<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1998
REGISTRATION NO. 333-__________
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
HARRAH'S ENTERTAINMENT, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7993 62-1411755
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
1023 CHERRY ROAD
MEMPHIS, TENNESSEE 38117
(901) 762-8600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
HARRAH'S OPERATING COMPANY, INC.
(Exact name of Registrant as specified in governing instruments)
<TABLE>
<S> <C> <C>
DELAWARE 7993 75-1941623
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
1023 CHERRY ROAD
MEMPHIS, TENNESSEE 38117
(901) 762-8600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
<TABLE>
<S> <C>
COPY TO:
Edward Sonnenschein, Jr., Esq.
E.O. Robinson, Jr., Esq. David M. Hernand, Esq.
General Counsel Latham & Watkins
Harrah's Entertainment, Inc. 633 West Fifth Street, Suite 4000
1023 Cherry Road Los Angeles, California 90071-2007
Memphis, Tennessee 38117 (213) 485-1234
(901) 762-8600
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective as determined by
market conditions and other factors.
--------------------------
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING
SECURITIES TO BE REGISTERED PRICE(1)
<S> <C>
Debt securities of Harrah's Operating Company, Inc. ("HOC")..................................
Guarantees by Harrah's Entertainment, Inc. of the debt securities of HOC (2).................
Total.................................................................................. $750,000,000
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Debt securities of Harrah's Operating Company, Inc. ("HOC")..................................
Guarantees by Harrah's Entertainment, Inc. of the debt securities of HOC (2).................
Total.................................................................................. $208,500(3)
</TABLE>
(1) Or, if any debt securities are issued at an original issue discount, such
greater principal amount as shall result in an aggregate offering price
equal to $750,000,000.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is
payable for the Guarantees.
(3) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933, as amended.
----------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 18, 1998
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
HARRAH'S OPERATING COMPANY, INC.
DEBT SECURITIES
PAYMENT OF PRINCIPAL, INTEREST AND PREMIUM, IF ANY, GUARANTEED BY
HARRAH'S ENTERTAINMENT, INC.
Harrah's Operating Company, Inc. may from time to time sell up to
$750,000,000 aggregate initial offering price of debt securities, consisting of
debentures, notes or other types of debt. Harrah's Entertainment, Inc. will
guarantee the payment of all obligations of Harrah's Operating Company, Inc.
under any of these debt securities. Harrah's Operating and Harrah's
Entertainment will provide specific terms of the debt securities and related
guarantee in supplements to this prospectus. You should read this prospectus and
any supplement carefully before you invest.
------------------------
THE SECURITIES AND EXCHANGE COMMISSION, STATE SECURITIES REGULATORS AND
GAMING REGULATORY AUTHORITIES HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES,
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this prospectus is ___________________, 1998
<PAGE>
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE
DATE ON THE FRONT OF THOSE DOCUMENTS REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT OR A SALE OF THE DEBT
SECURITIES. YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT. WE HAVE
NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE
OFFERING THE DEBT SECURITIES AND SEEKING OFFERS TO BUY THE DEBT SECURITIES ONLY
IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
About this Prospectus.................................................................. 2
Where You Can Find More Information.................................................... 3
Disclosure Regarding Forward-Looking Statements........................................ 4
The Company............................................................................ 5
Ratio of Earnings to Fixed Charges..................................................... 5
Use of Proceeds........................................................................ 6
Description of the Debt Securities..................................................... 6
Plan of Distribution................................................................... 16
Legal Matters.......................................................................... 17
Experts................................................................................ 17
</TABLE>
ABOUT THIS PROSPECTUS
IN THIS PROSPECTUS, THE WORDS "COMPANY," "HARRAH'S," "WE," "OUR," "OURS,"
AND "US" REFER TO HARRAH'S ENTERTAINMENT, INC., A DELAWARE CORPORATION
("HARRAH'S ENTERTAINMENT"), AND ITS WHOLLY OWNED SUBSIDIARY, HARRAH'S OPERATING
COMPANY, INC., A DELAWARE CORPORATION ("HARRAH'S OPERATING"), UNLESS OTHERWISE
STATED OR THE CONTEXT OTHERWISE REQUIRES.
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "Commission") utilizing a "shelf"
registration process. Under this shelf registration process, we may sell any
combination of the debt securities (and related guarantees) described in this
prospectus in one or more offerings up to a total dollar amount of $750,000,000.
This prospectus provides you with a general description of the securities we may
offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the next heading
"Where You Can Find More Information."
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any document we file at
the Commission's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330
(1-800-732-0330) for further information on the public reference rooms. You can
also obtain copies of these materials from the public reference section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission (http://www.sec.gov). You also may read and
copy reports and other information we file at the office of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
We have filed a registration statement and related exhibits with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
The registration statement contains additional information about us and the debt
securities. You may inspect the registration statement and its exhibits without
charge at the office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and you may obtain copies from the Commission at prescribed rates.
The Commission allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended ("the Exchange Act"):
- Annual Report on Form 10-K for the year ended December 31, 1997;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June
30, 1998 and September 30, 1998;
- Proxy Statement on Schedule 14A dated October 15, 1998; and
- Current Reports on Form 8-K dated June 1, 1998, August 9, 1998, September
4, 1998, October 21, 1998 and December 4, 1998 and on Form 8-K/A dated
June 1, 1998.
You may request a free copy of these filings by writing or telephoning us at
the following address:
Attention: Corporate Secretary
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
(901) 762-8600
3
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. Although we believe
that our plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, we can give no assurance that such
plans, intentions or expectations will be achieved. These forward-looking
statements are subject to risks, uncertainties and assumptions about us,
including those discussed elsewhere in the documents that are incorporated by
reference into this prospectus and the following, any of which could affect our
future results and could cause results to differ materially from those expressed
in such forward-looking statements:
- the effect of economic, credit and capital market conditions;
- our construction and development activities;
- the ability of Harrah's and Rio Hotel & Casino, Inc. to complete their
merger and successfully integrate their operations;
- the impact of competition;
- changes in laws or regulations, third party relations and approvals,
decisions of courts, regulators and governmental bodies; and
- changes in customer demand.
THE COMPANY
We are one of the leading casino entertainment companies in the United
States, operating in more markets than any other casino company and offering a
Harrah's casino experience within a three-hour drive of one-third of the U.S.
population. Our U.S. operations currently include eight land-based casinos,
seven riverboat or dockside casinos, and three casinos on Indian reservations.
We also own a partial interest in and manage a land-based casino in Sydney,
Australia and own a non-controlling interest in and will manage the only
land-based casino in New Orleans, Louisiana upon its anticipated completion in
late October 1999. In addition, completion of our pending merger with Rio Hotel
& Casino, Inc. (expected to close on January 1, 1999) will add a profitable,
premier Las Vegas destination resort with a unique level of service, strong
brand name, and distinct customer base to our existing national distribution of
casino offerings. Harrah's Entertainment is a holding company, the principal
asset of which is the capital stock of Harrah's Operating. Harrah's Operating
directly owns certain of the assets and directly and indirectly owns the stock
of certain subsidiaries which operate our business.
Our principal executive offices are located at 1023 Cherry Road, Memphis,
Tennessee 38117, and our telephone number is (901) 762-8600.
RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges for the periods
indicated were as follows (unaudited):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED -----------------------------------------------------
SEPTEMBER 30, 1998 1997 1996 1995 1994 1993
- ----------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
2.8x 2.8x 2.8x 1.3x 2.0x 2.6x
</TABLE>
For purposes of computing this ratio, "earnings" consist of:
- income before income taxes, plus
- fixed charges (excluding capitalized interest) and
4
<PAGE>
- minority interests (relating to subsidiaries whose fixed charges are
included in the computation), less
- equity in undistributed earnings of less than 50% owned investments.
"Fixed charges" include:
- interest (whether expensed or capitalized),
- amortization of debt expense,
- discount or premium related to indebtedness, and
- the portion of rental expense that we deem to be representative of
interest.
As required by the rules which govern the computation of this ratio, both
earnings and fixed charges are adjusted where appropriate to include the
financial results for the Company's nonconsolidated majority-owned subsidiaries.
Accordingly, the 1994 and 1995 periods have been adjusted to include the
financial results and fixed charges of Harrah's Jazz Company. For the nine
months ended September 30, 1998, the computation of the ratio has been adjusted
to include the financial results and fixed charges of Showboat Marina Casino
Partnership.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of any series of the debt
securities for general corporate purposes or other purposes specified in the
applicable prospectus supplement. Such general corporate purposes may include
acquisitions, capital expenditures and working capital requirements, as well as
the repayment, redemption or repurchase of outstanding indebtedness. We will
describe in the prospectus supplement any indebtedness we intend to refinance
with the net proceeds received from the sale of any series of debt securities.
DESCRIPTION OF THE DEBT SECURITIES
This prospectus describes the general terms and provisions of our debt
securities. When we offer to sell a particular series of debt securities, we
will describe the specific terms of the series in a supplement to this
prospectus. We also will indicate in the supplement whether the general terms
and provisions described in this prospectus apply to a particular series of debt
securities.
The debt securities will be issued under an indenture between Harrah's
Operating, as obligor, Harrah's Entertainment, as guarantor, and IBJ Schroder
Bank & Trust Company, as trustee. We have summarized select portions of the
indenture below. The summary is not complete. The indenture is attached as an
exhibit to the registration statement and is incorporated by reference into this
prospectus. You should read the indenture for provisions that may be important
to you. The indenture is subject to and also includes terms incorporated from
the Trust Indenture Act of 1939, as amended. Capitalized terms used and not
otherwise defined in this summary have the meaning specified in the indenture.
GENERAL
The terms of each series of debt securities will be established from time to
time by or pursuant to a resolution of the Board of Directors of Harrah's
Operating or by a supplemental indenture. The particular terms of each series of
debt securities will be described in a prospectus supplement relating to such
series (including any pricing supplement). Unless otherwise provided in a
supplemental indenture, Harrah's Operating will be able to issue additional debt
securities of a particular series from time to time without obtaining the
consent of holders of previously issued debt securities of the same series.
5
<PAGE>
There may be more than one trustee with respect to one or more series of
debt securities. Any trustee under the indenture may resign or be removed with
respect to one or more series of debt securities, and a successor trustee may be
appointed to act with respect to such series. In the event that two or more
persons are acting as trustees with respect to different series of debt
securities, each such trustee shall be a trustee of a trust under the indenture
separate and apart from the trust administered by any other trustee thereunder,
and, except as otherwise indicated herein, any action described herein to be
taken by the trustee may be taken by each such trustee with respect to, and only
with respect to, the one or more series of debt securities for which it is
trustee under the indenture.
Harrah's Operating can issue an unlimited amount of debt securities under
the indenture that may be in one or more series with the same or various
maturities, at par, at a premium, or at a discount. We will set forth in a
prospectus supplement (including any pricing supplement) relating to any series
of debt securities being offered, the aggregate principal amount and the
following terms of the debt securities:
- the title of the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the price or prices (expressed as a percentage of the aggregate principal
amount) at which we will sell the debt securities;
- the date or dates on which Harrah's Operating will pay the principal on
the debt securities (or the method by which such date or dates will be
determined);
- the rate or rates (which may be fixed or variable) per annum or the method
used to determine the rate or rates (including any commodity, commodity
index, stock exchange index or financial index) at which the debt
securities will bear interest, the date or dates from which the interest
will accrue, and the circumstances, if any, in which Harrah's Operating
may defer interest payments, the dates on which the interest shall be
payable and the record date for the interest payable on any interest
payment date;
- the place or places where principal, premium and interest on the debt
securities will be payable (or the method of such payment) and the debt
securities may be surrendered for transfer or exchange;
- any obligation of Harrah's Operating to redeem or purchase the debt
securities pursuant to any sinking fund or analogous provisions or at the
option of a holder of debt securities;
- the terms and conditions upon which Harrah's Operating may redeem the debt
securities;
- the denominations in which the debt securities will be issued, if other
than denominations of $1,000 and any integral multiple thereof;
- whether the debt securities will be issued at a discount;
- the portion of principal amount of the debt securities payable upon
declaration of acceleration of the maturity date, if other than the
principal amount;
- any provisions for the defeasance or discharge of certain obligations with
respect to the debt securities, which may add to, substitute for or modify
(or any combination of the foregoing) the provisions of the indenture;
- whether the debt securities will be in registered or bearer form;
- the designation of the currency, currencies or currency units in which
payments of principal, premium and interest on the debt securities will be
made;
- the currency of denomination of the debt securities;
6
<PAGE>
- if payments of principal, premium or interest on the debt securities will
be made in one or more currencies or currency units other than that or
those in which the debt securities are denominated, the manner in which
the exchange rate with respect to these payments will be determined;
- the manner in which the amounts of payment of principal, premium or
interest on the debt securities will be determined, if these amounts may
be determined by reference to an index based on a currency or currencies
other than that in which the debt securities are denominated or designated
to be payable or by reference to a commodity, commodity index, stock
exchange index or financial index;
- any addition to or change in the Events of Default described in this
prospectus or in the indenture with respect to the debt securities and any
change in the acceleration provisions described in this prospectus or in
the indenture with respect to the debt securities;
- any depositaries, interest rate calculation agents, exchange rate
calculation agents or other agents with respect to the debt securities;
- whether the debt securities will be issued in the form of certificated
debt securities or global debt securities and whether such global debt
securities will be issuable in temporary or permanent global form;
- any terms on which the debt securities (and related guarantees) will be
subordinate to other debt of Harrah's Operating or Harrah's Entertainment,
as the case may be;
- any provisions relating to any security provided for the debt securities;
- any listing of the debt securities on a securities exchange;
- any addition to or change in the covenants described in this prospectus or
in the indenture with respect to the debt securities; and
- any other terms of the debt securities, which may modify or delete any
provision of the indenture as it applies to that series.
Harrah's Operating may issue debt securities that provide for an amount less
than their stated principal amount to be due and payable upon declaration of
acceleration of their maturity pursuant to the terms of the indenture. We will
provide you with information on the federal income tax considerations and other
special considerations applicable to any of these debt securities in the
applicable prospectus supplement.
If we denominate the purchase price of any of the debt securities in a
foreign currency or currencies or a foreign currency unit or units, or if the
principal of and any premium and interest on any series of debt securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
we will provide you with information on the restrictions, elections, general tax
considerations, specific terms and other information with respect to that issue
of debt securities and such foreign currency or currencies or foreign currency
unit or units in the applicable prospectus supplement. In addition, special
United States federal tax considerations or other restrictions or terms
applicable to any debt securities issuable in bearer form or offered exclusively
to foreigners will be set forth in the applicable prospectus supplement.
GUARANTEE OF THE DEBT SECURITIES
Harrah's Entertainment irrevocably and unconditionally will guarantee the
payment of all obligations of Harrah's Operating under the debt securities. If
Harrah's Operating defaults in the payment of the principal of, premium, if any,
or interest on the debt securities when and as the same shall become due,
whether upon maturity, acceleration, call for redemption or otherwise, without
the necessity of
7
<PAGE>
action by the trustee or any holder of the debt securities, Harrah's
Entertainment shall be required promptly and fully to make such payment. The
indenture releases Harrah's Entertainment as guarantor of the debt securities in
certain circumstances, including circumstances in which:
- Harrah's Operating ceases to be a wholly owned subsidiary of Harrah's
Entertainment, or
- Harrah's Operating transfers all or substantially all of its assets to, or
merges with, another entity in a transaction governed by the "Merger,
Consolidation or Sale of Assets" covenant in the indenture, and (x) such
transferee entity assumes Harrah's Operating's obligations under the
indenture and (y) such transfer or merger otherwise complies with the
requirements of such covenant.
Harrah's Entertainment conducts substantially all of its business through
Harrah's Operating and subsidiaries of Harrah's Operating and does not own any
material assets other than all of the capital stock of Harrah's Operating. As
such, Harrah's Entertainment is dependent on the receipt of dividends or other
payments from Harrah's Operating to make payments on the guarantee of the debt
securities. Harrah's Entertainment's obligations under the guarantee with
respect to any particular series of debt securities are as a secondary obligor,
and such obligations will be subordinated to all present and future senior
indebtedness of Harrah's Entertainment on the same basis as debt securities of
that series are subordinated to senior indebtedness of Harrah's Operating.
8
<PAGE>
TRANSFER AND EXCHANGE
Each debt security will be represented by one or more global securities
registered in the name of The Depository Trust Company, as Depositary (the
"Depositary"), or a nominee (we will refer to any debt security represented by a
global debt security as a "book-entry debt security"), or a certificate issued
in definitive registered form (we will refer to any debt security represented by
a certificated security as a "certificated debt security") as set forth in the
applicable prospectus supplement. Except as set forth under the heading "Global
Debt Securities and Book-Entry System" below, book-entry debt securities will
not be issuable in certificated form.
CERTIFICATED DEBT SECURITIES. You may transfer or exchange certificated
debt securities at any office we maintain for this purpose in accordance with
the terms of the indenture. No service charge will be made for any transfer or
exchange of certificated debt securities, but we may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with a transfer or exchange.
You may effect the transfer of certificated debt securities and the right to
receive the principal of, premium and interest on certificated debt securities
only by surrendering the certificate representing those certificated debt
securities and either reissuance by Harrah's Operating or the trustee of the
certificate to the new holder or the issuance by Harrah's Operating or the
trustee of a new certificate to the new holder.
GLOBAL DEBT SECURITIES AND BOOK-ENTRY SYSTEM. Each global debt security
representing book-entry debt securities will be deposited with, or on behalf of,
the Depositary, and registered in the name of the Depositary or a nominee of the
Depositary.
The Depositary has indicated it intends to follow the following procedures
with respect to book-entry debt securities.
Ownership of beneficial interests in book-entry debt securities will be
limited to persons that have accounts with the Depositary for the related global
debt security ("participants") or persons that may hold interests through
participants. Upon the issuance of a global debt security, the Depositary will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the book-entry debt securities
represented by such global debt security beneficially owned by such
participants. The accounts to be credited will be designated by any dealers,
underwriters or agents participating in the distribution of the book-entry debt
securities. Ownership of book-entry debt securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depositary for the related global debt security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to own,
transfer or pledge beneficial interests in book-entry debt securities.
So long as the Depositary for a global debt security, or its nominee, is the
registered owner of that global debt security, the Depositary or its nominee, as
the case may be, will be considered the sole owner or holder of the book-entry
debt securities represented by such global debt security for all purposes under
the indenture. Except as described below, beneficial owners of book-entry debt
securities will not be entitled to have securities registered in their names,
will not receive or be entitled to receive physical delivery of a certificate in
definitive form representing securities and will not be considered the owners or
holders of those securities under the indenture. Accordingly, each person
beneficially owning book-entry debt securities must rely on the procedures of
the Depositary for the related global debt security and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the indenture.
9
<PAGE>
We understand, however, that under existing industry practice, the
Depositary will authorize the persons on whose behalf it holds a global debt
security to exercise certain rights of holders of debt securities, and the
indenture provides that Harrah's Operating, the trustee and our respective
agents will treat as the holder of a debt security the persons specified in a
written statement of the Depositary with respect to that global debt security
for purposes of obtaining any consents or directions required to be given by
holders of the debt securities pursuant to the indenture.
Harrah's Operating will make payments of principal of, and premium and
interest on book-entry debt securities to the Depositary or its nominee, as the
case may be, as the registered holder of the related global debt security. None
of Harrah's Operating, Harrah's Entertainment, the trustee or any other agent of
ours or agent of the trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in a global debt security or for maintaining, supervising or
reviewing any records relating to beneficial ownership interests.
We expect that the Depositary, upon receipt of any payment of principal of,
premium or interest on a global debt security, will immediately credit
participants' accounts with payments in amounts proportionate to the respective
amounts of book-entry debt securities held by each participant as shown on the
records of such Depositary. We also expect that payments by participants to
owners of beneficial interests in book-entry debt securities held through those
participants will be governed by standing customer instructions and customary
practices, as is now the case with the securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of those participants.
Harrah's Operating will issue certificated debt securities in exchange for
each global debt security if the Depositary is at any time unwilling or unable
to continue as Depositary or ceases to be a clearing agency registered under the
Exchange Act, and a successor Depositary registered as a clearing agency under
the Exchange Act is not appointed by us within 90 days. In addition, Harrah's
Operating may at any time and in its sole discretion determine not to have the
book-entry debt securities of any series represented by one or more global debt
securities and, in that event, will issue certificated debt securities in
exchange for the global debt securities of that series. Global debt securities
will also be exchangeable by the holders for certificated debt securities if an
Event of Default with respect to the book-entry debt securities represented by
those global debt securities has occurred and is continuing. Any certificated
debt securities issued in exchange for a global debt security will be registered
in such name or names as the Depositary shall instruct the trustee. We expect
that such instructions will be based upon directions received by the Depositary
from participants with respect to ownership of book-entry debt securities
relating to such global debt security.
We have obtained the foregoing information concerning the Depositary and the
Depositary's book-entry system from sources we believe to be reliable, but we
take no responsibility for the accuracy of this information.
NO PROTECTION IN THE EVENT OF A CHANGE OF CONTROL
Unless we state otherwise in the applicable prospectus supplement, the debt
securities will not contain any provisions which may afford holders of the debt
securities protection in the event either Harrah's Operating or Harrah's
Entertainment has a change of control or in the event of a highly leveraged
transaction (whether or not such transaction results in a change in control)
which could adversely affect holders of debt securities.
COVENANTS
We will set forth in the applicable prospectus supplement any restrictive
covenants applicable to any issue of debt securities.
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MERGER, CONSOLIDATION OR SALE OF ASSETS
Neither Harrah's Operating nor Harrah's Entertainment may consolidate with
or merge with or into, or convey, transfer or lease all or substantially all of
its properties and assets to another corporation, person or entity unless:
- (i) in the case of a merger or consolidation, Harrah's Operating or
Harrah's Entertainment, as the case may be, is the surviving person, or
(ii) the successor or transferee is a corporation organized under the laws
of any U.S. domestic jurisdiction and expressly assumes, by supplemental
indenture, our obligations under the debt securities and the indenture;
and
- immediately after giving effect to the transaction, no default or Event of
Default shall exist under the indenture.
EVENTS OF DEFAULT
"Event of Default" means with respect to any series of debt securities, any
of the following:
- failure to pay principal of any debt security of that series when due and
payable at maturity, upon redemption or otherwise or failure to deposit a
sinking fund payment when and as due in respect of any debt security of
that series;
- failure to pay any interest on any debt security of that series when due,
and such default continues for 30 days;
- default in the performance or breach of any other covenant or warranty of
Harrah's Operating or Harrah's Entertainment in the indenture (other than
a covenant or warranty that has been included in the indenture solely for
the benefit of a series of debt securities other than that series), which
default continues uncured for a period of 60 days after Harrah's Operating
receives written notice from the trustee or Harrah's Operating and the
trustee receive written notice from the holders of at least 25% in
principal amount of the outstanding debt securities of that series as
provided in the indenture;
- certain events of bankruptcy, insolvency or reorganization;
- the acceleration of the maturity of any indebtedness of Harrah's Operating
(other than Non-recourse Indebtedness), at any one time, in an amount in
excess of the greater of (i) $25 million and (ii) 5% of the Consolidated
Net Tangible Assets, if such acceleration is not annulled within 30 days
after Harrah's Operating receives written notice from the trustee and the
holders of at least 25% in principal amount of the outstanding debt
securities of the affected series; and
- any other Event of Default provided with respect to debt securities of the
series that is described in the applicable prospectus supplement.
"Non-recourse Indebtedness" means indebtedness with terms providing that the
lender's claim for repayment of that indebtedness is limited solely to a claim
against the property that secures the indebtedness.
"Consolidated Net Tangible Assets" means the total amount of assets
(including investments in joint ventures) of Harrah's Operating and its
subsidiaries (less applicable depreciation, amortization and other valuation
reserves) after deducting therefrom:
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- all of Harrah's Operating's and its subsidiaries' current liabilities
(excluding (i) the current portion of long-term indebtedness, (ii)
intercompany liabilities and (iii) any liabilities which are by their
terms renewable or extendable at the option of the obligor to a time more
than 12 months from the time as of which the amount thereof is being
computed); and
- all goodwill, trade names, trademarks, patents, unamortized debt discount
and any other like intangibles, all as set forth on the consolidated
balance sheet of Harrah's Operating for the most recently completed fiscal
quarter for which financial statements are available and computed in
accordance with generally accepted accounting principles.
If an Event of Default with respect to debt securities of any series (other
than an Event or Default relating to certain events of bankruptcy, insolvency or
reorganization) occurs and is continuing, either the trustee or the holders of
at least 25% in principal amount of the outstanding debt securities of that
series may, by a notice as provided in the indenture, declare the unpaid
principal amount (or, if the debt securities of that series are discount
securities, such lesser amount as may be specified in the terms of that series)
of, and any accrued and unpaid interest on, all debt securities of that series
to be due and payable immediately. However, at any time after a declaration of
acceleration with respect to debt securities of any series has been made, but
before the trustee obtains a judgment or decree based on that acceleration, the
holders of a majority in principal amount of the outstanding debt securities of
that series may, under certain circumstances, rescind and annul that
acceleration. For information regarding waiver of defaults, see "Modification
and Waiver" below.
The indenture will provide that, subject to the trustee's duty to act with
the required standard of care during an Event of Default, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any of the holders, unless such holders offer the trustee
reasonable security or indemnity. Subject to certain provisions of the
indenture, including those entitling the trustee to receive security and
indemnification, the holders of a majority in principal amount of the
outstanding debt securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee or exercising any trust or power conferred on the trustee with
respect to the debt securities of that series.
The indenture requires that we furnish annually to the trustee a statement
as to our performance of our obligations under the indenture and as to any
default in such performance.
MODIFICATION AND WAIVER
We generally may amend the indenture or the debt securities with the written
consent of the holders of a majority in principal amount of the outstanding debt
securities of each series affected by the amendment, with each series voting as
a separate class. The holders of a majority in principal amount of the
outstanding debt securities of any series may also waive our compliance in a
particular instance with any provision of the indenture with respect to the debt
securities of that series. We must obtain the consent of each holder of debt
securities affected by a particular amendment or waiver, however, if such
amendment or waiver:
- reduces the percentage of the principal amount of debt securities whose
holders must consent to an amendment or waiver;
- reduces the rate of or changes the time for payment of interest (including
default interest) on any debt security;
- reduces the principal of or premium on, or changes the fixed maturity of,
any debt security or reduces the amount of, or postpones the date fixed
for, redemption or the payment of any sinking fund or analogous obligation
with respect to any series of debt securities;
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- reduces the principal amount of discount securities payable upon
acceleration of maturity;
- makes the principal of or premium or interest on any debt security payable
in currency other than that stated in the debt security;
- makes any change to provisions of the indenture concerning waivers of
defaults or Events of Default by holders or the rights of holders of debt
securities to recover the principal of, premium or interest on those debt
securities; or
- waives a default in the payment of the principal of or interest on any
debt security, except as otherwise provided in the indenture.
We may amend the indenture or the debt securities without notice to or the
consent of any holder of a debt security:
- to cure any ambiguity, defect or inconsistency;
- to comply with the indenture's provisions with respect to successor
corporations;
- to comply with any requirements of the Commission in connection with the
qualification of the indenture under the Trust Indenture Act of 1939, as
amended;
- to provide for certificated or unregistered debt securities and to make
all appropriate changes for such purpose;
- to add to, change or eliminate any of the provisions of the indenture in
respect of one of more series of debt securities, provided, however, that
any such addition, change or elimination (A) (1) does not apply to any
debt security of any series created prior to the execution of such
amendment and entitled to the benefit of such provision, and (2) does not
modify the rights of a holder of any such debt security with respect to
such provision, or (B) becomes effective only when there is no outstanding
debt security of any series created prior to such amendment and entitled
to the benefit of such provision;
- to make any change that does not adversely affect in any material respect
the interest of any holder of a debt security; or
- to establish additional series of debt securities as permitted by the
indenture.
The holders of a majority in principal amount of the outstanding debt
securities of any series, by notice to the trustee, may waive any existing
default or Event of Default and its consequences with respect to the debt
securities of that series other than a default or Event of Default in the
payment of the principal of or any interest on any debt security; PROVIDED,
HOWEVER, that the holders of a majority in principal amount of the outstanding
debt securities of any series may rescind an acceleration and its consequences,
including any related payment default that resulted from the acceleration.
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
DEFEASANCE AND DISCHARGE. The indenture provides that we may be discharged
from any and all obligations in respect of the debt securities of any series
(except for certain obligations to pay additional amounts, if any, upon the
occurrence of certain tax, assessment or governmental charge events with respect
to payments on such debt securities, to register the transfer or exchange of
debt securities
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of such series, to replace stolen, lost or mutilated debt securities of such
series, to maintain paying agencies and to hold money for payment in trust). We
will be so discharged when we:
- deposit with the trustee money and/or government obligations that, through
the payment of interest and principal in accordance with their terms, will
provide money in an amount sufficient in the opinion of a nationally
recognized firm of independent public accountants to pay each installment
of principal, premium and interest on, and any mandatory sinking fund
payments in respect of, the debt securities of that series on the dates
such payments are due; and
- deliver to the trustee an opinion of counsel or a ruling from the United
States Internal Revenue Service (an "IRS Ruling"), in either case to the
effect that holders of the debt securities of that series will not
recognize income, gain or loss for United States federal income tax
purposes as a result of the deposit, defeasance and discharge.
DEFEASANCE OF CERTAIN COVENANTS. The indenture provides that, unless
otherwise provided by the terms of the applicable series of debt securities,
upon compliance with certain conditions:
- we may omit to comply with certain restrictive covenants contained in the
indenture (or, if provided for in the applicable prospectus supplement,
any other restrictive covenant relating to any series of debt securities
provided for in a resolution of the Board of Directors of Harrah's
Operating or a supplemental indenture which, by its terms may be defeased
pursuant to the terms of that series of debt securities), and
- any omission to comply with such obligations will not constitute a default
or Event of Default with respect to any debt securities of that series
("covenant defeasance").
The conditions require, among others, that we:
- deposit with the trustee money and/or government obligations that, through
the payment of interest and principal in respect thereof in accordance
with their terms, will provide money in an amount sufficient in the
opinion of a nationally recognized firm of independent public accountants
to pay each installment of principal, premium and interest on, and any
mandatory sinking fund payments in respect of, the debt securities of that
series on the dates such payments are due; and
- deliver to the trustee an opinion of counsel or an IRS Ruling, in either
case to the effect that holders of the debt securities of that series will
not recognize income, gain or loss for United States federal income tax
purposes as a result of the deposit, defeasance and discharge.
LIMITED LIABILITY OF CERTAIN PERSONS
None of the past, present or future stockholders, incorporators, employee
officers or directors, as such, of Harrah's Operating, Harrah's Entertainment or
any of our affiliates or successor corporations shall have any personal
liability in respect of our obligations under the indenture or the debt
securities by reason of his, her or its status as such stockholder,
incorporator, employee officer or director.
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MANDATORY DISPOSITION PURSUANT TO GAMING LAWS
Federal, state and local authorities in several jurisdictions regulate
extensively our casino entertainment operations. The nature of such regulation
is described in detail in "Business and Properties-- Governmental Regulation" in
the 1997 Form 10-K of Harrah's Entertainment, which we have incorporated by
reference herein. The gaming authority of any jurisdiction in which we or any of
our subsidiaries conduct or propose to conduct gaming may require that a holder
of the debt securities or the beneficial owner of the debt securities of a
holder be licensed, qualified or found suitable under applicable gaming laws.
Under the indenture, each person that holds or acquires beneficial ownership of
any of the debt securities subject to the indenture shall be deemed to have
agreed, by accepting such debt securities, that if any such gaming authority
requires such person to be licensed, qualified or found suitable under
applicable gaming laws, such holder or beneficial owner, as the case may be,
shall apply for a license, qualification or a finding of suitability within the
required time period.
If a person required to apply or become licensed or qualified or be found
suitable fails to do so, we shall have the right, at our election, (i) to
require such person to dispose of its debt securities or beneficial interest
therein within 30 days of receipt of notice of such election or such earlier
date as may be requested or prescribed by such gaming authority or (ii) to
redeem such debt securities at a redemption price equal to the lesser of (A)
such person's cost or (B) 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the earlier of (x) the redemption date or (y) the
date of the finding of unsuitability, which may be less than 30 days following
the notice of redemption if so requested or prescribed by the applicable gaming
authority. We will notify the trustee in writing of any such redemption as soon
as practicable. We will not be responsible for any costs or expenses any such
holder may incur in connection with its application for a license, qualification
or a finding of suitability. Under the indenture, the trustee must report the
names of the record holders of the debt securities to any gaming authority when
required by law.
GOVERNING LAW
The indenture and the debt securities will be governed by, and construed in
accordance with, the internal laws of the state of New York.
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PLAN OF DISTRIBUTION
We may sell the debt securities to one or more underwriters for public
offering and sale by them and also may sell the debt securities to investors
directly or through agents. We will name any underwriter or agent involved in
the offer and sale of debt securities in the applicable prospectus supplement.
We have reserved the right to sell or exchange the debt securities directly to
investors on our own behalf in those jurisdictions where and in such manner as
we are authorized to do so. We may also exchange debt securities for outstanding
securities of Harrah's Operating.
We may distribute the debt securities from time to time in one or more
transactions:
- at a fixed price or prices, which may be changed;
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices; or
- at negotiated prices.
We also may, from time to time, authorize dealers, acting as our agents, to
offer and sell the debt securities upon the terms and conditions as are set
forth in the applicable prospectus supplement. In connection with the sale of
the debt securities, we, or the purchasers of debt securities for whom the
underwriters may act as agents, may compensate underwriters in the form of
discounts or commissions. Underwriters may sell the debt securities to or
through dealers, and those dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent. Unless otherwise indicated
in a prospectus supplement, an agent will be acting on a best efforts basis and
a dealer will purchase the debt securities as a principal, and may then resell
the debt securities at varying prices to be determined by the dealer.
We will describe in the applicable prospectus supplement any compensation we
pay to underwriters or agents in connection with the offering of debt
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers. Dealers and agents participating in the
distribution of debt securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the debt securities may be deemed to be underwriting discounts and
commissions. We may enter into agreements to indemnify underwriters, dealers and
agents against certain civil liabilities, including liabilities under the
Securities Act, and to reimburse these persons for certain expenses.
To facilitate the offering of debt securities, certain persons participating
in the offering may engage in transactions that stabilize, maintain, or
otherwise affect the price of the debt securities. This may include
over-allotments or short sales of the debt securities, which involves the sale
by persons participating in the offering of more debt securities than we sold to
them. In these circumstances, these persons would cover such over-allotments or
short positions by making purchases in the open market or by exercising their
over-allotment option. In addition, these persons may stabilize or maintain the
price of the debt securities by bidding for or purchasing debt securities in the
open market or by imposing penalty bids, whereby selling concessions allowed to
dealers participating in the offering may be reclaimed if debt securities sold
by them are repurchased in connection with stabilization transactions. The
effect of these transactions may be to stabilize or maintain the market price of
the debt securities at a level above that which might otherwise prevail in the
open market. These transactions may be discontinued at any time.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with and perform services for us in the ordinary course
of business.
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LEGAL MATTERS
Latham & Watkins of Los Angeles, California, and E. O. Robinson, Jr., our
Senior Vice President and General Counsel, will issue opinions about certain
legal matters with respect to the debt securities for Harrah's.
EXPERTS
The audited financial statements of Harrah's Entertainment appearing in
Harrah's Entertainment's Annual Report on Form 10-K for the year ended December
31, 1997 have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated herein by reference in reliance upon the authority of such firm as
experts in giving said reports.
The audited financial statements of Rio appearing in Rio's Annual Report on
Form 10-K for the year ended December 31, 1997 have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated herein by reference in reliance upon the
authority of such firm as experts in giving said reports.
The consolidated financial statements of Showboat, Inc. and subsidiaries as
of December 31, 1997, and for each of the years in the three-year period ended
December 31, 1997, appearing in the Showboat, Inc. Form 10-K for the year ended
December 31, 1997, incorporated herein by reference, have been incorporated
herein by reference in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated herein by reference, and
upon the authority of such firm as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All expenses other than the Commission's filing fees are estimated.
<TABLE>
<S> <C>
Commission registration fee....................................... $ 208,500
Accountants' fees and expenses*................................... 100,000
Legal fees and expenses*.......................................... 200,000
Rating agency fees*............................................... 210,000
Printing expenses*................................................ 100,000
Trustee's and registrar's fees and expenses*...................... 25,000
Miscellaneous*.................................................... 50,000
---------
Total......................................................... $ 893,500
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</TABLE>
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* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware empowers Harrah's
Entertainment and Harrah's Operations to indemnify, subject to the standards set
forth therein, any person who is a party in any action in connection with any
action, suit or proceeding brought or threatened by reason of the fact that the
person was a director, officer, employee or agent of such company, or is or was
serving as such with respect to another entity at the request of such company.
The General Corporation Law of Delaware also provides that Harrah's
Entertainment and Harrah's Operations may purchase insurance on behalf of any
such director, officer, employee or agent.
Article Tenth of the Certificate of Incorporation of Harrah's Entertainment
provides for indemnification of the officers and directors of Harrah's
Entertainment to the full extent permitted by the Delaware General Corporation
Law.
Article VI of the Bylaws of Harrah's Operating provides, in effect, for the
indemnification by Harrah's Operating of each director and officer of Harrah's
Operating to the fullest extent permitted by applicable law.
Harrah's Entertainment has entered into Indemnification Agreements with its
directors, executive officers and certain other officers. Generally, the
Indemnification Agreements provide that Harrah's Entertainment will indemnify
such persons against any and all expenses, judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect to such expenses,
judgments, fines, penalties or amounts paid in settlement) of any Claim by
reason of (or arising in part out of) an Indemnifiable Event. "Claim" is defined
as any threatened, pending or completed action, suit or proceeding or any
inquiry or investigation, whether conducted by Harrah's Entertainment or any
other party, that the indemnitee in good faith believes might lead to the
institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other. "Indemnifiable Event" is defined as any
event or occurrence related to the fact that indemnitee is or was a director,
officer, employee, trustee, agent or fiduciary of Harrah's Entertainment, or is
or was serving at the request of Harrah's Entertainment or a director, officer,
employee, trustee, agent or fiduciary of another corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise, or by reason of
anything done or not done by indemnitee in any such capacity. Notwithstanding
the foregoing, (i) the obligations of Harrah's Entertainment shall be subject to
the condition that the reviewing party (as defined) shall not have determined
(in a
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written opinion, in any case in which special, independent counsel is involved)
that indemnitee would not be permitted to be indemnified under applicable law,
and (ii) the obligation of Harrah's Entertainment to make an expense advance
shall be subject to the condition that, if, when and to the extent that the
reviewing party determines that indemnitee would not be permitted to be so
indemnified under applicable law, Harrah's Entertainment shall be entitled to be
reimbursed by indemnitee (who has agreed to reimburse Harrah's Entertainment,
for any amounts theretofore paid; provided, that if indemnitee has commenced
legal proceedings in a court of competent jurisdiction to secure a determination
that indemnitee should be indemnifed under applicable law, any determination
made by the reviewing party that indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and indemnitee shall not
be required to reimburse Harrah's Entertainment for any expense advance until a
final judicial determination is made with respect thereto as to which all rights
of appeal therefrom have been exhausted or lapsed).
Harrah's Entertainment carries policies of insurance which cover the
individual directors and officers of Harrah's Entertainment and its subsidiaries
for legal liability and which would pay on behalf of Harrah's Entertainment for
expenses of indemnifying directors and officers in accordance with Harrah's
Entertainment's Certificate of Incorporation.
Under the merger agreements pursuant to which Harrah's Entertainment
acquired Showboat, Inc. and will acquire Rio Hotel & Casino, Inc., Harrah's
Entertainment agreed to indemnify each person that served as a director and
officer of Showboat and Rio prior to the merger against all liabilities arising
out of the fact that such person was an officer or director of such entities to
the full extent that would have been permitted under Nevada law and the articles
of incorporation or bylaws of such entities. Harrah's Entertainment also agreed
to maintain in effect for six years directors' and officers' liability insurance
policies for each of the directors and officers of Showboat and Rio with
coverage at least as favorable (subject to certain limitations) as the coverage
provided to such persons prior to the merger of Showboat or Rio, as the case may
be.
Section 102(b)(7) of the Delaware General Corporation Law enables a Delaware
corporation to provide in its certificate of incorporation for the elimination
or limitation of the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Any such provision cannot eliminate or limit a director's liability (1) for any
breach of the director's duty of loyalty to the corporation or its stockholders;
(2) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (3) under Section 174 of the Delaware
General Corporation Law (which imposes liability on directors for unlawful
payment of dividends or unlawful stock purchase or redemption); or (4) for any
transaction from which the director derived an improper personal benefit.
Article Thirteenth of the Harrah's Entertainment Certificate eliminates the
liability of a director of Harrah's Entertainment to Harrah's Entertainment or
its stockholders for monetary damages for breach of fiduciary duty as a director
to the full extent permitted by the Delaware General Corporation Law.
ITEM 16. EXHIBITS
<TABLE>
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(1) Form of Underwriting Agreement*
4(1) Indenture, dated as of December 18, 1998, by and among Harrah's Operating,
as obligor, Harrah's Entertainment, as guarantor, and IBJ Schroder Bank
& Trust Company, as trustee.
4(2) Form of Debt Security.*
5(1) Opinion of Latham & Watkins as to the legality of the securities being
registered.
12(1) Computation of Ratios.
23(1) Consent of Latham & Watkins (included in Exhibit 5(1)).
</TABLE>
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<TABLE>
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23(2) Consent of Arthur Andersen LLP.
23(3) Consent of Arthur Andersen LLP.
23(4) Consent of KPMG Peat Marwick LLP.
24(1) Power of Attorney for Harrah's Operating (contained on Page II-4).
24(2) Power of Attorney for Harrah's Entertainment (contained on Page II-5).
25(1) Statement of Eligibility of Trustee on Form T-1.
</TABLE>
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* To be filed by amendment or by a report on Form 8-K pursuant to Regulation
S-K, Item 601(b).
ITEM 17. UNDERTAKINGS
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, the information required to be included in a post-effective
amendment by paragraphs (a)(1)(i) and (a)(1)(ii) is contained in periodic
reports filed with or furnished to the Commission by the Registrants pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) We hereby undertake that, for purposes of determining any liability
under the Securities Act of 1933, each filing of our annual reports pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrants of expenses incurred or paid by our
directors, officers or controlling persons in the successful defense
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of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be govern
(j) We hereby undertake to file an application for the purpose of
determining the eligibility of the trustee to act under Subsection (a) of
Section 310 of the Trust Indenture Act (the "Act") in accordance with the rules
and regulations prescribed by the Commission under Section 305(b)(2) of the Act.
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HARRAH'S OPERATING SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Memphis, State of Tennessee on December 18, 1998.
HARRAH'S OPERATING COMPANY, INC.
Dated: December 18, 1998 By /s/ PHILIP G. SATRE
-----------------------------------------
Philip G. Satre
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Philip G. Satre and E. O. Robinson, Jr. and each
of them, each of whom may act without joinder of the other, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all pre- and post-effective amendments to this
Registration Statement or any registration statement for the same offering that
is to be effective upon filing pursuant to 462(b) under the Securities Act, and
to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman, President and
/s/ PHILIP G. SATRE Chief Executive Officer December 18, 1998
- ------------------------------
Philip G. Satre
Director and
/s/ COLIN V. REED Chief Financial Officer December 18, 1998
- ------------------------------
Colin V. Reed
/s/ GARY W. LOVEMAN Director December 18, 1998
- ------------------------------
Gary W. Loveman
Controller and Principal
/s/ JUDY T. WORMSER Accounting Officer December 18, 1998
- ------------------------------
Judy T. Wormser
II-5
<PAGE>
HARRAH'S ENTERTAINMENT SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Memphis, State of Tennessee on December 18, 1998.
<TABLE>
<S> <C> <C>
HARRAH'S ENTERTAINMENT, INC.
Dated: December 18, 1998 By /s/ PHILIP G. SATRE
-----------------------------------------
Philip G. Satre
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Philip G. Satre and E. O. Robinson, Jr. and each
of them, each whom may act without joinder of the other, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all pre- and post-effective amendments to this
Registration Statement or any registration statement for the same offering that
is to be effective upon filing pursuant to 462(b) under the Securities Act, and
to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, or the substitute or substitutes
of any or all of them, may lawfully do or cause to be done by virtue hereof
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<S> <C> <C>
/s/ SUSAN CLARK-JOHNSON Director December 18, 1998
- ------------------------------
Susan Clark-Johnson
/s/ JAMES B. FARLEY Director December 18, 1998
- ------------------------------
James B. Farley
/s/ JOE M. HENSON Director December 18, 1998
- ------------------------------
Joe M. Henson
/s/ RALPH HORN Director December 18, 1998
- ------------------------------
Ralph Horn
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<S> <C> <C>
Director December 18, 1998
- ------------------------------
J. Kell Houssels, III
Director December 18, 1998
- ------------------------------
R. Brad Martin
Director and
/s/ COLIN V. REED Chief Financial Officer December 18, 1998
- ------------------------------
Colin V. Reed
/s/ WALTER J. SALMON Director December 18, 1998
- ------------------------------
Walter J. Salmon
Chairman, President and
/s/ PHILIP G. SATRE Chief Executive Officer December 18, 1998
- ------------------------------
Philip G. Satre
/s/ BOAKE A. SELLS Director December 18, 1998
- ------------------------------
Boake A. Sells
/s/ EDDIE N. WILLIAMS Director December 18, 1998
- ------------------------------
Eddie N. Williams
Controller and Principal
/s/ JUDY T. WORMSER Accounting Officer December 18, 1998
- ------------------------------
Judy T. Wormser
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1(1) Form of Underwriting Agreement.*
4(1) Indenture, dated as of December 18, 1998, by and among Harrah's Operating, as obligor, Harrah's
Entertainment, as guarantor, and IBJ Schroder Bank & Trust Company, as trustee.
4(2) Form of Debt Security.*
5(1) Opinion of Latham & Watkins as to the legality of the securities being registered.
12(1) Computation of Ratios.
23(1) Consent of Latham & Watkins (included in Exhibit 5.1).
23(2) Consent of Arthur Andersen LLP.
23(3) Consent of Arthur Andersen LLP.
23(4) Consent of KPMG Peat Marwick LLP.
24(1) Power of Attorney for Harrah's Operating (contained on Page II-4).
24(2) Power of Attorney for Harrah's Entertainment (contained on Page II-5).
25(1) Statement of Eligibility of Trustee on Form T-1.
</TABLE>
- ------------------------
* To be filed by amendment or by a report on Form 8-K pursuant to Regulation
S-K, Item 601(b).
<PAGE>
EXHIBIT 4(1)
- -------------------------------------------------------------------------------
HARRAH'S OPERATING COMPANY, INC.
Issuer
--------------------------------
HARRAH'S ENTERTAINMENT, INC.
Guarantor
--------------------------------
INDENTURE
Dated as of December 18, 1998
--------------------------------
IBJ SCHRODER BANK & TRUST COMPANY
Trustee
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . 1
SECTION 1.1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. OTHER DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. . . . . . . . . . . 6
SECTION 1.4. RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II. THE SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1. ISSUABLE IN SERIES . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2. ESTABLISHMENT OF TERMS OF SERIES OF SECURITIES . . . . . . . . . . . . 8
SECTION 2.3. EXECUTION AND AUTHENTICATION . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.4. REGISTRAR AND PAYING AGENT . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5. PAYING AGENT TO HOLD MONEY IN TRUST. . . . . . . . . . . . . . . . . . 12
SECTION 2.6. SECURITYHOLDER LISTS . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.7. TRANSFER AND EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.8. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES . . . . . . . . . . . 13
SECTION 2.9. OUTSTANDING SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.10. TREASURY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.11. TEMPORARY SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.12. CANCELLATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.13. DEFAULTED INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.14. GLOBAL SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.15. CUSIP NUMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III. REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.1. NOTICE TO TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED . . . . . . . . . . . . . . . . 18
SECTION 3.3. NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.6. SECURITIES REDEEMED IN PART. . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.1. PAYMENT OF PRINCIPAL AND INTEREST. . . . . . . . . . . . . . . . . . . 19
SECTION 4.2. SEC REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.3. COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.4. STAY, EXTENSION AND USURY LAWS . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.5. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 4.6. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.1. WHEN COMPANY MAY MERGE, ETC. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED. . . . . . . . . . . . . . . . . . . 21
ARTICLE VI. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.1. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT . . . . . . . . . . 23
SECTION 6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE. . . . 24
SECTION 6.4. TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . . . . . . . . . 25
SECTION 6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES. . . . . . 26
SECTION 6.6. APPLICATION OF MONEY COLLECTED . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.7. LIMITATION ON SUITS. . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST . . . 27
SECTION 6.9. RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . 27
SECTION 6.10. RIGHTS AND REMEDIES CUMULATIVE. . . . . . . . . . . . . . . . . . . . 28
SECTION 6.11. DELAY OR OMISSION NOT WAIVER. . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.12. CONTROL BY HOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.13. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.14. UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII. TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.1. DUTIES OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.2. RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.4. TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.5. NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS. . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.7. COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.8. REPLACEMENT OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC . . . . . . . . . . . . . . . . . . . 34
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY . . . . . . . . . . 34
ARTICLE VIII. SATISFACTION AND DISCHARGE; DEFEASANCE. . . . . . . . . . . . . . . . . . 35
SECTION 8.1. SATISFACTION AND DISCHARGE OF INDENTURE. . . . . . . . . . . . . . . . 35
SECTION 8.2. APPLICATION OF TRUST FUNDS; INDEMNIFICATION. . . . . . . . . . . . . . 36
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 8.3. LEGAL DEFEASANCE OF SECURITIES OF ANY SERIES . . . . . . . . . . . . . 36
SECTION 8.4. COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.5. REPAYMENT TO COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX. AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.1. WITHOUT CONSENT OF HOLDERS . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.2. WITH CONSENT OF HOLDERS. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9.3. LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.4. COMPLIANCE WITH TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . 42
SECTION 9.5. REVOCATION AND EFFECT OF CONSENTS. . . . . . . . . . . . . . . . . . . 42
SECTION 9.6. NOTATION ON OR EXCHANGE OF SECURITIES. . . . . . . . . . . . . . . . . 42
SECTION 9.7. TRUSTEE PROTECTED. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE X. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.1. TRUST INDENTURE ACT CONTROLS. . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.2. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS . . . . . . . . . . . . . 43
SECTION 10.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. . . . . . . . . . 44
SECTION 10.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION . . . . . . . . . . . . 44
SECTION 10.6. RULES BY TRUSTEE AND AGENTS . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.7. LEGAL HOLIDAYS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.8. NO RECOURSE AGAINST OTHERS. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.9. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.10. GOVERNING LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. . . . . . . . . . . . 45
SECTION 10.12. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.13. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.14. TABLE OF CONTENTS, HEADINGS, ETC . . . . . . . . . . . . . . . . . . 46
SECTION 10.15. SECURITIES IN A FOREIGN CURRENCY OR IN ECU . . . . . . . . . . . . . 46
SECTION 10.16. JUDGMENT CURRENCY. . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XI. SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.1. APPLICABILITY OF ARTICLE. . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.2. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES . . . . . . . . 47
SECTION 11.3. REDEMPTION OF SECURITIES FOR SINKING FUND . . . . . . . . . . . . . . 48
ARTICLE XII. GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 12.1. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 12.2. EXECUTION AND DELIVERY OF GUARANTEE. . . . . . . . . . . . . . . . . 50
SECTION 12.3. RELEASE OF GUARANTOR. . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 12.4. WHEN GUARANTOR MAY MERGE, ETC . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
iv
<PAGE>
HARRAH'S OPERATING COMPANY, INC.
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of December 18, 1998
<TABLE>
<CAPTION>
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . NOT APPLICABLE
(a)(4) . . . . . . . . . . . . . . . . . . . . NOT APPLICABLE
(a)(5) . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . 7.10
Section 311(a) . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . NOT APPLICABLE
Section 312(a) . . . . . . . . . . . . . . . . . . . . 2.6
(b) . . . . . . . . . . . . . . . . . . . . 10.3
(c) . . . . . . . . . . . . . . . . . . . . 10.3
Section 313(a) . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . 7.6
(b)(2) . . . . . . . . . . . . . . . . . . . . 7.6
(c)(1) . . . . . . . . . . . . . . . . . . . . 7.6
(d) . . . . . . . . . . . . . . . . . . . . 7.6
Section 314(a) . . . . . . . . . . . . . . . . . . . . 4.2, 10.5
(b) . . . . . . . . . . . . . . . . . . . . NOT APPLICABLE
(c)(1) . . . . . . . . . . . . . . . . . . . . 10.4
(c)(2) . . . . . . . . . . . . . . . . . . . . 10.4
(c)(3) . . . . . . . . . . . . . . . . . . . . NOT APPLICABLE
(d) . . . . . . . . . . . . . . . . . . . . NOT APPLICABLE
(e) . . . . . . . . . . . . . . . . . . . . 10.5
(f) . . . . . . . . . . . . . . . . . . . . NOT APPLICABLE
Section 315(a) . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . 7.5
(c) . . . . . . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . . . . . . 6.14
Section 316(a) . . . . . . . . . . . . . . . . . . . . 2.10
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . 6.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . 6.13
(b) . . . . . . . . . . . . . . . . . . . . 6.8
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . 6.3
(a)(2) . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . 2.5
Section 318(a) . . . . . . . . . . . . . . . . . . . . 10.1
</TABLE>
- -----------------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
i
<PAGE>
Indenture dated as of December 18, 1998 between Harrah's
Operating Company, Inc., a Delaware corporation ("Company"), Harrah's
Entertainment, Inc., a Delaware corporation ("Guarantor"), and IBJ Schroder
Bank & Trust Company, a New York banking corporation ("Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Securities
issued under this Indenture.
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. DEFINITIONS.
"Additional Amounts" means any additional amounts which are
required hereby or by any Security, under circumstances specified herein or
therein, to be paid by the Company in respect of certain taxes imposed on
Holders specified therein and which are owing to such Holders.
"Affiliate" of any specified person means any other person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such person,
whether through the ownership of voting securities or by agreement or
otherwise.
"Agent" means any Registrar, Paying Agent or Service Agent.
"Authorized Newspaper" means a newspaper in an official
language of the country of publication customarily published at least once a
day for at least five days in each calendar week and of general circulation
in the place in connection with which the term is used. If it shall be
impractical in the opinion of the Trustee to make any publication of any
notice required hereby in an Authorized Newspaper, any publication or other
notice in lieu thereof that is made or given by the Trustee shall constitute
a sufficient publication of such notice.
"Bearer" means anyone in possession from time to time of a
Bearer Security.
"Bearer Security" means any Security, including any interest
coupon appertaining thereto, that does not provide for the identification of
the Holder thereof.
"Board of Directors" means the Board of Directors of the
Company or any duly authorized committee thereof.
1
<PAGE>
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been adopted
by the Board of Directors or pursuant to authorization by the Board of
Directors and to be in full force and effect on the date of the certificate
and delivered to the Trustee.
"Business Day" means, unless otherwise provided by Board
Resolution, Officers' Certificate or supplemental indenture hereto for a
particular Series, any day except a Saturday, Sunday or a legal holiday in
the City of New York on which banking institutions are authorized or required
by law, regulation or executive order to close.
"Company" means the party named as such above until a
successor replaces it and thereafter means the successor.
"Company Order" means a written order signed in the name of
the Company by two Officers, one of whom must be the Company's principal
executive officer, principal financial officer or principal accounting
officer.
"Company Request" means a written request signed in the name
of the Company by its Chairman of the Board, a President or a Vice President,
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Consolidated Net Tangible Assets" means the total amount of
assets (including investments in Joint Ventures) of the Company and its
subsidiaries (less applicable depreciation, amortization and other valuation
reserves) after deduction therefrom (a) all current liabilities of the
Company and its subsidiaries (excluding (i) the current portion of long-term
indebtedness, (ii) intercompany liabilities and (iii) any liabilities which
are by their terms renewable or extendible at the option of the obligor
thereon to a time more than 12 months from the time as of which the amount
thereof is being computed) and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and any other like intangibles, all as set
forth on the consolidated balance sheet of the Company for the most recently
completed fiscal quarter for which financials are available and computed in
accordance with generally accepted accounting principles.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be
principally administered.
"Default" means any event which is, or after notice or passage
of time would be, an Event of Default.
"Depository" means, with respect to the Securities of any
Series issuable or issued in whole or in part in the form of one or more
Global Securities, the person designated as Depository for such Series by the
Company, which Depository shall be a clearing agency registered under the
Exchange Act; and if at any time there is more than one such person,
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"Depository" as used with respect to the Securities of any Series shall mean
the Depository with respect to the Securities of such Series.
"Discount Security" means any Security that provides for an
amount less than the stated principal amount thereof to be due and payable
upon declaration of acceleration of the maturity thereof pursuant to Section
6.2.
"Dollars" means the currency of The United States of America.
"ECU" means the European Currency Unit as determined by the
Commission of the European Union.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Foreign Currency" means any currency or currency unit issued
by a government other than the government of The United States of America.
"Foreign Government Obligations" means with respect to
Securities of any Series that are denominated in a Foreign Currency, (i)
direct obligations of the government that issued or caused to be issued such
currency for the payment of which obligations its full faith and credit is
pledged or (ii) obligations of a person controlled or supervised by or acting
as an agency or instrumentality of such government the timely payment of
which is unconditionally guaranteed as a full faith and credit obligation by
such government, which, in either case under clauses (i) or (ii), are not
callable or redeemable at the option of the issuer thereof.
"Gaming Laws" means the gaming laws of a jurisdiction or
jurisdictions to which the Company or a subsidiary of the Company is, or may
at any time after the date of this Indenture be, subject.
"Gaming Authority" means the Nevada Gaming Commission, the
Nevada State Gaming Control Board, the New Jersey Casino Control Commission
or any similar commission or agency which has, or may at any time after the
date of this Indenture have, jurisdiction over the gaming activities of the
Company or a subsidiary of the Company or any successor thereto.
"Global Security" or "Global Securities" means a Security or
Securities, as the case may be, in the form established pursuant to Section 2.2
evidencing all or part of a Series of Securities, issued to the Depository for
such Series or its nominee, and registered in the name of such Depository or
nominee.
"Guarantee" shall have the meaning set forth in Section 12.1
hereof.
"Guarantor" means the party named as such above until a
successor replaces it and thereafter means the successor.
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"Holder" or "Securityholder" means a person in whose name a
Security is registered or the holder of a Bearer Security.
"Indenture" means this Indenture as amended from time to time
and shall include the form and terms of particular Series of Securities
established as contemplated hereunder.
"interest" with respect to any Discount Security which by its
terms bears interest only after Maturity, means interest payable after
Maturity.
"Joint Venture" means any partnership, corporation or other
entity, in which up to and including 50% of the partnership interests,
outstanding voting stock or other equity interests is owned, directly or
indirectly, by the Company and/or more subsidiaries.
"Maturity," when used with respect to any Security or
installment of principal thereof, means the date on which the principal of
such Security or such installment of principal becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption, notice of option to elect repayment or
otherwise.
"Non-recourse Indebtedness" means indebtedness the terms of
which provide that the lender's claim for repayment of such indebtedness is
limited solely to a claim against the property which secures such
indebtedness.
"Officer" means the Chairman of the Board, any President, any
Vice-President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers, one of whom must be the Company's principal executive officer,
principal financial officer or principal accounting officer.
"Opinion of Counsel" means a written opinion of legal counsel
who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company.
"person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"principal" of a Security means the principal of the Security
plus, when appropriate, the premium, if any, on, and any Additional Amounts
in respect of, the Security.
"Responsible Officer" means any officer of the Trustee in its
Corporate Trust Office and also means, with respect to a particular corporate
trust matter, any other officer to
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whom any corporate trust matter is referred because of his or her knowledge
of and familiarity with a particular subject.
"SEC" means the Securities and Exchange Commission.
"Securities" means the debentures, notes or other debt
instruments of the Company of any Series authenticated and delivered under
this Indenture.
"Series" or "Series of Securities" means each series of
debentures, notes or other debt instruments of the Company created pursuant
to Sections 2.1 and 2.2 hereof.
"Significant Subsidiary" means (i) any direct or indirect
Subsidiary of the Company that would be a "significant subsidiary" as defined
in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the
Securities Act of 1933, as amended, as such regulation is in effect on the
date hereof, or (ii) any group of direct or indirect Subsidiaries of the
Company that, taken together as a group, would be a "significant subsidiary"
as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to
the Securities Act of 1933, as amended, as such regulation is in effect on
the date hereof.
"Stated Maturity" when used with respect to any Security or
any installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security or such installment of principal or interest is due and payable.
"Subsidiary" of any specified person means any corporation of
which at least a majority of the outstanding stock having by the terms
thereof ordinary voting power for the election of 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 by such person, or by one or more other Subsidiaries, or by
such person and one or more other Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of this Indenture; PROVIDED,
HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after
such date, "TIA" means, to the extent required by any such amendment, the
Trust Indenture Act as so amended.
"Trustee" means the person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each person who is then a Trustee hereunder,
and if at any time there is more than one such person, "Trustee" as used with
respect to the Securities of any Series shall mean the Trustee with respect
to Securities of that Series.
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"U.S. Government Obligations" means securities which are (i)
direct obligations of The United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a person
controlled or supervised by and acting as an agency or instrumentality of The
United States of America the payment of which is unconditionally guaranteed
as a full faith and credit obligation by The United States of America, and
which in the case of (i) and (ii) are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt, PROVIDED that (except as required by law)
such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by
the custodian in respect of the U.S. Government Obligation evidenced by such
depository receipt.
Section 1.2. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
DEFINED IN
TERM SECTION
- ---- -------
<S> <C>
"Bankruptcy Law" 6.1
"Custodian" 6.1
"Event of Default" 6.1
"Journal" 10.15
"Judgment Currency" 10.16
"Legal Holiday" 10.7
"mandatory sinking fund payment" 11.1
"Market Exchange Rate" 10.15
"New York Banking Day" 10.16
"optional sinking fund payment" 11.1
"Paying Agent" 2.4
"Registrar" 2.4
"Required Currency" 10.16
"Service Agent" 2.4
"successor person" 5.1
</TABLE>
Section 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
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"indenture security holder" means a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee"
means the Trustee.
"obligor" on the indenture securities means the
Company and any successor obligor upon the
Securities.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA and not otherwise defined herein are used herein as so defined.
Section 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles;
(c) references to "generally accepted accounting principles"
shall mean generally accepted accounting principles in effect as of the
time when and for the period as to which such accounting principles are
to be applied;
(d) "or" is not exclusive;
(e) words in the singular include the plural, and in the
plural include the singular; and
(f) provisions apply to successive events and transactions.
ARTICLE II.
THE SECURITIES
Section 2.1. ISSUABLE IN SERIES.
The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited. The
Securities may be issued in one or more Series. All Securities of a Series
shall be identical except as may be set forth in a Board Resolution, a
supplemental indenture or an Officers' Certificate detailing the adoption of
the terms thereof pursuant to the authority granted under a Board Resolution.
In the case of Securities of a Series to be issued from time to time, the
Board Resolution, Officers' Certificate or supplemental indenture may provide
for the method by which specified terms (such as interest rate, maturity
date, record date or date from which interest shall accrue) are to be
determined. Securities may
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differ between Series in respect of any matters, provided that all Series of
Securities shall be equally and ratably entitled to the benefits of the
Indenture.
Section 2.2. ESTABLISHMENT OF TERMS OF SERIES OF SECURITIES.
At or prior to the issuance of any Securities within a Series,
the following shall be established (as to the Series generally, in the case
of Subsection 2.2.1 and either as to such Securities within the Series or as
to the Series generally in the case of Subsections 2.2.2 through 2.2.25) by a
Board Resolution, a supplemental indenture or an Officers' Certificate
pursuant to authority granted under a Board Resolution:
2.2.1. the title of the Series (which shall distinguish the
Securities of that particular Series from the Securities of any other Series);
2.2.2. the price or prices (expressed as a percentage of the
principal amount thereof) at which the Securities of the Series will be
issued;
2.2.3. any limit upon the aggregate principal amount of the
Securities of the Series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the Series pursuant to Section 2.7, 2.8, 2.11, 3.6 or 9.6);
2.2.4. the date or dates on which the principal of the
Securities of the Series is payable;
2.2.5. the rate or rates (which may be fixed or variable) per
annum or, if applicable, the method used to determine such rate or rates
(including, but not limited to, any commodity, commodity index, stock
exchange index or financial index) at which the Securities of the Series
shall bear interest, if any, the date or dates from which such interest, if
any, shall accrue, the date or dates on which such interest, if any, shall
commence and be payable and any regular record date for the interest payable
on any interest payment date;
2.2.6. the place or places where the principal of and
interest, if any, on the Securities of the Series shall be payable, or the
method of such payment, if by wire transfer, mail or other means;
2.2.7. if applicable, the period or periods within which, the
price or prices at which and the terms and conditions upon which the
Securities of the Series may be redeemed, in whole or in part, at the option
of the Company;
2.2.8. the obligation, if any, of the Company to redeem or
purchase the Securities of the Series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the date or
dates on or period or periods within which, the
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price or prices at which and the terms and conditions upon which Securities
of the Series shall be redeemed or purchased, in whole or in part, pursuant
to such obligation;
2.2.9. if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which the Securities of the Series
shall be issuable;
2.2.10. the forms of the Securities of the Series in bearer or
fully registered form (and, if in fully registered form, whether the
Securities will be issuable as Global Securities);
2.2.11. if other than the principal amount thereof, the
portion of the principal amount of the Securities of the Series that shall be
payable upon declaration of acceleration of the maturity thereof pursuant to
Section 6.2;
2.2.12. the currency of denomination of the Securities of the
Series, which may be Dollars or any Foreign Currency, including, but not
limited to, the ECU, and if such currency of denomination is a composite
currency other than the ECU, the agency or organization, if any, responsible
for overseeing such composite currency;
2.2.13. the designation of the currency, currencies or
currency units in which payment of the principal of and interest, if any, on
the Securities of the Series will be made;
2.2.14. if payments of principal of, premium or interest on
the Securities of the Series are to be made in one or more currencies or
currency units other than that or those in which such Securities are
denominated, the manner in which the exchange rate with respect to such
payments will be determined;
2.2.15. the manner in which the amounts of payment of
principal of or interest, if any, on the Securities of the Series will be
determined, if such amounts may be determined by reference to an index based
on a currency or currencies or by reference to a commodity, commodity index,
stock exchange index or financial index;
2.2.16. the provisions, if any, relating to any security
provided for the Securities of the Series;
2.2.17. any addition to or change in the Events of Default
which applies to any Securities of the Series and any change in the right of
the Trustee or the requisite Holders of such Securities to declare the
principal amount thereof due and payable pursuant to Section 6.2;
2.2.18. whether the Securities of the Series are to be issued
at a discount;
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2.2.19. the provisions, if any, for the defeasance or
discharge of certain obligations with respect to the Securities of the
Series, which provisions may be in addition to, in substitution for, or in
modification of (or any combination of the foregoing), the provisions of this
Indenture;
2.2.20. any depositories, interest rate calculation agents,
exchange rate calculation agents or other agents with respect to Securities
of such Series if other than those appointed herein;
2.2.21. whether the Securities of the Series will be issued in
the form of one or more global securities and whether such global securities
are to be issuable in a temporary global form or permanent global form;
2.2.22. any terms on which the Securities of the Series (and
the related Guarantees) will be subordinate to other debt of the Company or
the Guarantor, as the case may be;
2.2.23. any listing of the Securities of the Series on a
securities exchange;
2.2.24. any addition to or change in the covenants set forth
in Articles IV or V which applies to Securities of the Series; and
2.2.25. any other terms of the Securities of the Series (which
terms shall not be inconsistent with the provisions of this Indenture, except
as permitted by Section 9.1, but which may modify or delete any provision of
this Indenture insofar as it applies to such Series).
All Securities of any one Series need not be issued at the
same time and may be issued from time to time, consistent with the terms of
this Indenture, if so provided by or pursuant to the Board Resolution,
supplemental indenture or Officers' Certificate referred to above, and the
authorized principal amount of any Series may not be increased to provide for
issuances of additional Securities of such Series, unless otherwise provided
in such Board Resolution, supplemental indenture or Officers' Certificate.
Section 2.3. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Securities for the Company by manual
or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
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A Security shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent. The signature
shall be conclusive evidence that the Security has been authenticated under
this Indenture.
Subject to the provisions of this Section 2.3, the Trustee
shall at any time, and from time to time, authenticate Securities for
original issue in the principal amount provided in the Board Resolution,
supplemental indenture hereto or Officers' Certificate, upon receipt by the
Trustee of a Company Order. Such Company Order may authorize authentication
and delivery pursuant to oral or electronic instructions from the Company or
its duly authorized agent or agents, which oral instructions shall be
promptly confirmed in writing. Each Security shall be dated the date of its
authentication unless otherwise provided by a Board Resolution, a
supplemental indenture hereto or an Officers' Certificate.
The aggregate principal amount of Securities of any Series
outstanding at any time may not exceed any limit upon the maximum principal
amount for such Series set forth in the Board Resolution, supplemental
indenture hereto or Officers' Certificate delivered pursuant to Section 2.2,
except as provided in Section 2.8.
Prior to the issuance of Securities of any Series, the Trustee
shall have received and (subject to Section 7.2) shall be fully protected in
relying on: (a) the Board Resolution, supplemental indenture hereto or
Officers' Certificate establishing the form of the Securities of that Series
or of Securities within that Series and the terms of the Securities of that
Series or of Securities within that Series, (b) an Officers' Certificate
complying with Section 10.4, and (c) an Opinion of Counsel complying with
Section 10.4.
The Trustee shall have the right to decline to authenticate
and deliver any Securities of such Series: (a) if the Trustee, being advised
by counsel, determines that such action may not lawfully be taken; or (b) if
the Trustee in good faith by its board of directors or trustees, executive
committee or a trust committee of directors and/or vice-presidents shall
determine that such action would expose the Trustee to personal liability to
Holders of any then outstanding Series of Securities.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. An authenticating agent may
authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal
with the Company or an Affiliate.
Section 2.4. REGISTRAR AND PAYING AGENT.
The Company shall maintain, with respect to each Series of
Securities, at the place or places specified with respect to such Series
pursuant to Section 2.2, an office or agency where Securities of such Series
may be presented or surrendered for payment ("Paying Agent"), where
Securities of such Series may be surrendered for registration of transfer or
exchange
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("Registrar") and where notices and demands to or upon the Company in respect
of the Securities of such Series and this Indenture may be served ("Service
Agent"). The Registrar shall keep a register with respect to each Series of
Securities and to their transfer and exchange. The Company will give prompt
written notice to the Trustee of the name and address, and any change in the
name or address, of each Registrar, Paying Agent or Service Agent. If at any
time the Company shall fail to maintain any such required Registrar, Paying
Agent or Service Agent or shall fail to furnish the Trustee with the name and
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more
co-registrars, additional paying agents or additional service agents and may
from time to time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company of its
obligations to maintain a Registrar, Paying Agent and Service Agent in each
place so specified pursuant to Section 2.2 for Securities of any Series for
such purposes. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the name or address
of any such co-registrar, additional paying agent or additional service
agent. The term "Registrar" includes any co-registrar; the term "Paying
Agent" includes any additional paying agent; and the term "Service Agent"
includes any additional service agent.
The Company hereby appoints the Trustee the initial Registrar,
Paying Agent and Service Agent for each Series unless another Registrar,
Paying Agent or Service Agent, as the case may be, is appointed prior to the
time Securities of that Series are first issued.
Section 2.5. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust, for the
benefit of Securityholders of any Series of Securities, or the Trustee, all
money held by the Paying Agent for the payment of principal of or interest on
the Series of Securities, and will notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the
Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent,
it shall segregate and hold in a separate trust fund for the benefit of
Securityholders of any Series of Securities all money held by it as Paying
Agent.
Section 2.6. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders of each Series of
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Securities and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at
least ten days before each interest payment date and at such other times as
the Trustee may request in writing a list, in such form and as of such date
as the Trustee may reasonably require, of the names and addresses of
Securityholders of each Series of Securities.
Section 2.7. TRANSFER AND EXCHANGE.
Where Securities of a Series are presented to the Registrar or
a co-registrar with a request to register a transfer or to exchange them for
an equal principal amount of Securities of the same Series, the Registrar
shall register the transfer or make the exchange if its requirements for such
transactions are met. To permit registrations of transfers and exchanges,
the Trustee shall authenticate Securities at the Registrar's request. No
service charge shall be made for any registration of transfer or exchange
(except as otherwise expressly permitted herein), but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer tax or
similar governmental charge payable upon exchanges pursuant to Sections 2.11,
3.6 or 9.6).
Neither the Company nor the Registrar shall be required (a) to
issue, register the transfer of, or exchange Securities of any Series for the
period beginning at the opening of business fifteen days immediately
preceding the mailing of a notice of redemption of Securities of that Series
selected for redemption and ending at the close of business on the day of
such mailing, or (b) to register the transfer of or exchange Securities of
any Series selected, called or being called for redemption as a whole or the
portion being redeemed of any such Securities selected, called or being
called for redemption in part.
Section 2.8. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same Series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and make available for delivery, in
lieu of any such destroyed, lost or stolen Security, a new Security of the
same Series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any Series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that Series duly
issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.9. OUTSTANDING SECURITIES.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation, those reductions in the interest on a Global Security
effected by the Trustee in accordance with the provisions hereof and those
described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.8, it ceases
to be outstanding until the Trustee receives proof satisfactory to it that
the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds on the Maturity of Securities of a Series
money sufficient to pay such Securities payable on that date, then on and
after that date such Securities of the Series cease to be outstanding and
interest on them ceases to accrue.
A Security does not cease to be outstanding because the
Company or an Affiliate holds the Security.
In determining whether the Holders of the requisite principal
amount of outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of a Discount Security that shall be deemed to be outstanding for such
purposes shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon a declaration of
acceleration of the Maturity thereof pursuant to Section 6.2.
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Section 2.10. TREASURY SECURITIES.
In determining whether the Holders of the required principal
amount of Securities of a Series have concurred in any request, demand,
authorization, direction, notice, consent or waiver Securities of a Series
owned by the Company or an Affiliate shall be disregarded, except that for
the purposes of determining whether the Trustee shall be protected in relying
on any such request, demand, authorization, direction, notice, consent or
waiver only Securities of a Series that the Trustee knows are so owned shall
be so disregarded.
Section 2.11. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall, subject to Section 2.3, (in the
case of original issuance), authenticate temporary Securities upon a Company
Order. Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare
and the Trustee upon request shall authenticate definitive Securities of the
same Series and date of maturity in exchange for temporary Securities. Until
so exchanged, temporary securities shall have the same rights under this
Indenture as the definitive Securities.
Section 2.12. CANCELLATION.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for registration of transfer,
exchange or payment. The Trustee shall cancel all Securities surrendered for
transfer, exchange, payment, replacement or cancellation and shall destroy
such canceled Securities (subject to the record retention requirement of the
Exchange Act) and deliver a certificate of such destruction to the Company,
unless the Company otherwise directs. The Company may not issue new
Securities to replace Securities that it has paid or delivered to the Trustee
for cancellation.
Section 2.13. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on a Series
of Securities, it shall pay the defaulted interest, plus, to the extent
permitted by law, any interest payable on the defaulted interest, to the
persons who are Securityholders of the Series on a subsequent special record
date. The Company shall fix the record date and payment date. At least 30
days before the record date, the Company shall mail to the Trustee and to
each Securityholder of the Series a notice that states the record date, the
payment date and the amount of interest to be paid. The Company may pay
defaulted interest in any other lawful manner.
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Section 2.14. GLOBAL SECURITIES.
2.14.1. TERMS OF SECURITIES. A Board Resolution, a
supplemental indenture hereto or an Officers' Certificate shall establish
whether the Securities of a Series shall be issued in whole or in part in the
form of one or more Global Securities and the Depository for such Global
Security or Securities.
2.14.2. TRANSFER AND EXCHANGE. Notwithstanding any provisions
to the contrary contained in Section 2.7 of the Indenture and in addition
thereto, any Global Security shall be exchangeable pursuant to Section 2.7 of
the Indenture for Securities registered in the names of Holders other than
the Depository for such Security or its nominee only if (i) such Depository
notifies the Company that it is unwilling or unable to continue as Depository
for such Global Security or if at any time such Depository ceases to be a
clearing agency registered under the Exchange Act, and, in either case, the
Company fails to appoint a successor Depository within 90 days of such event,
(ii) the Company executes and delivers to the Trustee an Officers'
Certificate to the effect that such Global Security shall be so exchangeable
or (iii) an Event of Default with respect to the Securities represented by
such Global Security shall have happened and be continuing. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Securities registered in such names as the Depository shall
direct in writing in an aggregate principal amount equal to the principal
amount of the Global Security with like tenor and terms.
Except as provided in this Section 2.14.2, a Global Security
may not be transferred except as a whole by the Depository with respect to
such Global Security to a nominee of such Depository, by a nominee of such
Depository to such Depository or another nominee of such Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
a successor Depository.
2.14.3. LEGEND. Any Global Security issued hereunder shall
bear a legend in substantially the following form:
"This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of the
Depository or a nominee of the Depository. This Security is exchangeable for
Securities registered in the name of a person other than the Depository or
its nominee only in the limited circumstances described in the Indenture, and
may not be transferred except as a whole by the Depository to a nominee of
the Depository, by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such a successor Depository."
2.14.4. ACTS OF HOLDERS. The Depository, as a Holder, may
appoint agents and otherwise authorize participants to give or take any
request, demand, authorization,
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direction, notice, consent, waiver or other action which a Holder is entitled
to give or take under the Indenture.
2.14.5. PAYMENTS. Notwithstanding the other provisions of
this Indenture, unless otherwise specified as contemplated by Section 2.2,
payment of the principal of and interest, if any, on any Global Security
shall be made to the Holder thereof.
2.14.6. CONSENTS, DECLARATION AND DIRECTIONS. Except as
provided in Section 2.14.5, the Company, the Trustee and any Agent shall
treat a person as the Holder of such principal amount of outstanding
Securities of such Series represented by a Global Security as shall be
specified in a written statement of the Depositary with respect to such
Global Security, for purposes of obtaining any consents, declarations,
waivers or directions required to be given by the Holders pursuant to this
Indenture.
Section 2.15. CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers
in notices of redemption as a convenience to Holders; PROVIDED that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of
a redemption and that reliance may be placed only on the other elements of
identification printed on the Securities, and any such redemption shall not
be affected by any defect in or omission of such numbers.
Section 2.16. MANDATORY DISPOSITION OF DEBT SECURITIES PURSUANT TO
GAMING LAWS
Each Holder and beneficial owner, by accepting or otherwise
acquiring an interest in the Debt Securities, shall be deemed to have agreed
that if the Gaming Authority of any jurisdiction in which the Company or any
of its subsidiaries conducts or proposes to conduct gaming requires that a
Person who is a Holder or beneficial owner must be licensed, qualified or
found suitable under the applicable Gaming Laws, such Holder or beneficial
owner shall apply for a license, qualification or a finding of suitability
within the required time period. If such Person fails to apply or become
licensed or qualified or is found unsuitable, then the Company shall have the
right, at its option, (i) to require such Person to dispose of its Debt
Securities or beneficial interest therein within 30 days of receipt of notice
of the Company's election or such earlier date as may be requested or
prescribed by such Gaming Authority or (ii) to redeem such Debt Securities at
a redemption price equal to the lesser of (a) such Person's cost or (b) 100%
of the principal amount thereof, plus accrued and unpaid interest to the
earlier of the redemption date and the date of the finding of unsuitability,
which may be less than 30 days following the notice of redemption if so
requested or prescribed by the Gaming Authority. The Company shall notify
the Trustee in writing of any such redemption as soon as practicable. The
Company shall not be responsible for any costs or expenses any such Holder or
beneficial owner may incur in connection with its application for a license,
qualification or a finding of suitability.
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ARTICLE III.
REDEMPTION
Section 3.1. NOTICE TO TRUSTEE.
The Company may, with respect to any Series of Securities,
reserve the right to redeem and pay the Series of Securities or may covenant
to redeem and pay the Series of Securities or any part thereof prior to the
Stated Maturity thereof at such time and on such terms as provided for in
such Securities. If a Series of Securities is redeemable and the Company
wants or is obligated to redeem prior to the Stated Maturity thereof all or
part of the Series of Securities pursuant to the terms of such Securities, it
shall notify the Trustee of the redemption date and the principal amount of
Series of Securities to be redeemed. The Company shall give such notice at
least 45 days before the redemption date (or such shorter notice as may be
acceptable to the Trustee).
Section 3.2. SELECTION OF SECURITIES TO BE REDEEMED.
Unless otherwise indicated for a particular Series by a Board
Resolution, a supplemental indenture or an Officers' Certificate, if less
than all the Securities of a Series are to be redeemed, the Trustee shall
select the Securities of the Series to be redeemed in any manner that the
Trustee deems fair and appropriate. The Trustee shall make the selection
from Securities of the Series outstanding not previously called for
redemption. The Trustee may select for redemption portions of the principal
of Securities of the Series that have denominations larger than $1,000.
Securities of the Series and portions of them it selects shall be in amounts
of $1,000 or whole multiples of $1,000 or, with respect to Securities of any
Series issuable in other denominations pursuant to Section 2.2.9, the minimum
principal denomination for each Series and integral multiples thereof.
Provisions of this Indenture that apply to Securities of a Series called for
redemption also apply to portions of Securities of that Series called for
redemption.
Section 3.3. NOTICE OF REDEMPTION.
Unless otherwise indicated for a particular Series by Board
Resolution, a supplemental indenture hereto or an Officers' Certificate, at
least 30 days but not more than 60 days before a redemption date, the Company
shall mail a notice of redemption by first-class mail to each Holder whose
Securities are to be redeemed (and provide a copy of such notice to the
Trustee) and if any Bearer Securities are outstanding, publish on one
occasion a notice in an Authorized Newspaper.
The notice shall identify the Securities of the Series to be
redeemed and shall state:
(a) the redemption date;
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(b) the redemption price;
(c) the name and address of the Paying Agent;
(d) that Securities of the Series called for redemption must
be surrendered to the Paying Agent to collect the redemption price;
(e) that interest on Securities of the Series called for
redemption ceases to accrue on and after the redemption date; and
(f) any other information as may be required by the terms of
the particular Series or the Securities of a Series being redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
Section 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed or published as provided
in Section 3.3, Securities of a Series called for redemption become due and
payable on the redemption date and at the redemption price. A notice of
redemption may not be conditional. Upon surrender to the Paying Agent, such
Securities shall be paid at the redemption price plus accrued interest to the
redemption date.
Section 3.5. DEPOSIT OF REDEMPTION PRICE.
On or before the redemption date, the Company shall deposit
with the Paying Agent money sufficient to pay the redemption price of and
accrued interest, if any, on all Securities to be redeemed on that date.
Section 3.6. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for the Holder a new Security of the same Series
and the same maturity equal in principal amount to the unredeemed portion of
the Security surrendered.
ARTICLE IV.
COVENANTS
Section 4.1. PAYMENT OF PRINCIPAL AND INTEREST.
The Company covenants and agrees for the benefit of the
Holders of each Series of Securities that it will duly and punctually pay the
principal of and interest, if any, on the Securities of that Series in
accordance with the terms of such Securities and this Indenture.
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Section 4.2. SEC REPORTS.
The Company shall deliver to the Trustee within 15 days after
it files them with the SEC copies of the annual reports and of the
information, documents, and other reports (or copies of such portions of any
of the foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act. The Company also shall comply with the other provisions of
TIA Section 314(a).
Section 4.3. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Company, an Officers' Certificate stating
that a review of the activities of the Company and its Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best
of his knowledge the Company has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions
hereof (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he may have knowledge).
The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default
or Event of Default and what action the Company is taking or proposes to take
with respect thereto.
Section 4.4. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture or the Securities;
and the Company (to the extent it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law has been enacted.
Section 4.5. CORPORATE EXISTENCE.
Subject to Article V, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Significant Subsidiary in accordance with the respective organizational
documents of each Significant Subsidiary and the rights (charter and
statutory), licenses and franchises of the Company and its Significant
Subsidiaries; PROVIDED, HOWEVER, that the
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Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any
Significant Subsidiary, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries taken as a whole and that the loss thereof
is not adverse in any material respect to the Holders.
Section 4.6. TAXES.
The Company shall, and shall cause each of its Significant
Subsidiaries to, pay prior to delinquency all taxes, assessments and
governmental levies, except as contested in good faith and by appropriate
proceedings.
ARTICLE V.
SUCCESSORS
Section 5.1. WHEN COMPANY MAY MERGE, ETC.
The Company shall not consolidate with or merge into, or
convey, transfer or lease all or substantially all of its properties and
assets to, any person (a "successor person"), and may not permit any person
to merge into, or convey, transfer or lease its properties and assets
substantially as an entirety to, the Company, unless:
(a) the successor person (if any) is a corporation,
partnership, trust or other entity organized and validly existing under
the laws of any U.S. domestic jurisdiction and expressly assumes the
Company's obligations on the Securities and under this Indenture and
(b) immediately after giving effect to the transaction, no
Default or Event of Default, shall have occurred and be continuing.
The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed
transaction and such supplemental indenture comply with this Indenture.
Section 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company in accordance with Section 5.1, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, lease, conveyance or other disposition is made shall succeed to,
and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor person
has been named as the Company
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herein; PROVIDED, HOWEVER, that the predecessor Company in the case of a
sale, lease, conveyance or other disposition shall not be released from the
obligation to pay the principal of and interest, if any, on the Securities.
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1. EVENTS OF DEFAULT.
"Event of Default," wherever used herein with respect to
Securities of any Series, means any one of the following events, unless in
the establishing Board Resolution, supplemental indenture or Officers'
Certificate, it is provided that such Series shall not have the benefit of
said Event of Default:
(a) default in the payment of any interest on any Security
of that Series when it becomes due and payable, and continuance of such
default for a period of 30 days (unless the entire amount of such
payment is deposited by the Company with the Trustee or with a Paying
Agent prior to the expiration of such period of 30 days); or
(b) default in the payment of the principal of any Security
of that Series at its Maturity; or
(c) default in the deposit of any sinking fund payment, when
and as due in respect of any Security of that Series; or
(d) default in the performance or breach of any covenant or
warranty of the Company or the Guarantor in this Indenture (other than
a covenant or warranty that has been included in this Indenture solely
for the benefit of Series of Securities other than that Series), which
default continues uncured for a period of 60 days after there has been
given, by registered or certified mail, to the Company or the Guarantor
by the Trustee or to the Company, the Guarantor and the Trustee by the
Holders of at least 25% in principal amount of the outstanding
Securities of that Series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(e) the acceleration of the maturity of any indebtedness of
the Company (other than Non-recourse Indebtedness), at any one time, in
an amount in excess of the greater of (i) $25 million and (ii) 5% of
Consolidated Net Tangible Assets, if such acceleration is not annulled
within 30 days after written notice to the Company by the Trustee and
the holders of at least 25% in principal amount of the outstanding Debt
Securities of that Series.
(f) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law:
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(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is unable to pay its debts as the same
become due; or
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case,
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of its
property, or
(iii) orders the liquidation of the Company or any of
its Significant Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days; or
(h) any other Event of Default provided with respect to
Securities of that Series, which is specified in a Board Resolution, a
supplemental indenture hereto or an Officers' Certificate, in accordance
with Section 2.2.17.
The term "Bankruptcy Law" means title 11, U.S. Code or any
similar Federal or State law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
Section 6.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Securities of any
Series at the time outstanding occurs and is continuing (other than an Event
of Default referred to in Section 6.1(f) or (g)) then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
outstanding Securities of that Series may declare the principal amount (or,
if any Securities of that Series are Discount Securities, such portion of the
principal amount as may be specified in the terms of such Securities) of and
accrued and unpaid interest, if any, on all of the Securities of that Series
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) and accrued and unpaid interest, if
any, shall become immediately
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due and payable. If an Event of Default specified in Section 6.1(f) or (g)
shall occur, the principal amount (or specified amount) of and accrued and
unpaid interest, if any, on all outstanding Securities shall IPSO FACTO
become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration with
respect to any Series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
outstanding Securities of that Series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all overdue interest, if any, on all Securities
of that Series,
(ii) the principal of any Securities of that Series
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities,
(iii) to the extent that payment of such interest is
lawful, interest upon any overdue principal and overdue interest
at the rate or rates prescribed therefor in such Securities, and
(iv) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(b) all Events of Default with respect to Securities of that
Series, other than the non-payment of the principal of Securities of
that Series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.13.
No such rescission shall affect any subsequent Default or impair
any right consequent thereon.
Section 6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(a) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
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(b) default is made in the payment of principal of any
Security at the Maturity thereof, or
(c) default is made in the deposit of any sinking fund
payment when and as due by the terms of a Security,
THEN, the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any
overdue principal or any overdue interest, at the rate or rates prescribed
therefor in such Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such
Securities and collect the moneys adjudged or deemed to be payable in the
manner provided by law out of the property of the Company or any other
obligor upon such Securities, wherever situated.
If an Event of Default with respect to any Securities of any
Series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such Series by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
Section 6.4. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor
upon the Securities or the property of the Company or of such other obligor
or their creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(a) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
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Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
Section 6.6. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of
principal or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
First: To the payment of all amounts due the Trustee
under Section 7.7; and
Second: To the payment of the amounts then due and unpaid for
principal of and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Securities for principal and interest, respectively; and
Third: To the Company.
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Section 6.7. LIMITATION ON SUITS.
No Holder of any Security of any Series shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities
of that Series;
(b) the Holders of not less than 25% in principal amount of
the outstanding Securities of that Series shall have made written
request to the Trustee to institute proceedings in respect of such Event
of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the outstanding Securities of that
Series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
Section 6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND
INTEREST.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any,
on such Security on the Stated Maturity or Stated Maturities expressed in
such Security (or, in the case of redemption, on the redemption date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 6.9. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
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shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
Section 6.10. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 2.8,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
Section 6.12. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the
outstanding Securities of any Series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such Series, provided that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture,
(b) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee
shall have the right to decline to follow any such direction if the
Trustee in good faith shall, by a Responsible Officer of the Trustee,
determine that the proceeding so directed would involve the Trustee in
personal liability.
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Section 6.13. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of
the outstanding Securities of any Series may on behalf of the Holders of all
the Securities of such Series waive any past Default hereunder with respect
to such Series and its consequences, except a Default in the payment of the
principal of or interest on any Security of such Series (provided, however,
that the Holders of a majority in principal amount of the outstanding
Securities of any Series may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent
or other Default or impair any right consequent thereon.
Section 6.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to
any suit instituted by the Company, to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in principal amount of the outstanding Securities of
any Series, or to any suit instituted by any Holder for the enforcement of
the payment of the principal of or interest on any Security on or after the
Stated Maturity or Stated Maturities expressed in such Security (or, in the
case of redemption, on the redemption date).
ARTICLE VII.
TRUSTEE
Section 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as
a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties that
are specifically set forth in this Indenture and no others.
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(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
Officers' Certificates or Opinions of Counsel furnished to the
Trustee and conforming to the requirements of this Indenture;
HOWEVER, in the case of any such Officers' Certificates or
Opinions of Counsel which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine such Officers' Certificates and Opinions of Counsel
to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its
own grossly negligent action, its own grossly negligent failure to act
or its own willful misconduct, except that:
(i) This paragraph does not limit the effect of
paragraph (b) of this Section.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it
is proved that the Trustee was negligent in ascertaining the
pertinent facts.
(iii) The Trustee shall not be liable with respect to
any action taken, suffered or omitted to be taken by it with
respect to Securities of any Series in good faith in accordance
with the direction of the Holders of a majority in principal
amount of the outstanding Securities of such Series relating to
the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture with respect to
the Securities of such Series.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraph (a), (b) and (c) of this
Section.
(e) The Trustee may refuse to perform any duty or exercise
any right or power unless it receives indemnity satisfactory to it
against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to risk its own funds or otherwise incur any financial liability in the
performance of any of its duties, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk is not
reasonably assured to it.
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(h) The Paying Agent, the Registrar and any authenticating
agent shall be entitled to the protections, immunities and standard of
care as are set forth in paragraphs (a), (b) and (c) of this Section
with respect to the Trustee.
Section 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on and shall be protected in acting
or refraining from acting upon any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care. No Depository shall be deemed an agent of the Trustee and the
Trustee shall not be responsible for any act or omission by any
Depository.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Securities unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction.
Section 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
an Affiliate with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee is also subject to
Sections 7.10 and 7.11.
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Section 7.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities other than its authentication.
Section 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing with
respect to the Securities of any Series and if it is known to a Responsible
Officer of the Trustee, the Trustee shall mail to each Securityholder of the
Securities of that Series and, if any Bearer Securities are outstanding,
publish on one occasion in an Authorized Newspaper, notice of a Default or
Event of Default within 90 days after it occurs or, if later, after a
Responsible Officer of the Trustee has knowledge of such Default or Event of
Default. Except in the case of a Default or Event of Default in payment of
principal of or interest on any Security of any Series, the Trustee may
withhold the notice if and so long as its corporate trust committee or a
committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Securityholders of that Series.
Section 7.6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after May 15 in each year, the Trustee shall
transmit by mail to all Securityholders, as their names and addresses appear
on the register kept by the Registrar and, if any Bearer Securities are
outstanding, publish in an Authorized Newspaper, a brief report dated as of
such May 15, in accordance with, and to the extent required under, TIA
Section 313.
A copy of each report at the time of its mailing to
Securityholders of any Series shall be filed with the SEC and each stock
exchange on which the Securities of that Series are listed. The Company
shall promptly notify the Trustee when Securities of any Series are listed on
any stock exchange.
Section 7.7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services as shall be agreed upon pursuant to
a separate agreement dated not later than the date hereof. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of
an express trust. The Company shall reimburse the Trustee upon request for
all reasonable out-of-pocket expenses incurred by it. Such expenses shall
include the reasonable compensation and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee (including the cost of
defending itself) against any loss, liability or expense incurred by it
except as set forth in the next paragraph in the performance of its duties
under this Indenture as Trustee or Agent. The Trustee shall notify the
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Company promptly of any claim for which it may seek indemnity. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld. This indemnification shall apply to officers, directors,
employees, shareholders and agents of the Trustee.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee or by any officer,
director, employee, shareholder or agent of the Trustee through gross
negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities of any Series on all
money or property held or collected by the Trustee, except that held in trust
to pay principal and interest on particular Securities of that Series.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(f) or (g) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign with respect to the Securities of one
or more Series by so notifying the Company. The Holders of a majority in
principal amount of the Securities of any Series may remove the Trustee with
respect to that Series by so notifying the Trustee and the Company. The
Company may remove the Trustee with respect to Securities of one or more
Series if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then
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outstanding Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
If a successor Trustee with respect to the Securities of any
one or more Series does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the Securities of the
applicable Series may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee with respect to the Securities of any one or
more Series fails to comply with Section 7.10, any Securityholder of the
applicable Series may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee subject to the lien provided for in Section 7.7, the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee with respect to each Series of Securities for which it is acting as
Trustee under this Indenture. A successor Trustee shall mail a notice of its
succession to each Securityholder of each such Series and, if any Bearer
Securities are outstanding, publish such notice on one occasion in an
Authorized Newspaper. Notwithstanding replacement of the Trustee pursuant to
this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring trustee with respect to expenses and
liabilities incurred by it prior to such replacement.
Section 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall
be the successor Trustee.
Section 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall always
have a combined capital and surplus of at least $25,000,000 as set forth in
its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b).
Section 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
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ARTICLE VIII.
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 8.1. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Order cease to be of further
effect (except as hereinafter provided in this Section 8.1), and the Trustee,
at the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated and
delivered (other than Securities that have been destroyed, lost
or stolen and that have been replaced or paid) have been
delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to
the Trustee for cancellation
(1) have become due and payable, or
(2) will become due and payable at their
Stated Maturity within one year, or
(3) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company, or
(4) are deemed paid and discharged pursuant to
Section 8.3, as applicable;
and the Company, in the case of (1), (2) or (3) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust an amount
sufficient for the purpose of paying and discharging the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for principal and interest to the date of such deposit (in the case of
Securities which have become due and payable on or prior to the date of such
deposit) or to the Stated Maturity or redemption date, as the case may be;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
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Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 7.7,
and, if money shall have been deposited with the Trustee pursuant to clause
(a) of this Section, the provisions of Sections 2.4, 2.7, 2.8, 8.1 8.2 and
8.5 shall survive.
Section 8.2. APPLICATION OF TRUST FUNDS; INDEMNIFICATION.
(a) Subject to the provisions of Section 8.5, all money
deposited with the Trustee pursuant to Section 8.1, all money and U.S.
Government Obligations or Foreign Government Obligations deposited with
the Trustee pursuant to Section 8.3 or 8.4 and all money received by the
Trustee in respect of U.S. Government Obligations or Foreign Government
Obligations deposited with the Trustee pursuant to Section 8.3 or 8.4,
shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the persons
entitled thereto, of the principal and interest for whose payment such
money has been deposited with or received by the Trustee or to make
mandatory sinking fund payments or analogous payments as contemplated by
Sections 8.3 or 8.4.
(b) The Company shall pay and shall indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against U.S.
Government Obligations or Foreign Government Obligations deposited
pursuant to Sections 8.3 or 8.4 or the interest and principal received
in respect of such obligations other than any payable by or on behalf of
Holders.
(c) The Trustee shall deliver or pay to the Company from
time to time upon Company Request any U.S. Government Obligations or
Foreign Government Obligations or money held by it as provided in
Sections 8.3 or 8.4 which, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited
for the purpose for which such U.S. Government Obligations or Foreign
Government Obligations or money were deposited or received. This
provision shall not authorize the sale by the Trustee of any U.S.
Government Obligations or Foreign Government Obligations held under this
Indenture.
Section 8.3. LEGAL DEFEASANCE OF SECURITIES OF ANY SERIES.
Unless this Section 8.3 is otherwise specified, pursuant to
Section 2.2.25, to be inapplicable to Securities of any Series, the Company
shall be deemed to have paid and discharged the entire indebtedness on all the
outstanding Securities of such Series on the 91st day after the date of the
deposit referred to in subparagraph (d) hereof, and the provisions of this
Indenture, as it relates to such outstanding Securities of such Series, shall no
longer be in effect
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(and the Trustee, at the expense of the Company, shall, at Company Request,
execute proper instruments acknowledging the same), except as to:
(a) the rights of Holders of Securities of such Series to
receive, from the trust funds described in subparagraph (d) hereof,
(i) payment of the principal of and each installment of principal of and
interest on the outstanding Securities of such Series on the Stated
Maturity of such principal or installment of principal or interest and
(ii) the benefit of any mandatory sinking fund payments applicable to
the Securities of such Series on the day on which such payments are due
and payable in accordance with the terms of this Indenture and the
Securities of such Series;
(b) the provisions of Sections 2.4, 2.7, 2.8, 8.2, 8.3 and
8.5; and
(c) the rights, powers, trust and immunities of the Trustee
hereunder;
provided that, the following conditions shall have been satisfied:
(d) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as
security for and dedicated solely to the benefit of the Holders of such
Securities (i) in the case of Securities of such Series denominated in
Dollars, cash in Dollars (or such other money or currencies as shall
then be legal tender in the United States) and/or U.S. Government
Obligations, or (ii) in the case of Securities of such Series
denominated in a Foreign Currency (other than a composite currency),
money and/or Foreign Government Obligations, which through the payment
of interest and principal in respect thereof, in accordance with their
terms, will provide (and without reinvestment and assuming no tax
liability will be imposed on such Trustee), not later than one day
before the due date of any payment of money, an amount in cash,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge each installment
of principal (including mandatory sinking fund or analogous payments) of
and interest, if any, on all the Securities of such Series on the dates
such installments of interest or principal are due;
(e) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other agreement
or instrument to which the Company is a party or by which it is bound;
(f) no Default or Event of Default with respect to the
Securities of such Series shall have occurred and be continuing on the
date of such deposit or during the period ending on the 91st day after
such date;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel to the effect that (i)
the Company has received from, or there
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has been published by, the Internal Revenue Service a ruling, or (ii)
since the date of execution of this Indenture, there has been a change
in the applicable Federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the Securities of such Series will not recognize
income, gain or loss for Federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to Federal
income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit, defeasance and
discharge had not occurred;
(h) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of the Securities of
such Series over any other creditors of the company or with the intent
of defeating, hindering, delaying or defrauding any other creditors of
the Company;
(i) such deposit shall not result in the trust arising from
such deposit constituting an investment company (as defined in the
Investment Company Act of 1940, as amended), or such trust shall be
qualified under such Act or exempt from regulation thereunder; and
(j) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance
contemplated by this Section have been complied with.
Section 8.4. COVENANT DEFEASANCE.
Unless this Section 8.4 is otherwise specified pursuant to
Section 2.2.19 to be inapplicable to Securities of any Series, on and after the
91st day after the date of the deposit referred to in subparagraph (a) hereof,
the Company may omit to comply with any term, provision or condition set forth
under Sections 4.2, 4.3, 4.4, 4.5, 4.6, and 5.1 as well as any additional
covenants contained in a supplemental indenture hereto for a particular Series
of Securities or a Board Resolution or an Officers' Certificate delivered
pursuant to Section 2.2.19 (and the failure to comply with any such covenants
shall not constitute a Default or Event of Default under Section 6.1) and the
occurrence of any event described in clause (e) of Section 6.1 shall not
constitute a Default or Event of Default hereunder, with respect to the
Securities of such Series, provided that the following conditions shall have
been satisfied:
(a) With reference to this Section 8.4, the Company has
deposited or caused to be irrevocably deposited (except as provided in
Section 8.2(c)) with the Trustee as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities (i) in the case of Securities of such Series
denominated in Dollars, cash in Dollars (or such other money or
currencies as shall then be legal tender in the United States) and/or
U.S. Government Obligations, or (ii) in the case of Securities of such
Series denominated in a Foreign Currency (other than a composite
currency), money
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and/or Foreign Government Obligations, which through the payment of
interest and principal in respect thereof, in accordance with their
terms, will provide (and without reinvestment and assuming no tax
liability will be imposed on such Trustee), not later than one day
before the due date of any payment of money, an amount in cash,
sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay principal and
interest, if any, on and any mandatory sinking fund in respect of the
Securities of such Series on the dates such installments of interest
or principal are due;
(b) Such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other agreement
or instrument to which the Company is a party or by which it is bound;
(c) No Default or Event of Default with respect to the
Securities of such Series shall have occurred and be continuing on the
date of such deposit or during the period ending on the 91st day after
such date;
(d) the Company shall have delivered to the Trustee an
Opinion of Counsel confirming that Holders of the Securities of such
Series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such deposit and defeasance
had not occurred;
(e) the Company shall have delivered to the Trustee an
Officers' Certificate stating the deposit was not made by the Company
with the intent of preferring the Holders of the Securities of such
Series over any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company; and
(f) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the defeasance
contemplated by this Section have been complied with.
Section 8.5. REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal and interest that
remains unclaimed for two years. After that, Securityholders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person.
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ARTICLE IX.
AMENDMENTS AND WAIVERS
Section 9.1. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this
Indenture or the Securities of one or more Series without the consent of any
Securityholder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article V;
(c) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(d) to make any change that does not adversely affect the
rights of any Securityholder;
(e) to provide for the issuance of and establish the form
and terms and conditions of Securities of any Series as permitted by
this Indenture;
(f) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more Series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee; or
(g) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA.
Section 9.2. WITH CONSENT OF HOLDERS.
The Company and the Trustee may enter into a supplemental
indenture with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities of each Series affected by such
supplemental indenture (including consents obtained in connection with a tender
offer or exchange offer for the Securities of such Series), for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Securityholders of each such Series. Except as
provided in Section 6.13, the Holders of at least a majority in principal amount
of the outstanding Securities of each Series affected by such waiver by notice
to the Trustee (including consents obtained in connection with a tender offer or
exchange offer for the Securities of such Series) may waive compliance by the
Company with any provision of this Indenture or the Securities with respect to
such Series.
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It shall not be necessary for the consent of the Holders of
Securities under this Section 9.2 to approve the particular form of any proposed
supplemental indenture or waiver, but it shall be sufficient if such consent
approves the substance thereof. After a supplemental indenture or waiver under
this section becomes effective, the Company shall mail to the Holders of
Securities affected thereby and, if any Bearer Securities affected thereby are
outstanding, publish on one occasion in an Authorized Newspaper, a notice
briefly describing the supplemental indenture or waiver. Any failure by the
Company to mail or publish such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture or waiver.
Section 9.3. LIMITATIONS.
Without the consent of each Securityholder affected, an amendment
or waiver may not:
(a) change the amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the rate of or extend the time for payment of
interest (including default interest) on any Security;
(c) reduce the principal or change the Stated Maturity of
any Security or reduce the amount of, or postpone the date fixed for,
the payment of any sinking fund or analogous obligation;
(d) reduce the principal amount of Discount Securities
payable upon acceleration of the maturity thereof;
(e) waive a Default or Event of Default in the payment of
the principal of or interest, if any, on any Security (except a
rescission of acceleration of the Securities of any Series by the
Holders of at least a majority in principal amount of the outstanding
Securities of such Series and a waiver of the payment default that
resulted from such acceleration);
(f) make the principal of or interest, if any, on any
Security payable in any currency other than that stated in the Security;
(g) make any change in Sections 6.8, 6.13, 9.3 (this
sentence), 10.15 or 10.16; or
(h) waive a redemption payment with respect to any Security
or change any of the provisions with respect to the redemption of any
Securities.
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Section 9.4. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to this Indenture or the Securities of one or
more Series shall be set forth in a supplemental indenture hereto that complies
with the TIA as then in effect.
Section 9.5. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment or waiver becomes effective, a consent to it
by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of a Security if the Trustee receives
the notice of revocation before the date the amendment or waiver becomes
effective.
Any amendment or waiver once effective shall bind every
Securityholder of each Series affected by such amendment or waiver unless it is
of the type described in any of clauses (a) through (g) of Section 9.3. In that
case, the amendment or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
Section 9.6. NOTATION ON OR EXCHANGE OF SECURITIES.
The Trustee may place an appropriate notation about an amendment
or waiver on any Security of any Series thereafter authenticated. The Company
in exchange for Securities of that Series may issue and the Trustee shall
authenticate upon request new Securities of that Series that reflect the
amendment or waiver.
Section 9.7. TRUSTEE PROTECTED.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee shall sign all
supplemental indentures, except that the Trustee need not sign any supplemental
indenture that adversely affects its rights.
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ARTICLE X.
MISCELLANEOUS
Section 10.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required or deemed to be included in
this Indenture by the TIA, such required or deemed provision shall control.
Section 10.2. NOTICES.
Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in person or mailed by
first-class mail:
if to the Company:
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Finance Trust Services
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to a Securityholder shall be mailed
by first-class mail to his address shown on the register kept by the Registrar
and, if any Bearer Securities are outstanding, published in an Authorized
Newspaper. Failure to mail a notice or communication to a Securityholder of any
Series or any defect in it shall not affect its sufficiency with respect to
other Securityholders of that or any other Series.
If a notice or communication is mailed or published in the manner
provided above, within the time prescribed, it is duly given, whether or not the
Securityholder receives it.
If the Company mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee and each Agent at the same
time.
Section 10.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders of any Series may communicate pursuant to
TIA Section 312(b) with other Securityholders of that Series or any other Series
with respect to their rights under this
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Indenture or the Securities of that Series or all Series. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
Section 10.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
Section 10.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 10.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or a meeting
of Securityholders of one or more Series. Any Agent may make reasonable rules
and set reasonable requirements for its functions.
Section 10.7. LEGAL HOLIDAYS.
Unless otherwise provided by Board Resolution, Officers'
Certificate or supplemental indenture for a particular Series, a "Legal Holiday"
is any day that is not a
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Business Day. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period.
Section 10.8. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting
a Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
Section 10.9. COUNTERPARTS.
This Indenture may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
Section 10.10. GOVERNING LAWS.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN
SUCH STATE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 10.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
Section 10.12. SUCCESSORS.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
Section 10.13. SEVERABILITY.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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Section 10.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 10.15. SECURITIES IN A FOREIGN CURRENCY OR IN ECU.
Unless otherwise specified in a Board Resolution, a supplemental
indenture hereto or an Officers' Certificate delivered pursuant to Section 2.2
of this Indenture with respect to a particular Series of Securities, whenever
for purposes of this Indenture any action may be taken by the Holders of a
specified percentage in aggregate principal amount of Securities of all Series
or all Series affected by a particular action at the time outstanding and, at
such time, there are outstanding Securities of any Series which are denominated
in a coin or currency other than Dollars (including ECUs), then the principal
amount of Securities of such Series which shall be deemed to be outstanding for
the purpose of taking such action shall be that amount of Dollars that could be
obtained for such amount at the Market Exchange Rate at such time. For purposes
of this Section 10.15, "Market Exchange Rate" shall mean the noon Dollar buying
rate in New York City for cable transfers of that currency as published by the
Federal Reserve Bank of New York; PROVIDED, HOWEVER, in the case of ECUs, Market
Exchange Rate shall mean the rate of exchange determined by the Commission of
the European Union (or any successor thereto) as published in the Official
Journal of the European Union (such publication or any successor publication,
the "Journal"). If such Market Exchange Rate is not available for any reason
with respect to such currency, the Trustee shall use, in its sole discretion and
without liability on its part, such quotation of the Federal Reserve Bank of New
York or, in the case of ECUs, the rate of exchange as published in the Journal,
as of the most recent available date, or quotations or, in the case of ECUs,
rates of exchange from one or more major banks in The City of New York or in the
country of issue of the currency in question or, in the case of ECUs, in
Luxembourg or such other quotations or, in the case of ECUs, rates of exchange
as the Trustee, upon consultation with the Company, shall deem appropriate. The
provisions of this paragraph shall apply in determining the equivalent principal
amount in respect of Securities of a Series denominated in currency other than
Dollars in connection with any action taken by Holders of Securities pursuant to
the terms of this Indenture.
All decisions and determinations of the Trustee regarding the
Market Exchange Rate or any alternative determination provided for in the
preceding paragraph shall be in its sole discretion and shall, in the absence of
manifest error, be conclusive to the extent permitted by law for all purposes
and irrevocably binding upon the Company and all Holders.
Section 10.16. JUDGMENT CURRENCY.
The Company agrees, to the fullest extent that it may effectively
do so under applicable law, that (a) if for the purpose of obtaining judgment in
any court it is necessary to
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convert the sum due in respect of the principal of or interest or other
amount on the Securities of any Series (the "Required Currency") into a
currency in which a judgment will be rendered (the "Judgment Currency"), the
rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the day on which final
unappealable judgment is entered, unless such day is not a New York Banking
Day, then, the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of New
York the Required Currency with the Judgment Currency on the New York Banking
Day preceding the day on which final unappealable judgment is entered and (b)
its obligations under this Indenture to make payments in the Required
Currency (i) shall not be discharged or satisfied by any tender, any recovery
pursuant to any judgment (whether or not entered in accordance with
subsection (a)), in any currency other than the Required Currency, except to
the extent that such tender or recovery shall result in the actual receipt,
by the payee, of the full amount of the Required Currency expressed to be
payable in respect of such payments, (ii) shall be enforceable as an
alternative or additional cause of action for the purpose of recovering in
the Required Currency the amount, if any, by which such actual receipt shall
fall short of the full amount of the Required Currency so expressed to be
payable, and (iii) shall not be affected by judgment being obtained for any
other sum due under this Indenture. For purposes of the foregoing, "New York
Banking Day" means any day except a Saturday, Sunday or a legal holiday in
The City of New York on which banking institutions are authorized or required
by law, regulation or executive order to close.
ARTICLE XI.
SINKING FUNDS
Section 11.1. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of the Securities of a Series, except as
otherwise permitted or required by any form of Security of such Series issued
pursuant to this Indenture.
The minimum amount of any sinking fund payment provided for by
the terms of the Securities of any Series is herein referred to as a
"mandatory sinking fund payment" and any other amount provided for by the
terms of Securities of such Series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Securities of any
Series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 11.2. Each sinking fund payment shall be
applied to the redemption of Securities of any Series as provided for by the
terms of the Securities of such Series.
Section 11.2. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company may, in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of any Series to be made
pursuant to the terms of such Securities
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(1) deliver outstanding Securities of such Series to which such sinking fund
payment is applicable (other than any of such Securities previously called
for mandatory sinking fund redemption) and (2) apply as credit Securities of
such Series to which such sinking fund payment is applicable and which have
been redeemed either at the election of the Company pursuant to the terms of
such Series of Securities (except pursuant to any mandatory sinking fund) or
through the application of permitted optional sinking fund payments or other
optional redemptions pursuant to the terms of such Securities, provided that
such Securities have not been previously so credited. Such Securities must be
received by the Trustee, together with an Officers' Certificate with respect
thereto, not later than 15 days prior to the date on which the Trustee begins
the process of selecting Securities for redemption, and shall be credited for
such purpose by the Trustee at the price specified in such Securities for
redemption through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly. If as a result of the
delivery or credit of Securities in lieu of cash payments pursuant to this
Section 11.2, the principal amount of Securities of such Series to be
redeemed in order to exhaust the aforesaid cash payment shall be less than
$100,000, the Trustee need not call Securities of such Series for redemption,
except upon receipt of a Company Order that such action be taken, and such
cash payment shall be held by the Trustee or a Paying Agent and applied to
the next succeeding sinking fund payment, PROVIDED, HOWEVER, that the Trustee
or such Paying Agent shall from time to time upon receipt of a Company Order
pay over and deliver to the Company any cash payment so being held by the
Trustee or such Paying Agent upon delivery by the Company to the Trustee of
Securities of that Series purchased by the Company having an unpaid principal
amount equal to the cash payment required to be released to the Company.
Section 11.3. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 45 days (unless otherwise indicated in the Board
Resolution, supplemental indenture hereto or Officers' Certificate in respect
of a particular Series of Securities) prior to each sinking fund payment date
for any Series of Securities, the Company will deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing mandatory
sinking fund payment for that Series pursuant to the terms of that Series,
the portion thereof, if any, which is to be satisfied by payment of cash and
the portion thereof, if any, which is to be satisfied by delivering and
crediting of Securities of that Series pursuant to Section 11.2, and the
optional amount, if any, to be added in cash to the next ensuing mandatory
sinking fund payment, and the Company shall thereupon be obligated to pay the
amount therein specified. Not less than 30 days (unless otherwise indicated
in the Board Resolution, Officers' Certificate or supplemental indenture in
respect of a particular Series of Securities) before each such sinking fund
payment date the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 3.2 and cause
notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 3.3. Such notice
having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 3.4, 3.5 and 3.6.
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ARTICLE XII.
GUARANTEE
Section 12.1. GUARANTEE
(a) Subject to subsection (b), below, the Guarantor hereby
irrevocably and unconditionally guarantees (such guarantee being the
"Guarantee") to each Holder of a Security authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture and
the Securities hereunder, that: (i) the principal of, premium, if any,
and interest on the Securities promptly will be paid in full when due,
whether at the Maturity, by acceleration, call for redemption or
otherwise, and interest on the overdue principal, premium, if any, and
interest, if any, of the Securities, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance
with the terms hereof and thereof, and (ii) in case of any extension of
time of payment or renewal of any Securities or any of such other
obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal,
whether at Stated Maturity, by acceleration or otherwise. Failing
payment when due by the Company of any amount so guaranteed for whatever
reason, the Guarantor shall be obligated to pay the same immediately.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the
Securities with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor. The Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with
a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenants that this Guarantee shall not
be discharged except by complete performance of the oblgations contained
in the Securities and this Indenture. If any Holder or the Trustee is
required by any court or otherwise to return to the Company or any
custodian, Trustee, liquidator or other similar official acting in
relation to the Company, any amount paid by the Company to the Trustee
or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. The Guarantor agrees that
it shall not be entitled to any right of subrogation in relation to the
Holders in respect of any obligations guaranteed hereby until payment in
full of all obligations is guaranteed hereby.
(b) It is the intention of the Guarantor and the Company that
the obligations of the Guarantor hereunder shall be, but not in excess
of, the maximum amount permitted by applicable law. Accordingly, if the
obligations in respect of the Guarantee would be
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annulled, avoided or subordinated to the creditors of the Guarantor by
a court of competent jurisdiction in a proceeding actually pending
before such court as a result of a determination both that such
Guarantee was made without fair consideration and, immediately after
giving effect thereto, the Guarantor was insolvent or unable to pay
its debts as they mature or left with an unreasonably small capital,
then the obligations of the Guarantor under the Guarantee shall be
reduced by such court if such reduction would result in the avoidance
of such annulment, avoidance or subordination; provided, however, that
any reduction pursuant to this paragraph shall be made in the smallest
amount as is strictly necessary to reach such result. For purposes of
this paragraph, "fair consideration," "insolvency," "unable to pay its
debts as they mature," "unreasonably small capital" and the effective
times of reductions, if any, required by this paragraph shall be
determined in accordance with applicable law.
(c) The Guarantor shall be subrogated to all rights of the
Holders against the Company in respect of any amounts paid by Guarantor
pursuant to the provisions of the Guarantee or this Indenture; provided,
however, that the Guarantor shall not be entitled to enforce or to
receive any payments arising out of, or based upon, such right of
subrogation until the principal of, premium, if any, and interest on all
Securities issued hereunder shall have been paid in full.
(d) Notwithstanding anything to the foregoing, the Guarantor's
obligations under this Section 12.1 shall be subordinated to other debt
obligations of the Guarantor if and to the extent set forth in a Board
Resolution, a supplemental indenture or an Officers' Certificate
pursuant to authority granted under a Board Resolution establishing the
terms of a particular Series of Securities pursuant to Section 2.2.
Section 12.2. EXECUTION AND DELIVERY OF GUARANTEE.
To evidence the Guarantee set forth in Section 12.1, the Company
and the Guarantor hereby agree that a notation of such Guarantee shall be
endorsed on each Security authenticated and delivered by the Trustee, that such
notation of such Guarantee shall be in such form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate provisions as are required or permitted by
this Indenture, and that this Indenture shall be executed on behalf of the
Guarantor by its Chairman of the Board, one of its Vice Chairmen of the Board,
its President or one of its Vice Presidents.
The Guarantor hereby agrees that the Guarantee set forth in
Section 12.1 shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of the Guarantee.
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If an officer whose signature is on this Indenture no longer
holds that office at the time the Trustee authenticates the Security on which
the Guarantee is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of the Guarantor.
Section 12.3. RELEASE OF GUARANTOR.
The Guarantor shall be released from all of its obligations under
the Guarantee and under this Indenture if:
(a) (i) the Company or the Guarantor has transferred all or
substantially all of its properties and assets to any Person (whether by
sale, merger or consolidation or otherwise), or has merged into or
consolidated with another Person, pursuant to a transaction in
compliance with this Indenture;
(ii) the corporation to whom all or substantially all
of the properties and assets of the Company or the Guarantor are
transferred, or whom the Company or the Guarantor has merged into
or consolidated with, has expressly assumed, by an indenture
supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the
Guarantor under the Guarantee and this Indenture;
(iii) immediately before and immediately after giving
effect to such transaction, no Event of Default, and no event or
condition which, after notice or lapse of time or both, would
become and Event of Default, shall have occurred and be
continuing; and
(iv) the Guarantor has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer and such supplemental
indenture comply with this Section 12.3 and that all conditions
precedent herein provided for relating to such transaction have
been complied with; or
(b) the Guarantor liquidates (other than pursuant to any
Bankruptcy Law) and complies, if applicable, with the provisions of this
Indenture; provided that if a Person and its Affiliates, if any, shall
acquire all or substantially all of the assets of the Guarantor upon
such liquidation the Guarantor shall liquidate only if:
(i) the Person and each such Affiliate (or the common
corporate parent of such Person and its Affiliates, if such
Person and its Affiliates are wholly owned by such parent) which
acquire or will acquire all or a portion of the assets of the
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Guarantor shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the
Guarantor, under the Guarantee and this Indenture and such Person
or any of such Affiliates (or such parent) shall be a corporation
organized and existing under the laws of the United States or any
State thereof or the District of Columbia;
(ii) immediately after giving effect to such
transaction, no Event of Default, and no event or condition
which, after notice or lapse of time or both, would become an
Event of Default, shall have occurred and be continuing; and
(iii) the Guarantor has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that such liquidation and such supplemental indenture comply with
this Section 12.3 and that all conditions precedent herein
provided for relating to such transaction have been complied
with; or
(c) the Company ceases for any reason to be a "wholly owned
subsidiary" of the Guarantor (as such term is defined in Rule 1-02(z) of
the Regulation S-X promulgated by the Commission).
Upon any assumption of the Guarantee by any Person pursuant to
this Section 12.3, such Person may exercise every right and power of the
Guarantor under this Indenture with the same effect as if such successor
corporation had been named as the Guarantor herein, and all the obligations of
the Guarantor, hereunder and under the Guarantee and the Indenture shall
terminate.
Section 12.4. WHEN GUARANTOR MAY MERGE, ETC.
The Guarantor shall not consolidate with or merge with or into any other
Person or, directly or indirectly, sell, lease or convey all or substantially
all of its assets (computed on a consolidated basis), whether in a single
transaction or a series of related transactions, to another Person, unless:
(a) either the Guarantor shall be the continuing person, or the
Person (if other than the Guarantor) formed by such consolidation or
into which the Guarantor is merged or to which the assets of the
Guarantor are transferred shall be a corporation organized and validly
existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Guarantor under
the Guarantee and this Indenture;
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(b) immediately after giving effect to such transaction, no
Event of Default, and no event or condition which, after notice or lapse
of time or both, would become an Event of Default, shall have occurred
and be continuing; and
(c) the Guarantor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, conveyance or lease and such supplemental
indenture comply with this Section 12.4 and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
Upon any consolidation or merger, or any sale, conveyance or
lease of all or substantially all of the assets of the Guarantor, in accordance
with this Section 12.4, the successor corporation formed by such consolidation
or into which the Guarantor is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Guarantor under this Indenture with the same effect as if such successor
corporation had been named as the Guarantor herein, and all the obligations of
the predecessor Guarantor hereunder and under the Guarantee and the Indenture
shall terminate.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed as of the day and year first above written.
HARRAH'S OPERATING COMPANY, INC.
By: /s/ CHARLES ATWOOD
-----------------------------
Name: Charles Atwood
Its: Vice President and
Treasurer
HARRAH'S ENTERTAINMENT, INC.
By: /s/ CHARLES ATWOOD
-----------------------------
Name: Charles Atwood
Its: Vice President and
Treasurer
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Stephen J. Giurlando
-----------------------------
Name: Stephen J. Giurlando
Its: Assistant Vice President
S-1
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December 18, 1998
Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Re: $750,000,000 Aggregate Offering Price of Debt Securities of
Harrah's Operating Company, Inc. and Related Guarantees of
Harrah's Entertainment, Inc.
Ladies and Gentlemen:
At your request, we have examined the registration statement on Form
S-3 (the "Registration Statement") being filed by Harrah's Entertainment, Inc.
("HET") and Harrah's Operating Company, Inc. ("HOC") with the Securities and
Exchange Commission in connection with the registration under the Securities Act
of 1933, as amended, of up to $750,000,000 aggregate offering price of one or
more series of debt securities of HOC (the "Debt Securities"). The payment of
principal and interest with respect to the Debt Securities will be guaranteed by
HET (the "Guarantees").
You have provided us with a draft prospectus (the "Prospectus") which
is part of the Registration Statement. The Prospectus provides that it will be
supplemented in the future by one or more supplements to the Prospectus (each, a
"Prospectus Supplement"). We also have examined the indenture to be entered into
by and between HOC, HET as guarantor and a trustee
<PAGE>
Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
December 18, 1998
Page 2
relating to the Debt Securities (the "Indenture"). The Debt Securities may be
issued pursuant to the Indenture or one or more supplements thereto
(collectively, the "Indentures").
In our capacity as your counsel in connection with such registration,
we are familiar with the proceedings taken and proposed to be taken by the
Company in connection with the authorization and issuance of the Debt Securities
and, for the purposes of this opinion, have assumed such proceedings will be
timely and properly completed in the manner presently proposed and the terms of
each issuance will otherwise be in compliance with applicable law.
We have made such legal and factual examination and inquiries,
including an examination of originals or copies certified or otherwise
identified to our satisfaction of such documents, corporate records and
instruments, as we have deemed necessary or appropriate for purposes of this
opinion. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies.
We have been furnished with, and with your consent have relied upon,
certificates of officers of the Company with respect to certain factual matters.
In addition, we have obtained and relied upon such certificates and assurances
from public officials as we have deemed necessary.
We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States, the General Corporation Law of the
State of Delaware and the internal laws of the State of New York, and we express
no opinion with respect to the applicability thereto, or the effect thereon, of
the laws of any other jurisdiction or, in the case of Delaware, any other laws,
or as to any matters of municipal law or the laws of any local agencies within
any state.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
1. When (a) the Debt Securities have been duly established in
accordance with the terms of the applicable Indentures (including, without
limitation, the adoption by the Board of Directors of HOC (the "HOC Board") of a
resolution duly authorizing the issuance and delivery of the Debt Securities),
the Debt Securities have been duly executed and delivered and the Debt
Securities have been duly authenticated by the Trustee and duly executed and
delivered on behalf of HOC against payment therefor in accordance with the terms
and provisions of the applicable Indentures and as contemplated by the
Registration Statement, the Prospectus and the related Prospectus Supplement(s),
(b) each of the Registration Statement and any required post-effective amendment
thereto have all become effective under the Securities Act, (c) assuming
<PAGE>
Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
December 18, 1998
Page 3
that the terms of the Debt Securities as executed and delivered are as described
in the Registration Statements, the Prospectus and the related Prospectus
Supplement(s), (d) assuming that the Debt Securities as executed and delivered
do not violate any law applicable to HOC or result in a default under or breach
of any agreement or instrument binding upon HOC, (e) assuming that the Debt
Securities as executed and delivered comply with all requirements and
restrictions, if any, applicable to HOC, whether imposed by any court or
governmental or regulatory body having jurisdiction over HOC, and (f) assuming
that the Debt Securities are then issued as contemplated in the Registration
Statement, the Prospectus and the related Prospectus Supplement(s), the Debt
Securities will constitute valid and legally binding obligations of HOC,
enforceable against HOC in accordance with the terms of the Debt Securities.
2. When (a) the terms of the Guarantees have been duly established in
accordance with the terms of the applicable Indenture and/or by adoption of the
HET Board of a resolution duly authorizing the issuance and delivery of the
Guarantees, and duly executed and delivered on behalf of HET in connection with
the delivery of the Debt Securities, as contemplated by the Registration
Statement, the Prospectus and the related Prospectus Supplement(s), (b) the
Registration Statement and any required post-effective amendment thereto have
all become effective under the Securities Act, (c) assuming that the terms of
the Guarantees as executed and delivered are as described in the Registration
Statement, the Prospectus and the related Prospectus Supplement(s), (d) assuming
that the Guarantees as executed and delivered do not violate any law applicable
to HET or result in a default under or breach of any agreement or instrument
binding upon HET, (e) assuming that the Guarantees as executed and delivered
comply with all requirements and restrictions, if any, applicable to HET,
whether imposed by any court or governmental or regulatory body having
jurisdiction over HET, (f) assuming that the Guarantees are then issued as
contemplated in the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), and (g) assuming that the Debt Securities have been
duly authorized, executed, authenticated and delivered against payment therefor,
the Guarantees will constitute valid and legally binding obligations of HET,
enforceable against HET in accordance with the terms of the Guarantees.
The opinions set forth above are subject to the following exceptions,
limitations and qualifications: (i) the effect of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors; (ii) the effect of general principles of equity regardless of whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought;
(iii) the unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of, or contribution
to, a party with respect to a liability where such indemnification or
contribution is contrary to public policy; (iv) we express no opinion
<PAGE>
Harrah's Entertainment, Inc.
Harrah's Operating Company, Inc.
December 18, 1998
Page 4
concerning the enforceability of any waiver of rights or defenses with respect
to stay, extension or usury laws; and (v) we express no opinion with respect to
whether acceleration of Debt Securities may affect the collectibility of any
portion of the stated principal amount thereof which might be determined to
constitute unearned interest thereon.
We assume for purposes of this opinion that each of HET and HOC has
been duly incorporated and is validly existing as a corporation under the laws
of the State of Delaware and has the corporate power and authority to issue and
sell the Securities; that the applicable Indentures have been duly authorized by
all necessary corporate action by HET and HOC, have been duly executed and
delivered by HET and HOC and constitute the legally valid, binding and
enforceable obligations of each of HET and HOC, enforceable against each of HET
and HOC in accordance with their terms; and the Trustee for each Indenture is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization; that such Trustee is duly qualified to engage in
the activities contemplated by the applicable Indenture; that the applicable
Indentures have been duly authorized, executed and delivered by each Trustee as
applicable and constitute a legally valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with their terms; and the Trustee
is in compliance, generally and with respect to acting as Trustee under the
applicable Indentures, with all applicable laws and regulations; and that the
Trustee has the requisite organizational and legal power and authority to
perform its obligations under the applicable Indentures.
We consent to your filing this opinion as an exhibit to the
Registration Statement, to the incorporation by reference of this opinion into
any registration statement of HET and HOC filed pursuant to Rule 462(b) of the
Securities Act in relation to the Registration Statement, and to the reference
to our firm under the caption "Legal Matters" in the prospectus included
therein.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE>
EXHIBIT 12(1)
HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF RATIOS
(IN THOUSANDS, EXCEPT RATIO AMOUNTS)
<TABLE>
<CAPTION>
For the
Nine Months
Ended Year Ended December 31,
September 30, ---------------------------------------------------------------------
1998(a) 1997(b) 1996(c) 1995(d) 1994(e) 1993
-------------- ----------- ----------- ----------- ----------- -----------
<S> <S> <C> <C> <C> <C> <C>
RATIO OF EARNINGS TO FIXED CHARGES(f)
Income from continuing operations.......... $ 106,124 $ 107,522 $ 98,897 $ 78,810 $ 49,984 $ 74,867
Add:
Provision for income taxes............ 65,043 68,746 67,316 60,677 75,391 59,394
Interest expense...................... 81,358 79,071 69,968 73,890 76,363 73,080
Interest included in rental expense... 6,635 7,692 7,663 6,738 5,244 7,207
Amortization of capitalized interest.. 636 606 763 580 628 892
(Income) or loss from equity
investments........................ 1,398 (473) (473) - - (89)
Adjustment to include 100% of
nonconsolidated, majority-owned
subsidiary(g)...................... 6,713 - - (34,775) (7,438) -
--------- --------- --------- --------- --------- ---------
Earnings as defined $ 267,907 $ 263,164 $ 244,134 $ 185,920 $ 200,172 $ 215,351
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Fixed charges:
Interest expenses..................... $ 81,358 $ 79,071 $ 69,968 $ 73,890 $ 76,363 $ 73,080
Capitalized interest.................. 240 6,860 11,025 3,636 3,764 3,107
Interest included in rental expense... 6,635 7,692 7,663 6,738 5,244 7,207
Adjustment to include 100% of
nonconsolidated, majority-owned
subsidiary(g)...................... 6,609 - - 56,652 17,069
--------- --------- --------- --------- --------- ---------
Total fixed charges........................ $ 94,842 $ 93,623 $ 88,656 $ 140,916 $ 102,440 $ 83,394
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Ratio of charges to fixed charges..... 2.8 2.8 2.8 1.3 2.0 2.6
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
- --------------
(a) 1998 includes a $13.2 million gain from the sale of Harrah's
Entertainment's equity investment in a restaurant subsidiary.
(b) 1997 includes $13.8 million in pretax charges for write-downs and reserves
and a $37.4 million gain on the sale of equity in New Zealand subsidiary.
(c) 1996 includes $52.2 million in pretax charges for write-downs and reserves.
(d) 1995 includes $93.3 million in pretax charges for write-downs.
(e) 1994 includes a $53.4 million provision for settlement of all claims and
related cost related to the Merger Agreement and Tax Sharing Agreement
arising from the 1990 spin-off of Harrah's Entertainment and acquisition of
the Holiday Inn business by Bass PLC.
(f) As discussed in Note 12 to the Consolidated Financial Statements in the
1997 Harrah's Entertainment Annual Report, Harrah's Entertainment has
guaranteed certain third party loans in connection with its casino
development activities. The above ratio computation excludes estimated
fixed charges associated with these guarantees as follows: 1997, $7.8
million; 1996, $5.2 million; 1995, $6.8 million; 1994, $5.5 million; and
1993, $3.1 million.
(g) Prior to November 1995, Harrah's Entertainment owned a majority interest in
Harrah's Jazz Company. However, voting control was shared equally among
three partners. As a result, Harrah's Jazz was not consolidated into
Harrah's Entertainment's financial statements. As required by Item
503(d)(2), Harrah's Entertainment's ratio of earnings to fixed charges
ratio computation for 1995 and 1994 has been adjusted to include Harrah's
Jazz financial results as if this entity were consolidated. For the nine
months ended September 30, 1998, the computation of the ratio has been
adjusted to include the financial results and fixed charges of Showboat
Marina Casino Partnership.
<PAGE>
EXHIBIT 23(2)
[Arthur Andersen Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports
dated February 3, 1998 included (or incorporated by reference) in Harrah's
Entertainment, Inc.'s Form 10-K for the year ended December 31, 1997 and to
all references to our Firm in this registration statement.
Arthur Andersen LLP
Memphis, Tennessee
December 16, 1998
<PAGE>
EXHIBIT 23(3)
[Arthur Andersen Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-3 of our
report dated February 24, 1998, included in the Annual Report on Form 10-K of
Rio Hotel & Casino, Inc. for the year ended December 31, 1997, and to all
references to our Firm included in this registration statement on Form S-3.
Arthur Andersen LLP
Las Vegas, Nevada
December 14, 1998
<PAGE>
EXHIBIT 23(4)
[KPMG Peat Marwick LLP Letterhead]
2300 West Sahara Avenue
Suite 300, Box 28
Las Vegas, NV 89102
CONSENT OF INDEPENDENT AUDITORS'
The Board of Directors
Harrah's Entertainment, Inc.:
We consent to the incorporation by reference in the Form S-3 of Harrah's
Entertainment, Inc. and Harrah's Operating Company, Inc. of our report dated
March 13, 1998, with respect to the consolidated balance sheets of Showboat,
Inc. and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash flows
for each of the years in the three-year period ended December 31, 1997, which
report appears in the December 31, 1997 annual report on Form 10-K of
Showboat, Inc.
KPMG PEAT MARWICK LLP
December 18, 1998
<PAGE>
EXHIBIT 25(1)
File Nos. 333-
---------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
----------
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-5375195
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. national bank) Identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
HARRAH'S ENTERTAINMENT, INC.
HARRAH'S OPERATING COMPANY, INC.
(Exact name of obligor as specified in its charter)
Delaware 75-1941623
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1023 Cherry Road
Memphis, Tennessee 38117
(Address of principal executive offices) (Zip Code)
----------
DEBT SECURITIES
(Title of indenture securities)
-------------------------------
<PAGE>
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
New York State Banking Department
Two Rector Street, New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York Second District
33 Liberty Street
New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
<PAGE>
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.
None
(b) If the trustee is a trustee under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, or is trustee for more than one outstanding
series of securities under the indenture, state whether there
has been a default under any such indenture or series,
identify the indenture or series affected, and explain the
nature of any such default.
Not applicable
Item 16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of
eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust
Company as amended to date. (See Exhibit 1A to Form T-1,
Securities and Exchange Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the trustee to
Commence Business (Included in Exhibit 1 above).
*3. A copy of the Authorization of the trustee to exercise
corporate trust powers, as amended to date (See Exhibit 4
to Form T-1, Securities and Exchange Commission File No.
22-19146).
*4. A copy of the existing By-Laws of the trustee, as amended
to date (See Exhibit 4 to Form T-1, Securities and
Exchange Commission File No. 22-19146).
5. Not Applicable
6. The consent of United States institutional trustee required
by Section 321(b) of the Act.
<PAGE>
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
* The Exhibits thus designated are incorporated herein by
reference as exhibits hereto. Following the description
of such Exhibits is a reference to the copy of the
Exhibit heretofore filed with the Securities and Exchange
Commission, to which there have been no amendments or
changes.
<PAGE>
NOTE
In answering any item in this Statement of Eligibility which relates to matters
peculiarly within the knowledge of the obligor and its directors or officers,
the trustee has relied upon information furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee of
all facts on which to base responsive answers to Item 2, the answer to said Item
are based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an amendment to
this Form T-1.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
IBJ Schroder Bank & Trust Company, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York, and State of New York, on the 18th day of December, 1998.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Stephen J. Giurlando
------------------------------
Stephen J. Giurlando
Assistant Vice President
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939, as amended, in connection with the issuance by Harrah's Operating Company,
Inc. of its Debt Securities, we hereby consent that reports of examinations by
Federal, State, Territorial, or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Stephen J. Giurlando
-------------------------------
Stephen J. Giurlando
Assistant Vice President
Dated: December 18, 1998
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
OF NEW YORK, NEW YORK
AND FOREIGN AND DOMESTIC SUBSIDIARIES
REPORT AS OF SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
<S> <C>
ASSETS
1. Cash and balance due from depository institutions:
a. Noninterest-bearing balances and currency and coin .................$ 42,702
b. Interest-bearing balances ..........................................$ 13,444
2. Securities:
a. Held-to-maturity securities ........................................$ 191,921
b. Available-for-sale securities ......................................$ 118,931
3. Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries and in IBFs:
Federal Funds sold and Securities purchased under agreements to resell ..$ 79,838
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income ..............$ 1,938,005
b. LESS: Allowance for loan and lease losses .............$ 63,361
c. LESS: Allocated transfer risk reserve .................$ -0-
d. Loans and leases, net of unearned income, allowance, and reserve ...$ 1,874,644
5. Trading assets held in trading accounts .................................$ 462
6. Premises and fixed assets (including capitalized leases) ................$ 1,922
7. Other real estate owned .................................................$ 819
8. Investments in unconsolidated subsidiaries and associated companies .....$ -0-
9. Customers' liability to this bank on acceptances outstanding ............$ 371
10. Intangible assets .......................................................$ 11,167
<PAGE>
11. Other assets ............................................................$ 68,097
12. TOTAL ASSETS ............................................................$ 2,404,318
LIABILITIES
13. Deposits:
a. In domestic offices ................................................$ 682,904
(1) Noninterest-bearing ...................................$ 135,253
(2) Interest-bearing ......................................$ 547,651
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs ......$ 1,154,887
(1) Noninterest-bearing ...................................$ 17,024
(2) Interest-bearing ......................................$ 1,137,863
14. Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds purchased and Securities sold under agreements to
repurchase ..............................................................$ 91,000
15. a. Demand notes issued to the U.S. Treasury ...........................$ 12,893
b. Trading Liabilities ................................................$ 239
16. Other borrowed money:
a. With a remaining maturity of one year or less ......................$ 31,002
b. With a remaining maturity of more than one year ....................$ 1,375
c. With a remaining maturity of more than three years .................$ 1,550
17. Not applicable.
18. Bank's liability on acceptances executed and outstanding ................$ 371
19. Subordinated notes and debentures .......................................$ 100,000
20. Other liabilities .......................................................$ 76,658
21. TOTAL LIABILITIES .......................................................$ 2,152,679
22. Limited-life preferred stock and related surplus ........................$ N/A
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus ...........................$ -0-
24. Common stock ............................................................$ 29,649
<PAGE>
25. Surplus (exclude all surplus related to preferred stock) ................$ 217,008
26. a. Undivided profits and capital reserves .............................$ 4,112
b. Net unrealized gains (losses) on available-for-sale securities .....$ 870
27. Cumulative foreign currency translation adjustments .....................$ -0-
28. TOTAL EQUITY CAPITAL ....................................................$ 251,639
29. TOTAL LIABILITIES AND EQUITY CAPITAL ....................................$ 2,404,318
</TABLE>
