiree under any Promus Medical/Dental Plan, not including any
coverage mandated by COBRA.
Savings and Retirement Plan: any of the following Plans, as the
---------------------------
context indicates, maintained pursuant to Section 401(a) of the Code:
(i) Harrah's Entertainment Savings and Retirement Plan:
--------------------------------------------------
the Promus Savings and Retirement Plan, as renamed, amended and continued
after the Distribution Date pursuant to Section 2.02(g); or
(ii) Promus Savings and Retirement Plan: The Promus
----------------------------------
Companies Incorporated Savings and Retirement Plan, as maintained by Promus
immediately prior to the Distribution Date; or
(iii)PHC Savings and Retirement Plan: the Savings and
-------------------------------
Retirement Plan established by PHC pursuant to Section 2.02(a) as of the
Distribution Date primarily for the benefit of PHC Employees.
Service Credit: the period taken into account under any Plan for
--------------
purposes of determining length of service or plan participation to satisfy
eligibility, vesting, benefit accrual and similar requirements under such
Plan.
Stock Option: a nonqualified or incentive option to purchase
------------
Employer Common Stock under an Employer Stock Option Plan.
Stock Plan: a stock-based compensation plan maintained by an
----------
Employer for the benefit of its Employees.
Transferred Business: any business or operation of Promus or its
--------------------
subsidiaries which is, pursuant to the Distribution Agreement, to be
conducted by PHC immediately following the Distribution.
Transferred Individual: any individual who (i) is a Transferred
----------------------
Employee or (ii) is, as of the Cut-off Date, a Promus Terminee (x) whose
last employment with Promus or a subsidiary of Promus was with a
Transferred Business or (y) whose employment with Promus was primarily
related to the hotel business to be conducted by PHC after the
9
<PAGE>
Distribution, or (iii) is a dependent or beneficiary of any individual
described in clause (i) or (ii).
Welfare Plan: any Plan which provides medical, health,
------------
disability, accident, life insurance, death, dental or any other welfare
benefit, including, without limitation, any post-employment benefit, but
excluding vacation benefits covered under Section 2.09.
Section 1.02 Other Terms. Any capitalized terms used herein
-----------
but not defined herein shall have the meaning set forth in the Distribution
Agreement.
Section 1.03 Certain Constructions. References to the singular
---------------------
in this Agreement shall refer to the plural and vice-versa and references
to the masculine shall refer to the feminine and vice-versa.
Section 1.04 Sections. References to a "Section" are, unless
--------
otherwise specified, to one of the Sections of this Agreement.
Section 1.05 Survival. Obligations described in this Agreement
--------
shall remain in full force and effect and shall survive the Distribution
Date.
ARTICLE II
EMPLOYEE BENEFITS
Section 2.01 Employment.
----------
(a) Allocation of Responsibilities on Distribution Date.
---------------------------------------------------
On the Distribution Date, except to the extent retained or assumed by
Harrah's Entertainment under this Agreement or any other agreement relating
to the Distribution, PHC shall retain or assume, as the case may be,
responsibility as employer for the Transferred Employees. On the
Distribution Date, except to the extent retained or assumed by PHC under
this Agreement or any other agreement relating to the Distribution,
Harrah's Entertainment shall retain or assume, as the case may be,
responsibility as employer for the Retained Employees. The assumption or
retention of responsibility as employer by Harrah's Entertainment or PHC
described in this Section 2.01 shall not, of itself, constitute a severance
or a termination of employment under any Plan of severance maintained by
Promus nor shall it constitute a change of control of Promus for purposes
of any Plan.
(b) Assumption of Liabilities on Distribution Date: Except
----------------------------------------------
as specifically provided in this Agreement, or as otherwise agreed by the
Parties:
(i) Immediately following the Distribution, Harrah's
Entertainment shall assume or retain, as the case may be, all benefit
obligations and all related rights in connection with any Plan with
respect to the Retained Employees
10
<PAGE>
and Promus Terminees; provided, however, that with respect to such Retained
-------- -------
Employees or Promus Terminees who become employed by PHC after the Distribution,
any benefit obligations and all related rights in connection with any Plan
with respect to such employment with PHC shall be assumed by PHC; and
(ii) Immediately following the Distribution, PHC shall
assume or retain, as the case may be, all benefit obligations and all related
rights in connection with any Plan with respect to the Transferred Employees,
and Harrah's Entertainment shall have no further liability with respect thereto;
provided, however, that with respect to such Transferred Employees
- -------- -------
or Promus Terminees who return to employment with Harrah's Entertainment
after the Distribution, any benefit obligations and all related rights in
connection with any Plan with respect to such employment with Harrah's
Entertainment shall be assumed by Harrah's Entertainment.
(c) Service Credits.
---------------
(i) Distribution Date Transfers. In connection with
---------------------------
the Distribution and for purposes of determining Service Credits under any
Plans, Harrah's Entertainment shall credit each Retained Employee and PHC
shall credit each PHC Employee with such Employee's Service Credits and
original hire date as reflected in the Promus payroll system records as of
the Cut-off Date. Such Service Credits and hire date shall continue to be
maintained as described herein for as long as the Employee does not
terminate employment or as otherwise may be required by applicable law or
any applicable Plan.
(ii) Post-Distribution Date Terminations. Subject to
-----------------------------------
the provisions of applicable law and to Sections 2.01(d), 2.02(g), 2.03(c)
and 2.09(c) herein (governing post-Distribution transfers through December
31, 1995), (x) PHC may, in the case of Transferred Employees, in its sole
discretion, make such decisions as it deems appropriate with respect to
determining Service Credits accrued after the Distribution Date for such
Employees, and (y) Harrah's Entertainment may, in the case of Retained
Employees, in its sole discretion, make such decisions as it deems appropriate
with respect to determining Service Credits accrued after the Distribution
Date for such Employees.
(d) Post-Distribution Date Transfers Through December 31,
-----------------------------------------------------
1995: Notwithstanding any provision of this Agreement to the contrary,
- ----
except to the extent prohibited by law or any applicable agreement, where
an Employee leaves the service of one Party to immediately begin employment
with the other Party at any time on or before December 31, 1995, such
Employee's accrued benefits, account balances, or other rights or interests,
to the extent transferable, under any Plan maintained by the former Employer
shall
11
<PAGE>
be transferred to the applicable Plan of the new Employer. The Parties
hereby agree to amend any Plan to the extent necessary to comply with the
preceding sentence of this Section 2.01(d). This Section 2.01(d) shall not
apply to any benefits, balances, rights or interests of such Employees in
any Employer Stock Option Plan or Employer Restricted Stock Plan.
Section 2.02 Savings and Retirement Plans.
----------------------------
(a) Establishment of PHC Savings and Retirement Plan.
------------------------------------------------
Effective as of the Distribution Date, PHC shall take, or cause to be
taken, all action necessary and appropriate to establish and administer a
new Plan named the PHC Savings and Retirement Plan and Trust in
substantially the form approved by the Promus Board of Directors at its
April 5, 1995 meeting. The PHC Savings and Retirement Plan shall be a spin
off of that portion of the Promus Savings and Retirement Plan which is
attributable to (i) Transferred Employees who, immediately prior to the
Distribution Date, were participants in or otherwise entitled to benefits
under the Promus Savings and Retirement Plan ("PHC Participants"), and (ii)
Hotel Terminees. PHC shall provide benefits under such PHC Savings and
Retirement Plan after the Distribution for all such Transferred Employees
and Hotel Terminees (and PHC Employees admitted to participation in such
Plan after the Distribution) subject to the terms and provisions of such
Plan. The PHC Savings and Retirement Plan shall be intended to qualify for
tax-favored treatment under Sections 401(a) and 401(k) of the Code and to
comply with the requirements of ERISA.
(b) Obligation to Make Base Matching Contribution.
---------------------------------------------
Effective as of the Cut-off Date, PHC shall assume, and shall be solely
responsible for, Promus's obligation to make payment of the Base Matching
Contributions to the account of any Transferred Employee who is a
participant under the Promus Savings and Retirement Plan for the portion of
the Current Plan Year ending on the Cut-off Date. For the remainder of the
1995 Plan Year (the Distribution Date through December 31, 1995) the rate
of Base Matching Contributions made to the PHC Savings and Retirement Plan
will continue at the same rate that Base Matching Contributions are made
prior to the Distribution under the Promus Savings and Retirement Plan.
Commencing with the 1996 Plan Year, Base Matching Contributions under the
PHC Savings and Retirement Plan will be as set forth in such Plan as it may
be amended or, with respect to discretionary contributions (including
Discretionary Matching Contributions) at the sole determination of the PHC
Chief Executive Officer or the PHC Human Resources Committee, or as
otherwise provided in such Plan.
(c) Transfer and Acceptance of Account Balances. As soon
-------------------------------------------
as practicable after the Distribution Date, Harrah's Entertainment shall
cause the trustees of the Harrah's Entertainment Savings and Retirement
Plan to transfer to the trustees or other funding agent of the PHC Savings
and Retirement Plan the amounts (in cash, securities, other property or a
combination thereof) representing the account balances of all PHC
Participants and Hotel Terminees, said amounts to be established as account
balances or accrued benefits of such individuals under the PHC Savings and
Retirement Plan. Each such transfer shall comply with Section 414(1) of
the Code and the requirements of ERISA and the regulations promulgated
thereunder. PHC shall cause the trustees or other funding agent of the PHC
Savings and Retirement to accept the plan-to-plan transfer from the
Harrah's
12
<PAGE>
Entertainment Savings and Retirement Plan trustees, and to credit the
accounts of such Transferred Employees and Hotel Terminees under the PHC
Savings and Retirement Plan with amounts transferred on their behalf, as
provided in an Asset Transfer Agreement between the plans. On and after
the Distribution Date, PHC shall be responsible for guaranteeing the
recovery of the April 11, 1991 balances of the Executive Life investment of
Transferred Employees and Hotel Terminees to the extent required by
Addendum A to the PHC Savings and Retirement Plan and pursuant to the
applicable closing agreement with the IRS related thereto.
(d) Harrah's Entertainment to Provide Information.
---------------------------------------------
Harrah's Entertainment shall provide PHC, as soon as practicable after the
Distribution Date (with the cooperation of PHC to the extent that relevant
information is in the possession of PHC, and in accordance with Section
5.02), with a list of Transferred Employees and Hotel Terminees who, to the
best knowledge of Harrah's Entertainment, were participants in or otherwise
entitled to benefits under the Promus Savings and Retirement Plan on the
Cut-off Date, together with a listing of each participant's Service Credits
under such Plan and a listing of each such Transferred Employee's or Hotel
Terminee's account balance thereunder, and each Transferred Employee's
investment election and beneficiary designation. Harrah's Entertainment
shall, as soon as practicable after the Distribution Date and in accordance
with Section 5.02, provide PHC with such additional information in the
possession of Harrah's Entertainment (and not already in the possession of
PHC) as may be reasonably requested by PHC and necessary for PHC to
administer effectively the PHC Savings and Retirement Plan.
(e) Regulatory Filings. PHC and Harrah's Entertainment
------------------
shall, in connection with the plan-to-plan transfer described in Section
2.02(c), cooperate in making any and all appropriate filings required by
the Commission or the IRS, or required under the Code or ERISA or any
applicable securities laws and the regulations thereunder, and take all
such action as may be necessary and appropriate to cause such plan-to-plan
transfer to take place as soon as practicable after the Distribution Date
or otherwise when required by law. Further, PHC shall seek a favorable IRS
determination letter that the PHC Savings and Retirement Plan, as
organized, satisfies all qualification requirements under Section 401(a) of
the Code. Notwithstanding the foregoing, such plan-to-plan transfers shall
take place pending issuance of such favorable determination letter. PHC
and Harrah's Entertainment shall each make any necessary amendments on a
retroactive basis to the PHC Savings and Retirement Plan or the Harrah's
Entertainment Savings and Retirement Plan, respectively, as required by the
IRS to issue the favorable determination letter described above.
(f) Account Balances of Retained Employees: Except as
--------------------------------------
provided in Section 2.02(a), on the Distribution Date, Harrah's
Entertainment shall retain sole responsibility for all liabilities and
obligations under the Promus Savings and Retirement Plan (including but not
limited to, liabilities and obligations to Promus Terminees except as to
accounts of Hotel Terminees that are transferred to the PHC Savings and
Retirement Plan pursuant to Section 2.02(c)), and PHC shall have no
liability or obligation with respect thereto. As soon as practicable after
the Distribution Date, Harrah's Entertainment shall take, or cause to be
taken, all action necessary and appropriate to amend and rename the Promus
Savings and Retirement Plan as the "Harrah's Entertainment Savings and
Retirement Plan". Harrah's Entertainment shall provide future benefits
thereunder accruing after the
13
<PAGE>
Cut-off Date for all Retained Employees who, on the Cut-off Date, were
participants in or otherwise entitled to benefits under the Promus Savings
and Retirement Plan and for Harrah's Employees who are admitted to
participate in the Harrah's Entertainment Savings and Retirement Plan on or
after the Distribution Date.
(g) Post-Distribution Employment Transfers. To
--------------------------------------
the extent permitted by applicable law, the accounts in the Harrah's
Entertainment Savings and Retirement Plan of any Retained Employee or
Harrah's Employee who transfers employment to PHC on or prior to
December 31, 1995 (or, only with respect to Retained Employees or Harrah's
Employees who work in the Harrah's Entertainment Information Technology
Department and who transfer to a similar position with PHC, thirty months
following the Distribution), or through such extended period as may be agreed
by Promus (or Harrah's Entertainment) and PHC with respect to any Employee
or group of Employees, may be transferred to the PHC Savings and Retirement
Plan. The business operation or business unit from which such employee
terminates employment shall promptly notify the administrator of the Savings
and Retirement Plan in which any such employee participates of the occurrence
of any transfers subject to the provisions of this Section 2.02(g). To the
extent necessary, the Harrah's Entertainment Savings and Retirement Plan and
the PHC Savings and Retirement Plan will be amended to permit such transfers.
Section 2.03 Deferred Compensation Plans.
---------------------------
(a) PHC Deferred Compensation Plans. Effective as of the
-------------------------------
Distribution Date, PHC shall assume or retain sponsorship of and shall be
solely responsible for all Assumed Deferred Compensation Liabilities, and
Harrah's Entertainment shall transfer to the PHC Rabbi Trust an amount of
assets held in the Promus Rabbi Trust sufficient to fund the Assumed
Deferred Compensation Liability with approximately the same relative
funding coverage as existed immediately prior to the Distribution. Upon
completion of such transfer, Harrah's Entertainment shall have no
additional liability or obligation with respect to the Assumed Deferred
Compensation Liabilities. Except as otherwise provided herein,
14
<PAGE>
PHC shall not be responsible for any liabilities or obligations of Promus
or Harrah's Entertainment under any Deferred Compensation Plan. Effective
as of the Distribution Date, the PHC Board of Directors shall adopt the PHC
Executive Deferred Compensation Plan and the PHC Deferred Compensation Plan
and shall provide future deferred compensation benefits thereunder accruing
after the Cut-off Date for all Transferred Employees, (or any beneficiaries of
such Transferred Employee) who, on the Cut-off Date, were participants in or
otherwise entitled to current or deferred benefits under the Promus
Executive Deferred Compensation Plan or the Promus Deferred Compensation
Plan, as the case may be, and for PHC Employees and PHC Directors who are
admitted to participate therein on or after the Distribution Date. PHC
shall be responsible for all reporting and withholding obligations relating
to the Assumed Deferred Compensation Liabilities with respect to pay-outs
made after the Cut-off Date to PHC Employees who, on the Cut-off Date, were
participants in or otherwise entitled to benefits under the Promus
Executive Deferred Compensation Plan. All accrued benefits, rights and
service credit shall carry over from the Promus Deferred Compensation Plans
to the PHC Deferred Compensation Plans. Any such Director who retires from the
Promus Board prior to the Distribution and commences service on the PHC
Board within 90 days of such retirement shall be credited with and vested in
the Retirement Rate (as described in the PHC Executive Deferred Compensation
Plan) under the PHC Executive Deferred Compensation Plan, which Retirement Rate
for the Current Plan Year and all prior plan years shall be the same as the
Retirement Rate under the Promus Executive Deferred Compensation Plan for each
corresponding plan year.
(b) Harrah's Entertainment Deferred Compensation Plans.
--------------------------------------------------
Except as provided in Section 2.03(a), on the Distribution Date, Harrah's
Entertainment shall retain sole responsibility for all liabilities and
obligations under the Promus Deferred Compensation Plans (including but not
limited to, liabilities and obligations to Promus Terminees or their
beneficiaries), and PHC shall have no liability or obligation with respect
thereto. As soon as practicable after the Distribution Date, Harrah's
Entertainment shall take, or cause to be taken, all action necessary and
appropriate to amend and rename the Promus Executive Deferred Compensation
Plan and the Promus Deferred Compensation Plans as the "Harrah's
Entertainment, Inc. Executive Deferred Compensation Plan" and the "Harrah's
Entertainment, Inc. Deferred Compensation Plan" (collectively, the
"Retained Deferred Compensation Plans"). Harrah's Entertainment shall
provide future benefits thereunder accruing after the Cut-off Date for all
Retained Employees, Promus Directors, Promus Terminees and Harrah's
Entertainment Directors who, on the Cut-off Date, were participants in or
otherwise entitled to benefits under the Retained Deferred Compensation Plans
and for Harrah's Employees and eligible Harrah's Entertainment Directors who
are admitted to participate therein on or after the Distribution Date. All
accrued benefits, rights and Service Credit shall continue under the Retained
Deferred Compensation Plans.
15
<PAGE>
(c) Post-Distribution Employment Transfers Through December
-------------------------------------------------------
31, 1995. For purposes of determining whether a termination of employment
- --------
has occurred under the Promus Executive Deferred Compensation Plan or the
Promus Deferred Compensation Plan, termination of employment shall not be
deemed to occur where an Employee leaves the service of PHC or Harrah's
Entertainment to immediately begin employment with Harrah's Entertainment
or PHC, respectively, at any time on or before December 31, 1995 (i.e.,
leaving Harrah's Entertainment employment to work for PHC, or leaving PHC
employment to work for Harrah's Entertainment); in any such case, the
business operation or business unit from which such Employee terminates
employment shall promptly notify the administrator of the Deferred
Compensation Plan in which such Employee participates of the occurrence of
any termination subject to the provisions of this Section 2.03(c).
Whichever Party is the former Employer shall inform the successor Employer
of any termination of employment of such transferred Employee, and the
former Employer shall inform the Plan administrator of the applicable
Deferred Compensation Plan in which such transferred Employee was a
participant. Upon such transfer of employment by such transferred Employee,
the account balances of such Employee in the applicable Deferred
Compensation Plan may be transferred to the applicable Deferred
Compensation Plan of the successor Employer in a manner complying with
Section 2.03(a) and the successor Employer shall be solely responsible for
the payment of such account balances. This special rule shall apply both
to the Assumed Deferred Compensation Liabilities and Retained Deferred
Compensation Liabilities.
(d) Special Provisions With Respect To Allocation of
------------------------------------------------
Deferred Compensation Liabilities of Michael D. Rose ("Mr. Rose").
- -----------------------------------------------------------------
Notwithstanding anything in this Section 2.03 to the contrary, Mr. Rose's
Promus Executive Deferred Compensation Plan account balances as of the
Distribution Date shall be prorated as follows:
(1) Proration to Harrah's Entertainment Executive
---------------------------------------------
Deferred Compensation Plan. Harrah's Entertainment shall retain and be
- --------------------------
solely responsible for 58.33 percent of Mr. Rose's Promus Executive
Deferred Compensation Plan account balance (the "Rose Retained Account
Balance") and shall administer it under the Harrah's Entertainment
Executive Deferred Compensation Plan. PHC shall have no liability or
obligation with respect to the Rose Retained Account Balance.
(2) Proration to PHC Executive Deferred Compensation
------------------------------------------------
Plan. Promus shall transfer to PHC 41.67 percent of Mr. Rose's Executive
- ----
Deferred Compensation Plan account balance (the "Rose Transferred Account
Balance"), and PHC shall administer such balance under the PHC Executive
Deferred Compensation Plan, unless otherwise agreed by the Parties. Harrah's
Entertainment shall have no further liability or obligation with respect to
the Rose Transferred Account Balance, unless otherwise agreed by the Parties.
(3) Proration Applicable to Each Year of Deferral.
---------------------------------------------
The percentage allocations under this Section 2.03(d) shall be applied to
each year of deferral under the Promus Executive Deferred Compensation Plan
and its accrued interest as of the Distribution Date. It is agreed Mr.
Rose is vested at the Retirement Rate under the Executive Deferred
Compensation Plans of both Parties.
16
<PAGE>
Section 2.04 Stock Plans.
-----------
(a) PHC Stock Plans. Effective as of the Distribution
---------------
Date, PHC shall take, or cause to be taken, all action necessary and
appropriate to establish and administer new stock-based compensation plans
named the "Promus Hotel Corporation 1995 Stock Option Plan" and the "Promus
Hotel Corporation 1995 Restricted Stock Plan" in substantially the form
approved by the Promus Board of Directors at its April 5, 1995 meeting.
PHC shall provide future benefits thereunder accruing after the Cut-off
Date for all Transferred Employees and PHC Directors who, on the Cut-off
Date, were participants in or otherwise entitled to benefits under the
Existing Stock Plans and for PHC Employees and PHC Directors who are
admitted to participate in the PHC Stock Plans on or after the Distribution
Date.
(b) Harrah's Entertainment Stock Plans. On the
----------------------------------
Distribution Date, except with respect to shares surrendered for
Replacement Shares (as defined below) and options replaced with PHC Stock
Options, Harrah's Entertainment shall retain sole responsibility for all
liabilities and obligations under the Existing Stock Plans, and PHC shall
have no liability or obligation with respect thereto. As soon as
practicable after the Distribution Date, Harrah's Entertainment shall take,
or cause to be taken, all action necessary and appropriate to amend and
rename the Promus Restricted Stock Plan and the Promus Stock Option Plan
Plans as the "Harrah's Entertainment, Inc. 1990 Restricted Stock Plan" and
the "Harrah's Entertainment, Inc. 1990 Stock Option Plan". Harrah's
Entertainment shall provide future benefits thereunder accruing after the
Cut-off Date for all Retained Employees and Harrah's Entertainment
directors who, on the Cut-off Date, were participants in or otherwise
entitled to benefits under the Existing Stock Plans and for Harrah's
Employees and Harrah's Entertainment directors who are admitted to
participate therein on or after the Distribution Date.
(c) Effect of the Distribution on Awards Made Prior to the
------------------------------------------------------
Cut-off Date.
- -------- ----
(i) Restricted Stock.
----------------
(A) Dividend: All Employees who hold Restricted
--------
Stock as of the Distribution Record Date shall receive as part of the
Distribution one unrestricted share of PHC Common Stock for every two
shares of Promus Restricted Stock they hold. Fractional interests will be
paid in cash. Shares of PHC Common Stock so received shall be
unrestricted.
(B) Harrah's Entertainment Restricted Stock: As
---------------------------------------
soon as possible after the Distribution, Retained Employees who have been
granted shares of Promus Restricted Stock as of the Cut-off Date shall
retain such shares, which shall become Harrah's Entertainment Common Stock.
Shares so retained shall be subject to the same terms and conditions as the
shares of Promus Restricted Stock surrendered in exchange therefor.
17
<PAGE>
(C) PHC Restricted Stock: As soon as possible
--------------------
following the Distribution, Transferred Employees who have been granted
shares of Promus Restricted Stock as of the Cut-off Date shall surrender
such shares, and shall receive shares of PHC Restricted Stock in
replacement thereof (the "Replacement Shares"). The number of Replacement
Shares so received by a Transferred Employee shall be determined by
multiplying the number of shares of Promus Restricted Stock held by such
Employee by a fraction, the numerator of which is equal to the sum of the
Pre-Distribution Stock Price minus one half of the PHC Post-Conversion
Stock Price, and the denominator of which is the PHC Post-Conversion Stock
Price. Fractional shares will not be awarded, rather, they will be rounded
to the next highest share. The Replacement Shares shall be subject to the
same terms and conditions as the shares of Promus Restricted Stock
surrendered and replaced by such Replacement Shares.
(ii) Adjustment of Stock Options. As soon as possible
---------------------------
following the Distribution, each Employee who is a grantee of a
nonqualified or incentive award of a Promus Stock Option shall receive for
each such award a Conversion Award intended to maintain the Aggregate
Spread of such Employee. Retained Employees shall receive Conversion
Awards for options to purchase Harrah's Entertainment Common Stock, and
Transferred Employees shall receive Conversion Awards for Options to
purchase PHC Common Stock, pursuant to one of the following sets of
formulas, as applicable:
(A) Harrah's Entertainment Stock Options:
------------------------------------
(1) Number of Shares Subject to Options:
-----------------------------------
The number of shares of Harrah's Entertainment Common Stock subject to a
Harrah's Entertainment Stock Option held by a Retained Employee shall be
determined by multiplying the number of shares of Promus Common Stock
subject to Promus Stock Options held by such Employee by a fraction, the
numerator of which is the Pre-Distribution Stock Price, and the denominator
of which is the Post-Distribution Harrah's Entertainment Stock Price.
Fractional shares shall be rounded to the next highest whole share.
(2) Adjustment of Option Price: The
--------------------------
exercise price of a Conversion Award of a Harrah's Entertainment Stock
Option held by a Retained Employee shall be determined by multiplying the
exercise price of the Promus Stock Option from which it is being converted
by a fraction, the numerator of which is the Harrah's Entertainment Post-
Conversion Stock Price and the denominator of which is the Pre-Distribution
Stock Price. The exercise price shall be rounded down to the next lowest
whole cent.
(B) PHC Stock Options:
-----------------
(1) Number of Shares Subject to Options:
-----------------------------------
The number of shares of PHC Common Stock subject to a PHC Stock Option held
by a Transferred Employee shall be determined by multiplying the number of
shares of Promus Common Stock subject to the Promus Stock Option held by
such Employee by a fraction, the numerator of which is the Pre-Distribution
Stock Price, and the denominator of which is the
18
<PAGE>
Post-Distribution PHC Stock Price. Fractional shares shall be rounded to
the next highest whole share.
(2) Adjustment of Option Price: The
--------------------------
exercise price of a Conversion Award of a PHC Stock Option held by a
Transferred Employee shall be determined by multiplying the exercise price
of the Promus Stock Option from which it is being converted by a fraction,
the numerator of which is the PHC Post-Conversion Stock Price and the
denominator of which is the Pre-Distribution Stock Price. The exercise
price shall be rounded down to the next lowest whole cent.
Section 2.05 Promus Employee Stock Purchase Plan. The Promus
------------------------------------
Employee Stock Purchase Plan shall continue in effect after the
Distribution and shall be renamed the "Harrah's Entertainment Employee
Stock Purchase Plan". Transferred Employees who were participants in the
Promus Employee Stock Purchase Plan shall no longer be eligible to
participate in such plan. Harrah's Entertainment shall provide
Transferred Employees the opportunity to withdraw their investments from
the Harrah's Entertainment Employee Stock Purchase Plan after the
Distribution Date. PHC may, in its sole discretion and on terms it may
determine, establish a similar Employee Stock Purchase Plan.
Section 2.06 Employee Bonus Plans.
--------------------
(a) Calculation of Bonuses for Transferred Employees for
----------------------------------------------------
the Current Plan Year.
- ---------------------
(i) Calculation of Bonuses for Transferred Employees
------------------------------------------------
Not Employed in a Transferred Business. With respect to the Current Plan Year,
- --------------------------------------
Harrah's Entertainment shall credit to each Transferred Employee (and to each
Harrah's Employee who terminates employment with Harrah's Entertainment to
immediately begin employment with PHC after the Distribution Date but not later
than December 31, 1995) currently employed by a division or operating unit of
Promus which is not a Transferred Business a prorated portion of the bonus to
which such Employee would be entitled under the Promus Bonus Plan determined as
if such Employee had remained employed by Harrah's Entertainment for the entire
Current Plan Year. Such bonus shall be prorated based upon the length of such
Employee's employment with Promus and/or Harrah's Entertainment, as the
case may be, during the Current Plan Year, pursuant to procedures adopted
in that certain memorandum of understanding dated March 9, 1995 by and
between Promus and PHC. PHC shall calculate such Transferred Employee's
bonus under the PHC Bonus Plan in accordance with the terms of the PHC
Bonus Plan for the remainder of the Current Plan Year, prorated based upon
the length of such Transferred Employee's employment with PHC for the
Current Plan Year.
(ii) Calculation of Bonuses for Transferred Employees
------------------------------------------------
Covered By Operating Unit Matrix. Bonuses of Transferred Employees who are
- --------------------------------
employed by a division or operating unit that is a Transferred Business
shall be calculated for the entire Current Plan Year, without proration,
under the PHC Bonus Plan pursuant to the operating
19
<PAGE>
unit matrix established for such division or operating unit under the
Promus Bonus Plan.
(b) Payment of Bonuses for Current Plan Year. PHC shall
----------------------------------------
pay to Transferred Employees the entire amount of the bonus as calculated
by Harrah's Entertainment and PHC pursuant to Section 2.06(a). Harrah's
Entertainment shall pay to PHC the portion of such bonus attributable to
such Transferred Employee's employment with Promus and/or Harrah's
Entertainment, as the case may be, during the Current Plan Year.
(c) Harrah's Entertainment Bonus Plan. Harrah's
---------------------------------
Entertainment shall assume and retain the Promus Annual Bonus Plan, which
shall be renamed the "Harrah's Entertainment Annual Management Bonus Plan"
and shall continue to provide benefits thereunder to eligible Harrah's
Employees. Bonuses of Retained Employees shall be calculated and paid
pursuant to the terms of the Harrah's Entertainment Bonus Plan, as such may
be amended from time to time, during the Current Plan Year and any
subsequent Plan Year.
(d) No Right to Bonus Created. Bonuses may be awarded in
-------------------------
the absolute discretion of the Parties, subject to the terms of the applicable
Employee Bonus Plan, and this section 2.06 shall not be construed as creating
any right or entitlement in favor of any third party to receive any bonus
under any Employee Bonus Plan.
Section 2.07 Harrah's Entertainment Medical/Dental Plans.
-------------------------------------------
(a) Liability for Claims. Except as otherwise provided
--------------------
herein, as of the Distribution Date, Harrah's Entertainment shall assume or
retain and shall be responsible for, or cause its insurance carriers or
HMOs to be responsible for, all liabilities and obligations related to
claims assembled or incurred or premiums owed through the Cut-off Date in
respect of any Retained Employee or any dependent or beneficiary hereof, Promus
Terminee or any dependent beneficiary hereof and, with respect to CORBA, the
Promus qualified beneficiary or Harrah's Entertainment Qualified Beneficiary
(whether such claims are asserted or incurred before, on or after
the Cut-off Date) under any Promus Medical/Dental Plan and claims asserted or
incurred or premiums due after the Cut-off Date in respect of any Retained
Employee or any dependent or beneficiary hereof, Promus Terminee or any
dependent beneficiary hereof and, with respect to CORBA, the Promus qualified
beneficiary or Harrah's Entertainment Qualified Beneficiary under any Harrah's
Entertainment Medical/Dental Plan, and PHC shall have no liability or
obligation with respect thereto.
(b) Continuation Coverage Administration. As of the
------------------------------------
Distribution Date, Harrah's Entertainment shall assume or retain and shall
be solely responsible for, or cause its insurance carriers or HMOs to be
responsible for, providing and administering the continuation coverage
required by COBRA as it relates to any Promus Qualified Beneficiary or Harrah's
Entertainment Qualified Beneficiary, except as provided in Section 2.08(d),
and PHC shall have no liability or obligation with respect thereto.
(c) Continuation Coverage Claims. As of the Distribution
-----------------------------
Date, and except as provided in Sections 2.08(a) and (e), Harrah's
Entertainment shall assume or retain and shall be responsible for, or cause
its insurance carriers or HMOs to be responsible for, all liabilities and
obligations in connection with claims asserted or incurred or premiums owed
through the Cut-off Date under any Promus Medical/Dental Plan in respect of
any Promus Qualified Beneficiary or and claims asserted or incurred or premiums
owed after the
20
<PAGE>
Cut-off Date under any Harrah's Entertainment Medical/Dental Plan in respect
of any Promus Qualified Beneficiary or Harrah's Entertainment Qualified
Beneficiary, and PHC shall have no liability or obligation with respect
thereto. Through December 31, 1995, or through such other period
to the extent required by COBRA, each Promus Qualified Beneficiary and each
Harrah's Entertainment Qualified Beneficiary shall, to the extent applicable,
for all purposes under any new Harrah's Entertainment Medical/Dental Plan (i)
have coverage which is substantially comparable to that provided immediately
prior to the Distribution Date, (ii) have no preexisting condition limitation
imposed other than that which is or was already imposed under the applicable
existing Plan, and (iii) be credited with or otherwise have taken into account,
to the extent applicable, the expenses incurred towards deductibles,
out-of-pocket limits, maximum benefit payments, and any benefit usage towards
plan limits credited to such individual as of the Cut-off Date under the terms
of the applicable existing Plan as if such expenses and usage had originally
been credited to such individual under a Harrah's Entertainment Medical/Dental
Plan.
(d) Liability for Medical Retirees. As of the Distribution
------------------------------
Date, Harrah's Entertainment shall assume or retain, as the case may be,
and shall be solely responsible for, or cause its insurance carriers or
HMOs to be responsible for, all liabilities and obligations whatsoever in
connection with claims asserted or incurred or premiums owed through or after
the Cut-off Date under the retiree coverage provisions of any Promus
Medical/Dental Plan (or successor thereto) or any Harrah's Entertainment
Medical/Dental Plan in respect of any Medical Retiree, and PHC shall have
no liability or obligation with respect thereto.
Section 2.08 PHC Medical/Dental Plans
------------------------
(a) Establishment of New PHC Medical/Dental Plans. As soon
---------------------------------------------
as practicable after the date hereof and effective as of the Distribution
Date, PHC shall take, or cause to be taken, all action necessary and
appropriate to establish and administer (or continue to administer) the PHC
Medical/Dental Plans and to provide benefits thereunder for all Transferred
Employees (and any dependents or beneficiaries thereof) and PHC Qualified
Beneficiaries (with respect to continuation coverage under COBRA only) who,
immediately prior to the Distribution Date, were participants in or otherwise
entitled to benefits under the Promus Medical/Dental Plans. Each such
individual shall, to the extent applicable, for all purposes under the new PHC
Medical/Dental Plans (i) have coverage which is substantially comparable to
that provided immediately prior to the Distribution Date, (ii) have no
preexisting condition limitation imposed other than that which is or was
already imposed under the applicable existing Plan, and (iii) be credited with
or otherwise have taken into account, to the extent applicable, Service
Credits, any expenses incurred towards deductibles, out-of-pocket limits,
maximum benefit payments, and any benefit usage towards plan limits
credited to such individual as of the Cut-off Date under the terms of the
applicable existing Plan as if such service had been rendered to PHC and as
if such expenses and usage had originally been credited to such individual
under the new PHC Medical/Dental Plans.
(b) Harrah's Entertainment to Provide Information. As soon
---------------------------------------------
as practicable after the Distribution Date, Harrah's Entertainment shall
provide PHC (with the
21
<PAGE>
cooperation of PHC to the extent that relevant information is in the
possession of PHC, and in accordance with Section 5.02), with a list of
individuals (and dependents thereof) employed by PHC who were, to the best
knowledge of Harrah's Entertainment, participants in or otherwise entitled
to benefits under the Promus Medical/Dental Plans immediately prior to the
Distribution Date, together with a listing of each such individual's
Service Credit under such Plans and a listing of each such individual's
expenses incurred towards deductibles, out-of-pocket limits, maximum
benefit payments, and any benefit usage towards plan limits thereunder.
Harrah's Entertainment shall, as soon as practicable after the Distribution
Date, in accordance with Section 5.02 provide PHC with such additional
information in the possession of Harrah's Entertainment (and not already in
the possession of PHC) as may be reasonably requested by PHC and necessary
for PHC to establish and administer effectively any new PHC Medical/Dental
Plan.
(c) Liability for Claims. As of the Distribution Date, PHC
--------------------
shall assume and shall be responsible for, or cause its insurance carriers
or HMOs to be responsible for, all liabilities and obligations in
connection with claims asserted or incurred or premiums due on and after the
Cut-off Date in respect of any Transferred Employee (or any dependent or
beneficiary thereof) and, with respect to COBRA any PHC Qualified Beneficiary
(whether such claims are asserted or incurred before, on or after the Cut-off
Date) under any Promus Medical/Dental Plan and Harrah's Entertainment shall
have no liability or obligation with respect thereto.
(d) Continuation Coverage Administration. As of the
------------------------------------
Distribution Date, PHC shall assume or retain, as the case may be, and
shall be solely responsible for, or cause its insurance carriers or HMOs
to be responsible for, providing and administering the continuation
coverage mandated by COBRA as it relates to any PHC Qualified Beneficiary,
and Harrah's Entertainment shall have no liability or obligation with respect
thereto.
(e) Continuation Coverage Claims. As of the Distribution
----------------------------
Date, PHC shall be solely responsible for, or cause its insurance carriers
or HMOs to be responsible for, all liabilities and obligations whatsoever
in connection with claims asserted or incurred or premiums due through and
after the Cut-off Date under any Promus Medical/Dental Plan (or successor
thereto) in respect of any PHC Qualified Beneficiary, and Harrah's
Entertainment shall have no liability or obligation with respect thereto.
Through December 31, 1995, or through such other period to the extent required
by COBRA, each PHC Qualified Beneficiary, shall, to the extent
applicable, for all purposes under the Plans established by PHC (i) have
coverage which is substantially comparable to that provided to him or her
immediately prior to the Distribution Date, (ii) have no preexisting
condition limitation imposed other than that which is or was already
imposed under the applicable existing Plan, and (iii) be credited with or
otherwise have taken into account, to the extent applicable, the expenses
incurred towards deductibles, out-of-pocket limits,
22
<PAGE>
maximum benefit payments, and any benefit usage towards plan limits
credited to such individual as of the Cut-off Date under the terms of the
applicable existing Plan as if such expenses and usage had originally been
credited to such individual under a PHC Medical/Dental Plan.
Section 2.09 Vacation and Sick Pay Liabilities.
---------------------------------
(a) Division of Liabilities. Effective on the Distribution
-----------------------
Date, PHC shall assume, as to the Transferred Employees, and Harrah's
Entertainment shall retain, as to the Retained Employees, all accrued
liabilities (whether vested or unvested, and whether funded or unfunded)
for vacation and sick leave in respect of such employees as of the Cut-off
Date. PHC shall be solely responsible for the payment of such vacation or
sick leave to PHC Employees after the Cut-off Date, and Harrah's
Entertainment shall be solely responsible for the payment of such vacation
or sick leave to Retained Employees after the Cut-off Date. Each Party
shall provide to its own Employees on the Distribution Date the same vested
and unvested balances of vacation and sick leave as credited to such
Employee on the Promus payroll system on the Cut-off Date.
(b) Funded Reserves. Assets attributable to funded
---------------
reserves for the vacation leave liabilities being divided in accordance
with Section 2.09(a) (whether held in a trust, a voluntary employees
beneficiary association, or any other funding vehicle) shall be divided in
accordance with the division of liabilities described above, i.e., assets
attributable to obligations to Transferred Employees shall be transferred
to PHC, and all remaining assets shall be retained by or within the control
of Harrah's Entertainment; provided however, that assets of any Promus
trust which is exempt from tax under Section 501(c)(9) of the Code
established to provide vacation leave benefits to Employees of Promus shall
be transferred only into another tax-exempt trust with comparable terms
established to provide vacation leave benefits to PHC Employees.
(c) Post-Distribution Transfers. Through December 31,
---------------------------
1995, an Employee who leaves the service of one Party to immediately begin
employment with the other Party (i.e., leaving Harrah's Entertainment
employment to work for PHC, or leaving PHC employment to work for Harrah's
Entertainment) shall be provided by the successor employer with the same
balance of vested and unvested vacation and sick leave hours as had been
accrued by the former Employer through such termination date. The former
Employer shall promptly notify the successor Employer in writing of the
occurrence of any termination subject to the provisions of this Section
2.09(c), and shall make a payment to such successor Employer within thirty
(30) days of the aforesaid termination date in an amount equal to the value
of the terminating Employee's vested balance of vacation leave accrued by
the former Employer through such termination date, based on the Employee's
final rate of pay with the former Employer. No payment shall be made by
the former Employer to the successor Employer for any sick leave or
unvested vacation leave balance relating to any post-Distribution transfer.
23
<PAGE>
Section 2.10 Adjustments for Welfare Plans. Except as otherwise
-----------------------------
expressly provided herein. Harrah's Entertainment shall retain all liabilities
accrued though the Cut-off Date under all Welfare Plans of Promus to the
extent relating to Retained Individuals, Promus Qualified Beneficiaries, Promus
Terminees and Medical Retirees, and PHC shall be responsible for all
liabilities accrued under such Welfare Plans, to the extent relating to PHC
Individuals or PHC Qualified Beneficiaries as of the Cut-off Date.
Section 2.11 Preservation of Right To Amend or Terminate Plans.
-------------------------------------------------
Except as otherwise expressly provided in this Article II, no provisions of
this Agreement, including, without limitation, the agreement of Harrah's
Entertainment or PHC to make a contribution or payment to or under any Plan
herein referred to for any period, shall be construed as a limitation on
the right of Harrah's Entertainment or PHC to amend such Plan or terminate
its participation therein which Harrah's Entertainment or PHC would
otherwise have under the terms of such Plan or otherwise, and no provision
of this Agreement shall be construed to create a right in any employee or
former employee, or dependent or beneficiary of such employee or former
employee under a Plan which such person would not otherwise have under the
terms of the Plan itself; provided, however, that neither Party shall amend
-------- -------
any Plan to the extent that such amendment would have the effect of
increasing the liabilities of the other Party under any Plan of the other
Party, without such other Party's consent.
Section 2.12 Reimbursement. Promus and PHC acknowledge that
-------------
Harrah's Entertainment, on the one hand, and PHC, on the other hand, may
incur costs and expenses, including, but not limited to, contributions to
Plans and the payment of insurance premiums arising from or related to any
of the Plans which are, as set forth in this Agreement, the responsibility
of the other Party hereto. Accordingly, Harrah's Entertainment and PHC
shall reimburse each other, as soon as practicable, but in any event within
thirty (30) days of receipt from the other Party of appropriate
verification, for all such costs and expenses.
Section 2.13 Payroll Reporting and Withholding.
---------------------------------
(a) Form W-2 Reporting. PHC and Harrah's Entertainment
------------------
hereby adopt the "alternative procedure" for preparing and filing IRS Forms
W-2 (Wage and Tax Statements), as described in Section 5 of Revenue
Procedure 84-77, 1984-2 IRS Cumulative Bulletin 753 ("Rev. Proc. 84-77").
Under this procedure PHC as the successor employer shall provide all
required Forms W-2 to all Transferred Employees reflecting all wages paid
and taxes withheld by both Promus as the predecessor and PHC as the
successor employer for the entire year during which the Distribution takes
place. Harrah's Entertainment shall provide all required Forms W-2 to all
Retained Employees reflecting all wages and taxes paid and withheld by
Promus before the Distribution Date and by Harrah's Entertainment on and
after the Distribution Date.
In connection with the aforesaid agreement under Rev. Proc.
84-77, each business unit or business operation of Promus shall be assigned
to either Harrah's Entertainment or PHC, depending upon whether it is a
Retained Business or a Transferred Business, and each Retained Employee or
Transferred Employee associated with such business unit or business
operation shall be assigned for payroll reporting purposes to
24
<PAGE>
Harrah's Entertainment or PHC, as the case may be. Harrah's Entertainment
and PHC shall be responsible for filing IRS Forms 941 for their respective
Employees.
(b) Forms W-4 and W-5. PHC and Harrah's Entertainment
-----------------
agree to adopt the alternative procedure of Rev. Proc. 84-77 for purposes
of filing IRS Forms W-4 (Employee's Withholding Allowance Certificate) and
W-5 (Earned Income Credit Advance Payment Certificate). Under this
procedure Harrah's Entertainment shall provide to PHC as the successor
employer all IRS Forms W-4 and W-5 on file with respect to each Transferred
Employee, and PHC will honor these forms until such time, if any, that
such Transferred Employee submits a revised form.
(c) Garnishments, Tax Levies, Child Support Orders, and
---------------------------------------------------
Wage Assignments. With respect to Employees with garnishments, tax levies,
- ----------------
child support orders, and wage assignments in effect with Promus on the
Cut-off Date, PHC as the successor employer with respect to each Transferred
Employee shall honor such payroll deduction authorizations and will
continue to make payroll deductions and payments to the authorized payee,
as specified by the court or governmental order which was filed with
Promus.
(d) Authorizations for Payroll Deductions. Unless
-------------------------------------
otherwise prohibited by this or another agreement entered into in
connection with the Distribution, or by a Plan document, with respect to
Transferred Employees with authorizations for payroll deductions in effect
with Promus on the Cut-off Date, PHC as the successor employer will honor
such payroll deduction authorizations relating to each Transferred
Employee, and shall not require that such Transferred Employee submit a new
authorization to the extent that the type of deduction by PHC does not
differ from that made by Promus. Such deduction types include, without
limitation, contributions to any Plan, U.S. Savings Bonds, and United
Giver's Fund; scheduled loan repayments to the Profit Sharing Plan or to an
employee credit union; and Direct Deposit of Payroll, bonus advances, union
dues, employee relocation loans, and other types of authorized company
receivables usually collectible through payroll deductions.
(e) Withholding Taxes on Account of The Distribution to
---------------------------------------------------
Promus Restricted Stockholders Who Are Transferred Employees. PHC shall
- ------------------------------------------------------------
cooperate with Harrah's Entertainment in the collection of withholding tax
liability of Transferred Employees who received the Distribution on account
of Promus Restricted Stock held by such Transferred Employee on the
Distribution Date. PHC shall collect such amounts, by payroll deduction or
otherwise, commencing on October 2, 1995, from those Transferred Employees
who have not as of that date satisfied the full amount of their liability
for such withholding taxes to Harrah's Entertainment. Such payroll
deductions shall be made ratably over 6 to 10 pay periods as determined by
Harrah's Entertainment. Any amount collected on account of such liability
shall be remitted to Harrah's Entertainment as soon as practicable after
collection.
25
<PAGE>
ARTICLE III
LABOR AND EMPLOYMENT MATTERS
Notwithstanding any other provision of this Agreement or any
other Agreement between PHC and Harrah's Entertainment to the contrary, PHC
and Harrah's Entertainment understand and agree that:
Section 3.01 Separate Employers. On and after the Distribution
------------------
Date and the separation of Employees into their respective companies, PHC
and Harrah's Entertainment will be separate and independent employers.
Section 3.02 Employment Policies and Practices. Subject to the
---------------------------------
provisions of ERISA and Sections 2.01(b) on Service Credits and 2.02(g),
2.03(c) and 2.09(c) governing post-Distribution transfers through December
31, 1995, and except as limited by applicable law or agreement, PHC and
Harrah's Entertainment may adopt, continue, modify or terminate such
employment policies, compensation practices, retirement plans, welfare
benefit plans, and other employee benefit plans of any kind or description,
as each may determine, in its sole discretion, are necessary or
appropriate.
Section 3.03 Collective Bargaining Agreements. With regard to
--------------------------------
Employees covered by a Collective Bargaining Agreement on the Cut-off Date
who become PHC Employees or Retained Employees, PHC and Harrah's
Entertainment promise and covenant to each other not to take any action
which disrupts or otherwise negatively impacts the labor relations of the
other. PHC and Harrah's Entertainment will diligently work to substitute
the appropriate employer for Promus in Collective Bargaining Agreements.
Section 3.04 Special Matters.
---------------
(a) Administrative Services In Connection With
------------------------------------------
The PHC Savings And Retirement Plan. It is agreed that Promus will provide
- -----------------------------------
administrative services to the PHC Savings and Retirement Plan from the
Distribution Date through December 31, 1995 at a reasonable fee to be
agreed upon by Promus and the Trustees of the PHC Savings
26
<PAGE>
and Retirement Plan, which fee shall comply with ERISA and other applicable
law. Such services will be substantially similar to the services provided by
Promus employees to the Promus Savings and Retirement Plan. These
administrative services may be extended beyond December 31, 1995, if agreed
to by Promus and the Trustees of the PHC Savings and Retirement Plan.
(b) Allocation of Group Insurance Reserves. The
--------------------------------------
Parties hereby agree to divide and allocate any surplus balances and any
reserves relating to any group insurance Plan maintained by Promus prior to
the Distribution, in accordance with a formula and procedures to be adopted
by the Parties prior to the Distribution Date.
Section 3.05 Funding of Union Plans. Without limitation to the
----------------------
scope and application of Section 3.04, any claims by or on behalf of
employees or their collective bargaining agent or any federal, state or
local governmental agency for alleged underfunding of, or failure to make
payments to, union or collectively bargained health, welfare and pension
plans and funds based on acts or omissions with respect to such plans and
funds occurring on or before the Distribution Date or arising from or in
connection with the Distribution, or resulting from actuarial recalculation
by auditors of such plans and funds, will be the sole responsibility of
each Party as to its own employees (i.e., PHC with respect to Transferred
Employees, and Harrah's Entertainment with respect to Retained Employees),
and the responsible Party will indemnify, defend, and hold harmless the
other from any such claims.
Section 3.06 Notice of Claims. Without limitation to the scope
----------------
and application to each Party in the performance of its duties under
Sections 3.04 and 3.05 herein, each Party will notify in writing and
consult with the other Party prior to making any settlement of an employee
claim, for the purpose of avoiding any prejudice to such other Party
arising from the settlement.
Section 3.07 Assumption of Unemployment Tax Rates. Changes in
------------------------------------
state unemployment tax experience from that of Promus as of the Cut-off
Date shall be handled as follows. In the event an option exists to
allocate state unemployment tax experience of Promus, the Promus experience
shall be transferred to PHC if this results in the lowest aggregate
unemployment tax costs for both Harrah's Entertainment and PHC combined,
and the Promus experience shall be retained by Harrah's Entertainment if
this results in the lowest aggregate unemployment tax costs for Harrah's
Entertainment and PHC combined.
Section 3.09 Employees on Leave of Absence. After the
-----------------------------
Distribution Date, PHC shall assume responsibility, if any, as employer for
all Employees returning from an
27
<PAGE>
approved leave of absence who prior to the Distribution Date were employed
in a Transferred Business. After the Distribution Date, Harrah's Entertainment
shall assume responsibility, if any, as employer for all Employees
returning from an approved leave of absence who prior to the Distribution
Date were not employed in a Transferred Business.
Section 3.10 No Third Party Beneficiary Rights.
---------------------------------
(a) Neither this Agreement nor any other intercompany
agreement between PHC and Harrah's Entertainment is intended to nor does it
create any third party contractual or other common law rights. No person
shall be deemed a third-party beneficiary of the agreements between PHC and
Harrah's Entertainment.
(b) Nothing contained in this Agreement shall confer upon
any Employee any right with respect to continuance of employment by either
Party, nor shall anything herein interfere with the right of either party
to terminate the employment of any Employee at any time, with or without
cause, or restrict a Party in the exercise of its independent business
judgment in modifying any of the terms and conditions of the employment of
an Employee, except as provided by applicable law.
(c) No provision of this Agreement shall create any third
party beneficiary rights in any Employee, any beneficiary or dependent
thereof, or any collective bargaining representative thereof, with respect
to the compensation, terms and conditions of employment and benefits that
may be provided to any Employee by either Party or under any benefit plan
which a Party may maintain.
Section 3.11 Attorney-Client Privilege. The provisions herein
-------------------------
requiring either Party to this Agreement to cooperate shall not be deemed
to be a waiver of the attorney/ client privilege for either Party nor shall
it require either Party to waive its attorney/client privilege.
ARTICLE IV
DEFAULT
Section 4.01 Default. If either Party materially defaults
-------
hereunder, the non-defaulting Party shall be entitled to all remedies
provided by law or equity (including reasonable attorneys' fees and costs
of suit incurred).
Section 4.02 Force Majeure. PHC and Harrah's Entertainment
-------------
shall incur no liability to each other due to a default under the terms and
conditions of this Agreement resulting from fire, flood, war, strike,
lock-out, work stoppage or slow-down, labor disturbances, power failure,
major equipment breakdowns, construction delays, accident, riots, acts of
God, acts of United States' enemies, laws, orders or at the insistence or
result of any governmental authority or any other delay beyond each other's
reasonable control.
28
<PAGE>
ARTICLE V
MISCELLANEOUS
Section 5.01 Relationship of Parties. Nothing in this
-----------------------
Agreement shall be deemed or construed by the Parties or any third party as
creating the relationship of principal and agent, partnership or joint
venture between the Parties, it being understood and agreed that no
provision contained herein, and no act of the Parties, shall be deemed to
create any relationship between the Parties other than the relationship set
forth herein.
Section 5.02 Access to Information; Cooperation. Harrah's
----------------------------------
Entertainment and PHC and their authorized agents shall be given reasonable
access to and may take copies of all information relating to the subjects
of this Agreement (to the extent permitted by federal and state
confidentiality laws) in the custody of the other Party, including any
agent, contractor, subcontractor, agent or any other person or entity under
the contract of such Party. The Parties shall provide one another with
such information within the scope of this Agreement as is reasonably
necessary to administer each Party's Plans. The Parties shall cooperate
with each other to minimize the disruption caused by any such access and
providing of information.
Section 5.03 Assignment. Neither Party shall, without the
----------
prior written consent of the other, have the right to assign any rights or
delegate any obligations under this Agreement.
Section 5.04 Headings. The headings used in this Agreement are
--------
inserted only for the purpose of convenience and reference, and in no way
define or limit the scope or intent of any provision or part hereof.
Section 5.05 Severability of Provisions. Neither Harrah's
--------------------------
Entertainment nor PHC intend to violate statutory or common law by
executing this Agreement. If any section, sentence, paragraph, clause or
combination of provisions in this Agreement is in violation of any law,
such sections, sentences, paragraphs, clauses or combinations shall be
inoperative and the remainder of this Agreement shall remain in full force
and effect and shall be binding upon the Parties.
Section 5.06 Parties Bound. This Agreement shall inure to the
-------------
benefit of and be binding upon the Parties hereto and their respective
successors and permitted assigns. Nothing herein, expressed or implied,
shall be construed to give any other person any legal or equitable rights
hereunder.
Section 5.07 Notices. All notices, consents, approvals and
-------
other communications given or made pursuant hereto shall be in writing and
shall be deemed to have been duly given when delivered personally or by
overnight courier or three days after being mailed by registered or
certified mail (postage prepaid, return receipt requested) to the named
representatives of the Parties at the following addresses (or at such other
address for a
29
<PAGE>
Party as shall be specified by like notice, except that notices of changes
of address shall be effective upon receipt):
(a) if to Harrah's Entertainment:
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: General Counsel
(b) if to PHC:
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, Tennessee 38138
Attention: General Counsel
PHC and Harrah's Entertainment agree that, upon the request of either
Party, the requested Party will give copies of all of its notices,
consents, approvals and other communications hereunder to any lender to the
requesting Party or other person specified by such requesting Party.
Section 5.08 Further Action. PHC and Harrah's Entertainment
--------------
each shall cooperate in good faith and take such steps and execute such
papers as may be reasonably requested by the other Party to implement the
terms and provisions of this Agreement.
Section 5.09 Waiver. PHC and Harrah's Entertainment each agree
------
that the waiver of any default under any term or condition of this
Agreement shall not constitute a waiver of any subsequent default or
nullify the effectiveness of that term or condition.
Section 5.10 Governing Law. All controversies and disputes
-------------
arising out of or under this Agreement shall be determined pursuant to the
laws of the State of Tennessee, regardless of the laws that might be
applied under applicable principles of conflicts of laws.
Section 5.11 Consent to Jurisdiction. The Parties irrevocably
-----------------------
submit to the exclusive jurisdiction of (a) the Courts of the State of
Tennessee, Shelby County, or (b) any federal district court where there is
federal jurisdiction for the purpose of any suit, action or other Court
proceeding arising out of this Agreement.
Section 5.12 Entire Agreement. This Agreement and the
----------------
Distribution Agreement constitute the entire understanding between the
Parties hereto, and supersede all
30
<PAGE>
prior written or oral communications, relating to the subject matter
covered by said agreements. To the extent that the terms of this Agreement
and similar terms of the Distribution Agreement are in conflict, the
interpretation given to the conflicting terms of the Distribution Agreement
shall govern the interpretation and performance of this Agreement. No
amendment, modification, extension or failure to enforce any condition of this
Agreement by either Party shall be deemed a waiver of any of its rights
herein. This Agreement shall not be amended except by a writing executed
by the Parties.
[SIGNATURE PAGE FOLLOWS]
31
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as
of the date first above written.
THE PROMUS COMPANIES INCORPORATED, a
Delaware corporation
By:
-------------------------------
Name:
Title:
PROMUS HOTEL CORPORATION, a
Delaware corporation
By:
-------------------------------
Name:
Title:
S-1
Exhibit 10(8)
RISK MANAGEMENT ALLOCATION AGREEMENT
AGREEMENT between The Promus Companies Incorporated, a Delaware
corporation ("Promus"), to be known as Harrah's Entertainment, Inc. after
the Distribution (as hereinafter defined), and Promus Hotel Corporation, a
Delaware corporation and an indirect wholly-owned subsidiary of Promus
("PRH").
RECITALS
--------
WHEREAS, subject to certain conditions, Promus intends to spin off its
hotel business by distributing all of the outstanding shares of common
stock of PRH to the holders of Promus common stock (the "Distribution");
WHEREAS, in connection with the Distribution, Promus and PRH have
entered into a Distribution Agreement (the "Distribution Agreement")
setting forth the principal corporate transactions required to effect the
Distribution and setting forth the agreements that will govern certain
matters following the Distribution; and
WHEREAS, pursuant to the aforesaid Distribution Agreement, Promus and
PRH have agreed to enter into an agreement allocating responsibilities with
respect to risk management matters pursuant to the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01. General. As used in this Agreement, the following terms
-------
shall have the following meanings:
Claim: Any demand for payment with respect to an injury, loss,
------
liability, damage or expense arising out of insured or insurable
occurrences or events under one or more of the Policies, the Excess
Policies or Self Insurance Programs, including any IBNR Losses for which a
demand for payment is subsequently made.
<PAGE>
Claims Administration: The processing of Claims including the
---------------------
reporting of Claims to the insurance carrier, management and defense of
Claims and providing for appropriate releases upon settlement of Claims.
Distribution Date: The date determined by the Promus Board as the
-----------------
date on which the Distribution shall be effected.
Excess Policies: The insurance policies described in Section 3.03 of
---------------
this Agreement.
IBNR Losses: "Incurred but not reported" losses for which reserves
-----------
are routinely established.
Insurance Administration: With respect to each Policy (including Self
------------------------
Insurance Programs) and Excess Policy, the accounting for premiums,
retrospectively rated premiums, defense costs, adjuster's fees, indemnity
payments, deductibles and retentions as appropriate under the terms and
conditions of each of the Policies; and the reporting to excess insurance
carriers of any losses or claims in accordance with Policy provisions, and
the distribution of Insurance Proceeds as contemplated by this Agreement.
Insurance Proceeds: Those moneys (i) received by an insured from an
------------------
insurance carrier or (ii) paid by an insurance carrier on behalf of the
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, cost or reserve paid
or held by or for the benefit of such insured.
Policies: Insurance policies and insurance contracts of any kind
--------
relating to the PRH Business or the Retained Business as conducted prior to
the Distribution Date, including without limitation primary and excess
policies, comprehensive general liability policies, automobile, aircraft
and workers' compensation insurance policies, state workers' compensation
funds in Ohio and Washington, and self-insurance and captive insurance
company arrangements, including any "fronted policies" with respect to
Self Insurance Programs, together with the rights, benefits and privileges
thereunder.
2
<PAGE>
Post-Distribution Claims: Claims asserted against the PRH Group or
-------------------------
the Promus Group with respect to any injury, loss, liability, damage or
expense incurred after the Distribution Date.
PRH Claims: Claims arising in or in connection with the PRH Business.
-----------
PRH Policies: All Policies, current or past, which are owned by or on
------------
behalf of Promus or any of its Affiliates or predecessors, which relate to
the PRH Business but do not relate to the Casino Business, and which
Policies are either maintained by PRH or assignable to PRH.
PRH Reserve: The reserve described in Section 3.01 of this Agreement.
-----------
Promus Claims: Claims arising in or in connection with the Retained
-------------
Business.
Self Insurance Programs: Those self-insured programs administered by
-----------------------
Promus for the benefit of its employees, properties and operating
businesses covering Claims arising prior to the Distribution Date,
including without limitation prospective funding of (a) workers'
compensation claims with the approval of state self-insurance departments,
(b) claims within the deductible of an insurance policy (including
property, workers' compensation, general liability, automobile liability
policies), and (c) reinsurance of an insurance company insuring Promus for
property, workers' compensation, general liability, or automobile liability.
Shared Policies: All Policies, current or past, which are owned or
---------------
maintained by or on behalf of Promus or any of its Subsidiaries or their
respective predecessors which relate to both the Casino Business and the
PRH Business, and all other Policies not constituting PRH Policies or
Retained Policies.
Section 1.02. Other Terms. Any capitalized terms used herein but not
-----------
defined herein shall have the meaning set forth in the Distribution Agreement.
3
<PAGE>
ARTICLE II
THE DISTRIBUTION
----------------
Section 2.01. Effective Date. This Agreement shall be effective on
--------------
the Distribution Date, and shall expire five (5) years thereafter, unless
sooner terminated as provided herein.
Section 2.02. Post-Distribution Claims. Effective as of 12:01 a.m.
-------------------------
on the day following the Distribution Date, Promus and PRH will have separate
risk management programs for the negotiation and execution of insurance
contracts, risk identification and treatment, risk control, claims
management, and risk retention and financing. With the exception of Claims
under the Excess Policies, which will be handled as described in Section 3.03
of this Agreement, Promus shall be solely responsible for the administration
and payment of Post-Distribution Claims relating to the Retained Business, and
PRH shall be solely responsible for the administration and payment of Post-
Distribution Claims relating to the PRH Business.
Section 2.03. Pre-Distribution Claims. The PRH Liabilities as
-----------------------
defined in the Distribution Agreement shall include any and all PRH Claims
asserted against the PRH Group or the Promus Group and which were incurred
or claimed to have been incurred on or prior to the Distribution Date. The
Retained Liabilities as defined in the Distribution Agreement shall include
any and all Promus Claims asserted against the PRH Group or the Promus
Group and which were incurred or claimed to have been incurred on or prior to
the Distribution Date.
ARTICLE III
INSURANCE POLICIES AND RESERVES
-------------------------------
Section 3.01. Reserves.
--------
(a) PRH shall be entitled to reserves recorded by Promus or its
captive insurance company, Aster Insurance Ltd., with respect to the PRH
Claims (the "PRH Reserve") in accordance with the terms and conditions of
this Agreement. The amount of the PRH Reserve shall be determined by
allocating a portion of Promus's reserve for insured losses (including
4
<PAGE>
losses insured under Self Insurance Programs) in the following manner: As
soon as is reasonably practicable after the Distribution Date, PRH Claims
which were incurred or claimed to be incurred prior to the Distribution
Date (including an estimate of PRH Claims incurred but not reported) shall
be valued by Becher + Carlson, Promus's actuary, as of the Distribution
Date. The parties will instruct Becher + Carlson to value the PRH Claims
using the same or similar methods used in previous valuations of the Claims
and without regard to the value of the Promus Claims. PRH Claims shall be
paid from the PRH Reserve in the manner provided in this Agreement.
Promus's liability for PRH Claims shall be limited to the amount of the PRH
Reserve.
(b) Promus shall be entitled to any reserves established by Promus or
any of its Subsidiaries with respect to the Retained Liabilities, or the
benefit of reserves held by any insurance carrier with respect to the PRH
Liabilities or the Retained Liabilities, subject to the rights of PRH to
the PRH Reserve as provided herein.
Section 3.02. Insurance Policies and Rights Included Within the PRH
-----------------------------------------------------
Assets. The PRH Assets as defined in the Distribution Agreement shall
- ------
include (a) any and all rights of an insured party under each of the Shared
Policies, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all injuries,
losses, liabilities, damages and expenses incurred or claimed to have been
incurred on or prior to the Distribution Date by any party in or in
connection with the conduct of the PRH Business or, to the extent any claim
is made against PRH or any of its Subsidiaries, the Retained Business, and
which injuries, losses, liabilities, damages and expenses may arise out of
insured or insurable occurrences or events under one or more of the Shared
Policies; provided, however, that nothing in this clause shall be deemed
-------- -------
to constitute (or to reflect) the assignment of the Shared Policies, or any
of them, to PRH and provided, further, that the foregoing shall not limit
-------- -------
the generality of the definition of the PRH Assets set forth in Section
1.01 of the Distribution Agreement or the effect of Section 2.02 thereof;
and (b) the PRH Policies.
5
<PAGE>
Section 3.03. Excess Liability Policies.
-------------------------
(a) After the Distribution, Promus shall provide continued coverage
for PRH Claims under the following excess liability insurance policies (the
"Excess Policies") until the expiration of the Excess Policies on June 1,
1997, or such later date as may be agreed by the parties:
- The X. L. Insurance Company Ltd. policy number UMB01565, with a
limit of liability of $50 million per occurrence, $100 million
annual aggregate, and attaching at $100 million.
- The ACE Limited policy number PRMU750/4, with a limit of
liability of $150 million and attaching at $150 million.
Forty-seven percent (47%) of the additional premiums, if any, for such
coverage shall be reimbursed by PRH within 10 business days of the
Distribution Date or any policy renewal date.
(b) In the event either party hereto makes a Claim which results
in a reduction of the policy limits of one or both of the Excess Policies,
the party making such Claim shall be required to reinstate the original
policy limit of any affected Excess Policy at its sole cost, unless
otherwise agreed by the other party. Each party agrees to be reasonable if
requested to waive the foregoing requirement, taking into account the
remaining term of the affected Excess Policy, the cost of reinstatement and
the availability of alternative insurance coverage.
Section 3.04. Treatment of Claims Against PRH Reserve.
----------------------------------------
(a) If any person, corporation, firm or entity shall assert a claim
against PRH or any PRH Subsidiary with respect to any injury, loss,
liability, damage or expense incurred or claimed to have been incurred on or
prior to the Distribution Date in or in connection with the conduct of the
PRH Business or, to the extent any claim is made against PRH or any of its
Subsidiaries, the Retained Business, and which injury, loss, liability, damage
or expense may arise out of insured or insurable occurrences or events under
a Self
6
<PAGE>
Insurance Program or otherwise be chargeable to the PRH Reserve,
PRH shall be entitled to payment of such Claim and related expenses from
the PRH Reserve in the manner described in this Section 3.04. Promus shall
make available an imprest bank account for use by PRH or its agent
(including, without limitation, its third party administrator) in paying
PRH Claims. PRH or its agent shall submit documentation to Promus on a
monthly basis detailing payments made from the imprest bank account during
the preceding month for PRH Claims and requesting replenishment of the
account in like amount. The requests for replenishment shall be
accompanied by reasonable supporting documentation. Promus shall replenish
the imprest bank account in accordance with procedures and requirements
contained in existing contractual arrangements among Promus, Promus's third
party administrator (which is also PRH's third party administrator) and Old
Republic Insurance Company, or in such other manner as the parties may from
time to time agree. The amount of the PRH Reserve shall be reduced by the
amount of any payment made by Promus of the PRH Claims, whether by funding
the imprest bank account or otherwise. The obligation of Promus to fund
the imprest bank account or to otherwise pay PRH Claims at any time shall
be limited to the balance remaining in the PRH Reserve after reductions to
such reserve as provided herein.
(b) Upon the expiration or earlier termination of this Agreement,
Promus will pay to PRH the cash equivalent of the balance, if any, then
remaining in the PRH Reserve.
Section 3.05. Treatment of Claims Under the Shared Polices and the
----------------------------------------------------
Excess Policies. If any person, corporation, firm or entity shall assert
- ---------------
a claim against PRH or any PRH Subsidiary with respect to any injury, loss,
liability, damage or expense incurred or claimed to have been incurred on or
prior to the Distribution Date in or in connection with the conduct of the
PRH Business or, to the extent any claim is made against PRH or any of its
Subsidiaries, the Retained Business, and which injury, loss, liability, damage
or expense may arise out of insured or insurable occurrences or events under
one or more of the Shared Policies or the Excess Policies, Promus shall at the
time such claim is asserted be deemed to assign, without need of further
documentation, to PRH any and all rights of an insured party under the
applicable Shared Policy or Excess Policy with respect to such asserted
claim, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer; provided, however, that
-------- -------
nothing in this sentence shall be deemed to constitute (or to reflect) the
assignment of the Shared Policies or the Excess Policies, or any of them,
to PRH.
7
<PAGE>
ARTICLE IV
ADMINISTRATION
--------------
Section 4.01. Administration. Notwithstanding the provisions of
--------------
Article III of the Distribution Agreement, but subject to any contrary
provisions of this Agreement, from and after the Distribution Date: (a)
Promus shall be responsible for (i) the Insurance Administration of the
Shared Policies and the Excess Policies and (ii) Claims Administration with
respect to the Promus Claims; provided, that the administration of the
--------
Shared Policies and the Excess Policies by Promus is in no way intended to
limit, inhibit, or preclude any right to insurance coverage for any Claim
of a named insured under the Shared Policies and the Excess Policies,
including but not limited to PRH and any of its operations, subsidiaries
and Affiliates; and (b) PRH shall be responsible for (i) the Insurance
Administration of the PRH Policies, and (ii) Claims Administration with
respect to the PRH Claims.
Section 4.02 Insurance Premiums. Except as otherwise provided
------------------
in this Agreement, (a) PRH shall pay that portion of the premiums
(retrospectively-rated or otherwise) with respect to Shared Policies
and the Excess Policies as are attributable to the PRH Liabilities, and
(b) Promus shall pay that portion of the premiums (retrospectively-rated
or otherwise) with respect to Shared Policies and the Excess Policies as
are attributable to the PRH Liabilities. Each party shall have the right
but not the obligation to pay the entire premium required under the terms
and conditions of any of the respective Policies to the extent the other
party does not pay its proportionate share thereof and to be reimbursed by
the non-paying party for the portion of the premium attributable to the
Liabilities of such party.
8
<PAGE>
Section 4.03 Allocation of Insurance Proceeds. Insurance Proceeds
--------------------------------
received with respect to claims, costs and expenses under the Policies
shall be paid to PRH with respect to the PRH Liabilities and to Promus with
respect to the Retained Liabilities. Payment of the allocable portions of
indemnity costs of Insurance Proceeds resulting from the liability policies
will be made to the appropriate party upon receipt from the insurance
carrier. In the event that the aggregate limits on any Shared Policies or
Excess Policies are exceeded, the parties agree to provide an equitable
allocation of Insurance Proceeds received after the Distribution Date based
upon their respective bona fide claims. The parties agree to use their
best efforts to cooperate with respect to insurance matters.
Section 4.04. Agreement for Waiver of Conflict and Shared Defense.
---------------------------------------------------
In the event that Claims of both PRH and Promus exist relating to the same
occurrence, PRH and Promus agree to jointly defend and to waive any
conflict of interest necessary to the conduct of that joint defense.
Nothing in this paragraph shall be construed to limit or otherwise alter in
any way the indemnity obligations of the parties to this Agreement,
including those created by this Agreement, the Distribution Agreement, by
operation of law or otherwise.
Section 4.05. Surety Bonds and Letters of Credit. Promus or its
-----------------------------------
Subsidiaries have posted surety bonds to secure obligations for self-
insured workers' compensation losses as required by various state insurance
departments (the "Surety Bonds") and the letters of credit to insurance
companies that front Promus's workers' compensation, general and automobile
liability insurance ("LOCs"). PRH shall replace all Surety Bonds and LOC's
relating to the PRH Business within three (3) months after the Distribution
Date. Promus shall keep any such Surety Bonds and LOCs in place after the
Distribution to secure obligations relating to periods preceding the
Distribution Date until their replacement by PRH or until three (3) months
after the Distribution Date, whichever first occurs, provided, that PRH
--------
9
<PAGE>
shall be responsible for payment of all obligations secured by the Surety
Bonds and LOCs constituting PRH Liabilities (and shall reimburse Promus for
any payment made directly by Promus with respect to such PRH Liabilities),
and Promus shall be responsible for all such obligations constituting
Retained Liabilities (and shall reimburse PRH for any payments made
directly by PRH on behalf of such Retained Liabilities), consistent with
the allocations of PRH Liabilities and Retained Liabilities set forth in
the Distribution Agreement. PRH will be responsible for the cost of any
Surety Bonds and LOCs outstanding after the Distribution Date that relate
to the PRH Business.
Section 4.06. Expenses. Except as otherwise provided herein, each
--------
party will bear the cost of its performance of this Agreement. In the
event that Promus should incur any material cost or expense in connection
with the PRH Claims or any of them or as a result of providing services
hereunder relating to the PRH Claims, which cost or expense was not
contemplated at the time this Agreement was executed, PRH agrees to
reimburse Promus for the reasonable amount of such cost or expense upon
presentation of appropriate supporting documentation. Promus and PRH each
agree to negotiate in good faith to resolve any disagreement concerning
whether a cost or expense is reimbursable under this Section 4.06 or
whether the amount thereof is reasonable.
Section 4.07. Third Party Administrator. PRH has retained Alexsis,
-------------------------
Inc. to serve as its third party administrator with respect to the PRH
Claims and the Post-Distribution Claims relating to the PRH Business. PRH
agrees not to change third party administrators without the prior written
consent of Promus, which consent shall not be unreasonably withheld.
ARTICLE V
INDEMNIFICATION
---------------
Section 5.01. Indemnification of Promus. Except as otherwise
-------------------------
expressly set forth herein, Promus shall indemnify, defend and hold
harmless PRH and each of the PRH Subsidiaries, and each of their respective
directors, officers, employees, agents and Affiliates and each of the
heirs, executors, successors and assigns of any of the foregoing (the "PRH
Indemnitees") from and against the Promus Claims and any and all losses,
Liabilities and damages, including, without limitation, the costs and
expenses of any and all Actions, threatened Actions, demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees
and any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any such Actions or threatened Actions
("Indemnifiable Losses") of the PRH Indemnitees arising out of or due to
the failure or alleged failure of Promus or any of its Affiliates to pay,
perform or otherwise discharge in due course any of the Promus Claims.
Section 5.02. Indemnification by PRH. Except as otherwise expressly
----------------------
set forth herein, PRH shall indemnify, defend and hold harmless Promus and
each of the Retained Subsidiaries, and each of their directors, officers,
employees, agents and Affiliates and each of the heirs, executors,
successors and assigns of any of the foregoing (the "Promus Indemnitees")
10
<PAGE>
from and against the PRH Claims and any and all losses, Liabilities,
damages, including, without limitation, the costs and expenses of any and
all Actions, threatened Actions, demands, assessments, judgments,
settlements and compromises relating thereto and attorneys' fees and any
and all expenses whatsoever reasonably incurred in investigation, preparing
or defending against any such Actions or threatened Actions ("Indemnifiable
Losses") of the Promus Indemnitees arising out of or due to the failure or
alleged failure of PRH or any of its Affiliates to pay, perform or
otherwise discharge in due course any of the PRH Claims.
Section 5.03. Insurance Proceeds. The amount which any party (an
-------------------
"Indemnifying Party") is or may be required to pay to any other Person (an
"Indemnitee") pursuant to Section 5.01 or Section 5.02 shall be reduced
(including, without limitation, retroactively) by any Insurance Proceeds or
other amounts actually recovered by or on behalf of such Indemnitee in
reduction of the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party
in respect of an Indemnifiable Loss and shall subsequently actually receive
Insurance Proceeds, or other amounts in respect of such Indemnifiable Loss
as specified above, then such Indemnitee shall pay to such Indemnifying
Party a sum equal to the amount of such Insurance Proceeds or other amounts
actually received.
Section 5.04. Procedure for Indemnification. The procedure for
-----------------------------
indemnification under this Agreement shall be the same as that set forth in
the Distribution Agreement.
11
<PAGE>
ARTICLE VI
DEFAULT
-------
Section 6.01. Events of Default. It shall be an Event of
-----------------
Default hereunder if either party:
(a) fails to perform any covenant, warranty or agreement under
this Agreement, and such breach continues for more than 30 days after
receipt of written notice thereof; or
(b) (i) either party generally fails to pay its debts as they
become due; (ii) either party becomes insolvent or makes an assignment for
the benefit of creditors; (iii) a receiver, trust conservator or liquidator
of either party, or of all or any substantial part of its assets, is
appointed with or without the application or consent of the other party and
is not contested or, if contested, not dismissed with 90 days; or (iv) a
petition is filed by or against either party requesting the entry of an
order for relief under the Bankruptcy Code or any amendment thereto, or
under any other state or federal insolvency law or laws providing for the
relief of debtors and is acquiesced to or, if contested, is not dismissed
within 90 days.
Section 6.02. Remedies.
---------
(a) If any Event of Default shall occur with respect to Promus, PRH
shall have the right, in addition to all other rights and remedies available
to it, to terminate this Agreement with respect to future rights and obligations
without any liability to PRH for such termination, and Promus shall pay to PRH
the then-remaining balance in the PRH Reserve.
(b) If any Event of Default shall occur with respect to PRH, Promus
shall have the right, in addition to all other rights and remedies
available to it, to terminate this Agreement with respect to future rights and
obligations without any liability to Promus for such termination, except for the
obligation of Promus to pay to PRH the then-remaining balance in the PRH Reserve
as provided in Section 3.04(b) of this Agreement.
(c) Neither party shall be liable to the other for consequential
damages.
(d) Except as expressly set forth herein, nothing shall limit the
rights and remedies of the parties hereto at law or in equity.
12
<PAGE>
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.01. Relationship of Parties. Nothing in this Agreement
------------------------
shall be deemed or construed by the parties or any third party as creating
the relationship of principal and agent, partnership or joint venture
between the parties, it being understood and agreed that no provision
contained herein, and no act of the parties, shall be deemed to create any
relationship between the parties other than the relationship set forth
herein.
Section 7.02. Access to Information; Cooperation. Promus and PRH and
-----------------------------------
their authorized agents will be given reasonable access to and may take
copies of all information relating to the subjects of this Agreement (to
the extent permitted by federal and state confidentiality laws) in the
custody of the other party, including any agent, contractor, subcontractor,
agent or any other person or entity under the contract of such party,
including the risk management information system ("RMIS"), claims management
system of any third party administrator. and any other information relating
to PRH Claims. The parties will cooperate with each other to minimize the
disruption caused by any such access and providing of information.
Section 7.03. Arbitration of Disputes.
-----------------------
(a) Any controversy or claim arising out of this Agreement, or any
breach of this Agreement, shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association then in effect, as
modified by this Section 7.03 or by the further agreement of the parties.
(b) Such arbitration shall be conducted in Memphis, Tennessee.
(c) Any judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitrators shall
not, under any circumstances, have any authority to award punitive,
exemplary or similar damages, and may not, in any event, make any ruling,
finding or award that does not conform to the terms and conditions of this
Agreement.
(d) Nothing contained in this Section 7.03 shall limit or restrict in
any way the right or power of a party at any time to seek injunctive relief
in any court and to litigage the isues relevant to such request for
injunctive relief before such court (i) to restrain the other party from
breaching this Agreement or (ii) for specific enforcement of this Section
7.03. The parties agree that any legal remedy available to a party with
respect to a breach of this Section 7.03 will not be adequate and that, in
addition to all other legal remedies, each party is entitled to an order
specifically enforcing this Section 7.03.
(e) The parties hereby consent to the jurisdiction of the federal
courts located in Memphis, Tennessee for all purposes.
(f) Neither party nor the arbitrators may disclose the existence or
results of any arbitration under this Agreement or any evidence presented
during the course of the arbitration without the prior written consent of
both parties, except as required to fulfill applicable disclosure and
reporting obligations, or as otherwise required by law.
(g) Each party shall bear its own costs incurred in the arbitration.
If either party refuses to submit to arbitration any dispute required to be
submited to arbitration pursuant to this Section 7.03, and instead
commences any other proceeding, including, without limitation, litigation,
then the party who seeks enforcement of the obligation to arbitrate shall
be entitled to its attorneys' fees and costs incurred in any such
proceeding.
Section 7.04. Assignment. Neither party shall, without the prior
----------
written consent of the other, have the right to assign any rights or
delegate any obligations under this Agreement.
Section 7.05. Parties Bound. This Agreement shall inure to the
--------------
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing herein, expressed or implied,
shall be construed to give any other person any legal or equitable rights
hereunder.
13
<PAGE>
Section 7.06. Notices. All notices, consents, approvals and other
--------
communications given or made pursuant hereto shall be in writing and shall
be deemed to have been duly given when delivered personally or by overnight
courier or three days after being mailed by registered or certified mail
(postage prepaid, return receipt requested) to the named representatives of
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice, except that notices of changes
of address shall be effective upon receipt):
(a) if to Promus
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attention: Corporate Secretary
(b) if to PRH
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, Tennessee 38138
Attention: Corporate Secretary
Section 7.07. Further Action. PRH and Promus each shall cooperate in
---------------
good faith and take such steps and execute such papers as may be reasonably
requested by the other party to implement the terms and provisions of this
Agreement.
Section 7.08. Waiver. PRH and Promus each agree that the waiver of
-------
any default under any term or condition of this Agreement shall not
constitute a waiver of any subsequent default or nullify the effectiveness
of that term or condition.
Section 7.09. Governing Law. All controversies and disputes arising
--------------
out of or under this Agreement shall be determined pursuant to the laws of
the State of Tennessee.
14
<PAGE>
Section 7.10. Entire Agreement. This Agreement and the Distribution
-----------------
Agreement constitute the entire understanding between the parties hereto,
and supersede all prior written or oral communications, relating to the
subject matter covered by said agreements. No amendment, modification,
extension or failure to enforce any condition of this Agreement by either
party shall be deemed a waiver of any of its rights herein. This Agreement
shall not be amended except by a writing executed by the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
this ___________day of___________, 1995.
THE PROMUS COMPANIES INCORPORATED,
a Delaware corporation
By: _____________________________________
Name:
Title:
PROMUS HOTEL CORPORATION, a
Delaware corporation
By: _____________________________________
Name:
Title:
15
Exhibit 10(9)
TAX SHARING AGREEMENT
TAX SHARING AGREEMENT, dated as of June 30, 1995, among The
Promus Companies, Incorporated, a Delaware corporation ("Promus") to be
renamed Harrah's Entertainment, Inc. ("HEI"), Promus Hotel Corporation, a
Delaware corporation ("PHC"), and their respective direct and indirect
subsidiaries. References herein to a "party" (or "parties") to this
Agreement, shall refer to Promus, PHC, and where appropriate and the
context so requires, HEI.
WHEREAS, Promus and its subsidiaries have joined in filing
consolidated Federal Income Tax Returns and certain consolidated, combined
or unitary state Income Tax Returns;
WHEREAS, Promus and PHC have entered into that certain Plan of
Reorganization and Distribution Agreement, dated as of the date hereof (the
"Distribution Agreement"), pursuant to which Promus will distribute all of
the outstanding common stock in PHC (such stock to be received by Promus
immediately before in a Code Section 355 distribution from Embassy Suites,
Inc. ("Embassy"), a wholly-owned subsidiary of Promus) to its stockholders
in a transaction intended to qualify for tax-free treatment under Code
Section 355 (the "Spin-off");
WHEREAS, pursuant to the Spin-off, (i) PHC and its subsidiaries
will leave the Promus Group and (ii) Promus will change its name to
Harrah's Entertainment, Inc.; and
WHEREAS, the parties hereto wish to provide for (i) allocations
of, and indemnifications against, certain liabilities for Taxes, (ii) the
preparation and filing of Tax Returns on a basis consistent with prior
practice and the payment of Taxes with respect thereto, and (iii) certain
related matters;
NOW THEREFORE, in consideration of their mutual promises, the
parties hereby agree as follows:
1. Definitions.
When used herein the following terms shall have the following
meanings:
"Affiliate" -- with respect to any corporation (the "given
corporation"), each person, corporation, partnership or other entity that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the given corporation. For
purposes of this definition, "control" means the possession, directly or
indirectly, of 50% or more of the voting power or value of outstanding
voting interests.
1
<PAGE>
"Affiliated Group" -- an affiliated group of corporations within
the meaning of Code Section 1504(a) for the Taxable Period or, for purposes
of any state income tax matters, any consolidated, combined or unitary
group of corporations within the meaning of the corresponding provisions of
tax law for the state in question.
"After-Tax Basis" -- any indemnity payment made hereunder shall
give effect to, and be reduced by the value of, any and all applicable
deductions, losses, credits, offsets or other tax items for Federal, state
or other Tax purposes attributable to the payment of the indemnified
liability, which value shall be determined on an assumed basis by (a)
multiplying the amount of such deductions, losses, offsets or other tax
items (such amount determined as if such deductions, losses, offsets or
other tax items will generate an immediate deduction for the full amount
ultimately available) by (i) 39% or (ii) if no state income tax benefit
shall result therefrom, 35% (such percentages to increase or decrease on a
percentage-for-percentage basis with any subsequent increases or decreases
in the current 35% highest marginal income tax rate for corporations) and
(b) valuing any credits or other direct reduction of Tax on a dollar-for-
dollar basis. For example, if a deductible interest payment of $100 is
indemnified hereunder, the indemnification payment with respect thereto
shall be reduced by $39 to $61.
"Closing" -- the time when the Spin-off shall become effective on
the Closing Date.
"Closing Date" -- the date on which the Spin-off is effected by
HEI.
"Code" -- the Internal Revenue Code of 1986, as amended, or any
successor thereto, as in effect for the Taxable Year in question.
"Combined Jurisdiction" -- for any Taxable Period, any state,
local or foreign jurisdiction in which Promus or a Promus Affiliate is
included in a consolidated, combined, unitary or similar return with Promus
or any Promus Affiliate for state, local or foreign Income Tax purposes.
"Distribution Agreement" -- as defined in the preamble to this
Agreement.
"Embassy" -- as defined in the preamble to this Agreement.
"Embassy Location-Specific Tax and Information Returns" -- as
defined in Section 2(a)(i)(D) of this Agreement.
"Final Determination" -- (i) a decision, judgment, decree, or
other order by a court of competent jurisdiction, which has become final
and unappealable; (ii) a closing agreement or accepted offer in compromise
under Code Sections 7121 or 7122, or comparable agreements under the laws
of other jurisdictions; or (iii) any other final settlement with the IRS or
other Taxing Authority, or (iv) the expiration of an applicable statute of
limitations.
2
<PAGE>
"HEI"-- as defined in the preamble to this Agreement.
"HEI Group" -- HEI and each corporation that joins with HEI in
filing a consolidated federal income tax return for any Post-Closing
Taxable Period. For purposes of this Agreement, the HEI Group shall exist
from the beginning of the day immediately after the Closing Date. To the
extent applicable, to any state income tax matters, the "HEI Group" shall
include all corporations joining in the filing of a consolidated, combined
or unitary income tax return for the state and period in question.
"HEI Member" -- a corporation that was immediately before the
Spin-off a Promus Member and becomes a member of the HEI Group at the
beginning of the day immediately after the Closing Date.
"Income Tax(es)" -- with respect to any corporation or group of
corporations, any and all Taxes based upon or measured by net income
(regardless of whether denominated as an "income tax," a "franchise tax" or
otherwise), imposed by any Taxing Authority, together with any related
interest, penalties or other additions thereto.
"Indemnified Party" -- as defined in Section 3(e) of this
Agreement.
"Indemnifying Party" -- as defined in Section 3(e) of this
Agreement.
"Information Return(s)" -- with respect to any corporation or
Affiliated Group, any and all reports, returns, declarations or other
filings (other than Tax Returns) required to be supplied to any Tax
Authority.
"IRS" -- the United States Internal Revenue Service.
"Other Tax(es)" -- with respect to any corporation or Affiliated
Group, any and all Taxes, other than Income Taxes, together with any
related interest, penalties or other additions thereto.
"Overdue Rate" -- a rate of interest per annum that fluctuates
with the Federal short-term rate established from time to time pursuant to
Code Section 6621.
"PHC"-- as defined in the preamble to this Agreement.
"PHC Group" -- PHC and each corporation that joins with PHC in
filing a consolidated federal income tax return for any Post-Closing
Taxable Period. For purposes of this Agreement, the PHC Group shall exist
from the beginning of the day immediately after the Closing Date. To the
extent applicable to any state income tax matters, the "PHC Group" shall
include all corporations joining in the filing of a consolidated, combined
or unitary income tax return for the state and period in question.
3
<PAGE>
"PHC Member" -- a corporation that was a Promus Member and
becomes a member of the PHC Group at the beginning of the day immediately
after the Closing Date.
"Post-Closing Straddle Period" -- with respect to any Straddle
Period, the period beginning on the day after the Closing Date and ending
on the last day of such Taxable Year.
"Post-Closing Taxable Period" -- a Taxable Year that begins on
the day immediately after the Closing Date, including any Post-Closing
Straddle Period.
"Pre-Closing Straddle Period" -- with respect to any Straddle
Period, the period beginning on the first day of such Taxable Year and
ending on the close of business on the Closing Date.
"Pre-Closing Taxable Period" -- a Taxable Year that ends at or
before the close of business on the Closing Date, including any Pre-Closing
Straddle Period.
"Promus" -- as defined in the Preamble to this Agreement.
"Promus Group" -- HEI and each corporation that joined with HEI
in filing a consolidated federal income tax return for any Pre-Closing
Taxable Period. For purposes of this Agreement, the Promus Group shall
terminate at the close of business on the Closing Date. To the extent
applicable to any state income tax matters, the "Promus Group" shall
include all corporations joining in the filing of a consolidated, combined
or unitary income tax return for the state and period in question.
"Promus Member" -- a corporation that was a member of the Promus
Group at the close of business on the Closing Date.
"Representative" -- with respect to any person or entity, any of
such person's or entity's directors, officers, employees, agents,
consultants, accountants, attorneys and other advisors.
"Spin-off" -- as defined in the Preamble to this Agreement.
"Straddle Period" -- any Taxable Year beginning before and ending
after the close of business on the Closing Date.
"Tax(es)" -- any net income, gross income, gross receipts, sales,
use, excise, franchise, transfer, payroll, premium, property or windfall
profits tax, alternative or add-on minimum tax, or other tax, fee or
assessment, together with any interest and any penalty, addition to tax or
additional amount imposed by any Taxing Authority, whether any such tax is
imposed directly or through withholding.
"Taxable Period" -- either a Pre-Closing Taxable Period or a
Post-Closing Taxable Period.
4
<PAGE>
"Taxable Year" -- a taxable year (which may be shorter than a
full calendar or fiscal year), year of assessment or similar period with
respect to which any Tax may be imposed.
"Tax Benefit(s)" -- (i) in the case of an Income Tax for which a
consolidated Federal, or a consolidated, combined or unitary state or
other, Tax Return is filed, the amount by which the Tax liability of the
Affiliated Group or other relevant group of corporations is actually
reduced on a "with and without" basis (by deduction, entitlement to refund,
credit, offset or otherwise, whether available in the current Taxable Year,
as an adjustment to taxable income in any other Taxable Year or as a
carryforward or carryback, and including the effect on other Income or
Other Taxes of such reduction), plus any interest received with respect to
any related Tax refund, and (ii) in the case of any Other Tax, the amount
by which the Tax liability of a corporation is actually reduced on a "with
and without" basis (by deduction, entitlement to refund, credit, offset or
otherwise, whether available in the current Taxable Year, as an adjustment
to taxable income in any other Taxable Year or as a carryforward or
carryback, and including the effect on other Income or Other Taxes of such
reduction), plus any interest received with respect to any related Tax
refund.
"Taxing Authority" -- the IRS and any other domestic or foreign
governmental authority responsible for the administration of any Tax.
"Tax Practices" -- the most recently applied policies, procedures
and practices employed by the Promus Group in the preparation and filing
of, and positions taken on, any Tax Returns of Promus or any Promus Member
or Promus Affiliate for any Pre-Closing Taxable Period.
"Tax Return(s)" -- with respect to any corporation or Affiliated
Group, all returns, reports, estimates, information statements,
declarations and other filings relating to, or required to be filed in
connection with, the payments or refund of any Tax.
"Tax Treatment" -- as defined in Section 3(c) hereto.
2. Obligations, Responsibilities and Rights of HEI and PHC.
(a) Preparation and Filing of Tax Returns.
(i) By HEI. HEI shall prepare and timely file (or
------
cause to be prepared and timely filed):
(A) all Tax and Information Returns for Income
Taxes of the Promus Group and any Promus Member for any Pre-Closing Taxable
Period other than a Pre-Closing Straddle Period;
5
<PAGE>
(B) all Tax and Information Returns for Income
Taxes of the Promus Group, the HEI Group, any Promus Member and any HEI
Member (other than such Returns solely for any PHC Member or any group of
PHC Members) for all Straddle Periods;
(C) all Tax and Information Returns for Income
Taxes of the HEI Group and any HEI Member for all Post-Closing Taxable
Periods;
(D) all Tax and Information Returns for Other
Taxes for all Taxable Periods relating to (i) all Promus Members (except
for PHC Members), the HEI Group, and the HEI Members (but not including any
hotel location-specific or hotel activity-specific Tax and Information
Returns filed by Embassy or Harrah's Operating Company, Inc. ("Embassy
Location-Specific Tax and Information Returns")), and (ii) any New York
City or State of New York real property transfer Taxes relating to the
transfer or deemed transfer of any real property owned or leased by any
Promus Member during any Pre-Closing Taxable Period (including, without
limitation, any such Taxes resulting from the Spin-off);
(E) all Information Returns required to be filed
by the Promus Group or any Promus Member at or before the close of business
on the Closing Date and by any HEI Member after the close of business on
the Closing Date, as well as any Information Returns required from the
Promus Group or any Promus Member with respect to the formation of the PHC
Group or the Spin-off; and
(F) all Tax and Information Returns not otherwise
required to be filed by HEI or PHC pursuant to this Section 2(a)(i) and
Section 2(a)(ii).
(ii) By PHC. PHC shall prepare and timely file (or
------
cause to be prepared and timely filed);
(A) all Information Returns for Income Taxes of
any PHC Member;
(B) all Tax and Information Returns for Income
Taxes of any PHC Member or any group of PHC Members (other than such
Returns for the Promus Group or any Promus Member) for all Straddle
Periods;
(C) all Tax and Information Returns for Income
Taxes of the PHC Group and any PHC Member for all Post-Closing Taxable
Periods;
(D) to the extent not filed by the close of
business on the Closing Date, all Tax Returns for Other Taxes for all
Taxable Periods relating to (i) all PHC Members, and (ii) Embassy Location-
Specific Tax and Information Returns; and
6
<PAGE>
(E) all Information Returns required to be filed
by the PHC Group or any PHC Member after the close of business on the
Closing Date.
(b) Provision of Filing Information. HEI (or PHC, as the
case may be) shall cooperate and assist PHC (or HEI) in the preparation and
filing of all Tax and Information Returns subject to Section 2(a) and
submit to PHC (or HEI) (i) all necessary filing information in a manner
consistent with past Tax Practices and (ii) all other information
reasonably requested by PHC (HEI) in connection with the preparation of
such Tax and Information Returns promptly after such request. It is
expressly understood and agreed that PHC s (or HEI s) ability to discharge
its Tax and Information Return preparation and filing responsibilities is
contingent upon HEI (or PHC) providing PHC (or HEI) with all cooperation,
assistance and information reasonably necessary or requested for the filing
of such Tax and Information Returns and that HEI (or PHC) shall indemnify
PHC (or HEI), and PHC s (or HEI s) indemnification obligations of Section 3
shall not apply, if, and to the extent that, penalties, interest or other
additions to Taxes are incurred as a result of material inaccuracies in
such information or of failures, material in nature, to provide such
information and assistance.
(c) Taxable Year. PHC and HEI agree that, for Income Tax
purposes, (i) the PHC Members shall be included in the consolidated Federal
Income Tax Return of the Promus Group for the Taxable Year that ends at the
close of business on the Closing Date (and in all corresponding
consolidated, combined or unitary state or other Income Tax Returns of the
Promus Group) and (ii) the PHC Group and each PHC Member shall begin a new
Taxable Year for purposes of such Federal and, to the extent permitted by
law, state Income Taxes on the day after the Closing Date. The parties
further agree that, to the extent permitted by applicable law, all Federal,
state or other Income Tax Returns shall be filed consistently with this
position.
(d) Advance Review of Tax Returns. At least fifteen (15)
days prior to the filing of any Federal Income Tax Return (including
amendments thereto) that includes a PHC Member, and at least ten (10) days
prior to the filing of any Tax Return other than any Federal Income Tax
Return (including amendments thereto) that includes a PHC Member, HEI
shall provide PHC with the portion of such Tax Return related to any PHC
Member. In the case of each Tax Return subject to the conformity
requirements of Section 2(e) and filed pursuant to Section 2(a), PHC shall
provide HEI with copies of any such Tax Return at least fifteen (15) days
prior to the filing thereof (including amendments thereto). PHC and its
Representatives (or HEI and its Representatives, as the case may be) shall
have the right to review all workpapers related to such portions of such
Tax Returns prior to the filing of any such Tax Return. HEI (or PHC, as
the case may be) shall consult with PHC (or HEI) regarding its comments
with respect to such Tax Returns and shall in good faith (A) consult with
PHC (or HEI) in an effort to resolve any differences with respect to the
preparation and accuracy of such Tax Returns and their consistency with
past Tax Practices and (B) consider PHC's (or HEI s) recommendations for
alternative positions with respect to items reflected on such Tax Returns;
provided, however, that HEI (or PHC) shall not be required to consider any
such recommendation if the result thereof would adversely affect the Taxes
of the HEI Group or any HEI Member (or the PHC Group or any PHC Member) for
any Post-Closing Taxable Period and may condition the acceptance of any
such recommendation upon the receipt of appropriate
7
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indemnification from PHC (HEI) for any increases in Taxes that may result
from the adoption of the relevant alternative position.
(e) Consistent Positions on Tax Returns. HEI (or PHC, as
the case may be) shall prepare all Tax Returns filed pursuant to Section
2(a) for all Taxable Years ended on or before December 31, 1996 in a manner
consistent with past Tax Practices except as otherwise required by changes
in applicable law or material underlying facts. Whether by original or
amended Tax Returns or otherwise, (i) HEI shall not (A) voluntarily
accelerate or shift deductions and other similar items into a Pre-Closing
Taxable Period or (B) voluntarily defer or shift income and other similar
items into a Post-Closing Taxable Period, and (ii) PHC shall not (A)
voluntarily defer or shift deductions and other similar items into a
Post-Closing Taxable Period or (B) voluntarily accelerate or shift income
and other similar items into a Pre-Closing Taxable Period; provided,
however, that this Section 2(e) shall not preclude the correction of
mathematical or material factual errors or other adjustments necessary to
conform any such Tax Return to applicable law or past Tax Practices.
(f) Allocation of Straddle Period Taxes. For purposes of
this Agreement, Taxes shall be allocated between the Pre- and Post-Closing
Straddle Periods, in HEI s reasonable judgment after consulting with
appropriate PHC personnel, in the following manner:
(i) To the extent not impractical, Income Taxes shall
be allocated on the basis of the actual taxable income for each such
period, determined by closing the books of the Promus Group at the close of
business on the Closing Date.
(ii) To the extent that such an allocation based on a
closing of the books is impractical, HEI shall be authorized to use any
reasonable method, including allocations based on (x) allocations of
taxable income, loss, gain, deduction and credits made for Federal Income
Tax purposes, (y) rounding to the next nearest month-end, or (z) the actual
number of days in the Pre- and Post-Closing Straddle Periods in proportion
to the number of days in the entire Straddle Period.
(g) Payment of Taxes. HEI shall pay all Taxes shown to be
due and payable on all Tax Returns filed by HEI pursuant to Section 2(a)(i)
hereof and, subject to Section 3(b), all Taxes that shall thereafter become
due and payable with respect to such Tax Returns as a result of a Final
Determination. PHC shall pay all Taxes shown to be due and payable on all
Tax Returns filed by PHC pursuant to Section 2(a)(ii) hereof and, subject
to Section 3(a), all Taxes that shall thereafter become due and payable
with respect to any such Tax Returns as a result of a Final Determination.
(h) Amendments to Tax Returns. HEI (or PHC, as the case
may be) shall be entitled to amend Tax Returns filed by HEI (or PHC)
pursuant to Section 2(a); provided, however, that PHC shall not amend for
any reason whatsoever any Tax Return of HEI or any HEI Member for
Pre-Closing Taxable Periods or Pre-Closing Straddle Periods, except (A)
after written notice to HEI, pursuant to a change in accounting method
granted by a Taxing
8
<PAGE>
Authority pursuant to a request made prior to the Closing Date, or (B) with
HEI's written consent (which consent may be withheld at HEI's sole
discretion). PHC shall not amend any Tax Return of the PHC Group or any
PHC Member for any Post-Closing Taxable Period ended on or before December
31, 1996, or any Pre-Closing Straddle Period, except (A) pursuant to the
settlement or other resolution of a contest subject to Section 6 or (B)
with HEI's written consent (which consent shall not be unreasonably
withheld); provided, however, that such prohibition shall not extend to the
correction of mathematical or material factual errors or other adjustments
necessary to conform such Tax Returns to applicable law or past Tax
Practices.
(i) Refunds of Taxes.
(i) HEI shall be entitled to any refund (including for
purposes of this Section 2(i), any Tax Benefits realized by the PHC Group
or any PHC Member in lieu of any refund) of (x) any and all Taxes of the
Promus Group or any Promus Member (excluding PHC and the PHC Members) for
all Pre-Closing Taxable Periods and all Pre-Closing Straddle Periods, and
(y) any and all Taxes of the HEI Group or any HEI Member for all Post-
Closing Taxable Periods (except for Taxes in connection with Embassy
Location-Specific Tax and Information Returns). PHC shall be entitled to
any refund (including for purposes of this Section 2(i), any Tax Benefits
realized by the Promus Group or any Promus Member (excluding PHC and the
PHC Members) or the HEI Group or any HEI Member in lieu of any refund) of
(x) any and all Taxes of the PHC Group or any PHC Member for all Taxable
Periods, and (y) any and all Taxes in connection with Embassy Location-
Specific Tax and Information Returns. Any such refunds attributable to a
Straddle Period shall be allocated between the Pre-Closing Straddle Period
and Post-Closing Straddle Period on a basis consistent with the method used
to allocate the Tax liability for such Straddle Period.
(ii) Except as otherwise provided in this Agreement, if
HEI or any HEI Member (or PHC or any PHC Member, as the case may be)
receives a Tax refund or Tax Benefit to which PHC or any PHC Member (or HEI
or any HEI Member) is entitled pursuant to this Agreement, HEI (or PHC)
shall pay (in accordance with Section 4) the amount of such Tax refund or
Tax Benefit (including any interest received thereon) to PHC (or HEI)
promptly after receipt thereof.
(iii) The realization of, and procedural
requirements with respect to, any Tax Benefit under this Section 2(i) shall
be governed by Section 3(e).
(j) Carrybacks. PHC shall not file any carryback claim for
federal Income Taxes or state, local or foreign Income Taxes in a Combined
Jurisdiction for the PHC Group or any PHC Member into a Pre-Closing Taxable
Period without the prior written consent of HEI, which consent shall not be
unreasonably withheld.
(k) NOL, ITC and AMT Credit Benefits. The Tax Returns of
the Promus Group for Taxable Years prior to and including the Taxable Year
that includes the Closing Date may reflect that certain PHC Members have
attributable to them, under applicable Federal and state Income Tax law,
certain net operating loss carryforwards, investment tax credit
9
<PAGE>
carryforwards and alternative minimum tax credit carryforwards (the
"Carryforwards"). The parties hereto agree that the PHC Group and the PHC
Members shall be exclusively entitled to use and benefit from the
Carryforwards without compensation to the Promus Group or any Promus
Member. PHC hereby acknowledges and agrees (on its behalf and on behalf of
all PHC Members) that the exact amount of the Carryforwards is not
presently known and may not be definitively determined until a Final
Determination has been reached for all Pre-Closing Taxable Periods of the
Promus Group and each Promus Member. PHC further agrees that it shall have
no recourse against the Promus Group, any Promus Member, HEI Group or any
HEI Member regardless of (a) what amount of such Carryforwards will
ultimately be available to the PHC Group and the PHC Members in Post-
Closing Taxable Years and (b) whether the Carryforwards shall be subject to
any limitation imposed as a result of the application of Code Sections 382
and 383, the Treasury regulations thereunder or other applicable law. HEI
hereby agrees to take any action or make any election reasonably required
to permit PHC and the PHC Members to utilize the Carryforwards; provided,
however, that no such action or election shall be required if it would
adversely affect in any way the Income Tax liabilities of the HEI Group or
any HEI Member for any Taxable Year. The parties also hereby agree that
the provisions of this Section 2(k) shall apply with respect to any similar
carryforwards available under applicable state, local or foreign Income Tax
law.
(l) Tax Reserves. The Tax reserves of the Promus Group, as
reported on the financial statements dated as of the Closing Date, shall be
apportioned between the HEI Group and the PHC Group based on the allocation
of the related Tax liabilities as provided in this Section 2.
3. Indemnification.
(a) By HEI.
(i) Taxes. Subject to Sections 2(b) and 3(b), HEI
-----
shall indemnify and hold PHC and PHC Members harmless (on an After-Tax
Basis) against any and all (A) federal, state, local and foreign Income
Taxes of (x) the predecessor group of the Promus Group for all Pre-Closing
Taxable Periods ending on or prior to February 7, 1990 and (y) the Promus
Group for all Pre-Closing Taxable Periods beginning after February 7, 1990
(but excluding Income Taxes solely attributable to the operations of any
PHC Member), (B) state, local and foreign Income Taxes of any Promus
Members (excluding PHC Members) or HEI Members for all Taxable Periods and
(C) federal, state, local and foreign Other Taxes (except for Other Taxes
paid in connection with Embassy Location-Specific Tax and Information
Returns) of any Promus Members or HEI Members for all Taxable Periods.
(ii) Member Liability. Subject to Sections 2(b) and
----------------
3(b), HEI shall indemnify and hold PHC and the PHC Members harmless (on an
After-Tax Basis) against each and every liability for Taxes of the Promus
Group under Treasury Regulation Section 1.1502-6 or any similar law, rule
or regulation administered by any Taxing Authority, together with any
related interest, penalties and other additions.
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(iii) Pre-existing Indemnification Obligations.
----------------------------------------
HEI shall indemnify and hold PHC and the PHC Members harmless (on an After-
Tax Basis) against any liability for Taxes of any person other than PHC or
a PHC Member for any Taxable Year; provided, however, that such liability
shall only be indemnified hereunder if it shall arise from, or be imposed
under or pursuant to, a contract, agreement, indemnity or other arrangement
that (A) is legally binding upon PHC or such a PHC Member, and was in full
force and effect, both (x) at the close of business on the Closing Date and
(y) at the time such liability arises and is imposed against PHC or the PHC
Member and (B) has not been amended, modified, changed, altered, restored,
reinstated, extended or otherwise affected by any action, inaction or other
event occurring after the close of business on the Closing Date. With
respect to any claim for indemnification under this Section 3(a)(iii), HEI
shall be entitled to enforce all rights and defenses available to PHC or
any PHC Member with respect to any contest of the underlying Taxes of such
other person and any available rights or defenses with respect to the
imposition of such liability against PHC or the PHC Member in a manner
consistent with Section 6 as if such underlying Taxes or such liability
were an indemnified "Tax" for purposes of such Section.
(iv) Bass Litigation. HEI shall indemnify and hold PHC
---------------
harmless (on an After-Tax Basis) against any liability for Taxes arising
from the Settlement Agreement, dated March 17, 1995, which effected the
settlement of the litigation styled as Bass Public Limited Company, Bass
---------------------------------
International Holdings N.V., (U.S.A.) Incorporated, Holiday Corporation and
- ---------------------------------------------------------------------------
Holiday Inns, Inc. v. The Promus Companies Incorporated, formerly pending
- -------------------------------------------------------
in the United States District Court for the Southern District of New York
(92 Civ. 0969).
(b) By PHC.
(i) Taxes. Subject to Sections 3(a)(ii), (iii) and
-----
(iv), PHC shall indemnify and hold HEI and HEI Members harmless (on an
After-Tax Basis) against any and all (A) federal, state, local and foreign
Income Taxes of the Promus Group for all Pre-Closing Taxable Periods
beginning after February 7, 1990 to the extent solely attributable to the
operations of any PHC Member, (B) federal, state, local and foreign Income
Taxes of the PHC Group and any PHC Members for all Post-Closing Taxable
Periods and (C) federal, state, local and foreign Other Taxes of PHC
Members and Other Taxes paid in connection with Embassy Location-Specific
Tax and Information Returns for all Taxable Periods.
(ii) Post-Closing Transactions. Notwithstanding any
-------------------------
contrary provision in this Agreement or in the Distribution Agreement, PHC
shall indemnify and hold the HEI Group and the HEI Members harmless (on an
After-Tax Basis) against any Taxes imposed on or against the Promus Group
(including Promus Members) or the HEI Group (including the HEI Members)
that are attributable to, or arise from, transactions or events outside the
ordinary course of business of PHC and the PHC Members occurring on the
Closing Date after the Closing.
(c) Assumed Tax Treatments. The parties expressly agree
for all purposes to treat the Spin-off as a tax-free transaction under Code
Sections 355 and 368 (the "Tax Treatment"). Each party hereto also
expressly agrees not to take (and to cause each of its
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Affiliates not to take) any action inconsistent with the treatment of the
Spin-off and all related transactions in accordance with the Tax Treatment
and to take (and to cause each of its affiliates to take) any and all
actions reasonably available to such party (or affiliate) to support and
defend such treatment. Notwithstanding anything to the contrary in
Sections 3(a) or 3(b), if, solely as a result of any action by a party
hereto (or an Affiliate thereof other than the other party hereto) or its
shareholders (in their capacities as shareholders of such party) occurring
after the Closing Date (such party being the "acting party" for purposes of
this Section 3(c)), a Final Determination results in the Tax Treatment
being incorrect and as a result thereof additional Taxes are incurred, or
any Tax Benefit is eliminated in a Pre-Closing Taxable Period, the acting
party shall indemnify and hold harmless the other party hereto for all such
additional Taxes or lost Tax Benefits. If both Promus and PHC shall be
"acting parties" for purposes of the preceding sentence, then (a) if it can
be clearly determined which such party (or Affiliate or shareholders
thereof) took the first action that irrevocably created the basis for the
Tax Treatment being incorrect, such party shall indemnify and hold harmless
the other party for all such additional Taxes or lost Tax Benefits, or (b)
if it cannot be so determined, the parties shall each bear (and indemnify
the other party against) 50% of such additional Taxes or lost Tax Benefits.
Any such claim for indemnification shall otherwise be handled in the manner
specified under this Section 3, but shall not affect in any manner the
provisions of Sections 5 and 6 with respect to cooperation and control of
contests and audits.
(d) Certain Reimbursements. PHC (or HEI, as the case may
be) shall notify HEI (or PHC) of any Taxes paid by the PHC Group or any PHC
Member (or the HEI Group or any HEI Member) which are subject to
indemnification under this Section 3. To the extent not otherwise provided
in this Section 3, any other notification contemplated by this Section 3(d)
shall include a detailed calculation (including, if applicable, separate
allocations of such Taxes between Pre- and Post-Closing Taxable Periods and
Pre- and Post-Closing Straddle Periods and supporting work papers) and a
brief explanation of the basis for indemnification hereunder. Whenever a
notification described in this Section 3(d) is given, the notified party
shall pay the amount requested in such notice to the notifying party in
accordance with Section 4, but only to the extent that the notified party
agrees with such request. To the extent the notified party disagrees with
such request, it shall, within 20 days, so notify the notifying party,
whereupon the parties shall use their best efforts to resolve any such
disagreement. To the extent not otherwise provided for in this Section 3
or in Section 4, any payment made after such 20-day period shall include
interest at the Overdue Rate from the date such payment would have been
made under Section 4 based upon the original notice given by the notifying
party.
(e) Tax Benefits Arising from Timing Adjustments. If and
to the extent that any Tax liability is indemnified under this Section 3 as
a result of a deferral, delay, acceleration or other timing adjustment with
respect to the accrual, recognition or utilization of any item of loss,
deduction, credit, income or gain of the party indemnified (the
"Indemnified Party") (and not as a result of the outright elimination or
denial of such item), the Indemnified Party shall (i) make, file or report
in a proper and timely manner, at the earliest time permitted by law, a
claim for or with respect to, such item, (ii) provide an annual notice to
the party providing such indemnification (the "Indemnifying Party") of the
Indemnified Party's realization of any Tax Benefit in other Taxable Periods
as a result of any such item, and (iii) pay to the
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Indemnifying Party the amount of any Tax Benefit that it may thereafter
obtain as a result of its use of such item; provided, however, that clauses
(ii) and (iii) hereof shall apply only after an indemnification payment
under this Section 3 has been received; and provided, further, that the
provisions of this Section 3(e) shall not apply if, and to the extent that,
any such item has been taken into account for purposes of determining the
After-Tax Basis for the related indemnification payment. The notices
contemplated by clauses (iii) above shall be accompanied by (1) appropriate
supporting Tax Returns (for past, current and, when available, future
Taxable Years), documentation, schedules and workpapers, and (2) such other
Tax Returns (for past, current and, when available, future Taxable Years),
documentation and information as the Indemnifying Party shall reasonably
request, to enable the Indemnifying Party to monitor the effect of such
loss, credit, savings or Tax Benefit on the actual Tax liabilities,
payments and refunds of the Indemnified Party. For purposes of this
Agreement: (A) a Tax Benefit related to an overpayment or refund of Taxes
shall be deemed to have been realized at the time (x) an actual cash refund
or payment is received or (y) such overpayment is applied against other
Taxes due; (B) where a party has other losses, deductions, credits or
similar items available to it, any losses, deductions, credits or items for
which the other party would be entitled to a payment under this Agreement
shall be treated as the last items utilized to produce a Tax Benefit; and
(C) in determining the amount of the Tax Benefit realized, the amount by
which the tax liability of a corporation (or an Affiliated Group) for a
Taxable Period is reduced because of such an item shall be equal to the
excess of (I) such corporation's Tax liability for such Taxable Period if
such item had not been taken into account, over (II) the corporation's
actual Tax liability for such Taxable Period. Each of HEI and PHC shall
take, and shall cause the members of their respective Affiliated Groups to
take, as promptly as practicable, all reasonable steps to ensure that all
available Tax Benefits are realized at the earliest possible time.
(f) Loss of Deductions or Tax Benefits. Appropriate
payments shall be made between the parties to take account of subsequent
losses of, or changes in (i) any deductions, losses, credits, offsets or
other tax items taken into account for purposes of determining the After-
Tax Basis of any indemnification payment or (ii) any Tax Benefit that has
been claimed and paid for by the Indemnified Party under Section 3(e)(iii)
above.
4. Method, Timing and Character of Payments Required by This
Agreement.
(a) Payment Procedures. HEI and PHC hereby agree to the
following monthly reporting and payment system with respect to all amounts
that shall become due and payable hereunder between the parties: (1) HEI
(or PHC, as the case may be) shall prepare and deliver to PHC (or HEI), on
or before the 5th calendar day of the following month (or, if such day is
not a business day, the next business day thereafter), a comprehensive
monthly report of all amounts that have become due hereunder to HEI (or
PHC) or HEI's (or PHC's) subsidiaries; and (2) the net amount due between
HEI and its subsidiaries on the one hand and PHC and its subsidiaries on
the other hand as of such month-end (including any amounts remaining
unpaid, plus interest thereon, from prior months) shall become due and
payable on the 10th calendar day of the following month (or, if such day is
not a business day, the next business day thereafter). The parties hereby
agree to consult with each other in good faith to resolve any differences
with respect to such monthly reports and payments. HEI's (or PHC's)
failure to prepare or distribute
13
<PAGE>
any such monthly report shall not relieve or defer its obligation to pay
any amounts it may owe to PHC (or HEI) hereunder.
(b) Payment in Immediately Available Funds; Interest. All
payments made pursuant to this Agreement shall be made in immediately
available funds. Except as otherwise provided herein, any payment not made
when due and payable under Section 4(a) shall thereafter bear interest at
the Overdue Rate.
(c) Characterization of Payments. Any payment (other than
interest thereon) made hereunder by HEI to PHC or by PHC to HEI shall be
treated by all parties for Tax purposes to the extent permitted by law, and
for accounting purposes to the extent permitted by generally accepted
accounting principles, as non-taxable dividend distributions or capital
contributions made prior to the close of business on the Closing Date.
5. Tax Returns; Cooperation; Document Retention;
Confidentiality.
(a) Tax Returns. Promptly upon reasonable request, each
party shall deliver to the other party a copy of all filed Income Tax
Returns for all Post-Closing Taxable Periods ending prior to January 1,
2000 and make available to the other party for inspection a copy of all
filed Income Tax Returns for all Post-Closing Taxable Periods ending after
December 31, 1999 and prior to January 1, 2010.
(b) Provision of Cooperation, Documents and Other
Information. Upon the reasonable request of any party to this Agreement,
HEI and PHC shall provide (and shall cause the members of their respective
Affiliated Groups to provide) the requesting party, promptly upon request,
with such cooperation and assistance, documents, and other information,
without charge, as may reasonably be requested by such party in connection
with (i) the preparation and filing of any original or amended Tax Return,
(ii) the conduct of any audit or other examination or any judicial or
administrative proceeding involving to any extent Taxes or Tax Returns
within the scope of this Agreement, or (iii) the verification by a party of
an amount payable hereunder to, or receivable hereunder from, another
party. Such cooperation and assistance shall include, without limitation:
(i) the provision on demand of books, records, Tax Returns, documentation
or other information relating to any relevant Tax Return; (ii) the
execution of any document that may be necessary or reasonably helpful in
connection with the filing of any Tax Return by the Promus Group, a Promus
Member, the HEI Group, a HEI Member, the PHC Group or a PHC Member, or in
connection with any audit, proceeding, suit or action of the type generally
referred to in the preceding sentence, including, without limitation, the
execution of powers of attorney and extensions of applicable statutes of
limitations, with respect to Tax Returns which HEI may be obligated to file
on behalf of PHC Members pursuant to Section 2(a); (iii) the prompt and
timely filing of appropriate claims for refund; and (iv) the use of
reasonable best efforts to obtain any documentation from a governmental
authority or a third party that may be necessary or helpful in connection
with the foregoing. Each party shall make its employees and facilities
available on a mutually convenient basis to facilitate such cooperation.
14
<PAGE>
(c) Retention of Books and Records. HEI, each HEI Member,
PHC and each PHC Member shall retain or cause to be retained all Tax
Returns, and all books, records, schedules, workpapers, and other documents
relating thereto, until the expiration of the later of (i) all applicable
statutes of limitations (including any waivers or extensions thereof), and
(ii) any retention period required by law or pursuant to any record
retention agreement. The parties hereto shall notify each other in writing
of any waivers, extensions or expirations of applicable statutes of
limitations. The parties shall provide written notice of any intended
destruction of the documents referred to in this subsection. A party
giving such a notification shall not dispose of any of the foregoing
materials without first offering to transfer possession thereof to all
notified parties.
(d) Status and Other Information Regarding Audits and
Litigation. HEI (or PHC, as the case may be) shall use reasonable best
efforts to keep PHC (or HEI) advised, as to the status of Tax audits and
litigation involving any issue relating to any Taxes, Tax Returns or Tax
Benefits subject to indemnification under this Agreement. To the extent
relating to any such issue, HEI (or PHC) shall promptly furnish PHC (or
HEI) copies of any inquiries or requests for information from any Taxing
Authority or any other administrative, judicial or other governmental
authority, as well as copies of any revenue agent's report or similar
report, notice of proposed adjustment or notice of deficiency.
(e) Confidentiality of Documents and Information. Except
as required by law or with the prior written consent of the other party,
all Tax Returns, documents, schedules, work papers and similar items and
all information contained therein, which Tax Returns and other materials
are within the scope of this Agreement, shall be kept confidential by the
parties hereto and their Representatives, shall not be disclosed to any
other person or entity and shall be used only for the purposes provided
herein.
6. Contests and Audits.
(a) Notification of Audits or Disputes. Upon the receipt
by HEI or any HEI Member (or PHC or any PHC Member, as the case may be) of
notice of any pending or threatened Tax audit or assessment which may
affect the liability for Taxes that are subject to indemnification
hereunder, HEI (or PHC) shall promptly notify the other in writing of the
receipt of such notice.
(b) Control and Settlement. HEI shall have the right to
control, and to represent the interests of all affected taxpayers in, any
Tax audit or administrative, judicial or other proceeding relating, in
whole or in part, to any Pre-Closing Taxable Period or any other Taxable
Period for which HEI is responsible, in whole or in part, for Taxes under
Sections 2(g) and (3), and to employ counsel of its choice at its expense;
provided, however, that, with respect to such issues that may impact PHC or
any PHC Member for any Post-Closing Taxable Period, HEI shall (i) afford
PHC full opportunity to participate in any such proceedings in a reasonable
manner at PHC's expense and to review any submissions related to such
issues, (ii) in good faith, consult with PHC regarding its comments with
respect to such proceedings and submissions in an effort to resolve any
differences with respect to HEI's positions with regard
15
<PAGE>
to such issues, consider PHC's recommendations for alternative positions
with respect to such issues and advise PHC of the reasons for rejecting any
such alternative position, (iii) in good faith consult with PHC as to
strategy and settlement decisions with respect to such proceedings and
submissions and (iv) use its best efforts to arrive at a settlement of such
proceedings that reflects the ultimate merits of the issues rather than the
respective indemnification obligations of the parties pursuant to Section
3. In the event of any disagreement regarding the proceedings, HEI shall
have the ultimate control of the contest and any settlement or other
resolution thereof. PHC shall have the right to control, and to represent
the interests of all affected taxpayers in, any Tax audit or admin-
istrative, judicial or other proceeding relating, in whole or in part, to
any Post-Closing Taxable Period of the PHC Group, or relating to any other
Taxable Period for which PHC is solely responsible, for Taxes under Section
2(g) and (3), and to employ counsel of its choice at its expense; provided,
however, that PHC shall (i) afford HEI full opportunity to participate in
any such proceedings in a reasonable manner at HEI's expense and to review
any submissions related thereto and (ii) not agree to settle any such
proceeding in a manner that could reasonably have a material and adverse
effect on (A) any indemnification obligation of HEI hereunder, (B) any Tax
liability of the Promus Group or any Promus Member for any Pre-Closing
Taxable Period or (C) any Tax liability of the HEI Group or any HEI Member
for any Post-Closing Taxable Period, without the prior written consent of
HEI, which consent shall not be unreasonably withheld.
(c) Delivery of Powers of Attorney and Other Documents.
PHC (or HEI, as the case may be) shall execute and deliver to HEI (or PHC),
promptly upon request, powers of attorney authorizing HEI (or PHC) to
extend statutes of limitations, receive refunds, negotiate settlements and
take such other actions that HEI or PHC reasonably considers to be
appropriate in exercising its control rights pursuant to Section 6(b), and
any other documents reasonably necessary to effect the exercising of such
control rights.
7. Miscellaneous.
(a) Effectiveness. This Agreement shall be effective from
and after the Closing Date and shall survive until the expiration of any
applicable statute of limitations; provided, however, that this Agreement
shall terminate immediately upon a termination of the Distribution
Agreement in accordance with the terms of Section 9.07 thereof and
thereafter this Agreement shall be of no further force and effect.
(b) Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the subject matter
hereof. This Agreement terminates and supersedes, on a prospective basis
only, any and all other sharing or allocation agreements with respect to
Taxes in effect at the time between the Promus Group and the PHC Members,
but shall not affect any such agreement to the extent applicable only among
HEI Members.
(c) Guarantees of Performance. HEI and PHC hereby
guarantee the complete and prompt performance by the members of their
respective Affiliated Groups of all of their obligations and undertakings
pursuant to this Agreement. If, subsequent to the close of business on the
Closing Date, either HEI or PHC shall be acquired by another entity such
that
16
<PAGE>
50% or more of its common stock is in common control, such acquirer shall,
by making such acquisition, simultaneously agree to jointly and severally
guarantee the complete and prompt performance by the acquired corporation
and any Affiliate of the acquired corporation of all of their obligations
and undertakings pursuant to this Agreement.
(d) Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable, the enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby. It is hereby stipulated
and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions hereof
without including any of such which may hereafter be declared invalid, void
or unenforceable. In the event that any such term, provision, covenant or
restriction is hereafter held to be invalid, void or unenforceable, the
parties hereto agree to use their best efforts to find and employ an
alternate means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction.
(e) Indulgences, etc. Neither the failure nor any delay on
the part of any party hereto to exercise any right under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise
of any right preclude any other or further exercise of the same or any
other right, nor shall any waiver of any right with respect to any
occurrence be construed as a waiver of such right with respect to any other
occurrence.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
without regard to the conflict of law principles thereof, except with
respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or subject of this Agreement, and as
to those matters the law of the jurisdiction under which the respective
entity derives its powers shall govern.
(g) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement that are routine
in nature shall be made in writing and shall be delivered by hand or mailed
by registered or certified mail (return receipt requested) to the
designated representative of the tax department of each party and confirmed
by a copy thereof directed to the general counsel of each party, while all
notices, requests, demands and other communications of material importance
shall be made in the manner provided in Section 9.04 of the Distribution
Agreement and confirmed by a copy thereof directed to the designated
representative of the tax department of each party.
(h) Modification or Amendment. This Agreement may be
amended at any time by written agreement executed and delivered by duly
authorized officers of PHC and HEI.
17
<PAGE>
(i) Successors and Assigns. A party's rights and
obligations under this Agreement may not be assigned without the prior
written consent of the other party. All of the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns, and shall survive any
acquisition, disposition or other corporate restructuring or transaction
involving either party.
(j) No Third-Party Beneficiaries. This Agreement is solely
for the benefit of the parties to this Agreement and their respective
Affiliates and should not be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without this Agreement.
(k) Other. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original
instrument, and all of such counterparts shall together constitute one and
the same instrument. The section numbers and captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions
hereof.
(l) Predecessors and Successors. To the extent necessary
to give effect to the purposes of this Agreement, any reference to any
corporation, Affiliated Group or member of an Affiliated Group shall also
include any predecessors or successors thereto, by operation of law or
otherwise.
(m) Tax Elections. Nothing in this Agreement is intended
to change or otherwise affect any previous tax election made by or on
behalf of the Promus Group (including the election with respect to the
calculation of earnings and profits under Code Section 1552 and the
regulations thereunder). HEI, as common parent of the HEI Group, shall
continue to have sole discretion to make any and all elections with respect
to all members of the Promus Group for all Pre-Closing Taxable Periods for
which it is obligated to file Tax or Information Returns under Section
2(a)(i).
(n) Injunctions. The parties acknowledge that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or were
otherwise breached. The parties hereto shall be entitled to an injunction
of injunctions to prevent breaches hereto and to enforce specifically the
terms and provisions hereof in any court having jurisdiction; such remedy
shall be in addition to any other remedy available at law or in equity.
(o) Further Assurances. Subject to the provisions hereof,
the parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions, as may be
reasonably required in order to effectuate the purposes of this Agreement
and to consummate the transactions contemplated hereby. Subject to the
provisions hereof, each party shall, in connection with entering into this
Agreement, performing its obligations hereunder and taking any and all
actions relating hereto, comply with all applicable laws, regulations,
orders and decrees, obtain all required consents and approvals and make all
required filings with any governmental agency, other regulatory or
administrative
18
<PAGE>
agency, commission or similar authority and promptly provide the other
party with all such information as it may reasonably request in order to be
able to comply with the provisions of this sentence.
(p) Setoff. Except as provided in Section 4(a), all
payments to be made by any party under this Agreement shall be made without
setoff, counterclaim or withholding, all of which are expressly waived.
(q) Costs and Expenses. Unless otherwise specifically
provided herein, each party agrees to pay its own costs and expenses
resulting from the fulfillment of its respective obligations hereunder.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, or have caused this Agreement to be duly executed on their
respective behalf by their respective officers thereunto duly authorized,
as of the day and year above written.
THE PROMUS COMPANIES,
INCORPORATED AND SUBSIDIARIES
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
The Promus Companies, Incorporated
PROMUS HOTEL CORPORATION AND
SUBSIDIARIES
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Promus Hotel Corporation
20
Exhibit 10(10)
Amendment to
------------
The Promus Companies Incorporated ("Company")
---------------------------------------------
Executive Deferred Compensation Plan ("Plan")
---------------------------------------------
May 26, 1995
------------
Pursuant to paragraph 9.1 of the Plan, the Human Resources Committee
of the Company's Board of Directors adopted this amendment to the Plan on
May 26, 1995:
1. The following Section 5.12 is added to the Plan:
"5.12 Spin-off Transactions. Notwithstanding anything
---------------------
in the Plan to the contrary, in the event any business
of Promus or its subsidiaries is spun-off and a
Participant becomes an employee or director of the
company owning the spun-off business (the "Spin-Off
Company") which adopts a deferred compensation plan
that is substantially the same as the Plan, then the
Human Resources Committee of the Board of Directors of
Promus in its discretion may determine as follows prior
to the spin-off:
(a) any director-Participant who resigns as a director
of the Company and who, within 90 days, commences
service as a director of the Spin-Off Company will not
be treated as having terminated service or employment
as a director for purposes of paying Plan benefits, and
his or her entire Account balance and all obligations
associated therewith will be transferred to the
corresponding Plan of the Spin-Off Company;
(b) a transfer of employment of a Participant to the
Spin-Off Company in connection with the spin-off will
not be considered a termination of employment for
purposes of paying Plan benefits or of forfeiting
matching contributions and interest thereon;
(c) a transferred Participant's Account balance as of
the effective date of the spin-off and all obligations
related thereto will be transferred to the
corresponding plan of the Spin-Off Company;
<PAGE>
(d) any Participant who will immediately after the
effective date of the spin-off continue to be employed
by Promus (or a subsidiary thereof) and will also be
employed by the Spin-Off Company (or a subsidiary
thereof) will have the right to designate in writing
(to be signed prior to the effective date of the spin-
off) a percentage (from zero to 100%) of his or her
Account Balance as of such effective date that will be
transferred to the Spin-Off Company (such percentage
being applied to the balances attributable to each year
of deferral) which transfer will include the transfer
of all obligations associated therewith. (To the
extent such designation is not made, the Participant's
Account will remain in the Plan pursuant to its
terms.);
(e) Any employee or director transferring to the Spin-
Off Company will receive credit for and will be vested
in the Retirement Account Interest Rate under the Plan
and under the Spin-Off Company's corresponding plan if
such Rate is earned or otherwise vested or credited
under the Plan on or prior to the effective date of the
spin-off; and
(f) Except to the extent related to that portion of a
Participant's Account balance that is retained in the
Plan pursuant to the above Section 5.12(e), no benefits
will be payable under the Plan to a Participant whose
Account balance (or portion thereof) is transferred to
the Spin-Off Company.
2. Subparagraph (e) of paragraph 5.2 of the Plan is deleted.
3. Paragraph 2.4 of the Plan is amended to read as follows:
"2.4 Change of Control. A Change of Control shall be
-----------------
deemed to have occurred, subject to subparagraph (iv)
hereof, if any of the events in subparagraphs (i), (ii)
or (iii) occur:
-2-
<PAGE>
(i) Any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than an employee
benefit plan of Promus, or a trustee or other fiduciary
holding securities under an employee benefit plan of Promus,
is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
25% or more of Promus's then outstanding voting securities
carrying the right to vote in elections of persons to the
Board of Directors, regardless of comparative voting power
of such voting securities, and regardless of whether or not
the Board of Directors shall have approved such Change in
Control; or
(ii) During any period of two consecutive years,
individuals who at the beginning of such period constitute
the Board of Directors and any new director (other than a
director designated by a person who shall have entered into
an agreement with Promus to effect a transaction described
in subparagraphs (i) or (iii) of this paragraph) whose
election by the Board of Directors or nomination for
election by Promus's stockholders was approved by a vote of
at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(iii) The holders of securities of Promus entitled to
vote thereon approve the following:
(A) A merger or consolidation of Promus with any other
corporation regardless of which entity is the surviving
company, other than a merger or consolidation which would
result in the voting securities of Promus carrying the right
to vote in elections of persons to the Board of Directors
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least 80% of Promus's then outstanding voting securities
carrying the right to vote in elections of persons to the
Board of Directors, or such securities of such surviving
entity outstanding immediately after such merger or
consolidation, or
-3-
<PAGE>
(B) A plan of complete liquidation of Promus or an
agreement for the sale or disposition by Promus of all or
substantially all of Promus's assets.
(iv) Notwithstanding the definition of a "Change in
Control" of Promus as set forth in this paragraph 2.4, the
Human Resources Committee of the Board of Directors (the
"Committee") shall have full and final authority, which
shall be exercised in its discretion, to determine
conclusively whether a Change in Control of Promus has
occurred, and the date of the occurrence of such Change in
Control and any incidental matters relating thereto, with
respect to a transaction or series of transactions which
have resulted or will result in a substantial portion of the
assets or business of Promus (as determined immediately
prior to the transaction or series of transactions by the
Committee in its sole discretion which determination shall
be final and conclusive) being held by a corporation at
least 80% of whose voting securities are held, immediately
following such transaction or series of transactions, by
holders of the voting securities of Promus (determined
immediately prior to such transaction or series of
transactions). The Committee may exercise such
discretionary authority without regard to whether one or
more of the transactions in such series of transactions
would otherwise constitute a Change in Control of Promus
under the definition set forth in this paragraph 2.4."
Executed as of this 26th day of May, 1995.
THE PROMUS COMPANIES INCORPORATED
By: _________________________________
William S. McCalmont
Vice President
-4-
Exhibit 10(11)
Amendment to
------------
The Promus Companies Incorporated ("Company")
---------------------------------------------
Deferred Compensation Plan ("Plan")
-----------------------------------
May 26, 1995
------------
Pursuant to paragraph 11 of the Plan, the Human Resources Committee of
the Company's Board of Directors adopted this amendment on May 26, 1995:
The following Section 5.8 is added to the Plan:
"5.8 Spin-off Transactions. Notwithstanding anything
---------------------
in the Plan to contrary, in the event any business of
Promus or its subsidiaries is spun-off and a
Participant becomes an employee or director of the
company owning the spun-off business (the "Spin-Off
Company") which adopts a deferred compensation plan
that is substantially the same as the Plan, then the
Human Resources Committee of the Board of Directors of
Promus may in its discretion determine as follows prior
to such spin-off:
(a) any director-Participant who resigns as a director
of Promus and who, within 90 days, commences service as
a director of the Spin-Off Company will not be treated
as having terminated service as a director for purposes
of paying Plan benefits, and his or her entire Account
balance and all obligations associated therewith will
be transferred to the corresponding Plan of the Spin-
Off Company;
(b) a transfer of employment of a Participant to the
Spin-Off Company will not be considered a termination
of employment for purposes of paying Plan benefits or
of forfeiting matching contributions and interest
thereon;
(c) a transferred Participant's Account balance as of
the effective date of the spin-off and all obligations
related thereto will be transferred to the
corresponding plan of the Spin-Off Company; and
<PAGE>
(d) any Participant who will immediately after the
effective date of the spin-off be employed by Promus
(or a subsidiary thereof) and also by the Spin-Off
Company (or a subsidiary thereof) will have the right
to designate in writing (to be signed prior to the
effective date of the spin-off) a percentage (from zero
to 100%) of his or her Account balance that will be
transferred to the Spin-Off Company (such percentage
being applied to the balances attributable to each year
of deferral) which will include the transfer of all
obligations associated therewith. (To the extent such
designation is not made, the Account Balance will
remain in the Plan pursuant to its terms); and
(e) Except to the extent related to that portion of a
Participant's Account balance that is retained in the
Plan pursuant to the above Section 5.8(d), no benefits
will be payable under the Plan to a Participant whose
Account balance (or portion thereof) is transferred to
the Spin-Off Company.
Executed as of this 26th day of May, 1995.
THE PROMUS COMPANIES INCORPORATED
By: _________________________________
William S. McCalmont
Vice President
-2-
Exhibit 10(12)
AMENDMENT TO ESCROW AGREEMENT
WHEREAS, The Promus Companies Incorporated has entered into an
Escrow Agreement (the "Escrow Agreement"), dated February 6, 1990 and
amended October 29, 1993, by and between The Promus Companies Incorporated,
a Delaware corporation (the "Company"), the subsidiaries of the Company
listed on the execution page of this Agreement ("Subsidiaries"), and
NationsBank (formerly Sovran Bank and formerly Commerce Union Bank, (the
"Escrow Agent").
WHEREAS, pursuant to Section 5.2 of the Escrow Agreement, the
Company maintains the right to amend the Escrow Agreement by an instrument
in writing signed on behalf of the parties to the Escrow Agreement together
with the written consent of Participants having at least 50 percent of all
amounts then accounted for in the Escrow Fund with respect to their
accounts (which consent is attached hereto as Exhibit A).
WHEREAS, pursuant to the distribution of a dividend of common
stock in Promus Hotel Corporation to the shareholders of The Promus
Companies Incorporated (the "Distribution"), certain employees of the
Company will be transferred to Promus Hotel Corporation ("PHC") and, with
respect such employees who have an account in or rights under the Plans (as
defined in the Escrow Agreement), PHC will assume all liabilities and
obligations of the Company to such transferred employees, accrued through
the Distribution with respect to the Promus Executive Deferred Compensation
Plan and the Promus Deferred Compensation Plan, along with earnings
required to be credited to account balances included therein through the
Distribution, to be assumed by PHC if the Company transfers to the escrow
agreement maintained by PHC an amount of assets held in the Escrow
Agreement sufficient to fund the Assumed Deferred Compensation Liability
with approximately the same relative funding coverage as existed
immediately prior to the Distribution.
WHEREAS, pursuant to Section 5.2 of the Escrow Agreement, the
parties hereto hereby adopt this amendment to the Escrow Agreement, this
amendment to become effective upon the distribution of a dividend of common
stock in Promus Hotel Corporation to the shareholders of The Promus
Companies Incorporated.
NOW THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration the receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. Section 1.2 of the Plan shall be amended to read in its
entirety as follows:
SECTION 1.2 Participants. The Participants are:
------------
Barksdale, James L. Meeks, D. Michael
Barnhart, Neil F. Mon, Hector H.
Bollenbach, Stephen F. Morgan, Bradford W.
Boushy, John M. Norville, Craig H.
<PAGE>
Brannon, Robert L. McCalmont, William S.
Burhop, Gary L. Peternell, Ben C.
Clark-Jackson, Susan Phillips, Louis J.
Culp, Clyde E., III Reed, Colin V.
Evans, Nicholas M. Regan, Michael N.
Farley, James B. Robinson, E. O., Jr.
Feldman, Hervey A. Rose, Michael D.
Goeglein, Richard J. Salmon, Walter J.
Henson, Joe M. Satre, Philip G.
Kates, Henry E. Sells, Boake A.
Lacaff, Laurance B. Solomonson, Charles D.
Ledsinger, Charles A., Jr. Sorenson, Perry
Lenczycki, Ronald A. Wallace, Dee A.
Martin, Robert Williams, Eddie N.
McAllister, J. W. Young, Shirley.
The Company may add Participants upon written notice to the
Escrow Agent. For purposes of this Agreement, the beneficiary of any
Participant who dies shall be deemed a Participant under this Agreement to
the extent such beneficiary is entitled to then accrued benefits under the
Plans.
2. The Plan shall be amended to add Section 3.3 which shall read
in its entirety as follows:
SECTION 3.3 Transfer to Escrow Fund of Promus Hotel
---------------------------------------
Corporation. Pursuant to the written instructions of the Company, on the
- -----------
date set forth in such notice the Escrow Agent shall transfer to the escrow
fund of Promus Hotel Corporation established pursuant to the Escrow
Agreement between Promus Hotel Corporation and NationsBank the assets held
in the Escrow Fund that are designated in such instructions.
* * * * * * * * * * * * * * * * * * * * * * * * * * *
Executed as of this 7th day of June, 1995.
THE PROMUS COMPANIES NATIONSBANK
INCORPORATED
By: _________________________ By: __________________________
Title: _________________________ Title: __________________________
-2-
<PAGE>
CONSENT
-------
The signatories below, being "Participants" under the Escrow
Agreement dated as of February 6, 1990 (the "Escrow Agreement") and as
amended as of October 29, 1993, as the term "Participants" is defined
therein, and who together have at least 50 percent of all amounts accounted
for in the Escrow Agreement allocable to benefits payable to them, hereby
consent to the foregoing Amendment executed as of June 7, 1995, to the
Escrow Agreement.
___________________________ _____________________________
Michael D. Rose Philip G. Satre
___________________________ _____________________________
Ben C. Peternell Raymond E. Schultz
___________________________
Ronald A. Lenczycki
-3-
Exhibit 10(13)
THE PROMUS COMPANIES INCORPORATED
_____________, 1995
_________________________________
The Promus Companies Incorporated
1023 Cherry Road
Memphis, Tennessee 38117
Re: Severance Agreement
-------------------
Dear ___________________:
The Promus Companies Incorporated (the "Company") considers it
essential to the best interest of its stockholders to foster the continuous
employment of key management personnel. In this connection, the Board of
Directors of the Company (the "Board") recognizes that, as is the case with
many publicly held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members
of the Company's management, including yourself, to their assigned duties
without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control of the Company,
although no such change is now contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreements set forth in Subsection 2(b) hereof, the
Company agrees that you shall receive the severance benefits set forth in
this letter agreement ("this Agreement") in the event your employment with
the Company terminates subsequent to a "Change in Control of the Company"
(as defined in Section 2 hereof) under the circumstances described below.
1. Term of Agreement. This Agreement shall commence on _______, 1995
-----------------
and shall continue in effect through December 31, 19 ; provided, however,
--- -----------------
that commencing on January 1, 19 and each January 1 thereafter, the term
---
of this Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company
shall have given notice that it does not wish to extend this Agreement;
provided, further, if a Change in Control of the Company shall have
- -----------------
occurred during the original or extended term of this Agreement, this
Agreement shall automatically
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 2
continue in effect for a period of twenty-four months beyond the month in
which such Change in Control occurred.
2. Change in Control.
-----------------
(a) No benefit shall be payable to you hereunder unless there shall
have been a Change in Control of the Company, as set forth below. For
purposes of this Agreement, a "Change in Control of the Company" shall be
deemed to have occurred, subject to subparagraph (iv) hereof, if any of the
events in subparagraphs (i), (ii) or (iii) occur:
(i) Any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than an employee benefit plan of the Company,
or a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 25% or more of the Company's then outstanding voting securities
carrying the right to vote in elections of persons to the Board,
regardless of comparative voting power of such voting securities, and
regardless of whether or not the Board shall have approved such Change
in Control; or
(ii) During any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction
described in clauses (i) or (iii) of this Subsection) whose election
by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(iii) The holders of securities of the Company entitled to
vote thereon approve the following:
(A) A merger or consolidation of the Company with any other
corporation regardless of which entity is the surviving company,
other than a merger or consolidation which would result in the
voting securities of the Company carrying the right to vote in
elections of persons to the Board outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least 80% of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to
the Board, or such securities of such surviving entity
outstanding immediately after such merger or consolidation, or
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 3
(B) A plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(iv) Notwithstanding the definition of a "Change in Control" of
the Company as set forth in this Section 2(a), the Human Resources
Committee of the Board (the "Committee") shall have full and final
authority, which shall be exercised in its discretion, to determine
conclusively whether a Change in Control of the Company has occurred,
and the date of the occurrence of such Change in Control and any
incidental matters relating thereto, with respect to a transaction or
series of transactions which have resulted or will result in a
substantial portion of the assets or business of the Company (as
determined immediately prior to the transaction or series of
transactions by the Committee in its sole discretion which
determination shall be final and conclusive) being held by a
corporation at least 80% of whose voting securities are held,
immediately following such transaction or series of transactions, by
holders of the voting securities of the Company (determined
immediately prior to such transaction or series of transactions). The
Committee may exercise such discretionary authority without regard to
whether one or more of the transactions in such series of transactions
would otherwise constitute a Change in Control of the Company under
the definition set forth in this Section 2(a).
(b) For purposes of this Agreement, a "Potential Change in Control of
the Company" shall be deemed to have occurred if the following occur:
(i) The Company enters into an agreement or letter of intent,
the consummation of which would result in the occurrence of a Change
in Control of the Company;
(ii) Any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company;
(iii) Any person, other than an employee benefit plan of the
Company, or a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to the
Board increases his beneficial ownership of such securities by 5% or
more over the percentage so owned by such person on the date hereof;
or
(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the
Company has occurred.
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 4
You agree that, subject to the terms and conditions of this Agreement,
in the event of a Potential Change in Control of the Company, you will
remain in the employ of the Company (or the subsidiary thereof by which you
are employed at the date such Potential Change in Control occurs) until the
earliest of (x) a date which is six months from the occurrence of such
Potential Change in Control of the Company, (y) the termination by you of
your employment by reasons of Disability or Retirement (at your normal
retirement age), as defined in Subsection 3(i), or (z) the occurrence of a
Change in Control of the Company.
(c) Good Reason. For purposes of this Agreement, "Good Reason" shall
-----------
mean, without your express written consent, the occurrence after a Change
in Control of the Company of any of the following circumstances unless, in
the case of paragraphs (i), (v), (vi), (vii) or (viii), such circumstances
are fully corrected prior to the Date of Termination specified in the
Notice of Termination, as defined in Subsections 3(e) and 3(d),
respectively, given in respect thereof:
(i) The assignment to you of any duties inconsistent with your
status as an executive officer of the Company or a substantial adverse
alteration in the nature or status of your responsibilities from those
in effect immediately prior to the Change in Control of the Company;
(ii) A reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from time to
time except for across-the-board salary reductions similarly affecting
all executives of the Company and all executives of any person in
control of the Company;
(iii) The relocation of the Company's principal executive
offices where you are working immediately prior to the Change in
Control of the Company to a location more than 50 miles from the
location of such offices immediately prior to the Change in Control of
the Company or the Company's requiring you to be based anywhere other
than the location of the Company's principal executive offices where
you were working immediately prior to the Change in Control of the
Company except for required travel on the Company's business to an
extent substantially consistent with your present business travel
obligations;
(iv) The failure by the Company, without your consent, to pay to
you any portion of your current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all
executives of the Company and all executives of any person in control
of the Company, or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Company, within thirty days of the date such compensation is due;
(v) The failure by the Company to continue in effect any
compensation
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 5
plan in which you are participating immediately prior to the Change in
Control of the Company which is material to your total compensation,
including but not limited to, the Company's Bonus Plan, Executive
Deferred Compensation Plan, Restricted Stock Plan, or any substitute
plans adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company
to continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed immediately
prior to the Change in Control of the Company;
(vi) The failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of
the Company's pension, savings and retirement plan, life insurance,
medical, health and accident, or disability plans in which you were
participating at the time of the Change in Control of the Company, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any material
fringe benefit enjoyed by you at the time of the Change in Control of
the Company, or the failure by the Company to provide you with the
number of paid vacation days to which you are entitled on the basis of
years of service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the Change in Control
of the Company;
(vii) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof; or
(viii) Any purported termination of your employment by the
Company which is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection 3(d) hereof and the
requirements of Subsection 3(b) above; for purposes of this Agreement,
no such purported termination shall be effective.
Your right to terminate your employment pursuant to this Agreement for
Good Reason shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good
Reason hereunder.
3. Termination Following Change in Control. If any of the events
---------------------------------------
described in Subsection 2(a) hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits provided
in Subsection 4(c) hereof upon the subsequent termination of your
employment if such termination is (y) by the Company other than for Cause,
Retirement or Disability, or (z) by you for Good Reason.
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 6
(a) Disability; Retirement. If, as a result of your incapacity due
----------------------
to physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six consecutive
months, and within thirty days after written notice of termination is given
you shall not have returned to the full-time performance of your duties,
your employment may be terminated for "Disability". Termination by the
Company or you of your employment based on "Retirement" shall mean
termination at age 65 (or later) with ten years of service or retirement in
accordance with any retirement contract between the Company and you.
(b) Cause. Termination by the Company of your employment for "Cause"
-----
shall mean termination upon your engaging in willful and continued
misconduct, or your willful and continued failure to substantially perform
your duties with the Company (other than due to physical or mental
illness), if such failure or misconduct is materially damaging or
materially detrimental to the business and operations of the Company,
provided that you shall have received written notice of such failure or
- --------
misconduct and shall have continued to engage in such failure or misconduct
after 30 days following receipt of such notice from the Board, which notice
specifically identifies the manner in which the Board believes that you
have engaged in such failure or misconduct. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of failure to substantially perform
your duties or of misconduct in accordance with the first sentence of this
Subsection, and of continuing such failure to substantially perform your
duties or misconduct as aforesaid after notice from the Board, and
specifying the particulars thereof in detail.
(c) Voluntary Resignation. After a Change in Control of the Company
---------------------
and for purposes of receiving the benefits provided in Subsection 4(c)
hereof, you shall be entitled to terminate your employment by voluntary
resignation given at any time during the two years following the occurrence
of a Change in Control of the Company hereunder, provided such resignation
--------
is by you for Good Reason. Such resignation shall not be deemed a breach
of any employment contract between you and the Company.
(d) Notice of Termination. Any purported termination of your
---------------------
employment by the Company or by you shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 6
hereof. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 7
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(e) Date of Termination, Etc. "Date of Termination" shall mean:
------------------------
(i) If your employment is terminated for Disability, thirty days
after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such
thirty day period), and
(ii) If your employment is terminated pursuant to Subsection (b)
or (c) above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a
termination pursuant to Subsection (b) above shall not be less than
thirty days, and in the case of a termination pursuant to Subsection
(c) above shall not be less than fifteen nor more than sixty days,
respectively, from the date such Notice of Termination is given);
provided that if within fifteen days after any Notice of Termination is
- --------
given, or, if later, prior to the Date of Termination (as determined
without regard to this provision), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties,
by a binding arbitration award, or by a final judgment, order or decree of
a court of competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal has been
perfected); provided further that the Date of Termination shall be extended
----------------
by a notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay you your full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue you as a participant in all compensation,
bonus, benefit and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Subsection. Amounts paid under this
Subsection are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
4. Compensation Upon Termination or During Disability Following a
--------------------------------------------------------------
Change of Control. Following a Change in Control of the Company, as
- -----------------
defined in Subsection 2(a), upon termination of your employment or during a
period of Disability, you shall be entitled to the following benefits:
(a) During any period that you fail to perform your full-time duties
with the
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 8
Company as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to
you under the Company's Bonus Plan, Restricted Stock Plan, and other
incentive compensation plans during such period, until this Agreement is
terminated pursuant to Section 3(a) hereof. Thereafter, or in the event
your employment shall be terminated for Retirement, or by reason of your
death, your benefits shall be determined under the Company's retirement,
insurance and other compensation programs then in effect in accordance with
the terms of such programs, subject to Subsection 4(e) hereof.
(b) If your employment shall be terminated by the Company for Cause,
the Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation plan of the Company at the time such payments are due, and the
Company shall have no further obligations to you under this Agreement.
(c) If your employment by the Company shall be terminated (y) by the
Company other than for Cause, Retirement or Disability or (z) by you for
Good Reason, then you shall be entitled to the benefits provided below:
(i) The Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled
under any compensation or benefit plan of the Company, at the time
such payments are due;
(ii) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you a lump sum severance payment (the "Severance
Payment") equal to 2.99 times the average of the Annual Compensation
(as defined below) which was payable to you by the Company (including,
for periods prior to February 7, 1990, Holiday Corporation or its
affiliates) or any corporation affiliated with the Company within the
meaning of Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code"), for the five calendar years preceding the
calendar year in which the Change in Control occurred. Such average
shall be determined in accordance with proposed, temporary or final
regulations promulgated under Section 280G(d) of the Code, or, in the
absence of such regulations, if you were not employed by the Company
(including for this purpose Holiday Corporation or its affiliates for
periods prior to February 7, 1990) or its affiliates during the entire
five calendar years preceding the calendar year in which the Change in
Control occurred, then such average shall be an average of your Annual
Compensation for the complete calendar years (if any) and partial
calendar year (if any) during which you were so employed provided that
--------
the amount for any such partial calendar year shall be an annualized
amount based on the
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 9
amount of Annual Compensation paid to you during the partial calendar
year. If you were not employed by the Company or its affiliates or,
for periods prior to February 7, 1990, Holiday Corporation or its
affiliates during such preceding calendar year, then such average
shall be an annualized amount based on the amount of Annual
Compensation paid to you during the calendar year in which the Change
of Control occurred. Annual Compensation is your base salary and your
annual bonus under the Annual Management Bonus Plan of the Company
that was payable to you by the Company or any of its affiliates
(including for this purpose base salary and bonus payable to you by
Holiday Corporation or its affiliates for periods prior to February 7,
1990) that was payable to you during a calendar year determined
without any reduction for any deferrals of such salary or such bonus
under any deferred compensation plan (qualified or unqualified) and
without any reduction for any salary reductions used for making
contributions to any group insurance plan of the Company (including
for this purpose Holiday Corporation or its affiliates for periods
prior to February 7, 1990) or its affiliates.
(iii) The Company shall also pay to you the amounts of any
compensation or awards payable to you or due to you in respect of any
period preceding the Date of Termination under any incentive
compensation plan of the Company (including, without limitation, the
Company's Restricted Stock Plan and Stock Option Plan (the "Option
Plan") and under any agreements with you in connection therewith, and
shall make any other payments and take any other actions provided for
in such plans and agreements.
(iv) In lieu of shares of common stock of the Company ("Company
Shares") issuable upon exercise of outstanding options, if any
("Options") granted to you under the Option Plan (which Options shall
be cancelled upon the making of the payment referred to below), you
shall receive an amount in cash equal to the product of (y) the excess
of, the higher of the closing price of Company Shares as reported on
the New York Stock Exchange on or nearest the Date of Termination (or,
if not listed on such exchange, on a nationally recognized exchange or
quotation system on which trading volume in Company Shares is highest)
or the highest per share price for Company Shares actually paid in
connection with any change in control of the Company, over the per
share exercise price of each Option held by you (whether or not then
fully exercisable), times (z) the number of Company Shares covered by
each such option.
(v) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection with any
tax audit or proceeding to the extent attributable to the
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 10
application of Section 4999 of the Code to any payment or benefit
provided hereunder).
(vi) In the event that you become entitled to the payments (the
"Severance Payments") provided under paragraphs (ii), (iii), and (iv),
above (and Subsections (d) and (e), below), and if any of the
Severance Payments will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code, the Company shall pay to you at
the time specified in paragraph (vii), below, an additional amount
(the "Gross-Up Payment") such that the net amount retained by you,
after deduction of any Excise Tax on the Severance Payments and any
federal (and state and local) income tax and Excise Tax upon the
payment provided for by this paragraph, shall be equal to the amount
of the Severance Payments less any Excise Tax attributable to
Severance Payments in respect of those shares of restricted stock
granted to you in 1990 in connection with the merger of Holiday
Corporation with and into a subsidiary of Bass plc and which were
issued in substitution of shares of Holiday Corporation restricted
stock granted to you on or after November 11, 1986 in connection with
the 1987 recapitalization of Holiday Corporation (the "Excluded
Severance Payments"). For purposes of determining whether any of the
Severance Payments will be subject to the Excise Tax and the amount of
such Excise Tax the following will apply:
(A) Any other payments or benefits received or to be
received by you in connection with a Change in Control of the
Company or your termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such person) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code,
and all "excess parachute payments" within the meaning of Section
280G(b)(1) shall be treated as subject to the Excise Tax, unless
in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to you such other payments or
benefits (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of
the base amount within the meaning of Section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax;
(B) The amount of the Severance Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser
of (y) the total amount of the Severance Payments or (z) the
amount of excess parachute payments within the meaning of Section
280G(b)(1) (after applying clause (A), above); and
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 11
(C) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's
independent auditors in accordance with proposed, temporary or
final regulations under Sections 280G(d)(3) and (4) of the Code
or, in the absence of such regulations, in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of your residence on the Date of Termination,
net of the maximum reduction in Federal income taxes which could
be obtained from deduction of such state and local taxes. In the
event that the amount of Excise Tax attributable to Severance
Payments other than the Excluded Severance Payment is
subsequently determined to be less than the amount taken into
account hereunder at the time of termination of your employment,
you shall repay to the Company at the time that the amount of
such reduction in Excise Tax is finally determined the portion of
the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax
and Federal (and state and local) income tax imposed on the
Gross-Up Payment being repaid by you if such repayment results in
a reduction in Excise Tax and/or a Federal (and state and local)
income tax deduction) plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax attributable to Severance
Payments other than the Excluded Severance Payment is determined
to exceed the amount taken into account hereunder at the time of
the termination of your employment (including by reason of any
payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an
additional gross-up payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that
the amount of such excess is finally determined.
(vii) The payments provided for in paragraphs (ii), (iii),
(iv) and (vi) above, shall be made not later than the fifth day
following the Date of Termination, provided, however, that if the
-------- -------
amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later
than the thirtieth day after the Date of Termination. In the event
that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute
a
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 12
loan by the Company to you payable on the fifth day after demand by
the Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(d) If your employment shall be terminated (y) by the Company other
than for Cause, Retirement or Disability or (z) by you voluntarily for Good
Reason, then for a twenty-four month period after such termination, the
Company shall arrange to provide you with life, disability, accident and
health insurance benefits substantially similar to those which you are
receiving immediately prior to the Notice of Termination. Benefits
otherwise receivable by you pursuant to this Subsection 4(d) shall be
reduced to the extent comparable benefits are actually received by you
during the twenty-four month period following your termination, and any
such benefits actually received by you shall be reported to the Company.
(e) In the event a Change in Control of the Company occurs after you
and the Company have entered into any retirement agreement including an
agreement providing for early retirement, then the present value, computed
using a discount rate of 8% per annum, of the total amount of all unpaid
deferred payments as payable to you in accordance with the payment schedule
that you elected when the deferral was agreed to and using the plan
interest rate applicable to your situation, or other payments payable or to
become payable to you or your estate or beneficiary under such retirement
agreement (other than payments payable pursuant to a plan qualified under
Section 401(a) of the Internal Revenue Code) including, without limitation,
any unpaid deferred payments under the Company's Executive Deferred
Compensation Plan and the Company's other deferred compensation plans shall
be paid to you (or your estate or beneficiary if applicable) in cash within
five business days after the occurrence of the Change in Control of the
Company. If you and the Company or its affiliates have executed a
retirement agreement and if the Change in Control of the Company occurs
before the effective date of your retirement, then you shall receive the
Severance Payment payable under Subsection 4(c)(ii) herein in addition to
the present value of your unpaid deferred retirement payments and other
payments under the retirement agreement as aforesaid. All other benefits
to which you or your estate or any beneficiary are entitled under such
retirement agreement shall continue in effect notwithstanding the Change in
Control of the Company. This Subsection 4(e) shall survive your
retirement.
(f) Notwithstanding that a Change in Control shall not have yet
occurred, if you so elect, by written notice to the Company given at any
time after the date hereof and prior to the time such amounts are otherwise
payable to you:
(i) The Company shall deposit with an escrow agent, pursuant to
an escrow agreement between the Company and such escrow agent, a sum
of money, or other property permitted by such escrow agreement,
sufficient in the opinion of the Company's management to fund payment
of the following amounts to you, as such amounts become payable:
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 13
(A) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate under the Company's Executive
Deferred Compensation Plan and under any agreements related
thereto in existence at the time of your election to make the
deposit into escrow.
(B) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate by reason of your deferral of
payments payable to you prior to the date of your election to
make the deposit into escrow under any other deferred
compensation agreements between you and the Company in existence
at the time of your election to make the deposit into escrow,
including but not limited to deferred compensation agreements
relating to the deferral of salary or bonuses.
(C) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate under any agreement relating to
your retirement from the Company (including payments described
under Subsection 4(e) above) which agreement is in existence at
the time of your election to make the deposit into escrow, other
than amounts payable by a plan qualified under Section 401(a) of
the Code.
(D) Subject to the approval of the Committee, amounts then
due and payable to you, but not yet paid, under any other benefit
plan or incentive compensation plan of the Company (whether such
amounts are stock or cash) other than amounts payable to you
under a plan qualified under Section 401(a) of the Code.
(ii) Upon the occurrence of a Potential Change of Control, the
Company shall deposit with an escrow agent (which shall be the same
escrow agent, if one exists, acting pursuant to clause (i) of this
Subsection 4(f)), pursuant to an escrow agreement between the Company
and such escrow agent, a sum of money, or other property permitted by
such escrow agreement, sufficient in the opinion of Company management
to fund the payment to you of the amounts specified in Subsection 4(c)
of this Agreement.
(iii) It is intended that any amounts deposited in escrow
pursuant to the provisions of clause (i) or (ii) of this Subsection
4(f), be subject to the claims of the Company's creditors, as set
forth in the form of such escrow agreement.
(g) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer, by retirement benefits, by offset
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 14
against any amount claimed to be owed by you to the Company, or otherwise
(except as specifically provided in this Section 4).
(h) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits payable to you
under any benefit plan of the Company in which you participate to the
extent such benefits are not paid under this Agreement.
5. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation
from the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment voluntarily for Good
Reason following a Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If you should die
while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For the purpose of this Agreement, notices and all other
------
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to
the Secretary of the Company, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified,
-------------
waived or
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 15
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in
this Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Delaware.
All references to sections of the Exchange Act or the Code shall be deemed
also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of the Company
under Section 4 shall survive the expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability of any provision of
--------
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
-----------
connection with this Agreement shall be settled exclusively by arbitration
in Memphis, Tennessee in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that you shall be entitled to seek specific performance of your right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
11. Similar Provisions in Other Agreement. The Severance Payment
-------------------------------------
under this Agreement supersedes and replaces any other severance payment to
which you may be entitled under any previous agreement between you and the
Company (including for this purpose Holiday Corporation or its affiliates)
or its affiliates.
<PAGE>
[Name of Executive]
, 1995
- ----------------
Page 16
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our binding agreement on this subject.
Very truly yours,
THE PROMUS COMPANIES
INCORPORATED
BY:_________________________
Name:
Title:
Agreed to as of this _____ day
of , 1995.
-------------------------
____________________________
[Name of Executive]
Exhibit 99(1)
Ralph Berry, The Promus Companies
(901) 762-8629
PROMUS ANNOUNCES THE SATISFACTION OF
------------------------------------
CONDITION TO SPIN-OFF HOTEL BUSINESS
------------------------------------
MEMPHIS, June 14, 1995 -- The Promus Companies Incorporated
(NYSE:PRI) today announced the satisfaction of the final
conditions to the spin-off of its wholly-owned subsidiary, Promus
Hotel Corporation (NYSE:PRH).
On May 26, 1995, stockholders of Promus approved the spin-
off and Promus' Board of Directors declared a dividend of shares
of Promus Hotel conditioned upon the occurrence of certain events
prior to June 19, 1995. The Executive Committee of Promus' Board
has determined that all necessary events have occurred and that
the conditions to the dividend have been satisfied: First, the
gaming regulatory authorities of the State on New Jersey approved
the spin-off on May 31, 1995. Second, the holders of a majority
of the outstanding aggregate principal amount of each of the 10
7/8 percent Senior Subordinated Notes due 2002 and the 8 3/4
percent Senior Subordinated Notes due 2000 of Embassy Suites,
Inc. consented to certain indenture amendments to permit the
spin-off. Third, on June 7, 1995, Promus, Embassy and Promus
Hotel entered into Credit Agreement with NationsBank, N.A.
(Carolinas) and NationsBanc Capital Market, Inc. to provide
Promus Hotel with financing of up to $350 millon. Fourth, all
other material third party consents have been received.
Stockholders will receive one share of the new hotel company
for each two shares of The Promus Companies owned on June 21,
1995, the record date for the dividend, The Promus Hotel shares
will be distributed on June 30, 1995, and, on that date The
Promus Companies will change its name it Harrah's Entertainment,
Inc. (NYSE:HET). It is currently anticipated that the Promus
Hotel common stock and the Harrah's Entertainment common stock
(ex-distribution) will each begin trading on a "when-issued"
basis on the New York Stock Exchange on or before June 19, 1995.