<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO .
Commission File No. 1-10410
HARRAH'S ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware I.R.S. No. 62-1411755
(State of Incorporation) (I.R.S. Employer Identification No.)
1023 Cherry Road
Memphis, Tennessee 38117
(Address of principal executive offices)
(901) 762-8600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
At June 30, 1999, there were outstanding 128,307,805 shares of the
Company's Common Stock.
Page 1 of 648
Exhibit Index Page 42
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
----------------------------
The accompanying unaudited Consolidated Condensed Financial Statements of
Harrah's Entertainment, Inc., a Delaware corporation, have been prepared in
accordance with the instructions to Form 10-Q, and therefore do not include all
information and notes necessary for complete financial statements in conformity
with generally accepted accounting principles. The results for the periods
indicated are unaudited, but reflect all adjustments (consisting only of normal
recurring adjustments) which management considers necessary for a fair
presentation of operating results. Results of operations for interim periods are
not necessarily indicative of a full year of operations. See Note 2 to these
Consolidated Condensed Financial Statements regarding the completion of our
merger with Rio Hotel & Casino, Inc. on January 1, 1999. These Consolidated
Condensed Financial Statements should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in our 1998 Annual
Report to Stockholders.
-2-
<PAGE>
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except share amounts) June 30, December 31,
1999 1998
<S> <C> <C>
ASSETS ---------- ----------
Current assets
Cash and cash equivalents $ 176,326 $ 158,995
Receivables, less allowance for doubtful
accounts of $41,594 and $14,356 90,694 55,043
Deferred income tax benefits 30,200 22,478
Prepayments and other 46,122 27,521
Inventories 32,741 15,306
---------- ----------
Total current assets 376,083 279,343
---------- ----------
Land, buildings, riverboats and equipment 3,820,964 2,660,004
Less: accumulated depreciation (864,128) (789,847)
---------- ----------
2,956,836 1,870,157
Excess of purchase price over net assets
of businesses acquired, net of amortization
of $47,333 and $40,051 (Note 2) 530,512 383,450
Investments in and advances to
nonconsolidated affiliates 301,447 273,508
Deferred costs, trademarks, notes receivable and
other assets 559,705 479,874
---------- ----------
$4,724,583 $3,286,332
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 53,733 $ 57,864
Construction payables 8,016 629
Accrued expenses 269,836 172,021
Current portion of long-term debt 10,263 2,332
---------- ----------
Total current liabilities 341,848 232,846
Long-term debt 2,582,392 1,999,354
Deferred credits and other 110,098 112,362
Deferred income taxes 200,484 75,457
---------- ----------
3,234,822 2,420,019
---------- ----------
Minority interests 14,828 14,906
---------- ----------
Commitments and contingencies (Notes 4, 6, 7 and 8)
Stockholders' equity
Common stock, $0.10 par value, authorized
360,000,000 shares, outstanding 128,307,805
and 102,188,018 shares (net of 3,292,614 and
3,036,562 shares held in treasury) 12,831 10,219
Capital surplus 951,018 407,691
Retained earnings 522,875 451,410
Accumulated other comprehensive income 10,942 6,567
Deferred compensation related to restricted stock (22,733) (24,480)
---------- ----------
1,474,933 851,407
---------- ----------
$4,724,583 $3,286,332
========== ==========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
-3-
<PAGE>
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except per share Second Quarter Ended Six Months Ended
amounts) June 30, June 30, June 30, June 30,
1999 1998 1999 1998
-------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues
Casino $599,603 $387,507 $1,165,562 $ 730,403
Food and beverage 105,387 54,533 208,540 104,258
Rooms 63,802 37,690 126,438 69,768
Management fees 18,275 22,160 34,995 32,337
Other 33,718 19,404 63,969 37,069
Less: casino promotional allowances (69,648) (42,660) (136,699) (80,754)
-------- -------- ---------- ----------
Total revenues 751,137 478,634 1,462,805 893,081
-------- -------- ---------- ----------
Operating expenses
Direct
Casino 314,397 219,347 615,923 395,585
Food and beverage 55,449 28,348 112,243 53,893
Rooms 16,513 10,810 33,594 20,420
Depreciation of buildings,
riverboats and equipment 45,711 31,593 93,755 61,073
Development costs 1,509 2,082 2,270 3,920
Write-downs, reserves and
recoveries (1,598) 1,847 (1,475) 1,847
Project opening costs 45 3,342 397 5,996
Other 170,189 94,970 322,809 195,160
-------- -------- ---------- ----------
Total operating expenses 602,215 392,339 1,179,516 737,894
-------- -------- ---------- ----------
Operating profit 148,922 86,295 283,289 155,187
Corporate expense (13,492) (8,936) (21,423) (15,586)
Relocation of corporate offices (1,422) - (4,492) -
Equity in losses of
nonconsolidated affiliates (6,153) (3,511) (12,821) (6,302)
Venture restructuring costs - (1,533) 397 (2,459)
Amortization of goodwill and
trademarks (4,351) (460) (8,963) (919)
-------- -------- ---------- ----------
Income from operations 123,504 71,855 235,987 129,921
Interest expense, net of interest
capitalized (48,692) (25,623) (99,587) (44,949)
Gain on sale of equity interest
in nonconsolidated affiliate - 13,155 - 13,155
Other income, including interest
income 4,404 1,395 6,570 5,525
-------- -------- ---------- ----------
Income before income taxes and
minority interests 79,216 60,782 142,970 103,652
Provision for income taxes (28,742) (22,031) (53,380) (37,952)
Minority interests (2,551) (1,732) (4,322) (3,778)
-------- -------- ---------- ----------
Income before extraordinary losses 47,923 37,019 85,268 61,922
Extraordinary losses on early
extinguishments of debt, net of
income tax benefit of $4,004,
$9,031, $5,768 and $9,755 (7,375) (16,613) (10,623) (18,280)
-------- -------- ---------- ----------
Net income $ 40,548 $ 20,406 $ 74,645 $ 43,642
======== ======== ========== ==========
</TABLE>
-4-
<PAGE>
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except per share
amounts) Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
Earnings per share-basic
Income before extraordinary losses $ 0.38 $ 0.37 $ 0.67 $ 0.62
Extraordinary losses, net (0.06) (0.17) (0.08) (0.18)
--------- --------- -------- ---------
Net income $ 0.32 $ 0.20 $ 0.59 $ 0.44
========= ========= ======== =========
Earnings per share-diluted
Income before extraordinary losses $ 0.37 $ 0.36 $ 0.66 $ 0.61
Extraordinary losses, net (0.06) (0.16) (0.08) (0.18)
--------- --------- -------- ---------
Net income $ 0.31 $ 0.20 $ 0.58 $ 0.43
========= ========= ======== =========
Average common shares outstanding 126,203 100,207 125,864 100,167
========= ========= ======== =========
Average common and common
equivalent shares outstanding 128,984 101,736 127,866 101,480
========= ========= ======== =========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
-5-
<PAGE>
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands) Six Months Ended
June 30, June 30,
1999 1998
----------- ----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 74,645 $ 43,642
Adjustments to reconcile net income to cash
flows from operating activities
Extraordinary losses, before income taxes 16,391 27,311
Depreciation and amortization 110,443 71,825
Other noncash items 23,384 18,227
Minority interests' share of income 4,322 3,778
Equity in losses of nonconsolidated
affiliates 12,821 6,302
Net gains from asset sales (1,714) (13,174)
Net change in long-term accounts 21,655 (15,090)
Net change in working capital accounts (7,827) (29,950)
----------- -----------
Cash flows provided by operating activities 254,120 112,871
----------- -----------
Cash flows from investing activities
Land, buildings, riverboats and equipment additions (172,406) (64,038)
Investments in and advances to nonconsolidated
affiliates (34,381) (15,203)
Purchase of minority interest in subsidiary (26,000) -
Cash acquired in Rio transaction 22,025 -
Proceeds from asset sales 10,789 96
Increase/(iecrease) in construction payables 7,387 (4,484)
Acquisition of Showboat, Inc., net of cash
acquired - (465,388)
Increase in notes receivable - (22,908)
Proceeds from sale of equity interest in
nonconsolidated affiliate - 17,000
Other 10,215 (1,147)
----------- -----------
Cash flows used in investing activities (182,371) (556,072)
----------- -----------
Cash flows from financing activities
Net borrowings under Revolving Credit Facility 960,651 1,068,802
Net repayments under retired revolving credit
facility (1,086,000) -
Proceeds from issuance of senior notes, net of
discount and issue costs of $5,980 494,020 -
Early extinguishments of debt (408,904) (560,708)
Scheduled debt retirements (3,866) (1,303)
Premiums paid on early extinguishments of debt (2,739) (24,569)
Purchases of treasury stock (3,180) -
Minority interests' distributions, net of
contributions (4,400) (3,583)
----------- -----------
Cash flows (used in) provided by financing
activities (54,418) 478,639
----------- -----------
Net increase in cash and cash equivalents 17,331 35,438
Cash and cash equivalents, beginning of period 158,995 116,443
----------- -----------
Cash and cash equivalents, end of period $ 176,326 $ 151,881
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
-6-
<PAGE>
HARRAH'S ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands) Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net income $ 40,548 $ 20,406 $ 74,645 $ 43,642
--------- --------- -------- ---------
Other comprehensive income
Foreign currency translation
adjustments, net of tax provision of
$2,247, $351, $1,402 and $351 3,035 572 2,288 572
Unrealized gains (losses) on available-for-sale
securities, net of tax provision (benefit) of
$641, $(1,714), $1,279 and $(858) 1,047 (2,726) 2,087 (1,387)
--------- --------- -------- ---------
Other comprehensive income 4,082 (2,154) 4,375 (815)
--------- ---------- -------- ---------
Comprehensive income $ 44,630 $ 18,252 $ 79,020 $ 42,827
========= ========= ======== =========
</TABLE>
-7-
<PAGE>
HARRAH'S ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
Note 1 - Basis of Presentation and Organization
- -----------------------------------------------
Harrah's Entertainment, Inc. ("Harrah's Entertainment", the "Company",
"we", "our" or "us", and including our subsidiaries where the context requires),
a Delaware corporation, is one of America's leading casino companies. Our casino
entertainment facilities, operating under the Harrah's, Rio and Showboat brand
names, include casino hotels in Reno, Lake Tahoe, Las Vegas and Laughlin,
Nevada; two casino hotel properties in Atlantic City, New Jersey; and riverboat
and dockside casinos in Joliet, Illinois; East Chicago, Indiana; Shreveport,
Louisiana; Tunica and Vicksburg, Mississippi; and North Kansas City and St.
Louis, Missouri. We also manage casinos on Indian lands near Phoenix, Arizona;
Cherokee, North Carolina; and Topeka, Kansas, as well as managing the Star City
casino in Sydney, Australia. We discontinued management of casinos in Auckland,
New Zealand, as of the end of second quarter 1998, and near Seattle, Washington
during fourth quarter 1998.
Certain amounts for the prior year second quarter and first six months have
been reclassified to conform with the current year presentation.
Note 2 - Acquisitions
- ---------------------
We are accounting for each of the transactions described below as a
purchase. Accordingly, the purchase price is allocated to the underlying assets
acquired and liabilities assumed based upon their estimated fair values based on
independent appraisals, discounted cash flows, quoted market prices and
estimates made by management. For the Showboat transaction, the allocation of
the purchase price was completed in second quarter 1999. For the Rio
transaction, the allocation of the purchase price will be completed within one
year from the date of the acquisition. To the extent that the purchase price
exceeds the fair value of the net identifiable tangible and intangible assets
acquired, such excess will be allocated to goodwill and amortized over a period
of 40 years. For periods prior to the finalization of the purchase price
allocation, our financial statements include estimated goodwill amortization
expense.
-8-
<PAGE>
Showboat, Inc. - On June 1, 1998, we completed our acquisition of Showboat, Inc.
("Showboat") for $520 million in cash and assumption of approximately $635
million of Showboat debt. The operating results for Showboat are included in the
Consolidated Condensed Financial Statements from the date of acquisition.
Subsequent to the closing of the acquisition, we completed tender
offers and consent solicitations for Showboat's 9 1/4% First Mortgage Bonds due
2008 (the "Bonds") and 13% Senior Subordinated Notes due 2009 (the "Notes"). As
a result of these tender offers, $128.6 million face amount of the Bonds and
$117.9 million face amount of the Notes were retired on June 15, 1998.
During first quarter 1999, we consummated an agreement with our
partners owning the other 45% ownership interest in the East Chicago Showboat
property to increase our ownership interest to 99.55%, and partnership
agreements were amended to give us a greater flexibility in operating this
property. Consequently, we began consolidating this partnership with the
financial results of our other businesses in first quarter 1999. The
consideration for this increase in ownership was cash and stock. In March
1999, we redeemed all $140 million face amount of 13 1/2% First Mortgage
Notes of this partnership and recorded an extraordinary loss of $2.0 million,
net of tax. Also during first quarter 1999, this property was rebranded as a
"Harrah's" property.
In April 1999, we announced plans to sell certain of our interests
in Star City casino in Sydney, Australia to an Australia-based company in
connection with that company's intention to offer to acquire the issued and
outstanding shares of Star City Holdings Ltd. We currently own 135 million
shares of Star City Holdings Ltd. and 37 million options to purchase
additional ordinary shares. We have agreed to sell approximately 110 million
ordinary shares of Star City Holdings, our interest in the Star City
management contract, and options to purchase additional ordinary shares. We
also intend to sell our remaining shares and any options in Star City not
purchased by the Australian based company for cash or by tendering such
shares and options into the separate tender offer for Star City shares that
will be initiated by that company. The acquisition of these securities and
interests is subject to New South Wales Casino Control Authority regulatory
approvals and satisfaction of closing conditions. Should such regulatory
approvals not be obtained,
-9-
<PAGE>
the Australia-based company has agreed to purchase 27.5 million ordinary shares
of our Star City shares, for which regulatory approval is not required. The
transaction is expected to close in the second half of 1999.
At the time of the Showboat acquisition, the Las Vegas Showboat
property was determined to be a non-strategic asset and is being reported as
an asset-held-for-sale in our financial statements. In July 1999 we announced
that we have reached an agreement to sell Showboat Las Vegas. The sale is
expected to close by the end of 1999, subject to certain conditions,
including regulatory approval. At June 30, 1999, the estimated net realizable
value of this property, net of estimated selling expenses, carrying costs and
interest costs through the assumed date of sale, is included in Deferred
costs, trademarks, notes receivable and other assets in the Consolidated
Condensed Balance Sheets.
Rio Hotel & Casino, Inc. - On January 1, 1999, we completed our merger with Rio
Hotel & Casino, Inc. ("Rio"). In connection with the merger, we issued
approximately 25 million shares of our common stock and assumed Rio's
outstanding debt of $435 million face amount.
In connection with the Rio merger, our equity interest in a new airline
based in Las Vegas, Nevada, increased to approximately 47.8%, but our voting
power is limited by contract to 25%. Our initial investment of $15 million in
this new airline was carried at cost. The increase in our ownership interest
requires us to account for the investment by the equity method, whereby we
include our share of this nonconsolidated affiliate's profits or losses in our
financial results. Operation of the airline began in May 1999. Rio's investment
in the new airline is reported as an asset-held-for-sale in our financial
statements.
During second quarter 1999 we completed tender offers and consent
solicitations for Rio's 10 5/8% Senior Subordinated Notes due 2005 and 9 1/2%
Senior Subordinated Notes due 2007 (collectively, the "Rio Notes"). As a result
of these tender offers, we redeemed all $225 million face amount of the Rio
Notes. We recorded liabilities assumed in the Rio merger, including these notes,
at their fair value as of the date of the consummation of the merger. The
difference between the consideration paid to the holders of the Rio Notes
pursuant to the tender offers and the carrying value of the notes on the date of
the redemption was recorded in the second quarter as an extraordinary loss of
$4.5 million, net of tax.
The following unaudited pro forma consolidated financial information
for the Company has been prepared assuming that the acquisitions and the
Showboat and Rio debt extinguishments discussed above had occurred on the
first day of the period:
-10-
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
(In millions, except June 30, 1998 June 30, 1998
per share amounts) ------------- ----------------
<S> <C> <C>
Revenues $674.7 $1,324.8
------- ---------
------- ---------
Income from operations $ 90.5 $ 185.5
------- ----------
------- ----------
Income before extraordinary
losses $ 24.2 $ 54.1
------- ----------
------- ----------
Net income $ 7.6 $ 35.8
------- ----------
------- ----------
Earnings per share-diluted
Income before extraordinary losses $ 0.19 $ 0.43
------- ----------
------- ----------
Net income $ 0.03 $ 0.25
------- ----------
------- ----------
</TABLE>
These unaudited pro forma results are presented for comparative purposes only.
The pro forma results are not necessarily indicative of what our actual results
would have been had the acquisitions been completed as of the beginning of the
period, or of future results.
Note 3 - Stockholders' Equity
- -----------------------------
In addition to its common stock, Harrah's Entertainment has the following
classes of stock authorized but unissued:
Preferred stock, $100 par value, 150,000 shares authorized
Special stock, $1.125 par value, 5,000,000 shares authorized -
Series A Special Stock, 2,000,000 shares designated
In July 1999, our Board of Directors authorized the repurchase in open
market and other transactions of up to 10 million shares of the Company's common
stock. We expect to acquire our shares from time to time at prevailing market
prices through the December 31, 2000, expiration of the approved plan.
Note 4 - Long-Term Debt
- -----------------------
Revolving Credit Facilities
- ---------------------------
On April 30, 1999, we consummated new revolving credit and letter of
credit facilities (the "Bank Facility") in the amount
-11-
<PAGE>
of $1.6 billion. This Bank Facility consists of a five-year $1.3 billion
revolving credit and letter of credit facility maturing in 2004 and a separate
$300 million revolving credit facility which is renewable annually, at the
borrower's and lenders' options. Initially, the Bank Facility bears interest
based upon 87.5 basis points over LIBOR for current borrowings under the
five-year facility and 92.5 basis points over LIBOR for the 364-day facility. In
addition, there is a facility fee for borrowed and unborrowed amounts which is
currently 20 basis points on the five-year, $1.3 billion facility and 15 basis
points on the 364-day, $300 million facility. The interest rate and facility fee
are based on our current debt ratings and leverage ratio and may change as our
debt ratings and leverage ratio change. Proceeds from the Bank Facility were
used to retire our previous revolving credit facility scheduled to mature in
2000 (the "Previous Facility") and to retire Rio's revolving credit facility
scheduled to mature in 2003 and Rio's 10 5/8% Senior Subordinated Notes due 2005
and 9 1/2% Senior Subordinated Notes due 2007.
Issuance of Senior Notes
- ------------------------
In keeping with our strategy to refinance a portion of our short-term,
floating-rate borrowings with debt that has fixed rates and longer maturities,
in January 1999 we issued $500 million of 7 1/2% Senior Notes due 2009 and used
the proceeds to reduce amounts outstanding under our Previous Facility. The
corresponding reduction in our available borrowing capacity under the Previous
Facility resulted in the write-off of related unamortized deferred finance
charges, recorded as an extraordinary loss of $1.2 million in first quarter.
Interest Rate Agreements
- ------------------------
To manage the relative mix of our debt between fixed and variable rate
instruments, we have entered into interest rate swap agreements to modify the
interest characteristics of our outstanding debt without an exchange of the
underlying principal amount.
We have six interest rate swap agreements which effectively convert a total
of $300 million in variable rate debt to a fixed rate. Pursuant to the terms of
these swaps, all of which reset quarterly, we receive variable payments tied to
LIBOR in exchange for our payments at a fixed interest rate. The fixed rates to
be paid by us and variable rates to be received by us are summarized in the
following table:
-12-
<PAGE>
<TABLE>
<CAPTION>
Swap Rate
Swap Rate Received
Paid (Variable) at Swap
Notional Amount (Fixed) June 30, 1999 Maturity
- --------------- --------- -------------- ------------
<S> <C> <C> <C>
$50 million 6.985% 5.174% March 2000
$50 million 6.951% 5.165% March 2000
$50 million 6.945% 5.165% March 2000
$50 million 6.651% 5.000% May 2000
$50 million 5.788% 5.096% June 2000
$50 million 5.785% 5.096% June 2000
</TABLE>
The differences to be paid or received under the terms of the interest rate
swap agreements are accrued as interest rates change and recognized as an
adjustment to interest expense for the related debt. Changes in the variable
interest rates to be paid or received pursuant to the terms of our interest rate
agreements will have a corresponding effect on our future cash flows. These
agreements contain a credit risk that the counterparties may be unable to meet
the terms of the agreements. We minimize that risk by evaluating the
creditworthiness of our counterparties, which are limited to major banks and
financial institutions, and do not anticipate nonperformance by the
counterparties.
Note 5 - Supplemental Cash Flow Disclosures
- -------------------------------------------
Cash Paid for Interest and Taxes
- --------------------------------
The following table reconciles our interest expense, net of interest
capitalized, per the Consolidated Condensed Statements of Income, to cash paid
for interest:
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
(In thousands) 1999 1998
------- --------
<S> <C> <C>
Interest expense, net of amount capitalized $99,587 $44,949
Adjustments to reconcile to cash paid for interest:
Net change in accruals (5,411) (12,905)
Amortization of deferred finance charges (5,553) (1,697)
Net amortization of discounts and premiums 1,313 609
------- -------
Cash paid for interest, net of amount capitalized $89,936 $30,956
======= =======
Cash payments of income taxes, net of refunds $12,743 $15,058
======= =======
</TABLE>
-13-
<PAGE>
Note 6 - Commitments and Contingent Liabilities
- -----------------------------------------------
New Orleans Casino Development
- ------------------------------
We have an approximate 43% ownership interest in Jazz Casino
Company, L.L.C. ("JCC"), the company which will own and operate the exclusive
land-based casino (the "Casino") in New Orleans, Louisiana. We will manage
that Casino pursuant to a management agreement between JCC and a subsidiary
of our Company. We have (i) guaranteed JCC's initial $100 million annual
payment under the Casino operating contract to the State of Louisiana gaming
board (the "State Guarantee"); (ii) guaranteed $166.5 million of a $236.5
million JCC bank credit facility; (iii) guaranteed to the State of Louisiana
gaming board, City of New Orleans, banks under the JCC bank credit facility
and JCC bondholders, completion and opening of the Casino on or before
October 30, 1999 (subject to force majeure); and (iv) made a $22.5 million
subordinated loan to JCC to finance construction of the Casino.
With respect to the State Guarantee, we are obligated to guarantee
JCC's first $100 million annual payment obligation commencing upon the
earlier of opening of the Casino or October 30, 1999 (subject to force
majeure), and, if certain cash flow tests (for the renewal periods beginning
April 1, 2001) and other conditions are satisfied each year, to renew the
guarantee beginning April 1, 2000, for each 12 month period ending March 31,
2004. Our obligations under the guarantee for the first year of operations or
any succeeding 12 month period is limited to a guarantee of the $100 million
payment obligation of JCC for the 12 month period in which the guarantee is
in effect and is secured by a first priority lien on JCC's assets. JCC's
payment obligation (and therefore the amount we have guaranteed) is $100
million at the commencement of each 12 month period under the Casino
operating contract and declines on a daily basis by 1/365 of $100 million to
the extent payments are made each day by JCC to Louisiana's gaming board.
Rio
- ---
Rio has entered into an agreement with Clark County, Nevada, to
construct a road across certain of its recently acquired properties that will
provide an additional east/west conduit for Las Vegas residents and tourists
and allow for additional access to the Rio from the Las Vegas Strip. Upon
completion, we will deed the roadway acreage to Clark County in exchange for
deeding other Clark County acreage to the Company and reimbursing us for a
majority of our construction costs.
-14-
<PAGE>
Contractual Commitments
- -----------------------
We continue to pursue additional casino development opportunities that may
require, individually and in the aggregate, significant commitments of capital,
up-front payments to third parties, guarantees by the Company's of third party
debt and development completion guarantees. Excluding guarantees and commitments
for the New Orleans casino development project discussed above, as of June 30,
1999, we had guaranteed third party loans and leases of $112 million, which
are secured by certain assets, and had commitments of $134 million, primarily
construction-related.
During second quarter 1999, we performed under our guarantee of the
Upper Skagit Tribe's development financing and purchased their receivable from
the lender for $11.4 million. Under the terms of our agreement with the Tribe,
they have agreed to fund the retirement of this debt. The Tribe is attempting to
secure new financing; however, there is no assurance that their efforts will be
successful and that the receivable will be retired.
The agreements under which we manage casinos on Indian lands contain
provisions required by law which provide that a minimum monthly payment be made
to the tribe. That obligation has priority over scheduled payments of borrowings
for development costs. In the event that insufficient cash flow is generated by
the operations to fund this payment, we must pay the shortfall to the tribe.
Such advances, if any, would be repaid to us in future periods in which
operations generate cash flow in excess of the required minimum payment. These
commitments will terminate upon the occurrence of certain defined events,
including termination of the management contract. As of June 30, 1999, the
aggregate monthly commitment pursuant to these contracts, which extend for
periods of up to 42 months from June 30, 1999, was $1.2 million.
Severance Agreements
- --------------------
As of June 30, 1999, we have severance agreements with 44 of our senior
executives, which provide for payments to the executives in the event of their
termination after a change in control, as defined. These agreements provide,
among other things, for a compensation payment of 1.5 to 3.0 times the
executive's average annual compensation, as defined, as well as for accelerated
payment or accelerated vesting of any compensation or awards payable to the
executive under any of our incentive plans. The estimated amount, computed as of
June 30, 1999, that would be payable under the agreements to these executives
based on earnings and stock options aggregated approximately $61.9 million.
-15-
<PAGE>
Tax Sharing Agreements
- ----------------------
In connection with the 1995 spin-off of certain hotel operations (the "PHC
Spin-off") to Promus Hotel Corporation ("PHC"), we entered into a Tax Sharing
Agreement with PHC wherein each company is obligated for those taxes associated
with their respective businesses. Additionally, we are obligated for all taxes
for periods prior to the PHC Spin-off date which are not specifically related to
PHC operations and/or PHC hotel locations. Our obligations under this agreement
are not expected to have a material adverse effect on our consolidated financial
position or results of operations.
Self-Insurance
- --------------
We are self-insured for various levels of general liability, workers'
compensation and employee medical coverage. We also have stop loss coverage to
protect against unexpected claims. Insurance claims and reserves include
accruals of estimated settlements for known claims, as well as accruals of
actuarial estimates of incurred but not reported claims.
Note 7 - Litigation
- --------------------
We are involved in various inquiries, administrative proceedings and
litigation relating to contracts, sales of property and other matters arising in
the normal course of business. While any proceeding or litigation has an element
of uncertainty, we believe that the final outcome of these matters will not have
a material adverse effect upon our consolidated financial position or our
results of operations.
Note 8 - Nonconsolidated Affiliates
- -----------------------------------
Summarized balance sheet and income statement information of
nonconsolidated affiliates as of June 30, 1999 and December 31, 1998, and for
the second quarters and first six months ended June 30, 1999 and 1998 is
included in the following tables.
-16-
<PAGE>
<TABLE>
<CAPTION>
(In thousands) June 30, Dec. 31,
1999 1998
---------- ----------
<S> <C> <C>
Combined Summarized Balance Sheet Information
Current assets $ 101,969 $ 111,218
Land, buildings and equipment, net 1,078,516 1,094,195
Other assets 356,763 355,505
---------- ----------
Total assets 1,537,248 1,560,918
---------- ----------
Current liabilities 44,235 96,095
Long-term debt 817,167 808,334
---------- ----------
Total liabilities 861,402 904,429
---------- ----------
Net assets $ 675,846 $ 656,489
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
-------- --------- -------- --------
<S> <C> <C> <C> <C>
(In thousands)
Combined Summarized Statements of
Operations
Revenues $ 99,073 $ 19,083 $187,656 $ 23,802
======== ========= ======== ========
Operating loss $(12,593) $ (15,807) $(16,012) $(24,628)
======== ========= ======== ========
Net loss $(12,997) $ (15,269) $(27,287) $(21,836)
======== ========= ======== ========
</TABLE>
Our share of nonconsolidated affiliates' combined net operating results
are reflected in the accompanying Consolidated Condensed Statements of Income as
Equity in losses of nonconsolidated affiliates.
Our investments in and advances to nonconsolidated affiliates are
reflected in the accompanying Consolidated Condensed Balance Sheets as follows:
<TABLE>
<CAPTION>
(In thousands) June 30, Dec. 31,
1999 1998
-------- --------
<S> <C> <C>
Investments in and advances to
Nonconsolidated affiliates
Accounted for under the equity method $271,027 $231,366
Accounted for at historical cost - 15,087
Equity securities available-for-sale and
recorded at market value 30,420 27,055
-------- --------
$301,447 $273,508
======== ========
</TABLE>
-17-
<PAGE>
In accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", we adjust the carrying value of certain marketable equity
securities to include unrealized gains and losses. A corresponding adjustment is
recorded in our stockholders' equity and deferred income tax accounts.
Note 9 - Summarized Financial Information
- ------------------------------------------
Harrah's Operating Company, Inc. ("HOC") is a wholly-owned subsidiary and
the principal asset of Harrah's Entertainment. HOC is the issuer of certain debt
securities which have been guaranteed by Harrah's Entertainment. Due to the
comparability of HOC's consolidated financial information with that of Harrah's
Entertainment, complete separate financial statements and other disclosures
regarding HOC have not been presented. Management has determined that such
information is not material to holders of HOC's debt securities. Summarized
financial information of HOC as of June 30, 1999 and December 31, 1998, and for
the second quarters and first six months ended June 30, 1999 and 1998, prepared
on the same basis as Harrah's Entertainment, was as follows:
<TABLE>
<CAPTION>
(In thousands) June 30, Dec. 31,
1999 1998
---------- ----------
<S> <C> <C>
Current assets $ 379,322 $ 271,247
Land, buildings, riverboats and
equipment, net 2,956,836 1,870,157
Other assets 1,391,582 1,136,750
---------- ----------
4,727,740 3,278,154
---------- ----------
Current liabilities 336,714 209,651
Long-term debt 2,582,392 1,999,354
Other liabilities 310,577 187,247
Minority interests 14,828 14,906
---------- ----------
3,244,511 2,411,158
---------- ----------
Net assets $1,483,229 $ 866,996
========== ==========
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
(In thousands) Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
Revenues $751,012 $481,980 $1,462,597 $900,112
======== ======== ========== ========
Income from operations $124,444 $ 76,520 $ 236,856 $139,129
======== ======== ========== ========
Income before extraordinary
losses $ 48,534 $ 40,051 $ 85,834 $ 67,907
======== ======== ========== ========
Net income $ 41,159 $ 24,438 $ 75,211 $ 49,627
======== ======== ========== ========
</TABLE>
Certain of our debt guarantees contain covenants which, among other
things, place limitations on HOC's ability to pay dividends and make other
restricted payments, as defined, to Harrah's Entertainment. The amount of HOC's
restricted net assets, as defined, computed in accordance with the most
restrictive of these covenants regarding restricted payments, was approximately
$1.5 billion at June 30, 1999.
-19-
<PAGE>
Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
The following discussion and analysis of the financial position and
operating results of Harrah's Entertainment, Inc., (referred to in this
discussion, together with its consolidated subsidiaries where appropriate, as
"Harrah's Entertainment", "Company", "we", "our" and "us") for second quarter
1999 and 1998, updates, and should be read in conjunction with, Management's
Discussion and Analysis of Financial Position and Results of Operations
presented in our 1998 Annual Report.
RIO ACQUISITION
- ---------------
On January 1, 1999, we completed our merger with Rio Hotel & Casino,
Inc. ("Rio"). In connection with the merger, we issued approximately 25 million
shares of our common stock and assumed Rio's outstanding debt of $435 million
face amount. The acquisition is being accounted for as a purchase. Accordingly,
the purchase price is being allocated to the underlying assets and liabilities
based upon their estimated fair values at the date of acquisition. We determine
the estimated fair values based on independent appraisals, discounted cash
flows, quoted market prices and estimates made by management. The allocation of
the purchase price will be completed by the end of 1999. To the extent that the
purchase price exceeds the fair value of the net identifiable tangible assets
acquired, such excess will be allocated to goodwill and amortized over 40 years.
For periods prior to the completion of the purchase price allocation, our
financial statements include estimated goodwill amortization expense.
In connection with the Rio merger, our equity interest in a new airline
based in Las Vegas, Nevada, increased to approximately 47.8%, but our voting
power is limited by contract to 25%. Our initial investment of $15 million in
this new airline was carried at cost. The increase in our ownership interest
requires us to account for the investment by the equity method, whereby we
include our share of this nonconsolidated affiliate's profits or losses in our
financial results. Operation of the airline began in May 1999. Rio's investment
in the new airline is reported as an asset-held-for-sale in our financial
statements.
-20-
<PAGE>
OPERATING RESULTS AND DEVELOPMENT PLANS
- ---------------------------------------
Overall
- -------
Second quarter 1999 results reflect the impact of the additions of
Showboat in June 1998 and Rio in January 1999, but even without them we
experienced a 8.1% increase in revenue and a 16.2% increase in income from
operations. We believe this growth in our year-over-year comparable results is
due to the continued execution of our customer loyalty strategy and cost-control
management. Our Harrah's brand benefited from both local repeat business and
cross-market customer visits generated through our marketing programs.
<TABLE>
<CAPTION>
Second Quarter Percentage Six Months Ended Percentage
(in millions, except -------------- Increase/ ---------------- Increase/
earnings per share) 1999 1998 (Decrease) 1999 1998 Decrease)
------ ------ -------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues $751.1 $478.6 56.9% $1,462.8 $893.1 63.8%
Operating profit 148.9 86.3 72.5% 283.3 155.2 82.5%
Income from operations 123.5 71.9 71.8% 236.0 129.9 81.7%
Income before extraordinary
losses 47.9 37.0 29.5% 85.3 61.9 37.8%
Net income 40.5 20.4 98.5% 74.6 43.6 71.1%
Earnings per share - diluted
Before extraordinary losses 0.37 0.36 2.8% 0.66 0.61 8.2%
Net income 0.31 0.20 55.0% 0.58 0.43 34.9%
Operating margin 16.4% 15.0% 1.4pts 16.1% 14.5% 1.6pts
</TABLE>
Revenues for second quarter 1999 increased 56.9% over second quarter 1998. This
increase was driven by the addition of revenues from the Showboat and Rio
properties, record revenues at Harrah's properties in Las Vegas, Atlantic City,
St. Louis and North Kansas City, and increased management fees from
Harrah's-brand casinos on Indian lands. These factors also contributed to
increased operating income, net income and earnings per share over prior year.
Revenues for the six months ended June 30, 1999 were up 63.8% over
revenues for the same period last year. While this increase was driven primarily
by the addition of revenues from the Showboat and Rio properties, revenues
excluding these recently acquired properties were up 9.7%.
-21-
<PAGE>
Western Region
- --------------
<TABLE>
<CAPTION>
Second Quarter Percentage Six Months Ended Percentage
-------------- Increase/ ---------------- Increase/
(in millions) 1999 1998 (Decrease) 1999 1998 Decrease)
------ ------ ----------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Casino revenues $175.8 $111.9 57.1% $352.8 $215.7 63.6%
Total revenues 283.0 159.4 77.5% 565.4 305.9 84.8%
Operating profit 43.9 23.0 90.9% 88.8 40.2 120.9%
Operating margin 15.5% 14.4% 1.1pts 15.7% 13.1% 2.6pts
</TABLE>
The addition of Rio plus increased second quarter revenues at all Harrah's
properties in the Western region, except Harrah's Reno, resulted in a 77.5%
increase over second quarter 1998 in this region. Although revenues at Harrah's
Reno were down slightly from last year, operating income was 5.1% higher than in
second quarter 1998. Overall, revenues at Northern Nevada properties were 4.9%
higher than in second quarter 1998 and operating profit 12.3% higher. Second
quarter revenues at Southern Nevada properties, excluding Rio which was acquired
January 1, 1999, were up 5.6% over last year and operating income was 26.7%
higher than in the same period last year. These increases were driven by more
effective marketing programs, cross-market visitation and improved margins.
For the six months ended June 30, 1999, revenues increased 8.1% in
Northern Nevada and 7.4% in Southern Nevada, excluding Rio, and operating income
increased 25.7% in Northern Nevada and 25.5% in Southern Nevada over the same
six month period last year. Rio contributed $235.9 million in revenue and
$38.2 million operating profit for the six months ended June 30, 1999.
In first quarter 1999, Rio began construction of a showroom complex as
an addition to Rio's existing entertainment venues. The showroom will include a
1,500 seat, state-of-the-art theater with balcony; a three-level lobby with
hospitality center; and a theater promenade with approximately 10,000 square
feet of retail space. The showroom complex will be located adjacent to the
Pavilion, Rio's new 110,000 square foot entertainment/convention complex which
opened in March 1999. The showroom complex is expected to cost approximately $35
million, of which $12.7 million had been spent through June 30, 1999. Completion
is scheduled for first quarter 2000.
At the time of the Showboat acquisition, the Showboat Las Vegas
property was determined to be a nonstrategic asset for us and is being reported
as an asset held-for-sale in our financial statements. In July 1999, we
announced that we have reached an agreement to sell Showboat Las Vegas. The sale
is expected to close by the end of 1999, subject to certain conditions,
including regulatory approval. No gain or loss is expected to be recorded on
this sale.
-22-
<PAGE>
In June 1999, we purchased properties adjacent to our casino in Reno,
Nevada. Buildings on these properties will be demolished to give way to possible
expansions in the future.
Eastern Region
- --------------
<TABLE>
<CAPTION>
Second Quarter Percentage Six Months Ended Percentage
-------------- Increase/ ---------------- Increase/
(in millions) 1999 1998 (Decrease) 1999 1998 Decrease)
------ ------ ----------- ------ ----- --------
<S> <C> <C> <C> <C> <C> <C>
Casino revenues $183.0 $113.1 61.8% $350.9 $192.1 82.7%
Total revenues 196.8 123.8 59.0% 375.8 210.2 78.8%
Operating profit 45.4 27.7 63.9% 81.5 44.8 81.9%
Operating margin 23.1% 22.4% 0.7pts 21.7% 21.3% 0.4pts
</TABLE>
Harrah's Atlantic City's revenues increased 9.9% in second quarter 1999 and
operating profit increased 17.6% over the same period last year. Revenues
increased 8.3% and operating income increased 12.8% over the same six month
period last year at Harrah's Atlantic City. Eastern region results also include
Showboat Atlantic City for 1999 and for one month during the second quarter and
first six months of 1998.
Central Region
- --------------
<TABLE>
<CAPTION>
Second Quarter Percentage Six Months Ended Percentage
-------------- Increase/ ---------------- Increase/
(in millions) 1999 1998 (Decrease) 1999 1998 Decrease)
------ ------ ----------- ------ ----- --------
<S> <C> <C> <C> <C> <C> <C>
Casino revenues $240.8 $162.5 48.2% $461.9 $322.6 43.2%
Total revenues 252.6 172.4 46.5% 485.6 342.6 41.7%
Operating profit 50.8 33.4 52.1% 92.0 69.0 33.3%
Operating margin 20.1% 19.4% 0.7pts 19.0% 20.1% (1.1)pts
</TABLE>
Chicagoland - Revenues increased 24.2% at Harrah's Joliet compared to the second
quarter of 1998, and operating profit increased 21.1% compared to the same
period last year. For the six months ended June 30, 1999, revenues were 19.6%
above the same six month period last year, while operating income was basically
flat when compared to the same period last year. In late June 1999, cruise
scheduling and ticketing were eliminated at Harrah's Joliet, and business levels
have increased noticeably since going dockside. We began construction in third
quarter 1998 of an 11-story 204-room hotel at this property. Estimated cost of
this project is $29.1 million, and $11.0 million had been spent through June 30,
1999. Completion is projected for fourth quarter 1999.
-23-
<PAGE>
In first quarter 1999, we consummated our agreement with our partners
owning the other 45% ownership interest in the East Chicago Showboat property to
increase our ownership interest to 99.55%, and partnership agreements were
amended to give us greater flexibility in operating this property. Consequently,
we began consolidating this partnership with the financial results of our other
businesses in first quarter. The consideration for this increase in ownership
was cash and stock. Also during first quarter 1999, this property was rebranded
as a "Harrah's" property, and, despite some rebranding-related disruptions,
results subsequent to rebranding have been strong.
Louisiana - Harrah's Shreveport's revenues and operating profit for second
quarter and first six months decreased from the same period last year due to
competitive conditions in the market. Construction began in May 1999 on a
514-room hotel with almost 13,500 square feet of convention center space. The
new hotel and amenity expansion is expected to cost $146.6 million, of which
$5.0 million had been spent through June 30, 1999, and is scheduled to open in
fourth quarter of 2000.
Mississippi - Combined second quarter revenues by Harrah's Mississippi
properties increased 3.5% over second quarter 1998 and 4.0% for the first six
months of 1999. Results from Harrah's Tunica improved significantly over second
quarter 1998, while operating profit at Harrah's Vicksburg declined from 1999.
In March 1999, we consummated the sale of our original Tunica property to
another casino company for cash and a note receivable. The note was collected in
full in April 1999, and a gain was recognized in second quarter. Our gain from
this disposition is not material.
Missouri - Harrah's North Kansas City's revenues for second quarter 1999
increased 14.3% over the same period in 1998, and operating profit increased
7.5% from second quarter last year. For the first six months, revenues were
11.1% higher than in 1998, while operating income remained flat.
Second quarter revenues at Harrah's St. Louis-Riverport casino
increased 38.1% over second quarter 1998. Operating profit increased 103.5% over
the same period last year. Revenues for the first six months of 1999 increased
38.6%, and operating income increased 123.3% over the same period last year. Our
pro-rata share of the operating losses of the related shoreside facilities,
which are owned jointly with another casino company, was $2.6 million for the
quarter and $5.4 million for the first six months of 1999. These losses are
included in Equity in losses of nonconsolidated affiliates in the Consolidated
Condensed Statements of Income (see Other Factors Affecting Net Income).
-24-
<PAGE>
Both Harrah's St. Louis and Harrah's North Kansas City were market-share
leaders in their respective markets for the second quarter and first six months.
Managed and Other Casinos
- -------------------------
Increases in our managed and other results were led by the addition of
management fees from the Star City casino in Sydney, Australia, for which we
assumed management with the Showboat acquisition on June 1, 1998, and by
increases in fees from our management of tribal-owned casino properties which
were open in both periods.
See DEBT and LIQUIDITY section for further discussion of Harrah's
guarantees of debt related to Indian projects.
Other Factors Affecting Net Income
- ----------------------------------
<TABLE>
<CAPTION>
Second Quarter Percentage Six Months Ended Percentage
(Income)/Expense -------------- Increase/ ---------------- Increase/
(in millions) 1999 1998 (Decrease) 1999 1998 (Decrease)
------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Development costs $ 1.5 $ 2.1 (28.6)% $ 2.3 $ 3.9 (41.0)%
Project opening costs - 3.3 N/M 0.4 6.0 (93.3)%
Corporate expense 13.5 8.9 51.7 % 21.4 15.6 37.2 %
Headquarters relocation expense 1.4 - N/M 4.5 - N/M
Equity in losses of
nonconsolidated affiliates 6.2 3.5 77.1 % 12.8 6.3 103.2 %
Write-downs, reserves and recoveries (1.6) 1.8 N/M (1.5) 1.8 N/M
Venture restructuring costs - 1.5 N/M (0.4) 2.5 N/M
Amortization of goodwill 4.4 1.9 131.6 % 9.0 2.3 N/M
Interest expense, net 48.7 25.6 90.2 % 99.6 44.9 121.8 %
Gain on sale of equity interest
in subsidiary - (13.1) N/M - (13.1) N/M
Other income (4.4) (1.4) N/M (6.6) (5.5) 20.0 %
Effective tax rate 36.3% 36.6% (0.3)pts 37.3% 36.6% 0.7pts
Minority interests $ 2.6 $ 1.7 52.9 % $ 4.3 $ 3.8 13.2 %
Extraordinary losses, net
of income taxes 7.4 16.6 (55.4)% 10.6 18.3 (42.1)%
Average common and common
equivalent shares outstanding 129.0 101.7 26.8 % 127.9 101.5 26.0 %
</TABLE>
Development costs for second quarter 1999 decreased 28.6% from the same
period last year, reflecting the continuing decline in development activity due
to the limited number of new markets opening for development.
-25-
<PAGE>
Project opening costs for the first six months of 1999 include costs
incurred in connection with expansions, remodeling and conversions at existing
properties. 1998 project opening costs included costs incurred in connection
with an initiative to develop and implement strategies and employee training
programs designed to better focus the Company on serving our targeted customers.
Corporate expense increased 51.7% in second quarter 1999 from the prior
year level due to timing of expenses and increased costs. Increased corporate
expense for the quarter included approximately $2.0 million in consultant costs
for a complete review of corporate services and expenses. The review generated
ideas from employees to cut costs through internal department efficiencies,
automation, capturing synergies, outsourcing and streamlining or eliminating
select, underutilized internal products or services. These cost saving measures
will be phased in over the next 12 to 18 months. $1.4 million of costs related
to the relocation of the Company's headquarters to Las Vegas, Nevada, were
expensed in second quarter 1999.
Equity in losses of nonconsolidated affiliates consists of losses from
the St. Louis shoreside facilities joint venture and our investments in Jazz
Casino Company L.L.C. in New Orleans, Star City casino in Australia, an airline
company in Las Vegas, Nevada, a golf course in Tunica, Mississippi, and a
thoroughbred racetrack in Florence, Kentucky.
Second quarter 1999 write-downs, reserves and recoveries include the
gain from the sale of our idle property in Tunica, Mississippi. Second quarter
1998 represents charges accrued in connection with the planned termination of a
development contract.
Amortization of goodwill increased significantly in 1999 over the same
period last year due to the acquisitions of Showboat and Rio, both of which were
accounted for as purchases.
Interest expense increased in 1999 over 1998, primarily as a result of
increases in debt arising from the Showboat and Rio transactions.
Other income increased in second quarter 1999 due to higher income
earned on the cash surrender value of company owned life insurance policies.
The effective tax rates for all periods are higher than the federal
statutory rate primarily due to state income taxes. The increase in the
effective tax rate for first six months of 1999 compared to 1998 is due to the
additional goodwill incurred in connection with the Showboat and Rio
acquisitions.
-26-
<PAGE>
Minority interests reflects joint venture partners' share of income
and decreased in 1999 from the prior year as a result of lower earnings from
those ventures.
The extraordinary losses in 1999 and 1998 are due to the early
extinguishments of debt and include premiums paid to the holders of the debt
retired and the write-off of related unamortized deferred finance charges. (See
Debt and Liquidity - Extinguishment of Debt.)
The increase in common and common equivalent shares outstanding over
last year is primarily the result of shares issued in the consummation of the
Rio merger.
CAPITAL SPENDING AND DEVELOPMENT
- --------------------------------
Year 2000 Update
- ----------------
We are continuing to address the potential impact of the Year 2000
("Y2K") on the systems and equipment that are essential to our operations.
Please see the discussion in our 1998 Form 10-K for a complete description of
our approach to the Y2K issue and the processes underway to address its
potential impact. We have prioritized our efforts according to the potential
impact to our business if a system is not Y2K ready. Priorities, in order, are:
Business Critical-required to operate the business; High Priority-significant
impact to revenues, operating costs, or customer services; and Other-used by the
business but not considered Business Critical or High Priority.
The following table provides an overview of Business Critical items for
Harrah's, Showboat, and Rio branded properties and corporate facilities and our
Y2K progress as of July 1999.
-27-
<PAGE>
<TABLE>
<CAPTION>
BUSINESS CRITICAL ITEMS Y2K Y2K READINESS INTERNALLY VENDOR
STRATEGY STATUS(1) TESTED CERTIFIED
<S> <C> <C> <C> <C>
Casino Management System (Harrah's and Showboat).............. Renovate/Test Y2K Ready Complete N/A
Casino Management System (Rio)................................ Replace/Test 3rd Qtr `99 Complete N/A
Financial Systems............................................. Renovate/Test Y2K Ready Complete Complete
Fire Alarm/Sprinkler Systems.................................. Test 3rd Qtr `99 Complete Complete
GPS/Navigational Systems...................................... Test Y2K Ready Complete Complete
HVAC.......................................................... Test/Renovate Y2K Ready Complete Complete
Key Lock System............................................... Renovate/Test Y2K Ready Complete Complete
IBM AS400/OS400............................................... Renovate/Test Y2K Ready Complete Complete
Kiosks........................................................ Test Y2K Ready Complete Complete
Lodging Management System..................................... Test Y2K Ready Complete Complete
Payroll....................................................... Renovate/Test Y2K Ready Complete Complete
Phone System-PBX.............................................. Renovate/Test Y2K Ready Complete Complete
Point-of-Sale System (Micros)................................. Renovate/Test Y2K Ready Complete Complete
Procurement and Payables...................................... Replace/Test 3rd Qtr `99 Complete Complete
Slot Data System (Harrah's and Showboat)...................... Renovate/Test Y2K Ready Complete Complete
Slot Data System (Rio)........................................ Replace/Test 3rd Qtr `99 Complete Complete
Slot Devices.................................................. Test Y2K Ready Complete Complete
Surveillance/Security......................................... Test Y2K Ready Complete Complete
Time & Attendance............................................. Replace/Test 3rd Qtr `99 Complete Complete
UPS/Generator................................................. Test Y2K Ready Complete Complete
WINet (Customer Database)..................................... Renovate/Test Y2K Ready Complete Complete
</TABLE>
- -----------------
(1) For purposes of this document, "Y2K Ready" means it is anticipated that the
product, process, or mechanism will operate during and after the Year 2000 in a
manner that will not create a material and adverse impact on our operations.
As noted in the table above, the majority of Business Critical items
have been internally tested to verify vendor Y2K compliance claims. Such testing
generally entails creating a test environment to roll the date forward to
simulate the transition from December 31, 1999, to January 1, 2000, test that
the year 2000 is recognized as a Leap year, and perform other tests such as end
of month, quarter and year-end processing.
We currently estimate the total costs of system replacements and
upgrades to address potential Y2K problems, as well as enhancing business and
operational functionality in some areas, to be approximately $11 million. Of
this $11 million, approximately $9.6 million represents capitalizable costs. The
total amount expended through June 30, 1999, was approximately $6.7 million,
of which approximately 80% is related to the cost to repair, replace, and
improve software and related hardware and
-28-
<PAGE>
equipment, approximately 20% related to the cost to repair, replace, and improve
embedded technology, and approximately $40,000 related to the costs of
identifying and communicating with significant suppliers. The estimated future
cost is approximately $4.3 million, of which approximately 80% relates to the
cost to repair, replace, and improve software and related hardware and
equipment, approximately 20% relates to the cost of replacing, repairing, and
improving embedded technology and approximately $10,000 relates to the costs of
identifying and communicating with significant suppliers. These costs, along
with internal resource hours, are being separately tracked. We continue to
evaluate the estimated costs associated with Y2K issues, and if significant
issues are identified in the future, such costs could increase. Although we are
devoting considerable resources to resolve Y2K issues, we continue to support
and implement other systems, operations and initiatives.
Based upon our efforts to date and the status of the plans to address
identified issues, we believe that our Business Critical and High Priority
systems are compliant or will be made compliant by December 1999. One of the
greatest challenges of the Y2K issue is the potential impact of items outside of
our control, such as those of utility companies, phone and network systems, and
financial institutions. We are assessing the Y2K status of such items on an
ongoing basis and developing contingency plans in the event of failures.
However, should we and/or our significant suppliers fail to timely correct
material Y2K issues, such failure could have a significant impact on our ability
to operate as we did before Y2K. We are currently developing contingency
plans designed to minimize any impact to the extent possible. The impact on our
operating results of such failures and of any contingency plans to be designed
to address such events cannot be determined at this time. We believe the "most
likely reasonable worst case scenario" is one in which there are power outages.
Although we have backup power supplies and generators and contingency plans to
address this type scenario, an extended power outage could impact our operating
results. Like all other businesses, our ability to predict the impact of the Y2K
Problem and the efficacy of our solutions with respect thereto is limited by the
unprecedented nature of the problem.
Summary
- -------
In addition to the specific development and expansion projects
discussed in the Operating Results and Development Plans section, we perform
on-going refurbishment and maintenance at our casino entertainment facilities in
order to maintain the
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Company's quality standards. We also continue to pursue development and
acquisition opportunities for additional casino entertainment facilities that
meet our strategic and return on investment criteria. Prior to the receipt of
necessary regulatory approvals, the costs of pursuing development projects are
expensed as incurred. Construction-related costs incurred after the receipt of
necessary approvals are capitalized and depreciated over the estimated useful
life of the resulting asset. Project opening costs are expensed as incurred.
Our planned development projects, if they go forward, will require,
individually and in the aggregate, significant capital commitments and, if
completed, may result in significant additional revenues. The commitment of
capital, the timing of completion and the commencement of operations of
casino entertainment development projects are contingent upon, among other
things, negotiation of final agreements and receipt of approvals from the
appropriate political and regulatory bodies. Cash needed to finance projects
currently under development as well as additional projects pursued is
expected to be made available from operating cash flows, the Bank Facility
(see Debt and Liquidity section), joint venture partners, specific project
financing, guarantees of third party debt and, if necessary, additional debt
and/or equity offerings. Our capital spending for the first six months of
1999 totaled approximately $230.0 million. Estimated total capital
expenditures for 1999 are expected to be between $350 million and $430
million.
DEBT AND LIQUIDITY
- ------------------
Bank Facility
- -------------
On April 30, 1999, we consummated new revolving credit and letter of
credit facilities (the "Bank Facility") in the amount of $1.6 billion. This Bank
Facility consists of a five-year $1.3 billion revolving credit and letter of
credit facility maturing in 2004 and a separate $300 million revolving credit
facility which is renewable annually, at the borrower's and lenders' options.
Initially, the Bank Facility bears interest based upon 87.5 basis points over
LIBOR for current borrowings under the five-year facility and 92.5 basis points
over LIBOR for the 364-day facility. In addition, there is a facility fee for
borrowed and unborrowed amounts which is currently 20 basis points on the
five-year, $1.3 billion facility and 15 basis points on the 364-day, $300
million facility. The interest rate and facility fee are based on our current
debt ratings and leverage ratio and may
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change as our debt ratings and leverage ratio change. Proceeds from the Bank
Facility were used to retire our previous revolving credit facility scheduled to
mature in 2000 (the "Previous Facility") and to retire Rio's revolving credit
facility scheduled to mature in 2003 and Rio's 10 5/8% Senior Subordinated Notes
due 2005 and 9 1/2% Senior Subordinated Notes due 2007.
Issuance of Senior Notes
- ------------------------
In keeping with our strategy to refinance a portion of our short-term,
floating-rate borrowings under our Previous Facility with debt that has fixed
rates and longer maturities, in January 1999, we issued $500 million of 7 1/2%
Senior Notes due 2009 and used the net proceeds to further reduce amounts
outstanding under our Previous Facility.
Extinguishments of Debt
- -----------------------
On March 15, 1999, we redeemed all $140 million face amount of our
99.55% owned subsidiary, Showboat Marina Casino Partnership's, 13 1/2% First
Mortgage Notes due 2003 (the "SMCP Notes"). We retired the SMCP Notes using
proceeds from our Previous Facility. We recorded liabilities assumed in the
Showboat acquisition, including the SMCP Notes, at their fair value as of the
consummation date of the transaction. The difference between the consideration
of $159.8 million paid to the holders of the SMCP Notes pursuant to this tender
offer and the carrying value of the SMCP notes on the consummation date was
recorded in the first quarter as an extraordinary loss of $2.0 million, net of
tax.
On May 17, 1999, we redeemed all $100 million face amount of Rio's 10
5/8% Senior Subordinated Notes due 2005 and all $125 million of Rio's 9 1/2%
Senior Subordinated Notes due 2007. We recorded liabilities assumed in the Rio
merger, including these notes, at their fair value as of the date of
consummation of the merger. The difference between the consideration of $251.8
million paid to the holders of the Rio notes pursuant to the tender offer and
the carrying value of the notes on the date of the redemption was recorded in
the second quarter as an extraordinary loss of $4.5 million, net of tax.
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Interest Rate Agreements
- ------------------------
To manage the relative mix of our debt between fixed and variable rate
instruments, we have entered into interest rate swap agreements to modify the
interest characteristics of our outstanding debt without an exchange of the
underlying principal amount. The differences to be paid or received under the
terms of our interest rate swap agreements are accrued as interest rates change
and recognized as an adjustment to interest expense for the related debt.
Changes in the variable interest rates to be paid or received pursuant to the
terms of our interest rate swap agreements will have a corresponding effect on
our future cash flows.
These agreements contain a credit risk that the counterparties may be
unable to meet the terms of the agreements. We minimize that risk by evaluating
the creditworthiness of our counterparties, which are limited to major banks and
financial institutions, and do not anticipate nonperformance by the
counterparties.
For more information regarding the Company's interest rate swap
agreements as of June 30, 1999, please see Note 4 to the accompanying
Consolidated Condensed Financial Statements.
Indian Contract Commitments and Guarantees
- ------------------------------------------
The agreements under which we manage casinos on Indian lands contain
provisions required by law which provide that a minimum monthly payment be made
to the tribe. That obligation has priority over scheduled repayments of
borrowings for development costs. In the event that insufficient cash flow is
generated by the operations to fund this payment, we must pay the shortfall to
the tribe. Such advances, if any, would be repaid to us in future periods in
which operations generate cash flow in excess of the required minimum payment.
These commitments will terminate upon the occurrence of certain defined events,
including termination of the management contract. Our aggregate monthly
commitment pursuant to the contracts for the three Indian-owned facilities we
now manage, which extend for periods of up to 42 months from June 30, 1999, is
$1.2 million.
We may guarantee all or part of the debt incurred by Indian tribes with
which we have entered into a management contract to fund development of casinos
on the Indian lands. For all existing guarantees of Indian debt, we have
obtained a first lien
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on certain personal property (tangible and intangible) of the casino enterprise.
There can be no assurance, however, the value of such property would satisfy our
obligations in the event these guarantees were enforced. Additionally, we have
received limited waivers from the Indian tribes of their sovereign immunity to
allow us to pursue our rights under the contracts between the parties and to
enforce collection efforts as to any assets in which a security interest is
taken. The aggregate outstanding balance of such debt as of June 30, 1999, was
$92.0 million, excluding the guarantee related to the Upper Skagit Tribe's
debt.
During second quarter 1999, we performed under our guarantee of the
Upper Skagit Tribe's development financing and purchased their receivable from
the lender for $11.4 million. Under the terms of our agreement with the Tribe,
they have agreed to fund the retirement of this debt. The Tribe is attempting to
secure new financing; however, there is no assurance that their efforts will be
successful and that the receivable will be retired.
Our agreement with the Ak-Chin tribe for management of their casino
near Phoenix, Arizona, expires in December 1999. We are presently negotiating
with the tribe for renewal of this management agreement.
Announced Dispositions
- ----------------------
In April 1999, we announced plans to sell certain of our interests
in Star City casino in Sydney, Australia to an Australia-based company in
connection with that company's intention to offer to acquire the issued and
outstanding shares of Star City Holdings Ltd. We currently own 135 million
shares of Star City Holdings Ltd. and 37 million options to purchase
additional ordinary shares. We have agreed to sell approximately 110 million
ordinary shares of Star City Holdings, our interest in the Star City
management contract, and our options to purchase additional ordinary shares.
We also intend to sell our remaining shares and any options in Star City not
purchased by the Australia-based company for cash or by tendering such shares
and options into the separate tender offer for Star City Shares that has been
initiated by that company. Based on current exchange rates, we expect to
realize approximately US$220 million in after-tax proceeds from the sale of
our equity and management contract interests in Star City, which will be used
to reduce our outstanding indebtedness. The
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acquisition of these securities and interests is subject to New South Wales
Casino Control Authority regulatory approvals and satisfaction of closing
conditions. Should such regulatory approvals not be obtained, the
Australia-based company has agreed to purchase 27.5 million ordinary shares
of our Star City shares, for which regulatory approval is not required. The
transaction is expected to close in the second half of 1999.
We own approximately 3 million shares of Sodak Gaming, Inc. ("Sodak"),
a company which distributes casino gaming products and software systems
throughout the U.S. In first quarter 1999, it was announced that the shares of
Sodak will be purchased by a gaming equipment manufacturing company for $10 a
share, with the transaction expected to close by the end of 1999.
EFFECTS OF CURRENT ECONOMIC AND POLITICAL CONDITIONS
- ----------------------------------------------------
Competitive Pressures
- ---------------------
Due to the limited number of new markets opening for development, the
focus of many casino operators has shifted to investing in existing markets in
an effort to attract new customers, thereby increasing competition in those
markets. Our properties in the long-established gaming markets of Nevada and New
Jersey have generally reacted less significantly to the changing competitive
conditions. With the exception of the additional supply being added in Las
Vegas, the amount of supply change within these markets has represented a
smaller percentage change than that experienced in some riverboat markets. In
riverboat markets, the additions to supply had a more noticeable impact, due to
the fact that competition was limited in the early stages of many of these
markets. As companies have completed expansion projects, supply has typically
grown at a faster pace than demand in some markets and competition has increased
significantly. Furthermore, several operators, including Harrah's, have
announced plans for additional developments or expansions in some markets. In
the Las Vegas market, three new "mega" facilities have opened since October
1998, and others are planned and under development. The impact that the
additional supply will have on our operations cannot be determined at this time.
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Over the last decade, there has also been a significant increase in the
number of casinos on Indian lands, made possible by the Indian Gaming Regulatory
Act of 1988. We manage three such facilities. The future growth potential from
Indian casinos is also uncertain, however. See "Political Uncertainties" below
for information concerning a California referendum.
Although the short-term effect of these competitive developments on the
Company has been negative, we are not able to determine the long-term impact,
whether favorable or unfavorable, that these trends and events will have on our
current or future markets. We believe that the geographic diversity of our
operations; our focus on multi-market customer relationships; our service
training, measurements and rewards programs; and our continuing efforts to
establish our brands as premier brands have well-positioned us to face the
challenges present within the industry. We have introduced WINet, a
sophisticated nationwide customer database, and our Total Gold Card, a
nationwide reward and recognition card, both of which we believe provide
competitive advantages, particularly with players who visit more than one
market. We are now embarking on the next state of our strategy with the launch
of the tiered customer loyalty card program - Total Diamond, Total Platinum and
Total Gold - to reward customers for choosing Harrah's Entertainment casinos.
Industry Consolidation
- ----------------------
As evidenced by a number of recent public announcements by casino
entertainment companies of plans to acquire or be acquired by other companies,
including our acquisitions of Showboat and Rio, consolidation in the gaming
industry is now underway. We believe we are well-positioned to, and may from
time to time, pursue additional strategic acquisitions to further enhance our
distribution, strengthen our access to target customers and leverage our
technological and centralized services infrastructure.
Political Uncertainties
- -----------------------
The casino entertainment industry is subject to political and
regulatory uncertainty. In 1996, the U.S. government formed the National
Gambling Impact Study Commission to study gambling in the United States,
including the casino gaming industry. The commission issued its report in
June 1999. During fourth quarter 1998, voters in
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the state of California approved a referendum that will allow an expansion of
gaming offerings on Indian lands in that state. A challenge to the
constitutionality of the initiated act is currently pending before the
California Supreme Count. At this time, the ultimate impacts that the
National Gambling Impact Study Commission report and the approval of the
California referendum will have on the industry are uncertain. From time to
time, individual jurisdictions have also considered legislation or
referendums which could adversely impact Harrah's Entertainment's operations,
and the likelihood or outcome of similar legislation and referendums in the
future is difficult to predict.
The casino entertainment industry represents a significant source of tax
revenues to the various jurisdictions in which casinos operate and hires large
numbers of employees for the casinos. From time to time, various state and
federal legislators and officials have proposed changes in tax laws, or in the
administration of such laws, which would affect the industry. It is not possible
to determine with certainty the scope or likelihood of possible future changes
in tax laws or in the administration of such laws. If adopted, such changes
could have a material adverse effect on our financial results.
INTERCOMPANY DIVIDEND RESTRICTION
- ---------------------------------
Certain of our debt guarantees require us to abide by covenants which,
among other things, limit HOC's ability to pay dividends and make other
restricted payments, as defined, to Harrah's Entertainment. The amount of HOC's
restricted net assets, as defined, computed in accordance with these covenants
regarding restricted payments was approximately $1.5 billion at June 30, 1999.
Harrah's Entertainment's principal asset is the stock of HOC, a wholly-owned
subsidiary which holds, directly and through subsidiaries, the principal assets
of our businesses. Given this ownership structure, these restrictions should not
impair our ability to conduct our business through our subsidiaries or to pursue
our development plans.
PRIVATE SECURITIES LITIGATION REFORM ACT
- ----------------------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. Certain information included in this
Form 10-Q and other materials filed or to be filed by the Company with the
Securities and Exchange Commission ("SEC") (as well as information included in
oral statements or other written statements made or to be made by the Company)
contain statements that are forward looking. These
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include statements relating to the following activities, among others: (A)
operations and expansions of existing properties, including future performance,
anticipated scope and opening dates of expansions; (B) planned development of
casinos and hotels that would be owned or managed by the Company and the pursuit
of strategic acquisitions; (C) the redevelopment of the casino in New Orleans;
(D) the sale of our interests in Star City casino and Sodak; (E) planned capital
expenditures for 1999 and beyond; (F) the impact of the WINet and Total Gold
Card Programs; (G) any future impact of the Showboat and Rio acquisitions; and
(H) Year 2000 compliance plans. These activities involve important factors that
could cause actual results to differ materially from those expressed in any
forward looking statements made by or on behalf of the Company. These include,
but are not limited to, the following factors as well as other factors described
from time to time in the Company's reports filed with the SEC: construction
factors, including zoning issues, environmental restrictions, soil conditions,
weather and other hazards, site access matters and building permit issues;
access to available and feasible financing; regulatory, licensing and other
government approvals, third party consents and approvals, and relations with
partners, owners and other third parties; conditions of credit markets and other
business and economic conditions, including international and national economic
problems; litigation, judicial actions and political uncertainties, including
gaming legislative action, referenda, and taxation; actions or inactions of
suppliers and vendors regarding Year 2000; and the effects of competition
including locations of competitors and operating and marketing competition. Any
forward looking statements are made pursuant to the Private Securities
Litigation Reform Act of 1995 and, as such, speak only as of the date made.
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PART II -OTHER INFORMATION
---------------------------
Item 4. Submission of Matters To a Vote of Security Holders
-----------------------------------------------------------
The Company held its annual stockholders meeting on May 7, 1999. The
following matters were voted upon at the meeting:
1. Election of Class III Directors
-------------------------------
Votes Cast
------------------------
Against or
Name of Director Elected For Withheld
------------------------- --- ----------
Susan Clark-Johnson 103,955,333 1,911,506
James B. Farley 103,951,915 1,914,924
Walter J. Salmon 103,938,905 1,927,934
Name of Each Other Director Whose Term of
Office as Director Continued After the Meeting
----------------------------------------------
Joe M. Henson
Ralph Horn
J. Kell Houssels III
R. Brad Martin
Colin V. Reed
Philip G. Satre
Boake A. Sells
Eddie N. Williams
2. Ratification of Arthur Against or
Andersen LLP as the For Withheld Abstentions
Company's independent --- -------- -----------
public accountants 105,450,842 152,868 263,129
for the 1999 calendar
year
----------------------
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Item 6. Exhibits and Reports on Form 8-K
------------------------------------------
(a) Exhibits
*EX-3.1 Bylaws of Harrah's Entertainment, Inc., as amended
May 7, 1999.
*EX-3.2 Bylaws of Harrah's Operating Company, Inc., as
amended May 7, 1999.
*EX-4.1 Five Year Loan Agreement Dated as of April 30, 1999 among
Harrah's Entertainment, Inc., as Guarantor, Harrah's Operating
Company, Inc. and Marina Associates, as Borrowers, The
Lenders, Syndication Agent, Document Agents and
Co-Documentation Agents and Bank of America National Trust and
Savings Association, as Administrative Agent.
*EX-4.2 364-Day Loan Agreement Dated as of April 30, 1999 among
Harrah's Entertainment, Inc., as Guarantor, Harrah's Operating
Company, Inc. and Marina Associates, as Borrowers, The
Lenders, Syndication Agent, Document Agents and
Co-Documentation Agents and Bank of America National Trust and
Savings Association, as Administrative Agent.
*EX-10.1 Master Agreement dated April 15, 1999 between TABCORP Holdings
Limited and Harrah's Entertainment, Inc., with attachments.
*EX-10.2 Amendment to Harrah's Entertainment, Inc. 1990 Stock Option
Plan.
*EX-10.3 Amendment to Harrah's Entertainment, Inc.'s Annual Management
Bonus Plan.
*EX-10.4 Employment Agreement dated May 7, 1999, between Harrah's
Entertainment, Inc. and Marilyn G. Winn.
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*EX-10.5 Severance Agreement dated May 7, 1999, between Harrah's
Entertainment, Inc. and Marilyn G. Winn.
*EX-11 Computation of per share earnings.
*EX-27 Financial Data Schedule.
*Filed herewith.
(b) The following Current Reports on Form 8-K were filed by the Company during
the second quarter of 1999: April 23, 1999 - reporting the first quarter 1999
results.
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Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARRAH'S ENTERTAINMENT, INC.
August 12, 1999 BY: /s/ JUDY T. WORMSER
-----------------------
Judy T. Wormser
Vice President and Controller
(Chief Accounting Officer)
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Exhibit Index
-------------
Sequential
Exhibit No. Description Page No.
- ----------- ------------------------------- ----------
EX-3.1 Bylaws of Harrah's Entertainment, Inc., as
amended May 7, 1999.
EX-3.2 Bylaws of Harrah's Operating Company,
Inc., as amended May 7, 1999.
EX-4.1 Five Year Loan Agreement Dated as of April
30, 1999 among Harrah's Entertainment,
Inc., as Guarantor, Harrah's Operating
Company, Inc. and Marina Associates, as
Borrowers, The Lenders, Syndication Agent,
Document Agents and Co-Documentation
Agents and Bank of America National Trust
and Savings Association, as Administrative
Agent.
EX-4.2 364-Day Loan Agreement Dated as of April
30, 1999 among Harrah's Entertainment,
Inc., as Guarantor, Harrah's Operating
Company, Inc. and Marina Associates, as
Borrowers, The Lenders, Syndication Agent,
Document Agents and Co-Documentation
Agents and Bank of America National Trust
and Savings Association, as Administrative
Agent.
EX-10.1 Master Agreement dated April 15, 1999
between TABCORP Holdings Limited and
Harrah's Entertainment, Inc., with
attachments.
EX-10.2 Amendment to Harrah's Entertainment, Inc.
1990 Stock Option Plan.
EX-10.3 Amendment to Harrah's Entertainment,
Inc.'s Annual Management Bonus Plan.
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Sequential
Exhibit No. Description Page No.
- ----------- ------------------------------- ----------
EX-10.4 Employment Agreement dated May 7, 1999,
between Harrah's Entertainment, Inc. and
Marilyn G. Winn.
EX-10.5 Severance Agreement dated May 7, 1999,
between Harrah's Entertainment, Inc. and
Marilyn G. Winn.
EX-11 Computation of per share earnings.
EX-27 Financial Data Schedule.
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Exhibit 3.1
BYLAWS
OF
HARRAH'S ENTERTAINMENT, INC.
(Amended May 7, 1999)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of Harrah's
Entertainment, Inc. (the "Corporation") shall be at 1013 Centre Road, in the
City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors of the Corporation (the "Board of Directors") may from time to time
determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
SECTION 2. ANNUAL MEETINGS. The annual meeting of stockholders shall be
held on the first Friday in May in each year or on such other date and at such
time as may be fixed by the Board of Directors and stated in the notice of the
meeting, for the purpose of electing directors and for the transaction of only
such other business as is properly brought before the meeting in accordance with
these Bylaws.
Written notice of an annual meeting stating the place, date and hour of
the meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten nor more than sixty days before the date of the meeting.
<PAGE>
To be properly brought before the annual meeting, business must be either
(i) specified in the notice of annual meeting (or any supplement or amendment
thereto) given by or at the direction of the Board of Directors, (ii) otherwise
brought before the annual meeting by or at the direction of the Board of
Directors, or (iii) otherwise properly brought before the annual meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
sixty (60) days nor more than ninety (90) days prior to the meeting, provided,
however, that in the event that less than seventy (70) days notice or prior
public disclosure of the date of the annual meeting is given or made to
stockholders, notice by a stockholder, to be timely, must be received no later
than the close of business on the tenth (10th) day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs. A stockholder's notice to the
Secretary shall set forth (a) as to each matter the stockholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, and (ii) any material interest of the
stockholder in such business, and (b) as to the stockholder giving the notice
(i) the name and record address of the stockholder and (ii) the class, series
and number of shares of capital stock of the Corporation which are beneficially
owned by the stockholder. Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Article II, Section 2. The
officer of the Corporation presiding at an annual meeting shall, if the facts
warrant, determine and declare to the annual meeting that business was not
properly brought before the annual meeting in accordance with the provisions of
this Article II, Section 2, and if such officer should so determine, such
officer shall so declare to the annual meeting and any such business not
properly brought before the meeting shall not be transacted.
SECTION 3. SPECIAL MEETINGS. Unless otherwise prescribed by law or by the
Certificate of Incorporation, special meetings of stockholders, for any purpose
or purposes, may only be called by a majority of the entire Board of Directors
or by the Chairman or the President.
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Written notice of a special meeting stating the place, date and hour of
the meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten nor more than sixty days before the date of the meeting.
SECTION 4. QUORUM. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the holders of a
majority of the votes entitled to be cast by the stockholders entitled to vote
thereat, present in person or represented by proxy may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented by proxy. At such adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally noticed. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder entitled to vote at the meeting.
SECTION 5. VOTING. Unless otherwise required by law, the Certificate of
Incorporation or these Bylaws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat, excluding any shares that are
voted "Abstain" on such question, so that abstentions shall not be counted in
the decision. Each stockholder represented at a meeting of stockholders shall be
entitled to cast one vote for each share of the capital stock entitled to vote
thereat held by such stockholder, unless otherwise provided by the Certificate
of Incorporation. Such votes may be cast in person or by proxy but no proxy
shall be voted after three years from its date, unless such proxy provides for a
longer period. The Board of Directors, in its discretion, or the officer of the
Corporation presiding at a meeting of stockholders, in his discretion, may
require that any votes cast at such meeting shall be cast by written ballot.
SECTION 6. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
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alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
SECTION 7. STOCK LEDGER. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 6 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
SECTION 1. NOMINATION OF DIRECTORS. Nominations of persons for election to
the Board of Directors of the Corporation at the annual meeting may be made at
such meeting by or at the direction of the Board of Directors, by any committee
or persons appointed by the Board of Directors or by any stockholder of the
Corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Article III, Section 1.
Such nominations by any stockholder shall be made pursuant to timely notice in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than sixty (60) days nor more than ninety
(90) days prior to the meeting; provided, however, that in the event that less
than seventy (70) days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder, to be
timely, must be received no later than the close of business on the tenth (10th)
day following the day on which such notice of the date of the meeting was mailed
or such public disclosure was made, whichever first occurs. Such stockholder's
notice to the Secretary shall set forth (i) as to each person whom the
stockholder proposes to nominate for
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election or reelection as a director, (a) the name, age, business address and
residence address of the person, (b) the principal occupation or employment of
the person, (c) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the person, and (d) any other
information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to the Rules and
Regulations of the Securities and Exchange Commission under Section 14 of the
Securities Exchange Act of 1934, as amended; and (ii) as to the stockholder
giving the notice (a) the name and record address of the stockholder and (b) the
class and number of shares of capital stock of the Corporation which are
beneficially owned by the stockholder. The Corporation may require any proposed
nominee to furnish such other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee to serve as a
director of the Corporation. No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the procedures
set forth herein. The officer of the Corporation presiding at an annual meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. The directors shall be elected at the annual
meeting of the stockholders, except as provided in the Certificate of
Incorporation, and each director elected shall hold office until his successor
is elected and qualified; provided, however, that unless otherwise restricted by
the Certificate of Incorporation or by law, any director or the entire Board of
Directors may be removed, either with or without cause, from the Board of
Directors at any meeting of stockholders by a majority of the stock represented
and entitled to vote thereat.
SECTION 2. MEETINGS. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board or the President or a majority of the entire Board of
Directors. Notice thereof stating the place, date and hour of the meeting shall
be given to each director either by mail not less than forty-eight (48) hours
before the date of the meeting, by telephone or telegram on twenty-four (24)
hours' notice, or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances.
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SECTION 3. QUORUM. Except as may be otherwise specifically provided by
law, the Certificate of Incorporation or these Bylaws, at all meetings of the
Board of Directors, a majority of the entire Board of Directors shall constitute
a quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, a majority of the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 4. ACTIONS OF BOARD OF DIRECTORS. Unless otherwise provided by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 5. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 5 of Article III shall
constitute presence in person at such meeting.
SECTION 6. COMMITTEES. The Board of Directors may, by resolution passed by
a majority of the entire Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of any such committee. In the absence or disqualification of a member of
a committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of
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Directors to act at the meeting in the place of any absent or disqualified
member. Any committee, to the extent allowed by law and provided in the
resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.
SECTION 7. COMPENSATION. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 8. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the shareholder entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the shareholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
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ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a President or one or more members of an Office
of the President (hereinafter sometimes referred to as "the President"), a
Secretary and a Treasurer. The Board of Directors, in its discretion, may also
choose a Chairman of the Board of Directors (who must be a director) and one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these Bylaws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors at its first meeting held
after each annual meeting of stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers who are directors of the Corporation
shall be fixed by the Board of Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name and on behalf of the Corporation, take all such action
as any such officer may deem advisable to vote in person or by proxy at any
meeting of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
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SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. Except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these Bylaws or by the Board of Directors.
SECTION 5. PRESIDENT OR OFFICE OF THE PRESIDENT. The President and members
of the Office of the President shall be selected by the Board and shall, subject
to the control of the Board of Directors and, if there be one, the Chairman of
the Board of Directors and, if there be one, the Chief Executive Officer, have
general supervision of the business of the Corporation, and the President, or
the members of the Office of the President, shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President,
and each member of the Office of the President, shall individually have the
authority to execute all bonds, mortgages, contracts and other instruments of
the Corporation, including those requiring a seal under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these Bylaws, the Board of Directors or
a Committee thereof, or the President or any member of the Office of the
President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President or the person in the Office of the
President having the title of Chief Executive Officer, or in his absence or
there being none, having the title of President shall preside at all meetings of
the stockholders and the Board of Directors. The President and the members of
the Office of the President shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to them by these
Bylaws or by the Board of Directors. Each member of the Office of the President
shall be authorized to act on behalf of such Office.
SECTION 6. VICE PRESIDENTS. At the request of the President or in his
absence or in the event of his inability or refusal to act (and if there be no
Chairman of the Board of Directors), the Vice President or the Vice Presidents
if there is more than one
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(in the order designated by the Board of Directors) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Each Vice President shall perform
such other duties and have such other powers as the Board of Directors from time
to time may prescribe. If there be no Chairman of the Board of Directors and no
Vice President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of the Board
of Directors and all meetings of stockholders and record all the proceedings
thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President, under whose
supervision he shall be. If the Secretary shall be unable or shall refuse to
cause to be given notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the President may choose another officer to
cause such notice to be given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or any Assistant Secretary, if there be one,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to be kept or filed are properly kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors,
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taking proper vouchers for such disbursements, and shall render to the President
and the Board of Directors, at its regular meetings, or when the Board of
Directors so requires, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, the Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Except as may be otherwise provided in
these Bylaws, Assistant Secretaries, if there be any, shall perform such duties
and have such powers as from time to time may be assigned to them by the Board
of Directors, the President, any Vice President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of his disability
or refusal to act, shall perform the duties of the Secretary, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
SECTION 11. CONTROLLER. The Controller shall establish and maintain the
accounting records of the Corporation in accordance with generally accepted
accounting principles applied on a consistent basis, maintain proper internal
control of the assets
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of the Corporation and shall perform such other duties as the Board of
Directors, the President or any Vice President of the Corporation may prescribe.
SECTION 12. OTHER OFFICERS. Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board of Directors, the President or a Vice President
and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
him in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on the certificate may
be a facsimile, including, but not limited to, signatures of officers of the
Corporation and countersignatures of a transfer agent or registrar. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
SECTION 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
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SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new certificate shall be
issued.
SECTION 5. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 6. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and
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such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed, by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, and may be
paid in cash, in property, or in shares of the capital stock. Before payment of
any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall end on
December 31 and the following fiscal year shall commence on January 1, unless
the fiscal year is otherwise fixed by affirmative resolution of the entire Board
of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed thereon
the name of the Corporation and the words "Corporate Seal, Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
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Exhibit 3.2
BYLAWS
OF
HARRAH'S OPERATING COMPANY, INC.
(Amended May 7, 1999)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of Harrah's Operating
Company, Inc. (the "Corporation") shall be at 1013 Centre Road, in the City of
Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors of the Corporation (the "Board of Directors") may from time to time
determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
SECTION 2. ANNUAL MEETINGS. The annual meeting of stockholders shall be
held on the first Friday in May in each year or on such other date and at such
time as may be fixed by the Board of Directors and stated in the notice of the
meeting, for the purpose of electing directors and for the transaction of only
such other business as is properly brought before the meeting in accordance with
these Bylaws. Written notice of an annual meeting stating the place, date and
hour of the meeting, shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
SECTION 3. SPECIAL MEETINGS. Unless otherwise prescribed by law or by the
Certificate of Incorporation, special meetings of stockholders, for any purpose
or purposes, may only be called by a majority of the entire Board of Directors
or by the Chairman or the President.
<PAGE>
Written notice of a special meeting stating the place, date and hour of
the meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten nor more than sixty days before the date of the meeting.
SECTION 4. QUORUM. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the holders of a
majority of the votes entitled to be cast by the stockholders entitled to vote
thereat, present in person or represented by proxy may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented by proxy. At such adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally noticed. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder entitled to vote at the meeting.
SECTION 5. VOTING. Unless otherwise required by law, the Certificate of
Incorporation or these Bylaws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat. Each stockholder represented at
a meeting of stockholders shall be entitled to cast one vote for each share of
the capital stock entitled to vote thereat held by such stockholder, unless
otherwise provided by the Certificate of Incorporation. Such votes may be cast
in person or by proxy but no proxy shall be voted after three years from its
date, unless such proxy provides for a longer period. The Board of Directors, in
its discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in his discretion, may require that any votes cast at such meeting
shall be cast by written ballot.
SECTION 6. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the
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notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder of the Corporation who is present.
SECTION 7. STOCK LEDGER. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 6 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
SECTION 1. MEETINGS. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board or the President or a majority of the entire Board of
Directors. Notice thereof stating the place, date and hour of the meeting shall
be given to each director either by mail not less than forty-eight (48) hours
before the date of the meeting, by telephone or telegram on twenty-four (24)
hours' notice, or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances.
SECTION 2. QUORUM. Except as may be otherwise specifically provided by
law, the Certificate of Incorporation or these Bylaws, at all meetings of the
Board of Directors, a majority of the entire Board of Directors shall constitute
a quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, a majority of the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 3. ACTIONS OF BOARD OF DIRECTORS. Unless otherwise provided by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
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SECTION 4. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 4 of Article III shall
constitute presence in person at such meeting.
SECTION 5. COMMITTEES. The Board of Directors may, by resolution passed by
a majority of the entire Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of any such committee. In the absence or disqualification of a member of
a committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent allowed by law and provided in
the resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.
SECTION 6. COMPENSATION. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 7. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for
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such purpose if (i) the material facts as to his or their relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (ii) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the shareholder entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the shareholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee thereof or the shareholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a President or one or more members of an Office
of the President (hereinafter sometimes referred to as "the President"), a
Secretary and a Treasurer. The Board of Directors, in its discretion, may also
choose a Chairman of the Board of Directors (who must be a director) and one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these Bylaws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors at its first meeting held
after each annual meeting of stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers who are directors of the Corporation
shall be fixed by the Board of Directors.
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SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name and on behalf of the Corporation, take all such action
as any such officer may deem advisable to vote in person or by proxy at any
meeting of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. Except whereby law the signature of the President
is required, the Chairman of the Board of Directors shall possess the same power
as the President to sign all contracts, certificates and other instruments of
the Corporation which may be authorized by the Board of Directors. During the
absence or disability of the President, the Chairman of the Board of Directors
shall exercise all the powers and discharge all the duties of the President. The
Chairman of the Board of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him by these
Bylaws or by the Board of Directors.
SECTION 5. PRESIDENT OR OFFICE OF THE PRESIDENT. The President and members
of the Office of the President shall be selected by the Board and shall, subject
to the control of the Board of Directors and, if there be one, the Chairman of
the Board of Directors and, if there be one, the Chief Executive Officer, have
general supervision of the business of the Corporation, and the President, or
the members of the Office of the President, shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President,
and each member of the Office of the President, shall individually have the
authority to execute all bonds, mortgages, contracts and other instruments of
the Corporation, including those requiring a seal under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these Bylaws, the Board of Directors or
a Committee thereof, or the President or any member of the Office of the
President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President or the person in the Office of the
President having the title of Chief Executive Officer, or in his absence or
there
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being none, having the title of President shall preside at all meetings of the
stockholders and the Board of Directors. The President and the members of the
Office of the President shall also perform such other duties and may exercise
such other powers as from time to time may be assigned to them by these Bylaws
or by the Board of Directors. Each member of the Office of the President shall
be authorized to act on behalf of such Office.
SECTION 6. VICE PRESIDENTS. At the request of the President or in his
absence or in the event of his inability or refusal to act (and if there be no
Chairman of the Board of Directors), the Vice President or the Vice Presidents
if there is more than one (in the order designated by the Board of Directors)
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. Each
Vice President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there be no Chairman of
the Board of Directors and no Vice President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President or
in the event of the inability or refusal of the President to act, shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of the Board
of Directors and all meetings of stockholders and record all the proceedings
thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President, under whose
supervision he shall be. If the Secretary shall be unable or shall refuse to
cause to be given notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the President may choose another officer to
cause such notice to be given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or any Assistant Secretary, if there be one,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to be kept or filed are properly kept or filed, as the case may be.
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SECTION 8. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Except as may be otherwise provided in
these Bylaws, Assistant Secretaries, if there be any, shall perform such duties
and have such powers as from time to time may be assigned to them by the Board
of Directors, the President, any Vice President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of his disability
or refusal to act, shall perform the duties of the Secretary, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
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SECTION 11. CONTROLLER. The Controller shall establish and maintain the
accounting records of the Corporation in accordance with generally accepted
accounting principles applied on a consistent basis, maintain proper internal
control of the assets of the Corporation and shall perform such other duties as
the Board of Directors, the President or any Vice President of the Corporation
may prescribe.
SECTION 12. OTHER OFFICERS. Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board of Directors, the President or a Vice President
and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
him in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on the certificate may
be a facsimile, including, but not limited to, signatures of officers of the
Corporation and countersignatures of a transfer agent or registrar. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
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SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new certificate shall be
issued.
SECTION 5. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 6. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
INDEMNIFICATION
SECTION 1. Subject to Section 3 of this Article VI, the Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
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amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
Corporation, or, with respect to any criminal action or proceeding, had
reasonable cause to believe his conduct was unlawful.
SECTION 2. Subject to Section 3 of this Article VI, the Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interest of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
SECTION 3. Any indemnification under this Article VI (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee, or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Section 1 or Section 2 of this Article VI, as the case
may be. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders. To the extent,
however, that a director, officer, employee or agent of the Corporation has been
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successful on the merits or otherwise in defense of any action, suit or
proceeding described in Section 1 or Section 2 of this Article VI, or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
SECTION 4. For purposes of any determination under Section 3 of this
Article VI, a person shall be deemed to have acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his conduct was unlawful, if his action is based
on the records or books of account of the Corporation or another enterprise, or
on information supplied to him by the officers of the Corporation or another
enterprise in the course of their duties, or on the advice of legal counsel for
the Corporation or another enterprise or on information or records given or
reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 4 of Article VI, shall mean any other
corporation or any partnership, joint venture, trust or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 4 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VI as the case may be.
SECTION 5. Notwithstanding any contrary determination in the specific case
under Section 3 of this Article VI, and notwithstanding the absence of any
determination thereunder, any director, officer, employee or agent may apply to
any court of competent jurisdiction in the State of Delaware for indemnification
to the extent otherwise permissible under Section 1 and Section 2 of this
Article VI. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standards of conduct set forth in Section 1 or Section 2 of this
Article VI, as the case may be. Notice of any application for indemnification
pursuant to this Section 5 of Article VI shall be given to the Corporation
promptly upon the filing of such application.
SECTION 6. Expenses incurred in defending or investigating a threatened or
pending action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or
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on behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VI.
SECTION 7. The indemnification and advancement of expenses provided by
this Article VI shall not be deemed exclusive of any other rights to which any
person seeking indemnification or advancement of expenses may be entitled under
any Bylaw, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Corporation that indemnification of, and advancement of expenses to, the persons
specified in Section 1 and Section 2 of Article VI shall be made to the fullest
extent permitted by law. The provisions of this Article VI shall not be deemed
to preclude the indemnification of, and advancement of expenses to, any person
who is not specified in Section 1 or Section 2 of this Article VI but whom the
Corporation has the power or obligation to indemnify under the provisions of the
General Corporation Law of the State of Delaware, or otherwise. The
indemnification provided by this Article VI shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
SECTION 8. The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VI.
SECTION 9. For purposes of this Article VI, reference to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article VI with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
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ARTICLE VII
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed, by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, and may be
paid in cash, in property, or in shares of the capital stock. Before payment of
any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall end on
December 31 and the following fiscal year shall commence on January 1, unless
the fiscal year is otherwise fixed by affirmative resolution of the entire Board
of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
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Exhibit 4.1
EXECUTION
FIVE YEAR LOAN AGREEMENT
Dated as of April 30, 1999
among
HARRAH'S ENTERTAINMENT, INC.
as Guarantor
HARRAH'S OPERATING COMPANY, INC.
MARINA ASSOCIATES
as Borrowers
The Lenders, Syndication Agent, Documentation Agents
And Co-Documentation Agents Herein Named
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
NATIONSBANC MONTGOMERY SECURITIES, LLC.,
Lead Arranger and Sole Book Manager
<PAGE>
TABLE OF CONTENTS
Article 1 DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms
1.2 Use of Defined Terms
1.3 Accounting Terms
1.4 Rounding
1.5 Exhibits and Schedules
1.6 Miscellaneous Terms
Article 2 LOANS AND LETTERS OF CREDIT
2.1 Committed Loans-General
2.2 Base Rate Loans
2.3 Eurodollar Rate Loans
2.4 Letters of Credit
2.5 Competitive Advances
2.6 Swing Line
2.7 Voluntary Increase to the Commitment
2.8 Voluntary Reduction of Commitment
2.9 Optional Termination of Commitment
2.10 Additional Borrowers
2.11 Administrative Agent's Right to Assume Funds Available
for Advances
2.12 Extension of the Maturity Date
Article 3 PAYMENTS AND FEES
3.1 Principal and Interest
3.2 Arrangement Fee
3.3 Upfront Fees
3.4 Facility Fees
3.5 Letter of Credit Fees
3.6 Agency Fees
3.7 Increased Commitment Costs
3.8 Eurodollar Costs and Related Matters
3.9 Default Rate
3.10 Computation of Interest and Fees
3.11 Non-Business Days
3.12 Manner and Treatment of Payments
3.13 Funding Sources
3.14 Failure to Charge Not Subsequent Waiver
3.15 Administrative Agent's Right to Assume Payments Will
be Made by Borrowers
3.16 Fee Determination Detail
3.17 Survivability
<PAGE>
Article 4 REPRESENTATIONS AND WARRANTIES
4.1 Existence and Qualification; Power; Compliance With
Laws
4.2 Authority; Compliance With Other Agreements and
Instruments and Government Regulations
4.3 No Governmental Approvals Required
4.4 Significant Subsidiaries
4.5 Financial Statements
4.6 No Other Liabilities; No Material Adverse Effect
4.7 Title to Property
4.8 Litigation
4.9 Binding Obligations
4.10 No Default
4.11 ERISA
4.12 Regulations T, U and X; Investment Company Act
4.13 Disclosure
4.14 Tax Liability
4.15 Projections
4.16 Hazardous Materials
4.17 Gaming Laws
4.18 Year 2000 Compliance
4.19 Solvency
Article 5 AFFIRMATIVE COVENANTS
5.1 Preservation of Existence
5.2 Maintenance of Properties
5.3 Maintenance of Insurance
5.4 Compliance With Laws
5.5 Inspection Rights
5.6 Keeping of Records and Books of Account
5.7 Use of Proceeds
5.8 Existing Rio Indentures
5.9 Year 2000 Preparations
Article 6 NEGATIVE COVENANTS
6.1 Consolidations, Mergers and Sales of Assets
6.2 Hostile Tender Offers
6.3 Change in Nature of Business
6.4 Liens, Negative Pledges, Sale Leasebacks and Rights of Others
6.5 Total Debt Ratio
6.6 Interest Coverage Ratio
6.7 Subsidiary Indebtedness
Article 7 INFORMATION AND REPORTING REQUIREMENTS
7.1 Financial and Business Information
7.2 Compliance Certificates
<PAGE>
Article 8 CONDITIONS
8.1 Initial Advances, Etc.
8.2 Any Increasing Advance, Etc.
Article 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
9.1 Events of Default
9.2 Remedies Upon Event of Default
Article 10 THE ADMINISTRATIVE AGENT
10.1 Appointment and Authorization
10.2 Administrative Agent and Affiliates
10.3 Proportionate Interest in any Collateral
10.4 Lenders' Credit Decisions
10.5 Action by Administrative Agent
10.6 Liability of Administrative Agent
10.7 Indemnification
10.8 Successor Administrative Agent
10.9 No Obligations of Parent or Borrowers
Article 11 MISCELLANEOUS
11.1 Cumulative Remedies; No Waiver
11.2 Amendments; Consents
11.3 Costs, Expenses and Taxes
11.4 Nature of Lenders' Obligations
11.5 Survival of Representations and Warranties
11.6 Notices
11.7 Execution of Loan Documents
11.8 Binding Effect; Assignment
11.9 Sharing of Setoffs
11.10 Indemnity by Parent and Borrowers
11.11 Nonliability of the Lenders
11.12 No Third Parties Benefitted
11.13 Confidentiality
11.14 Removal of a Lender
11.15 Further Assurances
11.16 Integration
11.17 Governing Law
11.18 Severability of Provisions
11.19 Headings
11.20 Time of the Essence
11.21 Foreign Lenders and Participants
11.22 Gaming Boards
11.23 Nature of the Borrowers' Obligations
11.24 Designated Senior Debt
11.25 Gaming Regulations
11.26 Waiver of Right to Trial by Jury
11.27 Purported Oral Amendments
<PAGE>
EXHIBITS
A - Assignment Agreement
B - Committed Advance Note
C - Competitive Advance Note
D - Competitive Bid
E - Competitive Bid Request
F - Compliance Certificate
G - Opinions of Counsel
H - Parent Guaranty
I - Request for Letter of Credit
J - Request for Loan
K - Election to Become a Borrower
L - Joint Borrower Provisions
SCHEDULES
1.1 Pro Rata Shares
1.2 Continuing Letters of Credit
1.3 Historical Combined EBITDA
4.3 Governmental Approvals
4.4 Significant Subsidiaries
4.7 Existing Liens, Negative Pledges and Rights of Others
<PAGE>
FIVE YEAR LOAN AGREEMENT
Dated as of April 30, 1999
This FIVE YEAR LOAN AGREEMENT ("Agreement") is entered into among
Harrah's Operating Company, Inc., a Delaware corporation ("Company"), Marina
Associates, a New Jersey general partnership ("Marina" and together with the
Company and such other Subsidiaries that become Borrowers pursuant to Section
2.10 hereof, as Borrowers, Harrah's Entertainment, Inc., a Delaware corporation
(the "Parent"), as Guarantor, Bank of America National Trust and Savings
Association and each lender whose name is set forth on the signature pages of
this Agreement and each other lender which may hereafter become a party to this
Agreement pursuant to Section 11.8 (collectively, the "Lenders" and
individually, a "Lender"), Bankers Trust Company, as Syndication Agent, Canadian
Imperial Bank of Commerce and Societe Generale, as Documentation Agents,
Commerzbank AG, PNC Bank, National Association and Wells Fargo Bank, N.A., as
Co-Documentation Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent. While not party to this Agreement,
NationsBanc Montgomery Securities, LLC has served as Lead Arranger and Sole Book
Manager and BT Alex. Brown Incorporated has served as Co-Lead Arranger for the
credit facilities described herein.
RECITALS
A. Parent and Borrowers have requested that the Lenders provide the
credit facilities described herein and in the 364-Day Loan Agreement to
provide for their common working capital needs and for the refinancing
of certain existing Indebtedness of Borrowers and their Subsidiaries,
including without limitation the Existing Harrah's Credit Agreements
and the Existing Rio Credit Agreements and the Existing Rio Indentures
described herein, all as further set forth in Section 5.7.
B. It is intended that the Company shall be jointly and severally
liable for all of the Obligations hereunder, as more particularly set
forth in Section 11.23, notwithstanding any allocation of the
Obligations to the nominal account of any other Borrower.
C. The principal Obligations of Marina for Loans, Swing Line Advances
and Letters of Credit hereunder shall be limited to the amount of Loans
and Swing Line Advances borrowed by Marina and Letters of Credit issued
for the account of Marina under its Aggregate Sublimit.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
Article 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the meanings set forth below:
"ABSOLUTE RATE BID" means a Competitive Bid to provide
Competitive Advances on the basis of a fixed interest rate.
"ADMINISTRATIVE AGENT" means Bank of America, when acting in
its capacity as the Administrative Agent under any of the Loan
Documents, or any successor Administrative Agent.
"ADMINISTRATIVE AGENT'S OFFICE" means the Administrative
Agent's address as set forth on the signature pages of this Agreement,
or such other address as the Administrative Agent hereafter may
designate by written notice to Borrowers and the Lenders.
"ADVANCE" means any advance made or to be made by any Lender
to a Borrower as provided in Article 2, and includes each Base Rate
Advance, Eurodollar Rate Advance, Committed Advance, Swing Line Advance
and Competitive Advance.
"AFFILIATE" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and
the correlative terms, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise); provided that, in any event, any Person that
owns, directly or indirectly, 5% or more of the securities having
ordinary voting power for the election of directors or other governing
body of a corporation that has more than 100 record holders of such
securities, or 5% or more of the partnership or other ownership
interests of any other Person that has more than 100 record holders of
such interests, will be deemed to control such corporation or other
Person.
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"AGGREGATE EFFECTIVE AMOUNT" means, as of any date of
determination and with respect to all Letters of Credit then
outstanding, the sum of (a) the aggregate undrawn face amounts of all
such Letters of Credit, plus (b) the aggregate amounts paid by Issuing
Lenders under any Letters of Credit for which the relevant Issuing
Lender has not been reimbursed and which are not the subject of
Advances made pursuant to Section 2.4(f).
"AGGREGATE SUBLIMIT" means (a) with respect to Marina
$500,000,000, and (b) with respect to each other Subsidiary of Parent
which hereafter becomes a Borrower, such aggregate amount as shall be
established in accordance with Section 2.10.
"AGREEMENT" means this Five Year Loan Agreement, either as
originally executed or as it may from time to time be supplemented,
modified, amended, restated or extended.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement
substantially in the form of Exhibit A.
"ATLANTIC CITY SHOWBOAT LAND DEBT" means, the $100,000,000
aggregate face amount of Showboat Land, LLC's 7.09% Promissory Note due
February 1, 2028.
"BANK OF AMERICA" means Bank of America National Trust and
Savings Association, its successors and assigns.
"BASE RATE" means, as of any date of determination, the rate
per annum (rounded upwards, if necessary, to the next 1/100 of 1%)
equal to the higher of (a) the Reference Rate in effect on such date
(calculated on the basis of a year of 365 or 366 days and the actual
number of days elapsed) and (b) the Federal Funds Rate in effect on
such date (calculated on the basis of a year of 360 days and the actual
number of days elapsed) plus 1/2 of 1% (50 basis points).
"BASE RATE ADVANCE" and "Base Rate Loan" mean, respectively, a
Committed Advance or a Committed Loan made hereunder and specified to
be a Base Rate Advance or Loan in accordance with Article 2.
"BASE RATE MARGIN" means, for each Pricing Period, the
Eurodollar Margin (after any Pricing Adjustment) for that Pricing
Period minus 125 basis points, provided that in no event shall the Base
Rate Margin be less than 0.00 basis points.
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"BORROWERS" means, collectively, Company, Marina and each
other Wholly-Owned Subsidiary which is hereafter designated as a
Borrower in accordance with Section 2.10, and their respective
successors and permitted assigns.
"BUSINESS DAY" means any Monday, Tuesday, Wednesday, Thursday
or Friday, other than a day on which commercial banks are authorized or
required to be closed in California or New York.
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of
a Person under any leasing or similar arrangement which, in accordance
with Generally Accepted Accounting Principles, is classified as a
capital lease.
"CASH" means, when used in connection with any Person, all
monetary and non-monetary items owned by that Person that are treated
as cash in accordance with Generally Accepted Accounting Principles,
consistently applied.
"CERTIFICATE OF A RESPONSIBLE OFFICIAL" means a certificate
signed by a Responsible Official of the Person providing the
certificate.
"CHANGE IN CONTROL" means the occurrence of a Rating Decline
in connection with any of the following events (or, if the Debt Ratings
are not then Investment Grade, any further decline in the Debt
Ratings): (i) upon any merger or consolidation of Parent with or into
any person or any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the assets of Parent, on a
consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction,
any person or group of persons (within the meaning of Section 13 or 14
of the Securities Exchange Act of 1934, as amended) is or becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of securities
representing a majority of the total voting power of the aggregate
outstanding securities of the transferee or surviving entity normally
entitled to vote in the election of directors, managers, or trustees,
as applicable, of the transferee or surviving entity, (ii) when any
person or group of persons (within the meaning of Section 13 or 14 of
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<PAGE>
the Securities Exchange Act of 1934, as amended) is or becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated by The
Securities and-Exchange Commission under said Act) of securities
representing a majority of total voting power of the aggregate
outstanding securities of Parent normally entitled to vote in the
election of directors of Parent, (iii) when, during any period of 12
consecutive calendar months, individuals who were directors of Parent
on the first day of such period (together with any new directors whose
election by the board of directors of Parent or whose nomination for
election by the stockholders of Parent was approved by a vote of a
majority of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of directors of Parent, or
(iv) the sale or disposition, whether directly or indirectly, by Parent
of all or substantially all of its assets.
"CLOSING DATE" means the time and Business Day on which the
conditions set forth in Section 8.1 are satisfied or waived. The
Administrative Agent shall notify Borrowers and the Lenders of the date
that is the Closing Date.
"CO-DOCUMENTATION AGENTS" means those Lenders listed in the
preamble of this Agreement as such. No Co-Documentation Agent shall
have any additional rights, duties or obligations under this Agreement
or the other Loan Documents by reason of its being a Co-Documentation
Agent.
"CO-LEAD ARRANGER" means BT Alex. Brown Incorporated. The
Co-Lead Arranger shall have no rights, duties or obligations under this
Agreement or the other Loan Documents.
"CODE" means the Internal Revenue Code of 1986, as amended or
replaced and as in effect from time to time.
"COMMITMENT" means, subject to Sections 2.7, 2.8, 2.9 and
11.14, $1,300,000,000. As of the Closing Date, the respective Pro Rata
Shares of the Lenders with respect to the Commitment are set forth in
Schedule 1.1.
"COMMITTED ADVANCE" means an Advance made to a Borrower by any
Lender in accordance with its Pro Rata Share pursuant to Section 2.1.
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"COMMITTED ADVANCE NOTE" means the promissory note made by
each Borrower to a Lender evidencing the Committed Advances under that
Lender's Pro Rata Share to that Borrower, substantially in the form of
Exhibit B, either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed, extended or
supplanted.
"COMMITTED LOANS" means Loans that are comprised of Committed
Advances.
"COMPANY" means Harrah's Operating Company, Inc., its
successors and permitted assigns.
"COMPETITIVE ADVANCE" means an Advance made to a Borrower by
any Lender not determined by that Lender's Pro Rata Share pursuant to
Section 2.5.
"COMPETITIVE ADVANCE NOTE" means the promissory note made by
each Borrower in favor of a Lender to evidence the Competitive Advances
made to that Borrower by that Lender, substantially in the form of
Exhibit C, either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed or extended.
"COMPETITIVE BID" means (a) a written bid to provide a
Competitive Advance substantially in the form of Exhibit D, signed by a
Responsible Official of a Lender and properly completed to provide all
information required to be included therein or (b) at the election of
any Lender, a telephonic bid by that Lender to provide a Competitive
Advance which, if so made, shall be made by a Responsible Official of
that Lender and deemed to have been made incorporating the substance of
Exhibit D, and shall promptly be confirmed by a written Competitive
Bid.
"COMPETITIVE BID REQUEST" means (a) a written request
submitted by a Borrower to the Administrative Agent to provide a
Competitive Bid, substantially in the form of Exhibit E, signed by a
Responsible Official of that Borrower and properly completed to provide
all information required to be included therein or (b) at the election
of any Borrower, a telephonic request by a Borrower to the
Administrative Agent to provide a Competitive Bid which, if so made,
shall be made by a Responsible Official of that Borrower and deemed to
have been made incorporating the substance of Exhibit E, and shall
promptly be confirmed by a written Competitive Bid Request.
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<PAGE>
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit F, properly completed and signed on behalf of
Borrowers by a Senior Officer of each Borrower.
"CONFIDENTIAL INFORMATION MEMORANDUM" means the Confidential
Information Memorandum dated March, 1999, distributed to the Lenders in
connection with the credit facilities provided herein.
"CONTINGENT OBLIGATION" means, as to any Person, any (a)
guarantee by that Person of Indebtedness of, or other obligation
performable by, any other Person or (b) assurance given by that Person
to an obligee of any other Person with respect to the performance of an
obligation by, or the financial condition of, such other Person,
whether direct, indirect or contingent, including any purchase or
repurchase agreement covering such obligation or any collateral
security therefor, any agreement to provide funds (by means of loans,
capital contributions or otherwise) to such other Person, any agreement
to support the solvency or level of any balance sheet item of such
other Person or any "keep-well", "make-well" or other arrangement of
whatever nature given for the purpose of assuring or holding harmless
such obligee against loss with respect to any obligation of such other
Person; provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in
the ordinary course of business.
"CONTINUING LETTERS OF CREDIT" means those of the letters of
credit issued under the Existing Harrah's Credit Agreements which are
described on Schedule 1.2.
"CONTRACTUAL OBLIGATION" means, as to any Person, any
provision of any outstanding security issued by that Person or of any
material agreement, instrument or undertaking to which that Person is a
party or by which it or any of its Property is bound.
"CREDITORS" means, collectively, the Administrative Agent,
each Issuing Lender, the Swing Line Lender, each Lender, Syndication
Agent, Documentation Agents, Co-Documentation Agents, the Lead
Arranger, the Co-Lead Arranger and, where the context requires, any one
or more of them.
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<PAGE>
"DEBT RATING" means, as of each date of determination, the
most creditworthy credit rating, actual or implicit, assigned to senior
unsecured Indebtedness of Company by S&P or Moody's, whichever is
higher.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other
applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws from time to time in effect affecting the rights of
creditors generally.
"DEFAULT" means any event that, with the giving of any
applicable notice or passage of time specified in Section 9.1, or both,
would be an Event of Default.
"DEFAULT RATE" means the interest rate prescribed in Section
3.9.
"DEFEASED DEBT" means (a) the $58,300,000 aggregate principal
amount of Showboat's First Mortgage Bonds due 2008, (b) the $2,400,000
aggregate outstanding principal amount of Showboat's Senior
Subordinated Notes due 2009, and (c) any other Indebtedness of Parent
and its Subsidiaries which, at any relevant time, is subject to legal
or covenant defeasance in a manner which is reasonably acceptable to
the Administrative Agent.
"DESIGNATED DEPOSIT ACCOUNT" means a deposit account to be
maintained by Borrowers with Bank of America, as from time to time
designated by Borrowers by written notification to the Administrative
Agent.
"DESIGNATED EURODOLLAR MARKET" means, with respect to any
Eurodollar Rate Loan, (a) the London Eurodollar Market, or (b) if prime
banks in the London Eurodollar Market are at the relevant time not
accepting deposits of Dollars or if the Administrative Agent determines
that the London Eurodollar Market does not represent at the relevant
time the effective pricing to the Lenders for deposits of Dollars in
the London Eurodollar Market, the Cayman Islands Eurodollar Market or
(c) if prime banks in the Cayman Islands Eurodollar Market are at the
relevant time
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<PAGE>
not accepting deposits of Dollars or if the Administrative Agent
determines that the Cayman Islands Eurodollar Market does not represent
at the relevant time the effective pricing to the Lenders for deposits
of Dollars in the Cayman Islands Eurodollar Market, such other
Eurodollar Market as may from time to time be selected by the
Administrative Agent with the approval of Borrowers and the Requisite
Lenders.
"DISQUALIFICATION" means, with respect to any Lender:
(a) the failure of that Person timely to file pursuant to
applicable Gaming Laws (i) any application requested of that Person by
any Gaming Board in connection with any licensing required of that
Person as a lender to Borrowers or (ii) any required application or
other papers in connection with determination of the suitability of
that Person as a lender to Borrowers;
(b) the withdrawal by that Person (except where requested or
permitted by the Gaming Board) of any such application or other
required papers; or
(c) any final determination by a Gaming Board pursuant to
applicable Gaming Laws (i) that such Person is "unsuitable" as a lender
to Borrowers, (ii) that such Person shall be "disqualified" as a lender
to Borrowers or (iii) denying the issuance to that Person of any
license required under applicable Gaming Laws to be held by all lenders
to Borrowers.
"DOCUMENTATION AGENTS" means those Lenders listed in the
preamble of this Agreement as such. No Documentation Agent shall have
any additional rights, duties or obligations under this Agreement or
the other Loan Documents by reason of its being a Documentation Agent.
"DOLLARS" or "$" means United States dollars.
"EBITDA" means, for any period, Net Income for such period
before (i) income taxes, (ii) interest expense, (iii) depreciation and
amortization, (iv) minority interest, (v) extraordinary losses or
gains, (vi) Pre-Opening Expenses, and (vii) nonrecurring non-cash
charges, provided that, in calculating "EBITDA":
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(a) for all periods ending on or prior to December 31, 1998,
"EBITDA" shall be computed on the basis of the combined operating
results of Parent and its Subsidiaries, Showboat and Rio as described
on Schedule 1.3.
(b) the operating results of each New Project which commences
operations and records not less than one full fiscal quarter's
operations during the relevant period shall be annualized; and
(c) EBITDA shall be adjusted, on a pro forma basis, to include
the operating results of each resort or casino property acquired by
Parent and its Consolidated Subsidiaries during the relevant period and
to exclude the operating results of each resort or casino property sold
or otherwise disposed of by Parent and its Subsidiaries, or whose
operations are discontinued during the relevant period.
"ELECTION TO BECOME A BORROWER" means an Election to Become a
Borrower, substantially in the form of Exhibit K to this Agreement,
properly completed and duly executed by each required party thereto.
"ELIGIBLE ASSIGNEE" means (a) another Lender, (b) with respect
to any Lender, any Affiliate of that Lender, (c) any commercial bank
having a combined capital and surplus of $100,000,000 or more which is
(i) organized under the laws of the United States or any state thereof,
or (ii) the domestic branch or agency of any such commercial bank
organized under the laws of a country which is a member of the
Organization for Economic Cooperation and Development, (d) any (i)
savings bank, savings and loan association or similar financial
institution or (ii) insurance company engaged in the business of
writing insurance which, in either case (A) has a net worth of
$200,000,000 or more, (B) is engaged in the business of lending money
and extending credit under credit facilities substantially similar to
those extended under this Agreement and (C) is operationally and
procedurally able to meet the obligations of a Lender hereunder to the
same degree as a commercial bank and (e) any other financial
institution (including a mutual fund or other fund) having total assets
of $250,000,000 or more which meets the requirements set forth in
subclauses (B) and (C) of clause (d) above; provided that each Eligible
Assignee must either (a) be organized under the Laws of the United
States of America, any State thereof or the District
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of Columbia or (b) be organized under the Laws of the Cayman Islands or
any country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of such a
country, and (i) act hereunder through a branch, agency or funding
office located in the United States of America and (ii) otherwise be
exempt from withholding of tax on interest and delivers Form 1001 or
Form 4224 pursuant to Section 11.21 at the time of any assignment
pursuant to Section 11.8.
"ERISA" means the Employee Retirement Income Security Act of
1974, and any regulations issued pursuant thereto, as amended or
replaced and as in effect from time to time.
"EURODOLLAR BUSINESS DAY" means any Business Day on which
dealings in Dollar deposits are conducted by and among banks in the
Designated Eurodollar Market.
"EURODOLLAR LENDING OFFICE" means, as to each Lender, its
office or branch so designated by written notice to Borrowers and the
Administrative Agent as its Eurodollar Lending Office. If no Eurodollar
Lending Office is designated by a Lender, its Eurodollar Lending Office
shall be its office at its address for purposes of notices hereunder.
"EURODOLLAR MARGIN" means, for each Pricing Period, the
interest rate margin set forth below (expressed in basis points)
opposite the Pricing Level for that Pricing Period plus or minus any
then Pricing Adjustment applicable during that Pricing Period:
PRICING LEVEL EURODOLLAR MARGIN
I 50.00
II 62.50
III 72.50
IV 80.00
V 100.00
VI 132.50
"EURODOLLAR MARGIN BID" means a Competitive Bid to provide a
Competitive Advance on the basis of a margin over the Eurodollar Quoted
Rate.
"EURODOLLAR MARKET" means a regular established market located
outside the United States of America by and among banks for the
solicitation, offer and acceptance of Dollar deposits in such banks.
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"EURODOLLAR OBLIGATIONS" means eurocurrency liabilities, as
defined in Regulation D.
"EURODOLLAR PERIOD" means, as to each Eurodollar Rate Loan,
the period commencing on the date specified by any Borrower pursuant to
Section 2.1(b) and ending 1, 2, 3 or 6 months thereafter (or, with the
written consent of all of the Lenders, any other period), as specified
by that Borrower in the applicable Request for Loan; provided that:
(a) The first day of any Eurodollar Period shall be a
Eurodollar Business Day;
(b) Any Eurodollar Period that would otherwise end on
a day that is not a Eurodollar Business Day shall be extended
to the next succeeding Eurodollar Business Day unless such
Eurodollar Business Day falls in another calendar month, in
which case such Eurodollar Period shall end on the next
preceding Eurodollar Business Day; and
(c) No Eurodollar Period shall extend beyond the
Maturity Date.
"EURODOLLAR QUOTED RATE" means, with respect to any Eurodollar
Rate Loan, the average of the interest rates per annum (rounded upward,
if necessary, to the next 1/16 of 1%) at which deposits in Dollars are
offered by Bank of America to prime banks in the Designated Eurodollar
Market at or about 11:00 a.m. local time in the Designated Eurodollar
Market, two Eurodollar Business Days before the first day of the
applicable Eurodollar Period in an aggregate amount approximately equal
to the amount of the Advances made by Bank of America with respect to
such Eurodollar Rate Loan and for a period of time comparable to the
number of days in the applicable Eurodollar Period. The determination
of the Eurodollar Quoted Rate by the Administrative Agent shall be
conclusive in the absence of manifest error.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate
Loan and any Competitive Advance based on a margin over the Eurodollar
Rate, an interest rate per annum (rounded upward, if necessary, to the
nearest 1/16 of one percent) determined pursuant to the following
formula:
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Eurodollar Eurodollar Quoted Rate
Rate ----------------------------
= 1.00 - Eurodollar Reserve
Percentage
"EURODOLLAR RATE ADVANCE" and "EURODOLLAR RATE LOAN" mean,
respectively, a Committed Advance made hereunder and specified to be a
Eurodollar Rate Advance or Loan in accordance with Article 2.
"EURODOLLAR RESERVE PERCENTAGE" means, with respect to any
Eurodollar Rate Loan, the maximum reserve percentage (expressed as a
decimal, rounded upward to the nearest 1/100th of 1%) in effect on the
date the Eurodollar Quoted Rate for that Eurodollar Rate Loan is
determined (whether or not applicable to any Lender) under regulations
issued from time to time by the Federal Reserve Board for determining
the maximum reserve requirement (including any emergency, supplemental
or other marginal reserve requirement) with respect to eurocurrency
funding (currently referred to as "eurocurrency liabilities") having a
term comparable to the Eurodollar Period for such Eurodollar Rate Loan.
The determination by the Administrative Agent of any applicable
Eurodollar Reserve Percentage shall be conclusive in the absence of
manifest error.
"EVENT OF DEFAULT" shall have the meaning provided in Section
9.1.
"EXISTING HARRAH'S CREDIT AGREEMENTS" means the Amended and
Restated Credit Agreement and the Amended and Restated 364-Day Credit
Agreement, in each case dated as of June 9, 1995, as amended and
restated April 1, 1998, and among Parent, the initial Borrowers, the
lenders therein named, and Bankers Trust Company, as Administrative
Agent, in each case as amended.
"EXISTING RIO CREDIT AGREEMENTS" means (a) the Amended and
Restated Credit Agreement dated as of February 24, 1998 among Rio
Properties, Inc., a Nevada corporation, Rio Leasing, Inc., a Nevada
corporation, the lenders referred to therein, and Bank of America, as
agent, and (b) the Loan Agreement dated as of December 18, 1998 among
Rio Properties, Inc., Rio Leasing, Inc., the lenders referred to
therein, and Bank of America, as agent, in each case as amended.
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"EXISTING RIO INDENTURES" means, (a) the $100,000,000 10-5/8%
Senior Subordinated Notes Due 2005 issued by Rio Hotel & Casino, Inc.,
a Nevada corporation, and (b) the $125,000,000 9-1/2% Senior
Subordinated Notes Due 2007 issued by Rio Hotel & Casino, Inc., in each
case as amended.
"EXISTING SENIOR NOTES" means the Company's $500,000,000 in
7.5% Senior Unsecured Notes due 2009 issued pursuant to the Indenture
dated December 18, 1998 between the Company and IBJ Schroeder Bank and
Trust Company, as Trustee and the First Supplemental Indenture with
respect thereto dated as of January 20, 1999 among the Company, the
Parent and IBJ Whitehall Bank & Trust Company, as Trustee.
"EXISTING SUBORDINATED DEBT" means the Company's $750,000,000
7.875% Senior Subordinated Notes due 2005 issued pursuant to the
Indenture dated December 9, 1998 among the Company and IBJ Schroeder
Bank and Trust Company, as Trustee and the First Supplemental Indenture
with respect thereto dated as of December 9, 1998 among the Company,
the Parent and the Trustee.
"FACILITY FEE RATE" means, for each Pricing Period, the rate
set forth below (expressed in basis points) opposite the Pricing Level
for that Pricing Period:
PRICING LEVEL FACILITY FEE RATE
I 10.00
II 12.50
III 15.00
IV 20.00
V 25.00
VI 30.00
"FEDERAL FUNDS RATE" means, as of any date of determination,
the rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, "H.15(519)") for such date
opposite the caption "Federal Funds (Effective)". If for any relevant
date such rate is not yet published in H.15(519), the rate for such
date will be the rate set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotations for U.S. government
securities, or any successor publication, published by the Federal
Reserve Bank
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of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such date under the caption "Federal Funds Effective
Rate". If on any relevant date the appropriate rate for such date is
not yet published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such date will be the arithmetic mean of the
rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that date by each of three
leading brokers of Federal funds transactions in New York City selected
by the Administrative Agent. For purposes of this Agreement, any change
in the Base Rate due to a change in the Federal Funds Rate shall be
effective as of the opening of business on the effective date of such
change.
"FISCAL QUARTER" means the fiscal quarter of Parent consisting
of a three month fiscal period ending on each March 31, June 30,
September 30, December 31.
"FISCAL YEAR" means the fiscal year of Parent consisting of a
twelve month fiscal period ending on each December 31.
"GAMING BOARD" means any Governmental Agency that holds
regulatory, licensing or permit authority over gambling, gaming or
casino activities conducted by Parent and its Subsidiaries within its
jurisdiction, or before which an application for licensing to conduct
such activities is pending.
"GAMING LAWS" means all Laws pursuant to which any Gaming
Board possesses regulatory, licensing or permit authority over
gambling, gaming or casino activities conducted by Parent and its
Subsidiaries within its jurisdiction.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means, as of any
date of determination, accounting principles (a) set forth as generally
accepted in then currently effective Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants, (b) set forth as generally accepted in then currently
effective Statements of the Financial Accounting Standards Board or (c)
that are then approved by such other entity as may be approved by a
significant segment of the accounting profession in the United States
of America. The term "consistently applied," as used in connection
therewith, means that the accounting principles applied are consistent
in all material respects to those applied at prior dates or for prior
periods.
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"GOVERNMENTAL AGENCY" means (a) any international, foreign,
federal, state, county or municipal government, or political
subdivision thereof, (b) any governmental or quasi-governmental agency,
authority, board, bureau, commission, department, instrumentality or
public body, or (c) any court or administrative tribunal.
"HAZARDOUS MATERIALS" means substances defined as hazardous
substances pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., or
as hazardous, toxic or pollutant pursuant to the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., the
Hazardous Waste Control Law, California Health & Safety Code ss. 25100,
et seq., or in any other applicable Hazardous Materials Law, in each
case as such Laws are amended from time to time.
"HAZARDOUS MATERIALS LAWS" means all federal, state or local
laws, ordinances, rules or regulations governing the disposal of
Hazardous Materials applicable to any of the Real Property.
"INDEBTEDNESS" means, as to any Person and as of each date of
determination, without duplication, (i) all obligations of such Person
for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the
ordinary course of business, (iv) all obligations of such Person as
lessee which are capitalized in accordance with Generally Accepted
Accounting Principles, (v) all indebtedness or other obligations
secured by a contractual Lien on any asset of such Person, whether or
not such indebtedness or other obligations are otherwise an obligation
of such Person, and (vi) all Contingent Obligations made by such Person
(including by way of provision of letters of credit or other contingent
obligations) with respect to indebtedness or other obligations of any
other Person which constitute "Indebtedness" of a type or class
described in clauses (i) through (v) of this definition.
"INTANGIBLE ASSETS" means assets that are considered
intangible assets under Generally Accepted Accounting Principles,
including customer lists, goodwill, computer software, copyrights,
trade names, trademarks and patents.
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"INTEREST COVERAGE RATIO" means, as of the last day of any
Fiscal Quarter, the RATIO OF (a) EBITDA for the four Fiscal Quarter
period ending on that date to (b) Interest Expense for the same period.
"INTEREST DIFFERENTIAL" means, with respect to any prepayment
of a Eurodollar Rate Loan on a day prior to the last day of the
applicable Eurodollar Period and with respect to any failure to borrow
a Eurodollar Rate Loan on the date or in the amount specified in any
Request for Loan, (a) the per annum interest rate payable pursuant to
Section 3.1(c) with respect to the Eurodollar Rate Loan minus (b) the
Eurodollar Rate on, or as near as practicable to the date of the
prepayment or failure to borrow for, a Eurodollar Rate Loan commencing
on such date and ending on the last day of the Eurodollar Period of the
Eurodollar Rate Loan so prepaid or which would have been borrowed on
such date.
"INTEREST EXPENSE" means, as of the last day of any fiscal
period, the SUM OF (a) all interest, fees, charges and related expenses
paid or payable (without duplication) for that fiscal period to a
lender in connection with borrowed money or the deferred purchase price
of assets that are considered "interest expense" under Generally
Accepted Accounting Principles, PLUS (b) the portion of rent paid or
payable (without duplication) for that fiscal period under Capital
Lease Obligations that should be treated as interest in accordance with
Financial Accounting Standards Board Statement No. 13.
"INVESTMENT" means, when used in connection with any Person,
any investment by or of that Person, whether by means of purchase or
other acquisition of stock or other securities of any other Person or
by means of a loan, advance creating a debt, capital contribution,
guaranty or other debt or equity participation or interest in any other
Person, including any partnership and joint venture interests of such
Person. The amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in
the value of such Investment.
"INVESTMENT GRADE" means (i) with respect to S&P, a rating of
BBB- or higher, and (ii) with respect to Moody's, a rating of Baa3 or
higher.
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"ISSUING LENDER" means, as to each Letter of Credit, the
Lender which issues the same in accordance with Section 2.4, but only
when acting in its capacity as Issuing Lender for that Letter of
Credit. Subject to the procedures set forth in Section 2.4, any Lender
may, at its option, be an Issuing Lender for Letters of Credit issued
under this Agreement.
"LAWS" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations,
ordinances, codes and administrative or judicial precedents.
"LEAD ARRANGER" means NationsBanc Montgomery Securities, LLC.
The Lead Arranger shall have no duties or obligations under this
Agreement or the other Loan Documents.
"LETTER OF CREDIT" means any letter of credit issued pursuant
to Section 2.4, either as originally issued or as the same may from
time to time be supplemented, modified, amended, renewed or extended in
accordance with the terms hereof.
"LETTER OF CREDIT FEE" means, for each Pricing Period, the
rate per annum set forth below (expressed in basis points) opposite the
Pricing Level for that Pricing Period PLUS or minus any then Pricing
Adjustment applicable during that Pricing Period:
PRICING LEVEL LETTER OF CREDIT FEE
I 60.00
II 75.00
III 87.50
IV 100.00
V 125.00
VI 162.50
"LICENSE REVOCATION" means the revocation, failure to renew or
suspension of, or the appointment of a receiver, supervisor or similar
official with respect to, any casino, gambling or gaming license issued
by any Gaming Board covering any casino or gaming facility of Parent or
any of its Subsidiaries.
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"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security interest, encumbrance,
lien or charge of any kind, whether voluntarily incurred or arising by
operation of Law or otherwise, affecting any Property, including any
agreement to grant any of the foregoing, any conditional sale or other
title retention agreement, any lease in the nature of a security
interest, and/or the filing of or agreement to give any financing
statement (other than a precautionary financing statement with respect
to a lease or other agreement that is not in the nature of a security
interest) under the Uniform Commercial Code or comparable Law of any
jurisdiction with respect to any Property.
"LOAN" means the aggregate of the Advances made at any one
time by the Lenders pursuant to Article 2.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Notes, the Letters of Credit, the Swing Line Documents, the Parent
Guaranty, any Request for Loan, any Request for Letter of Credit, any
Competitive Bid Request, any Compliance Certificate and any other
instruments, documents or agreements of any type or nature hereafter
executed and delivered by Parent or any of its Subsidiaries or
Affiliates to the Administrative Agent or any other Creditor in any way
relating to or in furtherance of this Agreement, in each case either as
originally executed or as the same may from time to time be
supplemented, modified, amended, restated, extended or supplanted.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation U.
"MATERIAL ADVERSE EFFECT" means any set of circumstances or
events which (a) has or could reasonably be expected to have any
material adverse effect whatsoever upon the validity or enforceability
of any Loan Document, (b) is or could reasonably be expected to be
material and adverse to the condition (financial or otherwise), assets,
business or operations of Parent and its Subsidiaries, taken as a
whole, or (c) materially impairs or could reasonably be expected to
materially impair the ability of Parent and its Subsidiaries, taken as
a whole, to perform the Obligations.
"MATURITY DATE" means April 30, 2004, or such later
anniversary thereof as may be established pursuant to Section 2.12.
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"MAXIMUM COMPETITIVE ADVANCE" means, with respect to any
Competitive Bid made by a Lender, the amount set forth therein as the
maximum Competitive Advance which that Lender is willing to make in
response to the related Competitive Bid Request.
"MOODY'S" means Moody's Investor Service, Inc., its successors
and assigns.
"MULTIEMPLOYER PLAN" means any employee benefit plan of the
type described in Section 4001(a)(3) of ERISA.
"NEGATIVE PLEDGE" means a Contractual Obligation that contains
a covenant binding on Parent or any of its Subsidiaries that prohibits
Liens on any of its or their Property, other than (a) any such covenant
contained in a Contractual Obligation granting a Lien permitted under
Section 6.4 which affects only the Property that is the subject of such
permitted Lien and (b) any such covenant that does not apply to Liens
securing the Obligations.
"NET INCOME" means, with respect to any fiscal period, the
consolidated net income of Parent and its Subsidiaries for that period,
determined in accordance with Generally Accepted Accounting Principles,
consistently applied.
"NET TANGIBLE ASSETS" means, as of each date of determination,
the total amount of assets of Parent and its Subsidiaries as of the
last day of the most recent Fiscal Quarter for which financial
statements have been delivered in accordance with Section 7.1, after
deducting therefrom (a) all current liabilities of Parent and its
Subsidiaries (excluding (i) the current portion of long term
Indebtedness, (ii) inter-company liabilities, and (iii) any liabilities
which are by their terms renewable or extendable at the option of the
obligor thereon to a time more than twelve 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 expense
and other like intangibles, all as set forth on the latest consolidated
balance sheet of Parent prepared in accordance with Generally Accepted
Accounting Principles.
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"NEW PROJECT" means each new hotel - casino, casino or resort
project (as opposed to any project which consists of an extension or
redevelopment of an operating hotel, casino or resort) owned by Parent
or its Subsidiaries having a development and construction budget in
excess of $25,000,000 which hereafter receives a certificate of
completion or occupancy and all relevant gaming and other licenses, and
in fact commences operations.
"NOTES" means, collectively, the Committed Advance Notes and
the Competitive Advance Notes.
"OBLIGATIONS" means all present and future obligations of
every kind or nature of Parent, Borrowers or any Party at any time and
from time to time owed to the Creditors or any one or more of them,
under any one or more of the Loan Documents, whether due or to become
due, matured or unmatured, liquidated or unliquidated, or contingent or
noncontingent, including obligations of performance as well as
obligations of payment, and including interest that accrues after the
commencement of any proceeding under any Debtor Relief Law by or
against Parent, any Borrower or any Subsidiary of Parent.
"OPINIONS OF COUNSEL" means (a) the favorable written legal
opinion of Parent's general counsel, and (b) the favorable written
legal opinion of Latham & Watkins, special counsel to Parent and the
Borrowers, substantially in the form of Exhibit G, together with copies
of all factual certificates and legal opinions upon which such counsel
have relied.
"OUTSTANDING OBLIGATIONS" means, as of each date of
determination, and giving effect to the making of any such credit
accommodations requested on that date, the sum of (i) the aggregate
principal amount of the outstanding Committed Loans, plus (ii) the
aggregate principal amount of the outstanding Competitive Advances,
plus (iii) the Swing Line Outstandings, plus (iv) the Aggregate
Effective Amount of all Letters of Credit.
"PARENT" means Harrah's Entertainment, Inc., a Delaware
corporation, and its permitted successors and assigns.
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"PARENT GUARANTY" means the Guaranty executed by Parent on the
Closing Date with respect to the Obligations, substantially in the form
of Exhibit H, either as originally executed or as it may from time to
time be supplemented, modified, amended, restated or extended.
"PARTY" means any Person other than Creditors which now or
hereafter is a party to any of the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereof established under ERISA.
"PENSION PLAN" means any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA), other than a
Multiemployer Plan, which is subject to Title IV of ERISA and is
maintained by Parent or any of its Subsidiaries or to which Parent or
any of its Subsidiaries contributes or has an obligation to contribute.
"PERMITTED ENCUMBRANCES" means:
(a) inchoate Liens incident to construction or
maintenance of Real Property; or Liens incident to
construction or maintenance of Real Property now or hereafter
filed of record for which adequate reserves have been set
aside (or deposits made pursuant to applicable Law) and which
are being contested in good faith by appropriate proceedings
and have not proceeded to judgment, provided that, by reason
of nonpayment of the obligations secured by such Liens, no
such Real Property is subject to a material risk of loss or
forfeiture;
(b) Liens for taxes and assessments on and similar
charges with respect to Real Property which are not yet past
due; or Liens for taxes and assessments on Real Property for
which adequate reserves have been set aside and are being
contested in good faith by appropriate proceedings and have
not proceeded to judgment, provided that, by reason of
nonpayment of the obligations secured by such Liens, no
material Real Property is subject to a material risk of loss
or forfeiture;
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(c) defects and irregularities in title to any Real
Property which in the aggregate do not materially impair the
fair market value or use of the Real Property for the purposes
for which it is or may reasonably be expected to be held;
(d) easements, exceptions, reservations, or other
agreements for the purpose of pipelines, conduits, cables,
wire communication lines, power lines and substations,
streets, trails, walkways, driveways, drainage, irrigation,
water, and sewerage purposes, dikes, canals, ditches, the
removal of oil, gas, coal, or other minerals, and other like
purposes affecting Real Property, facilities, or equipment
which in the aggregate do not materially burden or impair the
fair market value or use of such Real Property for the
purposes for which it is or may reasonably be expected to be
held;
(e) easements, exceptions, reservations, or other
agreements for the purpose of facilitating the joint or common
use of property which in the aggregate do not materially
burden or impair the fair market value or use of such property
for the purposes for which it is or may reasonably be expected
to be held;
(f) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, the use of any Real
Property;
(g) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, any right, power,
franchise, grant, license, or permit;
(h) present or future zoning laws, building codes and
ordinances, zoning restrictions, or other laws and ordinances
restricting the occupancy, use, or enjoyment of Real Property;
(i) statutory Liens, other than those described in
clauses (a) or (b) above, arising in the ordinary course of
business with respect to obligations which are not delinquent
or are being contested in good faith, provided that, if
delinquent, adequate reserves have been set aside with respect
thereto and, by reason of nonpayment, no property is subject
to a material risk of loss or forfeiture;
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(j) covenants, conditions, and restrictions affecting
the use of Real Property which in the aggregate do not
materially impair the fair market value or use of the Real
Property for the purposes for which it is or may reasonably be
expected to be held;
(k) rights of tenants under leases and rental
agreements covering Real Property entered into in the ordinary
course of business of the Person owning such Real Property;
(l) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar
legislation, including Liens of judgments thereunder which are
not currently dischargeable;
(m) Liens consisting of pledges or deposits of
property to secure performance in connection with operating
leases made in the ordinary course of business to which Parent
or any of its Subsidiaries is a party as lessee, provided the
aggregate value of all such pledges and deposits in connection
with any such lease does not at any time exceed 20% of the
annual fixed rentals payable under such lease;
(n) Liens consisting of deposits of property to
secure bids made with respect to, or performance of, contracts
(other than contracts creating or evidencing an extension of
credit to the depositor) in the ordinary course of business;
(o) Liens consisting of any right of offset, or
statutory bankers' lien, on bank deposit accounts maintained
in the ordinary course of business so long as such bank
deposit accounts are not established or maintained for the
purpose of providing such right of offset or bankers' lien;
(p) Liens consisting of deposits of property to
secure statutory obligations of Parent or any of its
Subsidiaries in the ordinary course of its business;
(q) Liens consisting of deposits of property to
secure (or in lieu of) surety, appeal or customs bonds in
proceedings to which Parent or any of its Subsidiaries is a
party in the ordinary course of business;
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(r) Liens created by or resulting from any litigation
or legal proceeding involving Parent or any of its
Subsidiaries in the ordinary course of its business which is
currently being contested in good faith by appropriate
proceedings, provided that adequate reserves have been set
aside and no material property is subject to a material risk
of loss or forfeiture;
(s) precautionary UCC financing statement filings
made in connection with operating leases and not constituting
Liens; and
(t) other non-consensual Liens incurred in the
ordinary course of business but not in connection with an
extension of credit, which do not in the aggregate, when taken
together with all other Liens, materially impair the value or
use of the Property of Parent and its Subsidiaries, taken as a
whole.
"PERMITTED RIGHT OF OTHERS" means a Right of Others consisting
of (i) an interest (other than a legal or equitable co-ownership
interest, an option or right to acquire a legal or equitable
co-ownership interest and any interest of a ground lessor under a
ground lease), that does not materially impair the value or use of
Property for the purposes for which it is or may reasonably be expected
to be held, (ii) an option or right to acquire a Lien that would be a
Permitted Encumbrance, (iii) the subordination of a lease or sublease
in favor of a financing entity and (iv) a license, or similar right, of
or to Intangible Assets granted in the ordinary course of business.
"PERSON" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, joint stock
company, trust, estate, unincorporated organization, business
association, firm, joint venture, Governmental Agency, or otherwise.
"PRE-OPENING EXPENSES" means, with respect to any fiscal
period, the amount of expenses (other than Interest Expense) incurred
with respect to capital projects which are classified as "pre-opening
expenses" on the applicable financial statements of Parent and its
Subsidiaries for such period (or, with respect to periods prior to
December 31, 1998, the financial statements of Rio and Showboat),
prepared in accordance with Generally Accepted Accounting Principles.
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"PRICING ADJUSTMENT" means, during any Pricing Period, (a) if
the Total Debt Ratio as of the last day of the Fiscal Quarter ending
immediately prior to the commencement of such Pricing Period was
greater than 3.75 to 1.00 but less than or equal to 4.25:1.00, an
increase to the Eurodollar Margin of 7.5 basis points, (b) if the Total
Debt Ratio as of the last day of the Fiscal Quarter ending immediately
prior to the commencement of such Pricing Period was greater than
4.25:1.00, an increase to the Eurodollar Margin of 15.0 basis points,
and (c) if the Total Debt Ratio as of the last day of the Fiscal
Quarter ending immediately prior to the commencement of such Pricing
Period was less than 2.00:1.00, a decrease to the Eurodollar Margin of
7.5 basis points.
"PRICING LEVEL" means, for each Pricing Period, the pricing
level set forth below opposite the Debt Ratings as of the first day of
that Pricing Period:
MOODY'S/S&P RATING APPLICABLE PRICING LEVEL
A-/A3 or higher Pricing Level I
BBB+/Baa1 Pricing Level II
BBB/Baa2 Pricing Level III
BBB-/Baa3 Pricing Level IV
BB+/Ba1 Pricing Level V
BB/Ba2 or lower Pricing Level VI
PROVIDED that if Moody's and S&P each assign Debt Ratings which are
associated with different Pricing Levels in the matrix set forth above,
then the applicable Pricing Level shall be the Pricing Level which is
one Pricing Level higher than that associated with the lower of the two
Debt Ratings.
"PRICING PERIOD" means (a) the period commencing on the
Closing Date and ending on May 31, 1999, (b) each subsequent three
month period commencing on each June 1, September 1, December 1 and
March 1, and (c) any shorter period ending on the date upon which the
Commitment is terminated.
"PROJECTIONS" means the financial projections contained in the
Confidential Information Memorandum.
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
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"PRO RATA SHARE" means, with respect to each Lender, the
percentage of the Commitment held by that Lender. The Pro Rata Share of
each Lender as of the Closing Date is set forth opposite the name of
that Lender on Schedule 1.1.
"QUARTERLY PAYMENT DATE" means each March 31, June 30,
September 30 and December 31.
"RATING DECLINE" means the occurrence of a decrease in the
Debt Rating by either Moody's or S&P to below Investment Grade on any
date on or within 90 days after the date of the first public notice of
(a) the occurrence of an event described in clauses (i)-(iv) of the
definition of "Change in Control" or (b) the intention by any of the
Parent or Borrowers to effect such an event (which 90-day period shall
be extended so long as the Debt Rating is under publicly announced
consideration for possible downgrade by Moody's or S&P).
"REAL PROPERTY" means, as of any date of determination, all
real property then or theretofore owned, leased or occupied by Parent
or any of its Subsidiaries.
"REFERENCE RATE" means the rate of interest publicly announced
from time to time by Bank of America as its "reference rate" or the
similar prime rate or reference rate announced by any successor
Administrative Agent. Bank of America's reference rate is a rate set by
Bank of America based upon various factors including Bank of America's
costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in
the Reference Rate announced by Bank of America or any successor
Administrative Agent shall take effect at the opening of business on
the day specified in the public announcement of such change.
"REGULATIONS D, T, U AND X" means Regulations D, T, U and X,
as at any time amended, of the Board of Governors of the Federal
Reserve System, or any other regulations in substance substituted
therefor.
"REQUEST FOR LETTER OF CREDIT" means a written request for a
Letter of Credit substantially in the form of Exhibit I, together with
any forms of application for letter of credit required by the relevant
Issuing Lender therefor, in each case signed by a Responsible Official
of a Borrower on
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behalf of that Borrower and properly completed to provide all
information required to be included therein (provided that it is
understood that the terms of the Loan Documents shall govern and
control in the event of any conflict between the terms of any such
application and the Loan Documents).
"REQUEST FOR LOAN" means a written request for a Loan
substantially in the form of Exhibit J, signed by a Responsible
Official of a Borrower, on behalf of that Borrower, and properly
completed to provide all information required to be included therein.
"REQUIREMENT OF LAW" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any Law, or judgment, award,
decree, writ or determination of a Governmental Agency, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"REQUISITE LENDERS" means (a) as of any date of determination
if the Commitment is then in effect, Lenders having in the aggregate
51% or more of the Commitment then in effect and (b) as of any date of
determination if the Commitment has then been terminated, Lenders
holding 51% of the Outstanding Obligations.
"RESPONSIBLE OFFICIAL" means when used with reference to a
Person other than an individual, any corporate officer of such Person,
general partner of such Person, corporate officer of a corporate
general partner of such Person, or corporate officer of a corporate
general partner of a partnership that is a general partner of such
Person, or any other responsible official thereof duly acting on behalf
thereof. Any document or certificate hereunder that is signed or
executed by a Responsible Official of another Person shall be
conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such other
Person.
"RIGHT OF OTHERS" means, as to any Property in which a Person
has an interest, any legal or equitable ownership right, title or other
interest (other than a Lien) held by any other Person in that Property,
and any option or right held by any other Person to acquire any such
right, title or
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other interest in that Property, including any option or right to
acquire a Lien; provided, however, that (a) any covenant restricting
the use or disposition of Property of such Person contained in any
Contractual Obligation of such Person, (b) any provision contained in a
contract creating a right of payment or performance in favor of a
Person that conditions, limits, restricts, diminishes, transfers or
terminates such right, and (c) any residual rights held by a lessor or
vendor of Property, shall not be deemed to constitute a Right of
Others.
"RIO" means Rio Hotel & Casino, Inc., a Nevada Corporation,
and its Subsidiaries.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., its successors and assigns.
"SALE AND LEASEBACK" means, with respect to any Person, the
sale of Property owned by that Person (the "Seller") to another Person
(the "Buyer"), together with the substantially concurrent leasing of
such Property (or any portion thereof) by the Buyer to the Seller.
"SALE AND LEASEBACK OBLIGATION" means, with respect to any
Sale and Leaseback and as of any date of determination, the present
value of the aggregate monetary obligations of the lessee under the
lease of the Property which is the subject of such Sale and Leaseback
(discounted at the interest rate implicit in such lease, compounded
annually) for the then remaining term of such lease (treating all
extension options exercisable by the lessor as having been exercised,
but deeming the lease terminated as of the earliest date upon which the
lessee has the option to do so); provided that such monetary
obligations shall exclude amounts payable in respect of maintenance,
repairs, insurance, taxes, assessments, utilities and similar charges.
"SENIOR OFFICER" means Parent's and each Borrower's (a) chief
executive officer, (b) president, (c) chief financial officer, (d)
treasurer, (e) vice presidents or (f) secretaries.
"SHORT TERM COMMITMENTS" means the lending commitment of the
lenders under the Short Term Loan Agreement.
"SHORT TERM LOAN AGREEMENT" means the 364-Day Loan Agreement
of even date herewith among the Lenders party to this Agreement on the
Effective Date and Bank of America National Trust and Savings
Association, as Administrative Agent, as at any time amended
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"SHOWBOAT" means Showboat, Inc., a Nevada corporation and its
Subsidiaries.
"SIGNIFICANT SUBSIDIARY" means, as of any date of
determination, each Subsidiary of Parent that had on the last day of
the Fiscal Quarter then most recently ended total assets (determined in
accordance with Generally Accepted Accounting Principles) of
$50,000,000 or more.
"SPECIAL EURODOLLAR CIRCUMSTANCE" means the application or
adoption after the date hereof of any Law or interpretation, or any
change therein or thereof, or any change in the interpretation or
administration thereof by any Governmental Agency, central bank or
comparable authority charged with the interpretation or administration
thereof, or compliance by any Lender or its Eurodollar Lending Office
with any request or directive (whether or not having the force of Law)
of any such Governmental Agency, central bank or comparable authority,
or the existence or occurrence of circumstances affecting the
Designated Eurodollar Market generally that are beyond the reasonable
control of the Lenders.
"SOLVENT" as to any Person shall mean that (a) the sum of the
assets of such Person, both at a fair valuation and at present fair
saleable value, exceeds its liabilities, including its probable
liability in respect of contingent liabilities, (b) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (c) such Person has not
incurred debts, and does not intend to incur debts, beyond its ability
to pay such debts as they mature. For purposes of this definition,
"debt" means any liability on a claim, and "claim" means (x) a right to
payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, or (y) a right to
an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured. With respect to any such contingent
liabilities, such liabilities shall be computed at the amount which, in
light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an
actual or matured liability.
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"SUBORDINATED DEBT" means (a) the Existing Subordinated Debt,
and (b) any other Indebtedness of Parent or the Company which is
subordinated in right of payment to the Obligations pursuant to
subordination provisions which are either (i) substantively no less
favorable to the Lenders than the subordination provisions of the
Existing Subordinated Debt, or (ii) otherwise are acceptable to the
Requisite Lenders in the exercise of their sole discretion.
"SUBSIDIARY" means, as of any date of determination and with
respect to any Person, any corporation or partnership (whether or not,
in either case, characterized as such or as a "joint venture"), whether
now existing or hereafter organized or acquired: (a) in the case of a
corporation, of which a majority of the securities having ordinary
voting power for the election of directors or other governing body
(other than securities having such power only by reason of the
happening of a contingency) are at the time beneficially owned by such
Person and/or one or more Subsidiaries of such Person, or (b) in the
case of a partnership, of which a majority of the partnership or other
ownership interests having ordinary management power are at the time
beneficially owned by such Person and/or one or more of its
Subsidiaries.
"SWING LINE" means the revolving line of credit established by
the Swing Line Lender in favor of Borrowers pursuant to Section 2.6.
"SWING LINE ADVANCES" means Advances made by the Swing Line
Lender to any of the Borrowers pursuant to Section 2.6.
"SWING LINE DOCUMENTS" means the promissory notes and any
other documents executed by Borrowers in favor of the Swing Line Lender
in connection with the Swing Line.
"SWING LINE LENDER" means, when acting in such capacity, Bank
of America (through its Nevada Commercial Banking Division), its
successors and assigns.
"SWING LINE OUTSTANDINGS" means, as of any date of
determination, the aggregate principal Indebtedness of Borrowers on all
Swing Line Advances then outstanding.
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"SYNDICATION AGENT" means Bankers Trust Company. Bankers Trust
Company shall not have any additional rights, duties or obligations
under this Agreement or the other Loan Documents by reason of its being
a Syndication Agent.
"TOTAL DEBT" means, as of any date of determination, the sum
(without duplication) of (a) the outstanding principal Indebtedness of
Parent and its Subsidiaries for borrowed money (including debt
securities issued by Parent or any of its Subsidiaries) on that date,
plus (b) the aggregate amount of all Capital Lease Obligations of
Parent and its Subsidiaries on that date, plus (c) all obligations in
respect of letters of credit or other similar instruments for which
Parent or any of its Subsidiaries are account parties or are otherwise
obligated, plus (d) the aggregate amount of all Contingent Obligations
and other similar contingent obligations of Parent and its Subsidiaries
with respect to any of the foregoing, and plus (e) any obligations of
Parent or any of its Subsidiaries to the extent that the same are
secured by a Lien on any of the assets of Parent or its Subsidiaries.
In computing "Total Debt," the amount of any Contingent Obligation or
letter of credit shall be deemed to be zero unless and until (1) in the
case of obligations in respect of letters of credit, a drawing is made
with respect thereto, (2) in the case of any other Contingent
Obligations, demand for payment is made with respect thereto, or (3)
Parent's independent auditors have quantified the amount of Parent's
and its Subsidiaries with respect to letters of credit and Contingent
Obligations as liabilities on Parent's consolidated balance sheet in
accordance with Generally Accepted Accounting Principles (as opposed to
merely noted in the footnotes to any such balance sheet) and the amount
of any such individual liability is in excess of $50,000,000, in which
case the amount thereof shall be deemed to be the amount so quantified
from time to time.
"TOTAL DEBT RATIO" means, as of the last day of any Fiscal
Quarter, the RATIO OF (a) Total Debt on that date, to (b) EBITDA for
the four Fiscal Quarter period ending on that date.
"TYPE", when used with respect to any Loan or Advance, means
the designation of whether such Loan or Advance is a Base Rate Loan or
Advance, or a Eurodollar Rate Loan or Advance.
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"WHOLLY-OWNED SUBSIDIARY" means, as to any Person any other
Person, 100% of whose capital stock, partnership interests, membership
interests or other forms of equity ownership interest (other than
directors qualifying shares and similar interests) is at the time
owned, directly or indirectly, by such Person.
"YEAR 2000 ISSUE" means failure of computer software, hardware
and firmware systems, and equipment containing embedded computer chips,
to properly receive, transmit, process, manipulate, store, retrieve,
re-transmit or in any other way utilize data and information due to the
occurrence of the year 2000 or the inclusion of dates on or after
January 1, 2000.
1.2 USE OF DEFINED TERMS. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.
1.3 ACCOUNTING TERMS. All accounting terms not specifically defined in
this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
Generally Accepted Accounting Principles applied on a consistent basis, except
as otherwise specifically prescribed herein. In the event that Generally
Accepted Accounting Principles change during the term of this Agreement such
that the covenants contained in Sections 6.5 and 6.6 would then be calculated in
a different manner or with different components, (a) Parent, Borrowers and the
Lenders agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Parent's consolidated
financial condition to substantially the same criteria as were effective prior
to such change in Generally Accepted Accounting Principles and (b) Parent and
Borrowers shall be deemed to be in compliance with the covenants contained in
the aforesaid Sections during the 90 day period following any such change in
Generally Accepted Accounting Principles if and to the extent that Parent and
Borrowers would have been in compliance therewith under Generally Accepted
Accounting Principles as in effect immediately prior to such change.
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1.4 ROUNDING. Any financial ratios required to be maintained by Parent
and Borrowers pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
1.5 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
1.6 MISCELLANEOUS TERMS. The term "or" is disjunctive; the term "and"
is conjunctive. The term "shall" is mandatory; the term "may" is permissive.
Masculine terms also apply to females; feminine terms also apply to males. The
term "including" is by way of example and not limitation.
Article 2
LOANS AND LETTERS OF CREDIT
2.1 COMMITTED LOANS-GENERAL.
(a) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date through and
including the Maturity Date, each Lender shall, pro rata according to that
Lender's Pro Rata Share of the then applicable Commitment, make Committed
Advances in Dollars to Borrowers in such amounts as any Borrower may request
provided that (a) giving effect to such Advances, the Outstanding Obligations
shall not exceed the Commitment at any time, (b) without the consent of all of
the Lenders, the aggregate principal amount of the Outstanding Obligations of
Marina plus the outstanding principal amount of the loans outstanding to Marina
under the Short Term Commitment shall not exceed Marina's Aggregate Sublimit at
any time, and (c) without the consent of all of the Lenders, the aggregate
principal amount of the
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Outstanding Obligations of each Borrower hereafter designated as such pursuant
to Section 2.10 PLUS the outstanding principal amount of the loans outstanding
to such Borrower under the Short Term Commitment shall not exceed that
Borrower's Aggregate Sublimit at any time. Subject to the limitations set forth
herein, each of the Borrowers may borrow, repay and reborrow under the
Commitment without premium or penalty.
(b) Subject to the next sentence, each Committed Loan shall be
made pursuant to a Request for Loan executed by the relevant Borrower which
shall specify the requested (i) date of such Loan, (ii) type of Loan, (iii)
amount of such Loan, and (iv) in the case of a Eurodollar Rate Loan, the
Eurodollar Period for such Loan. Unless the Administrative Agent has notified,
in its sole and absolute discretion, Borrowers to the contrary, a Loan may be
requested by telephone by a Responsible Official of any Borrower, in which case
that Borrower shall confirm such request by promptly delivering a Request for
Loan in person or by telecopier conforming to the preceding sentence to the
Administrative Agent. The Administrative Agent shall incur no liability
whatsoever hereunder in acting upon any telephonic request for loan purportedly
made by a Responsible Official of a Borrower, and each Borrower hereby jointly
and severally (but as between Borrowers, ratably) agrees to indemnify the
Administrative Agent from any loss, cost, expense or liability as a result of so
acting.
(c) Promptly following receipt of a Request for Loan, the
Administrative Agent shall notify each Lender by telephone or telecopier (and if
by telephone, promptly confirmed by telecopier) of the identity of the relevant
Borrower, the date and type of the Loan, the applicable Eurodollar Period, and
that Lender's Pro Rata Share of the Loan. Not later than 11:00 a.m., California
local time, on the date specified for any Loan (which must be a Business Day),
each Lender shall make its Pro Rata Share of the Committed Loan in immediately
available funds available to the Administrative Agent at the Administrative
Agent's Office. Upon satisfaction or waiver of the applicable conditions set
forth in Article 8, all Committed Advances shall be credited on that date in
immediately available funds to the Designated Deposit Account.
(d) Unless the Requisite Lenders otherwise consent, each
Committed Loan shall be an integral multiple of $1,000,000 and shall be not less
than $10,000,000.
(e) The Committed Advances made by each Lender to each
Borrower shall be evidenced by a Committed Advance Note issued by that Borrower
and made payable to that Lender.
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(f) A Request for Loan shall be irrevocable upon the
Administrative Agent's first notification thereof.
(g) If no Request for Loan (or telephonic request for loan
referred to in the second sentence of Section 2.1(b), if applicable) has been
made within the requisite notice periods set forth in Sections 2.2 or 2.3 in
connection with a Loan which, if made and giving effect to the application of
the proceeds thereof, would not increase the outstanding principal Indebtedness
evidenced by the Committed Advance Notes of the relevant Borrower, then that
Borrower shall be deemed to have requested, as of the date upon which the
related then outstanding Loan is due pursuant to Section 3.1(f)(i), a Base Rate
Loan in an amount equal to the amount necessary to cause the outstanding
principal Indebtedness evidenced by its Committed Advance Notes to remain the
same and the Lenders shall make the Advances necessary to make such Loan
notwithstanding Sections 2.1(b), 2.2 and 2.3.
2.2 BASE RATE LOANS. Each request by a Borrower for a Base Rate Loan
shall be made pursuant to a Request for Loan (or telephonic or other request for
loan referred to in the second sentence of Section 2.1(b), if applicable)
received by the Administrative Agent, at the Administrative Agent's Office, not
later than 9:00 a.m. California local time, on the date (which must be a
Business Day) of the requested Base Rate Loan. All Committed Loans shall
constitute Base Rate Loans unless properly designated as a Eurodollar Rate Loan
pursuant to Section 2.3.
2.3 EURODOLLAR RATE LOANS.
(a) Each request by a Borrower for a Eurodollar Rate Loan
shall be made pursuant to a Request for Loan (or telephonic or other request for
loan referred to in the second sentence of Section 2.1(b), if applicable)
received by the Administrative Agent, at the Administrative Agent's Office, not
later than 9:00 a.m., California local time, at least three Eurodollar Business
Days before the first day of the applicable Eurodollar Period.
(b) On the date which is two Eurodollar Business Days before
the first day of the applicable Eurodollar Period, the Administrative Agent
shall confirm its determination of the applicable Eurodollar Rate (which
determination shall be conclusive in the absence of manifest error) and promptly
shall give notice of the same to Borrowers and the Lenders by telephone or
telecopier (and if by telephone, promptly confirmed by telecopier).
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(c) Unless the Administrative Agent and the Requisite Lenders
otherwise consent, no more than twenty Eurodollar Rate Loans shall be
outstanding at any one time.
(d) No Eurodollar Rate Loan may be requested during the
existence of a Default or Event of Default.
(e) No Lender shall be required to obtain the funds necessary
to fund its Eurodollar Rate Advances in the Designated Eurodollar Market or from
any other particular source of funds, rather each Lender shall be free to obtain
such funds from any legal source.
2.4 LETTERS OF CREDIT.
(a) On the Closing Date, each of the Continuing Letters of
Credit shall be deemed to have been issued and to be outstanding under this
Agreement, and each issuer of a Continuing Letter of Credit hereby consents to
the termination, concurrently with the Closing Date, of the participation
therein of the lenders under the Existing Harrah's Credit Agreements.
(b) Subject to the terms and conditions hereof, at any time
and from time to time from the Closing Date through the day prior to the
Maturity Date, any one or more of the Borrowers may request that any one or more
of the Lenders issue, as Issuing Lender, additional Letters of Credit under the
Commitment (each of which shall be denominated in Dollars) by submission of a
Request for Letter of Credit to such Lender (with a copy to the Administrative
Agent); provided that giving effect to all such Letters of Credit, (i) the
Outstanding Obligations shall not exceed the Commitment at any time, (ii)
without the consent of all of the Lenders, the aggregate principal amount of the
Outstanding Obligations of Marina PLUS the outstanding principal amount of the
loans outstanding to Marina under the Short Term Commitment shall not exceed
Marina's Aggregate Sublimit at any time, (iii) without the consent of all of the
Lenders, the aggregate principal amount of the Outstanding Obligations of each
Borrower hereafter designated as such pursuant to Section 2.10 PLUS the
outstanding principal amount of the loans outstanding to such Borrower under the
Short Term Commitment shall not exceed that Borrower's Aggregate Sublimit at any
time, and (iv) the Aggregate Effective Amount under all outstanding Letters of
Credit shall not exceed $200,000,000. Each Letter of Credit shall be in a form
reasonably acceptable to the relevant Issuing Lender. Unless all the Lenders
otherwise consent in a writing delivered to the Administrative Agent, no Letter
of Credit shall have a term which extends beyond the Maturity Date.
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(c) Each Request for Letter of Credit shall be submitted to
the relevant Issuing Lender, with a copy to the Administrative Agent, at least
five Business Days prior to the date upon which the related Letter of Credit is
proposed to be issued (or such shorter period as may be acceptable to both the
relevant Issuing Lender and the Administrative Agent). The Administrative Agent
shall promptly notify the relevant Issuing Lender whether such Request for
Letter of Credit, and the issuance of a Letter of Credit pursuant thereto,
conforms to the requirements of this Agreement. Upon issuance, amendment to or
extension of a Letter of Credit, the relevant Issuing Lender shall promptly
notify the Administrative Agent, and the Administrative Agent shall promptly
notify the Lenders, of the amount and terms thereof.
(d) On the Closing Date, each Lender shall be deemed to have
purchased a pro rata participation in each Continuing Letter of Credit from the
relevant Issuing Lender in an amount equal to that Lender's Pro Rata share. Upon
the issuance of each other Letter of Credit, each Lender shall be deemed to have
purchased a pro rata participation in such Letter of Credit from the relevant
Issuing Lender in an amount equal to that Lender's Pro Rata Share. Without
limiting the scope and nature of each Lender's participation in any Letter of
Credit, to the extent that the relevant Issuing Lender has not been reimbursed
by the Borrower which is the account party for any Letter of Credit for any
payment required to be made by the relevant Issuing Lender thereunder, each
Lender shall, pro rata according to its Pro Rata Share, reimburse the relevant
Issuing Lender promptly upon demand for the amount of such payment. The
obligation of each Lender to so reimburse the relevant Issuing Lender shall be
absolute and unconditional and shall not be affected by the occurrence of an
Event of Default or any other occurrence or event. Any such reimbursement shall
not relieve or otherwise impair the obligation of Borrowers to reimburse the
relevant Issuing Lender for the amount of any payment made by the relevant
Issuing Lender under any Letter of Credit together with interest as hereinafter
provided.
(e) Promptly and in any event within one Business Day
following any drawing upon a Letter of Credit, the amendment or extension
thereof, the Issuing Bank for that Letter of Credit shall provide notice thereof
to the Administrative Agent. Each Borrower agrees to pay to the relevant Issuing
Lender an amount equal to any payment made by the relevant Issuing Lender with
respect to each Letter of Credit within one Business Day after demand made by
the relevant Issuing Lender therefor (which demand
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the relevant Issuing Lender shall make promptly and in any event shall make upon
the request of the Requisite Lenders), together with interest on such amount
from the date of any payment made by the relevant Issuing Lender at the rate
applicable to Base Rate Loans for three Business Days and thereafter at the
Default Rate. The principal amount of any such payment shall be used to
reimburse the relevant Issuing Lender for the payment made by it under the
Letter of Credit and, to the extent that the Lenders have not reimbursed the
relevant Issuing Lender pursuant to Section 2.4(d), the interest amount of any
such payment shall be for the account of the relevant Issuing Lender. Each
Lender that has reimbursed the relevant Issuing Lender pursuant to Section
2.4(d) for its Pro Rata Share of any payment made by the relevant Issuing Lender
under a Letter of Credit shall thereupon acquire a pro rata participation, to
the extent of such reimbursement, in the claim of the relevant Issuing Lender
against Borrowers for reimbursement of principal and interest under this Section
2.4(e) and shall share, in accordance with that pro rata participation, in any
principal payment made by Borrowers with respect to such claim and in any
interest payment made by Borrowers (but only with respect to periods subsequent
to the date such Lender reimbursed the relevant Issuing Lender) with respect to
such claim. The relevant Issuing Lender shall promptly make available to the
Administrative Agent, which will thereupon remit to the appropriate Lenders, in
immediately available funds, any amounts due to the Lenders under this Section.
(f) Each Borrower may, pursuant to a Request for Loan, request
that Advances be made pursuant to Section 2.1(a) to provide funds for the
payment required by Section 2.4(e) and, for this purpose, the conditions
precedent set forth in Article 8 shall not apply. The proceeds of such Advances
shall be paid directly by the Administrative Agent to the relevant Issuing
Lender to reimburse it for the payment made by it under the Letter of Credit.
(g) If Borrowers fail to make the payment required by Section
2.4(e) within the time period therein set forth, in lieu of the reimbursement to
the relevant Issuing Lender under Section 2.4(d) the relevant Issuing Lender may
(but is not required to), without notice to or the consent of Borrowers, to
require that the Administrative Agent request that the Lenders to make Advances
under the Commitment in an aggregate amount equal to the amount paid by that
Issuing Lender with respect to that
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Letter of Credit and, for this purpose, the conditions precedent set forth in
Article 8 shall not apply. The proceeds of such Advances shall be paid by the
Administrative Agent directly to the relevant Issuing Lender to reimburse it for
the payment made by it under the Letter of Credit.
(h) The issuance of any supplement, modification, amendment,
renewal, or extension to or of any Letter of Credit shall be treated in all
respects the same as the issuance of a new Letter of Credit.
(i) The obligation of Borrowers to pay to each Issuing Lender
the amount of any payment made by that Issuing Lender under any Letter of Credit
shall be absolute, unconditional, and irrevocable. Without limiting the
foregoing, Borrowers' obligations shall not be affected by any of the following
circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, this Agreement, or any other agreement or
instrument relating thereto;
(ii) any amendment or waiver of or any consent to
departure from the Letter of Credit, this Agreement, or any
other agreement or instrument relating thereto;
(iii) the existence of any claim, setoff, defense, or
other rights which any Borrower may have at any time against
any Issuing Lender or any other Creditor, any beneficiary of
the Letter of Credit (or any persons or entities for whom any
such beneficiary may be acting) or any other Person, whether
in connection with the Letter of Credit, this Agreement, or
any other agreement or instrument relating thereto, or any
unrelated transactions;
(iv) any demand, statement, or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
(v) payment by the relevant Issuing Lender under the
Letter of Credit against presentation of a draft or any
accompanying document which does not strictly comply with the
terms of the Letter of Credit;
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(vi) the existence, character, quality, quantity,
condition, packing, value or delivery of any Property
purported to be represented by documents presented in
connection with any Letter of Credit or any difference between
any such Property and the character, quality, quantity,
condition, or value of such Property as described in such
documents;
(vii) the time, place, manner, order or contents of
shipments or deliveries of Property as described in documents
presented in connection with any Letter of Credit or the
existence, nature and extent of any insurance relative
thereto;
(viii) the solvency or financial responsibility of
any party issuing any documents in connection with a Letter of
Credit;
(ix) any failure or delay in notice of shipments or
arrival of any Property;
(x) any error in the transmission of any message
relating to a Letter of Credit not caused by the relevant
Issuing Lender, or any delay or interruption in any such
message;
(xi) any consequence arising from acts of God, war,
insurrection, civil unrest, disturbances, labor disputes,
emergency conditions or other causes beyond the control of the
relevant Issuing Lender;
(xii) so long as the relevant Issuing Lender in good
faith determines that the contract or document appears to
comply with the terms of the Letter of Credit, the form,
accuracy, genuineness or legal effect of any contract or
document referred to in any document submitted to the relevant
Issuing Lender in connection with a Letter of Credit; and
(xiii) where the relevant Issuing Lender has acted in
good faith and observed general banking usage, any other
circumstances whatsoever.
(j) Each Issuing Lender shall be entitled to the protection
accorded to the Administrative Agent pursuant to Section 10.6, mutatis mutandis.
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2.5 COMPETITIVE ADVANCES.
(a) Subject to the terms and conditions hereof, at any time
and from time to time from the Closing Date through and including the Maturity
Date, each Lender may in its sole and absolute discretion make Competitive
Advances to each Borrower pursuant to Competitive Bids accepted by that Borrower
in such principal amounts as that Borrower may request pursuant to a Competitive
Bid Request that do not result in the aggregate outstanding principal
Indebtedness evidenced by the Competitive Advance Notes being in excess of
$200,000,000, provided that giving effect to the making of each Competitive
Advance, (a) the Outstanding Obligations shall not exceed the Commitment at any
time, and (b) without the consent of all of the Lenders, the aggregate principal
amount of the Outstanding Obligations of Marina plus the outstanding principal
amount of the loans outstanding to Marina under the Short Term Commitment shall
not exceed Marina's Aggregate Sublimit at any time, and (c) without the consent
of all of the Lenders, the aggregate principal amount of the Outstanding
Obligations of each Borrower hereafter designated as such pursuant to Section
2.10 PLUS the outstanding principal amount of the loans outstanding to such
Borrower under the Short Term Commitment shall not exceed that Borrower's
Aggregate Sublimit at any time. No Competitive Advance made by any Lender shall
relieve that Lender of its Pro Rata Share of the undrawn Commitment.
(b) Each Borrower shall request Competitive Advances by
submitting Competitive Bid Requests to the Administrative Agent, which specify
the relevant date, amount and maturity of the proposed Competitive Advance,
whether the Competitive Bid requested is an Absolute Rate Bid or a Eurodollar
Margin Bid. Any Competitive Bid Request made by telephone shall promptly be
confirmed by the delivery to Administrative Agent in person or by telecopier of
a written Competitive Bid Request. The Administrative Agent shall incur no
liability whatsoever hereunder in acting upon any telephonic Competitive Bid
Request purportedly made by a Responsible Official of a Borrower, and each
Borrower hereby jointly and severally (but as between Borrowers, ratably) agrees
to indemnify the Administrative Agent from any loss, cost, expense or liability
as a result of so acting. Each Competitive Bid Request must be received by the
Administrative Agent not later than 9:00 a.m., California local time, on a
Business Day that is at least one Business Day prior
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to the date of the proposed Competitive Advance if an Absolute Rate Bid is
requested; if a Eurodollar Margin Bid is requested, it must be received by the
Administrative Agent five Business Days prior to the date of the proposed
Competitive Advance.
(c) Unless the Administrative Agent otherwise agrees, in its
sole and absolute discretion, no Competitive Bid Request shall be made by a
Borrower if any Borrower has, within the immediately preceding five Business
Days, submitted another Competitive Bid Request.
(d) Each Competitive Bid Request must be made for a
Competitive Advance of at least $10,000,000 and shall be in an integral multiple
of $1,000,000.
(e) No Competitive Bid Request shall be made for a Competitive
Advance with a maturity of less than 14 days or more than 180 days, or with a
maturity date subsequent to the Maturity Date.
(f) The Administrative Agent shall, promptly after receipt of
a Competitive Bid Request, notify the Lenders thereof by telephone and provide
the Lenders a copy thereof by telecopier. Any Lender may, by written notice to
the Administrative Agent, advise the Administrative Agent that it elects not to
be so notified of Competitive Bid Requests, in which case the Administrative
Agent shall not notify such Lender of the Competitive Bid Request.
(g) Each Lender receiving a Competitive Bid Request may, in
its sole and absolute discretion, make or not make a Competitive Bid responsive
to the Competitive Bid Request. Each Competitive Bid shall be submitted to the
Administrative Agent not later than 7:30 a.m. (or, in the case of the Lender
which is also the Administrative Agent, submitted to the Borrower not later than
7:15 a.m.) California local time, in the case of a Eurodollar Margin Bid, on the
date which is four (4) Business Days prior to the requested Competitive Advance
and, in the case of an Absolute Rate Bid, on the date of the requested
Competitive Advance. Any Competitive Bid received by the Administrative Agent
after 7:30 a.m. (or 7:15 a.m. in the case of the Lender which is also the
Administrative Agent) on such date shall be disregarded for purposes of this
Agreement. Any Competitive Bid made by telephone shall promptly be confirmed by
the delivery to the Administrative Agent in person or by telecopier of a written
Competitive Bid. The Administrative Agent shall incur no
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liability whatsoever hereunder in acting upon any telephonic Competitive Bid
purportedly made by a Responsible Official of a Lender, each of which hereby
agrees to indemnify the Administrative Agent from any loss, cost, expense or
liability as a result of so acting with respect to that Lender.
(h) Each Competitive Bid shall specify the fixed interest rate
or the margin over the Eurodollar Quoted Rate, as applicable, for the offered
Maximum Competitive Advance set forth in the Competitive Bid. The Maximum
Competitive Advance offered by a Lender in a Competitive Bid may be less than
the Competitive Advance requested in the Competitive Bid Request, but, if so,
shall be an integral multiple of $1,000,000. Any Competitive Bid which offers an
interest rate other than a fixed interest rate or a margin over the Eurodollar
Quoted Rate, is in a form other than set forth in Exhibit D or which otherwise
contains any term, condition or provision not contained in the Competitive Bid
Request shall be disregarded for purposes of this Agreement. A Competitive Bid
once submitted to the Administrative Agent shall be irrevocable until 8:30 a.m.
California local time, in the case of a Eurodollar Margin Bid, on the date which
is three Business Days prior to the requested Competitive Advance and, in the
case of an Absolute Rate Bid, on the date of the proposed Competitive Advance
set forth in the related Competitive Bid Request, and shall expire by its terms
at such time unless accepted by the relevant Borrower prior thereto.
(i) Promptly after 7:30 a.m. California local time, in the
case of a Eurodollar Margin Bid, on the date which is four Business Days prior
to the date of the proposed Competitive Advance and, in the case of an Absolute
Rate Bid, on the date of the proposed Competitive Advance, the Administrative
Agent shall notify Borrowers of the names of the Lenders providing Competitive
Bids to the Administrative Agent at or before 7:30 a.m. on that date (or 7:15
a.m. in the case of the Lender which is also the Administrative Agent) and the
Maximum Competitive Advance and fixed interest rate or margin over the
Eurodollar Quoted Rate set forth by each such Lender in its Competitive Bid. The
Administrative Agent shall promptly confirm such notification in writing
delivered in person or by telecopier to Borrowers.
(j) Each Borrower may, in its sole and absolute discretion,
reject any or all of the Competitive Bids. If a Borrower accepts any Competitive
Bid, the following shall apply: (a) the relevant Borrower must accept all
Absolute Rate Bids at all lower fixed interest rates before accepting any
portion of an Absolute Rate Bid at a higher fixed interest rate, (b) the
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relevant Borrower must accept all Eurodollar Margin Bids at all lower margins
over the Eurodollar Quoted Rate before accepting any portion of a Eurodollar
Margin Bid at a higher margin over the Eurodollar Quoted Rate, (c) if two or
more Lenders have submitted a Competitive Bid at the same fixed interest rate or
margin, then the relevant Borrower must accept either all of such Competitive
Bids or accept such Competitive Bids in the same proportion as the Maximum
Competitive Advance of each Lender bears to the aggregate Maximum Competitive
Advances of all such Lenders, and (d) the relevant Borrower may not accept
Competitive Bids for an aggregate amount in excess of the requested Competitive
Advance set forth in the Competitive Bid Request. Acceptance by a Borrower of a
Eurodollar Margin Rate Bid must be made prior to 8:30 a.m., California local
time, on the date which is three Business Days prior to the requested
Competitive Advance and acceptance by a Borrower of an Absolute Rate Bid must be
made prior to 8:30 a.m. on the date of the requested Competitive Advance.
Acceptance of a Competitive Bid by a Borrower shall be irrevocable upon
communication thereof to the Administrative Agent. The Administrative Agent
shall promptly notify each of the Lenders whose Competitive Bid has been
accepted by a Borrower by telephone, which notification shall promptly be
confirmed in writing delivered in person or by telecopier to such Lenders. Any
Competitive Bid not accepted by a Borrower by 8:30 a.m., in the case of a
Eurodollar Margin Bid, on the date which is three Business Days prior to the
proposed Competitive Advance or, in the case of an Absolute Rate Bid, on the
date of the proposed Competitive Bid, shall be deemed rejected.
(k) In the case of Eurodollar Margin Bids, the Administrative
Agent shall determine the Eurodollar Quoted Rate (as the case may be) on the
date which is two Eurodollar Business Days prior to the date of the proposed
Competitive Advance, and shall promptly thereafter notify Borrowers and the
Lenders whose Competitive Bids were accepted by a Borrower of such Eurodollar
Quoted Rate.
(l) A Lender whose Competitive Bid has been accepted by a
Borrower shall make the Competitive Advance in accordance with the Competitive
Bid Request and with its Competitive Bid, subject to the applicable conditions
set forth in this Agreement by making funds immediately available to the
Administrative Agent at the Administrative Agent's Office in the amount of such
Competitive Advance not later than 12:00 noon, California local time, on the
date set forth in the Competitive Bid Request. The Administrative Agent shall
then promptly credit the Competitive Advance in immediately available funds to
the Designated Deposit Account.
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(m) The Administrative Agent shall notify Borrowers and the
Lenders promptly after any Competitive Advance is made of the amounts and
maturity of such Competitive Advances and the identity of the Lenders making
such Competitive Advances.
(n) The Competitive Advances made by a Lender to each Borrower
shall be evidenced by that Lender's Competitive Advance Note issued by that
Borrower.
2.6 SWING LINE. (a) The Swing Line Lender shall from time to time from
the Closing Date through the Business Day prior to the Maturity Date make Swing
Line Advances in Dollars to any Borrower in such amounts as that Borrower may
request, provided that (i) after giving effect to such Swing Line Advance, the
Swing Line Outstandings shall not exceed $50,000,000, (ii) after giving effect
to such Swing Line Advance, the Outstanding Obligations shall not exceed the
Commitment at any time, (iii) without the consent of all of the Lenders, no
Swing Line Advance may be made during the continuation of any Default or Event
of Default, (iv) without the consent of all of the Lenders, the aggregate
principal amount of the Outstanding Obligations of Marina and of each other
Borrower designated as such in accordance with Section 2.10 shall not exceed the
Aggregate Sublimit for that Borrower at any time, and (v) the Swing Line Lender
has not given at least twenty-four hours prior notice to the Parent that
availability under the Swing Line is suspended or terminated. Borrowers may
borrow, repay and reborrow under this Section. Unless notified to the contrary
by the Swing Line Lender, borrowings under the Swing Line may be made in amounts
which are integral multiples of $100,000 upon telephonic request by a
Responsible Official of any Borrower made to the Administrative Agent not later
than 1:00 p.m., California time, on the Business Day of the requested Swing Line
Advance (which telephonic request shall be promptly confirmed in writing by
telecopier). Promptly after receipt of such a request for a Swing Line Advance,
the Administrative Agent shall provide telephonic verification to the Swing Line
Lender that, after giving effect to such request, the Outstanding Obligations
shall not exceed the Commitment (and such verification shall be promptly
confirmed in writing by telecopier). Unless the Swing Line Lender otherwise
agrees, each repayment of a Swing Line Advance shall be in an amount which is an
integral multiple of $100,000. If a Borrower instructs the Swing Line Lender to
debit its demand deposit account at the Swing Line Lender in the amount of any
payment with respect to a Swing Line Advance, or the Swing Line Lender otherwise
receives
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repayment, after 3:00 p.m., California time, on a Business Day, such payment
shall be deemed received on the next Business Day. The Swing Line Lender shall
promptly notify the Administrative Agent of the Swing Loan Outstandings each
time there is a change therein.
(b) Swing Line Advances shall bear interest at a fluctuating
rate per annum equal to that applicable from time to time for Base Rate Loans.
Interest shall be payable on such dates, not more frequent than monthly, as may
be specified by the Swing Line Lender and in any event on the Maturity Date. The
Swing Line Lender shall be responsible for submitting invoices to the Borrowers
for such interest. The interest payable on Swing Line Advances shall be solely
for the account of the Swing Line Lender unless and until the Lenders fund their
participations therein pursuant to clause (d) of this Section.
(c) The Swing Line Advances shall be payable on demand made by
the Swing Line Lender and in any event on the Maturity Date.
(d) Upon the making of a Swing Line Advance, each Lender shall
be deemed to have purchased from the Swing Line Lender a participation therein
in an amount equal to that Lender's Pro Rata Share times the amount of the Swing
Line Advance. Upon demand made by the Swing Line Lender, each Lender shall,
according to its Pro Rata Share, promptly provide to the Swing Line Lender its
purchase price therefor in an amount equal to its participation therein. The
obligation of each Lender to so provide its purchase price to the Swing Line
Lender shall be absolute and unconditional (except only demand made by the Swing
Line Lender) and shall not be affected by the occurrence of a Default or Event
of Default; provided that no Lender shall be obligated to purchase its Pro Rata
Share of (i) Swing Line Advances to the extent that Swing Line Outstandings are
in excess of $10,000,000 and (ii) any Swing Line Advance made (absent the
consent of all of the Lenders) when the Swing Line Lender has written notice
that a Default or Event of Default has occurred and such Default or Event of
Default remains continuing. Each Lender that has provided to the Swing Line
Lender the purchase price due for its participation in Swing Line Advances shall
thereupon acquire a pro rata participation, to the extent of such payment, in
the claim of the Swing Line Lender against Borrowers for principal and interest
and shall share, in accordance with that pro rata participation, in any
principal payment made by Borrowers with respect to such claim and in any
interest payment made by Borrowers (but only with respect to periods subsequent
to the date such Lender paid the Swing Line Lender its purchase price) with
respect to such claim.
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(e) In the event that the Swing Line Outstandings are in
excess of $10,000,000 on ten consecutive Business Days then, on the next
Business Day (unless the relevant Borrower has made other arrangements
acceptable to the Swing Line Lender to reduce the Swing Line Outstandings below
$10,000,000) that Borrower shall request a Committed Loan in an amount
sufficient to reduce the Swing Line Outstandings below $10,000,000. In addition,
upon any demand for payment of the Swing Line Outstandings by the Swing Line
Lender (unless Borrowers have made other arrangements acceptable to the Swing
Line Lender to reduce the Swing Line Outstandings to $0), the relevant Borrower
shall request a Committed Loan in an amount sufficient to repay all Swing Line
Outstandings (and, for this purpose, Section 2.1(d) shall not apply). In each
case, the Administrative Agent shall automatically provide the responsive
Advances made by each Lender to the Swing Line Lender (which the Swing Line
Lender shall then apply to the Swing Line Outstandings). In the event that any
Borrower fails to request a Loan within the time specified by Section 2.2 on any
such date, the Administrative Agent may, but shall not be required to, without
notice to or the consent of Borrowers, cause Advances to be made by the Lenders
to that Borrower under the Commitment in amounts which are sufficient to reduce
the Swing Line Outstandings as required above. The conditions precedent set
forth in Article 8 shall not apply to Advances to be made by the Lenders
pursuant to the three preceding sentences. The proceeds of such Advances shall
be paid by the Administrative Agent directly to the Swing Line Lender for
application to the Swing Line Outstandings.
2.7 VOLUNTARY INCREASE TO THE COMMITMENT.
(a) Provided that no Default or Event of Default then exists,
during the one year period following the Closing Date, Parent and the
Borrowers may, upon at least 30 days notice to the Administrative Agent
(which shall promptly provide a copy of such notice to the Lenders),
propose to ratably increase the aggregate amount of the Commitment and
the Short Term Commitment by an aggregate amount not to exceed
$300,000,000 (the amount of any such ratable increase of the Commitment
being referred to as the "Increased Commitment"). Each Lender party to
this Agreement at such time shall have the right (but no obligation),
for a period of 15 days following receipt of such notice, to elect by
notice to Parent and the Borrowers and the Administrative Agent to
increase its Commitment by a principal amount which
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bears the same ratio to the Increased Commitments as its then
Commitment bears to the aggregate Commitments then existing. Each
Lender which fails to respond to any such request shall be conclusively
deemed to have refused to consent to an increase in its Commitment.
(b) If any Lender party to this Agreement shall not elect to
increase its Commitment pursuant to clause (a) of this Section, Parent
and the Borrowers may designate another Person which qualifies as an
Eligible Assignee (which may be, but need not be, one or more of the
existing Lenders) which at the time agrees to (i) in the case of any
such Person that is an existing Lender, increase its Commitment and
(ii) in the case of any other such Person (an "Additional Lender"),
become a party to this Agreement. The sum of the increases in the
Commitments of the existing Lenders pursuant to this clause (b) plus
the Commitments of the Additional Lenders shall not in the aggregate
exceed the unsubscribed amount of the Increased Commitments.
(c) An increase in the aggregate amount of the Commitments
pursuant to this Section shall become effective upon the receipt by the
Administrative Agent of an agreement in form and substance satisfactory
to the Administrative Agent signed by the Parent and the Borrowers, by
each Additional Lender and by each other Lender whose Commitment is to
be increased, setting forth the new Commitments of such Lenders and
setting forth the agreement of each Additional Lender to become a party
to this Agreement and to be bound by all the terms and provisions
hereof, together with such evidence of appropriate corporate
authorization on the part of Parent and the Borrowers and the
Additional Lenders with respect to the Increased Commitments as the
Administrative Agent may reasonably request.
2.8 VOLUNTARY REDUCTION OF COMMITMENT. Borrowers shall have the right,
at any time and from time to time, without penalty or charge, upon at least
three Business Days prior written notice to the Administrative Agent,
voluntarily to reduce or to terminate, permanently and irrevocably, in aggregate
principal amounts in an integral multiple of $1,000,000 but not less than
$10,000,000, all or a portion of the then undisbursed portion of the Commitment,
provided that any such reduction or termination shall be accompanied by payment
of all accrued and unpaid commitment fees with respect to the portion of the
Commitment being reduced or terminated. The Administrative Agent shall promptly
notify the Lenders of any reduction of the Commitment under this Section.
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2.9 OPTIONAL TERMINATION OF COMMITMENT. Following the occurrence of a
Change in Control, the Requisite Lenders may in their sole and absolute
discretion elect, during the sixty day period immediately subsequent to the
LATER OF (a) such occurrence and (b) the earlier of (i) receipt of Borrowers'
written notice to the Administrative Agent of such occurrence and (ii) if no
such notice has been received by the Administrative Agent, the date upon which
the Administrative Agent and the Lenders have actual knowledge thereof, to
terminate the Commitment. In any such case the Commitment shall be terminated
effective on the date which is sixty days subsequent to the date of written
notice from the Administrative Agent to Borrowers thereof, and (i) to the extent
that there are then any Obligations outstanding, the same shall be immediately
due and payable, and (ii) to the extent that any Letters of Credit are then
outstanding, Borrowers shall provide cash collateral for the same.
2.10 ADDITIONAL BORROWERS. From time to time following the Closing Date
and when no Default or Event of Default exists, Parent, Company and Marina (and
each other Borrower then a party to this Agreement) may jointly designate one or
more additional Wholly-Owned Subsidiaries as additional co-borrowers under this
Agreement in accordance with the provisions of this Section. Prior to the
effectiveness of any such designation each such additional Borrower shall have
duly authorized, executed and delivered to the Administrative Agent each of the
following:
(a) an Election to Become a Borrower, setting forth the proposed
Aggregate Sublimit for that Borrower, together with such other
documents, certificates, resolutions, opinions and other assurances as
the Administrative Agent may reasonably require in connection
therewith; and
(b) Competitive Advance Notes, Committed Advance Notes and Swing Line
Documents;
Promptly following the submission of the foregoing documents, the Administrative
Agent shall inform the Lenders of the proposed designation and the proposed
Aggregate Sublimit. Unless the Requisite Lenders have objected in writing to the
proposed designee or Aggregate Sublimit within ten Business Days following such
notice from the Administrative Agent (which objection may be in the sole
discretion of each Lender), the Administrative Agent shall notify the Borrowers
that the appointment is accepted, whereupon the proposed new Borrower shall be a
Borrower for all purposes of this Agreement, with the Aggregate Sublimit set
forth in its Election to Become a Borrower.
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2.11 ADMINISTRATIVE AGENT'S RIGHT TO ASSUME FUNDS AVAILABLE FOR
ADVANCES. Unless the Administrative Agent shall have been notified by any Lender
no later than the Business Day prior to the funding by the Administrative Agent
of any Loan that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of the total amount of such Loan, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on the date of the Loan and the Administrative Agent
may, in reliance upon such assumption, make available to the relevant Borrower a
corresponding amount. If the Administrative Agent has made funds available to a
Borrower based on such assumption and such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent promptly shall
notify Borrowers and the relevant Borrower shall pay such corresponding amount
to the Administrative Agent. The Administrative Agent also shall be entitled to
recover from such Lender interest on such corresponding amount in respect of
each day from the date such corresponding amount was made available by the
Administrative Agent to that Borrower to the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to the daily
Federal Funds Rate. Nothing herein shall be deemed to relieve any Lender from
its obligation to fulfill its share of the Commitment or to prejudice any rights
which the Administrative Agent or Borrowers may have against any Lender as a
result of any default by such Lender hereunder.
2.12 EXTENSION OF THE MATURITY DATE. The Maturity Date may be extended
for 364 day periods at the request of the Parent and with the written consent of
all of the Lenders (which may be withheld in the sole and absolute discretion of
each Lender) pursuant to this Section. Not earlier than January 15 of each year,
nor later than March 15 of each year, the Parent and the Borrowers may deliver
to the Administrative Agent and the Lenders a written request for a 364 day
extension of the Maturity Date together with a Certificate of a Responsible
Official signed by a Senior Officer on behalf of Parent and each Borrower
stating that the representations and warranties contained in Article 4 (other
than (i) representations and warranties which expressly speak as of a particular
date or are no longer true and correct as a result of a change which is
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not a violation of this Agreement, (ii) as otherwise disclosed by the Parent and
the Borrowers and approved in writing by the Requisite Lenders and (iii)
Sections 4.4(a), 4.6 (first sentence), and 4.15) shall be true and correct on
and as of the date of such Certificate. Each Lender shall notify the
Administrative Agent within 30 days following its receipt of such a Certificate
whether (in its sole and absolute discretion) it consents to such request and
the Administrative Agent shall, after receiving the notifications from all of
the Lenders or the expiration of such period, whichever is earlier, notify
Parent and the Borrowers and the Lenders of the results thereof. If all of the
Lenders have consented, then the Maturity Date shall, effective on the
then-current Maturity Date, be extended for 364 days from the then current
Maturity Date.
If Lenders holding at least 66 2/3% of the Commitment consent to the
request for extension, but one or more Lenders (each a "Non-Consenting Lender")
notify the Administrative Agent that it will not consent to the request for
extension (or fail to notify the Managing Agent in writing of its consent within
the required period), Parent and the Borrowers may (i) cause such Non-Consenting
Lender to be removed as a Lender under this Agreement pursuant to Section
11.14(a), (ii) voluntarily terminate the Pro Rata Share of Non-Consenting Lender
in accordance with Section 11.14(b), or (iii) utilize a combination of the
procedures described in clauses (i) and (ii) of this Section. If such removal is
accomplished by assignment to an Eligible Assignee which has consented to the
requested extension, then the request for extension shall be granted with the
effect as set forth above. If such removal is accomplished by a voluntary
reduction of the Commitment, then the Administrative Agent shall notify all of
the Lenders in writing thereof.
Article 3
PAYMENTS AND FEES
3.1 PRINCIPAL AND INTEREST.
(a) Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance from the date thereof until payment in full is
made and shall accrue and be payable at the rates set forth or provided for
herein before and after default, before and after maturity, before and after
judgment,
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and before and after the commencement of any proceeding under any Debtor Relief
Law, with interest on overdue interest to bear interest at the Default Rate to
the fullest extent permitted by applicable Laws.
(b) Interest accrued on each Base Rate Loan on each Quarterly
Payment Date, and on the date of any prepayment of the Committed Advance Notes
pursuant to Section 3.1(g), shall be due and payable on that day. Except as
otherwise provided in Section 3.9, the unpaid principal amount of any Base Rate
Loan shall bear interest at a fluctuating rate per annum equal to the Base Rate.
Each change in the interest rate under this Section 3.1(b) due to a change in
the Base Rate shall take effect simultaneously with the corresponding change in
the Base Rate.
(c) Interest accrued on each Eurodollar Rate Loan having a
Eurodollar Period of three months or less shall be due and payable on the last
day of the related Eurodollar Period. Interest accrued on each other Eurodollar
Rate Loan shall be due and payable on the date which is three months after the
date such Eurodollar Rate Loan was made (and, in the event that all of the
Lenders have approved a Eurodollar Period of longer than 6 months, every three
months thereafter through the last day of the Eurodollar Period) and on the last
day of the related Eurodollar Period. Except as otherwise provided in Sections
3.1(d) and 3.9, the unpaid principal amount of any Eurodollar Rate Loan shall
bear interest at a rate per annum equal to the Eurodollar Rate for that
Eurodollar Rate Loan PLUS the Eurodollar Margin.
(d) During the existence of a Default or Event of Default, the
Requisite Lenders may determine that any or all then outstanding Eurodollar Rate
Loans shall be converted to Base Rate Loans. Such conversion shall be effective
upon notice to Borrowers from the Requisite Lenders (or from the Administrative
Agent on behalf of the Requisite Lenders) and shall continue so long as such
Default or Event of Default continues to exist.
(e) Interest accrued on each Competitive Advance shall be due
and payable on the maturity date of the Competitive Advance. Except as otherwise
provided in Section 3.9, the unpaid principal amount of each Competitive Advance
shall bear interest at the fixed interest rate or the margin over the Eurodollar
Quoted Rate specified in the related Competitive Bid.
(f) If not sooner paid, the principal Indebtedness evidenced
by the Notes shall be payable as follows:
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(i) the principal amount of each Eurodollar Rate Loan
shall be payable on the last day of the Eurodollar Period for
such Loan;
(ii) the principal amount of each Competitive Advance
shall be payable on the maturity date specified in the related
Competitive Bid;
(iii) the amount, if any, by which the Outstanding
Obligations at any time exceed the Commitment shall be payable
immediately, and shall be applied to the Committed Advance
Notes; and
(iv) the principal Indebtedness evidenced by the
Committed Advance Notes shall in any event be payable on the
Maturity Date.
(g) The Committed Advance Notes may, at any time and from time
to time, voluntarily be paid or prepaid in whole or in part without premium or
penalty, except that with respect to any voluntary prepayment under this Section
3.1(g), (i) any partial prepayment shall be in an integral multiple of
$1,000,000 but not less than $10,000,000, (ii) the Administrative Agent shall
have received written notice of any prepayment by 9:00 a.m., California local
time on a Business Day on the date of prepayment in the case of a Base Rate
Loan, and three Business Days, in the case of a Eurodollar Rate Loan, before the
date of prepayment, which notice shall identify the date and amount of the
prepayment and the Loan(s) being prepaid, (iii) each prepayment of principal
shall be accompanied by payment of interest accrued to the date of payment on
the amount of principal paid and (iv) any payment or prepayment of all or any
part of any Eurodollar Rate Loan on a day other than the last day of the
applicable Eurodollar Period shall be subject to Section 3.8(d).
(h) No Competitive Advance Note may be prepaid without the
prior written consent of the Lender making such Competitive Advance.
3.2 ARRANGEMENT FEE. On the Closing Date, Parent and the Borrowers
shall pay to the Administrative Agent, for the sole account of the Arranger, an
arrangement fee in the amount heretofore agreed upon by letter agreement among
Parent, the Borrowers and the Arranger. Such arrangement fee is for the services
of the Arranger in arranging the credit facilities under this Agreement and is
fully earned when paid. The arrangement fee is earned as of the date hereof and
is nonrefundable.
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3.3 UPFRONT FEES. On the Closing Date, Parent and the Borrowers shall
pay to the Administrative Agent, for the respective accounts of the Lenders,
upfront fees in the respective amounts set forth in a writing addressed to that
Lender by the Lead Arranger Such fees are for the credit facility committed by
each Lender under this Agreement and are fully earned when paid. The upfront
fees paid to each Lender are solely for its own account and are nonrefundable.
3.4 FACILITY FEES. On the last day of each Pricing Period, Borrowers
shall pay to the Administrative Agent, for the respective accounts of the
Lenders, pro rata according to their Pro Rata Share, a facility fee equal to (a)
the Facility Fee Rate per annum for that Pricing Period times (b) the average
daily amount by of the Commitment (whether drawn or undrawn) during that Pricing
Period.
3.5 LETTER OF CREDIT FEES. Concurrently with the issuance of each
Letter of Credit, Borrowers shall pay a letter of credit issuance fee to the
relevant Issuing Lender, for the sole account of that Issuing Lender, in an
amount set forth in a letter agreement between the Parent and each Issuing
Lender. Each letter of credit issuance fee is nonrefundable. On each Quarterly
Payment Date and on the Maturity Date, Borrowers shall also pay to the
Administrative Agent in arrears, for the ratable account of the Lenders in
accordance with their Pro Rata Share, letter of credit fees in an amount equal
to the Letter of Credit Fee per annum times the average daily Aggregate
Effective Amount of all Letters of Credit for the period from the Closing Date
or the most recent Quarterly Payment Date.
3.6 AGENCY FEES. Borrowers shall pay to the Administrative Agent an
agency fee in such amounts and at such times as heretofore agreed upon by letter
agreement among Parent, the Borrowers and the Administrative Agent. The agency
fee is for the services to be performed by the Administrative Agent in acting as
Administrative Agent and is fully earned on the date paid. The agency fee paid
to the Administrative Agent is solely for its own account and is nonrefundable.
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3.7 INCREASED COMMITMENT COSTS. If any Lender shall determine that the
introduction after the Closing Date of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein or any change in the
interpretation or administration thereof by any central bank or other
Governmental Agency charged with the interpretation or administration thereof,
or compliance by such Lender (or its Eurodollar Lending Office) or any
corporation controlling the Lender, with any request, guidelines or directive
regarding capital adequacy (whether or not having the force of law) of any such
central bank or other authority, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation
controlling such Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital is
increased, or the rate of return on capital is reduced, as a consequence of its
obligations under this Agreement, then such Lender shall promptly give notice to
the Borrowers and the Agent of such determination. Thereafter, the Borrowers
shall pay to such Lender, within five Business Days following written demand
therefor (setting forth the additional amounts owed to such Lender and the basis
of the calculation thereof in reasonable detail), additional amounts sufficient
to compensate such Lender in light of such circumstances, to the extent
reasonably allocable to such obligations under this Agreement. Each Lender shall
afford treatment to Borrowers under this Section which is substantially similar
to that which such Lender affords to its other similarly situated customers.
3.8 EURODOLLAR COSTS AND RELATED MATTERS.
(a) If, after the date hereof, the existence or occurrence of
any Special Eurodollar Circumstance shall:
(1) subject any Lender or its Eurodollar Lending
Office to any tax, duty or other charge or cost with respect
to any Eurodollar Rate Advance, any of its Notes evidencing
Eurodollar Rate Loans or its obligation to make Eurodollar
Rate Advances, or shall change the basis of taxation of
payments to any Lender of the principal of or interest on any
Eurodollar Rate Advance or any other amounts due under this
Agreement in respect of any Eurodollar Rate Advance, any of
its
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Notes evidencing Eurodollar Rate Loans or its obligation to
make Eurodollar Rate Advances, excluding, with respect to each
Creditor, and any Affiliate or Eurodollar Lending Office
thereof, (i) taxes imposed on or measured in whole or in part
by its net income or capital and franchise taxes imposed on
it, (ii) any withholding taxes or other taxes based on net
income (other than withholding taxes and taxes based on net
income resulting from or attributable to any change in any
law, rule or regulation or any change in the interpretation or
administration of any law, rule or regulation by any
Governmental Agency) or (iii) any withholding taxes or other
taxes based on net income for any period with respect to which
it has failed to provide Borrowers with the appropriate form
or forms required by Section 11.21, to the extent such forms
are then required by applicable Laws;
(2) impose, modify or deem applicable any reserve not
applicable or deemed applicable on the date hereof (including,
without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding the
Eurodollar Reserve Percentage taken into account in
calculating the Eurodollar Rate), special deposit, capital or
similar requirements against assets of, deposits with or for
the account of, or credit extended by, any Lender or its
Eurodollar Lending Office; or
(3) impose on any Lender or its Eurodollar Lending
Office or the Designated Eurodollar Market any other condition
materially affecting any Eurodollar Rate Advance, any of its
Notes evidencing Eurodollar Rate Loans, its obligation to make
Eurodollar Rate Advances or this Agreement, or shall otherwise
materially affect any of the same;
and the result of any of the foregoing, as determined by such Lender, increases
the cost to such Lender or its Eurodollar Lending Office of making or
maintaining any Eurodollar Rate Advance or in respect of any Eurodollar Rate
Advance, any of its Notes evidencing Eurodollar Rate Loans or its obligation to
make Eurodollar Rate Advances or reduces the amount of any sum received or
receivable by such Lender or its Eurodollar Lending Office with respect to any
Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate Loans or
its obligation to make Eurodollar Rate Advances (assuming such Lender's
Eurodollar Lending Office had funded 100% of its Eurodollar Rate Advance in
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the Designated Eurodollar Market), then, provided that such Lender makes demand
upon Borrowers (with a copy to the Administrative Agent) within 90 days
following the date upon which it becomes aware of any such event or
circumstance, Borrowers shall within five Business Days pay to such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduction (determined as though such Lender's Eurodollar Lending Office
had funded 100% of its Eurodollar Rate Advance in the Designated Eurodollar
Market). Each of the Borrowers hereby jointly and severally (but as between
Borrowers, ratably) indemnifies each Lender against, and agrees to hold each
Lender harmless from and reimburse such Lender within five Business Days after
demand for (without duplication) all costs, expenses, claims, penalties,
liabilities, losses, legal fees and damages incurred or sustained by each Lender
in connection with this Agreement, or any of the rights, obligations or
transactions provided for or contemplated herein, as a result of the existence
or occurrence of any Special Eurodollar Circumstance. A statement of any Lender
claiming compensation under this clause and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. Each Lender agrees to endeavor promptly to notify Borrowers of
any event of which it has actual knowledge, occurring after the Closing Date,
which will entitle such Lender to compensation pursuant to this Section and
agrees to designate a different Eurodollar Lending Office if such designation
will avoid the need for or reduce the amount of such compensation and will not,
in the judgment of such Lender, otherwise be materially disadvantageous to such
Lender. If any Lender claims compensation under this Section, Borrowers may at
any time, upon at least four Eurodollar Business Days' prior notice to the
Administrative Agent and such Lender and upon payment in full of the amounts
provided for in this Section through the date of such payment PLUS any
prepayment fee required by Section 3.8(d), pay in full the affected Eurodollar
Rate Advances of such Lender or request that such Eurodollar Rate Advances be
converted to Base Rate Advances. To the extent that any Lender which receives
any payment from Borrowers under this Section later receives any funds which are
identifiable as a reimbursement or rebate of such amount from any other Person,
such Lender shall promptly refund such amount to Borrowers.
(b) If the existence or occurrence of any Special Eurodollar
Circumstance shall, in the opinion of any Lender, make it unlawful, impossible
or impracticable for such Lender or its Eurodollar Lending Office to make,
maintain or fund its portion of any Eurodollar Rate Loan, or materially restrict
the authority
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of such Lender to purchase or sell, or to take deposits of, Dollars in the
Designated Eurodollar Market, or to determine or charge interest rates based
upon the Eurodollar Rate, and such Lender shall so notify the Administrative
Agent, then such Lender's obligation to make Eurodollar Rate Advances shall be
suspended for the duration of such illegality, impossibility or impracticability
and the Administrative Agent forthwith shall give notice thereof to the other
Lenders and Borrowers. Upon receipt of such notice, the outstanding principal
amount of such Lender's Eurodollar Rate Advances, together with accrued interest
thereon, automatically shall be converted to Base Rate Advances on either (1)
the last day of the Eurodollar Period(s) applicable to such Eurodollar Rate
Advances if such Lender may lawfully continue to maintain and fund such
Eurodollar Rate Advances to such day(s) or (2) immediately if such Lender may
not lawfully continue to fund and maintain such Eurodollar Rate Advances to such
day(s), PROVIDED that in such event the conversion shall not be subject to
payment of a prepayment fee under Section 3.8(d). Each Lender agrees to endeavor
promptly to notify Borrowers of any event of which it has actual knowledge,
occurring after the Closing Date, which will cause that Lender to notify the
Administrative Agent under this Section 3.8(b), and agrees to designate a
different Eurodollar Lending Office if such designation will avoid the need for
such notice and will not, in the judgment of such Lender, otherwise be
disadvantageous to such Lender. In the event that any Lender is unable, for the
reasons set forth above, to make, maintain or fund its portion of any Eurodollar
Rate Loan, such Lender shall fund such amount as a Base Rate Advance for the
same period of time, and such amount shall be treated in all respects as a Base
Rate Advance. Any Lender whose obligation to make Eurodollar Rate Advances has
been suspended under this Section 3.8(b) shall promptly notify the
Administrative Agent and Borrowers of the cessation of the Special Eurodollar
Circumstance which gave rise to such suspension.
(c) If, with respect to any proposed Eurodollar Rate Loan:
(1) the Administrative Agent reasonably determines
that, by reason of circumstances affecting the Designated Eurodollar
Market generally that are beyond the reasonable control of the Lenders,
deposits in Dollars (in the applicable amounts) are not being offered
to any Lender in the Designated Eurodollar Market for the applicable
Eurodollar Period; or
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(2) the Requisite Lenders advise the Administrative
Agent that the Eurodollar Rate as determined by the Administrative
Agent (i) does not represent the effective pricing to such Lenders for
deposits in Dollars in the Designated Eurodollar Market in the relevant
amount for the applicable Eurodollar Period, or (ii) will not
adequately and fairly reflect the cost to such Lenders of making the
applicable Eurodollar Rate Advances;
then the Administrative Agent forthwith shall give notice thereof to Borrowers
and the Lenders, whereupon until the Administrative Agent notifies Borrowers
that the circumstances giving rise to such suspension no longer exist, the
obligation of the Lenders to make any future Eurodollar Rate Advances shall be
suspended. If at the time of such notice there is then pending a Request for
Loan that specifies a Eurodollar Rate Loan, such Request for Loan shall be
deemed to specify a Base Rate Loan.
(d) Upon payment or prepayment of any Eurodollar Rate Advance,
(OTHER THAN as the result of a conversion required under Section 3.1(d) or
3.8(b)), on a day other than the last day in the applicable Eurodollar Period
(whether voluntarily, involuntarily, by reason of acceleration, or otherwise),
or upon the failure of any Borrower (for a reason other than the failure of a
Lender to make an Advance) to borrow on the date or in the amount specified for
a Eurodollar Rate Loan in any Request for Loan, Borrowers shall pay to the
appropriate Lender within five Business Days after demand a prepayment fee or
failure to borrow fee, as the case may be, (determined as though 100% of the
Eurodollar Rate Advance had been funded in the Designated Eurodollar Market)
equal to the SUM of:
(1) principal amount of the Eurodollar Rate Advance
prepaid or not borrowed, as the case may be, times the quotient of (A)
the number of days between the date of prepayment or failure to borrow,
as applicable, and the last day in the applicable Eurodollar Period,
divided by (B) 360, times the applicable Interest Differential
(provided that the product of the foregoing formula must be a positive
number); plus
(2) all out-of-pocket expenses incurred by the Lender
reasonably attributable to such payment, prepayment or failure to
borrow.
Each Lender's determination of the amount of any prepayment fee payable under
this Section 3.8(d) shall be conclusive in the absence of manifest error.
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3.9 DEFAULT RATE. If (a) any installment of principal or interest or
any fee or cost or other amount payable under any Loan Document to any Creditor
is not paid when due, then such overdue Obligations shall, or (b) if any Event
of Default has occurred and remains continuing, then at the option of the
Requisite Lenders, all of the Obligations shall, thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the sum of the Base
Rate plus 2%, to the fullest extent permitted by applicable Laws. Accrued and
unpaid interest on past due amounts (including, without limitation, interest on
past due interest) shall be compounded monthly, on the last day of each calendar
month, to the fullest extent permitted by applicable Laws.
3.10 COMPUTATION OF INTEREST AND FEES. Computation of interest on Base
Rate Loans calculated with reference to the Reference Rate shall be calculated
on the basis of a year of 365 or 366 days, as the case may be, and the actual
number of days elapsed; computation of interest on Base Rate Loans calculated by
reference to the Federal Funds Rate, and on Eurodollar Rate Loans, Competitive
Advances and all fees under this Agreement shall be calculated on the basis of a
year of 360 days and the actual number of days elapsed. Each Borrower
acknowledges that such latter calculation method will result in a higher yield
to the Lenders than a method based on a year of 365 or 366 days. Interest shall
accrue on each Loan for the day on which the Loan is made; interest shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid. Any Loan that is repaid on the same day on which it is made
shall bear interest for one day.
3.11 NON-BUSINESS DAYS. Subject to clause (b) of the definition of
"Eurodollar Period," if any payment to be made by Borrowers or any other Party
under any Loan Document shall come due on a day other than a Business Day,
payment shall instead be considered due on the next succeeding Business Day and
the extension of time shall be reflected in computing interest and fees.
3.12 MANNER AND TREATMENT OF PAYMENTS.
(a) Each payment hereunder (except payments with respect to
Swing Line Obligations and payments pursuant to Sections 3.7, 3.8, 11.3, and
11.11) or on the Notes or under any other Loan Document shall be made without
setoff, counterclaim,
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recoupment or other deduction of any kind to the Administrative Agent, at the
Administrative Agent's Office, for the account of each of the Lenders or the
Administrative Agent, as the case may be, in immediately available funds not
later than 11:00 a.m., California local time, on the day of payment (which must
be a Business Day), other than payments with respect to Swing Line Advances,
which must be received by 3:00 p.m., California time, on the day of payment
(which must be a Business Day). All payments received after these deadlines
shall be deemed received on the next succeeding Business Day. The amount of all
payments received by the Administrative Agent for the account of each Lender
shall be immediately paid by the Administrative Agent to the applicable Lender
in immediately available funds and, if such payment was received by the
Administrative Agent by 11:00 a.m., California local time, on a Business Day and
not so made available to the account of a Lender on that Business Day, the
Administrative Agent shall reimburse that Lender for the cost to such Lender of
funding the amount of such payment at the Federal Funds Rate. All payments shall
be made in lawful money of the United States of America.
(b) Each payment or prepayment on account of any Committed
Loan shall be applied pro rata according to the outstanding Committed Advances
made by each Lender comprising such Committed Loan. Each payment or prepayment
of a Competitive Advance shall be applied to the Competitive Advance Note held
by the Lender which made such Competitive Advance.
(c) Each Lender shall use its best efforts to keep a record of
Advances made by it and payments received by it with respect to each of its
Notes and, subject to Section 10.6(g), such record shall, as against Borrowers,
be presumptive evidence absent manifest error of the amounts owing.
Notwithstanding the foregoing sentence, no Lender shall be liable to any Party
for any failure to keep such a record.
(d) Each payment of any amount payable by Borrowers or any
other Party under this Agreement or any other Loan Document shall be made free
and clear of, and without reduction by reason of, any taxes, assessments or
other charges imposed by any Governmental Agency, central bank or comparable
authority, excluding, in the case of each Creditor, and any Affiliate or
Eurodollar Lending Office thereof, (i) taxes imposed on or measured in whole or
in part by its net income or capital and franchise taxes imposed on it, (ii) any
withholding taxes or other taxes based on net income (other than withholding
taxes and
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taxes based on net income resulting from or attributable to any change in any
law, rule or regulation or any change in the interpretation or administration of
any law, rule or regulation by any Governmental Agency) or (iii) any withholding
taxes or other taxes based on net income for any period with respect to which it
has failed to provide Borrowers with the appropriate form or forms required by
Section 11.21, to the extent such forms are then required by applicable Laws,
(all such non-excluded taxes, assessments or other charges being hereinafter
referred to as "Taxes"). To the extent that Parent or any Borrower is obligated
by applicable Laws to make any deduction or withholding on account of Taxes from
any amount payable to any Lender under this Agreement, Parent or that Borrower
shall (i) make such deduction or withholding and pay the same to the relevant
Governmental Agency and (ii) pay such additional amount to that Lender as is
necessary to result in that Lender's receiving a net after-Tax amount equal to
the amount to which that Lender would have been entitled under this Agreement
absent such deduction or withholding. If and when receipt of such payment
results in an excess payment or credit to that Lender on account of such Taxes,
that Lender shall promptly refund such excess to Parent or the appropriate
Borrower.
3.13 FUNDING SOURCES. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for any Loan or Advance in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for any Loan or Advance in any
particular place or manner.
3.14 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER. Any decision by the
Creditors not to require payment of any interest (including interest arising
under Section 3.9), fee, cost or other amount payable under any Loan Document,
or to calculate any amount payable by a particular method, on any occasion shall
in no way limit or be deemed a waiver of the Creditor's right to require full
payment of any interest (including interest arising under Section 3.9), fee,
cost or other amount payable under any Loan Document on any other or subsequent
occasion.
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3.15 ADMINISTRATIVE AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE BY
BORROWERS. Unless the Administrative Agent shall have been notified by Borrowers
prior to the date on which any payment to be made by Borrowers hereunder is due
that Borrowers do not intend to remit such payment, the Administrative Agent
may, in its discretion, assume that the appropriate Borrower has remitted such
payment when so due and the Administrative Agent may, in its discretion and in
reliance upon such assumption, make available to each Lender on such payment
date an amount equal to such Lender's share of such assumed payment. If that
Borrower has not in fact remitted such payment to the Administrative Agent, each
Lender shall forthwith on demand repay to the Administrative Agent the amount of
such assumed payment made available to such Lender, together with interest
thereon in respect of each day from and including the date such amount was made
available by the Administrative Agent to such Lender to the date such amount is
repaid to the Administrative Agent at the Federal Funds Rate.
3.16 FEE DETERMINATION DETAIL. Each Creditor shall provide reasonable
detail to Parent and the Borrowers regarding the manner in which the amount of
any payment to that Creditor under Article 3 has been determined, concurrently
with demand for such payment.
3.17 SURVIVABILITY. All of the Parent's and the Borrowers' obligations
under Sections 3.7 and 3.8 shall survive for ninety days following the date on
which the Commitment is terminated and all Loans hereunder are fully paid.
Article 4
REPRESENTATIONS AND WARRANTIES
Parent and each Borrower represents and warrants to the Creditors, as
of the date hereof, as of the Closing Date, and as of the date of the making of
each Advance and the Issuance of each Letter of Credit that:
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4.1 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS. Parent
and each of the Borrowers are duly formed, validly existing and in good standing
under the Laws of its jurisdiction of formation. Parent and each of the
Borrowers are duly qualified or registered to transact business and is in good
standing in each other jurisdiction in which the conduct of its business or the
ownership or leasing of its Properties makes such qualification or registration
necessary, except where the failure so to qualify or register and to be in good
standing would not constitute a Material Adverse Effect. Parent and each of the
Borrowers have all requisite corporate or partnership power (as applicable) and
authority to conduct their respective business, to own and lease their
respective Properties and to execute and deliver each Loan Document to which it
is a Party and to perform its Obligations. All outstanding shares of capital
stock of Parent and each of the Borrowers are duly authorized, validly issued,
fully paid, and non-assessable and no holder thereof has any enforceable right
of rescission under any applicable state or federal securities Laws. Parent and
each of the Borrowers are in compliance with all Laws and other legal
requirements applicable to their respective business, have obtained all
authorizations, consents, approvals, orders, licenses and permits from, and have
accomplished all filings, registrations and qualifications with, or obtained
exemptions from any of the foregoing from, any Governmental Agency that are
necessary for the transaction of their business, except where the failure so to
comply, file, register, qualify or obtain exemptions does not constitute a
Material Adverse Effect.
4.2 AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS AND
GOVERNMENT REGULATIONS. The execution, delivery and performance by Parent and
each Borrower of the Loan Documents to which it is a Party have been duly
authorized by all necessary corporate or partnership action, as applicable, and
do not and will not:
(a) Require any consent or approval not heretofore
obtained of any partner, director, stockholder, security holder or
creditor of such Party;
(b) Violate or conflict with any provision of such
Party's charter, articles of incorporation or bylaws, as applicable;
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(c) Result in or require the creation or imposition
of any Lien or Right of Others upon or with respect to any Property now
owned or leased or hereafter acquired by such Party;
(d) Violate any Requirement of Law applicable to such
Party, subject to obtaining the authorizations from, or filings with,
the Governmental Agencies described in Schedule 4.3;
(e) Result in a breach by such Party of or constitute
a default by such Party under, or cause or permit the acceleration of
any obligation owed under, any indenture or loan or credit agreement or
any other Contractual Obligation to which such Party is a party or by
which such Party or any of its Property is bound or affected;
and neither Parent, Borrowers nor any of their Significant Subsidiaries is in
violation of, or default under, any Requirement of Law or Contractual
Obligation, or any indenture, loan or credit agreement described in Section
4.2(e), in any respect that constitutes a Material Adverse Effect.
4.3 NO GOVERNMENTAL APPROVALS REQUIRED. EXCEPT as set forth in Schedule
4.3 or previously obtained or made, no authorization, consent, approval, order,
license or permit from, or filing, registration or qualification with, any
Governmental Agency is or will be required to authorize or permit under
applicable Laws the execution, delivery and performance by Parent, Borrowers of
the Loan Documents to which any of them is a Party. All authorizations from, or
filings with, any Governmental Agency described in Schedule 4.3 will be
accomplished as of the Closing Date or such other date as is specified in
Schedule 4.3.
4.4 SIGNIFICANT SUBSIDIARIES.
(a) Schedule 4.4 hereto correctly sets forth the names, form
of legal entity, percentage of shares of each class of capital stock issued and
outstanding, percentage of shares owned by Parent or a Significant Subsidiary
(specifying such owner) and jurisdictions of organization of each of the
Significant Subsidiaries of Parent. Unless otherwise indicated in Schedule 4.4,
as of the Closing Date all of the outstanding shares of capital stock, or all of
the units of equity interest,
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as the case may be, of each such Significant Subsidiary are owned of record and
beneficially by the Persons described therein, there are no outstanding options,
warrants or other rights to purchase capital stock of any such Significant
Subsidiary, and all such shares or equity interests so owned are duly
authorized, validly issued, fully paid, non-assessable, and were issued in
compliance with all applicable state and federal securities and other Laws, and
are free and clear of all Liens and Rights of Others, except for Permitted
Encumbrances and Permitted Rights of Others.
(b) Each Significant Subsidiary of Parent is duly formed,
validly existing and in good standing under the Laws of its jurisdiction of
organization, is duly qualified to do business as a foreign organization and is
in good standing as such in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties makes such qualification
necessary (except where the failure to be so duly qualified and in good standing
does not constitute a Material Adverse Effect), and has all requisite power and
authority to conduct its business and to own and lease its Properties.
(c) Each Significant Subsidiary of Parent is in compliance
with all Laws and other requirements applicable to its business and has obtained
all authorizations, consents, approvals, orders, licenses, and permits from, and
each such Significant Subsidiary has accomplished all filings, registrations,
and qualifications with, or obtained exemptions from any of the foregoing from,
any Governmental Agency that are necessary for the transaction of its business,
except where the failure to be in such compliance, obtain such authorizations,
consents, approvals, orders, licenses, and permits, accomplish such filings,
registrations, and qualifications, or obtain such exemptions, does not
constitute a Material Adverse Effect.
4.5 FINANCIAL STATEMENTS. Parent and Borrowers have furnished to the
Lenders the audited consolidated financial statements of Parent and its
Subsidiaries for the Fiscal Year ended December 31, 1998. The financial
statements described above fairly present in all material respects the financial
condition, results of operations and changes in financial position of Parent and
its Subsidiaries as of such dates and for such periods, in conformity with
Generally Accepted Accounting Principles, consistently applied.
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4.6 NO OTHER LIABILITIES; NO MATERIAL ADVERSE EFFECT. As of the Closing
Date, Parent and its Subsidiaries do not have any material liability or material
contingent liability not reflected or disclosed in the financial statements
described in Section 4.5, other than liabilities and contingent liabilities
arising in the ordinary course of business since the date of such financial
statements. As of the Closing Date, no circumstance or event has occurred that
constitutes a Material Adverse Effect since December 31, 1998.
4.7 TITLE TO PROPERTY. Parent and its Subsidiaries have valid title to
the Property reflected in the financial statements described in Section 4.5,
other than immaterial items of Property and Property subsequently sold or
disposed of in the ordinary course of business, free and clear of all Liens and
Rights of Others, other than Liens or Rights of Others described in Schedule
4.7, as permitted by Section 6.4, and any other matters which do not have a
Material Adverse Effect.
4.8 LITIGATION. There are no actions, suits, proceedings or
investigations pending as to which Parent or any of its Subsidiaries have been
served or have received notice or, to the knowledge of Parent and the Borrowers,
threatened against or affecting Parent or any of its Subsidiaries or any
Property of any of them before any Governmental Agency in which there is any
reasonable possibility of an adverse decision which could materially adversely
affect the business, consolidated financial position or results of operations of
Parent and its Subsidiaries, taken as a whole, or which in any manner draws into
question the validity or enforceability of the Loan Documents.
4.9 BINDING OBLIGATIONS. Each of the Loan Documents will, when executed
and delivered by Parent and the Borrowers party thereto, constitute the legal,
valid and binding obligation of such Party, enforceable against such Party in
accordance with its terms, except as enforcement may be limited by Debtor Relief
Laws or equitable principles relating to the granting of specific performance
and other equitable remedies as a matter of judicial discretion.
4.10 NO DEFAULT. No event has occurred and is continuing that is a
Default or Event of Default.
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4.11 ERISA.
(a) With respect to each Pension Plan:
(i) such Pension Plan complies in all material
respects with ERISA and any other applicable Laws to the
extent that noncompliance could reasonably be expected to have
a Material Adverse Effect;
(ii) such Pension Plan has not incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA) that could reasonably be expected to have a Material
Adverse Effect;
(iii) no "reportable event" (as defined in Section
4043 of ERISA) has occurred that could reasonably be expected
to have a Material Adverse Effect; and
(iv) neither Parent nor any of its Subsidiaries has
engaged in any non-exempt "prohibited transaction" (as defined
in Section 4975 of the Code) that could reasonably be expected
to have a Material Adverse Effect.
(b) Neither Parent nor any of its Subsidiaries has incurred or
expects to incur any withdrawal liability to any Multiemployer Plan that could
reasonably be expected to have a Material Adverse Effect.
4.12 REGULATIONS T, U AND X; INVESTMENT COMPANY ACT. No part of the
proceeds of any Loan hereunder will be used to purchase or carry, or to extend
credit to others for the purpose of purchasing or carrying, any Margin Stock in
violation of Regulations T, U or X. Neither Parent nor any of its Subsidiaries
is or is required to be registered as an "investment company" under the
Investment Company Act of 1940.
4.13 DISCLOSURE. No written statement made by a Senior Officer of
Parent or any Borrower to any Creditor in connection with this Agreement,
including without limitation the statements made in the Confidential Offering
Memorandum, or in connection with any Loan, Advance or Letter of Credit as of
the date thereof contained any untrue statement of a material fact or omitted a
material fact necessary to make the statement made not misleading in light of
all the circumstances existing at the date the statement was made.
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4.14 TAX LIABILITY. Parent and its Subsidiaries have filed all tax
returns which are required to be filed, and have paid, or made provision for the
payment of, all taxes with respect to the periods, Property or transactions
covered by said returns, or pursuant to any assessment received by Parent or any
of its Subsidiaries, except (a) such taxes, if any, as are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been established and maintained and (b) immaterial taxes and tax returns so long
as no material item or portion of Property of Parent or any of its Subsidiaries
is in jeopardy of being seized, levied upon or forfeited.
4.15 PROJECTIONS. As of the Closing Date, to the best knowledge of
Parent and the Borrowers, the assumptions set forth in the Projections are
reasonable and consistent with each other and with all facts known to Parent and
the Borrowers, and the Projections are (a) reasonably based on such assumptions
and (b) although a range of possible different assumptions and estimates might
also be reasonable, neither Parent nor the Borrowers are aware of any facts
which would lead them to believe that the assumptions and estimates on which the
Projections were based are not reasonable; provided that no representation or
warranty can be given that the projected results will be realized or with
respect to the ability of Parent and its Subsidiaries to achieve the projected
results and, while the Projections are necessarily presented with numerical
specificity, the actual results achieved during the periods presented may differ
from the projected results, and such differences may be material.
4.16 HAZARDOUS MATERIALS. Parent and the Borrowers have reasonably
concluded that Environmental Laws are unlikely to have a material adverse effect
on the business, financial position, results of operations or prospects of the
Parent and its Subsidiaries, considered as a whole.
4.17 GAMING LAWS. Parent and each of its Subsidiaries are in compliance
in all material respects with all Gaming Laws that are applicable to them and
their businesses.
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4.18 YEAR 2000 COMPLIANCE. Parent and its Subsidiaries have reviewed
the effect of the Year 2000 Issue on the computer software, hardware and
firmware systems and equipment containing embedded microchips owned or operated
by or for Parent and its Subsidiaries. The costs to Parent and its Subsidiaries
of any reprogramming required as a result of the Year 2000 Issue to permit the
proper functioning of such systems and equipment and the proper processing of
data, and the testing of such reprogramming, and of required systems changes are
not reasonably expected to result in a Default or Event of Default or to have a
material adverse effect on the business, financial position, results of
operations or prospects of Parent and its Subsidiaries, considered as a whole.
4.19 SOLVENCY. As of the Closing Date, and giving effect to the
transactions contemplated to occur on the Closing Date, Parent and each of its
Subsidiaries are Solvent.
Article 5
AFFIRMATIVE COVENANTS
So long as any Advance remains unpaid, or any other Obligation remains
unpaid or unperformed, or any portion of the Commitment remains in force, Parent
and each Borrower shall, and shall cause each of their respective Subsidiaries
to, unless the Administrative Agent (with the written approval of the Requisite
Lenders) otherwise consents:
5.1 PRESERVATION OF EXISTENCE. Preserve and maintain their respective
existences in the jurisdiction of their formation and all material
authorizations, rights, franchises, privileges, consents, approvals, orders,
licenses, permits, or registrations from any Governmental Agency that are
necessary for the transaction of their respective business, except where the
failure to so preserve and maintain the existence of any Subsidiary and such
authorizations would not constitute a Material Adverse Effect and except that a
merger permitted by Section 6.1 shall not constitute a violation of this
covenant; and qualify and remain qualified to transact business in each
jurisdiction in which such qualification is necessary in view of their
respective business or the ownership or leasing of their respective Properties
except where the failure to so qualify or remain qualified would not constitute
a Material Adverse Effect.
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5.2 MAINTENANCE OF PROPERTIES. Maintain, preserve and protect all of
their respective depreciable Properties in good order and condition, subject to
wear and tear in the ordinary course of business, and not permit any waste of
their respective Properties, EXCEPT where the failure to maintain, preserve and
protect a particular item of depreciable Property would not have a Material
Adverse Effect.
5.3 MAINTENANCE OF INSURANCE. Maintain liability, casualty and other
insurance (subject to customary deductibles and retentions) with financially
sound and responsible insurance companies in such amounts and against such risks
as is carried by responsible companies engaged in similar businesses and owning
similar assets in the general areas in which Parent and its Subsidiaries
operate, and will furnish to the Administrative Agent upon request information
in reasonable detail as to the insurance so carried. Notwithstanding the
foregoing, Parent and its Subsidiaries may self-insure with respect to such
risks with respect to which companies of established reputation engaged in the
same general line of business in the same general area usually self-insure.
5.4 COMPLIANCE WITH LAWS. Comply in all material respects and within
the time period, if any, given for such compliance by the relevant Governmental
Agency or Agencies with enforcement authority, with all Laws and Requirements of
Law, including without limitation Hazardous Materials Laws, ERISA and all Gaming
Laws, except that Parent and its Subsidiaries need not comply with a Requirement
of Law then being contested by any of them in good faith by appropriate
proceedings.
5.5 INSPECTION RIGHTS. Upon reasonable notice, at any time during
regular business hours and as often as requested (but not so as to materially
interfere with the business of the Parent or any of its Subsidiaries), permit
the Administrative Agent or any Lender, or any authorized employee, agent or
representative thereof, to examine, audit and make copies and abstracts from the
records and books of account of, and to visit and inspect the Properties of, the
Parent and its Subsidiaries and to discuss the affairs, finances and accounts of
the Parent and its Subsidiaries with any of their officers, key employees or
accountants and, upon request, furnish promptly to the Administrative Agent or
any Lender true copies of all financial information made available to the senior
management of the Parent.
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5.6 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep adequate records and
books of account reflecting all financial transactions in conformity with
Generally Accepted Accounting Principles, consistently applied, and in material
conformity with all applicable requirements of any Governmental Agency having
regulatory jurisdiction over Parent or any of its Subsidiaries.
5.7 USE OF PROCEEDS. Use the proceeds of Loans (a) on the Closing Date,
for retirement of all outstanding obligations under the Existing Harrah's Credit
Agreements, the Rio Credit Agreements, and related transactional expenses, and
(b) thereafter to refinance or defease the Existing Rio Indentures in accordance
with Section 5.8, for working capital and general corporate purposes of Parent
and its Subsidiaries including without limitation capital expenditures, share
repurchases, commercial paper backup and acquisitions of equity securities or
assets of other Persons, in each case to the extent not prohibited by the Loan
Documents.
5.8 EXISTING RIO INDENTURES. Not later than June 1, 1999, either (a)
repay the Indebtedness under the Rio Indentures in its entirety, or (b) provide
for the legal or covenant defeasance of the Indebtedness under the Rio
Indentures, or (c) deliver to the Administrative Agent a writing acceptable to
the Administrative Agent reserving from the available Commitment and the Short
Term Commitment an aggregate amount equal to the then remaining principal
balance of the Indebtedness under the Rio Indentures (with such reserve to
remain in place until the satisfaction or defeasance of such Indebtedness).
5.9 YEAR 2000 PREPARATIONS. Make all required systems changes by
December 31, 1999, in computer software, hardware and firmware systems and
equipment containing embedded microchips owned or operated by or for Parent and
its Subsidiaries required as a result of the Year 2000 Issue to permit the
proper functioning of such computer systems and other equipment, except to the
extent that the failure to take any such action could not reasonably be expected
to result in a Default or Event of Default or to have a material adverse effect
on the business, financial position, results of operations or prospects of
Parent and its Subsidiaries, considered as a whole. At the request of any
Lender, Parent and Borrowers shall provide, and shall cause each of their
respective Subsidiaries to provide, to such Lender reasonable information with
respect to its compliance with this Section.
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Article 6
NEGATIVE COVENANTS
So long as any Advance remains unpaid, or any other Obligation remains
unpaid or unperformed, or any portion of the Commitment remains in force, Parent
and each Borrower shall not, and shall not permit any of their respective
Subsidiaries to, unless the Administrative Agent (with the written approval of
the Requisite Lenders) otherwise consents:
6.1 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. Merge or consolidate
with or into any Person, or sell lease or otherwise transfer all or any
substantial part of the assets of Parent and its Subsidiaries, taken as a whole,
to any Person, except:
(a) mergers and consolidations of a Subsidiary of a
Borrower into that Borrower or a Subsidiary thereof (with that Borrower
or the Subsidiary as the surviving entity) or of Subsidiaries of the
Borrowers with each other;
(b) a merger or consolidation of a Borrower or any
Subsidiary thereof with any other Person, provided that (i) either (A)
the Borrower or the Subsidiary is the surviving entity, or (B) the
surviving entity is a corporation organized under the Laws of a State
of the United States of America and, as of the date of such merger or
consolidation, expressly assumes, by an instrument satisfactory in form
and substance to the Requisite Lenders, the Obligations of the relevant
Borrower or the Subsidiary, as the case may be, (ii) giving effect
thereto, no Default or Event of Default exists or would result
therefrom, and (iii) giving pro forma effect thereto, Borrowers are in
compliance with the covenants set forth in Sections 6.5 and 6.6.
6.2 HOSTILE TENDER OFFERS. Make any offer to purchase or acquire, or
consummate a purchase or acquisition of, 5% or more of the capital stock of any
corporation or other equity securities of any business entity if the board of
directors or management of such corporation or business entity has notified
Parent or any of its Subsidiaries in writing that it opposes such offer or
purchase and such notice has not been withdrawn or superseded.
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6.3 CHANGE IN NATURE OF BUSINESS. Make any material change in the
nature of the business of Parent and its Subsidiaries, taken as a whole, or
acquire more than 49% of the capital stock or other equity securities of any
Person which is engaged in a line of business other than the lines of business
reasonably related to or incidental to the business engaged in by Parent and its
Subsidiaries.
6.4 LIENS, NEGATIVE PLEDGES, SALE LEASEBACKS AND RIGHTS OF OTHERS.
Create, incur, assume or suffer to exist any Lien, Negative Pledge or Right of
Others of any nature upon or with respect to any of their respective Properties,
whether now owned or hereafter acquired, or enter into any Sale and Leaseback
with respect to any such Properties except:
(a) Permitted Encumbrances and Permitted Rights of Others;
(b) Liens and Negative Pledges under the Loan Documents and
under the Short Term Loan Agreement;
(c) other existing Liens, Negative Pledges and Rights of
Others existing on the Closing Date and disclosed in Schedule 4.7 (or
not required to be disclosed therein under Section 4.7) and any
renewals or extensions thereof; provided that the obligations secured
or benefitted thereby are not increased;
(d) Until the date which is ninety days following the Closing
Date, any Lien, Negative Pledge or Right of Others on shares of any
equity security or any warrant or option to purchase an equity security
or any security which is convertible into an equity security issued by
any Subsidiary of Parent that holds, directly or indirectly through a
holding company or otherwise, a license to conduct gaming under any
Gaming Law, and in the proceeds thereof; provided that this clause
shall apply only so long as the Gaming Laws of the relevant
jurisdiction provide that the creation of any restriction on the
disposition of any of such securities shall not be effective and, if
such Gaming Laws at any time cease to so provide, then this clause
shall be of no further effect; and provided further that if at any time
Parent or any of its Subsidiaries creates or suffers to
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exist a Lien or Negative Pledge covering such securities in favor of
the holder of any other Indebtedness, it will (subject to any approval
required under such Gaming Laws) concurrently grant a pari-passu Lien
or Negative Pledge likewise covering such securities in favor of the
Administrative Agent for the benefit of the Lenders;
(e) Liens on Property acquired or constructed by
Parent or any of its Subsidiaries, and in the proceeds thereof, that
(i) were in existence at the time of the acquisition or construction of
such Property or were created at or within 90 days after such
acquisition or construction, and (ii) secure (in the case of Liens not
in existence at the time of acquisition of the Property) only the
unpaid portion of the acquisition or construction price for such
Property, or monies borrowed that were used to pay such acquisition or
construction price;
(f) Liens securing Indebtedness (including Capital
Lease Obligations) that replaces or refinances Indebtedness secured by
Liens permitted under clause (e); provided that such Liens cover only
the same Property as the Liens securing the Indebtedness replaced or
refinanced;
(g) Liens, Negative Pledges and Rights of Others held
by joint venture partners and any assignees thereof, and lenders
thereto and any assignees thereof, with respect to the interests of
Parent and its Subsidiaries in that joint venture and the proceeds
thereof, provided that such Liens, Negative Pledges and Rights of
Others shall secure and relate only the obligations of such joint
venture;
(h) Liens, Negative Pledges and Rights of Others in
favor of counterparties to agreements, and assignees thereof, entered
into by Parent and its Subsidiaries in the ordinary course of business
on the interests of Parent and its Subsidiaries under such agreements
and the proceeds thereof, provided that such Liens, Negative Pledges
and Rights of Others shall secure and relate only to restrictions on
transfer of the rights of Parent and its Subsidiaries to the holders
thereof under the relevant agreement;
(i) Liens on Cash securing only Defeased Debt;
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(j) Liens not otherwise permitted by the foregoing
clauses of this Section encumbering assets of the Parent and its
Subsidiaries having an aggregate fair market value which is not in
excess of 10% of Net Tangible Assets at any time; and
(k) Subject to Section 5.8, the Negative Pledges set
forth with respect to Rio and its Subsidiaries contained in the
Existing Rio Indentures.
6.5 TOTAL DEBT RATIO. Permit the Total Debt Ratio to exceed 4.50:1.00
as of the last day of any Fiscal Quarter.
6.6 INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio to be
less than 3.00:1.00 as of the last day of any Fiscal Quarter.
6.7 SUBSIDIARY INDEBTEDNESS. Permit any Subsidiary of Parent which is
not a Borrower hereunder to create, assume, incur or suffer to exist any
Indebtedness or Contingent Obligations with respect to Indebtedness other than:
(a) Defeased Debt;
(b) secured Indebtedness (including Capital Lease Obligations)
and Contingent Obligations which are permitted by Sections 6.4(e) or
6.4(f);
(c) unsecured Indebtedness and Contingent Obligations which
were created, assumed or incurred by such Subsidiary prior to its
acquisition by Parent and its Subsidiaries (and not in anticipation of
such acquisition) but not any refinancings, renewals or extensions
thereof;
(d) letters of credit, surety bonds and other similar forms of
credit enhancement for such Subsidiaries incurred in the ordinary
course of their business; and
(e) Subject to Section 5.8, the Indebtedness evidenced by the
Existing Rio Indentures.
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Article 7
INFORMATION AND REPORTING REQUIREMENTS
7.1 FINANCIAL AND BUSINESS INFORMATION. So long as any Advance remains
unpaid, or any other Obligation remains unpaid or unperformed, or any portion of
the Commitment remains in force, Parent and the Borrowers shall, unless the
Administrative Agent (with the written approval of the Requisite Lenders)
otherwise consents, deliver to the Administrative Agent and the Lenders, at
Parent's and Borrowers' sole expense:
(a) As soon as practicable, and in any event within
45 days after the end of each Fiscal Quarter (other than the fourth
Fiscal Quarter in any Fiscal Year), the consolidated balance sheet of
Parent and its Subsidiaries as at the end of such Fiscal Quarter and
the consolidated statement of operations for each Fiscal Quarter, and
its statement of cash flows for the portion of the Fiscal Year ended
with such Fiscal Quarter and as at and for the portion of the Fiscal
Year ended with such Fiscal Quarter, all in reasonable detail. Such
financial statements shall be certified by a Senior Officer of Parent
as fairly presenting the financial condition, results of operations and
cash flows of Parent and its Subsidiaries in accordance with Generally
Accepted Accounting Principles (other than footnote disclosures),
consistently applied, as at such date and for such periods, subject
only to normal year-end accruals and audit adjustments;
(b) As soon as practicable, and in any event prior to
the penultimate Business Day of February in each Fiscal Year, a
Certificate of a Responsible Official setting forth the Total Debt
Ratio as of the last day of the fourth Fiscal Quarter of the preceding
year, and providing reasonable detail as to the calculation thereof,
which calculations shall be based on the preliminary unaudited
financial statements of Parent and its Subsidiaries for such Fiscal
Quarter;
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(c) As soon as practicable, and in any event within
120 days after the end of each Fiscal Year, the consolidated balance
sheet of Parent and its Subsidiaries as at the end of such Fiscal Year
and the consolidated statements of operations, shareholders' equity and
cash flows, in each case of Parent and its Subsidiaries for such Fiscal
Year as at and for the Fiscal Year, all in reasonable detail. Such
financial statements shall be prepared in accordance with Generally
Accepted Accounting Principles, consistently applied, and such
consolidated balance sheet and consolidated statements shall be
accompanied by a report and opinion of independent public accountants
of recognized standing selected by Parent and reasonably satisfactory
to the Requisite Lenders, which report and opinion shall be prepared in
accordance with generally accepted auditing standards as at such date,
and shall not be subject to any qualifications or exceptions. Such
accountants' report and opinion shall be accompanied by a certificate
stating that, in making the examination pursuant to generally accepted
auditing standards necessary for the certification of such financial
statements and such report, such accountants have obtained no knowledge
of any Default or, if, in the opinion of such accountants, any such
Default shall exist, stating the nature and status of such Default, and
stating that such accountants have reviewed Parent's and Borrowers'
financial calculations as at the end of such Fiscal Year (which shall
accompany such certificate) under Section 6.5 and 6.6, have read such
Sections (including the definitions of all defined terms used therein)
and that nothing has come to the attention of such accountants in the
course of such examination that would cause them to believe that the
same were not calculated by Parent and the Borrowers in the manner
prescribed by this Agreement;
(d) As soon as practicable, and in any event within
90 days after the commencement of each Fiscal Year, a budget and
projection by Fiscal Quarter for that Fiscal Year and by Fiscal Year
for the next four succeeding Fiscal Years, including for the first such
Fiscal Year, projected quarterly consolidated balance sheets, statement
of operations and statements of cash flow and, for the remaining four
Fiscal Years, projected annual consolidated condensed balance sheets
and statements of operations and cash flow, of Parent and its
Subsidiaries, all in reasonable detail;
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(e) Promptly after the same are available, copies of
each annual report, proxy or financial statement or other report or
communication sent to the shareholders of Parent, and copies of all
annual, regular, periodic and special reports and registration
statements which Parent may file or be required to file with the
Securities and Exchange Commission under Sections 13 or 15(d) of the
Securities Exchange Act of 1934 and not otherwise required to be
delivered to the Lenders pursuant to other provisions of this Section;
(f) Promptly after the same are available, copies of
the Nevada "Regulation 6.090 Report" and "6-A Report" and copies of any
written communication to Parent or any of its Subsidiaries from any
Gaming Board advising it of a violation of or non-compliance with, any
Gaming Law by Parent or any of its Subsidiaries;
(g) Promptly after request by any Creditor, copies of
any other report or other document that was filed by Parent or any of
its Subsidiaries with any Governmental Agency;
(h) As soon as practicable, and in any event within
three Business Days after a Senior Officer becomes aware of the
existence of any condition or event which constitutes a Default,
telephonic notice specifying the nature and period of existence
thereof, and, no more than three Business Days after such telephonic
notice, written notice again specifying the nature and period of
existence thereof and specifying what action Parent or any of its
Subsidiaries are taking or propose to take with respect thereto;
(i) Promptly upon a Senior Officer becoming aware of
any litigation, governmental investigation or any proceeding (including
any litigation or proceeding by or subject to decision by any Gaming
Board) pending (i) against Parent or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect, (ii)
with respect to any material Indebtedness of Parent or any of its
Subsidiaries, or (iii) with respect to the Loan Documents, notice of
the existence of the same; and
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(j) Such other data and information as from time to
time may be reasonably requested by any Creditor through the
Administrative Agent.
7.2 COMPLIANCE CERTIFICATES. So long as any Advance remains unpaid, or
any other Obligation remains unpaid or unperformed, or any portion of the
Commitment remains outstanding, Parent and Borrowers shall deliver to the
Administrative Agent and the Lenders, at Parent's and Borrowers' sole expense,
concurrently with the financial statements required pursuant to Sections 7.1(a)
and 7.1(c), a Compliance Certificate signed on Parent's and Borrowers' behalf by
a Senior Officer.
Article 8
CONDITIONS
8.1 INITIAL ADVANCES, ETC. The obligation of each Lender to make the
initial Advance to be made by it, the obligation of the Swing Line Lender to
make Swing Line Advances and the obligation of the relevant Issuing Lenders to
issue the initial Letters of Credit, are each subject to the following
conditions precedent, each of which shall be satisfied prior to the making of
the initial Advances (unless all of the Lenders, in their sole and absolute
discretion, shall agree otherwise):
(a) The Administrative Agent shall have received all
of the following, each of which shall be originals unless otherwise
specified, each properly executed by a Responsible Official of each
party thereto, each dated as of the Closing Date and each in form and
substance satisfactory to the Administrative Agent and its legal
counsel (unless otherwise specified or, in the case of the date of any
of the following, unless the Administrative Agent otherwise agrees or
directs):
(1) at least one executed counterpart of this
Agreement, together with arrangements satisfactory to the
Administrative Agent for additional executed counterparts,
sufficient in number for distribution to the Lenders, Parent
and each Borrower;
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(2) Committed Advance Notes executed by each Borrower
in favor of each Lender, each in a principal amount equal to
that Lender's Pro Rata Share provided that the Committed
Advance Notes issued by Marina to each Lender shall be in a
principal amount equal to that Lender's Pro Rata Share of
Marina's Aggregate Sublimit;
(3) Competitive Advance Notes executed by each
Borrower in favor of each Lender;
(4) the Swing Line Documents;
(5) the Parent Guaranty executed by Parent;
(6) with respect to the Parent and each other
Borrower, such documentation as the Administrative Agent may
require to establish the due organization, valid existence and
good standing of Parent and each Borrower, its authority to
execute, deliver and perform any Loan Documents to which it is
a Party, the identity, authority and capacity of each
Responsible Official thereof authorized to act on its behalf,
including certified copies of articles of incorporation and
amendments thereto, bylaws and amendments thereto,
certificates of good standing, certificates of corporate
resolutions, incumbency certificates and Certificates of
Responsible Officials;
(7) the Opinions of Counsel;
(8) a Certificate of a Responsible Official
certifying that the attached copies of the governing
indentures and agreements for the Existing Subordinated Debt,
the Existing Senior Notes and the Atlantic City Showboat Land
Debt are true copies;
(9) such assurances as the Administrative Agent deems
appropriate that the relevant Gaming Boards have approved the
transactions contemplated by the Loan Documents to the extent
that such approval is required by applicable Gaming Laws;
(10) a Certificate of a Responsible Official signed
on Parent's and the Borrowers' behalf by a Senior Officer
setting forth the Total Debt Ratio as of March 31, 1999 and
the Debt Rating as of the Closing Date;
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(11) a Certificate of a Responsible Official signed
on Parent's and the Borrowers' behalf by a Senior Officer
certifying that the conditions specified in Sections 8.1(e)
and 8.1(f) have been satisfied;
(12) a copy of the Parent's audited consolidated
annual financial statements for the Fiscal Year ended December
31, 1998; and
(13) such other assurances, certificates, documents,
consents or opinions as the Administrative Agent reasonably
may require.
(b) The Borrowers shall have on the Closing Date
terminated the Existing Harrah's Credit Agreements and the Existing Rio
Credit Agreements and repaid each of the loans and terminated each of
the outstanding letters of credit and other credit accommodations made
thereunder (other than the Continuing Letters of Credit) pursuant to
arrangements acceptable to the Administrative Agent (including in the
case of the Existing Rio Credit Agreements the substantially concurrent
termination and reconveyance of all Liens in favor of the lenders
thereunder), and the proceeds of the initial Loans shall have been used
or shall concurrently be used to refinance the obligations of the
Borrowers thereunder.
(c) The arrangement fee, upfront fees and agency fees
payable pursuant to Sections 3.2, 3.3 and 3.6 shall have been paid.
(d) The reasonable costs and expenses of the
Administrative Agent in connection with the preparation of the Loan
Documents payable pursuant to Section 11.3, and invoiced to the Parent
prior to the Closing Date, shall have been paid.
(e) The representations and warranties of Parent and
the Borrowers contained in Article 4 shall be true and correct.
(f) Parent, Borrowers and any other Parties shall be
in compliance with all the terms and provisions of the Loan Documents,
and after giving effect to the initial Advance no Default or Event of
Default shall have occurred and be continuing.
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8.2 ANY INCREASING ADVANCE, ETC. The obligation of each Lender to make
any Committed Advance which would increase the aggregate principal amount of the
outstanding Committed Advances, the obligation of the relevant Issuing Lender to
issue each Letter of Credit, the obligation of the Swing Line Lender to make
Swing Line Advances, and the obligation of each Lender to make any Competitive
Advance, is subject to the following conditions precedent:
(a) Except (i) for representations and warranties
which expressly speak as of a particular date or are no longer true and
correct as a result of a change which is not a violation of the Loan
Documents and (ii) as disclosed by Parent and Borrowers and approved in
writing by the Requisite Lenders, the representations and warranties
contained in Article 4 (other than Sections 4.4(a), 4.6 (first
sentence), and 4.15) shall be true and correct on and as of the date of
the Advance as though made on that date;
(b) there shall not be then pending or threatened any
action, suit, proceeding or investigation against or affecting Parent
or any of its Subsidiaries or any Property of any of them before any
Governmental Agency that constitutes a Material Adverse Effect;
(c) the Administrative Agent shall, in the case of a
Committed Advance, have timely received a Request for Loan in
compliance with Article 2 (or telephonic or other request for loan
referred to in the second sentence of Section 2.1(c), if applicable) in
compliance with Article 2 (or, in the proper case, a Request for Letter
of Credit); and
(d) the Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, such other
assurances, certificates, documents or consents related to the
foregoing as the Administrative Agent or Requisite Lenders reasonably
may require.
Article 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
9.1 EVENTS OF DEFAULT. The existence or occurrence of any one or more
of the following events, whatever the reason therefor and under any
circumstances whatsoever, shall constitute an Event of Default:
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(a) Any Borrower (i) fails to pay any principal on
any Committed Advance Note or any Swing Line Advance, or any portion
thereof, on the date when due, (ii) fails to make any payment with
respect to any Letter of Credit when required by Section 2.4(e), or
(iii) fails to pay any principal on any Competitive Advance Note, or
any portion thereof on the date when due; or
(b) Parent or any Borrower fails to pay any interest
on any of the Notes, or any fees under Sections 3.4, 3.5 or 3.6, or any
portion thereof, within five Business Days after the date when due; or
fails to pay any other fee or amount payable to the Lenders under any
Loan Document, or any portion thereof, within five Business Days after
demand therefor; or
(c) Parent or any Borrower fails, immediately upon
notice from the Administrative Agent, to comply with any of the
covenants contained in Article 6 (other than the covenant contained in
Section 6.3); or
(d) Parent or any Borrower fails to comply with
Section 7.1(h) in any respect that is materially adverse to the
interests of the Lenders; or
(e) Parent, any Borrower or any other Party fails to
perform or observe any other covenant or agreement (not specified in
clauses (a), (b), (c) or (d) above) contained in any Loan Document on
its part to be performed or observed within thirty Business Days after
the giving of notice by the Administrative Agent on behalf of the
Requisite Lenders of such Default; or
(f) Any representation or warranty of Parent or any
Borrower made in any Loan Document, or in any certificate or other
writing delivered by Parent or any Borrower pursuant to any Loan
Document, proves to have been incorrect when made or reaffirmed; or
(g) Parent or any of its Significant Subsidiaries (i)
fails to pay the principal, or any principal installment, of any
present or future indebtedness for borrowed money of $100,000,000 or
more including without limitation the Short Term Loan Agreement, or any
guaranty of present or future indebtedness for borrowed money of
$100,000,000 or more, on its part to be paid, when due (or within any
stated grace period), whether at the stated
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maturity, upon acceleration, by reason of required prepayment or
otherwise or (ii) fails to perform or observe any other term, covenant
or agreement on its part to be performed or observed, or suffers any
event to occur, in connection with any present or future indebtedness
for borrowed money of $100,000,000 or more, or of any guaranty of
present or future indebtedness for borrowed money of $100,000,000 or
more, if as a result of such failure or sufferance any holder or
holders thereof (or an agent or trustee on its or their behalf) has the
right to declare such indebtedness due before the date on which it
otherwise would become due; or
(h) Any event occurs which gives the holder or
holders of any Subordinated Debt (or an agent or trustee on its or
their behalf) the right to declare such indebtedness due before the
date on which it otherwise would become due, or the right to require
the issuer thereof to redeem or purchase, or offer to redeem or
purchase, all or any portion of any Subordinated Debt; or
(i) Any Loan Document, at any time after its
execution and delivery and for any reason other than the agreement of
the Lenders or satisfaction in full of all the Obligations ceases to be
in full force and effect or is declared by a court of competent
jurisdiction to be null and void, invalid or unenforceable in any
respect which, in any such event in the reasonable opinion of the
Requisite Lenders, is materially adverse to the interests of the
Lenders; or any Party thereto denies in writing that it has any or
further liability or obligation under any Loan Document, or purports in
writing to revoke, terminate or rescind same; or
(j) A final judgment against the Parent or any of its
Significant Subsidiaries is entered for the payment of money in excess
of $25,000,000 and, absent procurement of a stay of execution, such
judgment remains unsatisfied for thirty calendar days after the date of
entry of judgment, or in any event later than five days prior to the
date of any proposed sale thereunder; or any writ or warrant of
attachment or execution or similar process is issued or levied against
all or any material part of the Property of any such Person and is not
released, vacated or fully bonded within thirty calendar days after its
issue or levy; or
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(k) The Parent or any of its Significant Subsidiaries
institutes or consents to the institution of any proceeding under a
Debtor Relief Law relating to it or to all or any part of its Property,
or is unable or admits in writing its inability to pay its debts as
they mature, or makes an assignment for the benefit of creditors; or
applies for or consents to the appointment of any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any part of its Property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar
officer is appointed without the application or consent of that Person
and the appointment continues undischarged or unstayed for 60 calendar
days; or any proceeding under a Debtor Relief Law relating to any such
Person or to all or any part of its Property is instituted without the
consent of that Person and continues undismissed or unstayed for 60
calendar days; or
(l) The occurrence of an Event of Default (as such
term is or may hereafter be specifically defined in any other Loan
Document) under any other Loan Document; or
(m) Any determination is made by a court of competent
jurisdiction that any Subordinated Debt is not subordinated in
accordance with its terms to the Obligations, provided that for so long
as such determination is effectively stayed during any pending appeal
the same shall not constitute an Event of Default; or
(n) Any Pension Plan maintained by the Parent or any
of its Subsidiaries is determined to have a material "accumulated
funding deficiency" as that term is defined in Section 302 of ERISA and
the result is a Material Adverse Effect; or
(o) The occurrence of a License Revocation with
respect to a license issued to Parent or any of its Subsidiaries by any
Gaming Board of the States of New Jersey or Nevada with respect to
gaming operations at any gaming facility accounting for 5% or more of
the consolidated gross revenues of Parent and its Subsidiaries that
continues for thirty calendar days.
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9.2 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other rights
or remedies of the Creditors provided for elsewhere in this Agreement, or the
Loan Documents, or by applicable Law, or in equity, or otherwise:
(a) Upon the occurrence, and during the continuance,
of any Event of Default other than an Event of Default described in
Section 9.1(k):
(1) the commitment to make Advances and all other
obligations of the Creditors and all rights of Parent,
Borrowers and any other Parties under the Loan Documents shall
be suspended without notice to or demand upon Parent or the
Borrowers , which are expressly waived by Parent and the
Borrowers , except that all of the Lenders or the Requisite
Lenders (as the case may be, in accordance with Section 11.2)
may waive an Event of Default or, without waiving, determine,
upon terms and conditions satisfactory to the Lenders or
Requisite Lenders, as the case may be, to reinstate the
Commitment and make further Advances, which waiver or
determination shall apply equally to, and shall be binding
upon, all the Lenders; and
(2) the Requisite Lenders may request the
Administrative Agent to, and the Administrative Agent
thereupon shall, terminate the Commitment, demand that
Borrowers deposit cash collateral for all Letters of Credit in
the amount thereof with the Administrative Agent and/or
declare all or any part of the unpaid principal of all Notes,
all interest accrued and unpaid thereon and all other amounts
payable under the Loan Documents to be forthwith due and
payable, whereupon the same shall become and be forthwith due
and payable, without protest, presentment, notice of dishonor,
demand or further notice of any kind, all of which are
expressly waived by Parent and the Borrowers.
(b) Upon the occurrence of any Event of Default
described in Section 9.1(k):
(1) the commitment to make Advances and all other
obligations of the Creditors and all rights of Parent,
Borrowers and any other Parties under the Loan Documents shall
terminate without notice to or demand upon Parent or
Borrowers, which are expressly waived by
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Parent and Borrowers, except that all the Lenders may waive
the Event of Default or, without waiving, determine, upon
terms and conditions satisfactory to all the Lenders, to
reinstate the Commitment and make further Advances, which
determination shall apply equally to, and shall be binding
upon, all the Lenders; and
(2) the unpaid principal of all Notes, all interest
accrued and unpaid thereon and all other amounts payable under
the Loan Documents shall be forthwith due and payable, without
protest, presentment, notice of dishonor, demand or further
notice of any kind, all of which are expressly waived by
Parent and Borrowers, and Borrowers shall be obligated to
immediately deposit cash collateral for all Letters of Credit
with the Administrative Agent in the amount thereof.
(c) Upon the occurrence of any Event of Default, the
Creditors, or any of them, without notice to (except as expressly
provided for in any Loan Document) or demand upon Parent or Borrowers,
which are expressly waived by Borrowers (except as to notices expressly
provided for in any Loan Document), may proceed (but only with the
consent of the Requisite Lenders) to protect, exercise and enforce
their rights and remedies under the Loan Documents against Parent and
the Borrowers and any other Parties and such other rights and remedies
as are provided by Law or equity.
(d) The order and manner in which the Lenders' rights
and remedies are to be exercised shall be determined by the Requisite
Lenders in their sole discretion, and all payments received by the
Creditors, shall be applied first to the costs and expenses (including
attorneys' fees and disbursements and the allocated costs of attorneys
employed by the Administrative Agent) of the Creditors, and thereafter
paid pro rata to the Lenders in the same proportions that the aggregate
Obligations owed to each Lender under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all the Lenders,
without priority or preference among the Lenders. Regardless of how
each Lender may treat payments for the purpose of its own accounting,
for the purpose of computing the Obligations hereunder and under the
Notes, payments shall be applied first, to the costs and expenses of
the Creditors, as set forth above, second, to the payment of
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accrued and unpaid interest due under any Loan Documents to and
including the date of such application (ratably, and without
duplication, according to the accrued and unpaid interest due under
each of the Loan Documents), and third, to the payment of all other
amounts (including principal and fees) then owing to the Creditors
under the Loan Documents. No application of payments will cure any
Event of Default, or prevent acceleration, or continued acceleration,
of amounts payable under the Loan Documents, or prevent the exercise,
or continued exercise, of rights or remedies of the Lenders hereunder
or thereunder or at Law or in equity.
Article 10
THE ADMINISTRATIVE AGENT
10.1 APPOINTMENT AND AUTHORIZATION. Each Creditor hereby irrevocably
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to the Administrative Agent by the terms thereof or are reasonably incidental,
as determined by the Administrative Agent, thereto. This appointment and
authorization is intended solely for the purpose of facilitating the servicing
of the Obligations and does not constitute appointment of the Administrative
Agent as trustee for any Lender or as representative of any Lender for any other
purpose and, except as specifically set forth in the Loan Documents to the
contrary, the Administrative Agent shall take such action and exercise such
powers only in an administrative and ministerial capacity.
10.2 ADMINISTRATIVE AGENT AND AFFILIATES. Bank of America (and each
successor Administrative Agent) has the same rights and powers under the Loan
Documents as any other Lender and may exercise the same as though it was not the
Administrative Agent, and the term "Lender" or "Lenders" includes Bank of
America in its individual capacity. Bank of America (and each successor
Administrative Agent) and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with
Parent, any Subsidiary thereof, or any Affiliate of Parent, as if it was not the
Administrative Agent and without any duty to account therefor to the Lenders.
Bank of America (and each successor Administrative Agent) need not account to
any other Bank for any monies received by it for reimbursement of its costs and
expenses as Administrative Agent hereunder, or for any monies received by it in
its capacity as a Lender hereunder. The Administrative Agent shall not be deemed
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to hold a fiduciary relationship with any Lender and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise exist against the Administrative Agent.
10.3 PROPORTIONATE INTEREST IN ANY COLLATERAL. The Administrative
Agent, on behalf of all the Lenders, shall hold in accordance with the Loan
Documents all items of any collateral or interests therein hereafter received or
held by the Administrative Agent. Subject to the Administrative Agent's and the
Lenders' rights to reimbursement for their costs and expenses hereunder
(including attorneys' fees and disbursements and other professional services and
the allocated costs of attorneys employed by the Administrative Agent or a
Lender), each Lender shall have an interest in the Lenders' interest in any
collateral or interests therein in the same proportions that the aggregate
Obligations owed such Lender under the Loan Documents bear to the aggregate
Obligations owed under the Loan Documents to all the Lenders, without priority
or preference among the Lenders.
10.4 LENDERS' CREDIT DECISIONS. Each Creditor agrees that it has,
independently and without reliance upon the Administrative Agent, any other
Creditor or the directors, officers, agents, employees or attorneys of any other
Creditor, and instead in reliance upon information supplied to it by or on
behalf of Parent and Borrowers and upon such other information as it has deemed
appropriate, made its own independent credit analysis and decision to enter into
this Agreement. Each Creditor also agrees that it shall, independently and
without reliance upon any other Creditor or the directors, officers, agents,
employees or attorneys of any other Creditor, continue to make its own
independent credit analyses and decisions in acting or not acting under the Loan
Documents.
10.5 ACTION BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent, the relevant Issuing Lender and
the Swing Line Lender may assume that no Default or Event of Default has
occurred and is continuing, unless they have received notice from a Parent or
any Borrower stating the nature of the Default or Event of Default or have
received notice from a Lender stating the nature of the Default or Event of
Default and that such Lender considers the Default or Event of Default to have
occurred and to be continuing.
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(b) The Administrative Agent has only those obligations under
the Loan Documents as are expressly set forth therein.
(c) Except for any obligation expressly set forth in the Loan
Documents and as long as the Administrative Agent may assume that no Event of
Default has occurred and is continuing, the Administrative Agent may, but shall
not be required to, exercise its discretion to act or not act, except that the
Administrative Agent shall be required to act or not act upon the instructions
of the Requisite Lenders (or of all the Lenders, to the extent required by
Section 11.2) and those instructions shall be binding upon the Administrative
Agent and all the Lenders, provided that the Administrative Agent shall not be
required to act or not act if to do so would be contrary to any Loan Document or
to applicable Law or would result, in the reasonable judgment of the
Administrative Agent, in substantial risk of liability to the Administrative
Agent.
(d) If the Administrative Agent has received a notice
specified in clause (a), the Administrative Agent shall immediately give notice
thereof to the Lenders and shall act or not act upon the instructions of the
Requisite Lenders (or of all the Lenders, to the extent required by Section
11.2), provided that the Administrative Agent shall not be required to act or
not act if to do so would be contrary to any Loan Document or to applicable Law
or would result, in the reasonable judgment of the Administrative Agent, in
substantial risk of liability to the Administrative Agent, and except that if
the Requisite Lenders (or all the Lenders, if required under Section 11.2) fail,
for five Business Days after the receipt of notice from the Administrative
Agent, to instruct the Administrative Agent, then the Administrative Agent, in
its sole discretion, may act or not act as it deems advisable for the protection
of the interests of the Creditors.
(e) The Administrative Agent shall have no liability to any
Creditor for acting, or not acting, as instructed by the Requisite Lenders (or
all the Lenders, if required under Section 11.2), notwithstanding any other
provision hereof.
10.6 LIABILITY OF ADMINISTRATIVE AGENT. Neither the Administrative
Agent nor any of its directors, officers, agents, employees or attorneys shall
be liable for any action taken or not taken by them under or in connection with
the Loan Documents, except for their own gross negligence or willful misconduct.
Without limitation on the foregoing, the Administrative Agent and its directors,
officers, agents, employees and attorneys:
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(a) May treat the payee of any Note as the holder
thereof until the Administrative Agent receives notice of the
assignment or transfer thereof, in form satisfactory to the
Administrative Agent, signed by the payee, and may treat each Lender as
the owner of that Lender's interest in the Obligations for all purposes
of this Agreement until the Administrative Agent receives notice of the
assignment or transfer thereof, in form satisfactory to the
Administrative Agent, signed by that Lender.
(b) May consult with legal counsel (including
in-house legal counsel), accountants (including in-house accountants)
and other professionals or experts selected by it, or with legal
counsel, accountants or other professionals or experts for Parent
and/or its Subsidiaries or the Lenders, and shall not be liable for any
action taken or not taken by it in good faith in accordance with any
advice of such legal counsel, accountants or other professionals or
experts.
(c) Shall not be responsible to any Lender for any
statement, warranty or representation made in any of the Loan Documents
or in any notice, certificate, report, request or other statement
(written or oral) given or made in connection with any of the Loan
Documents.
(d) Except to the extent expressly set forth in the
Loan Documents, shall have no duty to ask or inquire as to the
performance or observance by Parent or its Subsidiaries of any of the
terms, conditions or covenants of any of the Loan Documents or to
inspect any collateral or the Property, books or records of Parent or
its Subsidiaries.
(e) Will not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness,
effectiveness, sufficiency or value of any Loan Document, any other
instrument or writing furnished pursuant thereto or in connection
therewith, or any collateral.
(f) Will not incur any liability by acting or not
acting in reliance upon any Loan Document, notice, consent,
certificate, statement, request or other instrument or writing believed
by it to be genuine and signed or sent by the proper party or parties.
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(g) Will not incur any liability for any arithmetical
error in computing any amount paid or payable by Parent, Borrowers or
any Subsidiary thereof or paid or payable to or received or receivable
from any Lender under any Loan Document, including, without limitation,
principal, interest, commitment fees, Advances and other amounts;
provided that, promptly upon discovery of such an error in computation,
the Creditors (and, to the extent applicable, Parent and Borrowers)
shall make such adjustments as are necessary to correct such error and
to restore the parties to the position that they would have occupied
had the error not occurred.
10.7 INDEMNIFICATION. Each Lender shall, ratably in accordance with its
Pro Rata Share, indemnify and hold the Administrative Agent, the Lead Arranger
and their respective directors, officers, agents, employees and attorneys
harmless against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including, without limitation, attorneys' fees and
disbursements and allocated costs of attorneys employed by the Administrative
Agent or the Lead Arranger) that may be imposed on, incurred by or asserted
against it or them in any way relating to or arising out of the Loan Documents
(other than losses incurred by reason of the failure of Parent or Borrowers to
pay and perform the Obligations) or any action taken or not taken by it as
Administrative Agent and the Lead Arranger thereunder, except such as result
from their own gross negligence or willful misconduct. Without limitation on the
foregoing, each Lender shall reimburse the Administrative Agent and the Lead
Arranger upon demand for that Lender's Pro Rata Share of any out-of-pocket cost
or expense incurred by the Administrative Agent or the Lead Arranger in
connection with the negotiation, preparation, execution, delivery, amendment,
waiver, restructuring, reorganization (including a bankruptcy reorganization),
enforcement or attempted enforcement of the Loan Documents, to the extent that
Parent, Borrowers or any other Party fails to do so upon demand.
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10.8 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may, and
at the request of the Requisite Lenders shall, resign as Administrative Agent
upon thirty days notice to the Lenders, Parent and the Borrowers. If the
Administrative Agent resigns as Administrative Agent under this Agreement, the
Requisite Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, which successor administrative agent shall
be approved by Parent and Borrowers (and such approval shall not be unreasonably
withheld). If no successor administrative agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders, Parent and
Borrowers, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor administrative agent and the retiring Administrative
Agent's appointment, powers and duties as Administrative Agent shall be
terminated (except for any liabilities incurred prior to such termination).
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article 10, and Sections 11.3,
11.11 and 11.23, shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement. If no
successor administrative agent has accepted appointment as Administrative Agent
by the date which is thirty days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor administrative agent as provided for
above.
10.9 NO OBLIGATIONS OF PARENT OR BORROWERS. Nothing contained in this
Article 10 shall be deemed to impose upon Parent or Borrowers any obligation in
respect of the due and punctual performance by the Administrative Agent of its
obligations to the Lenders under any provision of this Agreement, and Parent and
Borrowers shall have no liability to any Creditor in respect of any failure by
any Creditor to perform any of its obligations to any other Creditor under this
Agreement.
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Article 11
MISCELLANEOUS
11.1 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers, privileges and
remedies of the Creditors provided herein or in any Note or other Loan Document
are cumulative and not exclusive of any right, power, privilege or remedy
provided by Law or equity. No failure or delay on the part of any Creditor in
exercising any right, power, privilege or remedy may be, or may be deemed to be,
a waiver thereof; nor may any single or partial exercise of any right, power,
privilege or remedy preclude any other or further exercise of the same or any
other right, power, privilege or remedy. The terms and conditions of Article 8
hereof are inserted for the sole benefit of the Creditors; the same may be
waived in whole or in part, with or without terms or conditions, in respect of
any Loan or Letter of Credit without prejudicing the Creditors rights to assert
them in whole or in part in respect of any other Loan or Letter of Credit.
11.2 AMENDMENTS; CONSENTS. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Agreement or any other
Loan Document, no approval or consent thereunder, and no consent to any
departure by Parent, Borrowers or any other Party therefrom, may in any event be
effective unless in writing signed by the Requisite Lenders (and, in the case of
any amendment, modification or supplement of or to any Loan Document to which
Parent or any Borrower is a party, signed by Parent and that Borrower and, in
the case of any amendment, modification or supplement to Article 10, signed by
the Administrative Agent), and then only in the specific instance and for the
specific purpose given; and, without the approval in writing of all the Lenders,
no amendment, modification, supplement, termination, waiver or consent may be
effective:
(a) To forgive any principal Obligation, defer any
required payment of any Obligation, reduce the amount or rate of
interest payable on any Loan or Advance without the consent of the
affected Lender, increase the amount of the Commitment (except as set
forth in Section 2.7) or the Pro Rata Share of any Lender or decrease
the amount of any Letter of Credit Fee or facility fee payable to any
Lender, or reduce any other fee or amount payable to the Creditors
under the Loan Documents or to waive an Event of Default consisting of
the failure of any Borrower to pay when due principal, interest or any
facility fee or letter of credit fee;
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(b) To postpone any date fixed for any payment of
principal of, prepayment of principal of or any installment of interest
on, any Note or any installment of any facility fee or letter of credit
fee, or to extend the term of the Commitment (except as set forth in
Section 2.12);
(c) To amend the provisions of the definition of
"Requisite Lenders" or this Section 11.2 or to amend or waive Section
6.2;
(d) to release or subordinate the Parent Guaranty; or
(e) To amend any provision of this Agreement that
expressly requires the consent or approval of all the Lenders.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 11.2 shall apply equally to, and shall be binding upon, all of
the Creditors.
If, in connection with any proposed amendment, modification, supplement,
termination, waiver or consent to any of the provisions hereof as contemplated
by clauses (a) through (d), inclusive, of this Section 11.2, the consent of the
Required Lenders is obtained, but the consent of one or more of the other
Lenders is required and is not obtained, then the Borrowers shall have the right
to (i) replace such non-consenting Lender with one or more Eligible Assignees in
accordance with Section 11.14(a) if such Eligible Assignee consents to the
proposed amendment, modification, supplement, termination, waiver or consent, or
(ii) reduce the Commitment in accordance with Section 11.14(b) or any
combination of the foregoing, provided that each such non-consenting Lender
shall be either replaced as set forth in clause (i) or eliminated as set forth
in clause (ii).
11.3 COSTS, EXPENSES AND TAXES. Each Borrower shall pay within two
Business Days after demand, accompanied by an invoice therefor, the reasonable
costs and expenses of the Administrative Agent and the Lead Arranger in
connection with the negotiation, preparation, syndication, execution and
delivery of the Loan Documents and any amendment thereto or waiver thereof which
is requested by Borrowers or is entered into when any Default or Event of
Default exists. Following any Event of Default, each Borrower shall pay on
demand, accompanied by an invoice therefor, the reasonable costs and expenses of
the Administrative Agent and each of the other Creditors in connection with the
restructuring,
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reorganization (including a bankruptcy reorganization) and enforcement or
attempted enforcement of the Loan Documents, and any matter related thereto. The
foregoing costs and expenses shall include filing fees, recording fees, title
insurance fees, appraisal fees, search fees, and other out-of-pocket expenses
and the reasonable fees and out-of-pocket expenses of any legal counsel
(including allocated costs of legal counsel employed by any Creditor),
independent public accountants and other outside experts retained by any of the
Creditors, whether or not such costs and expenses are incurred or suffered by
the Creditors in connection with or during the course of any bankruptcy or
insolvency proceedings of the Parent or any Subsidiary thereof. Such costs and
expenses shall also include, in the case of any amendment or waiver of any Loan
Document requested by the Parent or the Borrowers, the administrative costs of
the Administrative Agent reasonably attributable thereto. Each Borrower shall
pay any and all documentary and other taxes, excluding, in the case of each
Creditor and its Eurodollar Lending Office thereof, (i) taxes imposed on or
measured in whole or in part by its net income or capital and franchise taxes
imposed on it, (ii) any withholding taxes or other taxes based on net income
(other than withholding taxes and taxes based on net income resulting from or
attributable to any change following the Closing Date in any law, rule or
regulation or any change following the Closing Date in the interpretation or
administration of any law, rule or regulation by any governmental authority) or
(iii) any withholding taxes or other taxes based on net income for any period
with respect to which it has failed to provide the Parent with the appropriate
form or forms required by Section 11.21, to the extent such forms are then
required by applicable Laws, and all costs, expenses, fees and charges payable
or determined to be payable in connection with the filing or recording of this
Agreement, any other Loan Document or any other instrument or writing to be
delivered hereunder or thereunder, or in connection with any transaction
pursuant hereto or thereto, and shall reimburse, hold harmless and indemnify the
Creditors from and against any and all loss, liability or legal or other expense
with respect to or resulting from any delay in paying or failure to pay any such
tax, cost, expense, fee or charge or that any of them may suffer or incur by
reason of the failure of any Party to perform any of its Obligations. Any amount
payable to the Creditors under this Section 11.3 shall bear interest from the
second Business Day following the date of demand for payment at the Default
Rate.
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11.4 NATURE OF LENDERS' OBLIGATIONS. The obligations of the Lenders
hereunder are several and not joint or joint and several. Nothing contained in
this Agreement or any other Loan Document and no action taken by the Creditors
or any of them pursuant hereto or thereto may, or may be deemed to, make the
Creditors a partnership, an association, a joint venture or other entity, either
among themselves or with Parent, any Borrower or any Affiliate thereof. Each
Lender's obligation to make any Advance pursuant hereto is several and not joint
or joint and several, and in the case of the initial Advance only is conditioned
upon the performance by all other Lenders of their obligations to make initial
Advances. A default by any Lender will not increase the Pro Rata Share
attributable to any other Lender. Any Lender not in default may, if it desires,
assume in such proportion as a majority in interest of the nondefaulting Lenders
agree the obligations of any Lender in default, but is not obligated to do so.
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or in any other Loan Document, or in any
certificate or other writing delivered by or on behalf of any one or more of the
Parties to any Loan Document, will survive the making of the Loans hereunder and
the execution and delivery of the Notes, and have been or will be relied upon by
the Creditors, notwithstanding any investigation made by the Creditors or on
their behalf.
11.6 NOTICES. EXCEPT as otherwise expressly provided in the Loan
Documents, all notices, requests, demands, directions and other communications
provided for hereunder or under any other Loan Document must be in writing and
must be mailed, telecopied or delivered by overnight courier or otherwise to the
appropriate party at the address set forth on the signature pages of this
Agreement or other applicable Loan Document or, as to any party to any Loan
Document, at any other address as may be designated by it in a written notice
sent to all other parties to such Loan Document in accordance with this Section.
Except as otherwise expressly provided in any Loan Document, if any notice,
request, demand, direction or other communication required or permitted by any
Loan Document is given by mail it will be effective on the earlier of receipt or
the third calendar day after deposit in the United States mail with first class
or airmail postage prepaid; if given by telecopier, when sent; or if given by
personal delivery, when delivered.
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11.7 EXECUTION OF LOAN DOCUMENTS. Unless the Administrative Agent
otherwise specifies with respect to any Loan Document, (a) this Agreement and
any other Loan Document may be executed in any number of counterparts and any
party hereto or thereto may execute any counterpart, each of which when executed
and delivered will be deemed to be an original and all of which counterparts of
this Agreement or any other Loan Document, as the case may be, when taken
together will be deemed to be but one and the same instrument and (b) execution
of any such counterpart may be evidenced by a telecopier transmission of the
signature of such party. The execution of this Agreement or any other Loan
Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto.
11.8 BINDING EFFECT; ASSIGNMENT.
(a) This Agreement and the other Loan Documents will be
binding upon and inure to the benefit of Parent, Borrowers, the Creditors, and
their respective successors and assigns, except that Parent and Borrowers may
not assign their rights hereunder or thereunder or any interest herein or
therein without the prior written consent of all the Lenders (any purported
assignment by Parent or any Borrower in violation of this Section being void ab
initio). Each Lender represents that it is not acquiring its Notes with a view
to the distribution thereof within the meaning of the Securities Act of 1933, as
amended (subject to any requirement that disposition of such Notes must be
within the control of such Lender). Any Lender may at any time pledge its Notes
or any other instrument evidencing its rights as a Lender under this Agreement
to a Federal Reserve Bank, but no such pledge shall release that Lender from its
obligations hereunder or grant to such Federal Reserve Bank the rights of a
Lender hereunder absent foreclosure of such pledge.
(b) From time to time following the Closing Date, each Lender
may assign to one or more Eligible Assignees all or any portion of its Pro Rata
Share and its Notes; provided that (i) such Eligible Assignee, if not then a
Lender or an Affiliate of the assigning Lender having a combined capital and
surplus in excess of $100,000,000, shall be approved by each of the
Administrative Agent (which approval shall not be unreasonably withheld) and the
Parent and the Borrowers (which approval shall not be unreasonably withheld and
will not be required if an Event
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of Default has occurred and remains continuing), (ii) such assignment shall be
evidenced by an Assignment Agreement, a copy of which shall be furnished to the
Administrative Agent, (iii) except in the case of an assignment to an Affiliate
of the assigning Lender, to another Lender or of the entire remaining Commitment
of the assigning Lender, the assignment shall not assign a Pro Rata Share which
is less than $5,000,000, and (iv) the effective date of any such assignment
shall be as specified in the Assignment Agreement, but not earlier than the date
which is five Business Days after the date the Administrative Agent has received
the Assignment Agreement. Upon the effective date of such Assignment Agreement,
the Eligible Assignee named therein shall be a Lender for all purposes of this
Agreement, with the Pro Rata Share therein set forth and, to the extent of such
Pro Rata Share, the assigning Lender shall be released from its further
obligations under this Agreement and the other Loan Documents. Each Borrower
agrees that it shall execute and deliver (against delivery by the assigning
Lender to the Borrowers of its Notes) to such assignee Lender, Notes evidencing
that assignee Lender's Pro Rata Share, and to the assigning Lender, Notes
evidencing the remaining balance Pro Rata Share retained by the assigning
Lender.
(c) By executing and delivering an Assignment Agreement, the
Eligible Assignee thereunder acknowledges and agrees that: (i) other than the
representation and warranty that it is the legal and beneficial owner of the Pro
Rata Share being assigned thereby free and clear of any adverse claim, the
assigning Lender has made no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness or sufficiency of this Agreement or any
other Loan Document; (ii) the assigning Lender has made no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Parent or its Subsidiaries or the performance by the Parent or its
Subsidiaries of the Obligations; (iii) it has received a copy of this Agreement
and the other Loan Documents, together with copies of the most recent financial
statements delivered pursuant to Section 7.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment Agreement; (iv) it will, independently
and without reliance upon any other Creditor and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action
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under this Agreement; (v) it appoints and authorizes the Administrative Agent to
take such action and to exercise such powers under this Agreement and the Loan
Documents as are delegated to the Administrative Agent by this Agreement; and
(vi) it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain a copy of each
Assignment Agreement delivered to it. After receipt of a completed Assignment
Agreement executed by any Lender and an Eligible Assignee, and receipt (except
in the case of the assignment to an Affiliate of the Assignor) of an assignment
fee of $3,500 from such Eligible Assignee, the Administrative Agent shall,
promptly following the effective date thereof, provide to Parent and the
Borrowers and the Lenders a revised Schedule 1.1 giving effect thereto.
(e) Each Lender may from time to time grant participations in
a portion of its Pro Rata Share or in any Competitive Advance, in each case to
one or more banks or other financial institutions (including another Lender);
provided, however, that (i) such Lender's obligations under the Loan Documents
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other financial institutions shall not be a Lender
hereunder for any purpose except, if the participation agreement so provides,
for the purposes of Sections 3.7, 3.8 and 11.11, but only to the extent that the
cost of such benefits to Parent and Borrowers does not exceed the cost which
Parent and the Borrowers would have incurred in respect of such Lender absent
the participation, (iv) Parent, the Borrowers and the other Creditors shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, (v) the participation
interest shall not restrict an increase in the Commitment, or in the granting
Lender's Pro Rata Share, so long as the amount of the participation interest is
not affected thereby, and (vi) the consent of the holder of such participation
interest shall not be required for amendments or waivers of provisions of the
Loan Documents other than those which (A) extend the Maturity Date or any other
date upon which any payment of money is due to the Lender granting the
participation, (B) reduce the rate of interest on the Notes of such Lender, any
fee or any other monetary amount payable to that Lender, or (C) reduce the
amount of any installment of principal due under the Notes of that Lender.
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(f) Notwithstanding anything in this Section to the contrary,
the rights of the Lenders to make assignment of, and grant participations in,
their Pro Rata Share of the Commitment shall be subject to the approval of any
Gaming Board, to the extent required by applicable Gaming Laws.
(g) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") of such Granting Lender, identified as such in writing from time to
time by the Granting Lender to the Administrative Agent, Parent and the
Borrowers, the option to provide to the Borrowers all or any part of any Loan
that such Granting Lender would otherwise be obligated to make to the Borrowers
pursuant to Sections 2.1, 2.2, 2.3 or 2.5, provided that (i) nothing herein
shall constitute a commitment to make any Loan by any SPC and (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any part
of such Loan, the Granting Lender shall be obligated to make such Loan pursuant
to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender (and, if such Loan is a Competitive Advance,
shall be deemed to utilize the Commitments of all the Lenders) to the same
extent, and as if, such Loan were made by the Granting Lender. Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
related Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceedings under the laws of the United States or any State thereof,
provided that the Granting Lender for each SPC hereby agrees to indemnify, save,
and hold harmless each other party hereto for any loss, cost, damage and expense
arising out of their inability to institute any such proceeding against its SPC.
In addition, notwithstanding anything to the contrary contained in this Section
11.8, any SPC may (i) with notice to, but without the prior written consent of,
Parent, the Borrowers or the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to its Granting Lender or to any financial institutions providing liquidity
and/or credit facilities to or for the account of such SPC to fund the Loans
made by such SPC or
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to support the securities (if any) issued by such SPC to fund such Loans (but
nothing contained herein shall be construed in derogation of the obligation of
the Granting Lender to make Loans hereunder), provided that neither the consent
of the SPC or of any such assignee shall be required for amendments or waivers
of provisions of the Loan Documents except for those amendments or waivers for
which the consent of participants is required under Section 11.8(e)(vi), and
(ii) disclose on a confidential basis (in the same manner described in Section
11.13) any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of a surety, guarantee or credit or
liquidity enhancement to such SPC.
11.9 SHARING OF SETOFFS. Each Lender severally agrees that if it,
through the exercise of any right of setoff, banker's lien or counterclaim
against Parent, any Borrower, or otherwise, receives payment of the Obligations
held by it that is ratably more than any other Lender, through any means,
receives in payment of the Obligations held by that Lender, then, subject to
applicable Laws: (a) The Lender exercising the right of setoff, banker's lien or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from the other Lender a participation
in the Obligations held by the other Lender and shall pay to the other Lender a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker's lien or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien or counterclaim or receipt of
payment; and (b) Such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender's share of the Obligations immediately prior to, and without
taking into account, the payment; provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by Parent, Borrowers or any Person claiming through or
succeeding to the rights of Parent or Borrowers, the purchase of a participation
shall be rescinded and the purchase price thereof shall be restored to the
extent of the recovery, but without interest. Each Lender that purchases a
participation in the Obligations pursuant to this Section shall from and after
the purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased. Parent and each Borrower
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expressly consents to the foregoing arrangements and agrees that any Lender
holding a participation in an Obligation so purchased may exercise any and all
rights of setoff, banker's lien or counterclaim with respect to the
participation as fully as if the Lender were the original owner of the
Obligation purchased.
11.10 INDEMNITY BY PARENT AND BORROWERS. Parent and each Borrower
jointly and severally (but as between Parent and Borrowers, ratably) agrees to
indemnify, save and hold harmless each of the Creditors and the Arranger and
their Affiliates, directors, officers, agents, attorneys and employees
(collectively the "Indemnitees") from and against: (a) Any and all claims,
demands, actions or causes of action (except a claim, demand, action, or cause
of action for any amount excluded from the definition of "Taxes" in Section
3.12(d)) if the claim, demand, action or cause of action arises out of or
relates to any act or omission (or alleged act or omission) of Parent, any
Borrower, its Affiliates or any of its officers, directors or shareholders
relating to the Commitment, the use or contemplated use of proceeds of any Loan
or Letter of Credit, or the relationship of Parent, Borrowers and the Creditors
under this Agreement; (b) Any administrative or investigative proceeding by any
Governmental Agency arising out of or related to a claim, demand, action or
cause of action described in clause (a) above; and (c) Any and all liabilities,
losses, costs or expenses (including attorneys' fees and the allocated costs of
attorneys employed by any Indemnitee and disbursements of such attorneys and
other professional services) that any Indemnitee suffers or incurs as a result
of the assertion of any foregoing claim, demand, action or cause of action;
PROVIDED that no Indemnitee shall be entitled to indemnification for any loss
caused by its own gross negligence or willful misconduct or for any loss
asserted against it by another Indemnitee. If any claim, demand, action or cause
of action is asserted against any Indemnitee, such Indemnitee shall promptly
notify Parent and Borrowers, but the failure to so promptly notify Parent or
Borrowers shall not affect Parent's and Borrowers' obligations under this
Section unless such failure materially prejudices Parent's or Borrowers' right
to participate in the contest of such claim, demand, action or cause of action,
as hereinafter provided. Such Indemnitee may (and shall, if requested by Parent
and the Borrowers in writing) contest the validity, applicability and amount of
such claim, demand, action or cause of action and shall permit Parent and the
Borrowers to participate in such contest. Any Indemnitee that proposes to settle
or compromise any claim or proceeding for which Parent or the Borrowers may be
liable for payment of indemnity hereunder shall give Parent and the
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Borrowers written notice of the terms of such proposed settlement or compromise
reasonably in advance of settling or compromising such claim or proceeding and
shall obtain Parent's and the Borrowers' prior consent (which shall not be
unreasonably withheld). In connection with any claim, demand, action or cause of
action covered by this Section against more than one Indemnitee, all such
Indemnitees shall be represented by the same legal counsel (which may be a law
firm engaged by the Indemnitees or attorneys employed by an Indemnitee or a
combination of the foregoing) selected by the Indemnitees; provided, that if
such legal counsel determines in good faith that representing all such
Indemnitees would or could result in a conflict of interest under Laws or
ethical principles applicable to such legal counsel or that a defense or
counterclaim is available to an Indemnitee that is not available to all such
Indemnitees, then to the extent reasonably necessary to avoid such a conflict of
interest or to permit unqualified assertion of such a defense or counterclaim,
each Indemnitee shall be entitled to separate representation, with all such
legal counsel using reasonable efforts to avoid unnecessary duplication of
effort by counsel for all Indemnitees; and further provided that the
Administrative Agent (as an Indemnitee) shall at all times be entitled to
representation by separate legal counsel (which may be a law firm or attorneys
employed by the Administrative Agent or a combination of the foregoing). Any
obligation or liability of the Parent and the Borrowers to any Indemnitee under
this Section shall survive the expiration or termination of this Agreement and
the repayment of all Loans and the payment and performance of all other
Obligations owed to the Lenders.
11.11 NONLIABILITY OF THE LENDERS. Parent and each Borrower
acknowledges and agrees that:
(a) Any inspections of any Property of Parent or its
Subsidiaries made by or through the Creditors are solely for purposes
of administration of this Agreement and Parent and the Borrowers are
not entitled to rely upon the same (whether or not such inspections are
at the expense of Parent and the Borrowers);
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(b) By accepting, furnishing or approving anything
required to be observed, performed, fulfilled or given to the Creditors
pursuant to the Loan Documents, none of the Creditors shall be deemed
to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance, furnishing or approval thereof
shall not constitute a warranty or representation to anyone with
respect thereto by the Creditors;
(c) The relationship among Parent, the Borrowers and
the Creditors is, and shall at all times remain, solely that of
borrowers, guarantors and lenders; none of the Creditors shall under
any circumstance be construed to be partners or joint venturers of
Parent, Borrowers or their Affiliates; none of the Creditors shall
under any circumstance be deemed to be in a relationship of confidence
or trust or a fiduciary relationship with Parent or its Affiliates, or
to owe any fiduciary duty to Parent or its Affiliates; none of the
Creditors undertakes or assumes any responsibility or duty to Parent or
its Affiliates to select, review, inspect, supervise, pass judgment
upon or inform Parent or its Affiliates of any matter in connection
with their Property or the operations of Parent or its Affiliates;
Parent and its Affiliates shall rely entirely upon their own judgment
with respect to such matters; and any review, inspection, supervision,
exercise of judgment or supply of information undertaken or assumed by
the Creditors in connection with such matters is solely for the
protection of the Creditors and neither Parent, the Borrowers nor any
other Person is entitled to rely thereon; and
(d) The Creditors shall not be responsible or liable
to any Person for any loss, damage, liability or claim of any kind
relating to injury or death to Persons or damage to Property caused by
the actions, inaction or negligence of Parent and/or its Affiliates and
Parent and each Borrower hereby indemnifies and holds the Creditors
harmless from any such loss, damage, liability or claim.
11.12 NO THIRD PARTIES BENEFITTED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Parent, the Borrowers and the Creditors in connection with the Loans, Letters of
Credit and Swing Line Advances, and is made for the sole benefit of Parent, the
Borrowers, the Creditors, and the Creditors' successors and
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assigns, and, subject to Section 6.1 successors to Borrowers by permitted
merger. EXCEPT as provided in Sections 11.8 and 11.11, no other Person shall
have any rights of any nature hereunder or by reason hereof.
11.13 CONFIDENTIALITY. Each Creditor agrees to hold any confidential
information that it may receive from Parent and its Subsidiaries pursuant to
this Agreement in confidence, except for disclosure: (a) To Affiliates of that
Creditor and to other Creditors; (b) To legal counsel and accountants for Parent
and its Subsidiaries or any Creditor; (c) To other professional advisors to
Parent and its Subsidiaries or any Creditor, provided that the recipient has
accepted such information subject to a confidentiality agreement substantially
similar to this Section 11.13 or has notified such professional advisors of the
confidentiality of such information; (d) To regulatory officials having
jurisdiction over that Creditor; (e) To any Gaming Board having regulatory
jurisdiction over Parent or its Subsidiaries, provided that each Lender agrees
to use its best efforts to notify Parent and the Borrowers of any such
disclosure unless prohibited by applicable Laws; (f) As required by Law or legal
process (provided that the relevant Creditor shall endeavor, to the extent it
may do so under applicable Law, to give Parent and the Borrowers reasonable
prior notice thereof to allow Parent and the Borrowers to seek a protective
order) or in connection with any legal proceeding to which that Creditor, Parent
and any Borrower are adverse parties; and (g) To another financial institution
in connection with a disposition or proposed disposition to that financial
institution of all or part of that Creditor's interests hereunder or a
participation interest in its Notes, provided that the recipient has accepted
such information subject to a confidentiality agreement substantially similar to
this Section. For purposes of the foregoing, "confidential information" shall
mean any information respecting Parent or its Subsidiaries reasonably considered
by Parent and the Borrowers to be confidential, other than (i) information
previously filed with any Governmental Agency and available to the public, (ii)
information previously published in any public medium from a source other than,
directly or indirectly, that Lender, and (iii) information previously disclosed
to any Person not associated with Parent or its Affiliates without a
confidentiality agreement substantially similar to this Section. Nothing in this
Section shall be construed to create or give rise to any fiduciary duty on the
part of any Creditor to Parent or the Borrowers.
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11.14 REMOVAL OF A LENDER. Parent and the Borrowers shall have the
right to remove a Lender as a party to this Agreement pursuant to this Section
in the event that such Lender (a) refuses to consent to an extension of the
Maturity Date requested by Parent and the Borrowers in accordance with Section
2.12 which has been consented to by Lenders holding Pro Rata Share equal to or
greater than 66 2/3% of the Commitment, or (b) requests compensation under
Section 3.7 or Section 3.8 which has not been requested by all other Lenders, in
each case by written notice to the Administrative Agent and such Lender within
60 days following any such refusal or request, or (c) refuses to consent to
certain proposed changes, waivers, modifications, supplements, terminations,
waivers or consents with respect to this Agreement which have been approved by
the Required Lenders as provided in Section 11.2, provided that no Default or
Event of Default then exists, or (d) is the subject of a Disqualification. If
Parent and the Borrowers are entitled to remove a Lender pursuant to this
Section either:
(a) The Lender being removed shall within five
Business Days after such notice execute and deliver an Assignment
Agreement covering that Lender's Pro Rata Share in favor of one or more
Eligible Assignees designated by Parent and the Borrowers and
reasonably acceptable to the Administrative Agent, subject to payment
of a purchase price by such Eligible Assignee equal to all principal
and accrued interest, fees and other amounts payable to such Lender
under this Agreement through the date of the Assignment Agreement; or
(b) Parent and the Borrowers may reduce the
Commitment pursuant to Section 2.8 (and, for this purpose, the
numerical requirements of such Section shall not apply) by an amount
equal to that Lender's Pro Rata Share, pay and provide to such Lender
the amount required by clause (a) above and release such Lender from
its Pro Rata Share (subject, however, to the requirement that all
conditions set forth in Section 8.2 are met as of the date of such
reduction and the payment to the other Lenders of appropriate fees for
the assumption of that Lender's participation in all Letters of Credit
and Swing Line Advances then outstanding), in which case the percentage
Pro Rata Shares of the remaining Lenders shall be ratably increased
(but without any increase in the Dollar amount of the Pro Rata Shares
of such Lenders).
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11.15 FURTHER ASSURANCES. Parent and its Subsidiaries shall, at their
expense and without expense to the Creditors, do, execute and deliver such
further acts and documents as any Creditor from time to time reasonably requires
for the assuring and confirming unto the Creditors of the rights hereby created
or intended now or hereafter so to be, or for carrying out the intention or
facilitating the performance of the terms of any Loan Document.
11.16 INTEGRATION. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof. In the event of any conflict between the provisions
of this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control and govern; provided that the inclusion of supplemental
rights or remedies in favor of the Creditors in any other Loan Document shall
not be deemed a conflict with this Agreement. Each Loan Document was drafted
with the joint participation of the respective parties thereto and shall be
construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.
11.17 GOVERNING LAW. Except to the extent otherwise provided therein,
each Loan Document shall be governed by, and construed and enforced in
accordance with, the local Laws of California, without regard to the choice of
laws or conflicts of laws principles thereof.
11.18 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable or invalid as to any party or in
any jurisdiction shall, as to that party or jurisdiction, be inoperative,
unenforceable or invalid without affecting the remaining provisions or the
operation, enforceability or validity of that provision as to any other party or
in any other jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
11.19 HEADINGS. Article and Section headings in this Agreement and the
other Loan Documents are included for convenience of reference only and are not
part of this Agreement or the other Loan Documents for any other purpose.
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11.20 TIME OF THE ESSENCE. Time is of the essence of the Loan
Documents.
11.21 FOREIGN LENDERS AND PARTICIPANTS. Each Lender, and each holder of
a participation interest herein, that is incorporated under the Laws of a
jurisdiction other than the United States of America or any state thereof shall
deliver to Parent (with a copy to the Administrative Agent), within twenty days
after the Closing Date (or after accepting an Assignment Agreement or receiving
a participation interest herein pursuant to Section 11.8, if applicable) two
duly completed copies, signed by a Responsible Official, of either Form 1001
(relating to such Person and entitling it to a complete exemption from
withholding on all payments to be made to such Person by Parent and the
Borrowers pursuant to this Agreement) or Form 4224 (relating to all payments to
be made to such Person by Parent and the Borrowers pursuant to this Agreement)
of the United States Internal Revenue Service or such other evidence (including,
if reasonably necessary, Form W-9) satisfactory to Parent and the Borrowers and
the Administrative Agent that no withholding under the federal income tax laws
is required with respect to such Person. Thereafter and from time to time, each
such Person shall (a) promptly submit to Parent (with a copy to the
Administrative Agent), such additional duly completed and signed copies of one
of such forms (or such successor forms as shall be adopted from time to time by
the relevant United States taxing authorities) as may then be available under
then current United States laws and regulations to avoid, or such evidence as is
satisfactory to Parent and the Borrowers and the Administrative Agent of any
available exemption from, United States withholding taxes in respect of all
payments to be made to such Person by Parent and the Borrowers pursuant to this
Agreement and (b) take such steps as shall not be materially disadvantageous to
it, in the reasonable judgment of such Lender, and as may be reasonably
necessary (including the re-designation of its Eurodollar Lending Office, if
any) to avoid any requirement of applicable laws that Parent or the Borrowers
make any deduction or withholding for taxes from amounts payable to such Person.
11.22 GAMING BOARDS. The Creditors agree to cooperate with all Gaming
Boards in connection with the administration of their regulatory jurisdiction
over Parent and its Subsidiaries, including the provision of such documents or
other information as may be requested by any such Gaming Board relating to
Parent or any of its Subsidiaries or to the Loan Documents.
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11.23 NATURE OF THE BORROWERS' OBLIGATIONS. The Company hereby agrees
that it shall be liable for all of the Obligations on a joint and several basis,
notwithstanding which of the Borrowers may have directly received the proceeds
of any particular Loan or Advance or the benefit of a particular Letter of
Credit. Notwithstanding anything to the contrary set forth herein, the principal
liability of Marina and each Borrower hereafter designated under Section 2.10
for Loans, Swing Line Advances and Letters of Credit shall be limited to Loans
and Letters of Credit made to that Borrower and Letters of Credit issued for the
account of that Borrower under the Aggregate Sublimit of that Borrower. Each of
the Borrowers acknowledges and agrees that, for purposes of the Loan Documents,
Parent and its Subsidiaries constitute a single integrated financial enterprise
and that each receives a benefit from the availability of credit under this
Agreement. Borrowers each waive all defenses arising under the Laws of
suretyship, to the extent such Laws are applicable, in connection with their
obligations under this Agreement. Without limiting the foregoing, each Borrower
agrees to the Joint Borrower Provisions set forth in Exhibit L, incorporated by
this reference.
11.24 DESIGNATED SENIOR DEBT. Parent and each Borrower hereby
irrevocably designate the Obligations and this Agreement as "Designated Senior
Indebtedness" and "Senior Indebtedness" within the meanings given to those terms
in Section 1.1 of the Supplemental Indenture dated December 9, 1998 entered into
with respect to the Existing Subordinated Debt among the Company, Parent and IBJ
Schroeder Bank & Trust Company.
11.25 GAMING REGULATIONS. Each party to this Agreement hereby
acknowledges that the consummation of the transactions contemplated by the Loan
Documents is subject to applicable Gaming Laws (and Parent and Borrower
represent and warrant that all requisite approvals necessary thereunder to enter
into the transactions contemplated hereby have been duly obtained).
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11.26 WAIVER OF RIGHT TO TRIAL BY JURY. EACH SIGNATORY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE SIGNATORIES
HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH SIGNATORY HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY SIGNATORY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.
11.27 PURPORTED ORAL AMENDMENTS. PARENT AND EACH BORROWER EXPRESSLY
ACKNOWLEDGE THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED
OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. PARENT AND EACH BORROWER
AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR
ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF ANY OF THE CREDITORS THAT
DOES NOT COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER
OR SUPPLEMENT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
-113-
<PAGE>
Agreement to be duly executed as of the date first above written.
HARRAH'S ENTERTAINMENT, INC.
By: /s/ Charles L. Atwood
----------------------------------
Charles L. Atwood, Vice President
and Treasurer
HARRAH'S OPERATING COMPANY, INC.
By: /s/ Charles L. Atwood
----------------------------------
Charles L. Atwood, Vice President
and Treasurer
MARINA ASSOCIATES
By: Harrah's New Jersey, Inc.,
general partner
By: /s/ Charles L. Atwood
-------------------------------
Charles L. Atwood, authorized
signatory
By: Harrah's Atlantic City, Inc.,
general partner
By: /s/ Charles L. Atwood
-------------------------------
Charles L. Atwood, authorized
signatory
Address for notices for Parent and each
Borrower:
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: Charles L. Atwood, Vice President
and Treasurer
Telecopier: 901/ 762-8698
Telephone: 901/762-8852
-114-
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ Janice Hammond
---------------------------
Janice Hammond, Vice President
Address:
Bank of America National Trust
and Savings Association
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attn: Janice Hammond
Telecopier: (213) 228-2299
Telephone: (213) 228-9861
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Lender
By: /s/ Scott Faber
-----------------------------
Scott Faber, Vice President
Address:
Bank of America National Trust
and Savings Association
555 South Flower Street, #3283
Los Angeles, California 90071
Attn: Scott Faber, Vice President
Telecopier: (213) 228-3145
Telephone: (213) 228-2768
With a copy to:
Bank of America National Trust and
Savings Association
555 South Flower Street (LA-5777)
Los Angeles, California 90071
Attn: William Newby, Managing Director
Telecopier: (213) 228-3145
Telephone: (213) 228-2438
-115-
<PAGE>
BANKERS TRUST COMPANY
By: /s/ Mary Kay Coyle
-----------------------------
Mary Kay Coyle
Title: Managing Director
--------------------------
Address for notices:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attn.: Mary Kay Coyle
Facsimile: (212) 250-7218
Telephone: (212) 250-9094
-116-
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Paul J. Chakmak
-----------------------------
Paul J Chakmak
Title: Managing Director, CIBC
Oppenheimer Corp., AS AGENT
--------------------------
Address for notices:
CIBC Oppenheimer Corp.
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attn.: Sherry Hanamean
Facsimile: (770) 319-4955
Telephone: (770) 319-4856
With a copy to:
CIBC Oppenheimer Corp.
350 South Grand Avenue, Suite 2600
Los Angeles, California 90071
Attention: Carter Harned
Facsimile: (213) 346-0157
Telephone: (213)617-6216
-117
<PAGE>
SOCIETE GENERALE
By: /s/ Donald L. Schubert
-----------------------------
Donald L. Schubert
Title: Managing Director
--------------------------
Address for notices:
Societe Generale
2029 Century Park East, Suite 2900
Los Angeles, California 90067
Attn.: Donald Schubert, Managing Director
Facsimile: (310) 551-1537
Telephone: (310) 788-7104
-118-
<PAGE>
COMMERZBANK AKTIENGESELLSCHAFT, LOS
ANGELES BRANCH
By: /s/ Christian Jagenberg
-----------------------------
Christian Jagenberg
Title: SVP and Manager
--------------------------
By: /s/ Werner Schmidbauer
-----------------------------
Title: Vice President
--------------------------
Address for notices:
Commerzbank AG - Los Angeles Branch
633 West Fifth Street, Suite 6600
Los Angeles, California 90071
Attn.: Werner Schmidbauer
Facsimile: (213) 623-0039
Telephone: (213) 623-8223
-119-
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Gary W. Wessels
-----------------------------
Gary W. Wessels
Title: Vice President
--------------------------
Address for notices:
PNC Bank, National Association
Two Tower Center Boulevard
East Brunswick, New Jersey 08816
Attn.: Denise D. Killen, Vice President
Facsimile: (732) 220-3270
Telephone: (732) 220-3262
-120-
<PAGE>
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Sue Fuller
-----------------------------
Sue Fuller
Title: Vice President
Address for notices:
Wells Fargo Bank, National Association
One East First Street, Suite 300
Reno, Nevada 89501
Attn.: Sue Fuller, Vice President
Facsimile: (775) 334-5637
Telephone: (775) 334-5633
-121-
<PAGE>
FLEET BANK N.A.
By: /s/ John F. Cullinan
-----------------------------
John F. Cullinan
Title: SVP
--------------------------
Address for notices:
Fleet Bank N.A.
3670 Route 9 South
Freehold, New Jersey 07728
Attn.: John F. Cullinan,
Senior Vice President
Facsimile: (732) 780-0754
Telephone: (732) 294-4306
-122-
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Mark A. Isley
-----------------------------
Mark A. Isley
Title: First Vice President
--------------------------
Address for notices:
The First National Bank of Chicago
One First National Plaza, 11th Floor
Chicago, Illinois 60670
Attn.: Robert Simon
Facsimile: (312) 732-4840
Telephone: (312) 732-8543
-123-
<PAGE>
THE BANK OF NEW YORK
By: /s/ Lisa Y. Brown
-----------------------------
Lisa Y. Brown
Title: Vice President
--------------------------
Address for notices:
The Bank of New York
One Wall Street, 22nd Floor
New York, New York 10005
Attn.: Dawn Hertling
Facsimile: (212) 6399 or 6877
Telephone: (212) 635-6742
-124-
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-----------------------------
F. C. H. Ashby
Title: Senior Manager Loan Operations
----------------------------
Address for notices:
The Bank of Nova Scotia
Atlanta Agency
Suite 2700
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn.: Donna Gardner
Facsimile: (404) 888-8998
Telephone: (404) 877-1559
-125-
<PAGE>
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Diane M. Scott
-----------------------------
Diane M. Scott
Title: First Vice President and
Manager
--------------------------
Address for notices:
Credit Lyonnais Los Angeles Branch
515 South Flower Street, 22nd Floor
Los Angeles, California 90071
Attn.: Penney Chu
Facsimile: (213) 623-3437
Telephone: (213) 362-5905
-126-
<PAGE>
U.S. BANK NATIONAL ASSOCIATION
By: /s/ David Walquist
----------------------------
David Walquist
Title: Vice President
-------------------------
Address for domestic notices:
U.S. Bank National Association
2300 West Sahara, Suite 120
Las Vegas, Nevada 89102
Attn.: David Walquist, Vice President
Facsimile: (702) 386-3916
Telephone: (702) 386-3938
Address for eurodollar notices:
U.S. Bank National Association
CLS West - PL-7
555 S.W. Oak Street
Portland, Oregon 97204
Attn.: J. Ramirez
Facsimile: (503) 275-8181
Telephone: (503) 275-3259
-127-
<PAGE>
WACHOVIA BANK, N.A.
By: /s/ Karin E. Reel
-----------------------------
Karin E. Reel
Title: Vice President
--------------------------
Address for notices:
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn.: Karin E. Reel
Facsimile: (404) 332-5016
Telephone: (404) 332-5187
-128-
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: /s/ Alan S. Bookspan
-----------------------------
Alan S. Bookspan
Title: Director
--------------------------
By: /s/ Walter T. Duffy, III
-----------------------------
Walter T. Duffy, III
Title: Vice President
Address for notices:
Westdeutsche Landesbank Girozentrale
1211 Avenue of the Americas
New York, New York 10036
Attn.: Walter T. Duffy III, Vice
President
Facsimile: (212) 852-6148
Telephone: (212) 852-6095
-129-
<PAGE>
FIRST SECURITY BANK, N.A.
By: /s/ Stephen L. Goalen
-----------------------------
Stephen L. Goalen
Title: Sr. Vice President
--------------------------
Address for domestic notices:
First Security Bank, N.A.
15 East 100 South - 2nd Floor
Salt Lake City, Utah 84111
Attn.: David P. Williams
Facsimile: (801) 246-5532
Telephone: (801) 246-5540
Address for eurodollar notices:
First Security Bank, N.A.
15 East 100 South - 2nd Floor
Salt Lake City, Utah 84111
Attn.: David P. Williams
Facsimile: (801) 246-5532
Telephone: (801) 246-5540
-130-
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED
ATLANTA AGENCY
By: /s/ Koichi Hasegawa
-----------------------------
Koichi Hasegawa
Title: Senior Vice President and
Deputy General Manager
--------------------------
Address for notices:
The Industrial Bank of Japan, Limited,
Atlanta Agency
1251 Avenue of Americas
New York, New York 10020
Attn.: Michele Fuimo
Facsimile: (212) 282-4480
Telephone: (212) 282-4063
-131-
<PAGE>
BANKBOSTON, N.A.
By: /s/ Patrick D. Bonebrake
-----------------------------
Patrick D. Bonebrake
Title: Vice President
--------------------------
Address for notices:
BankBoston, N.A.
100 Federal Street
MA 01-08-08
Boston, Massachusetts 02110
Attn.: Brian Nathan
Facsimile: (617) 434-4301
Telephone: (617) 434-8479
-132-
<PAGE>
BANK OF HAWAII
By: /s/ Robert M. Wheeler, III
-----------------------------
Robert M. Wheeler, III
Title: Vice President
--------------------------
Address for notices:
Bank of Hawaii
130 Merchant Street, 20th Floor
Honolulu, Hawaii 96813
Attn.: Robert Wheeler, Vice President
Facsimile: (808) 537-8301
Telephone: (808) 537-8237
-133-
<PAGE>
BANK OF SCOTLAND
By: /s/ Annie Chin Tat
-----------------------------
Annie Chin Tat
Title: Senior Vice President
--------------------------
Address for notices:
Bank of Scotland
565 Fifth Avenue
New York, New York 10017
Attn.: Karen Workman, Banking Associate
Facsimile: (212) 687-4412
Telephone: (212) 450-0877
-134-
<PAGE>
BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By: /s/ Warren G. Parham
-----------------------------
Warren G. Parham
Title: Vice President
--------------------------
Address for notices:
Banque Nationale De Paris, Houston Agency
333 Clay Street, Suite 3400
Houston, Texas 77002
Attn.: Donna Jo Rose
Facsimile: (713) 659-1414
Telephone: (713) 951-1240
-135-
<PAGE>
COMERICA WEST INCORPORATED
By: /s/ Eoin P. Collins
-----------------------------
Eoin P. Collin
Account Officer
Address for notices:
Comerica West Incorporated
3980 Howard Hughes Parkway, Suite 350
Las Vegas, Nevada 89109
Attn.: Regina C. McGuire
Facsimile: (702) 791-2371
Telephone: (702) 791-4804
-136-
<PAGE>
MICHIGAN NATIONAL BANK
By: /s/ Jeffrey W. Billig
-----------------------------
Jeffrey W. Billig
Title: Relationship Manager
--------------------------
Address for notices:
Michigan National Bank
27777 Inkster Road, 10-36
Farmington Hills, Michigan 48334
Attn.: Jeffrey W. Billig, Relationship
Manager
Facsimile: (248) 473-4345
Telephone: (248) 473-4329
-137-
<PAGE>
THE SUMITOMO BANK, LIMITED
By: /s/ Gary P. Franke
-----------------------------
Gary P. Franke
Title: Vice President and Manager
--------------------------
Address for notices:
The Sumitomo Bank, Limited, New York
Branch
277 Park Avenue
New York, New York 10172
Attn.: Matthew Sullivan
Facsimile: (212) 224-5197
Telephone: (212) 224-4120
-138-
<PAGE>
FIRST AMERICAN NATIONAL BANK, operating
as DEPOSIT GUARANTY NATIONAL BANK
By: /s/ Larry C. Ratzlaff
----------------------------
Larry C. Ratzlaff
Title: Senior Vice President
--------------------------
Address for notices:
First American National Bank, Operating
as Deposit Guaranty National Bank
210 East Capitol Street
Jackson, Mississippi 39201
Attn.: Larry C. Ratzlaff, Senior
Vice President
Facsimile: (601) 354-8315
Telephone: (601) 968-4749
-139-
<PAGE>
ERSTE BANK
By: /s/ David Manheim
-----------------------------
David Manheim
Title: Assistant Vice President
Erste Bank New York Branch
--------------------------
By: /s/ John S. Runnion
-----------------------------
John S. Runnion
Title: First Vice President
--------------------------
Address for notices:
Erste Bank
West Building, 32nd Floor
280 Park Avenue
New York, New York 10017
Attn.: David Manheim, Assistant
Vice President
Facsimile: (212) 984-5627
Telephone: (212) 984-5633
-140-
<PAGE>
FIRST HAWAIIAN BANK
By: /s/ Donald C. Young
-----------------------------
Donald C. Young
Title: Vice President
-------------------------
Address for notices:
First Hawaiian Bank
999 Bishop Street, 11th Floor
Honolulu, Hawaii 96813
Attn.: Brenda Deakins
Facsimile: (808) 525-5085
Telephone: (808) 525-8100
-141-
<PAGE>
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By: /s/ James H. Moore, Jr.
-----------------------------
James H. Moore, Jr.
Title: Vice President
--------------------------
Address for notices:
First Tennessee Bank National Association
165 Madison Avenue, 9th Floor
Memphis, Tennessee 38103-2723
Attn.: James H. Moore, Jr.,
Vice President
Facsimile: (901) 523-4267
Telephone: (901) 523-4108
-142-
<PAGE>
HIBERNIA NATIONAL BANK
By: /s/ Ross S. Wales
-----------------------------
Ross S. Wales
Title: Vice President
--------------------------
Address for domestic notices:
Hibernia National Bank
313 Carondelet Street
New Orleans, Louisiana 70130
Attn.: Lorie Ferguson, Commercial
Banking Dept.
Facsimile: (504) 533-2060
Telephone: (504) 533-5718
Address for eurodollar notices:
Hibernia National Bank
313 Carondelet Street
New Orleans, Louisiana 70130
Attn.: Lorie Ferguson, Commercial
Banking Dept.
Facsimile: (504) 533-2060
Telephone: (504) 533-5718
-143-
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Bertram H. Tang
-----------------------------
Bertram H. Tang
Title: VP & Group Leader
--------------------------
Address for notices:
The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center, 48th Floor
New York, New York 10048
Attn.: Thomas Ho and
Bertram H. Tang, Vice
President & Group Leader
Facsimile: (212) 912-1879
Telephone: (212) 432-8845
-144-
<PAGE>
EXHIBIT A
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT ("Agreement") dated as of ____________, _____
is made with reference to that certain Five Year Loan Agreement dated as of
April 30, 1999 (as amended from time to time, the "Loan Agreement") by and among
Harrah's Entertainment, Inc., a Delaware corporation, as Guarantor, Harrah's
Operating Company, Inc., a Delaware corporation, Marina Associates, a New Jersey
general partnership (each a "Borrower" and collectively, the "Borrowers"), the
Lenders therein named, (collectively, the "Lenders" and individually, a
"Lender") and Bank of America National Trust and Savings Association, as
Administrative Agent and is entered into between the "Assignor" described below,
in its capacity as a Lender under the Loan Agreement, and the "Assignee"
described below.
Assignor and Assignee hereby represent, warrant and agree as follows:
1. DEFINITIONS. Capitalized terms defined in the Loan Agreement are
used herein with the meanings set forth for such terms in the Loan Agreement. As
used in this Agreement, the following capitalized terms shall have the meanings
set forth below:
"ASSIGNEE" means ___________________________________.
"ASSIGNED PRO RATA SHARE" means _________________% of the Commitment of
the Lenders under the Loan Agreement which equals $__________.
"ASSIGNOR" means _______________________
"EFFECTIVE DATE" means ___________, _____, the effective date of this
Agreement determined in accordance with Section 11.8 of the Loan Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE ASSIGNOR. The
Assignor represents and warrants to the Assignee as follows:
a. As of the date hereof, the Pro Rata Share of the
Assignor is ___________% of the Commitment (without giving effect to assignments
thereof which have not yet become effective). The Assignor is the legal and
beneficial owner of the Assigned Pro Rata Share and the Assigned Pro Rata Share
is free and clear of any adverse claim.
<PAGE>
b. As of the date hereof, the outstanding principal
balance of Advances made by the Assignor under the Assignor's Note is
$____________________, and Assignor's ratable participation in outstanding
Letters of Credit is $_____________________.
c. The Assignor has full power and authority, and has
taken all action necessary, to execute and deliver this Agreement and any and
all other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement, and no governmental
authorizations or other authorizations are required in connection therewith; and
d. This Agreement constitutes the legal, valid and
binding obligation of the Assignor.
The Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of each Borrower or the performance by
each Borrower of the Obligations, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with the
Loan Agreement or the execution, legality, validity, enforceability,
genuineness, or sufficiency of the Loan Agreement or any Loan Document other
than as expressly set forth above.
3. REPRESENTATIONS AND WARRANTIES OF THE ASSIGNEE. The
Assignee hereby represents and warrants to the Assignor as follows:
(a) The Assignee has full power and authority, and has taken
all action necessary, to execute and deliver this Agreement, and any and all
other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement, and no governmental
authorizations or other authorizations are required in connection therewith;
(b) This Agreement constitutes the legal, valid and binding
obligation of the Assignee;
(c) The Assignee has independently and without reliance upon
the Administrative Agent or Assignor and based on such documents and information
as the Assignee has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. The Assignee will, independently and
-2-
<PAGE>
without reliance upon the Administrative Agent or any Lender, and based upon
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Agreement;
(d) The Assignee has received copies of such of the Loan
Documents delivered pursuant to Section 8.1 of the Loan Agreement as it has
requested, together with copies of the most recent financial statements
delivered pursuant to Section 7.1 of the Loan Agreement;
(e) The Assignee will perform in accordance with their
respective terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender; and
(f) The Assignee is an Eligible Assignee.
4. ASSIGNMENT. On the terms set forth herein, the Assignor, as
of the Effective Date, hereby irrevocably sells, assigns and transfers to the
Assignee all of the rights and obligations of the Assignor under the Loan
Agreement, the other Loan Documents and the Assignor's Note to the extent of the
Assigned Pro Rata Share, and the Assignee irrevocably accepts such assignment of
rights and assumes such obligations from the Assignor on such terms and
effective as of the Effective Date. As of the Effective Date, the Assignee shall
have the rights and obligations of a "Lender" under the Loan Documents, except
to the extent of any arrangements with respect to payments referred to in
Section 5 hereof. Assignee hereby appoints and authorizes the Administrative
Agent to take such action and to exercise such powers under the Loan Agreement
as are delegated to the Administrative Agent by the Loan Agreement.
5. PAYMENT. On the Effective Date, the Assignee shall pay to
the Assignor, in immediately available funds, an amount equal to the purchase
price of the Assigned Pro Rata Share, as agreed between the Assignor and the
Assignee pursuant to a letter agreement of even date herewith. Such letter
agreement also sets forth the agreement between the Assignor and the Assignee
with respect to the amount of interest, fees, and other payments with respect to
the Assigned Pro Rata Share which are to be retained by the Assignor. Assignee
shall also pay to the Administrative Agent an assignment fee of $3,500 in
accordance with Section 11.8 of the Loan Agreement.
-3-
<PAGE>
The Assignor and the Assignee hereby agree that if either
receives any payment of interest, principal, fees or any other amount under the
Loan Agreement, their respective Notes or any other Loan Documents which is for
the account of the other, it shall hold the same in trust for such party to the
extent of such party's interest therein and shall promptly pay the same to such
party.
6. PRINCIPAL, INTEREST, FEES, ETC. Any principal that would be
payable and any interest, fees and other amounts that would accrue from and
after the Effective Date to or for the account of the Assignor pursuant to the
Loan Agreement and the Note shall be payable to or for the account of the
Assignor and the Assignee, in accordance with their respective interests as
adjusted pursuant to this Agreement.
7. NOTES. The Assignor and the Assignee shall make appropriate
arrangements with each Borrower concurrently with the execution and delivery
hereof so that replacement Notes are issued to the Assignor and new Notes are
issued to the Assignee, in each case in principal amounts reflecting their Pro
Rata Shares of the Commitment or their outstanding Advances (as adjusted
pursuant to this Agreement).
8. FURTHER ASSURANCES. Concurrently with the execution of this
Agreement, the Assignor shall execute two counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, and the Assignor specifically agrees to cause the delivery of (i) two
original counterparts of this Agreement and (ii) the Request for Registration,
to the Administrative Agent for the purpose of registration of the Assignee as a
"Lender" pursuant to Section 11.8 of the Loan Agreement.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LOCAL LAWS OF THE STATE OF CALIFORNIA. FOR
ANY DISPUTE ARISING IN CONNECTION WITH THIS AGREEMENT, THE ASSIGNEE HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
CALIFORNIA.
-4-
<PAGE>
10. NOTICES. All communications among the parties or notices
in connection herewith shall be in writing, hand delivered or sent by registered
airmail, postage prepaid, or by telex, telegram or cable, addressed to the
appropriate party at its address set forth on the signature pages hereof. All
such communications and notices shall be effective upon receipt.
11. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns;
provided, however, that the Assignee shall not assign its rights or obligations
under this Agreement without the prior written consent of the Assignor and any
purported assignment, absent such consent, shall be void. Nothing contained in
this Section shall restrict the assignment by Assignee of its rights under the
Loan Documents following the Effective Date.
12. INTERPRETATION. The headings of the various sections
hereof are for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.
"Assignor"
________________________________________
By:_____________________________________
Its:____________________________________
Address: _______________________________
_______________________________
_______________________________
Telephone: _____________________________
Telecopier: ____________________________
"Assignee"
________________________________________
By:_____________________________________
Its:____________________________________
Address: _______________________________
_______________________________
_______________________________
Telephone: _____________________________
Telecopier: ____________________________
-6-
<PAGE>
Exhibit A to Assignment Agreement
REQUEST FOR REGISTRATION
To: Bank of America National Trust and Savings Association, as
Administrative Agent, and Harrah's Entertainment, Inc., Harrah's
Operating Company, Inc. and Marina Associates
THIS REQUEST FOR REGISTRATION OF ASSIGNEE ("Request") is made as of the
date of the enclosed Assignment Agreement with reference to that certain Five
Year Loan Agreement, dated as of April 30, 1999 by and among Harrah's
Entertainment, Inc., a Delaware corporation, as Guarantor, Harrah's Operating
Company, Inc., a Delaware corporation, Marina Associates, a New Jersey general
partnership (each a "Borrower" and collectively, the "Borrowers"), the Lenders
therein named, (collectively, the "Lenders" and individually, a "Lender") and
Bank of America National Trust and Savings Association, as Administrative Agent
(as amended as of the date hereof, the "Loan Agreement").
The Assignor and Assignee described below hereby request that
Administrative Agent register the Assignee as a Lender pursuant to Section 11.8
of the Loan Agreement effective as of the Effective Date described in the
Assignment Agreement.
Enclosed with this Request are two counterpart originals of the
Assignment Agreement as well as the original Notes of each Borrower in favor of
the Assignor in the principal amount of $______________. The Assignor and
Assignee hereby jointly request that Administrative Agent cause each Borrower to
issue replacement Notes, dated as of the Effective Date, pursuant to Section
11.8 of the Loan Agreement in favor of Assignor in the principal amount of the
remainder of its Pro Rata Share of the Commitment and new Notes in favor of the
Assignee in the amount of the Assigned Pro Rata Share.
IN WITNESS WHEREOF, the Assignor and Assignee have executed this
Request for Registration by their duly authorized officers as of __________,
___________.
"Assignor" "Assignee"
________________________________ ________________________________
By:_____________________________ By:_____________________________
Its: ___________________________ Its: ___________________________
-7-
<PAGE>
CONSENT OF ADMINISTRATIVE AGENT AND BORROWERS
[When Required Pursuant to Loan Agreement]
TO: The Assignor and Assignee referred to in the above Request for
Registration
When countersigned by each Borrower and Administrative Agent below,
this document shall certify that:
[ ] [WHEN REQUIRED PURSUANT TO SECTION 11.8(b)(i) OF THE Loan
Agreement:]
[1.] Borrowers have consented, pursuant to the terms of the Loan
Documents, to the assignment by the Assignor to the Assignee of the Assigned Pro
Rata Share.
[2.] Administrative Agent has registered the Assignee as a Lender under
the Loan Agreement, effective as of the Effective Date described above, with a
Pro Rata Share of the Commitment corresponding to the Assigned Pro Rata Share
and has adjusted the registered Pro Rata Share of the Commitment of the Assignor
to reflect the assignment of the Assigned Pro Rata Share.
Approved:
Harrah's Entertainment, Inc. Bank of America National Trust and Savings
Association, as Administrative Agent
By:________________________
Its:_______________________ By:_______________________
Harrah's Operating Company, Inc. Its:______________________
By:________________________
Its:_______________________
Marina Associates
By: Harrah's New Jersey,
Inc., general partner
By: __________________
Its: _________________
By: Harrah's Atlantic City,
Inc., general partner
By: __________________
Its: _________________
-8-
<PAGE>
EXHIBIT B
COMMITTED ADVANCE NOTE
$_____________ April 30, 1999
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
___________________________________________ (the "Lender"), the principal amount
of _____________________________ Dollars ($___________________) or such lesser
aggregate amount of Committed Advances as may be made by the Lender as part of
the Loans pursuant to the Loan Agreement referred to below, together with
interest on the principal amount of each Committed Advance made hereunder as
part of the Loans and remaining unpaid from time to time from the date of each
such Committed Advance until the date of payment in full, payable as hereinafter
set forth.
Reference is made to the Five Year Loan Agreement dated as of April 30,
1999, by and among the undersigned, as a Borrower, the other Borrowers that are
parties thereto, the Lenders therein named and Bank of America National Trust
and Savings Association, as Administrative Agent (as amended from time to time,
the "Loan Agreement"). Terms defined in the Loan Agreement and not otherwise
defined herein are used herein with the meanings defined for those terms in the
Loan Agreement. This is one of the Committed Advance Notes referred to in the
Loan Agreement, and any holder hereof is entitled to all of the rights,
remedies, benefits and privileges provided for in the Loan Agreement as
originally executed or as it may from time to time be supplemented, modified or
amended. The Loan Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
upon the terms and conditions therein specified.
The principal indebtedness evidenced by this Committed Advance Note
shall be payable as provided in the Loan Agreement and in any event on the
Maturity Date.
Interest shall be payable on the outstanding daily unpaid principal
amount of Committed Advances from the date of each such Committed Advance until
payment in full and shall accrue and be payable at the rates and on the dates
set forth in the Loan Agreement both before and after default and before and
after maturity and judgment, with interest on overdue principal and interest to
bear interest at the rate set forth in Section 3.9 of the Loan Agreement, to the
fullest extent permitted by applicable Law.
<PAGE>
Each payment hereunder shall be made to the Administrative Agent at the
Administrative Agent's Office for the account of the Lender in immediately
available funds not later than 11:00 a.m., California local time, on the day of
payment (which must be a Business Day). All payments received after 11:00 a.m.,
California local time, on any particular Business Day shall be deemed received
on the next succeeding Business Day. All payments shall be made in lawful money
of the United States of America.
The Lender shall use its best efforts to keep a record of Committed
Advances made by it as part of Loans and payments received by it with respect to
this Committed Advance Note, and such record shall, subject to Section 10.6(g)
of the Loan Agreement, be presumptive evidence, absent manifest error, of the
amounts owing under this Committed Advance Note.
The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned's obligations
hereunder or in enforcing or attempting to enforce any of such holder's rights
hereunder, including reasonable attorneys' fees and disbursements, whether or
not an action is filed in connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Committed Advance Note shall be delivered to and accepted by the
Lender in the State of California, and shall be governed by, and construed and
enforced in accordance with, the local Laws thereof.
_______________________________,
a ______________________________
By: ____________________________
Title:__________________________
-2-
<PAGE>
SCHEDULE OF COMMITTED ADVANCES AND
PAYMENTS OF PRINCIPAL
Date Amount Interest Amount of Unpaid Notation
of Advance Period Principal Principal Made by
Paid Balance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-3-
<PAGE>
EXHIBIT C
COMPETITIVE ADVANCE NOTE
(FIVE YEAR LOAN AGREEMENT)
$____________ April 30, 1999
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
_____________________________________ (the "Lender"), the principal amount of
___________________________ Dollars ($__________) or such lesser aggregate
amounts as may be made as Competitive Advances pursuant to the Loan Agreement
hereinafter described, payable as hereinafter set forth. The undersigned
promises to pay interest on the principal amount hereof remaining unpaid from
time to time from the date hereof until the date of payment in full, payable as
hereinafter set forth.
Reference is made to the Five Year Loan Agreement dated as of April 30,
1999, among the undersigned, as a Borrower, the other Borrowers which are
parties thereto, the Lenders therein named and Bank of America National Trust
and Savings Association, as Administrative Agent (as amended from time to time
the "Loan Agreement"). Terms defined in the Loan Agreement and not otherwise
defined herein are used herein with the meanings defined for those terms in the
Loan Agreement. This is one of the Competitive Advance Notes referred to in the
Loan Agreement, and any holder hereof is entitled to all of the rights, benefits
and privileges provided for in the Loan Agreement as originally executed or as
it may from time to time be supplemented, modified or amended. The Loan
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events upon the terms and
conditions therein specified.
The principal indebtedness of each Competitive Advance evidenced by
this Competitive Advance Note shall be payable on the maturity date specified in
the Competitive Bid relating to such Competitive Advance.
Interest shall be payable on the outstanding daily unpaid principal
amount of each Competitive Advance hereunder from the date thereof until payment
in full and shall accrue and be payable at the rates and on the dates set forth
in the Competitive Bid relating to such Competitive Advance, both before and
after default and before and after maturity and judgment, with overdue principal
and interest to bear interest at the rate set forth in Section 3.9 of the Loan
Agreement, to the fullest extent permitted by applicable Laws.
<PAGE>
The amount of each payment hereunder shall be made to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Lender, in lawful money of the United States of America and in immediately
available funds not later than 11:00 A.M., California local time, on the day of
payment (which must be a Business Day). All payments received after 11:00 A.M.,
California local time, on any Business Day, shall be deemed received on the next
succeeding Business Day. The Lender shall use its best efforts to keep a record
of Competitive Advances made by it and payments of principal with respect to
this Competitive Advance Note, and such record shall, subject to Section 10.6(g)
of the Loan Agreement, be presumptive evidence, absent manifest error, of the
principal amount owing under this Competitive Advance Note.
The undersigned hereby promises to pay all costs and expenses of any
holder hereof incurred in collecting the undersigned's obligations hereunder or
in enforcing any of holder's rights hereunder, including attorneys' fees and
disbursements (including allocated costs of legal counsel employed by the
Administrative Agent or the holder), whether or not an action is filed in
connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality to the fullest extent permitted by applicable Laws.
This Competitive Advance Note shall be delivered to and accepted by the
Lender, or by the Administrative Agent on its behalf, in the State of
California, and shall be governed by, and construed and enforced in accordance
with, the local Laws thereof.
HARRAH'S OPERATING COMPANY, INC.
By: ___________________________________
Charles L. Atwood, Vice President
and Treasurer
-2-
<PAGE>
SCHEDULE OF
COMPETITIVE ADVANCES AND PAYMENTS OF PRINCIPAL
Date Amount Interest Amount of Unpaid Notation
of Advance Period Principal Principal Made by
Paid Balance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-3-
<PAGE>
EXHIBIT D
COMPETITIVE BID
(FIVE YEAR LOAN AGREEMENT)
Bank of America National Trust and
Savings Association, as Administrative Agent
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Janice Hammond
Re: Competitive Bid Rate Loan Quote for
____________________ [Name of Borrower]
Dear Ladies and Gentlemen:
Reference is made to the Five Year Loan Agreement dated as of April 30,
1999 (as the same has been amended, modified or extended, the "Agreement";
capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Agreement) by and among Harrah's Entertainment,
Inc., a Delaware corporation, as Guarantor, Harrah's Operating Company, Inc., a
Delaware corporation, Marina Associates, a New Jersey general partnership (each
a "Borrower" and collectively, the "Borrowers"), the Lenders therein named,
(collectively, the "Lenders" and individually, a "Lender") and Bank of America
National Trust and Savings Association, as Administrative Agent
In response to the Competitive Bid Request from _________________ dated
____________, _____, we hereby make the following Competitive Bid on the
following terms:
1. Quoting Lender:
-----------------------------------------------------
2. Person to contact at Quoting Lender and telephone number:
Name:______________________ Telephone Number:______________
3. Borrowing date of proposed Competitive Advance:
_____________________________________________________1
- --------------
1 As specified in the related Competitive Bid Request
<PAGE>
4. We hereby offer to make Competitive Advances in the following principal
amounts, for the following durations and at the following rates [insert
only one applicable rate on each line below]:
Duration of
Principal Competitive Absolute Eurodollar
Amount2 Advance3 Rate Bid4 Margin Bid5
---------- ----------- --------- -----------
$--------- ----------- ----------% -----------%
$--------- ----------- ----------% -----------%
$--------- ----------- ----------% -----------%
PROVIDED that the aggregate Maximum Competitive Advance for which this offer may
be accepted shall not exceed $________________.6
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Loan Agreement,
irrevocably obligate(s) us to make the Competitive Advance(s) for which any
offer(s) is (are) accepted, in whole or in part.
Very truly yours,
----------------------------
[Name of Lender]
Date:__________________ By:__________________________
Name:________________________
Title:_______________________
- --------------
2 Offers must be integral multiples of $1,000,000
3 As specified in the related Competitive Bid Request
4 As defined in the Loan Agreement
5 As defined in the Loan Agreement
6 Specify aggregate limitation if the sum of the individual offers
exceeds the aggregate amount the Quoting Lender is willing to lend
-2-
<PAGE>
EXHIBIT E
COMPETITIVE BID REQUEST
(FIVE YEAR LOAN AGREEMENT)
This Competitive Bid Request is executed and delivered by
__________________, a ____________ __________________ ("Requesting Borrower") to
the Administrative Agent pursuant to the Five Year Loan Agreement (as the same
has been amended, modified or extended, the "Loan Agreement") dated as of April
30, 1999, among Requesting Borrower, as a Borrower, the other Borrowers that are
parties thereto (each a Borrower" and collectively, the "Borrowers"), Harrah's
Entertainment, Inc., a Delaware corporation, as Guarantor, the Lenders therein
named and Bank of America National Trust and Savings Association, as the
Administrative Agent. Any terms used herein and not defined herein shall have
the meanings defined in the Loan Agreement.
Requesting Borrower hereby gives notice pursuant to Section 2.5(b) of
the Loan Agreement that it requests Competitive Bids pursuant to Section 2.5 of
the Loan Agreement for the following proposed Competitive Advances:
Proposed Date of Competitive Advance:
Duration of Basis for
Competitive Interest Rate
Principal Amount1 Advance2 Calculation3
- ----------------- -------- ------------
- ----------------- -------- ------------
- ----------------- -------- ------------
- ----------------- -------- ------------
- ----------------- -------- ------------
- --------------
1 Each amount must be $10,000,000 or a larger integral multiple of $1,000,000.
2 Duration must be a period of not less than 14 nor more than 180 days. No
requested Competitive Advance shall have a maturity date subsequent to the
Maturity Date or is on a date other than a Business Day.
3 Specify whether interest rate bids are to be quoted as "Absolute Rate Bids" or
"Eurodollar Margin Bids".
<PAGE>
In connection with the request, Requesting Borrower certifies that:
(a) Now, and as of the date of the requested Competitive Advance,
EXCEPT (i) for representations and warranties which expressly speak as of a
particular date or are no longer true and correct as a result of a change which
is not a violation of the Loan Agreement and (ii) as disclosed by Borrowers and
approved in writing by the Requisite Lenders, each representation and warranty
made by each Borrower in Article 4 of the Loan Agreement (other than Sections
4.4(a), 4.6 (first sentence), 4.8, and 4.15) will be true and correct, both
immediately before and after giving effect to such Competitive Advance, as
though such representations and warranties were made on and as of that date;
(b) No Default or Event of Default presently exists or will have
occurred and be continuing as a result of the making of any Competitive Advance
which is the subject of this Competitive Bid Request; and
(c) There is not any action, suit, proceeding or investigation pending
as to which Parent or any of its Subsidiaries have been served or received
notice or, to the best knowledge of Borrowers, threatened against or affecting
Parent or any of its Subsidiaries or any Property of any of them before any
Governmental Agency that constitutes a Material Adverse Effect.
This Competitive Bid Request is executed on ________________, _______
on behalf of Requesting Borrower.
____________________________________,
a ______________ ____________
By: ___________________________________
___________________________________
Printed Name and Title
-2-
<PAGE>
EXHIBIT F
COMPLIANCE CERTIFICATE
This Compliance Certificate (this "Certificate") is executed and
delivered by the undersigned to Bank of America National Trust and Savings
Association, as Agent (the "Agent"), pursuant to the Loan Agreements referred to
below to induce the Lenders described in the Loan Agreements to make certain
credit facilities available to Harrah's Operating Company, Inc., a Delaware
corporation (the "Company") and Marina Associates, a New Jersey general
partnership ("Marina"; Marina and the Company, each a "Borrower" and
collectively with the other parties from time to time a Borrower under the Loan
Agreements, the "Borrowers").
This Certificate is delivered with reference to the Five Year Loan
Agreement and the 364-Day Loan Agreement (as amended, supplemented or otherwise
modified from time to time, collectively, the "Loan Agreements"), each dated as
of April 30, 1999, among the Borrowers, Harrah's Entertainment, Inc., a Delaware
corporation (the "Parent") as Guarantor, the Agent and each of the several
financial institutions party to the Loan Agreements. The terms defined in the
Loan Agreements and not otherwise defined in this Certificate shall have the
meanings defined for them in the Loan Agreements. Section references herein
relate to the Loan Agreements unless stated otherwise.
This Certificate is delivered in accordance with Section 7.2 of the
Loan Agreements by a Senior Officer of the Borrowers and Parent. This
Certificate is delivered with respect to the Fiscal Quarter ended
_______________________ (the "Determination Date"). Computations indicating
compliance with Sections 6.5 and 6.6 of the Loan Agreements are set forth below:
1 SECTION 6.5 - TOTAL DEBT RATIO. As of the Determination Date, the Total
Debt Ratio was _______:1.00.
MAXIMUM PERMITTED RATIO: 4.50:1.00
Total Debt Ratio was calculated as follows (in each case determined in
accordance with GAAP):
(a) Total Debt as of the Determination Date
(as calculated on Appendix A hereto) $________
DIVIDED BY (b) EBITDA for the four Fiscal Quarter period ending on the
Determination Date (as calculated on Appendix A hereto) $________
<PAGE>
EQUALS TOTAL DEBT RATIO [(a)/(b)] _____:1.00
2 SECTION 6.6 - INTEREST COVERAGE RATIO. As of the Determination Date,
the Interest Coverage Ratio was _______:1.00.
MINIMUM PERMITTED RATIO:
3.00:1.00
INTEREST COVERAGE RATIO was computed as follows (in each case
determined in accordance with GAAP):
(a) EBITDA for the four Fiscal Quarter period ending on the
Determination Date (as calculated on Appendix A hereto) $________
DIVIDED BY (b) Interest Expense for the same period (as calculated on
Appendix A hereto) $________
EQUALS INTEREST COVERAGE RATIO [(a)/(b)] $________
3 A review of the activities of the Borrowers and each of the other
Parties during the fiscal periods covered by this Certificate has been
made under the supervision of the undersigned, with a view to
determining whether during such fiscal periods the Borrowers and each
of the other Parties performed and observed all of their respective
Obligations. To the best knowledge of the undersigned, during the
fiscal periods covered by this Certificate, all covenants and
conditions set forth in the Loan Documents, including, without
limitation, those set forth in Articles 4, 5 and 6 of the Loan
Agreements, have been so performed and observed and no Default or Event
of Default has occurred and is continuing, with only the exceptions set
forth below (if none, so state), and in response to which the Borrowers
and the other Parties have taken or propose to take the following
actions (if none, so state):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-2-
<PAGE>
4 The undersigned Senior Officer of the Borrowers and Parent certifies
that the calculations made and the information contained herein and in
each Appendix delivered herewith are derived from the books and records
of the Borrowers and the other Parties, as applicable, and that each
and every matter contained herein and therein correctly reflects those
books and records.
5 To the best knowledge of the undersigned no event or circumstance has
occurred that constitutes a Material Adverse Effect since the date the
most recent Compliance Certificate was executed and delivered, with the
exceptions set forth below (if none, so state):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Dated: _______________, ______
By __________________________________
Senior Officer of each
Borrower and Parent
-3-
<PAGE>
APPENDIX A
TO
COMPLIANCE CERTIFICATE
PART 1
EBITDA - Component Calculations
- -------------------------------
The calculations below relate to the period from _______________ to
________________ (the "Test Period" for purposes of this Part 1 of Appendix A).
EBITDA for the Test Period is calculated as follows for the Parent and
its Subsidiaries on a combined basis, in each case as determined in
accordance with GAAP:1
(a) Consolidated net income of Parent and its Subsidiaries
for the Test Period ("Net Income") $_____________
PLUS (b) all accrued taxes on or measured by income to the
extent included in the determination of Net Income set forth
in (a) above $_____________
PLUS (c) amounts treated as expenses for interest to
the extent included in the determination of Net Income
set forth in (a) above $_____________
PLUS (d) amounts treated as expenses for depreciation
and amortization to the extent included in the
determination of Net Income set forth in (a) above
$_____________
PLUS (e) minority interest $_____________
PLUS (f) any extraordinary loss reflected in such Net Income
$-------------
MINUS (g) any extraordinary gain reflected in such Net
Income $_____________
PLUS (h) Pre-Opening Expenses during the Test Period
$_____________
PLUS (i) non-recurring cash charges during the Test
Period $_____________
-4-
<PAGE>
EQUALS EBITDA [(a)+(b)+(c)+(d)+(e)+(f)-(g)+(h)+(i)]
$_____________
- --------------
1 provided that in computing EBITDA:
(a) for all periods ending on or prior to December 31, 1998, "EBITDA"
shall be computed on the basis of the combined operating results of Parent and
its Subsidiaries, Showboat and Rio as described on Schedule 1.3 of the Loan
Agreements.
(b) the operating results of each New Project which commences
operations and records not less than one full fiscal quarter's operations during
the relevant period shall be annualized; and
(c) EBITDA shall be adjusted, on a pro forma basis, to include the
operating results of each resort or casino property acquired by Parent and its
Consolidated Subsidiaries during the relevant period and to exclude the
operating results of each resort or casino property sold or otherwise disposed
of by Parent and its Subsidiaries, or whose operations are discontinued during
the relevant period.
PART 2
TOTAL DEBT - Component Calculation
- ----------------------------------
Total Debt as of the Determination Date is the SUM of the following
(without duplication):2
(a) the outstanding principal Indebtedness of Parent and its
Subsidiaries for borrowed money (including debt securities
issued by Parent or any of its Subsidiaries)
on the Determination Date $________
PLUS (b) the aggregate amount of
all Capital Lease Obligations of
Parent and its Subsidiaries
on the Determination Date $________
-5-
<PAGE>
PLUS (c) all obligations in respect of
letters of credit or other similar
instruments for which Parent or any
of its Subsidiaries are account
parties or are otherwise obligated $________
PLUS (d) the aggregate amount of all Contingent
Obligations and other similar contingent
obligations of Parent and its Subsidiaries with
respect to any of the foregoing $________
PLUS (e) any obligations of Parent of any of its
Subsidiaries to the extent that the same are secured
by a Lien on any of the assets of Parent or its
Subsidiaries $________
EQUALS TOTAL DEBT [(a)+(b)+(c)+(d)+(e)] $________
- --------------
2 provided that in computing "Total Debt," the amount of any Contingent
Obligation or letter of credit shall be deemed to be zero unless and until (1)
in the case of obligations in respect of letters of credit, a drawing is made
with respect thereto, (2) in the case of any other Contingent Obligations,
demand for payment is made with respect thereto, or (3) Parent's independent
auditors have quantified the amount of Parent's and its Subsidiaries with
respect to letters of credit and Contingent Obligations as liabilities on
Parent's consolidated balance sheet in accordance with Generally Accepted
Accounting Principles (as opposed to merely noted in the footnotes to any such
balance sheet) and the amount of any such individual liability is in excess of
$50,000,000, in which case the amount thereof shall be deemed to be the amount
so quantified from time to time.
PART 3
INTEREST EXPENSE - Component Calculations
- -----------------------------------------
The calculations below relate to the period from ____________________ to
____________________ (the "Test Period" for purposes of this Part 3 of Appendix
A).
-6-
<PAGE>
Interest Expense for the Test Period is calculated as follows:
(a) all interest, fees, charges and related expenses paid or
payable (without duplication) to a lender in connection with
borrowed money or the deferred purchase price of assets that
are considered "interest expense" under Generally Accepted
Accounting Principles $____________
plus (b) the portion of rent paid or payable (without
duplication) for the Test Period under Capital Lease
Obligations that should be treated as interest in accordance
with Financial Accounting Standards Board Statement No. 13
$____________
EQUALS INTEREST EXPENSE [(a)+(b)]
$____________
-7-
<PAGE>
EXHIBIT G
Latham & Watkins Letterhead
April 30, 1999
To the Administrative Agents and
each of the Lenders party to each
of the Loan Documents referred
to below
Ladies and Gentlemen:
We have acted as special counsel to Harrah's Entertainment, Inc., a
Delaware corporation ("Parent"), Harrah's Operating Company, Inc., a Delaware
corporation (the "Company"), and Marina Associates, a New Jersey general
partnership ("Marina"), in connection with the execution and delivery by Parent,
the Company and Marina of (i) the Five-Year Loan Agreement dated as of April 30,
1999 (the "5-Year Agreement") among Parent, as Guarantor, the Company, Marina,
such other Subsidiaries that may become a Borrower pursuant to the terms
thereof, each lender whose name is set forth on the signature pages thereto and
each other lender from time to time party thereto (the "5-Year Lenders"),
Bankers Trust Company, as Syndication Agent, CIBC Oppenheimer Corp. and Societe
Generale, as Documentation Agents, Commerzbank AG, PNC Bank, National
Association and Wells Fargo Bank, N.A., as Co-Documentation Agents, and Bank of
America National Trust and Savings Association, as Administrative Agent (the
"5-Year Administrative Agent") and (ii) the 364-Day Loan Agreement dated as of
April 30, 1999 (the "364-Day Agreement" and, together with the 5-Year Agreement,
the "Agreements"), among Parent, as Guarantor, the Company, Marina, such other
Subsidiaries that may become a Borrower pursuant to the terms thereof, each
lender whose name is set forth on the signature pages thereto and each other
lender from time to time party thereto (the "364-Day Lenders" and, together with
the 5-Year Lenders, the "Lenders"), Bankers Trust Company, as Syndication Agent,
CIBC Oppenheimer Corp. and Societe Generale, as Documentation Agents,
Commerzbank AG, PNC Bank, National Association and Wells Fargo Bank, N.A., as
Co-Documentation Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (the "364-Day Administrative Agent" and,
together with the 5-Year Administrative Agent, the "Administrative Agents").
<PAGE>
Capitalized terms used by not defined herein have the meanings assigned
to them in each of the Agreements.
In our capacity as such counsel, we have made such legal and factual
examinations and inquiries, including an examination of originals or copies
certified or otherwise identified to our satisfaction as being true
reproductions of originals of such documents, corporate records and other
instruments, and have obtained from public officials and from officers of the
Company, Parent, Marina and their respective Subsidiaries such certificates and
other representations and assurances, as we have deemed necessary or appropriate
for the purpose of the opinions stated below. We have examined, among other
things, the following:
(a) the Agreements.
(b) the Guaranty dated as of April 30, 1999, by Parent in
favor of the 5-Year Administrative Agent for the
benefit of the 5-Year Lenders;
(c) The Guaranty dated as of April 30, 1999, by Parent in
favor of the 364-Day Administrative Agent for the
benefit of the 364-Day Lenders;
(d) the Committed Advance Notes;
(e) the Competitive Advance Notes; and
(f) the Swing Line Notes.
The documents described in subsections (a)-(f) above are referred to
herein collectively as the "Loan Documents."
We have investigated such questions of law as we have deemed necessary
or appropriate for the purposes of the opinions stated herein. We are members of
the bar of the State of California, and we are opining herein as to the effect
on the subject transactions of the internal laws of the State of California, the
General Corporation Law of the State of Delaware and the federal laws of the
United States, 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 laws other than the General Corporation Law of the State
of Delaware) or as to any matters of municipal law or the laws of any other
local agencies within any state.
-2-
<PAGE>
On the basis of the foregoing, and in reliance thereon, and subject to
the limitations, qualifications and exceptions set forth below, we are of the
opinion that, as of the date hereof:
1. The execution, delivery and performance by each Borrower, Parent,
Harrah's Atlantic City, Inc., a New Jersey corporation ("Harrah's AC"), as
general partner of Marina, and Harrah's New Jersey, Inc., a New Jersey
corporation (together with Harrah's AC, the "Marina Partners"), as general
partner of Marina, of each of the Loan Documents to which such Borrower, Parent,
and the Marina Partners, as applicable, is a party (i) do not, in the case of
the Company, Parent and the Marina Partners, contravene any provisions of their
respective certificates of incorporation or by-laws, and, in the case of Marina,
contravene any provision of its partnership agreement and (ii) do not, to the
best of our knowledge, violate or constitute a default under, any applicable
provision of the laws of the State of California, the General Corporation Law of
the State of Delaware or the federal laws of the United States or any applicable
regulation under such laws or any other agreement of Parent, the Company,
Marina, the Marina Partners or any of their Subsidiaries which has been
identified to us by a responsible officer of Parent as an agreement which is
individually material to the business, properties or operations of Parent and
its Subsidiaries taken as a whole (each such agreement, a "Material Agreement"),
other than any such violations or defaults which would not, separately or in the
aggregate, have a material adverse effect on the validity or enforceability of
the Loan Documents or on the ability of any Borrower to perform its obligations
under the Loan Documents or have a material adverse effect on the business,
properties or operations of Parent and its Subsidiaries taken as a whole.
2. Assuming the due authorization, execution and delivery of each of
the Loan Documents by each of Parent, the Company and Marina, each of the Loan
Documents constitutes a legally valid and binding obligation of each of Parent,
the Company and Marina that is a party thereto, enforceable against them in
accordance with its terms.
3. At the time of consummation thereof, all consents and approvals of,
and filings and registrations with, and all other actions in respect of, all
United States federal, California and Delaware governmental agencies,
authorities or instrumentalities required in order to make or consummate the
loan transactions
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<PAGE>
contemplated by the Loan Documents and enter into the Loan Documents have been
obtained, given, filed or taken and are or will be in full force and effect (or
effective judicial relief with respect thereto has been obtained).
Our opinions in paragraphs 1 and 3 above as to compliance with certain
laws, statutes, rules or regulations and with respect to the consents,
approvals, filings and other actions is based upon a review of those laws,
statutes, rules and regulations which, in our experience, are normally
applicable to loan transactions of the type contemplated by the Loan Documents
(other than Federal securities laws and California state securities or "blue
sky" laws, as to which we express no opinion in those paragraphs). We are not
opining as to any federal or state gaming laws, statutes, rules or regulations.
In rendering the opinions expressed in Paragraph 1 insofar as they
require interpretation of the Material Agreements, (i) we have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of
California, without giving effect to any choice of law provisions contained
therein or any choice of law principles which would result in application of the
internal laws of any other state, (ii) to the extent that any questions of
legality or legal construction have arisen in connection with our review, we
have applied the laws of the State of California, in resolving such questions
and (iii) we express no opinion with respect to the effect of any action or
inaction, by any Party or Creditor under the Loan Documents or the Material
Agreements which may result in a breach or default under any Material Agreement.
We advise you that certain of the Material Agreements may be governed by other
laws, that such laws may vary substantially from the law assumed to govern for
purposes of this opinion, and that this opinion may not be relied upon as to
whether or not a breach or default would occur under the law actually governing
such Material Agreements.
The opinion expressed in paragraph 2 is further subject to the
following limitations, qualifications and exceptions:
(a) such opinion is subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, including, without limitation, the effect of
Section 548 of the federal Bankruptcy Code and comparable provisions of state
law;
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<PAGE>
(b) enforceability of the Loan Documents is subject to the effect of
general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief regardless of
whether considered in a proceeding in equity or at law;
(c) certain rights, remedies and waivers contained in the Loan
Documents may be limited or rendered ineffective by applicable California laws
or judicial decisions governing such provisions, but such laws or judicial
decisions do not render the Loan Documents invalid or unenforceable as a whole;
(d) we express no opinion as to the validity or enforceability of any
provision of the Loan Documents that permit the Lenders to increase the rate of
interest or collect a late charge or prepayment premium in the event of a
delinquency or death.
(e) the unenforceability under certain circumstances of provisions to
the effect that rights or remedies are not exclusive, that every right or remedy
is cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies, that any right or remedy may be
exercised without notice, or that failure to exercise or delay in exercising
rights or remedies will not operate as a waiver of any such right or remedy.
(f) the unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy or prohibited by law;
(g) the effect of Section 1717 of the California Civil Code, which
provides that, where a contract permits one party to the contract to recover
attorneys' fees, the prevailing party in any action to enforce any provision of
the contract shall be entitled to recover its reasonable attorneys' fees;
(h) the effect of California law, which provides that a court may
refuse to enforce, or may limit the application of, a contract or any clause
thereof which the court finds as a matter of law to have been unconscionable at
the time it was made or contrary to public policy;
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<PAGE>
(i) the effect of Section 631(d) of the California Code of Civil
Procedure, which provides that a court may, in its discretion upon just terms,
allow a trial by jury although there may have been a waiver of trial by jury;
(j) the enforceability of liquidated damages provisions of the Loan
Documents may be governed and restricted by Section 1671 of the California Civil
Code;
(k) we express no opinion as to the enforceability of the choice of law
provisions in the Loan Documents;
(l) we express no opinion with respect to the enforceability by a
federal court of any forum selection clause contained in any of the Loan
Documents; and
(m) we also advise you of California statutory provisions and case law
to the effect that, in certain circumstances, a surety may be exonerated if the
creditor materially alters the original obligation of the principal without the
consent of the guarantor, elects remedies for default that impair the
subrogation rights of the guarantor against the principal, or otherwise takes
any action without notifying the guarantor that materially prejudices the
guarantor. However, there is also authority to the effect that a guarantor may
validly waive such rights if the waivers are expressly set forth in the
guaranty. While we believe that a California court should hold that the explicit
language contained in the Loan Documents waiving all rights is enforceable, we
express no opinion with respect to the effect of (i) any modification to or
amendment of the obligations of any Party, Creditor or any other Person that
materially increases such obligations; (ii) any election of remedies by the
Administrative Agents or the Lenders following the occurrence of an event of
default under the Loan Documents, or (iii) any other action by the Agents or the
Lenders that materially prejudices the guarantor.
In connection with our opinions expressed herein, we assume, with your
permission, that each Lender and SPC is a member of a class of lenders which is
exempt or is otherwise exempt from California usury laws, including Section 1 of
Article XV of the California Constitution.
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<PAGE>
To the extent that the foregoing opinions may be dependent upon such
matters, we assume for the purposes of this opinion that each Person who is a
party to any of the Loan Documents is duly organized, validly existing and in
good standing, as applicable, under the laws of its jurisdiction of
organization; that each of the Loan Documents has been duly authorized, executed
and delivered by each such person party thereto and constitutes the legally
valid and binding obligation of each such Person (other than Parent and the
Borrowers), enforceable in accordance with its terms; and that each such Person
has the requisite corporate or other organizational power and authority to
perform its obligations under such agreements; and that all Parties to the Loan
Documents other than Parent and the Borrowers have complied with any applicable
requirement to file returns and pay taxes under the Franchise Tax Law of the
State of California. We are not expressing any opinion as to the effect of any
such Person's (other than Parent's and Borrower's) compliance with any state or
federal laws or regulations applicable to the transactions because of the nature
of such Person's business.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without our prior written
consent. At your request, we hereby consent to reliance hereon by any future
assigns of or participants in your interest in the Agreements as expressly
permitted by Section 11.8 of the Agreements, provided that this opinion speaks
only as of the date hereof and to its addresses and that we have no
responsibility or obligation to update this opinion, to consider its
applicability or correctness other than to its addresses, or to take into
account changes in law, facts or any other development of which we may later
become aware. We hereby consent to your furnishing this opinion to your auditors
and to regulatory officials having jurisdiction over you.
Very truly yours,
/s/ Latham & Watkins
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EXHIBIT G
E. O. ROBINSON, JR.'S LETTERHEAD
HARRAH'S ENTERTAINMENT, INC.
April 30, 1999
To the Administrative Agents and
each of the Lenders party to each
of the Loan Documents referred
to below
Ladies and Gentlemen:
I am Senior Vice President and General Counsel of Harrah's
Entertainment, Inc., a Delaware corporation ("Parent"), and Harrah's Operating
Company, Inc., a Delaware corporation (the "Company"), and in that capacity, I
have acted as counsel to Parent, the Company and Marina Associates, a New Jersey
general partnership ("Marina"), in connection with the execution and delivery by
Parent, the Company and Marina of (i) the Five-Year Loan Agreement dated as of
April 30, 1999 (the "5-Year Agreement") among Parent, as Guarantor, the Company,
Marina, such other Subsidiaries that may become a Borrower pursuant to the terms
thereof, each lender whose name is set forth on the signature pages thereto and
each other lender from time to time party thereto (the "5-Year Lenders"),
Bankers Trust Company, as Syndication Agent, CIBC Oppenheimer Corp. and Societe
Generale, as Documentation Agents, Commerzbank AG, PNC Bank, National
Association and Wells Fargo Bank, N.A., as Co-Documentation Agents, and Bank of
America National Trust and Savings Association, as Administrative Agent (the
"5-Year Administrative Agent) and (ii) the 364-Day Loan Agreement dated as of
April 30, 1999 (the "364-Day Agreement" and, together with the 5-Year Agreement,
the "Agreements"), among Parent, as Guarantor, the Company, Marina, such other
Subsidiaries that may become a Borrower pursuant to the terms thereof, each
lender whose name is set forth on the signature pages thereto and each other
lender from time to time party thereto (the "364-Day Lenders" and, together with
the 5-Year Lenders, the "Lenders"), Bankers Trust Company, as Syndication Agent,
CIBC Oppenheimer Corp. and Societe Generale, as Documentation Agents,
Commerzbank AG, PNC Bank, National Association and Wells Fargo Bank, N.A., as
Co-Documentation Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (the "364-Day
<PAGE>
Administrative Agent" and, together with the 5-Year Administrative Agent, the
"Administrative Agents").
Capitalized terms used but not defined herein have the meanings
assigned to them in each of the Agreements.
In that connection, I, or members of my staff, have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to my satisfaction as being true
reproductions of originals of such documents, corporate records and other
instruments, and have obtained from public officials and from other officers of
the Company, Parent, Marina and their Subsidiaries such certificates and other
representations and assurances as I have deemed necessary or appropriate for the
purposes of the opinions stated below.
I have investigated such questions of law as I have deemed necessary or
appropriate for the purpose of the opinions stated herein. I am a member of the
bar of the States of Tennessee and New York, and my opinions below are limited
to the effect on the subject transactions of the laws of the States of Tennessee
and New York, the General Corporation Law of the State of Delaware and the
federal laws of the United States.
Upon the basis of the foregoing and in reliance thereon, I am of the
opinion that, as of the date hereof:
1. Each of Parent, the Company, Harrah's Atlantic City, Inc., a New
Jersey corporation ("Harrah's AC"), and Harrah's New Jersey, Inc., a New Jersey
corporation (together with Harrah's AC, the "Marina Partners"), is a duly
organized and validly existing corporation, in good standing under the laws of
the jurisdiction of its organization, and has all corporate power to execute,
deliver and perform its obligations under the Loan Documents.
2. Marina is a general partnership validly existing under the laws of
the State of New Jersey, and has all partnership power to execute, deliver and
perform its obligations under the Loan Documents.
3. The execution, delivery, and performance by Parent, each Borrower
and the Marina Partners of each of the Loan Documents to which it is a party (i)
have been duly authorized by all necessary corporate or partnership, as
applicable, action by
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<PAGE>
Parent, each Borrower and the Marina Partners, as applicable, and (ii) do not
violate any judgment, order or decree binding upon any of them, other than any
such violations which would not, separately or in the aggregate, have an adverse
effect on the validity or enforceability of any of the Loan Documents or on the
ability of Parent, either Borrower or the Marina Partners to perform its
obligations under the Loan Documents or have a material adverse effect on the
value of the business, properties or operations of Parent and its Subsidiaries
taken as a whole. Each of Parent, the Company, the Marina Partners and Marina
has duly executed and delivered each Loan Document to which it is a party.
4. There does not exist any judgment, order or injunction prohibiting
or imposing material adverse conditions upon the consummation of the
transactions contemplated by the Loan Documents or the performance by Parent,
either Borrower or the Marina Partners of its obligations under the respective
Loan Documents.
5. There are no actions, suits or proceedings pending, or, to the best
of my knowledge, threatened, against Parent or any of its Subsidiaries with
respect to the Loan Documents or the transactions contemplated thereby or that
restrains, permits or imposes adverse conditions upon, or seeks to restrain,
prevent or impose adverse conditions upon, the Loan Documents or any such
transaction.
This opinion is furnished by me, as General Counsel of the Company and
Parent, to you for your benefit (and the benefit of your assigns) in connection
with the above transactions. This opinion may not be relied upon by you for any
other purpose or furnished to (unless otherwise required to be so furnished by
applicable law or judicial process), quoted to or relied upon by any other
Person for any purpose without my prior written consent.
Very truly yours,
/s/ E. O. Robinson, Jr.
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EXHIBIT H
GUARANTY
This GUARANTY ("Guaranty"), dated as of April 30, 1999, is made by
Harrah's Entertainment, Inc., a Delaware corporation ("Guarantor") in favor of
Bank of America National Trust and Savings Association, as Administrative Agent
for the benefit of the Lenders that are party to the Loan Agreement referred to
below, with reference to the following facts:
RECITALS
A. Pursuant to the Five Year Loan Agreement dated as of April 30, 1999
by and among Harrah's Entertainment, Inc., as Guarantor, Harrah's Operating
Company, Inc., a Delaware corporation, Marina Associates, a New Jersey general
partnership, and such other Subsidiaries that become Borrowers pursuant thereto
(collectively with Harrah's Operating Company, Inc. and Marina Associates, the
"Borrowers" and each, a "Borrower"), the Lenders therein named (collectively,
the "Lenders" and individually, a "Lender") and Bank of America National Trust
and Savings Association, as Administrative Agent (as such agreement may from
time to time be extended, modified, renewed, restated, supplemented or amended,
the "Loan Agreement"), the Lenders are making certain credit facilities
available to Borrowers.
B. As a condition to the availability of such credit facilities,
Guarantor is required to enter into this Guaranty and to guaranty the Guarantied
Obligations as hereinafter provided.
C. Guarantor expects to realize direct and indirect benefits as the
result of the availability of the aforementioned credit facilities to Borrowers.
AGREEMENT
NOW, THEREFORE, in order to induce Lender to extend the aforementioned
credit facilities, and for other good and valuable consideration, the receipt
and adequacy of which hereby are acknowledged, Guarantor hereby represents,
warrants, covenants, agrees and guaranties as follows:
<PAGE>
1. DEFINITIONS. This Guaranty is the Parent Guaranty referred to in the
Loan Agreement and is one of the Loan Documents. Terms defined in the Loan
Agreement and not otherwise defined in this Guaranty shall have the meanings
given those terms in the Loan Agreement when used herein and such definitions
are incorporated herein as though set forth in full. In addition, as used
herein, the following terms shall have the meanings respectively set forth after
each:
"GUARANTIED OBLIGATIONS" means all Obligations of Borrowers or any
Party at any time and from time to time owed to Lender under one or
more of the Loan Documents (but not including Obligations owed to
Lender under this Guaranty), whether due or to become due, matured or
unmatured, liquidated or unliquidated, or contingent or noncontingent,
including obligations of performance as well as obligations of payment,
and including interest that accrues after the commencement of any
bankruptcy or insolvency proceeding by or against Borrowers or any of
them, Guarantor or any other Person.
"GUARANTOR" means Harrah's Entertainment, Inc., a Delaware corporation.
"LENDER"means the Administrative Agent (acting as the Administrative
Agent and/or on behalf of the Lenders) and the Lenders, and each of
them, and any one or more of them. Subject to the terms of the Loan
Agreement, any right, remedy, privilege or power of Lender shall be
exercised by the Administrative Agent on behalf of the Lenders.
"GUARANTY" means this Guaranty, and any extensions, modifications,
renewals, restatements, reaffirmations, supplements or amendments
hereof.
2. GUARANTY OF GUARANTIED OBLIGATIONS. Guarantor hereby irrevocably,
unconditionally guaranties and promises to pay and perform on demand upon the
occurrence of any Event of Default the Guarantied Obligations and each and every
one of them, including all amendments, modifications, supplements, renewals or
extensions of any of them, whether such amendments, modifications, supplements,
renewals or extensions are evidenced by new or additional instruments, documents
or agreements or change the rate of interest on any Guarantied Obligation or the
security therefor, or otherwise.
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<PAGE>
3. NATURE OF GUARANTY. This Guaranty is irrevocable and continuing in
nature and relates to any Guarantied Obligations now existing or hereafter
arising. This Guaranty is a guaranty of prompt and punctual payment and
performance and is not merely a guaranty of collection.
4. RELATIONSHIP TO OTHER AGREEMENTS. Nothing herein shall in any way
modify or limit the effect of terms or conditions set forth in any other
document, instrument or agreement executed by Guarantor or in connection with
the Guarantied Obligations, but each and every term and condition hereof shall
be in addition thereto. All provisions contained in the Loan Agreement or any
other Loan Document that apply to Loan Documents generally are fully applicable
to this Guaranty and are incorporated herein by this reference.
5. SUBORDINATION OF INDEBTEDNESS OF BORROWERS TO GUARANTOR TO THE
GUARANTIED Obligations. Guarantor agrees that:
(a) Any indebtedness of Borrowers now or hereafter owed to
Guarantor hereby is subordinated to the Guarantied Obligations.
(b) If Lender so requests, upon the occurrence and during the
continuance of any Event of Default, any such indebtedness of Borrowers
now or hereafter owed to Guarantor shall be collected, enforced and
received by Guarantor as trustee for Lender and shall be paid over to
Lender in kind on account of the Guarantied Obligations, but without
reducing or affecting in any manner the obligations of Guarantor under
the other provisions of this Guaranty.
(c) Should Guarantor fail to collect or enforce any such
indebtedness of Borrowers now or hereafter owed to Guarantor and pay
the proceeds thereof to Lender in accordance with Section 5(b) hereof,
Lender as Guarantor's attorney-in-fact may do such acts and sign such
documents in Guarantor's name as Lender considers necessary or
desirable to effect such collection, enforcement and/or payment.
6. STATUTES OF LIMITATIONS AND OTHER LAWS. Until the Guarantied
Obligations shall have been paid and performed in full, all the rights,
privileges, powers and remedies granted to Lender hereunder shall continue to
exist and may be exercised by Lender at any time and from time to time
irrespective of the fact that any of the Guarantied Obligations may have become
barred by any statute of limitations. Guarantor expressly waives the benefit of
any and all statutes of limitation, and any and all Laws providing for exemption
of property from execution or for evaluation and appraisal upon foreclosure, to
the maximum extent permitted by applicable Laws.
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<PAGE>
7. WAIVERS AND CONSENTS. Guarantor acknowledges that the obligations
undertaken herein involve the guaranty of obligations of Persons other than
Guarantor and, in full recognition of that fact, consents and agrees that Lender
may, at any time and from time to time, without notice or demand, and without
affecting the enforceability or continuing effectiveness hereof: (a) supplement,
modify, amend, extend, renew, accelerate or otherwise change the time for
payment or the terms of the Guarantied Obligations or any part thereof,
INCLUDING any increase or decrease of the rate(s) of interest thereon; (b)
supplement, modify, amend or waive, or enter into or give any agreement,
approval or consent with respect to, the Guarantied Obligations or any part
thereof, or any of the Loan Documents to which Guarantor is not a party or any
additional security or guaranties, or any condition, covenant, default, remedy,
right, representation or term thereof or thereunder; (c) accept new or
additional instruments, documents or agreements in exchange for or relative to
any of the Loan Documents or the Guarantied Obligations or any part thereof; (d)
accept partial payments on the Guarantied Obligations; (e) receive and hold
additional security or guaranties for the Guarantied Obligations or any part
thereof; (f) release, reconvey, terminate, waive, abandon, fail to perfect,
subordinate, exchange, substitute, transfer and/or enforce any security or
guaranties, and apply any security and direct the order or manner of sale
thereof as Lender in its sole and absolute discretion may determine; (g) release
any Person from any personal liability with respect to the Guarantied
Obligations or any part thereof; (h) settle, release on terms satisfactory to
Lender or by operation of applicable Laws or otherwise liquidate or enforce any
Guarantied Obligations and any security or guaranty therefor in any manner,
consent to the transfer of any security and bid and purchase at any sale; and/or
(i) consent to the merger, change or any other restructuring or termination of
the corporate existence of Borrowers, or any of them, Guarantor or any other
Person, and correspondingly restructure the Guarantied Obligations, and any such
merger, change, restructuring or termination shall not affect the liability of
Guarantor or the continuing effectiveness hereof, or the enforceability hereof
with respect to all or any part of the Guarantied Obligations; provided that
nothing herein shall waive, alter, diminish or modify any rights of the
Borrowers under the Loan Documents, including, without limitation, the rights of
the Borrowers to agree to any amendments or modifications of the Loan Documents.
Upon the occurrence and during the continuance of any Event of Default,
Lender may enforce this Guaranty independently as to Guarantor and independently
of any other remedy or security
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<PAGE>
Lender at any time may have or hold in connection with the Guarantied
Obligations. Guarantor expressly waives any right to require Lender to marshal
assets in favor of Guarantor, and agrees that Lender may proceed against
Borrowers or any of them, or upon or against any security or remedy, before
proceeding to enforce this Guaranty, in such order as it shall determine in its
sole and absolute discretion. Lender may file a separate action or actions
against Borrowers, or any of them, and/or Guarantor without respect to whether
action is brought or prosecuted with respect to any security or against any
other Person, or whether any other Person is joined in any such action or
actions. Guarantor agrees that Lender, Borrowers, or any of them, and any
Affiliates of any Borrower may deal with each other in connection with the
Guarantied Obligations or otherwise, or alter any contracts or agreements now or
hereafter existing between any of them, in any manner whatsoever, all without in
any way altering or affecting the security of this Guaranty. Lender's rights
hereunder shall be reinstated and revived, and the enforceability of this
Guaranty shall continue, with respect to any amount at any time paid on account
of the Guarantied Obligations which thereafter shall be required to be restored
or returned by Lender upon the bankruptcy, insolvency or reorganization of
Borrowers, or any of them, or any other Person, or otherwise, all as though such
amount had not been paid. The rights of Lender created or granted herein and the
enforceability of this Guaranty with respect to Guarantor at all times shall
remain effective to guaranty the full amount of all the Guarantied Obligations
even though the Guarantied Obligations, or any part thereof, or any security or
guaranty therefor, may be or hereafter may become invalid or otherwise
unenforceable as against Borrowers or any other guarantor or surety and whether
or not Borrowers shall have any personal liability with respect thereto.
Guarantor expressly waives any and all defenses now or hereafter arising or
asserted by reason of (a) any disability or other defense of Borrowers, or any
of them, with respect to the Guarantied Obligations, (b) the unenforceability or
invalidity of any security or guaranty for the Guarantied Obligations or the
lack of perfection or continuing perfection or failure of priority of any
security for the Guarantied Obligations, (c) the cessation for any cause
whatsoever of the liability of Borrowers, or any of them (other than by reason
of the full payment and performance of all Guarantied Obligations), (d) any
failure of Lender to marshal assets in favor of Borrowers or any other Person,
(e) except as otherwise provided in this Guaranty, any failure of Lender to give
notice of sale or other disposition of collateral to Guarantor or any other
Person or any defect in any notice that may be given in connection with any sale
or disposition of collateral, (f) any failure of Lender to comply with
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<PAGE>
applicable Laws in connection with the sale or other disposition of any
collateral or other security for any Guarantied Obligation, including without
limitation, any failure of Lender to conduct a commercially reasonable sale or
other disposition of any collateral or other security for any Guarantied
Obligation, (g) any act or omission of Lender or others that directly or
indirectly results in or aids the discharge or release of Borrowers, or any of
them, or the Guarantied Obligations or any security or guaranty therefor by
operation of law or otherwise, (h) any Law which provides that the obligation of
a surety or guarantor must neither be larger in amount nor in other respects
more burdensome than that of the principal or which reduces a surety's or
guarantor's obligation in proportion to the principal obligation, (i) any
failure of Lender to file or enforce a claim in any bankruptcy or other
proceeding with respect to any Person, (j) the election by Lender, in any
bankruptcy proceeding of any Person, of the application or non-application of
Section 1111(b)(2) of the United States Bankruptcy Code, (k) any extension of
credit or the grant of any Lien under Section 364 of the United States
Bankruptcy Code, (l) any use of cash collateral under Section 363 of the United
States Bankruptcy Code, (m) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any Person, (n)
the avoidance of any Lien in favor of Lender for any reason, (o) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any of the Guarantied
Obligations (or any interest thereon) in or as a result of any such proceeding,
(p) to the extent permitted, the benefits of any form of one-action rule, or (q)
any action taken by Lender that is authorized by this Section or any other
provision of any Loan Document. Guarantor expressly waives all setoffs and
counterclaims and all presentments, demands for payment or performance, notices
of nonpayment or nonperformance, protests, notices of protest, notices of
dishonor and all other notices or demands of any kind or nature whatsoever with
respect to the Guarantied Obligations, and all notices of acceptance of this
Guaranty or of the existence, creation or incurrence of new or additional
Guarantied Obligations.
8. CONDITION OF BORROWERS AND BORROWERS' SUBSIDIARIES. Guarantor
represents and warrants to Lender that Guarantor has established adequate means
of obtaining from Borrowers' Subsidiaries, on a continuing basis, financial and
other information pertaining to the businesses, operations and condition
(financial and otherwise) of Borrowers and Borrowers' Subsidiaries and their
Properties, and Guarantor now is and hereafter will be completely familiar with
the businesses, operations and condition (financial and otherwise) of Borrowers
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<PAGE>
and Borrowers' Subsidiaries and their Properties. Guarantor hereby expressly
waives and relinquishes any duty on the part of Lender (should any such duty
exist) to disclose to Guarantor any matter, fact or thing related to the
businesses, operations or condition (financial or otherwise) of Borrowers or
Borrowers' Subsidiaries or their Properties, whether now known or hereafter
known by Lender during the life of this Guaranty. With respect to any of the
Guarantied Obligations, Lender need not inquire into the powers of Borrowers or
any their Subsidiaries or the officers or employees acting or purporting to act
on their behalf, and all Guarantied Obligations made or created in good faith
reliance upon the professed exercise of such powers shall be secured hereby.
9. LIENS ON REAL PROPERTY. In the event that all or any part of the
Guarantied Obligations at any time are secured by any one or more deeds of trust
or mortgages or other instruments creating or granting Liens on any interests in
real Property, Guarantor authorizes Lender, upon the occurrence of and during
the continuance of any Event of Default, at its sole option, without notice or
demand and without affecting any Guarantied Obligations of Guarantor, the
enforceability of this Guaranty, or the validity or enforceability of any Liens
of Lender on any collateral, to foreclose any or all of such deeds of trust or
mortgages or other instruments by judicial or nonjudicial sale. Guarantor
expressly waives all rights and defenses to the enforcement of this Guaranty or
any rights of Lender created or granted hereby or to the recovery by Lender
against Borrowers, or any of them, Guarantor or any other Person liable therefor
of any deficiency after a judicial or nonjudicial foreclosure or sale because
all or any part of the Guarantied Obligations is secured by real Property. This
means, among other things: (1) Lender may collect from any Guarantor without
first foreclosing on any real or personal Property collateral pledged by
Borrowers and (2) if the Lender forecloses on any real Property collateral
pledged by Borrowers: (A) The amount of the Guarantied Obligations may be
reduced only by the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price and (B) the
Lender may collect from any Guarantor even if the Lender, by foreclosing on the
real Property collateral, has destroyed any right any Guarantor may have to
collect from Borrowers. This is an unconditional and irrevocable waiver of any
rights and defenses any Guarantor may have because all or any part of the
Guarantied Obligations is secured by real Property. Guarantor expressly waives
any defenses or benefits that may be derived from California Code of Civil
Procedure ss.ss. 580a, 580b, 580d or 726, or comparable provisions of the Laws
of any other jurisdiction, including, without limitation, NRS
-7-
<PAGE>
Section 40.430 and judicial decisions relating thereto, and NRS Sections 40.451,
40.455, 40.457 and 40.459, and all other suretyship defenses it otherwise might
or would have under California Law or other applicable Law. Guarantor expressly
waives any right to receive notice of any judicial or nonjudicial foreclosure or
sale of any real Property or interest therein subject to any such deeds of trust
or mortgages or other instruments and any Guarantor's or any other Person's
failure to receive any such notice shall not impair or affect Guarantor's
Obligations or the enforceability of this Guaranty or any rights of Lender
created or granted.
10. WAIVER OF RIGHTS OF SUBROGATION. Notwithstanding anything to the
contrary elsewhere contained herein or in any other Loan Document to which
Guarantor is a Party, Guarantor hereby expressly waives with respect to any
Borrower and its successors and assigns (including any surety) and any other
Person which is directly or indirectly a creditor of any Borrower or any surety
for any Borrower, any and all rights at Law or in equity to subrogation, to
reimbursement, to exoneration, to contribution, to setoff or to any other rights
that could accrue to a surety against a principal, to a guarantor against a
maker or obligor, to an accommodation party against the party accommodated, or
to a holder or transferee against a maker, and which Guarantor may have or
hereafter acquire against any Borrower or any other such Person in connection
with or as a result of Guarantor's execution, delivery and/or performance of
this Guaranty or any other Loan Document to which Guarantor is a party.
Guarantor agrees that it shall not have or assert any such rights against any
Borrower or its successors and assigns or any other Person (including any
surety) which is directly or indirectly a creditor of any surety for any
Borrower, either directly or as an attempted setoff to any action commenced
against Guarantor by any Borrower (as borrower or in any other capacity), Lender
or any other such Person. Guarantor hereby acknowledges and agrees that this
waiver is intended to benefit Borrowers and Lender and shall not limit or
otherwise affect Guarantor's liability hereunder, under any other Loan Document
to which Guarantor is a party, or the enforceability hereof or thereof.
11. UNDERSTANDINGS WITH RESPECT TO WAIVERS AND CONSENTS. Guarantor
warrants and agrees that each of the waivers and consents set forth herein are
made with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which Guarantor otherwise
may have against Borrowers, Lender or others, or
-8-
<PAGE>
against any collateral, and that, under the circumstances, the waivers and
consents herein given are reasonable and not contrary to public policy or Law.
Guarantor acknowledges that it has either consulted with legal counsel regarding
the effect of this Guaranty and the waivers and consents set forth herein, or
has made an informed decision not to do so. If this Guaranty or any of the
waivers or consents herein are determined to be unenforceable under or in
violation of applicable Law, this Guaranty and such waivers and consents shall
be effective to the maximum extent permitted by Law.
12. REPRESENTATIONS AND WARRANTIES. Guarantor hereby makes each and
every representation and warranty applicable to Guarantor set forth in Article 4
of the Loan Agreement as if set forth in full herein.
13. COSTS AND EXPENSES. After an Event of Default, Guarantor agrees to
pay to Lender all costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by Lender in the enforcement or
attempted enforcement of this Guaranty, whether or not an action is filed in
connection therewith, and in connection with any waiver or amendment of any term
or provision hereof. All advances, charges, costs and expenses, including
reasonable attorneys' fees and disbursements (including the reasonably allocated
cost of legal counsel employed by Lender), incurred or paid by Lender in
exercising any right, privilege, power or remedy conferred by this Guaranty, or
in the enforcement or attempted enforcement thereof, shall be subject hereto and
shall become a part of the Guarantied Obligations and shall be paid to Lender by
Guarantor, after an Event of Default and immediately upon demand, together with
interest thereon at the rate(s) provided for under the Loan Agreement.
14. CONSTRUCTION OF THIS GUARANTY. This Guaranty is intended to give
rise to absolute and unconditional obligations on the part of Guarantor; hence,
in any construction hereof, notwithstanding any provision of any loan document
to the contrary, this Guaranty shall be construed strictly in favor of Lender in
order to accomplish its stated purpose.
15. LIABILITY. Notwithstanding anything to the contrary elsewhere
contained herein or in any Loan Document to which Guarantor is a Party, the
aggregate liability of Guarantor hereunder for payment and performance of the
Guarantied Obligations shall not exceed an amount which, in the aggregate, is
$1.00 less than that amount which if so paid or performed would constitute or
result in a "fraudulent transfer", "fraudulent conveyance", or terms of similar
import, under
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<PAGE>
applicable state or federal Law, including without limitation, Section 548 of
the United States Bankruptcy Code. The liability of Guarantor hereunder is
independent of any other guaranties at any time in effect with respect to all or
any part of the Guarantied Obligations, and Guarantor's liability hereunder may
be enforced regardless of the existence of any such guaranties. Any termination
by or release of any guarantor in whole or in part shall not affect the
continuing liability of Guarantor hereunder, and no notice of any such
termination or release shall be required. The execution hereof by Guarantor is
not founded upon an expectation or understanding that there will be any other
guarantor of the Guarantied Obligations.
16. WAIVER OF JURY TRIAL. GUARANTOR AND LENDER EXPRESSLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE LOAN
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. GUARANTOR AND LENDER AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS GUARANTY, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS
OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS. ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
17. THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LOCAL LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO THE CONFLICT OF LOCAL LAWS OR CHOICE OF LAW PRINCIPLES THEREOF.
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<PAGE>
IN WITNESS WHEREOF, Guarantor has executed this Guaranty by its duly
authorized officer as of the date first written above.
"Guarantor"
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By:____________________________________
Charles L. Atwood, Vice President and
Treasurer
Address:
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: Charles L. Atwood, Vice
President and Treasurer
Telecopier: 901/ 762-8698
Telephone: 901/762-8852
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<PAGE>
EXHIBIT I
REQUEST FOR LETTER OF CREDIT
(FIVE YEAR LOAN AGREEMENT)
1. This Request for Letter of Credit is executed and delivered by
__________________________ ("Requesting Borrower"), to ______________________
("Issuing Lender") and to Bank of America National Trust and Savings
Association, as the Administrative Agent ("Administrative Agent") pursuant to
the Five Year Loan Agreement (as amended, modified or extended, the "Loan
Agreement") dated as of April 30, 1999, among Requesting Borrower, as a
Borrower, the other Borrowers that are parties thereto (each a "Borrower" and
collectively, the "Borrowers"), Harrah's Entertainment, Inc., a Delaware
corporation, as Guarantor, the Lenders therein named, and Administrative Agent.
Any terms used herein and not defined herein shall have the meanings defined in
the Loan Agreement.
2. Requesting Borrower hereby requests that the Issuing Lender issue a
Letter of Credit as follows:
(a) Amount of Letter of Credit: $_______________.
(b) Date of Issuance: ________________, ____.
(c) Type of Letter of Credit (Check one box only):
/__/ Commercial Letter of Credit
/__/ Standby Letter of Credit
(d) Beneficiary under Letter of Credit:
Name: _______________________________
Address: _____________________________
_____________________________
_____________________________
(e) Expiry Date: __________________, _____.
(f) Purpose of Letter of Credit:
________________________________________________
________________________________________________.
<PAGE>
(g) Additional Information/Terms: __________________
________________________________________________
3. The requested Letter of Credit is (check one box only):
/__/ a new Letter of Credit in addition to Letters
of Credit already outstanding.
/__/ a supplement, modification, amendment, renewal, or
extension to or of the following outstanding
Letter(s) of Credit: [IDENTIFY]
4. In connection with the issuance of the Letter of Credit requested
herein, Requesting Borrower represents, warrants and certifies to the Lenders
that:
(a) Now and as of the date of the issuance of the requested
Letter of Credit, except (i) for representations and warranties which
expressly speak as of a particular date or which are no longer true and
correct as a result of a change permitted by the Loan Agreement or (ii)
as disclosed by Borrowers and approved in writing by the Requisite
Lenders, each representation and warranty made by each Borrower in
Article 4 of the Loan Agreement (other than Sections 4.4(a), 4.6 (first
sentence), 4.8 and 4.15) will be true and correct, both immediately
before such Letter of Credit is issued and after giving effect to such
Letter of Credit, as though such representations and warranties were
made on and as of the date of such Letter of Credit;
(b) There is not any action, suit, proceeding or investigation
pending as to which Parent or any of its Subsidiaries have been served
or received notice or, to the best knowledge of Borrowers, threatened
against or affecting Parent or any of its Subsidiaries or any Property
of any of them before any Governmental Agency that constitutes a
Material Adverse Effect; and
(c) Now and as of the date of the requested Letter of Credit,
no Default or Event of Default presently exists or will have occurred
and be continuing as a result of the issuance of the Letter of Credit.
5. Attached hereto is an Application for Letter of Credit on the form
provided to Requesting Borrower by the Issuing Lender.
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<PAGE>
6. This Request for Letter of Credit is executed on __________,
_______, by a Responsible Official of Requesting Borrower. The undersigned, in
such capacity, hereby certifies each and every matter contained herein to be
true and correct.
_________________________________,
a ____________ ______________
By:______________________________
Title:___________________________
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<PAGE>
EXHIBIT J
REQUEST FOR LOAN
FIVE YEAR LOAN AGREEMENT
1. This Request for Loan is executed and delivered by _______________
("Requesting Borrower"), to Bank of America National Trust and Savings
Association, as the Administrative Agent ("Administrative Agent") pursuant to
the Five Year Loan Agreement (as amended, modified or extended, the "Loan
Agreement") dated as of April 30, 1999, among Requesting Borrower, as a
Borrower, the other Borrowers that are parties thereto (each a "Borrower" and
collectively, the "Borrowers"), Harrah's Entertainment, Inc., a Delaware
corporation, as Guarantor, the Lenders therein named, and Administrative Agent.
Any terms used herein and not defined herein shall have the meanings defined in
the Loan Agreement.
2. Borrower hereby requests that the Lenders make a Committed Loan
pursuant to the Loan Agreement as follows:
(a) AMOUNT OF REQUESTED COMMITTED LOAN:
$_________________________
(b) FUNDING DATE OF COMMITTED LOAN:
__________________________
(c) TYPE OF COMMITTED LOAN (Check one box only):
/__/ BASE RATE
/__/ EURODOLLAR RATE FOR A EURODOLLAR PERIOD OF
________ MONTHS
3. In connection with the request, Borrower certifies that:
(a) If this Request for Loan is for a Committed Loan which
will increase the principal amount outstanding under the Notes, now and
as of the date of the requested Committed Loan, except (i) for
representations and warranties which speak as of a particular date or
are no longer true and correct as a result of a change which is
permitted by the Loan Agreement and (ii) as disclosed by Borrowers and
<PAGE>
approved in writing by the Requisite Lenders, each representation and
warranty made by each Borrower in Article 4 of the Loan Agreement
(other than Sections 4.4(a), 4.6 (first sentence), 4.8, 4.15) will be
true and correct, both immediately before and after giving effect to
such Committed Loan, as though such representations and warranties were
made on and as of that date; and
(b) There is not any action, suit, proceeding or
investigation pending as to which Parent or any of its Subsidiaries
have been served or received notice or, to the best knowledge of
Borrowers, threatened against or affecting Parent or any of its
Subsidiaries or any Property of any of them before any Governmental
Agency that constitutes a Material Adverse Effect.
4. This Request is executed on _________________ on behalf of
Requesting Borrower.
_________________________________,
a ____________ ______________
By:______________________________
Title:___________________________
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<PAGE>
EXHIBIT K
ELECTION TO BECOME A BORROWER
Bank of American National Trust and Savings Association,
as Administrative Agent under each of the Loan Agreements described below
555 South Flower Street
Los Angeles, California 90071
Ladies and Gentlemen:
The undersigned, ___________________________, a ______________
____________ ("Subsidiary") refers to the Five Year Loan Agreement and the
364-Day Loan Agreement (as amended, modified or extended, the "Loan Agreements")
each dated as of April 30, 1999, among Harrah's Entertainment, Inc., a Delaware
corporation ("Parent"), as Guarantor, Harrah's Operating Company, Inc., a
Delaware corporation ("Company"), Marina Associates, a New Jersey general
partnership ("Marina") (each a "Borrower" and collectively, the "Borrowers"),
the Lenders therein named, and Administrative Agent. Any terms used herein and
not defined herein shall have the meanings defined in the Loan Agreements.
Subsidiary, desiring to incur Loans under the Loan Agreements, hereby
elects, pursuant to the provisions of Section 2.10 of each of the Loan
Agreements, to become a Borrower for the purposes of the Loan Agreements,
effective from the date hereof. Subsidiary confirms that it is a Wholly-Owned
Subsidiary under the Loan Agreements and confirms that the representations and
warranties set forth in Article 4 of the Loan Agreements are true and correct as
to Subsidiary, and Subsidiary hereby agrees to comply with all the obligations
of a Borrower under, and to be bound in all respects by the terms of, the Loan
Agreements as if Subsidiary an original signatory thereto. Subsidiary proposes
the following Aggregate Sublimit:
PROPOSED AGGREGATE SUBLIMIT FOR SUBSIDIARY:
$____________________
Subsidiary, concurrenty with its execution hereof, is deliverying the
appropriate executed documents, certificates, resolutions, opinions, Competitive
Advance Note, Committed Advanced Notes and Swing Line Documents required by
Sections 2.10(a) and (b) of the Loan Agreements.
<PAGE>
Subsidiary shall, at its own expense, execute and deliver such further
documents, certificates, resolution, opinions and other assurances as the
Administrative Agent may reasonably request in connection herewith. All notices
and other communications provided for under the Loan Agreement may be sent to
the address set forth below.
Very truly yours,
Address:
__________________________ By: ___________________________
__________________________ Title: _________________________
__________________________
Acknowledged and Agreed: [additional Borrowers:]
Harrah's Entertainment, Inc. ____________________________
By:__________________________ By:_________________________
Its:__________________________ Its:________________________
Harrah's Operating Company, Inc. ____________________________
By:__________________________ By:_________________________
Its:__________________________ Its:________________________
Marina Associates
By: Harrah's New Jersey, Inc.,
general partner
By: ________________________
Its: _______________________
By: Harrah's Atlantic City, Inc.,
general partner
By: ________________________
Its: ________________________
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<PAGE>
EXHIBIT L
JOINT BORROWER PROVISIONS
Reference is made to the Five Year Loan Agreement ( the "Loan
Agreement") among Harrah's Operating Company, Inc., a Delaware corporation
("Company"), Marina Associates, a New Jersey general partnership ("Marina" and
together with the Company and such other Subsidiaries that become Borrowers
pursuant thereto, "Borrowers"), Harrah's Entertainment, Inc., a Delaware
corporation ("Parent"), as Guarantor, the Lenders therein named, and Bank of
America National Trust and Savings Association, as Administrative Agent. These
Joint Borrower Provisions are attached to and made a part of the Loan Agreement
as Exhibit L thereto. Capitalized terms used herein are used with the meanings
set forth for those terms in the Loan Agreement. Borrowers each agree that:
1. REQUESTS FOR LOANS AND LETTERS OF CREDIT. Requests for Loans and
Letters of Credit may be made by any Borrower, and the Administrative Agent and
the Lenders are authorized to honor and rely upon any such request or any
instructions received from any responsible official of any Borrower. It is
expressly agreed and understood by each Borrower that the Administrative Agent
and the Lenders shall have no responsibility to inquire into the apportionment,
allocation or disposition of any Loans or Letters of Credit made to any
Borrower.
2. ACKNOWLEDGMENT AND INDEMNITY RE JOINT HANDLING. It is understood and
agreed that the handling of this credit facility on a joint borrowing basis as
set forth in this Agreement is as an accommodation to Borrowers and at the
request of Borrowers, and that the Administrative Agent and the Lenders shall
incur no liability to any Borrower or any other Person as a result thereof. To
induce the Administrative Agent and the Lenders to do so, and in consideration
thereof, each of the Borrowers hereby agrees to indemnify the Administrative
Agent and each Lender and hold them harmless from and against any and all
liabilities, expenses, losses, damages and/or claims of damage or injury
asserted against them by any Borrower or by any other Person arising from or
incurred by reason of the joint handling of the financing arrangements provided
in the Loan Agreement, reliance by the Administrative Agent and the Lenders on
any requests or instructions from any Borrower, or any other similar action
taken by the Administrative Agent or any Lender under the Loan Documents.
<PAGE>
3. REPRESENTATION AND WARRANTY. Each Borrower represents and warrants
to the Administrative Agent and each Lender that (i) it has established adequate
means of obtaining, on a continuing basis, financial and other information
pertaining to the business, operations and condition (financial and otherwise)
of Parent and its Subsidiaries and their Property, and (ii) it now is and
hereafter will be completely familiar with the business, operations and
condition (financial and otherwise) of such Persons and their Property. Each
Borrower hereby waives and relinquishes any duty on the part of the
Administrative Agent or any Lender to disclose to it any matter, fact or thing
relating to the business, operations or condition (financial or otherwise) of
Borrowers, Parent, its Subsidiaries or their Property, whether now or hereafter
known by the Administrative Agent or any Lender during the term of the Loan
Agreement.
4. WAIVERS AND CONSENTS. Each of the Borrowers consents and agrees that
the Administrative Agent and the Lenders may, at any time and from time to time,
without notice or demand to any of them, and without affecting the
enforceability or continuing effectiveness hereof:
a. supplement, modify, amend, extend, renew, accelerate, or
otherwise change the time for payment or the terms of the Obligations
or any part thereof, including any increase or decrease of the rate(s)
of interest thereon;
b. supplement, modify, amend or waive, or enter into or give
any agreement, approval or consent with respect to, the Obligations or
any part thereof or any of the Loan Documents or any additional
security or guaranties, or any condition, covenant, default, remedy,
right, representation or term thereof or thereunder;
c. accept new or additional instruments, documents or
agreements in exchange for or relative to any of the Loan Documents or
the Obligations or any part thereof;
d. accept partial payments on the Obligations;
e. receive and hold additional security or guaranties for the
Obligations or any part thereof;
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<PAGE>
f. release, reconvey, terminate, waive, abandon, fail to
perfect, subordinate, exchange, substitute, transfer and/or enforce any
security or guaranties, and apply any security and direct the order or
manner of sale thereof as the Administrative Agent and the Lenders in
their sole and absolute discretion may determine;
g. release any Person from any personal liability with respect
to the Obligations or any part thereof;
h. settle, release on terms satisfactory to the Administrative
Agent and the Lenders or by operation of applicable Laws or otherwise
liquidate or enforce any Obligations and any security or guaranty
therefor in any manner, consent to the transfer of any security and bid
and purchase at any sale; and/or
i. consent to the merger, change or any other restructuring or
termination of the corporate existence of Borrowers, or any of them,
any guarantor or any other Person, and correspondingly restructure the
Obligations, and any such merger, change, restructuring or termination
shall not affect the liability of any Person or the continuing
effectiveness hereof or the enforceability hereof with respect to all
or any part of the Obligations;
provided that nothing herein shall waive, alter, diminish or modify any rights
of the Borrowers under the Loan Documents, including without limitation, the
rights of the Borrowers to agree to any amendments or modifications of the Loan
Documents.
Upon the occurrence and during the continuance of any Event of Default,
the Administrative Agent and the Lenders may enforce the Loan Agreement and the
other Loan Documents independently as to each Borrower and independently of any
other remedy or security the Administrative Agent or any Lender at any time may
have or hold in connection with the Obligations. Each Borrower expressly waives
any right to require the Administrative Agent or any Lender to marshal assets in
favor of Borrowers, and agrees that the Administrative Agent and Lenders may
proceed against Borrowers, or any of them, or upon any security or remedy before
proceeding to enforce this Loan Agreement, in such order as they shall determine
in their sole and absolute discretion. The Administrative Agent (with the
consent of the Requisite Lenders) may file a separate action or actions against
Borrowers, or any of them, and/or any guarantor without respect to any Borrower,
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<PAGE>
whether action is brought or prosecuted with respect to any other security or
against any other Person, or whether any other Person is joined in any such
action or actions. Each Borrower agrees that the Administrative Agent and the
Lenders may deal with each Borrower or themselves other in connection with the
Obligations or otherwise, or alter any contracts or agreements now or hereafter
existing between any of them, in any manner whatsoever, all without in any way
altering or affecting the security of the Loan Documents. Borrowers expressly
waive the benefit of any statute(s) of limitations affecting their liability
under the Loan Documents or the enforcement of the Obligations or any Liens
created or granted therein. The Administrative Agent and the Lenders' rights
hereunder shall be reinstated and revived, and the enforceability of this Loan
Agreement shall continue, with respect to any amount at any time paid on account
of the Obligations which thereafter shall be required to be restored or returned
by them upon the bankruptcy, insolvency or reorganization of Borrowers, or any
of them, or any other Person, or otherwise, all as though such amount had not
been paid. The rights of Lender created or granted under the Loan Documents and
their enforceability at all times shall remain effective to secure the full
amount of all the Obligations, even though the Obligations, including any part
thereof or any other security or guaranty therefor, may be or hereafter may
become invalid or otherwise unenforceable as against Borrowers or any guarantor
or surety and whether or not such other Persons shall have any personal
liability with respect thereto. Each Borrower expressly waives any and all
defenses now or hereafter arising or asserted by reason of (a) any disability or
other defense of any of the other such Persons with respect to the Obligations,
(b) the unenforceability or invalidity of any security or guaranty for the
Obligations or the lack of perfection or continuing perfection or failure of
priority of any security for the Obligations, (c) the cessation for any cause
whatsoever of the liability of Borrowers, or any of them (other than by reason
of the full payment and performance of all Obligations), (d) any failure of the
Administrative Agent or any Lender to marshal assets in favor of Borrowers or
any other Person, (e) except as otherwise provided in the Loan Documents, any
failure of the Administrative Agent or any Lender to give notice of sale or
other disposition of collateral to any Borrower or any other Person or any
defect in any notice that may be given in connection with any sale or
disposition of collateral, (f) any failure of the Administrative Agent or any
Lender to comply with applicable Laws in connection with the sale or other
disposition of any collateral or other security for any Obligation, including
without limitation any failure of the Administrative Agent or any
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<PAGE>
Lender to conduct a commercially reasonable sale or other disposition of any
collateral or other security for any Obligation, (g) any act or omission of the
Administrative Agent or any Lender or others that directly or indirectly results
in or aids the discharge or release of Borrowers or any of them, or any other
Person or the obligations or any other security or guaranty therefor by
operation of Law or otherwise, (h) any Law which provides that the obligation of
a surety or guarantor must neither be larger in amount nor in other respects
more burdensome than that of the principal or which reduces a surety's or
guarantor's obligation in proportion to the principal obligation, (i) any
failure of the Administrative Agent or any Lender to file or enforce a claim in
any bankruptcy or other proceeding with respect to any Person, (j) the election
by the Administrative Agent or any Lender, in any bankruptcy proceeding of any
Person, of the application or non-application of Section 1111(b)(2) of the
United States Bankruptcy Code, (k) any extension of credit or the grant of any
Lien under Section 364 of the United States Bankruptcy Code, (l) any use of cash
collateral under Section 363 of the United States Bankruptcy Code, (m) any
agreement or stipulation with respect to the provision of adequate protection in
any bankruptcy proceeding of any Person, (n) the avoidance of any Lien in favor
of the Administrative Agent or any Lender for any reason, (o) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any of the Obligations
(or any interest thereon) in or as a result of any such proceeding, (p) to the
extent permitted, the benefits of any form of one-action rule, or (q) any action
taken by Lender that is authorized by these Joint Borrower Provisions or any
other provision of any Loan Documents. Each Borrower expressly waives all
setoffs and counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor and all other notices or demands of any kind or
nature whatsoever with respect to the Obligations, and all notices of acceptance
of the Loan Agreement or of the existence, creation or incurrence of new or
additional Obligations.
5. LIENS ON REAL PROPERTY. In the event that all or any part of the
Obligations at any time are secured by any one or more deeds of trust or
mortgages or other instruments creating or granting Liens or any interests in
real Property, each of the Borrowers authorizes the Administrative Agent and
each Lender, upon the occurrence of and during the continuance of any Event of
Default, at their sole option, without notice or demand and
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<PAGE>
without affecting any Obligations of any such Person, the enforceability of the
Loan Documents, or the validity or enforceability of any Liens of the
Administrative Agent or any Lender on any collateral, to foreclose any or all of
such deeds of trust or mortgages or other instruments by judicial or nonjudicial
sale. Each Borrower expressly waives all rights and any defenses to the
enforcement of the Loan Documents or any rights of the Administrative Agent or
any Lender created or granted thereby or to the recovery by the Administrative
Agent and the Lenders against Borrowers, or any of them, any guarantor or any
other Person liable therefor of any deficiency after a judicial or nonjudicial
foreclosure or sale, even though such a foreclosure or sale because all or any
part of the Obligations is secured by real Property. This means, among other
things: (1) Administrative Agent and each Lender may collect from any Borrower,
any guarantor or any other Person without first foreclosing on any real or
personal Property collateral pledged by any Borrower, any other Party, any
guarantor or any other Person. (2) If Administrative Agent or any Lender
forecloses on any real Property collateral pledged by Borrowers, any guarantor
or any other Person: (A) The amount of the Obligations may be reduced only by
the price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price. (B) Administrative Agent and each
Lenders may collect from Borrowers, any guarantor or any other Person even if
the Administrative Agent or any Lender, by foreclosing on the real Property
collateral, has destroyed any right any guarantor, any other Party or any other
Person may have to collect from any Borrower. This is an unconditional and
irrevocable waiver of any rights and defenses any Borrower may have because all
or any part of the Obligations is secured by real Property. Each of the
Borrowers expressly waives any defenses or benefits that may be derived from
California Code of Civil Procedure ss.ss. 580a, 580b, 580d or 726, or comparable
provisions of the Laws of any other jurisdiction, including, without limitation,
NRS Section 40.430 and judicial decisions relating thereto, and NRS Sections
40.451, 40.455, 40.457 and 40.459, and all other suretyship defenses it
otherwise might or would have under California Law or other applicable Law. Each
Borrower expressly waives any right to receive notice of any judicial or
nonjudicial foreclosure or sale of any real Property or interest therein subject
to any such deeds of trust or mortgages or other instruments and any guarantor's
or any other Person's failure to receive any such notice shall not impair or
affect each Borrower's Obligations or the enforceability of the Joint Borrower
Provisions or any rights of Administrative Agent or Lenders created or granted.
-6-
<PAGE>
6. WAIVER OF RIGHTS OF SUBROGATION. Notwithstanding anything to the
contrary elsewhere contained herein or in any other Loan Document to which any
Borrower is a party, Borrowers hereby waive with respect each other and their
respective successors and assigns (including any surety) and any other Person
which is directly or indirectly a creditor of any Borrower or any surety for any
Borrower, any and all rights at Law or in equity, to subrogation, to
reimbursement, to exoneration, to contribution, to setoff or to any other rights
that could accrue to a surety against a principal, to a guarantor against a
maker or obligor, to an accommodation party against the party accommodated, or
to a holder or transferee against a maker and which any Borrower may have or
hereafter acquire against each other or any other party in connection with or as
a result of their execution, delivery and/or performance of this Loan Agreement
or any other Loan Document to which any of them is a party. Borrowers agree that
they shall not have or assert any such rights against one another or their
respective successors and assigns or any other Person (including any surety)
which is directly or indirectly a creditor of any surety for any Borrower,
either directly or as an attempted setoff to any action commenced against any
other Person comprising any Borrower (as a Borrower or in any other capacity) or
any other party. Each Borrower hereby acknowledges and agrees that this waiver
is intended to benefit of Borrowers and Lenders and shall not limit or otherwise
affect any of their liabilities hereunder, under any other Loan Document to
which any of them is a party, or the enforceability hereof or thereof.
7. UNDERSTANDINGS WITH RESPECT TO WAIVERS AND CONSENTS. Borrowers, and
each of them, warrant and agree that each of the waivers and consents set forth
herein are made with full knowledge of their significance and consequences, with
the understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which they otherwise may
have against each other, the Administrative Agent, the Lenders or others, or
against any collateral, and that, under the circumstances, the waivers and
consents herein given are reasonable and not contrary to public policy or Law.
Each Borrower acknowledges that it has either consulted with legal counsel
regarding the effect of the Loan Documents and the waivers and consents set
forth therein, or has made an informed decision not to do so. If the Loan
Documents or any of the waivers or consents herein are determined to be
unenforceable under or in violation of applicable Law, such waivers and consents
shall be effective to the maximum extent permitted by Law.
-7-
<PAGE>
SCHEDULE 1.1
HARRAH'S ENTERTAINMENT, INC.
FIVE YEAR LOAN AGREEMENT
$1,300,000,000 SENIOR CREDIT FACILITY
<TABLE>
<CAPTION>
BANKS AMOUNT PRO RATA SHARE
<S> <C> <C>
ADMINISTRATIVE AGENT
Bank of America National Trust and Savings Association 121,875,000.00 9.37500%
SYNDICATION AGENT
Bankers Trust Company 93,437,500.00 7.18750%
DOCUMENTATION AGENTS
Canadian Imperial Bank of Commerce 93,437,500.00 7.18750%
Societe Generale 93,437,500.00 7.18750%
CO-DOCUMENTATION AGENTS
Commerzbank AG - Los Angeles Branch 81,250,000.00 6.25000%
PNC Bank, National Association 81,250,000.00 6.25000%
Wells Fargo Bank, National Association 81,250,000.00 6.25000%
SENIOR MANAGING AGENT
Fleet Bank N.A 81,250,000.00 6.25000%
MANAGING AGENT
The First National Bank of Chicago 60,937,500.00 4.68750%
CO-AGENTS
The Bank of New York 40,625,000.00 3.12500%
The Bank of Nova Scotia 40,625,000.00 3.12500%
Credit Lyonnais Los Angeles Branch 40,625,000.00 3.12500%
U.S. Bank National Association 40,625,000.00 3.12500%
Wachovia Bank, N.A 40,625,000.00 3.12500%
Westdeutsche Landesbank Girozentrale 40,625,000.00 3.12500%
LENDERS
First Security Bank, N.A 28,437,500.00 2.18750%
The Industrial Bank of Japan, Limited, Atlanta Agency 24,375,000.00 1.87500%
BankBoston, N.A 20,312,500.00 1.56250%
Bank of Hawaii 20,312,500.00 1.56250%
Bank of Scotland 20,312,500.00 1.56250%
<PAGE>
BANKS AMOUNT PRO RATA SHARE
Banque Nationale de Paris, Houston Agency 20,312,500.00 1.56250%
Comerica West Incorporated 20,312,500.00 1.56250%
Michigan National Bank 20,312,500.00 1.56250%
The Sumitomo Bank, Limited 20,312,500.00 1.56250%
First American National Bank, operating as Deposit Guaranty National Bank 16,250,000.00 1.25000%
Erste Bank 12,187,500.00 0.93750%
First Hawaiian Bank 12,187,500.00 0.93750%
First Tennessee Bank National Association 12,187,500.00 0.93750%
Hibernia National Bank 12,187,500.00 0.93750%
The Dai-Ichi Kangyo Bank, Ltd. 8,125,000.00 0.62500%
TOTAL $1,300,000,000.00 100.00000%
</TABLE>
<PAGE>
SCHEDULE 1.2
Harrah's Entertainment, Inc.
Continuing Letters of Credit
<TABLE>
<CAPTION>
Date Expiration
Issued Bank Purpose Amount Date
<S> <C> <C> <C> <C> <C>
R 23-Jul-93 Credit Lyonnais Sec Pac TTEE for Syphus 490,000 28-Apr-00
R 23-Jul-93 Credit Lyonnais Sec Pac TTEE for Dougal 570,000 28-Apr-00
R 5-Oct-93 First Tennessee Risk Mgt - TN self ins 350,000 7-Oct-99
R 8-Nov-93 Bankers Trust Risk Mgt - Nevada ins 2,297,000 8-Nov-99
R 25-Feb-94 First Tennessee Risk Mgt - Miss 250,000 25-Feb-00
R 27-Jun-94 Bankers Trust LC Replacement-Risk Mgt-Gen'l & auto Liab
5,572,941 27-Jun-99
R 6-Jul-94 Bankers Trust LC Replacement-Risk Mgt-Aster
720,619 6-Jul-99
R 1-Nov-94 Bankers Trust Embassy-MO self ins (HOC obligation)
200,000 1-Nov-99
R 1-Nov-94 Bankers Trust Maryland Hts-MO self ins 425,000 1-Nov-99
R 1-Nov-94 Bankers Trust Harrah's NKC-MO self ins 425,000 1-Nov-99
R 18-May-96 Bankers Trust Aster losses 750,000 18-May-99
R 23-Jan-96 Bankers Trust Aster Ins-property Ins program
382,049 23-Jan-00
R 9-Feb-96 FNBC U.S. Army Corp of Engineers- Shreveport
5,000,000 2-Feb-00
R 12-Nov-97 Bankers Trust TCGE (Cherokee) 10,000,000 12-Nov-99
R 20-Jan-96 Bankers Trust Construction in Las Vegas (w/Sands)
152,717 20-Jan-00
1-Dec-98 Bankers Trust Shamrock Holdings Group 50,000 30-May-99
27-Jan-99 Bankers Trust Airlines Reporting Corporation
70,000 27-Jan-00
----------
Total Under Credit Facility
27,705,326
==========
</TABLE>
<PAGE>
Schedule 1.3
COMBINED HARRAH'S SHOWBOAT AND RIO EBITDA
First Quarter, 1998 $149,401,000
Second Quarter 1998 $172,983,000
Third Quarter, 1998 $184,543,000
Fourth Quarter, 1998 $135,071,000
<PAGE>
Schedule 4.3
GOVERNMENT APPROVALS
Approval by the Nevada Gaming Commission upon the recommendation of the Nevada
State Gaming Control Board of all restrictions on the transfer of and agreements
not to encumber the stock or other equity securities of Harrah's Las Vegas, Inc.
and Harrah's Laughlin, Inc.
<PAGE>
SCHEDULE 4.4
SIGNIFICANT SUBSIDIARIES
Red River Entertainment of Shreveport
Partnership in Commendam
- --------------------------------------
Type of Entity: Partnership
Jurisdiction: Louisiana
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Shreveport Investment Company, Inc. - 99%;
Harrah's Shreveport Management Company, Inc. - 1%
Harrah's Shreveport Investment Company, Inc.
- --------------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Shreveport Management Company, Inc.
- --------------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Showboat Marina Casino Partnership
- ----------------------------------
Type of Entity: Partnership
Jurisdiction: Indiana
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat Marina Partnership - 99%
Showboat Marina Partnership
- ---------------------------
Type of Entity: Partnership
Jurisdiction: Indiana
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat Indiana Investment Limited Partnership - 45%
<PAGE>
Showboat Indiana Investment Limited Partnership
- -----------------------------------------------
Type of Entity: Limited Partnership
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat Operating Company - 99%
Showboat Operating Company
- --------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat, Inc. - 100%
Showboat, Inc.
- --------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Showboat Australia Pty. Limited
- -------------------------------
Type of Entity: Corporation
Jurisdiction: Australia
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat, Inc. - 50%; Showboat Development
Company - 50%
Showboat Development Company
- ----------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat, Inc. - 100%
Harrah's Tunica Corporation
- --------------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
-2-
<PAGE>
Harrah's New Jersey, Inc.
- -------------------------
Type of Entity: Corporation
Jurisdiction: New Jersey
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Atlantic City, Inc.
- ----------------------------
Type of Entity: Corporation
Jurisdiction: New Jersey
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Laughlin, Inc.
- --------------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Las Vegas, Inc.
- ------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Noth Kansas City Corporation
- -------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
-3-
<PAGE>
Harrah's Maryland Heights Corporation
- -------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Des Plaines Development Limited Partnership
- -------------------------------------------
Type of Entity: Limited Partnership
Jurisdiction: Illinois
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Illinois Corporation
- - 80%
Harrah's Illinois Corporation
- -----------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Vicksburg Corporation
- ------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Tunica Partners II L.P.
- -----------------------
Type of Entity: Limited Partnership
Jurisdiction: Mississippi
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Tunica Corporation - 83%; Harrah's Vicksburg
Corporation - 17%
-4-
<PAGE>
Harrah's Crescent City Investment Company
- -----------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Rio Properties, Inc.
- --------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Rio Hotel & Casino, Inc. - 100%
Rio Hotel & Casino, Inc.
- ------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): [Harrah's Operating Company,
Inc. - 100%]
Marina Associates
- -----------------
Type of Entity: General Partnership
Jurisdiction: New Jersey
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Atlantic City, Inc. - 48.65%; Harah's New
Jersey, Inc. - 51.34%
Harrah's Operating Company, Inc.
- --------------------------------
Type of Entity: Corporation
Jurisdiction: Delaware
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Entertainment, Inc.
- - 100%
-5-
<PAGE>
SCHEDULE 4.7
EXISTING LIENS, NEGATIVE PLEDGES AND RIGHTS OF OTHERS
Lien on River Secco Golf Course pursuant to Construction Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing dated as of July 2,
1996, among Seven Hills Golf Limited Partnership, as Trustor, Nevada Title
Insurance Company, as Trustee, and Orex USA Corporation, as beneficiary, and
that certain Assumption Agreement and Modification of Loan Agreement dated as of
September 11, 1997, among Orex USA Corporation, as Lender, Seven Hills Golf
Limited Partnership, as Borrower, and Rio Development Company, Inc., as Buyer.
Mortgage and Security Agreement dated January 29, 1998 securing
$100,000,000 loan to Showboat Land LLC in favor of Column Financial, Inc.
Lien on Cash Deposited to Defease (a) $58,300,000 aggregate face amount
principal amount of Showboat's First Mortgage Bonds due 2008, and (b) the
$2,400,000 aggregate outstanding principal amount of Showboat's Senior
Subordinated Notes due 2009.
Rights of countersigning partners to acquire partnership interests granted
in Limited Partnership Agreement of Des Plaines Development Limited Partnership
dated February 28, 1992, between Harrah's Illinois Corporation and John Q.
Hammons; First Amendment to Limited Partnership Agreement of Des Plaines Limited
Partnership dated as of October 5, 1992, and as further amended.
Rights of countersigning partners to acquire partnership interests granted
in Partnership Agreement dated November 2, 1995, by and between Harrah's
Maryland Heights Corporation and Players MH, L.P. regarding the Riverside Joint
Venture; First Amendment to Partnership Agreement dated June 28, 1996; Second
Amendment to Partnership Agreement dated October 16, 1996.
Settlement Agreement dated October 29, 1998 by and among Harrah's
Entertainment, Inc., Harrah's Operating Company, Inc., Harrah's New Orleans
Management Company and the NOLDC Shareholders, including Stock Option for each
NOLDC Shareholder to acquire from Harrah's Entertainment, Inc. shares of Class B
stock of JCC Holding Company equal to 3% (in the aggregate) of the equity of JCC
Holding Company outstanding as of the specified plan consummation date.
<PAGE>
Right granted to George Novogroder to purchase 8.140% of Waterfront
Entertainment and Development, Inc. (and 1.5% of any Borrower's or its
Affiliates interest in a gaming venture in Cook County, Illinois) as set forth
in the Repurchase Agreement dated as of February 26, 1999, between Harrah's
Operating Company Inc. and George Novogroder.
Right granted to Barry Porter to purchase 5.43% of Waterfront Entertainment
and Development, (and 1.0005% of any of Borrower's or its Affiliate's interest
in a gaming venture in Cook County, Illinois) as set forth in the Repurchase
Agreement dated as of February 26, 1999, between Harrah's Operating Company,
Inc., and Barry Porter.
Right granted to the Estate of Nikos Kefalidis to purchase 5.430% of
Waterfront Entertainment and Development, Inc. (and 1.0005% of any of Borrower's
or its Affiliate's interest in a gaming venture in Cook County, Illinois) as set
forth in the Repurchase Agreement dated as of February 26, 1999, between
Harrah's Operating Company, Inc., and the Estate of Nikos Kefalidis, deceased.
Rights of counterparty to acquire partnership interests granted in
Partnership Agreement dated April 22, 1994 by and between Showboat Australia
Pty. Limited and Leighton Properties Limited.
-2-
<PAGE>
Exhibit 4.2
EXECUTION
364-DAY LOAN AGREEMENT
Dated as of April 30, 1999
among
HARRAH'S ENTERTAINMENT, INC.
as Guarantor
HARRAH'S OPERATING COMPANY, INC.
MARINA ASSOCIATES
as Borrowers
The Lenders, Syndication Agent, Documentation Agents
And Co-Documentation Agents Herein Named
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
NATIONSBANC MONTGOMERY SECURITIES, LLC.,
Lead Arranger and Sole Book Manager
<PAGE>
TABLE OF CONTENTS
Article 1 DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms
1.2 Use of Defined Terms
1.3 Accounting Terms
1.4 Rounding
1.5 Exhibits and Schedules
1.6 Miscellaneous Terms
Article 2 LOANS AND LETTERS OF CREDIT
2.1 Committed Loans-General
2.2 Base Rate Loans
2.3 Eurodollar Rate Loans
2.4 RESERVED
2.5 RESERVED
2.6 RESERVED
2.7 Voluntary Increase to the Commitment
2.8 Voluntary Reduction of Commitment
2.9 Optional Termination of Commitment
2.10 Additional Borrowers
2.11 Administrative Agent's Right to Assume Funds Available for
Advances
2.12 Extension of the Maturity Date
Article 3 PAYMENTS AND FEES
3.1 Principal and Interest
3.2 Arrangement Fee
3.3 Upfront Fees
3.4 Facility Fees
3.5 RESERVED
3.6 Agency Fees
3.7 Increased Commitment Costs
3.8 Eurodollar Costs and Related Matters
3.9 Default Rate
3.10 Computation of Interest and Fees
3.11 Non-Business Days
3.12 Manner and Treatment of Payments
3.13 Funding Sources
3.14 Failure to Charge Not Subsequent Waiver
3.15 Administrative Agent's Right to Assume Payments Will
be Made by Borrowers
3.16 Fee Determination Detail
3.17 Survivability
<PAGE>
Article 4 REPRESENTATIONS AND WARRANTIES
4.1 Existence and Qualification; Power; Compliance With Laws
4.2 Authority; Compliance With Other Agreements and Instruments
and Government Regulations
4.3 No Governmental Approvals Required
4.4 Significant Subsidiaries
4.5 Financial Statements
4.6 No Other Liabilities; No Material Adverse Effect
4.7 Title to Property
4.8 Litigation
4.9 Binding Obligations
4.10 No Default
4.11 ERISA
4.12 Regulations T, U and X; Investment Company Act
4.13 Disclosure
4.14 Tax Liability
4.15 Projections
4.16 Hazardous Materials
4.17 Gaming Laws
4.18 Year 2000 Compliance
4.19 Solvency
Article 5 AFFIRMATIVE COVENANTS
5.1 Preservation of Existence
5.2 Maintenance of Properties
5.3 Maintenance of Insurance
5.4 Compliance With Laws
5.5 Inspection Rights
5.6 Keeping of Records and Books of Account
5.7 Use of Proceeds
5.8 Year 2000 Preparations
Article 6 NEGATIVE COVENANTS
6.1 Consolidations, Mergers and Sales of Assets
6.2 Hostile Tender Offers
6.3 Change in Nature of Business
6.4 Liens, Negative Pledges, Sale Leasebacks and Rights of Others
6.5 Total Debt Ratio
6.6 Interest Coverage Ratio
6.7 Subsidiary Indebtedness
Article 7 INFORMATION AND REPORTING REQUIREMENTS
7.1 Financial and Business Information
7.2 Compliance Certificates
Article 8 CONDITIONS
8.1 Initial Advances, Etc.
8.2 Any Increasing Advance, Etc.
<PAGE>
Article 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
9.1 Events of Default
9.2 Remedies Upon Event of Default
Article 10 THE ADMINISTRATIVE AGENT
10.1 Appointment and Authorization
10.2 Administrative Agent and Affiliates
10.3 Proportionate Interest in any Collateral
10.4 Lenders' Credit Decisions
10.5 Action by Administrative Agent
10.6 Liability of Administrative Agent
10.7 Indemnification
10.8 Successor Administrative Agent
10.9 No Obligations of Parent or Borrowers
Article 11 MISCELLANEOUS
11.1 Cumulative Remedies; No Waiver
11.2 Amendments; Consents
11.3 Costs, Expenses and Taxes
11.4 Nature of Lenders' Obligations
11.5 Survival of Representations and Warranties
11.6 Notices
11.7 Execution of Loan Documents
11.8 Binding Effect; Assignment
11.9 Sharing of Setoffs
11.10 Indemnity by Parent and Borrowers
11.11 Nonliability of the Lenders
11.12 No Third Parties Benefited
11.13 Confidentiality
11.14 Removal of a Lender
11.15 Further Assurances
11.16 Integration
11.17 Governing Law
11.18 Severability of Provisions
11.19 Headings
11.20 Time of the Essence
11.21 Foreign Lenders and Participants
11.22 Gaming Boards
11.23 Nature of the Borrowers' Obligations
11.24 Designated Senior Debt
11.25 Gaming Regulations
11.26 Waiver of Right to Trial by Jury
11.27 Purported Oral Amendments
<PAGE>
Exhibits
- --------
A - Assignment Agreement
B - Committed Advance Note
C - Reserved
D - Reserved
E - Reserved
F - Compliance Certificate
G - Opinions of Counsel
H - Parent Guaranty
I - Reserved
J - Request for Loan
K - Election to Become a Borrower
L - Joint Borrower Provisions
Schedules
- ---------
1.1 Pro Rata Shares
1.2 Reserved
1.3 Historical Combined EBITDA
4.3 Governmental Approvals
4.4 Significant Subsidiaries
4.7 Existing Liens, Negative Pledges and Rights of Others
<PAGE>
364-DAY LOAN AGREEMENT
Dated as of April 30, 1999
This 364-DAY LOAN AGREEMENT ("Agreement") is entered into among
Harrah's Operating Company, Inc., a Delaware corporation ("Company"), Marina
Associates, a New Jersey general partnership ("Marina" and together with the
Company and such other Subsidiaries that become Borrowers pursuant to Section
2.10 hereof, as Borrowers), Harrah's Entertainment, Inc., a Delaware corporation
(the "Parent"), as Guarantor, Bank of America National Trust and Savings
Association and each lender whose name is set forth on the signature pages of
this Agreement and each other lender which may hereafter become a party to this
Agreement pursuant to Section 11.8 (collectively, the "Lenders" and
individually, a "Lender"), Bankers Trust Company, as Syndication Agent, Canadian
Imperial Bank of Commerce and Societe Generale, as Documentation Agents,
Commerzbank AG, PNC Bank, National Association and Wells Fargo Bank, N.A., as
Co-Documentation Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent. While not party to this Agreement,
NationsBanc Montgomery Securities, LLC has served as Lead Arranger and Sole Book
Manager and BT Alex. Brown Incorporated has served as Co-Lead Arranger for the
credit facilities described herein.
RECITALS
A. Parent and Borrowers have requested that the Lenders provide the
credit facilities described herein and in the Five Year Loan Agreement
to provide for their common working capital needs and for the
refinancing of certain existing Indebtedness of Borrowers and their
Subsidiaries, including without limitation the Existing Harrah's Credit
Agreements, the Existing Rio Credit Agreements and the Existing Rio
Indentures described herein, all as further set forth in Section 5.7.
B. It is intended that the Company shall be jointly and severally
liable for all of the Obligations hereunder, as more particularly set
forth in Section 11.23, notwithstanding any allocation of the
Obligations to the nominal account of any other Borrower.
C. The principal Obligations of Marina for Loans hereunder shall be
limited to the amount of Loans borrowed by Marina under its Aggregate
Sublimit.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto covenant and agree as follows:
Article 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the meanings set forth below:
"ADMINISTRATIVE AGENT" means Bank of America, when acting in
its capacity as the Administrative Agent under any of the Loan
Documents, or any successor Administrative Agent.
"ADMINISTRATIVE AGENT'S OFFICE" means the Administrative
Agent's address as set forth on the signature pages of this Agreement,
or such other address as the Administrative Agent hereafter may
designate by written notice to Borrowers and the Lenders.
"ADVANCE" means any advance made or to be made by any Lender
to a Borrower as provided in Article 2, and includes each Base Rate
Advance, Eurodollar Rate Advance and Committed Advance.
"AFFILIATE" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and
the correlative terms, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise); provided that, in any event, any Person that
owns, directly or indirectly, 5% or more of the securities having
ordinary voting power for the election of directors or other governing
body of a corporation that has more than 100 record holders of such
securities, or 5% or more of the partnership or other ownership
interests of any other Person that has more than 100 record holders of
such interests, will be deemed to control such corporation or other
Person.
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"AGGREGATE SUBLIMIT" means (a) with respect to Marina
$500,000,000, and (b) with respect to each other Subsidiary of Parent
which hereafter becomes a Borrower, such aggregate amount as shall be
established in accordance with Section 2.10.
"AGREEMENT" means this 364-Day Loan Agreement, either as
originally executed or as it may from time to time be supplemented,
modified, amended, restated or extended.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement
substantially in the form of Exhibit A.
"ATLANTIC CITY SHOWBOAT LAND DEBT" means, the $100,000,000
aggregate face amount of Showboat Land, LLC's 7.09% Promissory Note due
February 1, 2028.
"BANK OF AMERICA" means Bank of America National Trust and
Savings Association, its successors and assigns.
"BASE RATE" means, as of any date of determination, the rate
per annum (rounded upwards, if necessary, to the next 1/100 of 1%)
equal to the higher of (a) the Reference Rate in effect on such date
(calculated on the basis of a year of 365 or 366 days and the actual
number of days elapsed) and (b) the Federal Funds Rate in effect on
such date (calculated on the basis of a year of 360 days and the actual
number of days elapsed) plus 1/2 of 1% (50 basis points).
"BASE RATE ADVANCE" and "BASE RATE LOAN" mean, respectively, a
Committed Advance or a Committed Loan made hereunder and specified to
be a Base Rate Advance or Loan in accordance with Article 2.
"BASE RATE MARGIN" means, for each Pricing Period, the
Eurodollar Margin (after any Pricing Adjustment) for that Pricing
Period minus 125 basis points, provided that in no event shall the Base
Rate Margin be less than 0.00 basis points.
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"BORROWERS" means, collectively, Company, Marina and each
other Wholly-Owned Subsidiary which is hereafter designated as a
Borrower in accordance with Section 2.10, and their respective
successors and permitted assigns.
"BUSINESS DAY" means any Monday, Tuesday, Wednesday, Thursday
or Friday, other than a day on which commercial banks are authorized or
required to be closed in California or New York.
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of
a Person under any leasing or similar arrangement which, in accordance
with Generally Accepted Accounting Principles, is classified as a
capital lease.
"CASH" means, when used in connection with any Person, all
monetary and non-monetary items owned by that Person that are treated
as cash in accordance with Generally Accepted Accounting Principles,
consistently applied.
"CERTIFICATE OF A RESPONSIBLE OFFICIAL" means a certificate
signed by a Responsible Official of the Person providing the
certificate.
"CHANGE IN CONTROL" means the occurrence of a Rating Decline
in connection with any of the following events [[(or, if the Debt
Ratings are not then Investment Grade, any further decline in the Debt
Ratings\\ the occurrence of any of the following events without the
requirement of a Rating Decline)]]: (i) upon any merger or
consolidation of Parent with or into any person or any sale, transfer
or other conveyance, whether direct or indirect, of all or
substantially all of the assets of Parent, on a consolidated basis, in
one transaction or a series of related transactions, if, immediately
after giving effect to such transaction, any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) is or becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated by the
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Securities and Exchange Commission under said Act) of securities
representing a majority of the total voting power of the aggregate
outstanding securities of the transferee or surviving entity normally
entitled to vote in the election of directors, managers, or trustees,
as applicable, of the transferee or surviving entity, (ii) when any
person or group of persons (within the meaning of Section 13 or 14 of
the Securities Exchange Act of 1934, as amended) is or becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated by The
Securities and Exchange Commission under said Act) of securities
representing a majority of total voting power of the aggregate
outstanding securities of Parent normally entitled to vote in the
election of directors of Parent, (iii) when, during any period of 12
consecutive calendar months, individuals who were directors of Parent
on the first day of such period (together with any new directors whose
election by the board of directors of Parent or whose nomination for
election by the stockholders of Parent was approved by a vote of a
majority of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of directors of Parent, or
(iv) the sale or disposition, whether directly or indirectly, by Parent
of all or substantially all of its assets.
"CLOSING DATE" means the time and Business Day on which the
conditions set forth in Section 8.1 are satisfied or waived. The
Administrative Agent shall notify Borrowers and the Lenders of the date
that is the Closing Date.
"CO-DOCUMENTATION AGENTS" means those Lenders listed in the
preamble of this Agreement as such. No Co-Documentation Agent shall
have any additional rights, duties or obligations under this Agreement
or the other Loan Documents by reason of its being a Co-Documentation
Agent.
"CO-LEAD ARRANGER" means BT Alex. Brown Incorporated. The
Co-Lead Arranger shall have no rights, duties or obligations under this
Agreement or the other Loan Documents.
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"CODE" means the Internal Revenue Code of 1986, as amended or
replaced and as in effect from time to time.
"COMMITMENT" means, subject to Sections 2.7, 2.8, 2.9 and
11.14, $300,000,000. As of the Closing Date, the respective Pro Rata
Shares of the Lenders with respect to the Commitment are set forth in
Schedule 1.1.
"COMMITTED ADVANCE" means an Advance made to a Borrower by any
Lender in accordance with its Pro Rata Share pursuant to Section 2.1.
"COMMITTED ADVANCE NOTE" means the promissory note made by
each Borrower to a Lender evidencing the Committed Advances under that
Lender's Pro Rata Share to that Borrower, substantially in the form of
Exhibit B, either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed, extended or
supplanted.
"COMMITTED LOANS" means Loans that are comprised of Committed
Advances.
"COMPANY" means Harrah's Operating Company, Inc., its
successors and permitted assigns.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit F, properly completed and signed on behalf of
Borrowers by a Senior Officer of each Borrower.
"CONFIDENTIAL INFORMATION MEMORANDUM" means the Confidential
Information Memorandum dated March, 1999, distributed to the Lenders in
connection with the credit facilities provided herein.
"CONTINGENT OBLIGATION" means, as to any Person, any (a)
guarantee by that Person of Indebtedness of, or other obligation
performable by, any other Person or (b) assurance given by that Person
to an obligee of any other Person with respect to the performance of an
obligation by, or the financial condition of, such other Person,
whether direct, indirect or contingent, including any purchase or
repurchase agreement covering such obligation or any collateral
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security therefor, any agreement to provide funds (by means of loans,
capital contributions or otherwise) to such other Person, any agreement
to support the solvency or level of any balance sheet item of such
other Person or any "keep-well", "make-well" or other arrangement of
whatever nature given for the purpose of assuring or holding harmless
such obligee against loss with respect to any obligation of such other
Person; provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in
the ordinary course of business.
"CONTRACTUAL OBLIGATION" means, as to any Person, any
provision of any outstanding security issued by that Person or of any
material agreement, instrument or undertaking to which that Person is a
party or by which it or any of its Property is bound.
"CREDITORS" means, collectively, the Administrative Agent,
each Lender, Syndication Agent, Documentation Agents, Co-Documentation
Agents, the Lead Arranger, the Co-Lead Arranger and, where the context
requires, any one or more of them.
"DEBT RATING" means, as of each date of determination, the
most creditworthy credit rating, actual or implicit, assigned to senior
unsecured Indebtedness of Company by S&P or Moody's, whichever is
higher.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other
applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws from time to time in effect affecting the rights of
creditors generally.
"DEFAULT" means any event that, with the giving of any
applicable notice or passage of time specified in Section 9.1, or both,
would be an Event of Default.
"DEFAULT RATE" means the interest rate prescribed in Section
3.9.
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"DEFEASED DEBT" means (a) the $58,300,000 aggregate principal
amount of Showboat's First Mortgage Bonds due 2008, (b) the $2,400,000
aggregate outstanding principal amount of Showboat's Senior
Subordinated Notes due 2009, and (c) any other Indebtedness of Parent
and its Subsidiaries which, at any relevant time, is subject to legal
or covenant defeasance in a manner which is reasonably acceptable to
the Administrative Agent.
"DESIGNATED DEPOSIT ACCOUNT" means a deposit account to be
maintained by Borrowers with Bank of America, as from time to time
designated by Borrowers by written notification to the Administrative
Agent.
"DESIGNATED EURODOLLAR MARKET" means, with respect to any
Eurodollar Rate Loan, (a) the London Eurodollar Market, or (b) if prime
banks in the London Eurodollar Market are at the relevant time not
accepting deposits of Dollars or if the Administrative Agent determines
that the London Eurodollar Market does not represent at the relevant
time the effective pricing to the Lenders for deposits of Dollars in
the London Eurodollar Market, the Cayman Islands Eurodollar Market or
(c) if prime banks in the Cayman Islands Eurodollar Market are at the
relevant time not accepting deposits of Dollars or if the
Administrative Agent determines that the Cayman Islands Eurodollar
Market does not represent at the relevant time the effective pricing to
the Lenders for deposits of Dollars in the Cayman Islands Eurodollar
Market, such other Eurodollar Market as may from time to time be
selected by the Administrative Agent with the approval of Borrowers and
the Requisite Lenders.
"DISQUALIFICATION" means, with respect to any Lender:
(a) the failure of that Person timely to file pursuant to
applicable Gaming Laws (i) any application requested of that Person by
any Gaming Board in connection with any licensing required of that
Person as a lender to Borrowers or (ii) any required application or
other papers in connection with determination of the suitability of
that Person as a lender to Borrowers;
(b) the withdrawal by that Person (except where requested or
permitted by the Gaming Board) of any such application or other
required papers; or
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(c) any final determination by a Gaming Board pursuant to
applicable Gaming Laws (i) that such Person is "unsuitable" as a lender
to Borrowers, (ii) that such Person shall be "disqualified" as a lender
to Borrowers or (iii) denying the issuance to that Person of any
license required under applicable Gaming Laws to be held by all lenders
to Borrowers.
"DOCUMENTATION AGENTS" means those Lenders listed in the
preamble of this Agreement as such. No Documentation Agent shall have
any additional rights, duties or obligations under this Agreement or
the other Loan Documents by reason of its being a Documentation Agent.
"DOLLARS" or "$" means United States dollars.
"EBITDA" means, for any period, Net Income for such period
before (i) income taxes, (ii) interest expense, (iii) depreciation and
amortization, (iv) minority interest, (v) extraordinary losses or
gains, (vi) Pre-Opening Expenses, and (vii) nonrecurring non-cash
charges, provided that, in calculating "EBITDA":
(a) for all periods ending on or prior to December 31, 1998,
"EBITDA" shall be computed on the basis of the combined operating
results of Parent and its Subsidiaries, Showboat and Rio described on
Schedule 1.3.
(b) the operating results of each New Project which commences
operations and records not less than one full fiscal quarter's
operations during the relevant period shall be annualized; and
(c) EBITDA shall be adjusted, on a pro forma basis, to include
the operating results of each resort or casino property acquired by
Parent and its Consolidated Subsidiaries during the relevant period and
to exclude the operating results of each resort or casino property sold
or otherwise disposed of by Parent and its Subsidiaries, or whose
operations are discontinued during the relevant period.
"ELECTION TO BECOME A BORROWER" means an Election to Become a
Borrower, substantially in the form of Exhibit K to this Agreement,
properly completed and duly executed by each required party thereto.
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"ELIGIBLE ASSIGNEE" means (a) another Lender, (b) with respect
to any Lender, any Affiliate of that Lender, (c) any commercial bank
having a combined capital and surplus of $100,000,000 or more which is
(i) organized under the laws of the United States or any state thereof,
or (ii) the domestic branch or agency of any such commercial bank
organized under the laws of a country which is a member of the
Organization for Economic Cooperation and Development, (d) any (i)
savings bank, savings and loan association or similar financial
institution or (ii) insurance company engaged in the business of
writing insurance which, in either case (A) has a net worth of
$200,000,000 or more, (B) is engaged in the business of lending money
and extending credit under credit facilities substantially similar to
those extended under this Agreement and (C) is operationally and
procedurally able to meet the obligations of a Lender hereunder to the
same degree as a commercial bank and (e) any other financial
institution (including a mutual fund or other fund) having total assets
of $250,000,000 or more which meets the requirements set forth in
subclauses (B) and (C) of clause (d) above; provided that each Eligible
Assignee must either (a) be organized under the Laws of the United
States of America, any State thereof or the District of Columbia or (b)
be organized under the Laws of the Cayman Islands or any country which
is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of such a country, and (i) act
hereunder through a branch, agency or funding office located in the
United States of America and (ii) otherwise be exempt from withholding
of tax on interest and delivers Form 1001 or Form 4224 pursuant to
Section 11.21 at the time of any assignment pursuant to Section 11.8.
"ERISA" means the Employee Retirement Income Security Act of
1974, and any regulations issued pursuant thereto, as amended or
replaced and as in effect from time to time.
"EURODOLLAR BUSINESS DAY" means any Business Day on which
dealings in Dollar deposits are conducted by and among banks in the
Designated Eurodollar Market.
"EURODOLLAR LENDING OFFICE" means, as to each Lender, its
office or branch so designated by written notice to Borrowers and the
Administrative Agent as its Eurodollar Lending Office. If no Eurodollar
Lending Office is designated by a Lender, its Eurodollar Lending Office
shall be its office at its address for purposes of notices hereunder.
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"EURODOLLAR MARGIN" means, for each Pricing Period, the
interest rate margin set forth below (expressed in basis points)
opposite the Pricing Level for that Pricing Period plus or minus any
then Pricing Adjustment applicable during that Pricing Period:
PRICING LEVEL EURODOLLAR MARGIN
I 52.00
II 65.00
III 75.00
IV 85.00
V 105.00
VI 137.50
"EURODOLLAR MARKET" means a regular established market located
outside the United States of America by and among banks for the
solicitation, offer and acceptance of Dollar deposits in such banks.
"EURODOLLAR OBLIGATIONS" means eurocurrency liabilities, as
defined in Regulation D.
"EURODOLLAR PERIOD" means, as to each Eurodollar Rate Loan,
the period commencing on the date specified by any Borrower pursuant to
Section 2.1(b) and ending 1, 2, 3 or 6 months thereafter (or, with the
written consent of all of the Lenders, any other period), as specified
by that Borrower in the applicable Request for Loan; provided that:
(a) The first day of any Eurodollar Period shall be a
Eurodollar Business Day;
(b) Any Eurodollar Period that would otherwise end on
a day that is not a Eurodollar Business Day shall be extended
to the next succeeding Eurodollar Business Day unless such
Eurodollar Business Day falls in another calendar month, in
which case such Eurodollar Period shall end on the next
preceding Eurodollar Business Day; and
(c) No Eurodollar Period shall extend beyond the
Maturity Date.
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"EURODOLLAR QUOTED RATE" means, with respect to any Eurodollar
Rate Loan, the average of the interest rates per annum (rounded upward,
if necessary, to the next 1/16 of 1%) at which deposits in Dollars are
offered by Bank of America to prime banks in the Designated Eurodollar
Market at or about 11:00 a.m. local time in the Designated Eurodollar
Market, two Eurodollar Business Days before the first day of the
applicable Eurodollar Period in an aggregate amount approximately equal
to the amount of the Advances made by Bank of America with respect to
such Eurodollar Rate Loan and for a period of time comparable to the
number of days in the applicable Eurodollar Period. The determination
of the Eurodollar Quoted Rate by the Administrative Agent shall be
conclusive in the absence of manifest error.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate
Loan based on a margin over the Eurodollar Rate, an interest rate per
annum (rounded upward, if necessary, to the nearest 1/16 of one
percent) determined pursuant to the following formula:
Eurodollar Eurodollar Quoted Rate
Rate = -----------------------------
1.00 - Eurodollar Reserve
Percentage
"EURODOLLAR RATE ADVANCE" and "EURODOLLAR RATE LOAN" mean,
respectively, a Committed Advance made hereunder and specified to be a
Eurodollar Rate Advance or Loan in accordance with Article 2.
"EURODOLLAR RESERVE PERCENTAGE" means, with respect to any
Eurodollar Rate Loan, the maximum reserve percentage (expressed as a
decimal, rounded upward to the nearest 1/100th of 1%) in effect on the
date the Eurodollar Quoted Rate for that Eurodollar Rate Loan is
determined (whether or not applicable to any Lender) under regulations
issued from time to time by the Federal Reserve Board for determining
the maximum reserve requirement (including any emergency, supplemental
or other marginal reserve requirement) with respect to eurocurrency
funding (currently referred to as "eurocurrency liabilities") having a
term comparable to the Eurodollar Period for such Eurodollar Rate Loan.
The determination by the Administrative Agent of any applicable
Eurodollar Reserve Percentage shall be conclusive in the absence of
manifest error.
"EVENT OF DEFAULT" shall have the meaning provided in Section
9.1.
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"EXISTING HARRAH'S CREDIT AGREEMENTS" means the Amended and
Restated Credit Agreement and the Amended and Restated 364-Day Credit
Agreement, in each case dated as of June 9, 1995, as amended and
restated April 1, 1998, and among Parent, the initial Borrowers, the
lenders therein named, and Bankers Trust Company, as Administrative
Agent, in each case as amended.
"EXISTING RIO CREDIT AGREEMENTS" means (a) the Amended and
Restated Credit Agreement dated as of February 24, 1998 among Rio
Properties, Inc., a Nevada corporation, Rio Leasing, Inc., a Nevada
corporation, the lenders referred to therein, and Bank of America, as
agent, and (b) the Loan Agreement dated as of December 18, 1998 among
Rio Properties, Inc., Rio Leasing, Inc., the lenders referred to
therein, and Bank of America, as agent, in each case as amended.
"EXISTING RIO INDENTURES" means, (a) the $100,000,000 10-5/8%
Senior Subordinated Notes Due 2005 issued by Rio Hotel & Casino, Inc.,
a Nevada corporation, and (b) the $125,000,000 9-1/2% Senior
Subordinated Notes Due 2007 issued by Rio Hotel & Casino, Inc., in each
case as amended.
"EXISTING SENIOR NOTES" means the Company's $500,000,000 in
7.5% Senior Unsecured Notes due 2009 issued pursuant to the Indenture
dated December 18, 1998 between the Company and IBJ Schroeder Bank and
Trust Company, as Trustee and the First Supplemental Indenture with
respect thereto dated as of January 20, 1999 among the Company, the
Parent and IBJ Whitehall Bank & Trust Company, as Trustee.
"EXISTING SUBORDINATED DEBT" means the Company's $750,000,000
7.875% Senior Subordinated Notes due 2005 issued pursuant to the
Indenture dated December 9, 1998 among the Company and IBJ Schroeder
Bank and Trust Company, as Trustee and the First Supplemental Indenture
with respect thereto dated as of December 9, 1998 among the Company,
the Parent and the Trustee.
"FACILITY FEE RATE" means, for each Pricing Period, the rate
set forth below (expressed in basis points) opposite the Pricing Level
for that Pricing Period:
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PRICING LEVEL FACILITY FEE RATE
I 8.00
II 10.00
III 12.50
IV 15.00
V 20.00
VI 25.00
"FEDERAL FUNDS RATE" means, as of any date of determination, the rate
set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such date opposite the
caption "Federal Funds (Effective)". If for any relevant date such rate
is not yet published in H.15(519), the rate for such date will be the
rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. government securities, or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such date under the caption "Federal Funds Effective
Rate". If on any relevant date the appropriate rate for such date is
not yet published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such date will be the arithmetic mean of the
rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that date by each of three
leading brokers of Federal funds transactions in New York City selected
by the Administrative Agent. For purposes of this Agreement, any change
in the Base Rate due to a change in the Federal Funds Rate shall be
effective as of the opening of business on the effective date of such
change.
"FISCAL QUARTER" means the fiscal quarter of Parent consisting
of a three month fiscal period ending on each March 31, June 30,
September 30, December 31.
"FISCAL YEAR" means the fiscal year of Parent consisting of a
twelve month fiscal period ending on each December 31.
"FIVE YEAR COMMITMENTS" means the lending commitment of the
lenders under the Five Year Loan Agreement.
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"FIVE YEAR LOAN AGREEMENT" means the Five Year Loan Agreement
of even date herewith among the Lenders party to this Agreement on the
Effective Date and Bank of America National Trust and Savings
Association, as Administrative Agent, as at any time amended.
"GAMING BOARD" means any Governmental Agency that holds
regulatory, licensing or permit authority over gambling, gaming or
casino activities conducted by Parent and its Subsidiaries within its
jurisdiction, or before which an application for licensing to conduct
such activities is pending.
"GAMING LAWS" means all Laws pursuant to which any Gaming
Board possesses regulatory, licensing or permit authority over
gambling, gaming or casino activities conducted by Parent and its
Subsidiaries within its jurisdiction.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means, as of any
date of determination, accounting principles (a) set forth as generally
accepted in then currently effective Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants, (b) set forth as generally accepted in then currently
effective Statements of the Financial Accounting Standards Board or (c)
that are then approved by such other entity as may be approved by a
significant segment of the accounting profession in the United States
of America. The term "consistently applied," as used in connection
therewith, means that the accounting principles applied are consistent
in all material respects to those applied at prior dates or for prior
periods.
"GOVERNMENTAL AGENCY" means (a) any international, foreign,
federal, state, county or municipal government, or political
subdivision thereof, (b) any governmental or quasi-governmental agency,
authority, board, bureau, commission, department, instrumentality or
public body, or (c) any court or administrative tribunal.
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"HAZARDOUS MATERIALS" means substances defined as hazardous
substances pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., or
as hazardous, toxic or pollutant pursuant to the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., the
Hazardous Waste Control Law, California Health & Safety Code ss. 25100,
et seq., or in any other applicable Hazardous Materials Law, in each
case as such Laws are amended from time to time.
"HAZARDOUS MATERIALS LAWS" means all federal, state or local
laws, ordinances, rules or regulations governing the disposal of
Hazardous Materials applicable to any of the Real Property.
"INDEBTEDNESS" means, as to any Person and as of each date of
determination, without duplication, (i) all obligations of such Person
for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the
ordinary course of business, (iv) all obligations of such Person as
lessee which are capitalized in accordance with Generally Accepted
Accounting Principles, (v) all indebtedness or other obligations
secured by a contractual Lien on any asset of such Person, whether or
not such indebtedness or other obligations are otherwise an obligation
of such Person, and (vi) all Contingent Obligations made by such Person
(including by way of provision of letters of credit or other contingent
obligations) with respect to indebtedness or other obligations of any
other Person which constitute "Indebtedness" of a type or class
described in clauses (i) through (v) of this definition.
"INTANGIBLE ASSETS" means assets that are considered
intangible assets under Generally Accepted Accounting Principles,
including customer lists, goodwill, computer software, copyrights,
trade names, trademarks and patents.
"INTEREST COVERAGE RATIO" means, as of the last day of any
Fiscal Quarter, the RATIO OF (a) EBITDA for the four Fiscal Quarter
period ending on that date to (b) Interest Expense for the same period.
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"INTEREST DIFFERENTIAL" means, with respect to any prepayment
of a Eurodollar Rate Loan on a day prior to the last day of the
applicable Eurodollar Period and with respect to any failure to borrow
a Eurodollar Rate Loan on the date or in the amount specified in any
Request for Loan, (a) the per annum interest rate payable pursuant to
Section 3.1(c) with respect to the Eurodollar Rate Loan minus (b) the
Eurodollar Rate on, or as near as practicable to the date of the
prepayment or failure to borrow for, a Eurodollar Rate Loan commencing
on such date and ending on the last day of the Eurodollar Period of the
Eurodollar Rate Loan so prepaid or which would have been borrowed on
such date.
"INTEREST EXPENSE" means, as of the last day of any fiscal
period, the SUM OF (a) all interest, fees, charges and related
expenses paid or payable (without duplication) for that fiscal
period to a lender in connection with borrowed money or the deferred
purchase price of assets that are considered "interest expense"
under Generally Accepted Accounting Principles, plus (b) the portion
of rent paid or payable (without duplication) for that fiscal period
under Capital Lease Obligations that should be treated as interest
in accordance with Financial Accounting Standards Board Statement
No. 13.
"INVESTMENT" means, when used in connection with any Person,
any investment by or of that Person, whether by means of purchase or
other acquisition of stock or other securities of any other Person or
by means of a loan, advance creating a debt, capital contribution,
guaranty or other debt or equity participation or interest in any other
Person, including any partnership and joint venture interests of such
Person. The amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in
the value of such Investment.
"INVESTMENT GRADE" means (i) with respect to S&P, a rating of
BBB- or higher, and (ii) with respect to Moody's, a rating of Baa3 or
higher.
"LAWS" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations,
ordinances, codes and administrative or judicial precedents.
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"LEAD ARRANGER" means NationsBanc Montgomery Securities, LLC.
The Lead Arranger shall have no duties or obligations under this
Agreement or the other Loan Documents.
"LICENSE REVOCATION" means the revocation, failure to renew or
suspension of, or the appointment of a receiver, supervisor or similar
official with respect to, any casino, gambling or gaming license issued
by any Gaming Board covering any casino or gaming facility of Parent or
any of its Subsidiaries.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security interest,
encumbrance, lien or charge of any kind, whether voluntarily
incurred or arising by operation of Law or otherwise, affecting any
Property, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in
the nature of a security interest, and/or the filing of or agreement
to give any financing statement (other than a precautionary
financing statement with respect to a lease or other agreement that
is not in the nature of a security interest) under the Uniform
Commercial Code or comparable Law of any jurisdiction with respect
to any Property.
"LOAN" means the aggregate of the Advances made at any one
time by the Lenders pursuant to Article 2.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Notes, the Parent Guaranty, any Request for Loan, any Compliance
Certificate and any other instruments, documents or agreements of any
type or nature hereafter executed and delivered by Parent or any of its
Subsidiaries or Affiliates to the Administrative Agent or any other
Creditor in any way relating to or in furtherance of this Agreement, in
each case either as originally executed or as the same may from time to
time be supplemented, modified, amended, restated, extended or
supplanted.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation U.
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"MATERIAL ADVERSE EFFECT" means any set of circumstances or
events which (a) has or could reasonably be expected to have any
material adverse effect whatsoever upon the validity or enforceability
of any Loan Document, (b) is or could reasonably be expected to be
material and adverse to the condition (financial or otherwise), assets,
business or operations of Parent and its Subsidiaries, taken as a
whole, or (c) materially impairs or could reasonably be expected to
materially impair the ability of Parent and its Subsidiaries, taken as
a whole, to perform the Obligations.
"MATURITY DATE" means April 28, 2000, or such later
anniversary thereof as may be established pursuant to Section 2.12.
"MOODY'S" means Moody's Investor Service, Inc., its successors
and assigns.
"MULTIEMPLOYER PLAN" means any employee benefit plan of the
type described in Section 4001(a)(3) of ERISA.
"NEGATIVE PLEDGE" means a Contractual Obligation that contains
a covenant binding on Parent or any of its Subsidiaries that prohibits
Liens on any of its or their Property, other than (a) any such covenant
contained in a Contractual Obligation granting a Lien permitted under
Section 6.4 which affects only the Property that is the subject of such
permitted Lien and (b) any such covenant that does not apply to Liens
securing the Obligations.
"NET INCOME" means, with respect to any fiscal period, the
consolidated net income of Parent and its Subsidiaries for that period,
determined in accordance with Generally Accepted Accounting Principles,
consistently applied.
"NET TANGIBLE ASSETS" means, as of each date of determination,
the total amount of assets of Parent its Subsidiaries as of the last
day of the most recent Fiscal Quarter for which financial statements
have been delivered in accordance with Section 7.1, after deducting
therefrom (a) all current liabilities of Parent and its Subsidiaries
(excluding (i) the current portion of long term Indebtedness, (ii)
inter-company liabilities, and (iii) any liabilities which are by their
terms renewable or extendable at the option of the obligor thereon to a
time more than
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twelve 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 expense and other like intangibles, all
as set forth on the latest consolidated balance sheet of Parent
prepared in accordance with Generally Accepted Accounting Principles.
"NEW PROJECT" means each new hotel - casino, casino or resort
project (as opposed to any project which consists of an extension or
redevelopment of an operating hotel, casino or resort) owned by Parent
or its Subsidiaries having a development and construction budget in
excess of $25,000,000 which hereafter receives a certificate of
completion or occupancy and all relevant gaming and other licenses, and
in fact commences operations.
"NOTES" means, collectively, the Committed Advance Notes.
"OBLIGATIONS" means all present and future obligations of
every kind or nature of Parent, Borrowers or any Party at any time and
from time to time owed to the Creditors or any one or more of them,
under any one or more of the Loan Documents, whether due or to become
due, matured or unmatured, liquidated or unliquidated, or contingent or
noncontingent, including obligations of performance as well as
obligations of payment, and including interest that accrues after the
commencement of any proceeding under any Debtor Relief Law by or
against Parent, any Borrower or any Subsidiary of Parent.
"OPINIONS OF COUNSEL" means (a) the favorable written legal
opinion of Parent's general counsel, and (b) the favorable written
legal opinion of Latham & Watkins, special counsel to Parent and the
Borrowers, substantially in the form of Exhibit G, together with copies
of all factual certificates and legal opinions upon which such counsel
have relied.
"PARENT" means Harrah's Entertainment, Inc., a Delaware
corporation, and its permitted successors and assigns.
"PARENT GUARANTY" means the Guaranty executed by Parent on the
Closing Date with respect to the Obligations, substantially in the form
of Exhibit H, either as originally executed or as it may from time to
time be supplemented, modified, amended, restated or extended.
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"PARTY" means any Person other than Creditors which now or
hereafter is a party to any of the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereof established under ERISA.
"PENSION PLAN" means any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA), other than a
Multiemployer Plan, which is subject to Title IV of ERISA and is
maintained by Parent or any of its Subsidiaries or to which Parent or
any of its Subsidiaries contributes or has an obligation to contribute.
"PERMITTED ENCUMBRANCES" means:
(a) inchoate Liens incident to construction or
maintenance of Real Property; or Liens incident to
construction or maintenance of Real Property now or hereafter
filed of record for which adequate reserves have been set
aside (or deposits made pursuant to applicable Law) and which
are being contested in good faith by appropriate proceedings
and have not proceeded to judgment, provided that, by reason
of nonpayment of the obligations secured by such Liens, no
such Real Property is subject to a material risk of loss or
forfeiture;
(b) Liens for taxes and assessments on and similar
charges with respect to Real Property which are not yet past
due; or Liens for taxes and assessments on Real Property for
which adequate reserves have been set aside and are being
contested in good faith by appropriate proceedings and have
not proceeded to judgment, provided that, by reason of
nonpayment of the obligations secured by such Liens, no
material Real Property is subject to a material risk of loss
or forfeiture;
(c) defects and irregularities in title to any Real
Property which in the aggregate do not materially impair the
fair market value or use of the Real Property for the purposes
for which it is or may reasonably be expected to be held;
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(d) easements, exceptions, reservations, or other
agreements for the purpose of pipelines, conduits, cables,
wire communication lines, power lines and substations,
streets, trails, walkways, driveways, drainage, irrigation,
water, and sewerage purposes, dikes, canals, ditches, the
removal of oil, gas, coal, or other minerals, and other like
purposes affecting Real Property, facilities, or equipment
which in the aggregate do not materially burden or impair the
fair market value or use of such Real Property for the
purposes for which it is or may reasonably be expected to be
held;
(e) easements, exceptions, reservations, or other
agreements for the purpose of facilitating the joint or common
use of property which in the aggregate do not materially
burden or impair the fair market value or use of such property
for the purposes for which it is or may reasonably be expected
to be held;
(f) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, the use of any Real
Property;
(g) rights reserved to or vested in any Governmental
Agency to control or regulate, or obligations or duties to any
Governmental Agency with respect to, any right, power,
franchise, grant, license, or permit;
(h) present or future zoning laws, building codes and
ordinances, zoning restrictions, or other laws and ordinances
restricting the occupancy, use, or enjoyment of Real Property;
(i) statutory Liens, other than those described in
clauses (a) or (b) above, arising in the ordinary course of
business with respect to obligations which are not delinquent
or are being contested in good faith, provided that, if
delinquent, adequate reserves have been set aside with respect
thereto and, by reason of nonpayment, no property is subject
to a material risk of loss or forfeiture;
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(j) covenants, conditions, and restrictions affecting
the use of Real Property which in the aggregate do not
materially impair the fair market value or use of the Real
Property for the purposes for which it is or may reasonably be
expected to be held;
(k) rights of tenants under leases and rental
agreements covering Real Property entered into in the ordinary
course of business of the Person owning such Real Property;
(l) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar
legislation, including Liens of judgments thereunder which are
not currently dischargeable;
(m) Liens consisting of pledges or deposits of
property to secure performance in connection with operating
leases made in the ordinary course of business to which Parent
or any of its Subsidiaries is a party as lessee, provided the
aggregate value of all such pledges and deposits in connection
with any such lease does not at any time exceed 20% of the
annual fixed rentals payable under such lease;
(n) Liens consisting of deposits of property to
secure bids made with respect to, or performance of, contracts
(other than contracts creating or evidencing an extension of
credit to the depositor) in the ordinary course of business;
(o) Liens consisting of any right of offset, or
statutory bankers' lien, on bank deposit accounts maintained
in the ordinary course of business so long as such bank
deposit accounts are not established or maintained for the
purpose of providing such right of offset or bankers' lien;
(p) Liens consisting of deposits of property to
secure statutory obligations of Parent or any of its
Subsidiaries in the ordinary course of its business;
(q) Liens consisting of deposits of property to
secure (or in lieu of) surety, appeal or customs bonds in
proceedings to which Parent or any of its Subsidiaries is a
party in the ordinary course of business;
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(r) Liens created by or resulting from any litigation
or legal proceeding involving Parent or any of its
Subsidiaries in the ordinary course of its business which is
currently being contested in good faith by appropriate
proceedings, provided that adequate reserves have been set
aside and no material property is subject to a material risk
of loss or forfeiture;
(s) precautionary UCC financing statement filings
made in connection with operating leases and not constituting
Liens; and
(t) other non-consensual Liens incurred in the
ordinary course of business but not in connection with an
extension of credit, which do not in the aggregate, when taken
together with all other Liens, materially impair the value or
use of the Property of Parent and its Subsidiaries, taken as a
whole.
"PERMITTED RIGHT OF OTHERS" means a Right of Others consisting
of (i) an interest (other than a legal or equitable co-ownership
interest, an option or right to acquire a legal or equitable
co-ownership interest and any interest of a ground lessor under a
ground lease), that does not materially impair the value or use of
Property for the purposes for which it is or may reasonably be expected
to be held, (ii) an option or right to acquire a Lien that would be a
Permitted Encumbrance, (iii) the subordination of a lease or sublease
in favor of a financing entity and (iv) a license, or similar right, of
or to Intangible Assets granted in the ordinary course of business.
"PERSON" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, joint stock
company, trust, estate, unincorporated organization, business
association, firm, joint venture, Governmental Agency, or otherwise.
"PRE-OPENING EXPENSES" means, with respect to any fiscal
period, the amount of expenses (other than Interest Expense) incurred
with respect to capital projects which are classified as "pre-opening
expenses" on the applicable financial statements of Parent and its
Subsidiaries for such period (or, with respect to periods prior to
December 31, 1998, the financial statements of Rio and Showboat),
prepared in accordance with Generally Accepted Accounting Principles.
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"PRICING ADJUSTMENT" means, during any Pricing Period, (a)
if the Total Debt Ratio as of the last day of the Fiscal Quarter
ending immediately prior to the commencement of such Pricing Period
was greater than 3.75 to 1.00 but less than or equal to 4.25:1.00,
an increase to the Eurodollar Margin of 7.5 basis points, (b) if the
Total Debt Ratio as of the last day of the Fiscal Quarter ending
immediately prior to the commencement of such Pricing Period was
greater than 4.25:1.00, an increase to the Eurodollar Margin of 15.0
basis points, and (c) if the Total Debt Ratio as of the last day of
the Fiscal Quarter ending immediately prior to the commencement of
such Pricing Period was less than 2.00:1.00, a decrease to the
Eurodollar Margin of 7.5 basis points.
"PRICING LEVEL" means, for each Pricing Period, the pricing
level set forth below opposite the Debt Ratings as of the first day of
that Pricing Period:
MOODY'S/S&P RATING APPLICABLE PRICING LEVEL
A-/A3 or higher Pricing Level I
BBB+/Baa1 Pricing Level II
BBB/Baa2 Pricing Level III
BBB-/Baa3 Pricing Level IV
BB+/Ba1 Pricing Level V
BB/Ba2 or lower Pricing Level VI
PROVIDED that if Moody's and S&P each assign Debt Ratings which are
associated with different Pricing Levels in the matrix set forth above,
then the applicable Pricing Level shall be the Pricing Level which is
one Pricing Level higher than that associated with the lower of the two
Debt Ratings.
"PRICING PERIOD" means (a) the period commencing on the
Closing Date and ending on May 31, 1999, (b) each subsequent three
month period commencing on each June 1, September 1, December 1 and
March 1, and (c) any shorter period ending on the date upon which the
Commitment is terminated.
"PROJECTIONS" means the financial projections contained in the
Confidential Information Memorandum.
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
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"PRO RATA SHARE" means, with respect to each Lender, the
percentage of the Commitment held by that Lender. The Pro Rata Share of
each Lender as of the Closing Date is set forth opposite the name of
that Lender on Schedule 1.1.
"QUARTERLY PAYMENT DATE" means each March 31, June 30,
September 30 and December 31.
"RATING DECLINE" means the occurrence of a decrease in the
Debt Rating by either Moody's or S&P to below Investment Grade on any
date on or within 90 days after the date of the first public notice of
(a) the occurrence of an event described in clauses (i)-(iv) of the
definition of "Change in Control" or (b) the intention by any of the
Parent or Borrowers to effect such an event (which 90-day period shall
be extended so long as the Debt Rating is under publicly announced
consideration for possible downgrade by Moody's or S&P).
"REAL PROPERTY" means, as of any date of determination, all
real property then or theretofore owned, leased or occupied by Parent
or any of its Subsidiaries.
"REFERENCE RATE" means the rate of interest publicly announced
from time to time by Bank of America as its "reference rate" or the
similar prime rate or reference rate announced by any successor
Administrative Agent. Bank of America's reference rate is a rate set by
Bank of America based upon various factors including Bank of America's
costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in
the Reference Rate announced by Bank of America or any successor
Administrative Agent shall take effect at the opening of business on
the day specified in the public announcement of such change.
"REGULATIONS D, T, U AND X" means Regulations D, T, U and X,
as at any time amended, of the Board of Governors of the Federal
Reserve System, or any other regulations in substance substituted
therefor.
"REQUEST FOR LOAN" means a written request for a Loan
substantially in the form of Exhibit J, signed by a Responsible
Official of a Borrower, on behalf of that Borrower, and properly
completed to provide all information required to be included therein.
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"REQUIREMENT OF LAW" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any Law, or judgment, award,
decree, writ or determination of a Governmental Agency, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"REQUISITE LENDERS" means (a) as of any date of determination
if the Commitment is then in effect, Lenders having in the aggregate
51% or more of the Commitment then in effect and (b) as of any date of
determination if the Commitment has then been terminated, Lenders
holding 51% of the aggregate principal amount of the outstanding
Committed Loans.
"RESPONSIBLE OFFICIAL" means when used with reference to a
Person other than an individual, any corporate officer of such Person,
general partner of such Person, corporate officer of a corporate
general partner of such Person, or corporate officer of a corporate
general partner of a partnership that is a general partner of such
Person, or any other responsible official thereof duly acting on behalf
thereof. Any document or certificate hereunder that is signed or
executed by a Responsible Official of another Person shall be
conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such other
Person.
"RIGHT OF OTHERS" means, as to any Property in which a
Person has an interest, any legal or equitable ownership right,
title or other interest (other than a Lien) held by any other Person
in that Property, and any option or right held by any other Person
to acquire any such right, title or other interest in that Property,
including any option or right to acquire a Lien; provided, however,
that (a) any covenant restricting the use or disposition of Property
of such Person contained in any Contractual Obligation of such
Person, (b) any provision contained in a contract creating a right
of payment or performance in favor of a Person that conditions,
limits, restricts, diminishes, transfers or terminates such right,
and (c) any residual rights held by a lessor or vendor of Property,
shall not be deemed to constitute a Right of Others.
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"RIO" means Rio Hotel & Casino, Inc., a Nevada Corporation,
and its Subsidiaries.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., its successors and assigns.
"SALE AND LEASEBACK" means, with respect to any Person, the
sale of Property owned by that Person (the "Seller") to another Person
(the "Buyer"), together with the substantially concurrent leasing of
such Property (or any portion thereof) by the Buyer to the Seller.
"SALE AND LEASEBACK OBLIGATION" means, with respect to any
Sale and Leaseback and as of any date of determination, the present
value of the aggregate monetary obligations of the lessee under the
lease of the Property which is the subject of such Sale and Leaseback
(discounted at the interest rate implicit in such lease, compounded
annually) for the then remaining term of such lease (treating all
extension options exercisable by the lessor as having been exercised,
but deeming the lease terminated as of the earliest date upon which the
lessee has the option to do so); provided that such monetary
obligations shall exclude amounts payable in respect of maintenance,
repairs, insurance, taxes, assessments, utilities and similar charges.
"SENIOR OFFICER" means Parent's and each Borrower's (a) chief
executive officer, (b) president, (c) chief financial officer, (d)
treasurer, (e) vice presidents or (f) secretaries.
"SHOWBOAT" means Showboat, Inc., a Nevada corporation, and its
Subsidiaries.
"SIGNIFICANT SUBSIDIARY" means, as of any date of
determination, each Subsidiary of Parent that had on the last day of
the Fiscal Quarter then most recently ended total assets (determined in
accordance with Generally Accepted Accounting Principles) of
$50,000,000 or more.
"SPECIAL EURODOLLAR CIRCUMSTANCE" means the application or
adoption after the date hereof of any Law or interpretation, or any
change therein or thereof, or any change in the interpretation or
administration thereof by any Governmental Agency, central bank or
comparable
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authority charged with the interpretation or administration thereof, or
compliance by any Lender or its Eurodollar Lending Office with any
request or directive (whether or not having the force of Law) of any
such Governmental Agency, central bank or comparable authority, or the
existence or occurrence of circumstances affecting the Designated
Eurodollar Market generally that are beyond the reasonable control of
the Lenders.
"SOLVENT" as to any Person shall mean that (a) the sum of the
assets of such Person, both at a fair valuation and at present fair
saleable value, exceeds its liabilities, including its probable
liability in respect of contingent liabilities, (b) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (c) such Person has not
incurred debts, and does not intend to incur debts, beyond its ability
to pay such debts as they mature. For purposes of this definition,
"debt" means any liability on a claim, and "claim" means (x) a right to
payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, or (y) a right to
an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured. With respect to any such contingent
liabilities, such liabilities shall be computed at the amount which, in
light of all the facts and circumstances existing at the time,
represents the amount which can reasonably be expected to become an
actual or matured liability.
"SUBORDINATED DEBT" means (a) the Existing Subordinated Debt
and (b) any other Indebtedness of Parent or the Company which is
subordinated in right of payment to the Obligations pursuant to
subordination provisions which are either (i) substantively no less
favorable to the Lenders than the subordination provisions of the
Existing Subordinated Debt, or (ii) otherwise are acceptable to the
Requisite Lenders in the exercise of their sole discretion.
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"SUBSIDIARY" means, as of any date of determination and with
respect to any Person, any corporation or partnership (whether or not,
in either case, characterized as such or as a "joint venture"), whether
now existing or hereafter organized or acquired: (a) in the case of a
corporation, of which a majority of the securities having ordinary
voting power for the election of directors or other governing body
(other than securities having such power only by reason of the
happening of a contingency) are at the time beneficially owned by such
Person and/or one or more Subsidiaries of such Person, or (b) in the
case of a partnership, of which a majority of the partnership or other
ownership interests having ordinary management power are at the time
beneficially owned by such Person and/or one or more of its
Subsidiaries.
"SYNDICATION AGENT" means Bankers Trust Company. Bankers Trust
Company shall not have any additional rights, duties or obligations
under this Agreement or the other Loan Documents by reason of its being
a Syndication Agent.
"TOTAL DEBT" means, as of any date of determination, the
sum (without duplication) of (a) the outstanding principal
Indebtedness of Parent and its Subsidiaries for borrowed money
(including debt securities issued by Parent or any of its
Subsidiaries) on that date, plus (b) the aggregate amount of all
Capital Lease Obligations of Parent and its Subsidiaries on that
date, plus (c) all obligations in respect of letters of credit or
other similar instruments for which Parent or any of its
Subsidiaries are account parties or are otherwise obligated, plus
(d) the aggregate amount of all Contingent Obligations and other
similar contingent obligations of Parent and its Subsidiaries with
respect to any of the foregoing, and plus (e) any obligations of
Parent or any of its Subsidiaries to the extent that the same are
secured by a Lien on any of the assets of Parent or its
Subsidiaries. In computing "Total Debt," the amount of any
Contingent Obligation or letter of credit shall be deemed to be zero
unless and until (1) in the case of obligations in respect of
letters of credit, a drawing is made with respect thereto, (2) in
the case of any other Contingent Obligations, demand for payment is
made with respect thereto, or (3) Parent's independent auditors have
quantified the amount of Parent's and its Subsidiaries with respect
to letters of credit and Contingent Obligations
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as liabilities on Parent's consolidated balance sheet in accordance
with Generally Accepted Accounting Principles (as opposed to merely
noted in the footnotes to any such balance sheet) and the amount of any
such individual liability is in excess of $50,000,000, in which case
the amount thereof shall be deemed to be the amount so quantified from
time to time.
"TOTAL DEBT RATIO" means, as of the last day of any Fiscal
Quarter, the RATIO OF (a) Total Debt on that date, to (b) EBITDA for
the four Fiscal Quarter period ending on that date.
"TYPE", when used with respect to any Loan or Advance, means
the designation of whether such Loan or Advance is a Base Rate Loan or
Advance, or a Eurodollar Rate Loan or Advance.
"WHOLLY-OWNED SUBSIDIARY" means, as to any Person any other
Person, 100% of whose capital stock, partnership interests, membership
interests or other forms of equity ownership interest (other than
directors qualifying shares and similar interests) is at the time
owned, directly or indirectly, by such Person.
"YEAR 2000 ISSUE" means failure of computer software, hardware
and firmware systems, and equipment containing embedded computer chips,
to properly receive, transmit, process, manipulate, store, retrieve,
re-transmit or in any other way utilize data and information due to the
occurrence of the year 2000 or the inclusion of dates on or after
January 1, 2000.
1.2 USE OF DEFINED TERMS. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.
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1.3 ACCOUNTING TERMS. All accounting terms not specifically defined in
this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
Generally Accepted Accounting Principles applied on a consistent basis, except
as otherwise specifically prescribed herein. In the event that Generally
Accepted Accounting Principles change during the term of this Agreement such
that the covenants contained in Sections 6.5 and 6.6 would then be calculated in
a different manner or with different components, (a) Parent, Borrowers and the
Lenders agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Parent's consolidated
financial condition to substantially the same criteria as were effective prior
to such change in Generally Accepted Accounting Principles and (b) Parent and
Borrowers shall be deemed to be in compliance with the covenants contained in
the aforesaid Sections during the 90 day period following any such change in
Generally Accepted Accounting Principles if and to the extent that Parent and
Borrowers would have been in compliance therewith under Generally Accepted
Accounting Principles as in effect immediately prior to such change.
1.4 ROUNDING. Any financial ratios required to be maintained by Parent
and Borrowers pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
1.5 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
1.6 MISCELLANEOUS TERMS. The term "or" is disjunctive; the term "and"
is conjunctive. The term "shall" is mandatory; the term "may" is permissive.
Masculine terms also apply to females; feminine terms also apply to males. The
term "including" is by way of example and not limitation.
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Article 2
LOANS AND LETTERS OF CREDIT
2.1 COMMITTED LOANS-GENERAL.
(a) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date through and
including the Maturity Date, each Lender shall, pro rata according to that
Lender's Pro Rata Share of the then applicable Commitment, make Committed
Advances in Dollars to Borrowers in such amounts as any Borrower may request
provided that (a) giving effect to such Advances, the aggregate principal amount
of the outstanding Committed Loans shall not exceed the Commitment at any time,
(b) without the consent of all of the Lenders, the aggregate principal amount of
the outstanding Committed Loans to Marina plus the outstanding principal amount
of the loans outstanding to Marina under the Five Year Commitment shall not
exceed Marina's Aggregate Sublimit at any time, and (c) without the consent of
all of the Lenders, the aggregate principal amount of the outstanding Committed
Loans to each Borrower hereafter designated as such pursuant to Section 2.10
plus the outstanding principal amount of the loans outstanding to such Borrower
under the Five Year Commitment shall not exceed that Borrower's Aggregate
Sublimit at any time. Subject to the limitations set forth herein, each of the
Borrowers may borrow, repay and reborrow under the Commitment without premium or
penalty.
(b) Subject to the next sentence, each Committed Loan shall be
made pursuant to a Request for Loan executed by the relevant Borrower which
shall specify the requested (i) date of such Loan, (ii) type of Loan, (iii)
amount of such Loan, and (iv) in the case of a Eurodollar Rate Loan, the
Eurodollar Period for such Loan. Unless the Administrative Agent has notified,
in its sole and absolute discretion, Borrowers to the contrary, a Loan may be
requested by telephone by a Responsible Official of any Borrower, in which case
that Borrower shall confirm such request by promptly delivering a Request for
Loan in person or by telecopier conforming to the preceding sentence to the
Administrative Agent. The Administrative Agent shall incur no liability
whatsoever hereunder in acting upon any telephonic request for loan purportedly
made by a Responsible Official of a Borrower, and each Borrower hereby jointly
and severally (but as
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between Borrowers, ratably) agrees to indemnify the Administrative Agent from
any loss, cost, expense or liability as a result of so acting.
(c) Promptly following receipt of a Request for Loan, the
Administrative Agent shall notify each Lender by telephone or telecopier (and if
by telephone, promptly confirmed by telecopier) of the identity of the relevant
Borrower, the date and type of the Loan, the applicable Eurodollar Period, and
that Lender's Pro Rata Share of the Loan. Not later than 11:00 a.m., California
local time, on the date specified for any Loan (which must be a Business Day),
each Lender shall make its Pro Rata Share of the Committed Loan in immediately
available funds available to the Administrative Agent at the Administrative
Agent's Office. Upon satisfaction or waiver of the applicable conditions set
forth in Article 8, all Committed Advances shall be credited on that date in
immediately available funds to the Designated Deposit Account.
(d) Unless the Requisite Lenders otherwise consent, each
Committed Loan shall be an integral multiple of $1,000,000 and shall be not less
than $10,000,000.
(e) The Committed Advances made by each Lender to each
Borrower shall be evidenced by a Committed Advance Note issued by that Borrower
and made payable to that Lender.
(f) A Request for Loan shall be irrevocable upon the
Administrative Agent's first notification thereof.
(g) If no Request for Loan (or telephonic request for loan
referred to in the second sentence of Section 2.1(b), if applicable) has been
made within the requisite notice periods set forth in Sections 2.2 or 2.3 in
connection with a Loan which, if made and giving effect to the application of
the proceeds thereof, would not increase the outstanding principal Indebtedness
evidenced by the Committed Advance Notes of the relevant Borrower, then that
Borrower shall be deemed to have requested, as of the date upon which the
related then outstanding Loan is due pursuant to Section 3.1(e)(i), a Base Rate
Loan in an amount equal to the amount necessary to cause the outstanding
principal Indebtedness evidenced by its Committed Advance Notes to remain the
same and the Lenders shall make the Advances necessary to make such Loan
notwithstanding Sections 2.1(b), 2.2 and 2.3.
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2.2 BASE RATE LOANS. Each request by a Borrower for a Base Rate Loan
shall be made pursuant to a Request for Loan (or telephonic or other request for
loan referred to in the second sentence of Section 2.1(b), if applicable)
received by the Administrative Agent, at the Administrative Agent's Office, not
later than 9:00 a.m. California local time, on the date (which must be a
Business Day) of the requested Base Rate Loan. All Committed Loans shall
constitute Base Rate Loans unless properly designated as a Eurodollar Rate Loan
pursuant to Section 2.3.
2.3 EURODOLLAR RATE LOANS.
(a) Each request by a Borrower for a Eurodollar Rate Loan
shall be made pursuant to a Request for Loan (or telephonic or other request for
loan referred to in the second sentence of Section 2.1(b), if applicable)
received by the Administrative Agent, at the Administrative Agent's Office, not
later than 9:00 a.m., California local time, at least three Eurodollar Business
Days before the first day of the applicable Eurodollar Period.
(b) On the date which is two Eurodollar Business Days before
the first day of the applicable Eurodollar Period, the Administrative Agent
shall confirm its determination of the applicable Eurodollar Rate (which
determination shall be conclusive in the absence of manifest error) and promptly
shall give notice of the same to Borrowers and the Lenders by telephone or
telecopier (and if by telephone, promptly confirmed by telecopier).
(c) Unless the Administrative Agent and the Requisite Lenders
otherwise consent, no more than twenty Eurodollar Rate Loans shall be
outstanding at any one time.
(d) No Eurodollar Rate Loan may be requested during the
existence of a Default or Event of Default.
(e) No Lender shall be required to obtain the funds necessary
to fund its Eurodollar Rate Advances in the Designated Eurodollar Market or from
any other particular source of funds, rather each Lender shall be free to obtain
such funds from any legal source.
2.4 RESERVED.
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2.5 RESERVED.
2.6 RESERVED.
2.7 VOLUNTARY INCREASE TO THE COMMITMENT.
(a) Provided that no Default or Event of Default then exists,
during the one year period following the Closing Date, Parent and the
Borrowers may, upon at least 30 days notice to the Administrative Agent
(which shall promptly provide a copy of such notice to the Lenders),
propose to ratably increase the aggregate amount of the Commitment and
the Five Year Commitment by an aggregate amount not to exceed
$300,000,000 (the amount of any such ratable increase of the Commitment
being referred to as the "Increased Commitment"). Each Lender party to
this Agreement at such time shall have the right (but no obligation),
for a period of 15 days following receipt of such notice, to elect by
notice to Parent and the Borrowers and the Administrative Agent to
increase its Commitment by a principal amount which bears the same
ratio to the Increased Commitments as its then Commitment bears to the
aggregate Commitments then existing. Each Lender which fails to respond
to any such request shall be conclusively deemed to have refused to
consent to an increase in its Commitment.
(b) If any Lender party to this Agreement shall not elect to
increase its Commitment pursuant to clause (a) of this Section, Parent
and the Borrowers may designate another Person which qualifies as an
Eligible Assignee (which may be, but need not be, one or more of the
existing Lenders) which at the time agrees to (i) in the case of any
such Person that is an existing Lender, increase its Commitment and
(ii) in the case of any other such Person (an "Additional Lender"),
become a party to this Agreement. The sum of the increases in the
Commitments of the existing Lenders pursuant to this clause (b) plus
the Commitments of the Additional Lenders shall not in the aggregate
exceed the unsubscribed amount of the Increased Commitments.
(c) An increase in the aggregate amount of the Commitments
pursuant to this Section shall become effective upon the receipt by the
Administrative Agent of an agreement in form and substance satisfactory
to the Administrative Agent signed by the Parent and the Borrowers, by
each
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Additional Lender and by each other Lender whose Commitment is to be
increased, setting forth the new Commitments of such Lenders and
setting forth the agreement of each Additional Lender to become a party
to this Agreement and to be bound by all the terms and provisions
hereof, together with such evidence of appropriate corporate
authorization on the part of Parent and the Borrowers and the
Additional Lenders with respect to the Increased Commitments as the
Administrative Agent may reasonably request.
2.8 VOLUNTARY REDUCTION OF COMMITMENT. Borrowers shall have the right,
at any time and from time to time, without penalty or charge, upon at least
three Business Days prior written notice to the Administrative Agent,
voluntarily to reduce or to terminate, permanently and irrevocably, in aggregate
principal amounts in an integral multiple of $1,000,000 but not less than
$10,000,000, all or a portion of the then undisbursed portion of the Commitment,
provided that any such reduction or termination shall be accompanied by payment
of all accrued and unpaid commitment fees with respect to the portion of the
Commitment being reduced or terminated. The Administrative Agent shall promptly
notify the Lenders of any reduction of the Commitment under this Section.
2.9 OPTIONAL TERMINATION OF COMMITMENT. Following the occurrence of a
Change in Control, the Requisite Lenders may in their sole and absolute
discretion elect, during the sixty day period immediately subsequent to the
later of (a) such occurrence and (b) the earlier of (i) receipt of Borrowers'
written notice to the Administrative Agent of such occurrence and (ii) if no
such notice has been received by the Administrative Agent, the date upon which
the Administrative Agent and the Lenders have actual knowledge thereof, to
terminate the Commitment. In any such case the Commitment shall be terminated
effective on the date which is sixty days subsequent to the date of written
notice from the Administrative Agent to Borrowers thereof, and to the extent
that there are then any Obligations outstanding, the same shall be immediately
due and payable.
2.10 ADDITIONAL BORROWERS. From time to time following the Closing Date
and when no Default or Event of Default exists, Parent, Company and Marina (and
each other Borrower then a party to this Agreement) may jointly designate one or
more additional Wholly-Owned Subsidiaries as additional co-borrowers under this
Agreement in accordance with the provisions of this Section. Prior to the
effectiveness of any such designation each such additional Borrower shall have
duly authorized, executed and delivered to the Administrative Agent each of the
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(a) an Election to Become a Borrower, setting forth the proposed
Aggregate Sublimit for that Borrower, together with such other
documents, certificates, resolutions, opinions and other assurances as
the Administrative Agent may reasonably require in connection
therewith; and
(b) Committed Advance Notes;
Promptly following the submission of the foregoing documents, the Administrative
Agent shall inform the Lenders of the proposed designation and the proposed
Aggregate Sublimit. Unless the Requisite Lenders have objected in writing to the
proposed designee or Aggregate Sublimit within ten Business Days following such
notice from the Administrative Agent (which objection may be in the sole
discretion of each Lender), the Administrative Agent shall notify the Borrowers
that the appointment is accepted, whereupon the proposed new Borrower shall be a
Borrower for all purposes of this Agreement, with the Aggregate Sublimit set
forth in its Election to Become a Borrower.
2.11 ADMINISTRATIVE AGENT'S RIGHT TO ASSUME FUNDS AVAILABLE FOR
ADVANCES. Unless the Administrative Agent shall have been notified by any Lender
no later than the Business Day prior to the funding by the Administrative Agent
of any Loan that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of the total amount of such Loan, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on the date of the Loan and the Administrative Agent
may, in reliance upon such assumption, make available to the relevant Borrower a
corresponding amount. If the Administrative Agent has made funds available to a
Borrower based on such assumption and such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent promptly shall
notify Borrowers and the relevant Borrower shall pay such corresponding amount
to the
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Administrative Agent. The Administrative Agent also shall be entitled to recover
from such Lender interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Administrative
Agent to that Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to the daily Federal Funds Rate.
Nothing herein shall be deemed to relieve any Lender from its obligation to
fulfill its share of the Commitment or to prejudice any rights which the
Administrative Agent or Borrowers may have against any Lender as a result of any
default by such Lender hereunder.
2.12 EXTENSION OF THE MATURITY DATE. The Maturity Date may be extended
for 364 day periods at the request of the Parent and with the written consent of
all of the Lenders (which may be withheld in the sole and absolute discretion of
each Lender) pursuant to this Section. Not earlier than January 15 of each year,
nor later than March 15 of each year, the Parent and the Borrowers may deliver
to the Administrative Agent and the Lenders a written request for a 364 day
extension of the Maturity Date together with a Certificate of a Responsible
Official signed by a Senior Officer on behalf of Parent and each Borrower
stating that the representations and warranties contained in Article 4 (other
than (i) representations and warranties which expressly speak as of a particular
date or are no longer true and correct as a result of a change which is not a
violation of this Agreement, (ii) as otherwise disclosed by the Parent and the
Borrowers and approved in writing by the Requisite Lenders and (iii) Sections
4.4(a), 4.6 (first sentence), and 4.15) shall be true and correct on and as of
the date of such Certificate. Each Lender shall notify the Administrative Agent
within 30 days following its receipt of such a Certificate whether (in its sole
and absolute discretion) it consents to such request and the Administrative
Agent shall, after receiving the notifications from all of the Lenders or the
expiration of such period, whichever is earlier, notify Parent and the Borrowers
and the Lenders of the results thereof. If all of the Lenders have consented,
then the Maturity Date shall, effective on the then-current Maturity Date be
extended for 364 days from the then current Maturity Date.
If Lenders holding at least 66 2/3% of the Commitment consent to the
request for extension, but one or more Lenders (each a "Non-Consenting Lender")
notify the Administrative Agent that it will not consent to the request for
extension (or fail to notify the Managing Agent in writing of its consent within
the
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required period), Parent and the Borrowers may (i) cause such Non-Consenting
Lender to be removed as a Lender under this Agreement pursuant to Section
11.14(a), (ii) voluntarily terminate the Pro Rata Share of Non-Consenting Lender
in accordance with Section 11.14(b), or (iii) utilize a combination of the
procedures described in clauses (i) and (ii) of this Section. If such removal is
accomplished by assignment to an Eligible Assignee which has consented to the
requested extension, then the request for extension shall be granted with the
effect as set forth above. If such removal is accomplished by a voluntary
reduction of the Commitment, then the Administrative Agent shall notify all of
the Lenders in writing thereof.
Article 3
PAYMENTS AND FEES
3.1 PRINCIPAL AND INTEREST.
(a) Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance from the date thereof until payment in full is
made and shall accrue and be payable at the rates set forth or provided for
herein before and after default, before and after maturity, before and after
judgment, and before and after the commencement of any proceeding under any
Debtor Relief Law, with interest on overdue interest to bear interest at the
Default Rate to the fullest extent permitted by applicable Laws.
(b) Interest accrued on each Base Rate Loan on each Quarterly
Payment Date, and on the date of any prepayment of the Committed Advance Notes
pursuant to Section 3.1(f), shall be due and payable on that day. Except as
otherwise provided in Section 3.9, the unpaid principal amount of any Base Rate
Loan shall bear interest at a fluctuating rate per annum equal to the Base Rate.
Each change in the interest rate under this Section 3.1(b) due to a change in
the Base Rate shall take effect simultaneously with the corresponding change in
the Base Rate.
(c) Interest accrued on each Eurodollar Rate Loan having a
Eurodollar Period of three months or less shall be due and payable on the last
day of the related Eurodollar Period. Interest accrued on each other Eurodollar
Rate Loan shall be due and payable on the date which is three months after the
date such
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Eurodollar Rate Loan was made (and, in the event that all of the Lenders have
approved a Eurodollar Period of longer than 6 months, every three months
thereafter through the last day of the Eurodollar Period) and on the last day of
the related Eurodollar Period. Except as otherwise provided in Sections 3.1(d)
and 3.9, the unpaid principal amount of any Eurodollar Rate Loan shall bear
interest at a rate per annum equal to the Eurodollar Rate for that Eurodollar
Rate Loan plus the Eurodollar Margin.
(d) During the existence of a Default or Event of Default, the
Requisite Lenders may determine that any or all then outstanding Eurodollar Rate
Loans shall be converted to Base Rate Loans. Such conversion shall be effective
upon notice to Borrowers from the Requisite Lenders (or from the Administrative
Agent on behalf of the Requisite Lenders) and shall continue so long as such
Default or Event of Default continues to exist.
(e) If not sooner paid, the principal Indebtedness evidenced
by the Notes shall be payable as follows:
(i) the principal amount of each Eurodollar Rate
Loan shall be payable on the last day of the Eurodollar Period for such
Loan;
(ii) the amount, if any, by which the aggregate
principal amount of the outstanding Committed Loans at any time exceed
the Commitment shall be payable immediately, and shall be applied to
the Committed Advance Notes; and
(iii) the principal Indebtedness evidenced by the
Committed Advance Notes shall in any event be payable on the Maturity
Date.
(f) The Committed Advance Notes may, at any time and from time
to time, voluntarily be paid or prepaid in whole or in part without premium or
penalty, except that with respect to any voluntary prepayment under this Section
3.1(f), (i) any partial prepayment shall be in an integral multiple of
$1,000,000 but not less than $10,000,000, (ii) the Administrative Agent shall
have received written notice of any prepayment by 9:00 a.m., California local
time on a Business Day on the date of prepayment in the case of a Base Rate
Loan, and three Business Days, in the case of a Eurodollar Rate Loan, before the
date of prepayment, which notice shall identify the date and amount of the
prepayment and the Loan(s) being prepaid, (iii) each prepayment of principal
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shall be accompanied by payment of interest accrued to the date of payment on
the amount of principal paid and (iv) any payment or prepayment of all or any
part of any Eurodollar Rate Loan on a day other than the last day of the
applicable Eurodollar Period shall be subject to Section 3.8(d).
3.2 ARRANGEMENT FEE. On the Closing Date, Parent and the Borrowers
shall pay to the Administrative Agent, for the sole account of the Arranger, an
arrangement fee in the amount heretofore agreed upon by letter agreement among
Parent, the Borrowers and the Arranger. Such arrangement fee is for the services
of the Arranger in arranging the credit facilities under this Agreement and is
fully earned when paid. The arrangement fee is earned as of the date hereof and
is nonrefundable.
3.3 UPFRONT FEES. On the Closing Date, Parent and the Borrowers shall
pay to the Administrative Agent, for the respective accounts of the Lenders,
upfront fees in the respective amounts set forth in a writing addressed to that
Lender by the Lead Arranger Such fees are for the credit facility committed by
each Lender under this Agreement and are fully earned when paid. The upfront
fees paid to each Lender are solely for its own account and are nonrefundable.
3.4 FACILITY FEES. On the last day of each Pricing Period, Borrowers
shall pay to the Administrative Agent, for the respective accounts of the
Lenders, pro rata according to their Pro Rata Share, a facility fee equal to (a)
the Facility Fee Rate per annum for that Pricing Period times (b) the average
daily amount by of the Commitment (whether drawn or undrawn) during that Pricing
Period.
3.5 RESERVED.
3.6 AGENCY FEES. Borrowers shall pay to the Administrative Agent an
agency fee in such amounts and at such times as heretofore agreed upon by letter
agreement among Parent, the Borrowers and the Administrative Agent. The agency
fee is for the services to be performed by the Administrative Agent in acting as
Administrative Agent and is fully earned on the date paid. The agency fee paid
to the Administrative Agent is solely for its own account and is nonrefundable.
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3.7 INCREASED COMMITMENT COSTS. If any Lender shall determine that the
introduction after the Closing Date of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein or any change in the
interpretation or administration thereof by any central bank or other
Governmental Agency charged with the interpretation or administration thereof,
or compliance by such Lender (or its Eurodollar Lending Office) or any
corporation controlling the Lender, with any request, guidelines or directive
regarding capital adequacy (whether or not having the force of law) of any such
central bank or other authority, affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation
controlling such Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital is
increased, or the rate of return on capital is reduced, as a consequence of its
obligations under this Agreement, then such Lender shall promptly give notice to
the Borrowers and the Agent of such determination. Thereafter, the Borrowers
shall pay to such Lender, within five Business Days following written demand
therefor (setting forth the additional amounts owed to such Lender and the basis
of the calculation thereof in reasonable detail), additional amounts sufficient
to compensate such Lender in light of such circumstances, to the extent
reasonably allocable to such obligations under this Agreement. Each Lender shall
afford treatment to Borrowers under this Section which is substantially similar
to that which such Lender affords to its other similarly situated customers.
3.8 EURODOLLAR COSTS AND RELATED MATTERS.
(a) If, after the date hereof, the existence or occurrence of
any Special Eurodollar Circumstance shall:
(1) subject any Lender or its Eurodollar Lending
Office to any tax, duty or other charge or cost with respect
to any Eurodollar Rate Advance, any of its Notes evidencing
Eurodollar Rate Loans or its obligation to make Eurodollar
Rate Advances, or shall change the basis of taxation of
payments to any Lender of the principal of or interest on any
Eurodollar Rate Advance or any other amounts due under this
Agreement in respect of any Eurodollar Rate Advance, any of
its
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Notes evidencing Eurodollar Rate Loans or its obligation to
make Eurodollar Rate Advances, excluding, with respect to each
Creditor, and any Affiliate or Eurodollar Lending Office
thereof, (i) taxes imposed on or measured in whole or in part
by its net income or capital and franchise taxes imposed on
it, (ii) any withholding taxes or other taxes based on net
income (other than withholding taxes and taxes based on net
income resulting from or attributable to any change in any
law, rule or regulation or any change in the interpretation or
administration of any law, rule or regulation by any
Governmental Agency) or (iii) any withholding taxes or other
taxes based on net income for any period with respect to which
it has failed to provide Borrowers with the appropriate form
or forms required by Section 11.21, to the extent such forms
are then required by applicable Laws;
(2) impose, modify or deem applicable any reserve not
applicable or deemed applicable on the date hereof (including,
without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding the
Eurodollar Reserve Percentage taken into account in
calculating the Eurodollar Rate), special deposit, capital or
similar requirements against assets of, deposits with or for
the account of, or credit extended by, any Lender or its
Eurodollar Lending Office; or
(3) impose on any Lender or its Eurodollar Lending
Office or the Designated Eurodollar Market any other condition
materially affecting any Eurodollar Rate Advance, any of its
Notes evidencing Eurodollar Rate Loans, its obligation to make
Eurodollar Rate Advances or this Agreement, or shall otherwise
materially affect any of the same;
and the result of any of the foregoing, as determined by such Lender, increases
the cost to such Lender or its Eurodollar Lending Office of making or
maintaining any Eurodollar Rate Advance or in respect of any Eurodollar Rate
Advance, any of its Notes evidencing Eurodollar Rate Loans or its obligation to
make Eurodollar Rate Advances or reduces the amount of any sum received or
receivable by such Lender or its Eurodollar Lending Office with respect to any
Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate Loans or
its obligation to make
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Eurodollar Rate Advances (assuming such Lender's Eurodollar Lending Office had
funded 100% of its Eurodollar Rate Advance in the Designated Eurodollar Market),
then, provided that such Lender makes demand upon Borrowers (with a copy to the
Administrative Agent) within 90 days following the date upon which it becomes
aware of any such event or circumstance, Borrowers shall within five Business
Days pay to such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduction (determined as though such
Lender's Eurodollar Lending Office had funded 100% of its Eurodollar Rate
Advance in the Designated Eurodollar Market). Each of the Borrowers hereby
jointly and severally (but as between Borrowers, ratably) indemnifies each
Lender against, and agrees to hold each Lender harmless from and reimburse such
Lender within five Business Days after demand for (without duplication) all
costs, expenses, claims, penalties, liabilities, losses, legal fees and damages
incurred or sustained by each Lender in connection with this Agreement, or any
of the rights, obligations or transactions provided for or contemplated herein,
as a result of the existence or occurrence of any Special Eurodollar
Circumstance. A statement of any Lender claiming compensation under this clause
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. Each Lender agrees to
endeavor promptly to notify Borrowers of any event of which it has actual
knowledge, occurring after the Closing Date, which will entitle such Lender to
compensation pursuant to this Section and agrees to designate a different
Eurodollar Lending Office if such designation will avoid the need for or reduce
the amount of such compensation and will not, in the judgment of such Lender,
otherwise be materially disadvantageous to such Lender. If any Lender claims
compensation under this Section, Borrowers may at any time, upon at least four
Eurodollar Business Days' prior notice to the Administrative Agent and such
Lender and upon payment in full of the amounts provided for in this Section
through the date of such payment PLUS any prepayment fee required by Section
3.8(d), pay in full the affected Eurodollar Rate Advances of such Lender or
request that such Eurodollar Rate Advances be converted to Base Rate Advances.
To the extent that any Lender which receives any payment from Borrowers under
this Section later receives any funds which are identifiable as a reimbursement
or rebate of such amount from any other Person, such Lender shall promptly
refund such amount to Borrowers.
(b) If the existence or occurrence of any Special Eurodollar
Circumstance shall, in the opinion of any Lender, make it unlawful, impossible
or impracticable for such Lender or its
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Eurodollar Lending Office to make, maintain or fund its portion of any
Eurodollar Rate Loan, or materially restrict the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the Designated Eurodollar
Market, or to determine or charge interest rates based upon the Eurodollar Rate,
and such Lender shall so notify the Administrative Agent, then such Lender's
obligation to make Eurodollar Rate Advances shall be suspended for the duration
of such illegality, impossibility or impracticability and the Administrative
Agent forthwith shall give notice thereof to the other Lenders and Borrowers.
Upon receipt of such notice, the outstanding principal amount of such Lender's
Eurodollar Rate Advances, together with accrued interest thereon, automatically
shall be converted to Base Rate Advances on either (1) the last day of the
Eurodollar Period(s) applicable to such Eurodollar Rate Advances if such Lender
may lawfully continue to maintain and fund such Eurodollar Rate Advances to such
day(s) or (2) immediately if such Lender may not lawfully continue to fund and
maintain such Eurodollar Rate Advances to such day(s), provided that in such
event the conversion shall not be subject to payment of a prepayment fee under
Section 3.8(d). Each Lender agrees to endeavor promptly to notify Borrowers of
any event of which it has actual knowledge, occurring after the Closing Date,
which will cause that Lender to notify the Administrative Agent under this
Section 3.8(b), and agrees to designate a different Eurodollar Lending Office if
such designation will avoid the need for such notice and will not, in the
judgment of such Lender, otherwise be disadvantageous to such Lender. In the
event that any Lender is unable, for the reasons set forth above, to make,
maintain or fund its portion of any Eurodollar Rate Loan, such Lender shall fund
such amount as a Base Rate Advance for the same period of time, and such amount
shall be treated in all respects as a Base Rate Advance. Any Lender whose
obligation to make Eurodollar Rate Advances has been suspended under this
Section 3.8(b) shall promptly notify the Administrative Agent and Borrowers of
the cessation of the Special Eurodollar Circumstance which gave rise to such
suspension.
(c) If, with respect to any proposed Eurodollar Rate Loan:
(1) the Administrative Agent reasonably determines
that, by reason of circumstances affecting the Designated
Eurodollar Market generally that are beyond the reasonable
control of the Lenders, deposits in Dollars (in the applicable
amounts) are not being offered to any Lender in the Designated
Eurodollar Market for the applicable Eurodollar Period; or
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(2) the Requisite Lenders advise the Administrative
Agent that the Eurodollar Rate as determined by the
Administrative Agent (i) does not represent the effective
pricing to such Lenders for deposits in Dollars in the
Designated Eurodollar Market in the relevant amount for the
applicable Eurodollar Period, or (ii) will not adequately and
fairly reflect the cost to such Lenders of making the
applicable Eurodollar Rate Advances;
then the Administrative Agent forthwith shall give notice thereof to Borrowers
and the Lenders, whereupon until the Administrative Agent notifies Borrowers
that the circumstances giving rise to such suspension no longer exist, the
obligation of the Lenders to make any future Eurodollar Rate Advances shall be
suspended. If at the time of such notice there is then pending a Request for
Loan that specifies a Eurodollar Rate Loan, such Request for Loan shall be
deemed to specify a Base Rate Loan.
(d) Upon payment or prepayment of any Eurodollar Rate Advance,
(OTHER THAN as the result of a conversion required under Section 3.1(d) or
3.8(b)), on a day other than the last day in the applicable Eurodollar Period
(whether voluntarily, involuntarily, by reason of acceleration, or otherwise),
or upon the failure of any Borrower (for a reason other than the failure of a
Lender to make an Advance) to borrow on the date or in the amount specified for
a Eurodollar Rate Loan in any Request for Loan, Borrowers shall pay to the
appropriate Lender within five Business Days after demand a prepayment fee or
failure to borrow fee, as the case may be, (determined as though 100% of the
Eurodollar Rate Advance had been funded in the Designated Eurodollar Market)
equal to the SUM of:
(1) principal amount of the Eurodollar Rate Advance
prepaid or not borrowed, as the case may be, times the
quotient of (A) the number of days between the date of
prepayment or failure to borrow, as applicable, and the last
day in the applicable Eurodollar Period, divided by (B) 360,
times the applicable Interest Differential (provided that the
product of the foregoing formula must be a positive number);
plus
(2) all out-of-pocket expenses incurred by the Lender
reasonably attributable to such payment, prepayment or failure
to borrow.
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Each Lender's determination of the amount of any prepayment fee payable under
this Section 3.8(d) shall be conclusive in the absence of manifest error.
3.9 DEFAULT RATE. If (a) any installment of principal or interest or
any fee or cost or other amount payable under any Loan Document to any Creditor
is not paid when due, then such overdue Obligations shall, or (b) if any Event
of Default has occurred and remains continuing, then at the option of the
Requisite Lenders, all of the Obligations shall, thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the sum of the Base
Rate plus 2%, to the fullest extent permitted by applicable Laws. Accrued and
unpaid interest on past due amounts (including, without limitation, interest on
past due interest) shall be compounded monthly, on the last day of each calendar
month, to the fullest extent permitted by applicable Laws.
3.10 COMPUTATION OF INTEREST AND FEES. Computation of interest on Base
Rate Loans calculated with reference to the Reference Rate shall be calculated
on the basis of a year of 365 or 366 days, as the case may be, and the actual
number of days elapsed; computation of interest on Base Rate Loans calculated by
reference to the Federal Funds Rate, and on Eurodollar Rate Loans and all fees
under this Agreement shall be calculated on the basis of a year of 360 days and
the actual number of days elapsed. Each Borrower acknowledges that such latter
calculation method will result in a higher yield to the Lenders than a method
based on a year of 365 or 366 days. Interest shall accrue on each Loan for the
day on which the Loan is made; interest shall not accrue on a Loan, or any
portion thereof, for the day on which the Loan or such portion is paid. Any Loan
that is repaid on the same day on which it is made shall bear interest for one
day.
3.11 NON-BUSINESS DAYS. Subject to clause (b) of the definition of
"Eurodollar Period," if any payment to be made by Borrowers or any other Party
under any Loan Document shall come due on a day other than a Business Day,
payment shall instead be considered due on the next succeeding Business Day and
the extension of time shall be reflected in computing interest and fees.
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3.12 MANNER AND TREATMENT OF PAYMENTS.
(a) Each payment hereunder (EXCEPT payments pursuant to
Sections 3.7, 3.8, 11.3, and 11.11) or on the Notes or under any other Loan
Document shall be made without setoff, counterclaim, recoupment or other
deduction of any kind to the Administrative Agent, at the Administrative Agent's
Office, for the account of each of the Lenders or the Administrative Agent, as
the case may be, in immediately available funds not later than 11:00 a.m.,
California local time, on the day of payment (which must be a Business Day). All
payments received after these deadlines shall be deemed received on the next
succeeding Business Day. The amount of all payments received by the
Administrative Agent for the account of each Lender shall be immediately paid by
the Administrative Agent to the applicable Lender in immediately available funds
and, if such payment was received by the Administrative Agent by 11:00 a.m.,
California local time, on a Business Day and not so made available to the
account of a Lender on that Business Day, the Administrative Agent shall
reimburse that Lender for the cost to such Lender of funding the amount of such
payment at the Federal Funds Rate. All payments shall be made in lawful money of
the United States of America.
(b) Each payment or prepayment on account of any Committed
Loan shall be applied pro rata according to the outstanding Committed Advances
made by each Lender comprising such Committed Loan.
(c) Each Lender shall use its best efforts to keep a record of
Advances made by it and payments received by it with respect to each of its
Notes and, subject to Section 10.6(g), such record shall, as against Borrowers,
be presumptive evidence absent manifest error of the amounts owing.
Notwithstanding the foregoing sentence, no Lender shall be liable to any Party
for any failure to keep such a record.
(d) Each payment of any amount payable by Borrowers or any
other Party under this Agreement or any other Loan Document shall be made free
and clear of, and without reduction by reason of, any taxes, assessments or
other charges imposed by any Governmental Agency, central bank or comparable
authority, EXCLUDING, in the case of each Creditor, and any Affiliate or
Eurodollar Lending Office thereof, (i) taxes imposed on or
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measured in whole or in part by its net income and franchise taxes imposed on
it, (ii) any withholding taxes or other taxes based on net income (other than
withholding taxes and taxes based on net income resulting from or attributable
to any change in any law, rule or regulation or any change in the interpretation
or administration of any law, rule or regulation by any Governmental Agency) or
(iii) any withholding taxes or other taxes based on net income for any period
with respect to which it has failed to provide Borrowers with the appropriate
form or forms required by Section 11.21, to the extent such forms are then
required by applicable Laws, (all such non-excluded taxes, assessments or other
charges being hereinafter referred to as "Taxes"). To the extent that Parent or
any Borrower is obligated by applicable Laws to make any deduction or
withholding on account of Taxes from any amount payable to any Lender under this
Agreement, Parent or that Borrower shall (i) make such deduction or withholding
and pay the same to the relevant Governmental Agency and (ii) pay such
additional amount to that Lender as is necessary to result in that Lender's
receiving a net after-Tax amount equal to the amount to which that Lender would
have been entitled under this Agreement absent such deduction or withholding. If
and when receipt of such payment results in an excess payment or credit to that
Lender on account of such Taxes, that Lender shall promptly refund such excess
to Parent or the appropriate Borrower.
3.13 FUNDING SOURCES. Nothing in this Agreement shall be deemed to
obligate any Lender to obtain the funds for any Loan or Advance in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for any Loan or Advance in any
particular place or manner.
3.14 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER. Any decision by the
Creditors not to require payment of any interest (including interest arising
under Section 3.9), fee, cost or other amount payable under any Loan Document,
or to calculate any amount payable by a particular method, on any occasion shall
in no way limit or be deemed a waiver of the Creditor's right to require full
payment of any interest (including interest arising under Section 3.9), fee,
cost or other amount payable under any Loan Document on any other or subsequent
occasion.
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3.15 ADMINISTRATIVE AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE BY
BORROWERS. Unless the Administrative Agent shall have been notified by Borrowers
prior to the date on which any payment to be made by Borrowers hereunder is due
that Borrowers do not intend to remit such payment, the Administrative Agent
may, in its discretion, assume that the appropriate Borrower has remitted such
payment when so due and the Administrative Agent may, in its discretion and in
reliance upon such assumption, make available to each Lender on such payment
date an amount equal to such Lender's share of such assumed payment. If that
Borrower has not in fact remitted such payment to the Administrative Agent, each
Lender shall forthwith on demand repay to the Administrative Agent the amount of
such assumed payment made available to such Lender, together with interest
thereon in respect of each day from and including the date such amount was made
available by the Administrative Agent to such Lender to the date such amount is
repaid to the Administrative Agent at the Federal Funds Rate.
3.16 FEE DETERMINATION DETAIL. Each Creditor shall provide reasonable
detail to Parent and the Borrowers regarding the manner in which the amount of
any payment to that Creditor under Article 3 has been determined, concurrently
with demand for such payment.
3.17 SURVIVABILITY. All of the Parent's and the Borrowers' obligations
under Sections 3.7 and 3.8 shall survive for ninety days following the date on
which the Commitment is terminated and all Loans hereunder are fully paid.
Article 4
REPRESENTATIONS AND WARRANTIES
Parent and each Borrower represents and warrants to the Creditors, as
of the date hereof, as of the Closing Date, and as of the date of the making of
each Advance that:
4.1 EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS. Parent
and each of the Borrowers are duly formed, validly existing and in good standing
under the Laws of its jurisdiction of formation. Parent and each of the
Borrowers are duly qualified or registered to transact business and is in good
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standing in each other jurisdiction in which the conduct of its business or the
ownership or leasing of its Properties makes such qualification or registration
necessary, except where the failure so to qualify or register and to be in good
standing would not constitute a Material Adverse Effect. Parent and each of the
Borrowers have all requisite corporate or partnership power (as applicable) and
authority to conduct their respective business, to own and lease their
respective Properties and to execute and deliver each Loan Document to which it
is a Party and to perform its Obligations. All outstanding shares of capital
stock of Parent and each of the Borrowers are duly authorized, validly issued,
fully paid, and non-assessable and no holder thereof has any enforceable right
of rescission under any applicable state or federal securities Laws. Parent and
each of the Borrowers are in compliance with all Laws and other legal
requirements applicable to their respective business, have obtained all
authorizations, consents, approvals, orders, licenses and permits from, and have
accomplished all filings, registrations and qualifications with, or obtained
exemptions from any of the foregoing from, any Governmental Agency that are
necessary for the transaction of their business, except where the failure so to
comply, file, register, qualify or obtain exemptions does not constitute a
Material Adverse Effect.
4.2 AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS AND
GOVERNMENT REGULATIONS. The execution, delivery and performance by Parent and
each Borrower of the Loan Documents to which it is a Party have been duly
authorized by all necessary corporate or partnership action, as applicable, and
do not and will not:
(a) Require any consent or approval not heretofore obtained of
any partner, director, stockholder, security holder or creditor of such Party;
(b) Violate or conflict with any provision of such Party's
charter, articles of incorporation or bylaws, as applicable;
(c) Result in or require the creation or imposition of any
Lien or Right of Others upon or with respect to any Property now owned or leased
or hereafter acquired by such Party;
(d) Violate any Requirement of Law applicable to such Party,
subject to obtaining the authorizations from, or filings with, the Governmental
Agencies described in Schedule 4.3;
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(e) Result in a breach by such Party of or constitute a
default by such Party under, or cause or permit the acceleration of any
obligation owed under, any indenture or loan or credit agreement or any other
Contractual Obligation to which such Party is a party or by which such Party or
any of its Property is bound or affected; and neither Parent, Borrowers nor any
of their Significant Subsidiaries is in violation of, or default under, any
Requirement of Law or Contractual Obligation, or any indenture, loan or credit
agreement described in Section 4.2(e), in any respect that constitutes a
Material Adverse Effect.
4.3 NO GOVERNMENTAL APPROVALS REQUIRED. EXCEPT as set forth in Schedule
4.3 or previously obtained or made, no authorization, consent, approval, order,
license or permit from, or filing, registration or qualification with, any
Governmental Agency is or will be required to authorize or permit under
applicable Laws the execution, delivery and performance by Parent, Borrowers of
the Loan Documents to which any of them is a Party. All authorizations from, or
filings with, any Governmental Agency described in Schedule 4.3 will be
accomplished as of the Closing Date or such other date as is specified in
Schedule 4.3.
4.4 SIGNIFICANT SUBSIDIARIES.
(a) Schedule 4.4 hereto correctly sets forth the names, form
of legal entity, percentage of shares of each class of capital stock issued and
outstanding, percentage of shares owned by Parent or a Significant Subsidiary
(specifying such owner) and jurisdictions of organization of each of the
Significant Subsidiaries of Parent. Unless otherwise indicated in Schedule 4.4,
as of the Closing Date all of the outstanding shares of capital stock, or all of
the units of equity interest, as the case may be, of each such Significant
Subsidiary are owned of record and beneficially by the Persons described
therein, there are no outstanding options, warrants or other rights to purchase
capital stock of any such Significant Subsidiary, and all such shares or equity
interests so owned are duly authorized, validly issued, fully paid,
non-assessable, and were issued in compliance with all applicable state and
federal securities and other Laws, and are free and clear of all Liens and
Rights of Others, except for Permitted Encumbrances and Permitted Rights of
Others.
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(b) Each Significant Subsidiary of Parent is duly formed,
validly existing and in good standing under the Laws of its jurisdiction of
organization, is duly qualified to do business as a foreign organization and is
in good standing as such in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties makes such qualification
necessary (except where the failure to be so duly qualified and in good standing
does not constitute a Material Adverse Effect), and has all requisite power and
authority to conduct its business and to own and lease its Properties.
(c) Each Subsidiary of Parent is in compliance with all Laws
and other requirements applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits from, and
each such Subsidiary has accomplished all filings, registrations, and
qualifications with, or obtained exemptions from any of the foregoing from, any
Governmental Agency that are necessary for the transaction of its business,
except where the failure to be in such compliance, obtain such authorizations,
consents, approvals, orders, licenses, and permits, accomplish such filings,
registrations, and qualifications, or obtain such exemptions, does not
constitute a Material Adverse Effect.
4.5 FINANCIAL STATEMENTS. Parent and Borrowers have furnished to the
Lenders the audited consolidated financial statements of Parent and its
Subsidiaries for the Fiscal Year ended December 31, 1998. The financial
statements described above fairly present in all material respects the financial
condition, results of operations and changes in financial position of Parent and
its Subsidiaries as of such dates and for such periods, in conformity with
Generally Accepted Accounting Principles, consistently applied.
4.6 NO OTHER LIABILITIES; NO MATERIAL ADVERSE EFFECT. As of the Closing
Date, Parent and its Subsidiaries do not have any material liability or material
contingent liability not reflected or disclosed in the financial statements
described in Section 4.5, other than liabilities and contingent liabilities
arising in the ordinary course of business since the date of such financial
statements. As of the Closing Date, no circumstance or event has occurred that
constitutes a Material Adverse Effect since December 31, 1998.
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4.7 TITLE TO PROPERTY. Parent and its Subsidiaries have valid title to
the Property reflected in the financial statements described in Section 4.5,
other than immaterial items of Property and Property subsequently sold or
disposed of in the ordinary course of business, free and clear of all Liens and
Rights of Others, other than Liens or Rights of Others described in Schedule
4.7, as permitted by Section 6.4, and any other matters which do not have a
Material Adverse Effect.
4.8 LITIGATION. There are no actions, suits, proceedings or
investigations pending as to which Parent or any of its Subsidiaries have been
served or have received notice or, to the knowledge of Parent and the Borrowers,
threatened against or affecting Parent or any of its Subsidiaries or any
Property of any of them before any Governmental Agency in which there is any
reasonable possibility of an adverse decision which could materially adversely
affect the business, consolidated financial position or results of operations of
Parent and its Subsidiaries, taken as a whole, or which in any manner draws into
question the validity or enforceability of the Loan Documents.
4.9 BINDING OBLIGATIONS. Each of the Loan Documents will, when executed
and delivered by Parent and the Borrowers party thereto, constitute the legal,
valid and binding obligation of such Party, enforceable against such Party in
accordance with its terms, except as enforcement may be limited by Debtor Relief
Laws or equitable principles relating to the granting of specific performance
and other equitable remedies as a matter of judicial discretion.
4.10 NO DEFAULT. No event has occurred and is continuing that is a
Default or Event of Default.
4.11 ERISA.
(a) With respect to each Pension Plan:
(i) such Pension Plan complies in all material
respects with ERISA and any other applicable Laws to the
extent that noncompliance could reasonably be expected to have
a Material Adverse Effect;
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(ii) such Pension Plan has not incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA) that could reasonably be expected to have a Material
Adverse Effect;
(iii) no "reportable event" (as defined in Section
4043 of ERISA) has occurred that could reasonably be expected
to have a Material Adverse Effect; and
(iv) neither Parent nor any of its Subsidiaries
has engaged in any non-exempt "prohibited transaction" (as
defined in Section 4975 of the Code) that could reasonably be
expected to have a Material Adverse Effect.
(b) Neither Parent nor any of its Subsidiaries has incurred or
expects to incur any withdrawal liability to any Multiemployer Plan that could
reasonably be expected to have a Material Adverse Effect.
4.12 REGULATIONS T, U AND X; INVESTMENT COMPANY ACT. No part of the
proceeds of any Loan hereunder will be used to purchase or carry, or to extend
credit to others for the purpose of purchasing or carrying, any Margin Stock in
violation of Regulations T, U or X. Neither Parent nor any of its Subsidiaries
is or is required to be registered as an "investment company" under the
Investment Company Act of 1940.
4.13 DISCLOSURE. No written statement made by a Senior Officer of
Parent or any Borrower to any Creditor in connection with this Agreement,
including without limitation the statements made in the Confidential Offering
Memorandum, or in connection with any Loan, Advance as of the date thereof
contained any untrue statement of a material fact or omitted a material fact
necessary to make the statement made not misleading in light of all the
circumstances existing at the date the statement was made.
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4.14 TAX LIABILITY. Parent and its Subsidiaries have filed all tax
returns which are required to be filed, and have paid, or made provision for the
payment of, all taxes with respect to the periods, Property or transactions
covered by said returns, or pursuant to any assessment received by Parent or any
of its Subsidiaries, except (a) such taxes, if any, as are being contested in
good faith by appropriate proceedings and as to which adequate reserves have
been established and maintained and (b) immaterial taxes and tax returns so long
as no material item or portion of Property of Parent or any of its Subsidiaries
is in jeopardy of being seized, levied upon or forfeited.
4.15 PROJECTIONS. As of the Closing Date, to the best knowledge of
Parent and the Borrowers, the assumptions set forth in the Projections are
reasonable and consistent with each other and with all facts known to Parent and
the Borrowers, and the Projections are (a) reasonably based on such assumptions
and (b) although a range of possible different assumptions and estimates might
also be reasonable, neither Parent nor the Borrowers are aware of any facts
which would lead them to believe that the assumptions and estimates on which the
Projections were based are not reasonable; provided that no representation or
warranty can be given that the projected results will be realized or with
respect to the ability of Parent and its Subsidiaries to achieve the projected
results and, while the Projections are necessarily presented with numerical
specificity, the actual results achieved during the periods presented may differ
from the projected results, and such differences may be material.
4.16 HAZARDOUS MATERIALS. Parent and the Borrowers have reasonably
concluded that Environmental Laws are unlikely to have a material adverse effect
on the business, financial position, results of operations or prospects of the
Parent and its Subsidiaries, considered as a whole.
4.17 GAMING LAWS. Parent and each of its Subsidiaries are in compliance
in all material respects with all Gaming Laws that are applicable to them and
their businesses.
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4.18 YEAR 2000 COMPLIANCE. Parent and its Subsidiaries have reviewed
the effect of the Year 2000 Issue on the computer software, hardware and
firmware systems and equipment containing embedded microchips owned or operated
by or for Parent and its Subsidiaries. The costs to Parent and its Subsidiaries
of any reprogramming required as a result of the Year 2000 Issue to permit the
proper functioning of such systems and equipment and the proper processing of
data, and the testing of such reprogramming, and of required systems changes are
not reasonably expected to result in a Default or Event of Default or to have a
material adverse effect on the business, financial position, results of
operations or prospects of Parent and its Subsidiaries, considered as a whole.
4.19 SOLVENCY. As of the Closing Date, and giving effect to the
transactions contemplated to occur on the Closing Date, Parent and each of its
Subsidiaries are Solvent.
Article 5
AFFIRMATIVE COVENANTS
So long as any Advance remains unpaid, or any other Obligation remains
unpaid or unperformed, or any portion of the Commitment remains in force, Parent
and each Borrower shall, and shall cause their respective Subsidiaries to,
unless the Administrative Agent (with the written approval of the Requisite
Lenders) otherwise consents:
5.1 PRESERVATION OF EXISTENCE. Preserve and maintain their respective
existences in the jurisdiction of their formation and all material
authorizations, rights, franchises, privileges, consents, approvals, orders,
licenses, permits, or registrations from any Governmental Agency that are
necessary for the transaction of their respective business, except where the
failure to so preserve and maintain the existence of any Subsidiary and such
authorizations would not constitute a Material Adverse Effect and except that a
merger permitted by Section 6.1 shall not constitute a violation of this
covenant; and qualify and remain qualified to transact business in each
jurisdiction in which such qualification is necessary in view of their
respective business or the ownership or leasing of their respective Properties
except where the failure to so qualify or remain qualified would not constitute
a Material Adverse Effect.
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5.2 MAINTENANCE OF PROPERTIES. Maintain, preserve and protect all of
their respective depreciable Properties in good order and condition, subject to
wear and tear in the ordinary course of business, and not permit any waste of
their respective Properties, EXCEPT where the failure to maintain, preserve and
protect a particular item of depreciable Property would not have a Material
Adverse Effect.
5.3 MAINTENANCE OF INSURANCE. Maintain liability, casualty and other
insurance (subject to customary deductibles and retentions) with financially
sound and responsible insurance companies in such amounts and against such risks
as is carried by responsible companies engaged in similar businesses and owning
similar assets in the general areas in which Parent and its Subsidiaries
operate, and will furnish to the Administrative Agent upon request information
in reasonable detail as to the insurance so carried. Notwithstanding the
foregoing, Parent and its Subsidiaries may self-insure with respect to such
risks with respect to which companies of established reputation engaged in the
same general line of business in the same general area usually self-insure.
5.4 COMPLIANCE WITH LAWS. Comply in all material respects and within
the time period, if any, given for such compliance by the relevant Governmental
Agency or Agencies with enforcement authority, with all Laws and Requirements of
Law, including without limitation Hazardous Materials Laws, ERISA and all Gaming
Laws, except that Parent and its Subsidiaries need not comply with a Requirement
of Law then being contested by any of them in good faith by appropriate
proceedings.
5.5 INSPECTION RIGHTS. Upon reasonable notice, at any time during
regular business hours and as often as requested (but not so as to materially
interfere with the business of the Parent or any of its Subsidiaries), permit
the Administrative Agent or any Lender, or any authorized employee, agent or
representative thereof, to examine, audit and make copies and abstracts from the
records and books of account of, and to visit and inspect the Properties of, the
Parent and its Subsidiaries and to discuss the affairs, finances and accounts of
the Parent and its Subsidiaries with any of their officers, key employees or
accountants and, upon request, furnish promptly to the Administrative Agent or
any Lender true copies of all financial information made available to the senior
management of the Parent.
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5.6 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep adequate records and
books of account reflecting all financial transactions in conformity with
Generally Accepted Accounting Principles, consistently applied, and in material
conformity with all applicable requirements of any Governmental Agency having
regulatory jurisdiction over Parent or any of its Subsidiaries.
5.7 USE OF PROCEEDS. Use the proceeds of Loans (a) on the Closing Date,
for retirement of all outstanding obligations under the Existing Harrah's Credit
Agreements, the Rio Credit Agreements, and related transactional expenses, and
(b) thereafter to refinance or defease the Existing Rio Indentures in accordance
with Section 5.8, for working capital and general corporate purposes of Parent
and its Subsidiaries including without limitation capital expenditures, share
repurchases, commercial paper backup and acquisitions of equity securities or
assets of other Persons, in each case to the extent not prohibited by the Loan
Documents.
5.8 EXISTING RIO INDENTURES. Not later than June 1, 1999, either (a)
repay the Indebtedness under the Rio Indentures in its entirety, or (b) provide
for the legal or covenant defeasance of the Indebtedness under the Rio
Indentures, or (c) deliver to the Administrative Agent a writing acceptable to
the Administrative Agent reserving from the available Commitment and the Five
Year Commitment an aggregate amount equal to the then remaining principal
balance of the Indebtedness under the Rio Indentures (with such reserve to
remain in place until the satisfaction or defeasance of such Indebtedness).
5.9 YEAR 2000 PREPARATIONS. Make all required systems changes by
December 31, 1999, in computer software, hardware and firmware systems and
equipment containing embedded microchips owned or operated by or for Parent and
its Subsidiaries required as a result of the Year 2000 Issue to permit the
proper functioning of such computer systems and other equipment, except to the
extent that the failure to take any such action could not reasonably be expected
to result in a Default or Event of Default or to have a material adverse effect
on the business, financial position, results of operations or prospects of
Parent and its Subsidiaries, considered as a whole. At the request of any
Lender, Parent and Borrowers shall provide, and shall cause each of their
respective Subsidiaries to provide, to such Lender reasonable information with
respect to its compliance with this Section.
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Article 6
NEGATIVE COVENANTS
So long as any Advance remains unpaid, or any other Obligation remains
unpaid or unperformed, or any portion of the Commitment remains in force, Parent
and each Borrower shall not, and shall not permit any of their respective
Subsidiaries to, unless the Administrative Agent (with the written approval of
the Requisite Lenders) otherwise consents:
6.1 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. Merge or consolidate
with or into any Person, or sell lease or otherwise transfer all or any
substantial part of the assets of Parent and its Subsidiaries, taken as a whole,
to any Person, except:
(a) mergers and consolidations of a Subsidiary of a Borrower
into that Borrower or a Subsidiary thereof (with that Borrower or the Subsidiary
as the surviving entity) or of Subsidiaries of the Borrowers with each other;
(b) a merger or consolidation of a Borrower or any Subsidiary
thereof with any other Person, provided that (i) either (A) the Borrower or the
Subsidiary is the surviving entity, or (B) the surviving entity is a corporation
organized under the Laws of a State of the United States of America and, as of
the date of such merger or consolidation, expressly assumes, by an instrument
satisfactory in form and substance to the Requisite Lenders, the Obligations of
the relevant Borrower or the Subsidiary, as the case may be, (ii) giving effect
thereto, no Default or Event of Default exists or would result therefrom, and
(iii) giving pro forma effect thereto, Borrowers are in compliance with the
covenants set forth in Sections 6.5 and 6.6.
6.2 HOSTILE TENDER OFFERS. Make any offer to purchase or acquire, or
consummate a purchase or acquisition of, 5% or more of the capital stock of any
corporation or other equity securities of any business entity if the board of
directors or management of such corporation or business entity has notified
Parent or any of its Subsidiaries in writing that it opposes such offer or
purchase and such notice has not been withdrawn or superseded.
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6.3 CHANGE IN NATURE OF BUSINESS. Make any material change in the
nature of the business of Parent and its Subsidiaries, taken as a whole, or
acquire more than 49% of the capital stock or other equity securities of any
Person which is engaged in a line of business other than the lines of business
reasonably related to or incidental to the business engaged in by Parent and its
Subsidiaries.
6.4 LIENS, NEGATIVE PLEDGES, SALE LEASEBACKS AND RIGHTS OF OTHERS.
Create, incur, assume or suffer to exist any Lien, Negative Pledge or Right of
Others of any nature upon or with respect to any of their respective Properties,
whether now owned or hereafter acquired, or enter into any Sale and Leaseback
with respect to any such Properties except:
(a) Permitted Encumbrances and Permitted Rights of Others;
(b) Liens and Negative Pledges under the Loan Documents and
under the Five Year Loan Agreement;
(c) other existing Liens, Negative Pledges and Rights of
Others existing on the Closing Date and disclosed in Schedule 4.7 (or not
required to be disclosed therein under Section 4.7) and any renewals or
extensions thereof; provided that the obligations secured or benefited thereby
are not increased;
(d) Until the date which is ninety days following the Closing
Date, any Lien, Negative Pledge or Right of Others on shares of any equity
security or any warrant or option to purchase an equity security or any security
which is convertible into an equity security issued by any Subsidiary of Parent
that holds, directly or indirectly through a holding company or otherwise, a
license to conduct gaming under any Gaming Law, and in the proceeds thereof;
provided that this clause shall apply only so long as the Gaming Laws of the
relevant jurisdiction provide that the creation of any restriction on the
disposition of any of such securities shall not be effective and, if such Gaming
Laws at any time cease to so provide, then this clause shall be of no further
effect; and provided further that if at any time Parent or any of its
Subsidiaries creates or suffers to exist a Lien or Negative Pledge covering such
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securities in favor of the holder of any other Indebtedness, it will (subject to
any approval required under such Gaming Laws) concurrently grant a pari-passu
Lien or Negative Pledge likewise covering such securities in favor of the
Administrative Agent for the benefit of the Lenders;
(e) Liens on Property acquired or constructed by Parent or any
of its Subsidiaries, and in the proceeds thereof, that (i) were in existence at
the time of the acquisition or construction of such Property or were created at
or within 90 days after such acquisition or construction, and (ii) secure (in
the case of Liens not in existence at the time of acquisition of the Property)
only the unpaid portion of the acquisition or construction price for such
Property, or monies borrowed that were used to pay such acquisition or
construction price;
(f) Liens securing Indebtedness (including Capital Lease
Obligations) that replaces or refinances Indebtedness secured by Liens permitted
under clause (e); PROVIDED that such Liens cover only the same Property as the
Liens securing the Indebtedness replaced or refinanced;
(g) Liens, Negative Pledges and Rights of Others held by joint
venture partners and any assignees thereof, and lenders thereto and any
assignees thereof, with respect to the interests of Parent and its Subsidiaries
in that joint venture and the proceeds thereof, provided that such Liens,
Negative Pledges and Rights of Others shall secure and relate only the
obligations of such joint venture;
(h) Liens, Negative Pledges and Rights of Others in favor of
counterparties to agreements, and assignees thereof, entered into by Parent and
its Subsidiaries in the ordinary course of business on the interests of Parent
and its Subsidiaries under such agreements and the proceeds thereof, provided
that such Liens, Negative Pledges and Rights of Others shall secure and relate
only to restrictions on transfer of the rights of Parent and its Subsidiaries to
the holders thereof under the relevant agreement;
(i) Liens on Cash securing only Defeased Debt;
(j) Liens not otherwise permitted by the foregoing clauses of
this Section encumbering assets of the Parent and its Subsidiaries having an
aggregate fair market value which is not in excess of 10% of Net Tangible Assets
at any time; and
(k) Subject to Section 5.8, the Negative Pledges set forth
with respect to Rio and its Subsidiaries contained in the Existing Rio
Indentures.
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6.5 TOTAL DEBT RATIO. Permit the Total Debt Ratio to exceed 4.50:1.00
as of the last day of any Fiscal Quarter.
6.6 INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio to be
less than 3.00:1.00 as of the last day of any Fiscal Quarter.
6.7 SUBSIDIARY INDEBTEDNESS. Permit any Subsidiary of Parent which is
not a Borrower hereunder to create, assume, incur or suffer to exist any
Indebtedness or Contingent Obligations with respect to Indebtedness OTHER THAN:
(a) Defeased Debt;
(b) secured Indebtedness (including Capital Lease Obligations)
and Contingent Obligations which are permitted by Sections 6.4(e) or 6.4(f);
(c) unsecured Indebtedness and Contingent Obligations which
were created, assumed or incurred by such Subsidiary prior to its acquisition by
Parent and its Subsidiaries (and not in anticipation of such acquisition) but
not any refinancings, renewals or extensions thereof;
(d) letters of credit, surety bonds and other similar forms of
credit enhancement for such Subsidiaries incurred in the ordinary course of
their business; and
(e) Subject to Section 5.8, the Indebtedness evidenced by the
Existing Rio Indentures.
Article 7
INFORMATION AND REPORTING REQUIREMENTS
7.1 FINANCIAL AND BUSINESS INFORMATION. So long as any Advance remains
unpaid, or any other Obligation remains unpaid or unperformed, or any portion of
the Commitment remains in force, Parent and the Borrowers shall, unless the
Administrative Agent (with the written approval of the Requisite Lenders)
otherwise consents, deliver to the Administrative Agent and the Lenders, at
Parent's and Borrowers' sole expense:
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(a) As soon as practicable, and in any event within 45 days
after the end of each Fiscal Quarter (other than the fourth Fiscal Quarter in
any Fiscal Year), the consolidated balance sheet of Parent and its Subsidiaries
as at the end of such Fiscal Quarter and the consolidated statement of
operations for each Fiscal Quarter, and its statement of cash flows for the
portion of the Fiscal Year ended with such Fiscal Quarter and as at and for the
portion of the Fiscal Year ended with such Fiscal Quarter, all in reasonable
detail. Such financial statements shall be certified by a Senior Officer of
Parent as fairly presenting the financial condition, results of operations and
cash flows of Parent and its Subsidiaries in accordance with Generally Accepted
Accounting Principles (other than footnote disclosures), consistently applied,
as at such date and for such periods, subject only to normal year-end accruals
and audit adjustments;
(b) As soon as practicable, and in any event prior to the
penultimate Business Day of February in each Fiscal Year, a Certificate of a
Responsible Official setting forth the Total Debt Ratio as of the last day of
the fourth Fiscal Quarter of the preceding year, and providing reasonable detail
as to the calculation thereof, which calculations shall be based on the
preliminary unaudited financial statements of Parent and its Subsidiaries for
such Fiscal Quarter;
(c) As soon as practicable, and in any event within 120 days
after the end of each Fiscal Year, the consolidated balance sheet of Parent and
its Subsidiaries as at the end of such Fiscal Year and the consolidated
statements of operations, shareholders' equity and cash flows, in each case of
Parent and its Subsidiaries for such Fiscal Year as at and for the Fiscal Year,
all in reasonable detail. Such financial statements shall be prepared in
accordance with Generally Accepted Accounting Principles, consistently applied,
and such consolidated balance sheet and consolidated statements shall be
accompanied by a report and opinion of independent public accountants of
recognized standing selected by Parent and reasonably satisfactory to the
Requisite Lenders, which report and opinion shall be prepared in accordance with
generally accepted auditing standards as at such date, and shall not be subject
to any qualifications or exceptions. Such accountants' report and opinion shall
be accompanied by a certificate stating that, in making the examination pursuant
to generally accepted auditing
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standards necessary for the certification of such financial statements and such
report, such accountants have obtained no knowledge of any Default or, if, in
the opinion of such accountants, any such Default shall exist, stating the
nature and status of such Default, and stating that such accountants have
reviewed Parent's and Borrowers' financial calculations as at the end of such
Fiscal Year (which shall accompany such certificate) under Section 6.5 and 6.6,
have read such Sections (including the definitions of all defined terms used
therein) and that nothing has come to the attention of such accountants in the
course of such examination that would cause them to believe that the same were
not calculated by Parent and the Borrowers in the manner prescribed by this
Agreement;
(d) As soon as practicable, and in any event within 90 days
after the commencement of each Fiscal Year, a budget and projection by Fiscal
Quarter for that Fiscal Year and by Fiscal Year for the next four succeeding
Fiscal Years, INCLUDING for the first such Fiscal Year, projected quarterly
consolidated balance sheets, statement of operations and statements of cash flow
and, for the remaining four Fiscal Years, projected annual consolidated
condensed balance sheets and statements of operations and cash flow, of Parent
and its Subsidiaries, all in reasonable detail;
(e) Promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or communication
sent to the shareholders of Parent, and copies of all annual, regular, periodic
and special reports and registration statements which Parent may file or be
required to file with the Securities and Exchange Commission under Sections 13
or 15(d) of the Securities Exchange Act of 1934 and not otherwise required to be
delivered to the Lenders pursuant to other provisions of this Section;
(f) Promptly after the same are available, copies of the
Nevada "Regulation 6.090 Report" and "6-A Report" and copies of any written
communication to Parent or any of its Subsidiaries from any Gaming Board
advising it of a violation of or non-compliance with, any Gaming Law by Parent
or any of its Subsidiaries;
(g) Promptly after request by any Creditor, copies of any
other report or other document that was filed by Parent or any of its
Subsidiaries with any Governmental Agency;
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(h) As soon as practicable, and in any event within three
Business Days after a Senior Officer becomes aware of the existence of any
condition or event which constitutes a Default, telephonic notice specifying the
nature and period of existence thereof, and, no more than three Business Days
after such telephonic notice, written notice again specifying the nature and
period of existence thereof and specifying what action Parent or any of its
Subsidiaries are taking or propose to take with respect thereto;
(i) Promptly upon a Senior Officer becoming aware of any
litigation, governmental investigation or any proceeding, including any
litigation or proceeding by or subject to decision by any Gaming Board) pending
(i) against Parent or any of its Subsidiaries which could reasonably be expected
to have a Material Adverse Effect, (ii) with respect to any material
Indebtedness of Parent or any of its Subsidiaries, or (iii) with respect to the
Loan Documents, notice of the existence of the same; and
(j) Such other data and information as from time to time may
be reasonably requested by any Creditor through the Administrative Agent.
7.2 COMPLIANCE CERTIFICATES. So long as any Advance remains unpaid, or
any other Obligation remains unpaid or unperformed, or any portion of the
Commitment remains outstanding, Parent and Borrowers shall deliver to the
Administrative Agent and the Lenders, at Parent's and Borrowers' sole expense,
concurrently with the financial statements required pursuant to Sections 7.1(a)
and 7.1(c), a Compliance Certificate signed on Parent's and Borrowers' behalf by
a Senior Officer.
Article 8
CONDITIONS
8.1 INITIAL ADVANCES, ETC. The obligation of each Lender to make the
initial Advance to be made by it is subject to the following conditions
precedent, each of which shall be satisfied prior to the making of the initial
Advances (unless all of the Lenders, in their sole and absolute discretion,
shall agree otherwise):
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(a) The Administrative Agent shall have received all of the
following, each of which shall be originals unless otherwise specified, each
properly executed by a Responsible Official of each party thereto, each dated as
of the Closing Date and each in form and substance satisfactory to the
Administrative Agent and its legal counsel (unless otherwise specified or, in
the case of the date of any of the following, unless the Administrative Agent
otherwise agrees or directs):
(1) at least one executed counterpart of this Agreement,
together with arrangements satisfactory to the Administrative Agent for
additional executed counterparts, sufficient in number for distribution
to the Lenders, Parent and each Borrower;
(2) Committed Advance Notes executed by each Borrower in favor
of each Lender, each in a principal amount equal to that Lender's Pro
Rata Share;
(3) the Parent Guaranty executed by Parent;
(4) with respect to the Parent and each other Borrower, such
documentation as the Administrative Agent may require to establish the
due organization, valid existence and good standing of Parent and each
Borrower, its authority to execute, deliver and perform any Loan
Documents to which it is a Party, the identity, authority and capacity
of each Responsible Official thereof authorized to act on its behalf,
including certified copies of articles of incorporation and amendments
thereto, bylaws and amendments thereto, certificates of good standing,
certificates of corporate resolutions, incumbency certificates and
Certificates of Responsible Officials;
(5) the Opinions of Counsel;
(6) a Certificate of a Responsible Official certifying that
the attached copies of the governing indentures and agreements for the
Existing Subordinated Debt, the Existing Senior Notes and the Atlantic
City Showboat Land Debt are true copies;
(7) such assurances as the Administrative Agent deems
appropriate that the relevant Gaming Boards have approved the
transactions contemplated by the Loan Documents to the extent that such
approval is required by applicable Gaming Laws;
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(8) a Certificate of a Responsible Official signed on Parent's
and the Borrowers' behalf by a Senior Officer setting forth the Total
Debt Ratio as of March 31, 1999 and the Debt Rating as of the Closing
Date;
(9) a Certificate of a Responsible Official signed on Parent's
and the Borrowers' behalf by a Senior Officer certifying that the
conditions specified in Sections 8.1(e) and 8.1(f) have been satisfied;
(10) a copy of the Parent's audited consolidated annual
financial statements for the Fiscal Year ended December 31, 1998; and
(11) such other assurances, certificates, documents, consents
or opinions as the Administrative Agent reasonably may require.
(b) The Borrowers shall have on the Closing Date terminated
the Existing Harrah's Credit Agreements and the Existing Rio Credit Agreements
and repaid each of the loans and terminated each of the outstanding letters of
credit and other credit accommodations made thereunder (other than the
Continuing Letters of Credit (as defined in the Five Year Loan Agreement))
pursuant to arrangements acceptable to the Administrative Agent (including in
the case of the Existing Rio Credit Agreements the substantially concurrent
termination and reconveyance of all Liens in favor of the lenders thereunder),
and the proceeds of the initial Loans shall have been used or shall concurrently
be used to refinance the obligations of the Borrowers thereunder.
(c) The arrangement fee, upfront fees and agency fees payable
pursuant to Sections 3.2, 3.3 and 3.6 shall have been paid.
(d) The reasonable costs and expenses of the Administrative
Agent in connection with the preparation of the Loan Documents payable pursuant
to Section 11.3, and invoiced to the Parent prior to the Closing Date, shall
have been paid.
(e) The representations and warranties of Parent and the
Borrowers contained in Article 4 shall be true and correct.
(f) Parent, Borrowers and any other Parties shall be in
compliance with all the terms and provisions of the Loan Documents, and after
giving effect to the initial Advance no Default or Event of Default shall have
occurred and be continuing.
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8.2 ANY INCREASING ADVANCE, ETC. The obligation of each Lender to make
any Committed Advance which would increase the aggregate principal amount of the
outstanding Committed Advances is subject to the following conditions precedent:
(a) Except (i) for representations and warranties which
expressly speak as of a particular date or are no longer true and correct as a
result of a change which is not a violation of the Loan Documents and (ii) as
disclosed by Parent and Borrowers and approved in writing by the Requisite
Lenders, the representations and warranties contained in Article 4 (other than
Sections 4.4(a), 4.6 (first sentence) and 4.15) shall be true and correct on and
as of the date of the Advance as though made on that date;
(b) there shall not be then pending or threatened any action,
suit, proceeding or investigation against or affecting Parent or any of its
Subsidiaries or any Property of any of them before any Governmental Agency that
constitutes a Material Adverse Effect;
(c) the Administrative Agent shall, in the case of a Committed
Advance, have timely received a Request for Loan in compliance with Article 2
(or telephonic or other request for loan referred to in the second sentence of
Section 2.1(c), if applicable) in compliance with Article 2; and
(d) the Administrative Agent shall have received, in form and
substance satisfactory to the Administrative Agent, such other assurances,
certificates, documents or consents related to the foregoing as the
Administrative Agent or Requisite Lenders reasonably may require.
Article 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
9.1 EVENTS OF DEFAULT. The existence or occurrence of any one or more
of the following events, whatever the reason therefor and under any
circumstances whatsoever, shall constitute an Event of Default:
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(a) Any Borrower fails to pay any principal on any Committed
Advance Note, or any portion thereof, on the date when due; or
(b) Parent or any Borrower fails to pay any interest on any of
the Notes, or any fees under Sections 3.4 or 3.6, or any portion thereof, within
five Business Days after the date when due; or fails to pay any other fee or
amount payable to the Lenders under any Loan Document, or any portion thereof,
within five Business Days after demand therefor; or
(c) Parent or any Borrower fails, immediately upon notice from
the Administrative Agent, to comply with any of the covenants contained in
Article 6 (OTHER THAN the covenant contained in Section 6.3); or
(d) Parent or any Borrower fails to comply with Section 7.1(h)
in any respect that is materially adverse to the interests of the Lenders; or
(e) Parent, any Borrower or any other Party fails to perform
or observe any other covenant or agreement (not specified in clauses (a), (b),
(c) or (d) above) contained in any Loan Document on its part to be performed or
observed within thirty Business Days after the giving of notice by the
Administrative Agent on behalf of the Requisite Lenders of such Default; or
(f) Any representation or warranty of Parent or any Borrower
made in any Loan Document, or in any certificate or other writing delivered by
Parent or any Borrower pursuant to any Loan Document, proves to have been
incorrect when made or reaffirmed; or
(g) Parent or any of its Significant Subsidiaries (i) fails to
pay the principal, or any principal installment, of any present or future
indebtedness for borrowed money of $100,000,000 or more including without
limitation the Five Year Loan Agreement, or any guaranty of present or future
indebtedness for borrowed money of $100,000,000 or more, on its part to be paid,
when due (or within any stated grace period), whether at the stated maturity,
upon acceleration, by reason of required prepayment or otherwise or (ii) fails
to perform or observe any other term, covenant or agreement on its part to be
performed or observed, or suffers any event to occur, in connection with any
present or future indebtedness for borrowed money of $100,000,000
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or more, or of any guaranty of present or future indebtedness for borrowed money
of $100,000,000 or more, if as a result of such failure or sufferance any holder
or holders thereof (or an agent or trustee on its or their behalf) has the right
to declare such indebtedness due before the date on which it otherwise would
become due; or
(h) Any event occurs which gives the holder or holders of any
Subordinated Debt (or an agent or trustee on its or their behalf) the right to
declare such indebtedness due before the date on which it otherwise would become
due, or the right to require the issuer thereof to redeem or purchase, or offer
to redeem or purchase, all or any portion of any Subordinated Debt; or
(i) Any Loan Document, at any time after its execution and
delivery and for any reason other than the agreement of the Lenders or
satisfaction in full of all the Obligations ceases to be in full force and
effect or is declared by a court of competent jurisdiction to be null and void,
invalid or unenforceable in any respect which, in any such event in the
reasonable opinion of the Requisite Lenders, is materially adverse to the
interests of the Lenders; or any Party thereto denies in writing that it has any
or further liability or obligation under any Loan Document, or purports in
writing to revoke, terminate or rescind same; or
(j) A final judgment against the Parent or any of its
Significant Subsidiaries is entered for the payment of money in excess of
$25,000,000 and, absent procurement of a stay of execution, such judgment
remains unsatisfied for thirty calendar days after the date of entry of
judgment, or in any event later than five days prior to the date of any proposed
sale thereunder; or any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the Property of
any such Person and is not released, vacated or fully bonded within thirty
calendar days after its issue or levy; or
(k) The Parent or any of its Significant Subsidiaries
institutes or consents to the institution of any proceeding under a Debtor
Relief Law relating to it or to all or any part of its Property, or is unable or
admits in writing its inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any part of
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its Property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of that Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under a Debtor Relief Law relating to any such
Person or to all or any part of its Property is instituted without the consent
of that Person and continues undismissed or unstayed for 60 calendar days; or
(l) The occurrence of an Event of Default (as such term is or
may hereafter be specifically defined in any other Loan Document) under any
other Loan Document; or
(m) Any determination is made by a court of competent
jurisdiction that any Subordinated Debt is not subordinated in accordance with
its terms to the Obligations, provided that for so long as such determination is
effectively stayed during any pending appeal the same shall not constitute an
Event of Default; or
(n) Any Pension Plan maintained by the Parent or any of its
Subsidiaries is determined to have a material "accumulated funding deficiency"
as that term is defined in Section 302 of ERISA and the result is a Material
Adverse Effect; or
(o) The occurrence of a License Revocation with respect to a
license issued to Parent or any of its Subsidiaries by any Gaming Board of the
States of New Jersey or Nevada with respect to gaming operations at any gaming
facility accounting for 5% or more of the consolidated gross revenues of Parent
and its Subsidiaries that continues for thirty calendar days.
9.2 REMEDIES UPON EVENT OF DEFAULT. Without limiting any other rights
or remedies of the Creditors provided for elsewhere in this Agreement, or the
Loan Documents, or by applicable Law, or in equity, or otherwise:
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(a) Upon the occurrence, and during the continuance, of any
Event of Default other than an Event of Default described in Section 9.1(k):
(1) the commitment to make Advances and all other obligations
of the Creditors and all rights of Parent, Borrowers and any other
Parties under the Loan Documents shall be suspended without notice to
or demand upon Parent or the Borrowers, which are expressly waived by
Parent and the Borrowers, except that all of the Lenders or the
Requisite Lenders (as the case may be, in accordance with Section 11.2)
may waive an Event of Default or, without waiving, determine, upon
terms and conditions satisfactory to the Lenders or Requisite Lenders,
as the case may be, to reinstate the Commitment and make further
Advances, which waiver or determination shall apply equally to, and
shall be binding upon, all the Lenders; and
(2) the Requisite Lenders may request the Administrative Agent
to, and the Administrative Agent thereupon shall, terminate the
Commitment and/or declare all or any part of the unpaid principal of
all Notes, all interest accrued and unpaid thereon and all other
amounts payable under the Loan Documents to be forthwith due and
payable, whereupon the same shall become and be forthwith due and
payable, without protest, presentment, notice of dishonor, demand or
further notice of any kind, all of which are expressly waived by Parent
and the Borrowers.
(b) Upon the occurrence of any Event of Default described in
Section 9.1(k):
(1) the commitment to make Advances and all other obligations
of the Creditors and all rights of Parent, Borrowers and any other
Parties under the Loan Documents shall terminate without notice to or
demand upon Parent or Borrowers, which are expressly waived by Parent
and Borrowers, except that all the Lenders may waive the Event of
Default or, without waiving, determine, upon terms and conditions
satisfactory to all the Lenders, to reinstate the Commitment and make
further Advances, which determination shall apply equally to, and shall
be binding upon, all the Lenders; and
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(2) the unpaid principal of all Notes, all interest accrued
and unpaid thereon and all other amounts payable under the Loan
Documents shall be forthwith due and payable, without protest,
presentment, notice of dishonor, demand or further notice of any kind,
all of which are expressly waived by Parent and Borrowers.
(c) Upon the occurrence of any Event of Default, the
Creditors, or any of them, without notice to (except as expressly provided for
in any Loan Document) or demand upon Parent or Borrowers, which are expressly
waived by Borrowers (except as to notices expressly provided for in any Loan
Document), may proceed (but only with the consent of the Requisite Lenders) to
protect, exercise and enforce their rights and remedies under the Loan Documents
against Parent and the Borrowers and any other Parties and such other rights and
remedies as are provided by Law or equity.
(d) The order and manner in which the Lenders' rights and
remedies are to be exercised shall be determined by the Requisite Lenders in
their sole discretion, and all payments received by the Creditors, shall be
applied first to the costs and expenses (including attorneys' fees and
disbursements and the allocated costs of attorneys employed by the
Administrative Agent) of the Creditors, and thereafter paid pro rata to the
Lenders in the same proportions that the aggregate Obligations owed to each
Lender under the Loan Documents bear to the aggregate Obligations owed under the
Loan Documents to all the Lenders, without priority or preference among the
Lenders. Regardless of how each Lender may treat payments for the purpose of its
own accounting, for the purpose of computing the Obligations hereunder and under
the Notes, payments shall be applied first, to the costs and expenses of the
Creditors, as set forth above, second, to the payment of accrued and unpaid
interest due under any Loan Documents to and including the date of such
application (ratably, and without duplication, according to the accrued and
unpaid interest due under each of the Loan Documents), and third, to the payment
of all other amounts (including principal and fees) then owing to the Creditors
under the Loan Documents. No application of payments will cure any Event of
Default, or prevent acceleration, or continued acceleration, of amounts payable
under the Loan Documents, or prevent the exercise, or continued exercise, of
rights or remedies of the Lenders hereunder or thereunder or at Law or in
equity.
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Article 10
THE ADMINISTRATIVE AGENT
10.1 APPOINTMENT AND AUTHORIZATION. Each Creditor hereby irrevocably
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to the Administrative Agent by the terms thereof or are reasonably incidental,
as determined by the Administrative Agent, thereto. This appointment and
authorization is intended solely for the purpose of facilitating the servicing
of the Obligations and does not constitute appointment of the Administrative
Agent as trustee for any Lender or as representative of any Lender for any other
purpose and, EXCEPT as specifically set forth in the Loan Documents to the
contrary, the Administrative Agent shall take such action and exercise such
powers only in an administrative and ministerial capacity.
10.2 ADMINISTRATIVE AGENT AND AFFILIATES. Bank of America (and each
successor Administrative Agent) has the same rights and powers under the Loan
Documents as any other Lender and may exercise the same as though it was not the
Administrative Agent, and the term "Lender" or "Lenders" includes Bank of
America in its individual capacity. Bank of America (and each successor
Administrative Agent) and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust or other business with
Parent, any Subsidiary thereof, or any Affiliate of Parent, as if it was not the
Administrative Agent and without any duty to account therefor to the Lenders.
Bank of America (and each successor Administrative Agent) need not account to
any other Bank for any monies received by it for reimbursement of its costs and
expenses as Administrative Agent hereunder, or for any monies received by it in
its capacity as a Lender hereunder. The Administrative Agent shall not be deemed
to hold a fiduciary relationship with any Lender and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise exist against the Administrative Agent.
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10.3 PROPORTIONATE INTEREST IN ANY COLLATERAL. The Administrative
Agent, on behalf of all the Lenders, shall hold in accordance with the Loan
Documents all items of any collateral or interests therein hereafter received or
held by the Administrative Agent. Subject to the Administrative Agent's and the
Lenders' rights to reimbursement for their costs and expenses hereunder
(including attorneys' fees and disbursements and other professional services and
the allocated costs of attorneys employed by the Administrative Agent or a
Lender), each Lender shall have an interest in the Lenders' interest in any
collateral or interests therein in the same proportions that the aggregate
Obligations owed such Lender under the Loan Documents bear to the aggregate
Obligations owed under the Loan Documents to all the Lenders, without priority
or preference among the Lenders.
10.4 LENDERS' CREDIT DECISIONS. Each Creditor agrees that it has,
independently and without reliance upon the Administrative Agent, any other
Creditor or the directors, officers, agents, employees or attorneys of any other
Creditor, and instead in reliance upon information supplied to it by or on
behalf of Parent and Borrowers and upon such other information as it has deemed
appropriate, made its own independent credit analysis and decision to enter into
this Agreement. Each Creditor also agrees that it shall, independently and
without reliance upon any other Creditor or the directors, officers, agents,
employees or attorneys of any other Creditor, continue to make its own
independent credit analyses and decisions in acting or not acting under the Loan
Documents.
10.5 ACTION BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent may assume that no Default or
Event of Default has occurred and is continuing, unless they have received
notice from a Parent or any Borrower stating the nature of the Default or Event
of Default or have received notice from a Lender stating the nature of the
Default or Event of Default and that such Lender considers the Default or Event
of Default to have occurred and to be continuing.
(b) The Administrative Agent has only those obligations under
the Loan Documents as are expressly set forth therein.
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(c) Except for any obligation expressly set forth in the Loan
Documents and as long as the Administrative Agent may assume that no Event of
Default has occurred and is continuing, the Administrative Agent may, but shall
not be required to, exercise its discretion to act or not act, except that the
Administrative Agent shall be required to act or not act upon the instructions
of the Requisite Lenders (or of all the Lenders, to the extent required by
Section 11.2) and those instructions shall be binding upon the Administrative
Agent and all the Lenders, provided that the Administrative Agent shall not be
required to act or not act if to do so would be contrary to any Loan Document or
to applicable Law or would result, in the reasonable judgment of the
Administrative Agent, in substantial risk of liability to the Administrative
Agent.
(d) If the Administrative Agent has received a notice
specified in clause (a), the Administrative Agent shall immediately give notice
thereof to the Lenders and shall act or not act upon the instructions of the
Requisite Lenders (or of all the Lenders, to the extent required by Section
11.2), provided that the Administrative Agent shall not be required to act or
not act if to do so would be contrary to any Loan Document or to applicable Law
or would result, in the reasonable judgment of the Administrative Agent, in
substantial risk of liability to the Administrative Agent, and except that if
the Requisite Lenders (or all the Lenders, if required under Section 11.2) fail,
for five Business Days after the receipt of notice from the Administrative
Agent, to instruct the Administrative Agent, then the Administrative Agent, in
its sole discretion, may act or not act as it deems advisable for the protection
of the interests of the Creditors.
(e) The Administrative Agent shall have no liability to any
Creditor for acting, or not acting, as instructed by the Requisite Lenders (or
all the Lenders, if required under Section 11.2), notwithstanding any other
provision hereof.
10.6 LIABILITY OF ADMINISTRATIVE AGENT. Neither the Administrative
Agent nor any of its directors, officers, agents, employees or attorneys shall
be liable for any action taken or not taken by them under or in connection with
the Loan Documents, except for their own gross negligence or willful misconduct.
Without limitation on the foregoing, the Administrative Agent and its directors,
officers, agents, employees and attorneys:
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(a) May treat the payee of any Note as the holder thereof
until the Administrative Agent receives notice of the assignment or transfer
thereof, in form satisfactory to the Administrative Agent, signed by the payee,
and may treat each Lender as the owner of that Lender's interest in the
Obligations for all purposes of this Agreement until the Administrative Agent
receives notice of the assignment or transfer thereof, in form satisfactory to
the Administrative Agent, signed by that Lender.
(b) May consult with legal counsel (including in-house legal
counsel), accountants (INCLUDING in-house accountants) and other professionals
or experts selected by it, or with legal counsel, accountants or other
professionals or experts for Parent and/or its Subsidiaries or the Lenders, and
shall not be liable for any action taken or not taken by it in good faith in
accordance with any advice of such legal counsel, accountants or other
professionals or experts.
(c) Shall not be responsible to any Lender for any statement,
warranty or representation made in any of the Loan Documents or in any notice,
certificate, report, request or other statement (written or oral) given or made
in connection with any of the Loan Documents.
(d) Except to the extent expressly set forth in the Loan
Documents, shall have no duty to ask or inquire as to the performance or
observance by Parent or its Subsidiaries of any of the terms, conditions or
covenants of any of the Loan Documents or to inspect any collateral or the
Property, books or records of Parent or its Subsidiaries.
(e) Will not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, effectiveness,
sufficiency or value of any Loan Document, any other instrument or writing
furnished pursuant thereto or in connection therewith, or any collateral.
(f) Will not incur any liability by acting or not acting in
reliance upon any Loan Document, notice, consent, certificate, statement,
request or other instrument or writing believed by it to be genuine and signed
or sent by the proper party or parties.
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(g) Will not incur any liability for any arithmetical error in
computing any amount paid or payable by Parent, Borrowers or any Subsidiary
thereof or paid or payable to or received or receivable from any Lender under
any Loan Document, including, without limitation, principal, interest,
commitment fees, Advances and other amounts; provided that, promptly upon
discovery of such an error in computation, the Creditors (and, to the extent
applicable, Parent and Borrowers) shall make such adjustments as are necessary
to correct such error and to restore the parties to the position that they would
have occupied had the error not occurred.
10.7 INDEMNIFICATION. Each Lender shall, ratably in accordance with its
Pro Rata Share, indemnify and hold the Administrative Agent, the Lead Arranger
and their respective directors, officers, agents, employees and attorneys
harmless against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including, without limitation, attorneys' fees and
disbursements and allocated costs of attorneys employed by the Administrative
Agent or the Lead Arranger) that may be imposed on, incurred by or asserted
against it or them in any way relating to or arising out of the Loan Documents
(other than losses incurred by reason of the failure of Parent or Borrowers to
pay and perform the Obligations) or any action taken or not taken by it as
Administrative Agent and the Lead Arranger thereunder, except such as result
from their own gross negligence or willful misconduct. Without limitation on the
foregoing, each Lender shall reimburse the Administrative Agent and the Lead
Arranger upon demand for that Lender's Pro Rata Share of any out-of-pocket cost
or expense incurred by the Administrative Agent or the Lead Arranger in
connection with the negotiation, preparation, execution, delivery, amendment,
waiver, restructuring, reorganization (including a bankruptcy reorganization),
enforcement or attempted enforcement of the Loan Documents, to the extent that
Parent, Borrowers or any other Party fails to do so upon demand.
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10.8 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may, and
at the request of the Requisite Lenders shall, resign as Administrative Agent
upon thirty days notice to the Lenders, Parent and the Borrowers. If the
Administrative Agent resigns as Administrative Agent under this Agreement, the
Requisite Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders, which successor administrative agent shall
be approved by Parent and Borrowers (and such approval shall not be unreasonably
withheld). If no successor administrative agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders, Parent and
Borrowers, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor administrative agent and the retiring Administrative
Agent's appointment, powers and duties as Administrative Agent shall be
terminated (except for any liabilities incurred prior to such termination).
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article 10, and Sections 11.3,
11.11 and 11.23, shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement. If no
successor administrative agent has accepted appointment as Administrative Agent
by the date which is thirty days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor administrative agent as provided for
above.
10.9 NO OBLIGATIONS OF PARENT OR BORROWERS. Nothing contained in this
Article 10 shall be deemed to impose upon Parent or Borrowers any obligation in
respect of the due and punctual performance by the Administrative Agent of its
obligations to the Lenders under any provision of this Agreement, and Parent and
Borrowers shall have no liability to any Creditor in respect of any failure by
any Creditor to perform any of its obligations to any other Creditor under this
Agreement.
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Article 11
MISCELLANEOUS
11.1 CUMULATIVE REMEDIES; NO WAIVER. The rights, powers, privileges and
remedies of the Creditors provided herein or in any Note or other Loan Document
are cumulative and not exclusive of any right, power, privilege or remedy
provided by Law or equity. No failure or delay on the part of any Creditor in
exercising any right, power, privilege or remedy may be, or may be deemed to be,
a waiver thereof; nor may any single or partial exercise of any right, power,
privilege or remedy preclude any other or further exercise of the same or any
other right, power, privilege or remedy. The terms and conditions of Article 8
hereof are inserted for the sole benefit of the Creditors; the same may be
waived in whole or in part, with or without terms or conditions, in respect of
any Loan without prejudicing the Creditors rights to assert them in whole or in
part in respect of any other Loan.
11.2 AMENDMENTS; CONSENTS. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Agreement or any other
Loan Document, no approval or consent thereunder, and no consent to any
departure by Parent, Borrowers or any other Party therefrom, may in any event be
effective unless in writing signed by the Requisite Lenders (and, in the case of
any amendment, modification or supplement of or to any Loan Document to which
Parent or any Borrower is a party, signed by Parent and that Borrower and, in
the case of any amendment, modification or supplement to Article 10, signed by
the Administrative Agent), and then only in the specific instance and for the
specific purpose given; and, without the approval in writing of all the Lenders,
no amendment, modification, supplement, termination, waiver or consent may be
effective:
(a) To forgive any principal Obligation, defer any required
payment of any Obligation, reduce the amount or rate of interest payable on any
Loan or Advance without the consent of the affected Lender, increase the amount
of the Commitment (except as set forth in Section 2.7) or the Pro Rata Share of
any Lender or decrease the amount of any facility fee payable to any Lender, or
reduce any other fee or amount payable to the Creditors under the Loan Documents
or to waive an Event of Default consisting of the failure of any Borrower to pay
when due principal, interest or any facility fee;
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(b) To postpone any date fixed for any payment of principal
of, prepayment of principal of or any installment of interest on, any Note or
any installment of any facility fee, or to extend the term of the Commitment
(except as set forth in Section 2.12);
(c) To amend the provisions of the definition of "Requisite
Lenders" or this Section 11.2 or to amend or waive Section 6.2;
(d) to release or subordinate the Parent Guaranty; or
(e) To amend any provision of this Agreement that expressly
requires the consent or approval of all the Lenders.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 11.2 shall apply equally to, and shall be binding upon, all of
the Creditors.
If, in connection with any proposed amendment, modification, supplement,
termination, waiver or consent to any of the provisions hereof as contemplated
by clauses (a) through (d), inclusive, of this Section 11.2, the consent of the
Required Lenders is obtained, but the consent of one or more of the other
Lenders is required and is not obtained, then the Borrowers shall have the right
to (i) replace such non-consenting Lender with one or more Eligible Assignees in
accordance with Section 11.14(a) if such Eligible Assignee consents to the
proposed amendment, modification, supplement, termination, waiver or consent, or
(ii) reduce the Commitment in accordance with Section 11.14(b) or any
combination of the foregoing, provided that each such non-consenting Lender
shall be either replaced as set forth in clause (i) or eliminated as set forth
in clause (ii).
11.3 COSTS, EXPENSES AND TAXES. Each Borrower shall pay within two
Business Days after demand, accompanied by an invoice therefor, the reasonable
costs and expenses of the Administrative Agent and the Lead Arranger in
connection with the negotiation, preparation, syndication, execution and
delivery of the Loan Documents and any amendment thereto or waiver thereof which
is requested by Borrowers or is entered into when any Default or Event of
Default exists. Following any Event of Default, each Borrower shall pay on
demand, accompanied by an invoice therefor, the reasonable costs and expenses of
the Administrative Agent and each of the other Creditors in connection with the
restructuring, reorganization (including a bankruptcy reorganization) and
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enforcement or attempted enforcement of the Loan Documents, and any matter
related thereto. The foregoing costs and expenses shall include filing fees,
recording fees, title insurance fees, appraisal fees, search fees, and other
out-of-pocket expenses and the reasonable fees and out-of-pocket expenses of any
legal counsel (including allocated costs of legal counsel employed by any
Creditor), independent public accountants and other outside experts retained by
any of the Creditors, whether or not such costs and expenses are incurred or
suffered by the Creditors in connection with or during the course of any
bankruptcy or insolvency proceedings of the Parent or any Subsidiary thereof.
Such costs and expenses shall also include, in the case of any amendment or
waiver of any Loan Document requested by the Parent or the Borrowers, the
administrative costs of the Administrative Agent reasonably attributable
thereto. Each Borrower shall pay any and all documentary and other taxes,
excluding, in the case of each Creditor and its Eurodollar Lending Office
thereof, (i) taxes imposed on or measured in whole or in part by its net income
or capital and franchise taxes imposed on it, (ii) any withholding taxes or
other taxes based on net income (other than withholding taxes and taxes based on
net income resulting from or attributable to any change following the Closing
Date in any law, rule or regulation or any change following the Closing Date in
the interpretation or administration of any law, rule or regulation by any
governmental authority) or (iii) any withholding taxes or other taxes based on
net income for any period with respect to which it has failed to provide the
Parent with the appropriate form or forms required by Section 11.21, to the
extent such forms are then required by applicable Laws, and all costs, expenses,
fees and charges payable or determined to be payable in connection with the
filing or recording of this Agreement, any other Loan Document or any other
instrument or writing to be delivered hereunder or thereunder, or in connection
with any transaction pursuant hereto or thereto, and shall reimburse, hold
harmless and indemnify the Creditors from and against any and all loss,
liability or legal or other expense with respect to or resulting from any delay
in paying or failure to pay any such tax, cost, expense, fee or charge or that
any of them may suffer or incur by reason of the failure of any Party to perform
any of its Obligations. Any amount payable to the Creditors under this Section
11.3 shall bear interest from the second Business Day following the date of
demand for payment at the Default Rate.
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11.4 NATURE OF LENDERS' OBLIGATIONS. The obligations of the Lenders
hereunder are several and not joint or joint and several. Nothing contained in
this Agreement or any other Loan Document and no action taken by the Creditors
or any of them pursuant hereto or thereto may, or may be deemed to, make the
Creditors a partnership, an association, a joint venture or other entity, either
among themselves or with Parent, any Borrower or any Affiliate thereof. Each
Lender's obligation to make any Advance pursuant hereto is several and not joint
or joint and several, and in the case of the initial Advance only is conditioned
upon the performance by all other Lenders of their obligations to make initial
Advances. A default by any Lender will not increase the Pro Rata Share
attributable to any other Lender. Any Lender not in default may, if it desires,
assume in such proportion as a majority in interest of the nondefaulting Lenders
agree the obligations of any Lender in default, but is not obligated to do so.
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or in any other Loan Document, or in any
certificate or other writing delivered by or on behalf of any one or more of the
Parties to any Loan Document, will survive the making of the Loans hereunder and
the execution and delivery of the Notes, and have been or will be relied upon by
the Creditors, notwithstanding any investigation made by the Creditors or on
their behalf.
11.6 NOTICES. EXCEPT as otherwise expressly provided in the Loan
Documents, all notices, requests, demands, directions and other communications
provided for hereunder or under any other Loan Document must be in writing and
must be mailed, telecopied or delivered by overnight courier or otherwise to the
appropriate party at the address set forth on the signature pages of this
Agreement or other applicable Loan Document or, as to any party to any Loan
Document, at any other address as may be designated by it in a written notice
sent to all other parties to such Loan Document in accordance with this Section.
EXCEPT as otherwise expressly provided in any Loan Document, if any notice,
request, demand, direction or other communication required or permitted by any
Loan Document is given by mail it will be effective on the earlier of receipt or
the third calendar day after deposit in the United States mail with first class
or airmail postage prepaid; if given by telecopier, when sent; or if given by
personal delivery, when delivered.
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11.7 EXECUTION OF LOAN DOCUMENTS. Unless the Administrative Agent
otherwise specifies with respect to any Loan Document, (a) this Agreement and
any other Loan Document may be executed in any number of counterparts and any
party hereto or thereto may execute any counterpart, each of which when executed
and delivered will be deemed to be an original and all of which counterparts of
this Agreement or any other Loan Document, as the case may be, when taken
together will be deemed to be but one and the same instrument and (b) execution
of any such counterpart may be evidenced by a telecopier transmission of the
signature of such party. The execution of this Agreement or any other Loan
Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by all
the parties hereto or thereto.
11.8 BINDING EFFECT; ASSIGNMENT.
(a) This Agreement and the other Loan Documents will be
binding upon and inure to the benefit of Parent, Borrowers, the Creditors, and
their respective successors and assigns, except that Parent and Borrowers may
not assign their rights hereunder or thereunder or any interest herein or
therein without the prior written consent of all the Lenders (any purported
assignment by Parent or any Borrower in violation of this Section being void ab
initio). Each Lender represents that it is not acquiring its Notes with a view
to the distribution thereof within the meaning of the Securities Act of 1933, as
amended (subject to any requirement that disposition of such Notes must be
within the control of such Lender). Any Lender may at any time pledge its Notes
or any other instrument evidencing its rights as a Lender under this Agreement
to a Federal Reserve Bank, but no such pledge shall release that Lender from its
obligations hereunder or grant to such Federal Reserve Bank the rights of a
Lender hereunder absent foreclosure of such pledge.
(b) From time to time following the Closing Date, each Lender
may assign to one or more Eligible Assignees all or any portion of its Pro Rata
Share and its Notes; provided that (i) such Eligible Assignee, if not then a
Lender or an Affiliate of the assigning Lender having a combined capital and
surplus in excess of $100,000,000, shall be approved by each of the
Administrative Agent (which approval shall not be unreasonably withheld) and the
Parent and the Borrowers (which approval shall not be unreasonably withheld and
will not be required if an Event
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of Default has occurred and remains continuing), (ii) such assignment shall be
evidenced by an Assignment Agreement, a copy of which shall be furnished to the
Administrative Agent, (iii) except in the case of an assignment to an Affiliate
of the assigning Lender, to another Lender or of the entire remaining Commitment
of the assigning Lender, the assignment shall not assign a Pro Rata Share which
is less than $5,000,000, and (iv) the effective date of any such assignment
shall be as specified in the Assignment Agreement, but not earlier than the date
which is five Business Days after the date the Administrative Agent has received
the Assignment Agreement. Upon the effective date of such Assignment Agreement,
the Eligible Assignee named therein shall be a Lender for all purposes of this
Agreement, with the Pro Rata Share therein set forth and, to the extent of such
Pro Rata Share, the assigning Lender shall be released from its further
obligations under this Agreement and the other Loan Documents. Each Borrower
agrees that it shall execute and deliver (against delivery by the assigning
Lender to the Borrowers of its Notes) to such assignee Lender, Notes evidencing
that assignee Lender's Pro Rata Share, and to the assigning Lender, Notes
evidencing the remaining balance Pro Rata Share retained by the assigning
Lender.
(c) By executing and delivering an Assignment Agreement, the
Eligible Assignee thereunder acknowledges and agrees that: (i) other than the
representation and warranty that it is the legal and beneficial owner of the Pro
Rata Share being assigned thereby free and clear of any adverse claim, the
assigning Lender has made no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness or sufficiency of this Agreement or any
other Loan Document; (ii) the assigning Lender has made no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Parent or its Subsidiaries or the performance by the Parent or its
Subsidiaries of the Obligations; (iii) it has received a copy of this Agreement
and the other Loan Documents, together with copies of the most recent financial
statements delivered pursuant to Section 7.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment Agreement; (iv) it will, independently
and without reliance upon any other Creditor and based on such documents and
information as it shall deem appropriate at the time, continue to
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make its own credit decisions in taking or not taking action under this
Agreement; (v) it appoints and authorizes the Administrative Agent to take such
action and to exercise such powers under this Agreement and the Loan Documents
as are delegated to the Administrative Agent by this Agreement; and (vi) it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain a copy of each
Assignment Agreement delivered to it. After receipt of a completed Assignment
Agreement executed by any Lender and an Eligible Assignee, and receipt (except
in the case of the assignment to an Affiliate of the Assignor) of an assignment
fee of $3,500 from such Eligible Assignee, the Administrative Agent shall,
promptly following the effective date thereof, provide to Parent and the
Borrowers and the Lenders a revised Schedule 1.1 giving effect thereto.
(e) Each Lender may from time to time grant participations in
a portion of its Pro Rata Share, in each case to one or more banks or other
financial institutions (including another Lender); provided, however, that (i)
such Lender's obligations under the Loan Documents shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
financial institutions shall not be a Lender hereunder for any purpose EXCEPT,
if the participation agreement so provides, for the purposes of Sections 3.7,
3.8 and 11.11, but only to the extent that the cost of such benefits to Parent
and Borrowers does not exceed the cost which Parent and the Borrowers would have
incurred in respect of such Lender absent the participation, (iv) Parent, the
Borrowers and the other Creditors shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement, (v) the participation interest shall not restrict an increase in
the Commitment, or in the granting Lender's Pro Rata Share, so long as the
amount of the participation interest is not affected thereby, and (vi) the
consent of the holder of such participation interest shall not be required for
amendments or waivers of provisions of the Loan Documents other than those which
(A) extend the Maturity Date or any other date upon which any payment of money
is due to the Lender granting the participation, (B) reduce the rate of interest
on the Notes of such Lender, any fee or any other monetary amount payable to
that Lender, or (C) reduce the amount of any installment of principal due under
the Notes of that Lender.
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(f) Notwithstanding anything in this Section to the contrary,
the rights of the Lenders to make assignment of, and grant participations in,
their Pro Rata Share of the Commitment shall be subject to the approval of any
Gaming Board, to the extent required by applicable Gaming Laws.
(g) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") of such Granting Lender, identified as such in writing from time to
time by the Granting Lender to the Administrative Agent, Parent and the
Borrowers, the option to provide to the Borrowers all or any part of any Loan
that such Granting Lender would otherwise be obligated to make to the Borrowers
pursuant to Sections 2.1, 2.2 or 2.3, provided that (i) nothing herein shall
constitute a commitment to make any Loan by any SPC and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Granting Lender shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if, such Loan were
made by the Granting Lender. Each party hereto hereby agrees that no SPC shall
be liable for any indemnity or similar payment obligation under this Agreement
(all liability for which shall remain with the related Granting Lender). In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding senior
indebtedness of any SPC, it will not institute against, or join any other person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or similar proceedings under the laws of
the United States or any State thereof, provided that the Granting Lender for
each SPC hereby agrees to indemnify, save, and hold harmless each other party
hereto for any loss, cost, damage and expense arising out of their inability to
institute any such proceeding against its SPC. In addition, notwithstanding
anything to the contrary contained in this Section 11.8, any SPC may (i) with
notice to, but without the prior written consent of, Parent, the Borrowers or
the Administrative Agent and without paying any processing fee therefor, assign
all or a portion of its interests in any Loans to its Granting Lender or to any
financial institutions providing liquidity and/or credit facilities to or for
the account of such SPC to fund the Loans made by such SPC or to support the
securities (if any) issued by such SPC to fund such Loans (but nothing contained
herein shall be construed in derogation of the obligation of the Granting Lender
to make Loans hereunder), provided that neither the consent of the SPC or of any
such
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assignee shall be required for amendments or waivers of provisions of the Loan
Documents except for those amendments or waivers for which the consent of
participants is required under Section 11.8(e)(vi), and (ii) disclose on a
confidential basis (in the same manner described in Section 11.13) any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of a surety, guarantee or credit or liquidity
enhancement to such SPC.
11.9 SHARING OF SETOFFS. Each Lender severally agrees that if it,
through the exercise of any right of setoff, banker's lien or counterclaim
against Parent, any Borrower, or otherwise, receives payment of the Obligations
held by it that is ratably more than any other Lender, through any means,
receives in payment of the Obligations held by that Lender, then, subject to
applicable Laws: (a) The Lender exercising the right of setoff, banker's lien or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from the other Lender a participation
in the Obligations held by the other Lender and shall pay to the other Lender a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker's lien or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien or counterclaim or receipt of
payment; and (b) Such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender's share of the Obligations immediately prior to, and without
taking into account, the payment; provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by Parent, Borrowers or any Person claiming through or
succeeding to the rights of Parent or Borrowers, the purchase of a participation
shall be rescinded and the purchase price thereof shall be restored to the
extent of the recovery, but without interest. Each Lender that purchases a
participation in the Obligations pursuant to this Section shall from and after
the purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased. Parent and each Borrower
expressly consents to the foregoing arrangements and agrees that any Lender
holding a participation in an Obligation so purchased may exercise any and all
rights of setoff, banker's lien or counterclaim with respect to the
participation as fully as if the Lender were the original owner of the
Obligation
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11.10 INDEMNITY BY PARENT AND BORROWERS. Parent and each Borrower
jointly and severally (but as between Parent and Borrowers, ratably) agrees to
indemnify, save and hold harmless each of the Creditors and the Arranger and
their Affiliates, directors, officers, agents, attorneys and employees
(collectively the "Indemnitees") from and against: (a) Any and all claims,
demands, actions or causes of action (except a claim, demand, action, or cause
of action for any amount excluded from the definition of "Taxes" in Section
3.12(d)) if the claim, demand, action or cause of action arises out of or
relates to any act or omission (or alleged act or omission) of Parent, any
Borrower, its Affiliates or any of its officers, directors or shareholders
relating to the Commitment, the use or contemplated use of proceeds of any Loan,
or the relationship of Parent, Borrowers and the Creditors under this Agreement;
(b) Any administrative or investigative proceeding by any Governmental Agency
arising out of or related to a claim, demand, action or cause of action
described in clause (a) above; and (c) Any and all liabilities, losses, costs or
expenses (including attorneys' fees and the allocated costs of attorneys
employed by any Indemnitee and disbursements of such attorneys and other
professional services) that any Indemnitee suffers or incurs as a result of the
assertion of any foregoing claim, demand, action or cause of action; provided
that no Indemnitee shall be entitled to indemnification for any loss caused by
its own gross negligence or willful misconduct or for any loss asserted against
it by another Indemnitee. If any claim, demand, action or cause of action is
asserted against any Indemnitee, such Indemnitee shall promptly notify Parent
and Borrowers, but the failure to so promptly notify Parent or Borrowers shall
not affect Parent's and Borrowers' obligations under this Section unless such
failure materially prejudices Parent's or Borrowers' right to participate in the
contest of such claim, demand, action or cause of action, as hereinafter
provided. Such Indemnitee may (and shall, if requested by Parent and the
Borrowers in writing) contest the validity, applicability and amount of such
claim, demand, action or cause of action and shall permit Parent and the
Borrowers to participate in such contest. Any Indemnitee that proposes to settle
or compromise any claim or proceeding for which Parent or the Borrowers may be
liable for payment of indemnity hereunder shall give Parent and the Borrowers
written notice of the terms of such proposed settlement or compromise reasonably
in advance of settling or compromising such claim or proceeding and shall obtain
Parent's and the Borrowers' prior consent (which shall not
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be unreasonably withheld). In connection with any claim, demand, action or cause
of action covered by this Section against more than one Indemnitee, all such
Indemnitees shall be represented by the same legal counsel (which may be a law
firm engaged by the Indemnitees or attorneys employed by an Indemnitee or a
combination of the foregoing) selected by the Indemnitees; provided, that if
such legal counsel determines in good faith that representing all such
Indemnitees would or could result in a conflict of interest under Laws or
ethical principles applicable to such legal counsel or that a defense or
counterclaim is available to an Indemnitee that is not available to all such
Indemnitees, then to the extent reasonably necessary to avoid such a conflict of
interest or to permit unqualified assertion of such a defense or counterclaim,
each Indemnitee shall be entitled to separate representation, with all such
legal counsel using reasonable efforts to avoid unnecessary duplication of
effort by counsel for all Indemnitees; and further provided that the
Administrative Agent (as an Indemnitee) shall at all times be entitled to
representation by separate legal counsel (which may be a law firm or attorneys
employed by the Administrative Agent or a combination of the foregoing). Any
obligation or liability of the Parent and the Borrowers to any Indemnitee under
this Section shall survive the expiration or termination of this Agreement and
the repayment of all Loans and the payment and performance of all other
Obligations owed to the Lenders.
11.11 NONLIABILITY OF THE LENDERS. Parent and each Borrower
acknowledges and agrees that:
(a) Any inspections of any Property of Parent or its
Subsidiaries made by or through the Creditors are solely for purposes of
administration of this Agreement and Parent and the Borrowers are not entitled
to rely upon the same (whether or not such inspections are at the expense of
Parent and the Borrowers);
(b) By accepting, furnishing or approving anything required to
be observed, performed, fulfilled or given to the Creditors pursuant to the Loan
Documents, none of the Creditors shall be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of the
same, or of any term, provision or condition thereof, and such acceptance,
furnishing or approval thereof shall not constitute a warranty or representation
to anyone with respect thereto by the Creditors;
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(c) The relationship among Parent, the Borrowers and the
Creditors is, and shall at all times remain, solely that of borrowers,
guarantors and lenders; none of the Creditors shall under any circumstance be
construed to be partners or joint venturers of Parent, Borrowers or their
Affiliates; none of the Creditors shall under any circumstance be deemed to be
in a relationship of confidence or trust or a fiduciary relationship with Parent
or its Affiliates, or to owe any fiduciary duty to Parent or its Affiliates;
none of the Creditors undertakes or assumes any responsibility or duty to Parent
or its Affiliates to select, review, inspect, supervise, pass judgment upon or
inform Parent or its Affiliates of any matter in connection with their Property
or the operations of Parent or its Affiliates; Parent and its Affiliates shall
rely entirely upon their own judgment with respect to such matters; and any
review, inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by the Creditors in connection with such matters is solely
for the protection of the Creditors and neither Parent, the Borrowers nor any
other Person is entitled to rely thereon; and
(d) The Creditors shall not be responsible or liable to any
Person for any loss, damage, liability or claim of any kind relating to injury
or death to Persons or damage to Property caused by the actions, inaction or
negligence of Parent and/or its Affiliates and Parent and each Borrower hereby
indemnifies and holds the Creditors harmless from any such loss, damage,
liability or claim.
11.12 NO THIRD PARTIES BENEFITED. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Parent, the Borrowers and the Creditors in connection with the Loans, and is
made for the sole benefit of Parent, the Borrowers, the Creditors, and the
Creditors' successors and assigns, and, subject to Section 6.1 successors to
Borrowers by permitted merger. Except as provided in Sections 11.8 and 11.11, no
other Person shall have any rights of any nature hereunder or by reason hereof.
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11.13 CONFIDENTIALITY. Each Creditor agrees to hold any confidential
information that it may receive from Parent and its Subsidiaries pursuant to
this Agreement in confidence, except for disclosure: (a) To Affiliates of that
Creditor and to other Creditors; (b) To legal counsel and accountants for Parent
and its Subsidiaries or any Creditor; (c) To other professional advisors to
Parent and its Subsidiaries or any Creditor, provided that the recipient has
accepted such information subject to a confidentiality agreement substantially
similar to this Section 11.13 or has notified such professional advisors of the
confidentiality of such information; (d) To regulatory officials having
jurisdiction over that Creditor; (e) To any Gaming Board having regulatory
jurisdiction over Parent or its Subsidiaries, provided that each Lender agrees
to use its best efforts to notify Parent and the Borrowers of any such
disclosure unless prohibited by applicable Laws; (f) As required by Law or legal
process (provided that the relevant Creditor shall endeavor, to the extent it
may do so under applicable Law, to give Parent and the Borrowers reasonable
prior notice thereof to allow Parent and the Borrowers to seek a protective
order) or in connection with any legal proceeding to which that Creditor, Parent
and any Borrower are adverse parties; and (g) To another financial institution
in connection with a disposition or proposed disposition to that financial
institution of all or part of that Creditor's interests hereunder or a
participation interest in its Notes, provided that the recipient has accepted
such information subject to a confidentiality agreement substantially similar to
this Section. For purposes of the foregoing, "confidential information" shall
mean any information respecting Parent or its Subsidiaries reasonably considered
by Parent and the Borrowers to be confidential, other than (i) information
previously filed with any Governmental Agency and available to the public, (ii)
information previously published in any public medium from a source other than,
directly or indirectly, that Lender, and (iii) information previously disclosed
to any Person not associated with Parent or its Affiliates without a
confidentiality agreement substantially similar to this Section. Nothing in this
Section shall be construed to create or give rise to any fiduciary duty on the
part of any Creditor to Parent or the Borrowers.
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11.14 REMOVAL OF A LENDER. Parent and the Borrowers shall have the
right to remove a Lender as a party to this Agreement pursuant to this Section
in the event that such Lender (a) refuses to consent to an extension of the
Maturity Date requested by Parent and the Borrowers in accordance with Section
2.12 which has been consented to by Lenders holding Pro Rata Share equal to or
greater than 66 2/3% of the Commitment, or (b) requests compensation under
Section 3.7 or Section 3.8 which has not been requested by all other Lenders, in
each case by written notice to the Administrative Agent and such Lender within
60 days following any such refusal or request or (c) refuses to consent to
certain proposed changes, waivers, modifications, supplements, terminations,
waivers or consents with respect to this Agreement which have been approved by
the Required Lenders as provided in Section 11.2, provided that no Default or
Event of Default then exists, or (d) is the subject of a Disqualification. If
Parent and the Borrowers are entitled to remove a Lender pursuant to this
Section either:
(a) The Lender being removed shall within five Business Days
after such notice execute and deliver an Assignment Agreement covering that
Lender's Pro Rata Share in favor of one or more Eligible Assignees designated by
Parent and the Borrowers and reasonably acceptable to the Administrative Agent,
subject to payment of a purchase price by such Eligible Assignee equal to all
principal and accrued interest, fees and other amounts payable to such Lender
under this Agreement through the date of the Assignment Agreement; or
(b) Parent and the Borrowers may reduce the Commitment
pursuant to Section 2.8 (and, for this purpose, the numerical requirements of
such Section shall not apply) by an amount equal to that Lender's Pro Rata
Share, pay and provide to such Lender the amount required by clause (a) above
and release such Lender from its Pro Rata Share (subject, however, to the
requirement that all conditions set forth in Section 8.2 are met as of the date
of such reduction), in which case the percentage Pro Rata Shares of the
remaining Lenders shall be ratably increased (but without any increase in the
Dollar amount of the Pro Rata Shares of such Lenders).
11.15 FURTHER ASSURANCES. Parent and its Subsidiaries shall, at their
expense and without expense to the Creditors, do, execute and deliver such
further acts and documents as any Creditor from time to time reasonably requires
for the assuring and confirming unto the Creditors of the rights hereby created
or intended now or hereafter so to be, or for carrying out the intention or
facilitating the performance of the terms of any Loan Document.
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11.16 INTEGRATION. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof. In the event of any conflict between the provisions
of this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control and govern; provided that the inclusion of supplemental
rights or remedies in favor of the Creditors in any other Loan Document shall
not be deemed a conflict with this Agreement. Each Loan Document was drafted
with the joint participation of the respective parties thereto and shall be
construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.
11.17 GOVERNING LAW. EXCEPT to the extent otherwise provided therein,
each Loan Document shall be governed by, and construed and enforced in
accordance with, the local Laws of California, without regard to the choice of
laws or conflicts of laws principles thereof.
11.18 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable or invalid as to any party or in
any jurisdiction shall, as to that party or jurisdiction, be inoperative,
unenforceable or invalid without affecting the remaining provisions or the
operation, enforceability or validity of that provision as to any other party or
in any other jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
11.19 HEADINGS. Article and Section headings in this Agreement and the
other Loan Documents are included for convenience of reference only and are not
part of this Agreement or the other Loan Documents for any other purpose.
11.20 TIME OF THE ESSENCE. Time is of the essence of the Loan
Documents.
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11.21 FOREIGN LENDERS AND PARTICIPANTS. Each Lender, and each holder of
a participation interest herein, that is incorporated under the Laws of a
jurisdiction other than the United States of America or any state thereof shall
deliver to Parent (with a copy to the Administrative Agent), within twenty days
after the Closing Date (or after accepting an Assignment Agreement or receiving
a participation interest herein pursuant to Section 11.8, if applicable) two
duly completed copies, signed by a Responsible Official, of either Form 1001
(relating to such Person and entitling it to a complete exemption from
withholding on all payments to be made to such Person by Parent and the
Borrowers pursuant to this Agreement) or Form 4224 (relating to all payments to
be made to such Person by Parent and the Borrowers pursuant to this Agreement)
of the United States Internal Revenue Service or such other evidence (including,
if reasonably necessary, Form W-9) satisfactory to Parent and the Borrowers and
the Administrative Agent that no withholding under the federal income tax laws
is required with respect to such Person. Thereafter and from time to time, each
such Person shall (a) promptly submit to Parent (with a copy to the
Administrative Agent), such additional duly completed and signed copies of one
of such forms (or such successor forms as shall be adopted from time to time by
the relevant United States taxing authorities) as may then be available under
then current United States laws and regulations to avoid, or such evidence as is
satisfactory to Parent and the Borrowers and the Administrative Agent of any
available exemption from, United States withholding taxes in respect of all
payments to be made to such Person by Parent and the Borrowers pursuant to this
Agreement and (b) take such steps as shall not be materially disadvantageous to
it, in the reasonable judgment of such Lender, and as may be reasonably
necessary (including the re-designation of its Eurodollar Lending Office, if
any) to avoid any requirement of applicable laws that Parent or the Borrowers
make any deduction or withholding for taxes from amounts payable to such Person.
11.22 GAMING BOARDS. The Creditors agree to cooperate with all Gaming
Boards in connection with the administration of their regulatory jurisdiction
over Parent and its Subsidiaries, including the provision of such documents or
other information as may be requested by any such Gaming Board relating to
Parent or any of its Subsidiaries or to the Loan Documents.
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11.23 NATURE OF THE BORROWERS' OBLIGATIONS. The Company hereby agrees
that it shall be liable for all of the Obligations on a joint and several basis,
notwithstanding which of the Borrowers may have directly received the proceeds
of any particular Loan or Advance. Notwithstanding anything to the contrary set
forth herein, the principal liability of Marina and each Borrower hereafter
designated under Section 2.10 for Loans shall be limited to Loans made to that
Borrower under the Aggregate Sublimit of that Borrower. Each of the Borrowers
acknowledges and agrees that, for purposes of the Loan Documents, Parent and its
Subsidiaries constitute a single integrated financial enterprise and that each
receives a benefit from the availability of credit under this Agreement.
Borrowers each waive all defenses arising under the Laws of suretyship, to the
extent such Laws are applicable, in connection with their obligations under this
Agreement. Without limiting the foregoing, each Borrower agrees to the Joint
Borrower Provisions set forth in Exhibit L, incorporated by this reference.
11.24 DESIGNATED SENIOR DEBT. Parent and each Borrower hereby
irrevocably designate the Obligations and this Agreement as "Designated Senior
Indebtedness" and "Senior Indebtedness" within the meanings given to those terms
in Section 1.1 of the Supplemental Indenture dated December 9, 1998 entered into
with respect to the Existing Subordinated Debt among the Company, Parent and IBJ
Schroeder Bank & Trust Company.
11.25 GAMING REGULATIONS. Each party to this Agreement hereby
acknowledges that the consummation of the transactions contemplated by the Loan
Documents is subject to applicable Gaming Laws (and Parent and Borrower
represent and warrant that all requisite approvals necessary thereunder to enter
into the transactions contemplated hereby have been duly obtained).
11.26 WAIVER OF RIGHT TO TRIAL BY JURY. EACH SIGNATORY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE SIGNATORIES
HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH SIGNATORY HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY SIGNATORY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY
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11.27 PURPORTED ORAL AMENDMENTS. PARENT AND EACH BORROWER EXPRESSLY
ACKNOWLEDGE THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED
OR MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2. PARENT AND EACH BORROWER
AGREES THAT IT WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR
ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF ANY OF THE CREDITORS THAT
DOES NOT COMPLY WITH SECTION 11.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER
OR SUPPLEMENT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
HARRAH'S ENTERTAINMENT, INC.
By: /s/ Charles L. Atwood
-------------------------------------
Charles L. Atwood, Vice President
and Treasurer
HARRAH'S OPERATING COMPANY, INC.
By: /s/ Charles L. Atwood
-------------------------------------
Charles L. Atwood, Vice President
and Treasurer
MARINA ASSOCIATES
By: Harrah's New Jersey, Inc.,
general partner
By: /s/ Charles L. Atwood
-------------------------------
Charles L. Atwood, authorized
signatory
By: Harrah's Atlantic City, Inc.,
general partner
By: /s/ Charles L. Atwood
-------------------------------
Charles L. Atwood, authorized
signatory
Address for notices for Parent and each
Borrower:
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: Charles L. Atwood, Vice President
and Treasurer
Telecopier: 901/ 762-8698
Telephone: 901/762-8852
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By: /s/ Janice Hammond
-------------------------------------
Janice Hammond, Vice President
Address:
Bank of America National Trust
and Savings Association
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attn: Janice Hammond
Telecopier: (213) 228-2299
Telephone: (213) 228-9861
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Lender
By: /s/ Scott Faber
-------------------------------------
Scott Faber, Vice President
Address:
Bank of America National Trust
and Savings Association
555 South Flower Street, #3283
Los Angeles, California 90071
Attn: Scott Faber, Vice President
Telecopier: (213) 228-3145
Telephone: (213) 228-2768
With a copy to:
Bank of America National Trust and
Savings Association
555 South Flower Street (LA-5777)
Los Angeles, California 90071
Attn: William Newby, Managing Director
Telecopier: (213) 228-3145
Telephone: (213) 228-2438
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BANKERS TRUST COMPANY
By: /s/ Mary Kay Coyle
-----------------------------
Mary Kay Coyle
Title: Managing Director
--------------------------
Address for notices:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attn.: Mary Kay Coyle
Facsimile: (212) 250-7218
Telephone: (212) 250-9094
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CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Paul J. Chakmak
-----------------------------
Paul J Chakmak
Title: Managing Director, CIBC
Oppenheimer Corp., AS AGENT
--------------------------
Address for notices:
CIBC Oppenheimer Corp.
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attn.: Sherry Hanamean
Facsimile: (770) 319-4955
Telephone: (770) 319-4856
With a copy to:
CIBC Oppenheimer Corp.
350 South Grand Avenue, Suite 2600
Los Angeles, California 90071
Attention: Carter Harned
Facsimile: (213) 346-0157
Telephone: (213)617-6216
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SOCIETE GENERALE
By: /s/ Donald L. Schubert
-----------------------------
Donald L. Schubert
Title: Managing Director
--------------------------
Address for notices:
Societe Generale
2029 Century Park East, Suite 2900
Los Angeles, California 90067
Attn.: Donald Schubert, Managing Director
Facsimile: (310) 551-1537
Telephone: (310) 788-7104
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COMMERZBANK AKTIENGESELLSCHAFT, LOS
ANGELES BRANCH
By: /s/ Christian Jagenberg
-----------------------------
Christian Jagenberg
Title: SVP and Manager
--------------------------
By: /s/ Werner Schmidbauer
-----------------------------
Title: Vice President
--------------------------
Address for notices:
Commerzbank AG - Los Angeles Branch
633 West Fifth Street, Suite 6600
Los Angeles, California 90071
Attn.: Werner Schmidbauer
Facsimile: (213) 623-0039
Telephone: (213) 623-8223
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PNC BANK, NATIONAL ASSOCIATION
By: /s/ Gary W. Wessels
-----------------------------
Gary W. Wessels
Title: Vice President
--------------------------
Address for notices:
PNC Bank, National Association
Two Tower Center Boulevard
East Brunswick, New Jersey 08816
Attn.: Denise D. Killen, Vice President
Facsimile: (732) 220-3270
Telephone: (732) 220-3262
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WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Sue Fuller
-----------------------------
Sue Fuller
Title: Vice President
Address for notices:
Wells Fargo Bank, National Association
One East First Street, Suite 300
Reno, Nevada 89501
Attn.: Sue Fuller, Vice President
Facsimile: (775) 334-5637
Telephone: (775) 334-5633
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FLEET BANK N.A.
By: /s/ John F. Cullinan
-----------------------------
John F. Cullinan
Title: SVP
--------------------------
Address for notices:
Fleet Bank N.A.
3670 Route 9 South
Freehold, New Jersey 07728
Attn.: John F. Cullinan,
Senior Vice President
Facsimile: (732) 780-0754
Telephone: (732) 294-4306
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THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Mark A. Isley
-----------------------------
Mark A. Isley
Title: First Vice President
--------------------------
Address for notices:
The First National Bank of Chicago
One First National Plaza, 11th Floor
Chicago, Illinois 60670
Attn.: Robert Simon
Facsimile: (312) 732-4840
Telephone: (312) 732-8543
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THE BANK OF NEW YORK
By: /s/ Lisa Y. Brown
-----------------------------
Lisa Y. Brown
Title: Vice President
--------------------------
Address for notices:
The Bank of New York
One Wall Street, 22nd Floor
New York, New York 10005
Attn.: Dawn Hertling
Facsimile: (212) 6399 or 6877
Telephone: (212) 635-6742
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THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-----------------------------
F. C. H. Ashby
Title: Senior Manager Loan Operations
----------------------------
Address for notices:
The Bank of Nova Scotia
Atlanta Agency
Suite 2700
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn.: Donna Gardner
Facsimile: (404) 888-8998
Telephone: (404) 877-1559
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CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/ Diane M. Scott
-----------------------------
Diane M. Scott
Title: First Vice President and
Manager
--------------------------
Address for notices:
Credit Lyonnais Los Angeles Branch
515 South Flower Street, 22nd Floor
Los Angeles, California 90071
Attn.: Penney Chu
Facsimile: (213) 623-3437
Telephone: (213) 362-5905
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<PAGE>
U.S. BANK NATIONAL ASSOCIATION
By: /s/ David Walquist
----------------------------
David Walquist
Title: Vice President
-------------------------
Address for domestic notices:
U.S. Bank National Association
2300 West Sahara, Suite 120
Las Vegas, Nevada 89102
Attn.: David Walquist, Vice President
Facsimile: (702) 386-3916
Telephone: (702) 386-3938
Address for eurodollar notices:
U.S. Bank National Association
CLS West - PL-7
555 S.W. Oak Street
Portland, Oregon 97204
Attn.: J. Ramirez
Facsimile: (503) 275-8181
Telephone: (503) 275-3259
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WACHOVIA BANK, N.A.
By: /s/ Karin E. Reel
-----------------------------
Karin E. Reel
Title: Vice President
--------------------------
Address for notices:
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn.: Karin E. Reel
Facsimile: (404) 332-5016
Telephone: (404) 332-5187
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WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: /s/ Alan S. Bookspan
-----------------------------
Alan S. Bookspan
Title: Director
--------------------------
By: /s/ Walter T. Duffy, III
-----------------------------
Walter T. Duffy, III
Title: Vice President
Address for notices:
Westdeutsche Landesbank Girozentrale
1211 Avenue of the Americas
New York, New York 10036
Attn.: Walter T. Duffy III, Vice
President
Facsimile: (212) 852-6148
Telephone: (212) 852-6095
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FIRST SECURITY BANK, N.A.
By: /s/ Stephen L. Goalen
-----------------------------
Stephen L. Goalen
Title: Sr. Vice President
--------------------------
Address for domestic notices:
First Security Bank, N.A.
15 East 100 South - 2nd Floor
Salt Lake City, Utah 84111
Attn.: David P. Williams
Facsimile: (801) 246-5532
Telephone: (801) 246-5540
Address for eurodollar notices:
First Security Bank, N.A.
15 East 100 South - 2nd Floor
Salt Lake City, Utah 84111
Attn.: David P. Williams
Facsimile: (801) 246-5532
Telephone: (801) 246-5540
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THE INDUSTRIAL BANK OF JAPAN, LIMITED
ATLANTA AGENCY
By: /s/ Koichi Hasegawa
-----------------------------
Koichi Hasegawa
Title: Senior Vice President and
Deputy General Manager
--------------------------
Address for notices:
The Industrial Bank of Japan, Limited,
Atlanta Agency
1251 Avenue of Americas
New York, New York 10020
Attn.: Michele Fuimo
Facsimile: (212) 282-4480
Telephone: (212) 282-4063
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BANKBOSTON, N.A.
By: /s/ Patrick D. Bonebrake
-----------------------------
Patrick D. Bonebrake
Title: Vice President
--------------------------
Address for notices:
BankBoston, N.A.
100 Federal Street
MA 01-08-08
Boston, Massachusetts 02110
Attn.: Brian Nathan
Facsimile: (617) 434-4301
Telephone: (617) 434-8479
-118-
<PAGE>
BANK OF HAWAII
By: /s/ Robert M. Wheeler, III
-----------------------------
Robert M. Wheeler, III
Title: Vice President
--------------------------
Address for notices:
Bank of Hawaii
130 Merchant Street, 20th Floor
Honolulu, Hawaii 96813
Attn.: Robert Wheeler, Vice President
Facsimile: (808) 537-8301
Telephone: (808) 537-8237
-119-
<PAGE>
BANK OF SCOTLAND
By: /s/ Annie Chin Tat
-----------------------------
Annie Chin Tat
Title: Senior Vice President
--------------------------
Address for notices:
Bank of Scotland
565 Fifth Avenue
New York, New York 10017
Attn.: Karen Workman, Banking Associate
Facsimile: (212) 687-4412
Telephone: (212) 450-0877
-120-
<PAGE>
BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By: /s/ Warren G. Parham
-----------------------------
Warren G. Parham
Title: Vice President
--------------------------
Address for notices:
Banque Nationale De Paris, Houston Agency
333 Clay Street, Suite 3400
Houston, Texas 77002
Attn.: Donna Jo Rose
Facsimile: (713) 659-1414
Telephone: (713) 951-1240
-121-
<PAGE>
COMERICA WEST INCORPORATED
By: /s/ Eoin P. Collins
-----------------------------
Eoin P. Collin
Account Officer
Address for notices:
Comerica West Incorporated
3980 Howard Hughes Parkway, Suite 350
Las Vegas, Nevada 89109
Attn.: Regina C. McGuire
Facsimile: (702) 791-2371
Telephone: (702) 791-4804
-122-
<PAGE>
MICHIGAN NATIONAL BANK
By: /s/ Jeffrey W. Billig
-----------------------------
Jeffrey W. Billig
Title: Relationship Manager
--------------------------
Address for notices:
Michigan National Bank
27777 Inkster Road, 10-36
Farmington Hills, Michigan 48334
Attn.: Jeffrey W. Billig, Relationship
Manager
Facsimile: (248) 473-4345
Telephone: (248) 473-4329
-123-
<PAGE>
THE SUMITOMO BANK, LIMITED
By: /s/ Gary P. Franke
-----------------------------
Gary P. Franke
Title: Vice President and Manager
--------------------------
Address for notices:
The Sumitomo Bank, Limited, New York
Branch
277 Park Avenue
New York, New York 10172
Attn.: Matthew Sullivan
Facsimile: (212) 224-5197
Telephone: (212) 224-4120
-124-
<PAGE>
FIRST AMERICAN NATIONAL BANK, operating
as DEPOSIT GUARANTY NATIONAL BANK
By: /s/ Larry C. Ratzlaff
----------------------------
Larry C. Ratzlaff
Title: Senior Vice President
--------------------------
Address for notices:
First American National Bank, Operating
as Deposit Guaranty National Bank
210 East Capitol Street
Jackson, Mississippi 39201
Attn.: Larry C. Ratzlaff, Senior Vice
President
Facsimile: (601) 354-8315
Telephone: (601) 968-4749
-125-
<PAGE>
ERSTE BANK
By: /s/ David Manheim
-----------------------------
David Manheim
Title: Assistant Vice President
Erste Bank New York Branch
--------------------------
By: /s/ John S. Runnion
-----------------------------
John S. Runnion
Title: First Vice President
--------------------------
Address for notices:
Erste Bank
West Building, 32nd Floor
280 Park Avenue
New York, New York 10017
Attn.: David Manheim, Assistant Vice
President
Facsimile: (212) 984-5627
Telephone: (212) 984-5633
-126-
<PAGE>
FIRST HAWAIIAN BANK
By: /s/ Donald C. Young
-----------------------------
Donald C. Young
Title: Vice President
-------------------------
Address for notices:
First Hawaiian Bank
999 Bishop Street, 11th Floor
Honolulu, Hawaii 96813
Attn.: Brenda Deakins
Facsimile: (808) 525-5085
Telephone: (808) 525-8100
-127-
<PAGE>
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By: /s/ James H. Moore, Jr.
-----------------------------
James H. Moore, Jr.
Title: Vice President
--------------------------
Address for notices:
First Tennessee Bank National Association
165 Madison Avenue, 9th Floor
Memphis, Tennessee 38103-2723
Attn.: James H. Moore, Jr., Vice
President
Facsimile: (901) 523-4267
Telephone: (901) 523-4108
-128-
<PAGE>
HIBERNIA NATIONAL BANK
By: /s/ Ross S. Wales
-----------------------------
Ross S. Wales
Title: Vice President
--------------------------
Address for domestic notices:
Hibernia National Bank
313 Carondelet Street
New Orleans, Louisiana 70130
Attn.: Lorie Ferguson, Commercial
Banking Dept.
Facsimile: (504) 533-2060
Telephone: (504) 533-5718
Address for eurodollar notices:
Hibernia National Bank
313 Carondelet Street
New Orleans, Louisiana 70130
Attn.: Lorie Ferguson, Commercial
Banking Dept.
Facsimile: (504) 533-2060
Telephone: (504) 533-5718
-129-
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Bertram H. Tang
-----------------------------
Bertram H. Tang
Title: VP & Group Leader
--------------------------
Address for notices:
The Dai-Ichi Kangyo Bank, Ltd.
One World Trade Center, 48th Floor
New York, New York 10048
Attn.: Thomas Ho and Bertram H. Tang,
Vice President & Group Leader
Facsimile: (212) 912-1879
Telephone: (212) 432-8845
-130-
<PAGE>
EXHIBIT A
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT ("Agreement") dated as of
____________, _____ is made with reference to that certain 364-Day Loan
Agreement dated as of April 30, 1999 (as amended from time to time, the "Loan
Agreement") by and among Harrah's Entertainment, Inc., a Delaware corporation,
as Guarantor, Harrah's Operating Company, Inc., a Delaware corporation, Marina
Associates, a New Jersey general partnership (each a "Borrower" and
collectively, the "Borrowers"), the Lenders therein named, (collectively, the
"Lenders" and individually, a "Lender") and Bank of America National Trust and
Savings Association, as Administrative Agent and is entered into between the
"Assignor" described below, in its capacity as a Lender under the Loan
Agreement, and the "Assignee" described below.
Assignor and Assignee hereby represent, warrant and agree as
follows:
1. DEFINITIONS. Capitalized terms defined in the Loan
Agreement are used herein with the meanings set forth for such terms in the Loan
Agreement. As used in this Agreement, the following capitalized terms shall have
the meanings set forth below:
"ASSIGNEE" means ___________________________________.
"ASSIGNED PRO RATA SHARE" means _________________% of the Commitment of
the Lenders under the Loan Agreement which equals $__________.
"ASSIGNOR" means _______________________
"EFFECTIVE DATE" means ___________, _____, the effective date of this
Agreement determined in accordance with Section 11.8 of the Loan Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE ASSIGNOR. The
Assignor represents and warrants to the Assignee as follows:
a. As of the date hereof, the Pro Rata Share of the
Assignor is ___________% of the Commitment (without giving effect to assignments
thereof which have not yet become effective). The Assignor is the legal and
beneficial owner of the Assigned Pro Rata Share and the Assigned Pro Rata Share
is free and clear of any adverse claim.
<PAGE>
b. As of the date hereof, the outstanding principal
balance of Advances made by the Assignor under the Assignor's Note is
$____________________, and Assignor's ratable participation in outstanding
Letters of Credit is $_____________________.
c. The Assignor has full power and authority, and has
taken all action necessary, to execute and deliver this Agreement and any and
all other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement, and no governmental
authorizations or other authorizations are required in connection therewith; and
d. This Agreement constitutes the legal, valid and
binding obligation of the Assignor.
The Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of each Borrower or the performance by
each Borrower of the Obligations, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with the
Loan Agreement or the execution, legality, validity, enforceability,
genuineness, or sufficiency of the Loan Agreement or any Loan Document other
than as expressly set forth above.
3. REPRESENTATIONS AND WARRANTIES OF THE ASSIGNEE. The
Assignee hereby represents and warrants to the Assignor as follows:
(a) The Assignee has full power and authority, and has taken
all action necessary, to execute and deliver this Agreement, and any and all
other documents required or permitted to be executed or delivered by it in
connection with this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement, and no governmental
authorizations or other authorizations are required in connection therewith;
(b) This Agreement constitutes the legal, valid and binding
obligation of the Assignee;
-2-
<PAGE>
(c) The Assignee has independently and without reliance upon
the Administrative Agent or Assignor and based on such documents and information
as the Assignee has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. The Assignee will, independently and
without reliance upon the Administrative Agent or any Lender, and based upon
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Agreement;
(d) The Assignee has received copies of such of the Loan
Documents delivered pursuant to Section 8.1 of the Loan Agreement as it has
requested, together with copies of the most recent financial statements
delivered pursuant to Section 7.1 of the Loan Agreement;
(e) The Assignee will perform in accordance with their
respective terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender; and
(f) The Assignee is an Eligible Assignee.
4. ASSIGNMENT. On the terms set forth herein, the Assignor, as
of the Effective Date, hereby irrevocably sells, assigns and transfers to the
Assignee all of the rights and obligations of the Assignor under the Loan
Agreement, the other Loan Documents and the Assignor's Note to the extent of the
Assigned Pro Rata Share, and the Assignee irrevocably accepts such assignment of
rights and assumes such obligations from the Assignor on such terms and
effective as of the Effective Date. As of the Effective Date, the Assignee shall
have the rights and obligations of a "Lender" under the Loan Documents, except
to the extent of any arrangements with respect to payments referred to in
Section 5 hereof. Assignee hereby appoints and authorizes the Administrative
Agent to take such action and to exercise such powers under the Loan Agreement
as are delegated to the Administrative Agent by the Loan Agreement.
5. PAYMENT. On the Effective Date, the Assignee shall pay to
the Assignor, in immediately available funds, an amount equal to the purchase
price of the Assigned Pro Rata Share, as agreed between the Assignor and the
Assignee pursuant to a letter agreement of even date herewith. Such letter
agreement also sets forth the agreement between the Assignor and
-3-
<PAGE>
the Assignee with respect to the amount of interest, fees, and other payments
with respect to the Assigned Pro Rata Share which are to be retained by the
Assignor. Assignee shall also pay to the Administrative Agent an assignment fee
of $3,500 in accordance with Section 11.8 of the Loan Agreement.
The Assignor and the Assignee hereby agree that if either
receives any payment of interest, principal, fees or any other amount under the
Loan Agreement, their respective Notes or any other Loan Documents which is for
the account of the other, it shall hold the same in trust for such party to the
extent of such party's interest therein and shall promptly pay the same to such
party.
6. PRINCIPAL, INTEREST, FEES, ETC. Any principal that would be
payable and any interest, fees and other amounts that would accrue from and
after the Effective Date to or for the account of the Assignor pursuant to the
Loan Agreement and the Note shall be payable to or for the account of the
Assignor and the Assignee, in accordance with their respective interests as
adjusted pursuant to this Agreement.
7. NOTES. The Assignor and the Assignee shall make appropriate
arrangements with each Borrower concurrently with the execution and delivery
hereof so that replacement Notes are issued to the Assignor and new Notes are
issued to the Assignee, in each case in principal amounts reflecting their Pro
Rata Shares of the Commitment or their outstanding Advances (as adjusted
pursuant to this Agreement).
8. FURTHER ASSURANCES. Concurrently with the execution of this
Agreement, the Assignor shall execute two counterpart original Requests for
Registration, in the form of Exhibit A to this Agreement, to be forwarded to the
Administrative Agent. The Assignor and the Assignee further agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Agreement, and the Assignor specifically agrees to cause the delivery of (i) two
original counterparts of this Agreement and (ii) the Request for Registration,
to the Administrative Agent for the purpose of registration of the Assignee as a
"Lender" pursuant to Section 11.8 of the Loan Agreement.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LOCAL LAWS OF THE STATE OF CALIFORNIA. FOR
ANY DISPUTE ARISING IN CONNECTION WITH THIS AGREEMENT, THE ASSIGNEE HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
CALIFORNIA.
-4-
<PAGE>
10. NOTICES. All communications among the parties or notices
in connection herewith shall be in writing, hand delivered or sent by registered
airmail, postage prepaid, or by telex, telegram or cable, addressed to the
appropriate party at its address set forth on the signature pages hereof. All
such communications and notices shall be effective upon receipt.
11. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns;
provided, however, that the Assignee shall not assign its rights or obligations
under this Agreement without the prior written consent of the Assignor and any
purported assignment, absent such consent, shall be void. Nothing contained in
this Section shall restrict the assignment by Assignee of its rights under the
Loan Documents following the Effective Date.
12. INTERPRETATION. The headings of the various sections
hereof are for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officials, officers or agents
thereunto duly authorized as of the date first above written.
"Assignor"
______________________________________
By:___________________________________
Its:__________________________________
Address: ____________________________
Telephone: __________________________
__________________________
Telecopier: _________________________
______________________________________
"Assignee"
______________________________________
By:___________________________________
Its:__________________________________
Address: _____________________________
_____________________________
Telephone: ___________________________
Telecopier: __________________________
-6-
<PAGE>
Exhibit A to Assignment Agreement
REQUEST FOR REGISTRATION
To: Bank of America National Trust and Savings Association, as
Administrative Agent, and Harrah's Entertainment, Inc., Harrah's
Operating Company, Inc. and Marina Associates
THIS REQUEST FOR REGISTRATION OF ASSIGNEE ("Request") is made
as of the date of the enclosed Assignment Agreement with reference to that
certain 364-Day Loan Agreement, dated as of April 30, 1999 by and among Harrah's
Entertainment, Inc., a Delaware corporation, as Guarantor, Harrah's Operating
Company, Inc., a Delaware corporation, Marina Associates, a New Jersey general
partnership (each a "Borrower" and collectively, the "Borrowers"), the Lenders
therein named, (collectively, the "Lenders" and individually, a "Lender") and
Bank of America National Trust and Savings Association, as Administrative Agent
(as amended as of the date hereof, the "Loan Agreement").
The Assignor and Assignee described below hereby request that
Administrative Agent register the Assignee as a Lender pursuant to Section 11.8
of the Loan Agreement effective as of the Effective Date described in the
Assignment Agreement.
Enclosed with this Request are two counterpart originals of
the Assignment Agreement as well as the original Notes of each Borrower in favor
of the Assignor in the principal amount of $______________. The Assignor and
Assignee hereby jointly request that Administrative Agent cause each Borrower to
issue replacement Notes, dated as of the Effective Date, pursuant to Section
11.8 of the Loan Agreement in favor of Assignor in the principal amount of the
remainder of its Pro Rata Share of the Commitment and new Notes in favor of the
Assignee in the amount of the Assigned Pro Rata Share.
-7-
<PAGE>
IN WITNESS WHEREOF, the Assignor and Assignee have executed
this Request for Registration by their duly authorized officers as of
__________, ___________.
"Assignor" "Assignee"
- ------------------------- -------------------------
By:______________________ By:______________________
Its: _______________ Its: ________________
-8-
<PAGE>
CONSENT OF ADMINISTRATIVE AGENT AND BORROWERS
[When Required Pursuant to Loan Agreement]
TO: The Assignor and Assignee referred to in the above Request for
Registration
When countersigned by each Borrower and Administrative Agent below,
this document shall certify that:
[ ] [WHEN REQUIRED PURSUANT TO SECTION 11.8(b)(i) OF THE Loan
Agreement:]
[1.] Borrowers have consented, pursuant to the terms of the Loan
Documents, to the assignment by the Assignor to the Assignee of the Assigned Pro
Rata Share.
[2.] Administrative Agent has registered the Assignee as a Lender under
the Loan Agreement, effective as of the Effective Date described above, with a
Pro Rata Share of the Commitment corresponding to the Assigned Pro Rata Share
and has adjusted the registered Pro Rata Share of the Commitment of the Assignor
to reflect the assignment of the Assigned Pro Rata Share.
Approved:
Harrah's Entertainment, Inc. Bank of America National Trust and Savings
Association, as Administrative Agent
By:_______________________
Its:_______________________ By:________________________
Its:_______________________
Harrah's Operating Company, Inc.
By:_______________________
Its:_______________________
Marina Associates
By: Harrah's New Jersey, Inc., general partner
By: __________________
Its: _________________
By: Harrah's Atlantic City, Inc., general
partner
By: __________________
Its: _________________
-9-
<PAGE>
EXHIBIT B
COMMITTED ADVANCE NOTE
$_____________ April 30, 1999
Los Angeles, California
FOR VALUE RECEIVED, the undersigned promises to pay to the
order of ________________________________________ (the "Lender"), the principal
amount of ____________________________ Dollars ($___________________) or such
lesser aggregate amount of Committed Advances as may be made by the Lender as
part of the Loans pursuant to the Loan Agreement referred to below, together
with interest on the principal amount of each Committed Advance made hereunder
as part of the Loans and remaining unpaid from time to time from the date of
each such Committed Advance until the date of payment in full, payable as
hereinafter set forth.
Reference is made to the Five Year Loan Agreement dated as of
April 30, 1999, by and among the undersigned, as a Borrower, the other Borrowers
that are parties thereto, the Lenders therein named and Bank of America National
Trust and Savings Association, as Administrative Agent (as amended from time to
time, the "Loan Agreement"). Terms defined in the Loan Agreement and not
otherwise defined herein are used herein with the meanings defined for those
terms in the Loan Agreement. This is one of the Committed Advance Notes referred
to in the Loan Agreement, and any holder hereof is entitled to all of the
rights, remedies, benefits and privileges provided for in the Loan Agreement as
originally executed or as it may from time to time be supplemented, modified or
amended. The Loan Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
upon the terms and conditions therein specified.
The principal indebtedness evidenced by this Committed Advance
Note shall be payable as provided in the Loan Agreement and in any event on the
Maturity Date.
Interest shall be payable on the outstanding daily unpaid
principal amount of Committed Advances from the date of each such Committed
Advance until payment in full and shall accrue and be payable at the rates and
on the dates set forth in the Loan Agreement both before and after default and
before and after maturity and judgment, with interest on overdue principal and
interest to bear interest at the rate set forth in Section 3.9 of the Loan
Agreement, to the fullest extent permitted by applicable Law.
<PAGE>
Each payment hereunder shall be made to the Administrative
Agent at the Administrative Agent's Office for the account of the Lender in
immediately available funds not later than 11:00 a.m., California local time, on
the day of payment (which must be a Business Day). All payments received after
11:00 a.m., California local time, on any particular Business Day shall be
deemed received on the next succeeding Business Day. All payments shall be made
in lawful money of the United States of America.
The Lender shall use its best efforts to keep a record of
Committed Advances made by it as part of Loans and payments received by it with
respect to this Committed Advance Note, and such record shall, subject to
Section 10.6(g) of the Loan Agreement, be presumptive evidence, absent manifest
error, of the amounts owing under this Committed Advance Note.
The undersigned hereby promises to pay all costs and expenses
of any rightful holder hereof incurred in collecting the undersigned's
obligations hereunder or in enforcing or attempting to enforce any of such
holder's rights hereunder, including reasonable attorneys' fees and
disbursements, whether or not an action is filed in connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
This Committed Advance Note shall be delivered to and accepted
by the Lender in the State of California, and shall be governed by, and
construed and enforced in accordance with, the local Laws thereof.
_____________________________,
a ___________________________
By: _________________________
Title:_______________________
-2-
<PAGE>
SCHEDULE OF COMMITTED ADVANCES AND
PAYMENTS OF PRINCIPAL
Date Amount Interest Period Amount of Unpaid Notation
of Advance Principal Principal Made by
Paid Balance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-3-
<PAGE>
EXHIBIT C
RESERVED
<PAGE>
EXHIBIT D
RESERVED
<PAGE>
EXHIBIT E
RESERVED
<PAGE>
EXHIBIT F
COMPLIANCE CERTIFICATE
This Compliance Certificate (this "Certificate") is executed
and delivered by the undersigned to Bank of America National Trust and Savings
Association, as Agent (the "Agent"), pursuant to the Loan Agreements referred to
below to induce the Lenders described in the Loan Agreements to make certain
credit facilities available to Harrah's Operating Company, Inc., a Delaware
corporation (the "Company") and Marina Associates, a New Jersey general
partnership ("Marina"; Marina and the Company, each a "Borrower" and
collectively with the other parties from time to time a Borrower under the Loan
Agreements, the "Borrowers").
This Certificate is delivered with reference to the Five Year
Loan Agreement and the 364-Day Loan Agreement (as amended, supplemented or
otherwise modified from time to time, collectively, the "Loan Agreements"), each
dated as of April 30, 1999, among the Borrowers, Harrah's Entertainment, Inc., a
Delaware corporation (the "Parent") as Guarantor, the Agent and each of the
several financial institutions party to the Loan Agreements. The terms defined
in the Loan Agreements and not otherwise defined in this Certificate shall have
the meanings defined for them in the Loan Agreements. Section references herein
relate to the Loan Agreements unless stated otherwise.
This Certificate is delivered in accordance with Section 7.2
of the Loan Agreements by a Senior Officer of the Borrowers and Parent. This
Certificate is delivered with respect to the Fiscal Quarter ended
___________________ (the "Determination Date"). Computations indicating
compliance with Sections 6.5 and 6.6 of the Loan Agreements are set forth below:
1. SECTION 6.5 - TOTAL DEBT RATIO. As of the
Determination Date, the Total Debt Ratio was
_______:1.00.
MAXIMUM PERMITTED RATIO: 4.50:1.00
Total Debt Ratio was calculated as follows (in each case
determined in accordance with GAAP):
<PAGE>
(a) Total Debt as of the Determination Date
(as calculated on Appendix A hereto), $_________
DIVIDED BY (b) EBITDA for the four Fiscal Quarter period
ending on the Determination Date (as calculated on Appendix A
hereto) $_________
EQUALS TOTAL DEBT RATIO [(a)/(b)] ________:1.00
2. SECTION 6.6 - INTEREST COVERAGE RATIO. As of the
Determination Date, the Interest Coverage Ratio
was _______:1.00.
MINIMUM PERMITTED RATIO: 3.00:1.00
INTEREST COVERAGE RATIO was computed as follows (in each case
determined in accordance with GAAP):
(a) EBITDA for the four Fiscal Quarter period ending on the
Determination Date (as calculated on Appendix A hereto)
$_________
DIVIDED BY (b) Interest Expense for the
same period (as calculated on Appendix
A hereto) $_________
EQUALS INTEREST COVERAGE RATIO [(a)/(b)] $_________
3. A review of the activities of the Borrowers and each of the
other Parties during the fiscal periods covered by this
Certificate has been made under the supervision of the
undersigned, with a view to determining whether during such
fiscal periods the Borrowers and each of the other Parties
performed and observed all of their respective Obligations. To
the best knowledge of the undersigned, during the fiscal
periods covered by this Certificate, all covenants and
conditions set forth in the Loan Documents, INCLUDING, without
limitation, those set forth in Articles 4, 5 and 6 of the Loan
Agreements, have been so performed and observed and no Default
or Event of
-2-
<PAGE>
Default has occurred and is continuing, WITH ONLY THE
EXCEPTIONS set forth below (if none, so state), and in
response to which the Borrowers and the other Parties have
taken or propose to take the following actions (if none, so
state):
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
4. The undersigned Senior Officer of the Borrowers and Parent
certifies that the calculations made and the information
contained herein and in each Appendix delivered herewith are
derived from the books and records of the Borrowers and the
other Parties, as applicable, and that each and every matter
contained herein and therein correctly reflects those books
and records.
5. To the best knowledge of the undersigned no event or
circumstance has occurred that constitutes a Material Adverse
Effect since the date the most recent Compliance Certificate
was executed and delivered, with the exceptions set forth
below (if none, so state):
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
Dated: _______________, ______
By ______________________________
Senior Officer of each
Borrower and Parent
-3-
<PAGE>
APPENDIX A
TO
COMPLIANCE CERTIFICATE
PART 1
EBITDA - Component Calculations
- -------------------------------
The calculations below relate to the period from ___________ to __________ (the
"Test Period" for purposes of this Part 1 of Appendix A).
EBITDA for the Test Period is calculated as follows for the Parent and
its Subsidiaries on a combined basis, in each case as determined in
accordance with GAAP1:
(a) Consolidated net income of Parent and
its Subsidiaries for the Test Period
("Net Income") $______________
PLUS (b) all accrued taxes on or measured
by income to the extent included in the
determination of Net Income set forth in
(a) above $______________
PLUS (c) amounts treated as expenses for
interest to the extend included in the
determination of Net Income set forth in
(a) above $______________
PLUS (d) amounts treated as expenses for
depreciation and amortization to the
extent included in the determination of
Net Income set forth in (a) above $______________
PLUS (e) minority interest $______________
PLUS (f) any extraordinary loss reflected
in such Net Income $______________
MINUS (g) any extraordinary gain reflected
in such Net Income $______________
PLUS (h) Pre-Opening Expenses during the
Test Period $______________
-4-
<PAGE>
PLUS (i) non-recurring cash charges
during the Test Period $______________
EQUALS EBITDA [(a)+(b)+(c)+(d)+(e)+(f)-(g)+(h)+(i)]
$______________
- ------------------
(1) provided that in computing EBITDA:
(a) for all periods ending on or prior to December 31, 1998,
"EBITDA" shall be computed on the basis of the combined operating results of
Parent and its Subsidiaries, Showboat and Rio as described on Schedule 1.3 of
the Loan Agreements.
(b) the operating results of each New Project which commences
operations and records not less than one full fiscal quarter's operations during
the relevant period shall be annualized; and
(c) EBITDA shall be adjusted, on a pro forma basis, to include
the operating results of each resort or casino property acquired by Parent and
its Consolidated Subsidiaries during the relevant period and to exclude the
operating results of each resort or casino property sold or otherwise disposed
of by Parent and its Subsidiaries, or whose operations are discontinued during
the relevant period.
PART 2
TOTAL DEBT - Component Calculation
- ----------------------------------
Total Debt as of the Determination Date is the SUM of the following
(without duplication)2:
(a) the outstanding principal Indebtedness of Parent and its
Subsidiaries for borrowed money (INCLUDING debt securities
issued by Parent or any of its Subsidiaries)
on the Determination Date $______________
PLUS (b) the aggregate amount of
all Capital Lease Obligations of
Parent and its Subsidiaries
on the Determination Date $______________
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<PAGE>
PLUS (c) all obligations in respect of letters of credit or
other similar instruments for which Parent or any of its
Subsidiaries are account parties or are otherwise obligated
$______________
PLUS (d) the aggregate amount of all
Contingent Obligations and other similar
contingent obligations of Parent and
its Subsidairies with respect to any
of the foregoing $______________
PLUS (e) any obligations of Parent
of any of its Subsidiaries to the
extent that the same are secured by a
Lien on any of the assets of Parent or
its Subsidiaries $______________
EQUALS TOTAL DEBT [(a)+(b)+(c)+(d)+(e)]
$______________
- ---------------
(2) provided that in computing "Total Debt," the amount of any
Contingent Obligation or letter of credit shall be deemed to be zero unless and
until (1) in the case of obligations in respect of letters of credit, a drawing
is made with respect thereto, (2) in the case of any other Contingent
Obligations, demand for payment is made with respect thereto, or (3) Parent's
independent auditors have quantified the amount of Parent's and its Subsidiaries
with respect to letters of credit and Contingent Obligations as liabilities on
Parent's consolidated balance sheet in accordance with Generally Accepted
Accounting Principles (as opposed to merely noted in the footnotes to any such
balance sheet) and the amount of any such individual liability is in excess of
$50,000,000, in which case the amount thereof shall be deemed to be the amount
so quantified from time to time.
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<PAGE>
PART 3
INTEREST EXPENSE - Component Calculations
- -----------------------------------------
The calculations below relate to the period from ___________ to ____________
(the "Test Period" for purposes of this Part 3 of Appendix A).
Interest Expense for the Test Period is calcuated as follows:
(a) all interest, fees, charges and related expenses paid or
payable (without duplication) to a lender in connection with
borrowed money or the deferred purchase price of assets that
are considered "interest expense" under Generally Accepted
Accounting Principles $______________
PLUS (b) the portion of rent paid or payable (without
duplication) for the Test Period under Capital Lease
Obligations that should be treated as interest in accordance
with Financial Accounting Standards Board Statement
No. 13 $______________
EQUALS INTEREST EXPENSE [(a)+(b)] $______________
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<PAGE>
EXHIBIT G
Latham & Watkins Letterhead
April 30, 1999
To the Administrative Agents and
each of the Lenders party to each
of the Loan Documents referred
to below
Ladies and Gentlemen:
We have acted as special counsel to Harrah's Entertainment, Inc., a
Delaware corporation ("Parent"), Harrah's Operating Company, Inc., a Delaware
corporation (the "Company"), and Marina Associates, a New Jersey general
partnership ("Marina"), in connection with the execution and delivery by Parent,
the Company and Marina of (i) the Five-Year Loan Agreement dated as of April 30,
1999 (the "5-Year Agreement") among Parent, as Guarantor, the Company, Marina,
such other Subsidiaries that may become a Borrower pursuant to the terms
thereof, each lender whose name is set forth on the signature pages thereto and
each other lender from time to time party thereto (the "5-Year Lenders"),
Bankers Trust Company, as Syndication Agent, CIBC Oppenheimer Corp. and Societe
Generale, as Documentation Agents, Commerzbank AG, PNC Bank, National
Association and Wells Fargo Bank, N.A., as Co-Documentation Agents, and Bank of
America National Trust and Savings Association, as Administrative Agent (the
"5-Year Administrative Agent") and (ii) the 364-Day Loan Agreement dated as of
April 30, 1999 (the "364-Day Agreement" and, together with the 5-Year Agreement,
the "Agreements"), among Parent, as Guarantor, the Company, Marina, such other
Subsidiaries that may become a Borrower pursuant to the terms thereof, each
lender whose name is set forth on the signature pages thereto and each other
lender from time to time party thereto (the "364-Day Lenders" and, together with
the 5-Year Lenders, the "Lenders"), Bankers Trust Company, as Syndication Agent,
CIBC Oppenheimer Corp. and Societe Generale, as Documentation Agents,
Commerzbank AG, PNC Bank, National Association and Wells Fargo Bank, N.A., as
Co-Documentation Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (the "364-Day Administrative Agent" and,
together with the 5-Year Administrative Agent, the "Administrative Agents").
<PAGE>
Capitalized terms used by not defined herein have the meanings assigned
to them in each of the Agreements.
In our capacity as such counsel, we have made such legal and factual
examinations and inquiries, including an examination of originals or copies
certified or otherwise identified to our satisfaction as being true
reproductions of originals of such documents, corporate records and other
instruments, and have obtained from public officials and from officers of the
Company, Parent, Marina and their respective Subsidiaries such certificates and
other representations and assurances, as we have deemed necessary or appropriate
for the purpose of the opinions stated below. We have examined, among other
things, the following:
(a) the Agreements.
(b) the Guaranty dated as of April 30, 1999, by Parent in
favor of the 5-Year Administrative Agent for the
benefit of the 5-Year Lenders;
(c) The Guaranty dated as of April 30, 1999, by Parent in
favor of the 364-Day Administrative Agent for the
benefit of the 364-Day Lenders;
(d) the Committed Advance Notes;
(e) the Competitive Advance Notes; and
(f) the Swing Line Notes.
The documents described in subsections (a)-(f) above are referred to
herein collectively as the "Loan Documents."
We have investigated such questions of law as we have deemed necessary
or appropriate for the purposes of the opinions stated herein. We are members of
the bar of the State of California, and we are opining herein as to the effect
on the subject transactions of the internal laws of the State of California, the
General Corporation Law of the State of Delaware and the federal laws of the
United States, 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 laws other than the General Corporation Law of the State
of Delaware) or as to any matters of municipal law or the laws of any other
local agencies within any state.
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<PAGE>
On the basis of the foregoing, and in reliance thereon, and subject to
the limitations, qualifications and exceptions set forth below, we are of the
opinion that, as of the date hereof:
1. The execution, delivery and performance by each Borrower, Parent,
Harrah's Atlantic City, Inc., a New Jersey corporation ("Harrah's AC"), as
general partner of Marina, and Harrah's New Jersey, Inc., a New Jersey
corporation (together with Harrah's AC, the "Marina Partners"), as general
partner of Marina, of each of the Loan Documents to which such Borrower, Parent,
and the Marina Partners, as applicable, is a party (i) do not, in the case of
the Company, Parent and the Marina Partners, contravene any provisions of their
respective certificates of incorporation or by-laws, and, in the case of Marina,
contravene any provision of its partnership agreement and (ii) do not, to the
best of our knowledge, violate or constitute a default under, any applicable
provision of the laws of the State of California, the General Corporation Law of
the State of Delaware or the federal laws of the United States or any applicable
regulation under such laws or any other agreement of Parent, the Company,
Marina, the Marina Partners or any of their Subsidiaries which has been
identified to us by a responsible officer of Parent as an agreement which is
individually material to the business, properties or operations of Parent and
its Subsidiaries taken as a whole (each such agreement, a "Material Agreement"),
other than any such violations or defaults which would not, separately or in the
aggregate, have a material adverse effect on the validity or enforceability of
the Loan Documents or on the ability of any Borrower to perform its obligations
under the Loan Documents or have a material adverse effect on the business,
properties or operations of Parent and its Subsidiaries taken as a whole.
2. Assuming the due authorization, execution and delivery of each of
the Loan Documents by each of Parent, the Company and Marina, each of the Loan
Documents constitutes a legally valid and binding obligation of each of Parent,
the Company and Marina that is a party thereto, enforceable against them in
accordance with its terms.
3. At the time of consummation thereof, all consents and approvals of,
and filings and registrations with, and all other actions in respect of, all
United States federal, California and Delaware governmental agencies,
authorities or instrumentalities required in order to make or consummate the
loan transactions
-3-
<PAGE>
contemplated by the Loan Documents and enter into the Loan Documents have been
obtained, given, filed or taken and are or will be in full force and effect (or
effective judicial relief with respect thereto has been obtained).
Our opinions in paragraphs 1 and 3 above as to compliance with certain
laws, statutes, rules or regulations and with respect to the consents,
approvals, filings and other actions is based upon a review of those laws,
statutes, rules and regulations which, in our experience, are normally
applicable to loan transactions of the type contemplated by the Loan Documents
(other than Federal securities laws and California state securities or "blue
sky" laws, as to which we express no opinion in those paragraphs). We are not
opining as to any federal or state gaming laws, statutes, rules or regulations.
In rendering the opinions expressed in Paragraph 1 insofar as they
require interpretation of the Material Agreements, (i) we have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of
California, without giving effect to any choice of law provisions contained
therein or any choice of law principles which would result in application of the
internal laws of any other state, (ii) to the extent that any questions of
legality or legal construction have arisen in connection with our review, we
have applied the laws of the State of California, in resolving such questions
and (iii) we express no opinion with respect to the effect of any action or
inaction, by any Party or Creditor under the Loan Documents or the Material
Agreements which may result in a breach or default under any Material Agreement.
We advise you that certain of the Material Agreements may be governed by other
laws, that such laws may vary substantially from the law assumed to govern for
purposes of this opinion, and that this opinion may not be relied upon as to
whether or not a breach or default would occur under the law actually governing
such Material Agreements.
The opinion expressed in paragraph 2 is further subject to the
following limitations, qualifications and exceptions:
(a) such opinion is subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, including, without limitation, the effect of
Section 548 of the federal Bankruptcy Code and comparable provisions of state
law;
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<PAGE>
(b) enforceability of the Loan Documents is subject to the effect of
general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief regardless of
whether considered in a proceeding in equity or at law;
(c) certain rights, remedies and waivers contained in the Loan
Documents may be limited or rendered ineffective by applicable California laws
or judicial decisions governing such provisions, but such laws or judicial
decisions do not render the Loan Documents invalid or unenforceable as a whole;
(d) we express no opinion as to the validity or enforceability of any
provision of the Loan Documents that permit the Lenders to increase the rate of
interest or collect a late charge or prepayment premium in the event of a
delinquency or death.
(e) the unenforceability under certain circumstances of provisions to
the effect that rights or remedies are not exclusive, that every right or remedy
is cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies, that any right or remedy may be
exercised without notice, or that failure to exercise or delay in exercising
rights or remedies will not operate as a waiver of any such right or remedy.
(f) the unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy or prohibited by law;
(g) the effect of Section 1717 of the California Civil Code, which
provides that, where a contract permits one party to the contract to recover
attorneys' fees, the prevailing party in any action to enforce any provision of
the contract shall be entitled to recover its reasonable attorneys' fees;
(h) the effect of California law, which provides that a court may
refuse to enforce, or may limit the application of, a contract or any clause
thereof which the court finds as a matter of law to have been unconscionable at
the time it was made or contrary to public policy;
-5-
<PAGE>
(i) the effect of Section 631(d) of the California Code of Civil
Procedure, which provides that a court may, in its discretion upon just terms,
allow a trial by jury although there may have been a waiver of trial by jury;
(j) the enforceability of liquidated damages provisions of the Loan
Documents may be governed and restricted by Section 1671 of the California Civil
Code;
(k) we express no opinion as to the enforceability of the choice of law
provisions in the Loan Documents;
(l) we express no opinion with respect to the enforceability by a
federal court of any forum selection clause contained in any of the Loan
Documents; and
(m) we also advise you of California statutory provisions and case law
to the effect that, in certain circumstances, a surety may be exonerated if the
creditor materially alters the original obligation of the principal without the
consent of the guarantor, elects remedies for default that impair the
subrogation rights of the guarantor against the principal, or otherwise takes
any action without notifying the guarantor that materially prejudices the
guarantor. However, there is also authority to the effect that a guarantor may
validly waive such rights if the waivers are expressly set forth in the
guaranty. While we believe that a California court should hold that the explicit
language contained in the Loan Documents waiving all rights is enforceable, we
express no opinion with respect to the effect of (i) any modification to or
amendment of the obligations of any Party, Creditor or any other Person that
materially increases such obligations; (ii) any election of remedies by the
Administrative Agents or the Lenders following the occurrence of an event of
default under the Loan Documents, or (iii) any other action by the Agents or the
Lenders that materially prejudices the guarantor.
In connection with our opinions expressed herein, we assume, with your
permission, that each Lender and SPC is a member of a class of lenders which is
exempt or is otherwise exempt from California usury laws, including Section 1 of
Article XV of the California Constitution.
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<PAGE>
To the extent that the foregoing opinions may be dependent upon such
matters, we assume for the purposes of this opinion that each Person who is a
party to any of the Loan Documents is duly organized, validly existing and in
good standing, as applicable, under the laws of its jurisdiction of
organization; that each of the Loan Documents has been duly authorized, executed
and delivered by each such person party thereto and constitutes the legally
valid and binding obligation of each such Person (other than Parent and the
Borrowers), enforceable in accordance with its terms; and that each such Person
has the requisite corporate or other organizational power and authority to
perform its obligations under such agreements; and that all Parties to the Loan
Documents other than Parent and the Borrowers have complied with any applicable
requirement to file returns and pay taxes under the Franchise Tax Law of the
State of California. We are not expressing any opinion as to the effect of any
such Person's (other than Parent's and Borrower's) compliance with any state or
federal laws or regulations applicable to the transactions because of the nature
of such Person's business.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without our prior written
consent. At your request, we hereby consent to reliance hereon by any future
assigns of or participants in your interest in the Agreements as expressly
permitted by Section 11.8 of the Agreements, provided that this opinion speaks
only as of the date hereof and to its addresses and that we have no
responsibility or obligation to update this opinion, to consider its
applicability or correctness other than to its addresses, or to take into
account changes in law, facts or any other development of which we may later
become aware. We hereby consent to your furnishing this opinion to your auditors
and to regulatory officials having jurisdiction over you.
Very truly yours,
/s/ Latham & Watkins
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<PAGE>
EXHIBIT G
E. O. ROBINSON, JR.'S LETTERHEAD
HARRAH'S ENTERTAINMENT, INC.
April 30, 1999
To the Administrative Agents and
each of the Lenders party to each
of the Loan Documents referred
to below
Ladies and Gentlemen:
I am Senior Vice President and General Counsel of Harrah's
Entertainment, Inc., a Delaware corporation ("Parent"), and Harrah's Operating
Company, Inc., a Delaware corporation (the "Company"), and in that capacity, I
have acted as counsel to Parent, the Company and Marina Associates, a New Jersey
general partnership ("Marina"), in connection with the execution and delivery by
Parent, the Company and Marina of (i) the Five-Year Loan Agreement dated as of
April 30, 1999 (the "5-Year Agreement") among Parent, as Guarantor, the Company,
Marina, such other Subsidiaries that may become a Borrower pursuant to the terms
thereof, each lender whose name is set forth on the signature pages thereto and
each other lender from time to time party thereto (the "5-Year Lenders"),
Bankers Trust Company, as Syndication Agent, CIBC Oppenheimer Corp. and Societe
Generale, as Documentation Agents, Commerzbank AG, PNC Bank, National
Association and Wells Fargo Bank, N.A., as Co-Documentation Agents, and Bank of
America National Trust and Savings Association, as Administrative Agent (the
"5-Year Administrative Agent) and (ii) the 364-Day Loan Agreement dated as of
April 30, 1999 (the "364-Day Agreement" and, together with the 5-Year Agreement,
the "Agreements"), among Parent, as Guarantor, the Company, Marina, such other
Subsidiaries that may become a Borrower pursuant to the terms thereof, each
lender whose name is set forth on the signature pages thereto and each other
lender from time to time party thereto (the "364-Day Lenders" and, together with
the 5-Year Lenders, the "Lenders"), Bankers Trust Company, as Syndication Agent,
CIBC Oppenheimer Corp. and Societe Generale, as Documentation Agents,
Commerzbank AG, PNC Bank, National Association and Wells Fargo Bank, N.A., as
Co-Documentation Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (the "364-Day
<PAGE>
Administrative Agent" and, together with the 5-Year Administrative Agent, the
"Administrative Agents").
Capitalized terms used but not defined herein have the meanings
assigned to them in each of the Agreements.
In that connection, I, or members of my staff, have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to my satisfaction as being true
reproductions of originals of such documents, corporate records and other
instruments, and have obtained from public officials and from other officers of
the Company, Parent, Marina and their Subsidiaries such certificates and other
representations and assurances as I have deemed necessary or appropriate for the
purposes of the opinions stated below.
I have investigated such questions of law as I have deemed necessary or
appropriate for the purpose of the opinions stated herein. I am a member of the
bar of the States of Tennessee and New York, and my opinions below are limited
to the effect on the subject transactions of the laws of the States of Tennessee
and New York, the General Corporation Law of the State of Delaware and the
federal laws of the United States.
Upon the basis of the foregoing and in reliance thereon, I am of the
opinion that, as of the date hereof:
1. Each of Parent, the Company, Harrah's Atlantic City, Inc., a New
Jersey corporation ("Harrah's AC"), and Harrah's New Jersey, Inc., a New Jersey
corporation (together with Harrah's AC, the "Marina Partners"), is a duly
organized and validly existing corporation, in good standing under the laws of
the jurisdiction of its organization, and has all corporate power to execute,
deliver and perform its obligations under the Loan Documents.
2. Marina is a general partnership validly existing under the laws of
the State of New Jersey, and has all partnership power to execute, deliver and
perform its obligations under the Loan Documents.
3. The execution, delivery, and performance by Parent, each Borrower
and the Marina Partners of each of the Loan Documents to which it is a party (i)
have been duly authorized by all necessary corporate or partnership, as
applicable, action by
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<PAGE>
Parent, each Borrower and the Marina Partners, as applicable, and (ii) do not
violate any judgment, order or decree binding upon any of them, other than any
such violations which would not, separately or in the aggregate, have an adverse
effect on the validity or enforceability of any of the Loan Documents or on the
ability of Parent, either Borrower or the Marina Partners to perform its
obligations under the Loan Documents or have a material adverse effect on the
value of the business, properties or operations of Parent and its Subsidiaries
taken as a whole. Each of Parent, the Company, the Marina Partners and Marina
has duly executed and delivered each Loan Document to which it is a party.
4. There does not exist any judgment, order or injunction prohibiting
or imposing material adverse conditions upon the consummation of the
transactions contemplated by the Loan Documents or the performance by Parent,
either Borrower or the Marina Partners of its obligations under the respective
Loan Documents.
5. There are no actions, suits or proceedings pending, or, to the best
of my knowledge, threatened, against Parent or any of its Subsidiaries with
respect to the Loan Documents or the transactions contemplated thereby or that
restrains, permits or imposes adverse conditions upon, or seeks to restrain,
prevent or impose adverse conditions upon, the Loan Documents or any such
transaction.
This opinion is furnished by me, as General Counsel of the Company and
Parent, to you for your benefit (and the benefit of your assigns) in connection
with the above transactions. This opinion may not be relied upon by you for any
other purpose or furnished to (unless otherwise required to be so furnished by
applicable law or judicial process), quoted to or relied upon by any other
Person for any purpose without my prior written consent.
Very truly yours,
/s/ E. O. Robinson, Jr.
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<PAGE>
EXHIBIT H
GUARANTY
This GUARANTY ("Guaranty"), dated as of April 30, 1999, is
made by Harrah's Entertainment, Inc., a Delaware corporation ("Guarantor")
in favor of Bank of America National Trust and Savings Association, as
Administrative Agent for the benefit of the Lenders that are party to the
Loan Agreement referred to below, with reference to the following facts:
RECITALS
A. Pursuant to the 364-Day Loan Agreement dated as of
April 30, 1999 by and among Harrah's Entertainment, Inc., as Guarantor,
Harrah's Operating Company, Inc., a Delaware corporation, Marina Associates,
a New Jersey general partnership, and such other Subsidiaries that become
Borrowers pursuant thereto (collectively with Harrah's Operating Company,
Inc. and Marina Associates, the "Borrowers" and each, a "Borrower"), the
Lenders therein named (collectively, the "Lenders" and individually, a
"Lender") and Bank of America National Trust and Savings Association, as
Administrative Agent (as such agreement may from time to time be extended,
modified, renewed, restated, supplemented or amended, the "Loan Agreement"),
the Lenders are making certain credit facilities available to Borrowers.
B. As a condition to the availability of such credit
facilities, Guarantor is required to enter into this Guaranty and to
guaranty the Guarantied Obligations as hereinafter provided.
C. Guarantor expects to realize direct and indirect
benefits as the result of the availability of the aforementioned credit
facilities to Borrowers.
AGREEMENT
NOW, THEREFORE, in order to induce Lender to extend the
aforementioned credit facilities, and for other good and valuable
consideration, the receipt and adequacy of which hereby are acknowledged,
Guarantor hereby represents, warrants, covenants, agrees and guaranties as
follows:
<PAGE>
1. DEFINITIONS. This Guaranty is the Parent Guaranty
referred to in the Loan Agreement and is one of the Loan Documents. Terms
defined in the Loan Agreement and not otherwise defined in this Guaranty
shall have the meanings given those terms in the Loan Agreement when used
herein and such definitions are incorporated herein as though set forth in
full. In addition, as used herein, the following terms shall have the
meanings respectively set forth after each:
"GUARANTIED OBLIGATIONS" means all Obligations of
Borrowers or any Party at any time and from time to time
owed to Lender under one or more of the Loan Documents
(but not including Obligations owed to Lender under this
Guaranty), whether due or to become due, matured or
unmatured, liquidated or unliquidated, or contingent or
noncontingent, including obligations of performance as
well as obligations of payment, and including interest
that accrues after the commencement of any bankruptcy or
insolvency proceeding by or against Borrowers or any of
them, Guarantor or any other Person.
"GUARANTOR" means Harrah's Entertainment, Inc., a Delaware
corporation.
"LENDER"means the Administrative Agent (acting as the
Administrative Agent and/or on behalf of the Lenders) and
the Lenders, and each of them, and any one or more of
them. Subject to the terms of the Loan Agreement, any
right, remedy, privilege or power of Lender shall be
exercised by the Administrative Agent on behalf of the
Lenders.
"GUARANTY" means this Guaranty, and any extensions,
modifications, renewals, restatements, reaffirmations,
supplements or amendments hereof.
2. GUARANTY OF GUARANTIED OBLIGATIONS. Guarantor hereby
irrevocably, unconditionally guaranties and promises to pay and perform on
demand upon the occurrence of any Event of Default the Guarantied
Obligations and each and every one of them, including all amendments,
modifications, supplements,
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<PAGE>
renewals or extensions of any of them, whether such amendments,
modifications, supplements, renewals or extensions are evidenced by new or
additional instruments, documents or agreements or change the rate of
interest on any Guarantied Obligation or the security therefor, or
otherwise.
3. NATURE OF GUARANTY. This Guaranty is irrevocable and
continuing in nature and relates to any Guarantied Obligations now existing
or hereafter arising. This Guaranty is a guaranty of prompt and punctual
payment and performance and is not merely a guaranty of collection.
4. RELATIONSHIP TO OTHER AGREEMENTS. Nothing herein shall
in any way modify or limit the effect of terms or conditions set forth in
any other document, instrument or agreement executed by Guarantor or in
connection with the Guarantied Obligations, but each and every term and
condition hereof shall be in addition thereto. All provisions contained in
the Loan Agreement or any other Loan Document that apply to Loan Documents
generally are fully applicable to this Guaranty and are incorporated herein
by this reference.
5. SUBORDINATION OF INDEBTEDNESS OF BORROWERS TO GUARANTOR
TO THE GUARANTIED OBLIGATIONS. Guarantor agrees that:
(a) Any indebtedness of Borrowers now or hereafter
owed to Guarantor hereby is subordinated to the Guarantied Obligations.
(b) If Lender so requests, upon the occurrence and
during the continuance of any Event of Default, any such indebtedness
of Borrowers now or hereafter owed to Guarantor shall be collected,
enforced and received by Guarantor as trustee for Lender and shall be
paid over to Lender in kind on account of the Guarantied Obligations,
but without reducing or affecting in any manner the obligations of
Guarantor under the other provisions of this Guaranty.
(c) Should Guarantor fail to collect or enforce any
such indebtedness of Borrowers now or hereafter owed to Guarantor and
pay the proceeds thereof to Lender in accordance with Section 5(b)
hereof, Lender as Guarantor's attorney-in-fact may do such acts and
sign such documents in Guarantor's name as Lender considers necessary
or desirable to effect such collection, enforcement and/or payment.
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<PAGE>
6. STATUTES OF LIMITATIONS AND OTHER LAWS. Until the
Guarantied Obligations shall have been paid and performed in full, all the
rights, privileges, powers and remedies granted to Lender hereunder shall
continue to exist and may be exercised by Lender at any time and from time to
time irrespective of the fact that any of the Guarantied Obligations may have
become barred by any statute of limitations. Guarantor expressly waives the
benefit of any and all statutes of limitation, and any and all Laws providing
for exemption of property from execution or for evaluation and appraisal upon
foreclosure, to the maximum extent permitted by applicable Laws.
7. WAIVERS AND CONSENTS. Guarantor acknowledges that the
obligations undertaken herein involve the guaranty of obligations of Persons
other than Guarantor and, in full recognition of that fact, consents and agrees
that Lender may, at any time and from time to time, without notice or demand,
and without affecting the enforceability or continuing effectiveness hereof: (a)
supplement, modify, amend, extend, renew, accelerate or otherwise change the
time for payment or the terms of the Guarantied Obligations or any part thereof,
including any increase or decrease of the rate(s) of interest thereon; (b)
supplement, modify, amend or waive, or enter into or give any agreement,
approval or consent with respect to, the Guarantied Obligations or any part
thereof, or any of the Loan Documents to which Guarantor is not a party or any
additional security or guaranties, or any condition, covenant, default, remedy,
right, representation or term thereof or thereunder; (c) accept new or
additional instruments, documents or agreements in exchange for or relative to
any of the Loan Documents or the Guarantied Obligations or any part thereof; (d)
accept partial payments on the Guarantied Obligations; (e) receive and hold
additional security or guaranties for the Guarantied Obligations or any part
thereof; (f) release, reconvey, terminate, waive, abandon, fail to perfect,
subordinate, exchange, substitute, transfer and/or enforce any security or
guaranties, and apply any security and direct the order or manner of sale
thereof as Lender in its sole and absolute discretion may determine; (g) release
any Person from any personal liability with respect to the Guarantied
Obligations or any part thereof; (h) settle, release on terms satisfactory to
Lender or by operation of applicable Laws or otherwise liquidate or enforce any
Guarantied Obligations and any security or guaranty therefor in any manner,
consent to the transfer of any security and bid and purchase at any sale; and/or
(i) consent to the merger, change or any other restructuring or
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<PAGE>
termination of the corporate existence of Borrowers, or any of them, Guarantor
or any other Person, and correspondingly restructure the Guarantied Obligations,
and any such merger, change, restructuring or termination shall not affect the
liability of Guarantor or the continuing effectiveness hereof, or the
enforceability hereof with respect to all or any part of the Guarantied
Obligations; provided that nothing herein shall waive, alter, diminish or modify
any rights of the Borrowers under the Loan Documents, including, without
limitation, the rights of the Borrowers to agree to any amendments or
modifications of the Loan Documents.
Upon the occurrence and during the continuance of any Event of
Default, Lender may enforce this Guaranty independently as to Guarantor and
independently of any other remedy or security Lender at any time may have or
hold in connection with the Guarantied Obligations. Guarantor expressly waives
any right to require Lender to marshal assets in favor of Guarantor, and agrees
that Lender may proceed against Borrowers or any of them, or upon or against any
security or remedy, before proceeding to enforce this Guaranty, in such order as
it shall determine in its sole and absolute discretion. Lender may file a
separate action or actions against Borrowers, or any of them, and/or Guarantor
without respect to whether action is brought or prosecuted with respect to any
security or against any other Person, or whether any other Person is joined in
any such action or actions. Guarantor agrees that Lender, Borrowers, or any of
them, and any Affiliates of any Borrower may deal with each other in connection
with the Guarantied Obligations or otherwise, or alter any contracts or
agreements now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the security of this
Guaranty. Lender's rights hereunder shall be reinstated and revived, and the
enforceability of this Guaranty shall continue, with respect to any amount at
any time paid on account of the Guarantied Obligations which thereafter shall be
required to be restored or returned by Lender upon the bankruptcy, insolvency or
reorganization of Borrowers, or any of them, or any other Person, or otherwise,
all as though such amount had not been paid. The rights of Lender created or
granted herein and the enforceability of this Guaranty with respect to Guarantor
at all times shall remain effective to guaranty the full amount of all the
Guarantied Obligations even though the Guarantied Obligations, or any part
thereof, or any security or guaranty therefor, may be or hereafter may become
invalid or otherwise unenforceable as against Borrowers or any
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<PAGE>
other guarantor or surety and whether or not Borrowers shall have any personal
liability with respect thereto. Guarantor expressly waives any and all defenses
now or hereafter arising or asserted by reason of (a) any disability or other
defense of Borrowers, or any of them, with respect to the Guarantied
Obligations, (b) the unenforceability or invalidity of any security or guaranty
for the Guarantied Obligations or the lack of perfection or continuing
perfection or failure of priority of any security for the Guarantied
Obligations, (c) the cessation for any cause whatsoever of the liability of
Borrowers, or any of them (other than by reason of the full payment and
performance of all Guarantied Obligations), (d) any failure of Lender to marshal
assets in favor of Borrowers or any other Person, (e) except as otherwise
provided in this Guaranty, any failure of Lender to give notice of sale or other
disposition of collateral to Guarantor or any other Person or any defect in any
notice that may be given in connection with any sale or disposition of
collateral, (f) any failure of Lender to comply with applicable Laws in
connection with the sale or other disposition of any collateral or other
security for any Guarantied Obligation, including without limitation, any
failure of Lender to conduct a commercially reasonable sale or other disposition
of any collateral or other security for any Guarantied Obligation, (g) any act
or omission of Lender or others that directly or indirectly results in or aids
the discharge or release of Borrowers, or any of them, or the Guarantied
Obligations or any security or guaranty therefor by operation of law or
otherwise, (h) any Law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation, (i) any failure of Lender to file or
enforce a claim in any bankruptcy or other proceeding with respect to any
Person, (j) the election by Lender, in any bankruptcy proceeding of any Person,
of the application or non-application of Section 1111(b)(2) of the United States
Bankruptcy Code, (k) any extension of credit or the grant of any Lien under
Section 364 of the United States Bankruptcy Code, (l) any use of cash collateral
under Section 363 of the United States Bankruptcy Code, (m) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any Person, (n) the avoidance of any Lien in favor of
Lender for any reason, (o) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any Person, including any discharge of, or bar or stay
against collecting, all or any of the Guarantied
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<PAGE>
Obligations (or any interest thereon) in or as a result of any such proceeding,
(p) to the extent permitted, the benefits of any form of one-action rule, or (q)
any action taken by Lender that is authorized by this Section or any other
provision of any Loan Document. Guarantor expressly waives all setoffs and
counterclaims and all presentments, demands for payment or performance, notices
of nonpayment or nonperformance, protests, notices of protest, notices of
dishonor and all other notices or demands of any kind or nature whatsoever with
respect to the Guarantied Obligations, and all notices of acceptance of this
Guaranty or of the existence, creation or incurrence of new or additional
Guarantied Obligations.
8. CONDITION OF BORROWERS AND BORROWERS' SUBSIDIARIES.
Guarantor represents and warrants to Lender that Guarantor has established
adequate means of obtaining from Borrowers' Subsidiaries, on a continuing basis,
financial and other information pertaining to the businesses, operations and
condition (financial and otherwise) of Borrowers and Borrowers' Subsidiaries and
their Properties, and Guarantor now is and hereafter will be completely familiar
with the businesses, operations and condition (financial and otherwise) of
Borrowers and Borrowers' Subsidiaries and their Properties. Guarantor hereby
expressly waives and relinquishes any duty on the part of Lender (should any
such duty exist) to disclose to Guarantor any matter, fact or thing related to
the businesses, operations or condition (financial or otherwise) of Borrowers or
Borrowers' Subsidiaries or their Properties, whether now known or hereafter
known by Lender during the life of this Guaranty. With respect to any of the
Guarantied Obligations, Lender need not inquire into the powers of Borrowers or
any their Subsidiaries or the officers or employees acting or purporting to act
on their behalf, and all Guarantied Obligations made or created in good faith
reliance upon the professed exercise of such powers shall be secured hereby.
9. LIENS ON REAL PROPERTY. In the event that all or any part
of the Guarantied Obligations at any time are secured by any one or more deeds
of trust or mortgages or other instruments creating or granting Liens on any
interests in real Property, Guarantor authorizes Lender, upon the occurrence of
and during the continuance of any Event of Default, at its sole option, without
notice or demand and without affecting any Guarantied Obligations of Guarantor,
the enforceability of this Guaranty, or the validity or enforceability of any
Liens of Lender on any collateral, to foreclose any or all of such deeds of
trust or
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mortgages or other instruments by judicial or nonjudicial sale. Guarantor
expressly waives all rights and defenses to the enforcement of this Guaranty or
any rights of Lender created or granted hereby or to the recovery by Lender
against Borrowers, or any of them, Guarantor or any other Person liable therefor
of any deficiency after a judicial or nonjudicial foreclosure or sale because
all or any part of the Guarantied Obligations is secured by real Property. This
means, among other things: (1) Lender may collect from any Guarantor without
first foreclosing on any real or personal Property collateral pledged by
Borrowers and (2) if the Lender forecloses on any real Property collateral
pledged by Borrowers: (A) The amount of the Guarantied Obligations may be
reduced only by the price for which that collateral is sold at the foreclosure
sale, even if the collateral is worth more than the sale price and (B) the
Lender may collect from any Guarantor even if the Lender, by foreclosing on the
real Property collateral, has destroyed any right any Guarantor may have to
collect from Borrowers. This is an unconditional and irrevocable waiver of any
rights and defenses any Guarantor may have because all or any part of the
Guarantied Obligations is secured by real Property. Guarantor expressly waives
any defenses or benefits that may be derived from California Code of Civil
Procedure ss.ss. 580a, 580b, 580d or 726, or comparable provisions of the Laws
of any other jurisdiction, including, without limitation, NRS Section 40.430 and
judicial decisions relating thereto, and NRS Sections 40.451, 40.455, 40.457 and
40.459, and all other suretyship defenses it otherwise might or would have under
California Law or other applicable Law. Guarantor expressly waives any right to
receive notice of any judicial or nonjudicial foreclosure or sale of any real
Property or interest therein subject to any such deeds of trust or mortgages or
other instruments and any Guarantor's or any other Person's failure to receive
any such notice shall not impair or affect Guarantor's Obligations or the
enforceability of this Guaranty or any rights of Lender created or granted.
10. WAIVER OF RIGHTS OF SUBROGATION. Notwithstanding anything
to the contrary elsewhere contained herein or in any other Loan Document to
which Guarantor is a Party, Guarantor hereby expressly waives with respect to
any Borrower and its successors and assigns (including any surety) and any other
Person which is directly or indirectly a creditor of any Borrower or any surety
for any Borrower, any and all rights at Law or in equity to subrogation, to
reimbursement, to exoneration, to contribution, to setoff or to any other rights
that could accrue to a surety against a principal, to a guarantor against a
maker
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<PAGE>
or obligor, to an accommodation party against the party accommodated, or to a
holder or transferee against a maker, and which Guarantor may have or hereafter
acquire against any Borrower or any other such Person in connection with or as a
result of Guarantor's execution, delivery and/or performance of this Guaranty or
any other Loan Document to which Guarantor is a party. Guarantor agrees that it
shall not have or assert any such rights against any Borrower or its successors
and assigns or any other Person (including any surety) which is directly or
indirectly a creditor of any surety for any Borrower, either directly or as an
attempted setoff to any action commenced against Guarantor by any Borrower (as
borrower or in any other capacity), Lender or any other such Person. Guarantor
hereby acknowledges and agrees that this waiver is intended to benefit Borrowers
and Lender and shall not limit or otherwise affect Guarantor's liability
hereunder, under any other Loan Document to which Guarantor is a party, or the
enforceability hereof or thereof.
11. UNDERSTANDINGS WITH RESPECT TO WAIVERS AND CONSENTS.
Guarantor warrants and agrees that each of the waivers and consents set forth
herein are made with full knowledge of their significance and consequences, with
the understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which Guarantor otherwise
may have against Borrowers, Lender or others, or against any collateral, and
that, under the circumstances, the waivers and consents herein given are
reasonable and not contrary to public policy or Law. Guarantor acknowledges that
it has either consulted with legal counsel regarding the effect of this Guaranty
and the waivers and consents set forth herein, or has made an informed decision
not to do so. If this Guaranty or any of the waivers or consents herein are
determined to be unenforceable under or in violation of applicable Law, this
Guaranty and such waivers and consents shall be effective to the maximum extent
permitted by Law.
12. REPRESENTATIONS AND WARRANTIES. Guarantor hereby makes
each and every representation and warranty applicable to Guarantor set forth in
Article 4 of the Loan Agreement as if set forth in full herein.
13. COSTS AND EXPENSES. After an Event of Default, Guarantor
agrees to pay to Lender all costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by Lender in the
enforcement or attempted
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<PAGE>
enforcement of this Guaranty, whether or not an action is filed in connection
therewith, and in connection with any waiver or amendment of any term or
provision hereof. All advances, charges, costs and expenses, including
reasonable attorneys' fees and disbursements (including the reasonably allocated
cost of legal counsel employed by Lender), incurred or paid by Lender in
exercising any right, privilege, power or remedy conferred by this Guaranty, or
in the enforcement or attempted enforcement thereof, shall be subject hereto and
shall become a part of the Guarantied Obligations and shall be paid to Lender by
Guarantor, after an Event of Default and immediately upon demand, together with
interest thereon at the rate(s) provided for under the Loan Agreement.
14. CONSTRUCTION OF THIS GUARANTY. This Guaranty is intended
to give rise to absolute and unconditional obligations on the part of Guarantor;
hence, in any construction hereof, notwithstanding any provision of any loan
document to the contrary, this Guaranty shall be construed strictly in favor of
Lender in order to accomplish its stated purpose.
15. LIABILITY. Notwithstanding anything to the contrary
elsewhere contained herein or in any Loan Document to which Guarantor is a
Party, the aggregate liability of Guarantor hereunder for payment and
performance of the Guarantied Obligations shall not exceed an amount which, in
the aggregate, is $1.00 less than that amount which if so paid or performed
would constitute or result in a "fraudulent transfer", "fraudulent conveyance",
or terms of similar import, under applicable state or federal Law, including
without limitation, Section 548 of the United States Bankruptcy Code. The
liability of Guarantor hereunder is independent of any other guaranties at any
time in effect with respect to all or any part of the Guarantied Obligations,
and Guarantor's liability hereunder may be enforced regardless of the existence
of any such guaranties. Any termination by or release of any guarantor in whole
or in part shall not affect the continuing liability of Guarantor hereunder, and
no notice of any such termination or release shall be required. The execution
hereof by Guarantor is not founded upon an expectation or understanding that
there will be any other guarantor of the Guarantied Obligations.
16. WAIVER OF JURY TRIAL. GUARANTOR AND LENDER EXPRESSLY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE LOAN
AGREEMENT, THE OTHER
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<PAGE>
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR PARTIES, WHETHER NOW EXISTING OR HEREAFTER ARISING AND
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. GUARANTOR
AND LENDER AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS GUARANTY, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE LOAN AGREEMENT AND
THE OTHER LOAN DOCUMENTS. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
17. THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LOCAL LAWS OF THE STATE OF CALIFORNIA
WITHOUT REFERENCE TO THE CONFLICT OF LOCAL LAWS OR CHOICE OF LAW PRINCIPLES
THEREOF.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty by
its duly authorized officer as of the date first written above.
"Guarantor"
HARRAH'S ENTERTAINMENT, INC.,
a Delaware corporation
By:
----------------------------------
Charles L. Atwood, Vice President
and Treasurer
Address:
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Attn: Charles L. Atwood, Vice President
and Treasurer
Telecopier: 901/ 762-8698
Telephone: 901/762-8852
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<PAGE>
EXHIBIT I
RESERVED
<PAGE>
EXHIBIT J
REQUEST FOR LOAN
364-DAY LOAN AGREEMENT
1. This Request for Loan is executed and delivered by
_______________ ("Requesting Borrower"), to Bank of America National Trust and
Savings Association, as the Administrative Agent ("Administrative Agent")
pursuant to the Five Year Loan Agreement (as amended, modified or extended, the
"Loan Agreement") dated as of April 30, 1999, among Requesting Borrower, as a
Borrower, the other Borrowers that are parties thereto (each a "Borrower" and
collectively, the "Borrowers"), Harrah's Entertainment, Inc., a Delaware
corporation, as Guarantor, the Lenders therein named, and Administrative Agent.
Any terms used herein and not defined herein shall have the meanings defined in
the Loan Agreement.
2. Borrower hereby requests that the Lenders make a Committed
Loan pursuant to the Loan Agreement as follows:
(a) AMOUNT OF REQUESTED COMMITTED LOAN:
$_________________________
(b) FUNDING DATE OF COMMITTED LOAN:
__________________________
(c) TYPE OF COMMITTED LOAN (Check one box only):
/__/ BASE RATE
/__/ EURODOLLAR RATE FOR A EURODOLLAR PERIOD OF ________
MONTHS
3. In connection with the request, Borrower certifies that:
(a) If this Request for Loan is for a Committed Loan which
will increase the principal amount outstanding under the Notes, now and
as of the date of the requested Committed Loan, except (i) for
representations and warranties which speak as of a particular date or
are no longer true and correct as a result of a change which is
permitted by the Loan Agreement and (ii) as disclosed by Borrowers and
<PAGE>
approved in writing by the Requisite Lenders, each representation and
warranty made by each Borrower in Article 4 of the Loan Agreement
(other than Sections 4.4(a), 4.6 (first sentence), 4.8, 4.15) will be
true and correct, both immediately before and after giving effect to
such Committed Loan, as though such representations and warranties were
made on and as of that date; and
(b) There is not any action, suit, proceeding or
investigation pending as to which Parent or any of its
Subsidiaries have been served or received notice or, to the
best knowledge of Borrowers, threatened against or affecting
Parent or any of its Subsidiaries or any Property of any of
them before any Governmental Agency that constitutes a
Material Adverse Effect.
4. This Request is executed on _________________ on behalf of
Requesting Borrower.
_____________________________,
a _________________ _____________
By:___________________________
Title:__________________________
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EXHIBIT K
ELECTION TO BECOME A BORROWER
Bank of American National Trust and Savings Association,
as Administrative Agent under each of the Loan Agreements described below
555 South Flower Street
Los Angeles, California 90071
Ladies and Gentlemen:
The undersigned, ___________________________, a ______________
____________ ("Subsidiary") refers to the Five Year Loan Agreement and the
364-Day Loan Agreement (as amended, modified or extended, the "Loan Agreements")
each dated as of April 30, 1999, among Harrah's Entertainment, Inc., a Delaware
corporation ("Parent"), as Guarantor, Harrah's Operating Company, Inc., a
Delaware corporation ("Company"), Marina Associates, a New Jersey general
partnership ("Marina") (each a "Borrower" and collectively, the "Borrowers"),
the Lenders therein named, and Administrative Agent. Any terms used herein and
not defined herein shall have the meanings defined in the Loan Agreements.
Subsidiary, desiring to incur Loans under the Loan Agreements,
hereby elects, pursuant to the provisions of Section 2.10 of each of the Loan
Agreements, to become a Borrower for the purposes of the Loan Agreements,
effective from the date hereof. Subsidiary confirms that it is a Wholly-Owned
Subsidiary under the Loan Agreements and confirms that the representations and
warranties set forth in Article 4 of the Loan Agreements are true and correct as
to Subsidiary, and Subsidiary hereby agrees to comply with all the obligations
of a Borrower under, and to be bound in all respects by the terms of, the Loan
Agreements as if Subsidiary an original signatory thereto. Subsidiary proposes
the following Aggregate Sublimit:
PROPOSED AGGREGATE SUBLIMIT FOR SUBSIDIARY:
$_________________________
Subsidiary, concurrenty with its execution hereof, is deliverying
the appropriate executed documents, certificates, resolutions, opinions,
Competitive Advance Note, Committed Advanced Notes and Swing Line Documents
required by Sections 2.10(a) and (b) of the Loan Agreements.
<PAGE>
Subsidiary shall, at its own expense, execute and deliver such
further documents, certificates, resolution, opinions and other assurances as
the Administrative Agent may reasonably request in connection herewith. All
notices and other communications provided for under the Loan Agreement may be
sent to the address set forth below.
Address: Very truly yours,
_______________________________
_______________________________ By: ______________________
_______________________________ Title: ___________________
Acknowledged and Agreed: [additional Borrowers:]
Harrah's Entertainment, Inc. ___________________________
By: __________________________ By: ______________________
Its: __________________________ Its: ______________________
Harrah's Operating Company, Inc. ___________________________
By: __________________________ By: ______________________
Its: __________________________ Its: ______________________
Marina Associates
By: Harrah's New Jersey, Inc.,
general partner
By: _______________________
Its: _______________________
By: Harrah's Atlantic City,
Inc., general partner
By: _______________________
Its: _______________________
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<PAGE>
EXHIBIT L
JOINT BORROWER PROVISIONS
Reference is made to the 364-Day Loan Agreement ( the "Loan
Agreement") among Harrah's Operating Company, Inc., a Delaware corporation
("Company"), Marina Associates, a New Jersey general partnership ("Marina" and
together with the Company and such other Subsidiaries that become Borrowers
pursuant thereto, "Borrowers"), Harrah's Entertainment, Inc., a Delaware
corporation ("Parent"), as Guarantor, the Lenders therein named, and Bank of
America National Trust and Savings Association, as Administrative Agent. These
Joint Borrower Provisions are attached to and made a part of the Loan Agreement
as Exhibit L thereto. Capitalized terms used herein are used with the meanings
set forth for those terms in the Loan Agreement. Borrowers each agree that:
1. REQUESTS FOR LOANS. Requests for Loans may be made by any Borrower,
and the Administrative Agent and the Lenders are authorized to honor and rely
upon any such request or any instructions received from any responsible official
of any Borrower. It is expressly agreed and understood by each Borrower that the
Administrative Agent and the Lenders shall have no responsibility to inquire
into the apportionment, allocation or disposition of any Loans made to any
Borrower.
2. ACKNOWLEDGMENT AND INDEMNITY RE JOINT HANDLING. It is understood and
agreed that the handling of this credit facility on a joint borrowing basis as
set forth in this Agreement is as an accommodation to Borrowers and at the
request of Borrowers, and that the Administrative Agent and the Lenders shall
incur no liability to any Borrower or any other Person as a result thereof. To
induce the Administrative Agent and the Lenders to do so, and in consideration
thereof, each of the Borrowers hereby agrees to indemnify the Administrative
Agent and each Lender and hold them harmless from and against any and all
liabilities, expenses, losses, damages and/or claims of damage or injury
asserted against them by any Borrower or by any other Person arising from or
incurred by reason of the joint handling of the financing arrangements provided
in the Loan Agreement, reliance by the Administrative Agent and the Lenders on
any requests or instructions from any Borrower, or any other similar action
taken by the Administrative Agent or any Lender under the Loan Documents.
<PAGE>
3. REPRESENTATION AND WARRANTY. Each Borrower represents and warrants
to the Administrative Agent and each Lender that (i) it has established adequate
means of obtaining, on a continuing basis, financial and other information
pertaining to the business, operations and condition (financial and otherwise)
of Parent and its Subsidiaries and their Property, and (ii) it now is and
hereafter will be completely familiar with the business, operations and
condition (financial and otherwise) of such Persons and their Property. Each
Borrower hereby waives and relinquishes any duty on the part of the
Administrative Agent or any Lender to disclose to it any matter, fact or thing
relating to the business, operations or condition (financial or otherwise) of
Borrowers, Parent, its Subsidiaries or their Property, whether now or hereafter
known by the Administrative Agent or any Lender during the term of the Loan
Agreement.
4. WAIVERS AND CONSENTS. Each of the Borrowers consents and agrees that
the Administrative Agent and the Lenders may, at any time and from time to time,
without notice or demand to any of them, and without affecting the
enforceability or continuing effectiveness hereof:
a. supplement, modify, amend, extend, renew, accelerate, or
otherwise change the time for payment or the terms of the Obligations
or any part thereof, including any increase or decrease of the rate(s)
of interest thereon;
b. supplement, modify, amend or waive, or enter into or give
any agreement, approval or consent with respect to, the Obligations or
any part thereof or any of the Loan Documents or any additional
security or guaranties, or any condition, covenant, default, remedy,
right, representation or term thereof or thereunder;
c. accept new or additional instruments, documents or
agreements in exchange for or relative to any of the Loan Documents or
the Obligations or any part thereof;
d. accept partial payments on the Obligations;
e. receive and hold additional security or guaranties for the
Obligations or any part thereof;
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<PAGE>
f. release, reconvey, terminate, waive, abandon, fail to
perfect, subordinate, exchange, substitute, transfer and/or enforce any
security or guaranties, and apply any security and direct the order or
manner of sale thereof as the Administrative Agent and the Lenders in
their sole and absolute discretion may determine;
g. release any Person from any personal liability with respect
to the Obligations or any part thereof;
h. settle, release on terms satisfactory to the Administrative
Agent and the Lenders or by operation of applicable Laws or otherwise
liquidate or enforce any Obligations and any security or guaranty
therefor in any manner, consent to the transfer of any security and bid
and purchase at any sale; and/or
i. consent to the merger, change or any other restructuring or
termination of the corporate existence of Borrowers, or any of them,
any guarantor or any other Person, and correspondingly restructure the
Obligations, and any such merger, change, restructuring or termination
shall not affect the liability of any Person or the continuing
effectiveness hereof or the enforceability hereof with respect to all
or any part of the Obligations;
provided that nothing herein shall waive, alter, diminish or modify any rights
of the Borrowers under the Loan Documents, including without limitation, the
rights of the Borrowers to agree to any amendments or modifications of the Loan
Documents.
Upon the occurrence and during the continuance of any Event of Default,
the Administrative Agent and the Lenders may enforce the Loan Agreement and the
other Loan Documents independently as to each Borrower and independently of any
other remedy or security the Administrative Agent or any Lender at any time may
have or hold in connection with the Obligations. Each Borrower expressly waives
any right to require the Administrative Agent or any Lender to marshal assets in
favor of Borrowers, and agrees that the Administrative Agent and Lenders may
proceed against Borrowers, or any of them, or upon any security or remedy before
proceeding to enforce this Loan Agreement, in such order as they shall determine
in their sole and absolute discretion. The Administrative Agent (with the
consent of the Requisite Lenders) may file a separate action or actions against
Borrowers, or any
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<PAGE>
of them, and/or any guarantor without respect to any Borrower, whether action is
brought or prosecuted with respect to any other security or against any other
Person, or whether any other Person is joined in any such action or actions.
Each Borrower agrees that the Administrative Agent and the Lenders may deal with
each Borrower or themselves other in connection with the Obligations or
otherwise, or alter any contracts or agreements now or hereafter existing
between any of them, in any manner whatsoever, all without in any way altering
or affecting the security of the Loan Documents. Borrowers expressly waive the
benefit of any statute(s) of limitations affecting their liability under the
Loan Documents or the enforcement of the Obligations or any Liens created or
granted therein. The Administrative Agent and the Lenders' rights hereunder
shall be reinstated and revived, and the enforceability of this Loan Agreement
shall continue, with respect to any amount at any time paid on account of the
Obligations which thereafter shall be required to be restored or returned by
them upon the bankruptcy, insolvency or reorganization of Borrowers, or any of
them, or any other Person, or otherwise, all as though such amount had not been
paid. The rights of Lender created or granted under the Loan Documents and their
enforceability at all times shall remain effective to secure the full amount of
all the Obligations, even though the Obligations, including any part thereof or
any other security or guaranty therefor, may be or hereafter may become invalid
or otherwise unenforceable as against Borrowers or any guarantor or surety and
whether or not such other Persons shall have any personal liability with respect
thereto. Each Borrower expressly waives any and all defenses now or hereafter
arising or asserted by reason of (a) any disability or other defense of any of
the other such Persons with respect to the Obligations, (b) the unenforceability
or invalidity of any security or guaranty for the Obligations or the lack of
perfection or continuing perfection or failure of priority of any security for
the Obligations, (c) the cessation for any cause whatsoever of the liability of
Borrowers, or any of them (other than by reason of the full payment and
performance of all Obligations), (d) any failure of the Administrative Agent or
any Lender to marshal assets in favor of Borrowers or any other Person, (e)
except as otherwise provided in the Loan Documents, any failure of the
Administrative Agent or any Lender to give notice of sale or other disposition
of collateral to any Borrower or any other Person or any defect in any notice
that may be given in connection with any sale or disposition of collateral, (f)
any failure of the Administrative Agent or any Lender to comply with applicable
Laws in connection with the sale or other disposition
-4-
<PAGE>
of any collateral or other security for any Obligation, including without
limitation any failure of the Administrative Agent or any Lender to conduct a
commercially reasonable sale or other disposition of any collateral or other
security for any Obligation, (g) any act or omission of the Administrative Agent
or any Lender or others that directly or indirectly results in or aids the
discharge or release of Borrowers or any of them, or any other Person or the
obligations or any other security or guaranty therefor by operation of Law or
otherwise, (h) any Law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation, (i) any failure of the Administrative
Agent or any Lender to file or enforce a claim in any bankruptcy or other
proceeding with respect to any Person, (j) the election by the Administrative
Agent or any Lender, in any bankruptcy proceeding of any Person, of the
application or non-application of Section 1111(b)(2) of the United States
Bankruptcy Code, (k) any extension of credit or the grant of any Lien under
Section 364 of the United States Bankruptcy Code, (l) any use of cash collateral
under Section 363 of the United States Bankruptcy Code, (m) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any Person, (n) the avoidance of any Lien in favor of
the Administrative Agent or any Lender for any reason, (o) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any of the Obligations
(or any interest thereon) in or as a result of any such proceeding, (p) to the
extent permitted, the benefits of any form of one-action rule, or (q) any action
taken by Lender that is authorized by these Joint Borrower Provisions or any
other provision of any Loan Documents. Each Borrower expressly waives all
setoffs and counterclaims and all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor and all other notices or demands of any kind or
nature whatsoever with respect to the Obligations, and all notices of acceptance
of the Loan Agreement or of the existence, creation or incurrence of new or
additional Obligations.
5. LIENS ON REAL PROPERTY. In the event that all or any part of the
Obligations at any time are secured by any one or more deeds of trust or
mortgages or other instruments creating or granting Liens or any interests in
real Property, each of the Borrowers authorizes the Administrative Agent and
each Lender,
-5-
<PAGE>
upon the occurrence of and during the continuance of any Event of Default, at
their sole option, without notice or demand and without affecting any
Obligations of any such Person, the enforceability of the Loan Documents, or the
validity or enforceability of any Liens of the Administrative Agent or any
Lender on any collateral, to foreclose any or all of such deeds of trust or
mortgages or other instruments by judicial or nonjudicial sale. Each Borrower
expressly waives all rights and any defenses to the enforcement of the Loan
Documents or any rights of the Administrative Agent or any Lender created or
granted thereby or to the recovery by the Administrative Agent and the Lenders
against Borrowers, or any of them, any guarantor or any other Person liable
therefor of any deficiency after a judicial or nonjudicial foreclosure or sale,
even though such a foreclosure or sale because all or any part of the
Obligations is secured by real Property. This means, among other things: (1)
Administrative Agent and each Lender may collect from any Borrower, any
guarantor or any other Person without first foreclosing on any real or personal
Property collateral pledged by any Borrower, any other Party, any guarantor or
any other Person. (2) If Administrative Agent or any Lender forecloses on any
real Property collateral pledged by Borrowers, any guarantor or any other
Person: (A) The amount of the Obligations may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price. (B) Administrative Agent and each Lenders may
collect from Borrowers, any guarantor or any other Person even if the
Administrative Agent or any Lender, by foreclosing on the real Property
collateral, has destroyed any right any guarantor, any other Party or any other
Person may have to collect from any Borrower. This is an unconditional and
irrevocable waiver of any rights and defenses any Borrower may have because all
or any part of the Obligations is secured by real Property. Each of the
Borrowers expressly waives any defenses or benefits that may be derived from
California Code of Civil Procedure ss.ss. 580a, 580b, 580d or 726, or comparable
provisions of the Laws of any other jurisdiction, including, without limitation,
NRS Section 40.430 and judicial decisions relating thereto, and NRS Sections
40.451, 40.455, 40.457 and 40.459, and all other suretyship defenses it
otherwise might or would have under California Law or other applicable Law. Each
Borrower expressly waives any right to receive notice of any judicial or
nonjudicial foreclosure or sale of any real Property or interest therein subject
to any such deeds of trust or mortgages or other instruments and any guarantor's
or any other Person's failure to receive any such notice shall not impair or
affect each Borrower's Obligations or the enforceability of the Joint Borrower
Provisions or any rights of Administrative Agent or Lenders created or granted.
-6-
<PAGE>
6. WAIVER OF RIGHTS OF SUBROGATION. Notwithstanding anything to the
contrary elsewhere contained herein or in any other Loan Document to which any
Borrower is a party, Borrowers hereby waive with respect each other and their
respective successors and assigns (including any surety) and any other Person
which is directly or indirectly a creditor of any Borrower or any surety for any
Borrower, any and all rights at Law or in equity, to subrogation, to
reimbursement, to exoneration, to contribution, to setoff or to any other rights
that could accrue to a surety against a principal, to a guarantor against a
maker or obligor, to an accommodation party against the party accommodated, or
to a holder or transferee against a maker and which any Borrower may have or
hereafter acquire against each other or any other party in connection with or as
a result of their execution, delivery and/or performance of this Loan Agreement
or any other Loan Document to which any of them is a party. Borrowers agree that
they shall not have or assert any such rights against one another or their
respective successors and assigns or any other Person (including any surety)
which is directly or indirectly a creditor of any surety for any Borrower,
either directly or as an attempted setoff to any action commenced against any
other Person comprising any Borrower (as a Borrower or in any other capacity) or
any other party. Each Borrower hereby acknowledges and agrees that this waiver
is intended to benefit of Borrowers and Lenders and shall not limit or otherwise
affect any of their liabilities hereunder, under any other Loan Document to
which any of them is a party, or the enforceability hereof or thereof.
7. UNDERSTANDINGS WITH RESPECT TO WAIVERS AND CONSENTS. Borrowers, and
each of them, warrant and agree that each of the waivers and consents set forth
herein are made with full knowledge of their significance and consequences, with
the understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which they otherwise may
have against each other, the Administrative Agent, the Lenders or others, or
against any collateral, and that, under the circumstances, the waivers and
consents herein given are reasonable and not contrary to public policy or Law.
Each Borrower acknowledges that it has either consulted with legal counsel
regarding the effect of the Loan Documents and the waivers and consents set
forth therein, or has made an informed decision not to do so. If the Loan
Documents or any of the waivers or consents herein are determined to be
unenforceable under or in violation of applicable Law, such waivers and consents
shall be effective to the maximum extent permitted by Law.
-7-
<PAGE>
SCHEDULE 1.1
HARRAH'S ENTERTAINMENT, INC.
364-DAY LOAN AGREEMENT
$300,000,000 SENIOR CREDIT FACILITY
<TABLE>
<CAPTION>
BANKS AMOUNT PRO RATA SHARE
<S> <C> <C>
ADMINISTRATIVE AGENT
Bank of America National Trust and Savings Association 28,125,000.00 9.37500%
SYNDICATION AGENT
Bankers Trust Company 21,562,500.00 7.18750%
DOCUMENTATION AGENTS
Canadian Imperial Bank of Commerce 21,562,500.00 7.18750%
Societe Generale 21,562,500.00 7.18750%
CO-DOCUMENTATION AGENTS
Commerzbank AG - Los Angeles Branch 18,750,000.00 6.25000%
PNC Bank, National Association 18,750,000.00 6.25000%
Wells Fargo Bank, National Association 18,750,000.00 6.25000%
SENIOR MANAGING AGENT
Fleet Bank N.A 18,750,000.00 6.25000%
MANAGING AGENT
The First National Bank of Chicago 14,062,500.00 4.68750%
CO-AGENTS
The Bank of New York 9,375,000.00 3.12500%
The Bank of Nova Scotia 9,375,000.00 3.12500%
Credit Lyonnais Los Angeles Branch 9,375,000.00 3.12500%
U.S. Bank National Association 9,375,000.00 3.12500%
Wachovia Bank, N.A 9,375,000.00 3.12500%
Westdeutsche Landesbank Girozentrale 9,375,000.00 3.12500%
LENDERS
First Security Bank, N.A 6,562,500.00 2.18750%
The Industrial Bank of Japan, Limited, Atlanta Agency 5,625,000.00 1.87500%
BankBoston, N.A 4,687,500.00 1.56250%
Bank of Hawaii 4,687,500.00 1.56250%
Bank of Scotland 4,687,500.00 1.56250%
<PAGE>
<CAPTION>
BANKS AMOUNT PRO RATA SHARE
<S> <C> <C>
Banque Nationale de Paris, Houston Agency 4,687,500.00 1.56250%
Comerica West Incorporated 4,687,500.00 1.56250%
Michigan National Bank 4,687,500.00 1.56250%
The Sumitomo Bank, Limited 4,687,500.00 1.56250%
First American National Bank, operating as Deposit Guaranty National Bank 3,750,000.00 1.25000%
Erste Bank 2,812,500.00 0.93750%
First Hawaiian Bank 2,812,500.00 0.93750%
First Tennessee Bank National Association 2,812,500.00 0.93750%
Hibernia National Bank 2,812,500.00 0.93750%
The Dai-Ichi Kangyo Bank, Ltd. 1,875,000.00 0.62500%
TOTAL $300,000,000.00 100.00000%
</TABLE>
<PAGE>
SCHEDULE 1.2
RESERVED
<PAGE>
SCHEDULE 1.3
COMBINED HARRAH'S SHOWBOAT AND RIO EBITDA
First Quarter, 1998 $149,401,000
Second Quarter, 1998 $172,983,000
Third Quarter, 1998 $184,543,000
Fourth Quarter, 1998 $135,071,000
<PAGE>
SCHEDULE 4.3
GOVERNMENT APPROVALS
Approval by the Nevada Gaming Commission upon the recommendation of the Nevada
State Gaming Control Board of all restrictions on the transfer of and agreements
not to encumber the stock or other equity securities of Harrah's Las Vegas, Inc.
and Harrah's Laughlin, Inc.
<PAGE>
SCHEDULE 4.4
SIGNIFICANT SUBSIDIARIES
Red River Entertainment of Shreveport
Partnership in Commendam
- --------------------------------------
Type of Entity: Partnership
Jurisdiction: Louisiana
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Shreveport Investment
Company, Inc. - 99%; Harrah's Shreveport Management
Company, Inc. - 1%
Harrah's Shreveport Investment Company, Inc.
- --------------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Shreveport Management Company, Inc.
- --------------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Showboat Marina Casino Partnership
- ----------------------------------
Type of Entity: Partnership
Jurisdiction: Indiana
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat Marina Partnership - 99%
Showboat Marina Partnership
- ---------------------------
Type of Entity: Partnership
Jurisdiction: Indiana
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat Indiana Investment
Limited Partnership - 45%
<PAGE>
Showboat Indiana Investment Limited Partnership
- -----------------------------------------------
Type of Entity: Limited Partnership
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat Operating Company - 99%
Showboat Operating Company
- --------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat, Inc. - 100%
Showboat, Inc.
- --------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Showboat Australia Pty. Limited
- -------------------------------
Type of Entity: Corporation
Jurisdiction: Australia
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat, Inc. - 50%; Showboat
Development Company - 50%
Showboat Development Company
- ----------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Showboat, Inc. - 100%
Harrah's Tunica Corporation
- --------------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
-2-
<PAGE>
Harrah's New Jersey, Inc.
- -------------------------
Type of Entity: Corporation
Jurisdiction: New Jersey
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Atlantic City, Inc.
- ----------------------------
Type of Entity: Corporation
Jurisdiction: New Jersey
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Laughlin, Inc.
- --------------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Las Vegas, Inc.
- ------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Noth Kansas City Corporation
- -------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
-3-
<PAGE>
Harrah's Maryland Heights Corporation
- -------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Des Plaines Development Limited Partnership
- -------------------------------------------
Type of Entity: Limited Partnership
Jurisdiction: Illinois
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Illinois Corporation
- - 80%
Harrah's Illinois Corporation
- -----------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Harrah's Vicksburg Corporation
- ------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Tunica Partners II L.P.
- -----------------------
Type of Entity: Limited Partnership
Jurisdiction: Mississippi
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Tunica Corporation -
83%; Harrah's Vicksburg Corporation - 17%
-4-
<PAGE>
Harrah's Crescent City Investment Company
- -----------------------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Operating Company,
Inc. - 100%
Rio Properties, Inc.
- --------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Rio Hotel & Casino, Inc. - 100%
Rio Hotel & Casino, Inc.
- ------------------------
Type of Entity: Corporation
Jurisdiction: Nevada
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): [Harrah's Operating Company,
Inc. - 100%]
Marina Associates
- -----------------
Type of Entity: General Partnership
Jurisdiction: New Jersey
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Atlantic City, Inc. -
48.65%; Harah's New Jersey, Inc. - 51.34%
Harrah's Operating Company, Inc.
- --------------------------------
Type of Entity: Corporation
Jurisdiction: Delaware
% of Shares issued and outstanding: 100%
% of Shares owned by Parent or a Significant Subsidiary
(and name of that owner): Harrah's Entertainment, Inc.
- - 100%
-5-
<PAGE>
SCHEDULE 4.7
EXISTING LIENS, NEGATIVE PLEDGES AND RIGHTS OF OTHERS
Lien on River Secco Golf Course pursuant to Construction Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing dated as of July 2,
1996, among Seven Hills Golf Limited Partnership, as Trustor, Nevada Title
Insurance Company, as Trustee, and Orex USA Corporation, as beneficiary, and
that certain Assumption Agreement and Modification of Loan Agreement dated as of
September 11, 1997, among Orex USA Corporation, as Lender, Seven Hills Golf
Limited Partnership, as Borrower, and Rio Development Company, Inc., as Buyer.
Mortgage and Security Agreement dated January 29, 1998 securing
$100,000,000 loan to Showboat Land LLC in favor of Column Financial, Inc.
Lien on Cash Deposited to Defease (a) $58,300,000 aggregate face amount
principal amount of Showboat's First Mortgage Bonds due 2008, and (b) the
$2,400,000 aggregate outstanding principal amount of Showboat's Senior
Subordinated Notes due 2009.
Rights of countersigning partners to acquire partnership interests granted
in Limited Partnership Agreement of Des Plaines Development Limited Partnership
dated February 28, 1992, between Harrah's Illinois Corporation and John Q.
Hammons; First Amendment to Limited Partnership Agreement of Des Plaines Limited
Partnership dated as of October 5, 1992, and as further amended.
Rights of countersigning partners to acquire partnership interests granted
in Partnership Agreement dated November 2, 1995, by and between Harrah's
Maryland Heights Corporation and Players MH, L.P. regarding the Riverside Joint
Venture; First Amendment to Partnership Agreement dated June 28, 1996; Second
Amendment to Partnership Agreement dated October 16, 1996.
Settlement Agreement dated October 29, 1998 by and among Harrah's
Entertainment, Inc., Harrah's Operating Company, Inc., Harrah's New Orleans
Management Company and the NOLDC Shareholders, including Stock Option for each
NOLDC Shareholder to acquire from Harrah's Entertainment, Inc. shares of Class B
stock of JCC Holding Company equal to 3% (in the aggregate) of the equity of JCC
Holding Company outstanding as of the specified plan consummation date.
<PAGE>
Right granted to George Novogroder to purchase 8.140% of Waterfront
Entertainment and Development, Inc. (and 1.5% of any Borrower's or its
Affiliates interest in a gaming venture in Cook County, Illinois) as set forth
in the Repurchase Agreement dated as of February 26, 1999, between Harrah's
Operating Company Inc. and George Novogroder.
Right granted to Barry Porter to purchase 5.43% of Waterfront Entertainment
and Development, (and 1.0005% of any of Borrower's or its Affiliate's interest
in a gaming venture in Cook County, Illinois) as set forth in the Repurchase
Agreement dated as of February 26, 1999, between Harrah's Operating Company,
Inc., and Barry Porter.
Right granted to the Estate of Nikos Kefalidis to purchase 5.430% of
Waterfront Entertainment and Development, Inc. (and 1.0005% of any of Borrower's
or its Affiliate's interest in a gaming venture in Cook County, Illinois) as set
forth in the Repurchase Agreement dated as of February 26, 1999, between
Harrah's Operating Company, Inc., and the Estate of Nikos Kefalidis, deceased.
Rights of counterparty to acquire partnership interests granted in
Partnership Agreement dated April 22, 1994 by and between Showboat Australia
Pty. Limited and Leighton Properties Limited.
-2-
<PAGE>
Exhibit 10.1
TABCORP HOLDINGS LIMITED
and
HARRAH'S ENTERTAINMENT, INC.
-------------------------------------------
MASTER AGREEMENT
-------------------------------------------
Arthur Robinson & Hedderwicks
Melbourne
Tel 9614 1011
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------
1. INTERPRETATION; ANNOUNCEMENT; PAYMENT
2. ENTRY INTO SHARE SALE AGREEMENT (STAR CITY)
3. ENTRY INTO SHARE SALE AGREEMENT (SHOWBOAT)
4. ENTRY INTO MANAGEMENT SALE AGREEMENT
5. ENTRY INTO THE CASINO SERVICES AGREEMENT
6. CCA APPROVAL
7. SALE OF 5%
8. WARRANTIES - H
9. OBLIGATIONS OF H
10. WARRANTIES - T
11. TERMINATION BY T
12. TERMINATION BY H
13. TERMINATION BY PARTIES
14. SUBSTITUTION RIGHT
15. COSTS
16. MERGER
17. ASSIGNMENT
18. FURTHER ASSURANCES
19. ENTIRE AGREEMENT
20. WAIVER
21. NOTICES
22. GOVERNING LAW
23. COUNTERPARTS
SCHEDULE 1 - Warranties
<PAGE>
ATTACHMENTS
A. Share Sale Agreement (Star City)
B. Share Sale Agreement (Showboat)
C. Management Sale Agreement
D. Casino Services Agreement
E. Share Sale Agreement (5%)
<PAGE>
MASTER AGREEMENT
- --------------------------------------------------------------------------------
THIS AGREEMENT is made on 15 April 1999 between:
1. TABCORP HOLDINGS LIMITED (ACN 063 780 709) (T); and
2. HARRAH'S ENTERTAINMENT, INC. (H).
RECITALS
A. H owns all of the issued shares in SAL.
B. SAL owns, amongst other things:
(a) shares in Star City;
(b) shares in SCM; and
(c) through its interest in the Showboat Leighton
Partnership, an interest in the Management Agreement.
C. It is proposed that, subject to the satisfaction of certain
conditions precedent, the parties will enter into various agreements
contemplated by this Agreement.
IT IS AGREED as follows.
1. INTERPRETATION; ANNOUNCEMENT; PAYMENT
1.1 Definitions
The following definitions apply unless the context requires
otherwise.
AUTHORISATION means:
(a) any consent, registration, filing, agreement,
notarisation, certificate, licence, approval, permit,
authority or exemption from, by or with a Governmental
Agency; and
(b) in relation to anything which may be forbidden or
restricted wholly or partly by law or otherwise if a
Governmental Agency intervenes or acts in any way within
a specified period after lodgment, registration or other
notification of anything, the expiration of that period
without intervention by that Governmental Agency.
<PAGE>
CASINO CONTROL ACT means the Casino Control Act 1992 of New South
Wales.
CASINO CONTROL AUTHORITY means the New South Wales Casino Control
Authority established by the Casino Control Act.
CASINO MANAGEMENT RIGHTS means the rights and obligations of SCM and
the Showboat Leighton Partnership as constituted by the Management
Agreement.
CASINO SERVICES AGREEMENT means the agreement in the form attached as
Attachment D being an agreement relating to the provision by H of
certain management and support services in relation to the Star City
Casino.
CORPORATIONS LAW means the Corporations Law of Australia.
FINAL DATE means 31 December 1999 or such other date as the parties
may agree in writing.
GOVERNMENTAL AGENCY means the government of any country or any state,
territory, municipality or other political subdivision of a country,
and any minister, administrative or judicial body, department,
commission, authority, instrumentality, tribunal, agency or entity of
any such government.
HOLDING COMPANY has the meaning given to it in the Corporations Law.
LEIGHTON means Leighton Properties Pty Limited (ACN 001 046 395).
LIABILITIES means claims, losses, liabilities, costs or expenses of
any kind, including those which are prospective or contingent and
those the amount of which is not ascertained or ascertainable.
MANAGEMENT AGREEMENT means the Casino Complex Management Agreement of
that title dated 21 April 1994 between Sydney Casino Properties Pty
Limited and Sydney Harbour Casino Pty Limited (as Owner), SAL and
Leighton as the Showboat Leighton Partnership, and SCM as Manager.
MANAGEMENT SALE AGREEMENT means the agreement in the form attached as
Attachment C being an agreement providing for the sale and purchase
of the interest of SAL in the Showboat Leighton Partnership and the
shares of SAL in SCM.
-2-
<PAGE>
RELATED BODY CORPORATE has the meaning given to it in the
Corporations Law.
RELEVANT DATE means the later of:
(a) the date of completion under the Share Sale Agreement (Star
City); and
(b) the date of completion under the Share Sale Agreement
(Showboat) or, if T or H has given notice in accordance with
Clause 4.1, the date of completion under the Management Sale
Agreement.
SAL means Showboat Australia Pty Limited (ACN 061 299 625).
SCM means Sydney Casino Management Pty Ltd (ACN 060 462 053).
SHARE SALE AGREEMENT (SHOWBOAT) means the agreement in the form
attached as Attachment B being an agreement providing for the sale
and purchase of the shares in SAL.
SHARE SALE AGREEMENT (STAR CITY) means the agreement in the form
attached as Attachment A being an agreement providing for the sale
and purchase of certain of the voting shares in Star City held by SAL
(being ordinary shares in the capital of Star City) and certain
options over unissued shares of Star City held by SAL.
SHARE SALE AGREEMENT (5%) means the agreement in the form attached as
Attachment E providing for the sale and purchase of 5% of the voting
shares in Star City held by SAL (being ordinary shares in the capital
of Star City).
SHOWBOAT LEIGHTON PARTNERSHIP means the Partnership constituted by
the Showboat Leighton Partnership Agreement.
SHOWBOAT LEIGHTON PARTNERSHIP AGREEMENT means the partnership
agreement between SAL and Leighton which has a commencement date of
22 April 1994.
STAR CITY means Star City Holdings Limited (ACN 064 054 431).
STAR CITY CASINO means the casino complex owned (whether directly or
indirectly) by Star City.
SUBSIDIARY has the meaning given to it in the Corporations Law.
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TAKEOVER means a take-over scheme under the Corporations Law which is
subject only to a condition to the effect of Clause 6.1 of this
Agreement and a condition as to prescribed occurrences (within the
meaning of the Corporations Law).
TAX means any income tax, capital gains tax, recoupment tax, land
tax, sales tax, payroll tax, fringe benefit tax, group tax,
withholding tax, municipal rates, stamp duties and other charges,
levies and impositions, assessed or charged, or assessable or
chargeable, by or payable to any governmental taxation or excise
authority and includes any additional tax, interest, penalty, charge,
fee or other amount imposed or made on or in relation to a failure to
file a relevant return or to pay a relevant tax.
TAX ACT means the Income Tax Assessment Act 1936 or the Income Tax
Assessment Act 1997 or both the Income Tax Assessment Act 1936 and
the Income Tax Assessment Act 1997, as appropriate.
WARRANTY means a warranty set out in Schedule 1.
WHOLLY OWNED SUBSIDIARY means a Subsidiary all of whose shares are
owned, directly or indirectly, by the relevant Holding Company.
$ means Australian dollars.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation.
The following rules apply unless the context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical
forms have a corresponding meaning.
(d) A reference to a person, corporation, trust, partnership,
unincorporated body or other entity includes any of them.
(e) A reference to an agreement or document (including,
without limitation, a reference to this Agreement) is to
the agreement or document as amended, varied,
supplemented, novated or replaced except to the extent
prohibited by this Agreement or that other agreement or
document.
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(f) A reference to legislation or to a provision of
legislation includes a modification or re-enactment of it,
a legislative provision substituted for it and a
regulation or statutory instrument issued under it.
(g) A reference to WRITING includes a facsimile transmission
and any means of reproducing words in a tangible and
permanently visible form.
1.3 Consents or Approvals
If the doing of any act, matter or thing under this Agreement is
dependent on the consent or approval of a party or is within the
discretion of a party, the consent or approval may be given or the
discretion may be exercised conditionally or unconditionally or
withheld by the party in its absolute discretion.
1.4 Announcement
As soon as practicable after entry into this Agreement T must make a
public announcement in relation to the transactions contemplated by
this Agreement and announcing its intention to undertake a Takeover
of all the voting shares in Star City. The public announcement must
be in the form agreed by the parties. Where practicable, a party will
consult with the other party in relation to the content and timing of
subsequent public announcement in relation to the transactions
contemplated by this Agreement which may materially affect the other
party's interests.
1.5 All payments required to be made under this Agreement or any of the
agreements referred to in this Agreement must be tendered in cash or
by a draft or cheque drawn by a bank as defined in the Banking Act of
the Commonwealth of Australia.
2. ENTRY INTO SHARE SALE AGREEMENT (STAR CITY)
On the condition referred to in Clause 6.1 being fulfilled:
(a) T must enter into as guarantor, and procure that one of
its Wholly Owned Subsidiaries enters into as purchaser;
and
(b) H must enter into and must procure that SAL enters into,
the Share Sale Agreement (Star City).
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3. ENTRY INTO SHARE SALE AGREEMENT (SHOWBOAT)
Unless a party has given to the other a notice in writing in
accordance with Clause 4.1, on the condition referred to in Clause
6.1 being fulfilled:
(a) T must enter into as guarantor, and procure that one of
its Wholly Owned Subsidiaries enters into as purchaser;
and
(b) H must enter into and must procure that the Wholly Owned
Subsidiaries of H which own all the issued capital of SAL
enter into,
the Share Sale Agreement (Showboat).
4. ENTRY INTO MANAGEMENT SALE AGREEMENT
4.1 At any time prior to the condition referred to in Clause 6.1 being
fulfilled, either party may give notice in writing to the other party
that the Management Sale Agreement is to be entered into. This notice
may only be given if each of T and H is satisfied at the time that
entry into and performance of the Management Sale Agreement would not
be inconsistent with the rights of Leighton under the Showboat
Leighton Partnership Agreement.
4.2 Where a party has given written notice to the other party in
accordance with Clause 4.1, on the condition referred to in Clause
6.1 being fulfilled:
(a) T must enter into as guarantor, and procure that one of
its Wholly Owned Subsidiaries enters into as purchaser;
and
(b) H must enter into and must procure that SAL enters into,
the Management Sale Agreement.
5. ENTRY INTO THE CASINO SERVICES AGREEMENT
On the day after the date on which the Share Sale Agreement (Star
City) is entered into in accordance with Clause 2, T and H must enter
into the Casino Services Agreement.
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6. CCA APPROVAL
6.1 The condition referred to in Clauses 2, 3 and 4.2 is that a notice in
writing is issued by or on behalf of the Casino Control Authority
under the Casino Control Act (without any term or condition which T
or H reasonably considers unacceptable) stating or to the effect that
all requisite approvals have been granted to:
(a) the acquisition by T of all the issued shares, and all of
the options over unissued shares, in the capital of Star
City;
(b) except where a notice is given in accordance with Clause
4.1, the entry into and performance of the Share Sale
Agreement (Showboat);
(c) where a notice in writing is given in accordance with
Clause 4.1, the entry into and performance of the
Management Sale Agreement;
(d) the entry into the Share Sale Agreement (Star City); and
(e) the entry into the Casino Services Agreement.
6.2 Each party must co-operate with the other and do all things necessary
to procure the fulfilment of the condition referred to in Clause 6.1.
7. SALE OF 5%
If either:
(a) a notice in writing is issued by or on behalf of the
Casino Control Authority under the Casino Control Act
stating or to the effect that any requisite approval as
referred to in Clause 6.1 has been refused; or
(b) this Agreement is terminated under Clause 13,
T must enter into as guarantor, and procure that one of its Wholly
Owned Subsidiaries enters into as purchaser, and H must enter, and
procure that SAL enters, into the Share Sale Agreement (5%).
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8. WARRANTIES - H
8.1 H represents and warrants to T to the best of its knowledge and
belief after making due inquiry that, except as set out in the
disclosure statement referred to in Clause 8.3, each statement in
Schedule 1 is true and correct.
8.2 H represents and warrants to T that, to the best of its actual
knowledge and belief at the date of this Agreement, without having
made any inquiries prior to the entry into this Agreement which would
be inconsistent with the confidentiality of the discussions between T
and H, each statement in Schedule 1 is true and correct.
8.3 Within 21 days of the date of this Agreement H must make all due
inquiry as to the statements in Schedule 1 and provide to T a
disclosure statement setting out in full the nature of any
qualification to each statement.
8.4 Despite any other provision of this Agreement T may terminate this
Agreement by notice in writing if any qualification contained in the
disclosure statement referred to in Clause 8.3 has a material adverse
effect on its assessment of the transactions contemplated by this
Agreement or its view of the assets the subject of this Agreement.
Any notice of termination under this clause must be given to H not
later than 14 days after receipt by T of the disclosure statement. On
termination by T under this clause neither party has any liability to
the other party.
8.5 Each of the representations and warranties given in Clauses 8.1 and
8.2::
(a) remains in full force and effect despite the completion of
any of the agreements referred to in Clauses 2, 3, 4, 5 or
7; and
(b) is given as at the date of this Agreement and as at the
time immediately before completion under each of the
agreements referred to in Clauses 2, 3 and 4.
8.6 Subject to Clauses 8.7 to 8.14, H indemnifies T against all
Liabilities (except to the extent they are due to any negligence or
default of T) that may be incurred by T as a result (directly or
indirectly) of a breach of any Warranty.
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8.7 Subject to Clause 8.6 to 8.14, H indemnifies T against any loss that
T (and, where the Share Sale Agreement (Showboat) is entered into,
SAL) may suffer by reason of any liability of SAL, the Showboat
Leighton Partnership or SCM to Tax that may be assessed against or
levied on SAL, the Showboat Leighton Partnership or SCM with respect
to:
(a) any income (including capital gains) earned or derived or
deemed to have been earned or derived by SAL, the
Showboat Leighton Partnership or SCM at any time prior to
or that may be assessed or levied as a result of any
transaction, act, matter or thing which took place or
happened on or before completion of the agreements
referred to in Clauses 2, 3 or 4;
(b) any payments made in relation to persons working for SAL,
the Showboat Leighton Partnership or SCM prior to
completion of the agreements referred to in Clauses 2, 3
and 4;
(c) any stamp duties payable in respect of any agreement,
deed, other document or transaction entered into prior to
completion of the agreements referred to in Clauses 2, 3
and 4 to which SAL or SCM is or has been a party or by
which SAL or SCM derives, has derived or will derive a
substantial benefit;
(d) any liability for Tax from which SAL, SCM, the Showboat
Leighton Partnership or H may have obtained relief
(whether by way of deferred capital gains tax or
otherwise) which has or will become payable as a result
of entry into this Agreement or the agreements referred
to in Clauses 2, 3 and 4; and
(e) any liability to any current or former Related Body
Corporate of SAL or SCM (including H) as a result of any
tax loss transferred by SAL or SCM to that current or
former Related Body Corporate prior to completion of the
agreements referred to in Clauses 2, 3 and 4 being
disallowed, in whole or in part.
Where the Share Sale Agreement (Showboat) is entered into,
indemnification of liabilities of SAL is limited to the amount of the
excess over the amount of any provision for liabilities in the
Completion Statement of Residual Management Agreement Net Assets (as
defined in the Share Sale Agreement (Showboat)).
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8.8 H is not obliged to pay any amount under Clause 8.7 unless T, within
60 days after receipt by SAL or SCM or the Showboat Leighton
Partnership of the relevant assessment from the taxation authority,
gives to H notice of the claim on the indemnity and a copy of the
relevant parts of that assessment.
8.9 Where:
(a) notice is given in accordance with Clause 8.8;
(b) H proposes to dispute on behalf of SAL, SCM, the Showboat
Leighton Partnership or T (as the case may be) the
assessment; and
(c) payment of the assessment is required in order to dispute
the assessment, H must pay the amount of the assessment.
8.10 Where:
(a) notice is given in accordance with Clause 8.8;
(b) H, within 30 days after receiving notice in accordance
with Clause 8.8, gives T notice that H proposes to dispute
on behalf of SAL, SCM or the Showboat Leighton Partnership
or T (as the case may be) the assessment; and
(c) H has complied with Clause 8.9,
T must take action as H may reasonably request (by notice to T) to
object to, appeal against or settle the assessment, if H bears all
the costs and expenses of taking such actions (including, without
limitation, the costs to T, SCM or the Showboat Leighton Partnership
or SAL (as the case may be) involved in engaging its staff in the
matter).
8.11 Where a payment has been made by H under Clause 8.9 and the matter in
respect of which the payment is made is ultimately resolved in favour
of SAL, SCM or the Showboat Leighton Partnership, T shall cause SAL,
SCM or the Showboat Leighton Partnership (as the case may be),
following receipt of the money from the relevant taxation authority,
to pay an equivalent amount to H.
8.12 H has the right to be actively involved in any Tax audit conducted by
the Australian Taxation Office concerning SAL, SCM or the Showboat
Leighton Partnership insofar as the audit relates to any period or
periods prior to the date of completion under the agreements referred
to in Clauses 2, 3 and 4.
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8.13 The liability of H to T under any of the provisions of Clause 8
includes costs and expenses and direct loss suffered by T and, should
T enter into each of the relevant agreements described in Clauses 2,
5 and either 3 or 4, includes all costs and expenses and direct loss
suffered by SAL and 85% of the costs and expenses and direct loss
suffered by SCM or the Showboat Leighton Partnership (as the case may
be), but does not include consequential damage of any kind.
8.14 T may not commence any claim for any breach of any representation or
warranty (other than in respect of Tax) more than two years after the
date of this Agreement.
8.15 No claim may be made by T for any breach of any representation or
warranty in any of the agreements referred to in this Agreement
unless the amount of the claim and all other claims for breach of
representations and warranties exceeds in the aggregate $1 million.
9. OBLIGATIONS OF H
Prior to the Relevant Date, except as expressly disclosed in this
Agreement (or contemplated by the agreements referred to in Clauses
2, 3 and 4) or consented to by T, H must ensure that:
(a) the business of SAL, SCM and the Showboat Leighton
Partnership is conducted only in the ordinary course,
which includes the maintenance of all existing insurance
policies;
(b) neither SAL nor SCM will merge or consolidate with any
other corporation or acquire all or substantially all of
the shares or the business or assets of any other person,
firm, association, corporation or business organisation,
or agree to do any of the foregoing;
(c) neither SAL nor SCM will issue or allot any shares or any
securities or loan capital convertible into shares, or
purchase, redeem, retire or acquire any such shares or
securities, or agree to do so, or sell or give any
option, right to purchase, mortgage, charge, pledge, lien
or other form of security or encumbrance over any such
shares or securities;
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(d) neither SAL nor SCM will enter into a material capital
commitment or declare itself trustee of or encumber any
assets or dispose of or deal with any assets other than in
the ordinary course of business and for full market value
or make any unusual or extraordinary expenditures;
(e) neither SAL nor SCM will enter into or terminate any
contract or commitment or engage in any activity or
transaction not in the ordinary course of business;
(f) SAL and SCM will perform their obligations under the
Management Agreement;
(g) the business of SAL and SCM is conducted so as to comply
in all material respects with all applicable laws and
regulations; and
(h) Subject to any legally binding obligations as to
confidentiality by which H is bound (and of which H gives
T reasonable details), T, its solicitors, accountants and
other authorised representatives, are given access during
normal business hours, throughout the period prior to the
Relevant Date, to all available books of account, books,
records, contracts, commitments and property of or
relating to SAL, SCM and the Showboat Leighton Partnership
which are in, or prior to the Relevant Date come into,
existence and (subject as above) H must furnish or must
procure that SAL, SCM and the Showboat Leighton
Partnership furnish to T during that period all
information concerning SAL, SCM and the Showboat Leighton
Partnership as T may reasonably request.
10. WARRANTIES - T
10.1 T represents and warrants to H that:
(a) T is not aware of any fact or circumstance which may
prejudice fulfilment of the condition contained in Clause
6.1;
(b) it will process the application to the Casino Control
Authority for the requisite approvals referred to in
Clause 6.1 as expeditiously as practicable; and
(c) it will progress the takeover as expeditiously as
practicable.
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10.2 Each of the representations and warranties given in Clause 10.1
remains in full force and effect despite the completion of any of the
agreements referred to in Clauses 2, 3, 4, 5 or 7.
10.3 Subject to Clauses 10.4 and 10.5, T indemnifies H against all
Liabilities that may be incurred by H as a result (directly or
indirectly) of a breach of any representation or warranty under
Clause 10.1.
10.4 The liability of T to H under any of the provisions of Clause 10.1
includes costs and expenses and direct loss suffered by H but does
not include consequential damage.
10.5 H may not commence any claim for any breach of any representation or
warranty more than two years after the date of this Agreement.
10.6 T must use its reasonable endeavours to assist H in resolving any
contractual or other difficulty with Commonwealth Bank arising out of
the entry into this Agreement or any of the agreements referred to in
this Agreement.
11. TERMINATION BY T
The obligation of T to enter into any of the agreements referred to
in Clauses 2, 3, 4 or 5 is subject to the conditions that:
(a) each of the Warranties is true and correct as at the date
of any obligation to enter into any of the agreements,
with the same force and effect as if made on that date.
This condition may be waived by T at its discretion but a
waiver is not a waiver of any rights or remedies that it
may have against H by reason of any breach of either
Clause 8.1 or Clause 8.2; and
(b) no disclosure or disclosures made to T under this
Agreement, singularly or in the aggregate, reveals any
circumstance which has had, has or will have a materially
adverse effect on the business of Star City, SCM or SAL.
This condition may be waived by T at its discretion.
If condition (a) above is not satisfied or the circumstance described
in condition (b) above is revealed, T may terminate this Agreement by
notice to H. If T terminates this Agreement, no party has any further
liability to any other party under this Agreement except that the
termination does not prejudice any rights or remedies that T may have
against H by reason of any breach of either Clause 8.1 or Clause 8.2.
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12. TERMINATION BY H
The obligation of H to enter into any of the agreements referred to
in Clauses 2, 3, 4 or 5 is subject to the condition that each of the
warranties in Clause 10.1 is true and correct. If this condition is
not satisfied, H may terminate this Agreement by notice to T. If H
terminates this Agreement, no party has any further liability to any
other party except that the termination does not prejudice any rights
or remedies that H may have against T by reason of any breach of
Clause 10.1.
13. TERMINATION BY PARTIES
This Agreement (other than Clause 7) may be terminated by a party
giving notice in writing to the other party if the condition referred
to in Clause 6.1 has not been fulfilled by the Final Date. If this
Agreement is terminated under this Clause, no party has any further
liability to any other party except that the termination does not
prejudice any rights or remedies a party may have by reason of any
breach of this Agreement.
14. SUBSTITUTION RIGHT
Despite anything in this Agreement, T has the right on or before the
date of the condition referred to in Clause 6.1 being fulfilled to
nominate one or more of its Wholly Owned Subsidiaries to enter into
any of the agreements referred to in Clauses 2, 3, 4, 5 and 7 in
place of T, in which case the parties must procure that the relevant
agreement is entered into with the Wholly Owned Subsidiary and T.
15. COSTS
Each party must bear its own costs arising out of the negotiation,
preparation and execution of this Agreement. All stamp duty
(including fines, penalties and interest) which may be payable on or
in connection with this Agreement and any instrument executed under
this Agreement must be borne by T.
16. MERGER
The rights and obligations of the parties do not merge on the
completion of any transaction contemplated by this Agreement. They
survive the execution and delivery of any assignment or other
document entered into for the purpose of implementing any such
transaction.
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17. ASSIGNMENT
Subject to Clause 14, the rights and obligations of each party under
this Agreement are personal, and they cannot be assigned, encumbered
or otherwise dealt with and no party may attempt, or purport, to do
so without the prior written consent of all parties.
18. FURTHER ASSURANCES
Each party agrees to do all things and execute all deeds,
instruments, transfers or other documents as may be necessary or
desirable to give full effect to the provisions of this Agreement and
the transactions contemplated by it.
19. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties with
respect to its subject matter and supersedes all prior agreements and
understandings between the parties in connection with it.
20. WAIVER
No failure to exercise nor any delay in exercising any right, power
or remedy by a party operates as a waiver. A single or partial
exercise of any right, power or remedy does not preclude any other or
further exercise of that or any other right, power or remedy. A
waiver is not valid or binding on the party granting that waiver
unless made in writing.
21. NOTICES
Any notice, demand, consent or other communication (a NOTICE) given
or made under this Agreement:
(a) must be in writing and signed by a person duly authorised
by the sender;
(b) must be delivered to the intended recipient by prepaid
post (if posted to an address in another country, by
registered airmail) or by hand or fax to the address or
fax number below or the address or fax number last
notified by the intended recipient to the sender:
(i) to T: TABCORP Holdings Limited
Level 12
5 Bowen Crescent
Melbourne VIC 3004
Attention: The Secretary
Fax No: (03) 9868 2300
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(ii) to H: Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis
TN 38117-5423
Attention: The Secretary
Fax No: (901) 762 8637
(c) is taken to be duly given or made:
(i) in the case of delivery in person, when
delivered;
(ii) in the case of delivery by post two business
days after the date of posting (if posted to an
address in the same country) or seven business
days after the date of posting (if posted to an
address in another country);
(iii) in the case of fax, on receipt by the sender of
a transmission control report from the
despatching machine showing the relevant number
of pages and the correct destination fax
machine number and indicating that the
transmission had been made without error,
but if the result is that a Notice would be taken to be
given or made on a day which is not a business day in the
place to which the Notice is sent or is later than 4.00pm
(local time) it is taken to have been duly given or made
at the commencement of business on the next business day
in that place.
22. GOVERNING LAW
This Agreement is governed by the laws of New South Wales. Each party
submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there in connection with matters concerning this
Agreement.
23. COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
counterparts are taken to constitute one instrument.
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SCHEDULE 1
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Warranties
Ownership of shares in Star City
1. SAL is the legal and beneficial owner of 135 million ordinary shares
in Star City. These shares are the only shares in Star City in which
SAL has a legal or beneficial interest or to which SAL is entitled
(within the meaning of the Corporations Law).
Authorisations - Star City and its Related Bodies Corporate
2. So far as H is aware, Star City and its Related Bodies Corporate have
all necessary Authorisations required by each of them to own and
operate the Star City Casino and to conduct their respective
businesses and have paid all fees due in relation to them and
complied in all material respects with all conditions under them.
3. There is no factor which might materially prejudice the continuance
or renewal of any Authorisation required under Warranty 2.
4. So far as H is aware, Star City is in compliance with its obligations
to the Casino Control Authority whether arising under the Casino
Control Act, any agreement or any other legislation and H is not
aware of any fact or circumstance which may lead to a claim that Star
City is in breach of the Casino Control Act, any agreement or other
legislation.
Authorisations - SAL and SCM
5. SAL and SCM have all material Authorisations required to conduct
their respective businesses and have paid all fees due in relation to
them and complied in all material respects with all conditions under
them.
6. There is no factor which might materially prejudice the continuance
or renewal of any Authorisation required under Warranty 5.
Management Agreement
7. Neither SAL, SCM nor the Showboat Leighton Partnership nor any other
party is in breach of the Management Agreement nor is H, after due
enquiry, aware of any impending or threatened breach by any party and
the Management Agreement is valid and legally enforceable in
accordance with its terms.
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8. Without limiting Warranty 7 and except as provided for in the
Management Agreement, the Management Agreement is not subject to
termination or renegotiation or otherwise prejudicial materially as a
result of the change in ownership or control of SAL or SCM or other
action required or contemplated by this Agreement.
9. Neither the entry by H into this Agreement nor the performance by H
of any of its terms give rise to any rights or claims of any
description by Leighton or any other person on the basis of any claim
of a right of pre-emption, first right of refusal or other right in
respect of the Casino Management Rights other than as contained in
the Constitution of SCM or the Showboat Leighton Partnership
Agreement.
Showboat Leighton Partnership
10. (a) H is not, after due enquiry, aware of any actual,
impending or threatened breach of any agreement
constituting or affecting the Showboat Leighton
Partnership.
(b) Neither SAL nor SCM is a party to any other agreement or
arrangement (of whatever description and whether written,
oral or implied) that is subject to termination or
renegotiation or would otherwise be prejudiced materially
by any other party as a result solely of a change in the
ownership or control of SAL or SCM.
Casino Control Authority
11. Each of SAL, the Showboat Leighton Partnership and SCM is in
compliance with each of its obligations to the Casino Control
Authority whether arising under the Casino Control Act, any agreement
or any other legislation and neither SAL, the Showboat Leighton
Partnership or SCM is aware of any fact or circumstance which may
lead to a claim that any of them is in breach of the Casino Control
Act, any agreement or other legislation.
Proposals
12. H is not aware nor should it reasonably be aware of any proposals of
any Governmental Agency (including the Casino Control Authority) not
in the public arena, the implementation of which (whether by force of
law or voluntarily) might adversely affect Star City, SAL, SCM or the
Showboat Leighton Partnership.
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Conduct of the business of SAL
13. Since the date of the last balance sheet of SAL, neither SAL nor SCM
has done or omitted to do anything which might prejudicially affect
the goodwill of SAL or SCM or the profitability of its business and
the business of SAL and SCM has been conducted only in the ordinary
course.
Legal proceedings
14. (a) No suit, cause of action, proceeding, application,
claim or investigation is current, pending, threatened or
in prospect against SAL, SCM or the Showboat Leighton
Partnership.
(b) No resolution has been passed for the winding up of SAL or
SCM.
(c) No resolution has been passed for the appointment of an
administrator to SAL or SCM.
(d) There is no unsatisfied judgment against SAL or SCM.
No default under agreements
15. To the best of H's knowledge, information and belief, no party to any
material agreement relating to the business of SAL, SCM or the
Showboat Leighton Partnership is in breach of or in default under any
of those agreements nor is H, after due enquiry, aware of any
impending or threatened breach or default by any party and all those
agreements are valid and legally enforceable in accordance with their
terms.
Compliance with Law
16. The ownership and use of SAL's and SCM's assets and the general
conduct of and practices related to the businesses of SAL and SCM
comply materially with all applicable laws.
Right to Use
17. SAL and SCM have ownership of or the continuing right to use all
assets materially necessary to enable them to continue to carry on
their respective businesses in the manner previously carried on and
there are no claims against SAL or SCM or disputes directly involving
SAL or SCM which may affect these assets and which may have a
material adverse effect on their respective businesses.
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Change of control
18. Other than as contained in the Showboat Leighton Partnership
Agreement or the Constitution of SCM, neither SAL nor SCM is a party
to any material agreement relating to their respective businesses
under which any third party is entitled, as a result of a change in
ownership or control of SAL or SCM:
(a) to terminate the contract; or
(b) to impose or require the adoption of terms which are less
favourable to SAL or SCM (as the case may be) than the
current terms.
No notices
19. At the date of this Agreement neither SAL nor SCM has received any
written notice and to the knowledge of H does not know of any default
or any other matter not disclosed in this Agreement which might
affect any rights of SAL or SCM or the exercise of any rights by SAL
or SCM in respect of the Management Agreement or any other material
agreement relating to the business of SAL, SCM or the Showboat
Leighton Partnership.
Investigations or proceedings
20. Neither SAL, the Showboat Leighton Partnership nor SCM is:
(a) a party to any investigation, prosecution, litigation,
arbitration proceedings or any other form of mediation or
dispute resolution; or
(b) subject to any audit or investigation by any Governmental
Agency,
which may have a material adverse effect on the business of SAL, the
Showboat Leighton Partnership or SCM.
No litigation pending or threatened
21. No audit, investigation, prosecution, litigation, proceeding or any
other form of mediation or dispute resolution referred to in Warranty
20 is pending or threatened which reasonably could be expected to
have a material adverse effect on the business of SAL, SCM or the
Showboat Leighton Partnership nor does H know of any basis not
disclosed in this Agreement for or circumstances which are likely to
give rise to any such investigation, prosecution, litigation,
proceeding or other form of mediation or dispute resolution.
-20-
<PAGE>
Material information
22. Prior to the entry of the parties into this Agreement H has informed
T of all information material to the making of a decision to enter
into this Agreement known to H which would ordinarily be relevant to
a party making a decision of this nature which is not subject to any
other warranty in this Agreement or any warranty in any other
agreement described in this Agreement.
EXECUTED by the parties.
TABCORP HOLDINGS LIMITED
by: /s/ Ross Wilson
------------------------------
HARRAH'S ENTERTAINMENT, INC.
by: /s/ Philip G. Satre
------------------------------
Philip G. Satre
<PAGE>
ATTACHMENT A
--------------------------------------------------------------
Share Sale Agreement (Star City)
<PAGE>
[H]
and
SAL
and
[T]
and
[T ENTITY]
-------------------------------------------
SHARE SALE AGREEMENT (STAR CITY)
-------------------------------------------
Arthur Robinson & Hedderwicks
Melbourne
Ref RJS:CRG
Tel 9614 1011
<PAGE>
SHARE SALE AGREEMENT (STAR CITY)
--------------------------------------------------------------
THIS AGREEMENT is made on 1999 between:
1. [H] (H);
2. SAL (SAL);
3. [T] (T); and
4. [T ENTITY] (the PURCHASER).
RECITALS
A. SAL is a wholly owned subsidiary of H.
B. SAL is the registered and beneficial owner of the Shares and the
Options.
C. This Agreement records the terms on which H agrees to procure the
sale by SAL of, and SAL agrees to sell, the Shares and the Options to
the Purchaser.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
The following definitions apply unless the context otherwise
requires:
CASINO CONTROL ACT means the Casino Control Act 1992 of New South
Wales.
CASINO CONTROL AUTHORITY means the New South Wales Casino Control
Authority established under the Casino Control Act.
COMPLETION means completion by SAL and the Purchaser of the sale and
purchase of the Shares and the Options as provided in Clause 4.
COMPLETION DATE means the fifth day after entry into this Agreement.
CORPORATIONS LAW means the Corporations Law of Australia.
<PAGE>
MASTER AGREEMENT means the Master Agreement dated [#] 1999 between H
and T.
NOMINATED OPTIONS means that number of the Options nominated by T to
H in writing not less than seven days prior to the end of the
takeover period in respect of the Takeover referred to in Clause 1.4
of the Master Agreement or, failing nomination, all the Options.
OPTIONS means 37,400,000 options to acquire ordinary shares in the
capital of Star City exercisable between 1 July 1998 and 30 June
2000, both dates inclusive, at an exercise price of $1.15 per option.
SECURITY INTEREST means an interest or power:
(a) reserved in or over any interest in any asset including,
without limitation, any retention of title; or
(b) created or otherwise arising in or over any interest in
any asset under a bill of sale, mortgage, charge, lien,
pledge, trust or power,
by way of security for the payment of debt or any other monetary
obligation or the performance of any other obligation and whether
existing or agreed to be granted or created.
SHARE SALE AGREEMENT (SHOWBOAT) has the meaning given to that term in
the Master Agreement.
SHARES means 109,450,000 fully paid ordinary shares in the capital of
Star City together with the benefit of all rights (including dividend
rights) attached or accruing to the shares as at the date of this
Agreement.
STAR CITY means Star City Holdings Limited (ACN 064 054 431).
WARRANTIES means the representations, undertakings and other
obligations of H and SAL of whatever kind contained in this Agreement
(including, without limitation, those set out in Schedule 1).
$ means Australian dollars.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation.
The following rules apply unless the context requires otherwise.
-2-
<PAGE>
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical
forms have a corresponding meaning.
(d) A reference to a person, corporation, trust, partnership,
unincorporated body or other entity includes any of them.
(e) A reference to an agreement or document (including,
without limitation, a reference to this Agreement) is to
the agreement or document as amended, varied,
supplemented, novated or replaced except to the extent
prohibited by this Agreement or that other agreement or
document.
(f) A reference to legislation or to a provision of
legislation includes a modification or re-enactment of it,
a legislative provision substituted for it and a
regulation or statutory instrument issued under it.
(g) A reference to WRITING includes a facsimile transmission
and any means of reproducing words in a tangible and
permanently visible form.
1.3 Consents or Approvals
If the doing of any act, matter or thing under this Agreement is
dependent on the consent or approval of a party or is within the
discretion of a party, the consent or approval may be given or the
discretion may be exercised conditionally or unconditionally or
withheld by the party in its absolute discretion.
2. SALE AND PURCHASE
2.1 H agrees to procure the sale of, and SAL agrees to sell, the Shares
and the Nominated Options to the Purchaser and the Purchaser agrees
to buy the Shares and the Nominated Options from SAL, free from all
Security Interests.
2.2 The purchase price for the Shares is $1.60 per Share.
2.3 The purchase price for the Options is 45 cents per Option.
-3-
<PAGE>
2.4 The purchase price for the Shares and the Nominated Options must be
tendered on the Completion Date either by a cheque drawn on a bank as
defined in the Banking Act of the Commonwealth of Australia or by
other method of payment agreed by the parties.
3. WARRANTIES
3.1 H and SAL each represent to the Purchaser that each statement in
Schedule 1 is true and correct.
3.2 Each Warranty:
(a) remains in full force and effect after the Completion Date
despite Completion; and
(b) is given as at the date of this Agreement and as at the
time immediately before Completion.
3.3 H indemnifies the Purchaser on demand against all losses, costs and
liabilities that may be incurred by the Purchaser as a result
(directly or indirectly) of a breach of any Warranty.
4. COMPLETION
4.1 Completion of the sale and the purchase of the Shares and the Options
will take place on the Completion Date at [INSERT TIME AND VENUE].
4.2 On the Completion Date H and SAL must ensure that transfers of the
Shares and the Options are executed and delivered to the Purchaser
and that share certificates (if any) relating to the Shares and the
Options are delivered to the Purchaser, and the Purchaser must pay
the purchase price for the Shares and the Options to SAL.
5. TERMINATION
5.1 The obligation of the Purchaser to complete the purchase of the
Shares and the Options is subject to the condition that each of the
Warranties is true and correct on the Completion Date.
5.2 The condition referred to in Clause 5.1 may be waived by the
Purchaser in its discretion but a waiver is not a waiver of any
rights or remedies it may have against H by reason of any breach of
Clause 5.1.
5.3 If the condition referred to in Clause 5.1 is not satisfied the
Purchaser may terminate this Agreement by notice to H.
-4-
<PAGE>
6. GUARANTEE OF PURCHASER'S OBLIGATIONS BY T
T guarantees to SAL the performance by the Purchaser of each of the
Purchaser's obligations under this Agreement, and T separately must
indemnify SAL against all liabilities that may be incurred by SAL as
a result (directly or indirectly) of any failure to perform those
obligations.
7. COSTS
Each party must bear its own costs arising out of the negotiation,
preparation and execution of this Agreement. All stamp duty
(including fines, penalties and interest) which may be payable on or
in connection with this Agreement and any instrument executed under
this Agreement must be borne by the Purchaser.
8. MERGER
The rights and obligations of the parties do not merge on the
completion of any transaction contemplated by this Agreement. They
survive the execution and delivery of any assignment or other
document entered into for the purpose of implementing any such
transaction.
9. ENTIRE AGREEMENT
Apart from the Master Agreement and this Agreement, the parties
acknowledge and agree there are no agreements, arrangements or
understandings between the parties which relate in any way to the
voting or disposal of shares, options or other securities in Star
City.
10. ASSIGNMENT
The rights and obligations of each party under this Agreement are
personal. They cannot be assigned, encumbered or otherwise dealt with
and no party may attempt, or purport, to do so without the prior
written consent of all parties.
11. FURTHER ASSURANCES
Each party agrees to do all things and execute all deeds,
instruments, transfers or other documents as may be necessary or
desirable to give full effect to the provisions of this Agreement and
the transactions contemplated by it.
-5-
<PAGE>
12. WAIVER
No failure to exercise nor any delay in exercising any right, power
or remedy by a party operates as a waiver. A single or partial
exercise of any right, power or remedy does not preclude any other or
further exercise of that or any other right, power or remedy. A
waiver is not valid or binding on the party granting that waiver
unless made in writing.
13. NOTICES
Any notice, demand, consent or other communication (a NOTICE) given
or made under this Agreement:
(a) must be in writing and signed by a person duly authorised
by the sender;
(b) must be delivered to the intended recipient by prepaid
post (if posted to an address in another country, by
registered airmail) or by hand or fax to the address or
fax number below or the address or fax number last
notified by the intended recipient to the sender:
(i) to H or SAL: [#]
Attention: [#]
Fax No: [#]
(ii) to T or the Purchaser: [#]
Attention: [#]
Fax No: [#]
(c) is taken to be duly given or made:
(i) in the case of delivery in person, when
delivered;
(ii) in the case of delivery by post two business
days after the date of posting (if posted to
an address in the same country) or seven
business days after the date of posting (if
posted to an address in another country);
(iii) in the case of fax, on receipt by the sender
of a transmission control report from the
despatching machine showing the relevant
number of pages and the correct destination
fax machine number and indicating that the
transmission had been made without error,
-6-
<PAGE>
but if the result is that a Notice would be taken to be
given or made on a day which is not a business day in the
place to which the Notice is sent or is later than 4.00pm
(local time) it is taken to have been duly given or made
at the commencement of business on the next business day
in that place.
14. GOVERNING LAW
This Agreement is governed by the laws of New South Wales. Each party
submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there in connection with matters concerning this
Agreement.
EXECUTED by the parties.
-7-
<PAGE>
SIGNED on behalf of [H] by its
authorised representative )
in the presence of: )
---------------------------------
Authorised signatory
- ----------------------------------
Witness
---------------------------------
Print Name
- ----------------------------------
Print Name
SIGNED on behalf of [SAL] by its
authorised representative in the )
presence of: )
---------------------------------
Authorised signatory
- ----------------------------------
Witness
---------------------------------
Print Name
- ----------------------------------
SIGNED on behalf of [T ENTITY] by
its authorised representative in )
the presence of: )
---------------------------------
Authorised signatory
- ----------------------------------
Witness
---------------------------------
Print Name
- ----------------------------------
SIGNED on behalf of [T] by its
authorised representative in the )
presence of: )
---------------------------------
Authorised signatory
- ----------------------------------
Witness
---------------------------------
Print Name
- ----------------------------------
-8-
<PAGE>
SCHEDULE 1
Warranties
1. SAL:
(a) is the legal and beneficial owner of the Shares free from
all Security Interests;
(b) is the legal and beneficial owner of the Options free from
all Security Interests;
(c) has the full power and authority to transfer to the
Purchaser good legal and equitable title to the Shares
free from all Security Interests; and
(d) has the full power and authority to transfer to the
Purchaser good legal and equitable title to the Options
free from all Security Interests.
2. Without limiting Warranty 1, neither the entry by H or SAL into this
Agreement nor the performance by H or SAL of any of its terms give
rise to any rights or claims of any description by any person on the
basis of any claim of a right of pre-emption, first right of refusal
or other rights in respect of any of the Shares or Options.
-9-
<PAGE>
ATTACHMENT B
Share Sale Agreement (Showboat)
<PAGE>
[HARRAH's]
as Vendor
and
[TABCORP ENTITY]
as Purchaser
and
[H]
and
[T]
-------------------------------
SHARE SALE AGREEMENT (SHOWBOAT)
-------------------------------
Arthur Robinson & Hedderwicks
Melbourne
Ref RJS:CRG
Tel 9614 1011
<PAGE>
SHARE SALE AGREEMENT (SHOWBOAT)
- --------------------------------------------------------------------------------
THIS AGREEMENT is made on 1999 between:
1. [HARRAH'S ENTITY] [(ACN [#])] (the VENDOR);
2. [TABCORP ENTITY] [(ACN [#])] (the PURCHASER);
3. HARRAH'S ENTERTAINMENT, INC. (H); and
4. TABCORP HOLDINGS LIMITED (ACN 063 780 709) (T).
RECITALS
A. The Vendor is the registered holder and beneficial owner of the
Shares, which are all the issued shares in the capital of the
Company.
B. This Agreement records the terms on which the Vendor agrees to sell
the Shares to the Purchaser.
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
The following definitions apply unless the context requires
otherwise.
AUDITOR means the Auditor nominated by T for the purposes of this
Agreement as notified to H.
AUDITOR'S REPORT has the meaning set out in Clause 4.2(c).
BALANCE DATE means the date of the balance sheet appearing in the
Financial Accounts.
CASH means Australian legal tender.
CASINO COMPLEX MANAGEMENT AGREEMENT means the agreement of that title
dated 21 April 1994 between Sydney Casino Properties Pty Limited and
Sydney Harbour Casino Pty Limited (as Owner), the Company and
Leighton as the Showboat Leighton Partnership, and SCM as Manager.
<PAGE>
CASINO CONTROL ACT means the Casino Control Act 1992 of New South
Wales.
CASINO CONTROL AUTHORITY means the New South Wales Casino Control
Authority established under the Casino Control Act.
CASINO MANAGEMENT RIGHTS means the rights and obligations of SCM and
the Showboat Leighton Partnership as constituted by the Casino
Complex Management Agreement.
CASINO OPERATIONS AGREEMENT means the agreement of that title dated
14 December 1994 between the Casino Control Authority, SCM, Star City
and others.
COMPANY means Showboat Australia Pty Limited (ACN 061 299 625).
COMPLETION means completion by the parties of the sale and purchase
as provided in Clause 6.
COMPLETION ACCOUNTS means the Completion Statement of Net Assets and
the Completion Statement of Residual Management Agreement Net Assets.
COMPLETION DATE means the fifth day after the date on which T
receives a certificate from H under Clause 7 or any other date the
Vendor and the Purchaser may agree.
COMPLETION STATEMENT OF NET ASSETS has the meaning set out in Clause
4.1(a).
COMPLETION STATEMENT OF RESIDUAL MANAGEMENT AGREEMENT NET ASSETS has
the meaning set out in Clause 4.1(b).
CORPORATIONS LAW means the Corporations Law of Australia.
FINAL PAYMENT DATE means the date three business days after the
Completion Accounts have been finalised in accordance with Clause 4.
FINANCIAL ACCOUNTS means the consolidated audited balance sheet and
profit and loss account of the Company (including the Showboat
Leighton Partnership) for the year ended 31 December 1998.
INDEPENDENT AUDITOR means the President for the time being of the
Institute of Chartered Accountants in Australia or his or her
nominee.
-2-
<PAGE>
INTELLECTUAL PROPERTY means any industrial or intellectual property
whether protectable by statute, at common law or in equity, including
all copyright, moral rights (and similar rights), inventions,
patents, designs (whether or not registrable), registered and
unregistered trademarks, circuit layout designs, rights in relation
to circuit layouts and know how.
LEIGHTON means Leighton Properties Pty Limited (ACN 001 046 395).
LIABILITIES means claims, losses, liabilities, costs or expenses of
any kind, including those which are prospective or contingent and
those the amount of which is not ascertained or ascertainable.
MASTER AGREEMENT means the agreement between T and H dated [#].
NON MANAGEMENT AGREEMENT ASSETS means all assets of the Company, the
Showboat Leighton Partnership or SCM not directly related to the
Casino Complex Management Agreement, other than the Residual Cash
Amount.
NON MANAGEMENT AGREEMENT LIABILITIES means all liabilities of the
Company, the Showboat Leighton Partnership or SCM not directly
related to the Casino Complex Management Agreement.
PURCHASE PRICE ADJUSTMENT means the calculation and payment of a
price adjustment under Clause 3 and PURCHASE PRICE ADJUSTMENT AMOUNT
means the amount of the adjustment.
RELATED BODY CORPORATE has the meaning given to it in the
Corporations Law.
RESIDUAL CASH AMOUNT means the amount of Cash equal to the aggregate
amount of Tax payable by the Company and SCM as referred to in Clause
7.1(a)(ii) less any amount of Tax prepaid to the Commissioner of
Taxation.
SECURITY INTEREST means an interest or power:
(a) reserved in or over any interest in any asset including,
without limitation, any retention of title; or
-3-
<PAGE>
(b) created or otherwise arising in or over any interest in
any asset under a bill of sale, mortgage, charge, lien,
pledge, trust or power,
by way of security for the payment of debt or any other monetary
obligation or the performance of any other obligation and whether
existing or agreed to be granted or created.
SHARE SALE AGREEMENT (STAR CITY) means the agreement of that title
referred to in Clause 2 of the Master Agreement.
SHARES means [#] ordinary shares in the capital of the Company
together with the benefit of all rights (including dividend rights)
attached or accruing to those shares as at the date of this
Agreement.
SHOWBOAT LEIGHTON PARTNERSHIP means the Partnership constituted by
the Showboat Leighton Partnership Agreement.
SHOWBOAT LEIGHTON PARTNERSHIP AGREEMENT means the partnership
agreement between the Company and Leighton which has a commencement
date of 22 April 1994.
STAR CITY CASINO means the casino complex owned (whether directly or
indirectly) by Star City.
SUBSIDIARY has the meaning given by the Corporations Law.
TAX means any income tax, capital gains tax, recoupment tax, land
tax, sales tax, payroll tax, fringe benefit tax, group tax,
withholding tax, municipal rates, stamp duties and other charges,
levies and impositions, assessed or charged, or assessable or
chargeable, by or payable to any governmental taxation or excise
authority and includes any additional tax, interest, penalty, charge,
fee or other amount imposed or made on or in relation to a failure to
file a relevant return or to pay a relevant tax.
TAX ACT means the Income Tax Assessment Act 1936 or the Income Tax
Assessment Act 1997 or both the Income Tax Assessment Act 1936 and
the Income Tax Assessment Act 1997, as appropriate.
WARRANTIES means the representations, warranties, undertakings and
other obligations of the Vendor of whatever kind contained in this
Agreement (including, without limitation, those set out in Schedule
1).
-4-
<PAGE>
$ means Australian dollars.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation.
The following rules apply unless the context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical
forms have a corresponding meaning.
(d) A reference to a person, corporation, trust, partnership,
unincorporated body or other entity includes any of them.
(e) A reference to an agreement or document (including,
without limitation, a reference to this Agreement) is to
the agreement or document as amended, varied,
supplemented, novated or replaced except to the extent
prohibited by this Agreement or that other agreement or
document.
(f) A reference to legislation or to a provision of
legislation includes a modification or re-enactment of
it, a legislative provision substituted for it and a
regulation or statutory instrument issued under it.
(g) A reference to WRITING includes a facsimile transmission
and any means of reproducing words in a tangible and
permanently visible form.
1.3 Consents or Approvals
If the doing of any act, matter or thing under this Agreement is
dependent on the consent or approval of a party or is within the
discretion of a party, the consent or approval may be given or the
discretion may be exercised conditionally or unconditionally or
withheld by the party in its absolute discretion.
2. SALE AND PURCHASE
The Vendor agrees to sell the Shares to the Purchaser and the
Purchaser agrees to buy the Shares from the Vendor, free from all
Security Interests.
-5-
<PAGE>
3. PRICE AND PAYMENT
3.1 The Purchase Price is $204 million to be paid on the Completion Date.
3.2 On the Final Payment Date, the Purchase Price Adjustment Amount must
be paid as follows:
(a) the Purchaser pays to the Vendor the amount (if any) by
which the Completion Statement of Residual Management
Agreement Net Assets shows a balance in excess of zero; or
(b) the Vendor pays to the Purchaser the amount (if any) by
which the Completion Statement of Residual Management
Agreement Net Assets shows a balance less than zero.
4. COMPLETION ACCOUNTS
4.1 As soon as reasonably practicable, and in any case within 20 business
days after the Completion Date, the Vendor must prepare and provide
to the Auditor drafts of:
(a) a statement of the consolidated net assets of the Company
(including the Showboat Leighton Partnership) as at the
Completion Date prepared in accordance with accounting
principles and practices generally accepted in Australia,
the Corporations Law and all other applicable statutes and
regulations (except that all assets shall be valued at the
lower of cost and net realisable value). (This is the
draft Completion Statement of Net Assets); and
(b) a statement of the consolidated net assets of the Company
(including the Showboat Leighton Partnership) excluding
the book value of the asset pertaining to the Company's
entitlement to management fees payable by Sydney Harbour
Casino Pty Ltd under Clause 12.1 of the Casino Complex
Management Agreement as at the Completion Date prepared in
accordance with accounting principles and practices
generally accepted in Australia, the Corporations Law and
all other applicable statutes and regulations (except that
all assets shall be valued at the lower of cost and net
realisable value). (This is the draft Completion Statement
of Residual Management Agreement Net Assets.)
-6-
<PAGE>
4.2 The Vendor and the Purchaser must jointly instruct the Auditor to
prepare and deliver to each of them within 15 business days after
provision of the draft statements referred to in Clause 4.1:
(a) an audited Completion Statement of Net Assets;
(b) an audited Completion Statement of Residual Management
Agreement Net Assets; and
(c) an Auditor's Report in the form set out in Schedule 2.
4.3 The Vendor must:
(a) provide the Auditor full access to the books and records
of the Vendor and the Company to enable the Auditor to
prepare the audited statements referred to in Clause 4.2
(the AUDITED STATEMENTS); and
(b) provide the Auditor full access to the working papers used
in preparing the draft statements referred to in Clause
4.1.
4.4 The Vendor and the Purchaser must confer and use their best
endeavours to agree on the Audited Statements within five business
days after they are provided to the Vendor and the Purchaser by the
Auditor in accordance with Clause 4.2.
4.5 If the contents of the Audited Statements are agreed between the
Vendor and the Purchaser, the Audited Statements will be final and
binding on the parties, and will constitute the Completion Accounts.
4.6 If the Vendor and the Purchaser do not agree on the value of an item
in the Audited Statements within the period referred to in Clause
4.4, the Vendor and the Purchaser must within five days after the end
of that period refer the matter to the Independent Auditor for
determination in accordance with Clause 4.7.
4.7 (a) In referring a matter to the Independent Auditor for
determination under this Agreement, the parties must
instruct the Independent Auditor to complete the
determination within 14 business days of the referral.
-7-
<PAGE>
(b) The Vendor must provide the Independent Auditor full
access to its books and records, and the books and records
of the Company, and any information required by the
Independent Auditor to complete any determination under
this Agreement.
(c) Each party is entitled to make submissions to the
Independent Auditor in respect of any determination under
this Agreement.
(d) The Independent Auditor's written determination of any
matter referred to it under this Agreement is final and
binding on the parties and, where applicable, must be
incorporated in the Completion Accounts promptly after the
determination is made.
(e) In making a determination the Independent Auditor acts as
an expert not as an arbitrator.
(f) The costs of the Independent Auditor shall be borne by the
parties equally.
5. WARRANTIES
5.1 The Vendor represents and warrants to the Purchaser that to the best
of its knowledge and belief after making due enquiries (except as set
out in the disclosure statement referred to in Clause 8.1 of the
Master Agreement) each statement in Schedule 1 is true and correct.
5.2 Each Warranty:
(a) remains in full force and effect after the Completion Date
despite Completion; and
(b) is given as at the date of this Agreement and as at the
time immediately before Completion.
5.3 Subject to Clauses 5.4 to 5.11, the Vendor indemnifies the Purchaser
against all Liabilities (other than to the extent they are due to any
negligence or default of T) that may be incurred by the Purchaser as
a result (directly or indirectly) of a breach of any Warranty.
5.4 Subject to Clause 5.5 to 5.11, the Vendor indemnifies the Purchaser
against any loss that the Purchaser may suffer by reason of any
liability of the Company or SCM to Tax that may be assessed against
or levied on the Company or SCM with respect to:
-8-
<PAGE>
(a) any income (including capital gains) earned or derived or
deemed to have been earned or derived by the Company or
SCM at any time prior to the Completion Date or that may
be assessed or levied as a result of any transaction, act,
matter or thing which took place or happened on or before
the Completion Date;
(b) any payments made in relation to persons working for the
Company or SCM prior to the Completion Date;
(c) any stamp duties payable in respect of any agreement,
deed, other document or transaction entered into prior to
Completion to which the Company or SCM is or has been a
party or by which the Company or SCM derives, has derived
or will derive a substantial benefit;
(d) any liability for Tax from which the Company, SCM, the
Showboat Leighton Partnership or the Vendor may have
obtained relief (whether by way of deferred capital gains
tax or otherwise) which has or will become payable as a
result of entry into this Agreement; and
(e) any liability to any current or former Related Body
Corporate of the Company or SCM (including the Vendor) as
a result of any tax loss transferred by the Company or SCM
to that current or former Related Body Corporate prior to
the Completion Date being disallowed, in whole or in part,
but only to the amount of the excess over the amount of any relevant
provision for them in the Completion Statement of Residual Management
Agreement Net Assets.
5.5 The Vendor is not obliged to pay any amount under Clause 5.4 unless
the Purchaser, within 60 days after receipt by the Company or SCM or
the Showboat Leighton Partnership of the relevant assessment from the
taxation authority, gives to the Vendor notice of the claim on the
indemnity and a copy of the relevant parts of that assessment.
5.6 Where:
(a) notice is given in accordance with Clause 5.5;
-9-
<PAGE>
(b) the Vendor proposes to dispute on behalf of the Company,
SCM, the Showboat Leighton Partnership or the Purchaser
(as the case may be) the assessment; and
(c) payment of the assessment is required in order to dispute
the assessment,
the Vendor must pay the amount of the assessment.
5.7 Where:
(a) notice is given in accordance with Clause 5.5;
(b) the Vendor, within 30 days after receiving notice in
accordance with Clause 5.5, gives the Purchaser notice
that the Vendor proposes to dispute on behalf of the
Company, SCM or the Showboat Leighton Partnership or the
Purchaser (as the case may be) the assessment; and
(c) the Vendor has complied with Clause 5.6,
the Purchaser shall take such action as the Vendor may reasonably
request (by notice to the Purchaser) to object to, appeal against or
settle the assessment, if the Vendor bears all the costs and expenses
of taking such actions (including, without limitation, the costs to
the Purchaser, SCM or the Showboat Leighton Partnership or the
Company (as the case may be) involved in engaging its staff in the
matter).
5.8 Where a payment has been made by the Vendor under Clause 5.6 and the
matter in respect of which the payment is made is ultimately resolved
in favour of the Company, SCM or the Showboat Leighton Partnership,
the Purchaser shall cause the Company, SCM or the Showboat Leighton
Partnership (as the case may be), following receipt of the money from
the relevant taxation authority, to pay an equivalent amount to the
Vendor.
5.9 The Vendor has the right to be actively involved in any Tax audit
conducted by the Australian Taxation Office concerning the Company,
SCM or the Showboat Leighton Partnership insofar as the audit relates
to any period or periods prior to the Completion Date.
5.10 The liability of the Vendor to the Purchaser under this Clause 5 and
of H under Clause 10 includes costs and expenses and direct loss
suffered (and in respect of SCM or the Showboat Leighton Partnership,
is restricted to the Vendor's 85% interest) but does not include
consequential damage.
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<PAGE>
5.11 The Purchaser and T may not commence any claim in respect of any
breach of any representation or warranty (other than in respect of
Tax) more than two years after the date of this Agreement.
6. COMPLETION
6.1 Completion of the sale and purchase of the Shares must take place on
the Completion Date at [#].
6.2 On the Completion Date the Vendor must (subject to any necessary
Casino Control Authority approval):
(a) ensure that a duly convened board meeting of the Company
and SCM is held at which a quorum of directors is present
and acting throughout at which:
(i) persons nominated by the Purchaser by notice
to the Vendor are appointed as directors of
the Company and SCM, subject to the receipt
of signed consents to act;
(ii) persons nominated by the Purchaser by notice
to the Vendor are appointed as the
secretaries and public officers of the
Company and SCM, subject to the receipt of
signed consents to act;
(iii) persons nominated by the Purchaser by notice
to the Vendor resign as directors,
secretaries and public officers of the
Company and SCM; and
(iv) in the case of the board meeting of the
Company only, the transfer of the Shares to
the Purchaser (subject to the payment of
stamp duty on the instruments of transfer
which must be borne by the Purchaser), the
cancellation of the existing share
certificate for the Shares and the sealing
and delivery by the Company to the Purchaser
of a new share certificate for the Shares in
the name of the Purchaser are each approved;
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<PAGE>
(b) deliver to (or at the direction of) the Purchaser the
minute books, statutory books and registers (all in good
order and fully and accurately entered up as at the
Completion Date in accordance with all relevant statutory
requirements), books of account, trading and financial
records, copies of taxation returns and other documents
and papers, and any common seal, duplicate seal or
official seal, of the Company and SCM; and
(c) deliver to the Purchaser executed instruments of transfer
of the Shares in favour of the Purchaser together with the
share certificates relating to the Shares.
6.3 On the Completion Date and subject to the due performance by the
Vendor of the obligations on its part to be performed under Clause
6.2 the Purchaser will pay the Purchase Price to the Vendor.
7. COMPLETION OF PRE-COMPLETION EVENTS
7.1 Not later than twenty-one business days after completion under the
Share Sale Agreement (Star City), H must ensure that:
(a) the Company repatriates to H an amount equal to the
aggregate of:
(i) (A) the purchase prices payable to the
Company in respect of the sale of
shares and options in Star City by
the Company pursuant to the Share
Sale Agreement (Star City); and
(B) any consideration paid to the
Company pursuant to the disposal by
the Company of the shares in Star
City referred to in Clause 7.1(b);
LESS
(ii) the aggregate amount of any Tax (whether
capital gains tax or otherwise) payable by the
Company or SCM (as applicable) as a result of
the sale or disposal of shares and options in
Star City referred to in Clause 7.1(a)(i) or as
a result of the disposal of any Non Management
Agreement Assets as required by Clause 7.1(c);
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<PAGE>
(b) the Company disposes of (and ceases to be the legal and
beneficial owner of) the ordinary shares in Star City
which it held as at the date of this Agreement or which
arise from exercise of any options and which are not the
subject of the Share Sale Agreement (Star City), whether
the disposal is to a Related Body Corporate of H or
otherwise; and
(c) the Company and SCM (as applicable) dispose of all Non
Management Agreement Assets and repay in full, or
otherwise settle or extinguish, all Non Management
Agreement Liabilities,
and, on the requirements of this Clause being met, H must immediately
certify that to T in writing.
7.2 H will ensure that as at the Completion Date the Company will hold an
amount of Cash equal to the Residual Cash Amount.
7.3 H undertakes that to the extent that there is at the date of this
Agreement any agreement or arrangement between the Company, SCM or
the Showboat Leighton Partnership and H or any Related Body Corporate
or affiliate of H pursuant to which the Company, SCM or the Showboat
Leighton Partnership is required or obliged to pay any amount to H or
its Related Bodies Corporate or affiliates, then H will terminate, or
procure the termination of, any such agreement or arrangement prior
to the Completion Date so that as at the Completion Date neither the
Company, SCM nor the Showboat Leighton Partnership will have any
liability or ongoing obligation to H or its Related Bodies Corporate
or affiliates in connection with or in relation to the Casino Complex
Management Agreement, the provision of any services, the operations
of the Star City Casino or otherwise, and H will indemnify the
Purchaser, the Company, SCM and the Showboat Leighton Partnership in
respect of any liability incurred or loss or damage suffered as a
result of any breach of this covenant.
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<PAGE>
8. INFORMATION, TECHNOLOGY AND INTELLECTUAL PROPERTY
H acknowledges that it has supplied to, amongst others, Star City,
the Company, the Showboat Leighton Partnership and SCM certain
information, technology, know how and other Intellectual Property
which is used or has been used by them in or in connection with the
operations of Star City Casino or the Casino Management Rights. H
grants to the Purchaser, the Company, SCM, Star City, the Showboat
Leighton Partnership and any other person who may presently use or
have used the information, technology, know how and other
Intellectual Property referred to above a non-exclusive royalty free
licence in perpetuity to use all the information, technology, know
how and other Intellectual Property in or in connection with the
operations of Star City Casino or the Casino Management Rights, so
that the Purchaser, the Company, SCM, Star City, the Showboat
Leighton Partnership and any such other person may continue after the
Completion Date to use such information, technology, know how and
other Intellectual Property in the same manner as it had done at any
time before the Completion Date. H will use its reasonable endeavours
to ensure that the key executives engaged in connection with the
operations of Star City Casino or the Casino Management Rights
continue to be engaged in those operations after the Completion Date.
9. TERMINATION
9.1 The obligation of the Purchaser to complete the purchase of the
Shares is subject to the conditions that:
(a) each of the Warranties is true and correct as at the
Completion Date, with the same force and effect as if
made on the Completion Date. This condition may be waived
by the Purchaser at its discretion but a waiver is not a
waiver of any rights or remedies that it may have against
the Vendor by reason of any breach of Clause 5.1; and
(b) no disclosure or disclosures made to the Purchaser under
this Agreement, singularly or in the aggregate, reveals
any circumstance which has had, has or will have a
materially adverse effect on the business of the Company,
SCM or Star City. This condition may be waived by the
Purchaser at its discretion.
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<PAGE>
If condition (a) above is not satisfied or the circumstance described
in condition (b) above is revealed, the Purchaser may terminate this
Agreement by notice to the Vendor. If the Purchaser terminates this
Agreement, no party has any further liability to any other party
under this Agreement except that the termination will not prejudice
any rights or remedies that the Purchaser may have against the Vendor
by reason of any breach of Clause 5.1.
10. GUARANTEE BY H
10.1 In consideration of T entering into this Agreement at the request of
H, H:
(a) unconditionally and irrevocably guarantees to the
Purchaser on demand the due and punctual performance by
the Vendor of all its obligations under this Agreement;
and
(b) separately indemnifies the Purchaser against any
Liabilities (other than to the extent they are due to any
negligence or default of T) which may be incurred or
sustained by the Purchaser in connection with any default
or delay by the Vendor in the due and punctual performance
of any of its obligations under this Agreement.
10.2 The liability of H under this Clause is not affected by any act,
omission or thing which, but for this provision, might in any way
operate to release or otherwise exonerate or discharge H from any of
its obligations including (without limitation) the grant to the
Vendor or any other person of any time, waiver or other indulgence,
or the discharge or release of the Vendor or any other person from
any obligation.
10.3 This Clause is a continuing guarantee and indemnity and, despite
Completion, remains in full force and effect for so long as the
Vendor has any liability or obligation to the Purchaser under this
Agreement and until all of those liabilities or obligations have been
fully discharged.
11. GUARANTEE BY T
11.1 In consideration of H entering into this Agreement at the request of
T, T:
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<PAGE>
(a) unconditionally and irrevocably guarantees to the Vendor
on demand the due and punctual performance by the
Purchaser of all its obligations under this Agreement; and
(b) separately indemnifies the Purchaser against any
Liabilities (other than to the extent they are due to any
negligence or default of H) which may be incurred or
sustained by the Vendor in connection with any default or
delay by the Purchaser in the due and punctual performance
of any of its obligations under this Agreement.
11.2 The liability of T under this Clause is not affected by any act,
omission or thing which, but for this provision, might in any way
operate to release or otherwise exonerate or discharge T from any of
its obligations including (without limitation) the grant to the
Purchaser or any other person of any time, waiver or other
indulgence, or the discharge or release of the Purchaser or any other
person from any obligation.
11.3 This Clause:
(a) extends to cover this Agreement as amended, varied or
replaced, whether with or without the consent of T; and
(b) is a continuing guarantee and indemnity and, despite
Completion, remains in full force and effect for so long
as the Purchaser has any liability or obligation to the
Vendor under this Agreement and until all of those
liabilities or obligations have been fully discharged.
12. COSTS
Each party must bear its own costs arising out of the negotiation,
preparation and execution of this Agreement. All stamp duty
(including fines, penalties and interest) which may be payable on or
in connection with this Agreement and any instrument executed under
this Agreement must be borne by the Purchaser.
13. MERGER
The rights and obligations of the parties do not merge on the
completion of any transaction contemplated by this Agreement. They
survive the execution and delivery of any assignment or other
document entered into for the purpose of implementing any such
transaction.
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<PAGE>
14. ASSIGNMENT
The rights and obligations of each party under this Agreement are
personal. They cannot be assigned, encumbered or otherwise dealt with
and no party may attempt, or purport, to do so without the prior
written consent of all parties.
15. FURTHER ASSURANCES
Each party agrees to do all things and execute all deeds,
instruments, transfers or other documents as may be necessary or
desirable to give full effect to the provisions of this Agreement and
the transactions contemplated by it.
16. ENTIRE AGREEMENT
This Agreement and the Master Agreement contain the entire agreement
between the parties with respect to its subject matter and supersedes
all prior agreements and understandings between the parties in
connection with it.
17. WAIVER
No failure to exercise nor any delay in exercising any right, power
or remedy by a party operates as a waiver. A single or partial
exercise of any right, power or remedy does not preclude any other or
further exercise of that or any other right, power or remedy. A
waiver is not valid or binding on the party granting that waiver
unless made in writing.
18. NOTICES
Any notice, demand, consent or other communication (a NOTICE) given
or made under this Agreement:
(a) must be in writing and signed by a person duly authorised
by the sender;
(b) must be delivered to the intended recipient by prepaid
post (if posted to an address in another country, by
registered airmail) or by hand or fax to the address or
fax number below or the address or fax number last
notified by the intended recipient to the sender:
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<PAGE>
(i) to the Purchaser: [#]
Attention: [#]
Fax No: [#]
(ii) to the Vendor: [#]
Attention: [#]
Fax No: [#]
(iii) to H: [#]
Attention: [#]
Fax No: [#]
(iv) to T: [#]
Attention: [#]
Fax No: [#]
(c) is taken to be duly given or made:
(i) in the case of delivery in person, when
delivered;
(ii) in the case of delivery by post two business
days after the date of posting (if posted to an
address in the same country) or seven business
days after the date of posting (if posted to an
address in another country);
(iii) in the case of fax, on receipt by the sender of
a transmission control report from the
despatching machine showing the relevant number
of pages and the correct destination fax
machine number and indicating that the
transmission had been made without error,
but if the result is that a Notice would be taken to be
given or made on a day which is not a business day in the
place to which the Notice is sent or is later than 4.00pm
(local time) it is taken to have been duly given or made
at the commencement of business on the next business day
in that place.
19. GOVERNING LAW
This Agreement is governed by the laws of New South Wales. Each party
submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there in connection with matters concerning this
Agreement.
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<PAGE>
20. COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
counterparts will be taken to constitute one instrument.
-19-
<PAGE>
SCHEDULE 1
- --------------------------------------------------------------------------------
Warranties
Ownership of the Shares
1. The Vendor:
(a) is the legal and beneficial owner of the Shares free from
all Security Interests; and
(b) has full power and authority to transfer to the Purchaser
good legal and equitable title to the Shares free from all
Security Interests.
Shares - the Company, SCM
2. There are no outstanding subscription agreements, options, rights or
other analogous entitlements of any description to acquire from the
Company or SCM any unissued shares or stock of any class of the
Company or SCM, or any securities convertible into or exchangeable
for or which otherwise confer on the holder of it any right (whether
or not upon the happening of any contingency or after any lapse of
time and whether or not upon the payment or delivery of any
consideration) to acquire any unissued shares or stock of any class
of the Company or SCM nor is the Company or SCM committed to grant or
issue any such option, right or security.
3. The Shares are the only issued shares in the capital of the Company
and are validly issued and fully paid. The shares in SCM consist of
85 ordinary shares and are the only issued shares in the capital of
SCM other than 15 shares held by Leighton, are validly issued, fully
paid and legally and beneficially owned by the Company free from all
Security Interests.
Permanent establishments outside Australia
4. Neither the Company nor SCM has a permanent establishment (as that
expression is defined in any applicable double taxation convention)
outside Australia.
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<PAGE>
Subsidiaries
5. The Company does not control any entity other than SCM. Neither the
Company nor SCM is a member of a partnership or other unincorporated
association except that the Company is a member of the Showboat
Leighton Partnership. In this warranty control of an entity means
control of the entity within the meaning of the accounting standards
made for the purposes of section 295(2)(d) of the Corporations Law.
Financial Accounts
6. The Financial Accounts have been prepared in accordance with
accounting principles and practices generally accepted in Australia
and comply with the requirements of the Corporations Law and all
other applicable statutes and regulations.
7. The balance sheet appearing in the Financial Accounts:
(a) discloses a true and fair view of the consolidated state
of affairs of the Company as at the Balance Date;
(b) is true and accurate in all material respects;
(c) includes adequate reserves or provisions for all
liabilities (including Tax Liabilities) of the Company,
the Showboat Leighton Partnership and SCM as at the
Balance Date.
8. There are no loans, guarantees, indemnities, undertakings, mortgages,
charges, debentures, leases or other encumbrances or unusual
liabilities (including contingent liabilities) which have been given
or made or incurred by or assigned to or vested in or are outstanding
on behalf of the Company, the Showboat Leighton Partnership or SCM
other than as disclosed or taken into account in the Financial
Accounts.
9. The Financial Accounts contain fully adequate provisions for holiday
pay, sick leave and long service leave in amounts which are at least
equal to the accrued legal liability of the Company, SCM and the
Showboat Leighton Partnership as at the Balance Date.
10. The profit and loss account appearing in the Financial Accounts
discloses a true and fair view of the consolidated profit or loss of
the Company for the period covered in those accounts and is true and
accurate in all material
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<PAGE>
Completion Accounts
11. To the date of the Completion Accounts, there has been no change in
the total amount of the Liabilities or the trading position,
profitability or financial condition of the Company, the Showboat
Leighton Partnership and SCM from that set forth in the Financial
Accounts except changes in the ordinary course of business.
11A. (a) The Company has not been nor will it be;
(b) neither the Showboat Leighton Partnership nor SCM has
been;
(c) neither the Showboat Leighton Partnership nor SCM will be
(to the extent it is within the reasonable control of SAL
or the Vendor),
materially and adversely affected by any act, event or circumstance,
whether covered by insurance or not and except for the changes
required to be made under Clause 7 of this Agreement.
12. The Completion Accounts have been prepared in accordance with the
accounting principles and practices generally accepted in Australia
and comply with the requirements of the Corporations Law and all
other applicable statutes and regulations and the accounting
principles and practices determined by the Auditor or, in the event H
disagrees with these accounting principles and practices when
established, by the Independent Auditor.
13. The Completion Accounts:
(a) disclose a true and fair view of the state of affairs of
the Company, the Showboat Leighton Partnership and SCM as
at the date to which they are made up;
(b) are true and correct in all material respects;
(c) include adequate reserves or provisions for all
liabilities (including Tax Liabilities) of the Company,
the Showboat Leighton Partnership and SCM as at that date.
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<PAGE>
14. The Vendor has ensured that there is sufficient Cash held by the
Company as at the Completion Date to satisfy the aggregate amount of
any Tax (whether capital gains tax or otherwise) payable but unpaid
by the Company or SCM as a result of the sale or disposal of all the
Company's shares and options in Star City as required by the Master
Agreement, this Agreement and the Share Sale Agreement (Star City)
and the disposal of the Non Management Agreement Assets as required
by Clause 7.1(c) of this Agreement. Any Cash (net of any receivables
appearing in the Completion Statement of Residual Management
Agreement Net Assets) held by the Company shall be invested by the
Company with any interest accruing to the benefit of H on the
following terms:
(a) the Cash shall be invested with a trading bank or other
agreed financial institution of up to 90 day call; and
(b) all interest thereon (net of any Tax) will accrue to H and
be paid to H on demand.
15. The Completion Accounts contain fully adequate provisions for holiday
pay, sick leave and long service leave in amounts which are at least
equal to the accrued legal liability of the Company, the Showboat
Leighton Partnership and SCM as at the Completion Date.
16. Except to the extent of the amounts provided in the Completion
Accounts, neither the Company, the Showboat Leighton Partnership nor
SCM is under, nor will it assume prior to the Completion Date, any
liability to any person for any pension, lump sum retiring allowance
or redundancy payment or any liability with respect to holiday, long
service or sick leave entitlement.
17. As at the Completion Date, neither the Company, the Showboat Leighton
Partnership nor SCM has any Non Management Agreement Assets or Non
Management Agreement Liabilities.
Taxation
18. All Tax returns required by law to be lodged or filed by the Company,
SCM or the Showboat Leighton Partnership have been duly lodged or
filed and fully and accurately completed and each deduction, rebate
or credit claimed in them has been properly claimed and is duly
allowable.
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<PAGE>
19. All Taxes (other than those which may still be paid without penalty
or interest) on or payable by the Company, SCM or the Showboat
Leighton Partnership have been paid or adequate provisions, reserves
or accruals for their payment (whether or not assessed) have been
made or provided for in the balance sheet appearing in the Financial
Accounts.
20. There are no outstanding disputes or Tax audits by or with or
threatened by the Commissioner of Taxation or any other authority or
instrumentality or officer concerning the liability of the Company,
SCM or the Showboat Leighton Partnership to any Tax.
21. Neither the Company nor SCM has paid any dividend:
(a) in respect of which the required franking amount (as
provided for in section 160AQE of the Tax Act) has
exceeded the franked amount (as defined in section 160APA
of the Tax Act) of the dividend; or
(b) which has been franked in excess of the required franking
amount which would result in the Company or SCM being
liable to pay franking deficit tax as provided for in
section 160AQJ of the Tax Act or additional tax under
section 160ARX of the Tax Act.
23. No asset revaluation dividend (as defined in section 46E(1) of the
Tax Act) has at any time been paid to the Company or SCM.
24. The Company, SCM and the Showboat Leighton Partnership has complied
with the requirements of all legislation imposing Taxes in respect of
the retention of records and those records can be reconciled to the
returns lodged by the Company, SCM and the Showboat Leighton
Partnership. In particular, but without limitation, each of the
Company, SCM and the Showboat Leighton Partnership:
(a) has complied with section 262A and 160ZZU of the Tax Act;
(b) has retained duly prepared and executed election notices
required to be prepared under the Tax Act, has retained
duly completed and executed declarations required for the
purpose of ascertaining their liability to fringe
benefits tax; and
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<PAGE>
(c) has retained accurate records of franking credits and
franking debits in respect of its current and prior
accounting periods.
Legal Proceedings
25. (a) There is no suit, cause of action, proceeding,
application, arbitration, claim or investigation current,
pending, threatened or in prospect against the Company,
SCM and the Showboat Leighton Partnership and in
particular there is no outstanding product liability or
workers' compensation claim.
(b) No resolution has been passed for the winding up of the
Company or SCM.
(c) No resolution has been passed for the appointment of an
administrator to the Company or SCM.
(d) There is no unsatisfied judgment against the Company or
SCM.
(e) There are no facts, matters or circumstances which give
any person the right to apply to wind up the Company or
SCM or to appoint a controller within the meaning of
section 9 of the Corporations Law or an administrator or
an inspector under the Corporations Law in respect of the
Company or SCM or any part of its undertaking or assets or
income.
Agreements and Arrangements
26. Neither the Company, SCM nor the Showboat Leighton Partnership has
sold, transferred, assigned, created a Security Interest over,
declared itself a trustee of, parted with the benefit of or otherwise
disposed of the Casino Management Rights (or any interest in them or
any part of them) including without limitation by agreeing to pay,
assign, transfer or otherwise dispose of its right to management fees
payable under the Casino Complex Management Agreement, except for the
Security Interest created by the Commonwealth Bank over assets of the
Showboat Leighton Partnership under the primary finance facility
provided by the Commonwealth Bank to Star City and the trust
relationship between Leighton and National Mutual Limited.
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<PAGE>
27. Pursuant to the Casino Complex Management Agreement, the Showboat
Leighton Partnership will receive during each Fiscal Year of the
Operating Term (as defined in the Casino Complex Management
Agreement) net income equal to the Management Fee prescribed in
Clause 12.1 of the Casino Complex Management Agreement, and all costs
or expenses incurred by the Company, SCM or the Showboat Leighton
Partnership are capable of being charged back to, and will be
reimbursed by, Star City or its Subsidiaries and neither the Company,
SCM nor the Showboat Leighton Partnership has or will have at the
Completion Date any ongoing liability or obligation to make any
payment to H or its Related Bodies Corporate or affiliates (or to any
other person other than in the ordinary course of business) in
connection with or related to the Casino Complex Management
Agreement, the provision of any services, the operations of the Star
City Casino or otherwise.
Related party transactions
28. At Completion, there will be no outstanding contracts or transactions
between the Company, SCM or the Showboat Leighton Partnership and H
or any Related Body Corporate of H, other than the Management
Services Agreement (as defined in the Master Agreement).
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<PAGE>
SCHEDULE 2
- --------------------------------------------------------------------------------
Form of Auditor's Report
(Clause 4.2)
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<PAGE>
EXECUTED as an Agreement.
[Each attorney executing this [#] Agreement states that he or she has no notice
of revocation or suspension of his or her power of attorney.]
NOTE: INSERT THE APPROPRIATE EXECUTION CLAUSES.
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<PAGE>
ATTACHMENT C
- --------------------------------------------------------------------------------
Management Sale Agreement
<PAGE>
[SAL]
as Vendor
and
[TABCORP ENTITY]
as Purchaser
and
[H]
and
[T]
-------------------------
MANAGEMENT SALE AGREEMENT
--------------------------
Arthur Robinson & Hedderwicks
Melbourne
Ref RJS:CRG
Tel 9614 1011
<PAGE>
MANAGEMENT SALE AGREEMENT
- --------------------------------------------------------------------------------
THIS AGREEMENT is made on 1999 between:
1. SHOWBOAT AUSTRALIA PTY LTD (ACN 061 299 625) (SAL);
2. [TABCORP ENTITY] [(ACN [#])] (the PURCHASER);
3. HARRAH'S ENTERTAINMENT, INC. (H); and
4. TABCORP HOLDINGS LIMITED (ACN 063 780 709) (T).
RECITALS
A. SAL is a party to the Showboat Leighton Partnership Agreement
whereunder SAL and Leighton are, through SCM and in accordance with
the Management Agreement, to provide services to certain Related
Bodies Corporate of Star City in relation to the Star City Casino.
B. This Agreement records the terms on which SAL agrees to sell the
Shares and all of SAL's right, title and interest in the Casino
Management Interests to the Purchaser.
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
The following definitions apply unless the context requires
otherwise.
AUDITOR means the Auditor nominated by T for the purposes of this
Agreement as notified to H.
AUDITOR'S REPORT has the meaning set out in Clause 4.2(c).
BALANCE DATE means the date of the balance sheet appearing in the
Financial Accounts.
CASH means Australian legal tender.
CASINO CONTROL ACT means the Casino Control Act 1992 of New South
Wales.
<PAGE>
CASINO CONTROL AUTHORITY means the New South Wales Casino Control
Authority established under the Casino Control Act.
CASINO MANAGEMENT INTERESTS means all of SAL's rights and interests
(whether direct or indirect, and whether legal or equitable), and
associated liabilities and obligations, in and under the Management
Agreement (including, without limitation, all rights, interests,
liabilities and obligations under the Showboat Leighton Partnership).
CASINO MANAGEMENT RIGHTS means the rights and obligations of SCM and
the Showboat Leighton Partnership as constituted by the Management
Agreement.
COMPLETION means completion by the parties of the sale and purchase
as provided in Clause 6.
COMPLETION ACCOUNTS means the Completion Statement of Net Assets and
the Completion Statement of Residual Management Agreement Net Assets.
COMPLETION DATE means the fifth day after the date on which T
receives a certificate from H under Clause 7.1 or such later date as
the parties may agree.
COMPLETION STATEMENT OF NET ASSETS has the meaning set out in Clause
4.1(a).
COMPLETION STATEMENT OF RESIDUAL MANAGEMENT AGREEMENT NET ASSETS has
the meaning set out in Clause 4.1(b).
CORPORATIONS LAW means the Corporations Law of Australia.
FINAL PAYMENT DATE means the date three business days after the
Completion Accounts have been finalised in accordance with Clause 4.
FINANCIAL ACCOUNTS means the audited balance sheets and profit and
loss accounts of SCM and the Showboat Leighton Partnership prepared
in accordance with Clause 18 of the Showboat Leighton Partnership
Agreement for the year ended 31 December 1998.
INDEPENDENT AUDITOR means the President for the time being of the
Institute of Chartered Accountants in Australia or his or her
nominee.
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INTELLECTUAL PROPERTY means any industrial or intellectual property
whether protectable by statute, at common law or in equity, including
all copyright, moral rights (and similar rights), inventions,
patents, designs (whether or not registrable), registered and
unregistered trademarks, circuit layout designs, rights in relation
to circuit layouts and know how.
LEIGHTON means Leighton Properties Pty Limited (ACN 001 046 395).
LIABILITIES means claims, losses, liabilities, costs or expenses of
any kind, including those which are prospective or contingent and
those the amount of which is not ascertained or ascertainable.
MANAGEMENT AGREEMENT means the Casino Complex Management Agreement of
that title dated 21 April 1994 between Sydney Casino Properties Pty
Limited and Sydney Harbour Casino Pty Limited (as Owner), SAL and
Leighton as the Showboat Leighton Partnership, and SCM as Manager.
MASTER AGREEMENT means the agreement between T and H dated [#].
NON MANAGEMENT AGREEMENT ASSETS means all assets of SCM or the
Showboat Leighton Partnership not directly related to the Management
Agreement, other than the Residual Cash Amount.
NON MANAGEMENT AGREEMENT LIABILITIES means all liabilities of SCM or
the Showboat Leighton Partnership not directly related to the
Management Agreement.
PURCHASE PRICE ADJUSTMENT means the calculation and payment of a
price adjustment under Clause 3 and PURCHASE PRICE ADJUSTMENT AMOUNT
means the amount of the adjustment.
RELATED BODY CORPORATE has the meaning given to it in the
Corporations Law.
RESIDUAL CASH AMOUNT means the amount of Cash equal to the aggregate
amount of Tax (whether capital gains tax or otherwise) payable by SCM
as a result of the disposal of the Non Management Agreement Assets as
required by Clause 7.1 less any amount of Tax prepaid to the
Commissioner of Taxation.
SCM means Sydney Casino Management Pty Ltd (ACN 060 462 053).
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SECURITY INTEREST means an interest or power:
(a) reserved in or over any interest in any asset including,
without limitation, any retention of title; or
(b) created or otherwise arising in or over any interest in
any asset under a bill of sale, mortgage, charge, lien,
pledge, trust or power,
by way of security for the payment of debt or any other monetary
obligation or the performance of any other obligation and whether
existing or agreed to be granted or created.
SHARES means 85 ordinary shares in the capital of SCM (representing
85% of the issued shares in SCM) together with the benefit of all
rights (including dividend rights) attached or accruing to those
shares as at the date of this Agreement.
SHOWBOAT LEIGHTON PARTNERSHIP means the Partnership constituted by
the Showboat Leighton Partnership Agreement.
SHOWBOAT LEIGHTON PARTNERSHIP AGREEMENT means the partnership
agreement between SAL and Leighton which has a commencement date of
22 April 1994.
STAR CITY means Star City Holdings Limited (ACN 064 054 431).
STAR CITY CASINO means the casino complex owned (whether directly or
indirectly) by Star City.
SUBSIDIARY has the meaning given by the Corporations Law.
TAX means any income tax, capital gains tax, recoupment tax, land
tax, sales tax, payroll tax, fringe benefit tax, group tax,
withholding tax, municipal rates, stamp duties and other charges,
levies and impositions, assessed or charged, or assessable or
chargeable, by or payable to any governmental taxation or excise
authority and includes any additional tax, interest, penalty, charge,
fee or other amount imposed or made on or in relation to a failure to
file a relevant return or to pay a relevant tax.
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TAX ACT means the Income Tax Assessment Act 1936 or the Income Tax
Assessment Act 1997 or both the Income Tax Assessment Act 1936 and
the Income Tax Assessment Act 1997, as appropriate.
WARRANTIES means the representations, warranties, undertakings and
other obligations of SAL of whatever kind contained in this Agreement
(including, without limitation, those set out in Schedule 1).
$ means Australian dollars.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation.
The following rules apply unless the context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical
forms have a corresponding meaning.
(d) A reference to a person, corporation, trust, partnership,
unincorporated body or other entity includes any of them.
(e) A reference to an agreement or document (including,
without limitation, a reference to this Agreement) is to
the agreement or document as amended, varied,
supplemented, novated or replaced except to the extent
prohibited by this Agreement or that other agreement or
document.
(f) A reference to legislation or to a provision of
legislation includes a modification or re-enactment of
it, a legislative provision substituted for it and a
regulation or statutory instrument issued under it.
(g) A reference to WRITING includes a facsimile transmission
and any means of reproducing words in a tangible and
permanently visible form.
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1.3 Consents or Approvals
If the doing of any act, matter or thing under this Agreement is
dependent on the consent or approval of a party or is within the
discretion of a party, the consent or approval may be given or the
discretion may be exercised conditionally or unconditionally or
withheld by the party in its absolute discretion.
2. SALE AND PURCHASE
2.1 SAL agrees to sell to the Purchaser and the Purchaser agrees to buy
from SAL:
(a) the Casino Management Interests; and
(b) the Shares,
free from all Security Interests.
3. PRICE AND PAYMENT
3.1 The Purchase Price for the Casino Management Interests and the Shares
is $204 million to be paid on the Completion Date.
3.2 On the Final Payment Date, the Purchase Price Adjustment Amount must
be paid as follows:
(a) the Purchaser pays to SAL the amount (if any) by which
the Completion Statement of Residual Management Agreement
Net Assets shows a balance in excess of zero; or
(b) SAL pays to the Purchaser the amount (if any) by which
the Completion Statement of Residual Management Agreement
Net Assets shows a balance less than zero.
4. COMPLETION ACCOUNTS
4.1 As soon as reasonably practicable, and in any case within 20 business
days after the Completion Date, SAL must prepare and provide to the
Auditor drafts of:
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(a) a consolidated statement showing the aggregate of SAL's
85% interest in the net assets of SCM and the Showboat
Leighton Partnership as at the Completion Date prepared in
accordance with accounting principles and practices
generally accepted in Australia, the Corporations Law and
all other applicable statutes and regulations (except that
all assets shall be valued at the lower of cost and net
realisable value). (This is the draft Completion Statement
of Net Assets); and
(b) a consolidated statement showing the aggregate of SAL's
85% interest in the net assets of SCM and the Showboat
Leighton Partnership excluding the book value of the asset
pertaining to the entitlement to management fees payable
by Sydney Harbour Casino Pty Ltd under Clause 12.1 of the
Management Agreement as at the Completion Date prepared in
accordance with accounting principles and practices
generally accepted in Australia, the Corporations Law and
all other applicable statutes and regulations (except that
all assets shall be valued at the lower of cost and net
realisable value). (This is the draft Completion Statement
of Residual Management Agreement Net Assets.)
4.2 SAL and the Purchaser must jointly instruct the Auditor to prepare
and deliver to each of them within 15 business days after provision
of the draft statements referred to in Clause 4.1:
(a) an audited Completion Statement of Net Assets;
(b) an audited Completion Statement of Residual Management
Agreement Net Assets; and
(c) an Auditor's Report in the form set out in Schedule 2.
4.3 SAL must:
(a) provide the Auditor full access to the books and records
of SAL, SCM and the Showboat Leighton Partnership to
enable the Auditor to prepare the audited statements
referred to in Clause 4.2 (the audited statements); and
(b) provide the Auditor full access to the working papers used
in preparing the draft statements referred to in Clause
4.1.
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4.4 SAL and the Purchaser must confer and use their best endeavours to
agree on the Audited Statements within five business days after they
are provided to SAL and the Purchaser by the Auditor in accordance
with Clause 4.2.
4.5 If the contents of the Audited Statements are agreed between SAL and
the Purchaser, the Audited Statements will be final and binding on
the parties, and will constitute the Completion Accounts.
4.6 If SAL and the Purchaser do not agree on the value of an item in the
Audited Statements within the period referred to in Clause 4.4, SAL
and the Purchaser must within five days after the end of that period
refer the matter to the Independent Auditor for determination in
accordance with Clause 4.7.
4.7 (a) In referring a matter to the Independent Auditor for
determination under this Agreement, the parties must
instruct the Independent Auditor to complete the
determination within 14 business days of the referral.
(b) SAL must provide the Independent Auditor full access to
its books and records, and the books and records of SCM
and the Showboat Leighton Partnership, and any information
required by the Independent Auditor to complete any
determination under this Agreement.
(c) Each party is entitled to make submissions to the
Independent Auditor in respect of any determination under
this Agreement.
(d) The Independent Auditor's written determination of any
matter referred to it under this Agreement is final and
binding on the parties and, where applicable, must be
incorporated in the Completion Accounts promptly after the
determination is made.
(e) In making a determination the Independent Auditor acts as
an expert not as an arbitrator.
(f) The costs of the Independent Auditor shall be borne by the
parties equally.
4.8 All payments required to be made under this Agreement must be
tendered either in cash or by a draft or cheque drawn by a bank as
defined in the Banking Act of the Commonwealth of Australia or by
such other method of payment agreed by the parties.
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5. WARRANTIES
5.1 SAL represents and warrants to the Purchaser that to the best of its
knowledge and belief after making due enquiries (except as set out in
the disclosure statement referred to in Clause 8.1 of the Master
Agreement) each statement in Schedule 1 is true and correct.
5.2 Each Warranty:
(a) remains in full force and effect after the Completion Date
despite Completion; and
(b) is given as at the date of this Agreement and as at the
time immediately before Completion.
5.3 Subject to Clauses 5.4 to 5.11, SAL indemnifies the Purchaser against
all Liabilities (other than to the extent that they are due to any
negligence or default of T) that may be incurred by the Purchaser as
a result (directly or indirectly) of a breach of any Warranty.
5.4 Subject to Clause 5.5 to 5.11, SAL indemnifies the Purchaser against
any loss that the Purchaser may suffer by reason of any liability of
the Purchaser or SCM to Tax that may be assessed against or levied on
the Purchaser or SCM with respect to:
(a) any income (including capital gains) earned or derived or
deemed to have been earned or derived by SAL or SCM at any
time prior to the Completion Date or that may be assessed
or levied as a result of any transaction, act, matter or
thing which took place or happened on or before the
Completion Date;
(b) any payments made in relation to persons working for SAL
or SCM prior to the Completion Date;
(c) any stamp duties payable in respect of any agreement,
deed, other document or transaction entered into prior to
Completion to which SAL or SCM is or has been a party or
by which SAL or SCM derives, has derived or will derive a
substantial benefit;
(d) any liability for Tax from which SAL, SCM, the Showboat
Leighton Partnership or SAL may have obtained relief
(whether by way of deferred capital gains tax or
otherwise) which has or will become payable as a result of
entry into this Agreement; and
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(e) any liability to any current or former Related Body
Corporate of SAL or SCM (including H) as a result of any
tax loss transferred by SAL or SCM to that current or
former Related Body Corporate prior to the Completion Date
being disallowed, in whole or in part,
but only to the amount of the excess over the amount of any relevant
provision for them in the Completion Statement of Residual Management
Agreement Net Assets.
5.5 SAL is not obliged to pay any amount under Clause 5.4 unless the
Purchaser, within 60 days after receipt by the Purchaser or SCM or
the Showboat Leighton Partnership of the relevant assessment from the
taxation authority, gives to SAL notice of the claim on the indemnity
and a copy of the relevant parts of that assessment.
5.6 Where:
(a) notice is given in accordance with Clause 5.5;
(b) SAL proposes to dispute on behalf of the SCM, the Showboat
Leighton Partnership or the Purchaser (as the case may be)
the assessment; and
(c) payment of the assessment is required in order to dispute
the assessment,
SAL must pay the amount of the assessment.
5.7 Where:
(a) notice is given in accordance with Clause 5.5;
(b) SAL, within 30 days after receiving notice in accordance
with Clause 5.5, gives the Purchaser notice that SAL
proposes to dispute on behalf of SCM or the Showboat
Leighton Partnership or the Purchaser (as the case may be)
the assessment; and
(c) SAL has complied with Clause 5.6,
the Purchaser shall take such action as SAL may reasonably request
(by notice to the Purchaser) to object to, appeal against or settle
the assessment, if SAL bears all the costs and expenses of taking
such actions (including, without limitation, the costs to the
Purchaser, SCM or the Showboat Leighton Partnership (as the case may
be) involved in engaging its staff in the matter).
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5.8 Where a payment has been made by SAL under Clause 5.6 and the matter
in respect of which the payment is made is ultimately resolved in
favour of SAL, SCM or the Showboat Leighton Partnership, the
Purchaser shall cause SCM or the Showboat Leighton Partnership (as
the case may be), following receipt of the money from the relevant
taxation authority, to pay an equivalent amount to SAL.
5.9 SAL has the right to be actively involved in any Tax audit conducted
by the Australian Taxation Office concerning SCM or the Showboat
Leighton Partnership insofar as the audit relates to any period or
periods prior to the Completion Date.
5.10 The liability of SAL to the Purchaser under this Clause 5 and of H
under Clause 9 includes costs and expenses and direct loss suffered
(and, in respect of SCM or the Showboat Leighton Partnership, is
restricted to SAL's 85% interest) but does not include consequential
damage.
5.11 The Purchaser and T may not commence any claim in respect of any
breach of any representation or warranty (other than in respect of
Tax) more than two years after the date of this Agreement.
6. COMPLETION
6.1 Completion of the sale and purchase of the Casino Management
Interests and the Shares will take place on the Completion Date at
[#].
6.2 On the Completion Date SAL must deliver to the Purchaser all such
documents, agreements, assignments, instruments of transfer or
conveyance to transfer and assign the Casino Management Interests to
the Purchaser.
6.3 On the Completion Date SAL must (subject to any necessary Casino
Control Authority approval):
(a) ensure that a duly convened board meeting of SCM is held
at which a quorum of directors is present and acting
throughout at which:
(i) persons nominated by the Purchaser by notice
to SAL are appointed as directors of SCM,
subject to the receipt of signed consents to
act;
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(ii) persons nominated by the Purchaser by notice
to SAL are appointed as the secretaries and
public officers of SCM, subject to the
receipt of signed consents to act;
(iii) persons nominated by the Purchaser by notice
to SAL resign as directors, secretaries and
public officers of SCM; and
(iv) the transfer of the Shares to the Purchaser
(subject to the payment of stamp duty on the
instruments of transfer which must be borne
by the Purchaser), the cancellation of the
existing share certificate for the Shares
and the sealing and delivery by SCM to the
Purchaser of a new share certificate for the
Shares in the name of the Purchaser are each
approved;
(b) deliver to (or at the direction of) the Purchaser the
minute books, statutory books and registers (all in good
order and fully and accurately entered up as at the
Completion Date in accordance with all relevant statutory
requirements), books of account, trading and financial
records, copies of taxation returns and other documents
and papers, and any common seal, duplicate seal or
official seal, of SCM; and
(c) deliver to the Purchaser executed instruments of transfer
of the Shares in favour of the Purchaser together with
the share certificates relating to the Shares.
6.4 On the Completion Date and subject to the due performance by SAL of
the obligations on its part to be performed under Clauses 6.2 and 6.3
the Purchaser will pay the Purchase Price to SAL.
7. COMPLETION OF PRE-COMPLETION EVENTS
7.1 Not later than twenty-one business days after completion under the
Share Sale Agreement (Star City), H must ensure that SCM and the
Showboat Leighton Partnership dispose of all Non Management Agreement
Assets and repay in full, or otherwise settle or extinguish, all Non
Management Agreement Liabilities and, on the requirements of this
Clause being met, H must immediately certify that to T in writing.
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7.2 SAL will ensure that as at the Completion Date SCM will hold an
amount of Cash equal to the Residual Cash Amount.
7.3 H undertakes that to the extent that there is at the date of this
Agreement any agreement or arrangement between SAL, SCM or the
Showboat Leighton Partnership and H or any Related Body Corporate or
affiliate of H pursuant to which SAL, SCM or the Showboat Leighton
Partnership is required or obliged to pay any amount to H or its
Related Bodies Corporate or affiliates, then H will terminate, or
procure the termination of, any such agreement or arrangement prior
to the Completion Date so that as at the Completion Date neither SAL,
SCM nor the Showboat Leighton Partnership will have any liability or
ongoing obligation to H or its Related Bodies Corporate or affiliates
in connection with or in relation to the Casino Complex Management
Agreement, the provision of any services, the operations of the Star
City Casino or otherwise, and H will indemnify the Purchaser, SAL,
SCM and the Showboat Leighton Partnership in respect of any liability
incurred or loss or damage suffered as a result of any breach of this
covenant.
8. INFORMATION, TECHNOLOGY AND INTELLECTUAL PROPERTY
H acknowledges that it has supplied to, amongst others, SAL, Star
City, the Showboat Leighton Partnership and SCM certain information,
technology, know how and other Intellectual Property which is used or
has been used by them in or in connection with the operations of Star
City Casino or the Casino Management Rights. H grants to the
Purchaser and its Related Bodies Corporate, SCM, Star City, the
Showboat Leighton Partnership and any other person who may presently
use or have available to it the information, technology, know how and
other Intellectual Property referred to above a non-exclusive royalty
free licence in perpetuity to use all the information, technology,
know how and other Intellectual Property in or in connection with the
operations of Star City Casino or the Casino Management Rights, so
that the Purchaser, SCM, Star City, the Showboat Leighton Partnership
and any such other person may continue after the Completion Date to
use such information, technology, know how and other Intellectual
Property in the same manner as it had done at any time before the
Completion Date. H will use its reasonable endeavours to ensure that
the key executives engaged in connection with the operations of Star
City Casino or the Casino Management Rights continue to be engaged in
those operations after the Completion
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9. TERMINATION
9.1 The obligation of the Purchaser to complete the purchase of the
Casino Management Interests and the Shares is subject to the
conditions that:
(a) each of the Warranties is true and correct as at the
Completion Date, with the same force and effect as if made
on the Completion Date. This condition may be waived by
the Purchaser at its discretion but a waiver is not a
waiver of any rights or remedies that it may have against
SAL by reason of any breach of Clause 5.1; and
(b) no disclosure or disclosures made to the Purchaser under
this Agreement, singularly or in the aggregate, reveals
any circumstance which has had, has or will have a
materially adverse effect on the business of the Showboat
Leighton Partnership, SCM or Star City. This condition may
be waived by the Purchaser at its discretion.
If condition (a) above is not satisfied or the circumstance described
in condition (b) above is revealed, the Purchaser may terminate this
Agreement by notice to SAL. If the Purchaser terminates this
Agreement, no party has any further liability to any other party
under this Agreement except that the termination will not prejudice
any rights or remedies that the Purchaser may have against SAL by
reason of any breach of Clause 5.1.
10. GUARANTEE by H
10.1 In consideration of T entering into this Agreement at the request of H, H:
(a) unconditionally and irrevocably guarantees to the
Purchaser on demand the due and punctual performance by
SAL of all its obligations under this Agreement; and
(b) separately indemnifies the Purchaser against any
Liabilities (other than to the extent they are due to any
negligence or default of T) which may be incurred or
sustained by the Purchaser in connection with any default
or delay by SAL in the due and punctual performance of any
of its obligations under this Agreement.
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10.2 The liability of H under this Clause is not affected by any act,
omission or thing which, but for this provision, might in any way
operate to release or otherwise exonerate or discharge H from any of
its obligations including (without limitation) the grant to SAL or
any other person of any time, waiver or other indulgence, or the
discharge or release of SAL or any other person from any obligation.
10.3 This Clause:
(a) extends to cover this Agreement as amended, varied or
replaced, whether with or without the consent of H; and
(b) is a continuing guarantee and indemnity and, despite
Completion, remains in full force and effect for so long
as SAL has any liability or obligation to the Purchaser
under this Agreement and until all of those liabilities or
obligations have been fully discharged.
11. GUARANTEE by T
11.1 In consideration of H entering into this Agreement at the request of
T, T:
(a) unconditionally and irrevocably guarantees to SAL on
demand the due and punctual performance by the Purchaser
of all its obligations under this Agreement; and
(b) separately indemnifies the Purchaser against any
Liabilities (other than to the extent they are due to any
negligence or default of H) which may be incurred or
sustained by SAL in connection with any default or delay
by the Purchaser in the due and punctual performance of
any of its obligations under this Agreement.
11.2 The liability of T under this Clause is not affected by any act,
omission or thing which, but for this provision, might in any way
operate to release or otherwise exonerate or discharge T from any of
its obligations including (without limitation) the grant to the
Purchaser or any other person of any time, waiver or other
indulgence, or the discharge or release of the Purchaser or any other
person from any obligation.
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11.3 This Clause is a continuing guarantee and indemnity and, despite
Completion, remains in full force and effect for so long as the
Purchaser has any liability or obligation to SAL under this Agreement
and until all of those liabilities or obligations have been fully
discharged.
12. COSTS
Each party must bear its own costs arising out of the negotiation,
preparation and execution of this Agreement. All stamp duty
(including fines, penalties and interest) which may be payable on or
in connection with this Agreement and any instrument executed under
this Agreement must be borne by the Purchaser.
13. MERGER
The rights and obligations of the parties do not merge on the
completion of any transaction contemplated by this Agreement. They
survive the execution and delivery of any assignment or other
document entered into for the purpose of implementing any such
transaction.
14. ASSIGNMENT
The rights and obligations of each party under this Agreement are
personal. They cannot be assigned, encumbered or otherwise dealt with
and no party may attempt, or purport, to do so without the prior
written consent of all parties.
15. FURTHER ASSURANCES
Each party agrees to do all things and execute all deeds,
instruments, transfers or other documents as may be necessary or
desirable to give full effect to the provisions of this Agreement and
the transactions contemplated by it.
16. ENTIRE AGREEMENT
This Agreement and the Master Agreement contain the entire agreement
between the parties with respect to its subject matter and supersedes
all prior agreements and understandings between the parties in
connection with it.
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17. WAIVER
No failure to exercise nor any delay in exercising any right, power
or remedy by a party operates as a waiver. A single or partial
exercise of any right, power or remedy does not preclude any other or
further exercise of that or any other right, power or remedy. A
waiver is not valid or binding on the party granting that waiver
unless made in writing.
18. NOTICES
Any notice, demand, consent or other communication (a NOTICE) given
or made under this Agreement:
(a) must be in writing and signed by a person duly authorised
by the sender;
(b) must be delivered to the intended recipient by prepaid
post (if posted to an address in another country, by
registered airmail) or by hand or fax to the address or
fax number below or the address or fax number last
notified by the intended recipient to the sender:
(i) to the Purchaser: [#]
Attention: [#]
Fax No: [#]
(ii) to SAL: [#]
Attention: [#]
Fax No: [#]
(iii) to H: [#]
Attention: [#]
Fax No: [#]
(iv) to T: [#]
Attention: [#]
Fax No: [#]
(c) is taken to be duly given or made:
(i) in the case of delivery in person, when
delivered;
(ii) in the case of delivery by post two business
days after the date of posting (if posted to an
address in the same country) or seven business
days after the date of posting (if posted to an
address in another country);
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(iii) in the case of fax, on receipt by the sender of
a transmission control report from the
despatching machine showing the relevant number
of pages and the correct destination fax
machine number and indicating that the
transmission had been made without error,
but if the result is that a Notice would be taken to be
given or made on a day which is not a business day in the
place to which the Notice is sent or is later than 4.00pm
(local time) it is taken to have been duly given or made
at the commencement of business on the next business day
in that place.
19. GOVERNING LAW
This Agreement is governed by the laws of New South Wales. Each party
submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there in connection with matters concerning this
Agreement.
20. COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
counterparts are taken to constitute one instrument.
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SCHEDULE 1
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Warranties
Ownership of the Casino Management Interests
1 SAL:
(a) is the legal and beneficial owner of the Casino Management
Interests free from all Security Interests; and
(b) has full power and authority to transfer to the Purchaser
good legal and equitable title to the Casino Management
Interests free from all Security Interests.
Ownership of the Shares
2. SAL:
(a) is the legal and beneficial owner of the Shares free from
all Security Interests; and
(b) has full power and authority to transfer to the Purchaser
good legal and equitable title to the Shares free from all
Security Interests.
Shares
3. There are no outstanding subscription agreements, options, rights or
other analogous entitlements of any description to acquire from SCM
any unissued shares or stock of any class of SCM, or any securities
convertible into or exchangeable for or which otherwise confer on the
holder of it any right (whether or not upon the happening of any
contingency or after any lapse of time and whether or not upon the
payment or delivery of any consideration) to acquire any unissued
shares or stock of any class of SCM nor is SCM committed to grant or
issue any such option, right or security.
4. The Shares are the only issued shares in the capital of SCM other
than 15 shares held by Leighton, and represent 85% of the issued
shares in SCM.
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5. Neither the entry by SAL into this Agreement nor the performance by
SAL of any of its terms give rise to any rights or claims of any
description by Leighton or any other person on the basis of any claim
of a right of pre-emption, first right of refusal or other right in
respect of the Shares.
Authorisations - Showboat Leighton Partnership and SCM
6. The Showboat Leighton Partnership and SCM have all material
Authorisations required to conduct their respective businesses and
have paid all fees due in relation to them and complied in all
material respects with all conditions under them.
7. There is no factor which might materially prejudice the continuance
or renewal of any Authorisation required under Warranty 6.
Management Agreement
8. Neither SCM, SAL nor the Showboat Leighton Partnership nor any other
party is in breach of the Management Agreement nor is SAL, after due
enquiry, aware of any impending or threatened breach by any party and
the Management Agreement is valid and legally enforceable in
accordance with its terms.
9. Without limiting Warranty 8, the Management Agreement is not subject
to termination or renegotiation or otherwise prejudicial materially
as a result of the assignment of the Casino Management Interests or
the change in ownership or control of SCM or other action required or
contemplated by this Agreement.
10. Neither the entry by SAL into this Agreement nor the performance by
SAL of any of its terms give rise to any rights or claims of any
description by Leighton or any other person on the basis of any claim
of a right of pre-emption, first right of refusal or other right in
respect of the Casino Management Interests.
Showboat Leighton Partnership
11. SAL is not, after due enquiry, aware of any actual, impending or
threatened breach of any agreement constituting or affecting the
Showboat Leighton Partnership.
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<PAGE>
Casino Control Authority
12. Each of SAL, the Showboat Leighton Partnership and SCM is in
compliance with each of its obligations to the Casino Control
Authority whether arising under the Casino Control Act, any agreement
or any other legislation and neither SAL, the Showboat Leighton
Partnership nor SCM is aware of any fact or circumstance which may
lead to a claim that any of them is in breach of the Casino Control
Act, any agreement or other legislation.
Proposals
13. SAL is not aware nor should it reasonably be aware of any proposals
of any Governmental Agency (including the Casino Control Authority)
not in the public arena, the implementation of which (whether by
force of law or voluntarily) might adversely affect Star City, SCM or
the Showboat Leighton Partnership.
Permanent establishments outside Australia
14. SCM does not have a permanent establishment (as that expression is
defined in any applicable double taxation convention) outside
Australia.
Subsidiaries
15. SCM does not control any entity. SCM is not a member of a partnership
or other unincorporated association. In this warranty CONTROL of an
entity means control of the entity within the meaning of the
accounting standards made for the purposes of section 295(2)(d) of
the Corporations Law.
Financial Accounts
16. The Financial Accounts have been prepared in accordance with
accounting principles and practices generally accepted in Australia
and comply with the requirements of the Corporations Law and all
other applicable statutes and regulations.
17. The balance sheet appearing in the Financial Accounts:
(a) discloses a true and fair view of the state of affairs of
SCM and the Showboat Leighton Partnership (as the case may
be) as at the Balance Date;
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<PAGE>
(b) is true and accurate in all material respects;
(c) includes adequate reserves or provisions for all
liabilities of SCM and the Showboat Leighton Partnership
(as the case may be) (including Tax Liabilities) as at the
Balance Date.
18. There are no loans, guarantees, indemnities, undertakings, mortgages,
charges, debentures, leases or other encumbrances or unusual
liabilities (including contingent liabilities) which have been given
or made or incurred by or assigned to or vested in or are outstanding
on behalf of SCM or the Showboat Leighton Partnership other than as
disclosed or taken into account in the Financial Accounts.
19. The Financial Accounts contain fully adequate provisions for holiday
pay, sick leave and long service leave in amounts which are at least
equal to the accrued legal liability of SCM or the Showboat Leighton
Partnership as at the Balance Date.
20. The profit and loss accounts appearing in the Financial Accounts
disclose a true and fair view of the profit or loss of SCM and the
Showboat Leighton Partnership for the period covered in those
accounts and is true and accurate in all material respects.
Completion Accounts
21. To the date of the Completion Accounts, there has been no change in
the total amount of the Liabilities or the trading position,
profitability or financial condition of SCM or the Showboat Leighton
Partnership from that set forth in the Financial Accounts except
changes in the ordinary course of business.
21A. (a) The Company has not been nor will it be;
(b) Neither the Showboat Leighton Partnership nor SCM has
been;
(c) Neither the Showboat Leighton Partnership nor SCM will be
(to the extent it is within the reasonable control of SAL
or the Vendor),
materially and adversely affected by any act, event or circumstance,
whether covered by insurance or not and except for the changes
required to be made under Clause 7 of this Agreement.
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<PAGE>
22. The Completion Accounts have been prepared in accordance with the
accounting principles and practices generally accepted in Australia
and comply with the requirements of the Corporations Law and all
other applicable statutes and regulations and the accounting
principles and practices determined by the Auditor or, in the event H
disagrees with these accounting principles and practices when
established, by the Independent Auditor.
23. The Completion Accounts:
(a) disclose a true and fair view of the state of affairs of
SCM and the Showboat Leighton Partnership as at the date
to which they are made up;
(b) are true and correct in all material respects;
(c) include adequate reserves or provisions for all
liabilities (including Tax Liabilities) of SCM and the
Showboat Leighton Partnership as at that date.
24. SAL has ensured that there is sufficient Cash held by SCM as at the
Completion Date to satisfy the aggregate amount of any Tax (whether
capital gains tax or otherwise) payable but unpaid by SCM as a result
of the disposal of the Non Management Agreement Assets as required by
Clause 7.1 of this Agreement. Any Cash (net of any receivables
appearing in the Completion Statement of Residual Management
Agreement Net Assets) held by SCM shall be invested by SCM with any
interest accruing to the benefit of H on the following terms:
(a) the Cash shall be invested with a trading bank or other
agreed financial institution of up to 90 day call; and
(b) all interest thereon (net of any Tax) will accrue to H and
be paid to H on demand.
25. The Completion Accounts contain fully adequate provisions for holiday
pay, sick leave and long service leave in amounts which are at least
equal to the accrued legal liability of SCM and the Showboat Leighton
Partnership as at the Completion Date.
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<PAGE>
26. Except to the extent of the amounts provided in the Completion
Accounts, neither SCM nor the Showboat Leighton Partnership is under,
nor will it assume prior to the Completion Date, any liability to any
person for any pension, lump sum retiring allowance or redundancy
payment or any liability with respect to holiday, long service or
sick leave entitlement.
27. As at the Completion Date, neither SCM nor the Showboat Leighton
Partnership has any Non Management Agreement Assets or Non Management
Agreement Liabilities.
Taxation
28. All Tax returns required by law to be lodged or filed by SCM or the
Showboat Leighton Partnership have been duly lodged or filed and
fully and accurately completed and each deduction, rebate or credit
claimed in them has been properly claimed and is duly allowable.
29. All Taxes (other than those which may still be paid without penalty
or interest) on or payable by SCM or the Showboat Leighton
Partnership have been paid or adequate provisions, reserves or
accruals for their payment (whether or not assessed) have been made
or provided for in the balance sheet appearing in the Financial
Accounts.
30. There are no outstanding disputes or Tax audits by or with or
threatened by the Commissioner of Taxation or any other authority or
instrumentality or officer concerning the liability of SCM or the
Showboat Leighton Partnership to any Tax.
31. SCM has not paid any dividend:
(a) in respect of which the required franking amount (as
provided for in section 160AQE of the Tax Act) has
exceeded the franked amount (as defined in section 160APA
of the Tax Act) of the dividend; or
(b) which has been franked in excess of the required franking
amount which would result in SAL or SCM being liable to
pay franking deficit tax as provided for in section 160AQJ
of the Tax Act or additional tax under section 160ARX of
the Tax Act.
32. No asset revaluation dividend (as defined in section 46E(1) of the
Tax Act) has at any time been paid to SCM.
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<PAGE>
33. SCM and the Showboat Leighton Partnership has complied with the
requirements of all legislation imposing Taxes in respect of the
retention of records and those records can be reconciled to the
returns lodged by SCM and the Showboat Leighton Partnership. In
particular, but without limitation, each of SCM and the Showboat
Leighton Partnership:
(a) has complied with section 262A and 160ZZU of the Tax Act;
(b) has retained duly prepared and executed election notices
required to be prepared under the Tax Act, has retained
duly completed and executed declarations required for the
purpose of ascertaining their liability to fringe benefits
tax; and
(c) has retained accurate records of franking credits and
franking debits in respect of its current and prior
accounting periods.
Legal Proceedings
34. (a) There is no suit, cause of action, proceeding,
application, arbitration, claim or investigation current,
pending, threatened or in prospect against SAL, SCM and
the Showboat Leighton Partnership and in particular there
is no outstanding product liability or workers'
compensation claim.
(b) No resolution has been passed for the winding up of SAL or
SCM.
(c) No resolution has been passed for the appointment of an
administrator to SAL or SCM.
(d) There is no unsatisfied judgment against SAL or SCM.
(e) There are no facts, matters or circumstances which give
any person the right to apply to wind up SAL or SCM or to
appoint a controller within the meaning of section 9 of
the Corporations Law or an administrator or an inspector
under the Corporations Law in respect of SAL or SCM or any
part of its undertaking or assets or income.
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<PAGE>
Agreements and Arrangements
35. Neither SAL, SCM nor the Showboat Leighton Partnership has sold,
transferred, assigned, created a Security Interest over, declared
itself a trustee of, parted with the benefit of or otherwise disposed
of the Casino Management Rights (or any interest in them or any part
of them) including without limitation by agreeing to pay, assign,
transfer or otherwise dispose of its right to management fees payable
under the Management Agreement, except for the Security Interest
created by the Commonwealth Bank over assets of the Showboat Leighton
Partnership under the primary finance facility provided by the
Commonwealth Bank to Star City and the trust relationship between
Leighton and National Mutual Limited.
Related party transactions
36. At Completion, there will be no outstanding contracts or transactions
between SCM or the Showboat Leighton Partnership and H or any Related
Body Corporate of H.
37. Pursuant to the Casino Complex Management Agreement, the Showboat
Leighton Partnership will receive during each Fiscal Year of the
Operating Term (as defined in the Casino Complex Management
Agreement) net income equal to the Management Fee prescribed in
Clause 12.1 of the Casino Complex Management Agreement, and all costs
or expenses incurred by SAL, SCM or the Showboat Leighton Partnership
are capable of being charged back to, and will be reimbursed by, Star
City or its Subsidiaries and neither SAL, SCM nor the Showboat
Leighton Partnership has or will have at the Completion Date any
ongoing liability or obligation to make any payment to H or its
Related Bodies Corporate or affiliates (or to any other person other
than in the ordinary course of business) in connection with or
related to the Casino Complex Management Agreement, the provision of
any services, the operations of the Star City Casino or otherwise.
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<PAGE>
SCHEDULE 2
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Form of Auditor's Report
(Clause 4.2)
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<PAGE>
EXECUTED as an Agreement.
[Each attorney executing this [#] Agreement states that he or she has no notice
of revocation or suspension of his or her power of attorney.]
NOTE: INSERT THE APPROPRIATE EXECUTION CLAUSES.
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<PAGE>
ATTACHMENT D
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Casino Services Agreement
<PAGE>
T
and
H
---------------------------
CASINO SERVICES AGREEMENT
---------------------------
Arthur Robinson & Hedderwicks
Melbourne
Tel: 9614 1011
<PAGE>
CASINO SERVICES AGREEMENT
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THIS AGREEMENT is made on 1999 between:
1. T (ACN ) of [ ] (T); and
2. H of [ ] (H).
RECITALS
A. H currently provides, or makes available, services, information,
technology and Intellectual Property for use in connection with the
operations of Star City Casino.
B. This Agreement is entered into in accordance with Clause 5 of the
Master Agreement. The objective of this Agreement is that, in
consideration for the services fee, T will gain access to the
knowledge and experience of H in operating casinos for use in the
future management of the operations of Star City. This Agreement will
in particular provide T with a mechanism to benchmark all aspects of
Star City's operations against H's hotel and casino properties, in
the areas of financial controls, human resource management and casino
and hotel operations.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Master Agreement Definitions to Apply
Subject to Clause 1.2, words and expressions which are defined in the
Master Agreement have the same meaning in this Agreement.
1.2 Defined Terms
ADVISORY COMMITTEE means the committee established under Clause 4.1.
COMMENCEMENT DATE means the date of this Agreement.
<PAGE>
CONFIDENTIAL INFORMATION means information of one party (the
Disclosing Party) or its subsidiaries which is disclosed to or
observed by the other party (the Receiving Party) or its subsidiaries
in the course of performing this Agreement and which is regarded by
the Disclosing Party as confidential and which includes (but is not
limited to) information relating to technology and processes used or
developed by the Disclosing Party, and trade secrets and know-how and
information of a commercially sensitive nature, but does not include
any information which:
(a) at the time of the first disclosure to or observation by
the Receiving Party, was already in the lawful possession
of the Receiving Party;
(b) is in or comes into the public domain otherwise than by
disclosure in breach of the terms of this Agreement; or
(c) becomes available to the Receiving Party from any other
source provided that it was not acquired directly or
indirectly from the Disclosing Party.
DEFINED OPERATIONS means any of H's casino businesses and locations
including any attached hotel or other ancillary activity located in
Las Vegas, Nevada, Lake Tahoe, Nevada, Atlantic City, New Jersey,
East Chicago, Indiana, Shreveport, Louisiana and North Kansas City,
Missouri and, subject to agreement with H, any of H's other
Operations.
INTELLECTUAL PROPERTY means any industrial or intellectual property
whether protectable by statute, at common law or in equity, including
all copyright, moral rights (and similar rights), inventions,
patents, designs (whether or not registrable), registered and
unregistered trademarks, circuit layout designs, rights in relation
to circuit layouts, trade secrets and know-how.
MASTER AGREEMENT means the agreement dated [ ] between T and H.
OPERATIONS means any of H's casino businesses and locations including
any attached hotel or other ancillary activity.
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<PAGE>
SERVICES means advice, consultation and rights to inspection in
respect of all the operational know-how, methodology and technology
which H or any of its subsidiaries currently uses in Star City or any
of its Defined Operations or other businesses including but not
limited to:
(a) "Gold Card" Player tracking system and data base
methodology;
(b) gaming machine, table game and other casino games design
including rules of play, game denomination, pricing and
payment patterns;
(c) systems for measuring and monitoring and recording speed
of play, rating of players, dealers and supervisors;
(d) systems for measurement and optimisation of gaming machine
and table game and other casino game performance and
profitability;
(e) accounting systems, audit manuals and internal control
methodology systems and procedures;
(f) customer rating, marketing and complimentary reward
programs (including for premium, VIP and international
premium and VIP players);
(g) security and surveillance technology systems and
procedures;
(h) hotel car park and food and beverage yield management
systems;
(i) human resources policies not limited to employee
remuneration, training, recruitment and organisational
structures; and
(j) provision of H employees for the Advisory Committee as
described in Clause 4, access to information technology
and intellectual property as described in Clause 5, access
to Goods and Services as described in Clause 8 and rights
of inspection as contained in Clause 9.
YEAR means each consecutive period of twelve months, with the first
such period commencing on the Commencement Date.
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<PAGE>
1.3 Master Agreement Interpretation Provisions to Apply
The provisions of Clauses 1.2 and 1.3 of the Master Agreement apply,
mutatis mutandis, in the interpretation of this Agreement.
2. PROVISION OF SERVICES
On execution of this Agreement, as requested by T, H must provide for
the use of T, SAL, SCM and Star City, Services as set out in and,
where applicable, in accordance with procedures in this Agreement and
in particular as described in Clauses 4, 5, 6, 8 and 9. The provision
must be for a period commencing on the Commencement Date and expiring
on the earlier of three Years after that date or the termination of
this Agreement under Clause 10 (whichever occurs first). H is not
obligated to provide Services to the extent the provision of the
Services requires H to procure the Services from a third party (not
being a company controlled by H).
3. SERVICES FEE
3.1 In consideration for the provision of the Services in accordance with
this Agreement, T must pay to H in respect of each Year a services
fee payable quarterly in arrears within one month after the end of
each quarter.
3.2 The services fee applicable in respect of each Year will be either $7
million or $10 million, the fee applicable being dependent on T's
election at the beginning of each Year to a minimum level of Services
or to a maximum level of Services as set out in Clauses 4 and 9. The
$7 million fee applies to the minimum level of Services and the $10
million fee applies to the maximum level of Services.
4. ADVISORY COMMITTEE
4.1 As soon as practicable after the Commencement Date, the parties must
establish a committee (the Advisory Committee) which will have the
function of reviewing the operations of Star City Casino and must
meet for that purpose up to three times per year (minimum level of
Service) or if requested by T up to five times per year (maximum
level of Service).
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<PAGE>
4.2 As requested by T, H must appoint three persons as members of the
Advisory Committee (minimum level of Services) or, as requested by T,
up to five members (maximum level of Services). The persons appointed
as members will be as requested by T and agreed by H. With the
permission of or as requested by T, may from time to time remove any
member so appointed and appoint another person in his or her place,
except that:
(a) a person may only be appointed to the Advisory Committee
by a party where that person is a senior manager employed
by that party; and
(b) all of the persons who are appointed by a party as members
of the Advisory Committee at any one time must have
between them extensive experience in or knowledge of
casino operations including but not limited to management,
finance, human resources and marketing.
4.3 The parties acknowledge that the principal objectives of the Advisory
Committee are:
(a) to enable the members appointed by H to provide to the
members appointed by T the expertise, knowledge and
know-how of H and its subsidiaries in relation to casino
and hotel operations and finance and human resources in
the context of such operations for the purposes of the
operations of Star City Casino; and
(b) to enable T to benchmark all aspects of the operations of
Star City Casino against the Defined Operations.
4.4 H must provide such support and resources as is necessary to enable
the members appointed by it to the Advisory Committee to fulfil the
objectives of the Advisory Committee, including in particular the
objectives referred to in Clause 4.3.
4.5 Meetings of the Advisory Committee must be held at such locations as
are notified by T from time to time and members of the Advisory
Committee shall meet in person or by telephone. No meeting of the
Advisory Committee is to exceed three days in duration.
4.6 One of the H appointed members of the Advisory Committee, as
nominated by T, must act as the nominated point of contact for all
matters pertaining to the operation of this Agreement.
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<PAGE>
4.7 Meetings of the Advisory Committee must be convened in accordance
with this Agreement by a member appointed by T.
5. INFORMATION
During the term of this Agreement H must, on being given reasonable
notice by T, make available for inspection (and copying as agreed by
H) by T (at the Defined Operations) all documents and other records
as are necessary to access the Services in relation to the operation
of Star City. The right of T under this clause does not extend to
customer lists, whether contained in data bases or otherwise (save to
the extent it is necessary to understand customer tracking
methodology), documents or records disclosure of which would breach
obligations of confidence to third parties or require the consent of
third parties, or which constitutes an unwarranted intrusion into H's
affairs in the context of the intentions of the parties evidenced by
this Agreement.
6. LIBERTY TO T TO MERGE H INFORMATION WITH ITS OWN
H agrees that T will be at liberty to merge and use any information
supplied by it to T under Clause 5 with other information in the
possession of T (principally for use in connection with the operation
of Star City). The parties recognise that the merged information may
be available for use by T in other T operations in either Australia
and New Zealand or elsewhere (except that, during the currency of
this Agreement, T requires H's consent to the use of merged
information in T operations outside Australia and New Zealand).
7. CONFIDENTIALITY
7.1 Each party in this Clause 7 (referred to as the Disclosing Party)
undertakes not to disclose, or to allow the disclosure by its
subsidiaries or their respective officers, employees, contractors or
agents, or former subsidiaries or their respective officers,
employees, contractors or agents bound by this Agreement of,
Confidential Information of the other party or its subsidiaries,
except with the prior written consent of the second-mentioned party.
7.2 Nothing in this Clause 7 prohibits the disclosure of Confidential
Information by any Disclosing Party:
(a) to any Related Body Corporate of the Disclosing Party;
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<PAGE>
(b) if and to the extent required pursuant to any necessarily
applicable legislation or other legal requirement or
pursuant to the rules or regulations of any recognised
stock exchange which are applicable to the Disclosing
Party or any Related Body Corporate of the Disclosing
Party;
(c) to employees, officers, agents, professional advisers
(including legal advisers) and consultants of the
Disclosing Party whose duties in relation to the
Disclosing Party or under this Agreement necessarily
require the disclosure; or
(d) pursuant to a binding order of any court of competent
jurisdiction or other competent authority.
7.3 The provisions of this Clause 7 survive and continue to bind the
parties following the expiry or termination of this Agreement.
8. SUPPLIERS OF GOODS AND SERVICES
8.1 T and H must work together to gain maximum economic benefit in
relation to all purchases of Goods or Services for the mutual benefit
of each party. If requested by T from time to time, H or any of its
subsidiaries must:
(a) use its reasonable endeavours to ensure that the
suppliers of any Goods or Services which are purchased by
them and reasonably requested by T will supply those
Goods or Services for use in the operations of Star City
Casino at the same prices as those charged to H or its
subsidiaries; or
(b) purchase such Goods or Services as T may reasonably
request and on-sell them for use in the operations of
Star City Casino at the same prices as those charged to H
or its subsidiaries, adjusted only for taxes, duties and
other direct costs incurred by H or its subsidiaries.
8.2 In this Clause 8, Goods or Services means all goods or services used
or able to be used in the operations of Star City Casino and includes
but is not limited to casino technology, gaming machine equipment,
table game equipment and insurance.
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<PAGE>
9. INSPECTION OF KNOW-HOW, METHODOLOGY AND TECHNOLOGY
9.1 On the provision of 15 days notice by T, H must permit three persons
nominated by T, up to three times in any calendar year (minimum level
of Services) and up to five times in any calendar year (maximum level
of Services) for the purposes of meaningfully making benchmark
comparisons against Star's operations, to inspect the Defined
Operations. T's inspections cannot take place at times which are
disruptive to H's Operations.
9.2 For the inspections notified under Clause 9.1, H must designate a
contact person at each Defined Operation to be responsible for
arranging and co-ordinating with T access to the Defined Operation
and assistance in the inspection, including access to key management
and documents. H must also assist T (as reasonably requested by T) to
develop a plan of implementation of know-how, methodology and
technology of H's Operations into Star City's Operations and to
provide T with advice (as reasonably requested by T) on the
implementation of the plan. H will have the benefit of any
operational know-how, methodology and technology that T or any of its
subsidiaries develops with the assistance of H during the term of
this Agreement.
9.3 Additional to the periodic rights of inspection required by T, H must
allow T general access by telephone to any key personnel in any of
the Defined Operations following notification by T to the nominated
point of contact for H (refer Clause 4.6). The access by telephone
cannot take place at times which are disruptive to H's Operations.
10. TERMINATION
10.1 Either party may terminate this Agreement immediately by notice to
the other party if:
(a) the other party commits a material breach of this
Agreement and, if the breach is capable of being remedied,
the other party fails to remedy the breach within seven
days after being required in writing to do so;
(b) the other party:
(i) stops or suspends or threatens to stop or
suspend payment of all or a class of its debts;
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<PAGE>
(ii) is insolvent within the meaning of section 95A
of the Corporations Law;
(iii) must be presumed by a court to be insolvent by
reason of section 459C(2) of the Corporations
Law;
(iv) fails to comply with a statutory demand (within
the meaning of section 459F(1) of the
Corporations Law);
(v) has an administrator appointed over all or any
of its assets or undertaking or any step
preliminary to the appointment of an
administrator is taken;
(vi) has a controller within the meaning of section
9 of the Corporations Law or similar officer
appointed to all or any of its assets or
undertaking; or
(vii) has an application or order made, proceedings
commenced, a resolution passed or proposed in a
notice of meeting, an application to a court
made or other steps taken against or in respect
of it (other than frivolous or vexatious
applications, proceedings, notices or steps)
for its winding up or dissolution or for it to
enter an arrangement, compromise or composition
with or assignment for the benefit of its
creditors, a class of them or any of them;
(c) any event occurs in relation to a party which, under the
laws applicable to the party in its place of
incorporation, has the same or substantially similar
effect as any of the events specified in Clause 10.1(b);
or
(d) either T or H forms the reasonable opinion that
continuation of this Agreement may prejudice any licence
or licence application in relation to any casino or
wagering or gaming operation.
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<PAGE>
11. INDEMNITY
H indemnifies T, its subsidiaries and their respective officers,
employees, contractors and agents (each an Indemnified Person)
against all claims, losses, liabilities, damages, costs and expenses
(including, without limitation, court and legal costs, but excluding
claim losses, liabilities, damages, costs and expenses to the extent
they are due to any negligence or default of T) arising out of or
otherwise in connection with any action or claim by a person alleging
that the possession or use by the Indemnified Person of any
information, technology or Intellectual Property provided or made
available by H or any of its subsidiaries pursuant to this Agreement
infringes any Intellectual Property rights of that person.
12. BENEFIT OF AGREEMENT EXTENDS TO T's SUBSIDIARIES
12.1 H acknowledges that any wholly-owned subsidiary (within the meaning
of the Corporations Law) of T is entitled to the benefit of all
rights conferred on T by this Agreement and shall be entitled to
enforce those rights as if they were parties to this Agreement. In
particular H acknowledges that the subsidiaries of T are entitled to
the benefit of any licence which is granted to T under this
Agreement.
12.2 T is responsible for any breach of this Agreement which results from
the actions or omissions of any subsidiary of T.
13. COSTS
Each party must bear its own costs arising out of the negotiation,
preparation and execution of this Agreement. All stamp duty
(including fines, penalties and interest) which may be payable on or
in connection with this Agreement and any instrument executed under
this Agreement must be borne by T.
14. MERGER
The rights and obligations of the parties do not merge on the
completion of any transaction contemplated by this Agreement. They
survive the execution and delivery of any assignment or other
document entered into for the purpose of implementing any such
transaction.
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<PAGE>
15. ASSIGNMENT
15.1 H may not assign the whole or any part of its rights and obligations
under this Agreement.
15.2 T may not assign the whole or any part of its rights and obligations
under this Agreement:
(a) to a direct competitor of H;
(b) to a person which is not of good financial standing able
to discharge the obligations of T under this Agreement; or
(c) to any other person without the consent of H.
15.3 If H refuses its consent under Clause 15.2(c), T at its option may
terminate this Agreement by notice in writing to H.
16. NON-SOLICITATION
T undertakes to H that it will not solicit employees of H during the
term of this Agreement.
17. FURTHER ASSURANCES
Each party agrees to do all things and execute all deeds,
instruments, transfers or other documents as may be necessary or
desirable to give full effect to the provisions of this Agreement and
the transactions contemplated by it.
18. ENTIRE AGREEMENT
This Agreement and the Master Agreement contain the entire agreement
between the parties with respect to its subject matter and supersedes
all prior agreements and understandings between the parties in
connection with it.
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<PAGE>
19. WAIVER
No failure to exercise nor any delay in exercising any right, power
or remedy by a party operates as a waiver. A single or partial
exercise of any right, power or remedy does not preclude any other or
further exercise of that or any other right, power or remedy. A
waiver is not valid or binding on the party granting that waiver
unless made in writing.
20. NOTICES
Any notice, demand, consent or other communication (a NOTICE) given
or made under this Agreement:
(a) must be in writing and signed by a person duly authorised
by the sender;
(b) must be delivered to the intended recipient by prepaid
post (if posted to an address in another country, by
registered airmail) or by hand or fax to the address or
fax number below or the address or fax number last
notified by the intended recipient to the sender:
(i) to T: [#]
Attention: [#]
Fax No: [#]
(ii) to H: [#]
Attention: [#]
Fax No: [#]
(c) is taken to be duly given or made:
(i) in the case of delivery in person, when
delivered;
(ii) in the case of delivery by post two business
days after the date of posting (if posted to an
address in the same country) or seven business
days after the date of posting (if posted to an
address in another country);
(iii) in the case of fax, on receipt by the sender of
a transmission control report from the
despatching machine showing the relevant number
of pages and the correct destination fax
machine number and indicating that the
transmission had been made without error,
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<PAGE>
but if the result is that a Notice would be taken to be
given or made on a day which is not a business day in the
place to which the Notice is sent or is later than 4.00pm
(local time) it is taken to have been duly given or made
at the commencement of business on the next business day
in that place.
21. GOVERNING LAW
This Agreement is governed by the laws of New South Wales. Each party
submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there in connection with matters concerning this
Agreement.
22. COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
counterparts together are taken to constitute one instrument.
EXECUTED in Melbourne.
[Each attorney executing this Agreement states that he or she has no notice of
revocation or suspension of his or her power of attorney.]
[INSERT APPROPRIATE EXECUTION CLAUSES]
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<PAGE>
ATTACHMENT E
- --------------------------------------------------------------------------------
Share Sale Agreement (5%)
<PAGE>
[H]
and
SAL
and
[T]
and
[T ENTITY]
-------------------------
SHARE SALE AGREEMENT (5%)
-------------------------
Arthur Robinson & Hedderwicks
Melbourne
Ref RJS:CRG
Tel 9614 1011
<PAGE>
SHARE SALE AGREEMENT (5%)
- --------------------------------------------------------------------------------
THIS AGREEMENT is made on 1999 between:
1. [H] (H);
2. SAL (SAL);
3. [T] (T); and
4. [T ENTITY] (the PURCHASER).
RECITALS
A. SAL is a wholly owned subsidiary of H.
B. SAL is the registered and beneficial owner of the Shares.
C. This Agreement records the terms on which H agrees to procure the
sale by SAL of, and SAL agrees to sell, the Shares to the Purchaser.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
The following definitions apply unless the context otherwise
requires:
CASINO CONTROL ACT means the Casino Control Act 1992 of New South
Wales.
CASINO CONTROL AUTHORITY means the New South Wales Casino Control
Authority established under the Casino Control Act.
COMPLETION means completion by SAL and the Purchaser of the sale and
purchase of the Shares as provided in Clause 4.
COMPLETION DATE means the fifth day after entry into this Agreement.
CORPORATIONS LAW means the Corporations Law of Australia.
<PAGE>
MASTER AGREEMENT means the Master Agreement dated [#] 1999 between H
and T.
SECURITY INTEREST means an interest or power:
(a) reserved in or over any interest in any asset including,
without limitation, any retention of title; or
(b) created or otherwise arising in or over any interest in
any asset under a bill of sale, mortgage, charge, lien,
pledge, trust or power,
by way of security for the payment of debt or any other monetary
obligation or the performance of any other obligation and whether
existing or agreed to be granted or created.
SHARES means 27,500,000 ordinary shares in the capital of Star City
together with the benefit of all rights (including dividend rights)
attached or accruing to the shares as at the date of this Agreement.
STAR CITY means Star City Holdings Limited (ACN 064 054 431).
WARRANTIES means the representations, undertakings and other
obligations of H and SAL of whatever kind contained in this Agreement
(including, without limitation, those set out in Schedule 1).
$ means Australian dollars.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation.
The following rules apply unless the context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical
forms have a corresponding meaning.
(d) A reference to a person, corporation, trust, partnership,
unincorporated body or other entity includes any of them.
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<PAGE>
(e) A reference to an agreement or document (including,
without limitation, a reference to this Agreement) is to
the agreement or document as amended, varied,
supplemented, novated or replaced except to the extent
prohibited by this Agreement or that other agreement or
document.
(f) A reference to legislation or to a provision of
legislation includes a modification or re-enactment of it,
a legislative provision substituted for it and a
regulation or statutory instrument issued under it.
(g) A reference to WRITING includes a facsimile transmission
and any means of reproducing words in a tangible and
permanently visible form.
1.3 Consents or Approvals
If the doing of any act, matter or thing under this Agreement is
dependent on the consent or approval of a party or is within the
discretion of a party, the consent or approval may be given or the
discretion may be exercised conditionally or unconditionally or
withheld by the party in its absolute discretion.
2. SALE AND PURCHASE
2.1 H agrees to procure the sale of, and SAL agrees to sell, the Shares
to the Purchaser and the Purchaser agrees to buy the Shares from SAL,
free from all Security Interests.
2.2 The purchase price for the Shares is $1.60 per Share.
3. WARRANTIES
3.1 H and SAL each represent to the Purchaser that each statement in
Schedule 1 is true and correct.
3.2 Each Warranty:
(a) remains in full force and effect after the Completion Date
despite Completion; and
(b) is given as at the date of this Agreement and as at the
time immediately before Completion.
3.3 H indemnifies the Purchaser on demand against all losses, costs and
liabilities that may be incurred by the Purchaser as a result
(directly or indirectly) of a breach of any Warranty.
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<PAGE>
4. COMPLETION
4.1 Completion of the sale and the purchase of the Shares will take place
on the Completion Date at [INSERT TIME AND VENUE].
4.2 On the Completion Date H and SAL must ensure that transfers of the
Shares are executed and delivered to the Purchaser and that share
certificates (if any) relating to the Shares are delivered to the
Purchaser, and the Purchaser must pay the purchase price for the
Shares to SAL.
5. TERMINATION
5.1 The obligation of the Purchaser to complete the purchase of the
Shares is subject to the condition that each of the Warranties is
true and correct on the Completion Date.
5.2 The condition referred to in Clause 5.1 may be waived by the
Purchaser in its discretion but a waiver is not a waiver of any
rights or remedies it may have against H by reason of any breach of
Clause 5.1.
5.3 If the condition referred to in Clause 5.1 is not satisfied the
Purchaser may terminate this Agreement by notice to H.
6. GUARANTEE OF PURCHASER'S OBLIGATIONS BY T
T guarantees to SAL the performance by the Purchaser of each of the
Purchaser's obligations under this Agreement, and T separately must
indemnify SAL against all liabilities that may be incurred by SAL as
a result (directly or indirectly) of any failure to perform those
obligations.
7. COSTS
Each party must bear its own costs arising out of the negotiation,
preparation and execution of this Agreement. All stamp duty
(including fines, penalties and interest) which may be payable on or
in connection with this Agreement and any instrument executed under
this Agreement must be borne by the Purchaser.
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<PAGE>
8. MERGER
The rights and obligations of the parties do not merge on the
completion of any transaction contemplated by this Agreement. They
survive the execution and delivery of any assignment or other
document entered into for the purpose of implementing any such
transaction.
9. ENTIRE AGREEMENT
Apart from the Master Agreement, this Agreement and the Share Sale
Agreement (Showboat), the parties acknowledge and agree there are no
agreements, arrangements or understandings between the parties which
relate in any way to the voting or disposal of shares, options or
other securities in Star City.
10. ASSIGNMENT
The rights and obligations of each party under this Agreement are
personal. They cannot be assigned, encumbered or otherwise dealt with
and no party may attempt, or purport, to do so without the prior
written consent of all parties.
11. FURTHER ASSURANCES
Each party agrees to do all things and execute all deeds,
instruments, transfers or other documents as may be necessary or
desirable to give full effect to the provisions of this Agreement and
the transactions contemplated by it.
12. WAIVER
No failure to exercise nor any delay in exercising any right, power
or remedy by a party operates as a waiver. A single or partial
exercise of any right, power or remedy does not preclude any other or
further exercise of that or any other right, power or remedy. A
waiver is not valid or binding on the party granting that waiver
unless made in writing.
13. NOTICES
Any notice, demand, consent or other communication (a NOTICE) given
or made under this Agreement:
(a) must be in writing and signed by a person duly authorised
by the sender;
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<PAGE>
(b) must be delivered to the intended recipient by prepaid
post (if posted to an address in another country, by
registered airmail) or by hand or fax to the address or
fax number below or the address or fax number last
notified by the intended recipient to the sender:
(i) to H or SAL: [#]
Attention: [#]
Fax No: [#]
(ii) to T or the Purchaser: [#]
Attention: [#]
Fax No: [#]
(c) is taken to be duly given or made:
(i) in the case of delivery in person, when
delivered;
(ii) in the case of delivery by post two business
days after the date of posting (if posted to an
address in the same country) or seven business
days after the date of posting (if posted to an
address in another country);
(iii) in the case of fax, on receipt by the sender of
a transmission control report from the
despatching machine showing the relevant number
of pages and the correct destination fax
machine number and indicating that the
transmission had been made without error,
but if the result is that a Notice would be taken to be
given or made on a day which is not a business day in the
place to which the Notice is sent or is later than 4.00pm
(local time) it is taken to have been duly given or made
at the commencement of business on the next business day
in that place.
14. GOVERNING LAW
This Agreement is governed by the laws of New South Wales. Each party
submits to the non-exclusive jurisdiction of courts exercising
jurisdiction there in connection with matters concerning this
Agreement.
EXECUTED by the parties.
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<PAGE>
SIGNED on behalf of [H] by its
authorised representative )
in the presence of: )
---------------------------------
Authorised signatory
- ----------------------------------
Witness
---------------------------------
Print Name
- ----------------------------------
Print Name
SIGNED on behalf of [SAL] by its
authorised representative in the )
presence of: )
---------------------------------
Authorised signatory
- ----------------------------------
Witness
---------------------------------
Print Name
- ----------------------------------
SIGNED on behalf of [T ENTITY] by
its authorised representative in )
the presence of: )
---------------------------------
Authorised signatory
- ----------------------------------
Witness
---------------------------------
Print Name
- ----------------------------------
SIGNED on behalf of [T] by its
authorised representative in the )
presence of: )
---------------------------------
Authorised signatory
- ----------------------------------
Witness
---------------------------------
Print Name
- ----------------------------------
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<PAGE>
SCHEDULE 1
Warranties
1. SAL:
(a) is the legal and beneficial owner of the Shares free from
all Security Interests;
(b) has the full power and authority to transfer to the
Purchaser good legal and equitable title to the Shares
free from all Security Interests.
2. Without limiting Warranty 1, neither the entry by H or SAL into this
Agreement nor the performance by H or SAL of any of its terms give
rise to any rights or claims of any description by any person on the
basis of any claim of a right of pre-emption, first right of refusal
or other rights in respect of any of the Shares.
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<PAGE>
EX-10.2
Amendment to
The Harrah's Entertainment, Inc.
1990 Stock Option Plan (the "Plan")
Harrah's Entertainment, Inc. hereby adopts this Amendment to the Plan effective
May 6, 1999:
The following language is added at the end of Section D.2 of the Plan:
"Effective May 6, 1999, the number of authorized shares which may be
issued pursuant to the options and stock appreciation rights granted by
the Committee under the Plan is increased by an additional 2,500,000
shares all of which shall be treasury shares of the Company existing as
of May 6, 1999. No options or stock appreciation rights may be granted
under this Plan with respect to such 2,500,000 shares after February
28, 2008 and options utilizing these shares will be subject to the same
repricing restrictions contained in the provisions of the first
sentence of Section B.3 of the Plan that apply to the 3,500,000 shares
authorized by the Plan Amendment dated February 26, 1998."
This Amendment was duly approved by the Human Resources Committee of the Board
of Directors on May 6, 1999.
/s/ Rebecca W. Ballou
-----------------------------
Rebecca W. Ballou
Secretary of
Harrah's Entertainment, Inc.
<PAGE>
EX-10.3
Description of
Amendment to Annual Management
Bonus Plan
On June 17, 1999, the Human Resources Committee of the Board of
Directors approved a new method for determining bonuses for Executive Officers
under the Annual Management Bonus Plan. The bonus amounts as a percentage of
salary above and below a specific financial target will be based on specific
financial goals rather than using a bonus points method. Maximum and target
bonus amounts as a percent of salary are not changed. Any bonus amounts for
achieving below target will also be based on specific financial goals.
<PAGE>
Exhibit 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of May 7,
1999, by and between Harrah's Operating Company, Inc. ("Company") and Marilyn G.
Winn ("Executive").
The Company and the Executive agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as Senior Vice
President, Human Resources or in such other capacity as the Company reasonably
shall designate. The Executive may be an employee of the Company or one of its
subsidiaries.
2. DUTIES. During the term of this Agreement ("Active Employment"), the
Executive shall devote substantially all of her working time, energies, and
skills to the benefit of the Company's business. The Executive agrees to serve
the Company diligently and to the best of her ability, and to follow the
policies and directions of the Company.
3. COMPENSATION. The Executive's compensation and benefits during her
Active Employment shall be as follows:
(a) BASE SALARY. The Company shall pay the Executive a base salary
("Base Salary") of $250,000 per year, which will be reviewed annually by the
Company during the term of this Agreement in accordance with its compensation
practices regarding senior executives. The Executive's Base Salary shall be paid
biweekly in accordance with the Company's normal payroll schedule. All payments
shall be subject to the Executive's chosen benefit deductions and the deduction
of payroll taxes and similar assessments as required by law.
(b) BONUS. In addition to the Base Salary, the Executive shall be
eligible for an annual bonus in accordance with the Company's bonus plan.
4. INSURANCE AND BENEFITS. The Executive will be eligible to
participate in each employee benefit plan and receive each executive benefit
that the Company provides for its senior executives, in accordance with the
applicable plan rules.
5. TERM. The term of this Agreement shall be for four (4) years,
beginning May 7, 1999, and ending May 6, 2003.
<PAGE>
6. NO CAUSE TERMINATION/NON-RENEWAL OF AGREEMENT. The Company may
terminate the Executive's Active Employment at any time without cause upon
thirty (30) days' prior written notice ("no cause termination"). The Company
also, in its sole discretion, may elect not to renew this Agreement upon its
expiration ("non-renewal of Agreement"). In the event of such no cause
termination or non-renewal of Agreement, the Executive shall remain an employee
of the Company during the subsequent salary continuation period and shall be
entitled only to the salary and benefits set forth below, unless otherwise
specified in this Agreement.
BENEFIT TERMINATION DATE
Base Salary (rate as of Separation Date) 18 months (78 weeks) ("Salary
Continuation Period") Period") from
last day worked ("Separation from
last day of Active Employment
("Separation Date"). Date").
PTO and Service Credit Separation Date (accrued PTO will be
paid within 30 days of Separation
Date).
Use of Credit Cards Separation Date.
Bonus--Payment and Eligibility (i) Eligible for prior year bonus if
Separation Date occurs during
payment year but prior to payment;
(ii) eligible for prorated bonus for
the then current year if in job for
more than 6 months and Separation
Date occurs after June 30; (iii) not
eligible for bonus for year
following Separation Date.
Group Health and Life Insurance End of Salary Continuation Period.
18-month COBRA rights period for
health insurance will commence on
Separation Date. (See also Paragraph
10.)
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<PAGE>
Retaining Existing Stock Options for (i) Options from grants made prior
Vesting and Other Rights to 5/7/99 that have vested prior to
Separation Date can be exercised
through end of Salary Continuation
Period, but unvested options from
such grants will be forfeited as of
Separation Date; (ii) options from
grants made after 5/7/99 retained
for exercise and vesting through end
of Salary Continuation Period.
Exercise of vested options after
Salary Continuation Period per plan
rules.
Accelerated vesting of all options
not forfeited on Separation Date if
Change of Control occurs during
Salary Continuation Period.
Retaining Existing All restricted stock that is
Restricted Stock for unvested as of the Separation Date
Vesting and Other Rights will be forfeited on that date.
Forfeited restricted stock will not
vest upon a Change in Control during
Salary Continuation.
Eligibility for New Restricted Separation Date.
Stock or New Stock Options
TARSAP Next potential vesting, based on
Performance targets, after
Separation Date, at CEO's and HRC's
discretion. Accelerated vesting of
all shares if Change of Control
occurs during Salary Continuation.
Use of Financial Counseling per Plan End of Salary Continuation Period.
Provisions The maximum remaining benefit shall
be annual benefit remaining as of
Separation Date.
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<PAGE>
Savings and Retirement Plan Deductions End of year of Separation Date.
(Active Participation) Employment termination date will be
termination date under S&RP.
Executive Deferred Compensation End of year of Separation Date.
Plan/Deferred Compensation Plan (Active Distribution will commence after
Participation) Salary Continuation Period, in
accordance with previously made
elections, and at the termination
rate unless the Executive qualifies
for the retirement rate. (See also
Paragraph 11.) 3X death benefit
provision waived for death after
Separation Date. EDCP and other
deferred compensation balances will
continue to be protected by then
existing Escrow Agreement subject to
all terms and conditions thereof
including its termination
provisions.
7. DEATH OF EXECUTIVE. Upon the death of the Executive during her
Active Employment, her salary and all rights and benefits hereunder will
terminate, and her estate and beneficiary(ies) will receive the benefits to
which they are entitled under the terms of the Company's benefit plans and
programs by reason of a participant's death during employment, including the 3X
death benefit provided by the EDCP (3 X death benefit applies only if death
occurs during Active Employment) and the applicable rights and benefits under
the Company's stock plans. If the Executive dies during the Salary Continuation
Period, all of the provisions of the previous sentence apply except that the
remaining salary continuation will be paid in a lump sum to the Executive's
estate.
8. TERMINATION by Company for Cause. The Company shall have the right
to terminate the Executive's Active Employment for cause. Employment status and
all salary and benefits shall thereupon cease, except COBRA rights and as
otherwise provided in applicable benefit plans. Termination for cause shall be
effective immediately upon notice sent or given to the Executive
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<PAGE>
and this effective date will be both her Separation Date and date of termination
of employment. For purposes of this Agreement, the term "cause" shall mean and
be strictly limited to: (i) conviction of any crime that materially discredits
the Company or is materially detrimental to the reputation or goodwill of the
Company; (ii) commission of any material act of fraud or dishonesty against the
Company, or commission of an immoral or unethical act that materially reflects
negatively on the Company, or engaging in willful misconduct; provided that the
Executive shall first be provided with written notice of the claim against her
under this provision (ii) and with an opportunity to contest said claim before
the Board of Directors; or (iii) material breach of the Executive's obligations
under Paragraph 2. of this Agreement, as so determined by the Board of
Directors.
9. VOLUNTARY TERMINATION/NOTICE PERIOD. The Executive may terminate
this Agreement voluntarily at any time and for any or no reason during its term
upon thirty (30) days' prior written notice to the Company, except as specified
in this paragraph. If the Executive is going to work or act in competition with
the Company as described in Paragraph 14. of this Agreement, the Executive must
give the Company six (6) months' prior written notice of her intention to do so.
The written notice provided by the Executive shall specify the last day to be
worked by the Executive ("Separation Date"), which Separation Date under this
Paragraph 9. shall also be her termination of employment date and must be at
least thirty (30) days or six (6) months (as appropriate) after the date the
notice is received by the Company. Unless otherwise specified herein, or in a
writing executed by both parties, the Executive shall not receive any of the
benefits provided in this Agreement after the Separation Date set forth in her
written notice except for applicable rights and benefits that apply to employees
generally upon termination of employment.
10. CERTAIN HEALTH INSURANCE BENEFITS. If (i) the Executive reaches the
age of 50 and, when added to her number of years of continuous service with the
Company including any period of salary continuation, the sum of her age and
years of service equals or exceeds 65, and at any time after the occurrence of
both such events the Executive's employment is terminated pursuant to Paragraph
6., above; or (ii) the Executive reaches the age of 55 and has attained 10 years
of continuous service with the Company including any period of salary
continuation, and at any time after the occurrence of both such events the
Executive's employment terminates for any reason other than by the Company for
"cause" as described in paragraph 8., above, the Executive and her then-eligible
dependents shall be entitled to
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<PAGE>
participate in the Company's group health insurance plan, as amended from time
to time by the Company, after the Executive's Separation Date or the end of the
Salary Continuation Period, as applicable, for the remainder of the Executive's
life ("Life Coverage Period"). During the Life Coverage Period, the Executive
shall pay 20% of the current premium (revised annually) on an after-tax basis
each quarter, and the Company shall pay 80% of said premium on an after-tax
basis, which contribution will be imputed income to the Executive. As soon after
the Separation Date as the Executive becomes eligible for Medicare coverage, the
Company's group health insurance plan shall become secondary to Medicare.
If the Executive engages in any of the activities described in
Paragraph 14.(a), below, during the Life Coverage Period, the entitlement of the
Executive and her then-eligible dependents to participate in the Company's group
health insurance plan shall terminate automatically, without any further action
or notice by either party, subject to applicable COBRA rights, which shall
commence on the Separation Date. If the Executive engages in any of the
activities described in said Paragraph 14.(a)(i) in a business which does NOT
compete with the Company or any of its subsidiaries during the Life Coverage
Period, the Company's group health insurance plan shall become secondary to any
primary health insurance plan or coverage made available to the Executive by
that business.
The Executive shall also receive the benefits and be bound by the
provisions of this Paragraph 10 if a Change in Control, as defined in the
Executive's Severance Agreement, occurs following the effective date of this
Agreement.
11. EDCP RETIREMENT RATE. If the Executive reaches the age of 50 and,
when added to her number of years of continuous service with the Company, the
sum of her age and years of service equals or exceeds 65, and at any time after
the occurrence of both such events the Executive's employment is terminated
pursuant to Paragraph 6., above, the Executive shall be entitled to receive her
distributions from EDCP at the retirement rate. For EDCP retirement rate
purposes, the Executive will receive service credit for the Salary Continuation
Period.
12. CHANGE IN CONTROL. If a Change in Control, as defined in the
Executive's Severance Agreement, occurs during the Executive's Active
Employment, and if the Severance Agreement is in force when the Change in
Control occurs, then the Severance Agreement supersedes and replaces this
Agreement except as provided in Paragraph 10. If, prior to a Change in Control
(as defined above), the Executive's Active Employment has been terminated for
any reason by either party or this Agreement is not renewed by the Company, then
the Executive's Severance Agreement terminates automatically.
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<PAGE>
13. DISABILITY. If the Executive becomes disabled prior to the
termination of her Active Employment or the non-renewal of this Agreement, she
will be entitled to apply at her option for the Company's long-term disability
benefits. If she is accepted for such benefits, then the terms and provisions of
the Company's benefit plans and the programs (including the EDCP and the
Company's Stock Option and Restricted Stock Plans) that are applicable in the
event of such disability of an employee shall apply in lieu of the salary and
benefits under this Agreement, except that (i) the Escrow Agreement (if then in
force) and her indemnification agreement will continue in force (the Escrow
Agreement will be subject to amendment or termination in accordance with its
terms), and (ii) she will be entitled to the lifetime group insurance benefits
described in Paragraph 10. If the Executive is disabled so that she cannot
perform her duties (as determined by the Human Resources Committee (HRC), and if
she does not apply for long-term disability benefits or is not accepted for such
benefits, then the Company may terminate her duties under this Agreement. In
such event, she will receive eighteen months salary continuation, together with
all other benefits, and during such period of salary continuation any stock
options and restricted stock grants then in existence will continue in force for
vesting purposes. However, during such period of salary continuation for
disability, Executive will not be eligible to participate in the annual bonus
plan, nor will she be eligible to receive stock option or restricted stock
grants or any other long-term incentive awards except to the extent approved by
the HRC.
If the Executive becomes disabled during the Salary Continuation
Period, she will be entitled only to the salary and benefits described in
Paragraphs 6. and 10., above, for the periods set forth in those respective
paragraphs.
14. NON-COMPETITION.
(a) NON-COMPETITION. During the Executive's Active Employment,
and during the Salary Continuation Period described in Paragraph 6., above, the
Executive:
(i) shall not engage in any activity, including development
activity, whether as employer, proprietor, partner, stockholder (other than the
holder of less than 5% of the stock of a corporation the securities of which are
traded on a national securities exchange or in the over-the-counter market),
director, officer, employee, consultant or otherwise, in competition with (x)
the casino, casino/hotel and/or casino/resort businesses conducted at the date
hereof by the Company, or any subsidiary or affiliate ("Company" for purposes of
this paragraph 14) or (y) any casino, casino/hotel and/or casino/resort business
in which the Company is substantially engaged at any time during the Active
Employment period;
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<PAGE>
(ii) shall not solicit, in competition with the Company, any
person who is a customer of the businesses conducted by the Company at the date
hereof or of any business in which the Company is substantially engaged at any
time during the term of this Agreement.
(b) SCOPE OF COVENANTS; REMEDIES. The following provisions shall
apply to the covenants of the Executive contained in this Paragraph 14:
(i) the covenants contained in paragraphs (i) and (ii) of
Paragraph 14.(a) shall apply within the United States, Canada and Mexico, plus
any territories in which Company is actively engaged in the conduct of business
while the Executive is employed under this Agreement, including, without
limitation, the territories in which customers are then being solicited;
(ii) without limiting the right of the Company to pursue all
other legal and equitable remedies available for violation by the Executive of
the covenants contained in this Paragraph 14., it is expressly agreed by the
Executive and the Company that such other remedies cannot fully compensate the
Company for any such violation and that the Company shall be entitled to
injunctive relief to prevent any such violation or any continuing violation
thereof;
(iii) each party intends and agrees that if, in any action
before any court or agency legally empowered to enforce the covenants contained
in this Paragraph 14., any term, restriction, covenant or promise contained
therein is found to be unreasonable and accordingly unenforceable, then such
term, restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
15. Any confidentiality/non-solicitation agreement that Executive has
signed with the Company shall remain in full force and effect according to its
terms.
16. POST ACTIVE-EMPLOYMENT COOPERATION. Upon the termination of her
Active Employment, the Executive will cooperate with, and provide information
to, the Company in assuring an orderly transition of all matters being handled
by her. Upon the Company providing reasonable notice to her, she will also
appear as a witness at the Company's request and/or assist the Company in any
litigation, bankruptcy or similar matter in which the Company or any affiliate
thereof is a party; provided that the Company will defray any approved
out-of-pocket expenses incurred by her in connection with any such appearance
and that, if the Executive is no longer receiving salary compensation from the
Company, the Company will compensate her for all time spent, at either her then
current compensation rate or her salary rate as of the Separation Date,
whichever is
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<PAGE>
higher. The Company agrees further to indemnify her as prescribed in her
Indemnification Agreement and Article TENTH of the Certificate of Incorporation
of Harrah's Entertainment, Inc., as amended, filed on November 2, 1989, in the
Office of the Secretary of State of the State of Delaware and recorded in Book
935, Page 780, et seq.
17. RELEASE. Upon the termination of the Executive's Active Employment,
and in consideration of the receipt of the salary and benefits described in this
Agreement, except for claims arising from the covenants, agreements, and
undertakings of the Company as set forth herein and except as prohibited by
statutory language, the Executive forever and unconditionally waives, and
releases Harrah's Entertainment, Inc., Harrah's Operating Company, Inc., their
subsidiaries and affiliates, and their officers, directors, agents, benefit plan
trustees, and employees ("Released Parties") from any and all claims, whether
known or unknown, and regardless of type, cause or nature, including but not
limited to claims arising under all salary, vacation, insurance, bonus, stock,
and all other benefit plans, and all state and federal anti-discrimination,
civil rights and human rights laws, ordinances and statutes, including Title VII
of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act,
concerning her employment with Harrah's Operating Company, Inc., its
subsidiaries and affiliates, and the cessation of that employment
18. GENERAL PROVISIONS.
(a) NOTICES. Any notice to be given hereunder by either party to
the other may be effected by personal delivery, in writing, or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses set forth below, but
each party may change her or its address by written notice in accordance with
this Paragraph 18.(a). Notices shall be deemed communicated as of the actual
receipt or refusal of receipt.
If to Executive: Marilyn G. Winn
8816 Rozetta Court
Las Vegas, NV 89134
If to Company: Harrah's Operating Company, Inc.
1023 Cherry Rd.
Memphis, TN 38117
Attn: General Counsel
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(b) PARTIAL INVALIDITY. If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provision shall, nevertheless, continue in full force and without
being impaired or invalidated in any way.
(c) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee, without regard
to its conflict of laws provisions.
(d) NO CONFLICTING AGREEMENT. By signing this Agreement,
Executive warrants that she is not a party to any restrictive covenant,
agreement or contract which limits the performance of her duties and
responsibilities under this Agreement or under which such performance would
constitute a breach.
(e) HEADINGS. The Section, paragraph, and subparagraph headings
are for convenience or reference only and shall not define or limit the
provisions hereof.
(f) AMENDMENTS. Any amendments to this Agreement must be in
writing and signed by both parties.
(g) BINDING AGREEMENT. This Agreement is binding on the parties
and their heirs, successors and assigns.
(h) SURVIVAL OF PROVISIONS. The provisions of this Agreement
shall survive any termination thereof if so provided herein and if necessary or
desirable fully to accomplish the purposes of such provisions, including without
limitation the rights and obligations of the Executive under Paragraphs 6, 14,
15, 16 and 17 hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Harrah's Operating Company, Inc.
By: /s/ Philip G. Satre
---------------------------
Philip G. Satre
Chairman of the Board and
Chief Executive Officer
/s/ Marilyn G. Winn
-------------------------------
Marilyn G. Winn
Executive
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Exhibit 10.5
HARRAH'S ENTERTAINMENT, INC
May 7, 1999
Ms. Marilyn G. Winn
c/o Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, Tennessee 38117
Re: SEVERANCE AGREEMENT
Dear Ms. Winn:
Harrah's Entertainment, Inc. (the "Company") considers it essential to
the best interest of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated.
In order to induce you to remain in the employ of the Company or its
subsidiaries and in consideration of your agreements set forth in Subsection
2(b) hereof, the Company agrees that you shall receive the severance benefits
set forth in this letter agreement ("this Agreement") in the event your
employment with the Company or its subsidiaries terminates subsequent to a
"Change in Control of the Company" (as defined in Section 2 hereof) under the
circumstances described below.
<PAGE>
1. TERM OF AGREEMENT. This Agreement shall commence on May 7, 1999 and
shall continue in effect through December 31, 1999; provided, however, that
commencing on January 1, 2000 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than January 1 of the preceding year, the Company with the approval of the
Board of Directors shall have given you written notice that it does not wish to
extend this Agreement; provided, further, if a Change in Control of the Company
shall have occurred during the original or extended term of this Agreement, this
Agreement shall automatically continue in effect for a period of twenty-four
months beyond the month in which such Change in Control occurred.
2. CHANGE IN CONTROL.
(a) No benefit shall be payable to you hereunder unless there shall
have been a Change in Control of the Company, as set forth below. For purposes
of this Agreement, a "Change in Control of the Company" shall be deemed to have
occurred, subject to subparagraph (iv) hereof, if any of the events in
subparagraphs (i), (ii) or (iii) occur:
(i) Any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than an employee benefit plan of the Company, or a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of 25%
or more of the Company's then outstanding voting securities carrying
the right to vote in elections of persons to the Board, regardless of
comparative voting power of such voting securities, and regardless of
whether or not the Board shall have approved the acquisition of such
securities by the acquiring person; or
(ii) During any period of two consecutive years,
individuals who, at the beginning of such period, constitute the Board
together with any new director(s) (other than a director designated by
a person who shall have entered into an agreement with the Company to
effect a transaction described in clauses (i) or (iii) of this
Subsection) whose election by the Board or nomination for election by
the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the two year period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or
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(iii) The holders of securities of the Company entitled to
vote thereon approve the following:
(A) A merger or consolidation of the Company with any
other corporation regardless of which entity is the surviving
company, other than a merger or consolidation which would
result in the voting securities of the Company carrying the
right to vote in elections of persons to the Board outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of (a) the
Company's then outstanding voting securities carrying the
right to vote in elections of persons to the Board, or (b) the
voting securities of such surviving entity outstanding
immediately after such merger or consolidation, or
(B) A plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
(iv) Notwithstanding the definition of a "Change in
Control" of the Company as set forth in this Section 2(a), the Human
Resources Committee of the Board (the "Committee") shall have full and
final authority, which shall be exercised in its discretion, to
determine conclusively whether a Change in Control of the Company has
occurred, and the date of the occurrence of such Change in Control and
any incidental matters relating thereto, with respect to a transaction
or series of transactions which have resulted or will result in a
substantial portion of the assets or business of the Company (as
determined, prior to the transaction or series of transactions, by the
Committee in its sole discretion which determination as to whether a
substantial portion is involved shall be final and conclusive) being
held by a corporation at least 80% of whose voting securities are held,
immediately following such transaction or series of transactions, by
holders of the voting securities of the Company (as determined by the
Committee in its sole discretion prior to such transaction or series of
transactions which determination as to whether the 80% amount will be
satisfied shall be final and
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conclusive). The Committee may exercise any such discretionary
authority without regard to whether one or more of the transactions in
such series of transactions would otherwise constitute a Change in
Control of the Company under the definition set forth in this Section
2(a).
(b) For purposes of this Agreement, a "Potential Change in Control of
the Company" shall be deemed to have occurred if the following occur:
(i) The Company enters into a written agreement or letter of
intent, the consummation of which would result in the occurrence of a
Change in Control of the Company;
(ii) Any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company;
(iii) Any person (other than an employee benefit plan of the
Company, or a trustee or other fiduciary holding securities under an
employee benefit plan of the Company) who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to the
Board increases such beneficial ownership of such securities by an
additional five percentage points or more thereby beneficially owning
14.5% or more of such securities; or
(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the
Company has occurred.
You agree that, subject to the terms and conditions of this Agreement,
in the event of a Potential Change in Control of the Company, you will remain in
the employ of the Company (or the subsidiary thereof by which you are employed
at the date such Potential Change in Control occurs) until the earliest of (x) a
date which is six months from the occurrence of such Potential Change in Control
of the Company, (y) the termination by you of your employment by reasons of
Disability or Retirement (at your normal retirement age), as defined in
Subsection 3(a), or (z) the occurrence of a Change in Control of the Company.
(c) GOOD REASON. For purposes of this Agreement, "Good Reason" shall
mean, without your express written consent, the occurrence after a Change in
Control of the Company, of any of
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the following circumstances unless, in the case of paragraphs (i), (v), (vi),
(vii) or (viii), such circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination, as such terms are defined in
Subsections 3(e) and 3(d), respectively, given in respect thereof:
(i) The assignment to you of any duties inconsistent with your
status as an executive officer of the Company (or your status in the
position held by you immediately prior to the Change in Control) or a
substantial adverse alteration in the nature or status of your
responsibilities from those in effect immediately prior to the Change
in Control of the Company;
(ii) A reduction by the Company in your annual base salary as
in effect on the date hereof or as the same may be increased from time
to time except for an across-the-board salary reduction of a specific
percentage applied to all individuals at grade levels 26 and above and
all individuals in similar grade levels of any person in control of the
Company;
(iii) The relocation of the Company's principal executive
offices where you are working immediately prior to the Change in
Control of the Company to a location more than 50 miles from the
location of such offices immediately prior to the Change in Control of
the Company or the Company's requiring you to be based anywhere other
than the location of the Company's principal executive offices where
you were working immediately prior to the Change in Control of the
Company except for required travel on the Company's business to an
extent substantially consistent with your business travel obligations
during the year prior to the Change in Control;
(iv) The failure by the Company, without your consent, to pay
to you any portion of your current compensation except pursuant to an
across-the-board compensation deferral of a specific percentage applied
to all individuals in grade levels 26 or above and all individuals in
similar grades of any person in control of the Company, or to pay to
you any portion of an installment of deferred compensation under any
deferred compensation program of the Company, within thirty days of the
date such compensation is due;
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(v) The failure by the Company to continue in effect any
compensation plan in which you are participating immediately prior to
the Change in Control of the Company which is material to your total
compensation, including but not limited to, the Company's Bonus Plan,
Executive Deferred Compensation Plan, Deferred Compensation Plan,
Restricted Stock Plan, Stock Option Plan, or any substitute plans
adopted prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure by the Company to continue
your participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amount
of benefits provided and the level of your participation relative to
other participants, as existed immediately prior to the Change in
Control of the Company;
(vi) The failure by the Company to continue to provide you
with benefits substantially similar to those enjoyed by you under any
of the Company's pension, savings and retirement plan, life insurance,
medical, health and accident, or disability plans in which you were
participating at the time of the Change in Control of the Company, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any material
fringe benefit enjoyed by you at the time of the Change in Control of
the Company, or the failure by the Company to provide you with the
number of paid vacation or PTO days to which you are entitled on the
basis of years of service with the Company in accordance with the
Company's normal vacation policy and/or PTO policy in effect at the
time of the Change in Control of the Company;
(vii) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 5 hereof; or
(viii) Any purported termination of your employment by the
Company which is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection 3(d) hereof and the
requirements of Subsection 3(b) below; for purposes of this Agreement,
no such purported termination shall be effective.
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Your right to terminate your employment pursuant to this Agreement for
Good Reason shall not be affected by your incapacity due to physical or mental
illness. Your continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good Reason hereunder.
3. TERMINATION FOLLOWING CHANGE IN CONTROL (OR PRIOR TO A CHANGE IN
CONTROL IN SPECIFIC Circumstances). If any of the events described in Subsection
2(a) hereof constituting a Change in Control of the Company shall have occurred,
then following such Change in Control, you shall be entitled to the benefits
provided in Subsection 4(c) hereof: (1) if your employment was terminated within
six months prior to the Change of Control under the circumstances described in
Section 4.(2) below, or (2) if your employment is terminated during the term of
this Agreement after such Change in Control if such termination is (y) by the
Company, other than for Cause or (z) by you for Good Reason as provided in
Subsection 3(c)(i) hereof or by your Voluntary Termination as provided in
Subsection 3(c)(ii) hereof.
(a) DISABILITY; RETIREMENT. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six consecutive months, and
within thirty days after written notice of termination is given you shall not
have returned to the full-time performance of your duties, your employment may
be terminated for "Disability". Termination by the Company or you of your
employment based on "Retirement" shall mean termination at age 65 (or later)
with ten years of service or retirement in accordance with any retirement
contract between the Company and you.
(b) CAUSE. Termination by the Company of your employment for "Cause"
shall mean termination upon your engaging in willful and continued misconduct,
or your willful and continued failure to substantially perform your duties with
the Company (other than due to physical or mental illness), if such failure or
misconduct is materially damaging or materially detrimental to the business and
operations of the Company, provided that you shall have received written notice
of such failure or misconduct and shall have continued to engage in such failure
or misconduct after 30 days following receipt of such notice from the Board,
which notice specifically identifies the manner in which the Board believes that
you have engaged in such failure or misconduct. For purposes of this Subsection,
no act, or failure to act, on your part shall be deemed "willful" unless done,
or omitted to be
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done, by you not in good faith and without your reasonable belief that your
action or omission was in the best interest of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board you were guilty of failure to substantially perform your duties or of
misconduct in accordance with the first sentence of this Subsection, and of
continuing such failure to substantially perform your duties or misconduct as
aforesaid after notice from the Board, and specifying the particulars thereof in
detail.
(c) VOLUNTARY RESIGNATION. After a Change in Control of the Company and
for purposes of receiving the benefits provided in Subsection 4(c) hereof, you
shall be entitled to terminate your employment by voluntary resignation given at
any time during the two years following the occurrence of a Change in Control of
the Company hereunder, provided such resignation is (i) by you for Good Reason
or (ii) by you voluntarily without the necessity of asserting or establishing
Good Reason and regardless of your age or any disability and regardless of any
grounds that may exist for the termination of your employment if such voluntary
termination occurs by written notice given by you to the Company during the
thirty days immediately following the one year anniversary of the Change in
Control (your "Voluntary Termination"), provided, however, for purposes of this
Subsection 3(c)(ii) only, the language "25% or more" in Subsection 2(a)(i)
hereof is changed to "a majority". Such resignation shall not be deemed a breach
of any employment contract between you and the Company.
(d) NOTICE OF TERMINATION. Any purported termination of your employment
by the Company or by you shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 6 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(e) DATE OF TERMINATION, ETC. "Date of Termination" shall mean:
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(i) If your employment is terminated for Disability, thirty
days after Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties during such
thirty day period), and
(ii) If your employment is terminated pursuant to Subsection
(b) or (c) above or for any other reason (other than Disability), the
date specified in the Notice of Termination (which, in the case of a
termination pursuant to Subsection (b) above shall not be less than
thirty days, and in the case of a termination pursuant to Subsection
(c) above shall not be less than fifteen nor more than sixty days
(thirty days in case of your Voluntary Termination), respectively, from
the date such Notice of Termination is given);
Provided that if within fifteen days after any Notice of Termination is given,
or, if later, prior to the Date of Termination (as determined without regard to
this provision), the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (which
is not appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); provided further that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue you as a participant in all compensation, bonus,
benefit and insurance plans in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under this Subsection are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
4. COMPENSATION UPON TERMINATION FOLLOWING A CHANGE OF CONTROL (OR IF
TERMINATION OCCURS PRIOR TO A CHANGE IN CONTROL IN SPECIFIC CIRCUMSTANCES).
Following a Change in Control of the Company as defined in Subsection 2(a),
then: (1) upon termination of your employment after such Change in Control, or
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(2) notwithstanding anything in this Agreement to the contrary, if termination
of your employment occurred within six months prior to the Change in Control if
such termination was by the Company without Cause by reason of the request of
the person or persons (or their representatives) who subsequently acquire
control of the Company in the Change of Control transaction, you shall be
entitled to the following benefits:
(a) Deleted.
(b) If your employment shall be terminated by the Company for Cause,
the Company shall pay you your full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given, plus the
Company shall pay all other amounts and honor all rights to which you are
entitled under any compensation plan of the Company at the time such payments
are due, and the Company shall have no other obligations to you under this
Agreement.
(c) If your employment shall be terminated (y) after a Change of
Control, by the Company other than for Cause or (z) after a Change of Control,
by you for Good Reason or by your Voluntary Termination as provided in
Subsection 3(c)(ii), or (yy) within six months prior to a Change of Control, by
the Company under the circumstances described in Section 4.(2) above, then you
shall be entitled to the benefits provided below:
(i) The Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given, plus all other amounts to which you are entitled under any
compensation or benefit plan of the Company, at the time such payments are due;
(ii) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you a lump sum severance payment (the "Severance
Payment") equal to 3.0 times the average of the Annual Compensation (as
defined below) payable to you by the Company or any corporation
affiliated with the Company within the meaning of Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code"). Annual
Compensation is defined to consist of two components: (a) Your annual
salary in effect immediately prior to the Change in Control or in
effect as of the Date of Termination, whichever annual salary is
higher. Your annual salary for this purpose will be determined without
any reduction for deferrals of such salary under any deferred
compensation plan (qualified or unqualified) and without any reduction
for any salary reductions used for making
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contributions to any group insurance plan of the Company or its
affiliates and also without reduction for any other deductions from
salary for any reason; PLUS (b) The average of your annual bonuses
under the Company's Annual Management Bonus Plan, or any substitute or
successor plan including the Key Executive Officer Annual Incentive
Plan, for the three highest calendar years, in terms of annual bonus
paid to you in such years, during the five calendar years preceding the
calendar year in which the Change in Control occurred. Your annual
bonuses for this purpose will be determined without any reduction for
deferrals under any deferred compensation plan (qualified or
unqualified) and without any reduction for salary reductions used for
making contributions to any group insurance plan of the Company or its
affiliates and also without reduction for any other deductions from
bonus for any reason. If you were not employed by the Company or its
affiliates for a sufficient period of time to receive annual bonuses
during each of the five calendar years before the Change in Control
occurred, then the average bonus will be measured using the three
highest calendar years, in terms of annual bonus paid to you, in all
the consecutive calendar years immediately preceding the date the
Change in Control occurred. If you were not eligible for three years of
bonuses paid during the calendar years immediately preceding the date
the Change in Control occurred, then the average bonus will be the
average of the annual bonuses that were paid to you during such time
under such Plan. If you were not eligible for any bonus during such
time because of not being employed by the Company for a sufficient
period of time to qualify for a previous bonus payment, then Annual
Compensation will only consist of the salary component as provided
above and will not include a bonus component.
(iii) The Company shall also pay to you a pro rata amount of
your target bonus (the bonus amount for your grade level assuming 100
bonus points are earned) as shown on the matrix for the Annual
Management Bonus Plan (or any substitute or successor plan)
attributable to the bonus plan year which contains your Date of
Termination, regardless of whether or not any bonus is determined to be
actually earned for such year, provided that the target bonus for
calculating this pro rata payment will not be less than the target
bonus under such Plan for the Plan year that contains the day
immediately prior to the Change in Control (which target bonus will be
the one that applies to your grade level at that time) regardless of
whether or not any bonus was payable for such year. The pro-rata amount
will be
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based on the percentage of days of your employment in the calendar year
of the Date of Termination. For example, if the Date of Termination is
October 1 in a year with 365 days, with October 1 counted as the last
day of employment for a total of 274 days of employment that year, then
the pro-rata amount will be 75.06849% of target bonus (274 days / 365
days). In addition, the Company shall pay to you the amounts of any
compensation or awards payable to you or due to you under any incentive
compensation plan of the Company including, without limitation, the
Company's Restricted Stock Plan, Stock Option Plan (the "Option Plan")
and Annual Management Bonus Plan (or any substitute or successor plan
including the Key Executive Officer Annual Incentive Plan) and under
any agreements with you in connection therewith, and shall make any
other payments and take any other actions and honor such rights you may
have accrued under such plans and agreements including any rights you
may have to payments after the Date of Termination, which will include
the payment to you of any bonus earned during the bonus year fully
completed prior to the Date of Termination if such Date of Termination
occurs prior to the payment date for such bonus, it being understood,
however, that the pro-rata payment provided for in the first sentence
of this paragraph 4(c)(iii) is in lieu of any bonus earned for the
bonus plan year during which occurred the Date of Termination.
(iv) In lieu of shares of common stock of the Company or any
securities of a successor company which shall have replaced such common
stock ("Company Shares") issuable upon exercise of outstanding and
unexercised options (whether or not they are fully exerciseable or
"vested"), if any, granted to you under the Option Plan including
options granted under the plan of any successor company that replaced
or assumed the options under said Option Plan ("Options") (which
Options shall be cancelled upon the making of the payment referred to
below), you shall receive an amount in cash equal to the product of (y)
the excess of the higher of the closing price of Company Shares as
reported on the New York Stock Exchange on or nearest the Date of
Termination (or, if not listed on such exchange, on a nationally
recognized exchange or quotation system on which trading volume in
Company Shares is highest) or the highest per share price (including
cash, securities and any other consideration) for Company Shares
actually paid in connection with any change in control of the Company,
over the per share exercise price of each Option held by you (whether
or not then fully exercisable or "vested"), times (z) the number of
Company Shares covered by each such option.
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(v) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination (including all
such fees and expenses, if any, incurred in contesting or disputing any
such termination or in seeking to obtain or enforce any right or
benefit provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of Section
4999 of the Code to any payment or benefit provided hereunder).
(vi) In the event that you become entitled to the payments
(the "Severance Payments") provided under paragraphs (ii), (iii), and
(iv), above (and Subsections (d) and (e), below), and if any of the
Severance Payments will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code, the Company shall pay to you at
the time specified in paragraph (vii), below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by you (such net
amount to be the amount remaining after deducting any Excise Tax on the
Severance Payments and any federal, state and local income tax and
Excise Tax payable on the payment provided for by this paragraph),
shall be equal to the amount of the Severance Payments after deducting
normal and ordinary taxes but not deducting (a) the Excise Tax and (b)
any federal, state and local income tax and Excise tax payable on the
payment provided for by this paragraph. For example, if the Severance
Payments are $1,000,000 and if you are subject to the Excise Tax, then
the Gross-Up Payment will be such that you will retain an amount of
$1,000,000 less only any normal and ordinary taxes on such amount. (The
Excise Tax and federal, state and local taxes and any Excise Tax on the
payment provided by this paragraph will not be deemed normal and
ordinary taxes). For purposes of determining whether any of the
Severance Payments will be subject to the Excise Tax and the amount of
such Excise Tax, the following will apply:
(A) Any other payments or benefits received or to be
received by you in connection with a Change in Control of the
Company or your termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in
a Change in Control of the Company or any person affiliated
with the Company or such person) shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess
-13-
<PAGE>
parachute payments" within the meaning of Section 280G(b)(1) shall be
treated as subject to the Excise Tax, unless in the opinion of tax
counsel selected by the Company's independent auditors and acceptable
to you such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in
whole or in part) represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code
in excess of the base amount within the meaning of Section 280G(b)(3)
of the Code, or are otherwise not subject to the Excise Tax;
(B) The amount of the Severance Payments which shall
be treated as subject to the Excise Tax shall be equal to the
lesser of (y) the total amount of the Severance Payments or
(z) the amount of excess parachute payments within the meaning
of Section 280G(b)(1) (after applying clause (A), above); and
(C) The value of any non-cash benefits or any
deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with proposed,
temporary or final regulations under Sections 280G(d)(3) and
(4) of the Code or, in the absence of such regulations, in
accordance with the principles of Section 280G(d)(3) and (4)
of the Code. For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to pay Federal income
taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of your residence
on the Date of Termination, net of the maximum reduction in
Federal income taxes which could be obtained from deduction of
such state and local taxes. In the event that the amount of
Excise Tax attributable to Severance Payments is subsequently
determined to be less than the amount taken into account
hereunder at the time of termination of your employment, you
shall repay to the Company, at the time that the amount of
such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the
Excise Tax and Federal (and state and local) income tax
imposed on the Gross-Up Payment being repaid by you if such
repayment results in a reduction in Excise Tax and/or a
Federal
-14-
<PAGE>
(and state and local) income tax deduction) plus interest on
the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax
attributable to Severance Payments is determined to exceed the
amount taken into account hereunder at the time of the
termination of your employment (including by reason of any
payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment), the Company shall make
an additional gross-up payment to you in respect of such
excess (plus any interest payable with respect to such excess)
at the time that the amount of such excess is finally
determined.
(vii) The payments provided for in paragraphs (ii), (iii),
(iv) and (vi) above, shall be made not later than the fifth day
following the Date of Termination (or following the date of the Change
in Control if your employment is terminated under the circumstances
described in Section 4.(2) above), provided, however, that if the
amounts of such payments cannot be finally determined on or before such
day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than
the thirtieth day after the Date of Termination (or following the date
of the Change in Control if your employment is terminated under the
circumstances described in Section 4.(2) above). In the event that the
amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the
Company to you payable on the fifth day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code).
(d) If your employment shall be terminated (y) by the Company other
than for Cause, or (z) by you voluntarily for Good Reason or by your Voluntary
Termination, or by the Company within six months prior to a Change in Control
under the circumstances described in Section 4.(2) hereof, then for a
twenty-four month period after such termination, the Company shall arrange to
provide you with life, disability, accident and health insurance benefits
substantially similar to those which you are receiving immediately prior to the
Notice of Termination. Benefits otherwise receivable by you pursuant to this
Subsection 4(d) shall be reduced to the extent comparable benefits are actually
received by you during the twenty-four month period following your termination,
and any such benefits actually received by you shall be reported to the Company.
-15-
<PAGE>
(e) In the event a Change in Control of the Company occurs while you
are employed with the Company or its affiliates but after you and the Company
have executed an agreement that expressly provides for your subsequent
retirement including an agreement that expressly provides for your early
retirement, then the present value, computed using a discount rate of 8% per
annum, of (i) the total amount of all unpaid deferred payments as payable to you
in accordance with the payment schedule that you elected when the deferral was
agreed to and using the plan interest rate applicable to your situation,
including, without limitation, any unpaid deferred payments to be paid to you
under the Company's Executive Deferred Compensation Plan and the Company's other
deferred compensation plans, and (ii) the total amount of all other payments
payable or to become payable to you or your estate or beneficiary under such
retirement agreement (other than payments payable pursuant to a plan qualified
under Section 401(a) of the Internal Revenue Code) shall be accelerated and paid
to you (or your estate or beneficiary if applicable) in a lump sum cash payment
within five business days after the occurrence of the Change in Control of the
Company. In addition, if you and the Company or its affiliates have executed
such a retirement agreement and if the Change in Control of the Company occurs
before the effective date of your retirement, then you shall receive the
Severance Payment payable under Subsection 4(c)(ii) herein in addition to the
lump sum cash payment of the present value of your total unpaid deferred
payments and other payments under the retirement agreement as aforesaid. All
benefits (other than the payments accelerated and paid out to you in a lump sum
as provided above) to which you or your estate or any beneficiary are entitled
under such retirement agreement shall continue in effect notwithstanding the
Change in Control of the Company. This Subsection 4(e) shall survive your
retirement.
(f) Notwithstanding that a Change in Control shall not have yet
occurred, if you so elect, by written notice to the Company given at any time
after the date hereof and prior to the time such amounts are otherwise payable
to you:
(i) The Company shall deposit with an escrow agent, pursuant
to an escrow agreement between the Company and such escrow agent, a sum
of money, or other property permitted by such escrow agreement, which
are substantially sufficient in the opinion of the Company's management
to fund payment of the following amounts to you, as such amounts become
payable (provided such deposit will not be necessary to the extent the
escrow already contains funds or other assets which are substantially
sufficient in the opinion of the Company's management to fund such
payments) :
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<PAGE>
(A) Amounts payable, or to become payable, to you or
to your beneficiaries or your estate under the Company's
Executive Deferred Compensation Plan and under any agreements
related thereto in existence at the time of your election to
make the deposit into escrow.
(B) Amounts payable, or to become payable, to you or
to your beneficiaries or your estate by reason of your
deferral of payments payable to you prior to the date of your
election to make the deposit into escrow under any other
deferred compensation agreements between you and the Company
in existence at the time of your election to make the deposit
into escrow, including but not limited to deferred
compensation agreements relating to the deferral of salary or
bonuses.
(C) Amounts payable, or to become payable, to you or
to your beneficiaries or your estate under any executed
agreement that expressly provides for your retirement from the
Company (including payments described under Subsection 4(e)
above) which agreement is in existence at the time of your
election to make the deposit into escrow, other than amounts
payable by a plan qualified under Section 401(a) of the Code.
(D) Subject to the approval of the Committee, amounts
then due and payable to you, but not yet paid, under any other
benefit plan or incentive compensation plan of the Company
(whether such amounts are stock or cash) other than amounts
payable to you under a plan qualified under Section 401(a) of
the Code.
(ii) Within 5 days after the occurrence of a Potential Change
of Control, the Company shall deposit with an escrow agent (which shall
be the same escrow agent, if one exists, acting pursuant to clause (i)
of this Subsection 4(f)), pursuant to an escrow agreement between the
Company and such escrow agent, a sum of money, or other property
permitted by such escrow agreement, substantially sufficient in the
opinion of Company management to fund the payment to you of the amounts
specified in Subsection 4(c) of this Agreement.
(iii) It is intended that any amounts deposited in escrow
pursuant to the provisions of clause (i) or (ii) of this Subsection
4(f), shall be subject to the claims of the Company's creditors, as set
forth in the form of such escrow agreement.
-17-
<PAGE>
(g) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise (except as specifically provided in
this Section 4).
(h) In addition to all other amounts payable to you under this Section
4, you shall be entitled to receive all benefits payable to you under any
benefit plan of the Company in which you participate to the extent such benefits
are not paid under this Agreement.
5. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same amount and on the
same terms as you would be entitled to hereunder if you terminate your
employment voluntarily for Good Reason following a Change in Control of the
Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
-18-
<PAGE>
6. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid, by FAX
if available, or by overnight courier service, addressed as follows:
To the Company:
Secretary
Harrah's Entertainment, Inc.
1023 Cherry Road
Memphis, TN 38117
FAX: 901-762-8735
To you:
Addressed to your name at your office address (or FAX
number) with the Company or its affiliates (or any
successor thereto) at the time the notice is sent and
your home address at that time; and if you are not
employed by the Company at the time of the notice,
your home address as shown on the records of the
Company or its affiliates (or any successor thereto)
on the date of the notice.
To such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
7. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Company under Section 4 shall survive the expiration of the
term of this Agreement.
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<PAGE>
8. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Memphis, Tennessee in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that you shall be entitled to
seek specific performance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
11. SIMILAR PROVISIONS IN OTHER AGREEMENT. The Severance Payment under
this Agreement supersedes and replaces any previous severance agreement and any
other severance payment to which you may be entitled under any previous
agreement between you and the Company or its affiliates.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our binding agreement on this subject.
Very truly yours,
HARRAH'S ENTERTAINMENT, INC.
By: /s/ E. O. Robinson, Jr.
-----------------------
E. O. Robinson, Jr.
Senior Vice President
Agreed:
/s/ Marilyn G. Winn
- ------------------------
Marilyn G. Winn
-20-
<PAGE>
Exhibit 11
HARRAH'S ENTERTAINMENT, INC.
COMPUTATIONS OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income before extraordinary
losses $ 47,923,000 $ 37,019,000 $ 85,268,000 $ 61,922,000
Extraordinary losses, net (7,375,000) (16,613,000) (10,623,000) (18,280,000)
------------ ------------ ------------ ------------
Net income $ 40,548,000 $ 20,406,000 $ 74,645,000 $ 43,642,000
============ ============ ============ ============
BASIC EARNINGS PER SHARE
Weighted average number of common
shares outstanding 126,202,689 100,206,703 125,864,055 100,167,488
============ ============ ============ ============
BASIC EARNINGS PER COMMON SHARE
Income before extraordinary
losses $ 0.38 $ 0.37 $ 0.67 $ 0.62
Extraordinary losses, net (0.06) (0.17) (0.08) (0.18)
------------ ------------ ------------ ------------
Net income $ 0.32 $ 0.20 $ 0.59 $ 0.44
============ ============ ============ ============
DILUTED EARNINGS PER SHARE
Weighted average number of common
shares outstanding 126,202,689 100,206,703 125,864,055 100,167,488
Additional shares based on
average market price for
period applicable to:
Restricted stock 684,726 280,648 580,310 256,294
Stock options 2,096,989 1,248,649 1,422,001 1,056,030
------------ ------------ ------------ ------------
Average number of common and
common equivalent shares
outstanding 128,984,404 101,736,000 127,866,366 101,479,812
============ ============ ============ ============
DILUTED EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARES
Income before extraordinary
losses $ 0.37 $ 0.36 $ 0.66 $ 0.61
Extraordinary losses, net (0.06) (0.16) (0.08) (0.18)
------------ ------------ ------------ ------------
Net income $ 0.31 $ 0.20 $ 0.58 $ 0.43
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 176,326
<SECURITIES> 0
<RECEIVABLES> 132,288
<ALLOWANCES> 41,594
<INVENTORY> 32,741
<CURRENT-ASSETS> 376,083
<PP&E> 3,820,964
<DEPRECIATION> 864,128
<TOTAL-ASSETS> 4,724,583
<CURRENT-LIABILITIES> 341,848
<BONDS> 2,582,392
0
0
<COMMON> 12,831
<OTHER-SE> 1,462,102
<TOTAL-LIABILITY-AND-EQUITY> 4,724,583
<SALES> 0
<TOTAL-REVENUES> 1,462,805
<CGS> 0
<TOTAL-COSTS> 1,179,516
<OTHER-EXPENSES> 47,302
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99,587
<INCOME-PRETAX> 142,970
<INCOME-TAX> 53,380
<INCOME-CONTINUING> 85,268
<DISCONTINUED> 0
<EXTRAORDINARY> 10,623
<CHANGES> 0
<NET-INCOME> 74,645
<EPS-BASIC> 0.59
<EPS-DILUTED> 0.58
</TABLE>
